EXHIBIT 10.49
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NTSI PLEDGE AND SECURITY AGREEMENT
This Pledge and Security Agreement (this "Agreement") dated as of May 16,
2005 between Laurus Master Fund, Ltd. ("Pledgee") and Xxxxxx Traffic Systems,
Inc., a Delaware corporation ("Pledgor").
BACKGROUND
Pledgee and Xxxxxx, Inc., the parent corporation of Pledgor. have entered
or are entering into a Securities Purchase Agreement dated as of May 16, 2005
(as amended, modified, restated or supplemented from time to time, the "Purchase
Agreement") pursuant to which Pledgee provides or will provide certain financial
accommodations to Xxxxxx, Inc., the parent corporation of Pledgor.
In order to induce Pledgee to enter into the transactions contemplated by
the Purchase Agreement and the Related Agreements referred to therein, Pledgor
has agreed to pledge and grant a security interest in the collateral described
herein to Pledgee on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration the receipt of which is hereby acknowledged, the parties
hereto agree as follows:
1. DEFINITIONS. All capitalized terms used herein which are not defined
shall have the meanings given to them in the Purchase Agreement.
2. PLEDGE AND GRANT OF SECURITY INTEREST.
To secure the full and punctual payment and performance of (a) all
indebtedness obligations and liabilities of Pledgor to Pledgee under the
Purchase Agreement and the Related Agreements referred to thereinand (b) all
indebtedness, obligations and liabilities of Pledgor to Pledgee whether now
existing or hereafter arising, direct or indirect, liquidated or unliquidated,
absolute or contingent, due or not due and whether under, pursuant to or
evidenced by the Purchase Agreement or any other note, agreement, guaranty,
instrument or otherwise (collectively, the "Indebtedness"), Pledgor hereby
assigns, transfers and pledges, assigns, hypothecates, transfers and grants to
Pledgee a security interest in the personal property described on Schedule A
annexed hereto (collectively, the "Collateral").
3. REPRESENTATIONS AND WARRANTIES OF PLEDGOR. Pledgor represents and
warrants to Pledgee (which representations and warranties shall be deemed to
continue to be made until all of the Indebtedness has been paid in full in cash)
that:
(a) The execution, delivery and performance by Pledgor of this
Agreement and the pledge of the Collateral hereunder do not and will not result
in any violation of any agreement, indenture, instrument, license, judgment,
decree, order, law, statute, ordinance or other governmental rule or regulation
applicable to Pledgor.
(b) This Agreement constitutes the legal, valid, and binding
obligation of Pledgor enforceable against Pledgor in accordance with its terms.
(c) Other than a deposit account control agreement to be executed on
or prior to the date hereof in favor of and on terms satisfactory to Pledgee by
the financial institution at which the Pledged Account (as defined in Schedule A
hereto) is maintained, no consent or approval of any person, corporation,
governmental body, regulatory authority or other entity, is or will be necessary
for the execution, delivery and performance of this Agreement or, the exercise
by Pledgee of any rights with respect to the Collateral or for the pledge and
assignment of, and the grant of a security interest in, the Collateral
hereunder.
(d) There are no pending or, to the best of Pledgor's knowledge,
threatened actions or proceedings before any court, judicial body,
administrative agency or arbitrator which may materially adversely affect the
Collateral.
(e) Pledgor has the requisite power and authority to enter into this
Agreement and to pledge and assign the Collateral to Pledgee in accordance with
the terms of this Agreement.
(f) Pledgor owns each item of the Collateral and, except for the
pledge and security interest granted to Pledgee hereunder, the Collateral is
free and clear of any other security interest, pledge, claim, lien, charge,
hypothecation, assignment, offset or encumbrance whatsoever (collectively,
"Liens").
(g) The pledge and assignment of the Collateral and the grant of a
security interest under this Agreement vest in Pledgee all rights of Pledgor in
the Collateral as contemplated by this Agreement.
4. AFFIRMATIVE COVENANTS. Until such time as all of the Indebtedness has
been paid in full in cash, Pledgor shall:
(a) Defend the Collateral against the claims and demands of all other
parties and keep the Collateral free from all Liens, except for the Liens
granted to Pledgee under this Agreement.
(b) In the event Pledgor comes into possession of any portion of the
Collateral in violation of the terms of this Agreement, hold the same in trust
for Pledgee and deliver to Pledgee such Collateral in the form received no later
than one (1) business day following Pledgor's receipt thereof.
(c) In the event any portion of the Collateral is held by a third
party, take all action that Pledgee may request so as to maintain the validity,
enforceability, perfection and priority of Pledgee's security interest in the
Collateral.
(d) Within two (2) business days of receipt thereof by Pledgor,
deliver to Pledgee all notices and statements relating to the Collateral
received by Pledgor or any third party holding the Collateral.
