EXHIBIT 99.3
June 30, 2000 $2,100,000.00
Atlanta, Georgia
CONVERTIBLE SECURED PROMISSORY NOTE
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FOR VALUE RECEIVED, the undersigned Netvoice Encom LP, a Texas limited
partnership ("Maker"), promises to pay to the order of World Access
Telecommunications Group, Inc., an Illinois corporation ("Holder"), the
principal amount of Two Million and One Hundred Thousand Dollars
($2,100,000.00), together with interest on so much thereof as is from time
to time outstanding and unpaid at the Applicable Interest Rate (as defined
in Section 1(b) hereof), in lawful money of the United States of America,
which shall at the time of payment be legal tender in payment of all debts
and dues, public and private.
1. ACCRUAL AND CALCULATION OF INTEREST.
(a) Interest shall accrue on the outstanding principal balance
of this Convertible Secured Promissory Note (this "Note") at the
"Applicable Interest Rate" (as defined below) in effect from time to time.
Interest shall be computed hereunder based on a 360-day year, and shall
accrue for each and every day (365 days per year) on which any indebtedness
remains outstanding hereunder.
(b) As used herein, the "Applicable Interest Rate" in effect at
any time during any "Interest Period" (as defined below) shall mean an
interest rate per annum equal to two percent (2.0%) plus "LIBOR" (as
defined below) with respect to such Interest Period.
(c) As used herein, the term "LIBOR" shall mean a rate effective
for each "Interest Period" (as defined below) equal to the rate per annum
(rounded upwards, if not already in even one-sixteenths of one percent, to
the nearest one-sixteenth of one percent) published in the Money Rates
section of THE WALL STREET JOURNAL for the date which is one (1) "LIBOR
Business Day" (as defined below) prior to the first day of such Interest
Period, as the London Interbank Offered Rate for U.S. dollar deposits
having a designated maturity of three (3) months (or if such publication
shall cease to be publicly available or if the information contained in
such publication, in Holder's judgment, shall cease to accurately reflect
such London Interbank Offered Rate, then the parties shall select any
publicly available source of similar market data that accurately reflects
such London Interbank Offered Rate).
(d) As used herein, the term "Interest Period" shall mean (i)
with respect to the calculation of the first payment of interest due under
this Note, the period commencing on the date hereof and continuing through
September 30, 2000, and (ii) with
respect to the calculation of each subsequent payment of interest due under
this Note, the calendar quarter with respect to which such interest is due
and payable, ending on, and including, March 31, June 30, September 30 or
December 31, as applicable.
(e) As used herein, the term "LIBOR Business Day" shall mean any
day that is not a Saturday, a Sunday or a day on which banks in the City of
London, England are required or permitted to be closed for interbank or
foreign exchange transactions.
2. PAYMENTS OF PRINCIPAL AND INTEREST.
(a) Maker shall make calendar quarterly payments of interest
accruing under this Note, as follows: On each March 31st, June 30th,
September 30th and December 31st, beginning on September 30, 2000 and
continuing until the "Maturity Date" (as defined below), Maker shall pay to
Holder all interest accrued under this Note at the Applicable Interest Rate
during such Interest Period with respect to which such interest is due and
payable. As used herein, the term "Maturity Date" shall mean June 30, 2005.
(b) Principal amounts due under this Note shall be paid to
Holder as follows: On December 31, 2001, Maker shall pay to Holder a
principal payment of Three Hundred Fifty Thousand and No/100 Dollars
($350,000.00). Thereafter, the remaining outstanding principal amount
evidenced by this Note shall be payable in equal consecutive quarterly
installments on each March 31st, June 30th, September 30th and December
31st, beginning on March 31, 2002 and continuing until the Maturity Date.
(c) On the Maturity Date, the entire remaining outstanding
principal balance of this Note, together will all accrued and unpaid
interest thereon, shall be due and payable in full.
(d) All payments due under this Note shall be payable without
setoff, counterclaim or any other deduction whatsoever other than Maker's
right of setoff as provided in Section 5.1(g) of the Asset Purchase
Agreement, of even date herewith, between Maker, Holder and NetVoice (as
defined below).
3. CONVERSION.
(a) The then outstanding principal amount hereunder shall be
convertible into shares of common stock, par value $.001 per share, of
NetVoice Technologies Corporation, a Nevada corporation ("NetVoice") (such
shares being referred to as "NetVoice Common Stock"), at the sole election
of Holder, pursuant to the following provisions:
(i) Holder shall have the right, at any time prior to or on
the Maturity Date, to convert the then outstanding principal amount
hereunder (the "Converted Principal Amount"), into such number of shares of
NetVoice Common Stock as is equal to the Converted Principal Amount,
DIVIDED BY the "Market Price", but in no event less than $10.00 per share.
