Document:

Exhibit
      10.2

    

    TraceGuard
      Technologies, Inc.

    330
      Madison Avenue, 9th
      Floor

    New
      York,
      NY 10017

    

    April
      18,
      2008

     

    Golden
      Gate Investors

    1150
      Silverado Street, Suite 220

    La
      Jolla,
      CA 92037

    

    
      	 	
              RE:

            	
              Securities
                Purchase Agreement, Dated April 18, 2008 Between TraceGuard Technologies,
                Inc. (the “Company”) and Golden Gate Investors, Inc. (the “Holder”) (the
                “Purchase Agreement”) and 7 % Convertible Debenture, Dated April 18, 2008
                (the “Debenture”) Issued by the Company to the
                Holder

            

    

    

    This
      Letter Agreement clarifies and confirms certain terms, to the extent set forth
      herein, of the Purchase Agreement and the Debenture. This hereby confirms our
      understanding that (i) the notice described in the first sentence of Article
      I.G. of the Purchase Agreement shall be delivered by the Holder to the Company,
      not to the Holder as originally stated in the Purchase Agreement; (ii) the
      term
“principal amount” used in Article I.H. of the Purchase Agreement shall refer to
      the defined term “Principal Amount” as used in the Debenture.; and (iii) the
      phrase “upon conversion hereof” shall be added to the beginning of clause (y) of
      Section 3.4(i) of the Debenture.

    

    Except
      as
      specifically set forth herein, all other terms and conditions of the Purchase
      Agreement and Debenture shall remain in full force and effect.

    

    
      	
              TRACEGUARD
                TECHNOLOGIES, INC.

            
	 	 
	
              By:

            	 
	
              Name:

            	 
	
              Its:

            	 

    

    

    Acknowledged
      and Agreed:

     

    
      	
              GOLDEN
                GATE INVESTORS,
                INC.

            
	 	 
	
              By:

            	 
	
              Name:

            	 
	
              Its:Exhibit
      10.3

     

    STOCK
      PLEDGE AGREEMENT

    

    STOCK
      PLEDGE AGREEMENT (this "Agreement"), dated April 18, 2008 made by The S.Z.
      Management Corporation (“S.Z”), Lavi Krasny (“Krasny”), EGFE LTD West Indies
      (“EGFE”), Amir Uziel (“Uziel”), Dov Reznik (“Reznik”) and Yoram Drucker
      (“Drucker”) in favor of Golden Gate Investors, Inc., a California corporation
      (the "Pledgee"). Each of  S.Z., Krasny, EGFE, Uziel, Reznik and Drucker may
      be referred to herein individually as a “Pledgor,” and collectively as the
“Pledgors”).

     

    W
      I T N E S S E T H:

     

    WHEREAS,
      pursuant to the provisions of that certain Securities Purchase Agreement of
      even
      date herewith between TraceGuard Technologies, Inc. (the "Company") and the
      Pledgee (the "Purchase Agreement"), the Pledgee has agreed to lend to the
      Company and the Company has agreed to borrow from the Pledgee an aggregate
      of
      $1,500,000, $225,000 of which shall be advanced in cash as of the date of the
      closing of the Purchase Agreement (the “Initial Cash Advance”), and up to an
      additional $425,000 of which may be advanced in cash as set forth in Section
      I.B. of the Purchase Agreement (the “Additional Cash Advance,” if any, together
      with the Initial Cash Advance, the “Cash Advance”) under certain terms and
      conditions set forth in the Purchase Agreement and as further set forth in
      the
      Debenture (as defined in the Purchase Agreement); 

     

    WHEREAS,
      pursuant to the provisions of the Purchase Agreement, and as a condition to
      the
      obligation of the Pledgee to lend thereunder, each Pledgor has agreed to make
      the pledge contemplated by this Agreement in order to induce the Pledgee to
      perform its obligations under the Purchase Agreement;

     

    WHEREAS,
      each Pledgor is a shareholder of the Company, and as such, will derive direct
      and indirect benefits from the Purchase Agreement; and

     

    WHEREAS,
      all capitalized terms used but not defined herein shall have the meanings
      ascribed to them in the Purchase Agreement.

     

    NOW,
      THEREFORE, in consideration of the premises, covenants and promises contained
      herein and for other good and valuable consideration, the receipt and
      sufficiency of which are hereby acknowledged, the parties hereto hereby agree
      as
      follows:

     

    SECTION
      1. 

