EXHIBIT 4.39
EQUITY PLEDGE AGREEMENT
THIS EQUITY PLEDGE AGREEMENT (this "PLEDGE AGREEMENT") is entered into as
of November 25, 2003 by and between TIDEL TECHNOLOGIES, INC., a Delaware
corporation ("PLEDGOR") and LAURUS MASTER FUND, LTD., a Cayman Islands company
("LAURUS").
RECITALS
WHEREAS, pursuant to that certain Securities Purchase Agreement, dated as
of the date hereof (as amended, modified, extended, renewed or replaced from
time to time, the "PURCHASE AGREEMENT") by and between Pledgor and Laurus,
Pledgor agreed to sell and Laurus agreed to purchase the Purchaser Notes (as
defined in the Purchase Agreement) and Pledgor agreed to issue to Laurus the
Warrant (as defined in the Purchase Agreement) (the Purchase Agreement, the
Purchaser Notes, the Warrant together with all documents, instruments and
agreements executed in connection therewith, collectively, the "PURCHASE
DOCUMENTS").
WHEREAS, it is a condition precedent to the effectiveness of the Purchase
Agreement and the obligations of Laurus thereunder that Pledgor shall have
executed and delivered this Pledge Agreement in favor of Laurus.
NOW, THEREFORE, in consideration of these premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Definitions. Unless otherwise defined herein, capitalized terms used
herein shall have the meanings ascribed to such terms in the Purchase Agreement.
2. Pledge and Grant of Security Interest. To secure the prompt payment and
performance in full when due, whether by lapse of time or otherwise, of the
Secured Obligations (as defined in Section 3 hereof), Pledgor hereby pledges and
assigns to Laurus, and grants to Laurus, a first priority security interest in
any and all right, title and interest of Pledgor in and to the following,
whether now owned or existing or owned, acquired, or arising hereafter
(collectively, the "COLLATERAL"):
(a) Pledged Capital Stock. 100% (or, if less, the full amount owned
by Pledgor) of each class of the issued and outstanding stock owned by
Pledgor of each Subsidiary set forth on Schedule 1 attached hereto
together with the certificates (or other agreements or instruments), if
any, representing such stock, and all options and other rights,
contractual or otherwise, with respect thereto (collectively, together
with the shares of stock described in Section 2(b) and 2(c) below, the
"PLEDGED CAPITAL STOCK"), including, but not limited to, the following:
(i) all shares or securities representing a dividend on any of
the Pledged Capital Stock, or representing a distribution or return
of capital upon or in respect of the Pledged Capital Stock, or
resulting from a stock split, revision, reclassification or other
exchange therefor, and any subscriptions, warrants, rights
or options issued to the holder of, or otherwise in respect of, the
Pledged Capital Stock; and
(ii) without affecting the obligations of Pledgor under any
provision prohibiting such action hereunder or under any Purchase
Document, in the event of any consolidation or merger involving the
issuer of any Pledged Capital Stock and in which such issuer is not
the surviving entity, all shares of each class of the stock of the
successor entity formed by or resulting from such consolidation or
merger.
(b) Additional Interests. 100% (or, if less, the full amount owned
by Pledgor) of each class of the issued and outstanding stock owned by
Pledgor of any Person which hereafter becomes a Subsidiary, including,
without limitation, the certificates, if any, representing such stock.
(c) Proceeds. All proceeds and products of the foregoing, however
and whenever acquired and in whatever form.
Without limiting the generality of the foregoing, it is hereby
specifically understood and agreed that Pledgor may from time to time hereafter
deliver additional shares of stock to Laurus as collateral security for the
Secured Obligations. Upon delivery to Laurus, such additional shares of stock
shall be deemed to be part of the Collateral of Pledgor and shall be subject to
the terms of this Pledge Agreement whether or not Schedule 1 is amended to refer
to such additional shares.
