Exhibit 99.1
THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR UNDER ANY APPLICABLE STATE
SECURITIES LAW AND MAY NOT BE TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR AN
OPINION OF COUNSEL THAT SUCH REGISTRATION STATEMENT IS NOT REQUIRED UNDER THE
SECURITIES ACT AND THE RULES AND REGULATIONS PROMULGATED THEREUNDER OR UNDER
APPLICABLE STATE SECURITIES LAWS.
$______________
ACCESS WORLDWIDE COMMUNICATIONS, INC.
CONVERTIBLE PROMISSORY NOTE
AUGUST 31, 2005
1. ACCESS WORLDWIDE COMMUNICATIONS, INC., a Delaware corporation (along
with its subsidiaries, the "Company"), promises to grant to ____________________
(the "Holder") _____________________ shares of Company Common Shares, par value
$0.01 (the "Common Stock") within sixty (60) days of the Conversion Event, or as
soon as practicable thereafter. The Conversion Event is the date upon which the
shareholders of the Company vote, pursuant to Section 242 of the Delaware
General Corporation Law, to amend the Amended and Restated Certificate of
Incorporation of the Company (the "Certificate") to increase the number of
authorized shares of the Company's Common Stock as set forth in Article 4 of the
Certificate from twenty million (20,000,000) shares to no less than thirty five
million (35,000,000) shares (the "Conversion Event").
2. Pursuant to this promissory note (the "Note"), the Holder is funding
_______________________________________ (U.S.) Dollars ($____________) (the
"Purchase Price") in cash or other immediately available funds to the Company on
the date of execution hereof.
3. This Note shall mature on the date (the "Maturity Date") that is the
earlier of (a) the Conversion Event, (b) thirty six (36) months from the date of
issuance (the "Issuance Date") or (c) upon a Change of Control (as defined
below). With respect to (b) and (c) of this paragraph 3, the Holder shall be
remunerated the Reimbursement Amount only after (i) all amounts due under any
and all agreements or other instruments evidencing the Company's Institutional
Debt (as defined below) have been indefeasibly paid in full in cash or (ii) the
holder of the Company's Institutional Debt consents in writing to the repayment
of the principal amount hereof and all accrued and unpaid interest thereon.
Provided, however, that if the Purchase Price and the Non-Conversion Fee (as
defined below) are not paid at the Maturity Date, as such would be due in the
case of (b) and (c) above, such failure to pay shall result in an Event of
Default as described in Section 13 hereof and interest hereon shall accrue at
the Non-Conversion Rate (as defined below).
4. For purposes of this Note, a "Change of Control" shall be deemed to
occur on the effective date of any merger, consolidation, or reorganization that
results in the holders of the outstanding voting securities of the Company
(determined immediately prior to such merger or consolidation) owning less than
an majority of the outstanding voting securities of the surviving corporation
(determined immediately following such merger or consolidation), or any sale or
transfer by the Company of all or substantially all of its assets.
Notwithstanding the foregoing, a Change of Control shall not be deemed to occur
if the Company either merges or consolidates with or into another company or
sells or disposes of all or substantially all of its assets to another company,
if such merger, consolidation, sale or disposition is in connection with a
corporate restructuring wherein the stockholders of the Company immediately
before such merger, consolidation, sale, or disposition own, directly or
indirectly, immediately following such merger, consolidation, sale, or
disposition at least a majority of the combined voting power of all outstanding
classes of securities of the company resulting from such merger or
consolidation, or to which the Company sells or disposes of its assets, in
substantially the same proportion as their ownership in the Company immediately
before such merger, consolidation, sale, or disposition.
5. Should the Note mature thirty six (36) months from the Issuance Date, or
as the result of a Change of Control, as set forth in paragraph 3 above, then
within six (6) months of the Maturity Date, Company will pay to Holder (i) the
Purchase Price, and (ii) an additional twenty percent (20%) of the Purchase
Price (the "Non-Conversion Fee"). Additionally, the Note will begin accruing
interest based on the Purchase Price and Non-Conversion Fee at an annual rate of
fifteen percent (15%) beginning on the Maturity Date (the "Non-Conversion
Interest") and will continue to accrue interest until such time as the Holder is
reimbursed the Purchase Price, the Non-Conversion Fee and any and all
Non-Conversion Interest (collectively referred to as the "Reimbursement
Amount").
