EX-4.9 FORM OF SUBSCRIPTION AGREEMENT
FORM OF SUBSCRIPTION AGREEMENT
THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS AND
ARE BEING OFFERED AND SOLD IN RELIANCE ON EXEMPTIONS FROM THE
REGISTRATION REQUIREMENTS OF SUCH LAWS. THE SECURITIES ARE SUBJECT TO
RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED
OR RESOLD EXCEPT AS PERMITTED UNDER SUCH LAWS PURSUANT TO REGISTRATION
OR AN EXEMPTION THEREFROM. THE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY OTHER
REGULATORY AUTHORITY, NOR HAVE ANY OF THE FOREGOING AUTHORITIES PASSED
UPON OR ENDORSED THE MERITS OF THIS OFFERING OR THE ACCURACY OR
ADEQUACY OF THE OFFERING MATERIALS. ANY REPRESENTATION TO THE
CONTRARY IS UNLAWFUL.
This Subscription Agreement is made between 5G Wireless
Communications, Inc., a Nevada corporation ("Company"), and the
undersigned prospective purchaser ("Purchaser") who is subscribing
hereby for the Company's convertible debentures ("Debentures"). This
subscription is submitted to you in accordance with and subject to the
terms and conditions described in this Subscription Agreement,
together with any exhibits thereto, relating to an offering
("Offering") of up to $100,000 of Debentures. The Offering is limited
to accredited investors and is made in accordance with the exemptions
from registration provided for under Section 4(2) of the 1933 Act and
Rule 506 of Regulation D promulgated under the 1933 Act ("Regulation D").
1. SUBSCRIPTION.
(a) The Purchaser hereby irrevocably subscribes for and agrees
to purchase that amount of Debentures as stated on the signature page
upon the terms set forth in this Subscription Agreement. The
Debentures shall pay a nine percent (9%) cumulative interest, payable
in arrears at the time of each conversion, in cash or in common stock
of the Company, one tenth of one cent ($0.001) par value ("Common
Stock"), at the Company's option. If paid in Common Stock, the number
of shares of the Company's Common Stock to be received shall be
determined pursuant to the conversion terms of the Debenture. If the
dividend is to be paid in cash, the Company shall make such payment
within five (5) business days of the conversion date. If the dividend
is to be paid in Common Stock, said Common Stock shall be delivered to
the Purchaser, or per Purchaser's instructions, within five (5)
business days of the conversion date. The Debentures are subject to
automatic conversion at the end of three (3) years from the date of
issuance at which time all Debentures outstanding will be
automatically converted based upon the terms set forth in the
Debenture. The closing shall be deemed to have occurred on the date
funds, less placement fees, escrow fees and attorney fees, are
received by the Company (the "Closing Date"). Funds shall be disbursed
from escrow as follows: net proceeds shall be disbursed from escrow
upon the execution and delivery of all Transaction Documents.
Delivery may be made of the Transaction Documents (as defined below)
by e-mail, and execution may be evidenced by faxed signature pages.
"Transaction Documents" shall mean this Subscription Agreement, the
Debentures, and all exhibits to any of the aforementioned documents.
(b) Upon receipt by the Company of the requisite payment for the
Debentures being purchased, the Debentures so purchased will be
forwarded by the Escrow Agent to the Purchaser or its broker, as
listed on the signature page, and the name of such Purchaser will be
registered on the Debenture transfer books of the Company as the
record owner of such Debentures. The Escrow Agent shall not be liable
for any action taken or omitted by him in good faith and in no event
shall the Escrow Agent be liable or responsible except for the Escrow
Agent's own gross negligence or willful misconduct. The Escrow Agent
has made no representations or warranties in connection with this
transaction and has not been involved in the negotiation of the terms
of this Agreement or any matters relative thereto. The Company and
Purchaser each agree to indemnify and hold harmless the Escrow Agent
from and with respect to any suits, claims, actions or liabilities
arising in any way out of this transaction including the obligation to
defend any legal action brought which in any way arises out of or is
related to this Agreement.
(c) As long as the Purchaser owns the Debenture, the Purchaser
shall have the right to change the terms for the balance of the
Debenture it then holds, to match the terms of any other debenture
offering made by the Company.
(d) Conditions Precedent. The following shall be conditions
precedent to closing and release of funds from escrow: (i) the
Company arranges to have three million (3,000,000) shares of its
Common Stock issued as per the Agency Agreement and (ii) all
Transaction Documents are properly executed.
2. REPRESENTATIONS AND WARRANTIES.
The Purchaser hereby represents and warrants to, and agrees with,
the Company as follows:
a. The Purchaser has been furnished with, and has carefully
read the applicable form of Debenture annexed hereto as Exhibit A and
is familiar with and understands the terms of the Offering. With
respect to tax and other economic considerations involved in his
investment, the Purchaser is not relying on the Company. The
Purchaser has carefully considered and has, to the extent the
Purchaser believes such discussion necessary, discussed with the
Purchaser's professional legal, tax, accounting and financial advisors
the suitability of an investment in the Company, by purchasing the
Debentures, for the Purchaser 's particular tax and financial
situation and has determined that the investment being made by the
Purchaser is a suitable investment for the Purchaser.
b. The Purchaser acknowledges that all documents, records, and
books pertaining to this investment which the Purchaser has requested
have been made available for inspection or the Purchaser has had
access thereto.
c. The Purchaser has had a reasonable opportunity to ask
questions of and receive answers from a person or persons acting on
behalf of the Company concerning the Offering and if such opportunity
was taken, all such questions have been answered to the full
satisfaction of the Purchaser.
d. The Purchaser will not sell or otherwise sell the Debentures
or the Common Stock issued upon conversion of the Debentures without
registration under the 1933 Act or applicable state securities laws or
compliance with an exemption therefrom. The Debentures have not been
registered under the 1933 Act or under the securities laws of any
state. The Purchaser represents that the Purchaser is purchasing the
Debentures for the Purchaser's own account, for investment and not
with a view to resale or distribution except in compliance with the
1933 Act. The Purchaser has not offered or sold any portion of the
Debentures being acquired nor does the Purchaser have any present
intention of dividing the Debentures with others or of selling,
distributing or otherwise disposing of any portion of the Debentures
either currently or after the passage of a fixed or determinable
period of time or upon the occurrence or non-occurrence of any
predetermined event or circumstance in violation of the 1933 Act. The
Company has no obligation to register the Common Stock underlying
Debentures and the Common Stock that may be issued in lieu of cash
dividends.
e. The Purchaser recognizes that an investment in the
Debentures involves substantial risks, including loss of the entire
amount of such investment. Further, the Purchaser has carefully read
and considered the schedule entitled Pending Litigation matters
attached hereto as Schedule 3(h).
f. The Purchaser acknowledges that each certificate
representing the Debentures (and the shares of Common Stock issued
upon conversion of the Debentures, unless registered) or in payment of
dividends on the Debentures shall be stamped or otherwise imprinted
with a legend substantially in the following form:
THE SECURITIES EVIDENCED BY THIS CERTIFICATE MAY NOT BE
OFFERED OR SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR
OTHERWISE DISPOSED OF EXCEPT (i) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, (ii) TO THE EXTENT APPLICABLE, PURSUANT TO RULE 144
UNDER THE ACT (OR ANY SIMILAR RULE UNDER SUCH ACT RELATING
TO THE DISPOSITION OF SECURITIES), OR (iii) PURSUANT TO AN
AVAILABLE EXEMPTION FROM REGISTRATION UNDER SUCH ACT.
If Purchaser sends a Notice of Conversion and indicates on said notice
that the conversion is for an immediate sale, then in such event the
Company shall have its transfer agent send Purchaser the appropriate
number of shares of Common Stock without restrictive legends and not
subject to stop transfer instructions.
g. The Purchaser acknowledges and agrees that it shall not be
entitled to seek any remedies with respect to the Offering from any
party other than the Company.
h. If this Subscription Agreement is executed and delivered on
behalf of a corporation: (i) such corporation has the full legal
right and power and all authority and approval required (a) to execute
and deliver, or authorize execution and delivery of, this Subscription
Agreement and all other instruments executed and delivered by or on
behalf of such corporation in connection with the purchase of the
Debentures and (b) to purchase and hold the Debentures; and (ii) the
signature of the party signing on behalf of such corporation is
binding upon such corporation.
i. The Purchaser is not subscribing for the Debentures as a
result of, or pursuant to, any advertisement, article, notice or other
communication published in any newspaper, magazine or similar media or
broadcast over television or radio or presented at any seminar or
meeting.
j. The Purchaser is purchasing the Debentures for its own
account for investment, and not with a view toward the resale or
distribution thereof, except pursuant to sales registered or exempted
from registration under the 1933 Act; provided, however, that by
making the representations herein, Purchaser does not agree to hold
any of the Debentures for any minimum or other specific term and
reserves the right to dispose of the Debentures at any time in
accordance with or pursuant to a registration statement or an
exemption under the 1933 Act. Purchaser is neither an underwriter of,
nor a dealer in, the Debentures or the Common Stock issuable upon
conversion thereof or upon the payment of dividends thereon and is not
participating in the distribution or resale of the Debentures or the
Common Stock issuable upon conversion or exercise thereof.
k. The Purchaser or the Purchaser's representatives, as the
case may be, has such knowledge and experience in financial, tax and
business matters so as to enable the Purchaser to utilize the
information made available to the Purchaser in connection with the
Offering to evaluate the merits and risks of an investment in the
Debentures and to make an informed investment decision with respect
thereto. Brian F. Faulkner, A Professional Law Corporation has acted
as attorney for the Company and he has not acted as counsel to the
Purchaser.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
Except as set forth in the Schedules attached hereto, the Company
represents and warrants to the Purchaser that:
a. Organization and Qualification. The Company and its
"Subsidiaries" (which for purposes of this Subscription Agreement
means any entity in which the Company, directly or indirectly, owns
capital stock or holds an equity or similar interest) (a complete list
of which is set forth in Schedule 3(a)) are corporations duly
organized and validly existing in good standing under the laws of the
respective jurisdictions of their incorporation, and have the
requisite corporate power and authorization to own their properties
and to carry on their business as now being conducted. Each of the
Company and its Subsidiaries is duly qualified as a foreign
corporation to do business and is in good standing in every
jurisdiction in which its ownership of property or the nature of the
business conducted by it makes such qualification necessary, except to
the extent that the failure to be so qualified or be in good standing
would not have a Material Adverse Effect. As used in this Subscription
Agreement, "Material Adverse Effect" means any material adverse effect
on the business, properties, assets, operations, results of
operations, financial condition or prospects of the Company and its
Subsidiaries, if any, taken as a whole, or on the transactions
contemplated hereby or by the agreements and instruments to be entered
into in connection herewith, or on the authority or ability of the
Company to perform its obligations under the Transaction Documents (as
defined in Section 3(b)below).
b. Authorization; Enforcement; Compliance with Other
Instruments. (i) The Company has the requisite corporate power and
authority to enter into and perform this Subscription Agreement, and
each of the other agreements entered into by the parties hereto in
connection with the transactions contemplated by this Subscription
Agreement (collectively, the "Transaction Documents"), and to issue
the Debentures in accordance with the terms hereof and thereof, (ii)
the execution and delivery of the Transaction Documents by the Company
and the consummation by it of the transactions contemplated hereby and
thereby, including without limitation the reservation for issuance and
the issuance of the Debentures pursuant to this Subscription
Agreement, have been duly and validly authorized by the Company's
Board of Directors and no further consent or authorization is required
by the Company, its Board of Directors, or its shareholders, (iii) the
Transaction Documents have been duly and validly executed and
delivered by the Company, and (iv) the Transaction Documents
constitute the valid and binding obligations of the Company
enforceable against the Company in accordance with their terms, except
as such enforceability may be limited by general principles of equity
or applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation or similar laws relating to, or affecting generally, the
enforcement of creditors' rights and remedies.
c. Capitalization. As of the date hereof, the authorized
capital stock of the Company consists of (i) eight hundred million
(800,000,000) shares of Common Stock, of which as of February 15, 2003
approximately two hundred fourteen million four hundred forty-five
thousand seven hundred forty (214,455,740) shares are issued and
outstanding, and ten million (10,000,000) shares of Preferred Stock,
of which as of the date hereof zero (0) shares are issued and
outstanding. All of such outstanding shares have been, or upon
issuance will be, validly issued and are fully paid and nonassessable.
