Exhibit 4.3
EXHIBIT B
AMENDED AND RESTATED
SECURITY AGREEMENT
THIS AMENDED AND RESTATED SECURITY AGREEMENT, dated as of the 9th day
of August, 2006 (the "Security Agreement"), is made by and among Affinity
Technology Group, Inc., a Delaware corporation (the "Company"), whose address is
0000-X Xxx Xxxxx Xxxx, Xxxxxxxx, Xxxxx Xxxxxxxx 00000, and each of the investors
identified on Schedule 1 attached hereto as it may hereafter be amended from
time to time (collectively, the "Purchasers").
WHEREAS, the Company has entered into a Convertible Note Purchase
Agreement, dated as of June 3, 2002, as amended (the "Original Note Purchase
Agreement"), by and among the Company and the investors named therein (the
"Original Investors"), pursuant to which the Company has issued and sold an
aggregate of $1,575,336 principal amount of its 8% convertible secured notes
(the "Old Notes"), including Old Notes with a principal amount of $536,336 that
have been converted into shares of the common stock, par value $.0001 per share,
of the Company; and
WHEREAS, the obligations under the Old Notes issued from time to time
under the Original Note Purchase Agreement are secured by a security interest in
the Company's equity interest in xxxxxxxxxxx.xxx, Inc., a Delaware corporation
and wholly-owned subsidiary of the Company ("xxxxxxxxxxx.xxx"), pursuant to the
Security Agreement, dated as of June 3, 2002, between the Company and the
Original Investors (the "Original Security Agreement"); and
WHEREAS, the Company and the Purchasers have entered into an Amended
and Restated Convertible Note Purchase Agreement, dated as of the date hereof
(the "Note Purchase Agreement"), pursuant to which: (i) the Original Note
Purchase Agreement was amended and restated in its entirety; (ii) the Company
amended the Old Notes by issuing to the Original Investors new 8% convertible
secured notes (the "Notes") due in August 8, 2008 in exchange for the Old Notes
(including all interest accrued thereon); and (iii) the Company was authorized
to issue Notes having an aggregate principal amount of $5,000,000 (including the
Notes issued to the Original Investors in exchange for the Old Notes); and
WHEREAS, in connection with the Note Purchase Agreement, the Company
and the Purchasers desire to enter into this Agreement to amend and restate the
Original Security Agreement in its entirety and to evidence that the Company has
granted to the Purchasers a security interest in the Collateral (as defined
below);
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and the Purchasers
hereby agree for themselves and their successors and assigns as follows:
ARTICLE 1
DEFINITIONS
1.1 For purposes of this Security Agreement, in addition to the terms
defined elsewhere herein, the following terms shall have the meanings set forth
below:
"Collateral" shall mean, collectively, the Company's interest in all
issued and outstanding shares (the "Shares") of common stock, par value $.001
per share, of xxxxxxxxxxx.xxx, Inc., a Delaware corporation and wholly-owned
subsidiary of the Company (the "Subsidiary"), together with all (a)
certificates, instruments and entries upon the books of the Subsidiary
evidencing the foregoing, (b) rights to receive interest, dividends,
distributions, returns of capital and other amounts in respect thereof, (c)
additional stock, warrants, options, securities, interests and other property
from time to time paid or payable or distributed and/or distributable in respect
thereof, and (d) all proceeds of any of the foregoing. For purposes of this
Security Agreement, the term "proceeds" shall mean and include all cash,
securities and other property of any nature received or receivable upon the
sale, exchange or other disposition of any Collateral, together with
distributions in respect of any Collateral, including pursuant to any
liquidation, reorganization or similar proceeding with respect to the Company or
the Subsidiary.
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"Collateral Agent" shall mean Xxxx Xxxx, a resident of Columbia, South
Carolina, and a Purchaser under the Note Purchase Agreement.
"Event of Default" shall have the meaning given to such term in the
Notes.
"Obligations" shall mean the Company's indebtedness and other
obligations under the Notes issued from time to time pursuant to the Note
Purchase Agreement.
