1
EXHIBIT 4.11
PLEDGE AND SECURITY AGREEMENT
(STOCK)
THIS PLEDGE AND SECURITY AGREEMENT (this "Agreement") is executed as of
the 1st day of April, 1999 by TIDEL TECHNOLOGIES, INC., a Delaware corporation
("Pledgor"), in favor of CHASE BANK OF TEXAS, N.A., a national banking
association ("Pledgee").
RECITALS:
A. Tidel Engineering, L.P., a Delaware limited partnership (the
"Borrower"), Pledgor and Pledgee have entered into that certain Credit Agreement
dated of even date herewith (as amended, modified or supplemented from time to
time, the "Loan Agreement"), pursuant to which Pledgee has agreed to make
available to Borrower certain credit facilities subject to the terms and
conditions contained therein.
B. Pledgor is the legal, record and beneficial owner of:
(i) 100 shares of the issued and outstanding common
stock, $0.01 par value of Tidel Services, Inc.
("TSI"), evidenced by TSI common stock certificate
no. 1, registered in the name of Pledgor;
(ii) 100 shares of the issued and outstanding common
stock, $0.01 par value of Tidel Cash Systems, Inc.
("TCS"), evidenced by TCS common stock certificate
no. 2, registered in the name of Pledgor; and
(iii) 680,818 shares of the issued and outstanding common
stock, $0.01 par value of 3CI Complete Compliance
Corporation ("3CI"), evidenced by 3CI common stock
certificates nos. C-0063, C-0070, C-0094 and C-0319
through C-0324, registered in the name of Pledgor.
All of the common stock described in clauses (i), (ii) and (iii) preceding are
referenced to collectively as the "Initial Pledged Stock". Each of TSI, TCS and
3CI are individually referred to herein as an "Issuer", and collectively, the
"Issuers", as applicable.
C. It is a condition precedent to the obligations of Pledgee under the
Loan Agreement that Pledgor shall have executed and delivered this Agreement to
Pledgee.
D. Pledgor, by virtue of its ownership of the Initial Pledged Stock,
deems it to be in its best interest, based on sound judgment, in that valuable
benefits will be derived by the Pledgor by virtue of the Loans, to execute and
deliver to Pledgee this Agreement.
E. In consideration of these premises and in order to induce Pledgee to
extend the credit pursuant to the Loan Agreement, and for other good and
valuable consideration, the
PLEDGE AND SECURITY AGREEMENT (TIDEL TECHNOLOGIES, INC.) - Page 1
2
receipt and sufficiency of which is hereby acknowledged, the Pledgor and Pledgee
hereby agree as follows:
AGREEMENTS:
1. Defined Terms. Unless otherwise defined herein, terms defined in the
Loan Agreement shall have such defined meanings when used herein.
2. Pledge. The Pledgor hereby pledges, assigns, hypothecates, transfers
and delivers to the Pledgee, and hereby grants to Pledgee a first lien on, and
security interest in, (a) the Initial Pledged Stock, (b) all shares of stock,
common or preferred, options, interests, participations, and other equivalents,
warrants, convertible debentures and all agreements, instruments and documents
convertible, in whole or part, into any one or more of the foregoing
(collectively, "Stock") of the Issuers which Pledgor shall, from time to time,
become entitled to receive or shall receive as set forth in SECTION 3 hereof
(together with any Stock options or rights received pursuant to SECTION 3
hereof, the "Additional Pledged Stock"; the Additional Pledged Stock and the
Initial Pledged Stock being sometimes hereinafter referred to as the "Pledged
Stock"), (c) all other Collateral (as defined in SECTION 4 hereof) as may be
pledged to Pledgee at any time and from time to time hereunder and (d) all
proceeds thereof, together with appropriate undated stock powers duly executed
in blank, as collateral security for (i) the due and punctual payment and
performance by Pledgor of its obligations, covenants, agreements and
liabilities, absolute or contingent, liquidated or unliquidated, now existing or
hereinafter incurred under, arising out of or in connection with this Agreement,
(ii) the prompt and complete payment when due (whether at the stated due date,
by acceleration or otherwise) of the unpaid principal of and interest on the
Notes issued to evidence the Loans made by Pledgee to Borrower pursuant to the
Loan Agreement as well as collection costs therefor, and (iii) the due and
punctual payment and performance by Borrower of all Obligations (as defined in
the Loan Agreement) to Pledgee, absolute or contingent, liquidated or
unliquidated, now existing or hereinafter incurred (all the foregoing being
hereinafter called the "Obligations").
