Exhibit 4.1
FORM OF
WIRELESS FRONTIER INTERNET, INC.
SUBSCRIPTION AGREEMENT
Wireless Frontier Internet, Inc.
104 West Callaghan Street
Fort Stockton, Texas 79735
Attention: Alex Gonzalez, Chairman and CEO
Ladies and Gentlemen:
1. Subscription. The undersigned (the "Purchaser"), intending to be
legally bound, hereby agrees to purchase from Wireless Frontier Internet, Inc.
(the "Company") investment units (the "Units") in the amount set forth on the
signature page hereof. Each Unit consists of one (1) share (the "Shares") of
common stock, par value $0.001 per share, of the Company (the "Common Stock")
and (ii) one five-year warrant (the "Warrant") in the form annexed to the
Memorandum (as defined below), as Exhibit B to purchase one-half of one share
(the "Warrant Shares") of Common Stock. The offering price per Unit shall be
equal to $0.15 per Unit. The total amount of gross proceeds from the sale of
Units in the Offering shall be a and a maximum of $5,000,000 of Units. The
Shares and Warrants are collectively referred to herein as the "Securities".
The terms of the Offering are more completely described in the
Company's Confidential Private Placement Memorandum dated June 18, 2004 (the
"Memorandum"), as amended and supplemented, and such terms are incorporated
herein in their entirety. Certain terms used but not otherwise defined herein
shall have the respective meanings provided in the Memorandum.
2. Payment. The Purchaser encloses herewith a check payable to, or
will immediately make a wire transfer payment to "Independence Bank as Escrow
Agent for Wireless Frontier Internet, Inc." in the full amount of the purchase
price of the Units being subscribed for. Such funds will be held for the
Purchaser's benefit, and will be returned promptly, without interest, penalty,
expense or deduction if this Subscription Agreement is not accepted by the
Company or the Offering is terminated pursuant to its terms or by the Company.
Together with the check for, or the wire transfer of, the full purchase price,
the Purchaser is delivering a completed and executed signature page of this
Subscription Agreement and a fully completed Accredited Investor Certification
in the form contained herein.
3. Acceptance of Subscription. The Purchaser understands and agrees
that the Company and the Placement Agent reserve the right to accept or reject
this or any other subscription for Units, in whole or in part, and in any order,
notwithstanding prior receipt by the Purchaser of notice of acceptance of this
subscription. The Company shall have no obligation hereunder until the Company
shall execute and deliver to the Purchaser an executed copy of this Subscription
Agreement. If this subscription is rejected in whole or the Offering is
terminated, all funds received from the Purchaser will be returned without
interest, penalty, expense or deduction, and this Subscription Agreement shall
thereafter be of no further force or effect. If this subscription is rejected in
part, and in any order, the funds for the rejected portion of this subscription
will be returned without interest, penalty, expense or deduction, and this
Subscription Agreement will continue in full force and effect to the extent this
subscription was accepted.
4. Representations and Warranties.
(A) The Purchaser hereby represents and warrants to, and
acknowledges and agrees with, the Company as follows:
(a) Neither the Securities, nor the Warrant Shares, are
registered under the Securities Act of 1933, as amended (the "Securities Act"),
or any state securities laws. The Purchaser understands that the Securities are
being offered to it in reliance upon specific exemptions from the registration
requirements of the Securities Act, and that the Company is relying upon the
truth and accuracy of, and the Purchaser's compliance with, the representations,
warranties and agreements of the Purchaser contained in this Subscription
Agreement to determine the availability of such exemptions and the eligibility
of the Purchaser to acquire the Securities;
(b) The Purchaser has received the Memorandum and all other
documents it deems relevant in making an informed decision to purchase the
Securities, has carefully reviewed them and understands the information
contained therein, and the Purchaser, prior to the execution of this
Subscription Agreement, has had access to the same kind of information which
would be available in a registration statement filed by the Company under the
Securities Act;
(c) Neither the Securities and Exchange Commission nor any
state securities commission has approved the Units or any of the Securities or
the Warrant Shares, or passed upon or endorsed the merits of the Offering or
confirmed the accuracy or determined the adequacy of the Memorandum. The
Memorandum has not been reviewed by any Federal, state or other regulatory
authority;
(d) All documents, records and books pertaining to the
investment in the Units (including, without limitation, the Memorandum) that the
Purchaser deems relevant in making an informed decision to purchase the
Securities have been made available for inspection by the Purchaser;
(e) 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 of the Units and the business, financial
condition, results of operations and prospects of the Company, and all such
questions have been answered to the full satisfaction of the Purchaser;
(f) In evaluating the suitability of an investment in the
Company, the Purchaser has not relied upon any representation or other
information (oral or written) other than as stated in the Memorandum and this
Subscription Agreement;
(g) The Purchaser is unaware of, is in no way relying on,
and did not become aware of the offering of the Units through or as a result of,
any form of general solicitation or general advertising including, without
limitation, any article, notice, advertisement or other communication published
in any newspaper, magazine or similar media or broadcast over television or
radio, in connection with the offering and sale of the Units and is not
subscribing for Units and did not become aware of the offering of the Units
