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GAXC > SEC Filings for GAXC > Form 8-K on 15-Nov-2012All Recent SEC Filings

Show all filings for GLOBAL AXCESS CORP

Form 8-K for GLOBAL AXCESS CORP


15-Nov-2012

Entry into a Material Definitive Agreement, Results of Operations and Financia


Item 1.01 Entry into a Material Definitive Agreement.

On November 12, 2012, Global Axcess Corp., a Nevada corporation (the "Company"), and certain affiliates of the Company, entered into a Forbearance Agreement and Amendment (the "Forbearance Agreement") relating to several existing credit facilities with Fifth Third Bank ("Fifth Third"). The Forbearance Agreement (dated and effective as of November 8, 2012) relates to facilities entered into in connection with:

1. That certain Loan and Security Agreement, as amended (the "Loan and Security Agreement") and corresponding $5.0 million term note and $2.0 million inventory draw note that were entered into and issued by the Company to Fifth Third on June 18, 2010, and several draw loans that were extended to the Company in 2011 pursuant thereto. The Loan and Security Agreement was previously amended by the first amendment, entered into December 17, 2010, the second amendment entered into January 4, 2012, the third amendment entered into May 10, 2012, the fourth amendment entered into May 31, 2012, the fifth amendment entered into June 30, 2012 and the sixth amendment entered into August 13, 2012.

2.That certain 2011-A Loan and Security Agreement, as amended (the "A-Loan"), dated as of September 28, 2011 (providing a $960,000 draw loan facility) and related draw loans that were extended to the Company in 2011 pursuant thereto.

3.That certain 2011-B Loan and Security Agreement, as amended, (the "B-Loan"), dated as of November 23, 2011 (providing a $1.0 million draw loan facility) and related draw loans that were extended to the Company in 2011 pursuant thereto.

4. That certain 2011-C Loan and Security Agreement, as amended (the "C-Loan", and, collectively with the Loan and Security Agreement, the A-Loan and the B-Loan, the "Loan Agreements"), dated as of December 29, 2011 (providing a $3.0 million draw loan facility) and related draw loans that were extended to the Company in 2011 pursuant thereto.

5. That certain Master Equipment Lease Agreement (the "Lease Agreement"), dated June 18, 2010, and certain related specified loans on various equipments schedules extended to the Company thereunder in 2011 and 2012.

The Forbearance Agreements operates as a forbearance by Fifth Third of its rights against the Company with respect to several existing defaults by the Company under the Loan Agreements and the Lease Agreements. Specifically, Fifth Third agreed not to exercise certain rights in respect to the existing defaults for a period commencing on the date of the Forbearance Agreement and ending on the date which is the earliest of (i) February 15, 2013, (ii) the occurrence or existence of any event of default, other than the existing defaults, or (iii) the occurrence of any Termination Event (as defined in the Forbearance Agreement).

The Forbearance Agreement also operates as an omnibus amendment to certain terms contained in the Loan Agreements, in exchange for certain agreements and representations made by the Company.

Revolving Loans

Under the Forbearance Agreement, Fifth Third agrees to make certain loans available to the Company up to an aggregate principal amount of $1.0 million
(which may be increased to $1.5 million at the sole discretion of Fifth Third)
under the terms of a revolving note attached to the Forbearance Agreement as Exhibit A. Interest on these revolving loans will accrue at an annual rate of LIBOR + 12.0%. Proceeds under the revolving loans may only be used as specified in the Company's approved budget (as discussed below) and the Company must pay a $30,000 closing fee associated with the loan.

Sale Covenants

The Forbearance Agreement also calls for the Company to deliver evidences, at certain pre-designated times of commitments, in form and substance acceptable to Fifth Third, related to a reorganization of the Company (referred to as "sale covenants"; detailed on Exhibit D attached to the Amendment), including:
offering memoranda, letters of intent, definitive offers, and definitive purchase agreements. The Forbearance Agreement calls for the reorganization of the Company to be completed no later than February 15, 2013 (or such later date as the parties may agree).

Budget Covenants

The Forbearance Agreement also requires the Company to comply with certain cash flow and budget forecast covenants. Specifically, the Company must deliver cash flow forecasts and reconciliations (and explanations of material variances) to Fifth Third on a weekly basis. Pursuant to these covenants (an extension of the requirement put in place by the September 28, 2012 amendment to the Loan . . .



Item 2.02 Results of Operations and Financial Condition.

