-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, EscJOoPWS7XIQOj0CJClZmRBm//3uLDuZgXlklMq9e2KkZveiumAxtI4qbITxQIh 1hui+kGJhSg0v5SiYRP6Kg== 0001144204-05-019978.txt : 20050627 0001144204-05-019978.hdr.sgml : 20050627 20050627145003 ACCESSION NUMBER: 0001144204-05-019978 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 15 FILED AS OF DATE: 20050627 DATE AS OF CHANGE: 20050627 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: A CONSULTING TEAM INC CENTRAL INDEX KEY: 0001040792 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MISCELLANEOUS BUSINESS SERVICES [7380] IRS NUMBER: 133169913 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-53441 FILM NUMBER: 05917228 BUSINESS ADDRESS: STREET 1: 200 PARK AVE S STREET 2: SUITE 901 CITY: NEW YORK STATE: NY ZIP: 10003 BUSINESS PHONE: 2129798228 MAIL ADDRESS: STREET 1: 200 PARK AVENUE SOUTH STREET 2: SUITE 901 CITY: NEW YORK STATE: NY ZIP: 10003 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: OAK FINANCE INVESTMENTS LTD CENTRAL INDEX KEY: 0001315086 IRS NUMBER: 000000000 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: 325 WATERFRONT DRIVE STREET 2: OMAR HODGE BUILDING 2ND FLR WICKHAMS CAY CITY: ROAD TOWN TORTOLA STATE: D8 ZIP: 00000 BUSINESS PHONE: 212-548-2164 MAIL ADDRESS: STREET 1: 325 WATERFRONT DRIVE STREET 2: OMAR HODGE BUILDING 2ND FLR WICKHAMS CAY CITY: ROAD TOWN TORTOLA STATE: D8 ZIP: 00000 SC 13D/A 1 v020672_sc13da.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 SCHEDULE 13D UNDER THE SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. 2)* THE A CONSULTING TEAM, INC. - -------------------------------------------------------------------------------- (Name of Issuer) COMMON STOCK - -------------------------------------------------------------------------------- (Title of Class of Securities) 000881 10 2 ----------- (CUSIP Number) WILLIAM A. NEWMAN, ESQ. MCGUIREWOODS LLP 1345 AVENUE OF THE AMERICAS, SEVENTH FLOOR NEW YORK, NY 10105 (212) 548-2164 - -------------------------------------------------------------------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) MAY 24, 2005 - -------------------------------------------------------------------------------- (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of ss.ss. 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box. |_| NOTE: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See ss. 240.13d-7 for other parties to whom copies are to be sent. *The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). ================================ CUSIP NO. 000881 10 2 ================================ ================================================================================ 1 NAMES OF REPORTING PERSONS. I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) OAK FINANCE INVESTMENTS LTD. - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions) (a) |_| (b) |X| - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS (See Instructions) BK - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) |_| - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION BRITISH VIRGIN ISLANDS ================================================================================ NUMBER 7 SOLE VOTING POWER OF SHARES BENEFICIALLY 2,274,697 (SEE ITEM 5) OWNED ------------------------------------------------------------ BY EACH 8 SHARED VOTING POWER REPORTING PERSON ------------------------------------------------------------ WITH 9 SOLE DISPOSITIVE POWER 2,274,697 (SEE ITEM 5) ------------------------------------------------------------ 10 SHARED DISPOSITIVE POWER ================================================================================ 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 2,274,697 (SEE ITEM 5) - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (See Instructions) |_| - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 20.9% (SEE ITEM 5) - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON (See Instructions) CO ================================================================================ Item 1 Security and Issuer. This Amendment No. 2 to Schedule 13D (this "Statement") relates to shares of the common stock, par value $0.01 per share (the "Shares"), of The A Consulting Team, Inc. (the "Company" or "TACT"). The principal executive offices of the Company are located at 200 Park Avenue South, Suite 900, New York, New York 10003. Item 2 Identity and Background. This Statement is filed by Oak Finance Investments Ltd. ("Oak") as a direct beneficial owner of Shares. Oak is a British Virgin Islands company. The principal executive offices of Oak are located c/o Arias Fabrega & Fabrega Trust Company BVI Ltd., 325 Waterfront Drive, Omar Hodge Building, 2nd Floor, Wickham's Cay, Road Town, Tortola, British Virgin Islands. Oak is a company the principal business of which is to engage in any lawful activity, including making investments. As of the date of this Statement, all issued and outstanding shares of Oak are held by the Sigma Trust, a discretionary trust organized on July 26, 2004 under the laws of Jersey. Information required to be disclosed in this Statement about the Sigma Trust is incorporated by reference to Exhibit 18 to this Statement. During the past five years, neither Oak nor, to the best knowledge of Oak, any person named on Schedule A to this Statement, has been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors). During the past five years, neither Oak nor, to the best knowledge of Oak, any person named in Schedule A to this Statement, was a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of which proceeding Oak was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. Item 3 Source and Amount of Funds or Other Consideration. On January 21, 2005, Oak entered into a Stock Purchase Agreement (the "Company Stock Purchase Agreement") with TACT, pursuant to which Oak has agreed, subject to certain conditions, to purchase from the Company a minimum of 625,000 and up to 1,250,000 Shares at a price of $8.00 per share. After its initial purchase of the 625,000 Shares minimum, Oak or an assignee of Oak will have up to an additional 120 days to purchase up to an additional 625,000 Shares from TACT for a purchase price of $8.00 per Share. The maximum total amount of funds that will be required for Oak to acquire the maximum number of Shares pursuant to the Company Stock Purchase Agreement is $10,000,000. In addition, also on January 21, 2005, Oak entered into a Stock Purchase Agreement (the "Shareholder Stock Purchase Agreement") with Shmuel BenTov (together with persons with whom Shmuel BenTov shares beneficial ownership of the Shares, the "Selling Shareholder"), pursuant to which Oak agreed, subject to certain conditions, to purchase from the Selling Shareholder 1,024,697 Shares beneficially owned by the Selling Shareholder for an aggregate purchase prices of $10,503,144.25, or $10.25 per Share; provided, that if the TACT does not pay a dividend of $0.75 per Share on or prior to the closing date of the Shareholder Stock Purchase Agreement, then the price per Share shall be increased by the amount of the difference between $0.75 per share and the amount of any dividend actually paid. 1 On May 24, 2005, Oak obtained a line of credit in the amount of $16,750,000 (the "Loan") from Stonegate Bank ("Stonegate"), and the Cordell Consultants Inc. Money Purchase Plan ("Cordell" and, collectively with Stonegate, the "Lenders"). Oak obtained the Loan for the purpose of financing its acquisition of Shares under the Company Stock Purchase Agreement and the Shareholder Stock Purchase Agreement. The terms of the Loan are set forth in a Line of Credit Agreement, dated as of May 24, 2005, by and among Oak and the Lenders (the "Loan Agreement"), and Oak's repayment obligations are evidenced by a Promissory Note for the benefit of Stonegate in the principal amount of $15,450,000 and a Promissory Note for the benefit of Cordell in the principal amount of $1,300,000, each dated June 3, 2005 (the "Promissory Notes"). The Promissory Notes mature as of June 3, 2006, provided, however, that portions of the Loan must be repaid in the event the trading price of the Shares falls below $6.50 for two consecutive trading days. The entire Loan must be repaid in the event the trading price of the Shares falls below $5.00 for two consecutive days. The Loan is secured by the Shares of the Company that Oak will purchase, described in Item 5, as well as Shares which will be held by Excalibur Investment Group Limited ("Excalibur") and Andrew Harry Ball. Each of Oak, Excalibur and Mr. Ball have pledged to Stonegate, for the benefit of the Lenders, (i) the Shares that will be owned by Oak, Excalibur and Mr. Ball, respectively, (ii) any additional Shares that Oak, Excalibur and Mr. Ball, respectively, may acquire (excluding Shares that may be acquired in connection with Oak's option to purchase 625,000 additional Shares), (iii) any proceeds of the Shares that may be received by Oak, Excalibur and Mr. Ball, respectively, and (iv) any rights under the Share Exchange Agreement, dated as of January 21, 2005, among the Company, Vanguard Info-Solutions Corporation ("Vanguard"), the shareholders of Vanguard and the authorized representative named therein (the "Share Exchange Agreement"), the Company Stock Purchase Agreement, the Shareholder Stock Purchase Agreement and the related transactions to which Oak, Excalibur and Mr. Ball, respectively, are parties. Unless and until an event of default occurs, Oak, Excalibur and Mr. Ball will retain all voting rights with regard to the Shares that they each hold, and all rights under the transaction documents. The Shares held by each of Oak, Excalibur and Mr. Ball and any distributions made to such parties, respectively, by the Company in connection with the Shares will be held by Stonegate for the benefit of the Lenders. Each of Oak, Excalibur and Mr. Ball agrees to ensure that (and it will be an event of default under the pledge agreements unless) the Shares owned by Oak, Excalibur and Mr. Ball at all times constitute an aggregate of no less than 51% (or a larger percentage deemed necessary by the Lender to control the management of TACT) of the issued and outstanding Shares. In connection with the Loan, each of Excalibur and Mr. Ball will issue to the Lenders warrants to purchase, in the aggregate, up to five percent (5%) of the fully-diluted Shares. The warrants are exercisable for a period beginning 270 days after their issuance, which is expected to be on the date the transactions contemplated by the Company Stock Purchase Agreement, Shareholder Stock Purchase Agreement and Share Exchange Agreement are consummated, and ending on the date that is 30 months from the issuance date. The initial exercise price of these warrants is $9.30 per Share, subject to adjustment upon future issuances of Shares by TACT during the period that the warrants may be exercised. Upon the release of the proceeds of the Loan from escrow, Mr. Ball and Excalibur shall be obligated to deposit into escrow those Shares that are subject to the warrants. 2 Oak's obligation to repay the Loan is guaranteed by Excalibur, Mr. Ball, Mr. Kishore Jhunjhunwala and Mr. Saurabh Patel. Excalibur has guaranteed the performance of Oak of all the agreements executed in connection with the Loan and Mr. Ball in connection with his performance of the warrants issued by him to the Lenders. Mr. Ball has guaranteed the performance of Oak of all the agreements executed in connection with the Loan and Excalibur in connection with its performance of the warrants issued by it to the Lenders. Although TACT is not a party to or bound by the Loan Agreement, its failure to perform certain actions, or observe certain restrictions, could result in an event of default under the Loan Agreement and the related documents. The occurrence of the event of default could permit the Lenders to foreclose on the pledges of the Shares to them, thereby becoming the owners of up to 86.6% of the Shares issued and outstanding after the consummation of the proposed transactions. The actions and restrictions that could give rise to an event of default include, among others, the following: o TACT's obligation to deliver to Lender copies of its periodic reports filed with the SEC and other financial information; o TACT's failure to deliver a monthly compliance certificate; o TACT's purchase or an investment in a business conducted by, or assets owned by, another entity; and o TACT's failure to provide Lender and its representatives with access to TACT's properties, books and records. In addition to the above matters which relate specifically to TACT, Oak is subject to a full range of obligations typically applicable to a borrower in a secured loan transaction. As such, if Oak fails to make any payment when due, causes or allows the Lender's interest in the Shares pledged as collateral to be impaired or otherwise causes the value of the collateral or the likelihood of payment to decrease, the Lender may have the right to declare a default and take ownership of the Shares pledged as collateral to secure the loan. The Lender may also declare a default if Oak, Excalibur and Mr. Ball, as a group, own less than 51% of TACT's issued and outstanding shares or if Oak or TACT fail to maintain a "key man" life insurance policy for each of Donald Kovalevich in his capacity as Chief Executive Officer of TACT following the consummation of the proposed transactions and Richard D. Falcone in his capacity as Chief Financial Officer of TACT following the consummation of the proposed transactions. In addition, if Oak's option to purchase up to an additional 625,000 Shares pursuant to the Company Stock Purchase Agreement is not exercised on or before the third business day preceding the 120th day after the consummation of the proposed transactions, this option will be assigned to the Lenders who may exercise the option on or before the 120th day. The warrants issued by each of Excalibur and Mr. Ball also contain obligations that if not performed might result in an event of default under the Loan Agreement. Generally, if TACT issues additional Shares for less than the then-current exercise price, the market value on the date of issuance or $16.00 while the warrants are issued and outstanding (other than on the exercise of stock options and the option to purchase 625,000 additional shares), then both the then-current exercise price and the number of shares subject to the warrants will be adjusted, in which case both Mr. Ball and Excalibur will be obligated to deposit additional shares with the escrow agent who holds the Shares subject to the warrants. If either Mr. Ball or Excalibur does not hold sufficient additional Shares, then an event of default may occur. 3 Accordingly, Oak's total minimum commitment to purchase Shares is for an aggregate purchase price of $15,503,144.25, all of which will be funded by the Loan. In addition, additional Shares may be purchased by Oak, funded by either the remaining balance of the Loan, by Oak's own working capital or by other sources which have not been determined at the time of this Statement. Item 4 Purpose of Transaction. Oak engaged in the transactions contemplated by the Company Stock Purchase Agreement, the Shareholder Stock Purchase Agreement and the Share Exchange Agreement for investment purposes. Closing of Oak's purchase of the Shares is to occur concurrently with the closing of the Share Exchange Agreement. Pursuant to the Share Exchange Agreement, the Company will issue 7,312,796 Shares to the stockholders of Vanguard in exchange for 100% of the issued and outstanding shares of the capital stock of all classes of Vanguard. As described in Item 3, pursuant to the Company Stock Purchase Agreement, the Company has agreed to sell, and the Buyer has agreed to purchase, 625,000 Shares at a purchase price of $8.00 per share, and Oak has agreed to purchase 1,024,697 Shares from the Selling Shareholder. Oak plans to acquire the Shares for investment. Oak will, however, continually evaluate the business, financial condition and prospects of the Company, the market price of the Shares, its return on investment, alternative investments and conditions in the United States economy and in the industry in which the Company is engaged, with the view toward determining whether to hold, decrease or increase its investment in the Company. From time to time on or after the date on which it has acquired the Shares from the Company and the Selling Shareholder, based upon such evaluation, Oak may sell all or a portion of its Shares, or may purchase additional Shares at varying prices in the open market, in privately negotiated transactions and/or in other transactions. Such sales may or may not occur at the same time as sales by other persons who are acquiring shares from the Company concurrently with Oak's acquisition of its Shares. (a) If Oak and any assignees of Oak purchase the maximum number of shares under the Company Stock Purchase Agreement to which they are entitled, TACT will receive gross proceeds of $10,000,000 and will issue 1,250,000 shares to Oak and its assignees, if any. (b) The acquisition of Shares by Oak, any assignees of Oak and the shareholders of Vanguard will result in (i) the issuance by TACT of at least 625,000, and as many as 1,250,000, Shares to Oak and its assignees at a purchase price of $8.00 per Share paid to the Company, (ii) the transfer by the Selling Shareholder of 1,024,697 Shares to Oak for an aggregate purchase price of between $10,503,144.25 and $11,271,667.00 paid to the Selling Shareholder and (iii) the issuance of an aggregate of 7,312,796 Shares to the stockholders of Vanguard, in exchange for all of the outstanding capital stock of Vanguard. Based on the number of issued and outstanding shares of the Company of 10,892,254 (assuming the issuance of all 1,250,000 shares to Oak under the Company Stock Purchase Agreement and the issuance of 7,312,796 Shares to the stockholders of Vanguard under the Exchange Agreement), as a result of these transactions, Oak will beneficially own 2,274,697 Shares, or 20.9% of the issued and outstanding Shares, and the stockholders of Vanguard will own 7,312,796 Shares, or 67.1% of the issued and outstanding Shares. (d) The current board of directors of the Company is expected to expand from four to five members following the transactions contemplated by the Company Stock Purchase Agreement, the Shareholder Stock Purchase Agreement and 4 the Share Exchange Agreement. Further, under the terms of the Share Exchange Agreement, William Miller and Steven Mukamal, two of the four current directors of the Company, will remain as directors, and Andrew H. Ball, Joseph Harris and William A. Newman are expected to be named as additional members of the Company's board of directors. Of these five, Messrs. Harris, Miller and Mukamal are independent directors. (e) The present capitalization of the Company will change after giving effect to the transactions contemplated by the Share Exchange Agreement, the Company Stock Purchase Agreement and the Shareholder Stock Purchase Agreement. The number of Shares outstanding will increase by (i) at least 625,000 and as many as 1,250,000 Shares pursuant to the Company Stock Purchase Agreement, and (ii) 7,312,796 Shares pursuant to the Share Exchange Agreement. (f) Following the transactions, Oak believes that the Company's business will be combined with the business of Vanguard as a single business unit. TACT currently provides enterprise-wide information technology consulting, training services and software products. The Company's current business will be augmented by adding additional onshore and offshore IT services, offshore customer care and customer acquisition services and offshore business process outsourcing. (g) Oak understands that following the completion of the transactions contemplated by the Share Exchange Agreement, the Company Stock Purchase Agreement and the Shareholder Stock Purchase Agreement, the name of the Company will be changed, upon its receipt of the consent of its shareholders, to "Vanguard Info-Solutions International Inc." Except as described above in this Item 4, none of the Reporting Persons nor, to the best knowledge of the Reporting Persons, any other person named in Schedule A to this Statement, has formulated any plans or proposals that relate to or would result in any matter required to be described in response to paragraphs (a) through (j) of Item 4 of this Statement. Item 5 Interest in Securities of Issuer (a) As of the date of this Statement, Oak is the direct beneficial owner of 2,274,697 Shares, or approximately 20.9% of the 10,892,254 Shares that are anticipated to be outstanding after giving effect to (i) the exchange of Shares for shares of Vanguard that is contemplated by the Share Exchange Agreement and (ii) the purchase of the maximum number of Shares (1,250,000) to be purchased under the Company Stock Purchase Agreement. Oak does not currently beneficially own any Shares other than those reported in this Statement. Oak's beneficial ownership of Shares arises solely as a result of (i) its right under the Company Stock Purchase Agreement to purchase at least 625,000 Shares and up to 1,250,000 Shares from the Company under that agreement, and (ii) its right under the Shareholder Stock Purchase Agreement to purchase 1,024,697 Shares from the Selling Shareholder. Oak may acquire all of those Shares within 60 days from the date of this Statement, assuming that all of the conditions precedent to such purchase of Shares, as set forth in the Company Stock Purchase Agreement and the Shareholder Stock Purchase Agreement, are satisfied or waived. 5 Oak's right to purchase the Shares from TACT under the Company Stock Purchase Agreement is subject to certain conditions, including: o the accuracy of TACT's representations and warranties contained in the Company Stock Purchase Agreement; o TACT's material performance of and compliance with the covenants and obligations that TACT is required to perform or to comply with under the Company Stock Purchase Agreement; o the delivery of a legal opinion; o the absence of any legal proceeding that challenges or seeks damages or other relief in connection with any of the transactions contemplated by the Company Stock Purchase Agreement, or that may prevent or interfere with the contemplated transactions; o the absence of any material adverse change in the business, operations, properties, prospects, results of operations or condition (financial or otherwise) of TACT or any of its subsidiaries; and o the consummation of the transactions contemplated by the Share Exchange Agreement and the Shareholder Stock Purchase Agreement. The obligation of TACT to sell the Shares to Oak and its assignees under the Company Stock Purchase Agreement is subject to certain closing conditions, including: o the accuracy of Oak's representations and warranties contained in the Company Stock Purchase Agreement; o Oak's performance of and compliance with the covenants and obligations that Oak is required to perform or comply with under the Company Stock Purchase Agreement; o the delivery of a legal opinion; and o the absence of any legal requirement or any injunction or other order that prohibits consummation of the transactions contemplated by the Company Stock Purchase Agreement. Oak's obligation to purchase the 1,024,697 Shares from the Selling Shareholder is subject to certain conditions, including: o the accuracy of the Selling Shareholder's representations and warranties in the Shareholder Stock Purchase Agreement; o the Selling Shareholder's material performance of and compliance with the covenants and obligations that he is required to perform or to comply with under the Shareholder Stock Purchase Agreement and the Principal Shareholder's Agreement; o the delivery of any required consents; o the delivery of a legal opinion; 6 o the absence of legal proceedings that challenge or seek damages or other relief in connection with any of the transactions contemplated by the Shareholder Stock Purchase Agreement, or that may prevent or interfere with the contemplated transactions; o the absence of any claim by any person asserting that such person is a beneficial holder of any of the Shares to be purchased by Oak or is entitled to any portion of the purchase price payable by Oak; o the absence of any material adverse change in the business, operations, properties, prospects, results of operations or condition (financial or otherwise) of TACT or any of its subsidiaries; and o the consummation of the transactions contemplated by the Share Exchange Agreement and the Company Stock Purchase Agreement. The Selling Shareholder's obligation to sell the 1,024,697 Shares to Oak is subject to certain closing conditions, including: o the accuracy of Oak's representations and warranties in the Shareholder Stock Purchase Agreement; o Oak's performance of and compliance with the covenants and obligations that Oak is required to perform or comply with under the Shareholder Stock Purchase Agreement; o the delivery of any required consents; o the delivery of a legal opinion; and o the absence of any legal requirement or any injunction or other order that prohibits consummation of the transactions contemplated by the Shareholder Stock Purchase Agreement. The Shareholder Stock Purchase Agreement may be terminated by the mutual consent of Oak and the Selling Shareholder, if the closing of the purchase and sale of the Selling Shareholder's Shares has not occurred on or before July 31, 2005, if a material breach or failure of a closing condition has occurred, or if any governmental body has issued a final order that permanently enjoins or otherwise prohibits the transactions contemplated by the Share Exchange Agreement (unless the party relying on such order has not complied with its obligations under the agreement with respect to such matter). The Vanguard shareholders are the direct beneficial owners of the number of shares and corresponding percentage of post-transaction Shares outstanding, as set forth below, according to the information contained in the Company's Proxy Statement for the 2005 Annual Meeting of Shareholders, filed with the Securities and Exchange Commission on June 27, 2005 (the "Proxy Statement"). The Reporting Persons believe that none of the Vanguard shareholders beneficially owns any Shares other than those set forth below and reported in the Proxy Statement. 7
- -------------------------------------------------------------------------------------------------------------------- Vanguard Shareholders Number of Percentage Owned Percentage Owned Shares (assuming only the minimum of (assuming the maximum of 625,000 Shares issued under 1,250,000 Shares issued Company Stock Purchase under Company Stock Purchase Agreement) Agreement) - -------------------------------------------------------------------------------------------------------------------- Andrew H. Ball 2,303,781 22.4% 21.2% - -------------------------------------------------------------------------------------------------------------------- Excalibur Investment Group Limited 4,972,701 48.4% 45.7% - -------------------------------------------------------------------------------------------------------------------- Berenson Investments LLC 36,564 0.4% 0.3% - --------------------------------------------------------------------------------------------------------------------
(b) Assuming the consummation of Oak's purchase of the maximum number of shares it may purchase under the Company Stock Purchase Agreement and Oak's purchase of Shares under the Shareholder Stock Purchase Agreement and, following the completion of those transactions, Oak will have the direct power to vote and direct the disposition of the Shares it will acquire. As of the date of this Statement, all issued and outstanding shares of Oak are held by The Sigma Trust, a discretionary trust organized on July 26, 2004 under the laws of Jersey (the "Trust"). By virtue its relationship with Oak, the Trust may be deemed to have the indirect power to vote and direct the disposition of the Shares that Oak will acquire. Otherwise, no person shares the right to vote or the right to direct the disposition of the Shares with Oak. (c) Oak has not effected any transactions in the Shares during the 60 days prior to the date of this Statement. (d) Oak has the right to receive and the power to direct the receipt of dividends from, and the proceeds from the sale of, the Shares that it will hold after completion of the purchase and sale of Shares under the Company Stock Purchase Agreement and the Shareholder Stock Purchase Agreement. (e) Not applicable. Item 6 Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer. The Company Stock Purchase Agreement, the Shareholder Stock Purchase Agreement and the Share Exchange Agreement On January 21, 2005, (i) Oak and TACT entered into the Company Stock Purchase Agreement and (ii) Oak and the Selling Shareholder entered into the Shareholder Stock Purchase Agreement. The principal terms of the Company Stock Purchase Agreement are summarized under Items 4 and 5 of this Statement and below. The principal terms of the Shareholder Stock Purchase Agreement are summarized under Items 4 and 5 of this Statement. Also on January 21, 2005, the stockholders of Vanguard, their authorized representative and TACT entered into the Share Exchange Agreement. The principal terms of the Share Exchange Agreement are described under Items 4 and 5 of this Statement. The Shares to be purchased under the Company Stock Purchase Agreement are restricted shares and may not be sold or otherwise transferred unless the sale or other transfer is exempt from the registration requirements of the Securities Act of 1933, as amended (the "Securities Act"). After it acquires Shares from the Selling Shareholder and TACT, Oak will have the right to cause TACT to register Oak's Shares for resale in accordance with the requirements of the Securities Act. The Company has agreed that, within 90 days after Oak's initial purchase of Shares under the Company Stock Purchase Agreement, it will file a registration statement with the Securities and Exchange Commission (the "SEC") for the resale of the 625,000 Shares purchased by Oak and for the resale of any additional shares that Oak or an assignee of Oak have purchased under the Company Stock Purchase Agreement. If the purchase 8 of the additional Shares in excess of the initial 625,000 Shares does not occur within 20 days after the purchase of the initial 625,000 Shares, then within 90 days after the purchase of the additional Shares, the Company will file with the SEC either a new registration statement or an amendment to the initial registration statement that had been filed, in either case to register for resale all of the additional Shares that are purchased. The purchasers of the Shares under the Company Stock Purchase Agreement also have the right to demand the registration for resale of any Shares issued to them in addition to or in exchange for the purchased Shares. The Company has undertaken to use its commercially reasonable efforts to cause the registration statements it files to become effective as promptly as possible and to keep the registration statements effective during the period that ends on the earlier of the second anniversary of the initial purchase of the Shares and the date on which the purchasers no longer own or have any rights to acquire Shares. The Company has also agreed to take actions that are necessary to expedite and facilitate the disposition of the Shares pursuant to the registration statements that the Company has filed. If certain specified events occur, the Company is obligated to pay Oak and any other purchaser under the Company Share Purchase Agreement as partial liquidated damages an amount equal to 2% of the aggregate purchase price for the Shares for each calendar month or part thereof until the registration statement has been filed (if unfiled) or declared effective if filed or until any of the other specified events has been corrected. The specified events include TACT's failure to timely file the registration statement within the periods prescribed by the Company Stock Purchase Agreement, the failure of the registration statement to become effective within 120 days after the initial sale of shares under the Company Stock Purchase Agreement (or, if the SEC reviews the registration statement, 150 days), the inability of a purchaser to make sales pursuant to the registration statement other than by that purchaser's failure to comply with legal requirements and the delisting of the shares from trading. Payments of the specified amounts are partial compensation only and do not constitute the exclusive remedies for the specified event. The Company's board of directors has approved the transactions contemplated by the Shareholder Stock Purchase Agreement, the Share Exchange Agreement and the Company Stock Purchase Agreement and has agreed to recommend to the Company's shareholders that they approve the transactions contemplated by the Share Exchange Agreement and the Company Stock Purchase Agreement. The approval of the shareholders of the Company is necessary to consummate the transactions contemplated by the Share Exchange Agreement and the Company Stock Purchase Agreement. Under the Shareholder Stock Purchase Agreement, the Selling Shareholder has agreed to convert all of the issued and outstanding shares of the Company's Series A Preferred Stock, par value $0.01 per share, owed by him into Shares. The Principal Shareholder's Agreement In connection with the Shareholder Stock Purchase Agreement, Oak and the Selling Shareholder also entered into a separate agreement, dated as of January 21, 2005, (the "Principal Shareholder's Agreement"), pursuant to which the Selling Shareholder has granted Oak a proxy to vote all 1,024,697 Shares that he owns, and Oak intends to vote these shares in favor of the transactions contemplated by the Share Exchange Agreement and the Company Stock Purchase Agreement. The Selling Shareholder has also agreed to refrain from taking certain actions regarding other potential transactions involving the Company (described below). Pursuant to the Principal Shareholder's Agreement, to induce Oak to enter into the Shareholder Stock Purchase Agreement, the Selling 9 Shareholder has agreed to execute and deliver the Principal Shareholder's Agreement with respect to all 1,024,697 Shares that the Selling Shareholder beneficially owns, as well as any Shares that he may acquire in the future. Pursuant to the Principal Shareholder's Agreement, the Selling Shareholder has agreed, prior to the termination of the Principal Shareholder's Agreement in accordance with its terms, at any meeting (or any adjournment or postponement thereof), of the Company's shareholders to vote his Shares (excluding 3,750 Shares registered in the name of Ronit BenTov, the wife of Shmuel BenTov) (x) in favor of the approval of the Share Exchange Agreement and the Company Stock Purchase Agreement and each of the transactions contemplated by those agreements, (y) against any action, proposal, transaction or agreement that to the knowledge of the Shmuel BenTov would constitute a breach of any covenant, representation or warranty of the Company or of the Selling Shareholder and (z) against any action or proposal (other than as contemplated by the Share Exchange Agreement, the Company Stock Purchase Agreement or the Shareholder Stock Purchase Agreement) involving any of the following: (i) any extraordinary corporate transaction the Company or its subsidiaries, or any inquiry or offer with respect to a third party tender offer, business combination or similar transaction involving all or more than 10% of the assets of the Company or 10% or more of the Company's capital stock, or any acquisition of 10% or more of the capital stock or assets of the Company and its subsidiaries, taken as a whole, in a single transaction or a series of related transactions (any such proposal, offer or transaction is referred to in this Statement as a "Company Acquisition Proposal"); (ii) a sale, lease or transfer of a significant part of the Company's assets or a reorganization, recapitalization, dissolution or liquidation of the Company; (iii) any change in the board of directors that was not approved in advance by at least a majority of the persons who were directors as of the date of the Principal Shareholder's Agreement; (iv) any change in the current capitalization of the Company; (v) any other material change in the Company's corporate structure or business; and (vi) any other action or proposal involving the Company that is intended or to the knowledge of the Shareholder would reasonably be expected to prevent or postpone the transactions contemplated by the Shareholder Stock Purchase Agreement. The Selling Shareholder also agreed not to enter into any agreement that conflicts with or could reasonably be expected to conflict with provisions of the Principal Shareholder's Agreement or the Shareholder Stock Purchase Agreement. 10 Pursuant to the Principal Shareholder's Agreement, the Selling Shareholder irrevocably appointed Oak as his agent at any meeting of the Company's shareholders, that may be called with respect to the matters referred to in clauses (i) through (vi) of the preceding paragraph. The Selling Shareholder has agreed not to vote or execute any consent with respect to the matters as to which it has granted a proxy to Oak, or grant any other proxy or power or attorney with respect to any of the Shares with respect of those matters, not to deposit any of the Shares into a voting trust and not to enter into any other agreement to vote, or grant any proxy or give instructions with respect to the voting of any Shares in connection with any of the matters referred to in (i) through (vi) of the preceding paragraph. The Selling Shareholder has agreed, pursuant to the Principal Shareholder's Agreement, not to directly or indirectly solicit, facilitate, participate in or initiate any inquiries or any proposal by any person which may reasonably be expected to lead to any sale of the Shares or any company acquisition proposal, except to the extent that the Selling Shareholder takes such action to comply with the Share Exchange Agreement. If the Selling Shareholder receives an inquiry or proposal with respect to the sale of the Shares, the Selling Shareholder must promptly inform Oak of the terms and conditions of such inquiry of proposal and the identity of the person making it. The Selling Shareholder has also agreed to immediately cease any existing activities, discussions or negotiations with any parties conducted before the date of the Principal Shareholder's Agreement with respect to the any of the foregoing. The Selling Shareholder has also agreed not to, sell, transfer or pledge any of his Shares. The Selling Shareholder may nonetheless take any action which in his good faith judgment is required to fulfill his fiduciary duties as a director of the Company. The Principal Shareholder's Agreement terminates on the earlier of the consummation of the transactions under the Shareholder Stock Purchase Agreement and the termination of the Principal Shareholder's Agreement or either of the Shareholder Stock Purchase Agreement or the Company Stock Purchase Agreement in accordance with their respective terms. In any event, the grant of a proxy to Oak terminates as to any Shares held by the Selling Shareholder in excess of 500,000 if the Company's board of directors, in the exercise of its fiduciary duties, withdraws, modifies or changes in any manner adverse to Oak, its approval with regard to the Shareholder Stock Purchase Agreement or its recommendation with regard to any of the transactions contemplated by the Share Exchange Agreement or the Company Stock Purchase Agreement. The Loan On May 24, 2005, Oak obtained a line of credit in the amount of $16,750,000 pursuant to the Loan. The principal terms of the Loan are summarized under Item 3 of this Statement and below. According to the terms of the Loan Agreement, Oak, Excalibur and Mr. Ball have each pledged to Stonegate for the benefit of the Lenders all Shares that they will own following the transactions, any additional Shares that they may acquire, any proceeds from the sale of any Shares, and any rights under the Company Stock Purchase Agreement, the Shareholder Stock Purchase Agreement, and the Share Exchange Agreement. The occurrence of an event of default under the Loan Agreement could permit the Lenders to foreclose on the pledges of Shares to them, and the Lenders would thereby become the owners of up to 86.6% of the issued and outstanding Shares. Upon such foreclosure, the Lenders would have exclusive voting power and investment power over the Shares pledged by Oak, Excalibur and Mr. Ball. 11 Other Agreements Other than set forth above, neither Oak nor, to the best knowledge of the Oak, any person named in Schedule A to this Statement, has any contract, arrangement, understanding or relationship (legal or otherwise) with any person with respect to securities of the Company, including, but not limited to, transfer or voting of any such securities, finder's fees, joint ventures, loans or option arrangements, puts or calls, guarantees of profits, division of profits or losses, or the giving or withholding of proxies. Item 7 Material to be filed as Exhibits. Exhibit 1 Share Exchange Agreement, dated as of January 21, 2005, among Vanguard Info-Solutions Corporation (a New Jersey corporation formerly known as B2B Solutions, Inc.), the Vanguard Stockholders named therein, the authorized representative named therein and The A Consulting Team, Inc., incorporated by reference to Exhibit 2.1 of the Current Report of The A Consulting Team, Inc. on Form 8-K dated January 26, 2005. Exhibit 2 Principal Shareholder's Agreement, dated as of January 21, 2005, between Shmuel BenTov and Oak Finance Investments Limited, incorporated by reference to Exhibit 9.1 of the Current Report of The A Consulting Team, Inc. on Form 8-K dated January 26, 2005. Exhibit 3 Stock Purchase Agreement, dated as of January 21, 2005, between The A Consulting Team, Inc. and Oak Finance Investments Limited, incorporated by reference to Exhibit 10.1 of the Current Report of The A Consulting Team, Inc. on Form 8-K dated January 26, 2005. Exhibit 4 Stock Purchase Agreement, dated as of January 21, 2005, between Shmuel BenTov and Oak Finance Investments Limited, incorporated by reference to Exhibit 10.2 of the Current Report of The A Consulting Team, Inc. on Form 8-K dated January 26, 2005. Exhibit 5 Line of Credit Agreement, dated as of May 24, 2005, among Oak Finance Investments Limited, the lenders thereto and Stonegate Bank as administrative agent and collateral agent for the lenders. Exhibit 6 Pledge and Security Agreement, dated as of May 24, 2005, by Andrew Harry Ball in favor of Stonegate Bank, as collateral agent for the lender. Exhibit 7 Pledge and Security Agreement, dated as of May 24, 2005, by Excalibur Investment Group Limited in favor of Stonegate Bank, as collateral agent for the lender. Exhibit 8 Pledge and Security Agreement, dated as of May 24, 2005, by Oak Finance Investments Limited in favor of Stonegate Bank, as collateral agent for the lender. 12 Exhibit 9 Promissory Note dated June 3, 2005, by Oak Finance Investments Limited in the amount of $15,450,000, in favor of Stonegate Bank. Exhibit 10 Promissory Note dated June 3, 2005 by Oak Finance Investments Limited in the amount of $1,300,000, in favor of Cordell Consultants, Inc. Money Purchase Plan. Exhibit 11 Assignment Agreement, dated as of May 24, 2005, by and between Oak Finance Investments Limited and Stonegate Bank, as administrative agent and collateral agent under the Line of Credit Agreement. Exhibit 12 Guaranty of Payment of Saurabh Patel, dated May 24, 2005, in favor of the Lenders to the Line of Credit Agreement dated as of May 24, 2005. Exhibit 13 Guaranty of Payment of Kishore Jhunjhunwala, dated May 24, 2005, in favor of the Lenders to the Line of Credit Agreement dated as of May 24, 2005. Exhibit 14 Guaranty of Payment of Andrew Harry Ball, dated May 24, 2005, in favor of the Lenders to the Line of Credit Agreement dated as of May 24, 2005. Exhibit 15 Agreement Among Guarantors, dated May 24, 2005, by and among Oak Finance Investments Limited, Excalibur Investment Group Limited, Kishore Jhunjhunwala, Saurabh Patel and Andrew Harry Ball. Exhibit 16 Form of Warrant to Purchase Common Stock, granted to Stonegate Bank and Cordell Consultants Money Purchase Plan, Inc. by Andrew Harry Ball. Exhibit 17 Form of Warrant to Purchase Common Stock, granted to Stonegate Bank and Cordell Consultants Money Purchase Plan, Inc. by Excalibur Investment Group, Limited. Exhibit 18 Amendment No. 1 to Schedule 13D of the Sigma Trust filed with the SEC on June 15, 2005. Exhibit 19 Written Consent of the Sole Director of Oak Finance Investments Limited, naming Sorab Patel an authorized representative. 13 SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Date: June 27, 2005 OAK FINANCE INVESTMENTS LIMITED By: /s/Sorab Patel -------------------------------------------- Name: Sorab Patel Title: Authorized Person Signing in the capacities listed on Schedule A attached hereto and incorporated herein by reference. 14 SCHEDULE A The business address of Oak is c/o Arias Fabrega & Fabrega Trust Company BVI Ltd., 325 Waterfront Drive, Omar Hodge Building, 2nd Floor, Wickham's Cay, Road Town, Tortola, British Virgin Islands. The sole director of Oak is Brenda Patricia Cocksedge, whose address is 26 Eleftherias, Lakatamia, Nicosia 2312 Cyprus, and whose present principal employment is self employed, acting as director under arrangements with corporate entities via third party intermediaries. 15 EX-99.5 2 v020672_ex5.txt EXHIBIT 5 EXECUTION VERSION LINE OF CREDIT AGREEMENT THIS AGREEMENT (as amended, modified, extended or renewed from time to time, this "Agreement"), dated as of May 24, 2005, between OAK FINANCE INVESTMENTS LIMITED ("Borrower"), a British Virgin Islands company, having its principal place of business at c/o Arias Fabrega & Fabrega Trust Company BVI Ltd., 325 Waterfront Drive, Omar Hodge Building, 2nd Floor, Wickham's Cay, Road Town, Tortola, BVI, the lenders party hereto (collectively, the "Lender") and STONEGATE BANK, having an address at P.O. Box 4678, Fort Lauderdale, Florida 33338-4678, as administrative agent and collateral agent for the Lender (the "Agent"). W I T N E S S E T H: WHEREAS, Borrower wishes to obtain a non-revolving line of credit from Lender, under the guarantee of the Guarantors, the pledge of certain personal property, the pledge of certain securities and subject to other terms and conditions stated herein, pursuant to which Borrower may make one single draw on the Escrow Closing Date (as hereinafter defined) under such non-revolving line of credit in an aggregate principal amount not to exceed $16,750,000 (the "Line of Credit Amount") in the manner set forth herein; and WHEREAS, Lender is willing to extend such uncommitted non-revolving line of credit to Borrower up to the Line of Credit Amount, under the guarantee of the Guarantors, the pledge of certain personal property, the pledge of certain securities and subject to other terms and conditions stated in herein; NOW, THEREFORE, in consideration of the foregoing and of the covenants and conditions hereinafter set forth, Borrower and Lender hereby agree as follows: 1. Definitions. Defined terms used herein but not defined herein shall have the meanings ascribed to them in the other Loan Documents. As used herein: (a) "Accommodation TAC Shares" shall mean, in the aggregate, all shares of common stock or other equity securities of TAC as to which Excalibur has granted to Lender a security interest under the provisions of the Excalibur Pledge Agreement, any other Loan Document or otherwise, and all shares of common stock or other equity securities of TAC as to which Ball has granted to Agent, for the benefit of Lender, a security interest under the provisions of the Ball Pledge Agreement, any other Loan Document or otherwise. (b) "Advance" shall mean the extension of credit made by Lender to Borrower on the Escrow Closing Date, subject to the terms and conditions of this Agreement, pursuant to, and in the principal amount of, the Line of Credit Amount. (c) "Affiliate" of any Person shall mean any other Person which, directly or indirectly, controls or is controlled by, or is under common control with such Person. For the purposes of this definition, "controls" (including, with correlative meanings, the terms "controlled by" and "under common control with"), as used with respect to any Person, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities or by contract or otherwise. (d) "Ball" shall mean Andrew Harry Ball, an individual residing at 51 Baume Trocade, St. Jean, 83600 Frejus, France as of the Escrow Closing Date. (e) "Ball Pledge Agreement" shall mean that certain pledge and security agreement entered into by Ball in favor of Lender, substantially in the form of Exhibit 1E hereto. (f) "BenTov Stock Purchase Agreement" shall mean that certain Stock Purchase Agreement, dated as of January 21, 2005, between the Borrower and Shmuel BenTov, an individual. (g) "Borrower Pledge Agreement" shall mean that certain pledge and security agreement entered into by Borrower in favor of Agent, for the benefit of Lender, substantially in the form of Exhibit 1G hereto. (h) "Business Day" shall mean any day upon which banks located in the State of Florida generally are open to conduct regular banking business. (i) "CERCLA" shall mean the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended from time to time, 42 U.S.C. ss.ss.9601 et seq. (j) "Claims" shall have the meaning set forth in Section 8(g). (k) "Closing" or "Closings" shall mean the closing of the Advance, and, if applicable, the closing of any subsequent Advances. (l) [Intentionally Omitted]. (m) "Code" shall mean the Internal Revenue Code of 1986, as amended from time to time. (n) "Collateral" shall mean all collateral described in the Pledge Agreements or any other Loan Document, any and all other property of any obligor of an Obligation now or hereafter in the possession, custody or control of Lender or Agent, and any other property of any obligor now or hereafter subject to a security agreement, mortgage, pledge, assignment or other document granting Agent, for the benefit of Lender, a security interest therein with respect to an Advance hereunder. (o) "Default" shall mean any event or condition which constitutes an Event of Default or which upon notice, lapse of time or both would, unless cured or waived, become an Event of Default. (p) "Default Rate" shall have the meaning ascribed thereto in the Note. 2 (q) "Environmental Laws" shall mean a collective reference when and as applicable to (i) CERCLA, (ii) the Resource Conservation and Recovery Act, as amended, 42 U.S.C. Section 6901 et seq., and (iii) any and all other federal, state and local statutes, laws, rules, ordinances, regulations and executive orders pertaining to environmental matters applicable to Borrower's business and/or properties, as the same may be amended or supplemented from time to time. (r) "ERISA" shall mean the Employment Retirement Income Security Act of 1974, as amended from time to time. (s) "Escrow Account" shall mean the account established under the Escrow Closing Agreement, Account No. 5000260 with Stonegate Bank, as the escrow account under the Escrow Closing Agreement, into which the Advance will be funded on the Escrow Closing Date. (t) "Escrow Agent" shall mean the Escrow Agent named in the Escrow Closing Agreement. (u) "Escrow Closing Agreement" shall mean an escrow agreement among Borrower, and Agent, in its capacity as Agent and as escrow agent, substantially in the form of Exhibit 1U hereto. (v) "Escrow Closing Date" shall mean June 3, 2005, the date on which the conditions set forth in Section 5(a) are fulfilled to the satisfaction of Agent, or waived by Agent, and on which the disbursement of the Advance evidencing such satisfaction or waiver is made into the Escrow Account. (w) "Escrowed Warrant Shares" shall mean the shares of common stock of TAC issued to Excalibur and Ball on or before the Transaction Closing Date which are subject to the rights of the holders of the Warrants to purchase such shares from Excalibur or Ball, as the case may be. (x) "Event of Default" shall have the meaning assigned to it in Section 10. (y) "Excalibur" shall mean Excalibur Investment Group Limited, a British Virgin Islands company. (z) "Excalibur Guaranty" shall mean that certain absolute, irrevocable and unconditional guaranty, substantially in the form of Exhibit 1Z hereto, guaranteeing the payment and performance of the obligations of Borrower under this Agreement, the Note and the other Loan Documents, executed by Excalibur in favor of Lender on the date hereof, as the same may be amended, modified, extended or renewed from time to time. (aa) "Excalibur Pledge Agreement" shall mean that certain pledge and security agreement entered into by Excalibur in favor of Agent, for the benefit of Lender, executed on or about even date herewith, substantially in the form of Exhibit 1AA hereto. (bb) "Facility" shall mean the non-revolving line of credit extended by Lender hereunder subject to the terms and conditions of this Agreement. 3 (cc) "Final Maturity Date" shall mean (i) August 31, 2005, if the Transaction Closing Date shall not have occurred on or before such date and Borrower shall not have prepaid all interest payable through September 30, 2005 on or before August 29, 2005, (ii) September 30, 2005, if the Transaction Closing Date shall not have occurred on or before such date and Borrower shall have prepaid all interest payable through September 30, 2005 on or before August 29, 2005, or (iii) the first anniversary of the Escrow Closing Date, if the Transaction Closing Date shall have occurred on or before September 30, 2005. (dd) "GAAP" shall mean generally accepted accounting principles in the United State of America consistently applied. (ee) "Governmental Authority" or "Governmental Authorities" shall mean any federal, state, county or municipal governmental agency, board, commission, officer, official or entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government and having jurisdiction over Borrower, the Guarantors or the Collateral. (ff) "Guarantors" shall mean, collectively, Excalibur and the Individual Guarantors (individually, "Guarantor," and collectively "Guarantors"). (gg) "Guaranties" shall mean, collectively, the Excalibur Guaranty, and the Individual Guaranties. (hh) "Indebtedness" of any Person shall mean (a) all indebtedness and other obligations of such Person for borrowed money or for the deferred purchase price of property or services, (b) all indebtedness evidenced by notes or other similar instruments, (c) the full stated amount of all letters of credit issued for the account of such Person, (d) all capital leases to which such Person is a party, (e) all guarantees and other contingent obligations to which such Person is a party, (e) all indebtedness and other obligations of third parties secured by a Lien on the assets of such Person, whether or not such Person has assumed such indebtedness or other obligation, and (f) all obligations of such Person with respect to interest rate, currency or other derivatives. (ii) "Indemnified Party" and "Indemnified Parties" shall mean Lender, any of its assignees and participants, and their respective directors, officers, trustees, partners, employees, agents, attorneys and shareholders. (jj) "Individual Guaranties" shall mean, collectively, those certain absolute, irrevocable and unconditional guaranties, substantially in the form of Exhibit 1JJ hereto, guaranteeing the payment and performance of the obligations of Borrower under this Agreement, the Note and the other Loan Documents, executed by each of the Individual Guarantors in favor of Lender on the date hereof, as the same may be amended, modified, extended or renewed from time to time. (kk) "Individual Guarantors" shall mean, collectively, Ball, Kishor Jhunjhunwala, an individual residing at P.O. Box 17769, Dubai, United Arab Emirates as of the Escrow Closing Date, and Saurabh Patel, an individual residing at 6 Bittacy Park Avenue, Mill Hill, London NW7 2HA, United Kingdom as of the Escrow Closing Date. 4 (ll) "Lien" shall mean, with respect to any asset or other property, any mortgage, lien, pledge, charge, security interest, attachment, option or other encumbrance or adverse claim of any kind in respect of such asset or property, any agreement to grant any of the foregoing with respect to such asset, and the filing of a financing statement or similar recording in any jurisdiction with respect to such asset. (mm) "Line of Credit Amount" shall have the meaning set forth in the first recital of this Agreement. (nn) "Loan Documents" shall mean this Agreement, the Note, the Guaranties, the Pledge Agreements, the Warrants, the Escrow Closing Agreement, the Warrant Escrow Agreement, all filings under the Uniform Commercial Code as in effect in any jurisdiction and filings under any other applicable laws in respect of this Agreement, and any other documents or agreements given to Lender by Borrower, the Guarantors, or others in connection with the Facility, in each case as any of the foregoing may from time to time be respectively amended, modified, extended or renewed. (oo) "Losses" shall have the meaning set forth in Section 8(g). (pp) "Market Price" means the volume-weighted average price per share of the common stock of TAC on such Trading Day on a Trading Market, as reported by Bloomberg Financial, L.P. (based on a Trading Day from 9:30 a.m., Eastern Time, to 4:00 p.m., Eastern Time), using the AQR Function, for such Trading Day. (qq) "Maximum Rate" shall have the meaning set forth in Section 15. (rr) "Note" shall mean, collectively, the promissory notes in the aggregate amount of Sixteen Million Seven Hundred Fifty Thousand Dollars ($16,750,000.00) executed by Borrower on the Escrow Closing Date in favor of Lender evidencing and in connection with the Advance, as the same may be amended, modified, extended or renewed from time to time. (ss) "Oak TAC Shares" shall mean all shares of common stock or other equity securities of TAC as to which Borrower has granted to Agent, for the benefit of Lender, a security interest under the provisions of the Borrower Pledge Agreement, any other Loan Document or otherwise. (tt) "Obligations" shall mean all obligations and liabilities of Borrower and the Guarantors to Lender or Agent now or in the future existing under or in connection with this Agreement, the Note, the Guaranties, or any of the other Loan Documents, direct or indirect, absolute or contingent, due or to become due, now or in the future existing, including, without limitation, any payment of principal, interest, fees or expenses due at any time under this Agreement or the Note (including, without limitation, all interest and other amounts that would become due but for the operation of the automatic stay under Section 362(a) of the U.S. federal bankruptcy code). (uu) "Permits" shall mean material governmental licenses, authorizations, consents, permits and approvals. 5 (vv) "Permitted Liens" shall have the meaning set forth in Section 9(a). (ww) "Person" or "Persons" shall mean any one or more individuals, partnerships, corporations (including a business trust), joint stock companies, limited liability companies, trusts, unincorporated associations, joint ventures or other entities, or a foreign state or political subdivision thereof or any agency of such state of subdivision. (xx) "Pledge Agreements" shall mean, collectively, the Borrower Pledge Agreement, the Excalibur Pledge Agreement and the Ball Pledge Agreement. (yy) "Rights" shall have the meaning set forth in the Pledge Agreements. (zz) "Share Exchange Agreement" shall mean the Share Exchange Agreement, dated as of January 21, 2005, among Vanguard Info-Solutions Corporation, a New Jersey corporation ("Vanguard"), the Vanguard stockholders named therein, the authorized representative named therein, and TAC. (aaa) "Subsidiary" or "Subsidiaries" of any Person shall mean any other corporation, company, limited liability company, voluntary association, partnership, limited liability partnership, trust, unincorporated organization or other entity of which at least a majority of the outstanding shares of capital stock or other ownership interests ordinarily having, in the absence of contingencies, by the terms thereof voting power to elect a majority of the board of directors or similar governing body of such entity, is at the time directly or indirectly owned or controlled by such Person. (bbb) "TAC" shall mean The A Consulting Team, Inc., a New York corporation, and its successors and assigns. (ccc) "TAC Stock Purchase Agreement" shall mean that certain Stock Purchase Agreement, dated as of January 21, 2005, between the Borrower and TAC. (ddd) "Trading Day" means a day on which the common stock of TAC is traded on a Trading Market. (eee) "Trading Market" means the following markets or exchanges on which the common stock of TAC is listed or quoted for trading on the date in question: the Nasdaq SmallCap Market, the American Stock Exchange, the New York Stock Exchange or the Nasdaq National Market. (fff) "Transaction Agreements" shall mean, collectively, the Share Exchange Agreement, the TAC Stock Purchase Agreement and the BenTov Stock Purchase Agreement. (ggg) "Transaction Closing Date" shall mean the date, which shall in no event be later than August 31, 2005, on which the conditions set forth in Section 5(b) are fulfilled by Borrower, or waived by Agent and Lender, and on which the disbursement of the Advance is made from the Escrow Account to the Borrower's account in accordance with Section 2(a)(ii) hereof. 6 (hhh) "Transaction Escrow Shares" shall mean the "Escrow Shares", as such term is defined in the Share Exchange Agreement. (iii) "Warrant Escrow Agreement" shall mean an escrow agreement, dated as of the Transaction Closing Date, among Excalibur, Ball and Agent, in its capacity as Agent and as escrow agent, substantially in the form of Exhibit 1III hereto. (jjj) "Warrants" shall mean those certain warrants to purchase up to five percent of the fully-diluted common stock of TAC as of the Transaction Closing Date, subject to anti-dilution protections, dated as of the date hereof, and issued by Excalibur and Ball to the Lender, in the form of Exhibit 1JJJ hereto. 2. The Facility. (a) The Advance. (i) Lender hereby extends to Borrower a non-revolving line of credit in an amount not to exceed the Line of Credit Amount. (ii) On the Escrow Closing Date, Lender shall, subject to the terms and conditions of this Agreement, deposit the Advance with the Escrow Agent pursuant to the Escrow Closing Agreement by transfer of the proceeds thereof to the Escrow Account. On the Transaction Closing Date, Agent shall cause the proceeds of the Advance to be released from the Escrow Account and to be delivered to such account as Borrower may specify to Agent for the purpose of purchasing common stock of TAC pursuant to the TAC Stock Purchase Agreement and the BenTov Stock Purchase Agreement and for the other purposes permitted under Section 6(n) hereof. (iii) Borrower hereby grants to Agent, for the benefit of Lender, a lien on, and security interest in, all of Borrower's right, title and interest in and to the Escrow Account and all cash, moneys and instruments therein, and the proceeds (as such term is defined in Article 9 of the Uniform Commercial Code as in effect in the state of New York) as collateral security for the payment of the Obligations. The Escrow Account and all cash, moneys and instruments therein, and the proceeds thereof, constitute Collateral under the Loan Documents. (b) Advance. Notwithstanding anything to the contrary contained herein, Lender will, subject to the terms and conditions hereinafter set forth, make the Advance to Borrower in the principal amount of sixteen million seven hundred fifty thousand dollars ($16,750,000.00). Borrower represents, warrants and covenants that the proceeds of the Advance shall be used solely as described in Section 6(n) hereof. (c) Disbursement of Advance Proceeds. The proceeds of the Advance, less Lender's closing costs, including Lender's fees of counsel incurred in the preparation and negotiation of the Loan Documents (less the amount of $100,000 heretofore paid by Borrower in respect thereof), incurred prior to the Escrow Closing Date, shall be disbursed to the Escrow Account on the Escrow Closing Date. On the Transaction Closing Date, Agent shall cause the proceeds of the Advance, less Lender's closing costs, including Lender's fees of counsel incurred in the preparation and negotiation of the Loan Documents, incurred after the Escrow Closing Date and prior to the Transaction Closing Date, to be released from the Escrow Account and to be delivered to such account or accounts as Borrower may specify to Agents. 