CONFIDENTIAL
------------
SUBSCRIPTION AGREEMENT
SA TELECOMMUNICATIONS, INC.
THE UNITS (AS DEFINED BELOW) HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE.
THERE ARE RESTRICTIONS ON THE TRANSFERABILITY OF THE UNITS AND THE SHARES (AS
DEFINED BELOW) DESCRIBED IN THIS SUBSCRIPTION AGREEMENT.
SA Telecommunications, Inc.
0000 Xxxxxx X, Xxx. 000
Xxxxx, XX 00000
Ladies and Gentlemen:
The undersigned (the "Subscriber") has reviewed the most recent report
on Form 10-KSB of SA Telecommunications, Inc. (the "Company"), and all
reports on Forms 10-QSB and 8-K since such report on Form 10-KSB. The Company
represents and warrants to the Subscriber that all such filings (i) are
correct and accurate in all material respects and (ii) state all material
facts necessary to make such filings not misleading in any material respects,
in each case as of the date such filing was made.
The Subscriber acknowledges that it is not acting on the basis of any
representations or warranties other than as set forth herein and understands
that the offer and sale of the Units (as hereinafter defined) hereunder is
being made without registration of such Units under the Securities Act of
1933, as amended (the "Securities Act"), or any securities, "blue sky" or
other similar laws of any state ("State Securities Laws").
1. SUBSCRIPTION. Subject to the terms and conditions hereof, the
Subscriber hereby subscribes for and agrees to purchase the number of Units
set forth opposite its name below (the "Units") at a cash purchase price of
$1.25 per Unit. Each Unit consists of one share of common stock of the
Company, par value $.0001 per share ("Common Stock") and one warrant in the
form of EXHIBIT A hereto which entitles the holder thereof to purchase one
share of Common Stock for the price set forth therein. The warrants in the
preceding sentence are referred to as the "Warrants."
2. THE CLOSING. The closing of the purchase and sale of the Units (the
"Closing") shall take place at the offices of the Company on or before
September 12, 1995.
SUBSCRIPTION AGREEMENT - PAGE 1
3. PAYMENT FOR UNITS. The Subscriber agrees that the purchase price
for the Units is $1.25 per Unit payable in cash to the Company at Closing.
4. ACCEPTANCE OF SUBSCRIPTION. The Subscriber understands and
acknowledges that (a) the Company has the unconditional right, exercisable in
its sole and absolute discretion, to accept or reject this Subscription
Agreement, (b) no subscription shall be valid unless and until accepted by
the Company, (c) this Subscription Agreement shall be deemed to be accepted
by the Company only when and if it is signed by an authorized officer of the
Company on behalf of the Company, and (d) notwithstanding anything in this
Subscription Agreement to the contrary, the Company shall have no obligation
to issue the Units, or upon exercise of the Warrants, the Shares (as
hereinafter defined) to any person to whom the issuance would constitute a
violation of the Securities Act or any State Securities Laws. The Company
will deliver to the Subscriber certificates representing (i) the shares of
Common Stock and (ii) Warrants comprising the Units purchased by the
Subscriber at or promptly after the Closing.
5. REGISTRATION RIGHTS.
(a) Subject to the provisions hereof, after receiving a written
request by at least a majority of the Purchasers in substantially the form
attached hereto as EXHIBIT B (the "Demand Notice"), the Company shall prepare
and within 45 days after the Closing, file a registration statement (the
"Registration Statement") for the public sale by the Subscriber of the shares
of Common Stock (whether included initially in the Units or acquired upon
exercise of the Warrants comprising a part of the Units) (collectively, the
"Shares") then owned or which at any time then or thereafter may be acquired
upon exercise of the Warrants regardless of any prohibitions on the
exercisability thereof by such Subscriber. The Company shall use all
reasonable efforts to cause the Registration Statement to become effective as
soon as practicable and to remain effective until the earlier of (i) two (2)
years following the effectiveness of the Registration Statement or (ii) such
time as all shares subject to such Registration Statement have been sold
thereunder. The Demand Notice shall be accompanied by a list of blue sky
jurisdictions as Subscriber may reasonably request and the Company shall use
all reasonable efforts to ensure compliance with applicable blue sky laws in
such listed jurisdictions subject to the limitations set forth herein. The
term "Purchasers" means Subscribers acquiring the Units under similar
agreements of even date herewith. Any Demand Notice shall be binding upon all
Purchasers as a group and may not be exercised by any individual Subscriber.
(b) The Company shall pay all expenses of the registration
hereunder. In no event, however, shall the Company pay Subscriber's
underwriting discounts or commissions or any fees or costs of counsel to
Subscriber.
(c) The Company shall supply to Subscriber a reasonable number of
copies of all registration materials and prospectuses. The Company and
Subscriber shall execute and deliver to each other indemnity agreements which
are conventional in registered offerings of this type. The Subscriber shall
reasonably cooperate with the Company in the preparation and filing of the
Registration Statement and appropriate amendments thereto and in connection
therewith provide the Company with a representation letter as requested by
the Company.
SUBSCRIPTION AGREEMENT - PAGE 2
(d) Subscriber may not transfer the registration rights granted
hereunder.
(e) Notwithstanding the foregoing, the Company shall not be
obligated to effect, or take any action to effect, any such registration
pursuant to this Section 5 in any particular jurisdiction in which the
Company would be required to execute a general consent to service of process
or otherwise qualify to do business in effecting such registration,
qualification, or compliance, unless the Company has already consented to
service or qualify to do business in such jurisdiction or in any jurisdiction
in which the Company is not authorized to offer or sell its securities;
(f) The Registration Statement filed pursuant to the request of the
Purchasers may include other securities of the Company, with respect to which
registration rights have been granted or may be granted and may include
securities of the Company being sold for the account of the Company.
(g) Subscriber shall not have any right to take any action to
restrain, enjoin or otherwise delay any registration as a result of any
controversy that might arise with respect to the interpretation or
implementation of this Section 5.
(h) The Purchasers in the aggregate shall have the right to make
only one Demand Notice under Section 5(a) hereof. The right to request any
such registration shall expire on that date which is one year after the date
of this Subscription Agreement.
6. REPRESENTATIONS AND WARRANTIES OF THE SUBSCRIBER. The Subscriber
hereby represents and warrants to and covenants with the Company and to each
officer, director and agent of the Company as follows:
(a) AUTHORITY: The Subscriber has all requisite authority to enter
into this Subscription Agreement and to perform all the obligations required
to be performed by the Subscriber hereunder.
(b) INFORMATION CONCERNING THE COMPANY:
(i) The Subscriber is familiar with the business and financial
condition, properties, operations and prospects of the Company, and, at a
reasonable time prior to the execution of this Subscription Agreement, has
been afforded the opportunity to ask questions of and receive satisfactory
answers from the Company and the Company's officers and directors, or other
persons acting on the Company's behalf, concerning the business and financial
condition, properties, operations and prospects of the Company and concerning
the terms and conditions of the offer of the Units and has asked such
questions as it desires to ask and all such questions have been answered to
the full satisfaction of the Subscriber.
(ii) The Subscriber understands that, unless the Subscriber
notifies the Company in writing to the contrary before the Closing, all the
representations and warranties contained in this Subscription Agreement will
be deemed to have been reaffirmed and confirmed
SUBSCRIPTION AGREEMENT - PAGE 3
as of the Closing, taking into account all information received by the
Subscriber and will survive the Closing.
(iii) No representations or warranties have been made to the
Subscriber by the Company as to the tax consequences of this investment, or
as to profits, losses or cash flow which may be received or sustained as a
result of this investment.
(iv) All documents, records and books pertaining to a proposed
investment in the Units which the Subscriber has requested have been made
available to Subscriber.
(v) The Subscriber has reviewed with its own tax advisors the
Federal, State, local and foreign tax consequences of its investment in the
Units and the transactions contemplated by this Agreement. The Subscriber is
relying solely on such advisors in making its investment and not on any
statements or representations of the Company, or any of its agents. The
Subscriber has made independent determination that this investment is in
compliance with applicable laws.
(vi) The Subscriber is not purchasing the Units based on any
representation, oral or written, by the Company or any person with respect to
the future value of, or income from, the Units or the Shares, but rather upon
an independent examination and judgment as to the prospects of the Company.
(vii) The Subscriber understands and acknowledges that the
Company has significant outstanding indebtedness and a significant amount of
Preferred Stock issued to investors which such Preferred Stock has rights and
preferences superior to that of Common Stock.
(c) STATUS OF THE SUBSCRIBER: The Subscriber is able to bear the
economic risk of this investment. The Subscriber consulted with the
Subscriber's own attorney, accountant and/or purchaser representative
regarding the Subscriber's investment in the Units and their suitability for
purchase by the Subscriber, and to the extent necessary, the Subscriber has
retained and relied upon, appropriate independent professional advice
regarding the investment, tax and legal merits, risks and consequences of
this Subscription Agreement and of purchasing and owning the Shares and
Units. The Subscriber is an accredited investor as that term is defined under
Regulation D promulgated under the Securities Act.
(d) RESTRICTIONS ON TRANSFER OR SALE OF THE SHARES AND UNITS:
(i) The Subscriber is acquiring the Shares and Units
subscribed for solely for the Subscriber's own beneficial account, for
investment purposes, and not with a view to, or for resale in connection
with, any distribution of the Shares or the Units. The Subscriber understands
that the offer and sale of the Shares and Units have not been registered
under the Securities Act or any State Securities Laws by reason of specific
exemptions under the provisions thereof which depend in part upon the
investment intent of the Subscriber and/or the other representations made by
the Subscriber in this Subscription Agreement. The Subscriber
SUBSCRIPTION AGREEMENT - PAGE 4
understands that the Company is relying upon the representations, covenants
and agreements contained in this Subscription Agreement (and any supplemental
information) for the purpose of determining whether this transaction meets
the requirements for such exemptions.
(ii) The Subscriber understands that the Shares are
"restricted securities" under applicable federal securities laws and that the
Securities Act and the rules of the Securities and Exchange Commission (the
"Commission") provide in substance that the Subscriber may dispose of the
Shares and Units only pursuant to an effective registration statement under
the Securities Act or an exemption therefrom, and the Subscriber understands
that the Company has no obligation or intention to register any of the Shares
and Units purchased by the Subscriber thereunder, or to take action so as to
permit sales pursuant to the Securities Act (including Rule 144 thereunder)
except as expressly provided hereunder. The Subscriber understands that the
Subscriber may not at any time demand the purchase by the Company, or any
shareholder of the Company of the Shares or Units.
(iii) The Subscriber agrees (a) that the Subscriber will not
sell, assign, pledge, give, transfer or otherwise dispose of the Units or
Shares or any interest therein, or make any offer or attempt to do any of the
foregoing, except pursuant to a registration of the Units or Shares under the
Securities Act and all applicable State Securities Laws or in a transaction
which, in the opinion of counsel satisfactory to the Company, is exempt from
the registration provisions of the Securities Act and all applicable State
Securities Laws; (b) that the Company and any transfer agent for the Shares
or Units shall not be required to give effect to any purported transfer of
any of the Shares or Units except upon compliance with the foregoing
restrictions; and (c) that a legend in substantially the following form will
be placed on the certificates representing the Shares:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN TAKEN WITHOUT A
VIEW TO THE DISTRIBUTION THEREOF WITHIN THE MEANING OF THE SECURITIES ACT OF
1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED, TRANSFERRED OR OTHERWISE
DISPOSED OF EXCEPT IN ACCORDANCE WITH SUCH ACT AND THE RULES AND REGULATIONS
THEREUNDER AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. THE
ISSUER OF THESE SHARES WILL NOT TRANSFER SUCH SHARES EXCEPT UPON RECEIPT OF
EVIDENCE SATISFACTORY TO THE COMPANY THAT THE REGISTRATION PROVISIONS OF SUCH
ACT HAVE BEEN COMPLIED WITH OR THAT SUCH REGISTRATION IS NOT REQUIRED AND
THAT SUCH TRANSFER WILL NOT VIOLATE ANY APPLICABLE STATE SECURITIES LAWS.
(iv) The Subscriber has not offered or sold any portion of the
subscribed for the Units or Shares and has no present intention of dividing
such Units or Shares with others or of reselling or otherwise disposing of
any portion of such Units or Shares either currently or after the passage of
a fixed or determinable period of time or upon the occurrence or
nonoccurrence of any predetermined event or circumstance.
SUBSCRIPTION AGREEMENT - PAGE 5
(v) Subscriber acknowledges that (i) in connection herewith
it will execute a voting agreement in the form of EXHIBIT C hereto providing
for the manner in which any Shares may be voted (the "Voting Agreement"),
(ii) it fully understands the terms and conditions of the Voting Agreement
and (iii) it shall not be entitled to offer or sell any of the Shares
(irrespective of the registration thereof pursuant to Section 5) (except in
(i) bona fide broker transactions in which there is no intent for such Shares
to be acquired by any affiliate of any Purchaser or (ii) in private
transactions of blocks of 400,000 Shares or less to persons not affiliated
with any Purchaser (who will not have received in such transactions, when
aggregated with other block transactions hereunder by Subscriber and other
Purchasers, more than 400,000 Shares) unless the transferee executes a
counterpart of the Voting Agreement as if it were an initial signatory hereto.
7. SURVIVAL. All representations, warranties and covenants contained
in this Subscription Agreement and the indemnification contained in this
Section 7 shall survive (i) the acceptance of such Subscription Agreement by
the Company, and (ii) changes in the transactions, documents and instruments
which are not material or which are to the benefit of the Subscriber. The
Subscriber acknowledges the meaning and legal consequences of the
representations, warranties and covenants in paragraph 6 hereof and that the
Company has relied upon such representations, warranties and covenants in
determining the Subscriber's qualification and suitability to purchase the
Units and shall indemnify the Company for any breach thereof.
8. CONDITIONS TO OBLIGATIONS OF THE COMPANY. The obligations of the
Company to sell the Shares specified herein is subject to the condition that
the representations and warranties of the Subscriber contained in Section 6
hereof shall be true and correct on and as of the Closing in all respects
with the same effect as though such representations and warranties had been
made on and as of the Closing.
9. NOTICES. All notices and other communications provided for herein
shall be in writing and shall be deemed to have been duly given if and when
delivered personally or sent by registered or certified mail, return receipt
requested, postage prepaid:
(a) if to the Company, to it at the following address:
0000 Xxxxxx X, Xxx. 000
Xxxxx, XX 00000
Attention: Xxxx X. Xxxx, Xx.
(b) if to the Subscriber, to it at the address set forth on the
signature page hereto, or at such other address as either party shall have
specified by notice in writing to the other.
10. NOTIFICATION OF CHANGES. The Subscriber agrees and covenants to
notify the Company immediately upon the occurrence of any event prior to the
Closing which would cause any representation, warranty, covenant or other
statement contained in this Subscription Agreement to be false or incorrect
of any change in any statement made herein occurring prior to the Closing.
SUBSCRIPTION AGREEMENT - PAGE 6
11. ASSIGNABILITY. This Subscription Agreement is not assignable by
the Subscriber, and may not be modified, waived or terminated except by an
instrument in writing signed by the party against whom enforcement of such
modification, waiver or termination is sought.
