Exhibit 4.8
THIS NOTE AND THE COMMON SHARES ISSUABLE UPON CONVERSION OF THIS NOTE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES LAWS. THIS NOTE AND THE COMMON SHARES ISSUABLE UPON CONVERSION OF
THIS NOTE MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THIS NOTE UNDER SAID ACT
AND ANY APPLICABLE STATES SECURITIES LAWS OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO GLOBAL PAYMENT TECHNOLOGIES, INC. THAT SUCH REGISTRATION IS NOT
REQUIRED.
SECURED REVOLVING NOTE
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FOR VALUE RECEIVED, GLOBAL PAYMENT TECHNOLOGIES, INC. a Delaware
corporation (the "BORROWER") promises to pay to LAURUS MASTER FUND, LTD., c/o
Ironshore Corporate Services Ltd., P.O. Box 1234 G.T., Queensgate House, South
Church Street, Grand Cayman, Cayman Islands, Fax: 000-000-0000 (the "HOLDER") or
its registered assigns, on order, the sum of One Million Seven Hundred Fifty
Thousand Dollars ($1,750,000 ) without duplication of any amounts owing by
Borrower to Holder under the Minimum Borrowing Notes (as defined in the Security
Agreement referred to below), or, if different, the aggregate principal amount
of all "Loans" (as such term is defined in the Security Agreement referred to
below), together with any accrued and unpaid interest hereon, on March __, 2007
(the "MATURITY DATE").
Capitalized terms used herein without definition shall have the
meanings ascribed to such terms in the Security Agreement between Borrower and
the Holder dated as of March __, 2004 (as amended, modified and supplemented
from time to time, the "SECURITY AGREEMENT").
The following terms shall apply to this Note:
ARTICLE I
INTEREST & PREPAYMENTS
1.1. Interest Rate. Subject to Sections 4.3 and 5.7 hereof, interest
payable on this Note shall accrue at a rate per annum equal to the "prime rate"
published in The Wall Street Journal from time to time, plus one and one half
percent (1.50%) (the "CONTRACT RATE"). The Prime Rate shall be increased or
decreased as the case may be for each increase or decrease in the Prime Rate in
an amount equal to such increase or decrease in the Prime Rate; each change to
be effective as of the day of the change in such rate in accordance with the
terms of the Security Agreement. The Contract Rate shall not be less than six
percent (6.0%).
1.2. Interest Rate Adjustments and Payments. Interest shall be payable
monthly in arrears commencing on April 1, 2004 and on the first day of each
consecutive calendar month thereafter, (each, an "INTEREST PAYMENT DATE").
1.3 Allocation of Principal to Serial Minimum Borrowing Notes. In the
event that the amount due and payable hereunder should equal or exceed
$1,000,000, to the extent that the outstanding balance on Minimum Borrowing Note
shall be less than $750,000 (the difference of $750,000 less the actual balance
of the Minimum Borrowing Note, the "Available Minimum Borrowing"), such portion
of the balance hereof as shall equal the Available Minimum Borrowing shall be
deemed to be simultaneously extinguished on the Revolving Note and transferred
to, and evidenced by, a new Minimum Borrowing Note (e.g., the Available Minimum
Borrowing shall be $0) provided, however, that no more than two (2) Minimum
Borrowing Notes in the aggregate shall be issuable hereunder without the consent
of the Borrower.
ARTICLE II
HOLDER'S CONVERSION RIGHTS
2.1. Optional Conversion. Subject to the terms of this Article II, the
Holder shall have the right, but not the obligation, at any time until the
Maturity Date, or thereafter during an Event of Default (as defined in Article
IV), and, subject to the limitations set forth in Section 2.2 hereof, to convert
all or any portion of the outstanding Principal Amount and/or accrued interest
and fees due and payable into fully paid and nonassessable restricted shares of
the Common Stock at the Fixed Conversion Price (defined below). For purposes
hereof, subject to Section 3.5 hereof, the "FIXED CONVERSION PRICE" means $
_____ ((105%) of the average of the closing price of the Common Stock for the
ten (10) trading days immediately prior to the date hereof.) The shares of
Common Stock to be issued upon such conversion are herein referred to as the
"CONVERSION SHARES."
