IMPORTANT
---------
PLEASE READ CAREFULLY BEFORE SIGNING,
SIGNIFICANT REPRESENTATIONS ARE CALLED FOR HEREIN
SUBSCRIPTION AGREEMENT
Subject to the terms and conditions hereof, the undersigned (the
"Subscriber") hereby subscribes to purchase from Preferred Voice, Inc., a
Delaware corporation (the "Company"), _____ units ("Units") consisting of one
share (the "Shares") of the Company $.001 par value common stock (the "Common
Stock") and a warrant to purchase one-half of a share of Common Stock at an
exercise price of $_______ pursuant to the terms of a Warrant Agreement attached
hereto as Exhibit B (the "Warrant"), at a purchase price of $_____ in connection
with the Company's offering (the "Offering") of Units to a number of investors
(the Subscriber and the other investors are collectively referred to herein as
the "Subscribers") who execute a Subscription Agreement substantially similar to
this Subscription Agreement (the "Agreement"). The Shares of Common Stock
purchased by the Subscribers in this Offering, not including any shares (the
"Warrant Shares") issuable upon exercise of the Warrants issued in this Offering
or the Warrants, are hereinafter collectively referred to as the "Securities." A
wire transfer to the Company's account in the amount of $ ___________ for the
Units has been made in connection herewith.
1. General Representations. The Subscriber acknowledges and represents as
follows:
(a) The Subscriber has been given full access to information
regarding the Company (including the opportunity to meet with, to
ask questions of and receive satisfactory answers from the
Company officers and directors, or other persons acting on the
Company's behalf, and to review all material books and records,
material contracts and documents that Subscriber may have
requested, concerning the business and financial condition,
properties, operations and prospects of the Company) and has
utilized such access for the purpose of obtaining all information
the Subscriber deems necessary for purposes of making an informed
investment decision. The Subscriber currently owns other
securities issued by the Company.
(b) The Subscriber understands that the purchase of the Units is a
highly speculative investment and involves a high degree of risk,
that the Company may need additional financing in the future, and
that the Company makes no assurances whatever concerning the
present or prospective value of the Units;
(c) The Subscriber has obtained, to the extent he or she deems
necessary, personal professional advice with respect to the risks
inherent in the purchase of the Units and the suitability of such
investment in light of the Subscriber's personal financial
condition and investment needs. Unless the Subscriber has
otherwise advised the Company in writing, the Subscriber did not
1
employ the services of a purchaser representative, as defined in
Regulation D, promulgated by the Securities and Exchange
Commission (the "SEC"), in connection with this investment;
(d) The Subscriber has sufficient knowledge and experience in
financial and business matters to be capable of evaluating the
merits and risks of a prospective purchase of the Units; is
experienced in making investments that involve a high degree of
risk, and is sophisticated in making investment decisions; and
believes that he or she is able to bear the economic risk of the
purchase of the Units, including the total loss of such
investment; and
(e) The Subscriber realizes that (i) the purchase of the Units is a
long-term investment, (ii) the purchaser of the Units must bear
the economic risk of the investment for an indefinite period of
time because the issuance of the Units has not been registered
under the Securities Act of 1933, as amended, (the "Act"), or
applicable state laws or laws of other countries and, therefore,
the Shares, the Warrants and the Warrant Shares cannot be sold or
otherwise transferred unless such sale or resale is subsequently
registered under the Act and such other laws or exemptions from
such registration are available, and (iii) the transferability of
the Shares, the Warrants, and the Warrant Shares is restricted
and (A) requires conformity with the restrictions contained in
Section 2 below, and (B) will be further restricted by a legend
placed on the certificate(s) representing the Shares and the
Warrant Shares and on the Warrants stating that the issuance of
the Shares, the Warrants, and the Warrant Shares have not been
registered under the Act and applicable state laws and
referencing the restrictions on transferability of the Shares,
the Warrants, and the Warrant Shares.