1.2 All terms in this Security Agreement that are not capitalized shall
have the meanings provided by the Uniform Commercial Code of South Carolina to
the extent the same are used or defined therein.
ARTICLE II
CREATION OF SECURITY INTEREST
2.1 To secure the prompt payment and other performance of the
Obligations under the Notes as issued from time to time under the Note Purchase
Agreement, the Company hereby grants, pledges, assigns and delivers to the
Collateral Agent, for the ratable benefit of the Purchasers, a security interest
in the Collateral.
2.2 The Company shall execute and deliver to the Collateral Agent,
concurrent with the execution of this Security Agreement, (a) all certificates
evidencing the Collateral, together with the endorsement of the Company and
undated stock powers or other necessary instruments of transfer or assignment,
duly executed in blank, (b) all related UCC financing statements, and (c) all
other documents or instruments as may, from time to time, be reasonably
necessary to fully carry out the intent of this Security Agreement in order to
perfect and maintain the security interest and lien created hereunder, as a
legal, valid, and binding security interest and lien upon the Collateral.
2.3 The Company does hereby irrevocably make, constitute and appoint
the Collateral Agent as the true and lawful attorney of the Company with power
to, upon the occurrence and during the continuance of an Event of Default, take
or bring at the Company's cost, in the Company's name or in the name of the
Purchasers, all steps, actions and suits deemed by the Collateral Agent and the
Purchasers to be necessary or desirable to effect foreclosure on, and
collections of, the Collateral. This power, being coupled with an interest, is
irrevocable so long as any of the Obligations remain unpaid.
2.4 Neither the Purchasers or the Collateral Agent nor their respective
attorneys will be liable for any act or omission or for any error of judgment or
mistake of fact unless such act, omission, error or mistake shall occur as a
result of the willful misconduct of such persons.
ARTICLE III
APPOINTMENT OF COLLATERAL AGENT
3.1 Without in any way limiting the rights of the Purchasers hereunder
or otherwise, the Purchasers hereby appoint the Collateral Agent to hold the
Collateral and any and all certificates evidencing the Collateral for the
ratable benefit of all Purchasers hereunder. The Collateral Agent hereby accepts
such appointment and agrees to hold the Collateral and such certificates for the
ratable benefit of all Purchasers.
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ARTICLE IV
PRIORITY OF SECURITY INTERESTS
4.1 The Company represents and warrants that as to those assets for
which perfection may be accomplished by filing under the UCC, the security
interests granted to the Collateral Agent for the ratable benefit of the
Purchasers hereunder, when properly perfected by filing, shall constitute at all
times a valid and perfected security interest in and upon the Collateral vested
in the Collateral Agent for the ratable benefit of the Purchasers. The Company
further warrants and represents that the security interests in the Collateral
granted hereunder are not and hereinafter shall not become subordinate or junior
to any other security interests, liens or claims in the Collateral.
ARTICLE V
COVENANTS OF THE COMPANY
5.1 So long as no Event of Default shall have occurred and be
continuing, the Company may, in any lawful manner not inconsistent with the
provisions of this Security Agreement and the Note Purchase Agreement, use,
control and manage the Collateral in the operation of its business, and receive
and use the income, revenue and profits arising therefrom and the proceeds
thereof, in the same manner and with the same effect as if this Security
Agreement had not been made; provided, however, that without the written consent
of the Purchasers holding at least a majority of the aggregate principal balance
of all Notes then outstanding, the Company will not sell, assign or otherwise
dispose of, grant any option with respect to, or mortgage, pledge, grant any
lien with respect to or otherwise encumber any of the Collateral or any interest
therein, except for the security interest created in favor of the Collateral
Agent hereunder and except as may be otherwise expressly permitted in accordance
with the terms of this Security Agreement and the Note Purchase Agreement.