3. Security for Secured Obligations. The security interest created hereby
in the Collateral of Pledgor constitutes continuing collateral security for all
of the following (the "SECURED OBLIGATIONS"): All obligations owing by Pledgor
to Laurus under the Purchaser Notes, (including, without limitation, interest
accruing at the Contract Rate (as defined in the Purchaser Notes) after the
occurrence of an Event of Default and interest accruing at the Contract Rate
after the filing of any petition in bankruptcy, or the commencement of any
insolvency, reorganization or like proceeding, relating to Pledgor, whether or
not a claim for post-filing or post-petition interest is allowed in such
proceeding) and all other obligations and liabilities of Pledgor to Laurus,
whether direct or indirect, absolute or contingent, due or to become due, or now
existing or hereafter incurred, which may arise under, out of, or in connection
with, the Purchase Agreement, the Purchaser Notes, this Agreement, the other
Purchase Documents or any other document made, delivered or given in connection
therewith, or otherwise, in each case whether on account of principal, interest,
reimbursement obligations, fees, indemnities, costs, expenses or otherwise
(including, without limitation, all fees and disbursements of counsel to Laurus
that are required to be paid by Pledgor pursuant to the terms of the Purchase
Agreement, the Purchaser Notes, this Agreement or any other Purchase Document).
4. Delivery of the Collateral. Pledgor hereby agrees that:
(a) Delivery of Certificates. Pledgor shall cause the delivery to
Laurus (i) directly by its prior lender or promptly upon Pledgor's receipt
from its prior lender, all certificates representing the Pledged Capital
Stock of Pledgor and (ii) promptly upon the
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receipt thereof by or on behalf of Pledgor, all other certificates and
instruments constituting Collateral of Pledgor. Prior to delivery to
Laurus, all such certificates and instruments constituting Collateral of
Pledgor shall be held in trust by Pledgor for the benefit of Laurus
pursuant hereto. All such certificates shall be delivered in suitable form
for transfer by delivery or shall be accompanied by duly executed
instruments of transfer or assignment in blank, substantially in the form
provided in Schedule 2 attached hereto.
(b) Additional Securities. If Pledgor shall receive by virtue of its
being or having been the owner of any Collateral, any (i) stock
certificate or other certificate representing stock, including without
limitation, any certificate representing a dividend or distribution in
connection with any increase or reduction of capital, reclassification,
merger, consolidation, sale of assets, combination of shares or membership
or equity interests, stock splits, spin-off or split-off, promissory notes
or other instrument; (ii) option or right, whether as an addition to,
substitution for, or an exchange for, any Collateral or otherwise; (iii)
dividends payable in securities; or (iv) distributions of securities in
connection with a partial or total liquidation, dissolution or reduction
of capital, capital surplus or paid-in surplus, then Pledgor shall receive
such certificate, instrument, option, right or distribution in trust for
the benefit of Laurus, shall segregate it from Pledgor's other property
and shall deliver it forthwith to Laurus in the exact form received
together with any necessary endorsement and/or appropriate stock power
duly executed in blank, substantially in the form provided in Schedule 2,
to be held by Laurus as Collateral and as further collateral security for
the Secured Obligations.
(c) Financing Statements. Pledgor authorizes Laurus to file such UCC
or other applicable financing statements as may be reasonably requested by
Laurus in order to perfect and protect the security interest created
hereby in the Collateral of Pledgor.
5. Representations and Warranties. Pledgor hereby represents and warrants
to Laurus, that so long as any of the Secured Obligations remain outstanding or
any Purchase Document is in effect:
(a) Authorization of Pledged Capital Stock. The Pledged Capital
Stock is duly authorized and validly issued, is fully paid and
nonassessable and is not subject to the preemptive rights of any Person.
All other shares of stock constituting Collateral will be duly authorized
and validly issued, fully paid and nonassessable and not subject to the
preemptive rights of any Person.
