EXHIBIT A
NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS CONVERTIBLE
HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE
SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO
SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
COMPANY. THIS SECURITY AND THE SECURITIES ISSUABLE UPON CONVERSION OF THIS
SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER
LOAN SECURED BY SUCH SECURITIES.
Original Issue Date: October 27, 2005
Original Conversion Price (subject to adjustment herein): $1.45
$3,500,000
9% SENIOR SUBORDINATED SECURED CONVERTIBLE NOTE
DUE OCTOBER 27, 2010
THIS NOTE is duly authorized and issued 9% Secured Convertible Notes
of Global Axcess Corp., a Nevada corporation, having a principal place of
business at 000 Xxxxx Xxxxx Xxxx Xxxxx, Xxxxx Xxxxx Xxxxx, Xxxxxxx 00000 (the
"Company"), designated as its 9% Senior Subordinated Secured Convertible Notes,
due October 27, 2010 (the "Note(s)").
FOR VALUE RECEIVED, the Company promises to pay to CAMOFI Master LDC or
its registered assigns (the "Holder"), the principal sum of $3,500,000 on
October 27, 2010 or such earlier date as the Notes are required or permitted to
be repaid as provided hereunder (the "Maturity Date"), and to pay interest to
the Holder on the aggregate unconverted and then outstanding principal amount of
this Note in accordance with the provisions hereof. This Note is subject to the
following additional provisions:
Section 1. Definitions. For the purposes hereof, in addition to the terms
defined elsewhere in this Note: (a) capitalized terms not otherwise defined
herein have the meanings given to such terms in the Purchase Agreement, and (b)
the following terms shall have the following meanings:
"Alternate Consideration" shall have the meaning set forth in
Section 5(e)(iii).
"Business Day" means any day except Saturday, Sunday and any
day which shall be a federal legal holiday in the United States or a
day on which banking institutions in the State of New York are
authorized or required by law or other government action to close.
"Change of Control Transaction" means the occurrence after the
date hereof, of any of (i) an acquisition after the date hereof by an
individual or legal entity or "group" (as described in Rule 13d-5(b)(1)
promulgated under the Exchange Act) of effective control (whether
through legal or beneficial ownership of capital stock of the Company,
by contract or otherwise) of in excess of 33% of the voting securities
of the Company, (ii) a replacement at one time or within a three year
period of more than one-half of the members of the Company's board of
directors which is not approved by a majority of those individuals who
are members of the board of directors on the date hereof (or by those
individuals who are serving as members of the board of directors on any
date whose nomination to the board of directors was approved by a
majority of the members of the board of directors who are members on
the date hereof), (iii) Xxxxxxx Xxxxx shall no longer be employed on a
full time basis by the Company or (iv) the execution by the Company of
an agreement to which the Company is a party or by which it is bound,
providing for any of the events set forth above in (i), (ii) or (iii).
"Common Stock" means the common stock, $0.001 par value, of
the Company and stock of any other class into which such shares may
hereafter have been reclassified or changed.
"Conversion Date" shall have the meaning set forth in Section
4(a) hereof.
"Conversion Price" shall have the meaning set forth in Section
4(b).
"Conversion Shares" means the shares of Common Stock issuable
upon conversion of Notes or as payment of interest in accordance with
the terms hereof.
"Effectiveness Date" shall have the meaning given to such term
in the Registration Rights Agreement.
"Effectiveness Period" shall have the meaning given to such
term in the Registration Rights Agreement.
"Equity Conditions" shall mean, during the period in question,
(i) the Company shall have duly honored all conversions and redemptions
scheduled to occur or occurring by virtue of one or more Notice of
Conversions, if any, (ii) all liquidated damages and other amounts
owing in respect of the Notes shall have been paid; (iii) there is an
effective Registration Statement pursuant to which the Holder is
permitted to utilize the prospectus thereunder to resell all of the
shares issuable pursuant to the Transaction Documents (and the Company
believes, in good faith, that such effectiveness will continue
uninterrupted for the foreseeable future), (iv) the Common Stock is
trading on the Trading Market and all of the shares issuable pursuant
to the Transaction Documents are listed for trading on a Trading Market
(and the Company believes, in good faith, that trading of the Common
Stock on a Trading Market will continue uninterrupted for the
foreseeable future), (v) there is a sufficient number of authorized but
unissued and otherwise unreserved shares of Common Stock for the
issuance of all of the shares issuable pursuant to the Transaction
Documents, (vi) there is then existing no Event of Default or event
which, with the passage of time or the giving of notice, would
constitute an Event of Default, (vii) all of the shares issued or
issuable pursuant to the transaction proposed would not violate the
limitations set forth in Section 4(d), (viii) no public announcement of
a pending or proposed Fundamental Transaction, Change of Control
Transaction or acquisition transaction has occurred that has not been
consummated and (ix) the closing price for the Common Stock is at least
115% of the Conversion Price (as adjusted).
"Event of Default" shall have the meaning set forth in Section
8.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
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"Fundamental Transaction" shall have the meaning set forth in
Section 5(e)(iii) hereof.
"Late Fees" shall have the meaning set forth in the second
paragraph to this Note.
"Mandatory Prepayment Amount" for any Notes shall equal the
sum of (i) 110% of the principal amount of Notes to be prepaid, plus
all accrued and unpaid interest thereon, and (ii) all other amounts,
costs, expenses and liquidated damages due in respect of such Notes.
"Original Issue Date" shall mean the date of the first
issuance of the Notes regardless of the number of transfers of any Note
and regardless of the number of instruments which may be issued to
evidence such Note.
"Person" means a corporation, an association, a partnership,
organization, a business, an individual, a government or political
subdivision thereof or a governmental agency.
"Purchase Agreement" means the Securities Purchase Agreement,
dated as of October 27, 2005, to which the Company and the original
Holders are parties, as amended, modified or supplemented from time to
time in accordance with its terms.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of the date of the Purchase Agreement, to which the
Company and the original Holders are parties, as amended, modified or
supplemented from time to time in accordance with its terms.
"Registration Statement" means a registration statement
meeting the requirements set forth in the Registration Rights
Agreement, covering among other things the resale of the Conversion
Shares and naming the Holders as "selling stockholders" thereunder.
"Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder.
"Subsidiary" shall have the meaning given to such term in the
Purchase Agreement.
"Trading Day" means a day on which the Common Stock is traded
on a Trading Market.
"Trading Market" means the following markets or exchanges on
which the Common Stock is listed or quoted for trading on the date in
question: the Nasdaq SmallCap Market, the American Stock Exchange, the
New York Stock Exchange, the Nasdaq National Market or the OTC Bulletin
Board.
"Transaction Documents" shall have the meaning set forth in
the Purchase Agreement.
