These Warrants have not been registered under the Securities Act of 1933, as
amended (the "Act"), and may not be sold, transferred, assigned or otherwise
disposed of unless the person requesting the transfer of the Warrants shall
provide an opinion of counsel to Preferred Voice, Inc. (the "Company") (both
counsel and opinion to be satisfactory to the Company) to the effect that such
sale, transfer, assignment or disposition will not involve any violation of the
registration provisions of the Act or any similar or superseding statute.
No.___ ______Warrants
PREFERRED VOICE, INC
WARRANT CERTIFICATE
This warrant certificate ("Warrant Certificate") certifies that for value
received ______________ (the "Initial Warrant Holder") or registered assigns is
the owner of the number of warrants specified above, each of which entitles the
holder thereof to purchase, at any time on or before the Expiration Date
hereinafter provided, one fully paid and non-assessable share of Common Stock,
$0.00l par value per share, of Preferred Voice, Inc., a Delaware corporation
(the "Company"), at a purchase price of $.10 per share of Common Stock payable
in lawful money of the United States of America, in cash, by official bank or
certified check, or by wire transfer ("Warrants").
1. Warrant; Purchase Price
Each Warrant shall entitle the holder thereof to purchase one share of
Common Stock, $0.001 par value per share, of the Company ("Common Stock") during
the period commencing on the date hereof and ending on the Expiration Date. The
purchase price payable upon exercise of a Warrant shall be $.10 (the "Purchase
Price"). The Purchase Price and number of Warrants evidenced by this Warrant
Certificate are subject to adjustment as provided in Article 7. Common Stock
purchased or subject to purchase pursuant to the Warrants shall be called
"Warrant Shares" herein.
2. Exercise; Expiration Date
2.1 Each Warrant is exercisable, at the option of the holder, at any time
after issuance and on or before the Expiration Date. In the case of exercise of
less than all the Warrants represented by a Warrant Certificate, the Company
shall cancel the Warrant Certificate upon the surrender thereof and shall
execute and deliver a new Warrant Certificate for the balance of such Warrants.
2.2 The term "Expiration Date" shall mean 5:00 p.m. Dallas time on______,
2011, or if such date shall in the State of Texas be a holiday or a day on which
banks are authorized to close, then 5:00 p.m. Dallas time the next following day
which in the State of Texas is not a holiday or a day on which banks are
authorized to close.
2.3 The Warrant Holder may utilize a cashless exercise in which he will be
issued a number of shares of common stock equal to N(FMV-EP)/FMV where N is the
number of Warrants being exercised, FMV is the fair market value of one share of
the Company's common stock on the date of exercise and EP is the Purchase Price.
3. Registration and Transfer on Company Books
3.1 The Company shall maintain books for the registration and transfer of
Warrant Certificates.
3.2 Prior to due presentment for registration of transfer of this Warrant
Certificate, the Company may deem and treat the registered holder as the
absolute owner thereof.
3.3 The Company shall register upon its books any transfer of a Warrant
Certificate upon surrender of same to the Company accompanied (if so required by
the Company) by a written instrument of transfer duly executed by the registered
holder or by a duly authorized attorney. Upon any such registration of transfer,
new Warrant Certificate(s) shall be issued to the transferee(s) and the
surrendered Warrant Certificate shall be cancelled by the Company. A Warrant
Certificate may also be exchanged, at the option of the holder, for new Warrant
Certificates representing in the aggregate the number of Warrants evidenced by
the Warrant Certificate surrendered.
4. Securities Law Registration
4.1 The Warrant Shares will not be registered under the Securities Act or
any state securities law and shall not be transferable unless registered or an
exemption from registration is available. A legend to the foregoing effect will
be placed on any certificate representing such shares.
4.2 If, at any time within five (5) years of the date of this Warrant
Certificate, the Company proposes for any reason to register any of its
securities under the Securities 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 which does not
include substantially the same information as would be required to be included
in a registration statement covering the sale of the Warrant Shares, it shall
each such time give written notice to the holder of these Warrants or the
Warrant Shares ("Holder" for purposes of this Section 4) 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 Holders of the
Warrants and Warrant Shares outstanding, to register any of the Warrant Shares,
the Company shall cause the Warrant Shares so requested by the Holder to be
registered, whether such Warrant Shares are outstanding or subject to purchase
hereby, to be registered under the Securities Act, all to the extent requisite
to permit the sale or other disposition by the Holder of the Warrant Shares so
registered; provided, however, that the Warrant Shares as to which registration
had been requested need not be included in such registration if in the opinion
of counsel for the Company and counsel for the Holder the proposed transfer by
the Holder may be effected without registration under the Securities Act and any
certificate evidencing the Warrant Shares need not bear any restrictive legend.