(b) Title. Pledgor has good and indefeasible title to the Collateral
of Pledgor and will at all times be the legal and beneficial owner of such
Collateral free and clear of any Lien, other than Permitted Liens (as such
term is defined in the Security Agreement dated as of the date hereof made
by Pledgor and the Subsidiaries in favor of Laurus). Except with respect
to Permitted Liens, there exists no "adverse claim" within the meaning of
Section 8-102 of the Uniform Commercial Code as in effect in the State of
New York (the "UCC") with respect to the Pledged Capital Stock of Pledgor.
(c) Exercising of Rights. To the best of Pledgor's knowledge, the
exercise by Laurus of its rights and remedies hereunder will not violate
any law or governmental
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regulation or any material contractual restriction binding on or affecting
Pledgor or any of its property.
(d) Pledgor's Authority. No authorization, approval or action by,
and no notice or filing with any governmental authority or with the issuer
of any Pledged Capital Stock is required either (i) for the pledge made by
Pledgor or for the granting of the security interest by Pledgor pursuant
to this Pledge Agreement or (ii) to the best of Pledgor's knowledge, for
the exercise by Laurus of its rights and remedies hereunder (except as may
be required by laws affecting the offering and sale of securities).
(e) Security Interest/Priority. This Pledge Agreement creates a
valid first priority security interest in favor of the Laurus, in the
Collateral. The taking possession by Laurus of the certificates, if any,
representing the Pledged Capital Stock and all other certificates and
instruments constituting Collateral will perfect and establish the first
priority of Laurus's security interest in the Pledged Capital Stock and,
when properly perfected by filing or registration, in all other Collateral
represented by such Pledged Capital Stock and instruments securing the
Secured Obligations. Except as set forth in this Section 5(e), no action
is necessary to perfect or otherwise protect such security interest.
6. Covenants. Pledgor hereby covenants, that so long as any of the Secured
Obligations remain outstanding or any Purchase Document is in effect, Pledgor
shall:
(a) Books and Records. Mark its books and records (and shall cause
each issuer of the Pledged Capital Stock of Pledgor to mark its books and
records) to reflect the security interest granted to Laurus, pursuant to
this Pledge Agreement and the other Purchase Documents.
(b) Defense of Title. Warrant and defend title to and ownership of
the Collateral of Pledgor at its own expense against the claims and
demands of all other parties claiming an interest therein, keep the
Collateral free from all Liens, except for Permitted Liens, and not sell,
exchange, transfer, assign, lease or otherwise dispose of Collateral of
Pledgor or any interest therein, except as permitted under the Purchase
Agreement.
(c) Further Assurances. Promptly execute and deliver at its expense
all further instruments and documents and take all further action that may
be reasonably necessary and desirable or that Laurus may reasonably
request in order to (i) perfect and protect the security interest created
hereby in the Collateral of Pledgor (including without limitation any and
all action necessary to satisfy Laurus that Laurus has obtained a first
priority perfected security interest in any stock; (ii) enable Laurus to
exercise and enforce its rights and remedies hereunder in respect of the
Collateral of Pledgor; and (iii) otherwise effect the purposes of this
Pledge Agreement, including, without limitation and if requested by
Laurus, delivering to Laurus irrevocable proxies in respect of the
Collateral of Pledgor.
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(d) Amendments. Not make or consent to any amendment or other
modification or waiver with respect to any of the Collateral of Pledgor or
enter into any agreement or allow to exist any restriction with respect to
any of the Collateral of Pledgor other than pursuant hereto or as may be
permitted under the Purchase Agreement.
(e) Compliance with Securities Laws. File all reports and other
information now or hereafter required to be filed by Pledgor with the
United States Securities and Exchange Commission and any other state,
federal or foreign agency in connection with the ownership of the
Collateral of Pledgor.