7 (d) Disbursements Irrevocable. The disbursements described in Section 2(c) may be made, notwithstanding contrary directions from Borrower, and for such purpose Borrower agrees that: (i) The foregoing constitutes an irrevocable direction or authorization to so disburse the funds (said authorization being coupled with an interest) and no further direction or authorization from Borrower shall be necessary to warrant any such disbursements; and (ii) All such disbursements shall satisfy the obligations of Lender hereunder as of the date of such disbursement and shall be secured by the Guaranty, the Pledge Agreements and the Collateral as fully as if made by Borrower, regardless of the disposition by the party to whom such disbursements are so made. (e) Yield Protection and Illegality. (i) Illegality. Notwithstanding any other provision of this Agreement, in the event that it becomes unlawful for Lender to make or maintain the Advance hereunder, then Lender shall promptly so notify Borrower, and if the Advance is then outstanding, Borrower shall immediately prepay the Advance on the date reasonably and necessarily specified by Lender in writing as being the last permissible date for such prepayment under applicable laws, rules or regulations, together with interest accrued to the date of prepayment. (ii) Taxes. All payments of Obligations (as used in this Section 2(e)(ii), "Payments") shall be made free and clear of, and without deduction by reason of, any and all taxes, duties, assessments, withholdings, retentions or other similar charges whatsoever imposed, levied, collected, withheld or assessed by any jurisdiction or any agency or taxing authority thereof or therein (as used in this Section 2(e)(ii), "Taxes"), all of which shall be paid by Borrower for its own account not later than the date when due. If Borrower is required by law to deduct or withhold any Taxes from any Payment, Borrower shall: (A) make such deduction or withholding; (B) pay the amount so deducted or withheld to the appropriate taxing authority not later than the date when due (irrespective of the rate of such deduction or withholding); (C) deliver to Lender promptly and in any event within 30 days after the date on which such Taxes become due, original tax receipts and other evidence satisfactory to Lender, of the payment when due of the full amount of such Taxes; and (D) pay to Lender, forthwith upon any request by Lender therefor from time to time, such additional amounts as may be necessary so that Lender receives, free and clear of all Taxes, the full amount of such Payment stated to be due under this Agreement, the Note or the other Loan Documents as if no such deduction or withholding had been made. Borrower hereby indemnifies Lender against, and holds Lender harmless from, any Taxes and any loss, cost, damage, penalty or expense whatsoever arising from any failure of Borrower to make, or delay in making, any deduction or withholding of Taxes, or its failure to pay when due the amount so deducted or withheld to the appropriate taxation authority or its failure otherwise to comply with the terms and conditions of this Section 2(e)(ii). Determinations and allocations by Lender for purposes of this Section 2(e)(ii) shall be conclusive absent manifest error. 8 (iii) Increased Costs. (A) If there shall be any change in law, rule or regulation or in the interpretation thereof that: (I) changes the basis of taxation of any amounts payable to Lender, (II) imposes or modifies any reserve, special deposit, deposit insurance or assessment affecting Lender; or (III) imposes any other condition affecting this Agreement or any other Loan Document, or there shall be any increase in the cost to Lender of agreeing to make or making, funding or maintaining the Advance, then Borrower shall from time to time, upon written demand by Lender setting forth in reasonable detail the explanation for such demand, pay to Lender additional amounts sufficient to compensate for such increased cost. (B) Without duplication of Section 2(e)(iii)(A), if Lender, in its reasonable judgment, determines at any time that any change in law, rule or regulation or in the interpretation thereof has or will have the effect of increasing the amount of capital required or expected to be maintained by Lender (which term, for purposes of this Section 2(e)(iii)(B), shall include any corporation controlling Lender) based on the existence of this Facility, then Borrower shall pay to Lender, upon written demand by Lender setting forth in reasonable detail the explanation for such demand, such additional amounts as shall be required to compensate Lender for the increased cost to Lender as a result thereof (which compensation shall include, without limitation, an amount equal to any reduction in return on assets or equity of Lender to a level below that which it could have achieved but for such legal or regulatory change, taking into account Lender's policies as to capital adequacy). (iv) Determinations. A certificate of Lender as to the applicability of any of the provisions of this Section 2(e) or of any amount payable under this Section 2(e) shall be conclusive and binding, absent manifest error. (f) Registration Statement. Borrower agrees to pay to Agent, for the account of Lender, a fee of $167,500, payable in arrears on the last Business Day of each calendar month ending after 120 days after the Transaction Closing Date and during which month a registration statement with respect to all shares of common stock or equity securities of TAC (i) as to which any Person has granted to Lender a security interest under the provisions of any of the Pledge Agreements or otherwise, (ii) which are subject to issuance upon the exercise of the Warrants, in accordance with the terms of the Share Exchange Agreement and the Stock Purchase Agreement regarding such registration, is not effective under the federal securities laws. In connection with the registration of such shares of common stock or equity securities, the foregoing fee shall not be payable if the Lender is required by the rules and regulations of the U.S. Securities and Exchange Commission to furnish to TAC or TAC's representatives information regarding itself, the common stock or equity securities in which the Lender holds an interest and the intended method of disposition of such common stock or equity securities or to execute documents in connection with such registration, and the Lender does not provide such information or execute such documents. The obligations of Borrower, and the Obligations provided for, under this Section 2(f) shall survive payment in full of the Advance. 9 (g) Mandatory Prepayments. (i) In the event that the Market Price of TAC common stock is less than $6.50 (subject to adjustments from time to time for stock splits, stock dividends, combinations, and capital reorganizations, as applicable) for any two consecutive Trading Days, then Borrower shall, within two (2) Business Days of the second such consecutive Trading Day, make a prepayment of the principal amount of the Advance in the amount of $1,500,000.00, by wire transfer of $1,500,000.00 in immediately available funds to Agent, for the account of Lender. This prepayment Obligation is in addition to, and not in the stead of, any prepayment for which Borrower is obligated under clauses (ii) or (iii) of this Section 2(g). Amounts prepaid under this clause (i) may not be reborrowed. The prepayment provided for in this clause (i) shall only be required one time. Upon a breach of this Section 2(g)(i) by Borrower resulting in an Event of Default, Agent and Lender may exercise any and all rights and remedies provided for in the other Loan Documents as they relate to Borrower or any Guarantor, including the sale of all Pledged Collateral (as such term is defined in the Pledge Agreements). (ii) In the event that the Market Price of TAC common stock is less than $5.50 (subject to adjustments from time to time for stock splits, stock dividends, combinations, and capital reorganizations, as applicable) for any two consecutive Trading Days, then Borrower shall, within two (2) Business Days of the second such consecutive Trading Day, make a prepayment of the principal amount of the Advance in the amount of $2,000,000.00, by wire transfer of $2,000,000.00 in immediately available funds to Agent, for the account of Lender. This prepayment Obligation is in addition to, and not in the stead of, any prepayment for which Borrower is obligated under clauses (i) or (iii) of this Section 2(g). Amounts prepaid under this clause (ii) may not be reborrowed. The prepayment provided for in this clause (ii) shall only be required one time. Upon a breach of this Section 2(g)(ii) by Borrower resulting in an Event of Default, Agent and Lender may exercise any and all rights and remedies provided for in the other Loan Documents as they relate to Borrower or any Guarantor, including the sale of all Pledged Collateral. (iii) In the event that the Market Price of TAC common stock is less than $5.00 (subject to adjustments from time to time for stock splits, stock dividends, combinations, and capital reorganizations, as applicable) for any two consecutive Trading Days, then Borrower shall, within two (2) Business Days of the second such consecutive Trading Day, prepay the Obligations in full, by wire transfer of immediately available funds to Agent, for the account of Lender. This prepayment Obligation is in addition to, and not in the stead of, any prepayment for which Borrower is obligated under clauses (i) or (ii) of this Section 2(g). Amounts prepaid under this clause (iii) may not be reborrowed. Upon a breach of this Section 2(g)(iii) by Borrower resulting in an Event of Default, Agent and Lender may exercise any and all rights and remedies provided for in the other Loan Documents as they relate to Borrower or any Guarantor, including the sale of all Pledged Collateral. 10 (h) Agent's Fee. Borrower shall pay to Agent, for its services rendered to Lender as administrative agent and collateral agent under the Loan Documents, an administration fee of $1,000 per month, payable monthly on the last day of each calendar month commencing May 31, 2005. (i) Certain Guarantees. Borrower hereby absolutely, irrevocably and unconditionally guarantees the performance of all agreements of Ball and Excalibur (or their respective heirs, successors and assigns) now or hereafter existing under the Warrants issued by them to any Person in accordance with the Loan Documents. In the event of any failure of Ball or Excalibur to perform when due any obligations under any of the Warrants, Borrower will immediately perform the same at the time, place, funds and manner provided for in the Warrants, without set-off, counterclaim or deduction of any kind. The obligations of Borrower set forth in this Section 2(i) shall survive the termination of this Agreement and the final repayment of the Advance. 3. The Note. The obligation of Borrower to repay all monies advanced by Lender to Borrower in connection with the Facility shall be evidenced by this Agreement and the Note. The Advance shall bear interest at the rate(s) set forth in the Note and shall be payable as provided in the Note with final payment due on the Final Maturity Date, unless accelerated sooner. All of the Obligations, including the obligation to pay principal and interest when due, are secured by the Pledge Agreements and the Guaranties thereunder, and the Collateral. Should the principal of or interest on the Advance become due and payable on a day other than a Business Day, the maturity thereof shall be extended to the next succeeding Business Day and, in the case of principal, interest shall be payable thereon at the rate per annum specified in the Note during such extension. 4. AGENCY PROVISIONS (a) Appointment of Agent. Lender hereby irrevocably appoints Stonegate Bank, in its capacity as Agent, as administrative agent and collateral agent and authorizes Agent to take such action on its behalf and to exercise such powers as are delegated to the Agent by the terms of the Loan Documents, together with such actions and powers as are reasonably incidental thereto. (b) Agent as Lender. The bank serving as Agent shall have the same rights and powers in its capacity as Lender as any other Lender and may exercise the same as though it were not Agent. (c) Duties of Agent. Agent shall not have any duties except those expressly set forth in the Loan Documents. Without limiting the generality of the foregoing, (i) Agent shall not be subject to any fiduciary or other implied duties, regardless of whether an Event of Default has occurred and is continuing, and (ii) Agent shall not have any duties to take any discretionary actions or exercise any discretionary powers. Agent shall not be liable for any action taken or not taken by it with the consent or at the request of Lender or in the absence of its own gross negligence or willful misconduct. 11 (d) Agent Reliance. Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing believed by it to be genuine and to have been signed or sent by the proper Person. Agent also may rely upon any statement made to it orally or on the telephone and believed by it to be made by the proper Person, and shall not incur any liability for relying thereon. Agent may consult with legal counsel, independent accountants, and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of such counsel, accountants or experts. (e) Successor Agent. Subject to the appointment and acceptance of a successor to Agent as provided in this paragraph, Agent may resign at any time by notifying Lender and Borrower. Upon such resignation, Lender shall have the right to appoint a successor Agent. The resigning Agent shall continue to serve as Agent until a successor Agent is appointed. Upon acceptance of its appointment as Agent hereunder by a successor, such successor shall succeed to and become vested with all the rights, powers, privileges and duties of the retiring Agent, and the retiring Agent shall be discharged from its duties and obligations hereunder. After Agent's resignation hereunder, the provisions of this Article shall continue for the benefit of such retiring Agent in respect of actions taken or omitted to be taken by it while it was acting as Agent. 5. Conditions Precedent. (a) Conditions to Advance. The agreement of Lender to make the Advance hereunder on the Escrow Closing Date is subject to the satisfaction of the following conditions and the receipt by Agent of each of the following documents (other than the Warrants) and the receipt by the Escrow Agent of the Warrants, each of which shall be satisfactory to Agent and Lender in form and substance: (i) the Note, duly executed; (ii) this Agreement, duly executed; (iii) the Guaranties, duly executed; (iv) the Pledge Agreements, duly executed; (v) the Warrants, duly executed; (vi) the Warrant Escrow Agreement, duly executed; (vii) a statement of financial condition of the Borrower and each of the Guarantors, in each case as of March 31, 2005; (viii) UCC-1 financing statements required to evidence or perfect Agent and Lender's security interests in the Collateral granted on the Escrow Closing Date for filing in all relevant jurisdictions; 12 (ix) certificates, duly executed by the Borrower and each of the Guarantors, addressed to Agent and dated as of the date of the Advance and representing that since March 31, 2005 there has been no material adverse change in the business, results of operations or financial condition of the Borrower or such Guarantor, as the case may be; (x) evidence of a search of the public records which discloses no conditional sales contracts, chattel mortgages, leases of personalty, financing statements or title retention agreements filed or recorded against Borrower or the Guarantors or the Collateral, except for Permitted Liens; (xi) a copy of the memorandum and articles of association of each of Borrower and Excalibur, and all amendments thereto, certified as of a recent date by the appropriate governmental official, if applicable, and certified by a director or authorized signatory of Borrower and of Excalibur, as the case may be, to the effect that such documents or instruments have not been amended since such date; (xii) resolutions of Borrower and Excalibur authorizing the transactions or authorizing the entering into of any Loan Documents to be entered into by Borrower or Excalibur in connection with this Agreement, and certified by a director or authorized signatory of Borrower and of Excalibur, as the case may be; (xiii) opinions of BVI and New York legal counsel to Borrower and the legal counsel to each of the Guarantors, in form satisfactory to Lender in Lender's complete discretion; (xiv) evidence of the appointment of CT Corporation as agent in the State of New York to accept service of process on behalf of Borrower and Guarantors, pursuant to the requirements of the Loan Documents; (xv) the Escrow Closing Agreement shall have been executed and delivered, and the Escrow Account shall have been established pursuant to the terms of the Escrow Agreement; (xvi) receipt by Lender of all amounts due in respect of the commitment fee in the amount previously agreed upon between Lender and Borrower. (xvii) delivery by the Borrower to the Lender of a completed and executed Federal Reserve Form U-1 demonstrating compliance of the Advance with Regulation U of the Board of Governors of the Federal Reserve System; (xviii) Borrower, TAC and Agent, on behalf of Lender, shall have entered into an agreement, in form and substance satisfactory to Lender in its sole discretion, providing that the rights of Borrower to acquire an additional 625,000 shares of TAC pursuant to Section 2.5 of the TAC Stock Purchase Agreement, if not exercised on or before the third Business Day preceding the 120th day after the Transaction Closing Date (or such earlier day, at the option of the Borrower), shall be, and shall be deemed, assigned to Lender, with the consent of TAC and without further act of any party, and Lender may exercise such rights on or before the 120th day after closing of the TAC Stock Purchase Agreement; and 13 (xix) such other agreements, certificates or other documents as Lender may reasonably request. (b) Conditions to Occurrence of Transaction Closing Date. The release of the Advance from the Escrow Account on the Transaction Closing Date is subject to the satisfaction of the following conditions and the receipt by the Escrow Agent and the Agent of each of the following documents: (i) a certificate of Borrower stating, or other evidence acceptable to the Lender in its sole discretion, that each of the Transaction Agreements shall have been consummated in accordance with their respective terms and applicable law, subject only to payment of proceeds of the Advance; (ii) receipt by Agent, as secured party, of all certificates evidencing common stock or other equity interests or securities constituting Collateral under any of the Pledge Agreements or other Loan Documents, together with appropriate stock powers or assignments duly executed in blank; (iii) written consent of the parties to the Transaction Agreements , other than Excalibur, Ball and Borrower, to the pledge under the Pledge Agreements of the respective interests of Excalibur, Ball and Borrower to Agent, for the benefit of Lender, as security for the Obligations; (iv) the Warrants and the Warrant Escrow Agreement shall be dated and delivered to the holders of the Warrants, and the Escrowed Warrant Shares shall have been deposited into escrow with the escrow agent under the Warrant Escrow Agreement; (v) a certificate of Borrower stating that no Default or Event of Default shall have occurred and be continuing hereunder, certified by a director or authorized signatory of Borrower; (vi) a certificate of Borrower stating that the representations and warranties made hereunder and in all the Loan Documents are true and correct in all material respects as if having been made on the Transaction Closing Date, certified by a director or authorized signatory of Borrower; (vii) opinions of BVI and New York legal counsel to Borrower and the legal counsel to each of the Guarantors, and legal counsel in England, France and the United Arab Emirates, substantially in the form of Exhibit 5(b)(vii); (viii) Borrower or TAC shall have obtained "key man" life insurance policies, at Borrower or TAC's expense and naming Agent and Lender as beneficiaries, for Donald Kovalevich in his capacity as chief executive officer of TAC and for Richard Falcone in his capacity as chief financial officer of TAC, in the benefit amount of $5,000,000 for each of Donald Kovalevich and Richard Falcone; and (ix) such other agreements, certificates or other documents as Lender may reasonably request in order to effectuate the transactions contemplated by the Loan Documents in light of events or conditions occurring during the passage of time between the Escrow Closing Date and the Transaction Closing Date, including evidence that the fee of Raj Agarwal identified in Section 6(q) hereof shall have been paid on or prior to the Transaction Closing Date. 14 6. Representations and Warranties of Borrower. To induce Lender to make the Advance pursuant to this Agreement and to provide the Facility, Borrower hereby represents and warrants to Lender as follows, as of the date hereof and as of the date of the Advance: (a) Borrower is a company, duly organized under the laws of its jurisdiction of formation and validly existing in good standing under the laws of the British Virgin Islands and in all jurisdictions in which it is required to be in good standing, and has all requisite power and authority and legal right to own its property and to carry on its business as it is now being conducted, and Borrower has all requisite power and authority and legal right to enter into this Agreement and the other Loan Documents entered into by it and to perform all of its obligations hereunder and thereunder. Borrower has no Subsidiaries. Schedule 6(a) sets forth the capitalization of Borrower and identifies the name and address of every Person owning any equity interests, or right to acquire any equity interests, in Borrower. (b) Borrower possesses all Permits and owns or has unrestricted right to use, without conflict with the rights of others, all property purported to be owned by Borrower, necessary for the operation of its business as now conducted or as proposed to be conducted, and Borrower is not in violation of any valid rights of others with respect to any of the foregoing. (c) The execution and delivery by Borrower of any of the Loan Documents to which it is a party, and the performance of its obligations thereunder, have been duly authorized by all necessary action, and do not and will not: (i) require any further action, consent or approval on the part of Borrower; (ii) violate any provision of law, rule, regulation, order, writ, judgment, injunction, decree, determination or award presently in effect having applicability to Borrower, or the organizational documents of Borrower; or (iii) result in any breach of or constitute a default under any indenture or loan or credit agreement or any other agreement, lease or instrument to which Borrower is a party or by which Borrower or its properties may be bound or affected, and Borrower is not in default under any such law, rule, regulation, order, writ, judgment, injunction, decree, determination or award or any such indenture, agreement, lease or instrument. (d) The Loan Documents entered into by Borrower have been duly executed and delivered by Borrower and are legal, valid and binding obligations of Borrower, enforceable against Borrower in accordance with their respective terms, subject to the effect of (i) bankruptcy, insolvency, reorganization, receivership, moratorium or other laws affecting creditors' rights in general (including, without limitation, the effect of statutory and other laws regarding fraudulent conveyances, fraudulent transfers and preferential transfers) and (ii) the exercise of judicial discretion and the application of principles of equity, including, without limitation, requirements of good faith, fair dealing, reasonableness, conscionability and materiality (regardless of whether the applicable agreements are considered in a proceeding in equity or at law). 15 (e) There is no material action, suit, proceeding, inquiry or investigation, at law or in equity, or before any court, governmental instrumentality, public board or arbitrator pending or threatened against or affecting Borrower or any of its properties or rights, wherein an unfavorable decision, ruling or finding would (i) to the extent not covered by insurance as to which the insurer has not disclaimed coverage, result in any material adverse change in the financial condition, business, properties or operations of Borrower; (ii) materially or adversely affect the transactions evidenced by the Loan Documents; (iii) materially impair the right of Borrower to carry on its business substantially as now conducted; or (iv) adversely affect the validity or enforceability of the Loan Documents or have a material adverse effect on Lender. (f) Borrower is in compliance with all laws applicable to Borrower or its properties or assets. (g) Borrower is a pre-existing company and has not been created as a vehicle to obtain the Advance. The proceeds of the Advance will be used by Borrower for the purposes set forth in Section 6(n) in connection with the operation of Borrower's business, and the proceeds of the Advance will not be paid over or diverted by Borrower to any member, manager, officer, director or shareholder of Borrower, any Guarantor or any other person other than as agreed upon in Section 6(n). (h) There has been no material adverse change in the condition, financial or otherwise, of Borrower since December 31, 2004. (i) Borrower has good and marketable title to all of its properties and assets, and such properties and assets are free and clear of all Liens other than Permitted Liens. (j) Borrower has filed all federal, state and other income or franchise tax returns which are required to be filed or have received a valid extension and have paid all taxes due or which may become due pursuant to such returns or pursuant to any assessment received by it. (k) All timely authorizations, permits, approvals and consents of Governmental Authorities which may be required in connection with the valid execution and delivery of this Agreement and the other Loan Documents and the carrying out or performance of any of the activities or transactions required or contemplated hereunder or thereunder have been obtained (and remain in full force and effect). (l) All statements of financial condition, information and other financial data furnished by Borrower to Lender in connection with this Agreement (i) were true, correct and complete in all material respects, as of the date of said statements of financial condition, information and other data and (ii) such statements of financial condition present fairly the financial condition of the Borrower at the respective dates thereof. (m) Borrower's assets, at a fair valuation, exceed Borrower's liabilities (including, without limitation, contingent liabilities). Borrower is paying its debts as they become due and Borrower anticipates the continuing ability to pay its debts as they become due. Borrower has capital and assets sufficient to carry on its business. 16 (n) Proceeds from the Advance shall be used solely (i) to purchase common stock of TAC pursuant to the TAC Stock Purchase Agreement and the BenTov Stock Purchase Agreement, (ii) to pay the fees and expenses required to be paid to or on behalf of Lender in connection with the Advance, (iii) to pay legal fees and certain other out-of-pocket expenses incurred by Borrower in connection with the Advance, including to repay moneys paid by Borrower or on Borrower's behalf to Lender and Lender's counsel on or prior to the Escrow Closing Date, (iv) to pay interest on the Advance, (v) to pay the premiums on the key man insurance referred to in Section 5(b)(viii) and (vi) to pay the fees of any escrow agent to be engaged in connection herewith. No part of the proceeds of the Advance shall be used, directly or indirectly, for the purpose of purchasing or carrying any margin stock within the meaning of Regulation U of the Board of Governors of the Federal Reserve System under such circumstances as to involve Borrower in a violation of Regulation U of the Board of Governors of the Federal Reserve System. As used in this Section 6(n), the terms "margin stock" and "purpose of purchasing or carrying" shall have the meanings assigned to them in the aforesaid Regulation U. (o) Borrower is not in violation of or in default under (nor is there any waiver in effect which, if not in effect, would result in a violation or default under) any provision of Borrower's organizational documents, or under any provision of any agreement, indenture, evidence of Indebtedness, loan or financing agreement, certificate, lease or other instrument to which it is a party, or by which it is bound, or of any law, governmental order, rule or regulation, in any such case under this Section 6(o) so as to affect adversely in any material manner its business, assets or financial condition. (p) All statements, representations and warranties made by Borrower, any Guarantor, or any other person in this Agreement, any other Loan Document and any other agreement, document, certificate or instrument previously furnished or to be furnished by said person to Agent or Lender under this Agreement or in connection with the Advance: (i) are and shall be true, correct and complete in all material respects at the time they were made and, in the case of those made prior to the Escrow Closing Date, on and as of the Escrow Closing Date, (ii) do not and shall not contain any untrue statement of a material fact at the time made, and (iii) do not and shall not omit to state a material fact at the time made necessary in order to make the information contained herein or therein not misleading or incomplete. Borrower understands that all such statements, representations and warranties shall be deemed to have been relied upon by Agent and Lender as a material inducement to provide the Advance. (q) No person other than Raj Agarwal is entitled to receive from Borrower any brokerage commission, finder's fee or similar fee or payment in connection with the consummation of the transactions contemplated by this Agreement. Borrower has agreed to pay a finder's fee in the amount of one percent (1%) of the principal amount of the Advance to Raj Agarwal, an individual, in connection with the transactions contemplated hereby. (r) Borrower's business is conducted only at the location set forth in the caption of this Agreement. (s) Borrower is known solely as Oak Finance Investments Limited, and has not registered or conducted business under any other names. 17 (t) Borrower is not a party to any contracts or agreements, whether written or oral, material to the operation of Borrower's business. (u) Borrower maintains bank accounts and brokerage accounts solely with the institutions, under the account numbers set forth opposite the name of the institution as set forth on Schedule 6(u). (v) Borrower is not obligated with respect to any Indebtedness to any Person other than to Lender under the Loan Documents. 7. Survival of Representations and Warranties. The foregoing representations and warranties shall survive the execution of this Agreement and shall continue until the Obligations are paid and satisfied in full. 8. Affirmative Covenants. To induce Lender to make the Advance pursuant to this Agreement, Borrower hereby covenants and agrees that so long as the Advance shall remain outstanding hereunder and until the Obligations are paid and satisfied in full, Borrower shall comply with the following covenants: (a) Borrower shall keep and maintain complete and accurate books, accounts and records. (b) Borrower shall and shall cause the Guarantors to, deliver to Lender, as soon as available and in no event later than 45 days after the end of each calendar quarter, statement of their respective financial conditions as of the end of such calendar quarter in a format substantially similar to the statement of financial condition of Borrower and the Guarantors delivered in accordance with Section 5(a)(vii) hereof. (c) Borrower shall cause TAC to deliver to Lender, promptly after the same becomes publicly available, copies of all periodic and other reports, proxy statements and other materials filed by TAC or any of its Subsidiaries with the United States Securities and Exchange Commission, or any Governmental Authority succeeding to any and all of the functions of said commission, or with any national securities exchange, as the case may be. (d) Borrower shall cause TAC to deliver to Agent, within 10 days after the end of each calendar month occurring after the Transaction Closing Date, a certificate of the chief financial officer (or otherwise the seniormost financial officer) of TAC certifying that as of the end of the preceding calendar month, in compliance with Section 10(o) hereof, since the Transaction Closing Date neither TAC nor any of its Subsidiaries has (i) made any advance, loan, extension of credit or capital contribution to, or purchase any stock, bonds, notes, debentures or other securities of or any assets constituting a business unit of, or make any other investment in, any Person (in each case, other than to a Subsidiary of TAC), (ii) created, incurred, suffered to exist, assumed, guarantied, endorsed, became a surety, or otherwise became liable for the Indebtedness or other obligations of any other Person whether directly or indirectly, or made or incurred any advance, purchase commitment, other obligation or loan for the direct or indirect purpose of paying or discharging any such obligations, (iii) entered into transactions with Affiliates, or (iv) entered into any merger or consolidation or liquidated or wound-up or dissolved itself (or suffered any liquidation or dissolution) or conveyed, sold, leased, assigned, transferred or otherwise disposed of all or substantially all of its property, business or assets (in each case, other than to TAC or a Subsidiary of TAC), or made any material change in its present method of conducting business or permit any corporate guarantor to do any of the foregoing, in all cases other than (w) acquisitions of non-affiliated businesses by merger, acquisitions of shares or interest or acquisitions of assets that are approved by TAC's board of directors in good faith and, in each case, as to which, after giving effect to the issuance of shares of common stock as consideration, do not dilute the Oak TAC Shares and the Accommodation TAC Shares, in the aggregate, below 51% (or such larger percentage as the Lender, in its sole discretion, shall determine is necessary to control the management of TAC in light of the taking of any action by the board of directors of TAC that would require that the approval of more than 50% of the outstanding voting shares of TAC is necessary for the taking of any action by the shareholders, including, without limitation, the election of directors) of the issued and outstanding shares of common stock of TAC, or do not constitute at least 51% of the outstanding voting securities of TAC, after giving effect to the pledge of additional issued and outstanding shares by Excalibur, Ball or any other holder of TAC shares, (x) loans and dividends among any of TAC and its consolidated Subsidiaries, (y) transactions among any of TAC and its consolidated Subsidiaries (including the incurrence or guaranty of Indebtedness on behalf of TAC and its consolidate subsidiaries) that are entered into in the ordinary course of business, and (z) transactions that have been entered into prior to the date hereof among any of TAC and its consolidated Subsidiaries that are entered into in the ordinary course of business. 18 (e) Borrower shall comply in all material respects with all applicable federal, state, county and municipal laws, rules, regulations and orders of any Governmental Authority having jurisdiction over Borrower, except to the extent contested in good faith and by proper proceedings or where the failure to so comply would not have a material adverse effect on Borrower, including, without limitation, all Environmental Laws and health and safety laws. (f) Borrower shall promptly, and in any event within five Business Days, notify Agent and Lender of the occurrence of any Default or Event of Default and of the occurrence of any event or the commencement of any action, suit or proceeding which, if adversely determined, would adversely affect the condition, financial or otherwise, of Borrower or the Guarantors. (g) Borrower shall, and shall cause each Guarantor to, indemnify, protect, defend and save harmless the Indemnified Parties from and against (i) any and all losses, damages, expenses or liabilities of any kind or nature (collectively, "Losses") and from any suits, claims, or demands by third parties (collectively, "Claims") including reasonable counsel fees incurred in investigating or defending such Claims, suffered by any of them and caused by, relating to, arising out of, resulting from, or in any way connected with the Advance and the transactions contemplated herein, including without limitation any Losses and Claims arising from (w) any actual or proposed use by Borrower of any proceeds of the Advance, (x) any alleged breach of this Agreement or the Loan Documents, (y) the breach of any representation, warranty or covenant contained in this Agreement or any of the other Loan Documents by either the Borrower or the Guarantors and (z) the exercise by Lender of any rights or remedies hereunder or under any of the other Loan Documents; and (ii) any and all Losses sustained by Lender in connection with any environmental sampling or cleanup relating to any properties or assets owned or otherwise used by Borrower in the operation of its business, or mandated by any Environmental Law; provided, however, Borrower shall not be obligated to indemnify, protect, defend or save harmless an Indemnified Party, if the loss, damage, expense or liability was caused by or resulted from the gross negligence or willful misconduct of that Indemnified Party. In case any action shall be brought against an Indemnified Party based upon any of the above and in respect to which indemnity may be sought against Borrower, the Indemnified Party against whom such action was brought, shall promptly notify Borrower in writing, and Borrower shall assume the defense thereof, including the employment of counsel selected by Borrower and reasonably satisfactory to the Indemnified Party (which counsel may also be counsel to the Guarantors), the payment of all costs and expenses and the right to negotiate and consent to settlement. The Indemnified Party shall have the right to employ separate counsel in any such action and to participate in the defense thereof at the Indemnified Party's cost and expense. Borrower shall not be liable for any settlement of any such action effected without its consent, unless such settlement includes an explicit and unconditional release from the party bringing the action of all Indemnified Parties and does not contain any admission of fault or culpability on behalf of such Indemnified Parties, but if settled with Borrower's consent, or if there be a final judgment for the claimant in any such action, Borrower agrees to indemnify and save harmless said Indemnified Party against whom such action was brought from and against any Loss by reason of such settlement or judgment. The provisions of this Section 8(g) shall survive the termination of this Agreement and the final repayment of the Advance. 19 (h) Borrower will, and will cause Excalibur, Ball, and any other Person granting collateral to secure the Obligations to, perform any and all steps reasonably requested by Lender to create, perfect and maintain in Agent's favor (for the benefit of Lender) a first priority valid Lien on or security interest in the Collateral or pledges of Collateral, subject only to Permitted Liens (as such term is defined in Section 9(a)), including, without limitation, the execution, delivery, filing and recording of financing statements and continuation statements, supplemental security agreements, notes, filings with federal government offices and any other documents necessary, in the opinion of Lender, to protect its interest in the Collateral which Liens shall be exclusive except for those Liens expressly permitted elsewhere herein. Agent and its designated officer are hereby appointed Borrower's attorney-in-fact and are hereby authorized to do all acts and things which Lender may deem necessary to perfect and continue perfected the security interests and Liens provided for in this Agreement, including, but not limited to, executing financing statements on behalf of Borrower. (i) If Borrower receives any payments on any Collateral, Borrower agrees to receive any and all payments and remittances on such Collateral, including cash, checks, drafts, notes, acceptances or other forms of payment in trust for Agent, for the benefit of Lender, to the extent of any amounts due hereunder and, to the extent that any payment of any Obligation hereunder is then due but unpaid, to deliver such payments in the identical form in which they were received, properly endorsed (if endorsement is permitted), together with collection reports in form satisfactory to Lender. If endorsement is not permitted with respect to any such payment, then such payment shall be deposited and paid over to Agent, for the benefit of Lender, forthwith. 20 (j) All Proceeds of any Collateral which are delivered to or otherwise received by Lender for application to the Advance shall be deemed received as of the date of actual receipt by Lender, and shall be applied by Lender on account of the obligations upon Lender's receipt of same; provided, however, that no checks, drafts, or other instruments received by Lender shall constitute payment to Lender unless and until such item of payment has actually been collected by Lender. For the sole purpose of calculation of interest due to Lender from Borrower, all such Proceeds and other payments on account of the Advance, irrespective of the type or form of payment thereof, shall not be considered applied on account of the obligations until actual clearance of such funds. (k) Borrower shall furnish Agent with at least ten (10) days' prior written notice of any change in location of or addition to its chief executive office, the office where it keeps its records concerning the Collateral and other business locations. (l) Borrower shall pay and discharge, and require its Subsidiaries to pay and discharge, when due, all taxes, assessments or other governmental charges imposed on them or any of their respective properties, unless the same are currently being contested in good faith by appropriate proceedings and adequate reserves are maintained therefor. (m) Borrower shall operate its properties, and cause those of its Subsidiaries to be operated, in material compliance with all applicable orders, rules and regulations promulgated by the jurisdictions and agencies thereof where such properties are located and duly file or cause to be filed such reports and information returns as may be required or appropriate under applicable orders, regulations or law. (n) Borrower shall, and from and after the Transaction Closing Date shall cause TAC to, permit Lender's representatives and/or agents full and complete access to any or all of Borrower's and TAC's properties and financial records, including the Collateral, to make extracts from and audit such records and to examine and discuss their respective properties, business, finances and affairs with their respective officers and outside accountants, provided, that Borrower shall use its best efforts to cause TAC to advise Lender and its representatives and/or agents if any of the information (and the nature of such information) any of them shall request from TAC constitutes material non-public information.. (o) During the term of the Facility and until payment in full of the Obligations, the Sigma Trust shall remain the sole shareholder of Borrower. (p) Borrower shall maintain in effect with insurance companies, or both, reasonably satisfactory to Lender, insurance in such amounts and covering such risks as are customarily carried by prudent companies engaged in the same or similar business as Borrower and which are reasonably satisfactory to Lender, including without limitation general liability insurance and business asset insurance. All such insurance shall name Agent as loss payee pursuant to appropriate endorsements in form and substance satisfactory to Lender. 21 (q) From and after the Transaction Closing Date, Borrower shall cause TAC to file with the United States Securities and Exchange Commission, and take all commercially reasonable efforts to cause to become effective, a registration statement with respect to all shares of common stock or equity securities of TAC (i) as to which any Person has granted to Agent, for the benefit of Lender, a security interest under the provisions of any of the Pledge Agreement or otherwise, (ii) which are subject to issuance upon the exercise of the Warrants, in accordance with the terms of the Share Exchange Agreement and the Stock Purchase Agreement regarding such registration. Such registration statement may also register for sale any other shares owned by Borrower, Ball, Excalibur or any other shareholders of TAC that desire to register shares for sale or resale. 9. Negative Covenants of Borrower. To induce Lender to make the Advance pursuant to this Agreement, Borrower hereby covenants and agrees that so long as the Advance shall remain outstanding and until the Obligations are paid and satisfied in full, Borrower and each of its Subsidiaries shall not: (a) Except for (x) the Liens granted to Agent, for the benefit of Lender, hereunder and in the other Loan Documents, and (y) the rights of TAC and any escrow agent for the Transaction Escrow Shares with respect to the Transaction Escrow Shares arising under the Share Exchange Agreement (the "Permitted Liens"), at any time: (i) create, incur, assume or suffer to exist any Liens upon or with respect to its assets and properties or any Collateral, (ii) sign or file under the Uniform Commercial Code of any jurisdiction a financing statement which names it as a debtor or (iii) sign any security agreement authorizing any secured party thereunder to file such financing statement. Borrower further covenants and agrees that neither Borrower nor any of its Subsidiaries shall grant any similar negative pledge to any other lender other than the negative pledge granted to Lender hereunder. (b) Permit any part of the Collateral to be levied upon under any legal process, or permit anything to be done that is reasonably likely to materially impair the value of any of the Collateral or the security intended to be afforded by this Agreement and the other Loan Documents. (c) Except as to the sale or disposition of assets which are obsolete or worn out and are no longer used or useful in the conduct of its business, convey, sell, lease, assign, transfer, hypothecate or otherwise dispose of any of its now or hereafter acquired property, business or assets. (d) Create, incur, suffer to exist, assume, guaranty, endorse, become a surety, or otherwise become liable for the Indebtedness or other obligations of any other Person whether directly or indirectly, or make or incur any advance, purchase commitment, other obligation or loan for the direct or indirect purpose of paying or discharging any such obligations. (e) Without the prior written consent of Lender, (i) make any payments in respect of any Indebtedness or (ii) make any distributions of cash or property to any of its shareholders. (f) Make any advance, loan, extension of credit or capital contribution to, or purchase any stock, bonds, notes, debentures or other securities of or any assets constituting a business unit of, or make any other investment in, any Person. (g) Enter into any merger or consolidation or liquidate or wind-up or dissolve itself (or suffer any liquidation or dissolution) or convey, sell, lease, assign, transfer or otherwise dispose of all or substantially all of its property, business or assets or make any material change in its present method of conducting business or permit any corporate guarantor to do any of the foregoing. 22 (h) Materially change, amend, alter or modify the certificate of formation or its other governing documents. (i) Enter into any transaction, including, without limitation, the purchase, sale or exchange of property or the rendering of any service, with any officer, manager, member, director, shareholder or partner of Borrower or any Guarantor or Affiliate of any of the foregoing, without prior written notice to Lender. (j) Create, incur, or suffer to exist any Indebtedness. (k) Allow its company or corporate existence to be other than in good standing and will not, without the prior written consent of Lender, dissolve or liquidate, or merge or consolidate with or acquire or affiliate with any other business entity or form any Subsidiary. (l) Change its name without furnishing to Lender at least ten (10) days' prior written notice thereof. (m) Utilize any trade name, and will not in the future utilize any trade name without furnishing to Lender at least ten (10) days prior written notice thereof. (n) Change the nature of its business. (o) Allow addition of any shareholders to Borrower or any Subsidiary without Lender's prior written consent. 10. Events of Default. The occurrence of any of the following shall constitute an Event of Default hereunder: (a) failure of Borrower to make any payment of any installment of principal when due under the Note, including any required prepayment of principal (including, but not limited to, any prepayment required under any of clauses (i) through (iii) of Section 2(g) hereof); or failure of Borrower to make any payment of interest when due under the Note and continuation of such failure for three (3) days thereafter; or (b) failure of Borrower to pay any other sum when due hereunder or under the Note or any other Loan Document and continuation of such failure or breach for ten (10) days thereafter or if there shall occur a breach of any other covenant in this Agreement or any other Loan Document and continuation of such failure or breach for thirty (30) days after Borrower's receipt from Lender of written notice of such failure or breach; or (c) any representation or warranty of Borrower or the Guarantors made herein or in any other Loan Document or in any other writing given to Lender in connection with the Advance shall have been incorrect in any material respect as of the time when the same shall have been made or at any time prior to the repayment of the Advance in full; or 23 (d) the occurrence of an event of default under any of the Guaranties, any of the Pledge Agreements, or any other Loan Documents after giving effect to any required notice or rights of cure set forth therein; or (e) the sale, conveyance, assignment, transfer or other disposition or divestiture of Borrower's title to any of the Collateral, or the mortgage or other conveyance of a security interest in, or other Lien on any of the Collateral or any interest therein, whether voluntary or involuntary, except as provided herein (other than the right of Borrower to acquire an additional 625,000 shares of TAC pursuant to Section 2.5 of the TAC Stock Purchase Agreement); or (f) any merger, consolidation, liquidation or dissolution, or the sale or transfer of all or substantially all of the assets, of Borrower; or (g) the use of proceeds of the Advance for any purpose other than the purpose described in Section 6(n); or (h) any Loan Documents for any reason shall cease to be in full force and effect, the Liens on the Collateral purported to be created thereby shall cease to be or are not valid and perfected Liens having priority over all other Liens except any Liens specifically permitted under the Loan Documents, or any Guarantor shall assert that it has no liability under the Guaranty to which it is a party; or (i) one or more judgments or decrees shall be entered against Borrower or any Guarantor (not paid or fully covered by insurance), and payment (including interest and penalties) of the entire amount of all such judgments or decrees shall not have been paid within sixty (60) days from the entry thereof, or Borrower or any Guarantor, as the case may be, shall fail to diligently prosecute for the judgment or decree to be vacated or discharged, stayed or bonded; or (j) if Borrower or any Guarantor becomes insolvent; or (k) if Borrower or any Guarantor generally does not pay their respective debts as they become due; or (l) if Borrower or any Guarantor shall (i) apply for or consent to the appointment of, or the taking of possession by, a receiver, custodian, trustee or liquidator of Borrower or such Guarantor, as the case may be, or of all or a substantial part of the assets of Borrower or such Guarantor, (ii) make a general assignment for the benefit of the Borrower's or such Guarantor's creditors, as the case may be, (iii) commence a voluntary case under the U.S. federal bankruptcy code or any other applicable law (domestic or foreign) relating to bankruptcy, insolvency, reorganization, moratorium, reorganization, creditor or debtor rights, winding-up, or composition or readjustment of debts, (iv) file a petition seeking to take advantage of any other law relating to bankruptcy, insolvency, reorganization, moratorium, reorganization, creditor or debtor rights, winding-up, or composition or readjustment of debts, or (v) take any action for the purpose of effecting any of the foregoing; or 24 (m) if a proceeding or case shall be commenced against Borrower or any Guarantor, without the application or consent of Borrower or such Guarantor, as the case may be, in any court of competent jurisdiction, seeking (i) the reorganization, winding-up or the composition or readjustment of the debts of Borrower or such Guarantor, as the case may be, including the filing of an involuntary petition under the U.S. federal bankruptcy code, (ii) the appointment of a trustee, receiver, custodian, liquidator or the like of Borrower or such Guarantor, as the case may be, or of all or any substantial part of the assets of Borrower or such Guarantor, as the case may be, or (iii) similar relief in respect of Borrower or such Guarantor, as the case may be, under any law relating to bankruptcy, insolvency, reorganization, creditor or debtor rights, winding-up, or composition or adjustment of debts, and such proceeding or case shall continue undismissed, or an order, judgment or decree approving or ordering any of the foregoing shall be entered and shall not be vacated or dismissed within 90 days; or an order for relief against Borrower or such Guarantor, as the case may be, shall be entered in an involuntary case under any applicable bankruptcy code; or (n) Borrower shall fail to pay when due any principal of or interest on or any other amount in connection with any Indebtedness of Borrower (other than under this Agreement and the other Loan Documents), or Borrower shall fail to perform any term, covenant or condition in any agreement or instrument relating to any of such other Indebtedness, if the effect of such failure is to cause, or to permit the holder of such Indebtedness to cause, such Indebtedness to become due prior to its stated maturity; (o) at any time after the Transaction Closing Date, TAC or any of TAC's Subsidiaries shall (i) make any advance, loan, extension of credit or capital contribution to, or purchase any stock, bonds, notes, debentures or other securities of or any assets constituting a business unit of, or make any other investment in, any Person, (ii) create, incur, suffer to exist, assume, guaranty, endorse, become a surety, or otherwise become liable for the Indebtedness or other obligations of any other Person whether directly or indirectly, or make or incur any advance, purchase commitment, other obligation or loan for the direct or indirect purpose of paying or discharging any such obligations, (iii) enter into transactions with Affiliates, or (iv) enter into any merger or consolidation or liquidate or wind-up or dissolve itself (or suffer any liquidation or dissolution) or convey, sell, lease, assign, transfer or otherwise dispose of all or any material amount of its property, business or assets, or make any material change in its present method of conducting business or permit any corporate guarantor to do any of the foregoing, in all cases other than (x) acquisitions of non-affiliated businesses by merger, acquisitions of shares or interest or acquisitions of assets that are approved by TAC's board of directors in good faith and, in each case, as to which, after giving effect to the issuance of shares of common stock as consideration, do not dilute the Oak TAC Shares and the Accommodation TAC Shares, in the aggregate, below 51% (or such larger percentage as the Lender, in its sole discretion, shall determine is necessary to control the management of TAC in light of the taking of any action by the board of directors of TAC that would require that the approval of more than 50% of the outstanding voting shares of TAC is necessary for the taking of any action by the shareholders, including, without limitation, the election of directors) of the issued and outstanding shares of common stock of TAC, or do not constitute at least 51% of the outstanding voting securities of TAC, after giving effect to the pledge of additional issued and outstanding shares by Excalibur, Ball or any other holder of TAC shares, (x) loans and dividends among any of TAC and its consolidated Subsidiaries, (y) transactions among any of TAC and its consolidated Subsidiaries (including the incurrence or guaranty of Indebtedness on behalf of TAC and its consolidate subsidiaries) that are entered into in the ordinary course of business, and (z) transactions that have been entered into prior to the date hereof among any of TAC and its consolidated Subsidiaries that are entered into in the ordinary course of business; or 25 (p) at any time the Oak TAC Shares and the Accommodation TAC Shares, in the aggregate, do not equal at least 51% (or such larger percentage as the Lender, in its sole discretion, shall determine is necessary to control the management of TAC in light of the taking of any action by the board of directors of TAC that would require that the approval of more than 50% of the outstanding voting shares of TAC is necessary for the taking of any action by the shareholders, including, without limitation, the election of directors) of the issued and outstanding shares of common stock of TAC, or do not constitute at least 51% of the outstanding voting securities of TAC. 11. Remedies. (a) Upon the occurrence of an Event of Default and at any time thereafter during the continuance of such Event of Default, in addition to any remedies available to Agent and Lender under applicable law, Agent, subject to the provisions of Section 11(c) below, and Section 4 of each of the Pledge Agreements, may take one or more of the following remedial steps in any order of priority: (i) Terminate the Facility, declare immediately due and payable the outstanding principal balance of the Note, together with all accrued and unpaid interest, fees and other sums or expenses payable hereunder or pursuant to any of the other Loan Documents and accordingly accelerate payment thereof without presentment, demand, notice of intention to accelerate, notice of acceleration or notice of any other kind, all of which are expressly waived; provided, however, that in the case of the occurrence of an Event of Default referred to in Sections 10(j), (k), (l) or (m), the Facility shall be automatically terminated and the then outstanding principal balance of the Note, together with all accrued and unpaid interest, fees and other sums or expenses payable hereunder or pursuant to any of the other Loan Documents, shall be automatically due and payable, without presentment, demand, notice of intention to accelerate, notice of acceleration or notice of any other kind, all of which are expressly waived. (ii) Take any action at law or in equity against Borrower or the Guarantors (A) to collect the payments then due and thereafter to become due under the Loan Documents, or (B) to enforce performance and observance of any Obligation, agreement or covenant of Borrower or such other parties under the Loan Documents; (iii) Exercise any and all rights and remedies provided for in the other Loan Documents as they relate to Borrower or any Guarantor; and (iv) Immediately, and without notice or other action, set-off against any obligations of any obligor under the Loan Documents to Lender any sum owed by Lender in any capacity to any obligor whether due or not, and Agent shall be deemed to have exercised such right of set-off and to have made a charge against any such sum immediately upon the occurrence of an Event of Default, even though the actual book entries may be made at some time subsequent thereto. 26 No remedy conferred in this Agreement or the other Loan Documents is intended to be exclusive of any other remedy, and each and every such remedy shall be cumulative and shall be in addition to every other remedy conferred herein or now or hereafter existing at law or equity or by statute or otherwise. (b) Notwithstanding that Agent or Lender may obtain a judgment against Borrower, unless and until the Indebtedness owed by Borrower to Lender is satisfied in full, the Indebtedness shall continue to bear interest at the rate set forth herein and any advances that Lender makes to rehabilitate or protect any Collateral shall be added to the Indebtedness owed by Borrower to Lender. (c) Borrower shall remain liable for any deficiency if the proceeds of any sale or other disposition of the Collateral are insufficient to pay the Obligations and the fees and disbursements of any attorney employed by Lender to collect such deficiency. (d) Borrower further agrees that, if any payment made by Borrower or other Person and applied to the Obligations is at any time annulled, avoided, set aside, rescinded, invalidated, declared to be fraudulent or preferential or otherwise required to be refunded or repaid, or the proceeds of Collateral are required to be returned by Lender to such Person, its estate, trustee, receiver or any other party, including Borrower, under any bankruptcy law, state or federal law, common law or equitable cause, then, to the extent of such payment or repayment, any Lien or other Collateral securing such liability shall be and remain in full force and effect, as fully as if such payment had never been made or, if prior thereto the Lien granted hereby or other Collateral securing such liability hereunder shall have been released or terminated by virtue of such cancellation or surrender), such Lien or other Collateral shall be reinstated in full force and effect, and such prior cancellation or surrender shall not diminish, release, discharge, impair or otherwise affect any Lien or other Collateral securing the obligations of Borrower in respect of the amount of such payment. 12. Payment of Expenses. (a) Borrower agrees that it shall pay all out-of-pocket expenses incurred by Agent and Lender in connection with this Agreement, including without limitation any out-of-pocket expenses incurred by Agent and Lender in connection with evaluating whether to extend the Advance, any Closings and enforcement of the Advance. Such out-of-pocket expenses include without limitation fees and expenses for any title searches required hereunder, recording and filing fees, and reasonable attorneys' fees incurred by Agent and Lender in connection with the Advance (including any amendments and waivers) after giving effect to the $100,000 prepaid by Borrower prior to the date hereof, the preparation of the Loan Documents, the administration of the Facility, and the enforcement of Agent's and Lender's rights and remedies under the Loan Documents regardless of whether formal proceedings are instituted. (b) If Borrower should fail to perform or observe, or to cause to be performed or observed, any covenant or obligation under this Agreement or any of the other Loan Documents, then Lender may (but shall be under no obligation to) take such steps as are necessary to remedy any such nonperformance or nonobservance and provide for payment thereof, if any (which shall include, without limitation, steps necessary to cure any defaults of Borrower under any lease). 27 (c) All amounts expended or advanced by Agent and Lender pursuant to this Section 12 shall become part of the outstanding principal balance of the Advance and the Note, shall be secured by the Guaranties, the Pledge Agreements, and the other Collateral, shall become due and payable by Borrower within two (2) days following written demand by Agent or Lender, as the case may be, and shall bear interest at the Default Rate (such interest to be calculated from the date of such advance by Lender to the date of repayment thereof by Borrower). 13. Lender's Right to Assign. Lender shall have the right to sell, assign, transfer or dispose of, or sell one or more participation interests in, all or any part of its interest in the Advance without the consent or approval of Borrower or the Guarantors, but notwithstanding such assignment or participation, Agent shall continue to administer the Advance and Agent, as collateral agent for the benefit of the Lender, shall remain identified as the secured party on any financing statements, continuation statements or amendments of any the foregoing that may be filed publicly. 14. Default Interest Rate. All sums advanced and all expenses incurred by Lender pursuant to any provision of this Agreement or of the other Loan Documents which are not paid when due shall bear interest at the Default Rate set forth in the Note from the date such sum was due until such sum is paid in full and shall be guaranteed by the Guaranties and secured by the Pledge Agreements and the other Collateral. 15. Usury Savings. Notwithstanding anything to the contrary contained herein, under no circumstances shall the aggregate amount paid or agreed to be paid hereunder or under the Note exceed the highest lawful rate permitted under applicable usury law (the "Maximum Rate"), and the payment obligations of Borrower under this Agreement and the Note are hereby limited accordingly. If under any circumstances, whether by reason of advancement or acceleration of the maturity of the unpaid principal balance hereof or otherwise, the aggregate amounts paid hereunder or under the Note shall include amounts which by law are deemed interest and which would exceed the Maximum Rate, Borrower stipulates that payment and collection of such excess amounts shall have been and will be deemed to have been the result of a mistake on the part of both Borrower and Lender or the holder of the Note, and the party receiving such excess payments shall promptly credit such excess (only to the extent such payments are in excess of the Maximum Rate) against the unpaid principal balance hereof and any portion of such excess payments not capable of being so credited shall be refunded to Borrower. 