Except as disclosed in Schedule 3(c) which is attached hereto and made
a part hereof, (i) no shares of the Company's capital stock are
subject to preemptive rights or any other similar rights or any liens
or encumbrances suffered or permitted by the Company, (ii) there are
no outstanding debt securities, (iii) there are no outstanding shares
of capital stock, options, warrants, scrip, rights to subscribe to,
calls or commitments of any character whatsoever relating to, or
securities or rights convertible into, any shares of capital stock of
the Company or any of its Subsidiaries, or contracts, commitments,
understandings or arrangements by which the Company or any of its
Subsidiaries is or may become bound to issue additional shares of
capital stock of the Company or any of its Subsidiaries or options,
warrants, scrip, rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities or rights convertible
into, any shares of capital stock of the Company or any of its
Subsidiaries, (iv) there are no agreements or arrangements under which
the Company or any of its Subsidiaries is obligated to register the
sale of any of their securities under the 1933 Act, (v) there are no
outstanding securities of the Company or any of its Subsidiaries which
contain any redemption or similar provisions, and there are no
contracts, commitments, understandings or arrangements by which the
Company or any of its Subsidiaries is or may become bound to redeem a
security of the Company or any of its Subsidiaries, (vi) there are no
securities or instruments containing anti-dilution or similar
provisions that will be triggered by the issuance of the Securities as
described in this Subscription Agreement, (vii) the Company does not
have any stock appreciation rights or "phantom stock" plans or
agreements or any similar plan or agreement and (viii) there is no
dispute as to the class of any shares of the Company's capital stock.
The Company has furnished to the Purchaser, or the Purchaser has had
access through EDGAR to, true and correct copies of the Company's
articles of incorporation, as in effect on the date hereof ("Articles
Of Incorporation"), and the Company's by-laws, as in effect on the
date hereof ("By-Laws"), and the terms of all securities convertible
into or exercisable for Common Stock and the material rights of the
holders thereof in respect thereto.
d. Issuance of Debentures. A sufficient number of Debentures
issuable pursuant to this Subscription Agreement, but not representing
more than nineteen and ninety-nine hundredths percent (19.99%) of the
shares of Common Stock outstanding as of the date hereof (if the
Company becomes listed on Nasdaq or the American Stock Exchange), has
been duly authorized and reserved for issuance pursuant to this
Subscription Agreement. Upon issuance in accordance with this
Subscription Agreement, the Debentures will be validly issued, fully
paid and nonassessable and free from all taxes, liens and charges with
respect to the issue thereof. In the event the Company cannot register
a sufficient number of shares of Common Stock, due to the remaining
number of authorized shares of Common Stock being insufficient, the
Company will use its best efforts to register the maximum number of
shares it can based on the remaining balance of authorized shares and
will use its best efforts to increase the number of its authorized
shares as soon as reasonably practicable.
e. No Conflicts. The execution, delivery and performance of
the Transaction Documents by the Company and the consummation by the
Company of the transactions contemplated hereby and thereby will not
(i) result in a violation of the Articles of Incorporation, any
Certificate of Designations, Preferences and Rights of any outstanding
series of preferred stock of the Company or the By-laws or (ii)
conflict with, or constitute a material default (or an event which
with notice or lapse of time or both would become a material default)
under, or give to others any rights of termination, amendment,
acceleration or cancellation of, any material agreement, contract,
indenture mortgage, indebtedness or instrument to which the Company or
any of its Subsidiaries is a party, or result in a violation of any
law, rule, regulation, order, judgment or decree, including United
States federal and state securities laws and regulations and the rules
and regulations of the principal securities exchange or trading market
on which the Common Stock is traded or listed ("Principal Market"),
applicable to the Company or any of its Subsidiaries or by which any
property or asset of the Company or any of its Subsidiaries is bound
or affected. Except as disclosed in Schedule 3(e), neither the
Company nor its Subsidiaries is in violation of any term of, or in
default under, the Articles of Incorporation, any Certificate of
Designations, Preferences and Rights of any outstanding series of
preferred stock of the Company or the By-laws or their organizational
charter or by-laws, respectively, or any contract, agreement,
mortgage, indebtedness, indenture, instrument, judgment, decree or
order or any statute, rule or regulation applicable to the Company or
its Subsidiaries, except for possible conflicts, defaults,
terminations, amendments, accelerations, cancellations and violations
that would not individually or in the aggregate have a Material
Adverse Effect. The business of the Company and its Subsidiaries is
not being conducted, and shall not be conducted, in violation of any
law, statute, ordinance, rule, order or regulation of any governmental
authority or agency, regulatory or self-regulatory agency, or court,
except for possible violations the sanctions for which either
individually or in the aggregate would not have a Material Adverse
Effect. Except as specifically contemplated by this Subscription
Agreement and as required under the 1933 Act, the Company is not
required to obtain any consent, authorization, permit or order of, or
make any filing or registration with, any court, governmental
authority or agency, regulatory or self-regulatory agency or other
third party in order for it to execute, deliver or perform any of its
obligations under, or contemplated by, the Transaction Documents in
accordance with the terms hereof or thereof. All consents,
authorizations, permits, orders, and filings which the Company is
required to obtain pursuant to the preceding sentence have been
obtained or effected on or prior to the date hereof and are in full
force and effect as of the date hereof. Except as disclosed in
Schedule 3(e), the Company and its Subsidiaries are unaware of any
facts or circumstances which might give rise to any of the foregoing.
The Company is not, and will not be, in violation of the listing
requirements of the Principal Market as in effect on the date hereof
and on each of the Closing Dates and is not aware of any facts which
would reasonably lead to delisting of the Common Stock by the
Principal Market in the foreseeable future.
f. SEC Documents; Financial Statements. Since January 1, 2001,
the Company has filed all reports, schedules, forms, statements and
other documents required to be filed by it with the Securities and
Exchange Commission ("SEC") pursuant to the reporting requirements of
the Securities and Exchange Act of 1934 ("1934 Act") (all of the
foregoing filed prior to the date hereof and all exhibits included
therein and financial statements and schedules thereto and documents
incorporated by reference therein being hereinafter referred to as the
"Sec Documents"). The Company has delivered to the Purchaser or its
representatives, or they have had access through EDGAR, to true and
complete copies of the SEC Documents. As of their respective dates,
the SEC Documents complied in all material respects with the
requirements of the 1934 Act and the rules and regulations of the SEC
promulgated thereunder applicable to the SEC Documents, and none of
the SEC Documents, at the time they were filed with the SEC, contained
any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading. As of their respective dates, the financial statements of
the Company included in the SEC Documents complied as to form in all
material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto. Such
financial statements have been prepared in accordance with generally
accepted accounting principles, consistently applied, during the
periods involved (except (i) as may be otherwise indicated in such
financial statements or the notes thereto, or (ii) in the case of
unaudited interim statements, to the extent they may exclude footnotes
or may be condensed or summary statements) and fairly present in all
material respects the financial position of the Company as of the
dates thereof and the results of its operations and cash flows for the
periods then ended (subject, in the case of unaudited statements, to
normal year-end audit adjustments). No other written information
provided by or on behalf of the Company to the Purchaser which is not
included in the SEC Documents, including, without limitation,
information referred to in Section 3(d) of this Subscription
Agreement, contains any untrue statement of a material fact or omits
to state any material fact necessary to make the statements therein,
in the light of the circumstance under which they are or were made,
not misleading. Neither the Company nor any of its Subsidiaries or any
of their officers, directors, employees or agents have provided the
Purchaser with any material, nonpublic information which was not
publicly disclosed prior to the date hereof and any material,
nonpublic information provided to the Purchaser by the Company or its
Subsidiaries or any of their officers, directors, employees or agents
prior to any Closing Date shall be publicly disclosed by the Company
prior to such Closing Date.
g. Absence of Certain Changes. Except as disclosed in Schedule
3(g) or the SEC Documents filed at least five (5) days prior to the
date hereof, since January 1, 2001, there has been no change or
development in the business, properties, assets, operations, financial
condition, results of operations or prospects of the Company or its
Subsidiaries which has had or reasonably could have a Material Adverse
Effect. The Company has not taken any steps, and does not currently
expect to take any steps, to seek protection pursuant to any
bankruptcy law nor does the Company or its Subsidiaries have any
knowledge or reason to believe that its creditors intend to initiate
involuntary bankruptcy proceedings.
h. Absence of Litigation. Except as set forth in Schedule
3(h), there is no action, suit, proceeding, inquiry or investigation
before or by any court, public board, government agency, self-
regulatory organization or body pending or, to the knowledge of the
executive officers of Company or any of its Subsidiaries, threatened
against or affecting the Company, the Common Stock or any of the
Company's Subsidiaries or any of the Company's or the Company's
Subsidiaries' officers or directors in their capacities as such, in
which an adverse decision could have a Material Adverse Effect.
i. Acknowledgment Regarding the Purchase of Debentures. The
Company acknowledges and agrees that the Purchaser is acting solely in
the capacity of arm's length investor with respect to the Transaction
Documents and the transactions contemplated hereby and thereby. The
Company further acknowledges that the Purchaser is not acting as a
financial advisor or fiduciary of the Company (or in any similar
capacity) with respect to the Transaction Documents and the
transactions contemplated hereby and thereby and any advice given by
the Purchaser or any of its respective representatives or agents in
connection with the Transaction Documents and the transactions
contemplated hereby and thereby is merely incidental to the
Purchaser's purchase of the Debentures. The Company further
represents to the Purchaser that the Company's decision to enter into
the Transaction Documents has been based solely on the independent
evaluation by the Company and its representatives.
j. No Undisclosed Events, Liabilities, Developments or
Circumstances. No event, liability, development or circumstance has
occurred or exists, or to its knowledge is contemplated to occur, with
respect to the Company or its Subsidiaries or their respective
business, properties, assets, prospects, operations or financial
condition, that would be required to be disclosed by the Company under
applicable securities laws on a registration statement filed with the
SEC relating to an issuance and sale by the Company of its Common
Stock and which has not been publicly announced.
k. Employee Relations. Neither the Company nor any of its
Subsidiaries is involved in any union labor dispute nor, to the
knowledge of the Company or any of its Subsidiaries, is any such
dispute threatened. Neither the Company nor any of its Subsidiaries is
a party to a collective bargaining agreement, and the Company and its
Subsidiaries believe that relations with their employees are good. No
executive officer (as defined in Rule 501(f) of the 1933 Act) has
notified the Company that such officer intends to leave the Company's
employ or otherwise terminate such officer's employment with the Company.
