SUBSCRIPTION AGREEMENT
To:
|
KeyOn
Communications, Inc.
|
0000
Xxxx
Xxxxxx Xxxxx
Xxx
Xxxxx, XX 00000
Attn:
Xxxxxxxx Xxxxxx, President and Chief Executive Officer
This
Subscription Agreement (this “Agreement”)
is
being delivered to the purchaser identified on the signature page to this
Agreement (the “Subscriber”)
in
connection with its investment in a to be identified public company
(“Pubco”)
that
will acquire all of the issued and outstanding capital stock of KeyOn
Communications, Inc., a Nevada corporation (“KeyOn”),
and
succeed to the business of KeyOn as its sole line of business (on a combined,
post-acquisition basis, Pubco and its subsidiary, KeyOn, are collectively
referred to as the “Company”).
The
Company is conducting a private placement (the “Offering”)
of up
to $2,500,000 of units (“Units”), but in no event less than
$1,500,000; provided,
however,
that
the Company may, in its sole discretion, accept subscriptions for more than
$2,500,000 of Units. Each Unit shall consist of (i) 1 share of common stock,
par
value $0.001 per share (the “Shares”)
and
(ii) a callable five year warrant to purchase 0.5 of one share of common stock
at an exercise price $3.35 per share, substantially in the form attached hereto
as Exhibit
A
(the
“Warrants”).
For
purposes of this Agreement, the term “Securities”
shall
refer to the Units, the Shares, the Warrants, and the shares of common stock
underlying the Warrants (the “Warrant
Shares”).
The
exercise price of the Warrants shall be reduced from $3.35 per share to $2.00
per share if the Company does not record at least $8.5 million in consolidated
pro forma revenue during the year ending December 31, 2007. The purchase price
per Unit shall be fixed at $2.00 (the “Purchase
Price”).
All
funds received in the Offering prior to the closing of the Offering (the
“Closing”)
shall
be held in escrow by Signature Bank (the “Escrow
Agent”)
and,
upon fulfillment of the other conditions precedent set forth herein, shall
be
released from escrow and delivered to the Company at which time the Units
subscribed for as further described below shall be delivered, subject to Section
9 hereof, to the Subscriber.
1. SUBSCRIPTION
AND PURCHASE PRICE
(a) Subscription.
Subject
to the conditions set forth in Section 2 hereof, the Subscriber hereby
subscribes for and agrees to purchase the number of Units indicated on page
9
hereof on the terms and conditions described herein.
(b) Purchase
of Units.
The
Subscriber understands and acknowledges that the purchase price to be remitted
to the Company in exchange for the Units shall be set at $2.00 per Unit, for
an
aggregate purchase price as set forth on page 9 hereof (the “Aggregate
Purchase Price”).
The
Subscriber’s delivery of this Agreement to the Company shall be accompanied by
payment for the Units subscribed for hereunder, payable in United States
Dollars, by wire transfer of immediately available funds delivered
contemporaneously with the Subscriber’s delivery of this Agreement to the
Company in accordance with the instructions provided on Exhibit
B.
The
Subscriber understands and agrees that, subject to Section 2 and applicable
laws, by executing this Agreement, it is entering into a binding
agreement.
2. ACCEPTANCE,
OFFERING TERM AND CLOSING PROCEDURES
(a) Acceptance
or Rejection.
The
obligation of the Subscriber to purchase the Units shall be irrevocable, and
the
Subscriber shall be legally bound to purchase the Units subject to the terms
set
forth in this Agreement. The Subscriber understands and agrees that the Company
reserves the right to reject this subscription for Units in whole or part in
any
order at any time prior to the Closing for any reason, notwithstanding the
Subscriber’s prior receipt of notice of acceptance of the Subscriber’s
subscription. In the event of rejection of this subscription by the Company
in
accordance with this Section 2, or if the sale of the Units is not consummated
by the Company for any reason, this Agreement and any other agreement entered
into between the Subscriber and the Company relating to this subscription shall
thereafter have no force or effect, and the Company shall promptly return or
cause to be returned to the Subscriber the purchase price remitted to the Escrow
Agent, without interest thereon or deduction therefrom.
(b) Offering
Term.
The
subscription period for the Offering will begin as of July 20, 2007, and will
terminate upon the occurrence of the earlier of (i) August 5, 2007, unless
extended by the Company for up to an additional 2-week period, (ii) the
Company’s acceptance of subscriptions for $2,500,000 of Units and the receipt of
payment therefore, subject to the Company’s discretion to accept subscriptions
for more than $2,500,000 of Units or (iii) the Company’s decision to terminate
the Offering sooner.
(c) Closing.
The
Closing shall take place at the offices of the Company at 0000 Xxxx Xxxxxx
Xxxxx, Xxx Xxxxx, Xxxxxx 00000 or such other place as determined by the Company.