16. Notices. Any notices or other communications to be delivered to either party shall be delivered by (a) personal delivery, (b) certified mail, return receipt requested, postage prepaid, (c) nationally recognized overnight courier against receipt therefor or (d) fax, with a copy simultaneously delivered to the attorney for such party, addressed to the parties at their address first set forth above and to their attorneys as follows: 28 Borrower's Fax No.: Agent's Fax No.: Borrower's Attorney: McGuireWoods LLP 1345 Avenue of the Americas 7th Floor New York, New York 10105-0106 Attn: William A. Newman Telephone: (212) 548-2160 Facsimile: (212) 548-2170 Agent's and Lender's Attorney: Salans 620 Fifth Avenue New York, New York 10020 Attn: Laurence S. Markowitz, Esq. Fax No.: (212) 632-5555 Any party may change its address for notices by delivering notice thereof to the other party hereunder. Notices shall be deemed delivered (a) on the day delivered in person, (b) three (3) days after mailing as aforesaid, (c) on the date of delivery or refusal shown on the courier's receipt or (d) on the date when faxed as shown on the log of the transmitting machines. 17. Waiver; Amendments. (a) No course of dealing between Borrower and either Agent or Lender or any failure or delay on the part of Agent or Lender in exercising any rights or remedies hereunder shall operate as a waiver of any rights or remedies of Agent and Lender and no single or partial exercise of any rights or remedies hereunder shall operate as a waiver or preclude the exercise of any other rights or remedies hereunder. In the event any agreement contained in this Agreement or the other Loan Documents should be breached and thereafter waived by Lender, such waiver shall be limited to the particular breach so waived and shall not be deemed to waive any other breach hereunder or thereunder. (b) Neither this Agreement nor any other Loan Document may be waived, amended or modified except pursuant to an agreement in writing entered into, in the case of this Agreement, by Borrower and Agent, or in the case of any other Loan Document, by Agent and such other Persons (including, as the case may be, Borrower or any Guarantor) party thereto; provided, that no such agreement shall, without the written consent of Lender, (i) reduce the principal amount of the Advance or reduce the rate of interest thereon or reduce any fees payable hereunder, (ii) postpone the scheduled date of payment of the principal amount of the Advance, or any interest thereon, or any fees payable hereunder, (iii) release any Guarantor from its Guaranty, or limit its liability in respect of such Guaranty, or (iv) release any of the Collateral, other than shares of common stock of TAC underlying the Warrants, from the Liens of the Loan Documents. 29 18. Failure to Exercise Rights. Nothing herein contained shall impose upon Agent or Lender any obligation to enforce any terms, covenants or conditions contained in this Agreement and the other Loan Documents. Failure of Agent or Lender, in any one or more instances, to insist upon strict performance of any terms, covenants or conditions of this Agreement and the other Loan Documents, shall not be considered or taken as a waiver or relinquishment by Agent or Lender of their respective rights to insist upon and to enforce in the future, by injunction or other appropriate legal or equitable remedy, strict compliance with all the terms, covenants and conditions of this Agreement and the other Loan Documents. The consent of Lender to any act or omission by Borrower shall not be construed to be a consent to any other or subsequent act or omission or a waiver of the requirement for Lender's consent to be obtained in any future or other instance. 19. Prohibition Against Exercise of Rights Applicable Only to Individual Lenders. Borrower is hereby prohibited from exercising against Lender any right or remedy which it might otherwise be entitled to exercise against any one or more (but less than all) of the individual parties constituting Lender, including, without limitation, any right of set-off or any defense. 20. Miscellaneous. (a) Choice of Law. This Agreement and the Note and the other Loan Documents shall, except as otherwise stated therein, be governed by and construed in accordance with the laws of the State of New York (including, without limitation, Section 5-1401 of the New York General Obligations Law), and the respective rights and obligations of Borrower and Lender shall be governed by such laws, without regard to principles of conflicts of laws. (b) Jurisdiction. AT LENDER'S ELECTION, TO BE ENTERED IN ITS SOLE DISCRETION, ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST BORROWER, AGENT OR LENDER ARISING OUT OF OR RELATING TO THIS NOTE OR THE OTHER LOAN DOCUMENTS SHALL BE INSTITUTED IN ANY FEDERAL OR STATE COURT LOCATED IN THE STATE OF NEW YORK, COUNTY OF NEW YORK, AND BORROWER WAIVES ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING, AND HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY SUCH COURT IN ANY SUIT, ACTION OR PROCEEDING. BORROWER DOES HEREBY DESIGNATE AND APPOINT CT CORPORATION AS ITS AUTHORIZED AGENT TO ACCEPT AND ACKNOWLEDGE ON ITS BEHALF SERVICE OF ANY AND ALL PROCESS WHICH MAY BE SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING IN ANY FEDERAL OR STATE COURT LOCATED IN THE STATE OF NEW YORK, COUNTY OF NEW YORK, AND AGREES THAT SERVICE OF PROCESS UPON SAID AGENT AT SAID ADDRESS AND WRITTEN NOTICE OF SAID SERVICE MAILED OR DELIVERED TO BORROWER IN THE MANNER PROVIDED HEREIN SHALL BE DEEMED IN EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON BORROWER IN ANY SUCH SUIT, ACTION OR PROCEEDING IN THE STATE OF NEW YORK. BORROWER (x) SHALL GIVE PROMPT NOTICE TO AGENT OF ANY CHANGED ADDRESS OF ITS AUTHORIZED AGENT HEREUNDER, (y) MAY AT ANY TIME AND FROM TIME TO TIME DESIGNATE A SUBSTITUTE AUTHORIZED AGENT WITH AN OFFICE IN NEW YORK (WHICH OFFICE SHALL BE DESIGNATED AS THE ADDRESS FOR SERVICE OF PROCESS), AND (c) SHALL PROMPTLY DESIGNATE SUCH A SUBSTITUTE IF ITS AUTHORIZED AGENT CEASES TO HAVE AN OFFICE IN NEW YORK OR IS DISSOLVED WITHOUT LEAVING A SUCCESSOR. 30 (c) No modification or waiver of any provision of the Note or of this Agreement and no consent by Lender to any departure therefrom by Borrower shall be effective unless such modification or waiver shall be in writing and signed by a duly authorized officer of Lender, and the same shall then be effective only for the period and on the conditions provided therein. (d) Borrower shall, and shall cause each Guarantor to, as the case may be, execute and deliver, or cause to be executed and delivered to Lender, all other instruments, certificates and agreements as Lender or Lender's counsel may reasonably require, including, but not limited to, estoppel certificates stating, to the extent accurate, that this Agreement is in full force and effect and that there are no defenses or offsets thereto, or if such statement is inaccurate, then stating, to the extent inaccurate, the reasons therefor, all of the foregoing so as to effect, confirm or assure the rights, remedies and Liens intended to be granted or conveyed to Lender under this Agreement or any other Loan Document. (e) A determination that any portion of this Agreement or any of the Loan Documents is unenforceable or invalid shall not affect the enforceability or validity of any other provision, and any determination that the application of any provisions of this Agreement or any Loan Document to any person or circumstance is illegal or unenforceable shall not affect the enforceability or validity of such provisions that may apply to other persons or circumstances. 21. Successors and Assigns. (a) Borrower may not assign its rights under this Agreement without the prior written consent of Lender. Any such attempted assignment in violation of this Agreement shall be void and of no effect. (b) All covenants and agreements in this Agreement shall bind and inure to the benefit of the respective permitted successors and assigns of the parties hereto and any holder or holders of the Note or any portion thereof. 22. Waiver of Jury Trial. BORROWER, AGENT AND LENDER AGREE THAT ANY SUIT, ACTION OR PROCEEDING, WHETHER CLAIM OR COUNTERCLAIM, BROUGHT BY BORROWER OR LENDER ON OR WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE DEALINGS OF THE PARTIES WITH RESPECT HERETO OR THERETO, SHALL BE TRIED ONLY BY A COURT AND NOT BY A JURY. BORROWER, AGENT AND LENDER EACH HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY SUCH SUIT, ACTION OR PROCEEDING. FURTHER, BORROWER WAIVES ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER, IN ANY SUCH SUIT, ACTION OR PROCEEDING, ANY SPECIAL, EXEMPLARY, PUNITIVE, CONSEQUENTIAL OR OTHER DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES. BORROWER ACKNOWLEDGES AND AGREES THAT THIS SECTION IS A SPECIFIC AND MATERIAL ASPECT OF THIS AGREEMENT AND THAT LENDER WOULD NOT EXTEND CREDIT TO BORROWER IF THE WAIVERS SET FORTH IN THIS SECTION WERE NOT A PART OF THIS AGREEMENT. 31 23. WAIVER OF AUTOMATIC STAY. BORROWER HEREBY WAIVES ANY PROVISIONS APPLICABLE IN CONNECTION WITH ANY VOLUNTARY OR INVOLUNTARY INSOLVENCY, BANKRUPTCY, REORGANIZATION, FRAUDULENT CONVEYANCE, FRAUDULENT TRANSFER, OR SIMILAR PROCEEDINGS INVOLVING BORROWER UNDER ANY STATE OR FEDERAL LAW REGARDING CREDITORS' RIGHTS OR DEBTORS' OBLIGATIONS IMPOSING AGAINST AGENT OR LENDER, OR OTHERWISE PROVIDING FOR, AN AUTOMATIC STAY UNDER U.S.C. SECTION 362 OR ANY OTHER PROHIBITION AGAINST AGENT'S OR LENDER'S COMMENCING, MAINTAINING, OR COMPLETING ANY PROCEEDING IN CONNECTION WITH OR THE EXERCISE OR ENFORCEMENT OF ANY OF AGENT'S OR LENDER'S RIGHTS HEREUNDER, ANY OF THE LOAN DOCUMENTS OR ANY APPLICABLE LAW. BORROWER HEREBY ACKNOWLEDGES AND CONFIRMS THAT THIS SECTION IS A SPECIFIC AND MATERIAL ASPECT OF THIS AGREEMENT AND LENDER WOULD NOT EXTEND CREDIT TO BORROWER IF THE WAIVER SET FORTH IN THIS SECTION WERE NOT A PART OF THIS AGREEMENT. IN FURTHERANCE THEREOF, BORROWER AND LENDER AGREE AS FOLLOWS: (a) THAT IN THE EVENT OF IMPOSITION OF ANY SUCH STAY OR OTHER PROHIBITION, AGENT OR LENDER MAY SEEK TO LIFT ANY SUCH STAY OR OTHER PROHIBITION OR SEEK EXEMPTION THEREFROM; (b) THAT BORROWER WILL NOT CONTEST ANY SUCH MOTION MADE BY AGENT OR LENDER FOR LIFTING THEREOF OR FOR EXEMPTION THEREFROM; OR (c) THAT BORROWER WILL COOPERATE WITH AGENT AND LENDER, IN ANY MANNER REQUESTED BY AGENT OR LENDER, IN ITS EFFORTS TO OBTAIN RELIEF FROM ANY SUCH STAY OR OTHER PROHIBITION 24. Releases of Collateral. Agent may release, regardless of consideration, the obligation of any Person or Persons liable for payment of any of the Obligations secured hereby, or may release any part of the Collateral or any other collateral now or hereafter given to secure the payment of the Obligations or any part thereof, without impairing, reducing or affecting the Obligations of Borrower under the Loan Documents, the remainder of the security of the Collateral, or the priority of the rights created by this Agreement. 25. Public Announcements. No oral or written public announcement or disclosure with respect to the Loan Documents and the transactions contemplated herein and therein shall be made by or on behalf of any party without the prior written approval of the other parties, except to the extent required by applicable law or as may be necessary or advisable in the opinion of counsel to bring effective the registration statement referred to in Section 2(f). 32 26. Confidentiality. In addition to any duty of confidentiality imposed on Lender by applicable law, Lender hereby agrees that it will keep all written information to be furnished to it by Borrower and the Guarantors pursuant to the Loan Documents confidential in accordance with reasonable, customary, safe and sound banking practices, and will not knowingly make any disclosure to any other Person of such information until the same should have become public through no fault of Lender, except (a) in connection with (i) disputes arising out of the Loan Documents (including, without limitation, litigation involving Borrower, the Guarantors and Lender) and (ii) the obligations of Lender under applicable law or regulation, (b) pursuant to subpoenas or similar process, (c) to governmental authorities or examiners, (d) to independent auditors or counsel, (e) to any Affiliate of Lender, or (f) to any participant or proposed participant or assignee or proposed assignee hereunder so long as such participant or proposed participant or assignee or proposed assignee agrees in writing to accept such information subject to the restrictions provided in this Section 26. Lender shall not be liable or responsible for the breach or violation of this Section which breach or violation is caused by any other Person. 27. Counterparts. This Agreement and each other Loan Document may be executed in any number of counterparts, each of which shall be deemed an original, but all of which shall constitute one and the same agreement. This Agreement may be executed and delivered by facsimile signature. [Remainder of page intentionally left blank. Signature page follows.] 33 IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the day and year first set forth above. BORROWER: OAK FINANCE INVESTMENTS LIMITED By: /s/ Saurabh Patel Name:Saurabh Patel Title:Authorized Person AGENT: STONEGATE BANK By: /s/ David Seleski Name:David Seleski Title:President LENDERS: STONEGATE BANK By: /s/ David Seleski Name:David Seleski Title:President CORDELL CONSULTANTS, INC. MONEY PURCHASE PLAN By:/s/ Robin Rodriguez Name:Robin Rodriguez Title:Administrator 34 Schedule A - Principal Line of Credit Documents 1. Promissory Note; 2. Pledge and Security Agreement by Oak Finance Investments Limited for Interests in T A Team Consulting, Inc.; 3. Pledge and Security Agreement by Excalibur Investment Group Limited for Interests in The A Team Consulting, Inc. 4. Pledge and Security Agreement by Andrew Henry Ball for Interests in The A Team Consulting, Inc. 5. Guaranty of Excalibur Investment Group Limited 6. Guaranty of Andrew Henry Ball 7. Guaranty of Kishor Jhunjhunwala 8. Guaranty of Saurabh Patel 9. Warrants issued by Excalibur Trust to Lender 10. Warrants issued by Andrew Henry Ball to Lender 11. Escrow Closing Agreement 12. Opinion of Counsel for BVI Counsel for Borrower 13. Opinion of Counsel for New York Counsel for Borrower 14. Opinion of Counsel for Excalibur Investment Group Limited 35 EX-99.6 3 v020672_ex6.txt EXHIBIT 6 PLEDGE AND SECURITY AGREEMENT THIS PLEDGE AND SECURITY AGREEMENT (as amended, modified, extended or renewed from time to time, this "Agreement"), dated as of May 24, 2005, made by ANDREW HARRY BALL, an individual residing on the date hereof at 51 Baume Trocade, St. Jean, 83600 Frejus, France ("Pledgor"), in favor of STONEGATE BANK, as collateral agent for the Lender (as hereafter defined) with an address at P.O. Box 4678, Fort Lauderdale, Florida 33338-4678 ("Secured Party"). R E C I T A L S : A. Pledgor is a guarantor under that certain Line of Credit Agreement, dated as of even date herewith, by and between Oak Finance Investments Limited (the "Borrower"), the lenders party thereto (collectively, the "Lender"), and Secured Party, as administrative agent and collateral agent for the Lender (the "Line of Credit Agreement"), pursuant to which Lender has agreed to make available to the Borrower a non-revolving line of credit facility in an aggregate principal amount not to exceed $16,750,000.00 (the "Facility"). B. To secure Pledgor's obligations under the Loan Documents, Pledgor has agreed to deliver this Agreement and to pledge, assign and hypothecate to Secured Party, for the benefit of Lender, and to grant to Secured Party, for the benefit of Lender, a lien on and security interest in, all of Pledgor's right, title and interest in, to and under the Pledged Collateral (as hereafter defined), on the terms and conditions set forth herein. NOW, THEREFORE, in consideration of the premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Pledgor hereby agrees with Secured Party as follows: 1. Defined Terms. As used in this Agreement, the following terms shall have the following meanings: "Company" shall mean The A Consulting Team, Inc., a New York corporation, and its successors. Secured Party acknowledges that the Company's name shall be amended to be Vanguard Info-Solutions International Inc. "Pledged Collateral" shall have the meaning ascribed to such term in Section 2(a) hereof. "Proceeds" means all "proceeds" as such term is defined in Section 9-102(64) of the UCC and, in any event, shall include, without limitation, all dividends or other income from the Interests (as defined in Section 2), collections thereon or distributions with respect thereto, and should include all proceeds from sales or assignments of the Interests. "Share Exchange Agreement" shall mean the Share Exchange Agreement, dated as of January 21, 2005, among Vanguard Info-Solutions Corporation, a New Jersey corporation ("Vanguard"), the Vanguard stockholders named therein, the authorized representative named therein, and the Company. "UCC" shall mean the Uniform Commercial Code as from time to time in effect in the State of New York; provided, however, that, in the event that, by reason of mandatory provisions of applicable law, any of the attachment, perfection or priority of Lender's security interest in any Collateral is governed by the Uniform Commercial Code as in effect in a jurisdiction other than the State of New York, the term "UCC" shall mean the Uniform Commercial Code as in effect in such other jurisdiction for purposes of the provisions hereof relating to such attachment, perfection or priority and for purposes of definitions related to such provisions. Defined terms used herein but not defined herein shall have the meanings ascribed to them in the Line of Credit Agreement. 2. Grant of Security Interest. (a) Pledgor hereby pledges and grants to Secured Party, for the benefit of Lender, a lien on and security interest in (I) all of Pledgor's right, title and interest in, to and under all the common stock and other equity securities and interests owned by Pledgor in the Company, including, but not limited to, those equity securities identified on Schedule I hereto, including, without limitation, all of Pledgor's right, title and interest in, to and under all (i) all securities received on account of, in addition to or in exchange for the Interests (as hereafter defined), (ii) distributions of profits and income of the Company, (iii) capital distributions from the Company, (iv) distributions of cash flow by the Company, (v) proceeds of any liquidation upon the dissolution of the Company and winding up of its affairs and (vi) all other rights of Pledgor as a stockholder or other equity interest holder of the Company including, without limitation, rights to reports, accounting and information and voting rights, but excluding any rights with respect to common stock or equity interests other than those identified on Schedule I (all of the foregoing being collectively referred to as the "Interests"), (II) all of Pledgor's right, title and interest in, to and under any and all other rights to payment, whether in the nature of distributions, fees, compensation, or of any other nature or description, and all proceeds thereof, regardless of whether paid in Pledgor's capacity as a shareholder of the Company, which are made from the Company, or other Persons to the extent that such payments are derived from the Company, which shall be presumed absent clear and convincing evidence to the contrary determined by Secured Party at such time, to or for the benefit of Pledgor, the Company or any Affiliate of Pledgor or the Company, but excluding directors' fees and reimbursement of expenses incurred as a director of the Company (each of the foregoing, a "Payment" and, together with the Interests, the "Rights"), (III) all of Pledgor's right, title and interest in, to and under the Share Exchange Agreement, and (IV) all Proceeds in respect of the foregoing (collectively, the "Pledged Collateral"), as collateral security for the due and punctual payment and performance of the Obligations. (b) Notwithstanding the security interest in the Interests granted to and created in favor of Secured Party, for the benefit of Lender, by this Agreement, Pledgor shall have the right, until the occurrence of any of the Events of Default specified in Section 7 hereof, to retain all voting rights with respect to the Interests. (c) From the date hereof until indefeasible payment in full of the Obligations, Pledgor hereby agrees that all distributions and other payments by the Company which would otherwise be distributed or paid to Pledgor or any assigns or Affiliates of Pledgor shall, upon the occurrence and during the continuation of an Event of Default (as herein defined), be distributed or paid by the Company to Secured Party, for the benefit of Lender, and all distributions and payments received by Pledgor contrary to this clause (c) shall be (i) received in trust for the benefit of Secured Party, (ii) segregated from the other funds of Pledgor, and (iii) delivered to Secured Party forthwith in the same form as so received (with any necessary endorsement), to be held by Secured Party as part of the Pledged Collateral under and subject to the terms of this Agreement. Irrespective of whether an Event of Default has occurred and is continuing, all securities received in addition to or in exchange for the Interests shall be delivered forthwith to Secured Party in the exact form received, with Pledgor's endorsement when necessary and/or appropriate stock powers or assignments duly executed in blank, to be held by Secured Party, subject to the terms hereof, as further collateral security for the Obligations. 2 3. Exculpation. Secured Party shall have no obligation or liability whatsoever, including for the obligations of Pledgor or the Company, by reason of or arising out of the making of this Agreement, nor shall Secured Party be required or obligated in any manner to perform or fulfill any of the obligations of Pledgor. Nothing contained in this Agreement shall be construed or interpreted (a) to transfer to Secured Party any of the rights and obligations of a shareholder of the Company other than the rights of collateral security in and to the Interests, or (b) to constitute Secured Party as a shareholder of the Company provided that such limitation, in no manner, shall otherwise limit the rights of Secured Party granted under this Agreement. This Agreement (x) shall not be deemed to terminate Pledgor's status as a shareholder of the Company, and (y) shall not be construed as constituting a current conveyance, but rather as creating a security interest in the Interests. 4. Rights of the Secured Party; Limitation on Duties Regarding the Interest. Secured Party shall not be liable for failure to collect or realize upon the Obligations or any collateral security or guarantee therefor, or any part thereof, or for any delay in so doing, nor shall Secured Party be under any obligation to take any action whatsoever with regard thereto. If an Event of Default has occurred hereunder or under any of the Loan Documents and is continuing beyond any applicable cure period, the Interests held by Secured Party hereunder, at the election and written request of Secured Party, shall be registered with the Company in the name of Secured Party, or its nominee, all without liability except to account for property actually received by it, but Secured Party shall have no duty to exercise any of the aforesaid rights, privileges or options and shall not be responsible for any failure to do so or delay in so doing. 5. Representations and Warranties of Pledgor. Pledgor represents and warrants to Secured Party as follows, as of the date hereof and the date of each Advance: (a) The Interests have been duly authorized and validly issued, and are fully paid and non-assessable. (b) On the Transaction Closing Date, the Interests constituting Pledged Collateral will equal no less than twenty-two and six-tenths percent (22.6%) of all of the issued and outstanding common stock of the Company. There is no preferred stock of the Company issued or outstanding. 3 (c) Pledgor is the sole legal, record and beneficial owner of the Pledged Collateral, free and clear of any Lien, option or other interest (including, without limitation, any contract or other agreement to sell or otherwise transfer), other than the rights of the escrow agent with respect to the shares arising under the Warrant Escrow Agreement. (d) This Agreement (along with any financing statements filed with the Recorder of Deeds of the District of Columbia and the acknowledgement of the Company with respect to the pledge of the Pledged Collateral hereunder) is effective to create, and the pledge of the Pledged Collateral hereunder creates, a legal, valid and enforceable first priority perfected Lien on the Pledged Collateral, and the Pledged Collateral is not subject to any other Lien or security interest or to any agreement purporting to grant to any third party a security interest in the property or assets of Pledgor which would include any or all of the Pledged Collateral. All action necessary to perfect such Liens has been duly taken. (e) No security agreements or any other Lien instruments have been executed and delivered, and no financing statements or any other notice of any Lien have been filed in any jurisdiction, granting or purporting to grant a security interest in or creating a Lien on any or all of the Pledged Collateral to any party other than Secured Party. (f) [Intentionally Omitted] (g) Other than delivery by the Borrower to the Lender of a completed and executed Federal Reserve Form U-1 demonstrating compliance of the Advance with Regulation U of the Board of Governors of the Federal Reserve System, no consent, authorization, approval, or other action by, and no notice to or filing with, any Governmental Authority is required either (i) for the pledge by Pledgor of the Pledged Collateral pursuant to this Agreement or for the due execution, delivery or performance of this Agreement by Pledgor, or (ii) for the exercise by Secured Party of the rights provided for in this Agreement or of the remedies in respect of the Pledged Collateral pursuant to this Agreement, except as may be required in connection with the disposition of the Pledged Collateral by laws affecting the offering and sale of securities generally and under Article 9 of the UCC. (h) There is no action, suit or proceeding pending, or to the knowledge of Pledgor, threatened, before any court or governmental or administrative body or agency which may reasonably be expected to result in a material adverse change in the assets or properties or in the condition, financial or otherwise, of Pledgor, or impair the ability of Pledgor to perform his obligations under this Agreement, or any guaranties to which Pledgor has become obligated in favor of the Secured Party. Pledgor is not in default with respect to any judgment, writ, injunction, decree, rule or regulation of any court or any governmental or administrative body or agency. (i) Pledgor has cooperated with the Secured Party to assure the filing in the appropriate office of a UCC-1 financing statement covering the Pledged Collateral. 4 (j) Pledgor is a citizen of the United Kingdom and resides at 51 Baume Trocade, St. Jean, 83600 Frejus, France. Pledgor maintains his principal place of business at ______________________. (k) Except as identified on Schedule I hereto and delivered in pledge to Secured Party hereunder, the Company has not issued any certificates evidencing the Interests. (l) Pledgor has never changed his name or been known by any other names. (m) The Company has the requisite power and authority and legal right to enter into the Acknowledgment to this Agreement and the other Loan Documents and to perform all of its obligations hereunder and thereunder, and the execution and delivery of the Loan Documents (including the Acknowledgment to this Agreement) by the Company (i) have been duly authorized by all necessary action, (ii) do not and will not require any further action, consent, or approval of any Governmental Authority or Person, (iii) do not and will not violate any provisions of law, rule, regulation, order, writ, judgment, or determination, or the Company's organizational documents, and (iv) do not and will not result in any breach of or constitute a default under any agreement, document, or instrument to which the Company or its assets are bound. The Loan Documents have been duly executed and delivered by the Company and are the legal, valid, and binding obligations of the Company, enforceable against it in accordance with their terms. There is no material action, proceeding, or claim nor any basis for the foregoing against or affecting the Company or its properties or rights, and the Company is in compliance with all laws, rules, and ordinances. (n) The statements contained in the recitals to this Agreement are true and accurate and not misleading in any way. 6. Covenants of Pledgor. Pledgor hereby covenants and agrees as follows: (a) Pledgor shall defend Secured Party's right, title and security interest in and to the Pledged Collateral against the claims and demands of all Persons and shall maintain and preserve Secured Party's Lien and security interest until indefeasible payment in full in cash of all of the Obligations. (b) Pledgor shall not (i) sell, lease, assign, transfer, convey or otherwise dispose of all or any part of Pledgor's right, title or interest in or to the Pledged Collateral, whether such Pledged Collateral is owned directly or indirectly by Pledgor, (ii) create, incur or encumber or permit to exist on or with respect to all or any part of Pledgor's right, title and interest in and to the Pledged Collateral, any Lien, (iii) in its capacity as a shareholder of TAC, vote for any action, resolution, or amendment of the constituent documents of TAC which would alter the voting rights of holders of TAC common stock, or (iv) take any action to terminate, dilute, impair, modify, or limit Secured Party's rights or interests with respect to the Pledged Collateral. (c) Pledgor shall pledge hereunder, immediately upon his acquisition (directly or indirectly) thereof, any and all additional common stock, other equity interests or other securities of the Company issued in substitution for, on account of, or otherwise as Proceeds of, the Interests. 5 (d) Pledgor shall keep and maintain at his current principal place of business satisfactory and complete records of the Interests including, without limitation, a record of all payments received, all capital contributions made and all credits granted with respect to the Interests. Pledgor shall cause the Company to maintain the entries in its books and records pertaining to the Interests which evidence the security interest granted by this Agreement. Secured Party, its agents and representatives shall be granted access to, and the right to photocopy, such books and records maintained with respect to the Interests at all reasonable times on reasonable notice to Pledgor. (e) Pledgor shall do or cause to be done all things necessary to preserve and keep the existence of the Company in full force and effect and to cause the Company to remain qualified and licensed as necessary for the conduct of the Company's continued business and operations. (f) Pledgor shall notify Secured Party of the issuance of any certificate evidencing Pledgor's ownership of Interests and deliver to Secured Party any such certificate endorsed in blank to Pledgor. (g) Pledgor shall notify Secured Party in writing at least 30 days in advance of any change in Pledgor's principal place of business . Pledgor shall give Secured Party at least 30 days written notice prior to any change in the jurisdiction of organization of the Company. (h) Pledgor shall deliver to Secured Party any and all information that Secured Party reasonably requests in writing sent as required by Section 19 regarding the Company, its properties, financial information, within ten Business Days of receipt of such request (to the extent such information is in the possession of Pledgor or can be obtained by Pledgor without violation of law or regulations). (i) Pledgor authorizes Secured Party to file or record financing statements and other filings or recording documents or instruments with respect to the Pledged Collateral without the signature of Pledgor in such form and in such offices as Secured Party reasonably determines appropriate to perfect the security interests of Secured Party under this Agreement. A photographic or other reproduction of this Agreement shall be sufficient as a financing statement or other filing or recording document or instrument for filing or recording in any jurisdiction. (j) Pledgor shall cause the Pledged Collateral, together with the Oak TAC Shares and all other Accommodation TAC Shares (or such larger percentage as the Lender, in its sole discretion, shall determine is necessary to control the management of TAC in light of the taking of any action by the board of directors of TAC that would require that the approval of more than 50% of the outstanding voting shares of TAC is necessary for the taking of any action by the shareholders, including, without limitation, the election of directors) of the issued and outstanding shares of common stock of TAC, or do not constitute at least 51% of the outstanding voting securities of TAC, after giving effect to the pledge of additional issued and outstanding shares by Excalibur, Borrower or any other holder of TAC shares. Secured Party has no obligation to notify Pledgor of the existence of the condition during which the Oak TAC Shares and the Accommodation TAC Shares, in the aggregate, do not equal at least 51% (or such larger percentage as the Lender, in its sole discretion, shall determine is necessary to control the management of TAC in light of the taking of any action by the board of directors of TAC that would require that the approval of more than 50% of the outstanding voting shares of TAC is necessary for the taking of any action by the shareholders, including, without limitation, the election of directors) of the issued and outstanding shares of common stock of TAC, or do not constitute at least 51% of the outstanding voting securities of TAC. 6 (k) Pledgor shall cause TAC to file with the United States Securities and Exchange Commission, and take all commercially reasonable efforts to cause to become effective, a registration statement with respect to all shares of common stock or equity securities of TAC (i) as to which any Person has granted to Lender a security interest under the provisions of any of the Pledge Agreement or otherwise, or (ii) which are subject to issuance upon the exercise of the Warrants, in each case accordance with the terms of the Share Exchange Agreement and the Stock Purchase Agreement regarding such registration. Such registration statement may also register for sale any other shares owned by Borrower, Excalibur or any other shareholders of TAC that desire to register shares for sale or resale. 7. Events of Default; Remedies. (a) The following events shall constitute an "Event of Default" hereunder: (i) an Event of Default under the Note, (ii) an Event of Default under the Line of Credit Agreement, (iii) an Event of Default under any of the other Loan Documents, (iv) at any time the Oak TAC Shares and the Accommodation TAC Shares, in the aggregate, do not equal at least 51% (or such larger percentage as the Lender, in its sole discretion, shall determine is necessary to control the management of TAC in light of the taking of any action by the board of directors of TAC that would require that the approval of more than 50% of the outstanding voting shares of TAC is necessary for the taking of any action by the shareholders, including, without limitation, the election of directors) of the issued and outstanding shares of common stock of TAC, or do not constitute at least 51% of the outstanding voting securities of TAC, after giving effect to the pledge of additional issued and outstanding shares by Excalibur, Borrower or any other holder of TAC shares, and (v) any other breach by Pledgor of any representation, covenant or obligation of Pledgor under this Agreement that is not cured by Pledgor within thirty (30) days of his receipt from Secured Party of written notice of such breach. (b) Upon the occurrence and during the continuance of an Event of Default beyond any applicable cure period, Secured Party may, without notice to or assent of Pledgor, without demand of performance or other demand, advertisement or notice of any kind (except the notice specified below of time and place of public or private sale) to or upon Pledgor or any other Person, all and each of which demands, advertisements and other notices are expressly waived to the extent permitted by applicable law, forthwith collect, receive, appropriate and realize upon the Pledged Collateral or any part thereof, and may forthwith sell, assign, give option or options to purchase, contract to sell or otherwise dispose of and deliver the Pledged Collateral or any part thereof in accordance with law, in one or more parcels at public or private sale or sales, at any exchange, broker's board or any of Secured Party's offices or elsewhere upon such terms and conditions as it may deem advisable and at such prices as it may deem best, for cash or on credit or for future delivery without assumption of any credit risk, with the right to Secured Party or Secured Party's nominee upon any such sale or sales, public or private, to purchase the whole or any part of the Pledged Collateral. The parties agree that 10 days shall be reasonable notice for any public or private sale of the Pledged Collateral. 7 (c) Upon the occurrence and during the continuance of an Event of Default beyond any applicable cure period, any and all rights of Pledgor to exercise the voting and other consensual rights as a equity interest holder of the Company shall cease immediately, and such rights shall thereupon become vested in Secured Party who shall thereupon have the sole voting and consensual rights with respect to the Interests. Pledgor shall, if necessary to permit Secured Party to exercise the voting and other rights which it may be entitled to exercise and to receive all distributions which it may be entitled to receive, execute and deliver to Secured Party, from time to time and upon written notice from Secured Party, appropriate proxies and other instruments as Secured Party may request. The foregoing shall in no way limit Secured Party's power and authority granted pursuant to Section 10 hereof. (d) In addition to the rights and remedies granted to it in this Agreement and in any other instrument or agreement securing, evidencing or relating to any of the Obligations, Secured Party shall have all the rights and remedies of a secured party under the UCC. (e) Any cash held by Secured Party as Pledged Collateral and all cash Proceeds received by Secured Party in respect of any sale of, collection from, or other realization upon all or any part of the Pledged Collateral shall be applied by Secured Party: First, to the payment of the costs and expenses of such sale, including, without limitation, reasonable expenses of Secured Party and its agents including the fees and expenses of its counsel, and all expenses, liabilities and advances made or incurred by Secured Party in connection therewith; Next, to the payment of the Obligations, in such order as the Loan Documents shall prescribe; and Finally, after payment in full of all of the Obligations, to the payment to Pledgor or his heirs, representatives or assigns, or to whomsoever may be lawfully entitled to receive the same as a court of competent jurisdiction may direct. (f) Secured Party shall not, under any circumstances, or in any event whatsoever, have any liability for any error, omission or delay of any kind occurring in the settlement of, and collection or payment for, the Pledged Collateral. (g) The rights and remedies provided in this Agreement and the other Loan Documents and in any other agreements, instruments and documents delivered in connection with this Agreement and the other Loan Documents, are cumulative and are in addition to, and not exclusive of, any other rights or remedies provided by law including, without limitation, the rights and remedies of a secured party under the UCC. 8 8. Securities Act, Etc. In view of the position of the Pledgor in relation to the Pledged Collateral, or because of other current or future circumstances, a question may arise under the Securities Act of 1933, as now or hereafter in effect, or any similar statute hereafter enacted analogous in purpose or effect (such Act and any such similar statute as from time to time in effect being called the "Federal Securities Laws") with respect to any disposition of the Pledged Collateral permitted hereunder. Pledgor understands that compliance with the Federal Securities Laws might very strictly limit the course of conduct of Secured Party if Secured Party were to attempt to dispose of all or any part of the Pledged Collateral, and might also limit the extent to which or the manner in which any subsequent transferee of any Pledged Collateral could dispose of the same. Similarly, there may be other legal restrictions or limitations affecting Secured Party in any attempt to dispose of all or part of the Pledged Collateral under applicable Blue Sky or other state securities laws or similar laws analogous in purposed or effect. Pledgor recognizes that in light of such restrictions and limitations Secured Party may, with respect to any sale of the Pledged Collateral, limit the purchasers to those who will agree, among other things, to acquire such Pledged Collateral for their own account, for investment, and not with a view to the distribution or resale thereof. Pledgor acknowledges and agrees that in light of such restrictions and limitation, Secured Party, in its sole and absolute discretion, (a) may proceed to make such a sale whether or not a registration statement for the purpose of registering such Pledged Collateral or part thereof shall have been filed and is effective under the Federal Securities Laws and (b) may approach and negotiate with a single potential purchaser to effect such sale. Pledgor acknowledges and agrees that any such sale might result in prices and other terms less favorable to the seller than if such sale were a public sale without such restrictions. In the event of any such sale, Secured Party shall incur no responsibility or liability for selling all or any part of the Pledged Collateral at a price that Secured Party, in its sole and absolute discretion, may in good faith deem reasonable under the circumstances, notwithstanding the possibility that a substantially higher price might have been realized if the sale were deferred until after registration as aforesaid or if more than a single purchaser were approached. The provisions of this Section 8 will apply notwithstanding the existence of a public or private market upon which the quotations or sales prices may exceed substantially the price at which Secured Party sells. Secured Party acknowledges that, in connection with its interest in the Pledged Collateral, it may be or become obligated to file Schedule 13D of Forms 3 or 4, and other statements and reports, pursuant to applicable law including the Securities Exchange Act of 1934, as amended, and the regulations promulgated thereunder. Secured Party agrees to file all such statements and reports regarding the Pledged Collateral in compliance with applicable law and regulations. 9. Further Assurances. Pledgor further agrees that at any time and from time to time, and upon written request of Secured Party, at the cost and expense of Pledgor, Pledgor shall promptly execute and deliver such further documents and do such further acts and things as Secured Party may reasonably request in order to (i) perfect, protect and maintain the priority of the Lien and security interest granted or purported to be granted hereby, (ii) enable Secured Party to exercise and enforce its rights and remedies hereunder with respect to any Pledged Collateral, and (iii) otherwise effect the purposes of this Agreement, including, without limitation, the pledging of any substituted collateral, the pledging of any note or other instrument evidencing the Pledged Collateral and the filing of any financing or continuation statement without the signature of Pledgor, to the extent permitted by law. 9 10. Secured Party Appointed Attorney-in-Fact and Proxy. Pledgor hereby irrevocably constitutes and appoints, effective only upon the occurrence and during the continuation of an Event of Default, Secured Party and any officer thereof, with full power of substitution, as his true and lawful attorney-in-fact and proxy with full irrevocable power and authority in the place and stead of Pledgor and in the name of Pledgor or in his own name, from time to time in Secured Party's discretion, for the purpose of carrying out the terms of this Agreement, to take any and all appropriate action and to execute and deliver any and all documents and instruments which Secured Party may deem necessary or advisable to accomplish the purposes of this Agreement, including, without limitation, to receive, indorse and collect all instruments made payable to Pledgor representing any distribution or payment in respect of the Pledged Collateral or any part thereof and to give full discharge for the same and to vote or grant any consent in respect of the Interests authorized by Section 7(c) hereof. Pledgor hereby ratifies, to the extent permitted by law, all that any said attorney shall lawfully do or cause to be done by virtue hereof. This power, being coupled with an interest, is irrevocable until the Obligations are indefeasibly paid in full in cash. 11. Security Interest Absolute, Irrevocable and Unconditional. All rights of Secured Party and the security interest and Lien granted hereunder, and all obligations of Pledgor hereunder, shall be absolute, irrevocable and unconditional irrespective of: (a) any lack of validity or enforceability of any provision of the Line of Credit Agreement or any other Loan Document or any other agreement or instrument relating thereto; (b) any change in the time, manner or place of payment of, or in any other term of, or any increase in the amount of, any or all of the Obligations, or any other amendment or waiver of any term of, or any consent to any departure from any requirement of, the Line of Credit Agreement or any other Loan Document; (c) any exchange, release or non-perfection of any Lien on any other collateral, or any release or amendment or waiver of any term of any guaranty of, or consent to departure from any requirement of any guaranty of, all or any of the Obligations; and (d) any other circumstance which might otherwise constitute a defense available to, or a discharge of, a guarantor or surety. 12. Continuing Security Interest. This Agreement shall create a continuing security interest in the Pledged Collateral and shall (a) remain in full force and effect until indefeasible payment in full in cash of the Obligations, (b) be binding upon Pledgor and his heirs, successors and assigns, and (c) inure, together with the rights and remedies of Secured Party hereunder, to the benefit of and be enforceable by Secured Party and its successors, transferees and assigns. Upon the indefeasible payment in full in cash of the Obligations, Pledgor shall be entitled to the return, upon his request and at his expense, of such of the Pledged Collateral as shall not have been sold or otherwise applied pursuant to the terms hereof. 13. Severability; Paragraph Headings. (a) Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. 10 (b) The paragraph headings used in this Agreement are for convenience of reference only and are not to affect the construction hereof or be taken into consideration in the interpretation hereof. 14. No Waiver; Cumulative Remedies; Multiple Security. (a) Secured Party shall not by any act, delay, omission or otherwise be deemed to have waived any of its rights or remedies under this Agreement and no waiver shall be valid unless in writing, signed by Secured Party, and then only to the extent therein set forth. A waiver by Secured Party of any right or remedy under this Agreement on any one occasion shall not be construed as a bar to any right or remedy which Secured Party would otherwise have on any future occasion. No failure to exercise nor any delay in exercising on the part of Secured Party any right, power or privilege under this Agreement shall operate as a waiver thereof; nor shall any single or partial exercise of any right, power or privilege under this Agreement preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies provided in this Agreement are cumulative and may be exercised singly or concurrently, and are not exclusive of any rights or remedies provided by law. (b) Pledgor agrees that if Secured Party shall be prosecuting one or more actions against the Pledged Collateral, Pledgor waives any objections to such commencement, continuation or exercise, and waives any right to seek to dismiss, stay, remove, transfer or consolidate any action under this Agreement or such other proceedings on such basis. Neither the commencement or continuation of any proceedings under this Agreement, the exercise of any other rights hereunder, nor the recovery of any judgment by Secured Party in any such proceedings shall prejudice, limit or preclude Secured Party's right to commence or continue one or more proceedings or obtain a judgment against any other collateral which directly or indirectly secures the Obligations, and Pledgor expressly waives any objections to the commencement of, continuation of, or entry of a judgment in such other proceedings or exercise of any remedies in such proceedings based upon any action or judgment connected to this Agreement, and Pledgor also waives any right to seek to dismiss, stay, remove, transfer or consolidate either such other proceedings or any action under this Agreement on such basis. 15. Amendments. None of the terms or provisions of this Agreement may be waived, altered, modified or amended except by an instrument in writing, duly executed by Secured Party. 16. Governing Law. This Agreement and the rights and obligations of Pledgor shall be governed by and construed in accordance with the laws of the State of New York (including, without limitation, Section 5-1401 of the New York General Obligations Law), without regard to principles of conflicts of laws. 17. Submission to Jurisdiction; Waiver of Jury Trial. (a) Pledgor hereby irrevocably and unconditionally: 11 (i) submits himself and his property in any legal action or proceeding relating to this Agreement, or for recognition and enforcement of any judgment in respect thereof, to the exclusive jurisdiction of (i) any courts of the State of New York, County of New York, the courts of the United States of America for the Southern District of New York, and the appellate courts from any thereof, or (ii) any courts of England and the appellate courts thereof; (ii) consents that any such action or proceeding may be brought in such courts, and waives any objection that he may now or hereafter have to the venue of any such action or proceeding in any such court or that such action or proceeding was brought in an inconvenient court and agrees not to plead or claim the same; (iii) agrees that service of process in any such action or proceeding may be effected by mailing a copy thereof by registered or certified mail (or any substantially similar form of mail), postage prepaid, to his address set forth in Section 19 hereof; and (iv) agrees that nothing herein shall affect the right to effect service of process in any other manner permitted by law or shall limit the right to sue in any other jurisdiction. (b) PLEDGOR AND SECURED PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT AND FOR ANY COUNTERCLAIM THEREIN. 18. Reinstatement. Pledgor further agrees that, if any payment made by Pledgor or other Person and applied to the Obligations is at any time annulled, avoided, set aside, rescinded, invalidated, declared to be fraudulent or preferential or otherwise required to be refunded or repaid, or the proceeds of Collateral are required to be returned by Secured Party to such Person, his or its estate, trustee, receiver or any other party, including Pledgor, under any bankruptcy law, state or federal law, common law or equitable cause, then, to the extent of such payment or repayment, any Lien or other Collateral securing such liability shall be and remain in full force and effect, as fully as if such payment had never been made or, if prior thereto the Lien granted hereby or other Collateral securing such liability hereunder shall have been released or terminated by virtue of such cancellation or surrender, such Lien or other Collateral shall be reinstated in full force and effect, and such prior cancellation or surrender shall not diminish, release, discharge, impair or otherwise affect any Lien or other Collateral securing the obligations of Pledgor in respect of the amount of such payment. 19. Notices. All notices, requests, demands and other communications (collectively, a "Notice") given or made pursuant to this Agreement shall be given as provided in Section 17 of the Line of Credit Agreement. Notices shall be addressed (a) if to Secured Party, to Secured Party's address set forth in the caption hereof, with a copy to Secured Party's attorney as set forth in Section 17 of the Line of Credit Agreement, and (b) if to Pledgor, to the following address, with a copy to Pledgor's attorney: 12 Pledgor's Attorney: McGuireWoods LLP 1345 Avenue of the Americas 7th Floor New York, New York 10105-0106 Attn: William A. Newman Telephone: (212) 548-2160 Facsimile: (212) 548-2170 [Remainder of Page Intentionally Left Blank Signature page follows.] 13 IN WITNESS WHEREOF, Pledgor has caused this Agreement to be duly executed and delivered as of the day and year first above written. ANDREW HARRY BALL /s/ Andrew Harry Ball ----------------------------- 14 FORM OF ACKNOWLEDGMENT The A Consulting Team, Inc. (the "Company") hereby acknowledges receipt of a copy of the attached Pledge and Security Agreement, dated as of the date hereof (as amended, modified, restated or supplemented from time to time in accordance with the terms thereof, the "Pledge Agreement"; capitalized terms used herein but not otherwise defined herein shall have the meanings ascribed to them in the Pledge Agreement), made by Pledgor in favor of Secured Party, and the assignment by Pledgor of all of his common stock and other equity interests in the Company (the "Interests") pursuant to the terms of the Pledge Agreement. Upon Secured Party's notifying the Company in writing that an Event of Default has occurred, Secured Party shall immediately succeed to the Interests as if Secured Party were the absolute owner thereof, and to the extent it has not already done so, the Company will register the Interests in the name of the Secured Party on the books and records of the Company. The Company agrees that the grants provided herein and in the Pledge Agreement have been registered on the books and records of the Company, and the undersigned agrees not to allow the Company to acknowledge the transfer of any of the Interests. The Company hereby agrees that, upon receipt of the notice from Secured Party of the occurrence of an Event of Default (as provided in the previous paragraph), it will remit directly to Secured Party in accordance with the Pledge Agreement, and that it will cause its Affiliates to remit directly to Secured Party in accordance with the Pledge Agreement, all payments, including, without limitation, fees (whether or not paid in his capacity as a shareholder) and distributions, due to Pledgor of any nature whatsoever (including profits, cash, capital, or proceeds of liquidation). The Company agrees that Secured Party shall not be liable to any person, firm, corporation, or entity for any injury or damages of any nature whatsoever sustained by reason of any act or omission or commission of the Company or by reason of the grant of the security interest in the Interests. Dated: _______ __, 2005 THE A CONSULTING TEAM, INC. By:_____________________________ Name: Title: 15 EX-99.7 4 v020672_ex7.txt EXHIBIT 7 PLEDGE AND SECURITY AGREEMENT THIS PLEDGE AND SECURITY AGREEMENT (as amended, modified, extended or renewed from time to time, this "Agreement"), dated as of May 24, 2005, made by EXCALIBUR INVESTMENT GROUP LIMITED, a British Virgin Islands company, having its principal place of business at c/o Trident Trust Company, Trident Chambers, Wickhams Cay, P.O. Box 146, Road Town, Tortola, British Virgin Islands, telecopier 248.494.3754 ("Pledgor"), in favor of STONEGATE BANK, as collateral agent for Lender (as hereafter defined), with an address at P.O. Box 4678, Fort Lauderdale, Florida 33338-4678 ("Secured Party"). R E C I T A L S : A. Pledgor is a guarantor under that certain Line of Credit Agreement, dated as of even date herewith, by and between Oak Finance Investments Limited (the "Borrower"), the lenders party thereto (collectively, the "Lender"), and Secured Party, as administrative agent and collateral agent for the Lender (the "Line of Credit Agreement"), pursuant to which Lender has agreed to make available to the Borrower a non-revolving line of credit facility in an aggregate principal amount not to exceed $16,750,000.00 (the "Facility"). B. To secure Pledgor's obligations under the Loan Documents, Pledgor has agreed to deliver this Agreement and to pledge, assign and hypothecate to Secured Party, for the benefit of Lender, and to grant to Secured Party, for the benefit of Lender, a lien on and security interest in, all of Pledgor's right, title and interest in, to and under the Pledged Collateral (as hereafter defined), on the terms and conditions set forth herein. NOW, THEREFORE, in consideration of the premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Pledgor hereby agrees with Secured Party as follows: 1. Defined Terms. As used in this Agreement, the following terms shall have the following meanings: "Company" shall mean The A Consulting Team, Inc., a New York corporation, and its successors and assigns. Secured Party acknowledges that the Company's name shall be amended to be Vanguard Info-Solutions International Inc. "Pledged Collateral" shall have the meaning ascribed to such term in Section 2(a) hereof. "Proceeds" means all "proceeds" as such term is defined in Section 9-102(64) of the UCC and, in any event, shall include, without limitation, all dividends or other income from the Interests (as defined in Section 2), collections thereon or distributions with respect thereto, and should include all proceeds from sales or assignments of the Interests. "Share Exchange Agreement" shall mean the Share Exchange Agreement, dated as of January 21, 2005, among Vanguard Info-Solutions Corporation, a New Jersey corporation ("Vanguard"), the Vanguard stockholders named therein, the authorized representative named therein, and the Company. "UCC" shall mean the Uniform Commercial Code as from time to time in effect in the State of New York; provided, however, that, in the event that, by reason of mandatory provisions of applicable law, any of the attachment, perfection or priority of Lender's security interest in any Collateral is governed by the Uniform Commercial Code as in effect in a jurisdiction other than the State of New York, the term "UCC" shall mean the Uniform Commercial Code as in effect in such other jurisdiction for purposes of the provisions hereof relating to such attachment, perfection or priority and for purposes of definitions related to such provisions. Defined terms used herein but not defined herein shall have the meanings ascribed to them in the Line of Credit Agreement. 2. Grant of Security Interest. (a) Pledgor hereby pledges and grants to Secured Party, for the benefit of Lender, a lien on and security interest in (I) all of Pledgor's right, title and interest in, to and under all the common stock and other equity securities and interests owned by Pledgor in the Company, including, but not limited to, those equity securities identified on Schedule I hereto, including, without limitation, all of Pledgor's right, title and interest in, to and under all (i) all securities received on account of, in addition to or in exchange for the Interests (as hereafter defined), (ii) distributions of profits and income of the Company, (iii) capital distributions from the Company, (iv) distributions of cash flow by the Company, (v) proceeds of any liquidation upon the dissolution of the Company and winding up of its affairs and (vi) all other rights of Pledgor as a stockholder or other equity interest holder of the Company including, without limitation, rights to reports, accounting and information and voting rights, but excluding any rights with respect to common stock or equity interests other than those identified on Schedule I (all of the foregoing being collectively referred to as the "Interests"), (II) all of Pledgor's right, title and interest in, to and under any and all other rights to payment, whether in the nature of distributions, fees, compensation, or of any other nature or description, and all proceeds thereof, regardless of whether paid in Pledgor's capacity as a shareholder of the Company, which are made from the Company, or other Persons to the extent that such payments are derived from the Company, which shall be presumed absent clear and convincing evidence to the contrary determined by Secured Party at such time, to or for the benefit of Pledgor, the Company or any Affiliate of Pledgor or the Company (each of the foregoing, a "Payment" and, together with the Interests, the "Rights"), (III) all of Pledgor's right, title and interest in, to and under the Share Exchange Agreement, and (IV) all Proceeds in respect of the foregoing (collectively, the "Pledged Collateral"), as collateral security for the due and punctual payment and performance of the Obligations. (b) Notwithstanding the security interest in the Interests granted to and created in favor of Secured Party, for the benefit of Lender, by this Agreement, Pledgor shall have the right, until the occurrence of any of the Events of Default specified in Section 7 hereof, to retain all voting rights with respect to the Interests and the right to exercise any and all rights against the company under the Share Exchange Agreement. 2 (c) From the date hereof until indefeasible payment in full of the Obligations, Pledgor hereby agrees that all distributions and other payments by the Company which would otherwise be distributed or paid to Pledgor or any assigns or Affiliates of Pledgor shall, upon the occurrence and during the continuation of an Event of Default (as herein defined), be distributed or paid by the Company to Secured Party, for the benefit of Lender, and all distributions and payments received by Pledgor contrary to this clause (c) shall be (i) received in trust for the benefit of Secured Party, (ii) segregated from the other funds of Pledgor, and (iii) delivered to Secured Party forthwith in the same form as so received (with any necessary endorsement), to be held by Secured Party as part of the Pledged Collateral under and subject to the terms of this Agreement. Irrespective of whether an Event of Default has occurred and is continuing, all securities received in addition to or in exchange for the Interests shall be delivered forthwith to Secured Party in the exact form received, with Pledgor's endorsement when necessary and/or appropriate stock powers or assignments duly executed in blank, to be held by Secured Party, subject to the terms hereof, as further collateral security for the Obligations. 3. Exculpation. Secured Party shall have no obligation or liability whatsoever, including for the obligations of Pledgor or the Company, by reason of or arising out of the making of this Agreement, nor shall Secured Party be required or obligated in any manner to perform or fulfill any of the obligations of Pledgor. Nothing contained in this Agreement shall be construed or interpreted (a) to transfer to Secured Party any of the rights and obligations of a shareholder of the Company other than the rights of collateral security in and to the Interests, or (b) to constitute Secured Party as a shareholder of the Company provided that such limitation, in no manner, shall otherwise limit the rights of Secured Party granted under this Agreement. This Agreement (x) shall not be deemed to terminate Pledgor's status as a shareholder of the Company, and (y) shall not be construed as constituting a current conveyance, but rather as creating a security interest in the Interests. 4. Rights of the Secured Party; Limitation on Duties Regarding the Interest. Secured Party shall not be liable for failure to collect or realize upon the Obligations or any collateral security or guarantee therefor, or any part thereof, or for any delay in so doing, nor shall Secured Party be under any obligation to take any action whatsoever with regard thereto. If an Event of Default has occurred hereunder or under any of the Loan Documents and is continuing beyond any applicable cure period, the Interests held by Secured Party hereunder, at the election and written request of Secured Party, shall be registered with the Company in the name of Secured Party, or its nominee, all without liability except to account for property actually received by it, but Secured Party shall have no duty to exercise any of the aforesaid rights, privileges or options and shall not be responsible for any failure to do so or delay in so doing. 