(e) Notify Pledgee promptly of (a) any adverse event relating to the
Collateral or any adverse change in the value of the Collateral and (b)
Pledgee's intention to commence a voluntary case under any state or federal
bankruptcy laws (as now or hereafter in effect).
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(f) At the written request of Pledgee at any time and from time to
time, at Pledgor's sole expense, promptly take such action and execute and
deliver such financing statements, control agreements and further instruments
and documents as Pledgee may reasonably request in order to more fully perfect,
evidence or effectuate the pledge and assignment hereunder and the security
interest granted hereby and to enable Pledgee to exercise and enforce its rights
and remedies hereunder. Pledgee is hereby authorized to file one or more
financing or continuation statements under the applicable Uniform Commercial
Code (as in effect from time to time, the "UCC") relating to the Collateral,
naming Pledgee as "secured party."
(g) Furnish to Pledgee such other information relating to the
Collateral as Pledgee may from time to time reasonably request.
5. NEGATIVE COVENANTS. Until such time as the indebtedness has been paid in
full in cash, Pledgor shall not: (a) sell, convey, or otherwise dispose of any
of the Collateral or any interest therein or incur or permit to exist any Lien
with respect to any of the Collateral or the proceeds thereof other than the
Lien granted to Pledgee under this Agreement, (b) have any access to any funds
on deposit in the Pledged Account, (c) make or cause to be made any transfers
from the Pledged Account, (d) make or cause to be made any withdrawals from the
Pledged Account and/or (e) change the ownership of the Pledged Account, other
than with the prior written consent of Pledgee.
6. EVENTS OF DEFAULT.
The term "Event of Default" wherever used herein shall mean the
occurrence of any one of the following events:
(a) An "Event of Default" under the Purchase Agreement shall have
occurred and shall not have been cured during any applicable cure or grace
period;
(b) Pledgor's failure to comply with or perform any of its
undertakings or obligations under any agreement between Pledgor and Pledgee,
including, without limitation, this Agreement;
(c) Any representation, warranty, statement or covenant made or
furnished to Pledgee by or on behalf of Pledgor in connection with this
Agreement and/or the Purchase Agreement proves to have been false in any
material respect when made or furnished or is breached, violated or not complied
with;
(d) Pledgor shall (i) apply for, consent to, or suffer to exist the
appointment of, or the taking of possession by, a receiver, custodian, trustee,
liquidator or other fiduciary of itself or of all or a substantial part of its
property, (ii) make a general assignment for the benefit of creditors, (iii)
commence or inform Pledgee of its intention to commence a voluntary case under
any state or federal bankruptcy laws (as now or hereafter in effect), (iv) be
adjudicated a bankrupt or insolvent, (v) file a petition seeking to take
advantage of any other law providing for the relief of debtors, (vi) acquiesce
to, or fail to have dismissed, within thirty (30) days, any petition filed
against it in any involuntary case under such bankruptcy laws, or (vii) take any
action for the purpose of effecting any of the foregoing; or
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(e) The Collateral is subjected to levy of execution, attachment,
distraint or other judicial process; or the Collateral is the subject of a claim
(other than by Pledgee) of a Lien or other right or interest in or to the
Collateral.
7. REMEDIES.
Upon the occurrence of an Event of Default, Pledgee may:
(i) Demand, collect, receipt for, settle, compromise, adjust, xxx
for, foreclose, realize upon the Collateral (or any part thereof) or debit the
Pledged Account (as defined in Schedule A hereto), in each case as Pledgee may
determine in its sole discretion;
(ii) Transfer the Collateral into its name or into the name of
its nominee or nominees;
(iii) Subject to the requirements of applicable law, sell, assign
and deliver the whole or, from time to time any part of the Collateral, with or
without demand, advertisement or notice of the time or place of sale or
adjournment thereof or otherwise (all of which are hereby waived, except such
notice as is required by applicable law and cannot be waived), for such price or
prices and on such terms as Pledgee in its sole discretion may determine.
Pledgor acknowledges and agrees that ten (10) days' prior written
notice of the time and place of any public sale of any of the Collateral or any
other intended disposition thereof shall be reasonable and sufficient notice to
Pledgor within the meaning of the UCC. Pledgor hereby waives and releases any
and all right or equity of redemption, whether before or after sale hereunder.
In addition to the foregoing, Pledgee shall have all of the rights and remedies
of a secured party under applicable law and the UCC.
