PLEDGE AND SECURITY AGREEMENT WITH ASSIGNMENT OF RIGHTS AND INTERESTS
PLEDGE
AND
SECURITY AGREEMENT
WITH
ASSIGNMENT OF RIGHTS AND INTERESTS
This
PLEDGE
AND SECURITY
AGREEMENT WITH ASSIGNMENT OF RIGHTS AND INTERESTS ("Agreement"),
is entered into on this the 24th
of
August, 2007, by and between TSI
Holding CO., LLC and Airship Leasing Co., LLC (“Borrower)
and Ayuda Funding Corp.,
(“Lender”).
RECITALS
A. Borrower
has requested a loan to replace the funds advanced to ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
on
behalf of the Borrower in an amount of Three
Hundred Seventy Five Thousand and No/100ths Dollars
($375,000.00).
This
Commercial Loan is evidenced by a Promissory Note.
B. Borrower
desires to borrow Three
Hundred Seventy Thousand and No/100ths Dollars ($375,000.00)
as evidenced
a Promissory Note with interest thereon at the rate of 15.00% per annum,
with a
maturity date of February 21, 2008 (the “Promissory Note”). As inducement for
said loan, Borrower and Pledgor agrees to assign and pledge in favor of
SpiritBank, a security interest in certain personal property, listed and
described on Exhibit “A” attached hereto.
C. Subject
to Borrower’s compliance with all of the terms, conditions and covenants
hereinafter set forth and predicated on Borrower’s representations and
warranties, each of which is material and is being relied upon by Lender,
Lender
agrees to make the Loan and advance funds thereunder for the benefit of Borrower
in the amount and on the terms hereinafter set forth up to the total of the
Loan
amount, or in such lesser sums as Borrower may request in accordance with
the
Promissory Note.
NOW
THEREFORE,
in
consideration of the mutual promises, covenants, conditions, representations,
and warranties hereinafter set forth and for other good and valuable
consideration, the parties hereto mutually agree as follows:
AGREEMENT
1. Definitions
and Construction.
1.1 Definitions.
All
initially capitalized terms used but not defined in this Agreement shall
have
the meanings assigned to such terms in the Promissory Note. In addition,
the
following terms, as used in this Agreement, have the following
meanings:
"Bankruptcy
Code"
means
Bankruptcy Reform Act of 1978 (11 U.S.C. Sections 101-1330), as amended or
supplemented from time to time, and any successor statute, and any and all
rules
issued or promulgated in connection therewith.
"Code"
means
the New York Uniform Commercial Code, as amended and supplemented from time
to
time, and any successor statute.
“Collateral"
means
all of the following:
(i)
All
items listed and described under Exhibit “A”.
“Event
of Default"
has the
meaning given to such term in Section
9.
"Guaranty"
has the
meaning set forth in the recitals hereto.
"Guaranty
Documents"
documents signed by the guarantors.
“Secured
Obligations"
means
all loans, advances, debts, principal, interest (including any interest that,
but for the provisions of the Bankruptcy Code, would have accrued), premiums,
liabilities (including all amounts charged to Borrower pursuant hereto),
obligations, fees, charges, or costs (including any fees or expenses that,
but
for the provisions of the Bankruptcy Code, would have accrued), lease payments,
guaranties, covenants, and duties owing by Borrower to Lender of any kind
and
description pursuant to or evidenced by the Guaranty Documents, due or to
become
due, absolute or contingent, and further including all interest not paid
when
due and all Lender’s expenses that Borrower is required to pay or reimburse by
the terms of the Loan documents, security agreements, pledge, mortgage and
Guaranty Documents, by law, or otherwise.
1.2 Construction.
Unless
the context of this Agreement clearly requires otherwise, references to the
plural include the singular, references to the singular include the plural,
and
the term "including" is not limiting. The words "hereof," "herein," "hereby,"
"hereunder," and other similar terms refer to this Agreement as a whole and
not
to any particular provision of this Agreement. Any reference herein to any
document includes any and all alterations, amendments, extensions,
modifications, renewals, or supplements thereto or thereof, as applicable.