through or as a result of any seminar or meeting to which the Purchaser was
invited by, or any solicitation of a subscription by, a person not previously
known to the Purchaser in connection with investments in securities generally;
(h) The Purchaser has taken no action which would give rise
to any claim by any person for brokerage commissions, finders' fees or the like
relating to this Subscription Agreement or the transactions contemplated hereby
(other than amounts to be paid by the Company to the Placement Agent);
(i) The Purchaser has such knowledge and experience in
financial, tax, and business matters, and, in particular, investments in
securities, so as to enable it to utilize the information made available to them
in connection with the offering of the Units to evaluate the merits and risks of
an investment in the Units and the Company and to make an informed investment
decision with respect thereto;
(j) The Purchaser is not relying on the Company or any of
its employees or agents with respect to the legal, tax, economic and related
considerations as to an investment in the Units, and the Purchaser has relied on
the advice of, or has consulted with, only his own advisors as it deems
necessary or advisable;
(k) The Purchaser is acquiring the Units solely for the
Purchaser's own account for investment and not with a view to resale, assignment
or distribution thereof, in whole or in part. The Purchaser has
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no agreement or arrangement, formal or informal, with any person to sell or
transfer all or any part of the Units, Securities contained in the Units, or the
Warrant Shares, and the Purchaser has no plans to enter into any such agreement
or arrangement;
(l) The Purchaser must bear the substantial economic risks
of the investment in the Units indefinitely because none of the Securities may
be sold, hypothecated or otherwise disposed of unless subsequently registered
under the Securities Act and applicable state securities laws or an exemption
from such registration is available. Legends shall be placed on the securities
included in the Units to the effect that they have not been registered under the
Securities Act or applicable state securities laws and appropriate notations
thereof will be made in the Company's stock books. Stop transfer instructions
will be placed with the transfer agent of the securities constituting the Units.
Although the Company has the contractual obligation to register for resale the
Shares and the Warrant Shares (as set forth in the Registration Rights
Agreement, substantially in the form attached to the Memorandum as Exhibit C
(the "Registration Rights Agreement")), there can be no assurance that such
registration will be completed within the time frames required by the Company,
or at all. It is not anticipated that there will be any market for resale of the
Units, the Securities or the Warrant Shares, and the Units, the Securities and
the Warrant Shares will not be freely transferable at any time in the
foreseeable future, if at all;
(m) The Purchaser has adequate means of providing for the
Purchaser's current financial needs and foreseeable contingencies and has no
need for liquidity of the investment in the Units for an indefinite period of
time;
(n) The Purchaser is aware that an investment in the Units
involves a number of very significant risks and has carefully read and
considered the matters set forth under the caption "Risk Factors" in the
Memorandum;
(o) The Purchaser meets the requirements of at least one of
the suitability standards for an "accredited investor" as set forth on the
Accredited Investor Certification contained herein;
(p) The Purchaser: (i) if a natural person, represents that
the Purchaser has reached the age of 21 and has full power and authority to
execute and deliver this Subscription Agreement and all other related agreements
or certificates and to carry out the provisions hereof and thereof; (ii) if a
corporation, partnership, limited liability company or partnership, association,
joint stock company, trust, unincorporated organization or other entity, such
entity was not formed for the specific purpose of acquiring the Units, such
entity is duly organized, validly existing and in good standing under the laws
of the state of its organization, the consummation of the transactions
contemplated hereby is authorized by, and will not result in a violation of
state law or its charter or other organizational documents, such entity has full
power and authority to execute and deliver this Subscription Agreement and all
other related agreements or certificates and to carry out the provisions hereof
and thereof and to purchase and hold the securities constituting the Units, the
execution and delivery of this Subscription Agreement has been duly authorized
by all necessary action, this Subscription Agreement has been duly executed and
delivered on behalf of such entity and is a legal, valid and binding obligation
of such entity; and (iii) if executing this Subscription Agreement in a
representative or fiduciary capacity, it has full power and authority to execute
and deliver this Subscription Agreement in such capacity and on behalf of the
subscribing individual, ward, partnership, trust, estate, corporation, limited
liability company or limited liability partnership, or other entity for whom the
Purchaser is executing this Subscription Agreement, and such individual, ward,
partnership, trust, estate, corporation, limited liability company or
partnership, or other entity has full right and power to perform pursuant to
this Subscription Agreement and make an investment in the Company, and that this
Subscription Agreement constitutes a legal, valid and binding obligation of such
entity. The execution and delivery of this Subscription Agreement will not
violate or be in conflict with any order, judgment, injunction, agreement or
controlling document to which the Purchaser is a party or by which it is bound;
(q) The Purchaser has had the opportunity to obtain any
additional information that it deemed necessary to verify the accuracy of the