     

    1.1 Pledge
      and Security Interest.
      Each
      Pledgor hereby pledges to the Pledgee, and grants to the Pledgee a continuing
      security interest in, the following (collectively, the "Pledged
      Collateral"):

     

    
      	 	
              (a)

            	
              An
                aggregate of Three Million (3,000,000) shares of common stock (the
                "Pledged Shares" or “Pledged Collateral”) of the Company, in the
                aggregate, owned by the Pledgors, which shall, for the term of this
                agreement, be placed in the name of the Pledgee, represented by the
                certificates identified in Schedule 1(a) annexed hereto representing
                the
                Pledged Shares, and all dividends, cash, instruments and other property
                from time to time received, receivable or otherwise distributed in
                respect
                of or in exchange for any or all of the Pledged Shares, provided
                however
                that Pledgee shall have no beneficial ownership interest (with beneficial
                ownership calculated in accordance with Section 13(d) of the Securities
                Exchange Act of 1934, as amended, and the rules and regulations
                promulgated thereunder) in the Pledged Shares unless and until an
                Event of
                Default (as defined below) has occurred and the Pledgee has elected
                to
                exercise the rights set forth in Section 13 of this Agreement;
                and

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (b)

            	
              all
                proceeds of any and all of the foregoing Pledged Collateral, in whatever
                form (including, without limitation, proceeds that constitute property
                of
                the types described above).

            

    

     

    SECTION
      2. Security
      for Obligations.
      This
      Agreement secures the payment and performance of the following obligations
      (collectively, the "Obligations"): all present and future indebtedness,
      obligations, covenants, duties and liabilities of any kind or nature of the
      Company to the Pledgee now existing or hereafter arising under or in connection
      with this Agreement, the Purchase Agreement, the Debenture, and any and all
      related agreements, documents and instruments, each as now existing and as
      hereafter amended, modified and supplemented (collectively, the "Transaction
      Documents"), provided however, that the Obligations shall be limited at any
      given time to an amount not to exceed the lesser of (i) the Cash Advance, or
      (ii) that portion of the Cash Advance that has not been converted into the
      Company’s Common Stock under the terms of the Debenture and remains represented
      by the outstanding principal balance of the Debenture.

     

    SECTION
      3. Delivery
      of Pledged Collateral.
      Concurrently herewith, all certificates representing or evidencing the Pledged
      Shares, in suitable form for transfer by delivery, and in the name of the
      Pledgee are being deposited with and delivered to the Pledgee represented by
      a
      stock certificate or certificates evidencing 3,000,000 shares of the Company’s
      Common Stock (the aggregate of all such certificates referred to herein as
      a
“Pledged Shares Certificate”).

     

    SECTION
      4. Representations
      and Warranties.
      Each
      Pledgor represents and warrants as follows: 

     

    
      	 	
              (a)

            	
              The
                Pledged Shares set forth opposite the Pledgor’s name in Schedule 1(a)
                attached hereto have been beneficially owned by such Pledgor for
                at least
                twelve months from the date hereof.

            

    

     

    
      	 	
              (b)

            	
              The
                Pledgor is the legal, record and beneficial owner of the Pledged
                Collateral represented opposite such Pledgor’s name in Schedule 1(a)
                attached hereto, free and clear of any lien, security interest,
                restriction, option or other charge or encumbrance (each a “Lien”, and
                collectively, "Liens") except for the security interest created by
                this
                Agreement. 

            

    

     

    
      	 	
              (c)

            	
              The
                Pledgor has made necessary inquiries of the Company and believes
                that the
                Company fully intends to fulfill and has the capability of fulfilling
                Obligations to be performed by the Company in accordance with the
                terms of
                the Transaction Documents.

            

    

     

    
      	
              ____________

              
                Initials

              

            	
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                Initials

              

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (d)

            	
              The
                Pledgor is not acting, and has not agreed to act, in any plan to
                sell or
                dispose of the Pledged Shares in a manner intended to circumvent
                the
                registration requirements of the Securities Act of 1933, as amended,
                or
                any applicable state law.

            

    

     

    
      	 	
              (e)

            	
              The
                Pledgor has been advised by counsel of the elements of a bona fide
                pledge
                for purposes of Rule 144(d)(3)(iv) under the Securities Act of 1933,
                as
                amended, including the relevant SEC interpretations and affirms the
                pledge
                of shares by such Pledgor pursuant to this Pledge Agreement will
                constitute a bona fide pledge of such shares for purposes of such
                Rule.

            

    

     

    
      	 	
              (f)

            	
              This
                Agreement constitutes a legal, valid and binding obligation of such
                Pledgor enforceable in accordance with its terms (except as the
                enforcement thereof may be limited by bankruptcy, insolvency, fraudulent
                conveyance, reorganization, moratorium, and similar laws, now or
                hereafter
                in effect).