7. Advances by Laurus. On failure of Pledgor to perform any of the
covenants and agreements contained herein, Laurus may, at its sole option and in
its sole discretion, perform the same and in so doing may expend such sums as
Laurus may reasonably deem advisable in the performance thereof, including,
without limitation, the payment of any insurance premiums, the payment of any
taxes, a payment to obtain a release of a Lien or potential Lien (other than a
Permitted Lien), expenditures made in defending against any adverse claim (other
than a Permitted Lien) and all other expenditures which Laurus may make for the
protection of the security hereof or which may be compelled to make by operation
of law. All such sums and amounts so expended shall be repayable by Pledgor
promptly upon timely notice thereof and demand therefor, shall constitute
additional Secured Obligations and shall bear interest from the date said
amounts are expended at the Contract Rate. No such performance of any covenant
or agreement by Laurus on behalf of Pledgor, and no such advance or expenditure
therefor, shall relieve Pledgor of any default under the terms of this Pledge
Agreement or the other Purchase Documents. Laurus may make any payment hereby
authorized in accordance with any bill, statement or estimate procured from the
appropriate public office or holder of the claim to be discharged without
inquiry into the accuracy of such bill, statement or estimate or into the
validity of any tax assessment, sale, forfeiture, tax lien, title or claim
except to the extent such payment is being contested in good faith by Pledgor in
appropriate proceedings and against which adequate reserves are being maintained
in accordance with GAAP.
8. Events of Default. The occurrence of an event which under the Purchaser
Notes would constitute an Event of Default (as defined in the Purchaser Notes)
shall be an event of default hereunder (an "EVENT OF DEFAULT").
9. Remedies.
(a) General Remedies. Upon the occurrence of an Event of Default and
during the continuation thereof, Laurus shall have, in respect of the
Collateral of Pledgor, in addition to the rights and remedies provided
herein, in the Purchase Documents or by law, the rights and remedies of a
secured party under the UCC or any other applicable law.
(b) Sale of Collateral. Upon the occurrence of an Event of Default
and during the continuation thereof, without limiting the generality of
this Section and without notice, Laurus may, in its sole discretion, sell
or otherwise dispose of or realize upon the Collateral, or any part
thereof, in one or more parcels, at public or private sale, at any
exchange or broker's board or elsewhere, at such price or prices and on
such other terms
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as Laurus may deem commercially reasonable, for cash, credit or for future
delivery or otherwise in accordance with applicable law. To the extent
permitted by law, Laurus may in such event, bid for the purchase of such
securities. Pledgor agrees that, to the extent notice of sale shall be
required by law and has not been waived by such Pledgor, any requirement
of reasonable notice shall be met if notice, specifying the place of any
public sale or the time after which any private sale is to be made, is
personally served on or mailed, postage prepaid, to Pledgor, in accordance
with the notice provisions of Section 12.7 of the Purchase Agreement at
least ten (10) days before the time of such sale. Laurus shall not be
obligated to make any sale of Collateral of Pledgor regardless of notice
of sale having been given. Laurus may adjourn any public or private sale
from time to time by announcement at the time and place fixed therefor,
and such sale may, without further notice, be made at the time and place
to which it was so adjourned.
(c) Private Sale. Upon the occurrence of an Event of Default and
during the continuation thereof, Pledgor recognizes that Laurus may deem
it impracticable to effect a public sale of all or any part of the Pledged
Capital Stock or any of the securities constituting Collateral and that
Laurus may, therefore, determine to make one or more private sales of any
such securities to a restricted group of purchasers who will be obligated
to agree, among other things, to acquire such securities for their own
account, for investment and not with a view to the distribution or resale
thereof. Pledgor acknowledges that any such private sale may be at prices
and on terms less favorable to the seller than the prices and other terms
which might have been obtained at a public sale and, notwithstanding the
foregoing, agrees that such private sale shall be deemed to have been made
in a commercially reasonable manner and that Laurus shall have no
obligation to delay sale of any such securities for the period of time
necessary to permit the issuer of such securities to register such
securities for public sale under the Securities Act of 1933, as amended.
Pledgor further acknowledges and agrees that any offer to sell such
securities which has been made privately in the manner described above
shall be deemed to involve a "public sale" under the UCC, notwithstanding
that such sale may not constitute a "public offering" under the Securities
Act of 1933, as amended, and Laurus may, in such event, bid for the
purchase of such securities.