"VWAP" means, for any date, the price determined by the first
of the following clauses that applies: (a) if the Common Stock is then
listed or quoted on a Trading Market, the daily volume weighted average
price of the Common Stock for such date (or the nearest preceding date)
on the primary Trading Market on which the Common Stock is then listed
or quoted as reported by Bloomberg Financial L.P. (based on a Trading
Day from 9:30 a.m. EST to 4:02 p.m. Eastern Time) using the VAP
function; (b) if the Common Stock is not then listed or quoted on the
Trading Market and if prices for the Common Stock are then reported in
the "Pink Sheets" published by the Pink Sheets, LLC (or a similar
organization or agency succeeding to its functions of reporting
prices), the most recent bid price per share of the Common Stock so
reported; or (c) in all other cases, the fair market value of a share
of Common Stock as determined by a nationally recognized-independent
appraiser selected in good faith by Holders holding a majority of the
principal amount of Notes then outstanding.
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Section 2. Interest.
a) Payment of Interest in Cash. The Company shall pay interest to the
Holder on the aggregate unconverted and then outstanding principal amount of
this Note at the rate of 9% per annum, payable monthly in arrears beginning on
the first day of the first month after the Original Issue Date and on each
Conversion Date (as to that principal amount then being converted) and on the
Maturity Date (except that, if any such date is not a Business Day, then such
payment shall be due on the next succeeding Business Day; each such date, an
"Interest Payment Date"), in cash.
b) Reserved.
c) Interest Calculations. Interest shall be calculated on the basis of
a 360-day year and shall accrue daily commencing on the Original Issue Date
until payment in full of the principal sum, together with all accrued and unpaid
interest and other amounts which may become due hereunder, has been made.
Interest shall be compounded monthly. Payment of interest in shares of Common
Stock shall otherwise occur pursuant to Section 4(e)(ii) and only for purposes
of the payment of interest in shares, the Interest Payment Date shall be deemed
the Conversion Date. Interest shall cease to accrue with respect to any
principal amount converted, provided that the Company in fact delivers the
Conversion Shares within the time period required by Section 4(d)(ii). Interest
hereunder will be paid to the Person in whose name this Note is registered on
the records of the Company regarding registration and transfers of Notes (the
"Note Register"). Except as otherwise provided herein, if at any time the
Company pays interest partially in cash and partially in shares of Common Stock,
then such payment shall be distributed ratably among the Holders based upon the
principal amount of Notes held by each Holder.
d) Late Fee. All overdue accrued and unpaid interest to be paid
hereunder shall entail a late fee at the rate of 20% per annum (or such lower
maximum amount of interest permitted to be charged under applicable law) ("Late
Fee") which will accrue daily, from the date such interest is due hereunder
through and including the date of payment. Notwithstanding anything to the
contrary contained herein, if on any Interest Payment Date the Company has
elected to pay interest in Common Stock and is not able to pay accrued interest
in the form of Common Stock because it does not then satisfy the conditions for
payment in the form of Common Stock set forth above, then, at the option of the
Holder, the Company, in lieu of delivering either shares of Common Stock
pursuant to this Section 2 or paying the regularly scheduled cash interest
payment, shall deliver, within three Trading Days of each applicable Interest
Payment Date, an amount in cash equal to the product of the number of shares of
Common Stock otherwise deliverable to the Holder in connection with the payment
of interest due on such Interest Payment Date and the highest VWAP during the
period commencing on the Interest Payment Date and ending on the Trading Day
prior to the date such payment is made.
e) Optional Prepayment. The Company shall have the right to prepay, in
cash, all or a portion of the Notes at any time at 110% of the principal amount
thereof plus accrued interest to the date of repayment.
f) Mandatory Prepayment. On the execution of a definitive agreement to
sell more than 50% of the assets of the Company or upon a Change of Control
Transaction, the Company shall be required to prepay the Notes, in cash, at 110%
of the principal amount thereof plus accrued interest to the date of repayment.
This Mandatory Prepayment shall not apply to the sale of all of the stock or
assets of Electronic Payment & Transfer Corp., EFT Integration Inc. and Cash
Axcess Corp., the Company's wholly-owned subsidiaries, on terms satisfactory to
the Holder.
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Section 3. Registration of Transfers and Exchanges.
a) Different Denominations. This Note is exchangeable for an equal
aggregate principal amount of Notes of different authorized denominations, as
requested by the Holder surrendering the same. No service charge will be made
for such registration of transfer or exchange.
b) Investment Representations. This Note has been issued subject to
certain investment representations of the original Holders set forth in the
Purchase Agreement and may be transferred or exchanged only in compliance with
the Purchase Agreement and applicable federal and state securities laws and
regulations.
c) Reliance on Note Register. Prior to due presentment to the Company
for transfer of this Note, the Company and any agent of the Company may treat
the Person in whose name this Note is duly registered on the Note Register as
the owner hereof for the purpose of receiving payment as herein provided and for
all other purposes, whether or not this Note is overdue, and neither the Company
nor any such agent shall be affected by notice to the contrary.
Section 4. Conversion.
a) Voluntary Conversion. At any time after the Original Issue Date
until this Note is no longer outstanding, this Note shall be convertible into
shares of Common Stock at the option of the Holder, in whole or in part at any
time and from time to time (subject to the limitations on conversion set forth
in Section 4(d) hereof). The Holder shall effect conversions by delivering to
the Company the form of Notice of Conversion attached hereto as Annex A (a
"Notice of Conversion"), specifying therein the principal amount of Notes to be
converted and the date on which such conversion is to be effected (a "Conversion
Date"). If no Conversion Date is specified in a Notice of Conversion, the
Conversion Date shall be the date that such Notice of Conversion is provided
hereunder. To effect conversions hereunder, the Holder shall not be required to
physically surrender Notes to the Company unless the entire principal amount of
this Note plus all accrued and unpaid interest thereon has been so converted.
Conversions hereunder shall have the effect of lowering the outstanding
principal amount of this Note in an amount equal to the applicable conversion.
The Holder and the Company shall maintain records showing the principal amount
converted and the date of such conversions. The Company shall deliver any
objection to any Notice of Conversion within 3 Business Days of receipt of such
notice. In the event of any dispute or discrepancy, the records of the Holder
shall be controlling and determinative in the absence of manifest error. The
Holder and any assignee, by acceptance of this Note, acknowledge and agree that,
by reason of the provisions of this paragraph, following conversion of a portion
of this Note, the unpaid and unconverted principal amount of this Note may be
less than the amount stated on the face hereof. However, at the Company's
request, the Holder shall surrender the Note to the Company within five (5)
Trading Days following such request so that a new Note reflecting the correct
principal amount may be issued to Holder.
b) Conversion Price. The conversion price in effect on any Conversion
Date shall be $1.45, subject to adjustment herein.