On November 14, 2012, the Company announced its results of operations for the third quarter ended September 30, 2012. A copy of the related press release is being filed as Exhibit 99.1 to this Report and is incorporated herein by reference in its entirety. The earnings release contains non-GAAP financial measures. EBITDA has been presented in order to assist in the analysis of the operating profitability of the Company because the Company believes this form of measurement eliminates the effects of non-operating expenses and non-cash charges. Management reviews this form of measurement monthly.

The information in this in Item 2.02 and Exhibit 99.1 attached to this Report shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and shall not be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended (the "Securities Act") or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.



Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

The information contained in Item 1.01 is incorporated herein by reference.



Item 2.06 Material Impairments.

On November 12, 2012, the Company conducted a supplemental impairment test of its goodwill in connection with the entry into the Forbearance Agreement (as more particularly described in Item 1.01 of this Report).

The Forbearance Agreement contains a condition requiring the Company to sell its ATM assets by February 2013. As a result of this condition, the Company determined that it cannot rely on the current estimated average high-end valuation of this asset, and, as such it was more appropriate to rely on the average metric valuation as the estimated valuation of the ATM assets. Therefore, according to generally accepted accounting principals, the Company will be recording a non-cash impairment charge to its goodwill of $3.2 million.

'



Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

(c) On November 13, 2012, the Company appointed Kevin L. Reager (its Chief Executive Officer) as its Chief Restructuring Officer. This appointment has been made in connection with the requirements of the Forbearance Agreement described in Item 1.01 of this Report. As Chief Restructuring Officer, Mr. Reager will have day-to-day operational control of the Company and is empowered to facilitate the identification and execution of a strategic transaction for the Company (all as more fully described in Item 1.01 above).

Mr. Reager will receive no additional base compensation from the Company for his role as Chief Restructuring Officer. The terms of service by Mr. Reager as Chief Restructuring Officer are contained in an engagement letter (the "Engagement Letter") between Mr. Reager and the Company, which is attached to this Report as Exhibit 10.1. The foregoing description of the Engagement Letter is qualified in its entirety by reference to the text of the Engagement Letter, a copy of which is attached to this Report as Exhibit 10.1.

In connection with his appointment as Chief Restructuring Officer of the Company, Mr. Reager and the Company also entered into a Transaction Incentive Bonus Agreement (the "Incentive Bonus Agreement"), as more fully described below.

(e) On November 14, 2012, the Company entered into the Incentive Bonus Agreement with Kevin L. Reager, the Company's Chief Executive Officer and Chief Restructuring Officer, a copy of which is attached to this Report as Exhibit 10.2.

The Incentive Bonus Agreement calls for a bonus payment to be made to Mr. Reager in the event that the Company is successful in completing a strategic transaction of the Company prior to December 31, 2013. Specifically, if, during the term of the Incentive Bonus Agreement, there is (i) a sale of the Company, the Company shall pay to Mr. Reager a lump sum cash payment (defined in the Incentive Bonus Agreement as a "Sale Bonus") equal to the greater of (A) Two Hundred Twenty Five Thousand Dollars ($225,000) or (B) one percent (1%) of the total consideration received by the Company (including without limitation any financing proceeds) in connection with such triggering event; or (ii) a recapitalization or restructuring, the Company shall pay to Mr. Reager a lump sum cash payment equal to One Hundred Thousand Dollars ($100,000) (defined in the Incentive Bonus Agreement as the "Recapitalization/Restructuring Bonus," and together with the Sale Bonus, each a "Bonus"). The Bonus shall be payable to Mr. Reager within two (2) business days after the triggering event giving rise to such payment obligation.

The foregoing description of the Incentive Bonus Agreement is qualified in its entirety by reference to the text of the Incentive Bonus Agreement, a copy of which is attached to this Report as Exhibit 10.2.



Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

4.1 Forbearance Agreement and Amendment, entered November 12, 2012, by and between Global Axcess Corp. (and affiliates) and Fifth Third Bank.

10.1 Engagement Letter, dated November 13, 2012, by and between Global Axcess Corp. (and affiliates) and Kevin L. Reager.

10.2 Transaction Incentive Bonus Agreement, dated November 14, 2012, by and between Global Axcess Corp. (and affiliates) and Kevin L. Reager (Management compensation plan or arrangement).

99.1 Press Release, dated November 14, 2012, issued by Global Axcess Corp.

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