SECURITY
      AGREEMENT

     

    dated
      as
      of

     

    June
      __,
      2008

     

    between

     

    GPS
      INDUSTRIES, INC.,

     

    (the
      “Borrower”)

     

    and

     

    TULIP
      GROUP INVESTMENTS,
      LIMITED

     

    (“Secured
      Party”)

     

    
      

      

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    SECURITY
      AGREEMENT

     

    THIS
      SECURITY AGREEMENT (this “Agreement”),
      is
      entered into as of June __, 2008, by and between GPS
      INDUSTRIES, INC.,
      a
      Nevada corporation (“Maker”),
      DIRECT
      GOLF SERVICES INC.,
      a
      ______________ corporation (“Direct
      Golf”),
      GOLF
      ACADEMIES LTD. D/B/A GPSI EUROPE,
      a
      ____________ corporation (“GPSI
      Europe”),
      and
GPS
      IT, LLC,
      a
      _________ limited liability company (“GPS
      IT”,
      together with Direct Golf, and GPSI Europe, collectively referred to herein
      as
“Subsidiaries,”
and
      individually as a “Subsidiary”,
      and
      together with the Subsidiaries and Maker, collectively, the “Borrower")
      and
TULIP
      GROUP INVESTMENTS, LIMITED,
      a B.V.I
      company (“Secured
      Party”).

     

    RECITALS

     

    WHEREAS,
      Maker
      has executed and delivered to Secured Party that certain Non-Negotiable
      Convertible Promissory Note of even date herewith, in the original principal
      amount of $5,500,000 (the “Note”) securing a loan (the “Loan”) to
      Maker;

     

    WHEREAS,
      Direct
      Golf, GPSI Europe, and GPSI IT are each wholly owned subsidiaries of Maker,
      will
      receive certain of the proceeds of the Loan, will otherwise be benefited by
      the
      transactions contemplated by the Loan, and accordingly, guarantee the
      obligations of Maker under the Note;

     

    WHEREAS,
      Secured
      Party has required, as a condition to making the Loan that Borrower execute
      and
      deliver this Security Agreement to the Secured Party;

     

    WHEREAS,
      Secured
      Party has agreed that its security interest in Borrower’s personal property and
      Borrower’s obligations under the Note and this Security Agreement are
      subordinate to the liens listed on Exhibit
      D
      of the
      Note (collectively, the “Senior Debt”); and

    


    WHEREAS,
      concurrently herewith, Secured Party is executing that certain Intercreditor
      Agreement (the “Intercreditor Agreement”) with the Estate of Douglas J. Wood, an
      individual (“Wood”), Hansen, Inc., a Pennsylvania corporation (“Hansen”), and
      Great White Shark Enterprises LLC, a Florida limited liability company (“GWSE”),
      wherein: (i) GWSE and Secured Party agree that the GWSE Security Interest (as
      defined in the Intercreditor Agreement) and Secured Party’s security interest
      will rank pari passu with each other; and (ii) the Guarantors agree that their
      existing security interest is subrogated to the rights of Silicon Valley Bank
      (“Bank”) to receive distributions of, or payments of proceeds from, the
      Collateral in respect of the security interest owed by Maker to Bank (the
“Guarantors Security Interest”) shall rank pari passu with the GWSE Security
      Interest and Secured Party’s security interest.


    
      
        
        

      

      
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    NOW,
      THEREFORE,
      in
      consideration of the foregoing and the mutual agreements contained herein,
      and
      for other good and valuable consideration, the receipt of which is hereby
      acknowledged by the parties hereto, the parties hereto agree as
      follows:

     

    ARTICLE
      I

     

    DEFINITIONS
      AND RULES OF INTERPRETATION

     

    Section
      1.1 Definitions.
      The
      following terms shall have the meanings set forth in this Article l or elsewhere
      in the provisions of this Agreement referred to below:

     

    “Accounts”
means
      all currently existing and hereafter arising accounts, contract rights, and
      all
      other forms of obligations owing to Borrower arising out of the sale or lease
      of
      goods or the rendition of services by Borrower, irrespective of whether earned
      by performance, and any and all credit insurance, guaranties, or security
      therefore.

     

    “Account
      Debtor”
means
      Person who is or who may obligated under, with respect to, or on account of,
      an
      Account, General Intangible or Negotiable Collateral. 

     

    “Affiliate”
means,
      as applied to any Person, any other Person who, directly or indirectly,
      controls, is controlled by, is under common control with, or is a director
      or
      officer of such Person. For purposes of this definition, “control” means the
      possession, directly or indirectly, of the power to vote 5% or more of the
      Stock
      having ordinary voting power for the election of directors (or comparable
      managers) or the direct or indirect power to direct the management and policies
      of a Person.

     

    “Bankruptcy
      Code”
means
      Title 11, U.S.C. Section 101, et
      seq.,
      as
      amended from time to time or any successor statute thereto.

     

    “Borrower’s
      Books”
means
      all of Borrower’s books and records including ledgers; records indicating,
      summarizing, or evidencing Borrower’s properties or assets (including the
      Collateral) or liabilities; all information relating to Borrower’s business
      operations or financial condition; and all computer programs, disk or tape
      files, printouts, runs or other computer prepared information.