5.2 So long as no Event of Default shall have occurred and be
continuing, the Company shall be entitled to exercise all voting rights
pertaining to the Shares, and for that purpose the Collateral Agent will execute
and deliver or cause to be executed and delivered to the Company all such
proxies and other instruments as the Company may reasonably request in writing
to enable the Company to exercise such voting rights; provided, however, that
the Company will not cast any vote, give any consent, waiver or ratification, or
take or fail to take any action in any manner that would, or could reasonably be
expected to, violate or be inconsistent with any of the terms of this Security
Agreement or the Note Purchase Agreement, or have the effect of impairing the
position or interests of the Collateral Agent or any Purchaser.
5.3 So long as no Event of Default shall have occurred and be
continuing (or would occur as a result thereof), and except as provided
otherwise herein, all interest, income, dividends, distributions and other
amounts payable in cash in respect of the Shares may be paid to and retained by
the Company; provided, however, that all such interest, income, dividends,
distributions and other amounts shall, at all times after the occurrence and
during the continuance of an Event of Default, be paid to the Collateral Agent
for the ratable benefit of all the Purchasers and retained by it as part of the
Collateral. The Collateral Agent shall also be entitled at all times (whether or
not during the continuance of an Event of Default) to receive directly, and to
retain as part of the Collateral, (a) all interest, income, dividends,
distributions or other amounts paid or payable in cash or other property in
respect of the Shares in connection with the dissolution, liquidation,
recapitalization or reclassification of the capital of the Subsidiary to the
extent representing an extraordinary, liquidating or other distribution in
return of capital, (b) all additional equity interests or other securities or
property (other than cash) paid or payable or distributed or distributable in
respect of the Shares in connection with any noncash dividend, distribution,
return of capital, spin-off, stock split, split-up, reclassification,
combination of shares or similar rearrangement, and (c) without affecting any
restrictions against such actions contained in this Security Agreement, all
additional capital stock, equity interests or other securities or property
(including cash) paid or payable or distributed or distributable in respect of
the Shares in connection with any consolidation, merger, exchange of securities,
liquidation or other reorganization. All interest, income, dividends,
distributions or other amounts that are received by the Company in violation of
the provisions of this Section shall be received in trust for the benefit of the
Collateral Agent, shall be segregated from other property or funds of the
Company and shall be forthwith delivered to the Collateral Agent as Collateral
in the same form as so received (with any necessary endorsements).
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5.4 If the Company shall, at any time and from time to time after the
date hereof, acquire any additional capital stock or other equity interests in
the Subsidiary, the same shall be automatically deemed to be Collateral and to
be pledged to the Collateral Agent pursuant to Section 2.1, and the Company will
forthwith pledge and deposit the same with the Collateral Agent for the ratable
benefit of the Purchasers and deliver to the Collateral Agent any certificates
or instruments therefor, together with the endorsement of the Company and
undated stock powers or other necessary instruments of transfer or assignment,
duly executed in blank, to the Collateral Agent for the ratable benefit of the
Purchasers, together with such other certificates and instruments as the
Collateral Agent may reasonably request (including UCC financing statements or
appropriate amendments thereto).
5.5 Unless the Company shall have obtained the written consent of the
Purchasers holding at least a majority of the aggregate principal balance of all
Notes then outstanding:
(a) The Company will cause the Shares pledged by it hereunder to
constitute at all times 100% of the outstanding capital and equity interests in
the Subsidiary, such that the Subsidiary shall be a wholly-owned subsidiary of
the Company; and
(b) The Company will not cause or permit the Subsidiary to issue or
sell any new capital stock in the Subsidiary, any warrants, options or rights to
acquire any such capital stock, or other equity interests in the Subsidiary of
any nature to any person, firm or entity other than the Company, or cause,
permit or consent to the admission of any other person, firm or entity as a
stockholder, partner or member of the Subsidiary.