6. Notwithstanding the foregoing, under no circumstances shall the Purchase
Price or Non-Conversion Fee be paid out until (i) all amounts due under any and
all agreements or other instruments evidencing the Company's Institutional Debt
(as defined below) have been indefeasibly paid in full in cash or (ii) the
holder of the Company's Institutional Debt consents in writing to the repayment
of the Purchase Price or the Non-Conversion Fee. Provided, however, that if the
Purchase Price and Non-Conversion Fee are not paid at the Maturity Date, such
failure to pay shall result in an Event of Default as described in Section 3
below and Non-Conversion Interest shall continue to accrue. The Non-Conversion
Interest shall be payable in cash or other immediately available funds to the
Holder quarterly in arrears; provided that any such payment shall be made only
if the Company is not in Default or an Event of Default with Senior Lender (as
defined in paragraph 7 below), at which time all payments shall be blocked until
the earlier of (i) the cure of the Default or Event of Default with the Senior
Lender, (ii) written waiver of the Default or Event of Default by Senior Lender,
or (iii) the indefeasible payment in full of the Institutional Debt. Copies of
all credit agreements and other instruments evidencing the Company's
Institutional Debt are available for the Holder's review at the Company's
executive offices. The first interest payment shall be made on the last day of
the Company's next fiscal quarter following the Maturity Date and each
subsequent interest payment shall be due on the last day of each quarterly
period thereafter.
7. For purposes of this Note, "Institutional Debt" means the principal, and
premium, if any, and interest (including interest that accrues after a
bankruptcy, notwithstanding any law to the contrary), along with any other
indebtedness, obligations, liabilities, charges, fees, costs, and expenses
payable pursuant to the terms of instruments creating or evidencing indebtedness
of the Company, outstanding as of the date of initial issuance of this Note, or
indebtedness thereafter created, assumed, incurred, or guaranteed by the Company
and its affiliates, and all renewals, extensions, and refinances thereof, which
are payable to banks, commercial finance companies, insurance companies or other
institutional lenders including, without limitation, CapitalSource Finance LLC
and its affiliates (the "Senior Lender").
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8. Upon any bankruptcy, insolvency, dissolution, receivership, or other
proceeding involving the Company, all Institutional Debt shall first be
indefeasibly paid in full in cash before any payment or distribution of any kind
is made to the Holder of this Note, and any payment or distribution that may be
made with respect to this Note, whether in cash, securities, or otherwise, shall
be held in trust for the benefit of the holder of the Institutional Debt and
immediately upon receipt, delivered to the holder of the Institutional Debt.
9. This Note is being issued pursuant to an exemption from registration
under the Securities Act and the rules and regulations promulgated thereunder.
10. The Holder represents to the Company that it is aware of the Company's
business affairs and financial condition and has acquired sufficient information
about the Company to reach an informed and knowledgeable decision to acquire
this Note and the shares issuable upon conversion of this Note. The holder of
this Note further represents that it is acquiring this Note and the right to
acquire the shares issuable upon conversion of this Note for investment purposes
only, for its own account only and not with a view to, or for resale in
connection with, any "distribution" thereof within the meaning of the Securities
Act.
11. Conversion.
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(a) Automatic Conversion. Upon the Conversion Event, the
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Note shall immediately mature and shall automatically convert (except that upon
any liquidation of the Corporation the right of conversion shall terminate at
the close of business on the last full business day preceding the date fixed for
payment of the amount distributable on the Note as more fully described in the
Liquidation section below) into fully paid and nonassessable whole shares of
Common Stock on a two (2) to one (1) basis (the "Conversion Ratio"). For the
sake of clarity, for every one (1) dollar of the purchase price, Holder shall
receive two (2) shares of Common Stock (the "Conversion Price"). The Company
shall give written notice to Holder of the occurrence of the Conversion Event,
which notice shall include a calculation of the number of shares of Common Stock
into which the Note is converted. Thereafter, the Holder shall not be entitled
to the Reimbursement Amount, as set forth in paragraph 5 above.
(b) Issuance of Certificates; Time Conversion Effected.