            

    

     

    
      	 	
              (g)

            	
              The
                pledge of the Pledged Collateral pursuant to this Agreement creates
                a
                valid and perfected first priority security interest in the Pledged
                Collateral, securing payment and performance of the Obligations.
                

            

    

     

    
      	 	
              (h)

            	
              No
                consent of any other person or entity and no authorization, approval,
                or
                other action by, and no notice to or filing with, any governmental
                authority or regulatory body is required (i) for the pledge by the
                Pledgor
                of the Pledged Collateral pursuant to this Agreement or for the execution,
                delivery or performance of this Agreement by the Pledgor, (ii) for
                the
                perfection or maintenance of the security interest created hereby
                (including the first priority nature of such security interest),
                or (iii)
                for the exercise by the Pledgee of the voting or other rights provided
                for
                in this Agreement or the remedies in respect of the Pledged Collateral
                pursuant to this Agreement (except as may be required in connection
                with
                any disposition of any portion of the Pledged Collateral by laws
                affecting
                the offering and sale of securities generally).

            

    

     

    
      	 	
              (i)

            	
              There
                are no conditions precedent to the effectiveness of this Agreement
                that
                have not been satisfied or waived. 

            

    

     

    
      	 	
              (j)

            	
              The
                mailing address of the Pledgor is set forth in Section 17 of this
                Agreement and the Pledgor will not change its address except upon
                not less
                than thirty (30) days' prior written notice to the Pledgee.
                

            

    

     

    SECTION
      5. Further
      Assurances.
      Each
      Pledgor agrees that at any time and from time to time, at the expense of such
      Pledgor, such Pledgor shall promptly execute and deliver all further instruments
      and documents, and take all further action, that may be necessary or desirable,
      or that the Pledgee may reasonably request, in order to perfect and protect
      any
      security interest granted or purported to be granted hereby or to enable Pledgee
      to exercise and enforce its rights and remedies hereunder with respect to any
      Pledged Collateral. The Company and/or each Pledgor shall take all further
      action that may be necessary or desirable, or that the Pledgee may reasonably
      request to assist in the delivery to the Pledgee of any legal opinion(s)
      necessary for the Pledgee to sell or otherwise dispose of the Pledged Collateral
      upon an Event of Default (the “Legal Opinion Assistance”). In the event that any
      Pledgor and/or the Company fail to provide the Legal Opinion Assistance, the
      Pledgee shall have the right to seek legal remedy, including without limitation
      remedies of specific performance and/or monetary damages, from such Pledgor
      and/or the Company for the full amount of damages to the Pledgee resulting
      directly or indirectly from such failure to provide the Legal Opinion
      Assistance, including without limitation any damages to the Pledgee resulting
      from the inability of the Pledgee to sell, dispose of, or transfer the Pledged
      Collateral due to the failure of the Company and/or such Pledgor to provide
      the
      Legal Opinion Assistance.

    
       

      
        	
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                  Initials

                

              	
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                  Initials

                

              

      

       

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    SECTION
      6. Voting
      Rights; Dividends; Etc. 

     

    
      	 	
              (a)

            	
              So
                long as: (i) no Event of Default shall have occurred and been declared
                and
                (ii) the balance of the Debenture shall not have been
                accelerated:

            

    

     

    
      	 	
              (i)

            	
              Each
                Pledgor shall be entitled to exercise or refrain from exercising
                any and
                all voting and other consensual rights pertaining to the Pledged
                Collateral or any part thereof for any purpose not inconsistent with
                the
                terms of this Agreement; 

            

    

     

    
      	 	
              (ii)

            	
              Each
                Pledgor shall be entitled to receive and retain any and all cash
                dividends
                and interest paid in respect of the Pledged Collateral; provided,
                however,
                that any and all: 

            

    

     

    
      	 	
              (A)

            	
              dividends
                and interest paid or payable other than in cash in respect of, and
                instruments and other property received, receivable or otherwise
                distributed in respect of, or in exchange for, any Pledged Collateral,
                

            

    

     

    
      	 	
              (B)

            	
              dividends
                and other distributions paid or payable in cash in respect of any
                Pledged
                Collateral in connection with a partial or total liquidation or
                dissolution or in connection with a reduction of capital, capital
                surplus
                or paid-in-surplus, and 

            

    

     

    
      	 	
              (C)

            	
              cash
                paid, payable or otherwise distributed in respect of principal of,
                or in
                redemption of, or in exchange for, any Pledged Collateral,
                

            

    

     

    shall
      be,
      and shall be forthwith delivered to the Pledgee to hold as Pledged Collateral,
      and shall, if received by any Pledgor, be segregated from the other property
      or
      funds of such Pledgor, and be forthwith delivered to the Pledgee as Pledged
      Collateral in the same form as so received (with any necessary endorsement
      or
      assignment). 