(f) The Subscriber acknowledges and understands that the Company
files annual, quarterly and special reports and other information
with the SEC that may be inspected without charge at the SEC's
principal office in Washington, D.C., and copies of all or any
part thereof may be obtained from the Public Reference Section,
Securities and Exchange Commission, 000 Xxxxx Xxxxxx, X.X.,
Xxxxxxxxxx, X.X. 00000 upon payment of the prescribed fees and
also may be accessed at the address of the SEC's web site,
xxxx://xxx.xxx.xxx.
(g) The Subscriber is an accredited investor, as set forth on Exhibit
A hereto.
Subscriber recognizes that the offer and sale of Units pursuant to the
Offering is based upon representations and warranties contained herein, and the
Subscriber agrees to indemnify the Company and to hold it harmless against any
liabilities, costs or expenses (including reasonable attorneys' fees) arising by
reason of or in connection with any misrepresentation or any breach of such
representations or warranties by the Subscriber, or arising as a result of the
sale or distribution of any of the Units by the Subscriber in violation of the
Act or other applicable law.
2
Subscriber agrees that the foregoing acknowledgments, representations and
covenants shall survive the Subscriber's purchase of the Units, as well as any
investigation made by the party relying on the same or any acceptance or
rejection of this subscription.
2. No Registration Under the Securities Laws. The Subscriber has been
advised that the issuance of the Units pursuant to the Offering is not being
registered under the Act or state securities laws or securities laws of other
nations pursuant to exemptions from the Act and such laws, and that the
Company's reliance upon such exemptions is predicated in part on the
representations of the Subscriber contained herein. The Subscriber represents
and warrants that the Units are being purchased for the Subscriber's own account
and for investment without the intention of reselling or redistributing the
same, that no agreement has been made with others regarding the Units and that
the Subscriber's financial condition is such that it is not likely that it will
be necessary to dispose of the Units in the foreseeable future. The Subscriber
is aware that, in the view of the SEC and state authorities that administer
state securities laws, a purchase of the Units with an intent to resell by
reason of any foreseeable specific contingency or anticipated change in market
values, or any change in the condition of the Company or its business, or in
connection with a contemplated liquidation or settlement of any loan obtained
for the acquisition of the Units and for which the Units were pledged as
security, would represent an intent inconsistent with the representations set
forth above. The Subscriber further represents and agrees that, if contrary to
the foregoing intentions there should ever be a desire to dispose of or transfer
the Shares, the Warrants or the Warrant Shares in any manner, the Subscriber
shall not do so without first obtaining (a) an opinion of counsel satisfactory
to the Company that such proposed disposition or transfer lawfully may be made
without registration pursuant to the Act and applicable securities laws of
states and other nations or (b) such registrations (it being expressly
understood that the Company shall not have any obligation to register the Shares
for such purpose, except as provided in Section 3 hereof).
3. Registration Rights.
(a) (i) If, at any time within two (2) years of the date of this
Agreement, the Company proposes for any reason to register
any of its securities under the Act other than a
registration on Form S-8 relating solely to employee stock
option or purchase plans, on Form S-4 relating solely to an
SEC Rule 145 transaction or on any other form that does not
include substantially the same information as would be
required to be included in a registration statement covering
the public sale of the Shares, it shall each such time give
written notice to the Subscriber of the Company's intention
to register such securities, and, upon the written request,
given within thirty (30) days after receipt of any such
notice, of the Subscriber, to register the public sale of
any of the Shares, the Company shall use its reasonable best
efforts to include the Shares so requested by the Subscriber
to be registered, under the Act, all to the extent requisite
to permit the public sale or other disposition by the
3
Subscriber of such Shares so registered; provided, however,
that the Shares as to which registration had been requested
pursuant to this Section 3(a) need not be included in such
registration if in the opinion of counsel for the Company
the proposed transfer by the Subscriber may be effected
without registration under the Act and any certificate
evidencing the Shares need not bear any restrictive legend.