The Closing shall take place on a Business Day promptly following the
satisfaction of the conditions set forth in Section 9 below, as determined
by
the Company. “Business
Day”
shall
mean from the hours of 9:00 a.m. (Pacific Time) through 5:00 p.m. (Pacific
Time)
of a day other than a Saturday, Sunday or other day on which commercial banks
in
New York, New York are authorized or required to be closed. The Shares and
Warrants purchased by the Subscriber will be delivered by the Company promptly
following the Closing.
(d) Acceptance
or Rejection.
The
Subscriber acknowledges and agrees that this Agreement and any other documents
delivered in connection herewith will be held by the Company. In the event
that
this Agreement is not accepted by the Company for whatever reason, which the
Company expressly reserves the right to do, this Agreement, the Aggregate
Purchase Price received (without interest thereon) and any other documents
delivered in connection herewith will be returned to the Subscriber at the
address of the Subscriber as set forth in this Agreement. If this Agreement
is
accepted by the Company, the Company is entitled to treat the Aggregate Purchase
Price received as an interest free loan to the Company until such time as the
Subscription is accepted.
3. THE
SUBSCRIBER’S REPRESENTATIONS, WARRANTIES AND COVENANTS
The
Subscriber hereby acknowledges, agrees with and represents, warrants and
covenants to the Company, as follows:
(a) The
Subscriber has full power and authority to enter into this Agreement, the
execution and delivery of which has been duly authorized, if applicable, and
this Agreement constitutes a valid and legally binding obligation of the
Subscriber.
(b) The
Subscriber acknowledges its understanding that the Offering and sale of the
Securities is intended to be exempt from registration under the Securities
Act
of 1933, as amended (the “Securities
Act”),
by
virtue of Section 4(2) of the Securities Act and the provisions of Regulation
D
promulgated thereunder (“Regulation
D”).
In
furtherance thereof, the Subscriber represents and warrants to the Company
and
its affiliates as follows:
(i) The
Subscriber realizes that the basis for the exemption from registration may
not
be available if, notwithstanding the Subscriber’s representations contained
herein, the Subscriber is merely acquiring the Securities for a fixed or
determinable period in the future, or for a market rise, or for sale if the
market does not rise. The Subscriber does not have any such
intention.
(ii) The
Subscriber realizes that the basis for exemption would not be available if
the
Offering is part of a plan or scheme to evade registration provisions of the
Securities Act or any applicable state or federal securities laws.
(iii) The
Subscriber is acquiring the Securities solely for the Subscriber’s own
beneficial account, for investment purposes, and not with a view towards, or
resale in connection with, any distribution of the Securities.
(iv) The
Subscriber has the financial ability to bear the economic risk of the
Subscriber’s investment, has adequate means for providing for its current needs
and contingencies, and has no need for liquidity with respect to an investment
in the Company.
(v) The
Subscriber and the Subscriber’s attorney, accountant, purchaser representative
and/or tax advisor, if any (collectively, the “Advisors”)
has
such knowledge and experience in financial and business matters as to be capable
of evaluating the merits and risks of a prospective investment in the
Securities. If other than an individual, the Subscriber also represents it
has
not been organized solely for the purpose of acquiring the
Securities.
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(vi) The
Subscriber (together with its Advisors, if any) has received all documents
requested by the Subscriber, if any, has carefully reviewed them and understands
the information contained therein, prior to the execution of this
Agreement.
(c) The
Subscriber acknowledges its understanding that the Company may, in its sole
discretion, engage one or more registered broker-dealers in connection with
the
sale of the Units to act as placement agents. Each placement agent shall receive
a cash fee in an amount up to 7% of the aggregate proceeds from sales of Units
by such placement agent and warrants to purchase a number of shares equal to
3%
of the aggregate number of Shares included in the Units sold by such placement
agent.
(d) The
Subscriber is not relying on the Company or any of its employees, agents,
sub-agents or advisors with respect to economic considerations involved in
this
investment. The Subscriber has relied on the advice of, or has consulted with,
only its Advisors. Each Advisor, if any, is capable of evaluating the merits
and
risks of an investment in the Securities, and each Advisor, if any, has
disclosed to the Subscriber in writing (a copy of which is annexed to this
Agreement) the specific details of any and all past, present or future
relationships, actual or contemplated, between the Advisor and the Company
or
any affiliate or sub-agent thereof.
(e) The
Subscriber has carefully considered the potential risks relating to the Company
and a purchase of the Securities, and fully understands that the Securities
are
a speculative investment that involve a high degree of risk of loss of the
Subscriber’s entire investment.
(f) The
Subscriber represents, warrants and agrees that the Subscriber will not sell
or
otherwise transfer any Securities without registration under the Securities
Act
or an exemption therefrom, and fully understands and agrees that the Subscriber
must bear the economic risk of its purchase because, among other reasons, the
Securities have not been registered under the Securities Act or under the
securities laws of any state and, therefore, cannot be resold, pledged, assigned
or otherwise disposed of unless they are subsequently registered under the
Securities Act and under the applicable securities laws of such states, or
an
exemption from such registration is available. In particular, the Subscriber
is
aware that the Securities are “restricted securities,” as such term is defined
in Rule 144 promulgated under the Securities Act (“Rule
144”),
and
they may not be sold pursuant to Rule 144 unless all of the conditions of Rule
144 are met. The Subscriber also understands that, except as otherwise provided
in Section 5 hereof, the Company is under no obligation to register the
Securities on behalf of the Subscriber or to assist the Subscriber in complying
with any exemption from registration under the Securities Act or applicable
state securities laws. The Subscriber understands that any sales or transfers
of
the Securities are further restricted by state securities laws and the
provisions of this Agreement.
(g) No
oral
or written representations or warranties have been made to the Subscriber by
the
Company or any of its officers, employees, agents, sub-agents, affiliates,
advisors or subsidiaries, other than any representations of the Company
contained herein, and in subscribing for the Units, the Subscriber is not
relying upon any representations other than those contained herein.
(h) The
Subscriber’s overall commitment to investments that are not readily marketable
is not disproportionate to the Subscriber’s net worth, and an investment in the
Securities will not cause such overall commitment to become
excessive.
(i) The
Subscriber understands and agrees that the certificates for the Securities
shall
bear substantially the following legend until (i) such Securities shall have
been registered under the Securities Act and effectively disposed of in
accordance with a registration statement that has been declared effective or
(ii) in the opinion of counsel for the Company, such Securities may be sold
without registration under the Securities Act, as well as any applicable “blue
sky” or state securities laws:
THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY APPLICABLE
STATE SECURITIES LAWS. SUCH SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT
PURPOSES AND MAY NOT BE OFFERED FOR SALE, SOLD, DELIVERED AFTER SALE,
TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FILED BY THE ISSUER WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION
COVERING SUCH SECURITIES UNDER THE SECURITIES ACT OR AN OPINION OF COUNSEL
SATISFACTORY TO THE ISSUER THAT SUCH REGISTRATION IS NOT REQUIRED.
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(j) Neither
the Securities and Exchange Commission (the “SEC”)
nor
any state securities commission has approved the Securities or passed upon
or
endorsed the merits of the Offering. There is no government or other insurance
covering any of the Securities.
(k) The
Subscriber and its Advisors, if any, have 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 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 Subscriber and its Advisors,
if
any.
(l) The
Subscriber is unaware of, is in no way relying on, and did not become aware
of
the Offering 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, or electronic mail over
the
Internet, in connection with the Offering and is not subscribing for Units
and
did not become aware of the Offering through or as a result of any seminar
or
meeting to which the Subscriber was invited by, or any solicitation of a
subscription by, a person not previously known to the Subscriber in connection
with investments in securities generally.
(m) The
Subscriber has taken no action that would give rise to any claim by any person
for brokerage commissions, finders’ fees or the like relating to this Agreement
or the transactions contemplated hereby.
(n) The
Subscriber is not relying on the Company or any of its employees, agents, or
advisors with respect to the legal, tax, economic and related considerations
of
an investment in the Securities, and the Subscriber has relied on the advice
of,
or has consulted with, only its own Advisors.
(o) The
Subscriber acknowledges that any estimates or forward-looking statements or
projections furnished by the Company to the Subscriber were prepared by the
management of the Company in good faith, but that the attainment of any such
projections, estimates or forward-looking statements cannot be guaranteed by
the
Company or its management and should not be relied upon.
(p) No
oral
or written representations have been made, or oral or written information
furnished, to the Subscriber or its Advisors, if any, in connection with the
Offering that are in any way inconsistent with the information contained
herein.
(q) (For
ERISA plans only) The fiduciary of the ERISA plan (the “Plan”)
represents that such fiduciary has been informed of and understands the
Company’s investment objectives, policies and strategies, and that the decision
to invest “plan assets” (as such term is defined in ERISA) in the Company is
consistent with the provisions of ERISA that require diversification of plan
assets and impose other fiduciary responsibilities. The Subscriber or Plan
fiduciary (i) is responsible for the decision to invest in the Company; (ii)
is
independent of the Company and any of its affiliates; (iii) is qualified to
make
such investment decision; and (iv) in making such decision, the Subscriber
or
Plan fiduciary has not relied primarily on any advice or recommendation of
the
Company or any of its affiliates.
(r) This
Agreement is not enforceable by the Subscriber unless it has been accepted
by
the Company, and the Subscriber acknowledges and agrees that the Company
reserves the right to reject any subscription for any reason.
