UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of the earliest event reported): July 31, 1997
21ST CENTURY WIRELESS GROUP, INC.
(NAME OF SMALL BUSINESS ISSUER IN ITS CHARTER)
Nevada 0-27770 41-1824951
(State or other jurisdiction (Commission (IRS employer
of incorporation) File Number) identification No.)
406 Gateway Boulevard, Burnsville, Minnesota 55337
(Address of principal executive offices)
Issuer's telephone number (612) 890-8800
TABLE OF CONTENTS
PAGE
Item 1. Changes in Control of Registrant.................................... 1
Item 2. Acquisition or Disposition of Assets................................ 1
Item 3. Bankruptcy or Receivership.......................................... 1
Item 4. Changes in Registrant's Certifying Accountant....................... 1
Item 5. Other Events........................................................ 2
Item 6. Resignations of Registrant's Directors.............................. 2
Item 7. Financial Statements and Exhibits................................... 2
Item 8. Change in Fiscal Year............................................... 2
SIGNATURE ................................................................ 3
Item 1. Change in Control of Registrant........................ Not Applicable
Item 2. Acquisition or Disposition of Assets................... Not Applicable
Item 3. Bankruptcy or Receivership............................. Not Applicable
Item 4. Changes in Registrant's Certifying Accountant.......... Not Applicable
<PAGE>
Item 5. Other Events........................................................
Transactions with Private Investors
On July 9, 1997 the Company completed a transaction with a group of private
investors. The investors purchased 600,000 shares of the common stock of the
Company at a purchase price of $1.00 per share. The investors also received,
without additional charge, warrants to purchase another 800,000 shares of common
stock of the Company at a purchase price of $1.00 per share. The warrants are
exercisable for a period of five years. As part of the consideration for the
stock and warrants, one of the private investors has agreed to guaranty a bank
loan to the Company in the amount of $400,000 and to provide other assistance to
the Company in connection with the Company's financial activities. Charles J.
Burns provided consulting services to the Company in 1996 and 1997 in connection
with completing the transaction with the investors. Mr. Burns fee for his
services was $45,000. The Company has paid Mr. Burns $25,000 in cash and issued
20,000 shares of common stock and warrants to purchase 45,000 additional shares
of common stock in full payment of Mr. Burns' consulting fee. The shares and
warrants are included in the total package of 600,000 shares and 800,000
warrants described above. Transactions with Mr. Hansel
On July 9, 1997, the Company completed the purchase of certain assets from Alan
M. Hansel and Southern Minnesota Communications, Inc. The Company originally
entered into a contract for this purchase on February 9, 1996 but deferred the
final closing of the purchase until the closing of the equity financing
transaction described above under "Transactions with private investors, and
other investors." $300,000 of the proceeds of the equity financing transaction
were used to pay all current installments of the purchase agreement with Mr.
Hansel. The Company still owes Mr. Hansel $399,400 under the purchase agreement
to be paid in three installments on December 31, 1997, July 9, 1998 and July 9,
1999. Title to all assets being purchased from Mr. Hansel and his Company has
now been transferred to the Company. Mr. Hansel has retained a security interest
in certain equipment and mortgages on certain real estate transferred to the
Company to secure the Company's obligation to make the three future payments
under the purchase agreement. The Company has also entered into a 3-year
employment contract with Mr. Hansel providing for compensation at the rate of
$78,000 per year but subject to termination by either Mr. Hansel or the Company
under certain circumstances.
Changes in the Board of Directors
Effective July 9, 1997 the following individuals have resigned from the
Company's Board of Directors: Kenneth Thomson, Thomas Venable, Mark Seely, and
Galen McCord. Contemporaneously with the resignation, each of these individuals
has received, without charge, a grant of options to purchase 15,000 shares of
the Company's stock at $1.00 per share. The following individuals have been
appointed to the vacated seats on the Board of Directors:
Gary Kohler, Charles J. Burns and Ivan Arenson.
Notice of Late Filing of Initial Statement of Beneficial Interest of Securities
Alan Hansel, a significant shareholder and member of the Company's Board of
Directors has recently filed an Initial Statement of Beneficial Interest of
Securities. This document was filed after the prescribed due date.
Item 6. Resignation of Registrant's Directors................... Not Applicable
Item 7. Financial Statements and Exhibits....................... Not Applicable
Item 8. Change in Fiscal Year................................... Not Applicable
Exhibits: The following exhibits are filed herewith:
- ------------------------------------- ------------------------------------------
EXHIBIT NUMBER DESCRIPTION OF EXHIBIT
- ------------------------------------- ------------------------------------------
4.1 Subscription Agreement with New Investors
- ------------------------------------- ------------------------------------------
4.2 Form of Warrant Agreement
- ------------------------------------- ------------------------------------------
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
21ST CENTURY WIRELESS GROUP, INC.
By:_________________________________________
/g/ Stephen J. Mocol
Vice President & Chief Financial Officer
EXHIBIT 4.1
21ST CENTURY WIRELESS GROUP, INC.
SUBSCRIPTION AND INVESTMENT REPRESENTATION AGREEMENT
THIS AGREEMENT, made effective this 3rd day of July, 1997, is among 21ST
CENTURY WIRELESS GROUP, INC., a Nevada corporation (the "Company"), and Gary
Kohler, Jack Kohler, Charles Burns, Ivan Arenson, Circle F Ventures, LLC, Irvin
Kessler, Andrew Redleaf and Efi Gildor (individually a "Subscriber" and
collectively the "Subscribers").