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c) Mandatory Conversion. At any time after the Original Issue Date,
provided that the Equity Conditions are met, in the event that the average daily
trading volume exceeds 300,000 shares and such amount to be converted would not
exceed 25% of the volume for any of the previous 10 Trading Days (each subject
to adjustment for stock splits, reclassifications, combinations and similar
adjustments) for the 20 consecutive Trading Days immediately prior to the
Mandatory Conversion Notice Date (as defined below), unless the Holder is
prohibited from converting the Notes pursuant to Section 4(d) below, the Company
shall have the right to deliver a notice to the Holder (a "Mandatory Conversion
Notice" and the date such notice is received by the Holder, the "Mandatory
Conversion Notice Date") then the Company shall be able to require the Holder to
convert the percentage of the aggregate principal amount of the Notes
outstanding in the following amounts:
i. If the VWAP of the Common Stock (subject to adjustment for
stock splits, reclassifications, combinations and similar
adjustments) exceeds 150% of the initial Conversion Price
(i.e. $2.18 per share) for 20 consecutive Trading Days, 25% of
the Notes outstanding;
ii. If the VWAP of the Common Stock (subject to adjustment for
stock splits, reclassifications, combinations and similar
adjustments) exceeds 200% of the initial Conversion Price
(i.e. $2.90 per share) for 20 consecutive Trading Days, an
additional 25% of the Notes outstanding, provided that such
conversion shall not result in excess of 50% of the original
aggregate principal amount of the Notes being converted;
iii. If the VWAP of the Common Stock (subject to adjustment for
stock splits, reclassifications, combinations and similar
adjustments) exceeds 250% of the initial Conversion Price
(i.e. $3.63 per share) for 20 consecutive Trading Days, an
additional 25% of the Notes outstanding, provided that such
conversion shall not result in excess of 75% of the original
aggregate principal amount of the Notes being converted; and
iv. If the VWAP of the Common Stock (subject to adjustment for
stock splits, reclassifications, combinations and similar
adjustments) exceeds 300% of the initial Conversion Price
(i.e. $4.35 per share) for 20 consecutive Trading Days, 100%
of the Notes outstanding;
d) Conversion Limitations; Xxxxxx's Restriction on Conversion. The
Company shall not effect any conversion of this Note, and the Holder shall not
have the right to convert any portion of this Note, pursuant to Section 4(a) or
otherwise, to the extent that after giving effect to such conversion, the Holder
(together with the Holder's affiliates), as set forth on the applicable Notice
of Conversion, would beneficially own in excess of 4.99% of the number of shares
of the Common Stock outstanding immediately after giving effect to such
conversion. For purposes of the foregoing sentence, the number of shares of
Common Stock beneficially owned by the Holder and its affiliates shall include
the number of shares of Common Stock issuable upon conversion of this Note with
respect to which the determination of such sentence is being made, but shall
exclude the number of shares of Common Stock which would be issuable upon (A)
conversion of the remaining, nonconverted portion of this Note beneficially
owned by the Holder or any of its affiliates and (B) exercise or conversion of
the unexercised or nonconverted portion of any other securities of the Company
(including, without limitation, any other Notes or the Warrants) subject to a
limitation on conversion or exercise analogous to the limitation contained
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herein beneficially owned by the Holder or any of its affiliates. Except as set
forth in the preceding sentence, for purposes of this Section 4(c), beneficial
ownership shall be calculated in accordance with Section 13(d) of the Exchange
Act. To the extent that the limitation contained in this section applies, the
determination of whether this Note is convertible (in relation to other
securities owned by the Holder) and of which a portion of this Note is
convertible shall be in the sole discretion of such Holder. To ensure compliance
with this restriction, the Holder will be deemed to represent to the Company
each time it delivers a Notice of Conversion that such Notice of Conversion has
not violated the restrictions set forth in this paragraph and the Company shall
have no obligation to verify or confirm the accuracy of such determination. For
purposes of this Section 4(c), in determining the number of outstanding shares
of Common Stock, the Holder may rely on the number of outstanding shares of
Common Stock as reflected in (x) the Company's most recent Form 10-QSB or Form
10-KSB (or such related form), as the case may be, (y) a more recent public
announcement by the Company or (z) any other notice by the Company or the
Company's Transfer Agent setting forth the number of shares of Common Stock
outstanding. Upon the written or oral request of the Holder, the Company shall
within two Trading Days confirm orally and in writing to the Holder the number
of shares of Common Stock then outstanding. In any case, the number of
outstanding shares of Common Stock shall be determined after giving effect to
the conversion or exercise of securities of the Company, including this Note, by
the Holder or its affiliates since the date as of which such number of
outstanding shares of Common Stock was reported. The provisions of this Section
4(c) may be waived by the Holder upon, at the election of the Holder, not less
than 61 days' prior notice to the Company, and the provisions of this Section
4(d) shall continue to apply until such 61st day (or such later date, as
determined by the Holder, as may be specified in such notice of waiver).
e) Mechanics of Conversion
i. Conversion Shares Issuable Upon Conversion of Principal
Amount. The number of shares of Common Stock issuable upon a
conversion hereunder shall be determined by the quotient
obtained by dividing (x) the outstanding principal amount of
this Note to be converted by (y) the Conversion Price. i.
ii. Delivery of Certificate Upon Conversion. Not later than three
Trading Days after any Conversion Date, the Company will
deliver to the Holder (A) a certificate or certificates
representing the Conversion Shares which shall be free of
restrictive legends and trading restrictions (other than
those required by the Purchase Agreement) representing the
number of shares of Common Stock being acquired upon the
conversion of Notes (including, if so timely elected by the
Company, shares of Common Stock representing the payment of
accrued interest) and (B) a bank check in the amount of
accrued and unpaid interest (if the Company is required to
pay accrued interest in cash). The Company shall, if
available and if allowed under applicable securities laws,
use its best efforts to deliver any certificate or
certificates required to be delivered by the Company under
this Section electronically through the Depository Trust
Corporation or another established clearing corporation
performing similar functions.
iii. Failure to Deliver Certificates. If in the case of any Notice
of Conversion such certificate or certificates are not
delivered to or as directed by the applicable Holder by the
third Trading Day after a Conversion Date, the Holder shall
be entitled by written notice to the Company at any time on
or before its receipt of such certificate or certificates
thereafter, to rescind such conversion, in which event the
Company shall immediately return the certificates
representing the principal amount of Notes tendered for
conversion.