information contained in the Memorandum and all documents received or reviewed
in connection with the purchase of the Units and has had the opportunity to have
representatives of the Company provide it with such additional information
regarding the terms and conditions of
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this particular investment and the financial condition, results of operations,
business and prospects of the Company deemed relevant by the Purchaser and all
such requested information has been provided to its full satisfaction;
(r) The Purchaser represents to the Company that any
information which the undersigned has heretofore furnished or furnishes herewith
to the Company is complete and accurate and may be relied upon by the Company in
determining the availability of an exemption from registration under Federal and
state securities laws in connection with the offering of Units as described in
the Memorandum. The Purchaser further represents and warrants that it will
notify and supply corrective information to the Company immediately upon the
occurrence of any change therein occurring prior to the Company's issuance of
the securities contained in the Units; provided, that the Purchaser shall
provide to the Company a completed copy of any purchaser questionnaires
reasonably requested by the Company in connection with the preparation by the
Company of any registration statement covering the resale of the Shares and the
Warrant Shares as provided in the Registration Rights Agreement;
(s) The Purchaser has a sufficient net worth to sustain a
complete loss of its entire investment in the Company in the event such a loss
should occur. The Purchaser's overall commitment to investments which are not
readily marketable is not excessive in view of its net worth and financial
circumstances and the purchase of the Units will not cause such commitment to
become excessive. The investment is a suitable one for the Purchaser;
(t) The Purchaser's principal executive offices (if an
entity) or home address (if an individual) are in the jurisdiction set forth
immediately below the Purchaser's name on the signature pages hereto;
(u) The Purchaser understands that the components of the
Units shall bear a restrictive legend in substantially the following form:
"THE UNITS AND THEIR COMPONENTS OFFERED HEREBY HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS
OF CERTAIN STATES AND ARE BEING OFFERED AND SOLD IN RELIANCE ON EXEMPTIONS FROM
THE REGISTRATION REQUIREMENTS OF SAID ACT AND SUCH LAWS. THE SECURITIES ARE
SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED
OR RESOLD IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE
SECURITIES UNDER THE SECURITIES ACT, OR AN OPINION OF COUNSEL IN FORM, SUBSTANCE
AND SCOPE REASONABLY ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT
REQUIRED UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS OR UNLESS
SOLD PURSUANT TO RULE 144 UNDER THE SECURITIES ACT. THE SECURITIES HAVE NOT BEEN
APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION, ANY STATE
SECURITIES 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 MEMORANDUM. ANY REPRESENTATION TO THE CONTRARY IS
UNLAWFUL."
(v) The Purchaser acknowledges that it may not, except in
compliance with the Securities Act, and the rules and regulations promulgated
thereunder, and such other securities or Blue Sky laws as may be applicable,
directly or indirectly, offer, sell, pledge, transfer or otherwise dispose of
(or solicit any offers to buy, purchase or otherwise acquire or take a pledge
of) any of the Securities or engage in any Short Sale (as defined below);
(w) Neither the Purchaser nor any affiliate of the Purchaser
(as defined in Rule 405 of the Securities Act (each a "Purchaser/Affiliate") and
which (i) had knowledge about the transactions contemplated hereby, (ii) has or
shares discretion relating to the Purchaser's investments or trading or
information concerning Purchaser's investments, including the Units, or (iii) is
subject to the Purchaser's review or input concerning such
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Purchaser/Affiliate's investments or trading) has or will, directly or
indirectly, during the period beginning on the date on which the Purchaser was
first notified that the Company intended to engage in the transactions
contemplated by this Agreement and ending on the date that the Company files a
Current Report on Form 8-K or issues a press release describing the material
terms of the transaction contemplated by this Subscription Agreement engage (A)
in any "short sale" (as defined in Rule 3b-3 promulgated under the Exchange
Act), including, without limitation, the maintaining of any short position with
respect to, establishing or maintaining a "put equivalent position" (within the
meaning of Rule 16a-1(h) under the Exchange Act) with respect to, entering into
any swap, derivative transaction or other arrangement (whether any such
transaction is to be settled by delivery of Common Stock, other securities, cash
or other consideration) that transfers to another, in whole or in part, any of
the economic consequences of ownership, or otherwise dispose of, any of the
Securities by the Purchaser or (B) in any hedging transaction which establishes
a net short position with respect to the Securities (clauses (A) and (B)
together, a "Short Sale"); except for (1) Short Sales by a Purchaser/Affiliate
which was, prior to the date on which the Purchaser was first notified that the
Company intended to engage in the transactions contemplated by this Agreement, a
market maker for the Common Stock, provided that such Short Sales are in the
ordinary course of such Purchaser/Affiliate's business and are in compliance
with the Securities Act, and the rules and regulations promulgated thereunder,
and such other securities or Blue Sky laws as may be applicable or (2) Short
Sales by a Purchaser/Affiliate which by virtue of the procedures of the
Purchaser are made without knowledge of the transactions contemplated in this
Agreement and were not induced or encouraged by the Purchaser.