     

    “Business
      Day”
means
      any weekday, Monday through Friday, except a legal holiday or a day on which
      banking institutions in New York, New York are authorized by law to be
      closed.

     

    “Code”
means
      the Internal Revenue Code of 1986, as amended.

     

    “Collateral”
means
      all of Borrower’s right, title, and interest in and to each of the following:
      (i) the Accounts, (ii) Borrower’s Books, (iii) the Equipment, (iv) the General
      Intangibles, (v) the Inventory, (vi) the Negotiable Collateral, (vii) any money,
      securities, investment property, or other assets of Borrower that now or
      hereafter come into the possession, custody or control of Secured Party, (viii)
      commercial tort claims, and (ix) the proceeds and products, whether tangible
      or
      intangible, of any of the foregoing, including proceeds of insurance covering
      any or all of the Collateral, and any and all Accounts, Borrower’s Books,
      Equipment, General Intangibles, Inventory, Negotiable Collateral, money, deposit
      accounts, or other tangible or intangible property resulting from the sale,
      exchange, collection, or other disposition of any of the foregoing, or any
      portion thereof or interest therein, and the proceeds thereof. 

     

    
      
        
        

      

      
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    “Dollars”or
      “$”
means
      United States dollars.

     

    “Equipment”
means
      all of Borrower’s present and hereafter acquired machinery, machine tools,
      motors, equipment, furniture, furnishings, fixtures, vehicles (including motor
      vehicles and trailers), tools, parts, goods (other than consumer goods, farm
      products, or Inventory), wherever located, including, (a) any interest of
      Borrower in any of the foregoing, and (b) all attachments, accessories,
      accessions, replacements, substitutions, additions, and improvements to any
      of
      the foregoing.

     

    “Event
      of Default”
has
      the
      meaning set forth in Section 5 of the Note.

     

    “General
      Intangibles”
means
      all of Borrower’s present and future general intangibles and other personal
      property (including contract rights, rights arising under common law, statutes,
      or regulations, choses or things in action, goodwill, patents, trade names,
      trademarks, servicemarks, copyrights, blueprints, drawings, purchase orders,
      customer lists, monies due or recoverable from pension funds, route lists,
      rights to payment and other rights under any royalty or licensing agreements,
      infringement claims, computer programs, information contained on computer disks
      or tapes, literature, reports, catalogs, deposit accounts, insurance premium
      rebates, tax refunds, and tax refund claims), other than goods, Accounts, and
      Negotiable Collateral.

     

    “Indebtedness”
means
      (a) all obligations of Borrower for borrowed money, (b) all obligations of
      Borrower evidenced by bonds, debentures, notes, or other similar instruments
      and
      all reimbursement or other obligations of Borrower in respect of letters of
      credit, bankers acceptances, interest rate swaps, or other financial products,
      (c) all obligations of Borrower under capital leases, (d) all obligations or
      liabilities of others secured by a Lien on any property or asset of Borrower,
      irrespective of whether such obligation or liability is assumed, and (e) any
      obligation of Borrower guaranteeing or intended to guarantee (whether
      guaranteed, endorsed, co-made, discounted, or sold with recourse to Borrower)
      any indebtedness, lease, dividend, letter of credit, or other obligation of
      any
      other Person. 

     

    “Insolvency
      Proceeding”
means
      any proceeding commenced by or against any Person under any provision of the
      Bankruptcy Code or under any other bankruptcy or insolvency law, assignments
      for
      the benefit of creditors, formal or informal moratoria, compositions, extensions
      generally with creditors, or proceedings seeking reorganization, arrangement,
      or
      other similar relief.

     

    
      
        
        

      

      
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    “Inventory”
means
      all present and future inventory in which Borrower has any interest, including
      goods held for sale or lease or to be furnished under a contract of service
      and
      all of Borrower’s present and future raw materials, work in process, finished
      goods, and packing and shipping materials, wherever located. 

     

    “Lien”
means
      any interest in property securing an obligation owed to, or a claim by, any
      Person other than the owner of the property, whether such interest shall be
      based on the common law, statute, or contract, whether such interest shall
      be
      recorded or perfected, and whether such interest shall be contingent upon the
      occurrence of some future event or events or the existence of some future
      circumstance or circumstances, including the lien or security interest arising
      from a mortgage, deed of trust, encumbrance, pledge, hypothecation, assignment,
      deposit arrangement, security agreement, adverse claim or charge, conditional
      sale or trust receipt, or from a lease, consignment, or bailment for security
      purposes and also including reservations, exceptions, encroachments, easements,
      rights-of-way, covenants, conditions, restrictions, leases, and other title
      exceptions and encumbrances affecting Real Property.

     

    “Loan
      Documents”
means
      this Agreement, the Note and all other documents, instruments or agreements
      now
      or hereafter executed or delivered by or on behalf of Borrower in connection
      with the Loan.

     

    “Material
      Adverse Change”
means
      (a) a material adverse change in the business, prospects, operations, results
      of
      operations, assets, liabilities or condition (financial or otherwise) of
      Borrower, (b) the material impairment of Borrower’s ability to perform is
      obligations under the Loan Documents to which it is a party or of Secured Party
      to enforce the Obligations or realize upon the Collateral, (c) a material
      adverse effect on the value of the Collateral or the amount that Secured Party
      would likely receive (after giving consideration to delays in payment and costs
      of enforcement) in the liquidation of such Collateral, or (d) a material
      impairment of the priority of Secured Party’s Liens with respect to the
      Collateral. 

