Exhibit 4.5
GLOBAL PAYMENT TECHNOLOGIES, INC.
SECURITY AGREEMENT
To: Laurus Master Fund, Ltd.
c/o Onshore Corporate Services, Ltd.
X.X. Xxx 0000 G.T
Queensgate House
South Church Street
Grand Cayman, Cayman Islands
Gentlemen:
1. To secure the payment of all Obligations (as hereafter defined), we hereby
grant to you a continuing security interest in all of the following
property now owned or at any time hereafter acquired by us, or in which we
now have or at any time in the future may acquire any right, title or
interest (the "Collateral"): all accounts, inventory, equipment, goods,
documents, instruments (including, without limitation, promissory notes),
contract rights, general intangibles (including, without limitation,
payment intangibles and an absolute right to license on terms no less
favorable than those current in effect among our affiliates, but not own
intellectual property), chattel paper, supporting obligations, investment
property, letter-of-credit rights, trademarks and tradestyles in which we
now have or hereafter may acquire any right, title or interest, all
proceeds and products thereof (including, without limitation, proceeds of
insurance) and all additions, accessions and substitutions thereto or
therefore. In the event we wish to finance the acquisition of any hereafter
acquired equipment and have obtained a commitment from a financing source
to finance such equipment from an unrelated third party, you agree, if so
requested, to release your security interest on such hereafter acquired
equipment so financed by such third party financing source.
2. The term "Obligations" as used herein shall mean and include all debts,
liabilities and obligations owing by us to you hereunder and under whether
arising under, out of, or in connection with that certain Securities
Purchase Agreement dated as of the date hereof by and between the
undersigned and Laurus Master Fund, Ltd. ("Laurus") (the "Securities
Purchase Agreement"), that certain Secured Convertible Note dated as of the
date hereof made by in favor of Laurus in the original principal amount of
One Million Five Hundred Thousand Dollars ($1,500,000)(the "Term Note") the
Warrant dated as of the date hereof made by The undersigned in favor of
Laurus in connection with the Term Note (the "Term Note Warrant") that
certain Registration Rights Agreement dated as of the date hereof by and
between The undersigned and Laurus in connection with the Term Note (the
"Term Note Registration Rights Agreement"), (the Securities Purchase
Agreement, the Term Note, the Term Note Warrant and the Term Note
Registration Rights Agreement as each may be amended, modified, restated or
supplemented from time to time, are collectively referred to herein as the
"Documents").
3. We hereby represent, warrant and covenant to you that:
(a) we are a company validly existing, in good standing and formed
under the laws of the State of Delaware and we will provide you thirty (30)
days' prior written notice of any change in our state of formation;
(b) our legal name is Global Payment Technologies, Inc., as set forth
in our Certificate of Incorporation as amended through the date hereof;
(c) we are the lawful owner of the Collateral and have the sole right
to grant a security interest therein and will defend the Collateral against
all claims and demands of all persons and entities;
(d) we will keep the Collateral free and clear of all attachments,
levies, taxes, liens, security interests and encumbrances of every kind and
nature ("Encumbrances"), other than Permitted Encumbrances (as hereinafter
defined), except to the extent said Encumbrance does not secure
indebtedness in excess of $100,000 and such Encumbrance is removed or
otherwise released within ten (10) days of the creation thereof;
(e) we will at our own cost and expense keep the Collateral in good
state of repair (ordinary wear and tear excepted) and will not waste or
destroy the same or any part thereof other than ordinary course discarding
of items no longer used or useful in our business;
(f) we will not without your prior written consent, sell, exchange,
lease or otherwise dispose of the Collateral, whether by sale, lease or
otherwise, except for the sale of inventory in the ordinary course of
business and for the disposition or transfer in the ordinary course of
business during any fiscal year of obsolete and worn-out equipment or
equipment no longer necessary for our ongoing needs, having an aggregate
fair market value of not more than $75,000 and only to the extent that:
(i) the proceeds of any such disposition are used to acquire
replacement Collateral which is subject to your first priority
security interest or are used to repay Obligations or to pay general
corporate expenses; or
(ii) following the occurrence of an Event of Default which
continues to exist the proceeds of which are remitted to you to be
held as cash collateral for the Obligations;
(g) we will insure the Collateral in your name against loss or damage
by fire, theft, burglary, pilferage, loss in transit and such other hazards
as you shall specify in amounts and under policies by insurers acceptable
to you and all premiums thereon shall be paid by us and the policies
delivered to you. If we fail to do so, you may procure such insurance and
the cost thereof shall constitute Obligations;
(h) we will at all reasonable times allow you or your representatives
free access to and the right of inspection of the Collateral;
(i) we hereby indemnify and save you harmless from all loss, costs,
damage, liability and/or expense, including reasonable attorneys' fees,
that you may sustain or
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incur to enforce payment, performance or fulfillment of any of the
Obligations and/or in the enforcement of this Agreement or in the
prosecution or defense of any action or proceeding either against you or us
concerning any matter growing out of or in connection with this Agreement,
and/or any of the Obligations and/or any of the Collateral except to the
extent caused by your own gross negligence or willful misconduct.