(B) The Company hereby represents and warrants to, and acknowledges
and agrees with, the Purchaser as follows:
(a) Subsidiaries. The Company has no direct or indirect
subsidiaries (each a "Subsidiary," and collectively, "Subsidiaries") except as
described in the SEC Reports (as defined below). All the issued and outstanding
shares of capital stock of each Subsidiary are validly issued and are fully
paid, non-assessable and free of preemptive and similar rights, and the Company
owns all of the issued and outstanding shares of capital stock of each
Subsidiary, except as described in the SEC Reports or the Memorandum.
(b) Organization and Qualification. Each of the Company and
the Subsidiaries is an entity duly incorporated or otherwise organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation or organization (as applicable), with the requisite power and
authority to own and use its properties and assets and to carry on its business
as currently conducted. The Company is not in violation of any of the provisions
of its certificate of incorporation, bylaws or other organizational or charter
documents.
(c) Authorization; Enforcement. The Company has the
requisite corporate power and authority to enter into and to consummate the
Offering. The execution and delivery of this Subscription Agreement by the
Company and the consummation by it of the transactions contemplated hereby have
been duly authorized by all necessary action on the part of the Company and no
further consent or action is required by the Company, other than the Required
Approvals (as defined below). This Subscription Agreement, when executed and
delivered in accordance with the terms hereof, will constitute the valid and
binding obligation of the Company, enforceable against the Company in accordance
with its terms, subject to applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and similar laws affecting creditors'
rights and remedies generally and general principles of equity. Neither the
Company nor any Subsidiary is in violation of any of the provisions of its
respective certificate or articles of incorporation, by-laws or other
organizational or charter documents.
(d) No Conflicts. The execution, delivery and performance of
this Subscription Agreement by the Company and the consummation by the Company
of the Offering do not and will not: (i) conflict with or violate any provision
of the Company's or any Subsidiary's certificate or articles of incorporation,
bylaws or other organizational or charter documents, or (ii) subject to
obtaining the Required Approvals (as defined below), conflict with, or
constitute a default (or an event that with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation (with or without notice, lapse of time
or both) of, any agreement, credit facility, debt or other instrument
(evidencing a Company or Subsidiary debt or otherwise) to which the Company or
any Subsidiary is a party or by which any property or asset of the Company or
any Subsidiary is bound or affected, or (iii) result in a violation of any law,
rule, regulation,
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order, judgment, injunction, decree or other restriction of any court or
governmental authority as currently in effect to which the Company or a
Subsidiary is subject (including federal and state securities laws and
regulations), or by which any property or asset of the Company or a Subsidiary
is bound or affected; except in the case of each of clauses (ii) and (iii), such
as could not, individually or in the aggregate (a) adversely affect the
legality, validity or enforceability of the Offering, (b) have or result in or
be reasonably likely to have or result in a material adverse effect on the
results of operations, assets, prospects, business or condition (financial or
otherwise) of the Company and the Subsidiaries, taken as a whole, or (c)
adversely impair the Company's ability to perform fully on a timely basis its
obligations under this Subscription Agreement (any of (a), (b) or (c), a
"Material Adverse Effect").
(e) Filings, Consents and Approvals. Neither the Company nor
any Subsidiary is required to obtain any consent, waiver, authorization or order
of, give any notice to, or make any filing or registration with, any court or
other federal, state, local or other governmental authority or other Person in
connection with the execution, delivery and performance by the Company of this
Subscription Agreement, other than (i) the filing with the Securities and
Exchange Commission (the "Commission") of the Registration Statement required to
be filed pursuant to the Registration Rights Agreement, (ii) the filing with the
Commission of a Form D pursuant to Regulation D of the Securities Act, and (iii)
applicable state securities law Blue Sky filings (collectively, the "Required
Approvals").