     

    “Negotiable
      Collateral”
means
      all of a Person’s present and future letters of credit, notes, drafts,
      instruments, documents, personal property leases (wherein such Person is the
      lessor), chattel paper, and books relating to any of the foregoing.

     

    “Obligations”
means
      all Loans, debts, principal, interest, premiums, liabilities, obligations,
      fees,
      charges, costs, guaranties, covenants, and duties owing by Borrower to Secured
      Party of any kind and description (whether pursuant to or evidenced by a Note,
      the Loan Documents or pursuant to any other agreement between Secured Party
      and
      Borrower, and irrespective of whether for the payment of money), whether direct
      or indirect, absolute or contingent, due or to become due, now existing or
      hereafter arising, and including any debt, liability, or obligation owing from
      Borrower to others that Secured Party may have obtained by assignment or
      otherwise, and further including all interest not paid when due. Any reference
      in this Agreement or in the Loan Documents to the obligations shall include
      all
      amendments, changes, extensions, modifications, renewals, replacements,
      substitutions, and supplements thereto and thereof, as applicable. 

     

    
      
        
        

      

      
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    “Permitted
      Liens”
means
      (a) Liens held by Secured Party, (b) Liens for unpaid taxes that are not
      yet due and payable, (c) Liens set forth on Schedule
      D
      of the
      Note, (d) the interests of lessors under operating leases, (e) Liens arising
      by
      operation of law in favor of warehousemen, landlords, carriers, mechanics,
      materialmen, laborers, or suppliers, incurred in the ordinary course of business
      of Borrower and not in connection with the borrowing of money, and which
      Liens are for sums not yet due and payable, (f) Liens arising from deposits
      made in connection with obtaining worker’s compensation or other unemployment
      insurance, (g) Liens or deposits to secure performance of bids, tenders, or
      leases (to the extent permitted under this Agreement), incurred in the ordinary
      course of business of Borrower and not in connection with the borrowing of
      money, (h) Liens arising by reason of security for surety or appeal bonds in
      the
      ordinary course of business of Borrower, (i) Liens of or resulting from any
      judgment or award that reasonably could not be expected to result in a Material
      Adverse Change and as to which the time for the appeal or petition for rehearing
      of which has not yet expired, or in respect of which Borrower is in good faith
      prosecuting an appeal or proceeding for a review and in respect of which a
      stay
      of execution pending such appeal or proceeding for review has been secured,
      (j)
      with respect to any Real Property, easements, rights of way, zoning and similar
      covenants and restrictions, and similar encumbrances that customarily exist
      on
      properties of Persons engaged in similar activities and similarly situated
      and
      that in any event do not materially interfere with or impair the use or
      operation of the Collateral by Borrower or the value of Secured Party’s Lien
      thereon or therein, or materially interfere with the ordinary conduct of the
      business of Borrower and (k) Liens held by third parties securing Indebtedness
      incurred prior to the date hereof.

     

    ”Permitted
      Protest”
means
      the right of Borrower to protest any Lien other than any such Lien that secures
      the Obligations, tax (other than payroll taxes or taxes that are the subject
      of
      a United States federal tax lien), royalties, commissions, or other amounts
      due
      under a licensing agreement, or rental payment, provided that (a) a reserve
      with respect to such obligation is established on the books of Borrower in
      an
      amount that is reasonably satisfactory to Secured Party, (b) any such
      protest is instituted and diligently prosecuted by Borrower in good faith,
      and
      (c) Secured Party is satisfied that, while any such protest is pending,
      there will be no impairment of the enforceability, validity, or priority of
      any
      of the Liens of Secured Party in and to the Collateral

     

    “Person”
means
      any individual, corporation, limited liability company, partnership, trust,
      unincorporated association, business, or other legal entity, and any government
      or any governmental agency or political subdivision thereof.

     

    
      
        
        

      

      
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    “Real
      Property”
means
      any estates or interests in real property now owned or hereafter acquired by
      Borrower. 

     

    Section
      1.2 Construction.
      Unless
      the context of this Agreement clearly requires otherwise, references to the
      plural include the singular, references to the singular include the plural,
      the
      term “including” is not limiting, and the term “or” has, except where otherwise
      indicated, the inclusive meaning represented by the phrase “and/or.” The words
“hereof,” “herein,” “hereby,” “hereunder,” and similar terms in this Agreement
      refer to this Agreement as a whole and not to any particular provision of this
      Agreement. An Event of Default shall “continue” or be “continuing” until such
      Event of Default has been waived in writing by Secured Party. Section,
      subsection, clause, schedule, and exhibit references are to this Agreement
      unless otherwise specified. Any reference in this Agreement or in the Loan
      Documents to this Agreement or any of the Loan Documents shall include all
      alterations, amendments, changes, extensions, modifications, renewals,
      replacements, substitutions, and supplements, thereto and thereof, as
      applicable.

     

    Section
      1.3 Schedules
      and Exhibits.
      All of
      the schedules and exhibits attached to this Agreement shall be deemed
      incorporated by reference herein.