Neither this Agreement nor any uncertainty or ambiguity herein shall be
construed or resolved against the Lender whether under any rule of construction
or otherwise. On the contrary, this Agreement has been reviewed by Borrower
and
Borrower has had the opportunity to consult with an attorney, and this Agreement
shall be construed and interpreted according to the ordinary meaning of the
words used so as to fairly accomplish the purposes and intentions of the
Borrower and Lender.
2. Pledge.
As
security for the prompt and complete payment and performance of the Secured
Obligations, Borrower and Pledgor hereby deliver, pledge and grant to Lender,
for the benefit of the Lender, a continuing security interest in all of Borrower
and Pledgor’s now-owned or hereafter-acquired right, title, and interest in and
to the Collateral. All documents, certificates or instruments representing
or
evidencing the Collateral (excluding any mortgage documents) shall be held
by
the Borrower and/or Pledgor. Borrower
shall notify Lender of any change in location, possession or control of the
Collateral.
Failure
to notify Lender of any change in location, possession or control of the
Collateral shall constitute a default under the terms of the Promissory
Note.
3. Further
Assurances.
Borrower agree that it shall cooperate with Lender and shall execute and
deliver, or cause to be executed and delivered, to Lender all control
agreements, assignments, financing statements, instruments, and other documents,
and shall take all further action, at the expense of Borrower, from time
to time
reasonably requested by Lender, in order to maintain a continuing,
first-priority, perfected security interest in the Collateral in favor of
Lender, and to enable Lender to exercise and enforce its rights and remedies
hereunder with respect to the Collateral, and Borrower agree that it shall
execute and deliver to Lender at Lender’s request any further control agreement,
applications, agreements, documents and instruments, and shall perform any
and
all acts deemed reasonably necessary by Lender to carry into effect the terms,
conditions, and provisions of this Agreement and the transactions connected
herewith. Should Borrower fail to execute or deliver any such applications,
agreements, documents, financing statements and instruments, or to perform
any
such acts, Pledgor and Borrower acknowledge that Lender may execute and deliver
the same and perform such acts in the name of Borrower and on its behalf
as its
attorney-in-fact in accordance with Section
10.
4. Lender’s
Duties.
The
Lender shall not have any duties with respect to the Collateral other than
the
duty to use reasonable care if the Collateral is in its possession. In
accordance with the Code, Lender shall be deemed to have used reasonable
care if
it observes substantially the same standard of care with respect to the custody
or preservation of the Collateral as it observes with respect to similar
assets
owned or held in trust by Pledgor. Without limiting the generality of the
foregoing, the Lender shall not be under any obligation to take any steps
to
preserve rights in the Collateral against any other parties, to sell the
same if
it threatens to decline in value, or to exercise any rights represented thereby
(including rights with respect to calls, conversions, exchanges, maturities,
or
tenders); provided,
however,
that
Lender may, at its option, after the occurrence and during the continuance
of an
Event of Default, do so, and any and all expenses incurred in connection
therewith shall be for the account of the Borrowers.
5. Voting
Rights; Dividends; Etc.
During
the term of this Agreement, and as long as no Event of Default has occurred
and
is then continuing:
5.1 Pledgor
shall be entitled to exercise any and all voting and other consensual rights
pertaining to the Collateral or any part thereof; provided, however, no vote
shall be cast or any consent, waiver or ratification given or any action
taken
which would violate or be inconsistent with the terms of this Agreement,
the
Promissory Note or any other instrument or agreement referred to therein
or
herein, or which could have the effect of materially impairing the value
of the
Collateral or any part thereof or the position or interest of Agent
therein.
6. Representations,
Warranties, and Covenants.
Pledgor
warrants, represents, and covenants that:
6.1 The
execution, delivery and performance of this Agreement are within Pledgor’s
power, will not constitute an event of default under any material contract,
obligation, indenture or other instrument to which Pledgor is a party; and
there
is no law, rule or regulation, nor is there any judgment, decree or order
of any
court or governmental authority binding on Pledgor which would be contravened
by
the execution, delivery, performance or enforcement of this
Agreement.
6.2 Pledgor
has taken all action necessary to authorize the execution and delivery of
this
Agreement, and the consummation of the transactions contemplated hereby.