5. Representations and Warranties of Pledgor. Pledgor represents and warrants to Secured Party as follows, as of the date hereof and the date of each Advance: (a) The Interests have been duly authorized and validly issued, and are fully paid and non-assessable. 3 (b) On the Transaction Closing Date, the Interests constituting Pledged Collateral will equal no less than forty-eight and seven-tenths percent (48.7%) of all of the issued and outstanding common stock of the Company. There is no preferred stock of the Company issued or outstanding. (c) Pledgor is the sole legal, record and beneficial owner of the Pledged Collateral, free and clear of any Lien, option or other interest (including, without limitation, any contract or other agreement to sell or otherwise transfer), other than (i) the rights of TAC and any escrow agent for the Transaction Escrow Shares and (ii) the rights of the escrow agent for the shares arising under the Warrant Escrow Agreement. (d) Pledgor (i) is a business trust duly organized, validly existing and in good standing under the laws of its jurisdiction of organization and (ii) has the power and authority, and the legal right, to own and operate its property, to lease the property it operates as lessee and to conduct the business in which it is currently engaged. Pledgor has all requisite power and authority to enter into this Agreement and the other Loan Documents to which he is a party, to pledge the Pledged Collateral for the purposes described herein, and to carry out the transactions contemplated hereby and by the other Loan Documents to which it is a party, and the execution, delivery and performance by Pledgor of this Agreement and the other Loan Documents to which it is a party will not constitute a violation of, or default under, any agreement, license, indenture or other instrument, or judgment, decree, order or writ of any court, administrative agency or governmental body, applicable to Pledgor. (e) This Agreement (along with any financing statements filed with the Recorder of Deeds of the District of Columbia and the acknowledgement of the Company with respect to the pledge of the Pledged Collateral hereunder) is effective to create, and the pledge of the Pledged Collateral hereunder creates, a legal, valid and enforceable first priority perfected Lien on the Pledged Collateral, and the Pledged Collateral is not subject to any other Lien or security interest or to any agreement purporting to grant to any third party a security interest in the property or assets of Pledgor which would include any or all of the Pledged Collateral. All action necessary to perfect such Liens has been duly taken. (f) No security agreements or any other Lien instruments have been executed and delivered, and no financing statements or any other notice of any Lien have been filed in any jurisdiction, granting or purporting to grant a security interest in or creating a Lien on any or all of the Pledged Collateral to any party other than Secured Party. (g) The Company (i) is a corporation duly organized, validly existing and in good standing under the laws of its jurisdiction of organization and (ii) has the power and authority, and the legal right, to own and operate its property, to lease the property it operates as lessee and to conduct the business in which it is currently engaged. (h) Other than delivery by the Borrower to the Lender of a completed and executed Federal Reserve Form U-1 demonstrating compliance of the Advance with Regulation U of the Board of Governors of the Federal Reserve System, no consent, authorization, approval, or other action by, and no notice to or filing with, any Governmental Authority is required either (i) for the pledge by Pledgor of the Pledged Collateral pursuant to this Agreement or for the due execution, delivery or performance of this Agreement by Pledgor, or (ii) for the exercise by Secured Party of the rights provided for in this Agreement or of the remedies in respect of the Pledged Collateral pursuant to this Agreement, except as may be required in connection with the disposition of the Pledged Collateral by laws affecting the offering and sale of securities generally and under Article 9 of the UCC. 4 (i) There is no action, suit or proceeding pending, or to the knowledge of Pledgor, threatened, before any court or governmental or administrative body or agency which may reasonably be expected to result in a material adverse change in the assets or properties or in the condition, financial or otherwise, of Pledgor, or impair the ability of Pledgor to perform his obligations under this Agreement, or any guaranties to which Pledgor has become obligated in favor of the Secured Party. Pledgor is not in default with respect to any judgment, writ, injunction, decree, rule or regulation of any court or any governmental or administrative body or agency. (j) Pledgor has cooperated with the Secured Party to assure the filing in the appropriate office of a UCC-1 financing statement covering the Pledged Collateral. (k) Pledgor maintains its principal place of business at c/o Trident Trust Company, Trident Chambers, Wickhams Cay, P.O. Box 146, Road Town, Tortola, British Virgin Islands. (l) Except as identified on Schedule I hereto and delivered in pledge to Secured Party hereunder, the Company has not issued any certificates evidencing the Interests . (m) Pledgor has never changed its name or been known by any other names. (n) [Intentionally Omitted]. (o) The Company has the requisite power and authority and legal right to enter into the Acknowledgment to this Agreement and the other Loan Documents and to perform all of its obligations hereunder and thereunder, and the execution and delivery of the Loan Documents (including the Acknowledgment to this Agreement) by the Company (i) have been duly authorized by all necessary action, (ii) do not and will not require any further action, consent, or approval of any Governmental Authority or Person, (iii) do not and will not violate any provisions of law, rule, regulation, order, writ, judgment, or determination, or the Company's organizational documents, and (iv) do not and will not result in any breach of or constitute a default under any agreement, document, or instrument to which the Company or its assets are bound. The Loan Documents have been duly executed and delivered by the Company and are the legal, valid, and binding obligations of the Company, enforceable against it in accordance with their terms. There is no material action, proceeding, or claim nor any basis for the foregoing against or affecting the Company or its properties or rights, and the Company is in compliance with all laws, rules, and ordinances. (p) The statements contained in the recitals to this Agreement are true and accurate and not misleading in any way. 6. Covenants of Pledgor. Pledgor hereby covenants and agrees as follows: 5 (a) Pledgor shall defend Secured Party's right, title and security interest in and to the Pledged Collateral against the claims and demands of all Persons and shall maintain and preserve Secured Party's Lien and security interest until indefeasible payment in full in cash of all of the Obligations. (b) Pledgor shall not (i) sell, lease, assign, transfer, convey or otherwise dispose of all or any part of Pledgor's right, title or interest in or to the Pledged Collateral, whether such Pledged Collateral is owned directly or indirectly by Pledgor, (ii) create, incur or encumber or permit to exist on or with respect to all or any part of Pledgor's right, title and interest in and to the Pledged Collateral, any Lien, other than the rights of TAC and any escrow agent for the Transaction Escrow Shares with respect to the Transaction Escrow Shares arising under the Share Exchange Agreement, (iii) in its capacity as a shareholder of TAC, vote for any action, resolution, or amendment of the constituent documents of TAC which would alter the voting rights of holders of TAC common stock, or (iv) take any action to terminate, dilute, impair, modify, or limit Secured Party's rights or interests with respect to the Pledged Collateral. (c) Pledgor shall pledge hereunder, immediately upon its acquisition (directly or indirectly) thereof, any and all additional common stock, other equity interests or other securities of the Company issued in substitution for, on account of, or otherwise as Proceeds of, the Interests. (d) Pledgor shall keep and maintain at its current principal place of business satisfactory and complete records of the Interests including, without limitation, a record of all payments received, all capital contributions made and all credits granted with respect to the Interests. Pledgor shall cause the Company to maintain the entries in its books and records pertaining to the Interests which evidence the security interest granted by this Agreement. Secured Party, its agents and representatives shall be granted access to, and the right to photocopy, such books and records maintained with respect to the Interests at all reasonable times on reasonable notice to Pledgor. (e) Pledgor shall do or cause to be done all things necessary to preserve and keep the existence of the Company in full force and effect and to cause the Company to remain qualified and licensed as necessary for the conduct of the Company's continued business and operations. (f) Pledgor shall notify Secured Party of the issuance of any certificate evidencing Pledgor's ownership of Interests and deliver to Secured Party any such certificate endorsed in blank to Pledgor. (g) Pledgor shall notify Secured Party in writing at least 30 days in advance of any change in Pledgor's principal place of business . Pledgor shall give Secured Party at least 30 days written notice prior to any change in the jurisdiction of organization of the Company. (h) Pledgor shall deliver to Secured Party any and all information that Secured Party reasonably requests in writing sent as required by Section 19 regarding the Company, its properties, financial information, within ten Business Days of receipt of such request (to the extent such information is in the possession of Pledgor or can be obtained by Pledgor without violation of law or regulations). 6 (i) Pledgor authorizes Secured Party to file or record financing statements and other filings or recording documents or instruments with respect to the Pledged Collateral without the signature of Pledgor in such form and in such offices as Secured Party reasonably determines appropriate to perfect the security interests of Secured Party under this Agreement. A photographic or other reproduction of this Agreement shall be sufficient as a financing statement or other filing or recording document or instrument for filing or recording in any jurisdiction. (j) Pledgor shall cause the Pledged Collateral, together with the Oak TAC Shares and all other Accommodation TAC Shares (including any shares of the common stock of TAC pledged and included as collateral under this or under any other Pledge Agreement subsequent to the date hereof), to at all times constitute, in the aggregate, no less than 51% (or such larger percentage as the Lender, in its sole discretion, shall determine is necessary to control the management of TAC in light of the taking of any action by the board of directors of TAC that would require that the approval of more than 50% of the outstanding voting shares of TAC is necessary for the taking of any action by the shareholders, including, without limitation, the election of directors) of the issued and outstanding shares of common stock of TAC, or do not constitute at least 51% of the outstanding voting securities of TAC, after giving effect to the pledge of additional issued and outstanding shares by Borrower, Ball or any other holder of TAC shares. Secured Party has no obligation to notify Pledgor of the existence of the condition during which the Oak TAC Shares and the Accommodation TAC Shares, in the aggregate, do not equal at least 51% (or such larger percentage as the Lender, in its sole discretion, shall determine is necessary to control the management of TAC in light of the taking of any action by the board of directors of TAC that would require that the approval of more than 50% of the outstanding voting shares of TAC is necessary for the taking of any action by the shareholders, including, without limitation, the election of directors) of the issued and outstanding shares of common stock of TAC, or do not constitute at least 51% of the outstanding voting securities of TAC. (k) Pledgor shall cause TAC to file with the United States Securities and Exchange Commission, and take all commercially reasonable efforts to cause to become effective, a registration statement with respect to all shares of common stock or equity securities of TAC (i) as to which any Person has granted to Lender a security interest under the provisions of any of the Pledge Agreement or otherwise, or (ii) which are subject to issuance upon the exercise of the Warrants, in each case in accordance with the terms of the Share Exchange Agreement and the Stock Purchase Agreement regarding such registration. Such registration statement may also register for sale any other shares owned by Borrower, Ball or any other shareholders of TAC that desire to register shares for sale or resale. 7 7. Events of Default; Remedies. (a) The following events shall constitute an "Event of Default" hereunder: (i) an Event of Default under the Note, (ii) an Event of Default under the Line of Credit Agreement, (iii) an Event of Default under any of the other Loan Documents, (iv) at any time the Oak TAC Shares and the Accommodation TAC Shares, in the aggregate, do not equal at least 51% (or such larger percentage as the Lender, in its sole discretion, shall determine is necessary to control the management of TAC in light of the taking of any action by the board of directors of TAC that would require that the approval of more than 50% of the outstanding voting shares of TAC is necessary for the taking of any action by the shareholders, including, without limitation, the election of directors) of the issued and outstanding shares of common stock of TAC, or do not constitute at least 51% of the outstanding voting securities of TAC, after giving effect to the pledge of additional issued and outstanding shares by Borrower, Ball or any other holder of TAC shares, and (v) any other breach by Pledgor of any representation, covenant or obligation of Pledgor under this Agreement that is not cured by Pledgor within thirty (30) days of his receipt from Secured Party of written notice of such breach. (b) Upon the occurrence and during the continuance of an Event of Default beyond any applicable cure period, Secured Party may, without notice to or assent of Pledgor, without demand of performance or other demand, advertisement or notice of any kind (except the notice specified below of time and place of public or private sale) to or upon Pledgor or any other Person, all and each of which demands, advertisements and other notices are expressly waived to the extent permitted by applicable law, forthwith collect, receive, appropriate and realize upon the Pledged Collateral or any part thereof, and may forthwith sell, assign, give option or options to purchase, contract to sell or otherwise dispose of and deliver the Pledged Collateral or any part thereof in accordance with law, in one or more parcels at public or private sale or sales, at any exchange, broker's board or any of Secured Party's offices or elsewhere upon such terms and conditions as it may deem advisable and at such prices as it may deem best, for cash or on credit or for future delivery without assumption of any credit risk, with the right to Secured Party or Secured Party's nominee upon any such sale or sales, public or private, to purchase the whole or any part of the Pledged Collateral. The parties agree that 10 days shall be reasonable notice for any public or private sale of the Pledged Collateral. (c) Upon the occurrence and during the continuance of an Event of Default beyond any applicable cure period, any and all rights of Pledgor to exercise the voting and other consensual rights as a equity interest holder of the Company shall cease immediately, and such rights shall thereupon become vested in Secured Party who shall thereupon have the sole voting and consensual rights with respect to the Interests. Pledgor shall, if necessary to permit Secured Party to exercise the voting and other rights which it may be entitled to exercise and to receive all distributions which it may be entitled to receive, execute and deliver to Secured Party, from time to time and upon written notice from Secured Party, appropriate proxies and other instruments as Secured Party may request. The foregoing shall in no way limit Secured Party's power and authority granted pursuant to Section 10 hereof. (d) In addition to the rights and remedies granted to it in this Agreement and in any other instrument or agreement securing, evidencing or relating to any of the Obligations, Secured Party shall have all the rights and remedies of a secured party under the UCC. (e) Any cash held by Secured Party as Pledged Collateral and all cash Proceeds received by Secured Party in respect of any sale of, collection from, or other realization upon all or any part of the Pledged Collateral shall be applied by Secured Party: 8 First, to the payment of the costs and expenses of such sale, including, without limitation, reasonable expenses of Secured Party and its agents including the fees and expenses of its counsel, and all expenses, liabilities and advances made or incurred by Secured Party in connection therewith; Next, to the payment of the Obligations, in such order as the Loan Documents shall prescribe; and Finally, after payment in full of all of the Obligations, to the payment to Pledgor or his heirs, representatives or assigns, or to whomsoever may be lawfully entitled to receive the same as a court of competent jurisdiction may direct. (f) Secured Party shall not, under any circumstances, or in any event whatsoever, have any liability for any error, omission or delay of any kind occurring in the settlement of, and collection or payment for, the Pledged Collateral. (g) The rights and remedies provided in this Agreement and the other Loan Documents and in any other agreements, instruments and documents delivered in connection with this Agreement and the other Loan Documents, are cumulative and are in addition to, and not exclusive of, any other rights or remedies provided by law including, without limitation, the rights and remedies of a secured party under the UCC. 8. Securities Act, Etc. In view of the position of the Pledgor in relation to the Pledged Collateral, or because of other current or future circumstances, a question may arise under the Securities Act of 1933, as now or hereafter in effect, or any similar statute hereafter enacted analogous in purpose or effect (such Act and any such similar statute as from time to time in effect being called the "Federal Securities Laws") with respect to any disposition of the Pledged Collateral permitted hereunder. Pledgor understands that compliance with the Federal Securities Laws might very strictly limit the course of conduct of Secured Party if Secured Party were to attempt to dispose of all or any part of the Pledged Collateral, and might also limit the extent to which or the manner in which any subsequent transferee of any Pledged Collateral could dispose of the same. Similarly, there may be other legal restrictions or limitations affecting Secured Party in any attempt to dispose of all or part of the Pledged Collateral under applicable Blue Sky or other state securities laws or similar laws analogous in purposed or effect. Pledgor recognizes that in light of such restrictions and limitations Secured Party may, with respect to any sale of the Pledged Collateral, limit the purchasers to those who will agree, among other things, to acquire such Pledged Collateral for their own account, for investment, and not with a view to the distribution or resale thereof. Pledgor acknowledges and agrees that in light of such restrictions and limitation, Secured Party, in its sole and absolute discretion, (a) may proceed to make such a sale whether or not a registration statement for the purpose of registering such Pledged Collateral or part thereof shall have been filed and is effective under the Federal Securities Laws and (b) may approach and negotiate with a single potential purchaser to effect such sale. Pledgor acknowledges and agrees that any such sale might result in prices and other terms less favorable to the seller than if such sale were a public sale without such restrictions. In the event of any such sale, Secured Party shall incur no responsibility or liability for selling all or any part of the Pledged Collateral at a price that Secured Party, in its sole and absolute discretion, may in good faith deem reasonable under the circumstances, notwithstanding the possibility that a substantially higher price might have been realized if the sale were deferred until after registration as aforesaid or if more than a single purchaser were approached. The provisions of this Section 8 will apply notwithstanding the existence of a public or private market upon which the quotations or sales prices may exceed substantially the price at which Secured Party sells. 9 Secured Party acknowledges that, in connection with its interest in the Pledged Collateral, it may be or become obligated to file Schedule 13D of Forms 3 or 4, and other statements and reports, pursuant to applicable law including the Securities Exchange Act of 1934, as amended, and the regulations promulgated thereunder. Secured Party agrees to file all such statements and reports regarding the Pledged Collateral in compliance with applicable law and regulations. 9. Further Assurances. Pledgor further agrees that at any time and from time to time, and upon written request of Secured Party, at the cost and expense of Pledgor, Pledgor shall promptly execute and deliver such further documents and do such further acts and things as Secured Party may reasonably request in order to (i) perfect, protect and maintain the priority of the Lien and security interest granted or purported to be granted hereby, (ii) enable Secured Party to exercise and enforce its rights and remedies hereunder with respect to any Pledged Collateral, and (iii) otherwise effect the purposes of this Agreement, including, without limitation, the pledging of any substituted collateral, the pledging of any note or other instrument evidencing the Pledged Collateral and the filing of any financing or continuation statement without the signature of Pledgor, to the extent permitted by law. 10. Secured Party Appointed Attorney-in-Fact and Proxy. Pledgor hereby irrevocably constitutes and appoints, effective only upon the occurrence and during the continuation of an Event of Default, Secured Party and any officer thereof, with full power of substitution, as his true and lawful attorney-in-fact and proxy with full irrevocable power and authority in the place and stead of Pledgor and in the name of Pledgor or in his own name, from time to time in Secured Party's discretion, for the purpose of carrying out the terms of this Agreement, to take any and all appropriate action and to execute and deliver any and all documents and instruments which Secured Party may deem necessary or advisable to accomplish the purposes of this Agreement, including, without limitation, to receive, indorse and collect all instruments made payable to Pledgor representing any distribution or payment in respect of the Pledged Collateral or any part thereof and to give full discharge for the same and to vote or grant any consent in respect of the Interests authorized by Section 7(c) hereof. Pledgor hereby ratifies, to the extent permitted by law, all that any said attorney shall lawfully do or cause to be done by virtue hereof. This power, being coupled with an interest, is irrevocable until the Obligations are indefeasibly paid in full in cash. 11. Security Interest Absolute, Irrevocable and Unconditional. All rights of Secured Party and the security interest and Lien granted hereunder, and all obligations of Pledgor hereunder, shall be absolute, irrevocable and unconditional irrespective of: (a) any lack of validity or enforceability of any provision of the Line of Credit Agreement or any other Loan Document or any other agreement or instrument relating thereto; 10 (b) any change in the time, manner or place of payment of, or in any other term of, or any increase in the amount of, any or all of the Obligations, or any other amendment or waiver of any term of, or any consent to any departure from any requirement of, the Line of Credit Agreement or any other Loan Document; (c) any exchange, release or non-perfection of any Lien on any other collateral, or any release or amendment or waiver of any term of any guaranty of, or consent to departure from any requirement of any guaranty of, all or any of the Obligations; and (d) any other circumstance which might otherwise constitute a defense available to, or a discharge of, a guarantor or surety. 12. Continuing Security Interest. This Agreement shall create a continuing security interest in the Pledged Collateral and shall (a) remain in full force and effect until indefeasible payment in full in cash of the Obligations, (b) be binding upon Pledgor and its successors and assigns, and (c) inure, together with the rights and remedies of Secured Party hereunder, to the benefit of and be enforceable by Secured Party and its successors, transferees and assigns. Upon the indefeasible payment in full in cash of the Obligations, Pledgor shall be entitled to the return, upon his request and at his expense, of such of the Pledged Collateral as shall not have been sold or otherwise applied pursuant to the terms hereof. 13. Severability; Paragraph Headings. (a) Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. (b) The paragraph headings used in this Agreement are for convenience of reference only and are not to affect the construction hereof or be taken into consideration in the interpretation hereof. 14. No Waiver; Cumulative Remedies; Multiple Security. (a) Secured Party shall not by any act, delay, omission or otherwise be deemed to have waived any of its rights or remedies under this Agreement and no waiver shall be valid unless in writing, signed by Secured Party, and then only to the extent therein set forth. A waiver by Secured Party of any right or remedy under this Agreement on any one occasion shall not be construed as a bar to any right or remedy which Secured Party would otherwise have on any future occasion. No failure to exercise nor any delay in exercising on the part of Secured Party any right, power or privilege under this Agreement shall operate as a waiver thereof; nor shall any single or partial exercise of any right, power or privilege under this Agreement preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies provided in this Agreement are cumulative and may be exercised singly or concurrently, and are not exclusive of any rights or remedies provided by law. 11 (b) Pledgor agrees that if Secured Party shall be prosecuting one or more actions against the Pledged Collateral, Pledgor waives any objections to such commencement, continuation or exercise, and waives any right to seek to dismiss, stay, remove, transfer or consolidate any action under this Agreement or such other proceedings on such basis. Neither the commencement or continuation of any proceedings under this Agreement, the exercise of any other rights hereunder, nor the recovery of any judgment by Secured Party in any such proceedings shall prejudice, limit or preclude Secured Party's right to commence or continue one or more proceedings or obtain a judgment against any other collateral which directly or indirectly secures the Obligations, and Pledgor expressly waives any objections to the commencement of, continuation of, or entry of a judgment in such other proceedings or exercise of any remedies in such proceedings based upon any action or judgment connected to this Agreement, and Pledgor also waives any right to seek to dismiss, stay, remove, transfer or consolidate either such other proceedings or any action under this Agreement on such basis. 15. Amendments. None of the terms or provisions of this Agreement may be waived, altered, modified or amended except by an instrument in writing, duly executed by Secured Party. 16. Governing Law. This Agreement and the rights and obligations of Pledgor shall be governed by and construed in accordance with the laws of the State of New York (including, without limitation, Section 5-1401 of the New York General Obligations Law), without regard to principles of conflicts of laws. 17. Submission to Jurisdiction; Waiver of Jury Trial. (a) Pledgor hereby irrevocably and unconditionally: (i) submits itself and its property in any legal action or proceeding relating to this Agreement, or for recognition and enforcement of any judgment in respect thereof, to the non-exclusive general jurisdiction of the courts of the State of New York, County of New York, the courts of the United States of America for the Southern District of New York, and the appellate courts from any thereof; (ii) consents that any such action or proceeding may be brought in such courts, and waives any objection that it may now or hereafter have to the venue of any such action or proceeding in any such court or that such action or proceeding was brought in an inconvenient court and agrees not to plead or claim the same; (iii) agrees that service of process in any such action or proceeding may be effected by mailing a copy thereof by registered or certified mail (or any substantially similar form of mail), postage prepaid, to its address set forth in Section 19 hereof; and (iv) agrees that nothing herein shall affect the right to effect service of process in any other manner permitted by law or shall limit the right to sue in any other jurisdiction. (b) PLEDGOR AND SECURED PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT AND FOR ANY COUNTERCLAIM THEREIN. 12 18. Reinstatement. Pledgor further agrees that, if any payment made by Pledgor or other Person and applied to the Obligations is at any time annulled, avoided, set aside, rescinded, invalidated, declared to be fraudulent or preferential or otherwise required to be refunded or repaid, or the proceeds of Collateral are required to be returned by Secured Party to such Person, his or its estate, trustee, receiver or any other party, including Pledgor, under any bankruptcy law, state or federal law, common law or equitable cause, then, to the extent of such payment or repayment, any Lien or other Collateral securing such liability shall be and remain in full force and effect, as fully as if such payment had never been made or, if prior thereto the Lien granted hereby or other Collateral securing such liability hereunder shall have been released or terminated by virtue of such cancellation or surrender, such Lien or other Collateral shall be reinstated in full force and effect, and such prior cancellation or surrender shall not diminish, release, discharge, impair or otherwise affect any Lien or other Collateral securing the obligations of Pledgor in respect of the amount of such payment. 19. Notices. All notices, requests, demands and other communications (collectively, a "Notice") given or made pursuant to this Agreement shall be given as provided in Section 17 of the Line of Credit Agreement. Notices shall be addressed (a) if to Secured Party, to Secured Party's address set forth in the caption hereof, with a copy to Secured Party's attorney as set forth in Section 17 of the Line of Credit Agreement, and (b) if to Pledgor, to the following address, with a copy to Pledgor's attorney: Pledgor's Attorney: McGuireWoods LLP 1345 Avenue of the Americas 7th Floor New York, New York 10105-0106 Attn: William A. Newman Telephone: (212) 548-2160 Facsimile: (212) 548-2170 [Remainder of Page Intentionally Left Blank Signature page follows.] 13 IN WITNESS WHEREOF, Pledgor has caused this Agreement to be duly executed and delivered as of the day and year first above written. EXCALIBUR INVESTMENT GROUP LIMITED By: /s/ Kishore Jhunjhunwala ---------------------------- Kishore Jhunjhunwala Authorized Person 14 FORM OF ACKNOWLEDGMENT The A Consulting Team, Inc. (the "Company") hereby acknowledges receipt of a copy of the attached Pledge and Security Agreement, dated as of the date hereof (as amended, modified, restated or supplemented from time to time in accordance with the terms thereof, the "Pledge Agreement"; capitalized terms used herein but not otherwise defined herein shall have the meanings ascribed to them in the Pledge Agreement), made by Pledgor in favor of Secured Party, and the assignment by Pledgor of all of its common stock and other equity interests in the Company (the "Interests") pursuant to the terms of the Pledge Agreement. Upon Secured Party's notifying the Company in writing that an Event of Default has occurred, Secured Party shall immediately succeed to the Interests as if Secured Party were the absolute owner thereof, and to the extent it has not already done so, the Company will register the Interests in the name of the Secured Party on the books and records of the Company. The Company agrees that the grants provided herein and in the Pledge Agreement have been registered on the books and records of the Company, and the undersigned agrees not to allow the Company to acknowledge the transfer of any of the Interests. The Company hereby agrees that, upon receipt of the notice from Secured Party of the occurrence of an Event of Default (as provided in the previous paragraph), it will remit directly to Secured Party in accordance with the Pledge Agreement, and that it will cause its Affiliates to remit directly to Secured Party in accordance with the Pledge Agreement, all payments, including, without limitation, fees (whether or not paid in his capacity as a shareholder) and distributions, due to Pledgor of any nature whatsoever (including profits, cash, capital, or proceeds of liquidation). The Company agrees that Secured Party shall not be liable to any person, firm, corporation, or entity for any injury or damages of any nature whatsoever sustained by reason of any act or omission or commission of the Company or by reason of the grant of the security interest in the Interests. Dated: _______ __, 2005 THE A CONSULTING TEAM, INC. By:_____________________________ Name: Title: 15 EX-99.8 5 v020672_ex8.txt EXHIBIT 8 PLEDGE AND SECURITY AGREEMENT THIS PLEDGE AND SECURITY AGREEMENT (as amended, modified, extended or renewed from time to time, this "Agreement"), dated as of May 24, 2005, made by OAK FINANCE INVESTMENTS LIMITED, a British Virgin Islands company, having its principal place of business at c/o Arias Fabrega & Fabrega Trust Company BVI Ltd., 325 Waterfront Drive, Omar Hodge Building, 2nd Floor, Wickham's Cay, Road Town, Tortola, BVI ("Pledgor"), in favor of STONEGATE BANK, as collateral agent for the Lender (as hereafter defined), with an address at P.O. Box 4678, Fort Lauderdale, Florida 33338-4678 ("Secured Party"). R E C I T A L S : A. Pledgor is a party to the Line of Credit Agreement, dated as of even date herewith, by and between Pledgor, the lenders party thereto (collectively, the "Lender"), and Secured Party, as administrative agent and collateral agent for the Lender (the "Line of Credit Agreement"), pursuant to which Lender has agreed to make available to Pledgor a non-revolving line of credit facility in an aggregate principal amount not to exceed $16,750,000.00 (the "Facility"). B. In furtherance of the lending arrangement contemplated under the Line of Credit Agreement, Pledgor has issued the Note to Lender. C. To secure Pledgor's obligations under the Loan Documents, Pledgor has agreed to deliver this Agreement and to pledge, assign and hypothecate to Secured Party, for the benefit of Lender, and to grant to Secured Party, for the benefit of Lender, a lien on and security interest in, all of Pledgor's right, title and interest in, to and under the Pledged Collateral (as hereafter defined), on the terms and conditions set forth herein. NOW, THEREFORE, in consideration of the premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Pledgor hereby agrees with Secured Party as follows: 1. Defined Terms. As used in this Agreement, the following terms shall have the following meanings: "BenTov Stock Purchase Agreement" shall mean that certain Stock Purchase Agreement, dated as of January 21, 2005, between Pledgor and Shmuel BenTov, an individual. "Company" shall mean The A Consulting Team, Inc., a New York corporation, and its successors. Secured Party acknowledges that the Company's name shall be amended to be Vanguard Info-Solutions International Inc. "Pledged Collateral" shall have the meaning ascribed to such term in Section 2(a) hereof. "Proceeds" means all "proceeds" as such term is defined in Section 9-102(64) of the UCC and, in any event, shall include, without limitation, all dividends or other income from the Interests (as defined in Section 2), collections thereon or distributions with respect thereto, and should include all proceeds from sales or assignments of the Interests. "Share Exchange Agreement" shall mean the Share Exchange Agreement, dated as of January 21, 2005, among Vanguard Info-Solutions Corporation, a New Jersey corporation ("Vanguard"), the Vanguard stockholders named therein, the authorized representative named therein, and the Company. "TAC Stock Purchase Agreement" shall mean that certain Stock Purchase Agreement, dated as of January 21, 2005, between Pledgor and the Company. "Transaction Agreements" shall mean, collectively, the Share Exchange Agreement, the TAC Stock Purchase Agreement and the BenTov Stock Purchase Agreement. "UCC" shall mean the Uniform Commercial Code as from time to time in effect in the State of New York; provided, however, that, in the event that, by reason of mandatory provisions of applicable law, any of the attachment, perfection or priority of Lender's security interest in any Collateral is governed by the Uniform Commercial Code as in effect in a jurisdiction other than the State of New York, the term "UCC" shall mean the Uniform Commercial Code as in effect in such other jurisdiction for purposes of the provisions hereof relating to such attachment, perfection or priority and for purposes of definitions related to such provisions. Defined terms used herein but not defined herein shall have the meanings ascribed to them in the Line of Credit Agreement. 2. Grant of Security Interest. (a) Pledgor hereby pledges and grants to Secured Party, for the benefit of Lender, a lien on and security interest in (I) all of Pledgor's right, title and interest in, to and under all the common stock and other equity securities and interests owned by Pledgor in the Company, including, but not limited to, those equity securities identified on Schedule I hereto, and all additional equity interests or other securities of the Company from time to time acquired by Pledgor in any manner, including, without limitation, all of Pledgor's right, title and interest in, to and under all (i) distributions of profits and income of the Company, (ii) capital distributions from the Company, (iii) distributions of cash flow by the Company, (iv) proceeds of any liquidation upon the dissolution of the Company and winding up of its affairs and (v) all other rights of Pledgor as a stockholder or other equity interest holder of the Company including, without limitation, rights to reports, accounting and information and voting rights but excluding the right of Pledgor under Section 2.5 of the TAC Stock Purchase Agreement to purchase up to 625,000 additional shares of the Company's common stock (all of the foregoing being collectively referred to as the "Interests"), (II) all of Pledgor's right, title and interest in, to and under any and all other rights to payment, whether in the nature of distributions, fees, compensation, or of any other nature or description, and all proceeds thereof, regardless of whether paid in Pledgor's capacity as a shareholder of the Company, which are made from the Company, or other Persons to the extent that such payments are derived from the Company, which shall be presumed absent clear and convincing evidence to the contrary determined by Secured Party at such time, to or for the benefit of Pledgor, the Company or any Affiliate of Pledgor or the Company (each of the foregoing, a "Payment" and, together with the Interests, the "Rights"), (III) all of Pledgor's right, title and interest in, to and under the Transaction Agreements, and (IV) all Proceeds in respect of the foregoing (collectively, the "Pledged Collateral"), as collateral security for the due and punctual payment and performance of the Obligations. 2 (b) Notwithstanding the security interest in the Interests granted to and created in favor of Secured Party, for the benefit of Lender, by this Agreement, Pledgor shall have the right, until the occurrence of any of the Events of Default specified in Section 7 hereof, to retain all voting rights with respect to the Interests and the right to exercise any and all rights against the seller under the BenTov Stock Purchase Agreement and the company under the TAC Stock Purchase Agreement. (c) From the date hereof until indefeasible payment in full of the Obligations, Pledgor hereby agrees that all distributions and other payments by the Company which would otherwise be distributed or paid to Pledgor or any assigns or Affiliates of Pledgor shall, upon the occurrence and during the continuation of an Event of Default (as herein defined), be distributed or paid by the Company to Secured Party, for the benefit of Lender, and all distributions and payments received by Pledgor contrary to this clause (c) shall be (i) received in trust for the benefit of Secured Party, (ii) segregated from the other funds of Pledgor, and (iii) delivered to Secured Party forthwith in the same form as so received (with any necessary endorsement), to be held by Secured Party as part of the Pledged Collateral under and subject to the terms of this Agreement. Irrespective of whether an Event of Default has occurred and is continuing, all securities received in addition to or in exchange for the Interests shall be delivered forthwith to Secured Party in the exact form received, with Pledgor's endorsement when necessary and/or appropriate stock powers or assignments duly executed in blank, to be held by Secured Party, subject to the terms hereof, as further collateral security for the Obligations. 3. Exculpation. Secured Party shall have no obligation or liability whatsoever, including for the obligations of Pledgor or the Company, by reason of or arising out of the making of this Agreement, nor shall Secured Party be required or obligated in any manner to perform or fulfill any of the obligations of Pledgor. Nothing contained in this Agreement shall be construed or interpreted (a) to transfer to Secured Party any of the rights and obligations of a shareholder of the Company other than the rights of collateral security in and to the Interests, or (b) to constitute Secured Party as a shareholder of the Company provided that such limitation, in no manner, shall otherwise limit the rights of Secured Party granted under this Agreement. This Agreement (x) shall not be deemed to terminate Pledgor's status as a shareholder of the Company, and (y) shall not be construed as constituting a current conveyance, but rather as creating a security interest in the Interests. 3 4. Rights of the Secured Party; Limitation on Duties Regarding the Interest. Secured Party shall not be liable for failure to collect or realize upon the Obligations or any collateral security or guarantee therefor, or any part thereof, or for any delay in so doing, nor shall Secured Party be under any obligation to take any action whatsoever with regard thereto. If an Event of Default has occurred hereunder or under any of the Loan Documents and is continuing beyond any applicable cure period, the Interests held by Secured Party hereunder, at the election and written request of Secured Party, shall be registered with the Company in the name of Secured Party, or its nominee, all without liability except to account for property actually received by it, but Secured Party shall have no duty to exercise any of the aforesaid rights, privileges or options and shall not be responsible for any failure to do so or delay in so doing. 5. Representations and Warranties of Pledgor. Pledgor represents and warrants to Secured Party as follows, as of the date hereof and the date of each Advance: (a) The Interests have been duly authorized and validly issued, and are fully paid and non-assessable. (b) On the Transaction Closing Date hereof, the Interests constituting Pledged Collateral will equal not less than sixteen and two-tenths percent (16.2%) of all of the issued and outstanding common stock of the Company. There is no preferred stock of the Company issued or outstanding. (c) Pledgor is the sole legal, record and beneficial owner of the Pledged Collateral, free and clear of any Lien, option or other interest (including, without limitation, any contract or other agreement to sell or otherwise transfer). (d) Pledgor (i) is a company duly organized, validly existing and in good standing under the laws of its jurisdiction of organization and (ii) has the power and authority, and the legal right, to own and operate its property, to lease the property it operates as lessee and to conduct the business in which it is currently engaged. Pledgor has all requisite power and authority to enter into this Agreement and the other Loan Documents to which he is a party, to pledge the Pledged Collateral for the purposes described herein, and to carry out the transactions contemplated hereby and by the other Loan Documents to which it is a party, and the execution, delivery and performance by Pledgor of this Agreement and the other Loan Documents to which it is a party will not constitute a violation of, or default under, any agreement, license, indenture or other instrument, or judgment, decree, order or writ of any court, administrative agency or governmental body, applicable to Pledgor. (e) This Agreement (along with any financing statements filed with the Recorder of Deeds of the District of Columbia and the acknowledgement of the Company with respect to the pledge of the Pledged Collateral hereunder) is effective to create, and the pledge of the Pledged Collateral hereunder creates, a legal, valid and enforceable first priority perfected Lien on the Pledged Collateral, and the Pledged Collateral is not subject to any other Lien or security interest or to any agreement purporting to grant to any third party a security interest in the property or assets of Pledgor which would include any or all of the Pledged Collateral. All action necessary to perfect such Liens has been duly taken. 4 (f) No security agreements or any other Lien instruments have been executed and delivered, and no financing statements or any other notice of any Lien have been filed in any jurisdiction, granting or purporting to grant a security interest in or creating a Lien on any or all of the Pledged Collateral to any party other than Secured Party. (g) The Company (i) is a corporation duly organized, validly existing and in good standing under the laws of its jurisdiction of organization and (ii) has the power and authority, and the legal right, to own and operate its property, to lease the property it operates as lessee and to conduct the business in which it is currently engaged. (h) Other than delivery by the Borrower to the Lender of a completed and executed Federal Reserve Form U-1 demonstrating compliance of the Advance with Regulation U of the Board of Governors of the Federal Reserve System, no consent, authorization, approval, or other action by, and no notice to or filing with, any Governmental Authority is required either (i) for the pledge by Pledgor of the Pledged Collateral pursuant to this Agreement or for the due execution, delivery or performance of this Agreement by Pledgor, or (ii) for the exercise by Secured Party of the rights provided for in this Agreement or of the remedies in respect of the Pledged Collateral pursuant to this Agreement, except as may be required in connection with the disposition of the Pledged Collateral by laws affecting the offering and sale of securities generally and under Article 9 of the UCC. (i) There is no action, suit or proceeding pending, or to the knowledge of Pledgor, threatened, before any court or governmental or administrative body or agency which may reasonably be expected to result in a material adverse change in the assets or properties or in the condition, financial or otherwise, of Pledgor, or impair the ability of Pledgor to perform his obligations under this Agreement, or any guaranties to which Pledgor has become obligated in favor of the Secured Party. Pledgor is not in default with respect to any judgment, writ, injunction, decree, rule or regulation of any court or any governmental or administrative body or agency. (j) Pledgor has cooperated with the Secured Party to assure the filing in the appropriate office of a UCC-1 financing statement covering the Pledged Collateral. (k) Pledgor maintains its principal place of business at c/o Arias Fabrega & Fabrega Trust Company BVI Ltd., 325 Waterfront Drive, Omar Hodge Building, 2nd Floor, Wickham's Cay, Road Town, Tortola, BVI. (l) Except as identified on Schedule I hereto and delivered in pledge to Secured Party hereunder, the Company has not issued any certificates evidencing the equity interests owned by Pledgor in the Company. (m) Pledgor has never changed its name or been known by any other names. (n) [Intentionally Omitted]. 5 (o) The Company has the requisite power and authority and legal right to enter into the Acknowledgment to this Agreement and the other Loan Documents and to perform all of its obligations hereunder and thereunder, and the execution and delivery of the Loan Documents (including the Acknowledgment to this Agreement) by the Company (i) have been duly authorized by all necessary action, (ii) do not and will not require any further action, consent, or approval of any Governmental Authority or Person, (iii) do not and will not violate any provisions of law, rule, regulation, order, writ, judgment, or determination, or the Company's organizational documents, and (iv) do not and will not result in any breach of or constitute a default under any agreement, document, or instrument to which the Company or its assets are bound. The Loan Documents have been duly executed and delivered by the Company and are the legal, valid, and binding obligations of the Company, enforceable against it in accordance with their terms. There is no material action, proceeding, or claim nor any basis for the foregoing against or affecting the Company or its properties or rights, and the Company is in compliance with all laws, rules, and ordinances. (p) The statements contained in the recitals to this Agreement are true and accurate and not misleading in any way. 6. Covenants of Pledgor. Pledgor hereby covenants and agrees as follows: (a) Pledgor shall defend Secured Party's right, title and security interest in and to the Pledged Collateral against the claims and demands of all Persons and shall maintain and preserve Secured Party's Lien and security interest until indefeasible payment in full in cash of all of the Obligations. (b) Pledgor shall not (i) sell, lease, assign, transfer, convey or otherwise dispose of all or any part of Pledgor's right, title or interest in or to the Pledged Collateral, whether such Pledged Collateral is owned directly or indirectly by Pledgor, (ii) create, incur or encumber or permit to exist on or with respect to all or any part of Pledgor's right, title and interest in and to the Pledged Collateral, any Lien, (iii) in its capacity as a shareholder of TAC, vote for any action, resolution, or amendment of the constituent documents of TAC which would alter the voting rights of holders of TAC common stock, or (iv) take any action to terminate, dilute, impair, modify, or limit Secured Party's rights or interests with respect to the Pledged Collateral. (c) Pledgor shall pledge hereunder, immediately upon its acquisition (directly or indirectly) thereof, any and all additional common stock, other equity interests or other securities of the Company issued in substitution for, on account of, or otherwise as Proceeds of, the Interests. (d) Pledgor shall keep and maintain at its current principal place of business satisfactory and complete records of the Interests including, without limitation, a record of all payments received, all capital contributions made and all credits granted with respect to the Interests. Pledgor shall cause the Company to maintain the entries in its books and records pertaining to the Interests which evidence the security interest granted by this Agreement. Secured Party, its agents and representatives shall be granted access to, and the right to photocopy, such books and records maintained with respect to the Interests at all reasonable times on reasonable notice to Pledgor. 6 (e) Pledgor shall do or cause to be done all things necessary to preserve and keep the existence of the Company in full force and effect and to cause the Company to remain qualified and licensed as necessary for the conduct of the Company's continued business and operations. (f) Pledgor shall notify Secured Party of the issuance of any certificate evidencing Pledgor's ownership of Interests and deliver to Secured Party any such certificate endorsed in blank to Pledgor. (g) Pledgor shall notify Secured Party in writing at least 30 days in advance of any change in Pledgor's principal place of business . Pledgor shall give Secured Party at least 30 days written notice prior to any change in the jurisdiction of organization of the Company. (h) Pledgor shall deliver to Secured Party any and all information that Secured Party reasonably requests in writing sent as required by Section 19 regarding the Company, its properties, financial information, within ten Business Days of receipt of such request (to the extent such information is in the possession of Pledgor or can be obtained by Pledgor without violation of law or regulations). (i) Pledgor authorizes Secured Party to file or record financing statements and other filings or recording documents or instruments with respect to the Pledged Collateral without the signature of Pledgor in such form and in such offices as Secured Party reasonably determines appropriate to perfect the security interests of Secured Party under this Agreement. A photographic or other reproduction of this Agreement shall be sufficient as a financing statement or other filing or recording document or instrument for filing or recording in any jurisdiction. (j) Pledgor shall cause the Oak TAC Shares, together with the Accommodation TAC Shares (including any shares of the common stock of TAC pledged and included as collateral under this or under any other Pledge Agreement subsequent to the date hereof), to at all times constitute, in the aggregate, no less than 51% (or such larger percentage as the Lender, in its sole discretion, shall determine is necessary to control the management of TAC in light of the taking of any action by the board of directors of TAC that would require that the approval of more than 50% of the outstanding voting shares of TAC is necessary for the taking of any action by the shareholders, including, without limitation, the election of directors) of the issued and outstanding shares of common stock of TAC, or do not constitute at least 51% of the outstanding voting securities of TAC, after giving effect to the pledge of additional issued and outstanding shares by Excalibur, Ball or any other holder of TAC shares. Secured Party has no obligation to notify Pledgor of the existence of the condition in which the Oak TAC Shares and the Accommodation TAC Shares, in the aggregate, do not equal at least 51% (or such larger percentage as the Lender, in its sole discretion, shall determine is necessary to control the management of TAC in light of the taking of any action by the board of directors of TAC that would require that the approval of more than 50% of the outstanding voting shares of TAC is necessary for the taking of any action by the shareholders, including, without limitation, the election of directors) of the issued and outstanding shares of common stock of TAC, or do not constitute at least 51% of the outstanding voting securities of TAC. 7 (k) Pledgor shall cause TAC to file with the United States Securities and Exchange Commission, and take all commercially reasonable efforts to cause to become effective, a registration statement with respect to all shares of common stock or equity securities of TAC (i) as to which any Person has granted to Lender a security interest under the provisions of any of the Pledge Agreement or otherwise, or (ii) which are subject to issuance upon the exercise of the Warrants, in each case in accordance with the terms of the Share Exchange Agreement and the Stock Purchase Agreement regarding such registration. Such registration statement may also register for sale any other shares owned by Ball, Excalibur or any other shareholders of TAC that desire to register shares for sale or resale. 7. Events of Default; Remedies. (a) The following events shall constitute an "Event of Default" hereunder: (i) an Event of Default under the Note, (ii) an Event of Default under the Line of Credit Agreement, (iii) an Event of Default under any of the other Loan Documents, (iv) at any time the Oak TAC Shares and the Accommodation TAC Shares, in the aggregate, do not equal at least 51% (or such larger percentage as the Lender, in its sole discretion, shall determine is necessary to control the management of TAC in light of the taking of any action by the board of directors of TAC that would require that the approval of more than 50% of the outstanding voting shares of TAC is necessary for the taking of any action by the shareholders, including, without limitation, the election of directors) of the issued and outstanding shares of common stock of TAC, or do not constitute at least 51% of the outstanding voting securities of TAC, after giving effect to the pledge of additional issued and outstanding shares by Excalibur, Ball or any other holder of TAC shares, and (v) any other breach by Pledgor of any representation, covenant or obligation of Pledgor under this Agreement that is not cured by Pledgor within thirty (30) days of his receipt from Secured Party of written notice of such breach. (b) Upon the occurrence and during the continuance of an Event of Default beyond any applicable cure period, Secured Party may, without notice to or assent of Pledgor, without demand of performance or other demand, advertisement or notice of any kind (except the notice specified below of time and place of public or private sale) to or upon Pledgor or any other Person, all and each of which demands, advertisements and other notices are expressly waived to the extent permitted by applicable law, forthwith collect, receive, appropriate and realize upon the Pledged Collateral or any part thereof, and may forthwith sell, assign, give option or options to purchase, contract to sell or otherwise dispose of and deliver the Pledged Collateral or any part thereof in accordance with law, in one or more parcels at public or private sale or sales, at any exchange, broker's board or any of Secured Party's offices or elsewhere upon such terms and conditions as it may deem advisable and at such prices as it may deem best, for cash or on credit or for future delivery without assumption of any credit risk, with the right to Secured Party or Secured Party's nominee upon any such sale or sales, public or private, to purchase the whole or any part of the Pledged Collateral. The parties agree that 10 days shall be reasonable notice for any public or private sale of the Pledged Collateral. 8 (c) Upon the occurrence and during the continuance of an Event of Default beyond any applicable cure period, any and all rights of Pledgor to exercise the voting and other consensual rights as a equity interest holder of the Company shall cease immediately, and such rights shall thereupon become vested in Secured Party who shall thereupon have the sole voting and consensual rights with respect to the Interests. Pledgor shall, if necessary to permit Secured Party to exercise the voting and other rights which it may be entitled to exercise and to receive all distributions which it may be entitled to receive, execute and deliver to Secured Party, from time to time and upon written notice from Secured Party, appropriate proxies and other instruments as Secured Party may request. The foregoing shall in no way limit Secured Party's power and authority granted pursuant to Section 10 hereof. (d) In addition to the rights and remedies granted to it in this Agreement and in any other instrument or agreement securing, evidencing or relating to any of the Obligations, Secured Party shall have all the rights and remedies of a secured party under the UCC. (e) Any cash held by Secured Party as Pledged Collateral and all cash Proceeds received by Secured Party in respect of any sale of, collection from, or other realization upon all or any part of the Pledged Collateral shall be applied by Secured Party: First, to the payment of the costs and expenses of such sale, including, without limitation, reasonable expenses of Secured Party and its agents including the fees and expenses of its counsel, and all expenses, liabilities and advances made or incurred by Secured Party in connection therewith; Next, to the payment of the Obligations, in such order as the Loan Documents shall prescribe; and Finally, after payment in full of all of the Obligations, to the payment to Pledgor or his heirs, representatives or assigns, or to whomsoever may be lawfully entitled to receive the same as a court of competent jurisdiction may direct. (f) Secured Party shall not, under any circumstances, or in any event whatsoever, have any liability for any error, omission or delay of any kind occurring in the settlement of, and collection or payment for, the Pledged Collateral. (g) The rights and remedies provided in this Agreement and the other Loan Documents and in any other agreements, instruments and documents delivered in connection with this Agreement and the other Loan Documents, are cumulative and are in addition to, and not exclusive of, any other rights or remedies provided by law including, without limitation, the rights and remedies of a secured party under the UCC. 9 8. Securities Act, Etc. In view of the position of the Pledgor in relation to the Pledged Collateral, or because of other current or future circumstances, a question may arise under the Securities Act of 1933, as now or hereafter in effect, or any similar statute hereafter enacted analogous in purpose or effect (such Act and any such similar statute as from time to time in effect being called the "Federal Securities Laws") with respect to any disposition of the Pledged Collateral permitted hereunder. Pledgor understands that compliance with the Federal Securities Laws might very strictly limit the course of conduct of Secured Party if Secured Party were to attempt to dispose of all or any part of the Pledged Collateral, and might also limit the extent to which or the manner in which any subsequent transferee of any Pledged Collateral could dispose of the same. Similarly, there may be other legal restrictions or limitations affecting Secured Party in any attempt to dispose of all or part of the Pledged Collateral under applicable Blue Sky or other state securities laws or similar laws analogous in purposed or effect. Pledgor recognizes that in light of such restrictions and limitations Secured Party may, with respect to any sale of the Pledged Collateral, limit the purchasers to those who will agree, among other things, to acquire such Pledged Collateral for their own account, for investment, and not with a view to the distribution or resale thereof. Pledgor acknowledges and agrees that in light of such restrictions and limitation, Secured Party, in its sole and absolute discretion, (a) may proceed to make such a sale whether or not a registration statement for the purpose of registering such Pledged Collateral or part thereof shall have been filed and is effective under the Federal Securities Laws and (b) may approach and negotiate with a single potential purchaser to effect such sale. Pledgor acknowledges and agrees that any such sale might result in prices and other terms less favorable to the seller than if such sale were a public sale without such restrictions. In the event of any such sale, Secured Party shall incur no responsibility or liability for selling all or any part of the Pledged Collateral at a price that Secured Party, in its sole and absolute discretion, may in good faith deem reasonable under the circumstances, notwithstanding the possibility that a substantially higher price might have been realized if the sale were deferred until after registration as aforesaid or if more than a single purchaser were approached. The provisions of this Section 8 will apply notwithstanding the existence of a public or private market upon which the quotations or sales prices may exceed substantially the price at which Secured Party sells. Secured Party acknowledges that, in connection with its interest in the Pledged Collateral, it may be or become obligated to file Schedule 13D of Forms 3 or 4, and other statements and reports, pursuant to applicable law including the Securities Exchange Act of 1934, as amended, and the regulations promulgated thereunder. Secured Party agrees to file all such statements and reports regarding the Pledged Collateral in compliance with applicable law and regulations. 