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iv. Obligation Absolute; Partial Liquidated Damages. If the
Company fails for any reason to deliver to the Holder such
certificate or certificates pursuant to Section 4(d)(ii) by
the third Trading Day after the Conversion Date, the Company
shall pay to such Holder, in cash, as liquidated damages and
not as a penalty, for each $1000 of principal amount being
converted, $10 per Trading Day (increasing to $20 per Trading
Day after 5 Trading Days after such damages begin to accrue)
for each Trading Day after such third Trading Day until such
certificates are delivered. The Company's obligations to
issue and deliver the Conversion Shares upon conversion of
this Note in accordance with the terms hereof are absolute
and unconditional, irrespective of any action or inaction by
the Holder to enforce the same, any waiver or consent with
respect to any provision hereof, the recovery of any judgment
against any Person or any action to enforce the same, or any
setoff, counterclaim, recoupment, limitation or termination,
or any breach or alleged breach by the Holder or any other
Person of any obligation to the Company or any violation or
alleged violation of law by the Holder or any other person,
and irrespective of any other circumstance which might
otherwise limit such obligation of the Company to the Holder
in connection with the issuance of such Conversion Shares;
provided, however, such delivery shall not operate as a
waiver by the Company of any such action the Company may have
against the Holder. In the event a Holder of this Note shall
elect to convert any or all of the outstanding principal
amount hereof, the Company may not refuse conversion based on
any claim that the Holder or any one associated or affiliated
with the Holder of has been engaged in any violation of law,
agreement or for any other reason, unless, an injunction from
a court, on notice, restraining and or enjoining conversion
of all or part of this Note shall have been sought and
obtained and the Company posts a surety bond for the benefit
of the Holder in the amount of 150% of the principal amount
of this Note outstanding, which is subject to the injunction,
which bond shall remain in effect until the completion of
arbitration/litigation of the dispute and the proceeds of
which shall be payable to such Holder to the extent it
obtains judgment. In the absence of an injunction precluding
the same, the Company shall issue Conversion Shares or, if
applicable, cash, upon a properly noticed conversion. Nothing
herein shall limit a Xxxxxx's right to pursue actual damages
or declare an Event of Default pursuant to Section 8 herein
for the Company's failure to deliver Conversion Shares within
the period specified herein and such Holder shall have the
right to pursue all remedies available to it at law or in
equity including, without limitation, a decree of specific
performance and/or injunctive relief. The exercise of any
such rights shall not prohibit the Holders from seeking to
enforce damages pursuant to any other Section hereof or under
applicable law.
v. Compensation for Buy-In on Failure to Timely Deliver
Certificates Upon Conversion. In addition to any other rights
available to the Holder, if the Company fails for any reason
to deliver to the Holder such certificate or certificates
pursuant to Section 4(d)(ii) by the third Trading Day after
the Conversion Date, and if after such third Trading Day the
Holder is required by its brokerage firm to purchase (in an
open market transaction or otherwise) Common Stock to deliver
in satisfaction of a sale by such Holder of the Conversion
Shares which the Holder anticipated receiving upon such
conversion (a "Buy-In"), then the Company shall (A) pay in
cash to the Holder (in addition to any remedies available to
or elected by the Holder) the amount by which (x) the
Holder's total purchase price (including brokerage
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commissions, if any) for the Common Stock so purchased
exceeds (y) the product of (1) the aggregate number of
shares of Common Stock that such Holder anticipated
receiving from the conversion at issue multiplied by (2) the
actual sale price of the Common Stock at the time of the
sale (including brokerage commissions, if any) giving rise
to such purchase obligation and (B) at the option of the
Holder, either reissue Notes in principal amount equal to
the principal amount of the attempted conversion or deliver
to the Holder the number of shares of Common Stock that
would have been issued had the Company timely complied with
its delivery requirements under Section 4(e)(ii). For
example, if the Holder purchases Common Stock having a total
purchase price of $11,000 to cover a Buy-In with respect to
an attempted conversion of Notes with respect to which the
actual sale price of the Conversion Shares at the time of
the sale (including brokerage commissions, if any) giving
rise to such purchase obligation was a total of $10,000
under clause (A) of the immediately preceding sentence, the
Company shall be required to pay the Holder $1,000. The
Holder shall provide the Company written notice indicating
the amounts payable to the Holder in respect of the Buy-In.
Notwithstanding anything contained herein to the contrary,
if a Holder requires the Company to make payment in respect
of a Buy-In for the failure to timely deliver certificates
hereunder and the Company timely pays in full such payment,
the Company shall not be required to pay such Holder
liquidated damages under Section 4(d)(iv) in respect of the
certificates resulting in such Buy-In.
vi. Reservation of Shares Issuable Upon Conversion. The Company
covenants that it will at all times reserve and keep
available out of its authorized and unissued shares of
Common Stock solely for the purpose of issuance upon
conversion of the Notes and payment of interest on the Note,
each as herein provided, free from preemptive rights or any
other actual contingent purchase rights of persons other
than the Holders, not less than such number of shares of the
Common Stock as shall (subject to any additional
requirements of the Company as to reservation of such shares
set forth in the Purchase Agreement) be issuable (taking
into account the adjustments and restrictions of Section 5)
upon the conversion of the outstanding principal amount of
the Notes and payment of interest hereunder. The Company
covenants that all shares of Common Stock that shall be so
issuable shall, upon issue, be duly and validly authorized,
issued and fully paid, nonassessable and, if the
Registration Statement is then effective under the
Securities Act, registered for public sale in accordance
with such Registration Statement.
vii. Fractional Shares. Upon a conversion hereunder the Company
shall not be required to issue stock certificates
representing fractions of shares of the Common Stock, but
may if otherwise permitted, make a cash payment in respect
of any final fraction of a share based on the VWAP at such
time. If the Company elects not, or is unable, to make such
a cash payment, the Holder shall be entitled to receive, in
lieu of the final fraction of a share, one whole share of
Common Stock.
viii. Transfer Taxes. The issuance of certificates for shares of
the Common Stock on conversion of the Notes shall be made
without charge to the Holders thereof for any documentary
stamp or similar taxes that may be payable in respect of the
issue or delivery of such certificate, provided that the
Company shall not be required to pay any tax that may be
payable in respect of any transfer involved in the issuance
and delivery of any such certificate upon conversion in a
name other than that of the Holder of such Notes so
converted and the Company shall not be required to issue or
deliver such certificates unless or until the person or
persons requesting the issuance thereof shall have paid to
the Company the amount of such tax or shall have established
to the satisfaction of the Company that such tax has been
paid.
Section 5. Certain Adjustments.