(s) The
Subscriber will indemnify and hold harmless the Company and, where applicable,
its directors, officers, employees, agents, advisors, affiliates and
shareholders, and each other person, if any, who controls any of the foregoing
from and against any and all loss, liability, claim, damage and expense
whatsoever (including, but not limited to, any and all fees, costs and expenses
whatsoever reasonably incurred in investigating, preparing or defending against
any claim, lawsuit, administrative proceeding or investigation whether commenced
or threatened) (a “Loss”)
arising out of or based upon any representation or warranty of the Subscriber
contained herein or in any document furnished by the Subscriber to the Company
in connection herewith being untrue in any material respect or any breach or
failure by the Subscriber to comply with any covenant or agreement made by
the
Subscriber herein or therein; provided,
however,
that
the Subscriber shall not be liable for any Loss that
in
the aggregate exceeds such Subscriber’s Aggregate Purchase Price tendered
hereunder.
4
(t) The
Subscriber is, and on each date on which the Subscriber continues to own
restricted securities from the Offering, will be an “Accredited Investor” as
defined in Rule 501(a) under the Securities Act. In general, an “Accredited
Investor” is deemed to be an institution with assets in excess of $5,000,000 or
individuals with net worth in excess of $1,000,000 or annual income exceeding
$200,0000 or $300,000 jointly with his or her spouse.
(u) The
Subscriber, either alone or together with its representatives, has such
knowledge, sophistication and experience in business and financial matters
so as
to be capable of evaluating the merits and risks of the Offering, and has so
evaluated the merits and risks of such investment. The Subscriber has not
authorized any person or entity to act as its Purchaser Representative (as
that
term is defined in Regulation D of the General Rules and Regulations under
the
Securities Act) in connection with the Offering. The Subscriber is able to
bear
the economic risk of an investment in the Securities and, at the present time,
is able to afford a complete loss of such investment.
(v) The
foregoing representations, warranties and agreements shall survive the
Closing.
4. THE
COMPANY’S REPRESENTATIONS, WARRANTIES AND COVENANTS
The
Company hereby acknowledges, agrees with and represents, warrants and covenants
to the Subscriber, as follows:
(a) The
Company has the corporate power and authority to execute and deliver this
Agreement and to perform its obligations hereunder. This Agreement has been
duly
authorized, executed and delivered by the Company and is valid, binding and
enforceable against the Company in accordance with its terms.
(b) The
Securities to be issued to the Subscriber pursuant to this Agreement, when
issued and delivered in accordance with the terms of this Agreement, will be
duly and validly issued and will be fully paid and non-assessable.
(c) Neither
the execution and delivery nor the performance of this Agreement by the Company
will conflict with the Company’s organizational materials, as amended to date,
or result in a breach of any terms or provisions of, or constitute a default
under, any material contract, agreement or instrument to which the Company
is a
party or by which the Company is bound.
(d) After
giving effect to the transactions contemplated by this Agreement and immediately
after the Closing, the Company will have approximately the outstanding capital
stock as set forth on Exhibit
C
attached
hereto.
(e) Any
information furnished by the Company in connection with the Offering is true
and
correct in all material respects as of its date, including, without limitation,
the Investor Presentation attached hereto as Exhibit
D.
(f) The
Company acknowledges and agrees that the Subscriber is acting solely in the
capacity of an arm’s length purchaser with respect to the Securities and the
transactions contemplated hereby. The Company further acknowledges that the
Subscriber is not acting as a financial advisor or fiduciary of the Company
(or
in any similar capacity) with respect to this Agreement and the transactions
contemplated hereby and any advice given by the Subscriber or any of its
representatives or agents in connection with this Agreement and the transactions
contemplated hereby is merely incidental to the Subscriber’s purchase of the
Units. The Company further represents to the Subscriber that the Company’s
decision to enter into this Agreement has been based solely on the independent
evaluation of the transactions contemplated hereby by the Company and its
representatives.
(g) The
Company will indemnify and hold harmless the Subscriber and, where applicable,
its directors, officers, employees, agents, advisors and shareholders, from
and
against any and all loss, liability, claim, damage and expense whatsoever
(including, but not limited to, any and all fees, costs and expenses whatsoever
reasonably incurred in investigating, preparing or defending against any claim,
lawsuit, administrative proceeding or investigation whether commenced or
threatened) arising out of or based upon any representation or warranty of
the
Company contained herein or in any document furnished by the Company to the
Subscriber in connection herewith being untrue in any material respect or any
breach or failure by the Company to comply with any covenant or agreement made
by the Company to the Subscriber in connection therewith; provided,
however,
that
the Company’s liability shall not exceed the Subscriber’s Aggregate Purchase
Price tendered hereunder.
5
(h) The
foregoing representations, warranties and agreements shall survive the
Closing.
