DIAL-THRU INTERNATIONAL CORPORATION
INVESTMENT AGREEMENT
COMMON STOCK
$3.50 per share
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DIAL-THRU INTERNATIONAL CORPORATION
SUBSCRIPTION INSTRUCTIONS
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1. Carefully read the Conditions of Subscription for this Investment
Agreement listed below prior to completing this Investment Agreement.
2. Purchaser should complete the information required on the Subscription
and execute this Investment Agreement under Item 7 - "Signatures" on
Page 5.
3. Pursuant to Item 6 - "Suitability Requirements," Purchaser must read the
Investor Suitability Standards and initial the standards that apply to it
as accredited.
CONDITIONS OF SUBSCRIPTION
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This is a private placement by Dial-Thru International Corporation, a
Delaware corporation (the "Company"), of 571,428 shares of Common Stock, par
value $.001 per share, of the Company (the "Shares"). The Company shall
receive $2.0 million in cash. THIS IS A SPECULATIVE INVESTMENT. THE SHARES
SHOULD NOT BE PURCHASED IF PURCHASER CANNOT AFFORD THE LOSS OF THE ENTIRE
AMOUNT INVESTED.
It is understood that this Investment Agreement is not binding until
the Company accepts it in writing, and that it then becomes binding on the
Company and Purchaser in accordance with the terms of this Agreement.
1. Representations and Warranties of Purchaser: In order to induce the
Company to accept this subscription, the Purchaser hereby acknowledges
with the Company as follows:
a. The Shares offered hereby have not been registered under the
Securities Act of 1933, as amended (the "Act") or the securities
laws of any state, based upon an exemption from such registration
requirements for non-public offerings pursuant to Section 4(2) under
the Act or other exemptions thereunder.
b. The Shares are and will be "restricted securities," as said term is
defined in Rule 144 of the rules and regulations promulgated under
the Act.
c. The Shares may not be sold or otherwise transferred unless they have
first been registered with the SEC and all applicable state
securities agencies or unless exemptions from such registration
provisions with respect to said resale or transfer are available.
d. The undersigned is acquiring the Shares solely for the account of
the undersigned, for investment purposes only, and not with a view
towards the resale or distribution thereof.
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e. The Purchaser is not an officer, director or "affiliate" of the
Company.
f. The undersigned is an "accredited investor", as such term is defined
in Regulation D of the rules and regulations promulgated under the
Act or is involved in the business of the Company.
g. The Purchaser has had a reasonable opportunity to ask questions of
and receive answers from the Company concerning the Company and the
offering, and all such questions, if any, have been answered to the
full satisfaction of the Purchaser.
h. The Purchaser has such knowledge and expertise in financial and
business matters that the Purchaser is capable of evaluating the
merits and risks involved in an investment in the Shares and
acknowledges that an investment in the Shares entails a number of
very significant risks and funds should only be invested by persons
able to withstand the total loss of their investment.
i. Except as set forth in this agreement, no representations or
warranties have been made to the Purchaser by the Company or any
agent, employee or affiliate of the Company and in entering into
this transaction the Purchaser is not relying upon any information,
other than (i) the Company's Annual Report on Form 10-K for the year
ended October 31, 1999; (ii) the Company's Current Report on Form 8-
K dated as of November 2, 1999, as amended by the Form 8-K/A
relating thereto; and (iii) the Company's Quarterly Reports on Form
10-Q dated January 31, 2000 and April 30, 2000 (collectively, the
"SEC Filings"), and results of independent investigation by the
Purchaser. Purchaser acknowledges having received and reviewed the
SEC Filings, in particular the "Certain Business Factors" set forth
in the Company's Annual Report.
j. The Credits (i) are owned by Purchaser, free of any liens, claims,
or encumbrances, (ii) are freely transferable by Purchaser to the
Company, (iii) may be used by the Company for the full stated value
thereof ($2.0 million) without restriction or discount, and (iv)
will be freely transferable by the Company.
2. Representations of the Company.
a. The Company is a validly formed and filed corporation operating under
the laws of the State of Delaware, is current in its annual reports
and filing fees, and is in good standing.
b. Pursuant to its Articles of Incorporation and any amendments thereto,
The Company has sufficient authorized shares to satisfy its
obligations pursuant to this Investment Agreement.
c. The Company and its officers are duly authorized by the Board of
Directors actions and by ratification of said actions by the
appropriate number of shareholders, if necessary, pursuant to the
Company's Bylaws and Articles of Incorporation, to effect the
registration and issuance of the subject 571,428 Shares of the
Company's Common Stock to Purchaser.