3. Stock Dividends, Distributions, etc. If, while this Agreement is in
effect, the Pledgor shall become entitled to receive or shall receive any Stock
certificate (including, without limitation, any certificate representing a Stock
dividend or a distribution in connection with any reclassification, increase or
reduction of capital, or issued in connection with any reorganization), option
or rights, whether as an addition to, in substitution of, or in exchange for any
shares of any Pledged Stock, or otherwise, the Pledgor agrees to accept the same
as Pledgee's agent and to hold the same in trust on behalf of and for the
benefit of the Pledgee segregated from the other assets of the Pledgor and to
deliver the same forthwith to the Pledgee, in the exact form received, with the
endorsement of the Pledgor, when necessary and/or appropriate, to undated stock
powers, duly executed in blank, to be held by the Pledgee, subject to the terms
hereof, as additional collateral security for the Obligations, and such other
documents as the Pledgee shall reasonably request in order to perfect the
Pledgee's security interest therein. Any sums paid upon or in respect of the
Pledged Stock upon the liquidation or dissolution of any Issuer shall be paid
over to the Pledgee, to be held by it in trust as additional collateral security
for the Obligations; and in case any distribution of capital shall be made on or
in respect of the Pledged Stock or any property shall be distributed upon or
with respect to the
PLEDGE AND SECURITY AGREEMENT (TIDEL TECHNOLOGIES, INC.) - Page 2
3
Pledged Stock pursuant to the recapitalization or reclassification of the
capital of any Issuer or pursuant to the reorganization thereof, the property so
distributed shall be delivered to the Pledgee, to be held by it as additional
collateral security for the Obligations. All sums of money and property so paid
or distributed in respect of the Pledged Stock which are received by the Pledgor
shall, until paid or delivered to the Pledgee, be held by the Pledgor in trust,
segregated from the other assets of the Pledgor, as additional collateral
security for the Obligations.
4. Collateral. The Pledged Stock and all other property at any time and
from time to time pledged to Pledgee hereunder (whether described in SCHEDULE l
hereof or not) and all income therefrom and proceeds thereof, are herein
collectively sometimes called the "Collateral".
5. Record Ownership of Pledged Stock. Whether or not an Event of
Default has occurred and is continuing, Pledgee at any time may have the Pledged
Stock registered in its name, or in the name of its nominee or nominees, as
pledgee; and, as to any Pledged Stock so registered, Pledgee shall execute and
deliver (or cause to be executed and delivered) to Pledgor all such proxies,
powers of attorney, dividend coupons or orders, and other documents as Pledgor
may reasonably request for the purpose of enabling Pledgor to exercise the
voting rights and powers which it is entitled to exercise under this Agreement
and to receive the dividends and other payments in respect of the Pledged Stock
which it is authorized to receive and retain under this Agreement and the Loan
Agreement.
6. Voting of Pledged Stock. As long as an Event of Default has not
occurred and is not continuing, Pledgor shall be entitled to exercise all voting
rights pertaining to the Pledged Stock; provided, however, that no vote shall be
cast or consent, waiver or ratification given or action taken which would impair
the Collateral or violate any provision of this Agreement, the Loan Agreement or
the Loan Documents. After the occurrence and during the continuance of an Event
of Default, the right to vote the Pledged Stock and all other corporate rights
pertaining to the Pledged Stock shall be vested exclusively in Pledgee,
including any and all rights of conversion, exchange, subscription or any other
rights, privileges or options pertaining to any shares of the Pledged Stock as
if Pledgee were the absolute owner thereof, including, without limitation, the
right to exchange at its discretion any and all of the Pledged Stock upon the
merger, consolidation, reorganization, recapitalization or other readjustment of
any Issuer or upon the exercise by such Issuer or the Pledgee of any right,
privilege or option pertaining to any shares of the Pledged Stock, and in
connection therewith, to deposit and deliver any and all of the Pledged Stock
with any committee, depositary, transfer agent, registrar or other designated
agency upon such terms and conditions as it may determine, all without liability
except to account for property actually received by it, but the Pledgee shall
have no duty to exercise any of the aforesaid rights, privileges or options or
be responsible for any failure to do so or delay in so doing. To this end,
Pledgor hereby irrevocably constitutes and appoints Pledgee the proxy and
attorney-in-fact of Pledgor, with full power of substitution, to vote, and to
act with respect to, the Pledged Stock standing in the name of Pledgor or with
respect to which Pledgor is entitled to vote and act, subject to the
understanding that such proxy may not be exercised unless an Event of Default
has occurred and is continuing. The proxy herein granted is coupled with an
interest, is irrevocable, and shall continue until the Obligations have been
paid and performed in full.