9. Further Assurances. Pledgor further agrees that at any time and from time to time, and upon written request of Secured Party, at the cost and expense of Pledgor, Pledgor shall promptly execute and deliver such further documents and do such further acts and things as Secured Party may reasonably request in order to (i) perfect, protect and maintain the priority of the Lien and security interest granted or purported to be granted hereby, (ii) enable Secured Party to exercise and enforce its rights and remedies hereunder with respect to any Pledged Collateral, and (iii) otherwise effect the purposes of this Agreement, including, without limitation, the pledging of any substituted collateral, the pledging of any note or other instrument evidencing the Pledged Collateral and the filing of any financing or continuation statement without the signature of Pledgor, to the extent permitted by law. 10 10. Secured Party Appointed Attorney-in-Fact and Proxy. Pledgor hereby irrevocably constitutes and appoints, effective only upon the occurrence and during the continuation of an Event of Default, Secured Party and any officer thereof, with full power of substitution, as his true and lawful attorney-in-fact and proxy with full irrevocable power and authority in the place and stead of Pledgor and in the name of Pledgor or in his own name, from time to time in Secured Party's discretion, for the purpose of carrying out the terms of this Agreement, to take any and all appropriate action and to execute and deliver any and all documents and instruments which Secured Party may deem necessary or advisable to accomplish the purposes of this Agreement, including, without limitation, to receive, indorse and collect all instruments made payable to Pledgor representing any distribution or payment in respect of the Pledged Collateral or any part thereof and to give full discharge for the same and to vote or grant any consent in respect of the Interests authorized by Section 7(c) hereof. Pledgor hereby ratifies, to the extent permitted by law, all that any said attorney shall lawfully do or cause to be done by virtue hereof. This power, being coupled with an interest, is irrevocable until the Obligations are indefeasibly paid in full in cash. 11. Security Interest Absolute, Irrevocable and Unconditional. All rights of Secured Party and the security interest and Lien granted hereunder, and all obligations of Pledgor hereunder, shall be absolute, irrevocable and unconditional irrespective of: (a) any lack of validity or enforceability of any provision of the Line of Credit Agreement or any other Loan Document or any other agreement or instrument relating thereto; (b) any change in the time, manner or place of payment of, or in any other term of, or any increase in the amount of, any or all of the Obligations, or any other amendment or waiver of any term of, or any consent to any departure from any requirement of, the Line of Credit Agreement or any other Loan Document; (c) any exchange, release or non-perfection of any Lien on any other collateral, or any release or amendment or waiver of any term of any guaranty of, or consent to departure from any requirement of any guaranty of, all or any of the Obligations; and (d) any other circumstance which might otherwise constitute a defense available to, or a discharge of, a guarantor or surety. 12. Continuing Security Interest. This Agreement shall create a continuing security interest in the Pledged Collateral and shall (a) remain in full force and effect until indefeasible payment in full in cash of the Obligations, (b) be binding upon Pledgor and its successors and assigns, and (c) inure, together with the rights and remedies of Secured Party hereunder, to the benefit of and be enforceable by Secured Party and its successors, transferees and assigns. Upon the indefeasible payment in full in cash of the Obligations, Pledgor shall be entitled to the return, upon his request and at his expense, of such of the Pledged Collateral as shall not have been sold or otherwise applied pursuant to the terms hereof. 13. Severability; Paragraph Headings. (a) Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. 11 (b) The paragraph headings used in this Agreement are for convenience of reference only and are not to affect the construction hereof or be taken into consideration in the interpretation hereof. 14. No Waiver; Cumulative Remedies; Multiple Security. (a) Secured Party shall not by any act, delay, omission or otherwise be deemed to have waived any of its rights or remedies under this Agreement and no waiver shall be valid unless in writing, signed by Secured Party, and then only to the extent therein set forth. A waiver by Secured Party of any right or remedy under this Agreement on any one occasion shall not be construed as a bar to any right or remedy which Secured Party would otherwise have on any future occasion. No failure to exercise nor any delay in exercising on the part of Secured Party any right, power or privilege under this Agreement shall operate as a waiver thereof; nor shall any single or partial exercise of any right, power or privilege under this Agreement preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies provided in this Agreement are cumulative and may be exercised singly or concurrently, and are not exclusive of any rights or remedies provided by law. (b) Pledgor agrees that if Secured Party shall be prosecuting one or more actions against the Pledged Collateral, Pledgor waives any objections to such commencement, continuation or exercise, and waives any right to seek to dismiss, stay, remove, transfer or consolidate any action under this Agreement or such other proceedings on such basis. Neither the commencement or continuation of any proceedings under this Agreement, the exercise of any other rights hereunder, nor the recovery of any judgment by Secured Party in any such proceedings shall prejudice, limit or preclude Secured Party's right to commence or continue one or more proceedings or obtain a judgment against any other collateral which directly or indirectly secures the Obligations, and Pledgor expressly waives any objections to the commencement of, continuation of, or entry of a judgment in such other proceedings or exercise of any remedies in such proceedings based upon any action or judgment connected to this Agreement, and Pledgor also waives any right to seek to dismiss, stay, remove, transfer or consolidate either such other proceedings or any action under this Agreement on such basis. 15. Amendments. None of the terms or provisions of this Agreement may be waived, altered, modified or amended except by an instrument in writing, duly executed by Secured Party. 16. Governing Law. This Agreement and the rights and obligations of Pledgor shall be governed by and construed in accordance with the laws of the State of New York (including, without limitation, Section 5-1401 of the New York General Obligations Law), without regard to principles of conflicts of laws. 17. Submission to Jurisdiction; Waiver of Jury Trial. (a) Pledgor hereby irrevocably and unconditionally: (i) submits itself and its property in any legal action or proceeding relating to this Agreement, or for recognition and enforcement of any judgment in respect thereof, to the non-exclusive general jurisdiction of the courts of the State of New York, County of New York, the courts of the United States of America for the Southern District of New York, and the appellate courts from any thereof; 12 (ii) consents that any such action or proceeding may be brought in such courts, and waives any objection that it may now or hereafter have to the venue of any such action or proceeding in any such court or that such action or proceeding was brought in an inconvenient court and agrees not to plead or claim the same; (iii) agrees that service of process in any such action or proceeding may be effected by mailing a copy thereof by registered or certified mail (or any substantially similar form of mail), postage prepaid, to its address set forth in Section 19 hereof; and (iv) agrees that nothing herein shall affect the right to effect service of process in any other manner permitted by law or shall limit the right to sue in any other jurisdiction. (b) PLEDGOR AND SECURED PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT AND FOR ANY COUNTERCLAIM THEREIN. 18. Reinstatement. Pledgor further agrees that, if any payment made by Pledgor or other Person and applied to the Obligations is at any time annulled, avoided, set aside, rescinded, invalidated, declared to be fraudulent or preferential or otherwise required to be refunded or repaid, or the proceeds of Collateral are required to be returned by Secured Party to such Person, his or its estate, trustee, receiver or any other party, including Pledgor, under any bankruptcy law, state or federal law, common law or equitable cause, then, to the extent of such payment or repayment, any Lien or other Collateral securing such liability shall be and remain in full force and effect, as fully as if such payment had never been made or, if prior thereto the Lien granted hereby or other Collateral securing such liability hereunder shall have been released or terminated by virtue of such cancellation or surrender, such Lien or other Collateral shall be reinstated in full force and effect, and such prior cancellation or surrender shall not diminish, release, discharge, impair or otherwise affect any Lien or other Collateral securing the obligations of Pledgor in respect of the amount of such payment. 19. Notices. All notices, requests, demands and other communications (collectively, a "Notice") given or made pursuant to this Agreement shall be given as provided in Section 17 of the Line of Credit Agreement. Notices shall be addressed (a) if to Secured Party, to Secured Party's address set forth in the caption hereof, with a copy to Secured Party's attorney as set forth in Section 17 of the Line of Credit Agreement, and (b) if to Pledgor, to the following address, with a copy to Pledgor's attorney: 13 Pledgor's Attorney: McGuireWoods LLP 1345 Avenue of the Americas 7th Floor New York, New York 10105-0106 Attn: William A. Newman Telephone: (212) 548-2160 Facsimile: (212) 548-2170 [Remainder of Page Intentionally Left Blank Signature page follows.] 14 IN WITNESS WHEREOF, Pledgor has caused this Agreement to be duly executed and delivered as of the day and year first above written. OAK FINANCE INVESTMENTS LIMITED By:/s/ Kishore Jhunjhunwala --------------------------- Kishore Jhunjhunwala Authorized Person 15 FORM OF ACKNOWLEDGMENT The A Consulting Team, Inc. (the "Company") hereby acknowledges receipt of a copy of the attached Pledge and Security Agreement, dated as of the date hereof (as amended, modified, restated or supplemented from time to time in accordance with the terms thereof, the "Pledge Agreement"; capitalized terms used herein but not otherwise defined herein shall have the meanings ascribed to them in the Pledge Agreement), made by Pledgor in favor of Secured Party, and the assignment by Pledgor of all of its common stock and other equity interests in the Company (the "Interests") pursuant to the terms of the Pledge Agreement. Upon Secured Party's notifying the Company in writing that an Event of Default has occurred, Secured Party shall immediately succeed to the Interests as if Secured Party were the absolute owner thereof, and to the extent it has not already done so, the Company will register the Interests in the name of the Secured Party on the books and records of the Company. The Company agrees that the grants provided herein and in the Pledge Agreement have been registered on the books and records of the Company, and the undersigned agrees not to allow the Company to acknowledge the transfer of any of the Interests. The Company hereby agrees that, upon receipt of the notice from Secured Party of the occurrence of an Event of Default (as provided in the previous paragraph), it will remit directly to Secured Party in accordance with the Pledge Agreement, and that it will cause its Affiliates to remit directly to Secured Party in accordance with the Pledge Agreement, all payments, including, without limitation, fees (whether or not paid in his capacity as a shareholder) and distributions, due to Pledgor of any nature whatsoever (including profits, cash, capital, or proceeds of liquidation). The Company agrees that Secured Party shall not be liable to any person, firm, corporation, or entity for any injury or damages of any nature whatsoever sustained by reason of any act or omission or commission of the Company or by reason of the grant of the security interest in the Interests. Dated: ____ __, 2005 THE A CONSULTING TEAM, INC. By:_____________________________ Name: Title: 16 EX-99.9 6 v020672_ex9.txt EXHIBIT 9 PROMISSORY NOTE $15,450,000.00 June 3, 2005 FOR VALUE RECEIVED, the undersigned, OAK FINANCE INVESTMENTS LIMITED, a British Virgin Islands company, having its principal place of business at c/o Arias Fabrega & Fabrega Trust Company BVI Ltd., 325 Waterfront Drive, Omar Hodge Building, 2nd Floor, Wickham's Cay, Road Town, Tortola, BVI ("Borrower"), promises to pay to the order of STONEGATE BANK, with an address at P.O. Box 4678, Fort Lauderdale, Florida 33338-4678 ("Lender"), the principal sum of FIFTEEN MILLION FOUR HUNDRED FIFTY THOUSAND DOLLARS ($15,450,000.00) (the "Principal Amount") advanced (the "Advance") by Lender to Borrower on the date hereof pursuant to the Line of Credit Agreement (as defined below), together with interest on the unpaid Principal Amount thereof computed from the date hereof, at the rates provided herein until the Final Maturity Date, unless accelerated sooner (the "Maturity Date"); provided, however, that from and after (i) the Maturity Date, whether upon stated maturity, acceleration or otherwise, or (ii) the date on which the interest rate hereunder is increased to the Default Rate (as hereinafter defined) as provided herein, such additional interest shall be computed at the Default Rate. Defined terms used herein but not defined herein shall have the meaning ascribed to them in the Line of Credit Agreement entered into as of May 24, 2005 by and between Borrower, Lender and the other lenders party thereto, and Stonegate Bank, as administrative agent and collateral agent (the "Line of Credit Agreement"). Principal and interest hereunder shall be payable as follows: (a) Interest on the entire principal amount of the Advance from and including the date on which the Advance is made to but excluding the Final Maturity Date at the rate of fifteen percent (15%) per annum (such rate being referred to as the "Non-Default Interest Rate"). On the Escrow Closing Date, interest on the entire principal amount of the Advance will be paid in advance for the period from the Escrow Closing Date through and including August 31, 2005. After August 31, 2005, accrued interest on the Advance shall be payable by Borrower (i) monthly in arrears, with the first payment due one month following August 31, 2005 and continuing on the first Business Day of each succeeding month, and (ii) on each date on which such Advance or any portion thereof shall be paid (whether at stated maturity, by acceleration or otherwise); provided, however, that if Borrower prepays interest on the entire principal amount of the Advance through the period ending September 30, 2005 in accordance with clause (ii) of the definition of "Final Maturity Date" in the Line of Credit Agreement, accrued interest on the Advance shall be payable by Borrower monthly in arrears after September 30, 2005 with the first payment due one month following September 30, 2005. (b) All principal, interest and other sums due hereunder, shall be due and payable on the Maturity Date. Each payment of principal of an Advance shall be accompanied by unpaid interest accrued on such principal to the date of payment. (c) This Note and the Advance may be prepaid at any time in whole or in part, provided, however, that unless the Note and Advance are being prepaid in whole, any such prepayment shall be in an amount that is an integral multiple of $10,000 and not less than $100,000. Notwithstanding any such prepayment, in whole or in part, of the principal amount of the Advance, interest (the "Minimum Interest") shall accrue and shall be payable on the Principal Amount from and including the Escrow Closing Date to but excluding the Final Maturity Date (i.e., $2,512,500.00), in accordance with the foregoing paragraph (a), provided, however, that Minimum Interest shall not accrue and be payable on or with respect to any principal amounts of the Advance prepaid as required by Section 2(g) of the Line of Credit Agreement from and after the date of such prepayment; provided, further, that if the entire principal amount of the Advance at the time outstanding is prepaid before November __, 2005, the sixth month anniversary of this Note, then the Minimum Interest will be deemed to have accrued on the Principal Amount from the date of this Note through such prepayment date in the aggregate amount of $1,675,000, and such Minimum Interest, less the aggregate amount of interest previously paid hereunder, shall be due and payable on the date of such prepayment. The Minimum Interest shall constitute part of the Obligations. Each payment shall be credited first to Lender's collection expenses provided for in any of the Loan Documents, next to late charges provided for in any of the Loan Documents, next to unpaid interest (including, in the event of prepayment in whole, the Minimum Interest), and the balance, if any, to the reduction of principal. The interest on this Note shall be calculated on the basis of a 30-day month and a 360-day year. Except as otherwise provided in the Loan Documents, if the due date of any payment to be made hereunder would otherwise fall on a day that is not a Business Day, such due date shall be extended to the next succeeding Business Day and interest shall be payable for any principal so extended for the period of such extension. As used herein, the term "Default Rate" shall mean a rate per annum equal to 36%, but in no event shall the Default Rate be in excess of the Maximum Rate (as hereinafter defined). If any payment of interest is not paid on or before the due date for such payment (after giving effect to any grace or notice period), a late charge equal to the lesser of ten percent (10%) of such overdue payment or the maximum amount permitted by applicable law shall automatically become due to the holder of this Note, subject, however, to the limitation that late charges may be assessed only once on each overdue payment. Said late charges do not constitute interest and shall constitute compensation to the holder of this Note for collection and Lender's administration costs incurred hereunder. In addition, if any payment of principal or interest is not paid when due (after giving effect to any grace or notice period provided in the Loan Documents), the holder of this Note shall have the right, upon written notice to Borrower, to increase the rate of interest per annum on the entire amount due and payable under this Note and any other Loan Documents to the Default Rate and, upon said notice such rate increase shall be effective retroactively as of the date the overdue payment was due and shall remain in force and effect for so long as such default shall continue. This paragraph shall not be construed as an agreement or privilege to extend the due date of any payment, nor as a waiver of any other right or remedy accruing to the holder of this Note by reason of any default. It is understood and agreed that, except as may be provided in the Line of Credit Agreement, Borrower shall not be entitled to a refund of the interest (other than interest which has been prepaid but not yet earned), any fees, points, charges and the like paid by Borrower to Lender in connection with the Advance, or for fees and expenses incurred by Lender in making the Advance, all of which payments shall be retained by Lender from and after the date each such payment is made hereunder. 2 Borrower and each surety, endorser and guarantor hereof hereby waive all presentations for payment, notices of intention to accelerate maturity, notices of acceleration of maturity, demand for payment, protest, notice of protest and notice of dishonor, to the extent permitted by law, except for those notices expressly provided for herein. Borrower further waives trial by jury. No extension of time for payment of this Note or any installment hereof, no alteration, amendment or waiver of any provision of this Note and no release or substitution of any collateral securing Borrower's obligations hereunder shall release, modify, amend, waive, extend, change, discharge, terminate or affect the liability of Borrower under this Note. Any forbearance by the holder of this Note in exercising any right or remedy hereunder or under any other agreement or instrument in connection with this line of credit or otherwise afforded by applicable law shall not be a waiver or preclude the exercise of any right or remedy by the holder of this Note. The acceptance by the holder of this Note of payment of any sum payable hereunder after the due date of such payment shall not be a waiver of the right of the holder of this Note to require prompt payment when due of all other sums payable hereunder or to declare a default for failure to make prompt payment. If this Note is placed in the hands of an attorney for collection, Borrower shall pay all costs incurred and reasonable attorneys' fees for legal services in the collection effort whether or not suit be brought. At the election of the holder of this Note, all payments due hereunder may be accelerated, and this Note shall become immediately due and payable without notice or demand, upon the occurrence of an Event of Default under any Loan Document, which default is not cured within any grace period expressly provided therefor in such Loan Document; provided, however, that in the case of the occurrence of an Event of Default referred to in Sections 10(j), (k), (l) or (m) of the Line of Credit Agreement, all payments due hereunder shall be automatically accelerated and this Note shall become immediately due and payable without notice or demand and without any further action on the part of Lender. In addition to the rights and remedies provided herein, the holder of this Note may exercise any other right or remedy in any other document, instrument or agreement evidencing, securing or otherwise relating to the indebtedness evidenced hereby in accordance with the terms thereof, or under applicable law, all of which rights and remedies shall be cumulative. If this Note is transferred in any manner, the right, option or other provisions herein shall apply with equal effect in favor of any subsequent holder hereof. 3 Notwithstanding anything to the contrary contained herein, under no circumstances shall the aggregate amount paid or agreed to be paid hereunder exceed the highest lawful rate permitted under applicable usury law (the "Maximum Rate") and the payment obligations of Borrower under this Note are hereby limited accordingly. If under any circumstances, whether by reason of advancement or acceleration of the maturity of the unpaid principal balance hereof or otherwise, the aggregate amounts paid on this Note shall include amounts which by law are deemed interest and which would exceed the Maximum Rate, Borrower stipulates that payment and collection of such excess amounts shall have been and will be deemed to have been the result of a mistake on the part of both Borrower and the holder of this Note, and the party receiving such excess payments shall promptly credit such excess (to the extent only of such payments in excess of the Maximum Rate) against the unpaid principal balance hereof and any portion of such excess payments not capable of being so credited shall be refunded to Borrower. This Note is secured by the Pledge Agreements each executed in connection with this Note and the Line of Credit Agreement, and is entitled to the benefits and security thereof and any other documents or agreements given to Agent or Lender by Borrower, the Guarantors, or others as security for the Advance made under the Facility. This Note is guaranteed by the Guaranties and reference is made to the Guaranties for the respective rights of the parties thereunder. Borrower hereby agrees to indemnify, defend and hold harmless Lender from and against any and all claims, loss, cost, damage or expense (including, without limitation, reasonable attorneys' fees) which may be incurred by Lender as provided in the Line of Credit Agreement. All payments of principal and interest hereunder are payable in lawful money of the United States of America and shall be made by wire transfer to Agent, for the account of Lender, at such bank or other financial institution as Agent designates pursuant to wiring instructions to be provided to Borrower at the Closing of the Advance or thereafter. Borrower is hereby prohibited from exercising against Lender any right or remedy which it might otherwise be entitled to exercise against any one or more (but less than all) of the parties constituting Lender, including without limitation any right of setoff or any defense. This Note shall be binding on the parties hereto and their respective heirs, legal representatives, executors, successors and assigns. This Note shall be construed without any regard to any presumption or rule requiring construction against the party causing such instrument or any portion thereof to be drafted. This Note shall be governed by and construed in accordance with the laws of the State of New York without regard to choice of law considerations. Borrower hereby irrevocably consents to the jurisdiction of the courts of the State of New York, County of New York and of any federal court located in the Southern District of New York in connection with any action or proceeding arising out of or relating to this Note or the other Loan Documents. This Note may not be changed or terminated orally. A determination that any portion of this Note is unenforceable or invalid shall not affect the enforceability or validity of any other provision, and any determination that the application of any provision of this Note to any person or circumstance is illegal or unenforceable shall not affect the enforceability or validity of such provision to the extent legally permissible and otherwise as it may apply to other persons or circumstances. 4 JURY TRIAL WAIVER. BORROWER AGREES THAT ANY SUIT, ACTION OR PROCEEDING, WHETHER CLAIM OR COUNTERCLAIM, BROUGHT BY BORROWER OR THE HOLDER OF THIS NOTE ON OR WITH RESPECT TO THIS NOTE OR ANY OTHER LOAN DOCUMENT OR THE DEALINGS OF THE PARTIES WITH RESPECT HERETO OR THERETO, SHALL BE TRIED ONLY BY A COURT AND NOT BY A JURY. BORROWER AND LENDER EACH HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY SUCH SUIT, ACTION OR PROCEEDING. FURTHER, BORROWER WAIVES ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER, IN ANY SUCH SUIT, ACTION OR PROCEEDING, ANY SPECIAL, EXEMPLARY, PUNITIVE, CONSEQUENTIAL OR OTHER DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES. BORROWER ACKNOWLEDGES AND AGREES THAT THIS PARAGRAPH IS A SPECIFIC AND MATERIAL ASPECT OF THIS NOTE AND THAT LENDER WOULD NOT EXTEND CREDIT TO BORROWER IF THE WAIVERS SET FORTH IN THIS PARAGRAPH WERE NOT A PART OF THIS NOTE. [Remainder of page intentionally left blank. Signature page follows.] 5 IN WITNESS WHEREOF, the undersigned has executed this Note on the date first set forth above. OAK FINANCE INVESTMENTS LIMITED By: /s/ Kishore Jhunjhunwala ----------------------------------- Name: Kishore Jhunjhunwala 6 EX-99.10 7 v020672_ex10.txt EXHIBIT 10 PROMISSORY NOTE $1,300,000.00 June 3, 2005 FOR VALUE RECEIVED, the undersigned, OAK FINANCE INVESTMENTS LIMITED, a British Virgin Islands company, having its principal place of business at c/o Arias Fabrega & Fabrega Trust Company BVI Ltd., 325 Waterfront Drive, Omar Hodge Building, 2nd Floor, Wickham's Cay, Road Town, Tortola, BVI ("Borrower"), promises to pay to the order of CORDELL CONSULTANTS, INC. MONEY PURCHASE PLAN, with an address at 3333 Poinciana Avenue, Miami, FL 33133 ("Lender"), the principal sum of ONE MILLION THREE HUNDRED THOUSAND DOLLARS ($1,300,000.00) (the "Principal Amount") advanced (the "Advance") by Lender to Borrower on the date hereof pursuant to the Line of Credit Agreement (as defined below), together with interest on the unpaid Principal Amount thereof computed from the date hereof, at the rates provided herein until the Final Maturity Date, unless accelerated sooner (the "Maturity Date"); provided, however, that from and after (i) the Maturity Date, whether upon stated maturity, acceleration or otherwise, or (ii) the date on which the interest rate hereunder is increased to the Default Rate (as hereinafter defined) as provided herein, such additional interest shall be computed at the Default Rate. Defined terms used herein but not defined herein shall have the meaning ascribed to them in the Line of Credit Agreement entered into as of May 24, 2005 by and between Borrower, Lender and the other lenders party thereto, and Stonegate Bank, as administrative agent and collateral agent (the "Line of Credit Agreement"). Principal and interest hereunder shall be payable as follows: (a) Interest on the entire principal amount of the Advance from and including the date on which the Advance is made to but excluding the Final Maturity Date at the rate of fifteen percent (15%) per annum (such rate being referred to as the "Non-Default Interest Rate"). On the Escrow Closing Date, interest on the entire principal amount of the Advance will be paid in advance for the period from the Escrow Closing Date through and including August 31, 2005. After August 31, 2005, accrued interest on the Advance shall be payable by Borrower (i) monthly in arrears, with the first payment due one month following August 31, 2005 and continuing on the first Business Day of each succeeding month, and (ii) on each date on which such Advance or any portion thereof shall be paid (whether at stated maturity, by acceleration or otherwise); provided, however, that if Borrower prepays interest on the entire principal amount of the Advance through the period ending September 30, 2005 in accordance with clause (ii) of the definition of "Final Maturity Date" in the Line of Credit Agreement, accrued interest on the Advance shall be payable by Borrower monthly in arrears after September 30, 2005 with the first payment due one month following September 30, 2005. (b) All principal, interest and other sums due hereunder, shall be due and payable on the Maturity Date. Each payment of principal of an Advance shall be accompanied by unpaid interest accrued on such principal to the date of payment. (c) This Note and the Advance may be prepaid at any time in whole or in part, provided, however, that unless the Note and Advance are being prepaid in whole, any such prepayment shall be in an amount that is an integral multiple of $10,000 and not less than $100,000. Notwithstanding any such prepayment, in whole or in part, of the principal amount of the Advance, interest (the "Minimum Interest") shall accrue and shall be payable on the Principal Amount from and including the Escrow Closing Date to but excluding the Final Maturity Date (i.e., $2,512,500.00), in accordance with the foregoing paragraph (a), provided, however, that Minimum Interest shall not accrue and be payable on or with respect to any principal amounts of the Advance prepaid as required by Section 2(g) of the Line of Credit Agreement from and after the date of such prepayment; provided, further, that if the entire principal amount of the Advance at the time outstanding is prepaid before November __, 2005, the sixth month anniversary of this Note, then the Minimum Interest will be deemed to have accrued on the Principal Amount from the date of this Note through such prepayment date in the aggregate amount of $1,675,000, and such Minimum Interest, less the aggregate amount of interest previously paid hereunder, shall be due and payable on the date of such prepayment. The Minimum Interest shall constitute part of the Obligations. Each payment shall be credited first to Lender's collection expenses provided for in any of the Loan Documents, next to late charges provided for in any of the Loan Documents, next to unpaid interest (including, in the event of prepayment in whole, the Minimum Interest), and the balance, if any, to the reduction of principal. The interest on this Note shall be calculated on the basis of a 30-day month and a 360-day year. Except as otherwise provided in the Loan Documents, if the due date of any payment to be made hereunder would otherwise fall on a day that is not a Business Day, such due date shall be extended to the next succeeding Business Day and interest shall be payable for any principal so extended for the period of such extension. As used herein, the term "Default Rate" shall mean a rate per annum equal to 36%, but in no event shall the Default Rate be in excess of the Maximum Rate (as hereinafter defined). If any payment of interest is not paid on or before the due date for such payment (after giving effect to any grace or notice period), a late charge equal to the lesser of ten percent (10%) of such overdue payment or the maximum amount permitted by applicable law shall automatically become due to the holder of this Note, subject, however, to the limitation that late charges may be assessed only once on each overdue payment. Said late charges do not constitute interest and shall constitute compensation to the holder of this Note for collection and Lender's administration costs incurred hereunder. In addition, if any payment of principal or interest is not paid when due (after giving effect to any grace or notice period provided in the Loan Documents), the holder of this Note shall have the right, upon written notice to Borrower, to increase the rate of interest per annum on the entire amount due and payable under this Note and any other Loan Documents to the Default Rate and, upon said notice such rate increase shall be effective retroactively as of the date the overdue payment was due and shall remain in force and effect for so long as such default shall continue. This paragraph shall not be construed as an agreement or privilege to extend the due date of any payment, nor as a waiver of any other right or remedy accruing to the holder of this Note by reason of any default. It is understood and agreed that, except as may be provided in the Line of Credit Agreement, Borrower shall not be entitled to a refund of the interest (other than interest which has been prepaid but not yet earned), any fees, points, charges and the like paid by Borrower to Lender in connection with the Advance, or for fees and expenses incurred by Lender in making the Advance, all of which payments shall be retained by Lender from and after the date each such payment is made hereunder. 2 Borrower and each surety, endorser and guarantor hereof hereby waive all presentations for payment, notices of intention to accelerate maturity, notices of acceleration of maturity, demand for payment, protest, notice of protest and notice of dishonor, to the extent permitted by law, except for those notices expressly provided for herein. Borrower further waives trial by jury. No extension of time for payment of this Note or any installment hereof, no alteration, amendment or waiver of any provision of this Note and no release or substitution of any collateral securing Borrower's obligations hereunder shall release, modify, amend, waive, extend, change, discharge, terminate or affect the liability of Borrower under this Note. Any forbearance by the holder of this Note in exercising any right or remedy hereunder or under any other agreement or instrument in connection with this line of credit or otherwise afforded by applicable law shall not be a waiver or preclude the exercise of any right or remedy by the holder of this Note. The acceptance by the holder of this Note of payment of any sum payable hereunder after the due date of such payment shall not be a waiver of the right of the holder of this Note to require prompt payment when due of all other sums payable hereunder or to declare a default for failure to make prompt payment. If this Note is placed in the hands of an attorney for collection, Borrower shall pay all costs incurred and reasonable attorneys' fees for legal services in the collection effort whether or not suit be brought. At the election of the holder of this Note, all payments due hereunder may be accelerated, and this Note shall become immediately due and payable without notice or demand, upon the occurrence of an Event of Default under any Loan Document, which default is not cured within any grace period expressly provided therefor in such Loan Document; provided, however, that in the case of the occurrence of an Event of Default referred to in Sections 10(j), (k), (l) or (m) of the Line of Credit Agreement, all payments due hereunder shall be automatically accelerated and this Note shall become immediately due and payable without notice or demand and without any further action on the part of Lender. In addition to the rights and remedies provided herein, the holder of this Note may exercise any other right or remedy in any other document, instrument or agreement evidencing, securing or otherwise relating to the indebtedness evidenced hereby in accordance with the terms thereof, or under applicable law, all of which rights and remedies shall be cumulative. If this Note is transferred in any manner, the right, option or other provisions herein shall apply with equal effect in favor of any subsequent holder hereof. 3 Notwithstanding anything to the contrary contained herein, under no circumstances shall the aggregate amount paid or agreed to be paid hereunder exceed the highest lawful rate permitted under applicable usury law (the "Maximum Rate") and the payment obligations of Borrower under this Note are hereby limited accordingly. If under any circumstances, whether by reason of advancement or acceleration of the maturity of the unpaid principal balance hereof or otherwise, the aggregate amounts paid on this Note shall include amounts which by law are deemed interest and which would exceed the Maximum Rate, Borrower stipulates that payment and collection of such excess amounts shall have been and will be deemed to have been the result of a mistake on the part of both Borrower and the holder of this Note, and the party receiving such excess payments shall promptly credit such excess (to the extent only of such payments in excess of the Maximum Rate) against the unpaid principal balance hereof and any portion of such excess payments not capable of being so credited shall be refunded to Borrower. This Note is secured by the Pledge Agreements each executed in connection with this Note and the Line of Credit Agreement, and is entitled to the benefits and security thereof and any other documents or agreements given to Agent or Lender by Borrower, the Guarantors, or others as security for the Advance made under the Facility. This Note is guaranteed by the Guaranties and reference is made to the Guaranties for the respective rights of the parties thereunder. Borrower hereby agrees to indemnify, defend and hold harmless Lender from and against any and all claims, loss, cost, damage or expense (including, without limitation, reasonable attorneys' fees) which may be incurred by Lender as provided in the Line of Credit Agreement. All payments of principal and interest hereunder are payable in lawful money of the United States of America and shall be made by wire transfer to Agent, for the account of Lender, at such bank or other financial institution as Agent designates pursuant to wiring instructions to be provided to Borrower at the Closing of the Advance or thereafter. Borrower is hereby prohibited from exercising against Lender any right or remedy which it might otherwise be entitled to exercise against any one or more (but less than all) of the parties constituting Lender, including without limitation any right of setoff or any defense. This Note shall be binding on the parties hereto and their respective heirs, legal representatives, executors, successors and assigns. This Note shall be construed without any regard to any presumption or rule requiring construction against the party causing such instrument or any portion thereof to be drafted. This Note shall be governed by and construed in accordance with the laws of the State of New York without regard to choice of law considerations. Borrower hereby irrevocably consents to the jurisdiction of the courts of the State of New York, County of New York and of any federal court located in the Southern District of New York in connection with any action or proceeding arising out of or relating to this Note or the other Loan Documents. This Note may not be changed or terminated orally. A determination that any portion of this Note is unenforceable or invalid shall not affect the enforceability or validity of any other provision, and any determination that the application of any provision of this Note to any person or circumstance is illegal or unenforceable shall not affect the enforceability or validity of such provision to the extent legally permissible and otherwise as it may apply to other persons or circumstances. 4 JURY TRIAL WAIVER. BORROWER AGREES THAT ANY SUIT, ACTION OR PROCEEDING, WHETHER CLAIM OR COUNTERCLAIM, BROUGHT BY BORROWER OR THE HOLDER OF THIS NOTE ON OR WITH RESPECT TO THIS NOTE OR ANY OTHER LOAN DOCUMENT OR THE DEALINGS OF THE PARTIES WITH RESPECT HERETO OR THERETO, SHALL BE TRIED ONLY BY A COURT AND NOT BY A JURY. BORROWER AND LENDER EACH HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY SUCH SUIT, ACTION OR PROCEEDING. FURTHER, BORROWER WAIVES ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER, IN ANY SUCH SUIT, ACTION OR PROCEEDING, ANY SPECIAL, EXEMPLARY, PUNITIVE, CONSEQUENTIAL OR OTHER DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES. BORROWER ACKNOWLEDGES AND AGREES THAT THIS PARAGRAPH IS A SPECIFIC AND MATERIAL ASPECT OF THIS NOTE AND THAT LENDER WOULD NOT EXTEND CREDIT TO BORROWER IF THE WAIVERS SET FORTH IN THIS PARAGRAPH WERE NOT A PART OF THIS NOTE. [Remainder of page intentionally left blank. Signature page follows.] 5 IN WITNESS WHEREOF, the undersigned has executed this Note on the date first set forth above. OAK FINANCE INVESTMENTS LIMITED By: /s/ Kishore Jhunjhunwala ----------------------------------- Name: Kishore Jhunjhunwala EX-99.11 8 v020672_ex11.txt EXHIBIT 11 ASSIGNMENT AGREEMENT This ASSIGNMENT AGREEMENT (this "Agreement"), dated as of May 24, 2005, between OAK FINANCE INVESTMENTS LIMITED, a British Virgin Islands company ("Assignor") and STONEGATE BANK ("Assignee"), as administrative agent and collateral agent under the Line of Credit Agreement (as such term is hereafter defined). WHEREAS, pursuant to that certain Stock Purchase Agreement, dated as of January 21, 2005 (the "Stock Purchase Agreement"), Assignor has agreed to purchase 625,000 shares (the "Initially Purchased Shares") of the common stock of The A Consulting Team, Inc., a New York coropration (the "Company") on the Closing Date (as such term is defined in the Stock Purchase Agreement"); and WHEREAS, pursuant to Section 2.5 of the Stock Purchase Agreement, Assignor, and any Additional Shares Buyer (as such term is defined in the Share Purchase Agreement), shall have the right for 120 days from the Closing Date to purchase up to 625,000 additional shares of the common stock of the Company at the purchase price of $8.00 per share (the "Additional Shares Purchase Rights"); and WHEREAS, Assignor is a party to the Line of Credit Agreement, dated as of even date herewith, by and between Assignor, the lenders party thereto (collectively, the "Lender"), and Assignee, as administrative agent and collateral agent for the Lender (the "Line of Credit Agreement"), pursuant to which Lender has agreed to make available to Assignor a non-revolving line of credit facility in an aggregate principal amount not to exceed $16,750,000.00 for the purpose of financing Assignor's purchase of the Initially Purchased Shares; and WHEREAS, in furtherance of the lending arrangement contemplated under the Line of Credit Agreement, Assignor has agreed to assign to Assignee, for the benefit of Lender, its rights under the Additional Shares Purchase Rights effective as of the close of business on the third Business Day (as such term is defined in the Share Purchase Agreement) prior to the 120th day following the Closing Date. NOW, THEREFORE, in consideration of the premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Assignor and Assignee hereby agree as follows: 1. Assignee hereby assigns to Assignor (the "Assignment") all of its right, title and interest in and to the Additional Shares Purchase Rights, whether arising under Section 2.5 of the Stock Purchase Agreement or elsewhere in the Stock Purchase Agreement, but only to the extent Assignee has not exercised such Additional Shares Purchase Rights before 5:00 P.M. (New York, New York time) on the third Business Day prior to the 120th day following the Closing Date (the "Assignment Date"). Assignor and Assignee agree that the Assignment shall become, and shall be deemed to have become, effective as of 5:00 P.M. (New York, New York time) on the Assignment Date, without any further action or notice of either Assignor or Assignee. 2. The parties agree that, for the purposes of this Agreement, the delivery by Assignor to the Company of a notice to purchase shares of common stock of the Company under Section 2.5 of the Share Purchase Agreement extant as of the Assignment Date but which noticed purchase has not closed on or before 5:00 P.M. (New York time) on the Assignment Date shall not be an exercise of Additional Shares Purchase Rights, and as of 5:00 P.M. on the Assignment Date such extant notice shall be deemed withdrawn by the Assignor and shall be null and void and of no force and effect. 3. Assignor agrees to provide written notice to the Company on the Assignment Date that, effective as of the Assignment Date, Assignee shall be, and shall be deemed to be, the Additional Shares Buyer (as such term is defined in the Stock Purchase Agreement) with respect to any unexercised Additional Shares Purchase Rights arising under Section 2.5 of the Stock Purchase Agreement or elsewhere in the Stock Purchase Agreement. 4. Nothing in this Agreement shall prohibit Assignor from exercising, in whole or in part, the Additional Shares Purchase Rights at any time prior to 5:00 P.M. (New York, New York time) on the Assignment Date, so long as no Event of Default (as such term is defined in the Line of Credit Agreement ) has occurred and is continuing at the time of any such attempted exercise. Assignor and the Company agree that, during any period in which an Event of Default has occurred and is continuing, Assignor shall be prohibited from exercising the Additional Shares Purchase Rights, but nothing in this paragraph 3 shall affect the Assignment or Assignee's rights thereunder. 5. All covenants and agreements in this Agreement shall bind and inure to the benefit of the respective permitted successors and assigns of the parties hereto, provided, however, that neither Assignor nor the Company may assign its rights under this Agreement without the prior written consent of Assignee, and any such attempted assignment in violation of this Agreement shall be void and of no effect. 6. This Agreement is, and shall be deemed to be, a contract entered into under and pursuant to the laws of the State of New York (including, without limitation, Section 5-1401 of the New York General Obligations Law), without regard to conflicts of laws considerations and shall be in all respects governed, construed, applied and enforced in accordance with the laws of said state without regard to conflicts of laws consideration; and this Agreement shall be construed without regard to any presumption or rule requiring construction against the party causing such instrument or any portion thereof to be drafted; and no defense given or allowed by the laws of any other state or country shall be interposed in any action or proceeding hereon unless such defense is also given or allowed by the laws of the State of New York. Assignor and the Company hereby irrevocably consent to the jurisdiction of the courts of the State of New York, County of New York and of any federal court located in the Southern District of New York in connection with any action or proceeding arising out of or relating to this Agreement. 7. This Agreement shall constitute a Loan Document (as such term is defined in the Line of Credit Agreement. IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the day and year first set forth above. ASSIGNOR: OAK FINANCE INVESTMENTS LIMITED By: /s/ Kishore Jhunjhunwala ----------------------------------- Name: Kishore Jhunjhunwala ASSIGNEE: STONEGATE BANK, as administrative agent and collateral agent By: /s/ David Seleski ----------------------------------- Name: David Seleski Title: Chief Executive Officer and President EX-99.12 9 v020672_ex12.txt EXHIBIT 12 GUARANTY OF PAYMENT (SAURABH PATEL) $16,750,000.00 May 24, 2005 WHEREAS, pursuant to that certain Line of Credit Agreement, dated as of the date hereof, between Oak Finance Investments Limited, a British Virgin Islands company ("Borrower"), the Lenders party thereto (collectively, "Lender"), and Stonegate Bank, as administrative and collateral agent ("Agent"), Borrower has requested from Lender a non-revolving line of credit, pursuant to which Borrower may make a single draw in the total principal amount of SIXTEEN MILLION SEVEN HUNDRED FIFTY THOUSAND DOLLARS ($16,750,000.00) (the "Facility"); and WHEREAS, the Facility will be evidenced by promissory notes (collectively, the "Note") from Borrower to Lender dated as of the date hereof; and WHEREAS, Lender is willing to make the Facility available to Borrower only if, among other things, the undersigned (the "Guarantor") executes and delivers this Guaranty of Payment (as amended, restated, modified or supplemented from time to time, this "Guaranty") and guarantees payment to Lender of the Debt (as hereinafter defined) in the manner provided herein; and WHEREAS, the undersigned expects to derive benefit from the Facility; NOW, THEREFORE, for good and valuable consideration, the receipt of which is hereby acknowledged, in order to induce Lender to make the Facility available to Borrower, the undersigned hereby absolutely, irrevocably, and unconditionally guarantees to Lender the payment of the Debt, and covenants and agrees with Lender, as follows: Defined terms used herein but not defined herein shall have the meanings ascribed to them in the Line of Credit Agreement by and between Borrower and Lender dated on or about the date hereof (the "Loan Agreement"), and if not defined therein shall have the meanings ascribed to them in the other Loan Documents. The term "Debt" as used in this Guaranty shall mean the principal sum evidenced by the Note, together with interest thereon (including, without limitation, Minimum Interest (as defined in the Note)) at the rate of interest specified in the Note and all other sums, other than principal or interest, which may or shall become due and payable pursuant to the provisions of the Note or any other Loan Documents. Guarantor hereby absolutely, irrevocably and unconditionally guarantees the punctual payment when due, whether at stated maturity, by acceleration or otherwise, of the Debt and all obligations, and the performance of all agreements, of Borrower now or hereafter existing under the Loan Documents, whether for principal, interest, fees, expenses or otherwise. In the event of any failure of Borrower to pay or perform when due the Debt or any obligations under the Loan Documents, the Guarantor will immediately pay and perform the same at the time, place, funds and manner provided for in the Loan Documents, without set-off, counterclaim or deduction of any kind. Guarantor agrees that, if any payment made by Borrower or any other Person and applied to the Debt is at any time annulled, avoided, set aside, rescinded, invalidated, declared to be fraudulent or preferential or otherwise required to be refunded or repaid, or the proceeds of Collateral are required to be returned by Lender to Borrower, its estate, trustee, receiver or any other party, including Guarantor, under any bankruptcy law, state or federal law, common law or equitable cause, then, to the extent of such payment or repayment, Guarantor's liability hereunder (and any Collateral securing such liability) shall be and remain in full force and effect, as fully as if such payment had not been made, or, if prior thereto this Guaranty shall have been cancelled or surrendered (and if any Collateral securing Guarantor's liability hereunder shall have been released or terminated by virtue of such cancellation or surrender), this Guaranty (and such Collateral) shall be reinstated in full force and effect, and such prior cancellation or surrender shall not diminish, release, discharge, impair or otherwise affect the obligations of Guarantor in respect of the amount of such payment (or any Collateral securing such obligation). The undersigned agrees that, upon demand, the undersigned will reimburse Agent and Lender, to the extent that such reimbursement is not made by Borrower, for all expenses (including reasonable counsel fees) incurred by Agent and Lender in connection with the collection of the Debt or any portion thereof, including any expenses incurred in any post-judgment proceedings to collect and enforce the judgment. This provision is separate and several and shall survive the merger of this Guaranty into any judgment on this Guaranty. All moneys available to Agent and Lender for application in payment or reduction of the Debt may be applied by Agent and Lender in such manner and in such amounts and at such time or times and in such order and priority as Agent and Lender may see fit to the payment or reduction of such portion of the Debt or other obligations of Borrower as Agent and Lender may elect. The undersigned hereby consents that from time to time, before or after any default by Borrower, with or without further notice to or assent from the undersigned, (i) any security at any time held by or available to Agent or Lender for any obligation of Borrower, (ii) any security at any time held by or available to Agent or Lender for any obligation of any other person or party secondarily or otherwise liable for all or any portion of the Debt, and (iii) any obligation arising under any other guaranty to Agent or Lender made in connection with the Facility, may be exchanged, surrendered or released, and any obligation of Borrower may be changed, altered, renewed, extended, continued, surrendered, compromised, waived or released in whole or in part, or any default with respect thereto waived, and Agent or Lender may fail to set off and may release, in whole or in part, any balance of any credit on its books in favor of Borrower, and may extend further credit in any manner whatsoever to Borrower, and generally deal with Borrower or any such security or obligation, and the undersigned shall remain bound under this Guaranty notwithstanding any such exchange, surrender, release, change, alteration, renewal, extension, continuance, compromise, waiver, inaction, extension of further credit or other dealing. No (x) invalidity, irregularity or unenforceability of all or any part of the Debt or the impairment or loss of security or obligation therefor, whether caused by any action or inactions of Lender or otherwise, or (y) invalidity or unenforceability of the other Loan Documents, shall affect or impair this Guaranty. The undersigned hereby waives and agrees not to assert or take advantage of any defense based upon: (a) Notice of acceptance of this Guaranty and of the making of the Advance by Lender to Borrower; (b) Presentment and demand for payment of the Debt or any portion thereof; (c) Protest and notice of dishonor or default to the undersigned with respect to the Debt or any portion thereof; (d) Notice of intent to accelerate, notice of acceleration and all other notices to which the undersigned might otherwise be entitled; (e) Any demand for payment under this Guaranty; (f) The incapacity, lack of authority, death or disability of Borrower or any other person or entity; (g) The failure of Agent or Lender to commence an action against Borrower or any Guarantor or to proceed against or exhaust any security held by Agent or Lender at any time, or to pursue any other remedy whatsoever at any time; (h) Any duty on the part of Agent or Lender to disclose to the undersigned any facts Agent or Lender may now or hereafter know regarding Borrower, regardless of whether Agent or Lender has reason to believe (i) that any such facts materially increase the risk beyond that which the undersigned intends to assume, or (ii) that such facts are unknown to the undersigned, the undersigned acknowledging that he, she or it is fully responsible for being and keeping informed of the financial condition and affairs of Borrower; (i) Lack of notice of default, demand of performance or notice of acceleration to Borrower or any other party with respect to the Debt or the Advance or Borrower's obligations guaranteed hereby, except notices to cure provided for in the Loan Documents; (j) The consideration for this Guaranty (or lack or inadequacy thereof); (k) Any acts or omissions of Agent or Lender which vary, increase or decrease the risk on the undersigned; (l) Any rights or defenses based upon an offset by the undersigned against any obligation now or hereafter owed to the undersigned by Borrower; (m) Any statute of limitations affecting the liability of the undersigned hereunder, the liability of Borrower or any guarantor under the Loan Documents or the enforcement hereof, to the extent permitted by law; 3 (n) The application by Borrower of the proceeds of the Advance for purposes other than the purposes represented by Borrower to Lender and the undersigned or intended or understood by Lender or the undersigned; (o) An election of remedies by Agent or Lender, including any election to proceed against any Collateral by judicial or nonjudicial foreclosure, whether real property or personal property, or by deed in lieu thereof, and whether or not every aspect of any foreclosure sale is commercially reasonable, and whether or not any such election of remedies destroys or otherwise impairs the subrogation rights of the undersigned or the rights of the undersigned to proceed against Borrower or any guarantor by way of subrogation or for reimbursement or contribution, or all such rights; (p) Any statute or rule of law which provides that the obligation of a surety must be neither larger in amount nor in any other aspects more burdensome than that of the principal obligor; (q) Agent's or Lender's election, in any proceeding instituted under Title 11 of the United States Code (the "Bankruptcy Code"), of the application of Section 1111(b)(2) of the Bankruptcy Code or any successor statute; (r) Any borrowing or any grant of a security interest under Section 364 of the Bankruptcy Code; (s) AGENT AND LENDER MAY COLLECT FROM THE UNDERSIGNED WITHOUT FIRST FORECLOSING ON ANY REAL OR PERSONAL PROPERTY COLLATERAL PLEDGED BY BORROWER OR GUARANTOR; AND (t) IF AGENT OR LENDER FORECLOSES ON ANY REAL PROPERTY COLLATERAL PLEDGED BY BORROWER OR ANY GUARANTOR: (i) THE AMOUNT OF THE DEBT MAY BE REDUCED ONLY BY THE PRICE FOR WHICH THAT COLLATERAL IS SOLD AT THE FORECLOSURE SALE, EVEN IF THE COLLATERAL IS WORTH MORE THAN THE SALE PRICE; AND (ii) AGENT AND LENDER MAY COLLECT FROM THE UNDERSIGNED EVEN IF AGENT OR LENDER, BY FORECLOSING ON ANY REAL PROPERTY COLLATERAL, HAS DESTROYED ANY RIGHT THE UNDERSIGNED MAY HAVE TO COLLECT FROM BORROWER. THIS IS AN UNCONDITIONAL AND IRREVOCABLE WAIVER OF ANY RIGHTS AND DEFENSES THE UNDERSIGNED MAY HAVE BECAUSE BORROWER'S DEBT OR ANY GUARANTOR'S OBLIGATIONS HEREUNDER MAY BE SECURED BY REAL PROPERTY. This Guaranty is an absolute, irrevocable and unconditional guaranty of payment and not of collection and Lender, except as set forth above, shall be entitled to payment from the undersigned without first commencing any action against Borrower or resorting to any security or to any credit on the books of Agent or Lender in favor of Borrower. The undersigned acknowledges and agrees that this Guaranty and any or all other guaranties made to Lender in connection with this Facility are joint and several guaranties. Nothing herein shall preclude Agent or Lender from commencing legal actions and obtaining judgments simultaneously with actions against Borrower and with respect to other guarantors and any of Agent's or Lender's collateral. 4 Notwithstanding that Agent or Lender may obtain a judgment against Borrower or Guarantor, unless and until the Debt owed by Borrower to Lender is satisfied in full, the Debt shall continue to bear interest at the rates set forth in the Loan Documents and any advances that Lender makes to rehabilitate or protect any Collateral shall be added to the Debt. Each reference herein to Agent or Lender shall be deemed to include their respective successors and assigns, in whose favor the provisions of this Guaranty shall also inure. Each reference herein to the undersigned shall be deemed to include the heirs, executors, administrators, legal representatives, successors and assigns of the undersigned, all of whom shall be bound by the provisions of this Guaranty. No delay on the part of Agent or Lender in exercising any rights hereunder or failure to exercise the same shall operate as a waiver of such rights; no notice to or demand on the undersigned shall be deemed to be a waiver of the obligation of the undersigned or of the right of Agent or Lender to take further action without notice or demand as provided herein; nor in any event shall any modification or waiver of the provisions of this Guaranty be effective unless in writing nor shall any such waiver be applicable except in the specific instance for which such waiver is given. To further induce Lender to make the Facility available to Borrower, the Guarantor makes the following warranties and representations, as of the date hereof and the date of the Advance, with the knowledge that Lender will rely on the veracity thereof: (a) The execution and delivery by the Guarantor of this Guaranty and any other document executed and/or delivered by the Guarantor to Lender in connection herewith (collectively, the "Guaranty Documents"), and the performance of his obligations thereunder, do not and will not: (i) violate any provision of law, rule, regulation, order, writ, judgment, injunction, decree, determination or award presently in effect having applicability to the Guarantor; or (ii) result in any breach of or constitute any default under any indenture or loan or credit agreement or any other agreement, lease or instrument to which the Guarantor is a party or by which the Guarantor or his properties may be bound or affected, and the Guarantor is not in default under any such law, rule, regulation, order, writ, judgment, injunction, decree, determination or award or any such indenture, agreement, lease or instrument. (b) There is no material action, suit, proceeding, inquiry or investigation, at law or in equity, or before any court, governmental instrumentality, public board or arbitrator pending or threatened against or affecting the Guarantor or any of its properties or rights, wherein an unfavorable decision, ruling or finding would (i) to the extent not covered by insurance as to which the insurer has not disclaimed coverage, result in any material adverse change in the financial condition, business, properties or operations of the Guarantor; (ii) materially or adversely affect this Guaranty; or (iii) adversely affect the validity or enforceability of the Guaranty Documents. 