5. REGISTRATION
RIGHTS
(a) If,
at
any time during the 2 year period commencing on the date of the Closing, the
Company proposes to file a resale registration statement under the Securities
Act with respect to an offering of equity securities or securities exercisable
or exchangeable for, or convertible into, equity securities, by the Company
solely for the account of stockholders of the Company, other than a registration
statement (i) filed in connection with any employee stock option or other
benefit plan, (ii) for an exchange offer or offering of securities solely to
the
Company’s existing stockholders, (iii) for an offering of debt that is
convertible into equity securities of the Company or (iv) for a dividend
reinvestment plan, then the Company shall (x) give written notice of such
proposed filing to the Subscriber as soon as practicable but in no event less
than twenty (20) days before the anticipated filing date, which notice shall
describe the amount and type of securities to be included in such offering,
the
intended method(s) of distribution, and the name of the proposed managing
underwriter or underwriters, if any, of the offering, and (y) subject to Section
5(b) below, offer to the Subscriber in such notice the opportunity to register
the sale of such number of shares of Common Stock underlying the Securities
(the
“Registrable
Securities”)
as the
Subscriber may request in writing within five (5) days following receipt of
such
notice (a “Resale
Registration Statement”).
Subject to Section 5(b) below, the Company shall cause such Registrable
Securities to be included in such registration and shall use commercially
reasonable efforts to cause the managing underwriter or underwriters of a
proposed underwritten offering to permit the Registrable Securities requested
to
be included in a Resale Registration Statement, on the same terms and conditions
as any similar securities of the Company to be sold by stockholders of the
Company, and to permit the sale or other disposition of such Registrable
Securities in accordance with the intended method(s) of distribution thereof.
If
the Subscriber proposes to distribute any Registrable Securities through a
Resale Registration Statement that involves an underwriter or underwriters,
the
Subscriber shall enter into an underwriting agreement in customary form with
the
underwriter or underwriters selected for such Resale Registration Statement.
(b) Notwithstanding
any other provision of this Agreement, if (i) the managing underwriter of a
proposed underwritten offering, (ii) a placement agent or (iii) the Company
determines that the inclusion of all Registrable Securities requested to be
included in a Resale Registration Statement would adversely affect such
offering, the Company may, in its discretion, limit the number of Registrable
Securities to be included in such offering. Furthermore, in the event the
Company is advised by the SEC, or any applicable self-regulatory or state
securities agency, that the inclusion of any Registrable Securities will
prevent, preclude or materially delay the effectiveness of a registration
statement filed, the Company may amend such registration statement to exclude
the Registrable Securities without thereby incurring any liability to the
Subscriber.
6. ANTI-DILUTION
PRICE PROTECTION
Until
the
earlier of (i) twelve (12) months following the closing, (ii) the filing of
a
registration statement with respect to which the Subscriber has registration
rights under Section 5 above, or (iii) the closing of a “firm commitment” or
“best efforts” registered public offering by the Company, in the event that the
Company issues or sells any shares of any class of the Company’s common stock or
any warrants or other convertible security pursuant to which shares of any
class
of the Company’s common stock may be acquired at a price less than $2.00 per
share, other than “Excluded Securities,” then the Company shall promptly issue
additional shares to the Subscriber in an amount sufficient that the
subscription price paid hereunder, when divided by the total number of shares
issued will result in an actual price paid by the Subscriber per share equal
to
such lower price (this is intended to be a “full ratchet” adjustment). Such
adjustment shall be made successively whenever such an issuance is made. For
purposes of this Agreement, “Excluded Securities” shall mean (i) options to
purchase common stock or shares of common stock issued upon exercise of such
options to employees, consultants, officers or directors (if in transactions
with primarily non-financing purposes) of this Company directly or pursuant
to
any stock incentive plan approved by the Company’s board of directors, (ii)
securities issued upon exercise or conversion of any convertible securities,
options or warrants outstanding on the date hereof, (iii) securities issued
or
issuable in connection with bona fide strategic transactions entered into by
the
Company, whether by merger, consolidation, joint venture, acquisition, sale
or
purchase of assets, sale, purchase or exchange of stock or otherwise, in each
case approved by the Company’s board of directors, (iv) securities issued to
service providers (such as investor relations firms) or lessors in consideration
for bona fide services provided to the Company in each case that are approved
by
the Company’s board of directors, (v) securities issued or issuable pursuant to
stock dividends, stock splits or similar transactions.
6
7. USE
OF PROCEEDS
The
Company anticipates using the gross proceeds from the Offering as provided
on
Exhibit
E
hereto.
8. ESCROW
RELEASE
The
Subscriber acknowledges that the Company may act on the Subscriber’s behalf,
solely for the sake of convenience, in connection with confirmation to the
Escrow Agent that the Closing has occurred and thereby direct the Escrow Agent
to disburse the Subscriber’s subscription funds held in escrow to the Company at
such time. In doing so, however, the Company makes no representation or warranty
to the Subscriber with respect to any due diligence investigations concerning
the Company, all of which shall be and remain the Subscriber’s own
responsibility.
9. CONDITIONS
TO ACCEPTANCE OF SUBSCRIPTION
The
Company’s right to accept the subscription of the Subscriber is conditioned upon
satisfaction of the following conditions precedent on or before the date the
Company accepts such subscription:
(a) As
of the
Closing, no legal action, suit or proceeding shall be pending that seeks to
restrain or prohibit the transactions contemplated by this
Agreement.