PLEDGE AND SECURITY AGREEMENT (TIDEL TECHNOLOGIES, INC.) - Page 3
4
7. Limitations on Pledgee's Obligations. The Pledgee 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 the Pledgee be under any obligation to take any action
whatsoever with regard thereto.
8. The Pledgee's Appointment as Attorney-in-Fact. (a) In addition to,
and without limiting the scope of any other provision in this Agreement, the
Pledgor hereby irrevocably constitutes and appoints the Pledgee and any officer
or agent thereof, with full power of substitution, as its true and lawful
attorney-in-fact with full irrevocable power and authority in the place and
stead of the Pledgor and in the name of the Pledgor or in its own name, from
time to time in the Pledgee's discretion, for the purpose of carrying out the
actions and to execute any and all documents and instruments which may be
necessary or desirable to accomplish the purposes of this Agreement and, without
limiting the generality of the foregoing, hereby gives the Pledgee the power and
right, on behalf of the Pledgor, without notice to or assent by the Pledgor to
do the following upon the occurrence and during the continuance of an Event of
Default: (i) to ask, demand, collect, receive and give acquittances and receipts
for any and all monies due and to become due under the Collateral; (ii) in the
name of the Pledgor or its own name or otherwise, to take possession of and
endorse and collect any checks, drafts, notes, acceptances or other instruments
for the payment of moneys due under the Collateral; (iii) to file any claim or
to take any other action or proceeding in any court of law or equity or
otherwise deemed appropriate by the Pledgee for the purpose of collecting any
and all such moneys due under the Collateral whenever payable; (iv) to pay or
discharge taxes, liens, security interests or other encumbrances levied or
placed on or threatened against the Collateral; (v) to direct any party liable
for any payment under the Collateral to make payment of any and all moneys due
and to become due thereunder directly to the Pledgee or as the Pledgee shall
direct; (vi) to receive payment of and receipt for any and all moneys, claims
and other amounts due and to become due at any time in respect of or arising out
of any Collateral; (vii) to commence and prosecute any suits, actions or
proceedings at law or in equity in any court of competent jurisdiction to
collect the Collateral or any part thereof and to enforce any other right in
respect of the Collateral; (viii) to defend any suit, action or proceeding
brought against the Pledgor with respect to any Collateral; (ix) to settle,
compromise or adjust any suit, action or proceeding described above and, in
connection therewith, to give such discharges or releases as the Pledgee may
deem appropriate; (x) exercise voting rights attributable to the Pledged Stock
pursuant to SECTION 6; and (xi) generally to sell, transfer, pledge, make any
agreement with respect to or otherwise deal with any of the Collateral as fully
and completely as though the Pledgee were the absolute owner thereof for all
purposes, and to do, at the Pledgee's option and the Pledgor's expense, at any
time, or from time to time, all acts and things which the Pledgee deems
necessary to protect, preserve or realize upon the Collateral and the Pledgee's
security interest therein, in order to effect the intent of this Agreement, all
as fully and effectively as the Pledgor might do.
The Pledgor hereby ratifies all that said attorneys shall lawfully do
or cause to be done by virtue hereof. This power of attorney is a power coupled
with an interest and shall be irrevocable.
PLEDGE AND SECURITY AGREEMENT (TIDEL TECHNOLOGIES, INC.) - Page 4
5
(b) The powers conferred on the Pledgee hereunder are solely to protect
its interests in the Collateral and shall not impose any duty upon it to
exercise any such powers. Pledgee shall be accountable only for amounts that it
actually receives as a result of the exercise of such powers and neither it nor
any of its officers, directors, employees or agents shall be responsible to the
Pledgor for any act or failure to act.