l. Intellectual Property Rights. The Company and its
Subsidiaries own or possess adequate rights or licenses to use all
trademarks, trade names, service marks, service mark registrations,
service names, patents, patent rights, copyrights, inventions,
licenses, approvals, governmental authorizations, trade secrets and
rights necessary to conduct their respective businesses as now
conducted. Except as set forth on Schedule 3(l), none of the
Company's trademarks, trade names, service marks, service mark
registrations, service names, patents, patent rights, copyrights,
inventions, licenses, approvals, government authorizations, trade
secrets or other intellectual property rights necessary to conduct its
business as now or as proposed to be conducted have expired or
terminated, or are expected to expire or terminate within two years
from the date of this Subscription Agreement. The Company and its
Subsidiaries do not have any knowledge of any infringement by the
Company or its Subsidiaries of trademark, trade name rights, patents,
patent rights, copyrights, inventions, licenses, service names,
service marks, service mark registrations, trade secret or other
similar rights of others, or of any such development of similar or
identical trade secrets or technical information by others and, except
as set forth on Schedule 3(l), there is no claim, action or proceeding
being made or brought against, or to the Company's knowledge, being
threatened against, the Company or its Subsidiaries regarding
trademark, trade name, patents, patent rights, invention, copyright,
license, service names, service marks, service mark registrations,
trade secret or other infringement; and the Company and its
Subsidiaries are unaware of any facts or circumstances which might
give rise to any of the foregoing. The Company and its Subsidiaries
have taken reasonable security measures to protect the secrecy,
confidentiality and value of all of their intellectual properties.
m. Environmental Laws. The Company and its Subsidiaries (i)
are in compliance with any and all applicable foreign, federal, state
and local laws and regulations relating to the protection of human
health and safety, the environment or hazardous or toxic substances or
wastes, pollutants or contaminants ("Environmental Laws"), (ii) have
received all permits, licenses or other approvals required of them
under applicable Environmental Laws to conduct their respective
businesses and (iii) are in compliance with all terms and conditions
of any such permit, license or approval where, in each of the three
foregoing cases, the failure to so comply would have, individually or
in the aggregate, a Material Adverse Effect.
n. Title. The Company and its Subsidiaries have good and
marketable title in fee simple to all real property and good and
marketable title to all personal property owned by them which is
material to the business of the Company and its Subsidiaries, in each
case free and clear of all liens, encumbrances and defects except such
as are described in Schedule 3(n) or such as do not materially affect
the value of such property and do not interfere with the use made and
proposed to be made of such property by the Company or any of its
Subsidiaries. Any real property and facilities held under lease by the
Company or any of its Subsidiaries are held by them under valid,
subsisting and enforceable leases with such exceptions as are not
material and do not interfere with the use made and proposed to be
made of such property and buildings by the Company and its
Subsidiaries.
o. Insurance. The Company and each of its Subsidiaries are
insured by insurers of recognized financial responsibility against
such losses and risks and in such amounts as management of the Company
believes to be prudent and customary in the businesses in which the
Company and its Subsidiaries are engaged. Neither the Company nor any
such Subsidiary has been refused any insurance coverage sought or
applied for and neither the Company nor any such Subsidiary has any
reason to believe that it will not be able to renew its existing
insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue
its business at a cost that would not have a Material Adverse Effect.
p. Regulatory Permits. The Company and its Subsidiaries have
in full force and effect all certificates, approvals, authorizations
and permits from the appropriate federal, state, local or foreign
regulatory authorities and comparable foreign regulatory agencies,
necessary to own, lease or operate their respective properties and
assets and conduct their respective businesses, and neither the
Company nor any such Subsidiary has received any notice of proceedings
relating to the revocation or modification of any such certificate,
approval, authorization or permit, except for such certificates,
approvals, authorizations or permits which if not obtained, or such
revocations or modifications which, would not have a Material Adverse Effect.
q. Internal Accounting Controls. The Company and each of its
Subsidiaries maintain a system of internal accounting controls
sufficient to provide reasonable assurance that (i) transactions are
executed in accordance with management's general or specific
authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally
accepted accounting principles and to maintain asset accountability,
(iii) access to assets is permitted only in accordance with
management's general or specific authorization and (iv) the recorded
accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to
any differences.
r. No Materially Adverse Contracts, Etc. Neither the Company
nor any of its Subsidiaries is subject to any charter, corporate or
other legal restriction, or any judgment, decree, order, rule or
regulation which in the judgment of the Company's officers has or is
expected in the future to have a Material Adverse Effect. Neither the
Company nor any of its Subsidiaries is a party to any contract or
agreement which in the judgment of the Company's officers has or is
expected to have a Material Adverse Effect.
s. Tax Status. The Company and each of its Subsidiaries has
made or filed all United States federal and state income and all other
tax returns, reports and declarations required by any jurisdiction to
which it is subject (unless and only to the extent that the Company
and each of its Subsidiaries has set aside on its books provisions
reasonably adequate for the payment of all unpaid and unreported
taxes) and has paid all taxes and other governmental assessments and
charges that are material in amount, shown or determined to be due on
such returns, reports and declarations, except those being contested
in good faith and has set aside on its books provision reasonably
adequate for the payment of all taxes for periods subsequent to the
periods to which such returns, reports or declarations apply. There
are no unpaid taxes in any material amount claimed to be due by the
taxing authority of any jurisdiction, and the officers of the Company
know of no basis for any such claim.
t. Certain Transactions. Except as set forth on Schedule 3(t)
and in the SEC Documents filed at least ten days prior to the date
hereof and except for arm's length transactions pursuant to which the
Company makes payments in the ordinary course of business upon terms
no less favorable than the Company could obtain from third parties and
other than the grant of stock options disclosed on Schedule 3(c), none
of the officers, directors, or employees of the Company is presently a
party to any transaction with the Company or any of its Subsidiaries
(other than for services as employees, officers and directors),
including any contract, agreement or other arrangement providing for
the furnishing of services to or by, providing for rental of real or
personal property to or from, or otherwise requiring payments to or
from any officer, director or such employee or, to the knowledge of
the Company, any corporation, partnership, trust or other entity in
which any officer, director, or any such employee has a substantial
interest or is an officer, director, trustee or partner.
u. Dilutive Effect. The Company understands and acknowledges
that the number of shares of Common Stock issuable upon purchases
pursuant to this Subscription Agreement will increase in certain
circumstances including, but not necessarily limited to, the
circumstance wherein the trading price of the Common Stock declines
following the effective date of the registration statement covering
the Common Stock underlying the Debentures ("Effective Date"). The
Company's executive officers and directors have studied and fully
understand the nature of the transactions contemplated by this
Subscription Agreement and recognize that they have a potential
dilutive effect. The board of directors of the Company has concluded,
in its good faith business judgment, that such issuance is in the best
interests of the Company. The Company specifically acknowledges that,
subject to such limitations as are expressly set forth in the
Transaction Documents, its obligation to issue shares of Common Stock
upon purchases pursuant to this Subscription Agreement is absolute and
unconditional regardless of the dilutive effect that such issuance may
have on the ownership interests of other shareholders of the Company.
v. The Company understands that the Purchasers are relying on
the Security Agreement in the event the Company defaults in the terms
of the Security Agreement, Subscription Agreement, or the Debentures
being entered into between the Company and the Purchasers.
Furthermore, the Company understands that were it not for this pledge
being made by certain shareholders, the Purchasers would not be
subscribing for the Debentures. Therefore, the Company represents and
warrants that in the event it defaults by failing to have the
registration statement covering this Offering declared effective that
it will cooperate with the Purchasers and do everything necessary to
have the legend removed from the pledged shares to facilitate their
sale pursuant to the terms of the Security Agreement. The Company also
represents and acknowledges that the Debenture is a full recourse loan
being made by the Purchasers to the Company that the Company shall be
completely liable and responsible to pay any deficiency to the
Purchasers including liquidated damages and reasonable attorney's fees
and costs as stated in this Subscription Agreement, the Security
Agreement and the Debentures.
4. COVENANTS OF THE COMPANY
a. Best Efforts. The Company shall use its best efforts timely
to satisfy each of the conditions to be satisfied by it as provided in
this Subscription Agreement.
b. Blue Sky. The Company shall, at its sole cost and expense
take such action as the Company shall reasonably determine is
necessary to qualify the Common Stock underlying the shares for, or
obtain exemption for the same for, sale to the Purchaser under
applicable securities or "Blue Sky" laws of such states of the United
States, as specified by Purchaser. The Company shall, at its sole cost
and expense, make all filings and reports relating to the offer and
sale of the Common Stock underlying the Debentures as required under
the applicable securities or "Blue Sky" laws of such states of the
United States as specified by the Purchaser.
c. Reporting Status. Until the earlier of (i) the date that
the Purchaser may sell all of the Common Stock underlying the shares
acquired pursuant to this Subscription Agreement without restriction
pursuant to Rule 144(k) promulgated under the 1933 Act (or successor
thereto), or (ii) the date on which the Purchaser shall have sold all
the Common Stock underlying the Debentures, the Company shall file all
reports required to be filed with the SEC pursuant to the 1934 Act,
and the Company shall not terminate its status as a reporting company
under the 1934 Act.
d. Use of Proceeds. The Company will use the proceeds from the
sale of the Debentures (excluding amounts paid by the Company for fees
as set forth in the Transaction Documents) for general corporate and
working capital purposes.
e. Financial Information. The Company agrees to make available
to the Purchaser via EDGAR or other electronic means the following:
(i) within five (5) business days after the filing thereof with the
SEC, a copy of its Annual Reports on Form 10-KSB, its Quarterly
Reports on Form 10-QSB, any Current Reports on Form 8-K and any
Registration Statements or amendments filed pursuant to the 1933 Act;
(ii) on the same day as the release thereof, facsimile copies of all
press releases issued by the Company or any of its Subsidiaries, (iii)
copies of any notices and other information made available or given to
the shareholders of the Company generally, contemporaneously with the
making available or giving thereof to the shareholders and (iv) within
two (2) calendar days of filing or delivery thereof, copies of all
documents filed with, and all correspondence sent to, the Principal
Market, any securities exchange or market, or the National Association
of Securities Dealers, Inc.
f. Reservation of Common Stock. Subject to the following
sentence, the Company shall take all action necessary to at all times
have authorized, and reserved for the purpose of issuance, a
sufficient number of shares of Common Stock to provide for the
issuance of the Common Stock underlying the Debentures. In the event
that the Company determines that it does not have a sufficient number
of authorized shares of Common Stock to reserve and keep available for
issuance, the Company shall use its best efforts to increase the
number of authorized shares of Common Stock by seeking shareholder
approval by written consent within thirty (30) days of their being
such deficiency for the authorization of such additional shares.
g. Listing. The Company shall promptly secure the listing of
all of the Common Stock underlying the Debentures upon the Principal
Market and each other national securities exchange and automated
quotation system, if any, upon which shares of Common Stock are then
listed (subject to official notice of issuance) and shall maintain,
such listing. The Company shall maintain the Common Stock's
authorization for quotation on the Principal Market, unless the
Purchaser and the Company agree otherwise. Neither the Company nor any
of its Subsidiaries shall take any action which would be reasonably
expected to result in the delisting or suspension of the Common Stock
on the Principal Market (excluding suspensions of not more than one
trading day resulting from business announcements by the Company). The
Company shall promptly provide to the Purchaser copies of any notices
it receives from the Principal Market regarding the continued
eligibility of the Common Stock for listing on such automated
quotation system or securities exchange. The Company shall pay all
fees and expenses in connection with satisfying its obligations under
this Section.
h. Transactions With Affiliates. The Company shall not, and
shall cause each of its Subsidiaries not to, enter into, amend, modify
or supplement, or permit any Subsidiary to enter into, amend, modify
or supplement, any agreement, transaction, commitment or arrangement
with any of its or any Subsidiary's officers, directors, persons who
were officers or directors at any time during the previous two (2)
years, shareholders who beneficially own five percent (5%) or more of
the Common Stock, or affiliates or with any individual related by
blood, marriage or adoption to any such individual or with any entity
in which any such entity or individual owns a five percent (5%) or
more beneficial interest (each a "Related Party"), except for (i)
customary employment arrangements and benefit programs on reasonable
terms, (ii) any agreement, transaction, commitment or arrangement on
an arms-length basis on terms no less favorable than terms which would
have been obtainable from a person other than such Related Party, or
(iii) any agreement, transaction, commitment or arrangement which is
approved by a majority of the disinterested directors of the Company.