12. BINDING EFFECT. Except as otherwise provided herein, this
Subscription Agreement shall be binding upon and inure to the benefit of the
parties and their heirs, executors, administrators, successors, legal
representatives and assigns, and the agreements, representations, warranties
and acknowledgements contained herein shall be deemed to be made by and be
binding upon such heirs, executors, administrators, successors, legal
representatives and assigns. If the Subscriber is more than one person, the
obligation of the Subscriber shall be joint and several and the agreements,
representations, warranties and acknowledgements contained herein shall be
deemed to be made by and be binding upon each such person and his heirs,
executors, administrators and successors.
13. OBLIGATIONS IRREVOCABLE. The obligations of the Subscriber shall
be irrevocable, except with the prior written consent of the Company, until
the Closing (provided the Closing occurs within five (5) business days of
Subscriber's tender of this Agreement and appropriate payment for the Units).
14. ENTIRE AGREEMENT. This Subscription Agreement and the agreements
contemplated hereby constitute the entire agreement of the Subscriber and the
Company relating to the matters contained herein, superseding all prior
contracts or agreements, whether oral or written.
15. GOVERNING LAW. This Subscription Agreement shall be governed and
controlled as to validity, enforcement, interpretation, construction and
effect and in all other aspects by the substantive laws of the State of
Texas, without reference to conflicts of laws principles.
16. SEVERABILITY. If any provision of this Subscription Agreement or
the application thereof to any Subscriber or circumstance shall be held
invalid or unenforceable to any extent, the remainder of this Subscription
Agreement and the application of such provision to other subscriptions or
circumstances shall not be affected thereby and shall be enforced to the
greatest extent permitted by law.
17. HEADINGS. The headings in this Subscription Agreement are inserted
for convenience and identification only and are not intended to describe,
interpret, define, or limit the scope, extent or intent of this Subscription
Agreement or any provision hereof.
18. COUNTERPARTS. This Subscription Agreement may be executed in any
number of counterparts, each of which when so executed and delivered shall be
deemed to be an original and all of which together shall be deemed to be one
and the same agreement.
19. DOCUMENTS BEING TENDERED. The Subscriber hereby tenders two
completed and executed copies of this Subscription Agreement and Voting
Agreement and irrevocably agrees
SUBSCRIPTION AGREEMENT - PAGE 7
to make the payments set-forth herein upon acceptance of the Subscription
Agreement by the Company.
IN WITNESS WHEREOF, the undersigned Subscriber has executed this
Subscription Agreement this _______ day of _____________, 1995.
SUBSCRIBER:
5,000 Units XXXXXXX TRADING L.P.
By: __________________________________
Title: _______________________________
000 Xxxxxxx Xxxxxx
Xxxxxxxx, Xxx Xxxxxx 00000
SUBSCRIPTION AGREEMENT - PAGE 8
Subscription accepted as to _______ Units on ________________, 1995.
SA TELECOMMUNICATIONS, INC.
By: __________________________________
Title: _______________________________
SUBSCRIPTION AGREEMENT - PAGE 9
SCHEDULE OF DIFFERENCES
Name of Subscriber Number of Units
1. Cong, Ahavas Tzedach Vachsed 7,000
2. Xxxxx Xxxxxxxxx/Xxxxx Xxxxxx Partnership 600,000
3. Xxxxxx Xxxxxx 5,000
4. Xxxxx Xxxxx 8,000
5. Xxxxx Xxxxxxxxx 300,000
6. Xxxx Xxxx 40,000
7. Xxxxx Xxxxx 40,000
8. Xx. Xxxxxxx Xxxxxxxxx 10,000
9. Seth Xxxxxx Xxxxxx 80,000
10. Xxxx Xxxxxxxxx 5,000
SUBSCRIPTION AGREEMENT - PAGE 10