(f) Issuance of the Securities. The Securities are duly
authorized and, when issued and paid for in accordance with this Subscription
Agreement, will be duly and validly issued, fully paid and nonassessable, free
and clear of all liens. The Company has reserved from its duly authorized
capital stock a number of shares of Common Stock for issuance upon purchase of
the Common Stock and of the shares underlying the Warrants. The Securities
conform to the description contained in the Memorandum. Assuming the accuracy of
the Purchaser's representations and warranties set forth in Section 4(A), no
registration under the Securities Act is required for the offer and sale of the
Units by the Company to the Purchaser as contemplated hereby. The issuance and
sale of the Units hereunder does not contravene the rules and regulations of the
trading market for the Common Stock and no shareholder approval is required for
the Company to fulfill its obligations pursuant to this Offering.
(g) Capitalization. As of immediately prior to the First
Closing, the number of shares and type of all authorized, issued and outstanding
capital stock of the Company shall consist of 100,000,000 shares of Common
Stock, of which 45,077,386 shares shall be issued and outstanding. No Person has
any right of first refusal, preemptive right, right of participation, or any
similar right to participate in the Offering. Except as a result of the purchase
and sale of the Securities which may be issued in connection with this Offering
and except for options and shares of capital stock issued or issuable under the
Company's option plans, there are no outstanding options, warrants, script
rights to subscribe to, calls or commitments of any character whatsoever
relating to, or securities, rights or obligations convertible into or
exchangeable for, or giving any Person any right to subscribe for or acquire,
any shares of Common Stock, or contracts, commitments, understandings or
arrangements by which the Company or any Subsidiary is or may become bound to
issue additional shares of Common Stock, or securities or rights convertible or
exchangeable into shares of Common Stock. The issuance and sale of the
Securities will not obligate the Company to issue shares of Common Stock or
other securities to any Person (other than the Purchaser and other purchasers in
the Offering) and will not result in a right of any holder of Company securities
to adjust the exercise, conversion, exchange or reset price under such
securities.
(h) SEC Reports; Financial Statements. The Company has filed
(i) all reports required to be filed by it under the Securities Act; (ii) all
annual reports on Form 10-KSB and all quarterly reports on Form 10-QSB required
to be filed by it under the Exchange Act, including pursuant to Section 13(a) or
15(d) thereof, in order for it to satisfy its filing requirements under the
Exchange Act for the periods to which each such report relates, in each case
commencing with the fiscal quarter ended September 30, 2003 (or such shorter
period as the Company was required by law to file such material); (iii) an
annual report on Form 10-KSB, covering the fiscal years ended December 31, 1998,
1999, 2000, 2001 and 2002, which was filed with the SEC on May 28, 2004; (iv) a
quarterly report on Form 10-QSB, covering the fiscal quarters ended March 31,
June 30 and September 30, 1999, which was filed with the SEC on May 28, 2004;
(v) a quarterly report on Form 10-QSB, covering the fiscal quarters ended March
31, June 30 and September 30, 2000, which was filed with the SEC on May 28,
2004; (vi) a quarterly report on Form 10-QSB, covering the fiscal quarters ended
March 31, June 30 and September 30, 2001, which was
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filed with the SEC on May 28, 2004; (vii) a quarterly report on Form 10-QSB,
covering the fiscal quarters ended March 31, June 30 and September 30, 2002,
which was filed with the SEC on May 28, 2004; and (viii) a quarterly report on
Form 10-QSB, covering the fiscal quarters ended March 31 and June 30, 2002,
which was filed with the SEC on May 28, 2004 (the foregoing materials, as
amended, where applicable, being collectively referred to herein as the "SEC
Reports"). The Company has made available to the Purchaser a copy of all SEC
Reports filed within the 10 days preceding the date hereof. As of their
respective dates, the SEC Reports complied in all material respects with the
requirements of the Securities Act and the Exchange Act and the rules and
regulations of the Commission promulgated thereunder, and none of the SEC
Reports, when filed, contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. The financial statements of the Company included
in the SEC Reports comply in all material respects with applicable accounting
requirements and the rules and regulations of the Commission with respect
thereto as in effect at the time of filing. Such financial statements have been
prepared in accordance with generally accepted accounting principles applied on
a consistent basis during the periods involved ("GAAP"), except as may be
otherwise specified in such financial statements or the notes thereto, and
fairly present in all material respects the financial position of the Company
and its consolidated subsidiaries as of and for the dates thereof and the
results of operations and cash flows for the periods then ended, subject, in the
case of unaudited statements, to normal, immaterial, year-end audit adjustments.