For purposes hereof, any director who is also an officer of the
Company or any Subsidiary of the Company shall not be a disinterested
director with respect to any such agreement, transaction, commitment
or arrangement. "Affiliate" for purposes hereof means, with respect
to any person or entity, another person or entity that, directly or
indirectly, (i) has a ten percent (10%) or more equity interest in
that person or entity, (ii) has ten percent (10%) or more common
ownership with that person or entity, (iii) Controls that person or
entity, or (iv) shares common control with that person or entity.
"Control" or "Controls" for purposes hereof means that a person or
entity has the power, direct or indirect, to conduct or govern the
policies of another person or entity.
i. Corporate Existence. The Company shall use its best efforts
to preserve and continue the corporate existence of the Company.
j. Indemnification. In consideration of the Purchaser's
execution and delivery of the this Agreement and acquiring the
Debentures hereunder and in addition to all of the Company's other
obligations under the Transaction Documents, the Company shall defend,
protect, indemnify and hold harmless the Purchaser and all of their
shareholders, officers, directors, employees and direct or indirect
investors and any of the foregoing person's agents or other
representatives (including, without limitation, those retained in
connection with the transactions contemplated by this Agreement)
(collectively, the "Indemnitees") from and against any and all
actions, causes of action, suits, claims, losses, costs, penalties,
fees, liabilities and damages, and expenses in connection therewith
(irrespective of whether any such Indemnitee is a party to the action
for which indemnification hereunder is sought), and including
reasonable attorneys' fees and disbursements ("Indemnified
Liabilities"), incurred by any Indemnitee as a result of, or arising
out of, or relating to (i) any misrepresentation or breach of any
representation or warranty made by the Company in the Transaction
Documents or any other certificate, instrument or document
contemplated hereby or thereby, (ii) any breach of any covenant,
agreement or obligation of the Company contained in the Transaction
Documents or any other certificate, instrument or document
contemplated hereby or thereby, (iii) any cause of action, suit or
claim brought or made against such Indemnitee by a third party and
arising out of or resulting from the execution, delivery, performance
or enforcement of the Transaction Documents or any other certificate,
instrument or document contemplated hereby or thereby, (iv) any
transaction financed or to be financed in whole or in part, directly
or indirectly, with the proceeds of the issuance of the Debentures or
(v) the status of the Purchaser as an investor in the Company, except
insofar as any such untrue statement, alleged untrue statement,
omission or alleged omission is made in reliance upon and in
conformity with written information furnished to the Company by the
Purchaser which is specifically intended by the Purchaser for use in
the preparation of any such Registration Statement, preliminary
prospectus or prospectus. To the extent that the foregoing undertaking
by the Company may be unenforceable for any reason, the Company shall
make the maximum contribution to the payment and satisfaction of each
of the Indemnified Liabilities which is permissible under applicable
law. The indemnity provisions contained herein shall be in addition to
any cause of action or similar rights the Purchaser may have, and any
liabilities to which the Purchaser may be subject.
k. Reimbursement. If (i) Purchaser, other than by reason of its
gross negligence or willful misconduct, becomes involved in any
capacity in any action, proceeding or investigation brought by any
shareholder of the Company, in connection with or as a result of the
consummation of the transactions contemplated by the Transaction
Documents, or if Purchaser is impleaded in any such action, proceeding
or investigation by any person, or (ii) Purchaser, other than by
reason of its gross negligence or willful misconduct or by reason of
its trading of the Common Stock in a manner that is illegal under the
federal securities laws, becomes involved in any capacity in any
action, proceeding or investigation brought by the SEC against or
involving the Company or in connection with or as a result of the
consummation of the transactions contemplated by the Transaction
Documents, or if Purchaser is impleaded in any such action, proceeding
or investigation by any person, then in any such case, the Company
will reimburse Purchaser for its reasonable legal and other expenses
(including the cost of any investigation and preparation) incurred in
connection therewith, as such expenses are incurred. In addition,
other than with respect to any matter in which Purchaser is a named
party, the Company will pay to Purchaser the charges, as reasonably
determined by Purchaser, for the time of any officers or employees of
Purchaser devoted to appearing and preparing to appear as witnesses,
assisting in preparation for hearings, trials or pretrial matters, or
otherwise with respect to inquiries, hearing, trials, and other
proceedings relating to the subject matter of this Subscription
Agreement. The reimbursement obligations of the Company under this
section shall be in addition to any liability which the Company may
otherwise have, shall extend upon the same terms and conditions to any
affiliates of Purchaser that are actually named in such action,
proceeding or investigation, and partners, directors, agents,
employees, attorneys, accountants, auditors and controlling persons
(if any), as the case may be, of Purchaser and any such affiliate, and
shall be binding upon and inure to the benefit of any successors of
the Company, Purchaser and any such affiliate and any such person.
5. LIMITATION ON AMOUNT OF CONVERSION AND OWNERSHIP.
Notwithstanding anything to the contrary in this Agreement,
in no event shall the Purchaser be entitled to convert any of the
Debentures to the extent that, after such conversion, that number of
shares of Common Stock, which when added to the sum of the number of
Debentures beneficially owned, (as such term is defined under Section
13(d) and Rule 13d-3 of the Securities Exchange Act of 1934 ("1934
Act")), by the Purchaser, would exceed four and ninety-nine hundredths
percent (4.99%) of the number of shares of Common Stock outstanding on
the Conversion Date (as that term is defined in the Debenture), as
determined in accordance with Rule 13d-1(j) of the 1934 Act. In no
event shall the Purchaser purchase shares of the Common Stock other
than pursuant to this Subscription Agreement and the Debenture until
such date as the Purchaser has fully converted the Debentures into
Common Stock.
6. OPINION LETTER/BOARD RESOLUTION
Prior to or on the Closing Date the Company shall deliver to the
Escrow Agent an opinion letter signed by counsel for the Company in the
form attached hereto as Exhibit C. Also, prior to or on the Closing
Date the Company shall deliver to the Escrow Agent a signed Board
Resolution authorizing this Offering.
7. DELIVERY INSTRUCTIONS; FEES
The Debentures being purchased hereunder shall be delivered to
Brian F. Faulkner, A Professional Law Corporation as Escrow Agent, who
will hold them in escrow until the Closing Date at which time funds
(less escrow fees, attorneys fees and placement fees) will be wired to
the Company and the Debentures will be delivered to the Purchaser, per
the Purchaser's instructions.
May Davis Group, Inc. shall receive a cash placement fee equal to
ten percent (10%) of the gross proceeds on each Closing Date and
unallocated expenses, which amount shall be paid upon closing directly
from escrow.
8. UNDERSTANDINGS.
The undersigned understands, acknowledges and agrees with the
Company as follows:
9. FOR ALL SUBSCRIBERS.
a. This Subscription may be rejected, in whole or in part, by
the Company in its sole and absolute discretion at any time before the
date set for closing unless the Company has given notice of acceptance
of the undersigned's subscription by signing this Subscription
Agreement and delivering it to Purchaser or May Davis Group, Inc.
b. No U.S. federal or state agency or any agency of any other
jurisdiction has made any finding or determination as to the fairness
of the terms of the Offering for investment nor any recommendation or
endorsement of the Debentures or the Company.
c. The representations, warranties and agreements of the
undersigned and the Company contained herein shall be true and correct
in all material respects on and as of the date of the sale of the
Debentures as if made on and as of such date and shall survive the
execution and delivery of this Subscription Agreement and the purchase
of the Debentures.
d. In making an investment decision, purchasers must rely on
their own examination of the company and the terms of the offering,
including the merits and risks involved. The shares have not been
recommended by any federal or state securities commission or
regulatory authority. Furthermore, the foregoing authorities have not
confirmed the accuracy or determined the adequacy of this document.
Any representation to the contrary is a criminal offense.
e. The Offering is intended to be exempt from registration by
virtue of Section 4(2) of the 1933 Act and the provisions of
Regulation D thereunder, which is in part dependent upon the truth,
completeness and accuracy of the statements made by the undersigned
herein and in the Offeree Questionnaire.
f. It is understood that in order not to jeopardize the
Offering's exempt status under Section 4(2) of the 1933 Act and
Regulation D, any purchaser may, at a minimum, be required to fulfill
the investor suitability requirements thereunder.
g. The shares may not be resold except as permitted under the
securities act and applicable state securities laws, pursuant to
registration or exemption therefrom. Purchasers should be aware that
they will be required to bear the financial risks of this investment
for an indefinite period of time.
10. SUBMISSION TO JURISDICTION
a. Forum Selection and Consent to Jurisdiction. Any litigation
based thereon, or arising out of, under, or in connection with, this
Agreement or any course of conduct, course of dealing, statements
(whether oral or written) or actions of the Company or Purchaser shall
be brought and maintained exclusively in the courts of the State of
Nevada. The Company hereby expressly and irrevocably submits to the
jurisdiction of the state and federal Courts of the State of Nevada
for the purpose of any such litigation as set forth above and
irrevocably agrees to be bound by any final judgment rendered thereby
in connection with such litigation. The Company further irrevocably
consents to the service of process by registered mail, postage
prepaid, or by personal service within or without the State of Nevada.
The Company hereby expressly and irrevocably waives, to the fullest
extent permitted by law, any objection which it may have or hereafter
may have to the laying of venue of any such litigation brought in any
such court referred to above and any claim that any such litigation
has been brought in any inconvenient forum. To the extent that the
Company has or hereafter may acquire any immunity from jurisdiction of
any court or from any legal process (whether through service or
notice, attachment prior to judgment, attachment in aid of execution
or otherwise) with respect to itself or its property. The Company
hereby irrevocably waives such immunity in respect of its obligations
under this agreement and the other loan documents.
b. Waiver of Jury Trial. The Purchaser and the Company
hereby knowingly, voluntarily and intentionally waive any rights they
may have to a trial by jury in respect of any litigation based hereon,
or arising out of, under, or in connection with, this agreement, or
any course of conduct, course of dealing, statements (whether oral or
written) or actions of the Purchaser or the Company. The Company
acknowledges and agrees that it has received full and sufficient
consideration for this provision and that this provision is a material
inducement for the Purchaser entering into this agreement.
c. Submission To Jurisdiction. Any legal action or proceeding
in connection with this Agreement or the performance hereof may be
brought in the state and federal courts located in New York, and the
parties hereby irrevocably submit to the non-exclusive jurisdiction of
such courts for the purpose of any such action or proceeding.
11. MISCELLANEOUS.
a. Any notices, consents, waivers or other communications
required or permitted to be given under the terms of this Subscription
Agreement must be in writing and will be deemed to have been delivered
(i) upon receipt, when delivered personally; (ii) upon receipt, when
sent by facsimile (provided a confirmation of transmission is
mechanically or electronically generated and kept on file by the
sending party); or (iii) one (1) day after deposit with a nationally
recognized overnight delivery service, in each case properly addressed
to the party to receive the same. The addresses and facsimile numbers
for such communications shall be:
If to the Company:
5G Wireless Communications, Inc.
1350 East Flamingo Road, Suite 414
Las Vegas, Nevada 89119
Attention: Jerry Dix, CEO
Facsimile: (310) 754-4004
With a copy to:
Brian F. Faulkner, A Professional Law Corporation
31877 Del Obispo Street, Suite 205
San Juan Capistrano, California 92675
Facsimile: (949) 240-1362
If to the Investor:
At the address listed in the Offeree Questionnaire.