(ii) In the event that any registration pursuant to this Section
3(a) shall be, in whole or in part, an underwritten offering
of securities of the Company, then (x) any request pursuant
to this Section 3(a) to register the Shares shall specify
that such Shares are to be included in the underwriting on
the same terms and conditions as the shares of the Company's
capital stock otherwise being sold through underwriters
under such registration, (y) if the managing underwriter of
such offering determines that the number of shares to be
offered by all selling stockholders must be reduced, then
the Company shall have the right to reduce the number of
Shares registered on behalf of the Subscriber, provided that
the number of Shares to be registered on behalf of the
Subscriber shall not be reduced to such an extent that the
ratio of the Shares that the Subscriber is permitted to
register to the total number of Shares the Subscriber owns
is less than that ratio for any other selling stockholder,
and (z) the Subscriber will be bound by the terms of the
underwriting agreement and the conditions imposed by the
underwriter on selling stockholders.
(iii) If the Company elects to terminate any registration filed
under this Section 3(a), the Company will have no obligation
to register the Shares sought to be included by the
Subscriber in such registration.
(b) (i) Subject to the limitations contained in the following
paragraphs of this Section 3(b), at any time within one (1)
year of the date of this Agreement, the Subscribers of at
least a majority of the Securities may request that the
Company include such Securities in a registration statement
(the "Demand Registration Statement") under the Act for
public sale (but only if the aggregate number of such
Securities to be included in the Demand Registration
Statement is more than fifty percent (50%) of the
Securities). Within ten (10) days after the receipt by the
Company of such written request pursuant to this Section
3(b)(i), the Company shall give written notice of such
registration request to the other Subscribers. The
registration rights set forth in this Section 3(b) and any
comparable right granted by the Company shall be referred to
hereinafter as "demand registration rights."
(ii) Subject to the limitations contained in this Section 3(b),
the Company will use its reasonable best efforts to cause to
be included in the Demand Registration Statement the
4
Securities requested by the Subscribers pursuant to Section
3(b)(i) and the Subscribers who have received written notice
under Section 3(b)(i) and have responded within fifteen (15)
days after the date the Company gave notice to such
Subscribers with a request by such Subscribers to include
Securities in the Demand Registration Statement. The
response referred to in this Section 3(b)(ii) shall specify
the number of Securities to be registered, the intended
method of disposition of the Securities and any other
information reasonably requested by the Company in such
notice; provided, however, that Securities need not be
included in the Demand Registration Statement if in the
opinion of counsel for the Company the proposed sale of such
Securities may be effected without registration under the
Act and any certificate evidencing the Securities need not
bear any restrictive legend. The Company shall not be
required to file a separate registration statement with
respect to any Securities if such Securities are included in
the registration statement on Form SB-2 filed by the Company
with the SEC on March 8, 2001, by amendment, prior to the
SEC declaring such registration statement effective.
(iii) The Subscribers will be entitled to exercise their demand
registration rights in accordance with Section 3(b) one
time.
(iv) A Demand Registration Statement may include other securities
of the Company with respect to which registration rights
have been granted, and may include securities of the Company
being sold for the account of the Company; provided,
however, that if the Company shall request inclusion in any
registration pursuant to this Section 3(b) of the securities
being sold for its own account, or if other persons with
registration rights shall request or demand inclusion, as
the case may be, in any registration undertaken pursuant to
this Section 3(b), the Subscriber shall permit the inclusion
of such securities in the Demand Registration Statement;
provided, however, that the Subscriber may require the
acceptance by the Company and persons with "piggy-back"
registration rights of reasonable conditions (including,
without limitation, if such offering is underwritten, that
the Company or such persons agree in writing to enter into
an underwriting agreement with usual and customary terms
with the underwriter selected by the Subscribers).
Notwithstanding any other provisions of this Section 3(b),
if the representative of the underwriters advises the
Subscribers in writing that marketing factors require a
limitation on the number of shares to be underwritten, the
number of shares to be underwritten and included in the
registration shall be allocated: (x) first, to the
Subscribers and any other holders of "demand registration
rights" requiring such registration, pro rata among such
persons on the basis of the number of shares of Common Stock
for which each such person has requested registration, (y)
second, to the Company, and (z) third, to the other
5
stockholders requesting inclusion in the registration, pro
rata among the respective stockholders thereof on the basis
of the number of shares of Common Stock for which each such
requesting stockholder has requested registration. If a
person with "piggy-back" registration rights has requested
inclusion in such registration as provided above and does
not agree to the terms of any such underwriting, such person
shall be excluded therefrom by written notice from the
Company or the underwriter. The securities so excluded shall
also be withdrawn from registration.
(c) If a Subscriber requests registration pursuant to the terms of
Section 3(a) or 3(b) hereof, the Subscriber agrees to the
following:
(i) In connection with a resale registration statement covering
all or certain of the Shares, undersigned shall timely
furnish such information regarding the undersigned and the
distribution of those Shares sought to be registered and to
take such other action as the Company may from time to time
reasonably request in connection with such registration and
shall promptly correct any information previously furnished
if the inclusion of such information in the registration
statement would be materially misleading. The Company may
exclude from the registration statement any Subscriber that
fails to comply timely with the provisions of the preceding
sentence. Subscriber shall not effect the sale of securities
under the registration statement until such Subscriber has
received notice of the effectiveness of the registration
statement and such Subscriber has received the then current
prospectus and any supplements thereto.
(ii) Upon receipt of notice from the Company of the occurrence of
any event necessitating a prospectus supplement or
post-effective amendment, Subscriber will forthwith
discontinue disposition of all Shares sought to be
registered following the effective date of a registration
statement covering such Shares until such Subscriber
receives copies of the prospectus supplement and/or
post-effective amendment, or until such Subscriber is
advised in writing by the Company that the use of the
applicable prospectus may be resumed and, in either case,
has received copies of any additional or supplemental
filings that are incorporated or deemed to be incorporated
by reference in such prospectus or registration statement.
(iii) Subscriber shall comply with the plan of distribution as set
forth in the registration statement.
(iv) All registration expenses of the Subscriber, as applicable,
including registration and filing fees and printing
expenses, incurred in connection with registrations
requested pursuant to Sections 3(a) and 3(b) shall be borne
6
by the Company. All selling expenses of the Subscriber,
including underwriting fees and commissions and expenses of
counsel to the Subscriber, in connection with such
registration shall be borne by the Subscriber incurring such
expenses.
(v) Any underwriter selected by the Subscribers shall be subject
to the consent of the Company, which consent shall not be
unreasonably withheld.
(d) The Company will use its reasonable best efforts to cause any
registration statement filed with the SEC pursuant to the terms
of this Section 3 that has become effective to remain effective
for up to nine (9) months.
(e) The registration rights set forth in this Section 3 are rights
granted only with respect to the Shares and not with respect to
the Warrants and the Warrant Shares.
4. State of Domicile. The Subscriber represents and warrants that the
Subscriber is a bona fide resident of, and is domiciled in, the state or country
so designated on the signature page hereto, and that the Units are being
purchased solely for the beneficial interest of the Subscriber and not as
nominee for, or on behalf of, or for the beneficial interest of, or with the
intention to transfer to, any other person, trust, or organization.
5. Obligation to Update. The information provided by the Subscriber is
correct and complete as of the date hereof. The Subscriber is informed of the
significance to the Company of the foregoing representations, and they are made
with the intention that the Company will rely upon them. If there should be any
adverse change in such information prior to the subscription being accepted, the
Subscriber will immediately provide the Company with such information.
6. Anti-dilution. All other provisions hereof notwithstanding, if at any
time during the six-month period immediately following the date hereof, the
Company issues (enters into a binding contract to issue) any shares (the
"Additional Shares") of the Company's Common Stock or Common Stock equivalents
including indebtedness convertible into Common Stock or preferred stock
convertible into Common Stock, to any third party (a "Third Party"), for a price
per share, which in the case of Common Stock equivalents shall be the applicable
conversion ratio, that is less than the price per share designated in the
opening paragraph of this Subscription Agreement (as adjusted for stock splits,
stock dividends, recapitalizations and other adjustments to the Company's Common
Stock as a whole) then, promptly after issuance of the Additional Shares, the
Company shall issue to the Subscriber (without payment of additional
consideration by the Subscriber) that number of additional shares of the
Company's Common Stock equal to the difference between (a) the total
consideration paid by the Subscriber pursuant hereto divided by the
consideration per share paid by the Third Party and (b) the number of shares
issued to the Subscriber pursuant hereto. This provision shall not apply to
issuances pursuant to currently outstanding options, rights and/or warrants, and
7
shall not apply to issuances pursuant to bona fide stock option, stock grant and
other employee benefit plans. This Section 6 shall survive for the entirety of
the above-mentioned six-month period.
7. Entity Representation. The Subscriber makes the following additional
representations:
(a) The Subscriber was not organized for the specific purpose of
acquiring the Units; and
(b) This Agreement has been duly authorized by all necessary actions
of the Board of Directors, stockholders, partners, trustees, or
other duly authorized acting body or person on the part of the
Subscriber, has been duly executed by an authorized officer or
representative of the Subscriber, and is a legal, valid, and
binding obligation of the Subscriber enforceable in accordance
with its terms.
8. Further Assurances - Revocation. The Subscriber agrees to execute any
and all further documents necessary or advisable in connection with his/her/its
purchase of the Units. Further, Subscriber agrees that he/she/it may not cancel,
terminate or revoke this Agreement, which shall survive the death or disability
of the Subscriber and shall be binding upon the Subscriber's heirs, executors,
administrators, successors and assigns.
9. Miscellaneous.
(a) All notices or other communications given or made hereunder shall
be in writing and shall be personally delivered, sent by
facsimile transmission with a confirming copy sent by overnight
courier or mailed by registered or certified mail, return receipt
requested, postage prepaid, to the Subscriber or to the Company
at the respective addresses set forth herein. Each such notice of
consent shall for all purposes of the Agreement be treated as
being effective or having been given when delivered.
(b) This Agreement shall be governed by and construed in accordance
with the laws of the State of Texas applicable to contracts made
and wholly performed in that state.
(c) This Agreement constitutes the entire agreement among the parties
hereto with respect to the subject matter hereof, and may be
amended only by a writing executed by the party to be bound
thereby.
(d) The registration rights of the Subscriber under this Agreement
are transferable; provided, however, that the Company is given
written notice by the Subscriber at the time of such transfer
stating the name and address of the transferee and identifying
the number of shares of Common Stock with respect to which the
8
rights under this Agreement are being assigned and provided
further that the transferee agrees in writing to acquire and hold
such shares of Common Stock subject to the provisions of this
Agreement.
(e) Section 3 of this Agreement may not be amended or terminated,
except pursuant to a written consent of Subscribers owning at
least a majority of the Securities.
[signature page follows]
9
THIS SUBSCRIPTION AGREEMENT SHALL NOT BECOME BINDING UNLESS THIS
SUBSCRIPTION IS ACCEPTED BY THE COMPANY.
Dated: ________, 2001.
-------------------------------------
Signature
-------------------------------------
Name Typed or Printed, Title
-------------------------------------
Entity Name
-------------------------------------
Address
-------------------------------------
City, State and Zip Code
-------------------------------------
(Area Code) Telephone Number
-------------------------------------
(Area Code) Facsimile Number
-------------------------------------
Tax Identification or Social
Security Number
The Subscription Agreement is accepted as of _______________, 2001.
PREFERRED VOICE, INC.
By:
---------------------------------
Its:
--------------------------------
Address:
0000 Xxxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
000-000-0000 Facsimile Number
10
EXHIBIT A
ACCREDITED INVESTOR QUESTIONNAIRE
The undersigned (the "Subscriber") represents and warrants to Preferred
Voice, Inc., in connection with its purchase securities to be issued by
Preferred Voice, Inc., that Subscriber is one or more of the following (please
check appropriate box):
[ ] (1) A bank as defined in section 3(a)(2) of the Securities Act of
1933, as amended (the "Act"), acting either in its individual or
fiduciary capacity.
[ ] (2) A savings and loan association or other institution as defined in
section 3(a)(5)(A) of the Act, acting either in its individual or
fiduciary capacity.
[ ] (3) A broker or dealer registered pursuant to section 15 of the
Securities Exchange Act of 1934, as amended.
[ ] (4) An insurance company as defined in section 2(13) of the Act.
[ ] (5) An investment company registered under the Investment Company Act
of 1940, as amended (the "Investment Company Act of 1940").
[ ] (6) A business development company as defined in section 2(a)(48) of
the Investment Company Act of 1940.
[ ] (7) A Small Business Investment Company licensed by the U.S. Small
Business Administration under section 301(c) or (d) of the Small
Business Investment Act of 1958.
[ ] (8) A plan established and maintained by a state, its political
subdivisions, or any agency or instrumentality of a state or its
political subdivisions for the benefit of its employees and that
has total assets in excess of $5,000,000.
[ ] (9) An employee benefit plan within the meaning of Title I of the
Employee Retirement Income Security Act of 1974 ("ERISA") and (i)
the investment decision was made by a plan fiduciary, as defined
in section 3(21) of ERISA, which fiduciary is either a bank,
savings and loan association, insurance company, or registered
investment adviser, (ii) the employee benefit plan has total
assets in excess of $5,000,000, or (iii) the employee benefit
plan is a self-directed plan and the investment decision in the
securities was made solely by persons that are accredited
investors.
[ ] (10) A private business development company as defined in section
202(a)(22) of the Investment Advisers Act of 1940, as amended.
1
[ ] (11) A not-for-profit organization described in section 501(c)(3) of
the Internal Revenue Code of 1986, as amended, that was not
formed for the specific purpose of acquiring the securities
offered and that has total assets in excess of $5,000,000.
[ ] (12) A corporation, Massachusetts or similar business trust, or
partnership that was not formed for the specific purpose of
acquiring the securities offered and that has total assets in
excess of $5,000,000.
[ ] (13) A director, executive officer, or general partner of the issuer
of the securities being offered or sold, or any director,
executive officer, or general partner of a general partner of
that issuer.
[ ] (14) A natural person (i.e., not a corporation, trust or partnership)
whose individual net worth (total assets less total liabilities),
or joint net worth with Subscriber's spouse, is in excess of
$1,000,000.
[ ] (15) A natural person who had an individual income in excess of
$200,000 in each of the two most recent years or joint income
with Subscriber's spouse in excess of $300,000 in each of those
years and has a reasonable expectation of reaching the same
income level in the current year.
[ ] (16) A trust that has total assets in excess of $5,000,000, that was
not formed for the specific purpose of acquiring the securities
offered and whose purchase is directed by a person who has such
knowledge and experience in financial and business matters that
the person is capable of evaluating the merits and risks of the
investment.
[ ] (17) An entity in which ALL of the equity owners (i.e., partners or
Subscribers) are accredited investors pursuant to any of the
preceding paragraphs.
EXECUTED this _____ day of ______________, 20____.
-------------------------------------
Print Name:
--------------------------
2