(i) Material Changes. Except for the proposed Offering,
since the date of the latest audited financial statements included within the
SEC Reports, except as specifically disclosed in the SEC Reports: (i) there has
been no event, occurrence or development that has had a Material Adverse Effect,
(ii) the Company has not incurred any liabilities (contingent or otherwise)
other than (A) trade payables and accrued expenses incurred in the ordinary
course of business consistent with past practice and (B) liabilities not
required to be reflected in the Company's financial statements pursuant to GAAP
or required to be disclosed in filings made with the Commission, (iii) the
Company has not altered its method of accounting or the identity of its
auditors, (iv) the Company has not declared or made any dividend or distribution
of cash or other property to its stockholders except in the ordinary course of
business consistent with prior practice, or purchased, redeemed or made any
agreements to purchase or redeem any shares of its capital stock except
consistent with prior practice or pursuant to existing Company stock option or
similar plans, and (v) the Company has not issued any equity securities to any
officer, director or Affiliate of the Company, except pursuant to existing
Company stock option or similar plans.
The term "Affiliate of the Company" means (A) any person or
entity directly or indirectly controlling, controlled by or under common control
with the Company; (B) any person or entity owning or controlling ten percent
(10%) or more of the outstanding voting securities of the Company; or (C) any
officer or director of the Company.
(j) Litigation. Except as set forth in the SEC Reports,
there is no action, suit, inquiry, notice of violation, proceeding or
investigation pending or, to the knowledge of the Company, threatened against or
affecting the Company, any Subsidiary or any of their respective properties
before or by any court, arbitrator, governmental or administrative agency or
regulatory authority (federal, state, county, local or foreign) (collectively,
an "Action") which: (i) adversely affects or challenges the legality, validity
or enforceability of this Subscription Agreement or the Securities or (ii)
would, if there were an unfavorable decision, individually or in the aggregate,
have or reasonably be expected to result in a Material Adverse Effect. Neither
the Company nor any Subsidiary is or has been the subject of any Action
involving a claim of violation of or liability under federal or state securities
laws. The Company does not have pending before the Commission any request for
confidential treatment of information. There has not been, and to the knowledge
of the Company, there is not pending or contemplated, any investigation by the
Commission involving the Company. The Commission has not issued any stop order
or other order suspending the effectiveness of any registration statement filed
by the Company or any Subsidiary under the Exchange Act or the Securities Act.
(k) Compliance. Neither the Company nor any Subsidiary: (i)
is in default under or in violation of (and no event has occurred that has not
been waived that, with notice or lapse of time or both, would result in a
default by the Company or any Subsidiary under), nor has the Company or any
Subsidiary received notice of a claim that it is in default under or that it is
in violation of, any material indenture, loan or credit
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agreement or any other material agreement or instrument to which it is a party
or by which it or any of its properties is bound (whether or not such default or
violation has been waived), which default or violation would have or result in a
Material Adverse Effect, (ii) is in violation of any order of any court,
arbitrator or governmental body, or (iii) is or has been in violation of any
statute, rule or regulation of any governmental authority, except in each case
as would not, individually or in the aggregate, have or result in a Material
Adverse Effect.
(l) Regulatory Permits. The Company and the Subsidiaries
possess all certificates, authorizations and permits issued by the appropriate
federal, state, local or foreign regulatory authorities necessary to conduct
their respective businesses as described in the SEC Reports, except where the
failure to possess such permits would not, individually or in the aggregate,
have or reasonably be expected to result in a Material Adverse Effect ("Material
Permits"), and neither the Company nor any Subsidiary has received any notice of
proceedings relating to the revocation or modification of any Material Permit.
(m) Listing and Maintenance Requirements. The Company has
not, in the 12 months preceding the date hereof, received notice from the
principal trading market for the Common Stock to the effect that the Company is
not in compliance with the listing or maintenance requirements of such market.
(n) Internal Accounting Controls/Sarbanes-Oxley Act of 2002.
The Company is in material compliance with the requirements of the
Sarbanes-Oxley Act of 2002 applicable to it as of the date hereof. The Company
and the 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 GAAP 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. The Company has established disclosure
controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for
the Company and designed such disclosures controls and procedures to ensure that
material information relating to the Company, including its Subsidiaries, is
made known to the certifying officers by others within those entities. The
Company's certifying officers have evaluated the effectiveness of the Company's
controls and procedures as of the end of the period covered by its most recent
periodic report (such date, the "Evaluation Date"). The Company presented in its
most recently filed periodic report the conclusions of the certifying officers
about the effectiveness of the disclosure controls and procedures based on their
evaluations as of the Evaluation Date. Since the Evaluation Date, there have
been no significant changes in the Company's internal controls (as such term is
defined in Item 307(b) of Regulation S-K under the Exchange Act).