(b) The
representations and warranties of the Company contained in this Agreement shall
have been true and correct in all material respects on the date of this
Agreement and shall be true and correct as of the Closing as if made on the
date
of the Closing.
(c) The
Company shall have received subscriptions for at least $1,500,000 of Units
in
connection with the Offering.
(d) The
Company shall have provided the Subscriber with a substantially completed draft
of a Current Report on Form 8-K containing such information about KeyOn as
would
be required to be disclosed in a Registration Statement on Form 10-SB (the
“Jumbo
8-K”),
and
following receipt of such Jumbo 8-K, the Subscriber shall have reconfirmed,
in
writing, its subscription hereunder.
(e) Pubco
shall have consummated its acquisition of KeyOn’s issued and outstanding capital
stock and Pubco shall have succeeded to KeyOn’s business as its sole line of
business.
(f) The
former shareholders of KeyOn shall have executed a twelve (12) month lock-up
agreement, substantially in the Form of Exhibit
F
hereto.
10. NOTICES
TO THE SUBSCRIBER
(a) THE
SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OR THE SECURITIES
LAWS OF ANY STATE AND ARE BEING OFFERED AND SOLD IN RELIANCE ON EXEMPTIONS
FROM
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH LAWS. THE SHARES
HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SEC, ANY STATE SECURITIES
COMMISSION OR 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 ANY INFORMATION FURNISHED IN CONNECTION WITH THIS OFFERING.
ANY
REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
(b) THE
SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY
NOT
BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE SECURITIES ACT, AND
APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION
THEREFROM. THE SUBSCRIBER SHOULD BE AWARE THAT IT MAY BE REQUIRED TO BEAR THE
FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF
TIME.
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11.
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MISCELLANEOUS
PROVISIONS
|
(a) All
parties hereto have been represented by counsel, and no inference shall be
drawn
in favor of or against any party by virtue of the fact that such party’s counsel
was or was not the principal draftsman of this Agreement.
(b) Each
of
the parties hereto shall be responsible to pay the costs and expenses of its
own
legal counsel in connection with the preparation and review of this Agreement
and related documentation.
(c) Neither
this Agreement, nor any provisions hereof, shall be waived, modified, discharged
or terminated except by an instrument in writing signed by the party against
whom any waiver, modification, discharge or termination is sought.
(d) The
representations, warranties and agreement of the Subscriber and the Company
made
in this Agreement shall survive the execution and delivery of this Agreement
and
the delivery of the Securities.
(e) Any
party
may send any notice, request, demand, claim or other communication hereunder
to
the Subscriber at the address set forth on the signature page of this Agreement
or to the Company at the address set forth above using any means (including
personal delivery, expedited courier, messenger service, fax, ordinary mail
or
electronic mail), but no such notice, request, demand, claim or other
communication will be deemed to have been duly given unless and until it
actually is received by the intended recipient. Any party may change the address
to which notices, requests, demands, claims and other communications hereunder
are to be delivered by giving the other parties written notice in the manner
herein set forth.
(f) Except
as
otherwise provided herein, this Agreement shall be binding upon, and inure
to
the benefit of, the parties to this Agreement and their heirs, executors,
administrators, successors, legal representatives and assigns. If the Subscriber
is more than one person or entity, the obligation of the Subscriber shall be
joint and several and the agreements, representations, warranties and
acknowledgments contained herein shall be deemed to be made by, and be binding
upon, each such person or entity and its heirs, executors, administrators,
successors, legal representatives and assigns. This Agreement sets forth the
entire agreement and understanding between the parties as to the subject matter
thereof and merges and supersedes all prior discussions, agreements and
understandings of any and every nature among them.
(g) This
Agreement is not transferable or assignable by the Subscriber.
(h) This
Agreement shall be governed by and construed in accordance with the laws of
the
State of Nevada, without giving effect to conflicts of law
principles.
(i) The
Company and the Subscriber hereby agree that any dispute that may arise between
them arising out of or in connection with this Agreement shall be adjudicated
before a court located in Las Vegas, Nevada, and they hereby submit to the
exclusive jurisdiction of the federal and state courts of the State of Nevada
located in Las Vegas with respect to any action or legal proceeding commenced
by
any party, and irrevocably waive any objection they now or hereafter may have
respecting the venue of any such action or proceeding brought in such a court
or
respecting the fact that such court is an inconvenient forum, relating to or
arising out of this Agreement or any acts or omissions relating to the sale
of
the securities hereunder, and consent to the service of process in any such
action or legal proceeding by means of registered or certified mail, return
receipt requested, postage prepaid, in care of the address set forth herein
or
such other address as either party shall furnish in writing to the
other.
(j) This
Agreement may be executed in two or more counterparts, each of which shall
be
deemed an original, but all of which together shall constitute one and the
same
instrument.