5 (c) The execution and delivery by the Guarantor of this Guaranty, and the performance of his obligations hereunder, do not and will not: (i) require any further action, consent or approval on the part of the Guarantor; (ii) violate any provision of law, rule, regulation, order, writ, judgment, injunction, decree, determination or award presently in effect having applicability to the Guarantor; or (iii) result in any breach of or constitute a default under any indenture or loan or credit agreement or any other agreement, lease or instrument to which the Guarantor is a party or by which the Guarantor or his properties may be bound or affected, and the Guarantor is not in default under any such law, rule, regulation, order, writ, judgment, injunction, decree, determination or award or any such indenture, agreement, lease or instrument. (d) The Guarantor is in compliance with all applicable laws. (e) On the date hereof, (i) the assets of the Guarantor exceed the liabilities of Guarantor, and (ii) the Guarantor is paying the Guarantor's debts as they become due. (f) The financial statements provided by Guarantor to Agent and Lender pursuant to of the Loan Agreement are true, correct, and complete in all material respects as of the date thereof. To further induce Lender to make the Facility available to Borrower, the Guarantor hereby covenants and agrees that so long as the Advance shall remain outstanding and until the Obligations are paid and satisfied in full: (i) From and after the Transaction Closing Date, the Guarantor shall cause TAC to deliver to Lender, within 10 days after the end of each calendar month, a certificate of the chief financial officer (or otherwise the seniormost financial officer) of TAC certifying that as of the end of the preceding calendar month, in compliance with Section 10(o) of the Loan Agreement, since the Transaction Closing Date neither TAC nor any of its Subsidiaries has (w) made any advance, loan, extension of credit or capital contribution to, or purchased any stock, bonds, notes, debentures or other securities of or any assets constituting a business unit of, or make any other investment in, any Person (in each case, other than to a Subsidiary of TAC), (x) created, incurred, suffered to exist, assumed, guarantied, endorsed, became a surety, or otherwise became liable for the Indebtedness or other obligations of any other Person whether directly or indirectly, or made or incurred any advance, purchase commitment, other obligation or loan for the direct or indirect purpose of paying or discharging any such obligations, (y) entered into transactions with Affiliates, or (z) entered into any merger or consolidation or liquidated or wound-up or dissolved itself (or suffered any liquidation or dissolution) or conveyed, sold, leased, assigned, transferred or otherwise disposed of all or substantially all of its property, business or assets (in each case, other than to TAC or a Subsidiary of TAC), or made any material change in its present method of conducting business or permit any corporate guarantor to do any of the foregoing, in all cases other than (A) acquisitions of non-affiliated businesses by merger, acquisitions of shares or interest or acquisitions of assets that are approved by TAC's board of directors in good faith and, in each case, as to which, after giving effect to the issuance of shares of common stock as consideration, do not dilute the Oak TAC Shares and the Accommodation TAC Shares, in the aggregate, below 51% (or such larger percentage as the Lender, in its sole discretion, shall determine is necessary to control the management of TAC in light of the taking of any action by the board of directors of TAC that would require that the approval of more than 50% of the outstanding voting shares of TAC is necessary for the taking of any action by the shareholders, including, without limitation, the election of directors) of the issued and outstanding shares of common stock of TAC, or do not constitute at least 51% of the outstanding voting securities of TAC, after giving effect to the pledge of additional issued and outstanding shares by Excalibur, Ball or any other holder of TAC shares, (B) loans and dividends among any of TAC and its consolidated Subsidiaries, (C) transactions among any of TAC and its consolidated Subsidiaries (including the incurrence or guaranty of Indebtedness on behalf of TAC and its consolidate subsidiaries) that are entered into in the ordinary course of business, and (D) transactions that have been entered into prior to the date hereof among any of TAC and its consolidated Subsidiaries that are entered into in the ordinary course of business. 6 (ii) The Guarantor shall deliver to Lender, as soon as available and in no event later than 45 days after the end of each calendar quarter, commencing with the quarter ending September 30, 2005, a statement of his financial condition as of the end of such calendar quarter in a format substantially similar to the statement of financial condition of the Guarantor delivered in accordance with Section 5(a)(vii) of the Loan Agreement. (iii) From and after the Transaction Closing Date, the Guarantor shall cause TAC to deliver to Lender, promptly after the same becomes publicly available, copies of all periodic and other reports, proxy statements and other materials filed by TAC or any of its Subsidiaries with the United States Securities and Exchange Commission, or any Governmental Authority succeeding to any and all of the functions of said commission, or with any national securities exchange, as the case may be. (iv) From and after the Transaction Closing Date, the Guarantor shall cause TAC to file with the United States Securities and Exchange Commission, and take all commercially reasonable efforts to cause to become effective, a registration statement with respect to all shares of common stock or equity securities of TAC (i) as to which any Person has granted to Lender a security interest under the provisions of any of the Pledge Agreement or otherwise, or (ii) which are subject to issuance upon the exercise of the Warrants, in each case in accordance with the terms of the Share Exchange Agreement and the Stock Purchase Agreement regarding such registration. Such registration statement may also register for sale any other shares owned by Borrower, Ball, Excalibur or any other shareholders of TAC that desire to register shares for sale or resale. (v) The Guarantor shall not create, incur, or suffer to exist any Indebtedness, except Indebtedness hereunder and Indebtedness existing as of the date of the financial statements delivered pursuant to Section 5(a)(vii) of the Line of Credit Agreement. 7 Guarantor shall indemnify, protect, defend and save harmless the Indemnified Parties from and against (i) any and all losses, damages, expenses or liabilities of any kind or nature (collectively, "Losses") and from any suits, claims, or demands by third parties (collectively, "Claims") including reasonable counsel fees incurred in investigating or defending such Claims, suffered by any of them and caused by, relating to, arising out of, resulting from, or in any way connected with the Advance and the transactions contemplated herein, including without limitation any Losses and Claims arising from (w) any actual or proposed use by Borrower of any proceeds of the Advance, (x) any alleged breach of this Agreement or the Loan Documents, (y) the breach of any representation, warranty or covenant contained in this Agreement or any of the other Loan Documents by either the Borrower or the Guarantors and (z) the exercise by Lender of any rights or remedies hereunder or under any of the other Loan Documents; and (ii) any and all Losses sustained by Lender in connection with any environmental sampling or cleanup relating to any properties or assets owned or otherwise used by Borrower in the operation of its business, or mandated by any Environmental Law; provided, however, Guarantor shall not be obligated to indemnify, protect, defend or save harmless an Indemnified Party, if the loss, damage, expense or liability was caused by or resulted from the gross negligence or willful misconduct of that Indemnified Party. In case any action shall be brought against an Indemnified Party based upon any of the above and in respect to which indemnity may be sought against Guarantor, the Indemnified Party against whom such action was brought, shall promptly notify Guarantor in writing, and Guarantor shall assume the defense thereof, including the employment of counsel selected by Guarantor and reasonably satisfactory to the Indemnified Party, (which counsel may be counsel to the Borrower), the payment of all costs and expenses and the right to negotiate and consent to settlement. The Indemnified Party shall have the right to employ separate counsel in any such action and to participate in the defense thereof at the Indemnified Party's cost and expense. Guarantor shall not be liable for any settlement of any such action effected without its consent, unless such settlement includes an explicit and unconditional release from the party bringing the action of all Indemnified Parties and does not contain any admission of fault or culpability on behalf of such Indemnified Parties, but if settled with Guarantor's consent, or if there be a final judgment for the claimant in any such action, Guarantor agrees to indemnify and save harmless said Indemnified Party against whom such action was brought from and against any Loss by reason of such settlement or judgment. The provisions of this paragraph shall survive the termination of this Agreement and the Loan Agreement and the final repayment of the Advance. Notwithstanding any payments made by the undersigned pursuant to the provisions of this Guaranty, the undersigned shall have no right of subrogation in and to the Note, or any other security held by or available to Lender for the Debt or the payment thereof until the Debt has indefeasibly been paid in full in cash to Lender. Guarantor is hereby prohibited from exercising against Agent or Lender any right or remedy which it might otherwise be entitled to exercise against any one or more (but less than all) of the individual parties constituting Lender, including, without limitation, any right of set-off or any defense. 8 This Guaranty is, and shall be deemed to be, a contract entered into under and pursuant to the laws of the State of New York (including, without limitation, Section 5-1401 of the New York General Obligations Law), without regard to conflicts of laws considerations and shall be in all respects governed, construed, applied and enforced in accordance with the laws of said state without regard to conflicts of laws consideration; and this Guaranty shall be construed without regard to any presumption or rule requiring construction against the party causing such instrument or any portion thereof to be drafted; and no defense given or allowed by the laws of any other state or country shall be interposed in any action or proceeding hereon unless such defense is also given or allowed by the laws of the State of New York. The undersigned agrees to submit to personal jurisdiction in the State of New York in any action or proceeding arising out of this Guaranty and, in furtherance of such agreement, the undersigned hereby agrees and consents that without limiting other methods of obtaining jurisdiction, personal jurisdiction over the undersigned in any such action or proceeding may be obtained within or without the jurisdiction of any courts of the State of New York, County of New York, the courts of the United States of America for the Southern District of New York, and the appellate courts from any thereof, and that any process or notice of motion or other application to any such court in connection with any such action or proceeding may be served upon the undersigned by registered mail to or by personal service at the last known address of the undersigned, whether such address be within or without the jurisdiction of any such court. Notwithstanding the foregoing, Guarantor hereby designates CT Corporation as his duly appointed agent within the State of New York to accept service of process on their behalf. Guarantor hereby waives any claim, right or remedy which Guarantor may now have or hereafter acquire against Borrower that arises hereunder and/or from the performance by Guarantor hereunder including, without limitation, any claim, remedy or right of subrogation, reimbursement, exoneration, contribution, indemnification, or participation in any claim, right or remedy of Agent or Lender against Borrower or any security which Agent or Lender now has or hereafter acquires, whether or not such claim, right or remedy arises in equity, under contract, by statute, under common law or otherwise. The foregoing waiver by the Guarantor shall terminate and be of no further force or effect at such time as the entire Debt has been fully and indefeasibly paid to and received by Lender. A determination that any portion of this Guaranty is unenforceable or invalid shall not affect the enforceability or validity of any other provision, and any determination that the application of any provision of this Guaranty to any circumstance is illegal or unenforceable shall not affect the enforceability or validity of such provision as it may apply to other circumstances. JURY TRIAL WAIVER. THE UNDERSIGNED AGREES THAT ANY SUIT, ACTION OR PROCEEDING, WHETHER CLAIM OR COUNTERCLAIM, BROUGHT BY THE UNDERSIGNED OR LENDER ON OR WITH RESPECT TO THIS GUARANTY OR ANY OTHER LOAN DOCUMENT OR THE DEALINGS OF THE PARTIES WITH RESPECT HERETO OR THERETO, SHALL BE TRIED ONLY BY A COURT AND NOT BY A JURY. AGENT, LENDER AND THE UNDERSIGNED EACH HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY SUCH SUIT, ACTION OR PROCEEDING. FURTHER, THE UNDERSIGNED WAIVES ANY RIGHT ANY OF THEM MAY HAVE TO CLAIM OR RECOVER, IN ANY SUCH SUIT, ACTION OR PROCEEDING, ANY SPECIAL, EXEMPLARY, PUNITIVE, CONSEQUENTIAL OR OTHER DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES. THE UNDERSIGNED ACKNOWLEDGES AND AGREES THAT THIS PARAGRAPH IS A SPECIFIC AND MATERIAL ASPECT OF THIS GUARANTY AND THAT LENDER WOULD NOT EXTEND CREDIT TO BORROWER IF THE WAIVERS SET FORTH IN THIS PARAGRAPH WERE NOT A PART OF THIS GUARANTY. 9 WAIVER OF AUTOMATIC STAY. GUARANTOR HEREBY WAIVES ANY PROVISIONS APPLICABLE IN CONNECTION WITH ANY VOLUNTARY OR INVOLUNTARY INSOLVENCY, BANKRUPTCY, REORGANIZATION, FRAUDULENT CONVEYANCE, FRAUDULENT TRANSFER, OR SIMILAR PROCEEDINGS INVOLVING GUARANTOR UNDER ANY STATE OR FEDERAL LAW REGARDING CREDITORS' RIGHTS OR DEBTORS' OBLIGATIONS IMPOSING AGAINST AGENT OR LENDER, OR OTHERWISE PROVIDING FOR, AN AUTOMATIC STAY UNDER U.S.C. SECTION 362 OR ANY OTHER PROHIBITION AGAINST AGENT'S OR LENDER'S COMMENCING, MAINTAINING, OR COMPLETING ANY PROCEEDING IN CONNECTION WITH OR THE EXERCISE OR ENFORCEMENT OF ANY OF AGENT'S OR LENDER'S RIGHTS HEREUNDER, ANY OF THE LOAN DOCUMENTS OR ANY APPLICABLE LAW. GUARANTOR HEREBY ACKNOWLEDGES AND CONFIRMS THAT THIS SECTION IS A SPECIFIC AND MATERIAL ASPECT OF THIS AGREEMENT AND LENDER WOULD NOT EXTEND CREDIT TO BORROWER IF THE WAIVER SET FORTH IN THIS SECTION WERE NOT A PART OF THIS AGREEMENT. IN FURTHERANCE THEREOF, GUARANTOR, AGENT AND LENDER AGREE AS FOLLOWS: (a) THAT IN THE EVENT OF IMPOSITION OF ANY SUCH STAY OR OTHER PROHIBITION, AGENT AND LENDER MAY SEEK TO LIFT ANY SUCH STAY OR OTHER PROHIBITION OR SEEK EXEMPTION THEREFROM; (b) THAT GUARANTOR WILL NOT CONTEST ANY SUCH MOTION MADE BY AGENT OR LENDER FOR LIFTING THEREOF OR FOR EXEMPTION THEREFROM; AND (c) THAT GUARANTOR WILL COOPERATE WITH AGENT AND LENDER, IN ANY MANNER REQUESTED BY AGENT OR LENDER, IN THEIR EFFORTS TO OBTAIN RELIEF FROM ANY SUCH STAY OR OTHER PROHIBITION [Signature page follows] 10 IN WITNESS WHEREOF, the undersigned has executed this Guaranty as of the date first above set forth. GUARANTOR: /s/ Saurabh Patel -------------------------------------- SAURABH PATEL ------------------------------ Address: 6 Bittacy Park Avenue, Mill Hill, London NW7 2HA, United Kingdom 11 EX-99.13 10 v020672_ex13.txt EXHIBIT 13 GUARANTY OF PAYMENT (KISHOR JHUNJHUNWALA) $16,750,000.00 May 24, 2005 WHEREAS, pursuant to that certain Line of Credit Agreement, dated as of the date hereof, between Oak Finance Investments Limited, a British Virgin Islands company ("Borrower"), the Lenders party thereto (collectively, "Lender"), and Stonegate Bank, as administrative and collateral agent ("Agent"), Borrower has requested from Lender a non-revolving line of credit, pursuant to which Borrower may make a single draw in the total principal amount of SIXTEEN MILLION SEVEN HUNDRED FIFTY THOUSAND DOLLARS ($16,750,000.00) (the "Facility"); and WHEREAS, the Facility will be evidenced by promissory notes (collectively, the "Note") from Borrower to Lender dated as of the date hereof; and WHEREAS, Lender is willing to make the Facility available to Borrower only if, among other things, the undersigned (the "Guarantor") executes and delivers this Guaranty of Payment (as amended, restated, modified or supplemented from time to time, this "Guaranty") and guarantees payment to Lender of the Debt (as hereinafter defined) in the manner provided herein; and WHEREAS, the undersigned expects to derive benefit from the Facility; NOW, THEREFORE, for good and valuable consideration, the receipt of which is hereby acknowledged, in order to induce Lender to make the Facility available to Borrower, the undersigned hereby absolutely, irrevocably, and unconditionally guarantees to Lender the payment of the Debt, and covenants and agrees with Lender, as follows: Defined terms used herein but not defined herein shall have the meanings ascribed to them in the Line of Credit Agreement by and between Borrower and Lender dated on or about the date hereof (the "Loan Agreement"), and if not defined therein shall have the meanings ascribed to them in the other Loan Documents. The term "Debt" as used in this Guaranty shall mean the principal sum evidenced by the Note, together with interest thereon (including, without limitation, Minimum Interest (as defined in the Note)) at the rate of interest specified in the Note and all other sums, other than principal or interest, which may or shall become due and payable pursuant to the provisions of the Note or any other Loan Documents. Guarantor hereby absolutely, irrevocably and unconditionally guarantees the punctual payment when due, whether at stated maturity, by acceleration or otherwise, of the Debt and all obligations, and the performance of all agreements, of Borrower now or hereafter existing under the Loan Documents, whether for principal, interest, fees, expenses or otherwise. In the event of any failure of Borrower to pay or perform when due the Debt or any obligations under the Loan Documents, the Guarantor will immediately pay and perform the same at the time, place, funds and manner provided for in the Loan Documents, without set-off, counterclaim or deduction of any kind. Guarantor agrees that, if any payment made by Borrower or any other Person and applied to the Debt is at any time annulled, avoided, set aside, rescinded, invalidated, declared to be fraudulent or preferential or otherwise required to be refunded or repaid, or the proceeds of Collateral are required to be returned by Lender to Borrower, its estate, trustee, receiver or any other party, including Guarantor, under any bankruptcy law, state or federal law, common law or equitable cause, then, to the extent of such payment or repayment, Guarantor's liability hereunder (and any Collateral securing such liability) shall be and remain in full force and effect, as fully as if such payment had not been made, or, if prior thereto this Guaranty shall have been cancelled or surrendered (and if any Collateral securing Guarantor's liability hereunder shall have been released or terminated by virtue of such cancellation or surrender), this Guaranty (and such Collateral) shall be reinstated in full force and effect, and such prior cancellation or surrender shall not diminish, release, discharge, impair or otherwise affect the obligations of Guarantor in respect of the amount of such payment (or any Collateral securing such obligation). The undersigned agrees that, upon demand, the undersigned will reimburse Agent and Lender, to the extent that such reimbursement is not made by Borrower, for all expenses (including reasonable counsel fees) incurred by Agent and Lender in connection with the collection of the Debt or any portion thereof, including any expenses incurred in any post-judgment proceedings to collect and enforce the judgment. This provision is separate and several and shall survive the merger of this Guaranty into any judgment on this Guaranty. All moneys available to Agent and Lender for application in payment or reduction of the Debt may be applied by Agent and Lender in such manner and in such amounts and at such time or times and in such order and priority as Agent and Lender may see fit to the payment or reduction of such portion of the Debt or other obligations of Borrower as Agent and Lender may elect. The undersigned hereby consents that from time to time, before or after any default by Borrower, with or without further notice to or assent from the undersigned, (i) any security at any time held by or available to Agent or Lender for any obligation of Borrower, (ii) any security at any time held by or available to Agent or Lender for any obligation of any other person or party secondarily or otherwise liable for all or any portion of the Debt, and (iii) any obligation arising under any other guaranty to Agent or Lender made in connection with the Facility, may be exchanged, surrendered or released, and any obligation of Borrower may be changed, altered, renewed, extended, continued, surrendered, compromised, waived or released in whole or in part, or any default with respect thereto waived, and Agent or Lender may fail to set off and may release, in whole or in part, any balance of any credit on its books in favor of Borrower, and may extend further credit in any manner whatsoever to Borrower, and generally deal with Borrower or any such security or obligation, and the undersigned shall remain bound under this Guaranty notwithstanding any such exchange, surrender, release, change, alteration, renewal, extension, continuance, compromise, waiver, inaction, extension of further credit or other dealing. No (x) invalidity, irregularity or unenforceability of all or any part of the Debt or the impairment or loss of security or obligation therefor, whether caused by any action or inactions of Lender or otherwise, or (y) invalidity or unenforceability of the other Loan Documents, shall affect or impair this Guaranty. 2 The undersigned hereby waives and agrees not to assert or take advantage of any defense based upon: (a) Notice of acceptance of this Guaranty and of the making of the Advance by Lender to Borrower; (b) Presentment and demand for payment of the Debt or any portion thereof; (c) Protest and notice of dishonor or default to the undersigned with respect to the Debt or any portion thereof; (d) Notice of intent to accelerate, notice of acceleration and all other notices to which the undersigned might otherwise be entitled; (e) Any demand for payment under this Guaranty; (f) The incapacity, lack of authority, death or disability of Borrower or any other person or entity; (g) The failure of Agent or Lender to commence an action against Borrower or any Guarantor or to proceed against or exhaust any security held by Agent or Lender at any time, or to pursue any other remedy whatsoever at any time; (h) Any duty on the part of Agent or Lender to disclose to the undersigned any facts Agent or Lender may now or hereafter know regarding Borrower, regardless of whether Agent or Lender has reason to believe (i) that any such facts materially increase the risk beyond that which the undersigned intends to assume, or (ii) that such facts are unknown to the undersigned, the undersigned acknowledging that he, she or it is fully responsible for being and keeping informed of the financial condition and affairs of Borrower; (i) Lack of notice of default, demand of performance or notice of acceleration to Borrower or any other party with respect to the Debt or the Advance or Borrower's obligations guaranteed hereby, except notices to cure provided for in the Loan Documents; (j) The consideration for this Guaranty (or lack or inadequacy thereof); (k) Any acts or omissions of Agent or Lender which vary, increase or decrease the risk on the undersigned; (l) Any rights or defenses based upon an offset by the undersigned against any obligation now or hereafter owed to the undersigned by Borrower; (m) Any statute of limitations affecting the liability of the undersigned hereunder, the liability of Borrower or any guarantor under the Loan Documents or the enforcement hereof, to the extent permitted by law; 3 (n) The application by Borrower of the proceeds of the Advance for purposes other than the purposes represented by Borrower to Lender and the undersigned or intended or understood by Lender or the undersigned; (o) An election of remedies by Agent or Lender, including any election to proceed against any Collateral by judicial or nonjudicial foreclosure, whether real property or personal property, or by deed in lieu thereof, and whether or not every aspect of any foreclosure sale is commercially reasonable, and whether or not any such election of remedies destroys or otherwise impairs the subrogation rights of the undersigned or the rights of the undersigned to proceed against Borrower or any guarantor by way of subrogation or for reimbursement or contribution, or all such rights; (p) Any statute or rule of law which provides that the obligation of a surety must be neither larger in amount nor in any other aspects more burdensome than that of the principal obligor; (q) Agent's or Lender's election, in any proceeding instituted under Title 11 of the United States Code (the "Bankruptcy Code"), of the application of Section 1111(b)(2) of the Bankruptcy Code or any successor statute; (r) Any borrowing or any grant of a security interest under Section 364 of the Bankruptcy Code; (s) AGENT AND LENDER MAY COLLECT FROM THE UNDERSIGNED WITHOUT FIRST FORECLOSING ON ANY REAL OR PERSONAL PROPERTY COLLATERAL PLEDGED BY BORROWER OR GUARANTOR; AND (t) IF AGENT OR LENDER FORECLOSES ON ANY REAL PROPERTY COLLATERAL PLEDGED BY BORROWER OR ANY GUARANTOR: (i) THE AMOUNT OF THE DEBT MAY BE REDUCED ONLY BY THE PRICE FOR WHICH THAT COLLATERAL IS SOLD AT THE FORECLOSURE SALE, EVEN IF THE COLLATERAL IS WORTH MORE THAN THE SALE PRICE; AND (ii) AGENT AND LENDER MAY COLLECT FROM THE UNDERSIGNED EVEN IF AGENT OR LENDER, BY FORECLOSING ON ANY REAL PROPERTY COLLATERAL, HAS DESTROYED ANY RIGHT THE UNDERSIGNED MAY HAVE TO COLLECT FROM BORROWER. THIS IS AN UNCONDITIONAL AND IRREVOCABLE WAIVER OF ANY RIGHTS AND DEFENSES THE UNDERSIGNED MAY HAVE BECAUSE BORROWER'S DEBT OR ANY GUARANTOR'S OBLIGATIONS HEREUNDER MAY BE SECURED BY REAL PROPERTY. This Guaranty is an absolute, irrevocable and unconditional guaranty of payment and not of collection and Lender, except as set forth above, shall be entitled to payment from the undersigned without first commencing any action against Borrower or resorting to any security or to any credit on the books of Agent or Lender in favor of Borrower. The undersigned acknowledges and agrees that this Guaranty and any or all other guaranties made to Lender in connection with this Facility are joint and several guaranties. Nothing herein shall preclude Agent or Lender from commencing legal actions and obtaining judgments simultaneously with actions against Borrower and with respect to other guarantors and any of Agent's or Lender's collateral. 5 Notwithstanding that Agent or Lender may obtain a judgment against Borrower or Guarantor, unless and until the Debt owed by Borrower to Lender is satisfied in full, the Debt shall continue to bear interest at the rates set forth in the Loan Documents and any advances that Lender makes to rehabilitate or protect any Collateral shall be added to the Debt. Each reference herein to Agent or Lender shall be deemed to include their respective successors and assigns, in whose favor the provisions of this Guaranty shall also inure. Each reference herein to the undersigned shall be deemed to include the heirs, executors, administrators, legal representatives, successors and assigns of the undersigned, all of whom shall be bound by the provisions of this Guaranty. No delay on the part of Agent or Lender in exercising any rights hereunder or failure to exercise the same shall operate as a waiver of such rights; no notice to or demand on the undersigned shall be deemed to be a waiver of the obligation of the undersigned or of the right of Agent or Lender to take further action without notice or demand as provided herein; nor in any event shall any modification or waiver of the provisions of this Guaranty be effective unless in writing nor shall any such waiver be applicable except in the specific instance for which such waiver is given. To further induce Lender to make the Facility available to Borrower, the Guarantor makes the following warranties and representations, as of the date hereof and the date of the Advance, with the knowledge that Lender will rely on the veracity thereof: (a) The execution and delivery by the Guarantor of this Guaranty and any other document executed and/or delivered by the Guarantor to Lender in connection herewith (collectively, the "Guaranty Documents"), and the performance of his obligations thereunder, do not and will not: (i) violate any provision of law, rule, regulation, order, writ, judgment, injunction, decree, determination or award presently in effect having applicability to the Guarantor; or (ii) result in any breach of or constitute any default under any indenture or loan or credit agreement or any other agreement, lease or instrument to which the Guarantor is a party or by which the Guarantor or his properties may be bound or affected, and the Guarantor is not in default under any such law, rule, regulation, order, writ, judgment, injunction, decree, determination or award or any such indenture, agreement, lease or instrument. (b) There is no material action, suit, proceeding, inquiry or investigation, at law or in equity, or before any court, governmental instrumentality, public board or arbitrator pending or threatened against or affecting the Guarantor or any of its properties or rights, wherein an unfavorable decision, ruling or finding would (i) to the extent not covered by insurance as to which the insurer has not disclaimed coverage, result in any material adverse change in the financial condition, business, properties or operations of the Guarantor; (ii) materially or adversely affect this Guaranty; or (iii) adversely affect the validity or enforceability of the Guaranty Documents. 6 (c) The execution and delivery by the Guarantor of this Guaranty, and the performance of his obligations hereunder, do not and will not: (i) require any further action, consent or approval on the part of the Guarantor; (ii) violate any provision of law, rule, regulation, order, writ, judgment, injunction, decree, determination or award presently in effect having applicability to the Guarantor; or (iii) result in any breach of or constitute a default under any indenture or loan or credit agreement or any other agreement, lease or instrument to which the Guarantor is a party or by which the Guarantor or his properties may be bound or affected, and the Guarantor is not in default under any such law, rule, regulation, order, writ, judgment, injunction, decree, determination or award or any such indenture, agreement, lease or instrument. (d) The Guarantor is in compliance with all applicable laws. (e) On the date hereof, (i) the assets of the Guarantor exceed the liabilities of Guarantor, and (ii) the Guarantor is paying the Guarantor's debts as they become due. (f) The financial statements provided by Guarantor to Agent and Lender pursuant to of the Loan Agreement are true, correct, and complete in all material respects as of the date thereof. To further induce Lender to make the Facility available to Borrower, the Guarantor hereby covenants and agrees that so long as the Advance shall remain outstanding and until the Obligations are paid and satisfied in full: (i) From and after the Transaction Closing Date, the Guarantor shall cause TAC to deliver to Lender, within 10 days after the end of each calendar month, a certificate of the chief financial officer (or otherwise the seniormost financial officer) of TAC certifying that as of the end of the preceding calendar month, in compliance with Section 10(o) of the Loan Agreement, since the Transaction Closing Date neither TAC nor any of its Subsidiaries has (w) made any advance, loan, extension of credit or capital contribution to, or purchased any stock, bonds, notes, debentures or other securities of or any assets constituting a business unit of, or make any other investment in, any Person (in each case, other than to a Subsidiary of TAC), (x) created, incurred, suffered to exist, assumed, guarantied, endorsed, became a surety, or otherwise became liable for the Indebtedness or other obligations of any other Person whether directly or indirectly, or made or incurred any advance, purchase commitment, other obligation or loan for the direct or indirect purpose of paying or discharging any such obligations, (y) entered into transactions with Affiliates, or (z) entered into any merger or consolidation or liquidated or wound-up or dissolved itself (or suffered any liquidation or dissolution) or conveyed, sold, leased, assigned, transferred or otherwise disposed of all or substantially all of its property, business or assets (in each case, other than to TAC or a Subsidiary of TAC), or made any material change in its present method of conducting business or permit any corporate guarantor to do any of the foregoing, in all cases other than (A) acquisitions of non-affiliated businesses by merger, acquisitions of shares or interest or acquisitions of assets that are approved by TAC's board of directors in good faith and, in each case, as to which, after giving effect to the issuance of shares of common stock as consideration, do not dilute the Oak TAC Shares and the Accommodation TAC Shares, in the aggregate, below 51% (or such larger percentage as the Lender, in its sole discretion, shall determine is necessary to control the management of TAC in light of the taking of any action by the board of directors of TAC that would require that the approval of more than 50% of the outstanding voting shares of TAC is necessary for the taking of any action by the shareholders, including, without limitation, the election of directors) of the issued and outstanding shares of common stock of TAC, or do not constitute at least 51% of the outstanding voting securities of TAC, after giving effect to the pledge of additional issued and outstanding shares by Excalibur, Ball or any other holder of TAC shares, (B) loans and dividends among any of TAC and its consolidated Subsidiaries, (C) transactions among any of TAC and its consolidated Subsidiaries (including the incurrence or guaranty of Indebtedness on behalf of TAC and its consolidate subsidiaries) that are entered into in the ordinary course of business, and (D) transactions that have been entered into prior to the date hereof among any of TAC and its consolidated Subsidiaries that are entered into in the ordinary course of business. 7 (ii) The Guarantor shall deliver to Lender, as soon as available and in no event later than 45 days after the end of each calendar quarter, commencing with the quarter ending September 30, 2005, a statement of his financial condition as of the end of such calendar quarter in a format substantially similar to the statement of financial condition of the Guarantor delivered in accordance with Section 5(a)(vii) of the Loan Agreement. (iii) From and after the Transaction Closing Date, the Guarantor shall cause TAC to deliver to Lender, promptly after the same becomes publicly available, copies of all periodic and other reports, proxy statements and other materials filed by TAC or any of its Subsidiaries with the United States Securities and Exchange Commission, or any Governmental Authority succeeding to any and all of the functions of said commission, or with any national securities exchange, as the case may be. (iv) From and after the Transaction Closing Date, the Guarantor shall cause TAC to file with the United States Securities and Exchange Commission, and take all commercially reasonable efforts to cause to become effective, a registration statement with respect to all shares of common stock or equity securities of TAC (i) as to which any Person has granted to Lender a security interest under the provisions of any of the Pledge Agreement or otherwise, or (ii) which are subject to issuance upon the exercise of the Warrants, in each case in accordance with the terms of the Share Exchange Agreement and the Stock Purchase Agreement regarding such registration. Such registration statement may also register for sale any other shares owned by Borrower, Ball, Excalibur or any other shareholders of TAC that desire to register shares for sale or resale. (v) The Guarantor shall not create, incur, or suffer to exist any Indebtedness, except Indebtedness hereunder and Indebtedness existing as of the date of the financial statements delivered pursuant to Section 5(a)(vii) of the Line of Credit Agreement. 8 Guarantor shall indemnify, protect, defend and save harmless the Indemnified Parties from and against (i) any and all losses, damages, expenses or liabilities of any kind or nature (collectively, "Losses") and from any suits, claims, or demands by third parties (collectively, "Claims") including reasonable counsel fees incurred in investigating or defending such Claims, suffered by any of them and caused by, relating to, arising out of, resulting from, or in any way connected with the Advance and the transactions contemplated herein, including without limitation any Losses and Claims arising from (w) any actual or proposed use by Borrower of any proceeds of the Advance, (x) any alleged breach of this Agreement or the Loan Documents, (y) the breach of any representation, warranty or covenant contained in this Agreement or any of the other Loan Documents by either the Borrower or the Guarantors and (z) the exercise by Lender of any rights or remedies hereunder or under any of the other Loan Documents; and (ii) any and all Losses sustained by Lender in connection with any environmental sampling or cleanup relating to any properties or assets owned or otherwise used by Borrower in the operation of its business, or mandated by any Environmental Law; provided, however, Guarantor shall not be obligated to indemnify, protect, defend or save harmless an Indemnified Party, if the loss, damage, expense or liability was caused by or resulted from the gross negligence or willful misconduct of that Indemnified Party. In case any action shall be brought against an Indemnified Party based upon any of the above and in respect to which indemnity may be sought against Guarantor, the Indemnified Party against whom such action was brought, shall promptly notify Guarantor in writing, and Guarantor shall assume the defense thereof, including the employment of counsel selected by Guarantor and reasonably satisfactory to the Indemnified Party, (which counsel may be counsel to the Borrower), the payment of all costs and expenses and the right to negotiate and consent to settlement. The Indemnified Party shall have the right to employ separate counsel in any such action and to participate in the defense thereof at the Indemnified Party's cost and expense. Guarantor shall not be liable for any settlement of any such action effected without its consent, unless such settlement includes an explicit and unconditional release from the party bringing the action of all Indemnified Parties and does not contain any admission of fault or culpability on behalf of such Indemnified Parties, but if settled with Guarantor's consent, or if there be a final judgment for the claimant in any such action, Guarantor agrees to indemnify and save harmless said Indemnified Party against whom such action was brought from and against any Loss by reason of such settlement or judgment. The provisions of this paragraph shall survive the termination of this Agreement and the Loan Agreement and the final repayment of the Advance. Notwithstanding any payments made by the undersigned pursuant to the provisions of this Guaranty, the undersigned shall have no right of subrogation in and to the Note, or any other security held by or available to Lender for the Debt or the payment thereof until the Debt has indefeasibly been paid in full in cash to Lender. Guarantor is hereby prohibited from exercising against Agent or Lender any right or remedy which it might otherwise be entitled to exercise against any one or more (but less than all) of the individual parties constituting Lender, including, without limitation, any right of set-off or any defense. 9 This Guaranty is, and shall be deemed to be, a contract entered into under and pursuant to the laws of the State of New York (including, without limitation, Section 5-1401 of the New York General Obligations Law), without regard to conflicts of laws considerations and shall be in all respects governed, construed, applied and enforced in accordance with the laws of said state without regard to conflicts of laws consideration; and this Guaranty shall be construed without regard to any presumption or rule requiring construction against the party causing such instrument or any portion thereof to be drafted; and no defense given or allowed by the laws of any other state or country shall be interposed in any action or proceeding hereon unless such defense is also given or allowed by the laws of the State of New York. The undersigned agrees to submit to personal jurisdiction in the State of New York in any action or proceeding arising out of this Guaranty and, in furtherance of such agreement, the undersigned hereby agrees and consents that without limiting other methods of obtaining jurisdiction, personal jurisdiction over the undersigned in any such action or proceeding may be obtained within or without the jurisdiction of any courts of the State of New York, County of New York, the courts of the United States of America for the Southern District of New York, and the appellate courts from any thereof, and that any process or notice of motion or other application to any such court in connection with any such action or proceeding may be served upon the undersigned by registered mail to or by personal service at the last known address of the undersigned, whether such address be within or without the jurisdiction of any such court. Notwithstanding the foregoing, Guarantor hereby designates CT Corporation as his duly appointed agent within the State of New York to accept service of process on their behalf. Guarantor hereby waives any claim, right or remedy which Guarantor may now have or hereafter acquire against Borrower that arises hereunder and/or from the performance by Guarantor hereunder including, without limitation, any claim, remedy or right of subrogation, reimbursement, exoneration, contribution, indemnification, or participation in any claim, right or remedy of Agent or Lender against Borrower or any security which Agent or Lender now has or hereafter acquires, whether or not such claim, right or remedy arises in equity, under contract, by statute, under common law or otherwise. The foregoing waiver by the Guarantor shall terminate and be of no further force or effect at such time as the entire Debt has been fully and indefeasibly paid to and received by Lender. A determination that any portion of this Guaranty is unenforceable or invalid shall not affect the enforceability or validity of any other provision, and any determination that the application of any provision of this Guaranty to any circumstance is illegal or unenforceable shall not affect the enforceability or validity of such provision as it may apply to other circumstances. JURY TRIAL WAIVER. THE UNDERSIGNED AGREES THAT ANY SUIT, ACTION OR PROCEEDING, WHETHER CLAIM OR COUNTERCLAIM, BROUGHT BY THE UNDERSIGNED OR LENDER ON OR WITH RESPECT TO THIS GUARANTY OR ANY OTHER LOAN DOCUMENT OR THE DEALINGS OF THE PARTIES WITH RESPECT HERETO OR THERETO, SHALL BE TRIED ONLY BY A COURT AND NOT BY A JURY. AGENT, LENDER AND THE UNDERSIGNED EACH HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY SUCH SUIT, ACTION OR PROCEEDING. FURTHER, THE UNDERSIGNED WAIVES ANY RIGHT ANY OF THEM MAY HAVE TO CLAIM OR RECOVER, IN ANY SUCH SUIT, ACTION OR PROCEEDING, ANY SPECIAL, EXEMPLARY, PUNITIVE, CONSEQUENTIAL OR OTHER DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES. THE UNDERSIGNED ACKNOWLEDGES AND AGREES THAT THIS PARAGRAPH IS A SPECIFIC AND MATERIAL ASPECT OF THIS GUARANTY AND THAT LENDER WOULD NOT EXTEND CREDIT TO BORROWER IF THE WAIVERS SET FORTH IN THIS PARAGRAPH WERE NOT A PART OF THIS GUARANTY. 10 WAIVER OF AUTOMATIC STAY. GUARANTOR HEREBY WAIVES ANY PROVISIONS APPLICABLE IN CONNECTION WITH ANY VOLUNTARY OR INVOLUNTARY INSOLVENCY, BANKRUPTCY, REORGANIZATION, FRAUDULENT CONVEYANCE, FRAUDULENT TRANSFER, OR SIMILAR PROCEEDINGS INVOLVING GUARANTOR UNDER ANY STATE OR FEDERAL LAW REGARDING CREDITORS' RIGHTS OR DEBTORS' OBLIGATIONS IMPOSING AGAINST AGENT OR LENDER, OR OTHERWISE PROVIDING FOR, AN AUTOMATIC STAY UNDER U.S.C. SECTION 362 OR ANY OTHER PROHIBITION AGAINST AGENT'S OR LENDER'S COMMENCING, MAINTAINING, OR COMPLETING ANY PROCEEDING IN CONNECTION WITH OR THE EXERCISE OR ENFORCEMENT OF ANY OF AGENT'S OR LENDER'S RIGHTS HEREUNDER, ANY OF THE LOAN DOCUMENTS OR ANY APPLICABLE LAW. GUARANTOR HEREBY ACKNOWLEDGES AND CONFIRMS THAT THIS SECTION IS A SPECIFIC AND MATERIAL ASPECT OF THIS AGREEMENT AND LENDER WOULD NOT EXTEND CREDIT TO BORROWER IF THE WAIVER SET FORTH IN THIS SECTION WERE NOT A PART OF THIS AGREEMENT. IN FURTHERANCE THEREOF, GUARANTOR, AGENT AND LENDER AGREE AS FOLLOWS: (a) THAT IN THE EVENT OF IMPOSITION OF ANY SUCH STAY OR OTHER PROHIBITION, AGENT AND LENDER MAY SEEK TO LIFT ANY SUCH STAY OR OTHER PROHIBITION OR SEEK EXEMPTION THEREFROM; (b) THAT GUARANTOR WILL NOT CONTEST ANY SUCH MOTION MADE BY AGENT OR LENDER FOR LIFTING THEREOF OR FOR EXEMPTION THEREFROM; AND (c) THAT GUARANTOR WILL COOPERATE WITH AGENT AND LENDER, IN ANY MANNER REQUESTED BY AGENT OR LENDER, IN THEIR EFFORTS TO OBTAIN RELIEF FROM ANY SUCH STAY OR OTHER PROHIBITION [Signature page follows] 11 IN WITNESS WHEREOF, the undersigned has executed this Guaranty as of the date first above set forth. GUARANTOR: /s/ Kishor Jhunjhunwala -------------------------------------- KISHOR JHUNJHUNWALA ------------------------------ Address: 12 EX-99.14 11 v020672_ex14.txt EXHIBIT 14 GUARANTY OF PAYMENT (ANDREW HARRY BALL) $16,750,000.00 May 24, 2005 WHEREAS, pursuant to that certain Line of Credit Agreement, dated as of the date hereof, between Oak Finance Investments Limited, a British Virgin Islands company ("Borrower"), the Lenders party thereto (collectively, "Lender"), and Stonegate Bank, as administrative and collateral agent ("Agent"), Borrower has requested from Lender a non-revolving line of credit, pursuant to which Borrower may make a single draw in the total principal amount of SIXTEEN MILLION SEVEN HUNDRED FIFTY THOUSAND DOLLARS ($16,750,000.00) (the "Facility"); and WHEREAS, the Facility will be evidenced by promissory notes (collectively, the "Note") from Borrower to Lender dated as of June 1, 2005; and WHEREAS, Lender is willing to make the Facility available to Borrower only if, among other things, the undersigned (the "Guarantor") executes and delivers this Guaranty of Payment (as amended, restated, modified or supplemented from time to time, this "Guaranty") and guarantees payment to Lender of the Debt (as hereinafter defined) in the manner provided herein; and WHEREAS, the undersigned expects to derive benefit from the Facility; NOW, THEREFORE, for good and valuable consideration, the receipt of which is hereby acknowledged, in order to induce Lender to make the Facility available to Borrower, the undersigned hereby absolutely, irrevocably, and unconditionally guarantees to Lender the payment of the Debt, and covenants and agrees with Lender, as follows: Defined terms used herein but not defined herein shall have the meanings ascribed to them in the Line of Credit Agreement by and between Borrower and Lender dated on or about the date hereof (the "Loan Agreement"), and if not defined therein shall have the meanings ascribed to them in the other Loan Documents. The term "Debt" as used in this Guaranty shall mean the principal sum evidenced by the Note, together with interest thereon (including, without limitation, Minimum Interest (as defined in the Note)) at the rate of interest specified in the Note and all other sums, other than principal or interest, which may or shall become due and payable pursuant to the provisions of the Note or any other Loan Documents. Guarantor hereby absolutely, irrevocably and unconditionally guarantees the punctual payment when due, whether at stated maturity, by acceleration or otherwise, of the Debt and all obligations, and the performance of all agreements, of Borrower now or hereafter existing under the Loan Documents, whether for principal, interest, fees, expenses or otherwise. In the event of any failure of Borrower to pay or perform when due the Debt or any obligations under the Loan Documents, the Guarantor will immediately pay and perform the same at the time, place, funds and manner provided for in the Loan Documents, without set-off, counterclaim or deduction of any kind. Guarantor further hereby absolutely, irrevocably and unconditionally guarantees the performance of all agreements of Borrower and Excalibur Investment Group Limited ("Excalibur"), a British Virgin Islands company (or their respective succcesors and assigns) now or hereafter existing under the Warrants issued by them to any Person in accordance with the Loan Documents. In the event of any failure of Borrower or Excalibur to perform when due any obligations under any of the Warrants, the Guarantor will immediately perform the same at the time, place, funds and manner provided for in the Warrants, without set-off, counterclaim or deduction of any kind. The obligations of Guarantor set forth in this paragraph shall survive payment in full of the Advance. Guarantor agrees that, if any payment made by Borrower or any other Person and applied to the Debt is at any time annulled, avoided, set aside, rescinded, invalidated, declared to be fraudulent or preferential or otherwise required to be refunded or repaid, or the proceeds of Collateral are required to be returned by Lender to Borrower, its estate, trustee, receiver or any other party, including Guarantor, under any bankruptcy law, state or federal law, common law or equitable cause, then, to the extent of such payment or repayment, Guarantor's liability hereunder (and any Collateral securing such liability) shall be and remain in full force and effect, as fully as if such payment had not been made, or, if prior thereto this Guaranty shall have been cancelled or surrendered (and if any Collateral securing Guarantor's liability hereunder shall have been released or terminated by virtue of such cancellation or surrender), this Guaranty (and such Collateral) shall be reinstated in full force and effect, and such prior cancellation or surrender shall not diminish, release, discharge, impair or otherwise affect the obligations of Guarantor in respect of the amount of such payment (or any Collateral securing such obligation). The undersigned agrees that, upon demand, the undersigned will reimburse Agent and Lender, to the extent that such reimbursement is not made by Borrower, for all expenses (including reasonable counsel fees) incurred by Agent and Lender in connection with the collection of the Debt or any portion thereof, including any expenses incurred in any post-judgment proceedings to collect and enforce the judgment. This provision is separate and several and shall survive the merger of this Guaranty into any judgment on this Guaranty. All moneys available to Agent and Lender for application in payment or reduction of the Debt may be applied by Agent and Lender in such manner and in such amounts and at such time or times and in such order and priority as Agent and Lender may see fit to the payment or reduction of such portion of the Debt or other obligations of Borrower as Agent and Lender may elect. The undersigned hereby consents that from time to time, before or after any default by Borrower, with or without further notice to or assent from the undersigned, (i) any security at any time held by or available to Agent or Lender for any obligation of Borrower, (ii) any security at any time held by or available to Agent or Lender for any obligation of any other person or party secondarily or otherwise liable for all or any portion of the Debt, and (iii) any obligation arising under any other guaranty to Agent or Lender made in connection with the Facility, may be exchanged, surrendered or released, and any obligation of Borrower may be changed, altered, renewed, extended, continued, surrendered, compromised, waived or released in whole or in part, or any default with respect thereto waived, and Agent or Lender may fail to set off and may release, in whole or in part, any balance of any credit on its books in favor of Borrower, and may extend further credit in any manner whatsoever to Borrower, and generally deal with Borrower or any such security or obligation, and the undersigned shall remain bound under this Guaranty notwithstanding any such exchange, surrender, release, change, alteration, renewal, extension, continuance, compromise, waiver, inaction, extension of further credit or other dealing. No (x) invalidity, irregularity or unenforceability of all or any part of the Debt or the impairment or loss of security or obligation therefor, whether caused by any action or inactions of Lender or otherwise, or (y) invalidity or unenforceability of the other Loan Documents, shall affect or impair this Guaranty. 2 The undersigned hereby waives and agrees not to assert or take advantage of any defense based upon: (a) Notice of acceptance of this Guaranty and of the making of the Advance by Lender to Borrower; (b) Presentment and demand for payment of the Debt or any portion thereof; (c) Protest and notice of dishonor or default to the undersigned with respect to the Debt or any portion thereof; (d) Notice of intent to accelerate, notice of acceleration and all other notices to which the undersigned might otherwise be entitled; (e) Any demand for payment under this Guaranty; (f) The incapacity, lack of authority, death or disability of Borrower or any other person or entity; (g) The failure of Agent or Lender to commence an action against Borrower or any Guarantor or to proceed against or exhaust any security held by Agent or Lender at any time, or to pursue any other remedy whatsoever at any time; (h) Any duty on the part of Agent or Lender to disclose to the undersigned any facts Agent or Lender may now or hereafter know regarding Borrower, regardless of whether Agent or Lender has reason to believe (i) that any such facts materially increase the risk beyond that which the undersigned intends to assume, or (ii) that such facts are unknown to the undersigned, the undersigned acknowledging that he, she or it is fully responsible for being and keeping informed of the financial condition and affairs of Borrower; (i) Lack of notice of default, demand of performance or notice of acceleration to Borrower or any other party with respect to the Debt or the Advance or Borrower's obligations guaranteed hereby, except notices to cure provided for in the Loan Documents; (j) The consideration for this Guaranty (or lack or inadequacy thereof); (k) Any acts or omissions of Agent or Lender which vary, increase or decrease the risk on the undersigned; 3 (l) Any rights or defenses based upon an offset by the undersigned against any obligation now or hereafter owed to the undersigned by Borrower; (m) Any statute of limitations affecting the liability of the undersigned hereunder, the liability of Borrower or any guarantor under the Loan Documents or the enforcement hereof, to the extent permitted by law; (n) The application by Borrower of the proceeds of the Advance for purposes other than the purposes represented by Borrower to Lender and the undersigned or intended or understood by Lender or the undersigned; (o) An election of remedies by Agent or Lender, including any election to proceed against any Collateral by judicial or nonjudicial foreclosure, whether real property or personal property, or by deed in lieu thereof, and whether or not every aspect of any foreclosure sale is commercially reasonable, and whether or not any such election of remedies destroys or otherwise impairs the subrogation rights of the undersigned or the rights of the undersigned to proceed against Borrower or any guarantor by way of subrogation or for reimbursement or contribution, or all such rights; (p) Any statute or rule of law which provides that the obligation of a surety must be neither larger in amount nor in any other aspects more burdensome than that of the principal obligor; (q) Agent's or Lender's election, in any proceeding instituted under Title 11 of the United States Code (the "Bankruptcy Code"), of the application of Section 1111(b)(2) of the Bankruptcy Code or any successor statute; (r) Any borrowing or any grant of a security interest under Section 364 of the Bankruptcy Code; (s) AGENT AND LENDER MAY COLLECT FROM THE UNDERSIGNED WITHOUT FIRST FORECLOSING ON ANY REAL OR PERSONAL PROPERTY COLLATERAL PLEDGED BY BORROWER OR GUARANTOR; AND (t) IF AGENT OR LENDER FORECLOSES ON ANY REAL PROPERTY COLLATERAL PLEDGED BY BORROWER OR ANY GUARANTOR: (i) THE AMOUNT OF THE DEBT MAY BE REDUCED ONLY BY THE PRICE FOR WHICH THAT COLLATERAL IS SOLD AT THE FORECLOSURE SALE, EVEN IF THE COLLATERAL IS WORTH MORE THAN THE SALE PRICE; AND (ii) AGENT AND LENDER MAY COLLECT FROM THE UNDERSIGNED EVEN IF AGENT OR LENDER, BY FORECLOSING ON ANY REAL PROPERTY COLLATERAL, HAS DESTROYED ANY RIGHT THE UNDERSIGNED MAY HAVE TO COLLECT FROM BORROWER. THIS IS AN UNCONDITIONAL AND IRREVOCABLE WAIVER OF ANY RIGHTS AND DEFENSES THE UNDERSIGNED MAY HAVE BECAUSE BORROWER'S DEBT OR ANY GUARANTOR'S OBLIGATIONS HEREUNDER MAY BE SECURED BY REAL PROPERTY. 4 This Guaranty is an absolute, irrevocable and unconditional guaranty of payment and not of collection and Lender, except as set forth above, shall be entitled to payment from the undersigned without first commencing any action against Borrower or resorting to any security or to any credit on the books of Agent or Lender in favor of Borrower. The undersigned acknowledges and agrees that this Guaranty and any or all other guaranties made to Lender in connection with this Facility are joint and several guaranties. Nothing herein shall preclude Agent or Lender from commencing legal actions and obtaining judgments simultaneously with actions against Borrower and with respect to other guarantors and any of Agent's or Lender's collateral. Notwithstanding that Agent or Lender may obtain a judgment against Borrower or Guarantor, unless and until the Debt owed by Borrower to Lender is satisfied in full, the Debt shall continue to bear interest at the rates set forth in the Loan Documents and any advances that Lender makes to rehabilitate or protect any Collateral shall be added to the Debt. Each reference herein to Agent or Lender shall be deemed to include their respective successors and assigns, in whose favor the provisions of this Guaranty shall also inure. Each reference herein to the undersigned shall be deemed to include the heirs, executors, administrators, legal representatives, successors and assigns of the undersigned, all of whom shall be bound by the provisions of this Guaranty. No delay on the part of Agent or Lender in exercising any rights hereunder or failure to exercise the same shall operate as a waiver of such rights; no notice to or demand on the undersigned shall be deemed to be a waiver of the obligation of the undersigned or of the right of Agent or Lender to take further action without notice or demand as provided herein; nor in any event shall any modification or waiver of the provisions of this Guaranty be effective unless in writing nor shall any such waiver be applicable except in the specific instance for which such waiver is given. To further induce Lender to make the Facility available to Borrower, the Guarantor makes the following warranties and representations, as of the date hereof and the date of the Advance, with the knowledge that Lender will rely on the veracity thereof: (a) The execution and delivery by the Guarantor of this Guaranty and any other document executed and/or delivered by the Guarantor to Lender in connection herewith (collectively, the "Guaranty Documents"), and the performance of his obligations thereunder, do not and will not: (i) violate any provision of law, rule, regulation, order, writ, judgment, injunction, decree, determination or award presently in effect having applicability to the Guarantor; or (ii) result in any breach of or constitute any default under any indenture or loan or credit agreement or any other agreement, lease or instrument to which the Guarantor is a party or by which the Guarantor or his properties may be bound or affected, and the Guarantor is not in default under any such law, rule, regulation, order, writ, judgment, injunction, decree, determination or award or any such indenture, agreement, lease or instrument. 5 (b) There is no material action, suit, proceeding, inquiry or investigation, at law or in equity, or before any court, governmental instrumentality, public board or arbitrator pending or threatened against or affecting the Guarantor or any of its properties or rights, wherein an unfavorable decision, ruling or finding would (i) to the extent not covered by insurance as to which the insurer has not disclaimed coverage, result in any material adverse change in the financial condition, business, properties or operations of the Guarantor; (ii) materially or adversely affect this Guaranty; or (iii) adversely affect the validity or enforceability of the Guaranty Documents. (c) The execution and delivery by the Guarantor of this Guaranty, and the performance of his obligations hereunder, do not and will not: (i) require any further action, consent or approval on the part of the Guarantor; (ii) violate any provision of law, rule, regulation, order, writ, judgment, injunction, decree, determination or award presently in effect having applicability to the Guarantor; or (iii) result in any breach of or constitute a default under any indenture or loan or credit agreement or any other agreement, lease or instrument to which the Guarantor is a party or by which the Guarantor or his properties may be bound or affected, and the Guarantor is not in default under any such law, rule, regulation, order, writ, judgment, injunction, decree, determination or award or any such indenture, agreement, lease or instrument. (d) The Guarantor is in compliance with all applicable laws. (e) On the date hereof, (i) the assets of the Guarantor exceed the liabilities of Guarantor, and (ii) the Guarantor is paying the Guarantor's debts as they become due. (f) The financial statements provided by Guarantor to Agent and Lender pursuant to of the Loan Agreement are true, correct, and complete in all material respects as of the date thereof. To further induce Lender to make the Facility available to Borrower, the Guarantor hereby covenants and agrees that so long as the Advance shall remain outstanding and until the Obligations are paid and satisfied in full: (i) From and after the Transaction Closing Date, the Guarantor shall cause TAC to deliver to Lender, within 10 days after the end of each calendar month, a certificate of the chief financial officer (or otherwise the seniormost financial officer) of TAC certifying that as of the end of the preceding calendar month, in compliance with Section 10(o) of the Loan Agreement, since the Transaction Closing Date neither TAC nor any of its Subsidiaries has (w) made any advance, loan, extension of credit or capital contribution to, or purchased any stock, bonds, notes, debentures or other securities of or any assets constituting a business unit of, or make any other investment in, any Person (in each case, other than to a Subsidiary of TAC), (x) created, incurred, suffered to exist, assumed, guarantied, endorsed, became a surety, or otherwise became liable for the Indebtedness or other obligations of any other Person whether directly or indirectly, or made or incurred any advance, purchase commitment, other obligation or loan for the direct or indirect purpose of paying or discharging any such obligations, (y) entered into transactions with Affiliates, or (z) entered into any merger or consolidation or liquidated or wound-up or dissolved itself (or suffered any liquidation or dissolution) or conveyed, sold, leased, assigned, transferred or otherwise disposed of all or substantially all of its property, business or assets (in each case, other than to TAC or a Subsidiary of TAC), or made any material change in its present method of conducting business or permit any corporate guarantor to do any of the foregoing, in all cases other than (A) acquisitions of non-affiliated businesses by merger, acquisitions of shares or interest or acquisitions of assets that are approved by TAC's board of directors in good faith and, in each case, as to which, after giving effect to the issuance of shares of common stock as consideration, do not dilute the Oak TAC Shares and the Accommodation TAC Shares, in the aggregate, below 51% (or such larger percentage as the Lender, in its sole discretion, shall determine is necessary to control the management of TAC in light of the taking of any action by the board of directors of TAC that would require that the approval of more than 50% of the outstanding voting shares of TAC is necessary for the taking of any action by the shareholders, including, without limitation, the election of directors) of the issued and outstanding shares of common stock of TAC, or do not constitute at least 51% of the outstanding voting securities of TAC, after giving effect to the pledge of additional issued and outstanding shares by Excalibur, Ball or any other holder of TAC shares, (B) loans and dividends among any of TAC and its consolidated Subsidiaries, (C) transactions among any of TAC and its consolidated Subsidiaries (including the incurrence or guaranty of Indebtedness on behalf of TAC and its consolidate subsidiaries) that are entered into in the ordinary course of business, and (D) transactions that have been entered into prior to the date hereof among any of TAC and its consolidated Subsidiaries that are entered into in the ordinary course of business. 