     

    
      	 	
              (b)

            	
              After
                the occurrence of any Event of Default if within twenty four hours
                of
                delivery of written notice of such Event of Default (as hereinafter
                defined) from the Pledgee the Company has not paid all outstanding
                principal and accrued an unpaid interest and fees (including penalties)
                owed on the Debenture and any liquidated damages associated with
                such
                Event of Default, until the Debenture shall have been satisfied by
                conversion or payment in full: 

            

    

    
       

      
        	
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                  Initials

                

              	
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                  Initials

                

              

      

       

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (i)

            	
              All
                rights of any and all Pledgors to exercise or refrain from exercising
                the
                voting and other consensual rights which it would otherwise be entitled
                to
                exercise pursuant to Section 6(a)(i) and to receive the dividends
                and
                interest payments which it would otherwise be authorized to receive
                and
                retain pursuant to Section 6(a)(ii) shall cease, and all such rights
                shall
                thereupon become vested in the Pledgee holding the applicable Pledged
                Collateral who shall thereupon have the sole right to exercise or
                refrain
                from exercising such voting and other consensual rights and to receive
                and
                hold as Pledged Collateral such dividends and interest payments.
                

            

    

     

    
      	 	
              (ii)

            	
              All
                dividends and interest payments which are received by any Pledgor
                contrary
                to the provisions of paragraph (i) of this Section 6(b) shall be
                segregated from other funds of such Pledgor and shall be forthwith
                paid
                over to the Pledgee as Pledged Collateral in the same form as so
                received
                (with any necessary endorsement). 

            

    

     

    SECTION
      7. Transfers
      and Other Liens; Additional Shares.
      Each
      Pledgor agrees that it shall not (i) sell, assign (by operation of law or
      otherwise) or otherwise dispose of, or grant any option with respect to, any
      of
      the Pledged Collateral, or (ii) create or permit to exist any Lien upon or
      with
      respect to any of the Pledged Collateral, except for the security interest
      granted pursuant to this Agreement. 

     

    SECTION
      8.   Pledgee
      Appointed Attorney-in-Fact.
      Each
      Pledgor hereby appoints the Pledgee as such Pledgor's attorney-in-fact, with
      full authority in the place and stead of such Pledgor and in the name of such
      Pledgor or otherwise, from time to time in Pledgee's discretion to take any
      action and to execute any instrument which Pledgee may deem necessary or
      desirable to accomplish the purposes of this Agreement, including, without
      limitation, to receive, endorse and collect all instruments made payable to
      such
      Pledgor representing any dividend, interest payment or other distribution in
      respect of the Pledged Collateral or any part thereof and to give full discharge
      for the same. 

     

    SECTION
      9. Pledgee
      May Perform.
      If any
      Pledgor fails to perform any agreement contained herein, Pledgee may itself
      perform, or cause performance of, such agreement, and the expenses of Pledgee
      incurred in connection therewith shall be payable jointly and severally by
      the
      Pledgors to Pledgee along with any other amounts due to be paid by any Pledgor
      to Pledgee hereunder. 

     

    SECTION
      10. The
      Pledgee's Duties.
      Except
      for the safe custody of any Pledged Collateral in its possession and the
      accounting for moneys actually received by it hereunder, Pledgee shall not
      have
      any duty as to any Pledged Collateral, as to ascertaining or taking action
      with
      respect to calls, conversions, exchanges, maturities, tenders or other matters
      relative to any Pledged Collateral, whether or not such party has or is to
      have
      knowledge of such matters, or as to the taking of any necessary steps to
      preserve rights against any parties or any other rights pertaining to any
      Pledged Collateral. Pledgee shall be deemed to have exercised reasonable care
      in
      the custody and preservation of any Pledged Collateral in its possession if
      such
      Pledged Collateral is accorded treatment substantially equal to that which
      such
      party accords its own property. 