ARTICLE VI
DEFAULT
6.1 Subject to the immediately succeeding sentence, if an Event of
Default shall have occurred and be continuing, the Purchasers shall have, in
addition to any other rights and remedies contained in this Security Agreement,
all the rights and remedies of a secured party under the Uniform Commercial
Code, and all other rights and remedies provided by law, all of which shall be
cumulative to the extent permitted by law. Upon the occurrence of an Event of
Default and at any time thereafter if such or any other Event of Default shall
then be continuing, the Purchasers, acting by the written consent of the
Purchasers holding at least two-thirds of the aggregate principal balance of all
Notes then outstanding, shall have the right without further notice to the
Company to settle, compromise or release, in whole or in part, any amounts owing
on the Collateral, to prosecute any action, suit or proceeding with respect to
the Collateral, to sell, assign and deliver the Collateral (or any part
thereof), at public or private sale, at broker's board, for cash, upon credit or
otherwise, at the Purchasers' sole option and discretion and the Purchasers may
bid or become purchasers at any such sale, if public, free from any right of
redemption, which is hereby expressly waived. The net cash proceeds resulting
from the exercise of any of the foregoing rights or remedies shall be applied by
the Purchasers to the payment of the Obligations in such order as the Purchasers
may elect, and the Company shall remain liable to the Purchasers for any
deficiency, together with interest thereon at the rate provided in the Notes,
and the cost and expenses of collection of such deficiency, including (to the
extent permitted by law), without limitation, attorneys' fees, expenses and
disbursements.
6.2 If at any time or times hereafter the Purchasers or the Collateral
Agent employ counsel for advice with respect to this Security Agreement, or to
intervene, file a petition, answer, motion or other pleading in any suit or
proceeding relating to this Security Agreement or relating to any Collateral, or
to protect, take possession of, or liquidate any Collateral, or to attempt to
enforce any security interest or lien in any Collateral, or to represent the
Purchasers in any pending or threatened litigation with respect to the affairs
of the Company in any way relating to any of the Collateral or to the
Obligations or to enforce any rights of the Purchasers or liabilities of the
Company, account debtors, or any other person, firm or corporation which may be
obligated to the Purchasers by virtue of this Security Agreement or any
instrument or document now or hereafter delivered to the Purchasers by or for
the benefit of the Company, then in any of such events, all of the attorneys'
fees arising from such services, and any expenses, costs and charges relating
thereto, shall become a part of the Obligations secured by the Collateral
payable on demand.
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ARTICLE VII
MISCELLANEOUS
7.1 The laws of the State of South Carolina shall govern this Security
Agreement.
7.2 All notices and other communications hereunder shall be in writing
and shall be deemed to have been validly served, given or delivered (a) upon
receipt, if delivered personally or by fax, or (b) three (3) days after deposit
in the United States mails with postage prepaid, and addressed to the party to
be notified as provided above, if sent by mail.
7.3 Except as otherwise expressly provided herein, any term of this
Security Agreement may be amended and the observance of any term of this
Security Agreement may be waived (either generally or in a particular instance,
either retroactively or prospectively and either for a specified period of time
or indefinitely) with the written consent of the Company and the Purchasers
holding at least a majority of the principal amount of all Notes then
outstanding.
7.4 The terms and conditions of this Security Agreement shall inure to
the benefit of and be binding upon the successors and assigns of the parties.
Nothing in this Security Agreement, express or implied, is intended to confer
upon any third party any rights, obligations or liabilities under or by reason
of this Security Agreement, except as expressly provided in this Security
Agreement.
[THE NEXT PAGE IS THE SIGNATURE PAGE.]
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IN WITNESS WHEREOF, this Security Agreement has been executed as of the
day and year first above written.
THE COMPANY: AFFINITY TECHNOLOGY GROUP, INC.,
a Delaware corporation
By:
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Xxxxxx X. Xxxxx
President and Chief Executive Officer
[SIGNATURE PAGES FOR THE PURCHASERS FOLLOW THIS PAGE.]
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PURCHASER SIGNATURE PAGE
Principal Amount of
Note Purchased: $__________ (Name of Purchaser)
By:
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Name:
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Title:
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Schedule 1
Name and Address Principal Amount
of Purchaser of Note Acquired Purchase Price Maturity Date
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