6 (ii) The Guarantor shall deliver to Lender, as soon as available and in no event later than 45 days after the end of each calendar quarter, commencing with the quarter ending September 30, 2005, a statement of his financial condition as of the end of such calendar quarter in a format substantially similar to the statement of financial condition of the Guarantor delivered in accordance with Section 5(a)(vii) of the Loan Agreement. (iii) From and after the Transaction Closing Date, the Guarantor shall cause TAC to deliver to Lender, promptly after the same becomes publicly available, copies of all periodic and other reports, proxy statements and other materials filed by TAC or any of its Subsidiaries with the United States Securities and Exchange Commission, or any Governmental Authority succeeding to any and all of the functions of said commission, or with any national securities exchange, as the case may be. (iv) From and after the Transaction Closing Date, the Guarantor shall cause TAC to file with the United States Securities and Exchange Commission, and take all commercially reasonable efforts to cause to become effective, a registration statement with respect to all shares of common stock or equity securities of TAC (i) as to which any Person has granted to Lender a security interest under the provisions of any of the Pledge Agreement or otherwise, or (ii) which are subject to issuance upon the exercise of the Warrants, in each case in accordance with the terms of the Share Exchange Agreement and the Stock Purchase Agreement regarding such registration. Such registration statement may also register for sale any other shares owned by Borrower, Ball, Excalibur or any other shareholders of TAC that desire to register shares for sale or resale. (v) The Guarantor shall not create, incur, or suffer to exist any Indebtedness, except Indebtedness hereunder and Indebtedness existing as of the date of the financial statements delivered pursuant to Section 5(a)(vii) of the Line of Credit Agreement. 7 Guarantor shall indemnify, protect, defend and save harmless the Indemnified Parties from and against (i) any and all losses, damages, expenses or liabilities of any kind or nature (collectively, "Losses") and from any suits, claims, or demands by third parties (collectively, "Claims") including reasonable counsel fees incurred in investigating or defending such Claims, suffered by any of them and caused by, relating to, arising out of, resulting from, or in any way connected with the Advance and the transactions contemplated herein, including without limitation any Losses and Claims arising from (w) any actual or proposed use by Borrower of any proceeds of the Advance, (x) any alleged breach of this Agreement or the Loan Documents, (y) the breach of any representation, warranty or covenant contained in this Agreement or any of the other Loan Documents by either the Borrower or the Guarantors and (z) the exercise by Lender of any rights or remedies hereunder or under any of the other Loan Documents; and (ii) any and all Losses sustained by Lender in connection with any environmental sampling or cleanup relating to any properties or assets owned or otherwise used by Borrower in the operation of its business, or mandated by any Environmental Law; provided, however, Guarantor shall not be obligated to indemnify, protect, defend or save harmless an Indemnified Party, if the loss, damage, expense or liability was caused by or resulted from the gross negligence or willful misconduct of that Indemnified Party. In case any action shall be brought against an Indemnified Party based upon any of the above and in respect to which indemnity may be sought against Guarantor, the Indemnified Party against whom such action was brought, shall promptly notify Guarantor in writing, and Guarantor shall assume the defense thereof, including the employment of counsel selected by Guarantor and reasonably satisfactory to the Indemnified Party, (which counsel may be counsel to the Borrower), the payment of all costs and expenses and the right to negotiate and consent to settlement. The Indemnified Party shall have the right to employ separate counsel in any such action and to participate in the defense thereof at the Indemnified Party's cost and expense. Guarantor shall not be liable for any settlement of any such action effected without its consent, unless such settlement includes an explicit and unconditional release from the party bringing the action of all Indemnified Parties and does not contain any admission of fault or culpability on behalf of such Indemnified Parties, but if settled with Guarantor's consent, or if there be a final judgment for the claimant in any such action, Guarantor agrees to indemnify and save harmless said Indemnified Party against whom such action was brought from and against any Loss by reason of such settlement or judgment. The provisions of this paragraph shall survive the termination of this Agreement and the Loan Agreement and the final repayment of the Advance. Notwithstanding any payments made by the undersigned pursuant to the provisions of this Guaranty, the undersigned shall have no right of subrogation in and to the Note, or any other security held by or available to Lender for the Debt or the payment thereof until the Debt has indefeasibly been paid in full in cash to Lender. Guarantor is hereby prohibited from exercising against Agent or Lender any right or remedy which it might otherwise be entitled to exercise against any one or more (but less than all) of the individual parties constituting Lender, including, without limitation, any right of set-off or any defense. 8 This Guaranty is, and shall be deemed to be, a contract entered into under and pursuant to the laws of the State of New York (including, without limitation, Section 5-1401 of the New York General Obligations Law), without regard to conflicts of laws considerations and shall be in all respects governed, construed, applied and enforced in accordance with the laws of said state without regard to conflicts of laws consideration; and this Guaranty shall be construed without regard to any presumption or rule requiring construction against the party causing such instrument or any portion thereof to be drafted; and no defense given or allowed by the laws of any other state or country shall be interposed in any action or proceeding hereon unless such defense is also given or allowed by the laws of the State of New York. The undersigned agrees to submit to personal jurisdiction in the State of New York in any action or proceeding arising out of this Guaranty and, in furtherance of such agreement, the undersigned hereby agrees and consents to the exclusive jurisdiction of (i) any courts of the State of New York, County of New York, the courts of the United States of America for the Southern District of New York, and the appellate courts from any thereof, or (ii) any courts of England and the appellate courts thereof, and that any process or notice of motion or other application to any such court in connection with any such action or proceeding may be served upon the undersigned by registered mail to or by personal service at the last known address of the undersigned, whether such address be within or without the jurisdiction of any such court. Notwithstanding the foregoing, Guarantor hereby designates CT Corporation as his duly appointed agent within the State of New York to accept service of process on their behalf. Guarantor hereby waives any claim, right or remedy which Guarantor may now have or hereafter acquire against Borrower that arises hereunder and/or from the performance by Guarantor hereunder including, without limitation, any claim, remedy or right of subrogation, reimbursement, exoneration, contribution, indemnification, or participation in any claim, right or remedy of Agent or Lender against Borrower or any security which Agent or Lender now has or hereafter acquires, whether or not such claim, right or remedy arises in equity, under contract, by statute, under common law or otherwise. The foregoing waiver by the Guarantor shall terminate and be of no further force or effect at such time as the entire Debt has been fully and indefeasibly paid to and received by Lender. A determination that any portion of this Guaranty is unenforceable or invalid shall not affect the enforceability or validity of any other provision, and any determination that the application of any provision of this Guaranty to any circumstance is illegal or unenforceable shall not affect the enforceability or validity of such provision as it may apply to other circumstances. JURY TRIAL WAIVER. THE UNDERSIGNED AGREES THAT ANY SUIT, ACTION OR PROCEEDING, WHETHER CLAIM OR COUNTERCLAIM, BROUGHT BY THE UNDERSIGNED OR LENDER ON OR WITH RESPECT TO THIS GUARANTY OR ANY OTHER LOAN DOCUMENT OR THE DEALINGS OF THE PARTIES WITH RESPECT HERETO OR THERETO, SHALL BE TRIED ONLY BY A COURT AND NOT BY A JURY. AGENT, LENDER AND THE UNDERSIGNED EACH HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY SUCH SUIT, ACTION OR PROCEEDING. FURTHER, THE UNDERSIGNED WAIVES ANY RIGHT ANY OF THEM MAY HAVE TO CLAIM OR RECOVER, IN ANY SUCH SUIT, ACTION OR PROCEEDING, ANY SPECIAL, EXEMPLARY, PUNITIVE, CONSEQUENTIAL OR OTHER DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES. THE UNDERSIGNED ACKNOWLEDGES AND AGREES THAT THIS PARAGRAPH IS A SPECIFIC AND MATERIAL ASPECT OF THIS GUARANTY AND THAT LENDER WOULD NOT EXTEND CREDIT TO BORROWER IF THE WAIVERS SET FORTH IN THIS PARAGRAPH WERE NOT A PART OF THIS GUARANTY. 9 WAIVER OF AUTOMATIC STAY. GUARANTOR HEREBY WAIVES ANY PROVISIONS APPLICABLE IN CONNECTION WITH ANY VOLUNTARY OR INVOLUNTARY INSOLVENCY, BANKRUPTCY, REORGANIZATION, FRAUDULENT CONVEYANCE, FRAUDULENT TRANSFER, OR SIMILAR PROCEEDINGS INVOLVING GUARANTOR UNDER ANY STATE OR FEDERAL LAW REGARDING CREDITORS' RIGHTS OR DEBTORS' OBLIGATIONS IMPOSING AGAINST AGENT OR LENDER, OR OTHERWISE PROVIDING FOR, AN AUTOMATIC STAY UNDER U.S.C. SECTION 362 OR ANY OTHER PROHIBITION AGAINST AGENT'S OR LENDER'S COMMENCING, MAINTAINING, OR COMPLETING ANY PROCEEDING IN CONNECTION WITH OR THE EXERCISE OR ENFORCEMENT OF ANY OF AGENT'S OR LENDER'S RIGHTS HEREUNDER, ANY OF THE LOAN DOCUMENTS OR ANY APPLICABLE LAW. GUARANTOR HEREBY ACKNOWLEDGES AND CONFIRMS THAT THIS SECTION IS A SPECIFIC AND MATERIAL ASPECT OF THIS AGREEMENT AND LENDER WOULD NOT EXTEND CREDIT TO BORROWER IF THE WAIVER SET FORTH IN THIS SECTION WERE NOT A PART OF THIS AGREEMENT. IN FURTHERANCE THEREOF, GUARANTOR, AGENT AND LENDER AGREE AS FOLLOWS: (a) THAT IN THE EVENT OF IMPOSITION OF ANY SUCH STAY OR OTHER PROHIBITION, AGENT AND LENDER MAY SEEK TO LIFT ANY SUCH STAY OR OTHER PROHIBITION OR SEEK EXEMPTION THEREFROM; (b) THAT GUARANTOR WILL NOT CONTEST ANY SUCH MOTION MADE BY AGENT OR LENDER FOR LIFTING THEREOF OR FOR EXEMPTION THEREFROM; AND (c) THAT GUARANTOR WILL COOPERATE WITH AGENT AND LENDER, IN ANY MANNER REQUESTED BY AGENT OR LENDER, IN THEIR EFFORTS TO OBTAIN RELIEF FROM ANY SUCH STAY OR OTHER PROHIBITION [Signature page follows] 10 IN WITNESS WHEREOF, the undersigned has executed this Guaranty as of the date first above set forth. GUARANTOR: /s/ Andrew Harry Ball -------------------------------------- ANDREW HARRY BALL ------------------------------ Address: 51 Baume Trocade, St. Jean, 83600 Frejus, France 11 EX-99.15 12 v020672_ex15.txt EXHIBIT 15 AGREEMENT AMONG GUARANTORS THIS AGREEMENT AMONG GUARANTORS dated May 24, 2005, by and among Oak Finance Investments Limited ("Borrower"), Excalibur Investment Group Limited ("Excalibur"), Kishore Jhunjhunwala ("Jhunjhunwala"), Saurabh Patel ("Patel") and Andrew Harry Ball (Ball"). WHEREAS, each of the Guarantors (as defined below) has guaranteed to the lenders (collectively, the "Lender") named in the Line of Credit Agreement (the "Credit Agreement"), dated the date hereof, among Oak, the Lender and Stonegate Bank as administrative agent and collateral agent for the Lender, the payment and performance by Borrower of its Obligations under the Credit Agreement; WHEREAS, the Guarantors desire to provide for rights of indemnity and contribution in the event that any of them are required to perform their respective obligations under their Guaranties. 1. Certain Definitions. As used herein, (a) "Advance" means the advance made under the Credit Agreement. (b) "Claims" means any suits, claims, or demands by third parties, including reasonable counsel fees incurred in investigating or defending such Claims, suffered by any of them and caused by, relating to, arising out of, resulting from, or in any way connected with the Advance and the transactions contemplated by the Credit Agreement. (c) "Collateral" has the meaning given it in the Credit Agreement. (d) "Guarantor" means any or all of Excalibur, Jhunjhunwala, Patel and Ball. (e) "Indemnified Party" means any Guarantor that has become subject to a Claim or has suffered a Loss and any of the heirs and assigns of such Guarantor and any of the directors, officers, trustees, partners, employees, agents, attorneys and shareholders of such Guarantor. (f) "Loan Documents" has the meaning given to it in the Credit Agreement. (g) "TAC" means The A Consulting Team, Inc., a New York Corporation. (h) "TAC Stock Purchase Agreement" has the meaning given it in the Credit Agreement. (i) "Loss" means any and all losses, damages, expenses or liabilities of any kind or nature. 2. Covenant to Comply. Oak and each of the Guarantors agrees, for the benefit of each other party to this Agreement, that they will comply with each and every obligation that they respectively owe to the Lender in connection with the Advance and otherwise. 3. Indemnity. Borrower and each Guarantor other than an Indemnified Party (collectively, the "Indemnifying Parties") shall indemnify, protect, defend and save harmless each Indemnified Party from and against all Losses from any Claims; provided, that no Indemnifying Party shall be obligated to indemnify, protect, defend or save harmless an Indemnified Party if the loss, damage, expense or liability was caused by or resulted from (a) the gross negligence or willful misconduct of that Indemnified Party; (b) the willful violation by any Indemnifying Party of its obligation under any Loan Document; (c) the willful breach by any Indemnifying Party of the representations and warranties that such Indemnifying Party has made in any of the Loan Documents or Section 1 of this Agreement; or, (d) in case of Ball or Excalibur, the willful breach of Section 5 of this Agreement. In case any action shall be brought against an Indemnified Party based upon the above and in respect of which indemnity may be sought against any Indemnified Party, the Indemnified Party against whom such claim was brought, shall promptly notify the Indemnifying Parties, and the Indemnifying Parties shall assume the defense thereof, including the employment of counsel selected by the Indemnifying Parties and reasonably satisfactory to the Indemnified Party. The Indemnified Party shall nonetheless have the right to employ separate counsel to defend any such claim and to participate in the defense thereof at the Indemnified Party's sole cost and expense. No Indemnifying Party shall be liable for any settlement of any such claim effected without its consent, unless such settlement includes an explicit and unconditional release from the party bringing the action of all Indemnified Parties and does not contain any admission of fault or culpability on behalf of such Indemnified Parties, but if settled with the consent of the Indemnifying Parties, or if there be a final judgment for the claimant of any such claim, the Indemnifying Parties will indemnify and save harmless the Indemnified Party against whom such claim was made from and against any Loss by reason of such settlement or judgment. 4. Contribution. If the Indemnification provided for in Section 3 is unavailable or insufficient to hold harmless an Indemnified Party, then each applicable Indemnifying Party shall contribute to the amount paid or payable by such Indemnified Party as a result of the Claims or Losses referred to in Section 3 of this Agreement (a) in such proportion as is appropriate to reflect the relative benefits received by the Indemnifying Parties on the one hand and the Indemnified Party from the Advance or (b) if the allocation provided by clause (a) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (a) above but also the relative fault of the Indemnifying Parties on the one hand and the Indemnified Party on the other in connection with actions or omissions that resulted in such Losses, as well as any other relevant equitable considerations. Relative fault of the Indemnifying Parties on the one hand and the Indemnified Party on the other hand shall be determined by reference to, among other things, the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such actions or omission. The amount paid or payable by an indemnified party as a result of the Losses referred to in the first sentence of this Section 4 shall be deemed to include any legal or other expenses reasonably incurred by such Indemnified Party in connection with investigating or defending against any action or claim which is the subject of this Section 4. Each party entitled to contribution agrees that upon the service of a summons or other initial legal process upon it in any action instituted against it in respect of which contribution may be sought, it shall promptly give written notice of such service to the party or parties from whom contribution may be sought, but the omission so to notify such party or parties of any such service shall not relieve the party from whom contribution may be sought from any obligation it may have hereunder or otherwise. The Indemnifying Parties may agree, as between themselves and without limiting the Indemnified Party, as to the respective amounts of such liability for which they each shall be responsible. 2 5. Covenants of Excalibur and Ball. In furtherance of Section 2, each of Excalibur and Bell covenant to the other that they will perform and discharge each and every obligation under the Warrant respectfully issued them to the holder thereof. 6. Actions and Omissions by TAC. Notwithstanding any provision of this Agreement, no Guarantor shall be liable to any other Guarantor for a failure to cause TAC to perform any action as required by any Loan Document unless such other Guarantor shall have the action to impede TAC from performing such auction. 7. Released Collateral. At such time as the Lender releases the Collateral, the Collateral shall be allocated as follows: (a) if no Event of Default has occurred and the Collateral has been returned to the pledgors thereof without sale or transfer in any part, then the Collateral shall be returned to each of Oak, Excalibur and Ball in the number of shares of TAC stock pledged by each of Oak, Excalibur and Ball; and (b) if an Event of Default has occurred and less than all of the Collateral has been returned to the pledgors thereof, then the Collateral that is returned shall be allocated as follows: FIRST, to Ball, up to 2,303,531 shares, less the number of shares that are subject to the Warrant issued by Ball; SECOND, to Excalibur, up to 4,972,701 shares (less the number of shares that are Escrow Shares or that were Escrow Shares and were subsequently transferred to TAC), less the number of shares that are subject to the Warrant issued by Excalibur; THIRD, to Oak, up to 1,649,697, plus the number of shares (if any) that Oak has purchased from TAC under Section 2.5 of the TAC Stock Purchase Agreement; and FOURTH, the balance, if any, to Ball, Excalibur and Oak in proportion to the number of shares of TAC respectively held by them at such time. 8. Miscellaneous. (a) Choice of Law. This Agreement shall be governed and construed, in accordance with the laws of the State of New York, and the respective rights and obligations of the parties hereto shall be governed by such laws, without regard to principles of conflicts of laws. 3 (b) Jurisdiction. ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST ANY PARTY TO THIS AGREEMENT ARISING OUT OF OR RELATING TO THIS AGREEMENT MAY, BUT IS NOT REQUIRED TO, BE INSTITUTED IN ANY FEDERAL OR STATE COURT LOCATED IN THE STATE OF NEW YORK, COUNTY OF NEW YORK, AND IF SO INSTITUED ANY PARTY NAMED AS A DEFENDANT IN SUCH SUIT, ACTION OR PROCEEDING WAIVES ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING, AND HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY SUCH COURT IN ANY SUIT, ACTION OR PROCEEDING. EACH PARTY HEREBY DESIGNATES AND APPOINTS CT CORPORATION AS ITS AUTHORIZED AGENT TO ACCEPT AND ACKNOWLEDGE ON ITS BEHALF SERVICE OF ANY AND ALL PROCESS WHICH MAY BE SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING IN ANY FEDERAL OR STATE COURT LOCATED IN THE STATE OF NEW YORK, COUNTY OF NEW YORK, AND AGREES THAT SERVICE OF PROCESS UPON SAID AGENT AT SAID ADDRESS AND WRITTEN NOTICE OF SAID SERVICE MAILED OR DELIVERED TO SUCH PARTY IN THE MANNER PROVIDED HEREIN SHALL BE DEEMED IN EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON SUCH PARTY IN ANY SUCH SUIT, ACTION OR PROCEEDING IN THE STATE OF NEW YORK. BORROWER (x) SHALL GIVE PROMPT NOTICE TO AGENT OF ANY CHANGED ADDRESS OF ITS AUTHORIZED AGENT HEREUNDER, (y) MAY AT ANY TIME AND FROM TIME TO TIME DESIGNATE A SUBSTITUTE AUTHORIZED AGENT WITH AN OFFICE IN NEW YORK (WHICH OFFICE SHALL BE DESIGNATED AS THE ADDRESS FOR SERVICE OF PROCESS), AND (c) SHALL PROMPTLY DESIGNATE SUCH A SUBSTITUTE IF ITS AUTHORIZED AGENT CEASES TO HAVE AN OFFICE IN NEW YORK OR IS DISSOLVED WITHOUT LEAVING A SUCCESSOR. (c) No modification or waiver of any provision of this Agreement shall be effective unless such modification or waiver shall be in writing and signed by the party from whom such modification or waiver is sought, and the same shall then be effective only for the period and on the conditions provided therein. (d) A determination that any portion of this Agreement is unenforceable or invalid shall not affect the enforceability or validity of any other provision, and any determination that the application of any provisions of this Agreement to any person or circumstance is illegal or unenforceable shall not affect the enforceability or validity of such provisions that may apply to other persons or circumstances. 9. Successors and Assigns. (a) All covenants and agreements in this Agreement shall bind and inure to the benefit of the respective successors and assigns of the parties hereto. 10. Waiver of Jury Trial. THE PARTIES HERETO AGREE THAT ANY SUIT, ACTION OR PROCEEDING, WHETHER CLAIM OR COUNTERCLAIM, BROUGHT BY ANY OF THEM ON OR WITH RESPECT TO THIS AGREEMENT OR THE DEALINGS OF THE PARTIES WITH RESPECT HERETO OR THERETO, SHALL BE TRIED ONLY BY A COURT AND NOT BY A JURY. THE PARTIES HERETO EACH HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY SUCH SUIT, ACTION OR PROCEEDING AND WAIVES ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER, IN ANY SUCH SUIT, ACTION OR PROCEEDING, ANY SPECIAL, EXEMPLARY, PUNITIVE, CONSEQUENTIAL OR OTHER DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES. 4 IN WITNESS WHEREOF, the undersigned have signed this Agreement as of the date and year first written above. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first set forth above. OAK FINANCE INVESTMENTS LIMITED By:/s/ Saurabh Patel ------------------------------------ Name: Saurabh Patel Title: Authorized Person EXCALIBUR INVESTMENT GROUP LIMITED By:/s/ Saurabh Patel ------------------------------------ Name: Saurabh Patel Title: Authorized Person /s/ Kishore Jhunjhunwala -------------------------------------- Kishore Jhunjhunwala /s/ Saurabh Patel -------------------------------------- Saurabh Patel /s/ Andrew Harry Ball -------------------------------------- Andrew Harry Ball 5 EX-99.16 13 v020672_ex16.txt EXHIBIT 16 THIS WARRANT AND THE SHARES OF STOCK ISSUABLE ON ITS EXERCISE ARE SUBJECT TO THE RESTRICTIONS ON TRANSFERABILITY SET FORTH HEREIN. FORM OF WARRANT TO PURCHASE COMMON STOCK ISSUE DATE: _________, 2005 This certifies that _________________________________ (the "Warrantholder", as further defined in Section 1(t)), or its assigns, is entitled, subject to the terms set forth below, to purchase from ANDREW HARRY BALL, a British subject ("Ball"), up to 182,762 fully paid and nonassessable shares (the "Shares") of Common Stock, $0.01 par value ("Common Stock"), of The A Consulting Team, Inc., a New York corporation (the "Company"), and its successors, at a purchase price equal to the Exercise Price (as defined in Section 1), from time to time from 9:00 a.m., New York City time, on ___________, 2006 [270 days after issue date] through 5:00 p.m., New York City time, on the Termination Date (as defined in Section 1). The Exercise Price and the number of Shares subject to this Warrant are subject to adjustment as provided in Section 5 of this Warrant. Notwithstanding any other provision of this Warrant to the contrary, this Warrant shall not be or become exercisable unless and until the Advance (as defined in the Credit Agreement (as defined in Section 1(f) below)) is disbursed to the Borrower under the Credit Agreement in accordance with its terms. 1. Definitions. As used in this Warrant, the following terms have the following meanings: (a) "Cashless Exercise" has the meaning given in Section 4(a). (b) "Common Stock" has the meaning given to it in the first paragraph of this Warrant. (c) "Company" has the meaning given to it in the first paragraph of this Warrant. (d) "Convertible Securities" means securities that are convertible or exchangeable into shares of Stock or into other securities that are exercisable, convertible or exchangeable into shares of Stock. (e) "Credit Agreement" means the Line of Credit Agreement of even date herewith among Stonegate Bank, as collateral agent and administrative agent, the lenders named therein and Oak. (f) "Current Market Price" for one share of Stock means (i) the average of the reported closing prices of a share of Stock quoted on The Nasdaq SmallCap Market, The Nasdaq National Market, the NASD OTC Bulletin Board or any exchange on which the Stock is then listed, whichever is applicable, for the 10 trading days immediately prior to the date of exercise of this Warrant, (ii) if no such closing price is available, the average of the closing bid and asked prices of a share of Stock as quoted in the Over-the-Counter Market Summary for the 10 trading days immediately prior to the exercise date of this Warrant or (iii) if the shares of Stock are not listed on any of the Nasdaq markets referred to above or on any exchange or quoted in the Over-the-Counter Market, the fair market value per share of Stock as of the date of exercise of this Warrant as determined by agreement of Ball and the Warrantholder or, if no such agreement can be reached within 15 days after the date of exercise of this Warrant, as determined by an arbitrator pursuant to Section 9. For the purpose of any computation under Sections 5(b), (d), (e) and (f), the Current Market Price per share of Stock shall be determined as provided above with reference to the earlier of the day in question under such sections and the day before the "ex date" (that is, the first date on which the Stock trades regular way on the applicable securities exchange or market without the right to receive such issuance or distribution) with respect to the issuance or distribution requiring such computation. (g) "Excalibur" means Excalibur Investment Group Limited, a British Virgin Islands company. (h) "Excalibur Warrant" means the warrant of like tenor to this Warrant being issued on the date of this Warrant to the Warrantholder by Excalibur and to which 394,535 shares of Stock are subject. (i) "Exercise Price" means $9.30 per Share, as it may be adjusted from time to time pursuant to the provisions of Section 5. (j) "Fully-Diluted Base" means, as of the date of this Warrant, the fully-diluted Common Stock, that is, (i) all shares of Common Stock issued and outstanding and (ii) all shares thereof subject to issuance on the exercise, conversion or exchange of outstanding Options or Convertible Securities issued by the Company that have an exercise, conversion or exchange price of less than $16.00 per share of Common Stock, including without limitation, all shares issuable as stock awards, or on exercise of options, that have been, or may be, granted under the Company's 1997 Stock Option and Award Plan or any other employee stock option or similar plan of the Company. For the avoidance of doubt, as of the Transaction Closing Date, the Fully-Diluted Base is 11,545,939 shares of Common Stock, determined as follows: Issued and outstanding shares 10,208,346 Shares reserved for issuance to Oak or its nominee 625,000 Shares reserved for issuance upon the exercise of existing options with exercise price of less than $16.00 per share 212,593 Shares reserved for issuance upon the exercise of options to be granted on or about the Transaction Closing Date with exercise price of less than $16.00 per share 500,000 ---------- 11,545,939 -2- (k) "Oak" means Oak Finance Investments Limited, a British Virgin Islands company. (l) "Options" means options, warrants, rights and similar securities that are exercisable to purchase or subscribe for shares of Stock or other securities that are exercisable, convertible or exchangeable into shares of Stock. (m) "Qualifying Acquisition" means an acquisition by the Company of a non-affiliated business by merger or the acquisition of assets, shares or other equity interests, that is approved by the Company's Board of Directors in good faith and as to which, after giving effect to any issuance by the Company in connection with such acquisition of shares of Stock as consideration, in whole or in part, does not dilute the aggregate shares of Common Stock pledged by various parties pursuant to the Credit Agreement below 51% of the issued and outstanding shares of Stock, after giving effect to additional outstanding shares of Stock pledged by Excalibur or Ball. (n) "Shares" has the meaning given to it in the first paragraph of this Warrant. (o) "Stock" means shares of Common Stock and stock of any other class into which the shares of Common Stock are subsequently changed. (p) "Termination Date" means [insert Date that is 30 months after the date of the Warrant]. (q) "Transaction Closing Date" has the meaning given to it in the Credit Agreement. (r) "Warrant Escrow Agent" means the party serving as escrow agent under the Warrant Escrow Agreement. (s) "Warrant Escrow Agreement" means the Escrow Agreement of even date herewith among the Warrantholder, Excalibur, Ball and Stonegate Bank, as escrow agent, pursuant to which the Shares and the shares of Common Stock subject to the Excalibur Warrant have been placed into escrow with such escrow agent. (t) "Warrantholder" "means any person or entity that at the time is the holder of this Warrant or any portion of this Warrant. References to "Warrantholder" shall include all parties who then hold Warrants pursuant to the transfer provisions of Sections 7 and 8. (u) "Warrant Ratio" means the portion of the aggregate shares of Common Stock subject to this Warrant and the Excalibur Warrant represented by the Shares, expressed as a percentage, after giving effect to any stock splits, reverse stock splits, stock dividends or combinations. -3- 2. Aggregate Number of Shares of Common Stock. This Warrant is being issued concurrently with the issuance to the Warrantholder by Excalibur of the Excalibur Warrant in connection with the Credit Agreement. It is the intention of the Warrantholder, Excalibur and Ball that the aggregate number of shares of Common Stock subject to this Warrant and the Excalibur Warrant as of the Transaction Closing Date shall equal 5% of the Fully-Diluted Base, and Ball represents and warrants to the Warrantholder that this shall be the case as of the Transaction Closing Date. If, for any reason, including, without limitation, mistake, the aggregate number of shares subject to this Warrant and the Excalibur Warrant as of the Transaction Closing Date is more or less than 5% of the Fully-Diluted Base, this Warrant and the Excalibur Warrant shall automatically be deemed to be amended, in such respective amounts as shall maintain the Warrant Ratio, to decrease or increase such aggregate number of Shares so that it equals 5% of the Fully-Diluted Base. 3. Escrow; Reservation of Shares. (a) Deposit. On the date of this Warrant, Ball has deposited into escrow pursuant to the Warrant Escrow Agreement, (i) stock certificates in proper form for all of the Shares subject to this Warrant on the date hereof and (ii) ten undated stock powers duly executed by Ball in blank for the purpose of transferring such Shares to the Warrantholder on exercise of this Warrant. Ball shall at all times through the earliest of the Termination Date or the date on which this Warrant has been exercised in full (A) not sell or agree to sell, or grant any option, warrant or right in respect of any of the Shares and (B) hold (subject to the Warrant Escrow Agreement and to the pledge and security interest in the Shares in favor of the Agent under the Credit Agreement), free and clear of all claims, liens, security interests, charges, restrictions, options, warrants and other encumbrances or rights, such number of Shares as are subject to this Warrant, including in both cases all Shares originally subject to this Warrant and any additional Shares that become subject to this Warrant pursuant to the adjustment provisions of Section 5. (b) Subsequent Deposits. If the number of Shares subject to this Warrant increases due to the provisions of Section 5, or any other securities and property to which the Warrantholder would be entitled on exercise of this Warrant pursuant to Section 5 is distributed and received by or for the account of Ball, Ball shall deposit into escrow pursuant to the Warrant Escrow Agreement not later than three Business Days (as defined in the Credit Agreement) after the event causing such increase or distribution, (i) stock certificates in proper form for such number of Shares as shall, when added to the Shares already deposited into escrow pursuant to the Warrant Escrow Agreement, equal such increased number of Shares or (ii) if applicable, any such other securities or property. (c) Subsequent Withdrawals. If the number of shares in the Fully Diluted Base decreases, Ball shall have the right to receive from the Warrant Escrow Agent one or more certificates representing a number of Shares such that the aggregate number of Shares deposited into escrow pursuant to the Warrant Escrow Agreement by Ball and Excalibur, after giving effect to any similar request to receive shares from Excalibur, equals 5% of the Fully Diluted Base. In such event, Ball shall also have the right to withdraw any securities or other property deposited in escrow pursuant to Section 3(b) that had been distributed in respect of the Shares withdrawn from escrow pursuant to this Section 3(c). The withdrawals contemplated by the preceding two sentences shall be subject to Ball's obligation set forth in Section 3(b) to deposit additional Shares (and any related distributions) into escrow pursuant to the Warrant Escrow Agreement and to the pledge and security interest in the Shares in favor of the Agent under the Credit Agreement so long as it is applicable. -4- 4. Exercise. (a) Manner of Exercise. This Warrant may be exercised, in whole or in part, from time to time and at any time on or after the date that is 270 days after the date of issuance of this Warrant through the Termination Date by the Warrantholder's surrendering to the Warrant Escrow Agent, at its address as set forth in the Warrant Escrow Agreement, this Warrant, together with the exercise form attached to this Warrant duly executed by the Warrantholder and payment to the Warrant Escrow Agent, for the account of Ball, in the amount obtained by multiplying the then Exercise Price by the number of shares of Stock designated in the exercise form. Payment may be made at the option of the Warrantholder (i) by certified or official bank check or a wire transfer to an account designated by the Warrant Escrow Agent or (ii) by "Cashless Exercise" as describe in this Section 4(a), including the surrender of this Warrant with instructions that Ball retain as payment of the Exercise Price the number of Shares determined as set forth in clause (ii) of the following paragraph. The Warrantholder shall concurrently provide Ball with a copy of such exercise form and appropriate advice of its payment. In the event of a Cashless Exercise: (i) the Warrantholder shall receive the number of Shares determined by multiplying the total number of Shares for which the Cashless Exercise is made by a fraction, the numerator of which shall be the difference between the then Current Market Price and the Exercise Price, and the denominator of which shall be the Current Market Price and (ii) the remaining Shares for which the Cashless Exercise has been made shall be deemed to have been paid to Ball as the Exercise Price and shall be released by the Warrant Escrow Agent to Ball as provided in the Warrant Escrow Agreement, notwithstanding any other provision thereof. All payments received by the Warrant Escrow Agent on exercise of the Warrant shall be remitted to Ball in accordance with the provisions of the Warrant Escrow Agreement. (b) Partial Exercise. On any partial exercise of this Warrant, Ball shall promptly issue and deliver to the Warrantholder, at Ball's sole expense, a new Warrant or Warrants of like tenor in the name of the Warrantholder providing for the right to purchase the number of Shares as to which this Warrant has not been exercised. (c) Fractional Shares. Ball and the Escrow Agent shall not be required to deliver fractional Shares to the Warrantholder on exercise of this Warrant. If any fraction of a Share would, but for this Section 3(c), be issuable on exercise of this Warrant, , if the fraction is 0.5 or greater, rounded up to the nearest whole Share and, if less than 0.5, be rounded down to the nearest whole Share. (d) Delivery of Stock Certificates. The Warrant Escrow Agreement shall require that, as promptly as practicable and in any event within three days after full or any partial exercise of this Warrant (except as otherwise provided in the Warrant Escrow Agreement), the Warrant Escrow Agent shall cause to be issued in the name of, and delivered to, the Warrantholder, a certificate or certificates for the number of shares of Stock to which the Warrantholder is entitled on such exercise, together with any other securities and property to which the Warrantholder is entitled on such exercise pursuant to Section 5. While the Warrant Escrow Agent shall be responsible for obtaining from the Company stock certificates in the proper denominations for the Shares deliverable to the Warrantholder on any exercise of this Warrant, all related expenses, taxes and other charges of the Company, the Warrant Escrow Agent and any other party payable in connection with the preparation, issuance and delivery of share certificates shall be the sole responsibility of Ball and the Borrower under the Credit Agreement. -5- 5. Adjustments to Exercise Price. The Exercise Price shall be subject to adjustment from time to time, so long as this Warrant is outstanding, in whole or in part, as follows: (a) Stock Distributions. If at any time the Company pays or makes a dividend or distribution on all or any portion of its Stock or makes a dividend or other distribution on any other class of capital stock of the Company, which dividend or distribution includes Stock, the Exercise Price in effect at the opening of business on the day following the date fixed for the determination of shareholders entitled to receive such dividend or other distribution shall be decreased by multiplying such Exercise Price by a fraction, of which (i) the numerator shall be the number of shares of Stock outstanding at the close of business on the date fixed for such determination and (ii) the denominator shall be the sum of such number of shares of Stock and the total number of shares of Stock or other class of capital stock constituting such dividend or other distribution, such decrease to become effective immediately after the opening of business on the day following the date fixed for such determination. For purposes of this Section 5(a), the number of shares of Stock at any time outstanding shall not include shares held in treasury of the Company but shall include shares issuable in respect of scrip certificates, if any, issued in lieu of fractions of shares of Stock. If any dividend or other distribution of the type described in this Section 5(a) is declared, but not paid or made, the Exercise Price shall again be adjusted to be the Exercise Price which would then be in effect if such dividend or other distribution had not been declared. (b) Rights Distributions. If at any time the Company pays or makes a dividend or distribution on all or any portion of its Stock consisting of, or shall otherwise issue to all holders of its Stock, Options entitling the holders of Stock to subscribe for or purchase Stock at a price per share less than the then Current Market Price on the date fixed for the determination of shareholders entitled to receive such Options, the Exercise Price in effect at the opening of business on the day following the date fixed for such determination shall be decreased by multiplying such Exercise Price by a fraction, of which (i) the numerator shall be the number of shares of Stock outstanding at the close of business on the date fixed for such determination, plus the number of shares of Stock which the aggregate of the offering price of the total number of shares of Stock so offered for subscription or purchase would purchase at such Current Market Price, and (ii) the denominator shall be the number of shares of Stock outstanding at the close of business on the date fixed for such determination, plus the number of shares of Stock so offered for subscription or purchase, such decrease to become effective immediately after the opening of business on the day following the date fixed for such determination. -6- For purposes of this Section 5(b), the number of shares of Stock at any time outstanding shall not include shares held in treasury of the Company (but shall include shares issuable in respect of scrip certificates, if any, issued in lieu of fractions of shares of Stock) unless the Company issues any Options in respect of Stock held in its treasury and does not agree not to exercise any such Options in respect of Stock held in treasury. If such Options are not so issued, the Exercise Price shall be re-adjusted to be the Exercise Price which would then be in effect if such date for the determination of shareholders entitled to receive such Options had not been fixed. In determining whether any Options entitle the holders thereof to subscribe for or purchase shares of Stock at less than the then Current Market Price, and in determining the aggregate offering price of such shares of Stock, there shall be taken into account any consideration received for such Options. The value of such consideration, if other than cash, shall be determined in the reasonable good faith judgment of the Board of Directors of the Company, whose determination shall be conclusive. (c) Subdivisions and Combinations. If at any time all or any portion of the Stock outstanding (i) is subdivided into a greater number of shares of Stock, the Exercise Price in effect at the opening of business on the day following the day on which such subdivision becomes effective shall be proportionately reduced or (ii) is combined into a smaller number of shares of Stock, the Exercise Price in effect at the opening of business on the day following the day on which such combination becomes effective shall be proportionately increased. Such reduction or increase, as the case may be, shall become effective immediately after the opening of business on the day following the day on which such subdivision or combination becomes effective. (d) Distributions of Assets. If at any time the Company, by dividend or otherwise, distributes to all holders of its Stock evidences of its indebtedness or assets (including securities, Options (but excluding any Options referred to in Section 5(b)) entitling the holders of Stock to subscribe for or purchase Stock at a price per share less than the then Current Market Price, any dividend or distribution paid exclusively in cash, any dividend or distribution referred to in Section 5(a) and any dividend or distribution on a merger or consolidation referred to in Section 6), the Exercise Price in effect at the opening of business on the day following the date fixed for the determination of shareholders entitled to receive such dividend or other distribution shall be decreased by multiplying such Exercise Price by a fraction, of which (i) the numerator shall be the Current Market Price on the date fixed for such determination, less the then fair market value (as determined by the Board of Directors of the Company, whose determination shall be conclusive) of the portion of the assets or evidence of indebtedness so distributed applicable to one share of Stock, and (ii) the denominator shall be such Current Market Price, such adjustment to become effective immediately prior to the opening of business on the day following the date fixed for the determination of shareholders entitled to receive such distribution. -7- If any dividend or distribution of the type described in this Section 5(d) is declared but not paid or made, the Exercise Price shall be re-adjusted to the Exercise Price which would then be in effect if such dividend or distribution had not been declared. (e) Distributions of Cash. If at any time the Company, by dividend or otherwise, makes a distribution to all holders of its Stock consisting of cash (excluding any cash that is distributed on a merger or consolidation or a sale or transfer of all or substantially all of the assets of the Company to which Section 6 applies or as a part of a distribution referred to in Section 5(d)) in an aggregate amount that, combined together with (i) the aggregate amount of any other distributions to all holders of its Stock made exclusively in cash within the 12 months immediately preceding the date of payment of such distribution and in respect of which no adjustment pursuant to this Section 5(e) has been made and (ii) the aggregate of any cash plus the fair market value (as determined by the Board of Directors of the Company, whose determination shall be conclusive) of consideration payable in respect of any tender offer by the Company or any of its subsidiaries or affiliates for all or any portion of the Stock concluded with the 12 months immediately preceding the date of payment of such distribution and in respect of which no adjustment pursuant to this Section 5(e) has been made, exceeds 10% of the product of the Current Market Price on the date for the determination of holders of Stock entitled to receive such distribution, multiplied by the number of shares of Stock outstanding on such date, then, and in each such case, immediately after the close of business on such date for determination, the Exercise Price in effect immediately prior to the close of business on the date fixed for determination of the shareholders entitled to receive such distribution shall be decreased by multiplying such Exercise Price by a fraction (A) the numerator of which shall be equal to the Current Market Price on the date fixed for such determination, less an amount equal to the quotient of (x) the excess of such combined amount over such 10% and (y) the number of shares of Stock outstanding on such date for determination and (B) the denominator of which shall be equal to the Current Market Price on such date for determination. If any dividend or distribution of the type described in this Section 5(e) is declared but not so paid or made, the Exercise Price shall be re-adjusted to the Exercise Price which would then be in effect if such dividend or distribution had not been declared. (f) Tender or Exchange Offer. In case a tender or exchange offer is made by the Company or any subsidiary or affiliate of the Company for all or any portion of the Stock and expires, and such tender or exchange offer requires the payment to shareholders (based on the acceptance of the offer (up to any maximum specified in the terms of the offer) of Purchased Shares (as defined below)) of an aggregate consideration having a fair market value (as determined by the Board of Directors of the Company, whose determination shall be conclusive) that, combined together with (i) the aggregate of the cash plus the fair market value (as determined by the Board of Directors of the Company, whose determination shall be conclusive) as of the expiration of such tender or exchange offer, of consideration payable in respect of any other tender or exchange offer by the Company or any subsidiary or affiliate of the Company for all or any portion of the Stock expiring within the 12 months immediately preceding the expiration of such tender or exchange offer and in respect of which no adjustment pursuant to this Section 5(f) has been made and (ii) the aggregate amount of any distributions to all holders of the Stock made exclusively in cash within 12 months immediately preceding the expiration of such tender or exchange offer and in respect of which no adjustment pursuant to Section 5(e) has been made, exceeds 10% of the product of the Current Market Price as of the last time (the "Expiration Time") tenders or exchanges could have been made pursuant to such tender or exchange offer (as it may be amended), multiplied by the number of shares of Stock outstanding (including any tendered or exchanged shares) on the Expiration Time, then, and in each such case, immediately prior to the opening of business on the day after the date of the Expiration Time, the Exercise Price in effect immediately prior to the close of business on the date of the Expiration Time shall be decreased by multiplying such Exercise Price by a fraction (A) the numerator of which shall be equal to (1) the product of (x) the Current Market Price on the date of the Expiration Time and (y) the number of shares of Stock outstanding (including any tendered or exchanged shares) on the date of the Expiration Time less (2) the amount of cash plus the fair market value (as determined by the Board of Directors of the Company, whose determination shall be conclusive) of the aggregate consideration payable to shareholders based on the acceptance of the offer (up to any maximum specified in the terms of the offer) of Purchased Shares, and (B) the denominator of which shall be equal to the product of (xx) the Current Market Price on the date of the Expiration Time and (yy) the number of shares of Stock outstanding (including any tendered or exchanged shares) on the date of the Expiration Time less the number of all shares of Stock validly tendered or exchanged and not withdrawn as of the Expiration Time (the shares of Stock deemed so accepted up to any such maximum, being referred to as the "Purchased Shares"). -8- If the Company is obligated to purchase shares pursuant to any such tender offer, but the Company is permanently prevented by applicable law from effecting any such purchases or all such purchases are rescinded, the Exercise Price shall be re-adjusted to be the Exercise Price which would then be in effect if such tender offer had not been made. (g) Reclassifications. The reclassification of Stock into securities other than Stock (other than any reclassification on a consolidation or merger to which Section 6 applies) shall be deemed to involve (i) a distribution of such securities other than Stock to all holders of Stock (and the effective date of such reclassification shall be deemed to be "the date fixed for the determination of shareholders entitled to receive such distribution" and "the date fixed for such determination" within the meaning of Section 5(a)) and (ii) a subdivision or combination, as the case may be, of the number of shares of Stock outstanding immediately prior to such reclassification into the number of shares of Stock outstanding immediately thereafter (and the effective date of such reclassification shall be deemed to be "the day upon which such subdivision becomes effective," as the case may be, and "the day upon which such subdivision or combination becomes effective", within the meaning of the Section 5(c)). (h) Issuances Below Current Market Price, Exercise Price or $16.00. Except as provided in Section 5(h)(F), if at any time the Company issues or sells (or is deemed to have issued or sold, in accordance with subparagraphs (A), (B) or (C) below) any shares of Stock without consideration or for a consideration per share less than (1) the Exercise Price in effect immediately prior to the time of such issuance or sale, (2) the then Current Market Price or (3) $16.00 per share (proportionately reduced or increased if a subdivision or combination contemplated in Section 5(c) occurs), then, forthwith on such issuance or sale, the Exercise Price shall be reduced to the lowest of the prices determined: -9- (i) by dividing (A) an amount equal to the sum of (I) the number of shares of Stock outstanding immediately prior to such issuance or sale (including as outstanding for this purpose all shares included in the Fully-Diluted Base), multiplied by the then existing Exercise Price, and (II) the consideration, if any, received by the Company on such issuance or sale, by (B) the total number of shares of Stock outstanding immediately after such issuance or sale (including as outstanding for this purposes all shares included in the Fully-Diluted Base); or (ii) by dividing (A) an amount equal to the sum of (I) the number of shares of Stock outstanding immediately prior to such issuance or sale (including as outstanding for this purpose all shares included in the Fully-Diluted Base), multiplied by the then Current Market Price, and (II) the consideration, if any, received by the Company on such issuance or sale, by (B) the total number of shares of Stock outstanding immediately after such issuance or sale (including as outstanding for this purposes all shares included in the Fully-Diluted Base); or (iii) by dividing (A) an amount equal to the sum of (I) the number of shares of Stock outstanding immediately prior to such issuance or sale (including as outstanding for this purpose all shares included in the Fully-Diluted Base), multiplied by $16.00 (proportionately reduced or increased as provided above), and (II) the consideration, if any, received by the Company on such issuance or sale, by (B) the total number of shares of Stock outstanding immediately after such issuance or sale (including as outstanding for this purposes all shares included in the Fully-Diluted Base). No adjustment of the Exercise Price shall be made, however, in an amount less than $0.01 per share, and any such lesser adjustment shall be carried forward and shall be made at the time and together with the next subsequent adjustment which together with any adjustments so carried forward shall amount to $0.01 per share or more. For purposes of this Section 5(h), the following subparagraphs (A) through (F) shall also be applicable: (A) Issuance of Options, Warrants or Rights. If the Company in any manner grants (whether directly, by assumption in a merger or otherwise) any Options for Stock or for Convertible Securities, whether or not such Options or the right to convert or exchange any such Convertible Securities are immediately exercisable, and the price per share for which Stock is issuable on the exercise of such Options or on the conversion or exchange of such Convertible Securities (determined by dividing (i) the total amount, if any, received or receivable by the Company as consideration for the issuance of all such Options, plus the minimum aggregate amount of additional consideration payable to the Company on the exercise of all such Options, plus, in the case of Options that relate to Convertible Securities, the minimum aggregate amount of additional consideration, if any, payable on the issuance or sale of such Convertible Securities and on the conversion or exchange thereof, by (ii) the total maximum number of shares of Stock issuable on the exercise of such Options or on the conversion or exchange of all such Convertible Securities issuable on the exercise of such Options) shall be less than the Exercise Price in effect immediately prior to the time of the granting of such Options or the then Current Market Price or $16.00 (proportionately reduced or increased as provided above), then the total maximum number of shares of Stock issuable on the exercise of all such Options or on the conversion or exchange of all such Convertible Securities issuable on the exercise of such Options shall be deemed to have been issued for such price per share as of the date of granting of such Options and thereafter shall be deemed to be outstanding. Except as otherwise provided in subparagraph (C) below, no adjustment of such Exercise Price shall be made on the actual issuance of such Stock or of such Convertible Securities on exercise of such Options or on the issuance of such Stock on conversion or exchange of such Convertible Securities. -10- (B) Issuance of Convertible Securities. If the Company in any manner issues (whether directly or by assumption in a merger or otherwise) or sells any Convertible Securities, whether or not the rights to exchange or convert the same are immediately exercisable, and the price per share for which Stock is issuable upon such conversion or exchange (determined by dividing (i) the total amount received or receivable by the Company as consideration for the issuance or sale of such Convertible Securities, plus the minimum aggregate amount of additional consideration, if any, payable to the Company on the conversion or exchange thereof, by (ii) the total maximum number of shares of Stock issuable on the conversion or exchange of all such Convertible Securities) shall be less than the Exercise Price in effect immediately prior to the time of the granting of such Options or the then Current Market Price or $16.00 (proportionately reduced or increased as provided above), then the total maximum number of shares of Stock issuable on conversion or exchange of all such Convertible Securities shall be deemed to have been issued for such price per share as of the date of the issuance or sale of such Convertible Securities and thereafter shall be deemed to be outstanding. Except as otherwise provided in subparagraph (C) below, no adjustment of such Conversion Price shall be made on the actual issuance of Stock on conversion or exchange of such Convertible Securities. If any such issuance or sale of such Convertible Securities is made on exercise of any Option to purchase any such Convertible Securities for which adjustments of any Conversion Price have been or are to be made pursuant to the provisions of subparagraph (A) above, no further adjustment of such Conversion Price shall be made by reason of such issuance or sale. (C) Change in Option Price or Conversion Rate. If (i) the purchase price provided for in any Option referred to in clause (A) above, (ii) the additional consideration, if any, payable on the conversion or exchange of any Convertible Securities referred to in clauses (A) or (B) above or (iii) the rate at which any Convertible Securities referred to in clause (A) or (B) above are convertible into or exchangeable for Stock shall change at any time (in each case other than under or by reason of provisions designed to protect against dilution), the Exercise Price in effect at the time of such event shall forthwith be readjusted to the Exercise Price which would have been in effect at such time had such Options or Convertible Securities provided for such changed purchase price, additional consideration or conversion rate, as the case may be, at the time initially granted, issued or sold. On the expiration of any such Option or the termination of any such right to convert or exchange such Convertible Securities, the Exercise Price then in effect shall forthwith be increased to the Exercise Price which would have been in effect at the time of such expiration or termination had such Option or Convertible Securities never been issued, and the Common Stock issuable thereunder shall no longer be deemed to be outstanding. If the purchase price provided for in any such Option referred to in subparagraph (A) above is reduced, or the rate at which any Convertible Securities referred to in subparagraph (A) or (B) above are convertible into or exchangeable for Common Stock is increased, at any time under or by reason of provisions with respect thereto designed to protect against dilution, then, in case of the delivery of Stock on the exercise of any such Option or on conversion or exchange of any such Convertible Securities, the Exercise Price then in effect shall forthwith be re-adjusted to such respective amount as would have been obtained had such Option or Convertible Securities never been issued as to such Stock and had adjustments been made upon the issuance of the shares of Stock delivered as aforesaid, but only if as a result of such adjustment the Exercise Price then in effect is thereby reduced. -11- (D) Consideration for Stock. In case any shares of Stock, Options or Convertible Securities are issued or sold for cash, the consideration received therefor shall be deemed to be the amount received by the Company therefor, without deduction therefrom of any expenses incurred or any underwriting commissions or concessions paid or allowed by the Company in connection therewith. In case any shares of Common Stock, Options or Convertible Securities are issued or sold for a consideration other than cash, the amount of the consideration other than cash received by the Company shall be deemed to be the fair value of such consideration as determined in good faith by the Company's Board of Directors, without deduction of any expenses incurred or any underwriting commissions or concessions paid or allowed by the Company in connection therewith. In case any Options are issued in connection with the issuance and sale of other securities of the Company, together comprising one integral transaction in which no specific consideration is allocated to such Options by the parties thereto, such Options shall be deemed to have been issued without consideration. (E) Other Transactions. If the Company takes or omits to take any action as to which the other provisions of this Section 5(h) are not strictly applicable but as to which the failure to make any adjustment would not fairly protect the exercise rights of the Warrantholder in accordance with the essential intent and principles of this Section 5(h) then, in each such case, the Warrantholder may, on not less than five Business Days' notice to Ball, appoint a firm of independent public accountants of recognized national standing reasonably acceptable to Ball, which shall give its opinion as to the adjustment, if any, on a basis consistent with the essential intent and principles of this Section 5(h), necessary to preserve such exercise rights. On receipt of such opinion, the Exercise Price shall automatically be deemed to have been adjusted in accordance with such opinion as of the date its is received by the Warrantholder and Ball. The fees and expenses of such independent public accountants shall be borne by Ball. -12- (F) Certain Issuances of Common Stock Excepted. Notwithstanding any other provision hereof, no adjustment to the Exercise Price shall be made: (1) On any exercise by Oak or any assignee of Oak (including the Lender under the Credit Agreement) of its right to purchase 625,000 shares of Common Stock pursuant to the Stock Purchase Agreement, dated as of January 21, 2005, between the Company and Oak; (2) On the issuance of shares of Stock on exercise of any Options, or the conversion of any Convertible Securities, included in the Fully-Diluted Base; (3) On the grant of any Options that are included in the Fully-Diluted Base; or (4) On any issuance of shares of Stock in a Qualifying Acquisition. (i) Notwithstanding any other provision of this Section 5, no adjustment of the Exercise Price need be made until all cumulative adjustments amount to 1% or more of the Exercise Price as last adjusted. Any adjustments that are not made shall he carried forward and taken into account in any subsequent adjustment. (j) In the event of any adjustment of the Exercise Price under Section 5(a), 5(b), 5(c) or 5(h), the number of Shares subject to this Warrant shall also be adjusted to the greater of (i) the number of Shares determined by dividing (A) the product of the Exercise Price in effect, and the number of Shares subject to this Warrant, immediately prior to such adjustment, by (B) the Exercise Price as adjusted and (ii) such number of Shares as then constitute (A) the Warrant Ratio times (B) 5% of (I) the Fully-Diluted Base, plus (II) all shares of Stock issued or issuable on exercise or conversion of Options or Convertible Securities issued in the transaction giving rise to the adjustment under Sections 5(a), 5(b), 5(c) or 5(h). -13- 6. Merger, Consolidation, Restructuring, Reclassification, Etc. If the Company is a party to any transaction, including without limitation any (i) recapitalization or reclassification of the Stock (other than a change in par value, or from par value to no par value, or from no par value to par value, or as a result of a subdivision or combination of the Stock), (ii) any consolidation of the Company with, or merger of the Company into, any other entity, any merger of another entity into the Company (other than a merger which does not result in a reclassification, conversion, exchange or cancellation of outstanding shares of Stock), (iii) any sale or transfer of all or substantially all of the assets of the Company or (iv) any compulsory share exchange, pursuant to which the Stock is converted into the right to receive other securities, cash or other property, then lawful provision shall be made as part of the terms of such transaction whereby the Warrantholder shall have the right thereafter, to exercise this Warrant into the kind and amount of securities, cash and other property receivable on such recapitalization, reclassification, consolidation, merger, sale, transfer or share exchange by a holder of the number of shares of Stock into which this Warrant might have been exercised immediately prior to such recapitalization, reclassification, consolidation, merger, sale, transfer or share exchange. The Company or the entity formed by such consolidation or resulting from such merger or which acquires such assets or which acquires the Company's shares, as the case may be, shall make provisions in its certificate or articles of incorporation or other constituent document to establish such right. Such certificate or articles of incorporation or other constituent document shall provide for adjustments which, for events subsequent to the effective date of such certificate or articles of incorporation or other constituent document shall be as nearly equivalent as may be practicable to die adjustments provided for in this Section 6. These provisions shall similarly apply to successive recapitalizations, reclassifications, consolidations, mergers, sales, transfers or share exchanges. 