(c) The Pledgor also authorizes the Pledgee, at any time and from time
to time, to execute, in connection with any sale of the Collateral, any
endorsements, assignments or other instruments of conveyance or transfer with
respect to the Collateral.
9. Performance by the Pledgee of the Pledgor's Obligations. If the
Pledgor fails to perform or comply with any of its agreements contained herein
and the Pledgee, as provided for by the terms of this Agreement, shall itself
perform or comply, or otherwise cause performance or compliance, with such
agreement, then the expenses of the Pledgee incurred in connection with such
performance or compliance, together with interest thereon to accrue at a rate of
interest equal to the Highest Lawful Rate from the date such expenses are
incurred, shall be payable by the Pledgor to the Pledgee on demand and shall
constitute Obligations secured hereby.
10. Events of Default. The occurrence of any of the following shall
constitute an "Event of Default" under this Agreement:
(a) The Pledgor shall fail to pay its Obligations when due;
(b) Any representation, warranty or statement made or deemed made by
the Pledgor herein or in connection herewith shall prove to have been incorrect
or untrue in any material respect on or as of the date made or deemed made;
(c) The Pledgor shall default in the observance or performance of any
term, covenant, or agreement contained herein and Pledgor shall fail to cure
such default within fifteen (15) days after the occurrence of such default; or
(d) An Event of Default (subject to any applicable cure period), as
such term is defined in the Loan Agreement, shall occur and be continuing.
11. Remedies. (a) Upon the occurrence and during the continuance of any
Event of Default, and at any time thereafter, the Pledgee may declare all of the
Obligations or any part thereof immediately due and payable and, 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
the Pledgor or any other person (all and each of which demands, advertisements
and/or notices are hereby expressly waived), may forthwith collect, receive,
appropriate and realize upon the Collateral, or any part thereof, and/or may
forthwith sell, assign, give option or options to purchase, contract to sell or
otherwise dispose of and deliver said Collateral, or any part thereof, in one or
more parcels at public or private sale or sales, at any exchange, broker's board
or at the Pledgee'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
the Pledgee
PLEDGE AND SECURITY AGREEMENT (TIDEL TECHNOLOGIES, INC.) - Page 5
6
upon any such sale or sales, public or private, to purchase the whole or any
part of said Collateral so sold, free of any right or equity of redemption in
the Pledgor, which right or equity is hereby expressly waived or released. The
Pledgee shall apply the net proceeds of any such collection, recovery, receipt,
appropriation, realization or sale, after deducting all reasonable costs and
expenses of every kind incurred therein or incidental to the care, safekeeping
or otherwise of any and all of the Collateral or in any way relating to the
rights of the Pledgee hereunder, including reasonable attorneys' fees and legal
expenses, to the payment in whole or in part of the Obligations in such order as
the Pledgee may elect, the Pledgor remaining liable for any deficiency remaining
unpaid after such application, and only after so applying such net proceeds and
after the payment by the Pledgee of any amount required by any provision of law,
including, without limitation, Section 9-504 (a) (3) of the Uniform Commercial
Code of the State of Texas (the "Code"), need the Pledgee account for the
surplus, if any, to the Pledgor. The Pledgor agrees that, to the extent
permitted by law, the Pledgee need not give more than ten (10) days' notice of
the time and place of any public sale or of the time after which a private sale
or other intended disposition is to take place and that such notice is
reasonable notification of such matters. No notification need be given to the
Pledgor if it has signed after default a statement renouncing or modifying any
right to notification of sale or other intended disposition. 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, THE
PLEDGEE SHALL HAVE ALL THE RIGHTS AND REMEDIES OF A SECURED PARTY UNDER THE
CODE. All waivers by the Pledgor of rights (including rights to notice) and all
rights and remedies afforded the Pledgor herein, and all other provisions of
this Agreement, are expressly made subject to any applicable mandatory
provisions of law limiting, or imposing conditions (including conditions as to
reasonableness) upon such waivers of the effectiveness thereof or any such
rights and remedies. Any sale or other disposition of the Collateral shall be in
compliance with all provisions of law (including applicable securities laws, and
regulations and applicable provisions of the Code).