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a) Stock Dividends and Stock Splits. If the Company, at any time while
the Notes are outstanding: (A) shall pay a stock dividend or otherwise make a
distribution or distributions on shares of its Common Stock or any other equity
or equity equivalent securities payable in shares of Common Stock (which, for
avoidance of doubt, shall not include any shares of Common Stock issued by the
Company pursuant to this Note, including as interest thereon), (B) subdivide
outstanding shares of Common Stock into a larger number of shares, (C) combine
(including by way of reverse stock split) outstanding shares of Common Stock
into a smaller number of shares, or (D) issue by reclassification of shares of
the Common Stock any shares of capital stock of the Company, then the Conversion
Price shall be multiplied by a fraction of which the numerator shall be the
number of shares of Common Stock (excluding treasury shares, if any) outstanding
before such event and of which the denominator shall be the number of shares of
Common Stock outstanding after such event. Any adjustment made pursuant to this
Section shall become effective immediately after the record date for the
determination of stockholders entitled to receive such dividend or distribution
and shall become effective immediately after the effective date in the case of a
subdivision, combination or re-classification.
b) Subsequent Equity Sales. Except for the Current offering, if the
Company or any Subsidiary thereof, as applicable, at any time while this Note is
outstanding, shall offer, sell, grant any option to purchase or offer, sell or
grant any right to reprice its securities, or otherwise dispose of or issue (or
announce any offer, sale, grant or any option to purchase or other disposition)
any Common Stock or Common Stock Equivalents entitling any Person to acquire
shares of Common Stock, at an effective price per share less than the then
Conversion Price (such lower price, the "Base Share Price" and such issuances
collectively, a "Dilutive Issuance"), as adjusted hereunder (if the holder of
the Common Stock or Common Stock Equivalents so issued shall at any time,
whether by operation of purchase price adjustments, reset provisions, floating
conversion, exercise or exchange prices or otherwise, or due to warrants,
options or rights per share which is issued in connection with such issuance, be
entitled to receive shares of Common Stock at an effective price per share which
is less than the Conversion Price, such issuance shall be deemed to have
occurred for less than the Conversion Price), then, the Conversion Price shall
be reduced to equal the Base Share Price and the number of Conversion Shares
issuable hereunder shall be increased. Such adjustment shall be made whenever
such Common Stock or Common Stock Equivalents are issued. The Company shall
notify the Holder in writing, no later than the Trading Day following the
issuance of any Common Stock or Common Stock Equivalents subject to this
section, indicating therein the applicable issuance price, or of applicable
reset price, exchange price, conversion price and other pricing terms (such
notice the "Dilutive Issuance Notice"). For purposes of clarification, whether
or not the Company provides a Dilutive Issuance Notice pursuant to this Section
3(b), upon the occurrence of any Dilutive Issuance, after the date of such
Dilutive Issuance the Holder is entitled to receive a number of Conversion
Shares based upon the Base Share Price regardless of whether the Holder
accurately refers to the Base Share Price in the Notice of Conversion.
c) Pro Rata Distributions. If the Company, at any time while Notes are
outstanding, shall distribute to all holders of Common Stock (and not to
Holders) evidences of its indebtedness or assets or rights or warrants to
subscribe for or purchase any security, then in each such case the Conversion
Price shall be determined by multiplying such Conversion Price in effect
immediately prior to the record date fixed for determination of stockholders
entitled to receive such distribution by a fraction of which the denominator
shall be the VWAP determined as of the record date mentioned above, and of which
the numerator shall be such VWAP on such record date less the then fair market
value at such record date of the portion of such assets or evidence of
indebtedness so distributed applicable to one outstanding share of the Common
Stock as determined by the Board of Directors in good faith. In either case the
adjustments shall be described in a statement provided to the Holders of the
portion of assets or evidences of indebtedness so distributed or such
subscription rights applicable to one share of Common Stock. Such adjustment
shall be made whenever any such distribution is made and shall become effective
immediately after the record date mentioned above.
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d) Calculations. All calculations under this Section 5 shall be made to
the nearest cent or the nearest 1/100th of a share, as the case may be. The
number of shares of Common Stock outstanding at any given time shall not
includes shares of Common Stock owned or held by or for the account of the
Company, and the description of any such shares of Common Stock shall be
considered on issue or sale of Common Stock. For purposes of this Section 5, the
number of shares of Common Stock deemed to be issued and outstanding as of a
given date shall be the sum of the number of shares of Common Stock (excluding
treasury shares, if any) issued and outstanding.
e) Notice to Holders.
i. Adjustment to Conversion Price. Whenever the Conversion Price
is adjusted pursuant to any of this Section 5, the Company
shall promptly mail to each Holder a notice setting forth the
Conversion Price after such adjustment and setting forth a
brief statement of the facts requiring such adjustment. If
the Company issues a variable rate security, despite the
prohibition thereon in the Purchase Agreement, the Company
shall be deemed to have issued Common Stock or Common Stock
Equivalents at the lowest possible conversion or exercise
price at which such securities may be converted or exercised
in the case of a Variable Rate Transaction (as defined in the
Purchase Agreement), or the lowest possible adjustment price
in the case of an MFN Transaction (as defined in the Purchase
Agreement).
ii. Notice to Allow Conversion by Xxxxxx. If (A) the Company
shall declare a dividend (or any other distribution) on the
Common Stock; (B) the Company shall declare a special
nonrecurring cash dividend on or a redemption of the Common
Stock; (C) the Company shall authorize the granting to all
holders of the Common Stock rights or warrants to subscribe
for or purchase any shares of capital stock of any class or
of any rights; (D) the approval of any stockholders of the
Company shall be required in connection with any
reclassification of the Common Stock, any consolidation or
merger to which the Company is a party, any sale or transfer
of all or substantially all of the assets of the Company, of
any compulsory share exchange whereby the Common Stock is
converted into other securities, cash or property; (E) the
Company shall authorize the voluntary or involuntary
dissolution, liquidation or winding up of the affairs of the
Company; then, in each case, the Company shall cause to be
filed at each office or agency maintained for the purpose of
conversion of the Notes, and shall cause to be mailed to the
Holders at their last addresses as they shall appear upon the
stock books of the Company, at least 20 calendar days prior
to the applicable record or effective date hereinafter
specified, a notice stating (x) the date on which a record is
to be taken for the purpose of such dividend, distribution,
redemption, rights or warrants, or if a record is not to be
taken, the date as of which the holders of the Common Stock
of record to be entitled to such dividend, distributions,
redemption, rights or warrants are to be determined or (y)
the date on which such reclassification, consolidation,
merger, sale, transfer or share exchange is expected to
become effective or close, and the date as of which it is
expected that holders of the Common Stock of record shall be
entitled to exchange their shares of the Common Stock for
securities, cash or other property deliverable upon such
reclassification, consolidation, merger, sale, transfer or
share exchange; provided, that the failure to mail such
notice or any defect therein or in the mailing thereof shall
not affect the validity of the corporate action required to
be specified in such notice. Holders are entitled to convert
Notes during the 20-day period commencing the date of such
notice to the effective date of the event triggering such
notice.