In the event that any registration pursuant to this Section 4.2 shall be, in
whole or in part, an underwritten offering of securities of the Company, then
(i) any request pursuant to this Section 4.2 to register Warrant Shares may
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, (ii) if the managing
underwriter of such offering determines that the number of shares to be offered
by all selling shareholders must be reduced, then the Company shall have the
right to reduce the number of shares registered on behalf of the Holder,
provided that the number of shares to be registered on behalf of the Holder
shall not be reduced to such an extent that the ratio of the shares which the
Holder is permitted to register to the total number of shares the Holder owns is
less than that ratio for any other selling shareholder, and (iii) the Holder
will be bound by the terms of the underwriting agreement and the conditions
imposed by the underwriter on selling shareholders.
4.3 If and whenever the Company is under an obligation pursuant to the
provisions of this Warrant Certificate to register any Warrant Shares, the
Company shall, as expeditiously as practicable:
(a) prepare and file with the Securities and Exchange Commission
(the "Commission") a registration statement with respect to such shares
and use its best efforts to cause such registration statement to become
and remain effective for at least nine (9) months;
(b) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration
statement effective for at least nine months and to comply with the
provisions of the Securities Act with respect to the sale or other
disposition of all Warrant Shares covered by such registration statement;
(c) furnish to the Holder a suitable number of copies of all
preliminary and final prospectuses to enable the Holder to comply with the
requirements of the Securities Act, and such other documents as the Holder
may reasonably request in order to facilitate the public sale or other
disposition of the Warrant Shares;
(d) use its best efforts to register or qualify the Warrant Shares
covered by such registration statement under such securities or blue sky
laws of such jurisdictions as the Holder shall reasonably request and
where registration or qualification will not involve unreasonable expense
or delay and provided, however, that the Company will not have to register
or qualify in any state in which solely because of such registration or
qualification it would have to qualify to do business; and the Company
shall do any and all other reasonable acts and things which may be
necessary or advisable to enable the Holder to consummate the public sale
or other disposition of the Warrant Shares in such jurisdictions;
(e) notify the Holder, at any time when a prospectus relating to the
Warrant Shares is required to be delivered under the Securities Act within
the appropriate period mentioned in clause (b) of this Section 4.3, of the
happening of any event as a result of which the prospectus included in
such registration statement, as then in effect, includes an untrue
statement of a material fact or omits to state a material fact required to
be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances then existing, and at the
request of the Holder prepare and furnish to the Holder a reasonable
number of copies of a supplement to or an amendment of such prospectus as
may be necessary so that, as thereafter delivered to the purchasers of the
Warrant Shares, such prospectus shall not include an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in the
light of the circumstances then existing; and
(f) exercise its best efforts to furnish, at the request of the
Holder on the date that the Warrant Shares are delivered to the
underwriters for sale pursuant to such registration or, if the Warrant
Shares are not being sold through underwriters, on the date that the
registration statements with respect to such Warrant Shares are declared
effective, (1) an opinion, dated such date, of the counsel representing
the Company for the purposes of such registration, addressed to the
Holder, stating that such registration statement has become effective
under the Securities Act and that (i) to the best of the knowledge of such
counsel, no stop order suspending the effectiveness thereof has been
issued and no proceedings for that purpose have been instituted or are
pending or contemplated under the Securities Act; (ii) the registration
statement, the related prospectus, and each amendment or supplement
thereto, comply as to form in all material respects with the requirements
of the Securities Act and the applicable rules and regulations of the
Commission thereunder (except that such counsel need express no opinion as
to financial statements and other financial data contained therein); and
(iii) such counsel has no reason to believe that either the registration
statement or the prospectus, or any amendment or supplement thereto,
contains any untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading; and (2) a letter dated such date, from
the independent certified public accountants of the Company, stating that
they are independent certified public accountants within the meaning of
the Securities Act and the rules and regulations of the Commission
thereunder and that in the opinion of such accountants, the financial
statements and other financial data of the Company included in the
registration statement or the prospectus, or any amendment or supplement
thereof, comply as to form in all material respects with the applicable
accounting requirements of the Securities Act and the rules and
regulations of the Commission thereunder. Such letter from the independent
certified public accountants shall additionally cover such other financial
matters (including information as to periods ending not more than five
business days prior to the date of such letter) as the Holder may
reasonably request.
If the Holder exercises its rights to have the Warrant Shares registered,
it is understood that the Holder shall furnish to the Company such information
regarding the securities held by it and the intended method of disposition
thereof as the Company shall reasonably request and as shall be required in
connection with the action to be taken by the Company.
4.4 All Registration Expenses incurred in connection with any registration
pursuant to this Warrant Certificate shall be borne by the Company. All Selling
Expenses in connection with any registration pursuant to this Warrant
Certificate shall be borne by the Holder.
For purposes of Section 4.4, all expenses incurred by the Company in
complying with Section 4.3, including, without limitation, all registration and
filing fees, fees and expenses of complying with securities and blue sky laws,
printing expenses, and fees and disbursements of counsel and of independent
public accountants for the Company (including the expense of any special audits
in connection with any such registration), are herein called "Registration
Expenses", and all underwriting discounts and selling commissions applicable to
the Warrant Shares covered by any such registration and all fees and
disbursements of counsel for the Holder are herein called "Selling Expenses".
4.5 In the event of any registration of any Warrant Shares under the
Securities Act pursuant to this Warrant Certificate, the Company shall indemnify
and hold harmless the Holder, each underwriter of such shares, if any, each
broker, and any other person, if any, who controls any of the foregoing persons
within the meaning of the Securities Act, against any losses, claims, damages or
liabilities, joint or several, to which any of the foregoing persons may become
subject under the Securities Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon an untrue statement or alleged untrue statement of a material fact
contained in any registration statement under which the Warrant Shares were
registered under the Securities Act, any preliminary prospectus or final
prospectus contained therein, or any amendment or supplement thereto, or any
document incident to registration or qualification of any Warrant Shares
pursuant to paragraph 4.3(d) above, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading or,
with respect to any prospectus, necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading, or any
violation by the Company of the Securities Act or state securities or blue sky
laws applicable to the Company and relating to action or inaction required of
the Company in connection with such registration or registration or
qualification under such state securities or blue sky laws; and shall reimburse
the Holder and such underwriter, broker or other person acting on behalf of the
Holder and each such controlling person for any legal or any other expenses
reasonably incurred by any of them in connection with investigating or defending
any such loss, claim, damage, liability or action; provided, however, that the
Company shall not be liable in any such case to the extent that any such loss,
claim, damage, or liability arises out of or is based upon an untrue statement
or alleged untrue statement or omission or alleged omission made in reliance
upon and in conformity with written information furnished to the Company in an
instrument duly executed by the Holder or such underwriter specifically for use
in the preparation thereof. The indemnity agreement set forth in this Section
4.5, insofar as it relates to any such omission, alleged omission, untrue
statement or alleged untrue statement made in a preliminary prospectus but
eliminated or remedied in the final prospectus, shall not inure to the benefit
of any of the beneficiaries named in this Section 4.5 whose responsibility it
was to send, furnish or give a copy of the final prospectus to a person
asserting a claim for which indemnification is sought (the "Claimant") unless a
copy of the final prospectus was so sent, furnished or given to the Claimant at
or prior to the time such action is required by the Act.
Before Warrant Shares held or purchasable by the Holder shall be included
in any registration pursuant to this Warrant Certificate, the Holder and any
underwriter acting on its behalf shall have agreed to indemnify and hold
harmless (in the same manner and to the same extent as set forth in the
preceding paragraph) the Company, each director of the Company, each officer of
the Company who shall sign such registration statement and any person who
controls the Company within the meaning of the Securities Act, with respect to
any failure of the Holder or such underwriter to comply with all laws, rules and
regulations in connection with the offer and sale of Warrant Shares, or any
statement or omission from such registration statement, any preliminary
prospectus or final prospectus contained therein, or any amendment or supplement
thereto, if such statement or omission was made in reliance upon and in
conformity with written information furnished to the Company in an instrument
duly executed by the Holder or such underwriter specifically for use in the
preparation of such registration statement, preliminary prospectus, final
prospectus or amendment or supplement.
Promptly after receipt by an indemnified party of notice of the
commencement of any action involving a claim referred to in the preceding
paragraphs of this Section 4.5, such indemnified party will, if a claim in
respect thereof is to be made against an indemnifying party, give written notice
to the indemnifying party of the commencement of such action. In case any such
action is brought against an indemnified party, the indemnifying party will be
entitled to participate in and to assume the defense thereof, jointly with any
other indemnifying party similarly notified to the extent that it may wish, with
counsel reasonably satisfactory to such indemnified party, and after notice from
the indemnifying party to such indemnified party of its election so to assume
the defense thereof, the indemnifying party will not be liable to such
indemnified party for any legal or other expenses subsequently incurred by the
latter in connection with the defense thereof.
5. Reservation of Warrant Shares
The Company covenants that it will at all times reserve and keep available
out of its authorized Common Stock, solely for the purpose of issue upon
exercise of the Warrants, such number of shares of Common Stock as shall then be
issuable upon the exercise of all outstanding Warrants. The Company covenants
that all shares of Common Stock which shall be issuable upon exercise of the
Warrants shall be duly and validly issued and fully paid and non-assessable and
free from all taxes, liens and charges with respect to the issue thereof.
6. Loss or Mutilation
Upon receipt by the Company of reasonable evidence of the ownership of and
the loss, theft, destruction or mutilation of any Warrant Certificate and, in
the case of loss, theft or destruction, of indemnity reasonably satisfactory to
the Company, or, in the case of mutilation, upon surrender and cancellation of
the mutilated Warrant Certificate, the Company shall execute and deliver in lieu
thereof a new Warrant Certificate representing an equal number of Warrants.
7. Adjustment of Purchase Price and Number of Warrant Shares Deliverable
7.1 The Purchase Price and the number of shares of Common Stock
purchasable pursuant to this Warrant shall be subject to adjustment from time to
time as hereinafter set forth in this Article 7. Whenever reference is made in
this Article 7 to the issue or sale of shares of Common Stock, or simply shares,
such term shall mean any stock of any class of the Company other than preferred
stock with a fixed limit on dividends and a fixed amount payable in the event of
any voluntary or involuntary liquidation, dissolution or winding up of the
Company. The shares issuable upon exercise of the Warrants shall however be
shares of Common Stock of the Company, par value $0.00l per share, as
constituted at the date hereof, except as otherwise provided in Sections 7.3 and
7.4.
7.2 In case the Company shall at any time change as a whole, by
subdivision or combination in any manner or by the making of a stock dividend,
the number of outstanding shares into a different number of shares, with or
without par value, (i) the number of shares which immediately prior to such
change the holder of each Warrant shall have been entitled to purchase pursuant
to this Warrant shall be increased or decreased in direct proportion to the
increase or decrease, respectively, in the number of shares outstanding
immediately prior to such change, and (ii) the Purchase Price in effect
immediately prior to such change shall be increased or decreased in inverse
proportion to such increase or decrease in the number of such shares outstanding
immediately prior to such change. For the purpose of this Section 7.2, the
number of shares outstanding at any given time shall not include shares in the
treasury of the Company.
7.3 In case of any capital reorganization or any reclassification of the
capital stock of the Company or in case of the consolidation or merger of the
Company with another corporation, or in case of any sale, transfer or other
disposition to another corporation of all or substantially all the property,
assets, business and good will of the Company, the holder of each Warrant shall
thereafter be entitled to purchase (and it shall be a condition to the
consummation of any such reorganization, reclassification, consolidation,
merger, sale, transfer or other disposition that appropriate provision shall be
made so that such holder shall thereafter be entitled to purchase) the kind and
amount of shares of stock and other securities and property receivable in such
transaction which a shareholder receives who holds the number of shares which
the Warrant entitled the holder to purchase immediately prior to such capital
reorganization, reclassification of capital stock, consolidation, merger, sale,
transfer or other disposition; and in any such case appropriate adjustments
shall be made in the application of the provisions of this Article 7 with
respect to rights and interests thereafter of the holder of the Warrants to the
end that the provisions of this Article 7 shall thereafter be applicable, as
nearly as reasonably may be, in relation to any shares or other property
thereafter purchasable upon the exercise of the Warrants.
7.4 In the event the Company shall declare a dividend upon the Common
Stock payable otherwise than out of earnings or earned surplus or otherwise than
in shares of Common Stock or in stock or obligations directly or indirectly
convertible into or exchangeable for such shares, the holder of each Warrant
shall, upon exercise of the Warrant, be entitled to purchase, in addition to the
number of shares deliverable upon such exercise, against payment of the Warrant
Price therefor but without further consideration, the cash, stock or other
securities or property which the holder of the Warrant would have received as
dividends (otherwise than out of such earnings or earned surplus and otherwise
than in shares or in obligations convertible into or exchangeable for Common
Stock) if continuously since the date hereof such holder (i) had been the holder
of record of the number of shares deliverable upon such exercise and (ii) had
retained all dividends in stock or other securities (other than shares or such
convertible or exchangeable stock or obligations) paid or payable in respect of
said number of shares or in respect of any such stock or other securities so
paid or payable as such dividends.
7.5 No certificate for fractional shares shall be issued upon the exercise
of the Warrants, but in lieu thereof the Company shall purchase any such
fractional interest calculated to the nearest cent.
7.6 Whenever the Purchase Price is adjusted as herein provided, the
Company shall forthwith deliver to each Warrant holder a statement signed by the
President of the Company and by its Treasurer or Secretary stating the adjusted
Purchase Price and number of shares determined as herein specified. Such
statement shall show in detail the facts requiring such adjustment, including a
statement of the consideration received by the Company for any additional stock
issued.
7.7 In the event at any time:
(i) The Company shall pay any dividend payable in stock upon its
Common Stock or make any distribution (other than cash dividends) to
the holders of its Common Stock; or
(ii) The Company shall offer for subscription pro rata to the
holders of its Common Stock any additional shares of stock of any
class or any other rights; or
(iii) The Company shall effect any capital reorganization or any
reclassification of or change in the outstanding capital stock of
the Company (other than a change in par value, or a change from par
value to no par value, or a change from no par value to par value,
or a change resulting solely from a subdivision or combination of
outstanding shares), or any consolidation or merger, or any sale,
transfer or other disposition of all or substantially all its
property, assets, business and good will as an entirety, or the
liquidation, dissolution or winding up of the Company; or
(iv) The Company shall declare a dividend upon its Common Stock
payable otherwise than out of earnings or earned surplus or
otherwise than in Common Stock or any stock or obligations directly
or indirectly convertible into or exchangeable for Common Stock;
then, in any such case, the Company shall cause at least thirty days' prior
notice to be mailed to the registered holder of each Warrant at the address of
such holder shown on the books of the Company. Such notice shall also specify
the date on which the books of the Company shall close, or a record be taken,
for such stock dividend, distribution or subscription rights, or the date on
which such reclassification, reorganization, consolidation, merger, sale,
transfer, disposition, liquidation, dissolution, winding up or dividend, as the
case may be, shall take place, and the date of participation therein by the
holders of shares if any such date is to be fixed, and shall also set forth such
facts with respect thereto as shall be reasonably necessary to indicate the
effect of such action on the rights of the holders of the Warrants.
7.8 All other provisions hereof notwithstanding, if at any time
immediately following the date hereof until the Expiration Date, 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 or warrants exercisable for Common Stock (the "Common Stock
Equivalents"), to any third party (a "Third Party") for a price per share (the
"Third Party Price Per Share"), which in the case of Common Stock Equivalents
shall be the applicable conversion ratio or exercise price, that is less than
the Purchase Price per share designated in Section 1 herein (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 or Common Stock Equivalents, 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 Third Party Price Per Share and (b) the number of shares
issued to the Subscriber pursuant hereto if the Subscriber has already exercised
the Warrant into Common Stock or shall adjust the Purchase Price per share
designated in Section 1 to equal the Third Party Price Per Share. This provision
shall not apply to issuances pursuant to currently outstanding options, rights
and/or warrants. The delivery to the Subscriber of the additional shares of
Common Stock shall be not later than the closing date of the transaction giving
rise to the requirement to issue additional shares of Common Stock.
8. Governing Law
8.1 This Warrant Certificate shall be governed by and construed in
accordance with the laws of the State of New York.
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be
duly executed by its officers thereunto duly authorized and its corporate seal
to be affixed hereon as of the _____ day of ________, 2006.
PREFERRED VOICE, INC.
BY:_________________________
Chief Executive Officer