7. Compliance with Securities Act. By acceptance of this Warrant, the Warrantholder agrees that this Warrant and all Shares issued on its exercise are being acquired for investment and that such holder shall not offer, sell or otherwise dispose of this Warrant or any Shares except under circumstances that shall not result in a violation of the Securities Act of 1933, as amended (the "Act"). On exercise of this Warrant, if requested by Ball or the Company. the Warrantholder shall confirm in writing that the Shares are being acquired for investment and not with a view toward distribution or resale (unless sale of the Shares has been registered under the Act or an exemption therefrom is available). Any proposed transferee of this Warrant or the Shares shall be required to agree in writing to the provisions of this Section 7 (unless such transfer of the Shares has been registered under the Act). The Warrantholder acknowledges that certificates representing the Shares shall bear an appropriate restrictive legend unless the Shares are registered under the Act. 8. Transfer. Subject to the provisions of Section 7, any Warrantholder may assign and transfer all or any portion of this Warrant that is held by such Warrantholder. Prior to any such proposed transfer, the Warrantholder shall give written notice to Ball of its intention to effect such transfer, including the name and address of the proposed transferee. Any Warrantholder may request that this Warrant be subdivided into one or more Warrants of like tenor, but covering a lesser number of Shares, provided that the total number of Shares subject to such replacement Warrants does not exceed the number of Shares covered by such Warrantholder's original Warrant. Subject to the foregoing and to Section 7, Ball, at its expense, shall execute and deliver, in lieu of any such original Warrant, the requested number of replacement Warrants. 9. Arbitration. -14- (a) General. Any controversy or claim between the Warrantholder and Ball and arising out of or relating to this Warrant shall be finally resolved by arbitration in accordance with the Commercial Arbitration Rules of the American Arbitration Association, in New York, New York. The parties further agree that (i) the arbitrators shall be empowered to include arbitration costs and attorney fees in the award to the prevailing party in such proceedings and (ii) the award in such proceedings shall be final and binding on the parties. The arbitrators shall apply the law of the State of New York, exclusive of conflict of laws principles, to any dispute. Judgment on the arbitrators' award may be entered in any court having the requisite jurisdiction. Nothing in this Agreement shall require the arbitration of disputes between the parties that arise from actions, suits or proceedings instituted by third parties, if such third parties cannot be joined in the arbitration. (b) Consent to Jurisdiction; Service of Process. Each party irrevocably submits to the jurisdiction and venue of the arbitration described in Section 9(a) and to the jurisdiction and venue of the federal and state courts sitting in New York County, New York, for the enforcement of any judgment on the arbitrators' award and the prosecution of any action for equitable relief permitted by the last sentence of Section 9(a), and waives any objection it may have with respect to the jurisdiction of such arbitration or courts or the inconvenience of such forums or venues. Warrantholder appoints Salans, 620 Fifth Avenue, New York, New York 10020, U.S.A., Attention: Laurence S. Markowitz, Esq., and Group appoints McGuire Woods LLP, 1345 Avenue of the Americas, New York, New York 10105-0106, Attention: William A. Newman, Esq., as their respective attorneys-in-fact and authorized agents solely to receive on their behalf, service of any demands for, or any notice with respect to, arbitration hereunder or any service of process. Service on either of such attorneys-in-fact may be made by registered or certified mail or by personal delivery, in any case return receipt requested, and shall be effective as service on the Warrantholder or Ball, as the case may be. Nothing herein shall be deemed to affect any right to serve any such demand, notice or process in any other manner permitted under applicable law. 10. Miscellaneous. (a) Amendment or Waiver. The provisions of this Warrant may be amended only by an instrument in writing signed by Ball and the Warrantholder, or if there is more than one Warrantholder, the holders of at least 51% in interest of the then outstanding and unexpired Warrants, provided that any such amendment that adversely affects any Warrantholder shall require the separate consent of such Warrantholder. So long as it is not adversely effected and subject to the foregoing, the Warrantholder agrees that its rights hereunder may be waived or amended by persons or entities holding not less than 51% in interest of the then outstanding and unexpired Warrants without obtaining any additional consents of the Warrantholders; provided, however, that any holder of a Warrant may waive any of its rights under this Warrant with respect to itself without obtaining the consent of any other holder. Any amendment or waiver effected in accordance with this Section 10(a) shall be binding on each Warrantholder and the Warrantholder's successors and assigns. -15- (b) Replacement. On receipt of evidence reasonably satisfactory to Ball of the loss, theft, destruction, or mutilation of this Warrant and, in the case of loss, theft, or destruction, on delivery of any indemnity agreement or bond reasonably satisfactory in form and amount to Ball or, in the case of mutilation, on surrender and cancellation of this Warrant, Ball at its expense shall execute and deliver, in lieu of this Warrant, a new Warrant of like tenor. (c) No Rights as Shareholder. No holder of this Warrant, as such, shall be entitled to vote or receive dividends or be considered a shareholder of the Company for any purpose, nor shall anything in this Warrant be construed to confer on any Warrantholder as such, any rights of a shareholder of the Company or any right to vote, to give or withhold consent to any corporate action, to receive notice of meetings of shareholders, to receive dividends or subscription rights or otherwise. (d) Notices. Notices hereunder to the Warrantholder shall be sent by certified or registered mail to the address given to Ball by such holder and shall be deemed given when so mailed, or if sent to a holder outside the United States, by telecopy with a copy sent by air mail or courier. (e) Governing Law. This Warrant shall be governed by and construed in accordance with the laws of the State of New York, without reference to conflict of laws principles. (f) Construction. References to Sections are to the sections of this Warrant. Dated: _____________, 2005. _________________________________________ ANDREW HARRY BALL -16- Form of Exercise (To be signed only on exercise of Warrant) To: STONEGATE BANK ANDREW HARRY BALL, The undersigned holder of the attached Warrant hereby irrevocably elects to exercise the right to purchase _____________ shares of Common Stock of THE A CONSULTING TEAM, INC., a New York corporation (the "Company") and herewith makes payment of $_____________ (based on an Exercise Price of $_____) for those shares and requests that the certificate for those shares be issued in the name of the undersigned and delivered to the address below the signature of the undersigned. The undersigned hereby affirms the statements and covenants in Section 7 of the Warrant. Dated: ___________________ ------------------------------------ Signature Print Name: (Signature must conform in all respects to the name of holder as specified on the face of the attached Warrant.) ------------------------------------ Address -17- EX-99.17 14 v020672_ex17.txt EXHIBIT 17 THIS WARRANT AND THE SHARES OF STOCK ISSUABLE ON ITS EXERCISE ARE SUBJECT TO THE RESTRICTIONS ON TRANSFERABILITY SET FORTH HEREIN. FORM OF WARRANT TO PURCHASE COMMON STOCK ISSUE DATE: _________, 2005 This certifies that _________________________________ (the "Warrantholder", as further defined in Section 1(t)), or its assigns, is entitled, subject to the terms set forth below, to purchase from EXCALIBUR INVESTMENT GROUP LIMITED, a British Virgin Islands company ("Excalibur"), up to 394,535 fully paid and nonassessable shares (the "Shares") of Common Stock, $0.01 par value ("Common Stock"), of The A Consulting Team, Inc., a New York corporation (the "Company"), and its successors, at a purchase price equal to the Exercise Price (as defined in Section 1), from time to time from 9:00 a.m., New York City time, on ___________, 2006 [270 days after issue date] through 5:00 p.m., New York City time, on the Termination Date (as defined in Section 1). The Exercise Price and the number of Shares subject to this Warrant are subject to adjustment as provided in Section 5 of this Warrant. Notwithstanding any other provision of this Warrant to the contrary, this Warrant shall not be or become exercisable unless and until the Advance (as defined in the Credit Agreement (as defined in Section 1(e) below)) is disbursed to the Borrower under the Credit Agreement in accordance with its terms. 1. Definitions. As used in this Warrant, the following terms have the following meanings: (a) "Ball" means Andrew Harry Ball, a British subject. (b) "Ball Warrant" means the warrant of like tenor to this Warrant being issued on the date of this Warrant to the Warrantholder by Ball and to which 182,762 shares of Stock are subject. (c) "Cashless Exercise" has the meaning given in Section 4(a). (d) "Common Stock" has the meaning given to it in the first paragraph of this Warrant. (e) "Company" has the meaning given to it in the first paragraph of this Warrant. (f) "Convertible Securities" means securities that are convertible or exchangeable into shares of Stock or into other securities that are exercisable, convertible or exchangeable into shares of Stock. (g) "Credit Agreement" means the Line of Credit Agreement of even date herewith among Stonegate Bank, as collateral agent and administrative agent, the lenders named therein and Oak. (h) "Current Market Price" for one share of Stock means (i) the average of the reported closing prices of a share of Stock quoted on The Nasdaq SmallCap Market, The Nasdaq National Market, the NASD OTC Bulletin Board or any exchange on which the Stock is then listed, whichever is applicable, for the 10 trading days immediately prior to the date of exercise of this Warrant, (ii) if no such closing price is available, the average of the closing bid and asked prices of a share of Stock as quoted in the Over-the-Counter Market Summary for the 10 trading days immediately prior to the exercise date of this Warrant or (iii) if the shares of Stock are not listed on any of the Nasdaq markets referred to above or on any exchange or quoted in the Over-the-Counter Market, the fair market value per share of Stock as of the date of exercise of this Warrant as determined by agreement of Excalibur and the Warrantholder or, if no such agreement can be reached within 15 days after the date of exercise of this Warrant, as determined by an arbitrator pursuant to Section 9. For the purpose of any computation under Sections 5(b), (d), (e) and (f), the Current Market Price per share of Stock shall be determined as provided above with reference to the earlier of the day in question under such sections and the day before the "ex date" (that is, the first date on which the Stock trades regular way on the applicable securities exchange or market without the right to receive such issuance or distribution) with respect to the issuance or distribution requiring such computation. (i) "Exercise Price" means $9.30 per Share, as it may be adjusted from time to time pursuant to the provisions of Section 5. (j) "Fully-Diluted Base" means, as of the date of this Warrant, the fully-diluted Common Stock, that is, (i) all shares of Common Stock issued and outstanding and (ii) all shares thereof subject to issuance on the exercise, conversion or exchange of outstanding Options or Convertible Securities issued by the Company that have an exercise, conversion or exchange price of less than $16.00 per share of Common Stock, including without limitation, all shares issuable as stock awards, or on exercise of options, that have been, or may be, granted under the Company's 1997 Stock Option and Award Plan or any other employee stock option or similar plan of the Company. For the avoidance of doubt, as of the Transaction Closing Date, the Fully-Diluted Base is 11,545,939 shares of Common Stock, determined as follows: Issued and outstanding shares 10,208,346 Shares reserved for issuance to Oak or its nominee 625,000 Shares reserved for issuance upon the exercise of existing options with exercise price of less than $16.00 per share 212,593 Shares reserved for issuance upon the exercise of options to be granted on or about the Transaction Closing Date with exercise price of less than $16.00 per share 500,000 ---------- 11,545,939 -2- (k) "Oak" means Oak Finance Investments Limited, a British Virgin Islands company. (l) "Options" means options, warrants, rights and similar securities that are exercisable to purchase or subscribe for shares of Stock or other securities that are exercisable, convertible or exchangeable into shares of Stock. (m) "Qualifying Acquisition" means an acquisition by the Company of a non-affiliated business by merger or the acquisition of assets, shares or other equity interests, that is approved by the Company's Board of Directors in good faith and as to which, after giving effect to any issuance by the Company in connection with such acquisition of shares of Stock as consideration, in whole or in part, does not dilute the aggregate shares of Common Stock pledged by various parties pursuant to the Credit Agreement below 51% of the issued and outstanding shares of Stock, after giving effect to additional outstanding shares of Stock pledged by Excalibur or Ball. (n) "Shares" has the meaning given to it in the first paragraph of this Warrant. (o) "Stock" means shares of Common Stock and stock of any other class into which the shares of Common Stock are subsequently changed. (p) "Termination Date" means [insert Date that is 30 months after the date of the Warrant]. (q) "Transaction Closing Date" has the meaning given to it in the Credit Agreement. (r) "Warrant Escrow Agent" means the party serving as escrow agent under the Warrant Escrow Agreement. (s) "Warrant Escrow Agreement" means the Escrow Agreement of even date herewith among the Warrantholder, Excalibur, Ball and Stonegate Bank, as escrow agent, pursuant to which the Shares and the shares of Common Stock subject to the Ball Warrant have been placed into escrow with such escrow agent. (t) "Warrantholder" "means any person or entity that at the time is the holder of this Warrant or any portion of this Warrant. References to "Warrantholder" shall include all parties who then hold Warrants pursuant to the transfer provisions of Sections 7 and 8. (u) "Warrant Ratio" means the portion of the aggregate shares of Common Stock subject to this Warrant and the Ball Warrant represented by the Shares, expressed as a percentage, after giving effect to any stock splits, reverse stock splits, stock dividends or combinations. 2. Aggregate Number of Shares of Common Stock. This Warrant is being issued concurrently with the issuance to the Warrantholder by Ball of the Ball Warrant in connection with the Credit Agreement. It is the intention of the Warrantholder, Excalibur and Ball that the aggregate number of shares of Common Stock subject to this Warrant and the Ball Warrant as of the Transaction Closing Date shall equal 5% of the Fully-Diluted Base, and Excalibur represents and warrants to the Warrantholder that this shall be the case as of the Transaction Closing Date. If, for any reason, including, without limitation, mistake, the aggregate number of shares subject to this Warrant and the Ball Warrant as of the Transaction Closing Date is more or less than 5% of the Fully-Diluted Base, this Warrant and the Ball Warrant shall automatically be deemed to be amended, in such respective amounts as shall maintain the Warrant Ratio, to decrease or increase such aggregate number of Shares so that it equals 5% of the Fully-Diluted Base. -3- 3. Escrow; Reservation of Shares. (a) Deposit. On the date of this Warrant, Excalibur has deposited into escrow pursuant to the Warrant Escrow Agreement, (i) stock certificates in proper form for all of the Shares subject to this Warrant on the date hereof and (ii) ten undated stock powers duly executed by Excalibur in blank for the purpose of transferring such Shares to the Warrantholder on exercise of this Warrant. Excalibur shall at all times through the earliest of the Termination Date or the date on which this Warrant has been exercised in full (A) not sell or agree to sell, or grant any option, warrant or right in respect of any of the Shares and (B) hold (subject to the Warrant Escrow Agreement and to the pledge and security interest in the Shares in favor of the Agent under the Credit Agreement), free and clear of all claims, liens, security interests, charges, restrictions, options, warrants and other encumbrances or rights, such number of Shares as are subject to this Warrant, including in both cases all Shares originally subject to this Warrant and any additional Shares that become subject to this Warrant pursuant to the adjustment provisions of Section 5. (b) Subsequent Deposits. If the number of Shares subject to this Warrant increases due to the provisions of Section 5, or any other securities and property to which the Warrantholder would be entitled on exercise of this Warrant pursuant to Section 5 is distributed and received by or for the account of Excalibur, Excalibur shall deposit into escrow pursuant to the Warrant Escrow Agreement not later than three Business Days (as defined in the Credit Agreement) after the event causing such increase or distribution, (i) stock certificates in proper form for such number of Shares as shall, when added to the Shares already deposited into escrow pursuant to the Warrant Escrow Agreement, equal such increased number of Shares or (ii) if applicable, any such other securities or property. (c) Subsequent Withdrawals. If the number of shares in the Fully Diluted Base decreases, Excalibur shall have the right to receive from the Warrant Escrow Agent one or more certificates representing a number of Shares such that the aggregate number of Shares deposited into escrow pursuant to the Warrant Escrow Agreement by Ball and Excalibur, after giving effect to any similar request to receive shares from Ball, equals 5% of the Fully Diluted Base. In such event, Excalibur shall also have the right to withdraw any securities or other property deposited in escrow pursuant to Section 3(b) that had been distributed in respect of the Shares withdrawn from escrow pursuant to this Section 3(c). The withdrawals contemplated by the preceding two sentences shall be subject to Excalibur's obligation set forth in Section 3(b) to deposit additional Shares (and any related distributions) into escrow pursuant to the Warrant Escrow Agreement and to the pledge and security interest in the Shares in favor of the Agent under the Credit Agreement so long as it is applicable. -4- 4. Exercise. (a) Manner of Exercise. This Warrant may be exercised, in whole or in part, from time to time and at any time on or after the date that is 270 days after the date of issuance of this Warrant through the Termination Date by the Warrantholder's surrendering to the Warrant Escrow Agent, at its address as set forth in the Warrant Escrow Agreement, this Warrant, together with the exercise form attached to this Warrant duly executed by the Warrantholder and payment to the Warrant Escrow Agent, for the account of Excalibur, in the amount obtained by multiplying the then Exercise Price by the number of shares of Stock designated in the exercise form. Payment may be made at the option of the Warrantholder (i) by certified or official bank check or a wire transfer to an account designated by the Warrant Escrow Agent or (ii) by "Cashless Exercise" as describe in this Section 4(a), including the surrender of this Warrant with instructions that Excalibur retain as payment of the Exercise Price the number of Shares determined as set forth in clause (ii) of the following paragraph. The Warrantholder shall concurrently provide Excalibur with a copy of such exercise form and appropriate advice of its payment. In the event of a Cashless Exercise: (i) the Warrantholder shall receive the number of Shares determined by multiplying the total number of Shares for which the Cashless Exercise is made by a fraction, the numerator of which shall be the difference between the then Current Market Price and the Exercise Price, and the denominator of which shall be the Current Market Price and (ii) the remaining Shares for which the Cashless Exercise has been made shall be deemed to have been paid to Excalibur as the Exercise Price and shall be released by the Warrant Escrow Agent to Excalibur as provided in the Warrant Escrow Agreement, notwithstanding any other provision thereof. All payments received by the Warrant Escrow Agent on exercise of the Warrant shall be remitted to Excalibur in accordance with the provisions of the Warrant Escrow Agreement. (b) Partial Exercise. On any partial exercise of this Warrant, Excalibur shall promptly issue and deliver to the Warrantholder, at Excalibur's sole expense, a new Warrant or Warrants of like tenor in the name of the Warrantholder providing for the right to purchase the number of Shares as to which this Warrant has not been exercised. (c) Fractional Shares. Excalibur and the Escrow Agent shall not be required to deliver fractional Shares to the Warrantholder on exercise of this Warrant. If any fraction of a Share would, but for this Section 3(c), be issuable on exercise of this Warrant, the number of shares to be issued to the Warrantholder shall, if the fraction is 0.5 or greater, rounded up to the nearest whole Share and, if less than 0.5, be rounded down to the nearest whole Share. -5- (d) Delivery of Stock Certificates. The Warrant Escrow Agreement shall require that, as promptly as practicable and in any event within three days after full or any partial exercise of this Warrant (except as otherwise provided in the Warrant Escrow Agreement), the Warrant Escrow Agent shall cause to be issued in the name of, and delivered to, the Warrantholder, a certificate or certificates for the number of shares of Stock to which the Warrantholder is entitled on such exercise, together with any other securities and property to which the Warrantholder is entitled on such exercise pursuant to Section 5. While the Warrant Escrow Agent shall be responsible for obtaining from the Company stock certificates in the proper denominations for the Shares deliverable to the Warrantholder on any exercise of this Warrant, all related expenses, taxes and other charges of the Company, the Warrant Escrow Agent and any other party payable in connection with the preparation, issuance and delivery of share certificates shall be the sole responsibility of Excalibur and the Borrower under the Credit Agreement. 5. Adjustments to Exercise Price. The Exercise Price shall be subject to adjustment from time to time, so long as this Warrant is outstanding, in whole or in part, as follows: (a) Stock Distributions. If at any time the Company pays or makes a dividend or distribution on all or any portion of its Stock or makes a dividend or other distribution on any other class of capital stock of the Company, which dividend or distribution includes Stock, the Exercise Price in effect at the opening of business on the day following the date fixed for the determination of shareholders entitled to receive such dividend or other distribution shall be decreased by multiplying such Exercise Price by a fraction, of which (i) the numerator shall be the number of shares of Stock outstanding at the close of business on the date fixed for such determination and (ii) the denominator shall be the sum of such number of shares of Stock and the total number of shares of Stock or other class of capital stock constituting such dividend or other distribution, such decrease to become effective immediately after the opening of business on the day following the date fixed for such determination. For purposes of this Section 5(a), the number of shares of Stock at any time outstanding shall not include shares held in treasury of the Company but shall include shares issuable in respect of scrip certificates, if any, issued in lieu of fractions of shares of Stock. If any dividend or other distribution of the type described in this Section 5(a) is declared, but not paid or made, the Exercise Price shall again be adjusted to be the Exercise Price which would then be in effect if such dividend or other distribution had not been declared. (b) Rights Distributions. If at any time the Company pays or makes a dividend or distribution on all or any portion of its Stock consisting of, or shall otherwise issue to all holders of its Stock, Options entitling the holders of Stock to subscribe for or purchase Stock at a price per share less than the then Current Market Price on the date fixed for the determination of shareholders entitled to receive such Options, the Exercise Price in effect at the opening of business on the day following the date fixed for such determination shall be decreased by multiplying such Exercise Price by a fraction, of which (i) the numerator shall be the number of shares of Stock outstanding at the close of business on the date fixed for such determination, plus the number of shares of Stock which the aggregate of the offering price of the total number of shares of Stock so offered for subscription or purchase would purchase at such Current Market Price, and (ii) the denominator shall be the number of shares of Stock outstanding at the close of business on the date fixed for such determination, plus the number of shares of Stock so offered for subscription or purchase, such decrease to become effective immediately after the opening of business on the day following the date fixed for such determination. -6- For purposes of this Section 5(b), the number of shares of Stock at any time outstanding shall not include shares held in treasury of the Company (but shall include shares issuable in respect of scrip certificates, if any, issued in lieu of fractions of shares of Stock) unless the Company issues any Options in respect of Stock held in its treasury and does not agree not to exercise any such Options in respect of Stock held in treasury. If such Options are not so issued, the Exercise Price shall be re-adjusted to be the Exercise Price which would then be in effect if such date for the determination of shareholders entitled to receive such Options had not been fixed. In determining whether any Options entitle the holders thereof to subscribe for or purchase shares of Stock at less than the then Current Market Price, and in determining the aggregate offering price of such shares of Stock, there shall be taken into account any consideration received for such Options. The value of such consideration, if other than cash, shall be determined in the reasonable good faith judgment of the Board of Directors of the Company, whose determination shall be conclusive. (c) Subdivisions and Combinations. If at any time all or any portion of the Stock outstanding (i) is subdivided into a greater number of shares of Stock, the Exercise Price in effect at the opening of business on the day following the day on which such subdivision becomes effective shall be proportionately reduced or (ii) is combined into a smaller number of shares of Stock, the Exercise Price in effect at the opening of business on the day following the day on which such combination becomes effective shall be proportionately increased. Such reduction or increase, as the case may be, shall become effective immediately after the opening of business on the day following the day on which such subdivision or combination becomes effective. (d) Distributions of Assets. If at any time the Company, by dividend or otherwise, distributes to all holders of its Stock evidences of its indebtedness or assets (including securities, Options (but excluding any Options referred to in Section 5(b)) entitling the holders of Stock to subscribe for or purchase Stock at a price per share less than the then Current Market Price, any dividend or distribution paid exclusively in cash, any dividend or distribution referred to in Section 5(a) and any dividend or distribution on a merger or consolidation referred to in Section 6), the Exercise Price in effect at the opening of business on the day following the date fixed for the determination of shareholders entitled to receive such dividend or other distribution shall be decreased by multiplying such Exercise Price by a fraction, of which (i) the numerator shall be the Current Market Price on the date fixed for such determination, less the then fair market value (as determined by the Board of Directors of the Company, whose determination shall be conclusive) of the portion of the assets or evidence of indebtedness so distributed applicable to one share of Stock, and (ii) the denominator shall be such Current Market Price, such adjustment to become effective immediately prior to the opening of business on the day following the date fixed for the determination of shareholders entitled to receive such distribution. -7- If any dividend or distribution of the type described in this Section 5(d) is declared but not paid or made, the Exercise Price shall be re-adjusted to the Exercise Price which would then be in effect if such dividend or distribution had not been declared. (e) Distributions of Cash. If at any time the Company, by dividend or otherwise, makes a distribution to all holders of its Stock consisting of cash (excluding any cash that is distributed on a merger or consolidation or a sale or transfer of all or substantially all of the assets of the Company to which Section 6 applies or as a part of a distribution referred to in Section 5(d)) in an aggregate amount that, combined together with (i) the aggregate amount of any other distributions to all holders of its Stock made exclusively in cash within the 12 months immediately preceding the date of payment of such distribution and in respect of which no adjustment pursuant to this Section 5(e) has been made and (ii) the aggregate of any cash plus the fair market value (as determined by the Board of Directors of the Company, whose determination shall be conclusive) of consideration payable in respect of any tender offer by the Company or any of its subsidiaries or affiliates for all or any portion of the Stock concluded with the 12 months immediately preceding the date of payment of such distribution and in respect of which no adjustment pursuant to this Section 5(e) has been made, exceeds 10% of the product of the Current Market Price on the date for the determination of holders of Stock entitled to receive such distribution, multiplied by the number of shares of Stock outstanding on such date, then, and in each such case, immediately after the close of business on such date for determination, the Exercise Price in effect immediately prior to the close of business on the date fixed for determination of the shareholders entitled to receive such distribution shall be decreased by multiplying such Exercise Price by a fraction (A) the numerator of which shall be equal to the Current Market Price on the date fixed for such determination, less an amount equal to the quotient of (x) the excess of such combined amount over such 10% and (y) the number of shares of Stock outstanding on such date for determination and (B) the denominator of which shall be equal to the Current Market Price on such date for determination. If any dividend or distribution of the type described in this Section 5(e) is declared but not so paid or made, the Exercise Price shall be re-adjusted to the Exercise Price which would then be in effect if such dividend or distribution had not been declared. (f) Tender or Exchange Offer. In case a tender or exchange offer is made by the Company or any subsidiary or affiliate of the Company for all or any portion of the Stock and expires, and such tender or exchange offer requires the payment to shareholders (based on the acceptance of the offer (up to any maximum specified in the terms of the offer) of Purchased Shares (as defined below)) of an aggregate consideration having a fair market value (as determined by the Board of Directors of the Company, whose determination shall be conclusive) that, combined together with (i) the aggregate of the cash plus the fair market value (as determined by the Board of Directors of the Company, whose determination shall be conclusive) as of the expiration of such tender or exchange offer, of consideration payable in respect of any other tender or exchange offer by the Company or any subsidiary or affiliate of the Company for all or any portion of the Stock expiring within the 12 months immediately preceding the expiration of such tender or exchange offer and in respect of which no adjustment pursuant to this Section 5(f) has been made and (ii) the aggregate amount of any distributions to all holders of the Stock made exclusively in cash within 12 months immediately preceding the expiration of such tender or exchange offer and in respect of which no adjustment pursuant to Section 5(e) has been made, exceeds 10% of the product of the Current Market Price as of the last time (the "Expiration Time") tenders or exchanges could have been made pursuant to such tender or exchange offer (as it may be amended), multiplied by the number of shares of Stock outstanding (including any tendered or exchanged shares) on the Expiration Time, then, and in each such case, immediately prior to the opening of business on the day after the date of the Expiration Time, the Exercise Price in effect immediately prior to the close of business on the date of the Expiration Time shall be decreased by multiplying such Exercise Price by a fraction (A) the numerator of which shall be equal to (1) the product of (x) the Current Market Price on the date of the Expiration Time and (y) the number of shares of Stock outstanding (including any tendered or exchanged shares) on the date of the Expiration Time less (2) the amount of cash plus the fair market value (as determined by the Board of Directors of the Company, whose determination shall be conclusive) of the aggregate consideration payable to shareholders based on the acceptance of the offer (up to any maximum specified in the terms of the offer) of Purchased Shares, and (B) the denominator of which shall be equal to the product of (xx) the Current Market Price on the date of the Expiration Time and (yy) the number of shares of Stock outstanding (including any tendered or exchanged shares) on the date of the Expiration Time less the number of all shares of Stock validly tendered or exchanged and not withdrawn as of the Expiration Time (the shares of Stock deemed so accepted up to any such maximum, being referred to as the "Purchased Shares"). -8- If the Company is obligated to purchase shares pursuant to any such tender offer, but the Company is permanently prevented by applicable law from effecting any such purchases or all such purchases are rescinded, the Exercise Price shall be re-adjusted to be the Exercise Price which would then be in effect if such tender offer had not been made. (g) Reclassifications. The reclassification of Stock into securities other than Stock (other than any reclassification on a consolidation or merger to which Section 6 applies) shall be deemed to involve (i) a distribution of such securities other than Stock to all holders of Stock (and the effective date of such reclassification shall be deemed to be "the date fixed for the determination of shareholders entitled to receive such distribution" and "the date fixed for such determination" within the meaning of Section 5(a)) and (ii) a subdivision or combination, as the case may be, of the number of shares of Stock outstanding immediately prior to such reclassification into the number of shares of Stock outstanding immediately thereafter (and the effective date of such reclassification shall be deemed to be "the day upon which such subdivision becomes effective," as the case may be, and "the day upon which such subdivision or combination becomes effective", within the meaning of the Section 5(c)). (h) Issuances Below Current Market Price, Exercise Price or $16.00. Except as provided in Section 5(h)(F), if at any time the Company issues or sells (or is deemed to have issued or sold, in accordance with subparagraphs (A), (B) or (C) below) any shares of Stock without consideration or for a consideration per share less than (1) the Exercise Price in effect immediately prior to the time of such issuance or sale, (2) the then Current Market Price or (3) $16.00 per share (proportionately reduced or increased if a subdivision or combination contemplated in Section 5(c) occurs), then, forthwith on such issuance or sale, the Exercise Price shall be reduced to the lowest of the prices determined: -9- (i) by dividing (A) an amount equal to the sum of (I) the number of shares of Stock outstanding immediately prior to such issuance or sale (including as outstanding for this purpose all shares included in the Fully-Diluted Base), multiplied by the then existing Exercise Price, and (II) the consideration, if any, received by the Company on such issuance or sale, by (B) the total number of shares of Stock outstanding immediately after such issuance or sale (including as outstanding for this purposes all shares included in the Fully-Diluted Base); or (ii) by dividing (A) an amount equal to the sum of (I) the number of shares of Stock outstanding immediately prior to such issuance or sale (including as outstanding for this purpose all shares included in the Fully-Diluted Base), multiplied by the then Current Market Price, and (II) the consideration, if any, received by the Company on such issuance or sale, by (B) the total number of shares of Stock outstanding immediately after such issuance or sale (including as outstanding for this purposes all shares included in the Fully-Diluted Base); or (iii) by dividing (A) an amount equal to the sum of (I) the number of shares of Stock outstanding immediately prior to such issuance or sale (including as outstanding for this purpose all shares included in the Fully-Diluted Base), multiplied by $16.00 (proportionately reduced or increased as provided above), and (II) the consideration, if any, received by the Company on such issuance or sale, by (B) the total number of shares of Stock outstanding immediately after such issuance or sale (including as outstanding for this purposes all shares included in the Fully-Diluted Base). No adjustment of the Exercise Price shall be made, however, in an amount less than $0.01 per share, and any such lesser adjustment shall be carried forward and shall be made at the time and together with the next subsequent adjustment which together with any adjustments so carried forward shall amount to $0.01 per share or more. For purposes of this Section 5(h), the following subparagraphs (A) through (F) shall also be applicable: (A) Issuance of Options, Warrants or Rights. If the Company in any manner grants (whether directly, by assumption in a merger or otherwise) any Options for Stock or for Convertible Securities, whether or not such Options or the right to convert or exchange any such Convertible Securities are immediately exercisable, and the price per share for which Stock is issuable on the exercise of such Options or on the conversion or exchange of such Convertible Securities (determined by dividing (i) the total amount, if any, received or receivable by the Company as consideration for the issuance of all such Options, plus the minimum aggregate amount of additional consideration payable to the Company on the exercise of all such Options, plus, in the case of Options that relate to Convertible Securities, the minimum aggregate amount of additional consideration, if any, payable on the issuance or sale of such Convertible Securities and on the conversion or exchange thereof, by (ii) the total maximum number of shares of Stock issuable on the exercise of such Options or on the conversion or exchange of all such Convertible Securities issuable on the exercise of such Options) shall be less than the Exercise Price in effect immediately prior to the time of the granting of such Options or the then Current Market Price or $16.00 (proportionately reduced or increased as provided above), then the total maximum number of shares of Stock issuable on the exercise of all such Options or on the conversion or exchange of all such Convertible Securities issuable on the exercise of such Options shall be deemed to have been issued for such price per share as of the date of granting of such Options and thereafter shall be deemed to be outstanding. Except as otherwise provided in subparagraph (C) below, no adjustment of such Exercise Price shall be made on the actual issuance of such Stock or of such Convertible Securities on exercise of such Options or on the issuance of such Stock on conversion or exchange of such Convertible Securities. -10- (B) Issuance of Convertible Securities. If the Company in any manner issues (whether directly or by assumption in a merger or otherwise) or sells any Convertible Securities, whether or not the rights to exchange or convert the same are immediately exercisable, and the price per share for which Stock is issuable upon such conversion or exchange (determined by dividing (i) the total amount received or receivable by the Company as consideration for the issuance or sale of such Convertible Securities, plus the minimum aggregate amount of additional consideration, if any, payable to the Company on the conversion or exchange thereof, by (ii) the total maximum number of shares of Stock issuable on the conversion or exchange of all such Convertible Securities) shall be less than the Exercise Price in effect immediately prior to the time of the granting of such Options or the then Current Market Price or $16.00 (proportionately reduced or increased as provided above), then the total maximum number of shares of Stock issuable on conversion or exchange of all such Convertible Securities shall be deemed to have been issued for such price per share as of the date of the issuance or sale of such Convertible Securities and thereafter shall be deemed to be outstanding. Except as otherwise provided in subparagraph (C) below, no adjustment of such Conversion Price shall be made on the actual issuance of Stock on conversion or exchange of such Convertible Securities. If any such issuance or sale of such Convertible Securities is made on exercise of any Option to purchase any such Convertible Securities for which adjustments of any Conversion Price have been or are to be made pursuant to the provisions of subparagraph (A) above, no further adjustment of such Conversion Price shall be made by reason of such issuance or sale. (C) Change in Option Price or Conversion Rate. If (i) the purchase price provided for in any Option referred to in clause (A) above, (ii) the additional consideration, if any, payable on the conversion or exchange of any Convertible Securities referred to in clauses (A) or (B) above or (iii) the rate at which any Convertible Securities referred to in clause (A) or (B) above are convertible into or exchangeable for Stock shall change at any time (in each case other than under or by reason of provisions designed to protect against dilution), the Exercise Price in effect at the time of such event shall forthwith be readjusted to the Exercise Price which would have been in effect at such time had such Options or Convertible Securities provided for such changed purchase price, additional consideration or conversion rate, as the case may be, at the time initially granted, issued or sold. On the expiration of any such Option or the termination of any such right to convert or exchange such Convertible Securities, the Exercise Price then in effect shall forthwith be increased to the Exercise Price which would have been in effect at the time of such expiration or termination had such Option or Convertible Securities never been issued, and the Common Stock issuable thereunder shall no longer be deemed to be outstanding. If the purchase price provided for in any such Option referred to in subparagraph (A) above is reduced, or the rate at which any Convertible Securities referred to in subparagraph (A) or (B) above are convertible into or exchangeable for Common Stock is increased, at any time under or by reason of provisions with respect thereto designed to protect against dilution, then, in case of the delivery of Stock on the exercise of any such Option or on conversion or exchange of any such Convertible Securities, the Exercise Price then in effect shall forthwith be re-adjusted to such respective amount as would have been obtained had such Option or Convertible Securities never been issued as to such Stock and had adjustments been made upon the issuance of the shares of Stock delivered as aforesaid, but only if as a result of such adjustment the Exercise Price then in effect is thereby reduced. -11- (D) Consideration for Stock. In case any shares of Stock, Options or Convertible Securities are issued or sold for cash, the consideration received therefor shall be deemed to be the amount received by the Company therefor, without deduction therefrom of any expenses incurred or any underwriting commissions or concessions paid or allowed by the Company in connection therewith. In case any shares of Common Stock, Options or Convertible Securities are issued or sold for a consideration other than cash, the amount of the consideration other than cash received by the Company shall be deemed to be the fair value of such consideration as determined in good faith by the Company's Board of Directors, without deduction of any expenses incurred or any underwriting commissions or concessions paid or allowed by the Company in connection therewith. In case any Options are issued in connection with the issuance and sale of other securities of the Company, together comprising one integral transaction in which no specific consideration is allocated to such Options by the parties thereto, such Options shall be deemed to have been issued without consideration. (E) Other Transactions. If the Company takes or omits to take any action as to which the other provisions of this Section 5(h) are not strictly applicable but as to which the failure to make any adjustment would not fairly protect the exercise rights of the Warrantholder in accordance with the essential intent and principles of this Section 5(h) then, in each such case, the Warrantholder may, on not less than five Business Days' notice to Excalibur, appoint a firm of independent public accountants of recognized national standing reasonably acceptable to Excalibur, which shall give its opinion as to the adjustment, if any, on a basis consistent with the essential intent and principles of this Section 5(h), necessary to preserve such exercise rights. On receipt of such opinion, the Exercise Price shall automatically be deemed to have been adjusted in accordance with such opinion as of the date its is received by the Warrantholder and Excalibur. The fees and expenses of such independent public accountants shall be borne by Excalibur. -12- (F) Certain Issuances of Common Stock Excepted. Notwithstanding any other provision hereof, no adjustment to the Exercise Price shall be made: (1) On any exercise by Oak or any assignee of Oak (including the Lender under the Credit Agreement) of its right to purchase 625,000 shares of Common Stock pursuant to the Stock Purchase Agreement, dated as of January 21, 2005, between the Company and Oak; (2) On the issuance of shares of Stock on exercise of any Options, or the conversion of any Convertible Securities, included in the Fully-Diluted Base; (3) On the grant of any Options that are included in the Fully-Diluted Base; or (4) On any issuance of shares of Stock in a Qualifying Acquisition. (i) Notwithstanding any other provision of this Section 5, no adjustment of the Exercise Price need be made until all cumulative adjustments amount to 1% or more of the Exercise Price as last adjusted. Any adjustments that are not made shall he carried forward and taken into account in any subsequent adjustment. (j) In the event of any adjustment of the Exercise Price under Section 5(a), 5(b), 5(c), 5(d), 5(e), 5(f) or 5(h), the number of Shares subject to this Warrant shall also be adjusted to the greater of (i) the number of Shares determined by dividing (A) the product of the Exercise Price in effect, and the number of Shares subject to this Warrant, immediately prior to such adjustment, by (B) the Exercise Price as adjusted and (ii) such number of Shares as then constitute (A) the Warrant Ratio times (B) 5% of (I) the Fully-Diluted Base, plus (II) all shares of Stock issued or issuable on exercise or conversion of Options or Convertible Securities issued in the transaction giving rise to the adjustment under Sections 5(a), 5(b), 5(c), 5(d), 5(e), 5(f) or 5(h). 6. Merger, Consolidation, Restructuring, Reclassification, Etc. If the Company is a party to any transaction, including without limitation any (i) recapitalization or reclassification of the Stock (other than a change in par value, or from par value to no par value, or from no par value to par value, or as a result of a subdivision or combination of the Stock), (ii) any consolidation of the Company with, or merger of the Company into, any other entity, any merger of another entity into the Company (other than a merger which does not result in a reclassification, conversion, exchange or cancellation of outstanding shares of Stock), (iii) any sale or transfer of all or substantially all of the assets of the Company or (iv) any compulsory share exchange, pursuant to which the Stock is converted into the right to receive other securities, cash or other property, then lawful provision shall be made as part of the terms of such transaction whereby the Warrantholder shall have the right thereafter, to exercise this Warrant into the kind and amount of securities, cash and other property receivable on such recapitalization, reclassification, consolidation, merger, sale, transfer or share exchange by a holder of the number of shares of Stock into which this Warrant might have been exercised immediately prior to such recapitalization, reclassification, consolidation, merger, sale, transfer or share exchange. -13- The Company or the entity formed by such consolidation or resulting from such merger or which acquires such assets or which acquires the Company's shares, as the case may be, shall make provisions in its certificate or articles of incorporation or other constituent document to establish such right. Such certificate or articles of incorporation or other constituent document shall provide for adjustments which, for events subsequent to the effective date of such certificate or articles of incorporation or other constituent document shall be as nearly equivalent as may be practicable to die adjustments provided for in this Section 6. These provisions shall similarly apply to successive recapitalizations, reclassifications, consolidations, mergers, sales, transfers or share exchanges. 7. Compliance with Securities Act. By acceptance of this Warrant, the Warrantholder agrees that this Warrant and all Shares issued on its exercise are being acquired for investment and that such holder shall not offer, sell or otherwise dispose of this Warrant or any Shares except under circumstances that shall not result in a violation of the Securities Act of 1933, as amended (the "Act"). On exercise of this Warrant, if requested by Excalibur or the Company. the Warrantholder shall confirm in writing that the Shares are being acquired for investment and not with a view toward distribution or resale (unless sale of the Shares has been registered under the Act or an exemption therefrom is available). Any proposed transferee of this Warrant or the Shares shall be required to agree in writing to the provisions of this Section 7 (unless such transfer of the Shares has been registered under the Act). The Warrantholder acknowledges that certificates representing the Shares shall bear an appropriate restrictive legend unless the Shares are registered under the Act. 8. Transfer. Subject to the provisions of Section 7, any Warrantholder may assign and transfer all or any portion of this Warrant that is held by such Warrantholder. Prior to any such proposed transfer, the Warrantholder shall give written notice to Excalibur of its intention to effect such transfer, including the name and address of the proposed transferee. Any Warrantholder may request that this Warrant be subdivided into one or more Warrants of like tenor, but covering a lesser number of Shares, provided that the total number of Shares subject to such replacement Warrants does not exceed the number of Shares covered by such Warrantholder's original Warrant. Subject to the foregoing and to Section 7, Excalibur, at its expense, shall execute and deliver, in lieu of any such original Warrant, the requested number of replacement Warrants. -14- 9. Arbitration. (a) General. Any controversy or claim between the Warrantholder and Excalibur and arising out of or relating to this Warrant shall be finally resolved by arbitration in accordance with the Commercial Arbitration Rules of the American Arbitration Association, in New York, New York. The parties further agree that (i) the arbitrators shall be empowered to include arbitration costs and attorney fees in the award to the prevailing party in such proceedings and (ii) the award in such proceedings shall be final and binding on the parties. The arbitrators shall apply the law of the State of New York, exclusive of conflict of laws principles, to any dispute. Judgment on the arbitrators' award may be entered in any court having the requisite jurisdiction. Nothing in this Agreement shall require the arbitration of disputes between the parties that arise from actions, suits or proceedings instituted by third parties, if such third parties cannot be joined in the arbitration. (b) Consent to Jurisdiction; Service of Process. Each party irrevocably submits to the jurisdiction and venue of the arbitration described in Section 9(a) and to the jurisdiction and venue of the federal and state courts sitting in New York County, New York, for the enforcement of any judgment on the arbitrators' award and the prosecution of any action for equitable relief permitted by the last sentence of Section 9(a), and waives any objection it may have with respect to the jurisdiction of such arbitration or courts or the inconvenience of such forums or venues. Warrantholder appoints Salans, 620 Fifth Avenue, New York, New York 10020, U.S.A., Attention: Laurence S. Markowitz, Esq., and Group appoints McGuire Woods LLP, 1345 Avenue of the Americas, New York, New York 10105-0106, Attention: William A. Newman, Esq., as their respective attorneys-in-fact and authorized agents solely to receive on their behalf, service of any demands for, or any notice with respect to, arbitration hereunder or any service of process. Service on either of such attorneys-in-fact may be made by registered or certified mail or by personal delivery, in any case return receipt requested, and shall be effective as service on the Warrantholder or Excalibur, as the case may be. Nothing herein shall be deemed to affect any right to serve any such demand, notice or process in any other manner permitted under applicable law. 10. Miscellaneous. (a) Amendment or Waiver. The provisions of this Warrant may be amended only by an instrument in writing signed by Excalibur and the Warrantholder, or if there is more than one Warrantholder, the holders of at least 51% in interest of the then outstanding and unexpired Warrants, provided that any such amendment that adversely affects any Warrantholder shall require the separate consent of such Warrantholder. So long as it is not adversely effected and subject to the foregoing, the Warrantholder agrees that its rights hereunder may be waived or amended by persons or entities holding not less than 51% in interest of the then outstanding and unexpired Warrants without obtaining any additional consents of the Warrantholders; provided, however, that any holder of a Warrant may waive any of its rights under this Warrant with respect to itself without obtaining the consent of any other holder. Any amendment or waiver effected in accordance with this Section 10(a) shall be binding on each Warrantholder and the Warrantholder's successors and assigns. -15- (b) Replacement. On receipt of evidence reasonably satisfactory to Excalibur of the loss, theft, destruction, or mutilation of this Warrant and, in the case of loss, theft, or destruction, on delivery of any indemnity agreement or bond reasonably satisfactory in form and amount to Excalibur or, in the case of mutilation, on surrender and cancellation of this Warrant, Excalibur at its expense shall execute and deliver, in lieu of this Warrant, a new Warrant of like tenor. (c) No Rights as Shareholder. No holder of this Warrant, as such, shall be entitled to vote or receive dividends or be considered a shareholder of the Company for any purpose, nor shall anything in this Warrant be construed to confer on any Warrantholder as such, any rights of a shareholder of the Company or any right to vote, to give or withhold consent to any corporate action, to receive notice of meetings of shareholders, to receive dividends or subscription rights or otherwise. (d) Notices. Notices hereunder to the Warrantholder shall be sent by certified or registered mail to the address given to Excalibur by such holder and shall be deemed given when so mailed, or if sent to a holder outside the United States, by telecopy with a copy sent by air mail or courier. (e) Governing Law. This Warrant shall be governed by and construed in accordance with the laws of the State of New York, without reference to conflict of laws principles. (f) Construction. References to Sections are to the sections of this Warrant. Dated: ________________, 2005. EXCALIBUR INVESTMENT GROUP LIMITED By_________________________________ Name: Title: -16- Form of Exercise (To be signed only on exercise of Warrant) To: STONEGATE BANK EXCALIBUR INVESTMENT GROUP LIMITED, The undersigned holder of the attached Warrant hereby irrevocably elects to exercise the right to purchase _____________ shares of Common Stock of THE A CONSULTING TEAM, INC., a New York corporation (the "Company") and herewith makes payment of $_____________ (based on an Exercise Price of $_____) for those shares and requests that the certificate for those shares be issued in the name of the undersigned and delivered to the address below the signature of the undersigned. The undersigned hereby affirms the statements and covenants in Section 7 of the Warrant. Dated: ___________________ ------------------------------------ Signature Print Name: (Signature must conform in all respects to the name of holder as specified on the face of the attached Warrant.) ------------------------------------ Address -17- EX-99.19 15 v020672_ex19.txt EXHIBIT 19 WRITTEN CONSENT OF THE SOLE DIRECTOR OF OAK FINANCE INVESTMENTS LIMITED The undersigned, being the sole director of Oak Finance Investments Limited, a company organized under the laws of the British Virgin Islands (the "Company"), hereby adopt by written action in lieu of a meeting the following resolutions: BE IT RESOLVED, that the Board of Directors does hereby authorize the execution, delivery and performance, including, without limitation, the incurrence of indebtedness in the amount of US$16,750,000 (or such other amount as the officers or authorized persons of the Company may in their discretion make) of a line of credit agreement (the "Loan Agreement"), by and between the Company and the lender(s) named therein (the "Lender"), dated as of May 24, 2005, in substantially the form of the draft comprising Exhibit A hereto, with such changes as the authorized officers and authorized persons of the Company may in their discretion make; FURTHER RESOLVED, that the Board of Directors does hereby authorize the execution, delivery and performance of one or more promissory notes in the aggregate principal amount of US$16,750,000 (or such other amount as the officers or authorized persons of the Company may in their discretion make) (collectively, the "Note"), by the Company in favor of the holders named therein, dated as of May 24, 2005, in substantially the form of the draft comprising Exhibit B hereto, with such changes as the authorized officers and authorized persons of the Company may in their discretion make; FURTHER RESOLVED, that the Board of Directors does hereby authorize the execution, delivery and performance of a pledge agreement (the "Pledge Agreement"), by and between the Company and the Lender, dated as of May 24, 2005, in substantially the form of the draft comprising Exhibit C hereto, with such changes as the authorized officers and authorized persons of the Company may in their discretion make; FURTHER RESOLVED, that the Company does hereby instruct its registered agent, Arias, Fabrega & Fabrega Trust Co. BVI, Limited (the "Registered Agent"), to establish on behalf of the Company a Register of Mortgages and Charges (the "Register") and maintain the Register at its office on the Company's behalf; FURTHER RESOLVED, that the Company does hereby instruct the Registered Agent to record in the Register details pertaining to the Pledge Agreement, substantially in the form of Schedule 1 attached hereto; FURTHER RESOLVED, that the Company does hereby instruct the Registered Agent to file with the British Virgin Islands Companies Registry the details concerning the Pledge Agreement as recorded in the Register; FURTHER RESOLVED, that the Board of Directors does hereby authorize the execution, delivery and performance of an escrow agreement (the "Escrow Agreement"), by and between the Company and Stonegate Bank, dated as of May 24, 2005, in substantially the form of the draft comprising Exhibit D hereto, with such changes as the authorized officers and authorized persons of the Company may in their discretion make; FURTHER RESOLVED, that the Board of Directors does hereby authorize the execution, delivery and performance of a participation agreement (the "Participation Agreement"), by and between the Company and Stonegate Bank, dated as of May 24, 2005, in substantially the form of the draft comprising Exhibit E hereto, with such changes as the authorized officers and authorized persons of the Company may in their discretion make; FURTHER RESOLVED, that the Board of Directors does hereby designate each of Saurabh Patel a/k/a Sorab Patel and Kishore Kumar Jhunjhunwala, each acting alternatively and singly, as an authorized person and authorized signatory (which terms shall for all purposes have the same meaning) for the Company in the execution of the Loan Agreement, the Note, the Pledge Agreement, the Escrow Agreement and the instruments and documents incidental and ancillary thereto; FURTHER RESOLVED, that the Board of Directors does hereby approve the procurement and funding of a "Key-Man" life insurance policy on each of the lives of Donald Kovalevich and Richard Falcone, with Lender designated as the loss payee as described in the Loan Agreement; FURTHER RESOLVED, that the Board of Directors does hereby appoint CT Corporation as the Company's registered agent in New York for Service of Process, as more specifically set forth in Exhibit F hereto; FURTHER RESOLVED, that the Board of Directors and proper officers and authorized persons of the Company, and each of them, are hereby authorized to take all such actions, to make such determinations and to execute and deliver all such agreements, instruments and documents in the name and on behalf of the Company (under its corporate seal or otherwise) as they, in their discretion, shall deem necessary or advisable in order to carry out the foregoing resolutions; and 2 FURTHER RESOLVED, that all actions heretofore taken by any of the directors, officers, authorized persons, representatives or agents of the Company or any of their affiliates with respect to any of the matters referred to in the foregoing resolutions be, and each of the same hereby is, ratified, confirmed and approved in all respects as the act and deed of the Company. [Signature page follows.] 3 IN WITNESS WHEREOF, the undersigned directors consent to the foregoing action as of this 24th day of May, 2005. /s/ Brenda Patricia Cocksedge ------------------------------ Brenda Patricia Cocksedge Sole Director 4 -----END PRIVACY-ENHANCED MESSAGE-----