(b) If Pledgee shall determine to exercise its right to sell any or all
of the Pledged Stock pursuant to this SECTION 11 hereof, and if in the opinion
of counsel for Pledgee it is advisable to have the Pledged Stock, or that
portion thereof to be sold, registered under the provisions of the Securities
Act of 1933, as amended (the "Securities Act"), the Pledgor will cause the
Issuer of such Pledged Stock to execute and deliver, and cause the directors and
officers thereof to execute and deliver, all at the Pledgor's expense, all such
instruments and documents, and to do or cause to be done all such other acts and
things as may be necessary to register the Pledged Stock, or that portion
thereof to be sold, under the provisions of the Securities Act and to cause the
registration statement relating thereto to become effective and to remain
effective for a period of 180 days from the date of the first public offering of
the Pledged Stock, or that portion thereof to be sold, and to make all
amendments thereto and/or to the related prospectus which are necessary, all in
conformity with the requirements of the Securities Act and the rules and
regulations of the Securities and Exchange Commission applicable thereto. The
Pledgor agrees to cause each Issuer to comply with the provisions of the
securities or "Blue Sky" laws of any jurisdiction which Pledgee shall designate
and to cause each Issuer to make available to its security holders, as soon as
practicable, an earnings statement which will satisfy the provisions of Section
11(a) of the Securities Act.
PLEDGE AND SECURITY AGREEMENT (TIDEL TECHNOLOGIES, INC.) - Page 6
7
(c) The Pledgor recognizes that the Pledgee may be unable to effect a
public sale of any or all the Pledged Stock by reason of certain prohibitions
contained in the Securities Act and applicable state securities laws, but may be
compelled to resort to one or more private sales thereof to a restricted group
of purchasers who will be obliged 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. The Pledgor acknowledges and agrees that any
such private sale may result in prices and other terms less favorable to the
seller than if such sale were a public sale and, notwithstanding such
circumstances, agrees that any such private sale shall be deemed to have been
made in a commercially reasonable manner. Pledgee shall be under no obligation
to delay a sale of any of the Pledged Stock for the period of time necessary to
permit the Issuer of such securities to register such securities for public sale
under the Securities Act, or under applicable state securities laws, even if
such Issuer would agree to do so.
(d) The Pledgor further agrees to do or cause to be done all such other
acts and things as may be necessary to make such sale or sales of any portion of
all of the Pledged Stock valid and binding and in compliance with any and all
applicable laws, regulations, orders, writs, injunctions, decrees or awards of
any and all courts, arbitrators or governmental instrumentalities, domestic or
foreign, having jurisdiction over any such sale or sales, all at the Pledgor's
expense. The Pledgor further agrees that a breach of any of the covenants
contained in this SECTION 11 will cause irreparable injury to Pledgee, that
Pledgee has no adequate remedy at law in respect of such breach and, as a
consequence, agrees that each and every covenant contained in this paragraph
shall be specifically enforceable against the Pledgor and the Pledgor hereby
waives and agrees not to assert any defenses against an action for specific
performance of such covenants except for a defense that no default of the
covenants, terms or conditions of the Loan Agreement has occurred. The Pledgor
further acknowledges the impossibility of ascertaining the amount of damages
which would be suffered by Pledgee by reason of a breach of any such covenants
and, consequently, agrees that, if Pledgee shall xxx for damages for breach,
Pledgor shall pay, as liquidated damages and not as a penalty, an amount equal
to the value of the Pledged Stock on the date Pledgee shall demand compliance
with this paragraph, but in no event to exceed the amount of the Obligations.
12. Waiver of Subrogation. Notwithstanding anything to the contrary in
this Agreement, unless and until the Obligations have been indefeasibly paid and
performed in full, the Pledgor hereby irrevocably waives all rights Pledgor may
have at law or in equity (including, without limitation, any law subrogating the
Pledgor to the rights of the Pledgee) to seek contribution, indemnification, or
any other form of reimbursement from the Issuer, any other guarantor or pledgor,
or any other person now or hereafter primarily or secondarily liable for any
obligations of the Borrower to the Pledgee, for any disbursement made by the
Pledgor under or in connection with this Agreement or otherwise. The Pledgor
further agrees that, to the extent that the waiver of any such subrogation,
contribution, reimbursement, indemnity or otherwise is found to be void or
voidable for any reason, any such rights which the Pledgor may have shall be
junior and subordinate in all respects to the rights of the Pledgee against the
Borrower.