If to May Davis Group, Inc.:
14 Wall Street, Suite 1615
New York, New York 10005
Attention: Michael Jacobs
Facsimile: (212) 871-9651
Each party shall provide five (5) business days prior notice to
the other party of any change in address, phone number or facsimile
number.
b. All pronouns and any variations thereof used herein shall be
deemed to refer to the masculine, feminine, impersonal, singular or
plural, as the identity of the person or persons may require.
c. Neither this Subscription Agreement nor any provision hereof
shall be waived, modified, changed, discharged, terminated, revoked or
canceled, except by an instrument in writing signed by the party
effecting the same against whom any change, discharge or termination
is sought.
d. Notices required or permitted to be given hereunder shall be
in writing and shall be deemed to be sufficiently given when
personally delivered or sent by facsimile transmission: (i) if to the
Company, at it's executive offices or (ii) if to the Purchaser, at the
address for correspondence set forth in the Offeree Questionnaire, or
at such other address as may have been specified by written notice
given in accordance with this paragraph.
e. This Subscription Agreement shall be enforced, governed and
construed in all respects in accordance with the laws of the State of
Nevada, as such laws are applied by Nevada courts to agreements
entered into, and to be performed in, Nevada, and shall be binding
upon the undersigned, the undersigned's heirs, estate and legal
representatives and shall inure to the benefit of the Company and its
successors. If any provision of this Subscription Agreement is
invalid or unenforceable under any applicable statue or rule of law,
then such provisions shall be deemed inoperative to the extent that it
may conflict therewith and shall be deemed modified to conform with
such statute or rule of law. Any provision hereof that may prove
invalid or unenforceable under any law shall not affect the validity
or enforceability of any other provision hereof.
f. This Agreement shall not be assignable.
g. This Subscription Agreement, together with Exhibits A, B, C,
and D attached hereto and made a part hereof, constitute the entire
agreement between the parties hereto with respect to the subject
matter hereof and may be amended only by a writing executed by both
parties hereto.
h. This Subscription Agreement may be executed in two or more
counterparts, all of which taken together shall constitute one
instrument. Execution and delivery of this Subscription Agreement by
exchange of facsimile copies bearing the facsimile signature of a
party shall constitute a valid and binding execution and delivery of
this Subscription Agreement by such party. Such facsimile copies
shall constitute enforceable original documents.
INVESTOR SIGNATURE PAGE
Your signature on this Signature Page evidences your agreement to
be bound by the Offeree Questionnaire and the Subscription Agreement.
1. The undersigned hereby represents that (a) the information
contained in the Offeree Questionnaire is complete and accurate and
(b) the undersigned will notify 5G Wireless Communications, Inc.
immediately if any material change in any of the information occurs
prior to the acceptance of the undersigned's subscription and will
promptly send 5G Wireless Communications, Inc. written confirmation of
such change.
2. The undersigned signatory hereby certifies that he/she has
read and understands the Subscription Agreement and Offeree
Questionnaire, and the representations made by the undersigned in the
Subscription Agreement and Offeree Questionnaire are true and accurate.
3. Upon closing please deliver the Debentures to May Davis
Group, Inc.
______________________________ ________________________
Amount of Debentures being purchased Date
By: _____________________
(Signature)
Name:
__________________
(Please Type or Print)
Title: ____________________
(Please Type or Print)
COMPANY ACCEPTANCE PAGE
This Subscription Agreement accepted and agreed
to this _____ day of _____________, 2003.
5G WIRELESS COMMUNICATIONS, INC.
By: ______________________________
Jerry Dix, CEO
EXHIBIT A
FORM OF DEBENTURE
THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS AND
ARE BEING OFFERED AND SOLD IN RELIANCE ON EXEMPTIONS FROM THE
REGISTRATION REQUIREMENTS OF SUCH LAWS. THE SECURITIES ARE SUBJECT TO
RESTRICTIONS OF TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED
OR RESOLD EXCEPT AS PERMITTED UNDER SUCH LAWS PURSUANT TO REGISTRATION
OR AN EXEMPTION THEREFROM. THE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY OTHER
REGULATORY AUTHORITY, NOR HAVE ANY OF THE FOREGOING AUTHORITIES PASSED
UPON OR ENDORSED THE MERITS OF THIS OFFERING OR THE ACCURACY OR
ADEQUACY OF THE OFFERING MATERIALS. ANY REPRESENTATION TO THE
CONTRARY IS UNLAWFUL.
AMOUNT $____________
DEBENTURE NUMBER ____________
ISSUANCE DATE ____________
MATURITY DATE ____________
FOR VALUE RECEIVED, 5G Wireless Communications, Inc., a Nevada
corporation (the "Company"), hereby promises to pay _______________
(the "Holder") on __________ (the "Maturity Date"), the principal
amount of _____________________ Dollars ($_______) U.S., and to pay
interest on the principal amount hereof, in such amounts, at such
times and on such terms and conditions as are specified herein.
Article 1. Interest
The Company shall pay interest on the unpaid principal amount of
this Debenture ("Debenture") at the time of each conversion until the
principal amount hereof is paid in full or has been converted. The
Debentures shall pay nine percent (9%) cumulative interest, in cash or
in shares of common stock, par value one tenth of one cent ($0.001)
per share, of the Company ("Common Stock"), at the Company's option,
at the time of each conversion. The closing shall be deemed to have
occurred on the date the funds (less placement fees, escrow fees and
attorney fees) are received by the Company ("Closing Date"). If the
interest is to be paid in cash, the Company shall make such payment
within five (5) business days of the date of conversion. If the
interest is to be paid in Common Stock, said Common Stock shall be
delivered to the Holder, or per Holder's instructions, within five (5)
business days of the date of conversion. The Debentures are subject to
automatic conversion at the end of three (3) years from the date of
issuance at which time all Debentures outstanding will be
automatically converted based upon the formula set forth in Section 3.2.
Article 2. Method of Payment; Secured Debenture
The principal amount of this Debenture is secured by shares
pledged as collateral pursuant to the terms of a Security Agreement.
This Debenture is a full recourse loan being made by the Holder and
the Company is liable for any deficiency.
This Debenture must be surrendered to the Company in order for
the Holder to receive payment of the principal amount hereof. The
Company shall have the option of paying the interest on this Debenture
in United States dollars or in Common Stock upon conversion pursuant
to Article 1 hereof. The Company may draw a check for the payment of
interest to the order of the Holder of this Debenture and mail it to
the Holder's address as shown on the Register (as defined in Section
7.2 below). Interest and principal payments shall be subject to
withholding under applicable United States Federal Internal Revenue
Service Regulations.
Article 3. Conversion
Section 3.1. Conversion Privilege
(a) The Holder of this Debenture shall have the right to convert
it into shares of Common Stock at any time and from time to time from
the Closing Date until a date which is one hundred eighty (180) days
from the Closing Date. The number of shares of Common Stock issuable
upon the conversion of this Debenture is determined pursuant to
Section 3.2 and rounding the result to the nearest whole share.
(b) Less than all of the principal amount of this Debenture may
be converted into Common Stock and the provisions of this Article 3
that apply to the conversion of all of the Debenture shall also apply
to the conversion of a portion of it. This Debenture may not be
converted, whether in whole or in part, except in accordance with
Article 3.
(c) In the event all or any portion of this Debenture remains
outstanding on the Maturity Date, the unconverted portion of such
Debenture will automatically be converted into shares of Common Stock
on such date in the manner set forth in Section 3.2.
Section 3.2. Conversion Procedure.
(a) Debentures. Upon receipt by the Company or its designated
attorney of a facsimile or original of Holder's signed Notice of
Conversion (See Exhibit B attached to the Subscription Agreement)
preceded by, together with or followed by receipt of the original
Debenture to be converted in whole or in part in the manner set forth
in 3.2(b) below, the Company shall instruct its transfer agent to
issue one or more Certificates representing that number of shares of
Common Stock into which the Debenture is convertible. The Company shall
act as Registrar and shall maintain an appropriate ledger containing
the necessary information with respect to each Debenture.
(b) Conversion Procedures. The face amount of this Debenture may
be converted, in whole or in part. Such conversion shall be
effectuated by surrendering to the Company, or its attorney, this
Debenture to be converted together with a facsimile or original of the
signed Notice of Conversion which evidences Holder's intention to
convert the Debenture indicated. The date on which the Notice of
Conversion is effective ("Conversion Date") shall be deemed to be the
date on which the Holder has delivered to the Company a facsimile or
original of the signed Notice of Conversion, as long as the original
Debenture(s) to be converted are received by the Company within three
(3) business days thereafter. Notwithstanding the above, any Notice of
Conversion not received by 5:00 P.M. EST, shall be deemed to have been
received the next business day.
(c) Common Stock to be Issued. Upon the conversion of any
Debentures and upon receipt by the Company or its attorney of a
facsimile or original of Holder's signed Notice of Conversion the
Company shall instruct its transfer agent to issue stock certificates
without restrictive legend or stop transfer instructions in such
denominations to be specified at conversion representing the number of
shares of Common Stock issuable upon such conversion, as applicable.
The Company warrants that no instructions, other than these
instructions, have been given or will be given to the transfer agent
and that the Common Stock shall otherwise be freely resold, except as
may be set forth herein.
(d) Conversion Rate. Holder is entitled to convert the face
amount of this Debenture, plus accrued interest, anytime following the
Closing Date but in accordance with paragraph 3.1 (a) above, at the one
hundred twenty-five percent (125%) of the closing bid price (as
reported by Bloomberg) on the Closing Date or (b) 60% of the lowest
closing bid price (as reported by Bloomberg) of the Company common
stock for the five days immediately preceding the date of conversion.
No fractional shares or scrip representing fractions of shares will be
issued on conversion, but the number of shares issuable shall be
rounded up or down, as the case may be, to the nearest whole share.
(e) Nothing contained in this Debenture shall be deemed to
establish or require the payment of interest to the Holder at a rate in
excess of the maximum rate permitted by governing law. In the event
that the rate of interest required to be paid exceeds the maximum rate
permitted by governing law, the rate of interest required to be paid
thereunder shall be automatically reduced to the maximum rate permitted
under the governing law and such excess shall be returned with
reasonable promptness by the Holder to the Company.
(f) It shall be the Company's responsibility to take all
necessary actions and to bear all such costs to issue the Common Stock
as provided herein, including the responsibility and cost for delivery
of an opinion letter to the transfer agent, if so required. The
person in whose name the certificate of Common Stock is to be
registered shall be treated as a shareholder of record on and after
the conversion date. Upon surrender of any Debentures that are to be
converted in part, the Company shall issue to the Holder a new
Debenture equal to the unconverted amount, if so requested in writing
by Holder.
(g) Within five (5) business days after receipt of the
documentation referred to above in Section 3.2(b), the Company shall
deliver a certificate, in accordance with Section 3.2(c) for the
number of shares of Common Stock issuable upon the conversion. In the
event the Company does not make delivery of the Common Stock, as
instructed by Holder, within five (5) business days after the
Conversion Date, then in such event the Company shall pay to Holder
one percent (1%) in cash, of the dollar value of the Debentures being
converted per each day after the fifth (5th) business day following
the Conversion Date that the Common Stock is not delivered to the
Purchaser.
The Company acknowledges that its failure to deliver the Common
Stock within five (5) business days after the Conversion Date will
cause the Holder to suffer damages in an amount that will be difficult
to ascertain. Accordingly, the parties agree that it is appropriate
to include in this Debenture a provision for liquidated damages. The
parties acknowledge and agree that the liquidated damages provision
set forth in this section represents the parties' good faith effort to
quantify such damages and, as such, agree that the form and amount of
such liquidated damages are reasonable and will not constitute a
penalty. The payment of liquidated damages shall not relieve the
Company from its obligations to deliver the Common Stock pursuant to
the terms of this Debenture.
Failure to issue unrestricted, freely tradable Common Stock to
the Holder(s) upon conversion shall be considered an Event of Default,
which if not cured within 10 days, shall entitle the Holder(s) to
accelerate full repayment of the Debentures then outstanding. The
Company acknowledges that the failure to honor a Notice of Conversion,
shall cause definable financial hardship on the Holder (s).
To the extent that the failure of the Company to issue the Common
Stock pursuant to this Section 3.2(g) is due to the unavailability of
authorized but unissued shares of Common Stock, the provisions of this
Section 3.2(g) shall not apply but instead the provisions of Section
3.2(h) shall apply.