2.2. Conversion Limitation. Notwithstanding anything contained herein
to the contrary, the Holder shall not be entitled to convert pursuant to the
terms of this Note an amount that would be convertible into that number of
Conversion Shares which would exceed the difference between the number of shares
of Common Stock beneficially owned by such Holder or issuable upon exercise of
warrants held by such Holder and 4.99% of the outstanding shares of Common Stock
of the Borrower. For the purposes of the immediately preceding sentence,
beneficial ownership shall be determined in accordance with Section 13(d) of the
Exchange Act and Regulation 13d-3 thereunder. The Conversion Shares limitation
described in this Section 2.2 shall automatically become null and void without
any notice to Borrower upon the occurrence and during the continuance beyond any
applicable grace period of an Event of Default, or upon 75 days prior notice to
the Borrower.
2.3. Mechanics of Xxxxxx's Conversion. In the event that the Holder
elects to convert this Note into Common Stock, the Holder shall give notice of
such election by delivering an executed and completed notice of conversion
("NOTICE OF CONVERSION") to the Borrower and such Notice of Conversion shall
provide a breakdown in reasonable detail of the Principal Amount, accrued
interest and fees that are being converted. On each Conversion Date (as
hereinafter defined) and in accordance with its Notice of Conversion, the Holder
shall make the appropriate reduction to the Principal Amount, accrued interest
and fees as entered in its records and shall provide written notice thereof to
the Borrower within two (2) business days after the
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Conversion Date. Each date on which a Notice of Conversion is delivered or
telecopied to the Borrower in accordance with the provisions hereof shall be
deemed a Conversion Date (the "CONVERSION DATE"). A form of Notice of Conversion
to be employed by the Holder is annexed hereto as Exhibit A. Pursuant to the
terms of the Notice of Conversion, the Borrower will issue instructions to the
transfer agent accompanied by an opinion of counsel within one (1) business day
of the date of the delivery to Borrower of the Notice of Conversion and shall
cause the transfer agent to transmit the certificates representing the
Conversion Shares to the Holder upon resale of such Conversion Shares by the
Holder by crediting the account of the Holder's designated broker with the
Depository Trust Corporation ("DTC") through its Deposit Withdrawal Agent
Commission ("DWAC") system within three (3) business days (plus any available
extension) after receipt by the Borrower of the Notice of Conversion (the
"DELIVERY DATE"). In the case of the exercise of the conversion rights set forth
herein the conversion privilege shall be deemed to have been exercised and the
Conversion Shares issuable upon such conversion shall be deemed to have been
issued upon the date of receipt by the Borrower of the Notice of Conversion. The
Holder shall be treated for all purposes as the record holder of such Common
Stock, unless the Holder provides the Borrower written instructions to the
contrary.
2.4. Late Payments. The Borrower understands that a delay in the
delivery of the shares of Common Stock in the form required pursuant to this
Article beyond the Delivery Date could result in economic loss to the Holder. As
compensation to the Holder for such loss, the Borrower agrees to pay late
payments to the Holder for late issuance of such shares in the form required
pursuant to this Article III upon conversion of the Note, in the amount equal to
$500 per business day after the Delivery Date. The Borrower shall pay any
payments incurred under this Section in immediately available funds upon demand.
2.5. Adjustment Provisions. The Fixed Conversion Price and number and
kind of shares or other securities to be issued upon conversion determined
pursuant to Section 2.1 shall be subject to adjustment from time to time upon
the happening of certain events while this conversion right remains outstanding,
as follows:
A. Reclassification. If the Borrower at any time shall, by
reclassification or otherwise, change the Common Stock into the same or a
different number of securities of any class or classes, this Note, as to the
unpaid Principal Amount and accrued interest thereon, shall thereafter be deemed
to evidence the right to purchase an adjusted number of such securities and kind
of securities as would have been issuable as the result of such change with
respect to the Common Stock immediately prior to such reclassification or other
change.