     

    Section
      1.4 Incorporation
      of Recitals.
      The
      recitals set forth above are hereby incorporated into and made a part of the
      substance of this Agreement as though fully set forth herein.

     

    ARTICLE
      II

     

    COLLATERAL
      SECURITY

     

    Section
      2.1 Grant
      of Security Interest.
      Borrower hereby grants to Secured Party a continuing security interest in all
      currently existing and hereafter acquired or arising Collateral, subordinate
      only to Borrower’s existing Senior Debt, in order to secure prompt repayment of
      any and all Obligations and in order to secure prompt performance by Borrower
      of
      each of its covenants and duties under the Loan Documents. Secured Party’s
      security interests in the Collateral shall attach to all Collateral without
      further act on the part of Secured Party or Borrower. Anything contained in
      this
      Agreement or any other Loan Document to the contrary notwithstanding, except
      for
      the sale of Inventory to buyers in the ordinary course of business, Borrower
      has
      no authority, express or
      implied, to dispose of any item or portion of the Collateral. 

     

    Section
      2.2 Subordination.
      Notwithstanding anything contain in this Agreement to the contrary, Secured
      Party hereby acknowledges and agrees that all rights and remedies granted to
      Secured Party pursuant to the terms and conditions of this Agreement are
      subordinate to the rights and remedies (a) granted to Bank and (b) Liens set
      forth on Exhibit D of the Note. 

     

    
      
        
        

      

      
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    Section
      2.3 Negotiable
      Collateral.
      In the
      event that any Collateral, including proceeds, is evidenced by or consists
      of
      Negotiable Collateral, Borrower, immediately upon the written request of Secured
      Party, shall endorse and deliver physical possession of such Negotiable
      Collateral to Secured Party.

     

    Section
      2.4 Collection
      of Accounts, General Intangibles and Negotiable
      Collateral.
      At any
      time an Event of Default has occurred and is continuing, Secured Party or
      Secured Party’s designee may (a) notify customers of Borrower that the Accounts,
      General Intangibles or Negotiable Collateral have been assigned to Secured
      Party
      or that Secured Party has a security interest therein, and (b) collect the
      Accounts, General Intangibles and Negotiable Collateral directly and charge
      Borrower the collection costs and expenses. Borrower agrees that it will hold
      in
      trust for Secured Party, as Secured Party’s trustee, any Collections that it
      receives and immediately will deliver said Collections to Secured Party in
      their
      original form as received by Borrower.

     

    Section
      2.5 Delivery
      of Additional Documentation Required.
      At any
      time upon the request of Secured Party, Borrower shall execute and deliver
      to
      Secured Party all financing statements, continuation of financing statements,
      fixture filings, security agreements, pledges, assignments, endorsements of
      certificates of title, applications for title, affidavits, reports, notices,
      schedules of accounts, letters of authority, and all other documents that
      Secured Party reasonably may request, in form satisfactory to Secured Party,
      to
      perfect and continue perfected Secured Party’s security interests in the
      Collateral, and in order to fully consummate all of the transactions
      contemplated hereby and under the other Loan Documents.

     

    Section
      2.6 Power
      of Attorney.
      Borrower hereby irrevocably makes, constitutes, and appoints Secured Party
      (and
      any of Secured Party’s officers, employees, or agents designated by Secured
      Party) as Borrower’s true and lawful attorney, with power to (a) if Borrower
      refuses to, or fails timely to execute and deliver any of the documents
      described in Section
      2.4,
      sign
      the name of Borrower on any of the documents described in Section
      2.4,
      (b) at
      any time that an Event of Default has occurred and is continuing or Secured
      Party deems itself insecure, sign Borrower’s name on any invoice or bill of
      lading relating to any Account, schedules and assignments of Accounts and
      verifications of Accounts, (c) send requests for verification of Accounts,
      (d)
      endorse Borrower’s name on any Collection item that may come into Secured
      Party’s possession, (e) at any time that an Event of Default has occurred and is
      continuing or Secured Party deems itself insecure, notify the post office
      authorities to change the address for delivery of Borrower’s mail to an address
      designated by Secured Party, to receive and open all mail addressed to Borrower,
      and to retain all mail relating to the Collateral and forward all other mail
      to
      Borrower, (f) at any time that an Event of Default has occurred and is
      continuing or Secured Party deems itself insecure, make, settle, and adjust
      all
      claims under Borrower’s policies of insurance and make all determinations and
      decisions with respect to such policies of insurance, and (g) at any time that
      an Event of Default has occurred and is continuing or Secured Party deems itself
      insecure, settle and adjust disputes and claims respecting the Accounts directly
      with any Person obligated under such Account, for amounts and upon terms that
      Secured Party determines to be reasonable, and Secured Party may cause to be
      executed and delivered any documents and releases that Secured Party determines
      to be necessary. The appointment of Secured Party as Borrower’s attorney, and
      each and every one of Secured Party’s rights and powers, being coupled with an
      interest, is irrevocable until all of the Obligations have been fully and
      finally repaid and performed and Secured Party’s obligation to extend credit
      hereunder is terminated.