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iii. Fundamental Transaction. If, at any time while this Note is
outstanding, (A) the Company effects any merger or
consolidation of the Company with or into another Person, (B)
the Company effects any sale of all or substantially all of
its assets in one or a series of related transactions, (C)
any tender offer or exchange offer (whether by the Company or
another Person) is completed pursuant to which holders of
Common Stock are permitted to tender or exchange their shares
for other securities, cash or property, or (D) the Company
effects any reclassification of the Common Stock or any
compulsory share exchange pursuant to which the Common Stock
is effectively converted into or exchanged for other
securities, cash or property (in any such case, a
"Fundamental Transaction"), then upon any subsequent
conversion of this Note, the Holder shall have the right to
receive, for each Conversion Share that would have been
issuable upon such conversion absent such Fundamental
Transaction, the same kind and amount of securities, cash or
property as it would have been entitled to receive upon the
occurrence of such Fundamental Transaction if it had been,
immediately prior to such Fundamental Transaction, the holder
of one share of Common Stock (the "Alternate Consideration").
For purposes of any such conversion, the determination of the
Conversion Price shall be appropriately adjusted to apply to
such Alternate Consideration based on the amount of Alternate
Consideration issuable in respect of one share of Common
Stock in such Fundamental Transaction, and the Company shall
apportion the Conversion Price among the Alternate
Consideration in a reasonable manner reflecting the relative
value of any different components of the Alternate
Consideration. If holders of Common Stock are given any
choice as to the securities, cash or property to be received
in a Fundamental Transaction, then the Holder shall be given
the same choice as to the Alternate Consideration it receives
upon any conversion of this Note following such Fundamental
Transaction. To the extent necessary to effectuate the
foregoing provisions, any successor to the Company or
surviving entity in such Fundamental Transaction shall issue
to the Holder a new note consistent with the foregoing
provisions and evidencing the Holder's right to convert such
note into Alternate Consideration. The terms of any agreement
pursuant to which a Fundamental Transaction is effected shall
include terms requiring any such successor or surviving
entity to comply with the provisions of this paragraph (c)
and insuring that this Note (or any such replacement
security) will be similarly adjusted upon any subsequent
transaction analogous to a Fundamental Transaction.
iv. Exempt Issuance. Notwithstanding the foregoing, no adjustment
will be made under this Section 5 in respect of an Exempt
Issuance.
Section 6. Reserved.
Section 7. Negative Covenants. So long as any portion of this Note is
outstanding, the Company will not and will not permit any of its Subsidiaries to
directly or indirectly:
a) enter into, create, incur, assume or suffer to exist any
indebtedness or liens of any kind (other than indebtedness and liens in favor of
the Senior Lender), on or with respect to any of its property or assets now
owned or hereafter acquired or any interest therein or any income or profits
therefrom that is senior to or pari passu with, in any respect, the Company's
obligations under the Notes;
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b) amend its certificate of incorporation, bylaws or its charter
documents so as to adversely affect any rights of the Holder;
c) repay, repurchase or offer to repay, repurchase or otherwise acquire
or make any dividend or distribution in respect of any of its Common Stock,
Preferred Stock, or other equity securities other than as to the Conversion
Shares to the extent permitted or required under the Transaction Documents;
d) engage in any transactions with any officer, director, employee or
any affiliate of the Company, including any contract, agreement or other
arrangement providing for the furnishing of services to or by, providing for
rental of real or personal property to or from, or otherwise requiring payments
to or from any officer, director or such employee or, to the knowledge of the
Company, any entity in which any officer, director, or any such employee has a
substantial interest or is an officer, director, trustee or partner, in each
case in excess of $10,000 other than (i) for payment of salary or consulting
fees for services rendered, (ii) reimbursement for expenses incurred on behalf
of the Company and (iii) for other employee benefits, including stock option
agreements under any stock option plan of the Company; or
e) create or acquire any Subsidiary after the date hereof unless (i)
such Subsidiary is a wholly-owned Subsidiary of the Company and (ii) such
Subsidiary becomes party to the Security Agreement and the Subsidiary Guaranty
(either by executing a counterpart thereof or an assumption or joinder agreement
in respect thereof) and satisfied each condition of this Agreement and the
Transaction Documents as if such Subsidiary were a Subsidiary on the Closing
Date;
f) sell, transfer or otherwise dispose of any of its assets on terms
where it is or may be leased to or re-acquired or acquired by the Company or any
of its Subsidiaries;
g) other than the sale of all of the stock or assets of Electronic
Payment & Transfer Corp., EFT Integration Inc. and Cash Axcess Corp. SA, on
terms satisfactory to the Holder, dispose, in a single transaction, or in a
series of transactions all or any part of its assets unless such disposal is (i)
in the ordinary course of business, (ii) for fair market value, (iii) for cash
and (iv) approved by the board of directors of the Company;
h) authorize or approve any reverse stock split of the Common Stock: or
i) enter into any agreement with respect to any of the foregoing.
Section 8. Events of Default.
a) "Event of Default", wherever used herein, means any one of the
following events (whatever the reason and whether it shall be voluntary or
involuntary or effected by operation of law or pursuant to any judgment, decree
or order of any court, or any order, rule or regulation of any administrative or
governmental body):
i. any default in the payment of (A) the principal of amount of
any Note, or (B) interest (including Late Fees) on, or liquidated
damages in respect of, any Note, in each case free of any claim of
subordination, as and when the same shall become due and payable
(whether on a Conversion Date or the Maturity Date or by acceleration
or otherwise) which default, solely in the case of an interest payment
or other default under clause (B) above, is not cured, within 3 Trading
Days;
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ii. the Company or any of its Subsidiaries shall fail to observe
or perform any other covenant or agreement contained in this Note or
any of the other Transaction Documents which failure is not cured, if
possible to cure, within the earlier to occur of (A) 5 Trading Days
after notice of such default sent by the Holder or by any other Holder
and (B)10 Trading Days after the Company shall become or should have
become aware of such failure;
iii. a default or event of default (subject to any grace or cure
period provided for in the applicable agreement, document or
instrument) shall occur under (A) any of the Transaction Documents
other than the Notes, or (B) any other material agreement, lease,
document or instrument to which the Company or any Subsidiary is bound,
which default, solely in the case of a default under clause (B) above,
is not cured, within 10 Trading Days;
iv. any representation or warranty made herein, in any other
Transaction Document, in any written statement pursuant hereto or
thereto, or in any other report, financial statement or certificate
made or delivered to the Holder or any other holder of Notes shall be
untrue or incorrect in any material respect as of the date when made or
deemed made;
v. (i) the Company or any of its Subsidiaries shall commence, or
there shall be commenced against the Company or any such Subsidiary, a
case under any applicable bankruptcy or insolvency laws as now or
hereafter in effect or any successor thereto, or the Company or any
Subsidiary commences any other proceeding under any reorganization,
arrangement, adjustment of debt, relief of debtors, dissolution,
insolvency or liquidation or similar law of any jurisdiction whether
now or hereafter in effect relating to the Company or any Subsidiary
thereof or (ii) there is commenced against the Company or any
Subsidiary thereof any such bankruptcy, insolvency or other proceeding
which remains undismissed for a period of 60 days; or (iii) the Company
or any Subsidiary thereof is adjudicated by a court of competent
jurisdiction insolvent or bankrupt; or any order of relief or other
order approving any such case or proceeding is entered; or (iv) the