13. Actions by Pledgee. No action that the Pledgee may take or omit to
take in connection with the Loan Agreement or any of the Loan Documents, any
indebtedness owing by
PLEDGE AND SECURITY AGREEMENT (TIDEL TECHNOLOGIES, INC.) - Page 7
8
Borrower to the Pledgee (including, without limitation, renewals, extensions,
modifications and increases thereof), or any security for the payment of any
indebtedness of Borrower to the Pledgee, or for the performance of any
obligation or undertaking of Borrower, nor any course of dealing with Borrower
or any other Person, shall release the Pledgor from its obligations hereunder,
affect this Agreement in any way, or afford the Pledgor any recourse against the
Pledgee. By way of example, but not in limitation of the foregoing, the Pledgor
hereby expressly agrees that the Pledgee may, from time to time, without notice
to the Pledgor:
(a) sell, assign, transfer or grant participations in the
Loans and/or any right held by the Pledgee pursuant to or in connection with the
Loan Agreement and the Loan Documents;
(b) amend, change, or modify, in whole or in part, any
documents or instruments evidencing, securing or relating to any indebtedness or
undertaking of Borrower to the Pledgee;
(c) accelerate, change, extend, or renew the time for payment
of the Notes or any other indebtedness arising under any documents or
instruments evidencing, securing or relating to any indebtedness or undertaking
of Borrower to the Pledgee;
(d) compromise or settle any amount due or owing, or claimed
to be due or owing, under the Notes or under any documents or instruments
evidencing, securing or relating to any indebtedness or undertaking of Borrower
to the Pledgee;
(e) surrender, release, or subordinate any or all security for
any indebtedness or undertaking of Borrower to the Pledgee or accept additional
or substituted security therefor;
(f) release any guarantor or pledgor of any indebtedness or
undertaking of the Borrower to the Pledgee, or substitute or add additional
guarantors or pledgors; and
(g) apply collateral securing the Notes to other indebtedness
also secured by such collateral.
The provisions of this Agreement shall extend and be applicable to all renewals,
increases, amendments, extensions, modifications of and substitutions for the
Loan Agreement and the Loan Documents, and all references herein to the Loan
Agreement and the Loan Documents shall be deemed to include any renewal,
increase, extension, amendment or modification thereof or substitution therefor.
14. No Impairment. The obligations, guaranties, undertakings,
covenants, agreements and duties of the Pledgor under this Agreement shall not
be affected or impaired by any of the following, although without notice to or
consent of the Pledgor:
(a) any failure, omission or delay on the part of the Pledgee (i) to
enforce, assert or exercise any right, power or remedy conferred on the Pledgee
by the provisions of the Loan Agreement and the Loan Documents or otherwise
inuring to the holders of the rights of the Pledgee under the Loan Agreement and
the Loan Documents, or (ii) to make demand first upon Borrower or to proceed
against Borrower;
PLEDGE AND SECURITY AGREEMENT (TIDEL TECHNOLOGIES, INC.) - Page 8
9
(b) the voluntary or involuntary liquidation, dissolution, sale of all
or substantially all assets, marshalling of assets or liabilities, receivership,
conservatorship, assignment for the benefit of creditors, insolvency,
bankruptcy, reorganization, arrangement, composition or other proceedings under
laws for the protection of debtors affecting Borrower or any of the assets of
Borrower, or any discharge from liability or rejection of burdensome contracts
or obligations in the course of or resulting from any such proceedings;
(c) the release, by operation of law or otherwise, of Borrower or any
guarantor from any obligation under the Loan Agreement or any of the Loan
Documents;
(d) the invalidity, deficiency, illegality or unenforceability of the
Loan Agreement and the Loan Documents, in whole or in part, or of any of the
provisions thereof, or failure to perfect or maintain perfection of any
security, or any defense or excuse for failure to perform on account of force
majeure, act of God, casualty, impossibility, impracticability, or other defense
or excuse whatsoever; or
(e) without limiting the foregoing, any fact or event (whether or not
similar to any of the foregoing) which in the absence of this provision would or
might constitute or afford a legal or equitable discharge or release of or
defense to a guarantor or surety.
None of the foregoing shall be a defense to this Agreement, and this Agreement
is a primary obligation of the Pledgor.