     

    
      
        
        

      

      
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    Section
      2.7 Right
      to Inspect.
      Secured
      Party (through any of its officers, employees or agents) shall have the right,
      from time to time hereafter, during normal business hours, to inspect Borrower’s
      Books and to check, test, and appraise the Collateral in order to verify
      Borrower’s financial condition or the amount, quality, value, condition of, or
      any other matter relating to, the Collateral.

     

    ARTICLE
      III

     

    REPRESENTATIONS
      AND WARRANTIES

     

    In
      order
      to induce Secured Party to enter into this Agreement, Borrower makes the
      following representations and warranties as of the date hereof:

     

    Section
      3.1 No
      Encumbrances.
      Borrower has good and indefeasible title to the Collateral, free and clear
      of
      Liens except for Permitted Liens.

     

    Section
      3.2 Location
      of Inventory and Equipment.
      The
      Inventory and Equipment are not stored with a bailee, warehouseman, or similar
      party.

     

    Section
      3.3 Due
      Authorization; No Conflict.
      

     

    (a) The
      execution, delivery, and performance by Borrower of this Agreement has been
      duly
      authorized by all necessary corporate action.

     

    (b) The
      execution, delivery, and performance by Borrower of this Agreement does not
      and
      will not (i) violate any provision of federal, state, or local law or
      regulation (including Regulations T, U, and X of the Federal Reserve Board)
      applicable to Borrower, the Governing Documents of Borrower, or any order,
      judgment, or decree of any court or other Governmental Authority binding on
      Borrower, (ii) conflict with, result in a breach of, or constitute (with
      due notice or lapse of time or both) a default under any material contractual
      obligation or material lease of Borrower, (iii) result in or require the
      creation or imposition of any Lien of any nature whatsoever upon any properties
      or assets of Borrower, other than Permitted Liens, or (iv) require any
      approval of stockholders or any approval or consent of any Person under any
      material contractual obligation of Borrower.

     

    
      
        
        

      

      
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    (c) Other
      than the filing of appropriate financing statements, fixture filings, and
      mortgages, the execution, delivery, and performance by Borrower of this
      Agreement does not and will not require any registration with, consent, or
      approval of, or notice to, or other action with or by, any federal, state,
      foreign, or other Governmental Authority or other Person.

     

    (d) This
      Agreement, when executed and delivered by Borrower will be the legally valid
      and
      binding obligations of Borrower, enforceable against Borrower in accordance
      with
      its terms, except as enforcement may be limited by equitable principles or
      by
      bankruptcy, insolvency, reorganization, moratorium, or similar laws relating
      to
      or limiting creditors’ rights generally.

     

    (e) The
      Liens
      granted by Borrower to Secured Party in and to Collateral pursuant to this
      Agreement and the other Loan Documents are validly created Liens, subject only
      to Permitted Liens.

     

    Section
      3.4 Options
      to Purchase.
      None of
      the Collateral is subject to any purchase option, buy-sell right, right of
      first
      refusal, right of first offer or other similar right to acquire any
      thereof.

     

    ARTICLE
      IV

     

    COVENANTS
      OF BORROWER

     

    Borrower
      covenants and agrees that, until full and final payment of the Obligations,
      and
      unless Secured Party shall otherwise consent in writing, Borrower
      shall:

     

    Section
      4.1 Title
      to Equipment.
      Upon
      Secured Party’s written request, Borrower immediately shall deliver to Secured
      Party, properly endorsed, any and all evidences of ownership of, certificates
      of
      title, or applications for title to any items of Equipment. 

     

    Section
      4.2 Maintenance
      of Equipment.
      Maintain the Equipment in good operating condition and repair (ordinary wear
      and
      tear excepted), and make all necessary replacements thereto so that the value
      and operating efficiency thereof shall at all times be maintained and preserved.
      Other than those items of Equipment that constitute fixtures on the date hereof,
      Borrower shall not permit any item of Equipment to become a fixture to real
      estate or an accession to other property, and such Equipment at all times shall
      remain personal property.

     

    
      
        
        

      

      
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    Section
      4.3 Insurance.
      

     

    (a) At
      its
      expense, maintain insurance respecting the Collateral wherever located, covering
      loss or damage by fire, theft, explosion, and all other hazards and risks as
      ordinarily are insured against by other Persons engaged in the same or similar
      businesses. Borrower also shall maintain business interruption, public
      liability, and product liability insurance, as well as insurance against
      larceny, embezzlement, and criminal misappropriation. All such policies of
      insurance shall be in such amounts and with such insurance companies as are
      reasonably satisfactory to Secured Party. Borrower shall deliver the originals
      of all such policies to Secured Party with Secured Party’s loss payable
      endorsements or other satisfactory Secured Party’s loss payable endorsements,
      naming Secured Party as sole loss payee or additional insured, as appropriate.
      Each policy of insurance or endorsement shall contain a clause requiring the
      insurer to give not less than 30 days prior written notice to Secured Party
      in
      the event of cancellation of the policy for any reason whatsoever. If Borrower
      fails to provide and pay for such insurance, Secured Party may, at its option,
      but shall not be required to, procure the same and charge Borrower
      therefor.

