EXHIBIT 10.1
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 $1.50 pursuant to the terms of a Warrant Agreement attached
hereto as Exhibit B (the "Warrant"), at a purchase price of $1.25 per Unit 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 $
___________ (the "Aggregate Purchase Price") 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
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.
(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 acknowledges that the Company may pay a commission
in connection with the Offering.
(h) 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
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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.
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) The Company will file a registration statement with the SEC to
register resale of the Shares and Warrant Shares promptly as
reasonably practicable following the closing of the Offering. If such
registration statement is not declared effective by the SEC within 90
days, and the Company has failed (i) to file its initial registration
statement within 20 business days of the closing of the Offering or
(ii) respond to any request by the SEC within 5 business days of its
receipt, the Company will be obligated to pay to the Subscriber in
cash, as liquidated damages, an amount equal to 2% of the Aggregate
Purchase Price for each month that the registration statement is not
effective beyond such 90 day period. Notwithstanding, the foregoing,
the Company will not be subject to such liquidated damages if the
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failure of the registration statement to be declared effective within
such 90 day period is attributable primarily to the Subscriber's
breach of Section 3(c)(i) hereof.
(b) 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
five (5) years.
(c) The Subscriber agrees to the following:
(i) In connection with the resale registration statement covering all
or certain of the Shares, the Subscriber 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 the registration pursuant to Section
3 shall be borne by the Company. All selling expenses of the
Subscriber, including underwriting fees and commissions and
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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 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 twelve-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 $1.25 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. This Section 6 shall survive for
the entirety of the above-mentioned twelve-month period.
7. Entity Representation. The Subscriber makes the following additional
representations:
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(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 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 and Section 6 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.
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(f) For purposes of Section 3(a), if the 90 day period described in
Section 3(a) expires on a day that is not a business day, such 90 day
period shall be deemed to expire on the next business day. For
purposes of Section 3(a) and this Section 9(f), the term business day
shall mean a day on which the SEC is open for business. The liquidated
damages provided for in Section 3(a) shall be the exclusive remedy for
the Subscriber for the failure of the registration statement to be
declared effective by the SEC within the 90 day period provided for in
Section 3(a).
[signature page follows]
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THIS SUBSCRIPTION AGREEMENT SHALL NOT BECOME BINDING UNLESS THIS
SUBSCRIPTION IS ACCEPTED BY THE COMPANY.
Dated: ________, 2001.
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Signature
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Name Typed or Printed, Title
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Entity Name
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Address
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City, State and Zip Code
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(Area Code) Telephone Number
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(Area Code) Facsimile Number
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Tax Identification or Social
Security Number
The Subscription Agreement is accepted as of _______________, 2001.
PREFERRED VOICE, INC.
By:
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Its:
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Address:
0000 Xxxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
000-000-0000 Facsimile Number
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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.
[ ] (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____.
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