15. Other Pledgors or Guarantors. The liabilities and obligations of
the Pledgor hereunder shall not be reduced or limited by reason of any guaranty
or pledge executed in favor of the Pledgee by any other Person, and this
Agreement shall be enforceable against the Pledgor without regard to any such
guaranty or pledge.
16. Representations, Warranties and Covenants of the Pledgor. The
Pledgor represents and warrants that (a) it is the legal, record and beneficial
owner of, and has good and, subject to applicable securities laws described in
SECTION 11 hereof, marketable title to, the Initial Pledged Stock, subject to no
pledge, lien, mortgage, hypothecation, security interest, charge, option, voting
proxy or other encumbrance whatsoever, except the existing lien and security
interest created by this Agreement; (b) it is duly organized, validly existing
and in good standing under the laws of its jurisdiction of incorporation and has
full power, authority and legal right to pledge the Initial Pledged Stock
pursuant to this Agreement; (c) this Agreement has been duly authorized,
executed and delivered by Pledgor and constitutes a legal, valid and binding
obligation of the Pledgor, and is enforceable in accordance with its terms; (d)
no consent of any other party (including, without limitation, the stockholders
or creditors of the Pledgor) and no consent, license, permit, approval or
authorization of, exemption by, notice or report to, or registration, filing or
declaration with, any Governmental Authority, domestic or foreign, is required
to be obtained by the Pledgor or the Pledgee in connection with the execution,
delivery or performance of this Agreement or the pledge of such shares
hereunder, in each case which has not been obtained or made, as the case may be,
and is not in full force and effect; (e) the execution, delivery and performance
of this Agreement will not violate any provision of any
PLEDGE AND SECURITY AGREEMENT (TIDEL TECHNOLOGIES, INC.) - Page 9
10
applicable law, or of any mortgage, indenture, lease, contract, or other
agreement, instrument or undertaking to which Pledgor is a party or which
purports to be binding upon Pledgor or upon any of its assets and will not
result in the creation or imposition of any lien, charge or encumbrance on or
security interest in any of the assets of Pledgor except as contemplated by this
Agreement or the Loan Agreement; (f) all the shares of the Initial Pledged Stock
have been duly and validly issued, are fully paid and non-assessable and have
not been issued in violation of any preemptive or other rights of any person;
(g) the Pledgor has not created any options, warrants, rights, calls,
commitments, plans, contracts or other agreements of any character, which
provide for the purchase, issuance or transfer of any shares of capital stock of
Issuer pledged hereby; and (h) the pledge, assignment and delivery of such
Initial Pledged Stock pursuant to this Agreement constitutes and, provided
Pledgee retains possession of the Initial Pledged Stock, at all times
(disregarding, however the effects of the change in any law relating to the
pledge of stock generally) will constitute a valid first lien on and a first
perfected security interest in such shares of the Initial Pledged Stock, and the
proceeds thereof, subject to no prior Lien, or to any agreement purporting to
grant to any third party other than Pledgee a security interest in the property
or assets of the Pledgor which would include the Initial Pledged Stock. Pledgor
covenants and agrees that at its expense it will defend the right, title and
security interest of the Pledgee in and to the Pledged Stock and the proceeds
thereof against the claims and demands of all persons whomsoever; and covenants
and agrees that he will have like title to and right to pledge any other
property at any time hereafter pledged to the Pledgee as Collateral hereunder
and will likewise defend the right of the Pledgee thereto and security interest
therein.
17. No Disposition. etc. Without the prior written consent of the
Pledgee, Pledgor agrees that it will not sell, assign, transfer, exchange, or
otherwise dispose of, or grant any option with respect to, the Collateral, nor
will it create, incur or permit to exist any pledge, lien, mortgage,
hypothecation, security interest, charge, option or any other encumbrance with
respect to any of the Collateral, or any interest therein, or any proceeds
thereof, except for the lien and security interest provided for by this
Agreement and except as permitted by this Agreement or by the Loan Agreement.
Without the prior written consent of the Pledgee, the Pledgor agrees that it
will not vote to enable any Issuer to issue or sell any stock or other
securities of any nature in addition to or in exchange or substitution for the
Pledged Stock or grant or issue any options, warrants, or rights of any kind to
acquire, or securities convertible into, shares of such Issuer's stock.