     

    (b) Borrower
      shall give Secured Party prompt notice of any material loss covered by such
      insurance and payable to Borrower. Any monies received as payment for any loss
      under any insurance policy mentioned above (other than liability insurance
      policies) or as payment of any award or compensation for condemnation or taking
      by eminent domain, shall be paid over to Secured Party to be applied at the
      option of Secured Party either to the prepayment of the Obligations without
      premium, in such order or manner as Secured Party may elect, or shall be
      disbursed to Borrower under staged payment terms reasonably satisfactory to
      Secured Party for application to the cost of repairs, replacements, or
      restorations.

     

    ARTICLE
      V

     

    NEGATIVE
      COVENANTS

     

    Borrower
      covenants and agrees that, until full and final payment of the Obligations,
      Borrower will not do any of the following without Secured Party’s prior written
      consent: 

     

    Section
      5.1 Liens.
      Create,
      incur, assume, or permit to exist, directly or indirectly, any Lien on or with
      respect to any of its property or assets, of any kind, whether now owned or
      hereafter acquired, or any income or profits therefrom, except for Permitted
      Liens (including Liens that are replacements of Permitted Liens to the extent
      that the original Indebtedness is refinanced and so long as the replacement
      Liens only encumber those assets or property that secured the original
      Indebtedness). This prohibition specifically includes any “priming liens” or the
      creation of any lien that is pari passu to any claims or interests of Secured
      Party (other than Guarantors Security Interest and GWSE’s Security Interest),
      irrespective of whether such claims or interests may be adequately
      protected.

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    Section
      5.2 Waste.
      Commit
      or suffer any waste of the Collateral or do or permit to be done thereon
      anything that may in any way impair the value of the Collateral. 

     

    ARTICLE
      VI

     

    FURTHER
      ASSURANCES

     

    Section
      6.1 Further
      Acts, etc.
      Borrower will, at the cost of Borrower, and without expense to Secured Party,
      do, execute, acknowledge and deliver all and every such further acts, deeds,
      conveyances, pledge, assignments, notices of assignments, transfers and
      assurances as Secured Party shall, from time to time, require, for the better
      assuring, conveying, assigning, transferring, and confirming unto Secured Party
      the Collateral and rights hereby granted, bargained, sold, conveyed, confirmed,
      pledged, assigned, warranted and transferred or intended now or hereafter so
      to
      be, or which Borrower may be or may hereafter become bound to convey or assign
      to Secured Party, or for carrying out the intention or facilitating the
      performance of the terms of this Agreement or for complying with all Applicable
      Laws. Borrower, on demand, will execute and deliver and hereby authorizes
      Secured Party to execute in the name of Borrower or without the signature of
      Borrower to the extent Secured Party may lawfully do so, one or more financing
      statements, chattel mortgages or other instruments, to evidence more effectively
      the security interest of Secured Party in the Collateral. Borrower grants to
      Secured Party an irrevocable power of attorney coupled with an interest for
      the
      purpose of exercising and perfecting any and all rights and remedies available
      to Secured Party at law and in equity, including without limitation such rights
      and remedies available to Secured Party pursuant to this Section
      6.1.

     

    ARTICLE
      VII

     

    RIGHTS
      AND REMEDIES

     

    Section
      7.1 Remedies.
      Upon
      the occurrence, and during the continuation, of an Event of Default, Borrower
      agrees that Secured Party may take such action, without notice or demand, as
      it
      deems advisable to protect and enforce its rights against Borrower and in and
      to
      the Collateral, including, but not limited to, the following actions, each
      of
      which may be pursued concurrently or otherwise, at such time and in such order
      as Secured Party may determine, in its sole discretion, without impairing or
      otherwise affecting the other rights and remedies of Secured Party:

     

    (a) exercise
      any and all rights and remedies granted to a secured party upon default under
      the Uniform Commercial Code, including, without limiting the generality of
      the
      foregoing: (i) the right to take possession of the property secured thereby
      or
      any part thereof, and to take such other measures as Secured Party may deem
      necessary for the care, protection and preservation of such property, and (ii)
      request Borrower at its expense to assemble such property and make it available
      to Secured Party at a convenient place acceptable to Secured Party. Any notice
      of sale, disposition or other intended action by Secured Party with respect
      to
      such property sent to Borrower in accordance with the provisions hereof at
      least
      five (5) days prior to such action, shall constitute commercially reasonable
      notice to Borrower;

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    (b) cause
      Borrower to hold all returned Inventory in trust for Secured Party, segregate
      all returned Inventory from all other property of Borrower or in Borrower’s
      possession and conspicuously label said Inventory as the property of Secured
      Party;

     

    (c) without
      notice to or demand upon Borrower, make such payments and do such acts as
      Secured Party considers necessary or reasonable to protect its security
      interests in the Collateral. Borrower agrees to assemble the Collateral if
      Secured Party so requires, and to make the Collateral available to Secured
      Party
      as Secured Party may designate. Borrower authorizes Secured Party to enter
      the
      premises where the Collateral is located, to take and maintain possession of
      the
      Collateral, or any part of it, and to pay, purchase, contest or compromise
      any
      encumbrance, charge or Lien that in Secured Party’s determination appears to
      conflict with its security interest and to pay all expenses incurred in
      connection therewith. With respect to any of Borrower’s owned or leased
      premises, Borrower hereby grants Secured Party a license to enter into
      possession of such premises and to occupy the same, without charge, for up
      to
      120 days in order to exercise any of Secured Party’s rights or remedies provided
      herein, at law, in equity or otherwise;