    
       

      
        	
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                  Initials

                

              	
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                  Initials

                

              

      

       

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    SECTION
      11. Event
      of Default.
      The
      occurrence of any of the following events, which events occur prior to the
      date
      the Company pays or converts upon the request of the Pledgee all amounts due
      on
      the Debenture in connection with the Cash Advance, including any liquidated
      damages that may become due, shall constitute an event of default under this
      Agreement (each, an "Event of Default"): 

     

    
      	 	
              (a)

            	
              the
                Company’s breach of a material covenant under this Agreement or the
                occurrence of an Event of Default under the
                Debenture;

            

    

     

    
      	 	
              (b)

            	
              if
                any representation or warranty of any Pledgor set forth in this Agreement
                shall be breached or shall be untrue or incorrect in any material
                respect
                or any Pledgor shall otherwise breach any term of this Agreement;
                or

            

    

     

    
      	 	
              (c)

            	
              the
                filing of any financing statement with regard to any of the Pledged
                Collateral other than pursuant to this Agreement, or the attachment
                of any
                additional Lien to any portion of the Pledged Collateral in favor
                of any
                Person other than the Pledgee.

            

    

     

    SECTION
      12. Cross-Default;
      Cross-Collateralization.
      Each
      Pledgor and the Company each acknowledge and agree that any default under the
      terms of this Agreement shall constitute a default by the Company under the
      Debenture. The security interests, liens and other rights and interests in
      and
      relative to any of the personal property of any Pledgor now or hereafter granted
      to the Pledgee by any Pledgor pursuant to any agreement, document or instrument,
      including, but not limited to, this Agreement, the Purchase Agreement or the
      Debenture, shall serve as security for any and all of the Obligations, and,
      for
      the repayment thereof, Pledgee may resort to any such collateral in such order
      and manner as Pledgee may elect. 

     

    SECTION
      13. Remedies
      upon Event of Default.
      After
      the occurrence of any Event of Default if within twenty four hours of receiving
      written notice of such Event of Default from the Pledgee the Company has not
      paid all outstanding principal and accrued and unpaid interest and all other
      amounts owed on the Debenture to the extent of the Cash Advance:

     

    
      	
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                Initials

              

            	
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                Initials

              

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (a)

            	
              Pledgee
                may exercise in respect of the Pledged Collateral held by it, in
                addition
                to other rights and remedies provided for herein or otherwise available
                to
                the Pledgee (including, without limitation, the vesting in the Pledgee
                pursuant to Section 6(b)(i) of the sole right to exercise voting
                rights
                pertaining to the Pledged Collateral, including, without limitation,
                voting rights with respect to the sale of assets of the Company),
                all the
                rights and remedies of a secured party on default under the Uniform
                Commercial Code in effect in the State of California at that time
                (the
                "UCC") (whether or not the UCC applies to the affected Collateral),
                and
                may also, without notice except as specified below, to the extent
                required
                to pay all amounts due on the Debenture associated with such Event
                of
                Default (provided however that such amounts shall not exceed the
                Cash
                Advance), including without limitation principal, accrued but unpaid
                interest, liquidated damages, if any, that are due under the Debenture
                and
                fees, sell, in a commercially reasonable sale, the Pledged Collateral
                or
                any part thereof in one or more parcels at a public sale, provided
                that
                the Pledged Collateral is then trading on a Trading Market (as defined
                in
                the Debenture), or at a private sale, if the Pledged Collateral is
                no
                longer trading on a Trading Market, for cash, on credit or for future
                delivery, and upon such other terms as the Pledgee may deem commercially
                reasonable. The application of the proceeds realized upon the sale
                of the
                Pledged Collateral may, in the sole discretion of the Pledgee, be
                applied
                to all or any portion of the amounts due on the Debenture associated
                with
                such Event of Default, in any order specified by the Pledgee, including
                without limitation the application of the proceeds realized upon
                the sale
                of the Pledged Collateral first to the liquidated damages, if any,
                owed in
                connection with the Debenture, and then to all other amounts due
                on the
                Debenture associated with such Event of Default, including without
                limitation principal, accrued and unpaid interest thereon and any
                other
                fees due under the Debenture, provided however, that such proceeds
                may
                only be applied to the satisfaction of the Cash Advance that is then
                outstanding under the Debenture, if any. Each Pledgor agrees that,
                to the
                extent notice of sale shall be required by law, at least three (3)
                days'
                notice to such Pledgor of the time and place of any public sale or
                the
                time after which any private sale is to be made shall constitute
                reasonable notification. Pledgee shall not be obligated to make any
                sale
                of Pledged Collateral regardless of notice of sale having been given.
                The
                Pledgee may adjourn any public or private sale from time to time
                without
                notice. Each Pledgor acknowledges and agrees that the Pledged Collateral
                consisting of the Pledged Shares, and/or any other shares of common
                stock
                of the Company, is of a type customarily sold on a recognized market,
                and
                accordingly that no notice of the sale thereof need be given.
                