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Within sixty (60) days, or as soon as practicable after the Conversion Event,
the Corporation shall issue and deliver, or cause to be issued and delivered, to
the Holder, registered in such name or names as such Holder may direct, subject
to compliance with applicable laws to the extent such designation shall involve
a transfer, a certificate or certificates for the number of whole shares of
Common Stock issuable upon the conversion of the Note (the "Conversion Shares").
To the extent permitted by law, such conversion shall be deemed to have been
effected as of the date the Conversion Event occurs, as applicable, and at such
time the rights of the Holder of the Note shall cease, and the person or persons
in whose name or names any certificate or certificates for shares of Common
Stock shall be issuable upon such conversion, shall be deemed to have become the
holder or holders of record of the Conversion Shares represented thereby.
Furthermore, the Company covenants that upon issuance of the Conversion Shares
in accordance with the terms hereof,such shares shall be duly authorized,
validly issued and outstanding, fully paid and non-assessable shares of Common
Stock. Except as described herein, this Note is not otherwise convertible into
any other shares of the Company's capital stock.
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(c) The certificates representing the Conversion Shares
shall bear a legend substantially similar to the following:
"The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended (the
"Act"), and may not be offered or sold except (1) pursuant to an
effective registration statement under the Act or (2) upon the
delivery by the holder to the Company of an opinion of counsel
that an exemption from registration under such Act is
available."
12. Anti-dilution.
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(a) Stock Splits and Combinations. If the Company shall
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combine all of its outstanding shares of Common Stock into a smaller number of
shares, the number of Conversion Shares issuable upon the Conversion Event
hereunder shall be proportionately decreased and the Conversion Price in effect
immediately prior to such combination shall be proportionately increased, as of
the effective date of such combination, as follows: (i) the number of Conversion
Shares purchasable immediately prior to the effective date of such combination
shall be adjusted so that the Holder of this Note, if converted on or after that
date, shall be entitled to receive the number and kind of Conversion Shares
which the Holder of this Note would have owned and been entitled to receive as a
result of the combination had the Note been converted immediately prior to that
date and (ii) the Conversion Price in effect immediately prior to such
adjustment shall be adjusted by multiplying such Conversion Price by a fraction,
the numerator of which is the aggregate number of Conversion Shares purchasable
upon conversion of this Note immediately prior to such adjustment, and the
denominator of which is the aggregate number of Conversion Shares purchasable
upon conversion of this Note immediately thereafter. If the Company shall
subdivide all of its outstanding shares of Common Stock, the number of
Conversion Shares shall be proportionally increased and the Conversion Price in
effect immediately prior to such subdivision shall be proportionately decreased,
as of the effective date of such subdivision, as follows: (i) the number of
Conversion Shares purchasable upon the conversion of this Note immediately prior
to the effective date of such subdivision, shall be adjusted so that the Holder
of this Note, if converted on or after that date, shall be entitled to receive
the number and kind of Conversion Shares that the Holder of this Note would have
owned and been entitled to receive as a result of the subdivision had the Note
been converted immediately prior to that date and (ii) the Conversion Price in
effect immediately prior to such adjustment shall be adjusted by multiplying the
Conversion Price by a fraction, the numerator of which is the aggregate number
of Conversion Shares purchasable upon conversion of this Note immediately prior
to such adjustment, and the denominator of which is the aggregate number of
Conversion Shares purchasable upon conversion of this Note immediately
thereafter.
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(b) Stock Dividends and Distributions. If the Company shall
---------------------------------
fix a record date for the holders of its Common Stock entitled to receive a
dividend or other distribution payable in additional shares of Common Stock,
then the number of Conversion Shares shall be proportionately increased and the
Conversion Price in effect immediately prior to the time of such issuance or the
close of business on such record date shall be proportionately decreased, as of
the time of such issuance, or in the event such record date is fixed, as of the
close of business on such record date, as follows: (i) the number of Conversion
Shares purchasable immediately prior to the time of such issuance or the close
of business on such record date shall be adjusted so that the Holder of this
Note, if converted after that date, shall be entitled to receive the number and
kind of Conversion Shares and additional shares of Common Stock of the Company
which the Holder of this Note would have owned and been entitled to receive as a
result of the dividend or other distribution had the Note been converted
immediately prior to that date, and (ii) the Conversion Price in effect
immediately prior to such adjustment shall be adjusted by multiplying such
Conversion Price by a fraction, the numerator of which is the aggregate number
of shares of Common Stock purchasable upon conversion of this Note immediately
prior to such adjustment, and the denominator of which is the aggregate number
of shares of Common Stock purchasable upon conversion of this Note immediately
thereafter.
(c) Other Dividends and Distributions. If the Company shall
---------------------------------
fix a record date for the holders of Common Stock entitled to receive a dividend
or other distribution payable in securities of the Company other than shares of
Common Stock, then lawful and adequate provision shall be made so that the
Holder of this Note shall be entitled to receive upon conversion of this Note,
for the Conversion Price in effect immediately prior thereto, in addition to the
number of Conversion Shares immediately theretofore issuable upon conversion of
this Note, the kind and number of securities of the Company which the Holder
would have owned and been entitled to receive had the Note been converted
immediately prior to the date of such dividend or other distribution.
(d) Reclassification, Exchange and Substitution. If the
-------------------------------------------
Common Stock is changed into the same or a different number of shares of any
class or classes of stock, whether by recapitalization, reclassification or
otherwise (other than by a subdivision or combination of shares or stock
dividend or a reorganization, merger, consolidation or sale of assets, provided
for elsewhere in this Section 2), then the Holder of this Note shall be entitled
to receive upon conversion of this Note, in lieu of the Conversion Shares
immediately theretofore issuable upon conversion of this Note, for the aggregate
Conversion Price in effect prior thereto, the kind and amount of stock and other
securities and property receivable upon such recapitalization, reclassification
or other change, which the Holder of this Note would have owned and been
entitled to receive had this Note been converted immediately prior to such
recapitalization, reclassification or other change (in any event, subject to
further anti-dilution protection as provided in this Section 12).
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(e) Reorganizations, Mergers, Consolidations or Sales of
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Assets. If any of the following transactions (each, a "Special Transaction")
- ------
shall become effective prior to the Maturity Date: (i) a capital reorganization,
share exchange, or exchange offer (other than a recapitalization, subdivision,
combination, reclassification or exchange of shares provided for elsewhere in
this Section 12), (ii) a consolidation or merger of the Company with and into
another entity, or (iii) a sale or conveyance of all or substantially all of the
Company's assets, then as a condition of any Special Transaction, lawful and
adequate provision shall be made so that the Holder of this Note shall
thereafter have the right to purchase and receive upon conversion of this Note,
in lieu of the Conversion Shares immediately issuable upon the Conversion Event,
for the Conversion Price in effect immediately prior to such conversion, such
shares of stock, other securities, cash or other assets as may be issued or
payable in and pursuant to the terms of such Special Transaction to the holders
of shares of Common Stock for which this Note could have been converted if the
Conversion Event took place immediately prior to such Special Transaction.
(f) Liquidation. If the Company shall, at any time prior to
-----------
the Conversion Event or the Maturity Date, dissolve, liquidate or wind up its
affairs, the Holder shall receive, subject to Senior Lender's approval, the
Purchase Price and the Non-Conversion Fee, in lieu of the Conversion Shares.
(g) Notice. Whenever this Note or the number of Conversion
------
Shares is to be adjusted as provided herein, the Company shall forthwith, as
soon as practicable, cause to be sent to the Holder a notice stating in
reasonable detail the relevant facts and any resulting adjustments and the
calculation thereof.
(h) Fractional Interests. The Company shall not be required
--------------------
to issue fractions of shares of Common Stock upon the conversion of this Note.
If any fraction of a share of Common Stock would be issuable upon the conversion
of this Note, the Company shall, upon such issuance, purchase such fraction for
an amount in cash equal to the current value of such fraction, computed on the
basis of the last reported closing price of the Common Stock on the securities
exchange or quotation system on which the shares of Common Stock are then listed
or traded, as the case may be, if any, on the last business day prior to the
date of conversion upon which such a sale shall have been effected, or, if the
Common Stock is not so listed or traded on an exchange or quotation system, as
the Board of Directors of the Company may in good faith determine.