As used herein, the "Market Price" shall mean, per
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share of NetVoice Common Stock, (x) the average of the daily closing prices
of NetVoice Common Stock, as reported by a national securities exchange or
on the National Market System of the Nasdaq Stock Market ("Nasdaq"), for
the twenty (20) consecutive trading days (in which such shares are traded
on such national securities exchange or the National Market System of
Nasdaq) ending at the close of trading on the trading day immediately
preceding the Conversion Date (as defined below) or (y) if, on the
Conversion Date, the shares of NetVoice Common Stock are not then listed or
admitted to trading on a national securities exchange or the National
Market System of Nasdaq, the average of the reported closing bid and asked
prices of the NetVoice Common Stock (for other over-the-counter securities)
on the trading day immediately preceding the Conversion Date. If neither
(x) nor (y) is applicable, the Market Price shall mean the fair market
value as determined in good faith by the Board of Directors of NetVoice
unless Holder requests that NetVoice obtain an opinion of a nationally
recognized investment banking firm chosen by Holder and NetVoice (at
NetVoice's expense), in which event the Market Price shall be determined by
such investment banking firm.
(ii) Holder shall exercise its conversion right under this
Section 3 by delivering to Maker a written notice (a "Conversion Notice")
(the date such notice is delivered by Holder being referred to as the
"Conversion Date") that Holder elects to convert the then outstanding
principal amount due hereunder into shares of NetVoice Common Stock.
Within five (5) business days following Holder's delivery of a Conversion
Notice, Maker shall deliver to Holder a certificate or certificates
representing the number of shares of NetVoice Common Stock into which the
then outstanding principal amount has been converted pursuant to the terms
hereof.
(b) Notwithstanding anything herein to the contrary, interest
shall continue to accrue on the Converted Principal Amount at the
Applicable Interest Rate, and shall continue to be payable to Holder on a
calendar quarterly basis through and including the date on which the
Registration Statement (as defined below) has been declared effective by
the Securities and Exchange Commission (the "SEC") (regardless of whether
the Registration Statement has been declared effective by the SEC before or
after the stated Maturity Date), at which time Maker shall pay to Holder
all interest accrued under this Note during such Interest Period, or
portion thereof with respect to which such interest is due and payable.
4. Prepayments. Prepayments of principal due hereunder may be made
in whole (but not in part) at any time without penalty, provided that such
prepayment is accompanied by all interest accrued but unpaid hereunder.
5. Security. The indebtedness evidenced by this Note and the
obligations created hereby are secured by the collateral described in that
certain Security Agreement, of even date herewith (the "Security
Agreement"), between Maker and Holder. All of the terms and provisions of
the Security Agreement are incorporated herein by reference.
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6. LATE Charge. If any sum payable under this Note (other than the
final payment of the principal balance and interest due on the Maturity
Date) is not paid prior to the tenth (10th) day following the date such sum
is due, then, subject to the provisions hereof limiting interest to the
maximum amount allowable by applicable law, Maker shall pay to Holder on
demand an amount equal to five percent (5%) of such past due sum, and such
amount shall be secured by the Security Agreement.
7. DEFAULT. It is hereby expressly agreed that should any "Event of
Default" (as defined below) occur, the indebtedness evidenced hereby,
including all unpaid interest accrued thereon, shall, at the option of
Holder and without notice to Maker, at once become due and payable and may
be collected forthwith, whether or not the principal amount due hereunder
has been converted into shares of NetVoice Common Stock or there has been
a prior demand for payment and regardless of the stipulated date of
maturity. So long as any default exists hereunder, regardless of whether
or not there has been an acceleration of the indebtedness evidenced hereby,
and at all times after maturity of the indebtedness evidenced hereby
(whether by acceleration or otherwise), interest shall accrue on the
outstanding principal balance of this Note at a rate per annum equal to
four percent (4%) plus the Applicable Interest Rate which would be in
effect hereunder absent such default or maturity, or if such increased rate
of interest may not be collected under applicable law, then at the maximum
rate of interest, if any, which may be collected from Maker under
applicable law, and such default interest shall be immediately due and
payable. The remedies of Holder in this Note or in the Security Agreement,
or at law or in equity, shall be cumulative and concurrent, and may be
pursued singularly, successively or together in Holder's discretion. In
the event this Note, or any part hereof, is collected by or through an
attorney-at-law, Maker agrees to pay all costs of collection including, but
not limited to, reasonable attorneys' fees and expenses. As used herein,
an "Event of Default" shall be deemed to have occurred upon the happening
of any of the following: (a) any payment of principal or interest required
under this Note has not been made within ten (10) days of the date such
payment is due (it being understood and agreed, however, that no grace
period is provided for the payment of principal and interest due on the
Maturity Date); (b) any breach by Maker of any of its covenants or
agreements hereunder, which breach has not been cured within ten (10) days
following Maker's receipt of notice of such breach; (c) if, within forty-five
(45) days following the delivery of a Conversion Notice, NetVoice has
not filed with the SEC a registration statement under the Securities Act of
1933, as amended, relating to the shares of NetVoice Common Stock into
which the Converted Principal Amount has been converted pursuant hereto
(the "Registration Statement") and pursuant to the Registration Rights
Agreement, dated June 30, 2000 (the "Registration Rights Agreement"),
between NetVoice and Holder, which Registration Statement shall be in a
form that can be declared effective as soon as practicable following the
filing thereof, unless a Delaying Event (as defined below) exists, in which
case NetVoice may delay the filing of the Registration Statement until the
earlier of such time as (i) the subject of the Delaying Event has been
terminated or (ii) the subject of the Delaying Event has been disclosed
(provided, however, that in no event shall NetVoice be permitted to delay
the filing of the Registration Statement for more than ninety (90) days
following the delivery of a Conversion Notice); (d) NetVoice shall not be
using its reasonable best efforts to have the Registration Statement
declared effective as soon as practicable after the filing thereof; or
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(e) if, at such time as the Registration Statement is declared effective by
the SEC, NetVoice Common Stock is not then listed or admitted to trading on
any national securities exchange. For purposes hereof, a "Delaying Event"
shall mean an event that would permit NetVoice to defer or delay the filing
of a registration statement under Sections 2(a)(i) or 2(a)(ii) of the
Registration Rights Agreement.