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d. Purchaser, upon the Company's acceptance of Purchaser's Subscription,
shall receive 571,428 fully paid for and non-assessable restricted
Shares of the Company which shall bear on the subject stock
certificate a restrictive legend prohibiting the transfer, assignment
or conveyance of the securities absent certain legal requirements and
opinions suitable to the Company.
e. The Company shall file a Registration Statement with the Securities
and Exchange Commission in other and unrelated matters, within ninety
(90) days from the execution of this Agreement, on Form S-3 or such
other suitable registration form for which the Company qualifies, and
shall include Purchaser's 571,428 shares in the Registration
Statement. The Company guarantees and represents that its shall use
best efforts in the preparation of said Registration Statement for
purposes of obtaining an effective date for said registration;
provided, however that it is understood that the Company cannot
guarantee that the SEC will declare any such Registration Statement
effective. The Company intends that Purchaser's Shares shall be
freely tradeable and registered without delay as soon as possible.
f. The subject placement of the Shares with Purchaser is consistent with
and qualifies for available exemptions from state and federal
securities registration and other regulatory requirements and that all
notice filings required, if any, have been made.
3. Exemption from Registration. The Purchaser understands that the Shares
are being offered and sold to it in reliance on specific exemptions from
the registration requirements of the United States Federal government
and state securities laws and that the Company is relying upon the truth
and accuracy of the representations, warranties, agreements,
acknowledgments and understandings of the Purchaser set forth herein in
order to determine the applicability of such exemptions and the
suitability of the Purchaser to acquire the Shares, and the Purchaser
acknowledges that it is solely the Company's responsibility to satisfy
itself as to the full observance by this placement and the sale of the
Shares to Purchaser of the laws of any jurisdiction outside the United
States and Purchaser has done so.
4. Authority. The Purchaser has full power and authority to execute and
deliver this Investment Agreement and to perform the obligations of the
undersigned hereunder, and this Agreement is legally binding upon and
enforceable against Purchaser in accordance with its terms.
5. Binding Effect. The Purchaser understands that this Subscription is not
binding upon the Company until the Company accepts it, which acceptance
is at the sole discretion of the Company and is to be evidenced by the
Company's execution of this Subscription where indicated. This
Subscription shall be null and void if the Company does not accept it as
aforesaid. Upon acceptance by the Company and receipt of the total
purchase price, the Company shall consecrate the Investment Agreement
and will issue one certificate to Purchaser for the full number of
Shares subscribed for. The Purchaser understands that the Company may,
in its sole discretion, reject this Subscription.
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6. Indemnification.
a. The Purchaser agrees to indemnify the Company and hold it harmless
from and against any and all losses, damages, liabilities, costs and
expenses which it may sustain or incur in connection with the breach
by the Purchaser of any representation, warranty or covenant made by
it herein.
b. The Company agrees to indemnify the Purchaser and hold it harmless
from and against any and all losses, damages, liabilities, costs and
expenses which it may sustain or incur in connection with the breach
by the Company of any representation, warranty or covenant made by
therein.
7. Nontransferability. Neither this Investment Agreement nor any of the
rights of the Purchaser hereunder may be transferred or assigned by the
Purchaser.
8. Registration Rights. Purchaser is entitled to registration rights with
regard to the 571,428 shares of common stock of the Company. The
Company shall file a Registration Statement with the Securities and
Exchange Commission within 90 days from the execution of this Agreement
(the "Registration Deadline"), on Form S-3 or such other suitable
registration form for which the Company qualifies, and shall include
Purchaser's 571,428 shares in such Registration Statement. The Company
shall use best efforts in the preparation of said Registration Statement
for purposes of obtaining an effective date for said Registration. The
Company shall pay all registration expenses arising from or incidental
to the performance of or compliance with this Agreement. As liquidated
damages, in the event the Company fails to file the Registration of
Purchaser's 571,428 shares within 90 days from the execution of this
Agreement, Purchaser shall be entitled to, and the Company shall issue
to Purchaser, an additional 10,000 shares of restricted voting common
stock of the Company, and shall further issue to Purchaser allotments of
10,000 shares for each additional 30-day period from the Registration
Deadline during which the Company fails to file the Registration of
Purchaser's 571,428 Shares.
9. Amendment; Entire Agreement; Governing Law. This Subscription
Agreement:
a. May be modified by a written instrument executed by the Purchaser and
the Company;
b. Sets forth the entire agreement of the Purchaser and the Company with
respect to the subject matter hereto;
c. Shall be governed by the laws of the State of California applicable to
contracts made and to be wholly performed therein; and
d. Shall inure to the benefit of, and be binding upon, the Company and
the Purchaser and their representative heirs, legal representatives,
successors and assigns.