B. Stock Splits, Combinations and Dividends. If the shares of
Common Stock are subdivided or combined into a greater or smaller number of
shares of Common Stock, or if a dividend is paid on the Common Stock in shares
of Common Stock, the Fixed Conversion Price shall be proportionately reduced in
case of subdivision of shares or stock dividend or proportionately increased in
the case of combination of shares, in each such case by the ratio which the
total number of shares of Common Stock outstanding immediately after such event
bears to the total number of shares of Common Stock outstanding immediately
prior to such event.
C. Share Issuances. Subject to the provisions of this Section
3.5, if the Borrower shall at any time prior to the conversion or repayment in
full of the Principal
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Amount issue any shares of Common Stock or securities convertible into Common
Stock to a person other than the Holder (except (i) pursuant to Subsections A or
B above; (ii) pursuant to options, warrants, or other obligations to issue
shares outstanding on the date hereof as disclosed to Holder in writing; or
(iii) pursuant to options that may be issued under any employee incentive stock
option and/or any qualified stock option plan adopted by the Borrower) for a
consideration per share (the "OFFER PRICE") less than the Fixed Conversion Price
in effect at the time of such issuance, then the Fixed Conversion Price shall be
immediately reset to such lower Offer Price pursuant to the formula below. For
purposes hereof, the issuance of any security of the Borrower convertible into
or exercisable or exchangeable for Common Stock shall result in an adjustment to
the Fixed Conversion Price at the time of issuance of such securities.
If the Corporation issues any additional shares pursuant to
Section 3.4 above then, and thereafter successively upon each such issue, the
Fixed Conversion Price shall be adjusted by multiplying the then applicable
Fixed Conversion Price by the following fraction:
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A + B
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(A + B) + [((C - D) x B) / C]
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A = Actual shares outstanding prior to such offering
B = Actual shares sold in the offering
C = Fixed Conversion Price
D = Offering price
C.
D. Computation of Consideration. For purposes of any computation
respecting consideration received pursuant to Subsection C above, the following
shall apply:
(a) in the case of the issuance of shares of Common Stock for
cash, the consideration shall be the amount of such cash, provided that in no
case shall any deduction be made for any commissions, discounts or other
expenses incurred by the Borrower for any underwriting of the issue or otherwise
in connection therewith;
(b) in the case of the issuance of shares of Common Stock for
a consideration in whole or in part other than cash, the consideration other
than cash shall be deemed to be the fair market value thereof as determined in
good faith by the Board of Directors of the Borrower (irrespective of the
accounting treatment thereof); and
(c) Upon any such exercise, the aggregate consideration
received for such securities shall be deemed to be the consideration received by
the Borrower for the issuance of such securities plus the additional minimum
consideration, if any, to be received
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by the Borrower upon the conversion or exchange thereof (the consideration in
each case to be determined in the same manner as provided in clauses (a) and (b)
of this Subsection (D)).
2.6. Reservation of Shares. During the period the conversion right
exists, the Borrower will reserve from its authorized and unissued Common Stock
a sufficient number of shares to provide for the issuance of Common Stock upon
the full conversion of this Note. The Borrower represents that upon issuance,
such shares will be duly and validly issued, fully paid and non-assessable. The
Borrower agrees that its issuance of this Note shall constitute full authority
to its officers, agents, and transfer agents who are charged with the duty of
executing and issuing stock certificates to execute and issue the necessary
certificates for shares of Common Stock upon the conversion of this Note.
ARTICLE III
EVENTS OF DEFAULT
The occurrence of any of the following events is an Event of Default
("EVENT OF DEFAULT"):
3.1. Failure to Pay Principal, Interest or other Fees. The Borrower
fails to pay when due any installment of principal, interest or other fees
hereon or on any other Note issued pursuant to the Security Agreement, when due
in accordance with the terms of such Note, and such failure shall continue for a
period of three (3) business days after the due date.