(d) Retention of Collateral. In addition to the rights and remedies
hereunder, upon the occurrence and during the continuance of an Event of
Default, Laurus may, after providing the notices required by Section 9-620
of the UCC or otherwise complying with the requirements of applicable law
of the relevant jurisdiction, retain all or any portion of the Collateral
in satisfaction of the Secured Obligations. Unless and until Laurus shall
have provided such notices, however, Laurus shall not be deemed to have
retained any Collateral in satisfaction of any Secured Obligations for any
reason.
(e) Deficiency. In the event that the proceeds of any sale,
collection or realization are insufficient to pay all amounts to which
Laurus is legally entitled, Pledgor shall be liable for the deficiency,
together with interest thereon at the Contract Rate, together with the
costs of collection and the reasonable fees of any attorneys employed by
Laurus to collect such deficiency. Any surplus remaining after the full
payment and satisfaction of the Secured Obligations shall be returned to
the Pledgor or to whomsoever a court of competent jurisdiction shall
determine to be entitled thereto.
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10. Rights of Laurus.
(a) Power of Attorney. In addition to other powers of attorney
contained herein, Pledgor hereby designates and appoints Laurus, and each
of its designees or agents as attorney-in-fact of Pledgor, irrevocably and
with power of substitution, with authority to take any or all of the
following actions upon the occurrence and during the continuance of an
Event of Default:
(i) to demand, collect, settle, compromise, adjust and give
discharges and releases concerning the Collateral of Pledgor, all as
Laurus may reasonably determine;
(ii) to commence and prosecute any actions at any court for
the purposes of collecting any of the Collateral of Pledgor and
enforcing any other right in respect thereof;
(iii) to defend, settle or compromise any action brought and,
in connection therewith, give such discharge or release as Laurus
may deem reasonably appropriate;
(iv) to pay or discharge taxes, liens, security interests, or
other encumbrances levied or placed on or threatened against the
Collateral of Pledgor;
(v) to direct any parties liable for any payment under any of
the Collateral to make payment of any and all monies due and to
become due thereunder directly to Laurus or as Laurus shall direct;
(vi) to receive payment of and receipt for any and all monies,
claims, and other amounts due and to become due at any time in
respect of or arising out of any Collateral of Pledgor;
(vii) to sign and endorse any drafts, assignments, proxies,
stock powers, verifications, notices and other documents relating to
the Collateral of Pledgor;
(viii) to settle, compromise or adjust any suit, action or
proceeding described above and, in connection therewith, to give
such discharges or releases as Laurus may deem reasonably
appropriate;
(ix) to execute and deliver all assignments, conveyances,
statements, financing statements, renewal financing statements,
pledge agreements, affidavits, notices and other agreements,
instruments and documents that Laurus may determine necessary in
order to perfect and maintain the security interests and liens
granted in this Pledge Agreement and in order to fully consummate
all of the transactions contemplated therein;
(x) to exchange any of the Collateral of Pledgor or other
property upon any merger, consolidation, reorganization,
recapitalization or other readjustment of the issuer thereof and, in
connection therewith, deposit any of the Collateral of
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Pledgor with any committee, depository, transfer agent, registrar or
other designated agency upon such terms as Laurus may determine;
(xi) to vote for a shareholder, partner or member resolution,
or to sign an instrument in writing, sanctioning the transfer of any
or all of the Pledged Capital Stock of Pledgor into the name of
Laurus or into the name of any transferee to whom the Pledged
Capital Stock of Pledgor or any part thereof may be sold pursuant to
Section 9 hereof; and
(xii) to do and perform all such other acts and things as
Laurus may reasonably deem to be necessary, proper or convenient in
connection with the Collateral of Pledgor.