8. INTEREST LIMITED BY LAW. If from any circumstances whatsoever,
Maker is at any time required or obligated to pay interest at a rate in
excess of the maximum rate prescribed by any applicable usury statute or
any other applicable law, then, ipso facto, the obligation to be fulfilled
shall be reduced to such maximum rate, so that in no event shall any
payment be possible under this Note that is in excess of such maximum rate.
9. PARTIAL INVALIDITY. The unenforceability or invalidity of any
provision of this Note shall not affect the enforceability or validity of
any other provision herein.
10. APPLICABLE LAW. This Note shall be construed in accordance with
the laws of the State of Georgia, without giving effect to the conflict of
laws principles thereof.
11. NOTICE. Any notice, request, instruction or other document to be
given hereunder by any party hereto to any other party hereto must be in
writing and delivered personally (including by overnight courier or express
mail service) or sent by registered or certified mail, or be transmitted by
facsimile or other means of electronic data transmission, confirmed by
express mail or overnight courier, in each case with postage or fees prepaid,
If to Maker Netvoice Encom LP
or NetVoice: 137 Montfort Drive, Suite 250
Dallas, Texas 75240
Attention: Jeff Rothell
Telephone No.: (972) 788-2988
Facsimile No.: (972) 788-2995
With a copy to: Locke Liddell & Sapp LLP
2200 Ross Avenue, Suite 2200
Dallas, Texas 75201
Attention: Jack E. Jacobsen
Telephone No.: (214) 740-8553
Facsimile No.: (214) 740-8800
If to Holder: World Access Telecommunications Group, Inc.
945 East Paces Ferry Road, Suite 2200
Atlanta, Georgia 30026
Attention: W. Tod Chmar
Telephone No.: (404) 231-2025
Facsimile No.: (404) 233-2280
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With a copy to: Long Aldridge & Norman LLP
303 Peachtree Street, N.E., Suite 5300
Atlanta, Georgia 30308
Attention: H. Franklin Layson
Telephone No.: (404) 527-4052
Facsimile No.: (404) 527-4198
or to such other address as may be specified from time to time in a notice
given by such party. Any notice with is delivered personally in the manner
provided herein will be deemed to have been duly given to the party to whom
it is directed upon actual receipt by such party or the office of such
party. Any notice which is addressed and mailed in the manner provided
herein will be conclusively presumed to have been duly given to the party
to which it is addressed at the close of business, local time of the
recipient, on the first (1st) business day after the day it is so placed in
the mail or, if earlier, the time of actual receipt.
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IN WITNESS WHEREOF, Maker has executed this Note and Holder and
NetVoice have acknowledged and agreed to its terms as of the date first
above written.
"MAKER":
NETVOICE ENCOM LP
By: Netvoice Encom GP, Inc., its
general partner
By: /s/ NABIL LOPEZ
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Name: Nabil Lopez
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Title: President
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ACKNOWLEDGED AND AGREED TO:
"HOLDER":
WORLD ACCESS TELECOMMUNICATIONS GROUP, INC.
By: /s/ MARK A. GERGEL
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Name: Mark A. Gergel
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Title: Vice President
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"NETVOICE":
NETVOICE TECHNOLOGIES CORPORATION
By: /s/ JEFF ROTHELL
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Name: Jeff Rothell
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Title: President and Chief Executive Officer
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Subject to the terms of that certain Pledge Agreement dated as of December 30,
1998 and to provide collateral in respect of obligations owed by Telco
Systems, Inc. and World Access Holdings, Inc. to Bank of America, N.A.,
under that certain Credit Agreement, dated as of December 30, 1998 and
amended and restated on December 7, 1999, between Telco Systems, Inc.,
World Access Holdings, Inc., Bank of America, N.A., Fleet National Bank,
Bank Austria Creditanstalt Corporate Finance, Inc. and Banc of America
Securities LLC, Holder makes the following endorsement:
Pay to the order of Bank of America, N.A., as Administrative Agent, for
Bank of America, N.A. and the other banks party to the above-referenced
Credit Agreement, without recourse.
World Access Telecommunications Group, Inc.
By: /s/ MARK A. GERGEL
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Name: Mark A. Gergel
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Title: Vice President
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