(i) Effect of Alternate Securities. If at any time, as a
------------------------------
result of an adjustment made pursuant to this Section 12, the Holder of this
Note shall thereafter become entitled to receive any securities of the Company
other than shares of Common Stock, then the number of such other securities
receivable upon conversion of this Note shall be subject to adjustment from time
to time on terms as nearly equivalent as practicable to the provisions with
respect to shares of Common Stock contained in this Section 12.
(j) Successive Application. The provisions of this Section
----------------------
12 shall apply from time to time to successive events covered by this Section
12. Upon the occurrence of any event contemplated by this Section 12, all
references to Common Stock and to the Company and to other defined terms herein
shall be equitably adjusted to protect the interests of the Holder.
13. Events of Default. Subject to the terms of any agreements or instruments
-----------------
evidencing the Company's Institutional Debt, and subject to the rights of the
holders of such Institutional Debt, the occurrence of any one or more of the
following shall constitute an "Event of Default" hereunder:
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(a) nonpayment by the Company of any portion of the Purchase
Price or Non-Conversion Fee when due in accordance with the terms hereof;
(b) the Company (i) suspending or discontinuing its
business, (ii) making an assignment for the benefit of creditors, or (iii)
filing a voluntary petition in bankruptcy or having a petition in bankruptcy
filed against it.
If an Event of Default occurs, then, subject to the terms of any agreements or
instruments evidencing the Company's Institutional Debt, and subject to the
rights of the holders of such Institutional Debt, (i) the Holder may declare the
Purchase Price, the Non-Conversion Fee, and all accrued and unpaid interest of
the Note thereon to be immediately due and payable, (ii) and interest on the
outstanding Purchase Price and Non-Conversion Fee that was to begin accruing as
of the Maturity Date, the Non-Conversion Interest, shall begin to accrue at
fifteen percent (15%) per annum as of the date of the occurrence of the Event of
Default.
14. Registration Rights. Within six (6) months after the Conversion Event,
-------------------
or as soon as practicable thereafter, the Company shall cause to be prepared and
filed with the Securities and Exchange Commission (the "Commission"), and cause
to become effective no later than sixty (60) days after the date of filing, or
as soon as practicable thereafter (the "Effective Date"), a registration
statement on Form S-1 (or such other available registration statement form that
is eligible for use), as may be amended from time to time, the "Registration
Statement," and such other documents, as may be necessary, in the opinion of
counsel for the Company, so as to permit a public offering and sale by the
Holder of the Conversion Shares under the Securities Act. Notwithstanding the
foregoing to the contrary, the Company shall not be required to file the
Registration Statement within thirty (30) days of the date the Company is
required to file its annual report on Form 10-K with the Securities and Exchange
Commission. All expenses incurred in connection with the registration of the
Conversion Shares, including without limitation, all blue sky registration and
filing fees, legal fees, accounting fees, printing expenses, other expenses and
fees of experts used in connection with such registration and any fees and
expenses incidental to any post-effective amendment to the Registration
Statement, shall be borne and paid by the Company. The Company shall take all
reasonable efforts to keep such registration effective for a period of not less
than two (2) years after the Effective Date, and shall take all reasonable
efforts to cause the Conversion Shares at all times during such period to be
freely tradable under the Registration Statement, except as may be required
under the Federal Securities laws, and shall take such other actions as may be
necessary or advisable to enable the Holder to consummate the public sale of the
Conversion Shares by the Holder under the Registration Statement.
15. Use of Proceeds. The Company shall use the proceeds obtained from the
---------------
sale of this Note for its working capital needs.
16. Miscellaneous.
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(a) Usury. Nothing herein contained, nor any transaction
-----
related hereto, shall be construed or so operate as to require the Company to
pay interest at a greater rate than is now lawful, or to make any payment, or to
do any act contrary to law.
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(b) Ownership. The Holder shall be deemed to be the owner of
---------
this Note for all purposes, and either (i) the distribution of the Conversion
Shares, or (ii) the Reimbursement; whichever earlier, shall constitute the full
and complete discharge of the Company for such purposes.