     

    (d) Ship,
      reclaim, recover, store, finish, maintain, repair, prepare for sale, advertise
      for sale, and sell (in the manner provided for herein) the Collateral. Secured
      Party is hereby granted a license or other right to use, without charge,
      Borrower’s labels, patents, copyrights, rights of use of any name, trade
      secrets, trade names, trademarks, service marks, and advertising matter, or
      any
      property of a similar nature, as it pertains to the Collateral, in completing
      production of, advertising for sale, and selling any Collateral and Borrower’s
      rights under all licenses shall inure to Secured Party’s benefit; 

     

    (e) sell
      the
      Collateral at either a public or private sale, or both, by way of one or more
      contracts or transactions, for cash or on terms, in such manner and at such
      places (including Borrower’s premises) as Secured Party determines is
      commercially reasonable;

     

    (f) pursue
      such other remedies as Secured Party may have under applicable law;
      and

     

    (g) Borrower
      hereby acknowledges that the Obligations arose out of a commercial transaction,
      and agrees that if an Event of Default shall occur Secured Party shall have
      the
      right to an immediate writ of possession without notice of a hearing; provided,
      however, that notwithstanding anything to the contrary contained
      herein.

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    ARTICLE
      VIII

     

    WAIVERS

     

    Section
      8.1 Secured
      Party’s Liability for Collateral.
      Secured
      Party shall not in any way or manner be liable or responsible for: (a) the
      safekeeping of the Collateral; (b) any loss or damage thereto occurring or
      arising in any manner or fashion from any cause; (c) any diminution in the
      value
      thereof; or (d) any act or default of any carrier, warehouseman, bailee,
      forwarding agency or other Person. All risk of loss, damage or destruction
      of
      the Collateral shall be borne by Borrower

     

    ARTICLE
      IX

     

    NOTICE

     

    Section
      9.1 Notices.
      All
      notices or other written communications hereunder shall be deemed to have been
      properly given (i) upon delivery or refusal of delivery, if delivered in person,
      (ii) one (1) Business Day (defined below) after having been deposited for
      overnight delivery with any reputable overnight courier service, or (iii) three
      (3) Business Days after having been deposited in any post office or mail
      depository regularly maintained by the U.S. Postal Service and sent by
      registered or certified mail, postage prepaid, return receipt requested,
      addressed as follows:

     

    
      	
              If
                to Borrower:

            	
              GPS
                Industries, Inc.

            
	 	
              5550-152nd
                Street – Suite 214

            
	 	
              Surrey,
                British Columbia V3S 559

            
	 	
              Attention:
                Chief Executive Officer

            
	 	
              Facsimile
                No.: (604) 576-7400

            
	 	 
	
              With
                a copy to:

            	
              David
                Ficksman, Esq.

            
	 	
              Troy
                Gould

            
	 	
              1801
                Century Park East – Suite 1600

            
	 	
              Los
                Angeles, CA 90096

            
	 	
              Telephone
                No.: (310) 553-4441

            
	 	
              Facsimile
                No.: (310) 201-4746

            
	 	 
	
              If
                to Secured Party:

            	
              Tulip
                Group Investments, Limited

            
	 	
              P.O.
                Box 73147

            
	 	
              Dubai,
                UAE

            
	 	
              Atttention:
                Masoud Sangi

            
	 	
              Facsimile
                No.: 04 332 8451

            


    

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

    


    
      	
              With
                a copy to:

            	
              Jeffrey
                A. Hechtman, Esq.

            
	 	
              Horwood
                Marcus & Berk, Chtd.

            
	 	
              180
                North LaSalle Street – Suite 7300

            
	 	
              Chicago,
                IL 60601

            
	 	
              Telephone
                No.: (312) 606-3231

            
	 	
              Facsimile
                No.: (312) 264-2548

            


    

    


    or
      addressed as such party may from time to time designate by written notice to
      the
      other parties.

     

    Either
      party by notice to the other may designate additional or different addresses
      for
      subsequent notices or communications.

     

    ARTICLE
      X

     

    CHOICE
      OF LAW AND VENUE; JURY TRIAL WAIVER

     

    Section
      10.1 THE
      VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (UNLESS EXPRESSLY
      PROVIDED TO THE CONTRARY IN AN ANOTHER LOAN DOCUMENT), THE CONSTRUCTION,
      INTERPRETATION, AND ENFORCEMENT HEREOF AND THEREOF, AND THE RIGHTS OF THE
      PARTIES HERETO AND THERETO WITH RESPECT TO ALL MATTERS ARISING HEREUNDER OR
      THEREUNDER OR RELATED HERETO OR THERETO SHALL BE DETERMINED UNDER, GOVERNED
      BY,
      AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEVADA. THE PARTIES
      AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION WITH THIS AGREEMENT
      AND THE OTHER LOAN DOCUMENTS SHALL BE TRIED AND LITIGATED ONLY IN THE STATE
      AND
      FEDERAL COURTS LOCATED IN THE COUNTY OF CLARK, STATE OF NEVADA. EACH OF BORROWER
      AND SECURED PARTY WAIVES, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY
      RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT
      TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS
ARTICLE
      X.
      BORROWER AND SECURED PARTY HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL
      OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF ANY OF THE LOAN
      DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING CONTRACT
      CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR
      STATUTORY CLAIMS. EACH OF BORROWER AND SECURED PARTY REPRESENTS THAT IT HAS
      REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL
      RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION,
      A
      COPY OF THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE
      COURT.

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

    ARTICLE
      XI

     

    MISCELLANEOUS
      PROVISIONS

     

    Section
      11.1 Effectiveness.
      This
      Agreement shall be binding and deemed effective when executed by Borrower and
      Secured Party.

     

    Section
      11.2 Successors
      and Assigns.
      This
      Agreement shall bind and inure to the benefit of the respective successors
      and
      assigns of each of the parties; provided, however, that Borrower may not assign
      this Agreement or any rights or duties hereunder without Secured Party’s prior
      written consent and any prohibited assignment shall be absolutely
      void.
      No
      consent to an assignment shall release Borrower from its Obligations. Secured
      Party may assign this Agreement and its rights and duties hereunder and no
      consent or approval by Borrower is required in connection with any such
      assignment. Secured Party reserves the right to sell, assign, transfer,
      negotiate, or grant participations in all or any part of, or any interest in
      Secured Party’s rights and benefits hereunder. In connection with any such
      assignment or participation, Secured Party may disclose all documents and
      information which Secured Party now or hereafter may have relating to Borrower
      or Borrower’s business. To the extent that Secured Party assigns its rights and
      obligations to a third Person, Secured Party thereafter shall be released from
      such assigned obligations to Borrower and such assignment shall effect a
      novation between Borrower and such third Person.

     

    Section
      11.3 Section
      Headings.
      Headings and numbers have been set forth herein for convenience
      only.
      Unless
      the contrary is compelled by the context, everything contained in each section
      applies equally to this entire Agreement.

     

    Section
      11.4 Interpretation.
      Neither
      this Agreement nor any uncertainty or ambiguity herein shall be construed
      resolved against Secured Party or Borrower, whether under any rule of
      construction or otherwise.
      On the
      contrary, this Agreement has been reviewed by all parties and shall be construed
      and interpreted according to the ordinary meaning of the words used so as fairly
      accomplish the purposes and intentions of all parties hereto.

     

    Section
      11.5 Severability
      of Provisions.
      Each
      provision of this Agreement shall be severable from every other provision of
      this Agreement for the purpose of determining the legal enforceability of any
      specific provision.

     

    Section
      11.6 Amendments
      in Writing.
      This
      Agreement can only be amended by a writing signed by both Secured Party and
      Borrower.

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

    Section
      11.7 Counterparts;
      Facsimile Execution.
      This
      Agreement may be executed in any number of counterparts and by different parties
      on separate counterparts, each of which, when executed and delivered, shall
      be
      deemed to be an original, and all of which, when taken together, shall
      constitute but one and the same Agreement. Delivery of an executed counterpart
      of this Agreement by facsimile shall be equally as effective as delivery of
      an
      original executed counterpart of this Agreement. Any party delivering an
      executed counterpart of this Agreement by facsimile also shall deliver an
      original executed counterpart of this Agreement but the failure to deliver
      an
      original executed counterpart shall not affect the validity, enforceability,
      and
      binding effect of this Agreement.

     

    Section
      11.8 Entire
      Agreement.
      This
      Agreement constitutes the entire understanding and agreement between Borrower
      and Secured Party with respect to the transactions contemplated hereby and
      supersede all prior written or oral understandings and agreements between
      Borrower and Secured Party with respect thereto.

     

    [Remainder
      of Page Intentionally Left Blank, Signatures to Follow]


    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

     

    IN
      WITNESS WHEREOF,
      the
      undersigned have duly executed this Agreement as of the date first set forth
      above.

     

    
      	
              BORROWER:

            	
              GPS
                INDUSTRIES, INC., 

            
	 	
              a
                Nevada corporation

            
	 	 
	 	
              By:

            	 
	 	 	
              Name:

            
	 	 	
              Title:

            
	 	 	 
	 	
              DIRECT
                GOLF SERVICES INC.,

            
	 	
              a
                ____________corporation

            
	 	 
	 	
              By:

            	 
	 	 	
              Name:

            
	 	 	
              Title:

            
	 	 	 
	 	
              GOLF
                ACADEMIES LTD. D/B/A GPSI 

              EUROPE,

            
	 	
              a
                ____________corporation

            
	 	 
	 	
              By:

            	 
	 	 	
              Name:

            
	 	 	
              Title:

            
	 	 	 
	 	
              GPS
                IT, LLC,

            
	 	
              a
                ____________limited liability company

            
	 	 
	 	
              By:

            	 
	 	 	
              Name:

            
	 	 	
              Title:

            
	 	 	 
	
              SECURED
                PARTY: 

            	
              TULIP
                GROUP INVESTMENTS, LIMITED, 

            
	 	
              a
                B.V.I. company 

            
	 	
               

            
	 	
              By:

            	 
	 	 	
              Name:

            
	 	 	
              Title:

            


    

     

    
      
        
        

      

      
        17