3.2. Breach of Covenant. The Borrower breaches any covenant or other
term or condition of this Note in any material respect and such breach, if
subject to cure, continues for a period of thirty (30) days after the occurrence
thereof.
3.3. Breach of Representations and Warranties. Any material
representation or warranty of the Borrower made herein, or the Security
Agreement, or in any Ancillary Agreement shall be materially false or misleading
and shall not be cured for a period of ten (10) days after the occurrence
thereof.
3.4. Stop Trade. An SEC stop trade order or Principal Market trading
suspension of the Common Stock shall be in effect for 5 consecutive days or 5
days during a period of 10 consecutive days, excluding in all cases a suspension
of all trading on a Principal Market, provided that the Borrower shall not have
been able to cure such trading suspension within 30 days of the notice thereof
or list the Common Stock on another Principal Market within 60 days of such
notice. The "Principal Market" for the Common Stock shall include the NASD OTC
Bulletin Board, NASDAQ SmallCap Market, NASDAQ National Market System, American
Stock Exchange, or New York Stock Exchange (whichever of the foregoing is at the
time the principal trading exchange or market for the Common Stock), or any
securities exchange or other securities market on which the Common Stock is then
being listed or traded.
3.5. Default Under Related Agreement. The occurrence and continuance
of an Event of Default under and as defined in the Security Agreement.
3.6 Failure to Deliver Common Stock or Replacement Note. The
Borrower's failure to timely deliver Common Stock to the Holder pursuant to and
in the form required by
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this Note, and Section 9 of the Purchase Agreement, if such failure to timely
deliver Common Stock shall not be cured within two (2) days. If Borrower is
required to issue a replacement Note to Holder and Borrower shall fail to
deliver such replacement Note within seven (7) Business Days.
3.7 Payment Grace Period. The Borrower shall have a three (3) business
day grace period to pay any monetary amounts due under this Note or the Security
Agreement or any Ancillary Agreement.
ARTICLE IV
DEFAULT PAYMENTS
4.1. Default Payment. If an Event of Default occurs and is continuing
beyond any applicable grace period, the Holder, at its option, may elect, in
addition to all rights and remedies of Holder under the Security Agreement and
all obligations of Borrower under the Security Agreement, to require the
Borrower to make a Default Payment ("DEFAULT PAYMENT"). The Default Payment
shall be 115% of the outstanding principal amount of the Note, plus accrued but
unpaid interest, all other fees then remaining unpaid, and all other amounts
payable hereunder. The Default Payment shall be applied first to any fees due
and payable to Holder pursuant to the Notes or the Ancillary Agreements, then to
accrued and unpaid interest due on the Notes and then to outstanding principal
balance of the Notes.
4.2. Default Payment Date and Default Notice Period. The Default
Payment shall be due and payable on the fifth business day after an Event of
Default as defined in Article III ("DEFAULT PAYMENT DATE") has occurred and is
continuing beyond any applicable grace period. The period between date upon
which of an Event of Default has occurred and is continuing beyond any
applicable grace period and the Default Payment Date shall be the "DEFAULT
PERIOD." If during the Default Period, the Borrower cures the Event of Default,
the Event of Default will no longer exist and any additional rights the Holder
had triggered by the occurrence and continuance of an Event of Default will no
longer exist. If the Event of Default is not cured during the Default Notice
Period, all amounts payable hereunder shall be due and payable on the Default
Payment Date, all without further demand, presentment or notice, or grace
period, all of which hereby are expressly waived.
4.3. Default Interest Rate. Following the occurrence and during the
continuance of an Event of Default, interest on this Note shall automatically be
increased by ten percent (10%) per annum, and all outstanding Obligations,
including unpaid interest, shall continue to accrue interest from the date of
such Event of Default at such interest rate applicable to such Obligations until
such Event of Default is cured or waived.
4.4. Cumulative Remedies. The remedies under this Note shall be
cumulative.