            

    

     

    
      	 	
              (b)

            	
              Any
                cash held by Pledgee as Pledged Collateral and all cash proceeds
                received
                by Pledgee in respect of any sale of, collection from, or other
                realization upon all or any part of the Pledged Collateral may, in
                the
                discretion of Pledgee, be held as collateral for, and/or then or
                at any
                time thereafter be applied (after payment of any amounts payable
                pursuant
                to Section 14) in whole or in part against all or any part of the
                Obligations. Any surplus of such cash or cash proceeds held by Pledgee
                and
                remaining after payment in full of all the Obligations shall be paid
                over
                to the Pledgors or to whomsoever may be lawfully entitled to receive
                such
                surplus. 

            

    

     

    SECTION
      14. Fees.
      In the
      event an action is brought by Pledgee to enforce this Agreement, Pledgee shall
      be entitled to recover its reasonable attorneys’ fees and costs from the
      Pledgors on a joint and several basis for such action. 

    
       

      
        	
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                  Initials

                

              	
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                  Initials

                

              

      

       

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    SECTION
      15. Continuing
      Security Interest; Termination.
      This
      Agreement shall create a continuing security interest in the Pledged Collateral
      and shall remain in full force and effect until the indefeasible payment in
      full
      of the Obligations. Upon the indefeasible payment in full of the Obligations,
      the security interest granted hereby shall terminate and all rights to the
      Pledged Collateral shall revert to the Pledgors and all certificates
      representing the Pledged Collateral shall be re-issued in the name of the
      respective Pledgors, such Pledgor’s successors or assigns to the extent such
      certificates are not already in such names. Upon any such termination, the
      Pledgee shall immediately but no later than three Business Days after such
      termination, at the Company’s expense, return to the Company such of the Pledged
      Collateral as shall not have been sold or otherwise applied pursuant to the
      terms hereof and execute and deliver to the Company such documents as the
      Pledgors shall reasonably request to evidence such termination. Notwithstanding
      the foregoing, within ten days of the Cash Advance being repaid to the Pledgee
      or converted in full by the Pledgee, either due to repayment by the Company
      or
      conversion of the Cash Advance into the Company’s Common Stock at the request of
      the Pledgee under the terms of the Debenture, the Pledgee shall return to the
      Company the Pledged Shares Certificate. 

     

    SECTION
      16. Governing
      Law; Terms.
      This
      Agreement shall be governed by, and construed in accordance with, the laws
      of
      the State of California, without regard to principles of conflict of laws.
      Each
      Pledgor agrees to submit itself to the in personam jurisdiction of the state
      and
      federal courts situated within San Diego County, California with regard to
      any
      controversy arising out of or relating to this Agreement. Unless otherwise
      defined herein or in the Purchase Agreement, terms defined in Article 9 of
      the
      UCC are used herein as therein defined.

     

    SECTION
      17. Notice.
      All
      notices and other communications hereunder shall be in writing and shall be
      deemed to have been received when delivered personally (which shall include,
      without limitation, via express overnight courier) or if mailed, three (3)
      Business Days after having been mailed by registered or certified mail, return
      receipt requested, postage prepaid, to the addresses of the parties as set
      forth
      in the Purchase Agreement, and if to the Pledgor, to the following address:
      

    
      
        	 	 
	 	
                The
                  S.Z. Management Corporation

                Joseph
                  Shefet, Liechtenste instrasse 3/15

                Vienna
                  A-1090 Austria

                Facsimile:
                  +43-19422926

                

                Lavi
                  Krasny

                8
                  Pamoni, Tel Aviv

                Israel

                Facsimile:
                  +972-3-6130443

                

                EGFE
                  LTD West Indies

                7
                  Zabutinski, Ramat Gan

                Israel

                Facsimile:
                  +973-3-6120616

                

                Amir
                  Uziel

                9
                  Hakormin, Rishon LeZion

                Israel

                Facsimile:
                  +973-3-6120616

                

                 

                Dov
                  Reznik

                25/13
                  Zabutinski, Netania

                Israel

                Facsimile:
                  +972-3-6116201

                

                Yoram
                  Drucker

                31
                  Dov Sadan, Jeruzalem

                Israel

                Facsimile:
                  +972-2-5853275

              
	 	 

      

    

    or
      if by
      facsimile, (i) the date of transmission, if such notice or communication is
      delivered via facsimile at the facsimile number specified below prior to 5:30
      p.m. (Pacific Time), or (ii) the date immediately following the date of
      transmission, if such notice or communication is delivered via facsimile between
      5:30 p.m. (Pacific Time) on any date and earlier than 11:59 p.m. (Pacific Time)
      on any such date the date immediately following the date of
      transmission.