The Company shall make any payments incurred under this Section
3.2(g) in immediately available funds within five (5) business days
from the date the Common Stock is fully delivered. Nothing herein
shall limit a Holder's right to pursue actual damages or cancel the
conversion for the Company's failure to issue and deliver Common Stock
to the Holder within five (5) business days after the Conversion Date.
(h) The Company shall at all times reserve (or make alternative
written arrangements for reservation or contribution of shares) and
have available all Common Stock necessary to meet conversion of the
Debentures by all Holders of the entire amount of Debentures then
outstanding. If, at any time Holder submits a Notice of Conversion and
the Company does not have sufficient authorized but unissued shares of
Common Stock (or alternative shares of Common Stock as may be
contributed by Stockholders) available to effect, in full, a
conversion of the Debentures (a "Conversion Default", the date of such
default being referred to herein as the "Conversion Default Date"),
the Company shall issue to the Holder all of the shares of Common
Stock which are available, and the Notice of Conversion as to any
Debentures requested to be converted but not converted ("Unconverted
Debentures"), may be deemed null and void upon written notice sent by
the Holder to the Company. The Company shall provide notice of such
Conversion Default ("Notice of Conversion Default") to all existing
Holders of outstanding Debentures, by facsimile, within three (3)
business day of such default (with the original delivered by
overnight or two (2) day courier), and the Holder shall give notice to
the Company by facsimile within five (5) business days of receipt of
the original Notice of Conversion Default (with the original delivered
by overnight or two (2) day courier) of its election to either nullify
or confirm the Notice of Conversion.
The Company agrees to pay to all Holders of outstanding
Debentures payments for a Conversion Default ("Conversion Default
Payments") in the amount of (N/365) x (.24) x the initial issuance
price of the outstanding and/or tendered but not converted Debentures
held by each Holder where N = the number of days from the Conversion
Default Date to the date ("Authorization Date") that the Company
authorizes a sufficient number of shares of Common Stock to effect
conversion of all remaining Debentures. The Company shall send notice
("Authorization Notice") to each Holder of outstanding Debentures that
additional shares of Common Stock have been authorized, the
Authorization Date and the amount of Holder's accrued Conversion
Default Payments. The accrued Conversion Default shall be paid in
cash or shall be convertible into Common Stock at the Conversion Rate,
upon written notice sent by the Holder to the Company, which
Conversion Default shall be payable as follows: (i) in the event
Holder elects to take such payment in cash, cash payments shall be
made to such Holder of outstanding Debentures by the fifth day of the
following calendar month, or (ii) in the event Holder elects to take
such payment in stock, the Holder may convert such payment amount into
Common Stock at the conversion rate set forth in section 3.2(d) at
anytime after the 5th day of the calendar month following the month in
which the Authorization Notice was received, until the expiration of
the mandatory three (3) year conversion period.
The Company acknowledges that its failure to maintain a
sufficient number of authorized but unissued shares of Common Stock to
effect in full a conversion of the Debentures will cause the Holder to
suffer damages in an amount that will be difficult to ascertain.
Accordingly, the parties agree that it is appropriate to include in
this Agreement a provision for liquidated damages. The parties
acknowledge and agree that the liquidated damages provision set forth
in this section represents the parties' good faith effort to quantify
such damages and, as such, agree that the form and amount of such
liquidated damages are reasonable and will not constitute a penalty.
The payment of liquidated damages shall not relieve the Company from
its obligations to deliver the Common Stock pursuant to the terms of
this Debenture. Nothing herein shall limit the Holder's right to
pursue actual damages for the Company's failure to maintain a
sufficient number of authorized shares of Common Stock.
(i) If, by the fifth (5th) business day after the Conversion
Date of any portion of the Debentures to be converted ("Delivery
Date"), the transfer agent fails for any reason to deliver the Common
Stock upon conversion by the Holder and after such Delivery Date, the
Holder purchases, in an open market transaction or otherwise, shares
of Common Stock ("Covering Shares") solely in order to make delivery
in satisfaction of a sale of Common Stock by the Holder ("Sold
Shares"), which delivery such Holder anticipated to make using the
Common Stock issuable upon conversion (a "Buy-In"), the Company shall
pay to the Holder, in addition to any other amounts due to Holder
pursuant to this Debenture, and not in lieu thereof, the Buy-In
Adjustment Amount (as defined below). The "Buy-In Adjustment Amount"
is the amount equal to the excess, if any, of (x) the Holder's total
purchase price (including brokerage commissions, if any) for the
Covering Shares over (y) the net proceeds (after brokerage
commissions, if any) received by the Holder from the sale of the Sold
Shares. The Company shall pay the Buy-In Adjustment Amount to the
Holder in immediately available funds within five (5) business days of
written demand by the Holder. By way of illustration and not in
limitation of the foregoing, if the Holder purchases shares of Common
Stock having a total purchase price (including brokerage commissions)
of eleven thousand dollars ($11,000) to cover a Buy-In with respect to
shares of Common Stock it sold for net proceeds of ten thousand
dollars ($10,000), the Buy-In Adjustment Amount which the Company will
be required to pay to the Holder will be one thousand dollars ($1,000).
(j) The Company shall furnish to Holder such number of
prospectuses and other documents incidental to the registration of the
shares of Common Stock underlying the Debentures, including any
amendment of or supplements thereto.
(k) Limitation on Issuance of Shares. If the Company's Common
Stock becomes listed on the Nasdaq Small Cap Market after the
issuance of the Debentures, the Company may be limited in the number
of shares of Common Stock it may issue by virtue of (X) the number of
authorized shares or (Y) the applicable rules and regulations of the
principal securities market on which the Common Stock is listed or
traded, including, but not necessarily limited to, NASDAQ Rule
4310(c)(25)(H)(i) or Rule 4460(i)(1), as may be applicable
(collectively, the "Cap Regulations"). Without limiting the other
provisions thereof, the Debentures shall provide that (i) the Company
will take all steps reasonably necessary to be in a position to issue
shares of Common Stock on conversion of the Debentures without
violating the Cap Regulations and (ii) if, despite taking such steps,
the Company still cannot issue such shares of Common Stock without
violating the Cap Regulations, the holder of a Debenture which cannot
be converted as result of the Cap Regulations (each such Debenture,
an "Unconverted Debenture") shall have the right to elect either of
the following remedies:
(i) if permitted by the Cap Regulations, require the
Company to issue shares of Common Stock in accordance with such
Holder's Notice of Conversion at a conversion purchase price
equal to the average of the closing bid price per share of Common
Stock for any five (5) consecutive trading days (subject to
certain equitable adjustments for certain events occurring during
such period) during the sixty (60) trading days immediately
preceding the Conversion Date; or
(ii) require the Company to redeem each Unconverted
Debenture for an amount (the "Redemption Amount"), payable in
cash, equal to the sum of (i) one hundred thirty percent (130%)
of the principal of an Unconverted Debenture, plus (ii) any
accrued but unpaid interest thereon through and including the
date ("Redemption Date") on which the Redemption Amount is paid
to the holder.
A holder of an Unconverted Debenture may elect one of the above
remedies with respect to a portion of such Unconverted Debenture and
the other remedy with respect to other portions of the Unconverted
Debenture. The Debentures shall contain provisions substantially
consistent with the above terms, with such additional provisions as
may be consented to by the Holder. The provisions of this section are
not intended to limit the scope of the provisions otherwise included
in the Debentures.
(l) Limitation on Amount of Conversion and Ownership.
Notwithstanding anything to the contrary in this Debenture, in no
event shall the Holder be entitled to convert that amount of
Debenture, and in no event shall the Company permit that amount of
conversion, into that number of shares, which when added to the sum of
the number of shares of Common Stock beneficially owned, (as such term
is defined under Section 13(d) and Rule 13d-3 of the Securities
Exchange Act of 1934, as may be amended, ("1934 Act")), by the Holder,
would exceed four and ninety-nine hundredths percent (4.99%) of the
number of shares of Common Stock outstanding on the Conversion Date,
as determined in accordance with Rule 13d-1(j) of the 1934 Act. In the
event that the number of shares of Common Stock outstanding as
determined in accordance with Section 13(d) of the 1934 Act is
different on any Conversion Date than it was on the Closing Date, then
the number of shares of Common Stock outstanding on such Conversion
Date shall govern for purposes of determining whether the Holder would
be acquiring beneficial ownership of more than four and ninety-nine
hundredths percent (4.99%) of the number of shares of Common Stock
outstanding on such Conversion Date.
(m) Legend. The Holder acknowledges that each certificate
representing the Debentures, and the Common Stock, shall be stamped or
otherwise imprinted with a legend substantially in the following form:
THE SECURITIES EVIDENCED BY THIS CERTIFICATE MAY NOT BE
OFFERED OR SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR
OTHERWISE DISPOSED OF EXCEPT (i) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, (ii) TO THE EXTENT APPLICABLE, RULE 144 UNDER THE
ACT (OR ANY SIMILAR RULE UNDER SUCH ACT RELATING TO THE
DISPOSITION OF SECURITIES), OR (iii) IF AN EXEMPTION FROM
REGISTRATION UNDER SUCH ACT IS AVAILABLE.
(n) Prior to conversion of all the Debentures and exercise of
all the Warrants, if at anytime the conversion of all the Debentures
and exercise of all the Warrants outstanding would result in an
insufficient number of authorized shares of Common Stock being
available to cover all the conversions, then in such event, the
Company will move to call and hold a shareholder's meeting or have
shareholder action with written consent of the proper number of
shareholders within thirty (30) days of such event, or such greater
period of time if statutorily required or reasonably necessary as
regards standard brokerage house and/or SEC requirements and/or
procedures, for the purpose of authorizing additional shares of Common
Stock to facilitate the conversions. In such an event management of
the Company shall recommend to all shareholders to vote their shares
in favor of increasing the authorized number of shares of Common
Stock. Management of the Company shall vote all of its shares of
Common Stock in favor of increasing the number of shares of authorized
Common Stock. Company represents and warrants that under no
circumstances will it deny or prevent Holder's right to convert the
Debentures as permitted under the terms of this Subscription
Agreement. Nothing in this Section shall limit the obligation of the
Company to make the payments set forth in Section 3.2(g). In the
event the Company's shareholder's meeting does not result in the
necessary authorization, the Company shall redeem the outstanding
Debentures for an amount equal to (x) the sum of the principal of the
outstanding Debentures plus accrued interest thereon multiplied by (y) 133%.
(o) Redemption. The Company shall be entitled to redeem the
unconverted portion of the Debentures by giving the Holder at least
three (3) calendar day written notice. The Holder shall be entitled
to convert the balance of the Debentures not being converted at
anytime prior to the Date of Redemption. The redemption amount shall
be one hundred thirty percent (130%) of the principal amount being
redeemed.
Section 3.3. Fractional Shares. The Company shall not issue
fractional shares of Common Stock, or scrip representing fractions of
such shares, upon the conversion of this Debenture. Instead, the
Company shall round up or down, as the case may be, to the nearest
whole share.
Section 3.4. Taxes on Conversion. The Company shall pay any
documentary, stamp or similar issue or transfer tax due on the issue
of shares of Common Stock upon the conversion of this Debenture.
However, the Holder shall pay any such tax which is due because the
shares are issued in a name other than its name.
Section 3.5. Company to Reserve Stock. The Company shall
reserve the number of shares of Common Stock required pursuant to and
upon the terms set forth in the Subscription Agreement to permit the
conversion of this Debenture. All shares of Common Stock which may be
issued upon the conversion hereof shall upon issuance be validly
issued, fully paid and nonassessable and free from all taxes, liens
and charges with respect to the issuance thereof.
