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 224 Ponte Vedra Park Drive,
Ponte Vedra Beach, Florida 32802 (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.
<PAGE>
"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) Michael Dodak 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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<PAGE>
"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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<PAGE>
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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<PAGE>
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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<PAGE>
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; Holder'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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<PAGE>
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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<PAGE>
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 Holder's right to pursue actual damages
or declare an Event of Defau
