EXHIBIT 10.4
REAFFIRMATION AND RATIFICATION AGREEMENT AND AMENDMENT
December 28, 2005
Laurus Master Fund, Ltd.
c/o Laurus Capital Management, LLC
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Reference is made to the (a) the Security Agreement dated as of the May 16, 2005
by ▇▇▇▇▇▇ Traffic Systems, Inc. ("NTSI") and ▇▇▇▇▇▇, Inc. (the "Company") in
favor of Laurus Master Fund, Ltd., a Cayman Islands company ("Laurus") (as
amended, modified or supplemented from time to time, the "Security Agreement"),
(b) the Pledge and Security Agreement dated as of May 16, 2005 between NTSI and
Laurus (as amended, modified or supplemented from time to time, the "Pledge
Agreement") and (c) the Subsidiary Guaranty dated as of May 16, 2005 made by
NTSI in favor of Laurus(as amended, modified or supplemented from time to time,
the "Subsidiary Guaranty", and together with the Security Agreement and the
Pledge Agreement, the "Existing Security and Guaranty Agreements").
To induce Laurus to provide additional financial accommodations to the Company
evidenced by (i) that certain Secured Term Note, dated December 28, 2005, made
by the Company in favor of Laurus (as amended, modified or supplemented from
time to time, the "Note"), (ii) the Securities Purchase Agreement referred to in
the Note (as amended, modified or supplemented from time to time, the "Purchase
Agreement") and (iii) the Related Agreements referred to in, and defined in, the
Purchase Agreement (the agreements set forth in the preceding clauses (i)
through (iii), inclusive, collectively, the "December Agreements"), each of the
Company and NTSI hereby:
(a) represents and warrants to Laurus that it has reviewed and approved the
terms and provisions of the December Agreements and the documents, instruments
and agreements entered into in connection therewith;
(b) acknowledges, ratifies and confirms that all indebtedness incurred by,
and all other obligations and liabilities of, the Company and NTSI under the
December Agreements are (i) "Obligations" under, and as defined in the
Subsidiary Guaranty, (ii) "Obligations" under, and as defined in, the Security
Agreement and (iii) "Indebtedness" under, and as defined in, the Pledge
Agreement;
(c) acknowledges, ratifies and confirms that the December Agreements are
"Documents" under, and as defined in, each of the Subsidiary Guaranty, the
Security Agreement and the Pledge Agreement;
(d) acknowledges, ratifies and confirms that all of the terms, conditions,
representations and covenants contained in the Existing Security and Guaranty
Agreements are in full force and effect as of the date hereof and shall remain
in full force and effect after giving effect to the execution and effectiveness
of the December Agreements;
(e) represents and warrants that no offsets, counterclaims or defenses
exist as of the date hereof with respect to any of the undersigned's obligations
under any Existing Security and Guaranty Agreement; and
(f) acknowledges, ratifies and confirms the grant by the Company and NTSI
to Laurus of a security interest in the assets of (including the equity
interests owned by) the Company and NTSI, respectively, as more specifically set
forth in the Existing Security and Guaranty Agreements.
The Company, NTSI and Laurus hereby agree that this letter agreement shall
constitute a "Related Agreement" under, and as defined in, the Purchase
Agreement.
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This letter agreement shall be governed by and construed in accordance with
the laws of the State of New York.
Very truly yours,
▇▇▇▇▇▇ TRAFFIC SYSTEMS, INC.
By:_______________________________
Name:
Title:
▇▇▇▇▇▇, INC.
By:_______________________________
Name:
Title:
Acknowledged and Agreed to by:
LAURUS MASTER FUND, LTD.
By:___________________________
Name:
Title:
[SIGNATURE PAGE TO REAFFIRMATION AGREEMENT]
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