Section 3.6. Restrictions on Sale. This Debenture has not been
registered under the Securities Act of 1933, as amended, (the "Act")
and is being issued under Section 4(2) of the Act and Rule 506 of
Regulation D promulgated under the Act. This Debenture and the Common
Stock issuable upon the conversion thereof may only be sold pursuant
to registration under or an exemption from the Act.
Section 3.7. Mergers, Etc. If the Company merges or
consolidates with another corporation or sells or transfers all or
substantially all of its assets to another person and the holders of
the Common Stock are entitled to receive stock, securities or property
in respect of or in exchange for Common Stock, then as a condition of
such merger, consolidation, sale or transfer, the Company and any such
successor, purchaser or transferee shall amend this Debenture to
provide that it may thereafter be converted on the terms and subject
to the conditions set forth above into the kind and amount of stock,
securities or property receivable upon such merger, consolidation,
sale or transfer by a holder of the number of shares of Common Stock
into which this Debenture might have been converted immediately before
such merger, consolidation, sale or transfer, subject to adjustments
which shall be as nearly equivalent as may be practicable to
adjustments provided for in this Article 3.
Article 4. Mergers
The Company shall not consolidate or merge into, or transfer all
or substantially all of its assets to, any person, unless such person
assumes in writing the obligations of the Company under this Debenture
and immediately after such transaction no Event of Default exists.
Any reference herein to the Company shall refer to such surviving or
transferee corporation and the obligations of the Company shall
terminate upon such written assumption.
Article 5. Reports
The Company will mail to the Holder hereof at its address as
shown on the Register a copy of any annual, quarterly or current
report that it files with the Securities and Exchange Commission
promptly after the filing thereof and a copy of any annual, quarterly
or other report or proxy statement that it gives to its shareholders
generally at the time such report or statement is sent to shareholders.
Article 6. Defaults and Remedies
Section 6.1. Events of Default. An "Event of Default" occurs if
(a) the Company does not pay one hundred thirty percent (130%) of the
principal amount of this Debenture, plus accrued but unpaid interest
and liquidated damages, if any, in full on or before the three hundred
sixty five (365) days following the Closing Date, (b) any of the
Company's representations or warranties contained in the Subscription
Agreement or this Debenture were false when made or the Company fails
to comply with any of its other agreements in the Subscription
Agreement or this Debenture and such failure continues for the period
and after the notice specified below, (c) the Company pursuant to or
within the meaning of any Bankruptcy Law (as hereinafter defined):
(i) commences a voluntary case; (ii) consents to the entry of an order
for relief against it in an involuntary case; (iii) consents to the
appointment of a Custodian (as hereinafter defined) of it or for all
or substantially all of its property or (iv) makes a general
assignment for the benefit of its creditors or (v) a court of
competent jurisdiction enters an order or decree under any Bankruptcy
Law that: (A) is for relief against the Company in an involuntary
case; (B) appoints a Custodian of the Company or for all or
substantially all of its property or (C) orders the liquidation of the
Company, and the order or decree remains unstayed and in effect for
sixty (60) calendar days, (e) the Company's Common Stock is suspended
or no longer listed on any recognized exchange, including electronic
over-the-counter bulletin board. for in excess of five (5) consecutive
trading days. As used in this Section 6.1, the term "Bankruptcy Law"
means Title 11 of the United States Code or any similar federal or
state law for the relief of debtors. The term "Custodian" means any
receiver, trustee, assignee, liquidator or similar official under any
Bankruptcy Law. A default under clause (c) above is not an Event of
Default until the holders of at least twenty-five percent (25%) of the
aggregate principal amount of the Debentures outstanding notify the
Company of such default and the Company does not cure it within thirty
(30) business days after the receipt of such notice, unless the
Company commences to cure such default within such period, which must
specify the default, demand that it be remedied and state that it is a
"Notice of Default".
Section 6.2. Acceleration. If an Event of Default occurs and is
continuing, the Holder hereof by notice to the Company, may declare
the remaining principal amount of this Debenture, together with all
accrued interest and any liquidated damages, to be due and payable.
Upon such declaration, the remaining principal amount shall be due and
payable immediately.
Section 6.3 Concerning Seniority. Except as disclosed in the
Company's SEC filings, no indebtedness of the Company is senior to
this Debenture in right of payment, whether with respect to interest,
damages or upon liquidation or dissolution or otherwise.
Section 6.4 Liquidation Value. The liquidation value of this
Debenture shall be equal to one hundred thirty percent (130%) of the
outstanding balance remaining on this Debenture plus accrued but
unpaid interest and liquidated damages.
Article 7. Registered Debentures
Section 7.1. Series. This Debenture is one of a numbered series
of Debentures which are identical except as to the principal amount
and date of issuance thereof. Such Debentures are referred to herein
collectively as the "Debentures". The Debentures shall be issued in
whole multiples of five thousand dollars ($5,000).
Section 7.2. Record Ownership. The Company, or its attorney,
shall maintain a register of the holders of the Debentures
("Register") showing their names and addresses and the serial numbers
and principal amounts of Debentures issued to them. The Register may
be maintained in electronic, magnetic or other computerized form. The
Company may treat the person named as the Holder of this Debenture in
the Register as the sole owner of this Debenture. The Holder of this
Debenture is the person exclusively entitled to receive payments of
interest on this Debenture, receive notifications with respect to this
Debenture, convert it into Common Stock and otherwise exercise all of
the rights and powers as the absolute owner hereof.
Section 7.3. Worn or Lost Debentures. If this Debenture becomes
worn, defaced or mutilated but is still substantially intact and
recognizable, the Company or its agent may issue a new Debenture in
lieu hereof upon its surrender. Where the Holder of this Debenture
claims that the Debenture has been lost, destroyed or wrongfully
taken, the Company shall issue a new Debenture in place of the
original Debenture if the Holder so requests by written notice to the
Company actually received by the Company before it is notified that
the Debenture has been acquired by a bona fide purchaser and the
Holder has delivered to the Company an indemnity bond in such amount
and issued by such surety as the Company deems satisfactory together
with an affidavit of the Holder setting forth the facts concerning
such loss, destruction or wrongful taking and such other information
in such form with such proof or verification as the Company may request.
Article 8. Notice.
Any notices, consents, waivers or other communications required
or permitted to be given under the terms of this Debenture must be in
writing and will be deemed to have been delivered (i) upon receipt,
when delivered personally; (ii) upon receipt, when sent by facsimile
(provided a confirmation of transmission is mechanically or
electronically generated and kept on file by the sending party); or
(iii) one (1) day after deposit with a nationally recognized overnight
delivery service, in each case properly addressed to the party to
receive the same. The addresses and facsimile numbers for such
communications shall be:
If to the Company:
5G Wireless Communications, Inc.
1350 East Flamingo Road, Suite 414
Las Vegas, Nevada 89119
Attention: Jerry Dix, CEO
Facsimile: (310) 754-4004
With a copy to:
Brian F. Faulkner, A Professional Law Corporation
31877 Del Obispo Street, Suite 205
San Juan Capistrano, California 92675
Facsimile: (949) 240-1362
If to the Investor:
At the address listed in the Offeree Questionnaire.
If to May Davis Group, Inc.:
14 Wall Street, Suite 1615
New York, New York 10005
Attention: Michael Jacobs
Facsimile: (212) 871-9651
Each party shall provide five (5) business days prior notice to
the other party of any change in address, phone number or facsimile
number.
Article 9. Time
Where this Debenture authorizes or requires the payment of money
or the performance of a condition or obligation on a Saturday or
Sunday or a public holiday, or authorizes or requires the payment of
money or the performance of a condition or obligation within, before
or after a period of time computed from a certain date, and such
period of time ends on a Saturday or a Sunday or a public holiday,
such payment may be made or condition or obligation performed on the
next succeeding business day, and if the period ends at a specified
hour, such payment may be made or condition performed, at or before
the same hour of such next succeeding business day, with the same
force and effect as if made or performed in accordance with the terms
of this Debenture. A "business day" shall mean a day on which the
banks in New York are not required or allowed to be closed.
Article 10. No Assignment
This Debenture shall not be assignable.
Article 11. Rules of Construction.
In this Debenture, unless the context otherwise requires, words
in the singular number include the plural, and in the plural include
the singular, and words of the masculine gender include the feminine
and the neuter, and when the sense so indicates, words of the neuter
gender may refer to any gender. The numbers and titles of sections
contained in the Debenture are inserted for convenience of reference
only, and they neither form a part of this Debenture nor are they to
be used in the construction or interpretation hereof. Wherever, in
this Debenture, a determination of the Company is required or allowed,
such determination shall be made by a majority of the Board of
Directors of the Company and if it is made in good faith, it shall be
conclusive and binding upon the Company and the Holder of this
Debenture.
Article 12. Governing Law
The validity, terms, performance and enforcement of this
Debenture shall be governed and construed by the provisions hereof and
in accordance with the laws of the State of Nevada applicable to
agreements that are negotiated, executed, delivered and performed
solely in the State of Nevada.
Article 13. Litigation
(a) Forum Selection and Consent to Jurisdiction. Any litigation
arising out of, under, or in connection with, this Debenture or any
course of conduct, course of dealing, statements (whether oral or
written) or actions of the Company or Holder shall be brought and
maintained exclusively in the courts of the State of Nevada. The
Company hereby expressly and irrevocably submits to the jurisdiction
of the state and federal courts of the State of Nevada for the purpose
of any such litigation as set forth above and irrevocably agrees to be
bound by any final judgment rendered thereby in connection with such
litigation. The Company further irrevocably consents to the service
of process by registered mail, postage prepaid, or by personal service
within or without the State of Nevada. The Company hereby expressly
and irrevocably waives, to the fullest extent permitted by law, any
objection which it may have or hereafter may have to the laying of
venue of any such litigation brought in any such court referred to
above and any claim that any such litigation has been brought in any
inconvenient forum. To the extent that the Company has or hereafter
may acquire any immunity from jurisdiction of any court or from any
legal process (whether through service or notice, attachment prior to
judgment, attachment in aid of execution or otherwise) with respect to
itself or its property, the Company hereby irrevocably waives such
immunity in respect of its obligations under this Debenture.
(b) Waiver of Jury Trial. The Holder and the Company hereby
knowingly, voluntarily and intentionally waive any rights they may
have to a trial by jury in respect of any litigation based hereon, or
arising out of, under, or in connection with, this Debenture, or any
course of conduct, course of dealing, statements (whether oral or
written) or actions of the Holder or the Company. The Company
acknowledges and agrees that it has received full and sufficient
consideration for this provision and that this provision is a material
inducement for the Holder purchasing this Debenture.
(c) Governing Law. The terms of this Debenture shall be
governed by and construed and enforced in accordance with the laws of
the State of Nevada without regard to the conflicts of laws principles
thereof.
IN WITNESS WHEREOF, the Company has duly executed this Debenture
as of the date first written above.
5G WIRELESS COMMUNICATIONS, INC.
By: __________________________________
Name: Jerry Dix
Title: CEO
EXHIBIT B
FORM OF NOTICE OF CONVERSION
(To be Executed by the Registered Owner in order to Convert Debenture)
The undersigned hereby irrevocably elects, as of
________________, to convert $________________ of its convertible
debenture ("Debenture") into Common Stock of 5G Wireless
Communications, Inc., a Nevada corporation ("Company") according to
the conditions set forth in the Debenture issued by the Company. This
conversion is being made for an immediate sale.
Date of Conversion________________________________________________
Market Closing Price______________________________________________
Applicable Conversion Price________________________________________
Number of Debentures Issuable upon this
Conversion_______________________
Name(Print)_____________________________________________________
Address________________________________________________________
Phone_________________________ Fax______________________________
By:_______________________________________
EXHIBIT C
FORM OF OPINION
Purchasers of [Company] [Describe Securities] _______________, 2003
Re: [Company]
Ladies and Gentlemen:
We have acted as counsel to 5G Wireless Communications, Inc., a
corporation incorporated under the laws of the State of Nevada
("Company"), in connection with the proposed issuance and sale of
convertible debentures ("Securities") pursuant to the related
Subscription Agreement (including all exhibits and appendices thereto)
(collectively "Agreements").