Company or any Subsidiary thereof suffers any appointment of any
custodian or the like for it or any substantial part of its property
which continues undischarged or unstayed for a period of 60 days; or
(v) the Company or any Subsidiary thereof makes a general assignment
for the benefit of creditors; or (vi) the Company shall fail to pay, or
shall state that it is unable to pay, or shall be unable to pay, its
debts generally as they become due; or (vii) the Company or any
Subsidiary thereof shall call a meeting of its creditors with a view to
arranging a composition, adjustment or restructuring of its debts; or
(viii) the Company or any Subsidiary thereof shall by any act or
failure to act expressly indicate its consent to, approval of or
acquiescence in any of the foregoing; or (ix) any corporate or other
action is taken by the Company or any Subsidiary thereof for the
purpose of effecting any of the foregoing;
vi. the Company or any Subsidiary shall default in any of its
obligations under any mortgage, credit agreement or other facility,
indenture agreement, factoring agreement or other instrument under
which there may be issued, or by which there may be secured or
evidenced any indebtedness for borrowed money or money due under any
long term leasing or factoring arrangement of the Company in an amount
exceeding $50,000, whether such indebtedness now exists or shall
hereafter be created and such default shall result in such indebtedness
becoming or being declared due and payable prior to the date on which
it would otherwise become due and payable;
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vii. After the Registration Statement becomes effective, the
Common Stock shall not be eligible for quotation on or quoted for
trading on a Trading Market and shall not again be eligible for and
quoted or listed for trading thereon within five Trading Days;
viii. the Company shall be a party to any Change of Control
Transaction or Fundamental Transaction, shall agree to sell or dispose
of all or in excess of 33% of its assets in one or more transactions
(whether or not such sale would constitute a Change of Control
Transaction) or shall redeem or repurchase more than a de minimis
number of its outstanding shares of Common Stock or other equity
securities of the Company (other than redemptions of Conversion Shares
and repurchases of shares of Common Stock or other equity securities of
departing officers and directors of the Company; provided such
repurchases shall not exceed $100,000, in the aggregate, for all
officers and directors during the term of this Note);
ix. if, during the Effectiveness Period (as defined in the
Registration Rights Agreement), the effectiveness of the Registration
Statement lapses for any reason or the Holder shall not be permitted to
resell Registrable Securities (as defined in the Registration Rights
Agreement) under the Registration Statement, in either case, for more
than 10 consecutive Trading Days or 15 non-consecutive Trading Days
during any 12 month period; provided, however, that in the event that
the Company is negotiating a merger, consolidation, acquisition or sale
of all or substantially all of its assets or a similar transaction and
in the written opinion of counsel to the Company, the Registration
Statement, would be required to be amended to include information
concerning such transactions or the parties thereto that is not
available or may not be publicly disclosed at the time, the Company
shall be permitted an additional 10 consecutive Trading during any 12
month period relating to such an event;
x. an Event (as defined in the Registration Rights Agreement)
shall not have been cured to the satisfaction of the Holder prior to
the expiration of thirty days from the Event Date (as defined in the
Registration Rights Agreement) relating thereto (other than an Event
resulting from a failure of an Registration Statement to be declared
effective by the Commission on or prior to the Effectiveness Date (as
defined in the Registration Rights Agreement), which shall be covered
by Section 8(a)(ix);
xi. the Company shall fail for any reason to deliver certificates
to a Holder prior to the fifth Trading Day after a Conversion Date
pursuant to and in accordance with Section 4(e) or the Company shall
provide notice to the Holder, including by way of public announcement,
at any time, of its intention not to comply with requests for
conversions of any Notes in accordance with the terms hereof; or
xii. the Company shall fail for any reason to pay in full the
amount of cash due pursuant to a Buy-In within 5 Trading Days after
notice therefor is delivered hereunder or shall fail to pay all amounts
owed on account of an Event of Default within five days of the date
due.
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b) Remedies Upon Event of Default. If any Event of Default occurs, the
full principal amount of this Note, together with interest and other amounts
owing in respect thereof, to the date of acceleration shall become, at the
Holder's election, immediately due and payable in cash. The aggregate amount
payable upon an Event of Default shall be equal to the Mandatory Prepayment
Amount. Commencing 5 days after the occurrence of any Event of Default that
results in the eventual acceleration of this Note, the interest rate on this
Note shall accrue at the rate of 20% per annum, or such lower maximum amount of
interest permitted to be charged under applicable law. All Notes for which the
full Mandatory Prepayment Amount hereunder shall have been paid in accordance
herewith shall promptly be surrendered to or as directed by the Company. The
Holder need not provide and the Company hereby waives any presentment, demand,
protest or other notice of any kind, and the Holder may immediately and without
expiration of any grace period enforce any and all of its rights and remedies
hereunder and all other remedies available to it under applicable law. Such
declaration may be rescinded and annulled by Xxxxxx at any time prior to payment
hereunder and the Holder shall have all rights as a Note holder until such time,
if any, as the full payment under this Section shall have been received by it.
No such rescission or annulment shall affect any subsequent Event of Default or
impair any right consequent thereon.
Section 9. Miscellaneous.
a) Notices. Any and all notices or other communications or deliveries
to be provided by the Holders hereunder, including, without limitation, any
Notice of Conversion, shall be in writing and delivered personally, by
facsimile, sent by a nationally recognized overnight courier service, addressed
to the Company, at the address set forth above, facsimile number _________,
Attn: Xxxxxxx Xxxxx, Chief Executive Officer, or such other address or facsimile
number as the Company may specify for such purposes by notice to the Holders
delivered in accordance with this Section. Any and all notices or other
communications or deliveries to be provided by the Company hereunder shall be in
writing and delivered personally, by facsimile, sent by a nationally recognized
overnight courier service addressed to each Holder at the facsimile telephone
number or address of such Xxxxxx appearing on the books of the Company, or if no
such facsimile telephone number or address appears, at the principal place of
business of the Holder. Any notice or other communication or deliveries
hereunder shall be deemed given and effective on the earliest of (i) the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile telephone number specified in this Section prior to 5:30 p.m. (New
York City time), (ii) the date after the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile telephone number
specified in this Section later than 5:30 p.m. (New York City time) on any date
and earlier than 11:59 p.m. (New York City time) on such date, (iii) the second
Business Day following the date of mailing, if sent by nationally recognized
overnight courier service, or (iv) upon actual receipt by the party to whom such
notice is required to be given.
b) Absolute Obligation. Except as expressly provided herein, no
provision of this Note shall alter or impair the obligation of the Company,
which is absolute and unconditional, to pay the principal of, interest and
liquidated damages (if any) on, this Note at the time, place, and rate, and in
the coin or currency, herein prescribed. This Note is a direct debt obligation
of the Company. This Note ranks pari passu with all other Notes now or hereafter
issued under the terms set forth herein
c) Lost or Mutilated Note. If this Note shall be mutilated, lost,
stolen or destroyed, the Company shall execute and deliver, in exchange and
substitution for and upon cancellation of a mutilated Note, or in lieu of or in
substitution for a lost, stolen or destroyed Note, a new Note for the principal
amount of this Note so mutilated, lost, stolen or destroyed but only upon
receipt of evidence of such loss, theft or destruction of such Note, and of the
ownership hereof, and indemnity, if requested, all reasonably satisfactory to
the Company.