4. We shall be in default under this Agreement upon the happening of any of
the following events or conditions, each such event or condition an "Event
of Default:"
(a) any covenant, warranty, representation or statement made or
furnished to you by us or on our behalf was false in any material respect
when made or furnished;
(b) the loss, theft, substantial damage, destruction, sale or
encumbrance to or of any of the Collateral or the making of any levy,
seizure or attachment thereof or thereon except to the extent:
(i) such loss is covered by insurance proceeds which are used to
replace the item or repay us; or
(ii) said levy, seizure or attachment does not secure
indebtedness in excess of $100,000 and such levy, seizure or
attachment has not been removed or otherwise released within ten (10)
days of the creation or the assertion thereof;
(c) we shall become insolvent, cease operations, dissolve, terminate
our business existence, make an assignment for the benefit of creditors,
suffer the appointment of a receiver, trustee, liquidator or custodian of
all or any part of our property;
(d) any proceedings under any bankruptcy or insolvency law shall be
commenced by or against us and if commenced against us shall not be
dismissed within thirty (30) days;
(e) we shall repudiate, purport to revoke or fail to perform any of
our obligations under the Note (after passage of applicable cure period, if
any); or
(f) an Event of Default shall have occurred and be continuing past all
applicable cure periods under and as defined in the Term Note.
5. Upon the occurrence of any Event of Default and at any time thereafter, you
may declare all Obligations immediately due and payable and you shall have
the remedies of a secured party provided in the Uniform Commercial Code as
in effect in the State of New York, this Agreement and other applicable
law. Upon the occurrence of any Event of Default and at any time
thereafter, you will have the right to take possession of the Collateral
and to maintain such possession on our premises or to remove the Collateral
or any part thereof to such other premises as you may desire. Upon your
request, we shall assemble the Collateral and make it available to you at a
place designated by you. If any notification of intended disposition of any
Collateral is required by law, such notification,
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if mailed, shall be deemed properly and reasonably given if mailed at least
ten (10) days before such disposition, postage prepaid, addressed to us
either at our address shown herein or at any address appearing on your
records for us. Any proceeds of any disposition of any of the Collateral
shall be applied by you to the payment of all expenses in connection with
the sale of the Collateral, including reasonable attorneys' fees and other
legal expenses and disbursements and the reasonable expense of retaking,
holding, preparing for sale, selling, and the like, and any balance of such
proceeds may be applied by you toward the payment of the Obligations in
such order of application as you may elect, and we shall be liable for any
deficiency.
6. If we default in the performance or fulfillment of any of the terms,
conditions, promises, covenants, provisions or warranties on our part to be
performed or fulfilled under or pursuant to this Agreement, you may, at
your option without waiving your right to enforce this Agreement according
to its terms, immediately or at any time thereafter and without notice to
us, perform or fulfill the same or cause the performance or fulfillment of
the same for our account and at our sole cost and expense, and the cost and
expense thereof (including reasonable attorneys' fees) shall be added to
the Obligations and shall be payable on demand with interest thereon at the
highest rate permitted by law or, at your option, debited by you from the
Pledged Account.
7. We hereby appoint you, any of your officers, employees or any other person
or entity whom you may designate as our attorney, with power to execute
such documents in our behalf and to supply any omitted information and
correct patent errors in any documents executed by us or on our behalf; to
file financing statements against us covering the Collateral; to sign our
name on public records; and to do all other things you deem necessary to
carry out this Agreement. We hereby ratify and approve all acts of the
attorney and neither you nor the attorney will be liable for any acts of
commission or omission, nor for any error of judgment or mistake of fact or
law other than gross negligence or willful misconduct. This power being
coupled with an interest, is irrevocable so long as any Obligations remains
unpaid, but shall be of no force or effect, unless and until an Event of
Default shall have occurred and be continuing beyond any applicable grace
periods, and then shall have effect only so long as such Event of Default
shall be continuing.
8. No delay or failure on your part in exercising any right, privilege or
option hereunder shall operate as a waiver of such or of any other right,
privilege, remedy or option, and no waiver whatever shall be valid unless
in writing, signed by you and then only to the extent therein set forth,
and no waiver by you of any default shall operate as a waiver of any other
default or of the same default on a future occasion. Your books and records
containing entries with respect to the Obligations shall be admissible in
evidence in any action or proceeding, shall be binding upon us for the
purpose of establishing the items therein set forth and shall constitute
prima facie proof thereof. You shall have the right to enforce any one or
more of the remedies available to you, successively, alternately or
concurrently. We agree to join with you in executing financing statements
or other instruments to the extent required by the Uniform Commercial Code
in form satisfactory to you and in executing such other documents or
instruments as may be required or
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deemed necessary by you for purposes of affecting or continuing your
security interest in the Collateral.
9. This Agreement shall be governed by and construed in accordance with the
laws of the State of New York and cannot be terminated orally. All of the
rights, remedies, options, privileges and elections given to you hereunder
shall inure to the benefit of your successors and assigns. The term "you"
as herein used shall include your company, any parent of your company, any
of your subsidiaries and any co-subsidiaries of your parent, whether now
existing or hereafter created or acquired, and all of the terms,
conditions, promises, covenants, provisions and warranties of this
Agreement shall inure to the benefit of and shall bind the representatives,
successors and assigns of each of us and them. You and we hereby (a) waive
any and all right to trial by jury in litigation relating to this Agreement
and the transactions contemplated hereby and we agree not to assert any
counterclaim in such litigation, (b) submit to the nonexclusive
jurisdiction of any New York State court sitting in the borough of
Manhattan, the city of New York and (c) waive any objection you or we may
have as to the bringing or maintaining of such action with any such court.
10. All notices from you to us shall be sufficiently given if mailed or
delivered to us at our address set forth below.
Very truly yours,
GLOBAL PAYMENT TECHNOLOGIES, INC.
By:
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Name:
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ACKNOWLEDGED: Title:
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LAURUS MASTER FUND, LTD. Address:
By:
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Name:
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Title:
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