This power of attorney is a power coupled with an interest and shall be
irrevocable for so long as any of the Secured Obligations remain
outstanding or any Purchase Document is in effect. Laurus shall be under
no duty to exercise or withhold the exercise of any of the rights, powers,
privileges and options expressly or implicitly granted to Laurus in this
Pledge Agreement, and shall not be liable for any failure to do so or any
delay in doing so. Laurus shall not be liable for any act or omission or
for any error of judgment or any mistake of fact or law in its individual
capacity or its capacity as attorney-in-fact except acts or omissions
resulting from its gross negligence or willful misconduct. This power of
attorney is conferred on Laurus solely to protect, preserve and realize
upon its security interest in Collateral.
(b) Performance by Laurus of Pledgor's Obligations. If Pledgor fails
to perform any agreement or obligation contained herein, Laurus itself may
perform, or cause performance of, such agreement or obligation, and the
expenses of Laurus incurred in connection therewith shall be payable by
Pledgor pursuant to Section 24 hereof.
(c) Assignment by Laurus . Subject to Section 12.2 of the Purchase
Agreement, Laurus may from time to time assign the Secured Obligations and
any portion thereof and/or the Collateral and any portion thereof, and the
assignee shall be entitled to all of the rights and remedies of Laurus
under this Pledge Agreement in relation thereto.
(d) The Laurus's Duty of Care. Other than the exercise of reasonable
care to assure the safe custody of the Collateral while being held by
Laurus hereunder, Laurus shall have no duty or liability to preserve
rights pertaining thereto, it being understood and agreed that Pledgor
shall be responsible for preservation of all rights in the Collateral of
Pledgor, and Laurus shall be relieved of all responsibility for Collateral
upon surrendering it or tendering the surrender of it to the Pledgor.
Laurus shall be deemed to have exercised reasonable care in the custody
and preservation of the Collateral in its possession if such Collateral is
accorded treatment substantially equal to that which Laurus accords its
own property, which shall be no less than the treatment employed by a
reasonable and prudent person in the industry, it being understood that
Laurus shall not have responsibility for (i) ascertaining or taking action
with respect to calls, conversions, exchanges, maturities, tenders or
other matters relating to any Collateral, whether or not
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Laurus has or is deemed to have knowledge of such matters; or (ii) taking
any necessary steps to preserve rights against any parties with respect to
any Collateral.
(e) Voting Rights in Respect of the Collateral.
(i) So long as no Event of Default shall have occurred and be
continuing, to the extent permitted by law, Pledgor may exercise any
and all voting and other consensual rights pertaining to the
Collateral of Pledgor or any part thereof for any purpose not
inconsistent with the terms of this Pledge Agreement or any Purchase
Document; and
(ii) Upon the occurrence and during the continuance of an
Event of Default, all rights of Pledgor to exercise the voting and
other consensual rights which it would otherwise be entitled to
exercise pursuant to clause (i) of this subsection (e) shall cease
and all such rights shall thereupon become vested in Laurus which
shall then have the sole right to exercise such voting and other
consensual rights.
(f) Dividend Rights in Respect of the Collateral.
(i) So long as no Event of Default shall have occurred and be
continuing and subject to Section 4(b) hereof, Pledgor may receive
and retain any and all dividends (other than dividends and other
distributions constituting Collateral which are addressed
hereinabove) or interest paid in respect of the Collateral to the
extent they are allowed under the Purchase Documents.
(ii) Upon the occurrence and during the continuance of an
Event of Default:
(A) all rights of Pledgor to receive the dividends and
interest payments which it would otherwise be authorized to
receive and retain pursuant to paragraph (i) of this
subsection shall cease and all such rights shall thereupon be
vested in Laurus which shall then have the sole right to
receive and hold as Collateral such dividends and interest
payments; and
(B) all dividends and interest payments which are
received by Pledgor contrary to the provisions of paragraph
(A) of this clause shall be received in trust for the benefit
of Laurus, shall be segregated from other property or funds of
Pledgor, and shall be forthwith paid over to Laurus as
Collateral in the exact form received, to be held by Laurus as
Collateral and as further collateral security for the Secured
Obligations.