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d) Security Interest. This Note is a direct debt obligation of the
Company and, pursuant to the Security Agreement is secured by a second priority
perfected security interest in all of the assets of the Company for the benefit
of the Holders.
e) Governing Law. All questions concerning the construction, validity,
enforcement and interpretation of this Note shall be governed by and construed
and enforced in accordance with the internal laws of the State of New York,
without regard to the principles of conflicts of law thereof. Each party agrees
that all legal proceedings concerning the interpretations, enforcement and
defense of the transactions contemplated by any of the Transaction Documents
(whether brought against a party hereto or its respective affiliates, directors,
officers, shareholders, employees or agents) shall be commenced in the state and
federal courts sitting in the City of New York, Borough of Manhattan (the "New
York Courts"). Each party hereto hereby irrevocably submits to the exclusive
jurisdiction of the New York Courts for the adjudication of any dispute
hereunder or in connection herewith or with any transaction contemplated hereby
or discussed herein (including with respect to the enforcement of any of the
Transaction Documents), and hereby irrevocably waives, and agrees not to assert
in any suit, action or proceeding, any claim that it is not personally subject
to the jurisdiction of any such court, or such New York Courts are improper or
inconvenient venue for such proceeding. Each party hereby irrevocably waives
personal service of process and consents to process being served in any such
suit, action or proceeding by mailing a copy thereof via registered or certified
mail or overnight delivery (with evidence of delivery) to such party at the
address in effect for notices to it under this Note and agrees that such service
shall constitute good and sufficient service of process and notice thereof.
Nothing contained herein shall be deemed to limit in any way any right to serve
process in any manner permitted by law. Each party hereto hereby irrevocably
waives, to the fullest extent permitted by applicable law, any and all right to
trial by jury in any legal proceeding arising out of or relating to this Note or
the transactions contemplated hereby. If either party shall commence an action
or proceeding to enforce any provisions of this Note, then the prevailing party
in such action or proceeding shall be reimbursed by the other party for its
attorneys fees and other costs and expenses incurred with the investigation,
preparation and prosecution of such action or proceeding.
f) Waiver. Any waiver by the Company or the Holder of a breach of any
provision of this Note shall not operate as or be construed to be a waiver of
any other breach of such provision or of any breach of any other provision of
this Note. The failure of the Company or the Holder to insist upon strict
adherence to any term of this Note on one or more occasions shall not be
considered a waiver or deprive that party of the right thereafter to insist upon
strict adherence to that term or any other term of this Note. Any waiver must be
in writing.
g) Severability. If any provision of this Note is invalid, illegal or
unenforceable, the balance of this Note shall remain in effect, and if any
provision is inapplicable to any person or circumstance, it shall nevertheless
remain applicable to all other persons and circumstances. If it shall be found
that any interest or other amount deemed interest due hereunder violates
applicable laws governing usury, the applicable rate of interest due hereunder
shall automatically be lowered to equal the maximum permitted rate of interest.
The Company covenants (to the extent that it may lawfully do so) that it shall
not at any time insist upon, plead, or in any manner whatsoever claim or take
the benefit or advantage of, any stay, extension or usury law or other law which
would prohibit or forgive the Company from paying all or any portion of the
principal of or interest on this Note as contemplated herein, wherever enacted,
now or at any time hereafter in force, or which may affect the covenants or the
performance of this indenture, and the Company (to the extent it may lawfully do
so) hereby expressly waives all benefits or advantage of any such law, and
covenants that it will not, by resort to any such law, hinder, delay or impeded
the execution of any power herein granted to the Holder, but will suffer and
permit the execution of every such as though no such law has been enacted.
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h) Next Business Day. Whenever any payment or other obligation
hereunder shall be due on a day other than a Business Day, such payment shall be
made on the next succeeding Business Day.
i) Headings. The headings contained herein are for convenience only, do
not constitute a part of this Note and shall not be deemed to limit or affect
any of the provisions hereof.
j) Seniority. This Note is senior in right of payment to any and all
other indebtedness of the Company other than indebtedness owed to the Senior
Lender.
*********************
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IN WITNESS WHEREOF, the Company has caused this Note to be duly
executed by a duly authorized officer as of the date first above indicated.
GLOBAL AXCESS CORP.
-------------------------------------
Name:
Title:
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ANNEX A
NOTICE OF CONVERSION
The undersigned hereby elects to convert principal under the 9% Senior
Subordinated Secured Convertible Note of Global Axcess Corp., a Nevada
corporation (the "Company"), due on October 27, 2010, into shares of common
stock, par value $0.001 (the "Common Stock"), of the Company according to the
conditions hereof, as of the date written below. If shares are to be issued in
the name of a person other than the undersigned, the undersigned will pay all
transfer taxes payable with respect thereto and is delivering herewith such
certificates and opinions as reasonably requested by the Company in accordance
therewith. No fee will be charged to the holder for any conversion, except for
such transfer taxes, if any.
By the delivery of this Notice of Conversion the undersigned represents
and warrants to the Company that its ownership of the Common Stock does not
exceed the amounts determined in accordance with Section 13(d) of the Exchange
Act, specified under Section 4 of this Note.
The undersigned agrees to comply with the prospectus delivery
requirements under the applicable securities laws in connection with any
transfer of the aforesaid shares of Common Stock.
Conversion calculations:
Date to Effect Conversion:
Principal Amount of Notes to be Converted:
Payment of Interest in Common Stock __ yes __ no
If yes, $_____ of Interest Accrued on Account of
Conversion at Issue.
Number of shares of Common Stock to be issued:
Signature:
Name:
Address:
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Schedule 1
CONVERSION SCHEDULE
The 9% Senior Subordinated Secured Convertible Notes due on October 27, 2010, in
the aggregate principal amount of $3,500,000 issued by Global Axcess Corp., a
Nevada corporation. This Conversion Schedule reflects conversions made under
Section 4 of the above referenced Note.
Dated:
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Aggregate
Principal Amount
Remaining
Subsequent to
Conversion
Date of Conversion (or original
(or for first entry, Amount of Principal Company
Original Issue Date) Conversion Amount) Attest
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