     

    SECTION
      18. Waivers.
      

     

    
      	 	
              (a)

            	
              Waivers.
                Each Pledgor waives any right to require the Pledgee to (i) proceed
                against any person, (ii) proceed against any other collateral under
                any
                other agreement, (iii) pursue any other remedy, or (iv) make presentment,
                demand, dishonor, notice of dishonor, acceleration and/or notice
                of
                non-payment. 

            

    

     

    
      	 	
              (b)

            	
              Waiver
                of Defense.
                No course of dealing between any Pledgor and the Pledgee, nor any
                failure
                to exercise nor any delay in exercising on the part of Pledgee, any
                right,
                power, or privilege under this Agreement or under any of the other
                Transaction Documents shall operate as a waiver. No single or partial
                exercise of any right, power, or privilege under this Agreement or
                under
                any of the other Transaction Documents shall preclude any other or
                further
                exercise of such right, power, or privilege or the exercise of any
                other
                right, power, or privilege.

            

    

     

    
      	
              ____________

              
                Initials

              

            	
              ____________

              
                Initials

              

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    SECTION
      19. Rights
      Are Cumulative.
      All
      rights and remedies of the Pledgee with respect to the Pledged Collateral,
      whether established by this Agreement, the other Transaction Documents or by
      law, shall be cumulative and may be exercised concurrently or in any
      order.

     

    SECTION
      20. Indemnity.
      Each
      Pledgor agrees jointly and severally:

     

    
      	 	
              (a)

            	
              to
                indemnify and hold harmless the Pledgee and its respective, employees,
                consultants, officers, directors, shareholder, partners, attorneys,
                successors and assigns against and from all liabilities, losses,
                and costs
                (including, without limitation, reasonable attorneys' fees) arising
                out of
                or relating to the taking or the failure to take action in respect
                of any
                transaction effected under this Agreement or in connection with the
                lien
                provided for herein, including, without limitation, any and all excise,
                sales or other taxes which may be payable or determined to be payable
                with
                respect to any of the Pledged Collateral.

            

    

     

    
      	 	
              (b)

            	
              to
                pay and reimburse the Pledgee upon demand for all reasonable costs
                and
                expenses (including, without limitation, reasonable attorneys' fees
                and
                expenses) that the Pledgee may incur in connection with (i) the custody,
                use or preservation of, or the sale of, collection from or other
                realization upon, any of the Pledged Collateral, including the reasonable
                expenses of re-taking, holding, preparing for sale or lease, selling
                or
                otherwise disposing of or realizing on the Pledged Collateral, (ii)
                the
                exercise or enforcement of any rights or remedies granted hereunder,
                under
                the Debenture or otherwise available to it (whether at law, in equity
                or
                otherwise), or (iii) the failure by any Pledgor to perform or observe
                any
                of the provisions hereof. 

            

    

     

    The
      liabilities of each of the Pledgors under this Section 20 shall survive the
      termination of this Agreement. 

     

    SECTION
      21. Severability.
      The
      provisions of this Agreement are severable. If any provision of this Agreement
      is held invalid or unenforceable in whole or in part in any jurisdiction, then
      such invalidity or unenforceability shall affect only such provision, or part
      thereof, in such jurisdiction, and shall not in any manner affect such provision
      or part thereof in any other jurisdiction, or any other provision of this
      Agreement in any jurisdiction. 

     

    SECTION
      22.  Counterparts.
      This
      Agreement may be executed in several counterparts, each of which shall be
      considered an original, but all of which together shall constitute one and
      the
      same instrument and shall
      become effective when counterparts have been signed by each party and delivered
      to the other party, it being understood that both parties need not sign the
      same
      counterpart.
      In
      the
      event that any signature is delivered by facsimile transmission or by e-mail
      delivery of a “.pdf” format data file, such signature shall create a valid and
      binding obligation of the party executing (or on whose behalf such signature
      is
      executed) with the same force and effect as if such facsimile signature page
      were an original thereof.