(g) Release of Collateral. Laurus may release any of the Collateral
from this Pledge Agreement or may substitute any of the Collateral for
other Collateral without altering, varying or diminishing in any way the
force, effect, lien, pledge or security interest of this Pledge Agreement
as to any Collateral not expressly released or substituted, and this
Pledge Agreement shall continue as a first priority lien on all Collateral
not expressly released or substituted.
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11. Application of Proceeds. Upon the occurrence of and during the
continuance of an Event of Default, any payments in respect of the Secured
Obligations and any proceeds of any Collateral, when received by Laurus in cash
or its equivalent, will be applied as follows: first, to all reasonable costs
and expenses of Laurus (including without limitation reasonable attorneys' fees
and expenses) incurred in connection with the implementation and/or enforcement
of this Pledge Agreement and/or any of the other Purchase Documents; second, to
the principal amount of the Secured Obligations; third, to such of the Secured
Obligations consisting of accrued but unpaid interest and fees; fourth, to all
other amounts payable with respect to the Secured Obligations; and fifth, to the
payment of the surplus, if any, to whoever may be lawfully entitled to receive
such surplus. Pledgor shall remain liable to Laurus for any deficiency.
12. Costs of Counsel. If at any time hereafter, whether upon the
occurrence of an Event of Default or not, Laurus employs counsel to prepare or
consider amendments, waivers or consents with respect to this Pledge Agreement,
or to take action or make a response in or with respect to any legal or arbitral
proceeding relating to this Pledge Agreement or relating to the Collateral, or
to protect the Collateral or exercise any rights or remedies under this Pledge
Agreement or with respect to the Collateral, then Pledgor agrees to promptly pay
upon demand any and all such reasonable documented costs and expenses incurred
by Laurus, all of which costs and expenses shall constitute Secured Obligations
hereunder.
13. Continuing Agreement.
(a) This Pledge Agreement shall be a continuing agreement in every
respect and shall remain in full force and effect so long as any Purchase
Document is in effect or any amounts payable thereunder shall remain
outstanding. Upon such payment and termination, this Pledge Agreement
shall be automatically terminated and Laurus shall, upon the request and
at the expense of Pledgor, forthwith release all of its liens and security
interests hereunder and shall execute and deliver all UCC termination
statements and/or other documents reasonably requested by Pledgor
evidencing such termination. Notwithstanding the foregoing, all releases
and indemnities provided hereunder shall survive termination of this
Pledge Agreement.
(b) This Pledge Agreement shall continue to be effective or be
automatically reinstated, as the case may be, if at any time payment, in
whole or in part, of any of the Secured Obligations is rescinded or must
otherwise be restored or returned by Laurus as a preference, fraudulent
conveyance or otherwise under any bankruptcy, insolvency or similar law,
all as though such payment had not been made; provided that in the event
payment of all or any part of the Secured Obligations is rescinded or must
be restored or returned, all reasonable costs and expenses (including
without limitation any reasonable legal fees and disbursements) incurred
by Laurus in defending and enforcing such reinstatement shall be deemed to
be included as a part of the Secured Obligations.
14. Amendments; Waivers; Modifications. This Pledge Agreement and the
provisions hereof may not be amended, waived, modified, changed, discharged or
terminated except as set forth in Section 12.5 of the Purchase Agreement.
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15. Successors in Interest. This Pledge Agreement shall create a
continuing security interest in the Collateral and shall be binding upon
Pledgor, its successors and assigns and shall inure, together with the rights
and remedies of Laurus hereunder, to the benefit of Laurus and its successors
and permitted assigns; provided, however, that Pledgor may not assign its rights
or delegate its duties hereunder without the prior written consent of Laurus. To
the fullest extent permitted by law, Pledgor hereby releases Laurus, and its
successors and permitted assigns, from any liability for any act or omission
relating to this Pledge Agreement or the Collateral, except for any liability
arising from the gross negligence or willful misconduct of Laurus, or its
officers, employees or agents.
16. Notices. All notices required or permitted to be given under this
Pledge Agreement shall be in conformance with Section 12.7 of the Purchase
Agreement.