Upon
its execution and delivery in accordance with the terms hereof, this Agreement
will constitute the legal, valid and binding agreement and obligation of
Pledgor, enforceable against Pledgor in accordance with its terms, except
as
enforceability may be limited by bankruptcy, insolvency, and similar laws
and
equitable principles affecting the enforcement of creditors' rights
generally.
6.3 All
of
the Collateral is and shall remain free from all liens, claims, encumbrances,
and purchase-money or other security interests except as created hereby and
Permitted Liens, as defined in the Promissory Note.
6.4 The
execution and delivery of this Agreement creates a valid, perfected, and
first-priority security interest in the Collateral in favor of Lender for
the
benefit of the Lender, and all actions necessary or desirable to such perfection
have been duly taken or will be promptly taken upon execution of this
Agreement.
6.5 No
authorization or other action by, and no notice to or filing with, any
governmental authority or regulatory body is required either: (a) for the
grant
by Pledgor of the security interest granted hereby or for the execution,
delivery, or performance of this Agreement by Pledgor; (b) for the perfection
of
or exercise by Lender of its rights and remedies hereunder (except as may
have
been taken by or at the direction of Borrowers or Pledgor, or as may be required
in connection with a disposition of the Collateral by laws affecting the
offering and sale of securities generally, or filings for perfection on
proceeds).
6.6 The
pledge of the Collateral pursuant to this Agreement, and the making of the
loans
in accordance with the terms of the Promissory Note, does not violate
Regulations T, U, or X of the Board of Governors of the Federal Reserve
System.
6.7 Pledgor
has made its own arrangements for keeping informed of changes or potential
changes affecting the Collateral and Pledgor agrees that it shall have the
responsibility or liability for informing Lender of any such changes or
potential changes or for taking any action or omitting to take any action
with
respect thereto.
7. Revocation
of Trust.
N/A.
8. Reporting
Requirements.
N/A.
9. Events
of Default.
The
occurrence and continuation of any Event of Default under, and as defined
in,
the Promissory Note, this Agreement and accompanying documents shall constitute
an event of default ("Event of Default").
10. Remedies
Upon Default.
Upon
the occurrence of an Event of Default and during the continuance thereof,
Lender
shall have, in addition to any other rights given by law or in this Agreement,
in the Promissory Note, or in any other agreement between Borrowers and Lender,
all of the rights and remedies with respect to the Collateral of a secured
party
under the Code, and also shall have, without limitation, the following rights,
which Borrowers and Pledgor hereby agree to be commercially
reasonable:
10.1 Transfer,
sell, or dispose of all or any part of the Collateral.
10.2 All
rights of a Secured Party as provided for under Article 9 of the Code.
10.3 Expenses
payable by Borrowers in connection with any disposition under
Section
12
shall
include, but shall not be limited to, all costs including
attorneys’ fees, court cost, collection cost and other reasonable
and necessary costs.
11. General
Provisions.
11.1 Cumulative
Remedies; No Prior Recourse to Collateral.
The
enumeration herein of Lender’s rights and remedies is not intended to be
exclusive, and such rights and remedies are in addition to and not by way
of
limitation of any other rights or remedies that Lender may have under the
Promissory Note, the Guaranty Documents, the Code, or other applicable law.
Lender shall have the right, in its sole discretion, to determine which rights
and remedies are to be exercised and in which order. The exercise of one
right
or remedy shall not preclude the exercise of any others, all of which shall
be
cumulative.
11.2 No
Implied Waivers.
No act,
failure, or delay by Lender shall constitute a waiver of any of its or the
Lender’s rights and remedies. No single or partial waiver by Lender of any
provision of this Agreement or any other Loan Document or Guaranty Document,
or
of a breach or default hereunder or thereunder, or of any right or remedy
which
Lender may have, shall operate as a waiver of any other provision, breach,
default, right, or remedy or of the same provision, breach, default, right,
or
remedy on a future occasion. No
waiver by Lender shall affect its rights to require strict performance of
this
Agreement.
11.3 Notices.
All
notices or demands by any party hereto to the other party and relating to
this
Agreement shall be sent in accordance with the terms of this Agreement and
accompanying Loan Documents.