    
       

      
        	
                ____________

                
                  Initials

                

              	
                ____________

                
                  Initials

                

              

      

       

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    SECTION
      23. Amendments;
      Entire Agreement.
      This
      Agreement is subject to modification only by a writing signed by the parties.
      To
      the extent that any provision of this Agreement conflicts with any provision
      of
      the Purchase Agreement or the Debenture, the provision giving the Pledgee
      greater rights or remedies shall govern, it being understood that the purpose
      of
      this Agreement is to add to, and not detract from, the rights granted to the
      Pledgee under the Purchase Agreement and the Debenture. This Agreement, the
      Purchase Agreement, the Debenture and the other Transaction Documents constitute
      the entire agreement of the parties with respect to the subject matter of this
      Agreement. 

     

    [REMAINDER
      OF PAGE INTENTIONALLY LEFT BLANK]

    
       

      
        	
                ____________

                
                  Initials

                

              	
                ____________

                
                  Initials

                

              

      

       

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    SECTION
      24. Successors
      and Assigns.
      This
      Agreement shall be binding upon and inure to the benefit of the parties hereto
      and their respective heirs, executors, legal representatives, successors and
      assigns; provided, however, that no Pledgor may, without the prior written
      consent of the Pledgee, assign or delegate any rights, powers, duties or
      obligations hereunder, and any such purported assignment or delegation without
      such consent shall be null and void. Pledgee may assign or delegate any rights,
      powers, duties or obligations hereunder without the consent of any of the
      Pledgors.

     

    IN
      WITNESS WHEREOF, the parties hereto have duly executed and delivered this
      Agreement as of the date first above written.

     

    
      	
              PLEDGOR:

            
	

              The
                S.Z. Management Corporation

              

              By:
                ______________________

              Name:
                ____________________

              Its:
                _______________________

              

              

              

              __________________________

              Lavi
                Krasny

              

              EGFE
                LTD West Indies

              

              By:
                ______________________

              Name:
                ____________________

              Its:
                _______________________

              

              

              __________________________

              Amir
                Uziel

              

              

              __________________________

              Dov
                Reznik

              

              

              __________________________

              Yoram
                Drucker

            
	 
	 
	
              PLEDGEE:

            
	 
	
              Golden
                Gate Investors, Inc.

            
	 	 
	
              By:
                

            	 
	Name:
              Travis W. Huff
	Title:
              Vice President and Portfolio Manager

    

     

    ACKNOWLEDGED
      AND AGREED:

     

    
      	
              TraceGuard
                Technologies, Inc.

            	 
	 	 	 
	
              By:

            	
               

            	 
	 	Name:	 
	 	
              Title:

            	 

    

    
       

      
        	
                ____________

                
                  Initials

                

              	
                ____________

                
                  Initials

                

              

      

       

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    SCHEDULE
      1(a)

     

    Pledged
      Shares 

     

    3,000,000
      shares of Common Stock of TraceGuard Technologies, Inc. in the aggregate,
      certificated as follows: 

     

    
      
        

      

    

                                  

    
      
        
          	Pledgor 	 	Number
                  of
                  Shares 	 	Certificate
                  No.
	 	 	 	 	 
	
                  The
                    S.Z. Management Corporation

                	 	
                  850,000

                	 	
                  0350

                
	
                  The
                    S.Z. Management Corporation

                	 	
                  170,000

                	 	
                  0246

                
	
                  Lavi
                    Krasny

                	 	
                  250,000

                	 	
                  0423

                
	
                  Lavi
                    Krasny

                	 	
                  100,000

                	 	
                  0252

                
	
                  EGFE
                    LTD West Indies

                	 	
                  428,571

                	 	
                  0534

                
	
                  Amir
                    Uziel

                	 	
                  158,335

                	 	
                  0984

                
	
                  Amir
                    Uziel

                	 	
                  250,000

                	 	
                  0422

                
	
                  Dov
                    Reznik

                	 	
                  44,506*

                	 	
                  0651

                
	
                  Yoram
                    Drucker

                	 	
                  7,500

                	 	
                  0616

                
	
                  Yoram
                    Drucker

                	 	
                  7,500

                	 	
                  0617

                
	
                  Yoram
                    Drucker

                	 	
                  7,500

                	 	
                  0618

                
	
                  Yoram
                    Drucker

                	 	
                  7,500

                	 	
                  0619

                
	
                  Yoram
                    Drucker

                	 	
                  500,000

                	 	
                  0309

                
	
                  Yoram
                    Drucker

                	 	
                  250,000

                	 	
                  0424

                

        

        

        *31,412
          of these shares shall not be Pledged Shares

        
 

      

      
        	
                ____________

                
                  Initials

                

              	
                ____________

                
                  Initials

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00141-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00141-of-00352.parquet"}]]