(o) Disclosure. The Company confirms that, neither the
Company nor any other person acting on its behalf has provided the Purchaser or
its agents or counsel with any information that constitutes or might constitute
material, non-public information. The Company understands and confirms that the
Purchaser will rely on the foregoing representations and covenants in effecting
transactions in securities of the Company. The disclosure provided to the
Purchaser regarding the Company, its business and the transactions contemplated
hereby, furnished by or on behalf of the Company, including all of the SEC
Reports (as amended, where applicable) relating to the periods completed in the
24 months preceding the date hereof, does not contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements made therein, in light of the circumstances under which they were
made, not misleading. The Company acknowledges and agrees that the Purchaser
makes or has made no representations or warranties with respect to the
transactions contemplated hereby other than those specifically set forth in this
Subscription Agreement.
5. Irrevocability; Binding Effect. The Purchaser hereby acknowledges
and agrees that the subscription hereunder is irrevocable by the Purchaser,
except as required by applicable law, and that this Subscription Agreement shall
survive the death or disability of the Purchaser and shall be binding upon and
inure to the benefit of the parties and their heirs, executors, administrators,
successors, legal representatives and permitted assigns. If the Purchaser is
more than one person, the obligations of the Purchaser hereunder shall be joint
and several and the covenants, agreements, representations, warranties, and
acknowledgments herein shall be deemed to
8
be made by and be binding upon each such person and such person's heirs,
executors, administrators, successors, legal representatives and permitted
assigns.
6. Amendment and Modification. This Subscription Agreement shall not
be amended or modified, except by an instrument in writing signed by the Company
and, in the case of the Purchaser, the holders of at least sixty-six and
two-thirds percent (66-2/3%)-in-interest of the Shares issued in the Closings.
7. Notices. Any notice or other communication required or permitted
to be given hereunder shall be in writing and shall be mailed by certified mail,
return receipt requested, sent by nationwide overnight courier or delivered
against receipt to the party to whom it is to be given (a) if to Company, at the
address set forth above, or (b) if to the Purchaser, at the address set forth on
the signature page hereof (or, in either case, to such other address as the
party shall have furnished in writing in accordance with the provisions of this
Section). Any notice or other communication given by certified mail shall be
deemed given at the time that it is signed for by the recipient except for a
notice changing a party's address which shall be deemed given at the time of
receipt thereof. Any notice or other communication given by nationwide overnight
courier shall be deemed given the next business day following being deposited
with such courier.
8. Assignability. This Subscription Agreement and the rights,
interests and obligations hereunder are not transferable or assignable by the
Purchaser and the transfer or assignment of the Units, the components thereof,
or the underlying securities shall be made only in accordance with all
applicable laws.
9. Applicable Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York relating to contracts
entered into and to be performed wholly within such State.
10. Blue Sky Qualification. The purchase of Units under this
Subscription Agreement is expressly conditioned upon the exemption from
qualification of the offer and sale of the Units from applicable Federal and
state securities laws. The Company shall not be required to qualify this
transaction under the securities laws of any jurisdiction and, should
qualification be necessary, the Company shall be released from any and all
obligations to maintain its offer, and may rescind any sale contracted, in such
jurisdiction.
11. Use of Pronouns. All pronouns and any variations thereof used
herein shall be deemed to refer to the masculine, feminine, neuter, singular or
plural as the identity of the person or persons referred to may require.
12. Miscellaneous.
(a) This Agreement and its exhibits and schedules constitutes
the entire agreement between the Purchaser and the Company with respect to the
subject matter hereof and supersedes all prior oral or written agreements and
understandings, if any, relating to the subject matter hereof. The terms and
provisions of this Agreement may be waived, or consent for the departure
therefrom granted, only by a written document executed by the party (and, in the
case of the Purchaser, by the holders of at least sixty-six and two-thirds
percent in interest of the Shares issued in the Closings) entitled to the
benefits of such terms or provisions. The parties acknowledge that the
provisions of the Registration Rights Agreement are incorporated by reference
and made a part hereof, and that Purchaser's signature hereto will operate to be
effective as Purchaser's signature to the Registration Rights Agreement.
(b) The Purchaser's and Company's covenants, agreements,
representations and warranties made in this Agreement and the Memorandum shall
survive the execution and delivery hereof and delivery of the Securities
contained in the Units.
(c) Each of the parties hereto shall pay its own fees and
expenses (including the fees of any attorneys, accountants, appraisers or others
engaged by such party) in connection with this Agreement and the transactions
contemplated hereby whether or not the transactions contemplated hereby are
consummated.
9
(d) This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which shall
together constitute one and the same instrument.
(e) Each provision of this Subscription Agreement shall be
considered separable and, if for any reason any provision or provisions hereof
are determined to be invalid or contrary to applicable law, such invalidity or
illegality shall not impair the operation of or affect the remaining portions of
this Subscription Agreement.
(f) Paragraph titles are for descriptive purposes only and
shall not control or alter the meaning of this Subscription Agreement as set
forth in the text.