(c) Assignment. This Note and the rights, obligations and
----------
duties of the Company or the Holder hereunder shall not be assignable or
otherwise transferable by either party; provided, in the event the Company is
acquired by another entity and becomes a wholly-owned subsidiary of that entity,
then all references herein to Company shall also be applicable to its
shareholder, and such shareholder shall be bound by the terms hereof as if it
were the Company.
(d) Modification. No term or provision contained herein may
------------
be modified, amended or waived except by written agreement or consent signed by
the party to be bound thereby. Notwithstanding the foregoing, this Note shall
not be materially modified, amended changed or modified without the written
consent of Senior Lender.
(e) Binding Effect and Benefit. This Note shall inure to the
--------------------------
benefit of, and shall be binding upon, the parties hereto, their heirs,
executors, administrators, personal representatives, successors in interest and
permitted assigns.
(f) Further Assurances. Company and Holder agree that from
------------------
time to time hereafter, upon request, each party will, at such party's sole
expense, execute and deliver such other instruments and documents and take such
further action as may be reasonably necessary to carry out the intent of this
Note.
(g) Governing Law; Waiver of Jury Trial. This Note shall be
-----------------------------------
interpreted, and the rights and liabilities of the parties hereto determined, in
accordance with the internal laws (as opposed to conflicts of law provisions) of
the State of Delaware. As part of the consideration for new value this day
received, the Holder hereby consents to the jurisdiction of any state or federal
court located within Wilmington, Delaware. Each of the Company and the Holder
hereby irrevocably and unconditionally waives trial by jury in any suit or
proceeding arising out of or related to this Note.
(h) Incorporation by Reference. All exhibits and documents
--------------------------
referred to in this Note shall be deemed incorporated herein by any reference
thereto as if fully set out herein.
(i) Headings and Captions. Subject headings and captions are
---------------------
included for convenience purposes only and shall not affect the interpretation
of this agreement.
(j) Notice. All notices, requests, demands and other
------
communications permitted or required hereunder shall be in writing, and either
(i) delivered in person, (ii) sent by express mail or other overnight delivery
service providing receipt of delivery, (iii) mailed by certified or registered
mail, postage prepaid, return receipt requested or (iv) sent by telex, telegraph
or other facsimile transmission as follows:
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If to Company Access Worldwide Communications, Inc.
addressed or 4950 Communications Avenue, Suite 300
delivered Boca Raton, Florida 33431
in person to: Attention: Richard Lyew
Fax: 561-226-5021
With a copy to: Access Worldwide Communications, Inc.
4950 Communications Avenue, Suite 300
Boca Raton, Florida 33431
Attention: Mark Wright
Fax: 800-569-1587
If to the Holder, _______________________________________
addressed or delivered _______________________________________
in person to: _______________________________________
_______________________________________
or to such other address as either party may designate by notice in accordance
with this Section.
Any such notice or communication, if given or made by prepaid,
registered or certified mail or by recorded express delivery, shall be deemed to
have been made when actually received.
(k) Severability. If any portion of this Note is held
------------
invalid, illegal or unenforceable, such determination shall not impair the
enforceability of the remaining terms and provisions herein, which may remain
effective, and to this end this Note is declared to be severable.
(l) Waiver. No waiver of a default, breach or other
------
violation of any provision of this Note shall operate or be construed as a
waiver of any subsequent default, breach or other violation or limit or restrict
any right or remedy otherwise available. No delay or omission on the part of the
Holder to exercise any right or power arising by reason of a default shall
impair any such right or power or prevent its exercise at any time during the
continuance thereof.
(m) Gender and Pronouns. Throughout this agreement, the
-------------------
masculine shall include the feminine and neuter and the singular shall include
the plural and vice versa as the context requires.
(n) Entire Agreement. This Note constitutes the entire
----------------
agreement of the parties and supersedes any and all other prior agreements, oral
or written, with respect to the subject matter contained herein.
[SIGNATURES ON FOLLOWING PAGE]
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[SIGNATURE PAGE TO CONVERTIBLE PROMISSORY NOTE]
IN WITNESS WHEREOF, the Company has signed and sealed this Note on this
_______ day of August, 2005.
ACCESS WORLDWIDE COMMUNICATIONS, INC.
By:
---------------------------------
Mark Wright
General Counsel
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