18. Further Assurances. Pledgor agrees that at any time and from time
to time upon the written request of the Pledgee, the Pledgor will execute and
deliver such further documents and do such further acts and things which are
necessary in the reasonable judgment of the Pledgee to effect the purpose of
this Agreement or to obtain, maintain and perfect the security interest granted
under this Agreement in any applicable jurisdiction, and any expense of Pledgee
so incurred shall be a part of the Obligations.
19. Severability. Any provision of this Agreement which 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.
PLEDGE AND SECURITY AGREEMENT (TIDEL TECHNOLOGIES, INC.) - Page 10
11
20. No Waiver; Cumulative Remedies. The Pledgee shall not by any act,
delay, omission or otherwise be deemed to have waived any of its rights or
remedies hereunder and no waiver shall be valid unless in writing, signed by the
Pledgee, and then only to the extent therein set forth. A waiver by the Pledgee
of any right or remedy hereunder on any one occasion shall not be construed as a
bar to any right or remedy which Pledgee would otherwise have on any future
occasion. No failure to exercise nor any delay in exercising on the part of the
Pledgee, any right, power or privilege hereunder, shall operate as a waiver
thereof; nor shall any single or partial exercise of any right, power or
privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided are cumulative and may be exercised singly or concurrently, and are not
exclusive of any rights or remedies provided by law.
21. Waivers, Amendments, Entirety. 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 the Pledgee. This Agreement and all
obligations of the Pledgor hereunder shall be binding upon the successors and
assigns of the Pledgor, and shall, together with the rights and remedies of
Pledgee hereunder, inure to the benefit of Pledgee and its successors and
assigns. THIS AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES
HERETO AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR
SUBSEQUENT ORAL AGREEMENTS BY THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.
22. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND BE
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS
WITHOUT GIVING EFFECT TO THE CHOICE OF LAWS RULES THEREOF. THE CERTIFICATES
REPRESENTING THE PLEDGED STOCK SHALL BE DELIVERED TO PLEDGOR IN THE STATE OF
TEXAS.
23. Counterparts. This Agreement may be executed in any number of
counterparts and by the different parties on separate counterparts and each such
counterpart shall be deemed to be an original, but all such counterparts shall
together constitute one and the same Agreement.
24. Reinstatement. This Agreement shall remain in full force and effect
and continue to be effective should any petition be filed by or against the
Pledgor or Borrower for liquidation or reorganization, should the Pledgor or
Borrower become insolvent or make an assignment for the benefit of creditors or
should a receiver or trustee be appointed for all or any significant part of the
Pledgor's assets or the assets of Borrower and shall continue to be effective or
be reinstated, as the case may be, if at any time payment and performance of the
Obligations, or any part thereof is, pursuant to applicable law, rescinded or
reduced in amount, or must otherwise be restored or returned by any obligee of
the Obligations, whether as a "voidable preference", "fraudulent conveyance", or
otherwise, all as though such payment or performance had not been made. In the
event that any payment, or any part thereof, is rescinded, reduced, restored or
returned, the Obligations shall be reinstated and deemed reduced only by such
amount and not so rescinded, reduced, restored or returned.
PLEDGE AND SECURITY AGREEMENT (TIDEL TECHNOLOGIES, INC.) - Page 11
12
25. Replacement of Prior Agreement. This Agreement is given in renewal,
amendment, replacement, and restatement in its entirety (but not in novation,
extinguishment or satisfaction) of that certain Pledge and Security Agreement
dated June 12, 1997, executed by Pledgor, formerly known as American Medical
Technologies, Inc. d/b/a AMT Industries, Inc., for the benefit of Pledgee,
successor-in-interest to Texas Commerce Bank National Association, as amended by
that certain First Amendment to Pledge and Security Agreement dated May 27,
1998, executed by and between Pledgor and Pledgee (as amended, the "Prior
Agreement"). To the extent of any conflict between the terms of this Agreement
and the terms of the Prior Agreement, the terms of this Agreement shall control.
IN WITNESS WHEREOF, Pledgor has caused this Agreement to be duly
executed and delivered as of the day and year first above written.
TIDEL TECHNOLOGIES, INC.
By:
------------------------------------
Xxxx X. Xxxxxxxx,
Chief Operating Officer
PLEDGE AND SECURITY AGREEMENT (TIDEL TECHNOLOGIES, INC.) - Page 12
