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
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PREFERRED VOICE, INC.
WARRANT CERTIFICATE
This warrant certificate ("Warrant Certificate"), issued as of __________,
2001 (the "Date of Issuance") 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,
$0.001 par value per share, of Preferred Voice, Inc., a Delaware corporation
(the "Company"), at a purchase price of $ 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 $ (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
_____________________, 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.
1
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 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 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 use its reasonable best efforts to include 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 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 the proposed transfer by the Holder may
be effected without registration under the 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
stockholders 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
2
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 stockholder, and (iii) the Holder will be bound by the
terms of the underwriting agreement and the conditions imposed by the
underwriter on selling stockholders.
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 reasonable efforts to cause such
registration statement to become effective and to remain effective for
up to 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 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 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 reasonable 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 jurisdiction;
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(e) notify the Holder, at any time when a prospectus relating
to the Warrant Shares is required to be delivered under the 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 reasonable 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 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 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 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 Act and the rules and
regulations of the Commission thereunder and that in the opinion of
such accountants, the financial statement 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
Act and the rules and regulations of the Commission thereunder.
4.4 If the Holder exercises its rights to have the Warrant Shares
registered, the Holder agrees to the following:
(a) In connection with a resale registration statement
covering all or certain of the Warrant Shares, Holder shall timely
furnish such information regarding the Holder and the distribution of
those Warrant 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 Holder that
fails to comply timely with the provisions of the preceding sentence.
Holder shall not effect the sale of securities under the registration
statement until such Holder has received notice of the effectiveness of
the registration statement and such Holder has received the then
current prospectus and any supplements thereto.
(b) Upon receipt of notice from the Company of the occurrence
of any event necessitating a prospectus supplement or post-effective
amendment, Holder will forthwith discontinue disposition of all Warrant
Shares sought to be registered following the effective date of a
4
registration statement covering such Warrant Shares until such Holder
receives copies of the prospectus supplement and/or post-effective
amendment, or until such Holder 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.
(c) Holder shall comply with the plan of distribution as set
forth in the registration statement.
(d) Any underwriter selected by the Holder shall be subject to
the consent of the Company, which consent shall not be unreasonably
withheld.
4.5 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 4.5, 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".
4.6. If the Company elects to terminate any registration filed under
this Article 4, the Company will have no obligation to register the Warrant
Shares sought to be included by the Holder in such registration.
4.7 In the event of any registration of any Warrant Shares under the
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 Act, against any losses, claims, damages or liabilities, joint or
several, to which any of the foregoing persons may become subject under the 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 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 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
5
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 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
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 $0.001 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
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 a
dividend (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 chance 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
8
(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.
8. Governing Law
8.1 This Warrant Certificate shall be governed by and construed in
accordance with the laws of the State of Delaware.
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 ________________, 2001.
PREFERRED VOICE, INC.
By:
----------------------------
Name:
--------------------------
Title:
-------------------------
Attest:
-------------------------------
Secretary
9