12. Successors
and Assigns.
This
Agreement shall bind and inure to the benefit of the respective successors
and
assigns of the parties hereto; provided,
however,
that
Borrowers may not assign this Agreement nor delegate any of its duties hereunder
without Lender’s prior written consent and any prohibited assignment shall be
absolutely void. Lender may assign this Agreement and its rights and duties
hereunder and no consent or approval by Borrowers is required in connection
with
any such assignment.
12.1 Section
Headings.
Headings and numbers have been set forth herein for convenience only. Unless
the
contrary is compelled by the context, everything contained in each section
applies equally to this entire Agreement.
12.2 Amendments
in Writing.
This
Agreement cannot be changed or terminated orally, but only by a writing signed
by each party hereto. All prior agreements, understandings, representations,
warranties, and negotiations, if any, are merged into this
Agreement.
12.3 Counterparts;
facsimile Execution.
This
Agreement may be executed in any number of counterparts and by different
parties
on separate counterparts, each of which, when executed and delivered, shall
be
deemed to be an original, and all of which, when taken together, shall
constitute but one and the same Agreement. Delivery of an executed counterpart
of this Agreement by facsimile shall be equally as effective as delivery
of a
manually executed counterpart of this Agreement. Any party delivering an
executed counterpart of this Agreement by facsimile also shall deliver a
manually executed counterpart of this Agreement but the failure to deliver
a
manually executed counterpart shall not affect the validity, enforceability,
and
binding effect of this Agreement.
12.4 Termination
By Lender.
After
termination of the Promissory Note and when Lender or its assigns have received
payment and performance, in full, of the non-contingent Secured Obligations,
Lender shall execute and deliver to Borrowers a termination of all of the
security interests granted by Borrowers hereunder.
12.5 Governing
Law; Severability of Provisions.
This
Agreement shall be deemed to have been made in the State of New York and
the
validity, enforceability, construction, interpretation and enforcement of
this
Agreement and the rights of the parties hereto shall be determined under,
governed by and construed in accordance with the laws of the State of New
York,
without regard to the principles of conflicts of law. If any provision of
this
Agreement or its exhibits shall be determined to be invalid, void or illegal,
such provision shall be construed and amended in a manner which would permit
its
enforcement, but in no event shall such provision affect, impair or invalidate
any other provision hereof.
12.6 JURISDICTION
AND VENUE; WAIVER OF JURY TRIAL.
The
parties hereto agree that all actions or proceedings arising in connection
with
this Agreement shall be tried and litigated only in the state or federal
courts
located in New York County, State of New York; provided,
however,
that
nothing in this Agreement or the Guaranty Documents shall be deemed or operate
to preclude Lender from bringing suit or taking other legal action in any
other
jurisdiction to protect or realize on the Collateral or any other security
for
the Secured Obligations, or to enforce a judgment or other court order.
12.7 Resolution
of Conflicts.
In the
event that any express provision or term of this Agreement conflicts with
the
express provisions and terms of the Promissory Note, the provision or term
in
the Promissory Note shall control.
IN
WITNESS WHEREOF,
the
parties hereto have executed and delivered this Agreement as of the day and
year
first written above.
|
“PLEDGOR”
|
||
|
TSI
Holding Co., LLC a Georgia limited liability and
Airship
Leasing Co., LLC, an Oklahoma limited liability
company
|
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| By: |
|
|
|
|
▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇, President of Cyber Defense Systems,
Inc.,
Manager of TSI Holding Co., LLC and
Airship
Leasing Co., LLC
|
Exhibit
“A”
All
of
Airship Leasing Co., LLC’s rights, title and interest in and that certain
airship known as N681TS, and that certain airship (SA-60-A Spherical Airship)
currently under construction.
All
of
Airship Leasing Co., LLC’s rights, title and interests in and to all account
receivables, contract rights, lease rights, contract and lease payments,
general
intangibles, payment intangibles, licenses, license right, intellectual
property, equipment, inventory, tools, work in process, furniture, fixtures,
insurance proceeds, and all substitutions, replacements and modifications
thereof.