In connection with rendering the opinions set forth herein, we
have examined drafts of the Agreement, the Company's Certificate of
Incorporation, and its Bylaws, as amended to date [other documents -
describe], the proceedings of the Company's Board of Directors taken
in connection with entering into the Agreements, and such other
documents, agreements and records as we deemed necessary to render the
opinions set forth below.
In conducting our examination, we have assumed the following:
(i) that each of the Agreements has been executed by each of the
parties thereto in the same form as the forms which we have examined,
(ii) the genuineness of all signatures, the legal capacity of natural
persons, the authenticity and accuracy of all documents submitted to
us as originals, and the conformity to originals of all documents
submitted to us as copies, (iii) that each of the Agreements has been
duly and validly authorized, executed and delivered by the party or
parties thereto other than the Company, and (iv) that each of the
Agreements constitutes the valid and binding agreement of the party or
parties thereto other than the Company, enforceable against such party
or parties in accordance with the Agreements' terms.
Based upon the subject to the foregoing, we are of the opinion
that:
1. The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of Nevada, is duly qualified to do business as a foreign corporation
and is in good standing in all jurisdictions where the Company owns or
leases properties, maintains employees or conducts business, except
for jurisdictions in which the failure to so qualify would not have a
material adverse effect on the Company, and has all requisite
corporate power and authority to own its properties and conduct its
business.
2. The authorized capital stock of the Company consists of
800,000,000 shares of Common Stock, $0.001 par value per share,
("Common Stock") and 10,000,000 Preferred Stock, par value $0.001 per share;
3. The Common Stock is registered pursuant to Section 12(g) of
the Securities Exchange Act of 1934, as amended and the Company has
timely filed all the material required to be filed pursuant to
Sections 13(a) or 15(d) of such Act for a period of at least twelve
months preceding the date hereof;
4. When duly countersigned by the Company's transfer agent and
registrar, and delivered to you or upon your order against payment of
the agreed consideration therefor in accordance with the provisions of
the Agreements, the Securities [and any Common Stock to be issued upon
the conversion of the Securities] as described in the Agreements
represented thereby will be duly authorized and validly issued, fully
paid and nonassessable;
5. The Company has the requisite corporate power and authority
to enter into the Subscription Agreement and to sell and deliver the
Securities and the Common Stock to be issued upon the conversion of
the Securities as described in the Agreements; each of the Agreements
has been duly and validly authorized by all necessary corporate action
by the Company to our knowledge, no approval of any governmental or
other body is required for the execution and delivery of each of the
Agreements by the Company or the consummation of the transactions
contemplated thereby; each of the Agreements has been duly and validly
executed and delivered by and on behalf of the Company, and is a valid
and binding agreement of the Company, enforceable in accordance with
its terms, except as enforceability may be limited by general
equitable principles, bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or other laws affecting creditors rights
generally, and except as to compliance with federal, state, and
foreign securities laws, as to which no opinion is expressed;
6. To the best of our knowledge, after due inquiry, the
execution, delivery and performance of the Subscription Agreement and
Securities by the Company and the performance of its obligations
thereunder do not and will not constitute a breach or violation of any
of the terms and provisions of, or constitute a default under or
conflict with or violate any provision of (i) the Company's
Certificate of Incorporation or By-Laws, (ii) any indenture, mortgage,
deed of trust, agreement or other instrument to which the Company is
party or by which it or any of its property is bound, (iii) any
applicable statute or regulation or as other, (iv) or any judgment,
decree or order of any court or governmental body having jurisdiction
over the Company or any of its property.
7. The issuance of Common Stock upon conversion of the
Securities in accordance with the terms and conditions of the
Securities and the Subscription Agreement, will not violate the
applicable listing agreement between the Company and any securities
exchange or market on which the Company's securities are listed.
8. To the best of our knowledge, after due inquiry, there is no
pending or threatened litigation, investigation or other proceedings
against the Company [except as described in Exhibit A hereto].
This opinion is rendered only with regard to the matters set out
in the numbered paragraphs above. No other opinions are intended nor
should they be inferred. This opinion is based solely upon the laws
of the United States and the State of Nevada and does not include an
interpretation or statement concerning the laws of any other state or
jurisdiction. Insofar as the enforceability of the Subscription
Agreement and Securities may be governed by the laws of other states,
we have assumed that such laws are identical in all respects to the
laws of the State of Nevada.
The opinions expressed herein are given to you solely for your
use in connection with the transaction contemplated by the
Subscription Agreement and Securities and may not be relied upon by
any other person or entity or for any other purpose without our prior consent.
Very truly yours,
By: _____________________
EXHIBIT D
SUBSCRIPTION PROCEDURES
Convertible Debentures of 5G Wireless Communications, Inc. (the
"Company") are being offered ("Debentures"). This offering is being
made in accordance with the exemptions from registration provided for
under Section 4(2) of the Securities Act of 1933, as amended (the
"1933 Act") and Rule 506 of Regulation D promulgated under the 1933 Act.
In order to purchase Debentures, each subscriber must complete
and execute an offeree questionnaire ("Offeree Questionnaire") and a
subscription agreement ("Subscription Agreement"). In addition, the
subscriber must make a payment to an escrow fund for the amount being
purchased. All subscriptions are subject to acceptance by the
Company, which shall not occur until the Company has returned the
signed Company Signature Page.
The Offeree Questionnaire is designed to enable the Purchaser to
demonstrate the minimum legal requirements under federal and state
securities laws to purchase the Debentures. The Signature Page for
the Offeree Questionnaire and the Subscription Agreement contain
representations relating to the subscription and should be reviewed
carefully by each subscriber.
If you are a foreign person or foreign entity, you may be subject
to a withholding tax equal to 30% of any dividends paid by the
Company. In order to eliminate or reduce such withholding tax you
must submit a properly executed I.R.S. Form 4224 (Exemption from
Withholding of Tax on Income Effectively Connected with the Conduct of
a Trade or Business in the United States) or I.R.S. Form 1001
(Ownership Exemption or Reduced Trade Certificate), claiming exemption
from withholding or eligibility for treaty benefits in the form of a
lower rate of withholding tax on interest or dividends.
Payment must be made by wire transfer to Brian F. Faulkner, A
Professional Law Corporation Trust Account ("Escrow Agent") per the
wire instructions that will be established. In the event of a
termination of the offering or the rejection of a subscription,
subscription funds will be returned by the Escrow Agent without
interest or charges.
OFFEREE QUESTIONNAIRE
(All Information Will Be Treated Confidentially)
, 2003
Mr. Jerry Dix, President
5G Wireless Communications, Inc.
1350 East Flamingo Road, Suite 414
Las Vegas, Nevada 89119
Dear Mr. Dix:
The information contained in this Offeree Questionnaire if being
furnished to you in order to determine whether the offer of debentures
("Debentures") in a corporation known as 5G Wireless Communications,
Inc., a Nevada corporation ("Company"), may be made to the undersigned
pursuant to Section 4(2) Securities act of 1933, as amended ("Act"),
and Regulation D promulgated thereunder by the Securities and Exchange
Commission, relating to transactions involving a limited offering and
sale of securities, and similar provisions under states securities
laws and regulations. The undersigned understand that to: (i) you
will rely upon information contained herein for purposes of such
determination; (ii) the Debentures, and the underlying shares of
common stock, will not be registered under the Act in reliance upon
the exemptions from registration provided by Section 4(2) of the Act;
(iii) the Debentures, and the underlying shares of common stock, also
not be registered under any state securities laws reliance upon
similar exemptions from registration provided by state securities laws
and regulations; and (iv) this Offeree Questionnaire is not offer of
the Debentures or any other securities to the undersigned.
I herewith furnish you with the following representations and
information:
Please initial, as applicable, in the space provided:
1. I have (by myself or together with my offeree representative,
such knowledge and experience in financial and business matters to
be capable of evaluating the merits and risks of the proposed investment.
2. I can bear the economic risks of the investment (I can afford
a complete loss).
3. I am acquiring the Debentures for investment and not with a
view to resale or distribution thereof.
4. I qualify as an "accredited investor," as defined in Section
501(a) of Regulation D of Section 4 (2) of the Act, and similar
provisions under state securities laws and regulations; that is:
(a) I have a net worth (or joint net worth with my spouse) in
excess of $1,000,000, including my (our) home, furnishings, and
automobiles; or
(b) I have had an individual gross income in excess of $200,000
in each of the last two years, or joint income with my spouse in
excess of $300,000 in each of those years, and have a reasonable
expectation of reaching the same income level in the current year.
5. I understand that you may require me to use the services
of an offeree representative(s) in connection herewith. I acknowledge
the following named person to be my offeree representative in
connection with evaluating merits and risks of an investment in the
Debentures.
List name of Offeree Representative(s):
____________________________________________
The above named Offeree Representative(s) has (have) such knowledge
experience in financial and business matters that he (they) is (are)
capable of evaluating merits and risks of an investment in the
Debentures. IF YOU HAVE INITIALED BOX #5, THIS OFFEREE QUESTIONNAIRE
MUST BE ACCOMPANIED BY A COMPLETED IN SIGNED OFFEREE REPRESENTATIVE
QUESTIONNAIRE.
II The undersigned is a person who was able to bear the economic risk
of an investment in the Debentures of the size which you intend to
offer. In making this statement, consideration has been given to
whether the undersigned could afford to hold the Debentures for an
indefinite period, or whether, at this time, the undersigned could
afford a complete loss. The undersigned offers as evidence of ability
to bear the economic risk the information set forth in this Offeree
Questionnaire.
III. Except as indicated below, any purchase of the Debentures will be
solely for the account of the undersigned, and not for the account of
any other person or with a view to any resale or distribution thereof.
(State "No Exceptions" or set forth exceptions and give details)
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
IV. The undersigned represents to you that: (a) the information
contained herein is complete and accurate and may be relied upon by
you; and (b) the undersigned will notify you immediately of any
material change in any of such information occurring prior to the
closing of the purchase of the Debentures, if any, by the undersigned.
INFORMATION REQUIRED OF EACH PROSPECTIVE INVESTOR*
1. Name:_______________________________________________________
Age:__________
2. Residence address and telephone number:
______________________________________________________________________
3. Employer and position:
_______________________________________________________
4. Business address and telephone number:
______________________________________________________________________
5. Business or professional education and degree(s) received are as
follows:
School
Degree Year Received
______________________________________________________________________
______________________________________________________________________
6. Prior employment, positions or occupation during the past five
years (and the inclusive dates of each) are as follows:
Employment, Position, or Occupation Nature of Duties From To
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
7. Estimated gross income for 2003 (check appropriate range): $30,000
to $50,000 ; over $50,000 to $75,000 ; over
$75,000 to $100,000 ; over $100,000 to $150,000 ;
over $150,000 to $200,000 ; over $200,000 to $250,000
over $250,000 .
8. Estimated total net worth, exclusive of home furnishings, and
automobiles (check appropriate range): $30,000 to $50,000 ;
over $50,000 to $75,000 ; over $75,000 to $100,000 ; over
$100,000 to $150,000 ; over $150,000 to $200,000 ;
over $200,000 to $250,000 ; over $250,000 .
9. Securities investments to date are as follows:
Nature of Investment
Amount Invested
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
10.Other investments to date are as follows:
Nature of Property
Amount Invested
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
11. The undersigned has previously purchased securities which were
sold in reliance on the limited offering exemption from registration
under the Act: Yes: ; No: .
IN WITNESS WHEREOF, I have executed this Offeree Questionnaire this
day of
________________, 2003, and declare under oath that it is truthful and
correct.
____________________________________
Signature of Prospective Offeree
* Attach additional pages if necessary to fully answer any question