17. Counterparts. This Pledge Agreement may be executed in any number of
counterparts, each of which where so executed and delivered shall be an
original, but all of which shall constitute one and the same instrument. It
shall not be necessary in making proof of this Pledge Agreement to produce or
account for more than one such counterpart.
18. Headings. The headings of the sections and subsections hereof are
provided for convenience only and shall not in any way affect the meaning or
construction of any provision of this Pledge Agreement.
19. Governing Law; Consent to Jurisdiction and Service of Process; Waiver
of Jury Trial. THIS PLEDGE AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK. THE PROVISIONS OF THE
PURCHASE AGREEMENT RELATING TO CONSENT TO JURISDICTION AND WAIVER OF JURY TRIAL
ARE HEREBY INCORPORATED BY REFERENCE HEREIN, MUTATIS MUTANDIS.
20. Severability. If any provision of this Pledge Agreement is determined
to be illegal, invalid or unenforceable, such provision shall be fully severable
and the remaining provisions shall remain in full force and effect and shall be
construed without giving effect to the illegal, invalid or unenforceable
provisions.
21. Entirety. This Pledge Agreement and the other Purchase Documents
represent the entire agreement of the parties hereto and thereto, and supersede
all prior agreements and understandings, oral or written, if any, including any
commitment letters or correspondence relating to the Purchase Documents or the
transactions contemplated herein and therein.
22. Survival. All representations and warranties of Pledgor hereunder
shall survive the execution and delivery of this Pledge Agreement and the other
Purchase Documents and the delivery of the Purchaser Notes.
23. Other Security. To the extent that any of the Secured Obligations are
now or hereafter secured by property other than the Collateral (including,
without limitation, real and other personal property owned by Pledgor), or by a
guarantee, endorsement or property of any other Person, then Laurus shall have
the right to proceed against such other property, guarantee
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or endorsement upon the occurrence and during the continuance of any Event of
Default, and Laurus has the right, in its sole discretion, to determine which
rights, security, liens, security interests or remedies Laurus shall at any time
pursue, relinquish, subordinate, modify or take with respect thereto, without in
any way modifying or affecting any of them or any of Laurus's rights or the
Secured Obligations under this Pledge Agreement or under any other of the
Purchase Documents.
[Remainder of page intentionally left blank]
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Each of the parties hereto has caused a counterpart of this Pledge
Agreement to be duly executed and delivered as of the date first above written.
PLEDGOR: TIDEL TECHNOLOGIES, INC.
By: /s/ James T. Rash
----------------------------
Name: James T. Rash
Title: CEO
LENDER:
LAURUS MASTER FUND, LTD.
By: /s/ Eugene Grin
----------------------------
Name: Eugene Grin
Title: Director
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SCHEDULE 1
to
Equity Pledge Agreement
Dated as of November __, 2003
In favor of Laurus Master Fund, Ltd.
As Laurus
Stock
Number of Certificate
Name of Subsidiary Shares/ Interests Number Percentage Ownership
- ------------------------ ----------------- ------------ --------------------
Tidel Cash Systems, Inc 100% of the stock is
owned by Pledgor
Tidel Services, Inc 100% of the stock is
owned by Pledgor
[AnyCard International,
Inc.]
14
SCHEDULE 2
to
Pledge Agreement
Dated as of November __, 2003
In favor of Laurus Master Fund, Ltd.
Irrevocable Stock Power
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers to
the following shares of stock of _____________________, a ____________:
No. of Shares Certificate No.
and irrevocably appoints __________________________________ its agent and
attorney-in-fact to transfer all or any part of such stock and to take all
necessary and appropriate action to effect any such transfer. The agent and
attorney-in-fact may substitute and appoint one or more persons to act for him.
The effectiveness of a transfer pursuant to this stock power shall be subject to
any and all transfer restrictions referenced on the face of the certificates
evidencing such interest or in the certificate of incorporation or bylaws of the
subject corporation, to the extent they may from time to time exist.
___________________________________,
a ___________________________________
By: _________________________________
Name: _______________________________
Title: ______________________________
15