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10. Notices. All notices or other communications hereunder shall be in
writing and shall be deemed to have been duly given if delivered
personally or mailed by certified mail or registered mail, return receipt
requested, postage prepaid, as follows:
a. To the Purchaser at the address listed on Page 4 of this Subscription
Agreement;
b. To the Company to: Dial-Thru International Corporation
700 S. Flower Street, Suite 2950
Los Angeles, CA 90017
Attn: John Jenkins
or to such other address as the Company or the Purchaser shall
designate to the other by like notice.
[The remainder of this page intentionally left blank.]
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SUBSCRIPTION AGREEMENT
----------------------
1. INVESTMENT The Undersigned, hereby irrevocably agree to
purchase, subject to the acceptance of this
Subscription Agreement by Dial-Thru
International Corporation, the following:
571,428 shares of the Company for a total
investment of $2000,000 consisting of $2.0
million cash.
2. OWNERSHIP Please indicate the nature of the person(s)
or entity who will be the registered owner of
the Shares by checking one box below:
___ Individual ___ Community Property ___ Trust
___ Joint Venture ___ Partnership ____ Other
(explain)
___ Corporation ___ Tenants in Common
3. REGISTERED OWNER Please type or print here the exact name in
which the Shares should be registered.
Name _____________________________________
Address _____________________________________
City ___________ State _____ Zip Code _____
Telephone ___________________________________
Social Security No. or
Taxpayer ID No. _____________________________
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4. DISTRIBUTION Please insert address to which distribution
CHECKS checks should be sent if different than the
address listed above. If checks should be
sent to a financial institution please
indicate name and address of such institution
and account number that should be credited.
Name _______________________________________
c/o _______________________________________
Account No. _________________________________
Address _____________________________________
City ___________ State _____ Zip Code _____
Telephone ___________________________________
5. ADOPTION AND The undersigned hereby specifically adopts
ACKNOWLEDGMENT each and every provision of this Subscription
Agreement in substantially the form included
herein. The undersigned hereby acknowledges
he has read and understands all
representations contained herein and that all
statements he made herein are true and
accurate.
6. SUITABILITY The undersigned hereby acknowledges that he
REQUIREMENT has read the suitability standards and does
hereby represent that he meets the
suitability requirements as an Accredited
Investor.
7. SIGNATURES I HEREBY CONFIRM I HAVE THE AUTHORITY TO
ENTER INTO THIS SUBSCRIPTION AGREEMENT ON
BEHALF OF THE PERSON(S) OR ENTITY REGISTERED
IN 3 ABOVE.
Signed: __________________ Date: __________
Signed: __________________ Date: __________
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ADDITIONAL INFORMATION FOR PARTNERSHIP OR TRUST
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PARTNERSHIP: Identify entity as a general or limited partnership. The
general partners must be identified on the Subscription Agreement. All
general partners must sign unless a "managing partner" is designated for the
partnership, in which case he may sign on behalf of the partnership.
TRUST: The trustee must sign the Subscription Agreement. Requires name of
trust, name of trustee, and name of beneficiary.
INVESTOR SUITABILITY STANDARDS
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To qualify as an Accredited Investor, an investor must meet one or more of
the following conditions:
(Please indicate which of the following is applicable by initialing the
appropriate line)
_____ Any natural person whose individual net worth, or joint net worth
with that person's spouse, at the time of his purchase exceeds $1,000,000;
or
_____ Any natural person who had individual income in excess of $200,000 in
each of the two most recent years or joint income with their spouse in
excess of $300,000 in each of those years and a reasonable expectation of
reaching the same income level in the current year; or
_____ Any trust with total assets in excess of $5,000,000 not formed for
the specific purpose of acquiring the securities offered, whose purchase is
directed by a sophisticated person, as described in Rule 506(b)(2)(ii)
(meaning a person knowledgeable in financial and business matters who is
able to evaluate merits and risks of the proposed investment); or
_____ Any organization described in Section 501(c)(3) of the Internal
Revenue Code, corporation, Massachusetts or similar business trust, or
partnership, not formed for the specific purpose of acquiring the securities
offered, with total assets in excess of $5,000,000; or
_____ Any 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; and
_____ Any entity in which all the equity owners are accredited investors.
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ADDITIONAL INVESTOR REQUIREMENTS
--------------------------------
To qualify, each investor must also meet the following requirement and does
hereby make the following representations:
He is a sophisticated investor who has such business and financial
experience that he is capable of evaluating the merits and risks of this
investment and protecting his interest in this transaction.