[Signature
Pages Follow]
ALL
SUBSCRIBERS MUST COMPLETE THIS PAGE
IN
WITNESS WHEREOF, the Subscriber has executed this Agreement on the ____ day
of
____________ 2007.
________________________
|
x
$2.00 for each Unit
|
=
$_____________________.
|
Units
subscribed for
|
Aggregate
Purchase Price
|
Manner
in
which Title is to be held (Please Check One):
1.
|
___
|
Individual
|
7.
|
___
|
Trust/Estate/Pension
or Profit sharing Plan
Date
Opened:______________
|
2.
|
___
|
Joint
Tenants with Right of Survivorship
|
8.
|
___
|
As
a Custodian for
________________________________
Under
the Uniform Gift to Minors Act of the State of
________________________________
|
3.
|
___
|
Community
Property
|
9.
|
___
|
Married
with Separate Property
|
4.
|
___
|
Tenants
in Common
|
10.
|
___
|
Xxxxx
|
5.
|
___
|
Corporation/Partnership/
Limited Liability Company
|
11.
|
___
|
Tenants
by the Entirety
|
6.
|
___
|
XXX
|
ALTERNATIVE
DISTRIBUTION INFORMATION
To
direct
distribution to a party other than the registered owner, complete the
information below. YOU MUST COMPLETE THIS SECTION IF THIS IS AN XXX
INVESTMENT.
Name
of
Firm (Bank, Brokerage, Custodian):
Account
Name:
Account
Number:
Representative
Name:
Representative
Phone Number:
Address:
City,
State, Zip:
9
IF
MORE
THAN ONE SUBSCRIBER, EACH SUBSCRIBER MUST SIGN.
INDIVIDUAL
SUBSCRIBERS MUST COMPLETE THIS PAGE 10.
SUBSCRIBERS
WHICH ARE ENTITIES MUST COMPLETE PAGE 11.
EXECUTION
BY NATURAL PERSONS
_____________________________________________________________________________
Exact
Name in Which Title is to be Held
|
||
_________________________________
Name
(Please Print)
|
_________________________________
Name
of Additional Purchaser
|
|
_________________________________
Residence:
Number and Street
|
_________________________________
Address
of Additional Purchaser
|
|
_________________________________
City,
State and Zip Code
|
_________________________________
City,
State and Zip Code
|
|
_________________________________
Social
Security Number
|
_________________________________
Social
Security Number
|
|
_________________________________
Telephone
Number
|
_________________________________
Telephone
Number
|
|
_________________________________
Fax
Number (if available)
|
________________________________
Fax
Number (if available)
|
|
_________________________________
E-Mail
(if available)
|
________________________________
E-Mail
(if available)
|
|
__________________________________
(Signature)
|
________________________________
(Signature
of Additional Purchaser)
|
|
ACCEPTED
this ___ day of _________ 2007, on behalf of the
Company.
|
||
By: _________________________________
Name:
Title:
|
||
10
EXECUTION
BY SUBSCRIBER WHICH IS AN ENTITY
(Corporation,
Partnership, LLC, Trust, Etc.)
_____________________________________________________________________________
Name
of Entity (Please Print)
|
|
Date
of Incorporation or Organization:
|
|
State
of Principal Office:
|
|
Federal
Taxpayer Identification Number:
____________________________________________
Office
Address
____________________________________________
City,
State and Zip Code
____________________________________________
Telephone
Number
____________________________________________
Fax
Number (if available)
____________________________________________
E-Mail
(if available)
|
|
By:
_________________________________
Name:
Title:
|
|
[seal]
Attest:
_________________________________
(If
Entity is a Corporation)
|
_________________________________
_________________________________
Address
|
ACCEPTED
this ____ day of __________ 2007, on behalf of the
Company.
|
|
By:
_________________________________
Name:
Title:
|
11
INVESTOR
QUESTIONNAIRE
Instructions:
Check all boxes below which correctly describe you.
o |
You
are (i)
a
bank, as defined in Section 3(a)(2) of the Securities Act of 1933,
as
amended (the “Securities
Act”),
(ii)
a
savings and loan association or other institution, as defined in
Section
3(a)(5)(A) of the Securities Act, whether acting in an individual
or
fiduciary capacity, (iii)
a
broker or dealer registered pursuant to Section 15 of the Securities
Exchange Act of 1934, as amended (the “Exchange
Act”),
(iv)
an insurance company as defined in Section 2(13) of the Securities
Act,
(v)
an investment company registered under the Investment Company Act
of 1940,
as amended (the “Investment
Company Act”),
(vi)
a
business development company as defined in Section 2(a)(48) of the
Investment Company Act, (vii)
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, as amended, (viii)
a
plan established 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 and you have total assets in excess
of
$5,000,000, or (ix)
an employee benefit plan within the meaning of the Employee Retirement
Income Security Act of 1974, as amended (“ERISA”)
and (1) the decision that you shall subscribe for and purchase shares
of
common stock and warrants to purchase common stock (the “Units”),
is made by a plan fiduciary, as defined in Section 3(21) of ERISA,
which
is either a bank, savings and loan association, insurance company,
or
registered investment adviser, or (2) you have total assets in excess
of
$5,000,000 and the decision that you shall subscribe for and purchase
the
Shares is made solely by persons or entities that are accredited
investors, as defined in Rule 501 of Regulation D promulgated under
the
Securities Act (“Regulation
D”)
or (3) you are a self-directed plan and the decision that you shall
subscribe for and purchase the Units is made solely by persons or
entities
that are accredited investors.
|
o |
You
are a private business development company as defined in Section
202(a)(22) of the Investment Advisers Act of 1940, as
amended.
|
o |
You
are an organization described in Section 501(c)(3) of the Internal
Revenue
Code of 1986, as amended (the “Code”),
a corporation, Massachusetts or similar business trust or a partnership,
in each case not formed for the specific purpose of making an investment
in the Units and its underlying securities in excess of
$5,000,000.
|
o |
You
are a director or executive officer of KeyOn Communications,
Inc.
|
o |
You
are a natural person whose individual net worth, or joint net worth
with
your spouse, exceeds $1,000,000 at the time of your subscription
for and
purchase of the Units.
|
o |
You
are a natural person who had an individual income in excess of $200,000
in
each of the two most recent years or joint income with your spouse
in
excess of $300,000 in each of the two most recent years, and who
has a
reasonable expectation of reaching the same income level in the current
year.
|
o |
You
are a trust, with total assets in excess of $5,000,000, not formed
for the
specific purpose of acquiring the Units and whose subscription for
and
purchase of the Units is directed by a sophisticated person as described
in Rule 506(b)(2)(ii) of Regulation
D.
|
o |
You
are an entity in which all of the equity owners are persons or entities
described in one of the preceding
paragraphs.
|
12
Check
all boxes below which correctly describe you.
With
respect to this investment in the Units, your:
Investment
Objectives: x Aggressive
Growth x Speculation
Risk
Tolerance: o Low
Risk o Moderate
Risk x High
Risk
Are
you
associated with a NASD Member Firm? o Yes
o No
Your
initials (purchaser and co-purchaser, if applicable) are required for each
item
below:
____
____ I/We
understand that this investment is not guaranteed.
____
____ I/We
are
aware that this investment is not liquid.
____
____ I/We
are
sophisticated in financial and business affairs and are able
to
evaluate the risks and merits of an investment in this offering.
____
____ I/We
confirm that this investment is considered “high risk.” (This type of investment
is considered high risk due to the inherent risks including lack
of
liquidity and lack of diversification. Success or failure
of private placements such as this is dependent on the corporate issuer
of these
securities and is outside the control of the investors. While potential loss
is
limited to the amount invested, such
loss
is possible.)
The
Subscriber hereby represents and warrants that all of its answers to this
Investor Questionnaire are true as of the date of its execution of the
Subscription Agreement pursuant to which it purchased the Units.
___________________________________
Name
of Purchaser [please print]
___________________________________
Signature
of Purchaser (Entities please
provide
signature of Purchaser’s duly
authorized
signatory.)
___________________________________
Name
of Signatory (Entities only)
___________________________________
Title
of Signatory (Entities only)
|
___________________________________
Name
of Co-Purchaser [please print]
___________________________________
Signature
of Co-Purchaser
|
13
VERIFICATION
OF INVESTMENT ADVISOR/BROKER
I
state
that I am familiar with the financial affairs and investment objectives of
the
investor named above and reasonably believe that a purchase of the securities
is
a suitable investment for this investor and that the investor, either
individually or together with his or her purchaser representative, understands
the terms of and is able to evaluate the merits of this offering. I
acknowledge:
(a)
|
that
I have reviewed the Subscription Agreement and forms of securities
presented to me, and attachments (if any)
thereto;
|
(b)
|
that
the Subscription Agreement and attachments thereto have been fully
completed and executed by the appropriate party;
and
|
(c)
|
that
the subscription will be deemed received by the Company upon acceptance
of
the Subscription Agreement.
|
Deposit
securities from this offering directly to purchaser’s account? o Yes
o No
If
“Yes,”
please indicate the account number :
_____________________________________
_____________________________________ ____________________________________
Broker/Dealer Account
Executive
_____________________________________ ____________________________________
(Name
of
Broker/Dealer)
(Signature)
_____________________________________ ____________________________________
(Street
Address of Broker/Dealer Office) (Print
Name)
_____________________________________ ____________________________________
(City
of
Broker/Dealer Office) (State) (Zip)
(Representative
I.D. Number)
_____________________________________ ____________________________________
(Telephone
Number of Broker/Dealer Office) (Date)
_____________________________________
____________________________________
(Fax
Number of Broker/Dealer Office) (E-mail
Address of Account Executive)
14