10
Accredited Investor Certification Name of Investor:____________________
- ---------------------------------
Initial or Check the appropriate item(s)
The undersigned further represents and warrants as indicated below by the
undersigned's initials:
A. Individual investors: (Please initial one or more of the following
statements)
1. I certify that I am an accredited investor because I have had individual
income (exclusive of any income earned by my spouse) of more than $200,000
in each of the most recent two years and I reasonably expect to have an
individual income in excess of $200,000 for the current year.
2. I certify that I am an accredited investor because I have had joint income
with my spouse in excess of $300,000 in each of the most recent two years
and reasonably expect to have joint income with my spouse in excess of
$300,000 for the current year.
3. I certify that I am an accredited investor because I have an individual
net worth, or my spouse and I have a joint net worth, in excess of
$1,000,000.
4. I am a director or executive officer of Wireless Frontier Internet, Inc.
B. Partnerships, corporations, trusts or other entities: (Please initial one
of the following statements). The undersigned hereby certifies that it is
an accredited investor because it is:
1. a bank as defined in Section 3(a)(2) of the Securities Act, or a savings
and loan association or other institution as defined in Section 3(a)(5)(A) of
the Securities Act, whether acting in its individual or fiduciary capacity; a
broker or dealer registered pursuant to Section 15 of the Exchange Act;
2. an insurance company as defined in Section 2(a)(13) of the Securities
Act;
3. an investment company registered under the Investment Company Act of
1940 or a business development company as defined in Section 2(a)(48) of that
act;
4. a Small Business Investment Company licensed by the U.S. Small Business
Administration under Section 301(c) or (d) of the Small Business Investment Act
of 1958;
5. a plan established and maintained by a state or its political
subdivisions, and maintained by a state, its political subdivisions, or an
agency or instrumentality of a state or its political subdivisions, for the
benefit of its employees, with total assets in excess of $5,000,000;
6. an employee benefit plan, within the meaning of the Employee Retirement
Income Security Act of 1974, whose investments decisions are made by a plan
fiduciary, as defined in Section 3(21) of that act, which is either a bank,
savings and loan association or an insurance company (as defined in Section 3(a)
of the Securities Act) or an investment adviser registered as such under the
Investment Advisers Act of 1940;
7. a self-directed employee benefit plan, including an Individual
Retirement Account, with investment decisions made solely by persons that are
accredited investors;
8. an organization described in Section 501(c)(3) of the Internal Revenue
Code of 1986, as amended, not formed for the specific purpose of acquiring the
Units, with total assets in excess of $5,000,000;
9. a corporation, partnership, limited liability company, limited liability
partnership, other entity, or a Massachusetts or similar business trust, not
formed for the specific purpose of acquiring the Units, with total assets excess
of $5,000,000;
10. a trust, not formed for the specific purpose of acquiring the Units,
with total assets exceed $5,000,000, whose purchase is directed by a
sophisticated person as described in Rule 506(b)(2)(ii) of Regulation D of the
Securities Act; or
11. an entity (including a revocable grantor trust but other than a
conventional trust) in which each of the equity owners qualifies as an
accredited investor as defined above.
11
Wireless Frontier Internet, Inc.
SIGNATURE PAGE TO
SUBSCRIPTION AGREEMENT
EXECUTION OF THIS AGREEMENT BY ANY PURCHASER SHALL BE DEEMED TO CONSTITUTE
EXECUTION OF THE REGISTRATION RIGHTS AGREEMENT ANNEXED HERETO AS EXHIBIT A BY
SUCH PURCHASER.
Subscriber hereby elects to subscribe under the Subscription Agreement for
a total of $__________ of Unit(s) (NOTE: to be completed by subscriber):
Date (NOTE: To be completed by subscriber): _______________, 2004. If the
purchaser is an INDIVIDUAL, or if the purchasers are INDIVIDUALS who have
purchased as JOINT TENANTS, as JOINT TENANTS with RIGHT OF SURVIVORSHIP, as
TENANTS IN COMMON, or as COMMUNITY PROPERTY:
___________________________ ___________________________
Print Names(s) Social Security Number(s)
___________________________ ___________________________
Signature(s) of Investor(s) Joint Signature
___________________________
___________________________ Date
Address
If the purchaser is a PARTNERSHIP, CORPORATION, TRUST, LIMITED LIABILITY COMPANY
or LIMITED LIABILITY PARTNERSHIP:
___________________________ ___________________________
Name of Partnership, Federal Taxpayer
Corporation, Trust, Limited Identification Number
Liability Company or Limited
Liability Partnership
Address:
By:___________________________ ___________________________
Name: ________________________ State of Organization
Title:________________________
SUBSCRIPTION FOR ___ UNITS ACCEPTED AND AGREED TO this ___ day of _______ 2004.
Wireless Frontier Internet, Inc.
By:__________________________________
Name:
Title: