GLOBAL AXCESS CORP
SUBSCRIPTION AGREEMENT
March 11, 2005
TABLE OF CONTENTS
Page
1. AGREEMENT TO SELL AND SUBSCRIPTION ............................................. 1
2. COMMISSIONS .................................................................... 2
3. CLOSING, DELIVERY AND PAYMENT .................................................. 2
3.1 Closing ........................................................................ 2
3.2 Delivery ....................................................................... 2
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY .................................. 2
4.1......Organization, Good Standing and Qualification ......................... 2
4.2......Subsidiaries .......................................................... 2
4.3......Capitalization; Voting Rights ......................................... 2
4.4......Authorization; Binding Obligations .................................... 3
4.5......Liabilities ........................................................... 3
4.6......Agreements; Action .................................................... 3
4.7......Obligations to Related Parties ........................................ 3
4.8......Changes ............................................................... 4
4.9......Title to Properties and Assets; Liens, Etc. ........................... 4
4.10.....Intellectual Property ................................................. 5
4.11.....Compliance with Other Instruments ..................................... 5
4.12.....Litigation ............................................................ 5
4.13.....Tax Returns and Payments .............................................. 5
4.14.....Employees ............................................................. 5
4.15.....Registration Rights and Voting Rights ................................. 6
4.16.....Compliance with Laws; Permits ......................................... 6
4.18.....Valid Offering ........................................................ 6
4.19.....34 Act Reports......................................................... 7
4.20.....Full Disclosure ....................................................... 7
5. REPRESENTATIONS AND WARRANTIES OF THE SUBSCRIBERS .............................. 7
5.1......Requisite Power and Authority ......................................... 7
5.2......Investment Representations ............................................. 7
5.3......Subscriber Bears Economic Risk ........................................ 7
5.4......Acquisition for Own Account ........................................... 7
5.5......Subscriber Can Protect Its Assets ..................................... 7
5.6......Accredited Investor ................................................... 7
5.7......Risk Factors .......................................................... 7
6. COVENANTS OF THE COMPANY ....................................................... 8
6.1......Use of Funds .......................................................... 8
6.2......Taxes ................................................................. 8
6.3......Books and Records ..................................................... 8
6.4......Intellectual Property ................................................. 8
6.5......Properties ............................................................ 8
6.6......Confidentiality ....................................................... 8
7. COVENANTS OF THE COMPANY AND SUBSCRIBERS REGARDING INDEMNIFICATION ............. 8
7.1......Company Indemnification ............................................... 8
7.2......Subscriber's Indemnification .......................................... 8
8. REGISTRATION RIGHTS ............................................................ 9
8.1......Piggy-Back Registrations .............................................. 8
8.2......Registration Requirement............................................... 8
9. PARTICIPATION IN FUTURE FINANCING............................................... 9
Participation in Future Financing.
10. MISCELLANEOUS .................................................................. 10
9.1......Governing Law ......................................................... 10
9.2......Entire Agreement ...................................................... 10
9.3......Amendment and Waiver .................................................. 10
9.4......Delays or Omissions ................................................... 10
9.5......Notices ............................................................... 11
9.6......Attorneys' Fees ....................................................... 11
9.7......Titles and Subtitles .................................................. 11
9.8......Counterparts .......................................................... 11
9.9......Indemnification........................................................ 11
9.10.....Construction ........................................................... 11
GLOBAL AXCESS CORP
SUBSCRIPTION AGREEMENT
THIS SUBSCRIPTION AGREEMENT (the "Agreement") is made and entered by and
between Global Axcess Corp, a Nevada corporation (the "Company"), and the
Subscriber listed on Exhibit A hereto (the "Subscriber") as of the date set
forth on the signature page.
RECITALS
WHEREAS, the Company through its wholly owned subsidiaries, provides cash
dispensing and processing services through its automated teller machine network.
The business of the Company is further described in the Company's Form 10-KSB
for the year ended December 31, 2003 and the Form 10-QSB for the quarter ended
September 30, 2004, as filed with the Securities and Exchange Commission. (the
"34 Act Reports");
WHEREAS, the Company has authorized for sale a maximum of up to 2,678,511
units (the "Units"), at a price of $1.12 per Unit, for a $3,000,000 maximum
offering, with each Unit consisting of four shares of common stock, $.001 par
value per share, of the Company and two common stock purchase warrants (the
"Warrants") (the shares of common stock of the Company contained in the Units
including the shares of common stock issuable upon exercise of the Warrants are
hereinafter collectively referred to as the "Shares");
WHEREAS, the offering shall commence on the date hereof and shall continue
for a period of 90 days and the Company reserves the right to extend the
Offering period for an additional 90 days;
WHEREAS, the Company may offer the Units through broker-dealers who are
members of the National Association of Securities Dealers, Inc. ("NASD");
provided, however, sales made directly to investors by officers or directors of
the Company, no commission or any other form of remuneration will be paid;
WHEREAS, the offering will be offered by the Company on a "best efforts"
basis;
WHEREAS, the minimum investment is $56,000 (50,000 Units);
WHEREAS, Subscriber desires to Subscribe for the number of Units set forth
on Exhibit A hereto; and
WHEREAS, the Company desires to issue and sell the Units to Subscriber on
the terms and conditions set forth herein.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing recitals and the mutual
promises, representations, warranties and covenants hereinafter set forth and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:
1. AGREEMENT TO SELL AND SUBSCRIBE. Pursuant to the terms and conditions
set forth in this Agreement, as of the date hereof the Subscriber hereby agrees
to purchase, and the Company hereby agrees to issue and sell to the Subscriber,
the number of Units and for the consideration as set forth next to the
Subscriber's name on Exhibit A ("Purchase Price"). The Unit Subscription hereon
shall be known as the "Offering."
2. COMMISSIONS AND FINDERS FEES. The Company may offer the Units through
broker-dealers who are members of the NASD. On sales made directly to investors
by officers or directors of the Company, no commission or any other form of
remuneration will be paid. On sales made by members of the NASD, the Company may
pay a commission of ten percent (10%) (the "Commission") of the principal amount
of each Unit sold of the gross proceeds of this offering. No estimate can be
made on the number of broker-dealers, if any, who may participate in this
offering. In the event that commissions are paid, they will not exceed ten
percent (10%) of the offering for a maximum amount of commissions of $300,000.
Each broker-dealer will receive three percent (3%) of the Commission in shares
of common stock of the Company. The portion of the Commission that is payable in
shares of common stock will be converted to shares of common stock at the price
of $.28 per share. For example, if a broker-dealer is entitled to a $5,000 in
commissions, then it will be entitled to receive 17,857 shares of common stock
of the Company if it elects to be paid in shares of common stock of the Company
rather than cash.
3. CLOSING, DELIVERY AND PAYMENT.
3.1 Closing. All funds received from subscribers will be directly
submitted to the Company. Upon acceptance of this Agreement by the Company, the
Subscriber shall deliver funds equal to the Purchase Price. No escrow account
will be used in connection with this offering. The Company cannot guarantee that
it will be able to raise adequate funds in this offering to implement its
business plan. In the event that the Company does not raise adequate funds and
the Subscriber has invested in the Company, then the Subscriber's investment may
be lost entirely.
3.2 Delivery. Within a reasonable time after receipt of the Purchase
Price by the Company, subject to the terms and conditions hereof, the Company
will deliver to the Subscriber certificates representing the shares of common
stock and a common stock purchase warrant, substantially in the form of warrant
attached hereto as Exhibit "B", in the applicable amount, and each shall have
the appropriate Rule 144 restrictive legends.
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company hereby represents and warrants to the Subscriber as of the
date of this Agreement as set forth below (such representations and warranties
do not lessen or obviate the representations and warranties of the Subscriber
set forth in this Agreement).
4.1 Organization, Good Standing and Qualification. The Company is a
Nevada corporation duly organized, validly existing, in good standing. The
Company has the necessary corporate power and authority to own and operate its
properties and assets, to execute and deliver this Agreement and all other
agreements referred to herein (collectively, the "Related Agreements"), to issue
and sell the Units and to carry out the provisions of this Agreement and the
Related Agreements and to carry on its business as presently conducted and as
presently proposed to be conducted. The Company is duly qualified and is
authorized to do business and is in good standing as a foreign corporation in
all jurisdictions in which the nature of its activities and of its properties
(both owned and leased) makes such qualification necessary, except for those
jurisdictions in which failure to do so would not have a material adverse effect
on the Company or its business.
4.2 Subsidiaries. Except as set forth on Schedule 4.2, the Company
does not own or control any other interest of any other corporation, limited
partnership or other business entity that represents more than fifty percent
(50%) of the voting power of that corporation, limited partnership or other
business entity ("Subsidiary").
4.3 Capitalization; Voting Rights.
(a) The number of shares of common stock of the Company that are
issued and outstanding as of the date hereof consists of 88,485,469. In the
event that all the Units are sold in this Offering, the maximum number of shares
of common stock of the Company that will be issued and outstanding after this
offering shall consist of 104,556,535, which includes 5,357,022 shares of common
stock issuable upon exercise the Warrants. The Company represents that the
percentage of shares issuable in connection with the Units, including the
Warrants, being offered to the Subscribers constitutes 13.13% of its issued and
outstanding common stock.
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(b) Other than shares of common stock reserved for issuance under
the Units being sold pursuant to this Agreement (including shares of common
stock issuable upon exercise of warrants) and except as set forth on Schedule
4.3(b), there are no outstanding options, warrants, rights (including conversion
or preemptive rights and rights of first refusal), proxy or stockholder
agreements, or arrangements or agreements of any kind for the issuance of shares
of common stock of the Company.
(c) The rights, preferences, privileges and restrictions of the
Shares are as stated in the Certificate of Incorporation, as amended (the
"Charter"). When issued in compliance with the provisions of this Agreement and
the Company's Charter, the Shares and the Warrants will be validly issued, fully
paid and nonassessable, and will be free of any liens or encumbrances; provided,
however, that the Shares may be subject to restrictions on transfer under state
and/or federal Interest laws as set forth herein or as otherwise required by
such laws at the time a transfer is proposed.
4.4 Authorization; Binding Obligations. All corporate action on the
part of the Company, its officers, directors and stockholders necessary for the
authorization of this Agreement and the Related Agreements, the performance of
all obligations of the Company hereunder and the authorization, sale, issuance
and delivery of the Units pursuant hereto and the Related Agreements has been
taken or will be taken. The Agreement and the Related Agreements, when executed
and delivered, will be valid and binding obligations of the Company enforceable
in accordance with their terms, except (a) as limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other laws of general application
affecting enforcement of creditors' rights, and (b) as limited by general
principles that restrict the availability of equitable remedies.
4.5 Liabilities. Except as set forth in the Company's 34 Act Reports,
the Company has no material liabilities and, to the best of its knowledge, knows
of no material contingent liabilities, except current liabilities incurred in
the ordinary course of business which are not, either in any individual case or
in the aggregate, material.
4.6 Agreements; Action. Except as set forth on the 34 Act Reports, or
as contemplated by the terms of this Agreement or any other agreements to be
entered into between the Company and the Subscriber, there are no agreements,
understandings, instruments, contracts, proposed transactions, judgments,
orders, writs or decrees to which the Company is a party or to its knowledge by
which it is bound which may provide for (i) obligations (contingent or
otherwise) of, or payments to, the Company in excess of $50,000 (other than
obligations of, or payments to, the Company arising from Subscription or sale
agreements entered into in the ordinary course of business), or (ii) the
transfer or license of any patent, copyright, trade secret or other proprietary
right to or from the Company (other than licenses arising from the Subscription
of "off the shelf" or other standard products), or (iii) provisions restricting
the development, manufacture or distribution of the Company's products or
services, or (iv) indemnification by the Company with respect to infringements
of proprietary rights.
4.7 Obligations to Related Parties. Except as set forth on Schedule
4.7, there are no obligations of the Company to officers, directors,
stockholders or employees of the Company other than (a) for payment of salary
for services rendered, including bonus payments, (b) reimbursement for
reasonable expenses incurred on behalf of the Company and (c) for other employee
benefits (including stock option plans and stock option agreements outstanding
under any stock option plan approved by the Board of Directors of the Company).
None of the officers or directors of the Company, nor any members of their
immediate families, are indebted to the Company or, to the Company's knowledge,
have any direct or indirect ownership interest in any firm or corporation with
which the Company is affiliated or with which the Company has a business
relationship, or any firm or corporation which competes with the Company, other
than passive investments in publicly traded companies (representing less than 1%
of such company) which may compete with the Company. No officer or director or,
to the Company's knowledge, any member of their immediate families, is, directly
or indirectly, interested in any material contract with the Company and no
agreements, understandings or proposed transactions are contemplated between the
Company and any such person. The Company is not a guarantor or indemnitor of any
indebtedness of any other person, firm or corporation.
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4.8 Changes. Except as set forth on Schedule 4.8, since September 30,
2004, there has not been:
(a) Any material change in the assets, liabilities, financial
condition, prospects or operations of the Company, other than changes in the
ordinary course of business, none of which individually or in the aggregate has
had or is reasonably expected to have a material adverse effect on such assets,
liabilities, financial condition, prospects or operations of the Company;
(b) Any resignation or termination of any officer, key employee or
group of employees of the Company;
(c) Any material change, except in the ordinary course of business,
in the contingent obligations of the Company by way of guaranty, endorsement,
indemnity, warranty or otherwise;
(d) Any damage, destruction or loss, whether or not covered by
insurance, materially and adversely affecting the properties, business or
prospects or financial condition of the Company;
(e) Any waiver by the Company of a right deemed valuable by the
Company or of a material debt owed to it;
(f) Any direct or indirect loans made by the Company to any
employee, officer or director of the Company, other than advances made in the
ordinary course of business;
(g) Any material change in any compensation arrangement or
agreement with any employee, officer, or director;
(h) Any declaration or payment of any dividend or other
distribution of the assets of the Company;
(i) Any labor organization activity related to the Company;
(j) Any debt, obligation or liability incurred, assumed or
guaranteed by the Company, except those for immaterial amounts and for current
liabilities incurred in the ordinary course of business;
(k) Any sale, assignment or transfer of any patents, trademarks,
copyrights, trade secrets or other intangible assets;
(l) Any change in any material agreement to which the Company is a
party or by which it is bound which may materially and adversely affect the
business, assets, liabilities, financial condition, operations or prospects of
the Company;
(m) Any other event or condition of any character that, either
individually or cumulatively, has or may materially and adversely affect the
business, assets, liabilities, financial condition, prospects or operations of
the Company; or
(n) Any arrangement or commitment by the Company to do any of the
acts described in subsection (a) through (m) above.
4.9 Title to Properties and Assets; Liens, Etc. Except as set forth on
Schedule 4.9, the Company has good and marketable title to its properties and
assets, and good title to its leasehold estates, in each case subject to no
mortgage, pledge, lien, lease, encumbrance or charge, other than (a) those
resulting from taxes which have not yet become delinquent, (b) minor liens and
encumbrances which do not materially detract from the value of the property
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subject thereto or materially impair the operations of the Company, and (c)
those that have otherwise arisen in the ordinary course of business. All
facilities, machinery, equipment, fixtures, vehicles and other properties owned,
leased or used by the Company are in good operating condition and repair, normal
wear and tear excepted, and are reasonably fit and usable for the purposes for
which they are being used. The Company is in compliance with all material terms
of each lease to which it is a party or is otherwise bound.
4.10 Intellectual Property.
(a) The Company owns or possesses sufficient legal rights to all
patents, trademarks, service marks, trade names, copyrights, trade secrets,
licenses, information and other proprietary rights and processes necessary for
its business as now conducted and to the Company's knowledge as presently
proposed to be conducted (the "Intellectual Property"), without any known
infringement of the rights of others. There are no outstanding options, licenses
or agreements of any kind relating to the foregoing proprietary rights, nor is
the Company bound by or a party to any options, licenses or agreements of any
kind with respect to the patents, trademarks, service marks, trade names,
copyrights, trade secrets, licenses, information and other proprietary rights
and processes of any other person or entity other than such licenses or standard
products.
(b) The Company has not received any written communications
alleging that the Company has violated any of the patents, trademarks, service
marks, trade names, copyrights or trade secrets or other proprietary rights of
any other person or entity, nor is the Company aware of any basis therefor.
4.11 Compliance with Other Instruments. The Company is not in
violation or default of any material term of the Charter or Bylaws, or of any
material provision of any mortgage, indenture, contract, agreement, instrument
or contract to which it is party or by which it is bound or of any judgment,
decree, order or writ. The execution, delivery and performance of and compliance
with this Agreement and the Related Agreements, and the issuance and sale of
Interest pursuant hereto, will not, with or without the passage of time or
giving of notice, result in any such material violation, or be in conflict with
or constitute a default under any such term or provision, or result in the
creation of any mortgage, pledge, lien, encumbrance or charge upon any of the
material properties or assets of the Company or the suspension, revocation,
impairment, forfeiture or nonrenewal of any material permit, license,
authorization or approval applicable to the Company, its business or operations
or any of its material assets or properties.
4.12 Litigation. Except as set forth in Schedule 4.12, there is no
action, suit or proceeding pending or, to the Company's knowledge, currently
threatened against the Company that questions the validity of this Agreement or
the Related Agreements or the right of the Company to enter into any of such
agreements, or to consummate the transactions contemplated hereby or thereby, or
which is reasonably likely to result, either individually or in the aggregate,
in any material adverse change in the assets, condition, affairs or prospects of
the Company, financially or otherwise, nor is the Company aware that there is
any basis for any of the foregoing. The Company is not a party or subject to the
provisions of any order, writ, injunction, judgment or decree of any court or
government agency or instrumentality. Except as set forth in the Schedule 4.12,
there is no action, suit, proceeding or investigation by the Company currently
pending or which the Company intends to initiate.
4.13 Tax Returns and Payments. Except as set forth on Schedule 4.13,
the Company has timely filed all tax returns required to be filed by it. All
taxes shown to be due and payable on such returns, any assessments imposed, and
5
to the Company's knowledge all other taxes due and payable by the Company on or
before the date hereof, have been paid or will be paid prior to the time they
become delinquent. The Company has not been advised (a) that any of its returns,
federal, state or other, have been or are being audited as of the date hereof,
or (b) of any deficiency in assessment or proposed judgment to its federal,
state or other taxes. The Company has no knowledge of any liability of any tax
to be imposed upon its properties or assets as of the date of this Agreement
that is not adequately provided for.
4.14 Employees. The Company has no collective bargaining agreements
with any of its employees. There is no labor union organizing activity pending
or, to the Company's knowledge, threatened with respect to the Company. Except
as set forth in the Schedule 4.14, the Company is not a party to or bound by any
currently effective employment contract, deferred compensation arrangement,
bonus plan, incentive plan, profit sharing plan, retirement agreement or other
employee compensation plan or agreement. To the Company's knowledge, no employee
of the Company, nor any consultant with whom the Company has contracted, is in
violation of any term of any employment contract, proprietary information
agreement or any other agreement relating to the right of any such individual to
be employed by, or to contract with, the Company because of the nature of the
business to be conducted by the Company; and to the Company's knowledge the
continued employment by the Company of its present employees, and the
performance of the Company's contracts with its independent contractors, will
not result in any such violation. The Company is not aware that any of its
employees is obligated under any contract (including licenses, covenants or
commitments of any nature) or other agreement, or subject to any judgment,
decree or order of any court or administrative agency, that would interfere with
their duties to the Company. The Company has not received any written notice
alleging that any such violation has occurred. No employee of the Company has
been granted the right to continued employment by the Company or to any material
compensation following termination of employment with the Company. The Company
is not aware that any officer, key employee or group of employees intends to
terminate his, her or their employment with the Company, nor does the Company
have a present intention to terminate the employment of any officer, key
employee or group of employees.
4.15 Registration Rights and Voting Rights. Except as set forth under
Schedule 4.15 and except as provided in this Agreement and the Related
Agreements, the Company is presently not under any obligation, and has not
granted any rights, to register any of the Company's presently outstanding
securities or any of its securities that may hereafter be issued. To the
Company's knowledge, no stockholder of the Company has entered into any
agreement with respect to the voting of the securities of the Company.
4.16 Compliance with Laws; Permits. To its knowledge, the Company is
not in violation of any applicable statute, rule, regulation, order or
restriction of any domestic or foreign government or any instrumentality or
agency thereof in respect of the conduct of its business or the ownership of its
properties which violation would materially and adversely affect the business,
assets, liabilities, financial condition, operations or prospects of the
Company. Except as disclosed in this Agreement, no governmental orders,
permissions, consents, approvals or authorizations are required to be obtained
and no registrations or declarations are required to be filed in connection with
the execution and delivery of this Agreement and the issuance of any of the
Interest, except (i) such as has been duly and validly obtained or filed, or
(ii) with respect to any filings that must be made after the date hereof, as
will be filed in a timely manner, or (iii) such as would not have a material
adverse effect on the Company. The Company has all franchises, permits, licenses
and any similar authority necessary for the conduct of its business as now being
conducted by it, the lack of which could materially and adversely affect the
business, properties, prospects or financial condition of the Company.
4.17 Environmental and Safety Laws. To the Company's knowledge, the
Company is not in violation of any applicable statute, law or regulation
relating to the environment or occupational health and safety, and to its
knowledge, no material expenditures are or will be required in order to comply
with any such existing statute, law or regulation. No Hazardous Materials (as
defined below) are used or have been used, stored, or disposed of by the Company
or, to the Company's knowledge, by any other person or entity on any property
owned, leased or used by the Company. For the purposes of the preceding
sentence, "Hazardous Materials" shall mean (a) materials which are listed or
otherwise defined as "hazardous" or "toxic" under any applicable local, state,
federal and/or foreign laws and regulations that govern the existence and/or
remedy of contamination on property, the protection of the environment from
contamination, the control of hazardous wastes, or other activities involving
hazardous substances, including building materials, or (b) any petroleum
products or nuclear materials.
4.18 Valid Offering. Assuming the accuracy of the representations and
warranties of the Subscriber contained in this Agreement, the offer, sale and
issuance of the Units will be exempt from the registration requirements of the
Securities Act of 1933, as amended (the "Securities Act"), and will have been
6
registered or qualified (or are exempt from registration and qualification)
under the registration, permit or qualification requirements of all applicable
state laws. Neither the Company nor any agent on its behalf has solicited or
will solicit any offers to sell or has offered to sell or will offer to sell the
Units to any person or persons so as to bring the sale of such Units by the
Company within the registration provisions of the Securities Act or any state
securities laws.
4.19 34 Act Reports. The Company has provided the Subscriber with its
Form 10-KSB for the year ended December 31, 2003 and its Form 10-QSB for the
quarter ended September 30, 2004. No Statement of fact made by the Company in
its 34 Act Reports contains any untrue statement of a material fact or omits to
state any material fact necessary to make the statements contained therein not
misleading in light of the circumstances under which such statements were made.
4.20 Full Disclosure. The Company has provided the Subscriber with all
information requested by the Subscriber in connection with its decision to
Subscribe for the Units. Neither this Agreement, the exhibits and schedules
hereto, the Related Agreements nor any other document delivered by the Company
to Subscriber or its attorneys or agents in connection herewith or therewith or
with the transactions contemplated hereby or thereby, contain any untrue
statement of a material fact nor omit to state a material fact necessary in
order to make the statements contained herein or therein not misleading. To the
Company's knowledge, there are no facts which (individually or in the aggregate)
materially adversely affect the business, assets, liabilities, financial
condition, prospects or operations of the Company that have not been set forth
in the Agreement, the exhibits and schedules hereto, the Related Agreements or
in other documents delivered to Subscriber or its attorneys or agents in
connection herewith.
5. REPRESENTATIONS AND WARRANTIES OF THE SUBSCRIBER.
The Subscriber hereby represents and warrants to the Company with respect
to itself or himself as follows (such representations and warranties do not
lessen or obviate the representations and warranties of the Company set forth in
this Agreement):
5.1 Requisite Power and Authority. Subscriber has all necessary power
and authority under all applicable provisions of law to execute and deliver this
Agreement and the Related Agreements and to carry out their provisions. All
action on Subscriber's part required for the lawful execution and delivery of
this Agreement and the Related Agreements have been or will be effectively taken
prior to the sale of the Units pursuant to this Agreement. Upon their execution
and delivery, this Agreement and the Related Agreements will be valid and
binding obligations of Subscriber, enforceable in accordance with their terms,
except as limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other laws of general application affecting enforcement of
creditors' rights.
5.2 Investment Representations. Subscriber understands that the Units
are being offered and sold pursuant to an exemption from registration contained
in the Securities Act based in part upon Subscriber's representations contained
in this Agreement.
5.3 Subscriber Bears Economic Risk. Subscriber has substantial
experience in evaluating and investing in private placement transactions in
companies similar to the Company so that it is capable of evaluating the merits
and risks, including the risks listed on Schedule 5.7, of its investment in the
Company and has the capacity to protect its own interests. Subscriber must bear
the economic risk of this investment until the Units are sold by Subscriber.
5.4 Acquisition for Own Account. Subscriber is acquiring the Units for
Subscriber's own account for investment only, and not with a view towards their
distribution.
5.5 Subscriber Can Protect Its Interest. Subscriber represents that by
reason of its, or of its management's, business or financial experience,
Subscriber has the capacity to protect its own interests in connection with the
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transactions contemplated in this Agreement, and the Related Agreements.
Further, Subscriber is aware of no publication of any advertisement in
connection with the transactions contemplated in the Agreement.
5.6 Accredited Investor. Subscriber represents that it is an
accredited investor within the meaning of Regulation D under the Securities Act.
5.7 Risk Factors. Subscriber represents that it has read and fully
understands the risks associated with the Company and the Units listed on
Schedule 5.7.
6. COVENANTS OF THE COMPANY. The Company covenants and agrees with the
Subscriber as follows:
6.1 Use of Funds. The Company undertakes to use the proceeds of the
Subscriber's funds for the purposes set forth on Schedule 6.1 attached hereto.
6.2 Taxes. The Company will promptly pay and discharge, or cause to be
paid and discharged, when due and payable, all lawful taxes, assessments and
governmental charges or levies imposed upon the income, profits, property or
business of the Company; provided, however, that any such tax, assessment,
charge or levy need not be paid if the validity thereof shall currently be
contested in good faith by appropriate proceedings and if the Company shall have
set aside on its books adequate reserves with respect thereto, and provided,
further, that the Company will pay all such taxes, assessments, charges or
levies forthwith upon the commencement of proceedings to foreclose any lien
which may have attached as security therefor.
6.3 Books and Records. The Company will keep true records and books of
account in which full, true and correct entries will be made of all dealings or
transactions in relation to its business and affairs in accordance with
generally accepted accounting principles applied on a consistent basis.
6.4 Intellectual Property. The Company shall maintain in full force
and effect its corporate existence, rights and franchises and all licenses and
other rights to use Intellectual Property owned or possessed by it and
reasonably deemed to be necessary to the conduct of its business.
6.5 Properties. The Company will keep its properties in good repair,
working order and condition, reasonable wear and tear excepted, and from time to
time make all needful and proper repairs, renewals, replacements, additions and
improvements thereto; and the Company will at all times comply with each
provision of all leases to which it is a party or under which it occupies
property if the breach of such provision could reasonably be expected to have a
material adverse effect on the Company.
6.6 Confidentiality. The Company agrees that it will not disclose, and
will not include in any public announcement, the name of the Subscriber, unless
expressly agreed to by the Subscriber or unless and until such disclosure is
required by law or applicable regulation, and then only to the extent of such
requirement. 7. COVENANTS OF THE COMPANY AND SUBSCRIBER REGARDING
INDEMNIFICATION.
7.1 Company Indemnification. The Company agrees to indemnify, hold
harmless, reimburse and defend Subscriber, each of Subscriber's officers,
directors, agents, affiliates, control persons, and principal shareholders,
against any claim, cost, expense, liability, obligation, loss or damage
(including reasonable legal fees) of any nature, incurred by or imposed upon the
Subscriber which results, arises out of or is based upon (i) any
misrepresentation by the Company or breach of any warranty by the Company in
this Agreement or in any exhibits or schedules attached hereto or any Related
8
Agreement, or (ii) any breach or default in performance by the Company of any
covenant or undertaking to be performed by the Company hereunder, or any other
agreement entered into by the Company and Subscriber relating hereto.
7.2 Subscriber's Indemnification. Subscriber agrees to indemnify, hold
harmless, reimburse and defend the Company and each of the Company's officers,
directors, agents, affiliates, control persons and principal stockholders, at
all times against any claim, cost, expense, liability, obligation, loss or
damage (including reasonable legal fees) of any nature, incurred by or imposed
upon the Company which results, arises out of or is based upon (a) any
misrepresentation by Subscriber or breach of warranty by Subscriber in this
Agreement or in any exhibits or schedules attached hereto or any Related
Agreement; or (b) any breach or default in performance by Subscriber of any
covenant or undertaking to be performed by Subscriber hereunder, or any other
agreement entered into by the Company and Subscriber relating hereto.
8. REGISTRATION RIGHTS.
8.1 PIGGY-BACK REGISTRATIONS. If at any time the Company shall
determine to file with the SEC a Registration Statement relating to an offering
for its own account or the account of others under the Securities Act of 1933
Act of any of its equity securities (other than on Form S-4 or Form S-8 or their
then equivalents relating to equity securities to be issued solely in connection
with any acquisition of any entity or business or equity securities issuable in
connection with stock option or other bona fide, employee benefit plans), the
Company shall send to each Subscriber who is entitled to registration rights
under this Section 8.1, written notice of such determination and, if within
fifteen (15) days after the effective date of such notice, such Subscribers
shall so request in writing, the Company shall include in such Registration
Statement all or any part of the Shares such Subscriber requests to be
registered, except that if, in connection with any underwritten public offering
for the account of the Company the managing underwriter(s) thereof shall impose
a limitation on the number of shares of Common Stock which may be included in
the Registration Statement because, in such underwriter(s)' judgment, marketing
or other factors dictate such limitation is necessary to facilitate public
distribution, then the Company shall be obligated to include in such
Registration Statement only such limited portion of the Shares with respect to
which such Subscriber has requested inclusion hereunder as the underwriter shall
permit. Any exclusion of Shares shall be made pro rata among the Subscribers
seeking to include Shares in proportion to the number of Shares Securities
sought to be included by such Subscriber; provided, however, that the Company
shall not exclude any Shares unless the Company has first excluded all
outstanding securities, the holders of which are not entitled to inclusion of
such securities in such Registration Statement or are not entitled to pro rata
inclusion with the Shares; and provided, further, however, that, after giving
effect to the immediately preceding proviso, any exclusion of Shares shall be
made pro rata with holders of other securities having the right to include such
securities in the Registration Statement other than holders of securities
entitled to inclusion of their securities in such Registration Statement by
reason of demand registration rights. If an offering in connection with which a
Subscriber is entitled to registration under this Section 8.1 is an underwritten
offering, then each Subscriber whose Shares are included in such Registration
Statement shall, unless otherwise agreed by the Company, offer and sell such
Shares in an underwritten offering using the same underwriter or underwriters
and on the same terms and conditions as other shares of common stock included in
such underwritten offering.
8.2 REGISTRATION REQUIREMENT. The Company shall prepare and file, no
later than one hundred eighty (180) days from the date hereof (the "Scheduled
Filing Deadline"), with the SEC a Registration Statement on Form S-1 or SB-2
(or, if the Company is then eligible, on Form S-3) under the Securities Act of
1933 for the registration for the resale by the Subscriber of all or any part of
the Shares in accordance with Section 8.1 hereof. Notwithstanding the foregoing,
the Company, in its sole discretion, may extend the Scheduled Filing Deadline
for no longer then thirty (30) days in the event that the Company has filed an
application for the listing of its common stock on the American Stock Exchange.
The Company shall use its best efforts to insure that the Registration Statement
remains in effect until all of the Shares to be registered have been sold,
subject to the terms and conditions of Section 8.1. In the event the
Registration Statement is not filed by the Scheduled Filing Deadline, the
Company will pay as liquidated damages to the Subscriber, at the Subscriber's
option, either a cash amount or shares of the Company's common stock within
three (3) business days, after demand therefore, equal to one percent (1%) of
the purchase price paid by such Subscriber for each thirty (30) day period after
the Scheduled Filing Deadline the registration statement has not been filed
9
until such time that a Registration Statement is filed by the Company. In the
event that a Registration Statement is filed during any such 30-day period the
liquidated damages due pursuant to this Section 8.2 shall be pro-rated
accordingly.
9. Participation in Future Financing. For a period of twelve (12) months
after the date hereof, upon any financing by the Company of its equity
securities at a per share price which is less than $.28 per share (a "Subsequent
Financing"), the Subscriber shall have the right to participate in up to 100% of
such Subsequent Financing (the "Participation Maximum"). At least 5 Trading Days
prior to the closing of the Subsequent Financing, the Company shall deliver to
the Subscriber a written notice of its intention to effect a Subsequent
Financing ("Pre-Notice"), which such Pre-Notice shall ask the Subscriber if it
wants to review the details of such financing (such additional notice, a
"Subsequent Financing Notice"). Upon the request of the Subscriber for a
Subsequent Financing Notice, which such request must be made within 2 day after
the Pre-Notice is sent pursuant to Section 10.5(b) of this Agreement, the
Company shall promptly, but no later than 1 Trading Day after such request,
deliver a Subsequent Financing Notice to the Subscriber. The Subsequent
Financing Notice shall describe in reasonable detail the proposed terms of such
Subsequent Financing, the amount of proceeds intended to be raised thereunder,
and attached to which shall be a term sheet or similar document relating
thereto. If by 6:30 p.m. (New York City time) on the third Trading Day after the
Subscriber has received the Pre-Notice, notification by the Subscriber of its
willingness to participate in the Subsequent Financing is, in the aggregate,
less than the total amount of the Subsequent Financing, then the Company may
effect the remaining portion of such Subsequent Financing on the terms and to
the person or entity set forth in the Subsequent Financing Notice. If the
Company receives no notice from the Subscriber as of such third Trading Day, the
Subscriber shall be deemed to have notified the Company that it does not elect
to participate. The Company must provide the Subscriber with a second Subsequent
Financing Notice, and the Purchasers will again have the right of participation
set forth above in this Section 9, if the Subsequent Financing subject to the
initial Subsequent Financing Notice is not consummated for any reason on the
terms set forth in such Subsequent Financing Notice within 90 Trading Days after
the date of the initial Subsequent Financing Notice. In the event the Company
receives responses to Subsequent Financing Notices from Subscribers seeking to
purchase more than the aggregate amount of the Subsequent Financing, each such
Subscriber shall have the right to purchase their Pro Rata Portion (as defined
below) of the Participation Maximum. "Pro Rata Portion" is the ratio of (x) the
number of Units set forth on Exhibit A to be purchased by a Subscriber hereunder
and (y) the sum of the aggregate Units sold by the Company to all Subscribers in
connection with this Offering. Notwithstanding the foregoing, this Section 9
shall not apply in respect of any Subsequent Financing that consists of a
traditional registered underwritten equity offering and strategic deal.
10. MISCELLANEOUS.
10.1 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Florida, without regard to
principles of conflicts of laws. Any action brought by either party against the
other concerning the transactions contemplated by this Agreement shall be
brought only in the state courts of Florida or in the federal courts located in
the state of Florida. Both parties and the individuals executing this Agreement
and other agreements on behalf of the Company agree to submit to the
jurisdiction of such courts and waive trial by jury. The prevailing party shall
be entitled to recover from the other party its reasonable attorney's fees and
costs. In the event that any provision of this Agreement or any other agreement
delivered in connection herewith is invalid or unenforceable under any
applicable statute or rule of law, then such provision shall be deemed
inoperative to the extent that it may conflict therewith and shall be deemed
modified to conform with such statute or rule of law. Any such provision which
may prove invalid or unenforceable under any law shall not affect the validity
or enforceability of any other provision of any agreement.
10.2 Entire Agreement. This Agreement, the exhibits and schedules
hereto, the Related Agreements and the other documents delivered pursuant hereto
constitute the full and entire understanding and agreement between the parties
with regard to the subjects hereof and no party shall be liable or bound to any
other in any manner by any representations, warranties, covenants and agreements
except as specifically set forth herein and therein.
10
10.3 Amendment and Waiver.
(a) This Agreement may be amended or modified only upon the written
consent of the Company and the Subscriber.
(b) The obligations of the Company and the rights of the holders of
the Units under the Agreement may be waived only with the written consent of
such holders of the Units.
10.4 Delays or Omissions. It is agreed that no delay or omission to
exercise any right, power or remedy accruing to any party, upon any breach,
default or noncompliance by another party under this Agreement or the Related
Agreements, shall impair any such right, power or remedy, nor shall it be
construed to be a waiver of any such breach, default or noncompliance, or any
acquiescence therein, or of or in any similar breach, default or noncompliance
thereafter occurring. It is further agreed that any waiver, permit, consent or
approval of any kind or character on the Subscriber's part of any breach,
default or noncompliance under this Agreement, the Interest or the Related
Agreements or any waiver on such party's part of any provisions or conditions of
the Agreement, or the Related Agreements must be in writing and shall be
effective only to the extent specifically set forth in such writing. All
remedies, either under this Agreement, the Interest or the Related Agreements,
by law or otherwise afforded to any party, shall be cumulative and not
alternative.
10.5 Notices. All notices required or permitted hereunder shall be in
writing and shall be deemed effectively given: (a) upon personal delivery to the
party to be notified, (b) when sent by confirmed telex or facsimile if sent
during normal business hours of the recipient, if not, then on the next business
day, (c) five days after having been sent by registered or certified mail,
return receipt requested, postage prepaid, or (d) one day after deposit with a
nationally recognized overnight courier, specifying next day delivery, with
written verification of receipt. All communications shall be sent to the Company
at the address as set forth on the signature page hereof.
10.6 Attorneys' Fees. In the event that any suit or action is
instituted to enforce any provision in this Agreement, the prevailing party in
such dispute shall be entitled to recover from the losing party all fees, costs
and expenses of enforcing any right of such prevailing party under or with
respect to this Agreement, including, without limitation, such reasonable fees
and expenses of attorneys and accountants, which shall include, without
limitation, all fees, costs and expenses of appeals.
10.7 Titles and Subtitles. The titles of the sections and subsections
of the Agreement are for convenience of reference only and are not to be
considered in construing this Agreement.
10.8 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
10.9 Indemnification. The Company shall indemnify the Subscriber for
any losses or expenses incurred by the Subscriber in connection with any claims
brought against the Subscriber by any third party (including any other
stockholder of the Company) as a result of the transactions contemplated by this
Agreement, other than for a breach of representation or warranty made by the
Subscriber herein.
9.10 Construction. Each party acknowledges that its legal counsel
participated in the preparation of this Agreement and, therefore, stipulates
that the rule of construction that ambiguities are to be resolved against the
drafting party shall not be applied in the interpretation of this Agreement to
favor any party against the other.
11
IN WITNESS WHEREOF, the parties hereto have executed the SUBSCRIPTION
AGREEMENT as of ________, 2005.
COMPANY: SUBSCRIBER:
GLOBAL AXCESS CORP
By:
By: _____________________________________ Name:_________________________
Name: Address:
Title:
Address:
[Securities Purchase Agreement Signature Page]
12
LIST OF EXHIBITS AND SCHEDULES
Exhibit A Schedule of Subscribers
Exhibit B Form of Warrant
Schedule 4.2 List of Subsidiaries
Schedule 4.3 Capitalization
Schedule 4.7 Obligations to Related Parties
Schedule 4.8 Changes
Schedule 4.9 Title to Properties and Assets; Liens, Etc.
Schedule 4.12 Litigation
Schedule 4.13 Tax Returns
Schedule 4.14 Employees
Schedule 4.15 Registration Rights and Voting Rights
Schedule 5.7 Risk Factors
Schedule 6.1 Use of Funds
Form 10-KSB for the year ended December 31, 2003
Form 10-QSB for the quarter ended September 30, 2004
13
A-1
EXHIBIT A
SCHEDULE OF SUBSCRIBERS
---------------------- -------------------- ------------------ -----------------
Number of Units Aggregate
Subscriber Purchase Price Purchase Price
---------------------- -------------------- ------------------ -----------------
$1.12
---------------------- -------------------- ------------------ -----------------
A-1
EXHIBIT B