8. PROCEEDS OF COLLATERAL AGREEMENT. The proceeds of any disposition of the
Collateral under this Agreement shall be applied as follows:
(a) First, to the payment of all costs, expenses and charges of
Pledgee and to the reimbursement of Pledgee for the prior payment of such costs,
expenses and charges incurred in connection with the care and safekeeping of the
Collateral (including, without limitation, the expenses of any sale or any other
disposition of any of the Collateral), the expenses of any taking, attorneys'
fees and expenses, court costs, any other fees or expenses incurred or
expenditures or advances made by Pledgee in the protection, enforcement or
exercise of its rights, powers or remedies hereunder, with interest on any such
reimbursement at the rate prescribed in the Note from the date of payment;
(b) Second, to the payment of the Obligations, in whole or in part, in
such order as Pledgee may elect, whether or not such Obligation is then due;
(c) Third, to such persons, firms corporations or other entities as
required by applicable law including, without limitation the UCC; and
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(d) Fourth, to the extent of any surplus to Pledgor or as a court of
competent jurisdiction may direct.
In the event that the proceeds of any collection, recovery, receipt,
appropriation, realization or sale are insufficient to satisfy the Indebtedness,
Pledgor shall be liable for the deficiency together with interest thereon at the
rate prescribed in the Note plus the costs and fees of any attorneys employed by
Pledgee to collect such deficiency.
9. WAIVER OF MARSHALING. Pledgor hereby waives any right to compel any
marshaling of any of the Collateral.
10. NO WAIVER. Any and all of Pledgee's rights with respect to the Liens
granted under this Agreement shall continue unimpaired, and Pledgor shall be and
remain obligated in accordance with the terms hereof, notwithstanding (a) the
bankruptcy, insolvency or reorganization of Pledgor, (b) the release or
substitution of any item of the Collateral at any time, or of any rights or
interests therein, or (c) any delay, extension of time, renewal, compromise or
other indulgence granted by Pledgee in reference to any of the Indebtedness.
Pledgor hereby waives all notice of any such delay, extension, release,
substitution, renewal, compromise or other indulgence, and hereby consents to be
bound hereby as fully and effectively as if Pledgor had expressly agreed thereto
in advance. No delay or extension of time by Pledgee in exercising any power of
sale, option or other right or remedy hereunder, and no failure by Pledgee to
give notice or make demand, shall constitute a waiver thereof, or limit, impair
or prejudice Pledgee's right to take any action against Pledgor or to exercise
any other power of sale, option or any other right or remedy.
11. EXPENSES. The Collateral shall secure, and Pledgor shall pay to Pledgee
on demand, from time to time, all costs and expenses, (including but not limited
to, attorneys' fees and costs, taxes, and all transfer, recording, filing and
other charges) of, or incidental to, the custody, care, transfer, administration
of the Collateral or any other collateral, or in any way relating to the
enforcement, protection or preservation of the rights or remedies of Pledgee
under this Agreement or with respect to any of the Indebtedness.
12. PLEDGEE APPOINTED ATTORNEY-IN-FACT AND PERFORMANCE BY PLEDGEE. Upon the
occurrence of an Event of Default, Pledgor hereby irrevocably constitutes and
appoints Pledgee as Pledgor's true and lawful attorney-in-fact, with full power
of substitution, to execute, acknowledge and deliver any instruments and to do
in Pledgor's name, place and stead, all such acts, things and deeds for and on
behalf of and in the name of Pledgor, which Pledgor could or might do or which
Pledgee may deem necessary, desirable or convenient to accomplish the purposes
of this Agreement, including, without limitation, to execute such instruments of
assignment or transfer or orders and to register, convey or otherwise transfer
title to the Collateral into Pledgee's name. Pledgor hereby ratifies and
confirms all that said attorney-in-fact may so do and hereby declares this power
of attorney to be coupled with an interest and irrevocable. If Pledgor fails to
perform any agreement herein contained, Pledgee may itself perform or cause
performance thereof, and any costs and expenses of Pledgee incurred in
connection therewith shall be paid by Pledgor as provided in Section 11 hereof.
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13. CAPTIONS. All captions in this Agreement are included herein for
convenience of reference only and shall not constitute part of this Agreement
for any other purpose.
14. MISCELLANEOUS.
(a) This Agreement constitutes the entire and final agreement among
the parties with respect to the subject matter hereof and may not be changed,
terminated or otherwise varied except by a writing duly executed by the parties
hereto.
(b) No waiver of any term or condition of this Agreement, whether by
delay, omission or otherwise, shall be effective unless in writing and signed by
the party sought to be charged, and then such waiver shall be effective only in
the specific instance and for the purpose for which given.
(c) In the event that any provision of this Agreement or the
application thereof to Pledgor or any circumstance in any jurisdiction governing
this Agreement shall, to any extent, be invalid or unenforceable under any
applicable statute, regulation, or rule of law, such provision shall be deemed
inoperative to the extent that it may conflict therewith and shall be deemed
modified to conform to such statute, regulation or rule of law, and the
remainder of this Agreement and the application of any such invalid or
unenforceable provision to parties, jurisdictions, or circumstances other than
to whom or to which it is held invalid or unenforceable shall not be affected
thereby, nor shall same affect the validity or enforceability of any other
provision of this Agreement.
(d) This Agreement shall be binding upon Pledgor, and Pledgor's
successors and assigns, and shall inure to the benefit of Pledgee and its
successors and assigns.
(e) Any notice or other communication required or permitted pursuant
to this Agreement shall be given in accordance with the notice provisions of the
Purchase Agreement.
(f) This Agreement shall be governed by and construed and enforced in
all respects in accordance with the laws of the State of New York applied to
contracts to be performed wholly within the State of New York.
(g) EACH PARTY HERETO HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY
JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (A) ARISING UNDER THIS
AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED
IN CONNECTION HEREWITH, OR (B) IN ANY WAY CONNECTED WITH OR RELATED OR
INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OTHER AGREEMENT EXECUTED
OR DELIVERED BY THEM IN CONNECTION HEREWITH, OR THE TRANSACTIONS RELATED HERETO
OR THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER
SOUNDING IN CONTRACT OR TORT OR OTHERWISE AND EACH PARTY HERETO HEREBY AGREES
AND CONSENTS THAT ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED
BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY MAY FILE AN ORIGINAL
COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE
CONSENT OF EACH PARTY TO THE WAIVER OF ITS RIGHT TO TRIAL BY JURY.
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(h) PLEDGOR EXPRESSLY CONSENTS TO THE JURISDICTION AND VENUE OF EACH
COURT OF COMPETENT JURISDICTION LOCATED IN THE STATE OF NEW YORK FOR ALL
PURPOSES IN CONNECTION WITH THIS AGREEMENT. ANY JUDICIAL PROCEEDING BY PLEDGOR
AGAINST PLEDGEE INVOLVING, DIRECTLY OR INDIRECTLY ANY MATTER OR CLAIM IN ANY WAY
ARISING OUT OF, RELATED TO OR CONNECTED WITH THIS AGREEMENT SHALL BE BROUGHT
ONLY IN A STATE COURT LOCATED IN THE COUNTY OF NEW YORK, STATE OF NEW YORK.
PLEDGOR FURTHER CONSENTS THAT ANY SUMMONS, SUBPOENA OR OTHER PROCESS OR PAPERS
(INCLUDING, WITHOUT LIMITATION, ANY NOTICE OR MOTION OR OTHER APPLICATION TO
EITHER OF THE AFOREMENTIONED COURTS OR A JUDGE THEREOF) OR ANY NOTICE IN
CONNECTION WITH ANY PROCEEDINGS HEREUNDER, MAY BE SERVED INSIDE OR OUTSIDE OF
THE STATE OF NEW YORK OR THE SOUTHERN DISTRICT OF NEW YORK BY REGISTERED OR
CERTIFIED MAIL, RETURN RECEIPT REQUESTED, OR BY PERSONAL SERVICE PROVIDED A
REASONABLE TIME FOR APPEARANCE IS PERMITTED, OR IN SUCH OTHER MANNER AS MAY BE
PERMISSIBLE UNDER THE RULES OF SAID COURTS. PLEDGOR WAIVES ANY OBJECTION TO
JURISDICTION AND VENUE OF ANY ACTION INSTITUTED HEREON AND SHALL NOT ASSERT ANY
DEFENSE BASED ON LACK OF JURISDICTION OR VENUE OR BASED UPON FORUM NON
CONVENIENS.
(i) This Agreement may be executed in one or more counterparts, each
of which shall be deemed an original and all of which when taken together shall
constitute one and the same agreement. Any signature delivered by a party by
facsimile transmission shall be deemed an original signature hereto.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the day and year first written above.
XXXXXX TRAFFIC SYSTEMS, INC.
By: /s/Xxxxx X. Xxxxxxx
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Name: Xxxxx X. Xxxxxxx
Its: President and CEO
LAURUS MASTER FUND, LTD.
By: /s/ Xxxxx Grin
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Name: Xxxxx Grin
Its: Partner
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SCHEDULE A
Description of Collateral
All of Pledgor's right, title and interest in and to deposit account (the
"Pledged Account") number _______________ maintained with North Fork Bank
("Bank"), all contract rights, claims and privileges in respect of the Pledged
Account, all cash, checks, money orders and other items of value of Pledgor now
or hereafter paid to, deposited in, credited to, held (whether for collection,
provisionally or otherwise) for deposit in or otherwise in the possession or
under the control of, or in transit to, Bank or any agent, bailee or custodial
thereof for deposit in the Pledged Account, and all interest and income received
therefrom, all substitutions therefor and all proceeds thereof in any form.