ARTICLE V
MISCELLANEOUS
5.1. Failure or Indulgence Not Waiver. No failure or delay on the part
of the Holder hereof in the exercise of any power, right or privilege hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such power, right or privilege preclude
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other or further exercise thereof or of any other right, power or privilege. All
rights and remedies existing hereunder are cumulative to, and not exclusive of,
any rights or remedies otherwise available.
5.2. Notices. Any notice herein required or permitted to be given
shall be in writing and provided in accordance with the terms of the Security
Agreement.
5.3. Amendment Provision. The term "Note" and all reference thereto,
as used throughout this instrument, shall mean this instrument as originally
executed, or if later amended or supplemented, then as so amended or
supplemented, and any successor instrument as it may be amended or supplemented.
5.4. Assignability. This Note shall be binding upon the Borrower and
its successors and assigns, and shall inure to the benefit of the Holder and its
successors and assigns.
5.5. Cost of Collection. If default is made in the payment of this
Note, the Borrower shall pay the Holder hereof reasonable costs of collection,
including reasonable attorneys' fees.
5.6. Governing Law. This Note shall be governed by and construed in
accordance with the laws of the State of New York, without regard to principles
of conflicts of laws. Any action brought by either party against the other
concerning the transactions contemplated by this Agreement shall be brought only
in the state courts of New York or in the federal courts located in the state of
New York. Both parties and the individual signing this Note on behalf of the
Borrower agree to submit to the jurisdiction of such courts. The prevailing
party shall be entitled to recover from the other party its reasonable
attorney's fees and costs. In the event that any provision of this Note is
invalid or unenforceable under any applicable statute or rule of law, then such
provision shall be deemed inoperative to the extent that it may conflict
therewith and shall be deemed modified to conform with such statute or rule of
law. Any such provision which may prove invalid or unenforceable under any law
shall not affect the validity or unenforceability of any other provision of this
Note. Nothing contained herein shall be deemed or operate to preclude the Holder
from bringing suit or taking other legal action against the Borrower in any
other jurisdiction to collect on the Borrower's obligations to Holder, to
realize on any collateral or any other security for such obligations, or to
enforce a judgment or other court order in favor of Xxxxxx.
5.7. Maximum Payments. Nothing contained herein shall be deemed to
establish or require the payment of a rate of interest or other charges in
excess of the maximum permitted by applicable law. In the event that the rate of
interest required to be paid or other charges hereunder exceed the maximum
permitted by such law, any payments in excess of such maximum shall be credited
against amounts owed by the Borrower to the Holder and thus refunded to the
Borrower.
5.8. Security Interest. The Holder of this Note has been granted a
security interest in certain assets of the Borrower more fully described in a
Security Agreement dated as of March __, 2004.
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5.9. Construction. Each party acknowledges that its legal counsel
participated in the preparation of this Note and, therefore, stipulates that the
rule of construction that ambiguities are to be resolved against the drafting
party shall not be applied in the interpretation of this Note to favor any party
against the other.
[Balance of page intentionally left blank; signature page follows.]
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IN WITNESS WHEREOF, the Borrower has caused this Secured Convertible
Revolving Note to be signed in its name effective as of this ___ day of March,
2004.
GLOBAL PAYMENT TECHNOLOGIES, INC.
By:
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Name:
Title:
WITNESS:
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NOTICE OF CONVERSION
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(To be executed by the Holder in order to convert the Note)
The undersigned hereby elects to convert $_________ of the principal
and $_________ of the interest due on the Secured Convertible Revolving Note
issued by Global Payment Technologies, Inc. on _______ __, 2004 into Shares of
Common Stock of Global Payment Technologies, Inc. (the "Borrower") according to
the conditions set forth in such Note, as of the date written below.
Date of Conversion: ________________________________________________
Conversion Price: ________________________________________________
Shares To Be Delivered: ________________________________________________
Signature: ________________________________________________
Print Name: ________________________________________________
Address: ________________________________________________
________________________________________________
________________________________________________
Holder DWAC ________________________________________________
instructions
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