In consideration of the mutual promises contained herein, and other good
and valuable consideration, the parties hereto agree as follows:
1. AGREEMENT OF SALE. The Company agrees to sell to certain Subscribers
listed below (the "Stock Subscribers"), and the Stock Subscribers agree
to purchase from the Company, 600,000 shares of Common Stock, par value
$0.001 per share, of the Company (the "Common Stock") at a purchase
price of $1.00 per share. The Stock Subscribers shall, on the date
hereof, purchase the number of shares indicated below by paying the
purchase price thereof by wire transfer to the trust account of the
Company's counsel, Moss & Barnett:
- ----------------------------------------- --------------------------------------
STOCK SUBSCRIBER NAME NUMBER OF SHARES
- ----------------------------------------- --------------------------------------
Gary Kohler 85,000
- ----------------------------------------- --------------------------------------
Jack Kohler 15,000
- ----------------------------------------- --------------------------------------
Charles Burns 20,000
- ----------------------------------------- --------------------------------------
Circle F Ventures, LLC 50,000
- ----------------------------------------- --------------------------------------
Irvin Kessler 237,000
- ----------------------------------------- --------------------------------------
Andrew Redleaf 86,000
- ----------------------------------------- --------------------------------------
Efi Gildor 107,000
- ----------------------------------------- --------------------------------------
The Company will promptly deliver to each Stock Subscriber a certificate
registered in that Stock Subscriber's name, dated as of the date hereof,
representing the shares of Common Stock purchased by that Stock
Subscriber (the "Shares") against payment to the Company of the purchase
price of the Shares being purchased by that Stock Subscriber. The number
of shares to be issued to each Stock Subscriber under this Agreement
shall be increased in the circumstances stated in Section 4(h).
2. ISSUANCE OF THE WARRANTS. The Company shall issue to each Subscriber on
the date hereof, without the payment of additional consideration, a
warrant in the form of Exhibit A attached hereto (the "Warrants" and,
together with the Shares and the Common Stock to be issued pursuant to
the Warrants, the "Securities") to purchase shares of Common Stock, as
follows:
<PAGE>
- ------------------------------------- ------------------------------------------
SUBSCRIBER NAME NUMBER OF SHARES
- ------------------------------------- ------------------------------------------
Gary Kohler 125,000 (the "Escrow Warrant")
- ------------------------------------- ------------------------------------------
Gary Kohler 110,000
- ------------------------------------- ------------------------------------------
Charles Burns 45,000
- ------------------------------------- ------------------------------------------
Ivan Arenson 25,000
- ------------------------------------- ------------------------------------------
Jack Kohler 15,000
- ------------------------------------- ------------------------------------------
Circle F. Ventures, LLC 50,000
- ------------------------------------- ------------------------------------------
Irvin Kessler 237,000
- ------------------------------------- ------------------------------------------
Andrew Redleaf 86,000
- ------------------------------------- ------------------------------------------
Efi Gildor 107,000
- ------------------------------------- ------------------------------------------
Under this allocation of Warrants, each Stock Subscriber is receiving a
Warrant to purchase one share of Common Stock for each Share purchased
under this Agreement and Gary Kohler ("Kohler"), Charles Burns and Ivan
Arenson are receiving Warrants to purchase additional Common Stock. The
Escrow Warrant to be issued to Kohler shall be held by the Company in
escrow subject to the provisions of Section 3 below. The Company will
promptly deliver all other Warrants registered in the appropriate
Subscribers' name, dated as of the date hereof, representing the
Warrants purchased by such Subscriber. Each Warrant shall be in a form
comparable to all other warrants issued by the Company prior to the date
hereof and shall provide for an exercise price of $1.00 per share and an
exercise period commencing on the date of this Agreement and terminating
on the fifth anniversary date of this Agreement.
3. ESCROW OF CERTAIN WARRANTS. The Escrow Warrant to be issued to Kohler
under this Agreement shall be retained by the Company in escrow until
the satisfaction of the following two conditions:
a. Kohler shall have made available to the Company an unsecured
personal guaranty of payment from Kohler with customary terms
and conditions to assist the Company in obtaining a commitment
letter from a commercial bank located in Minnesota for a loan of
$400,000.00 on reasonable and customary terms and conditions.
The Company undertakes to use its best efforts to obtain such
loan. The loan shall be secured by a security interest in all
assets of the Company except (i) real estate and (ii) the
Company's Federal Communications Commission licenses. The
security interest shall be a first security interest except for
a prior security interest granted in certain equipment of the
Company as described in Section 13(d).
b. The Company shall have received commitments (in the form of
Exhibit B attached hereto) from two broker-dealers eligible to
act as market makers for the Common Stock under the rules of the
National Association of Securities Dealers.
Promptly upon satisfaction of both of these conditions, the Company
shall deliver the Escrow Warrant to Kohler registered in Kohler's name,
dated as of the date hereof, representing a portion of the Warrants
purchased by Kohler. If either condition is not satisfied in its
entirety by 5:00 p.m. CDT on October 1, 1997, the Escrow Warrant shall,
at the option of the Company, be canceled and, upon such cancellation,
Kohler shall have no further interest in the Escrow Warrant. Further,
Kohler, agrees that he will continue to
<PAGE>
provide his guaranty for any renewal or replacement of the loan
described in subsection (a) above through June 30, 2000.
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. In consideration of the
Subscribers' agreement to purchase the Shares, the Company represents
and warrants to the Subscribers as follows:
a. ORGANIZATION. The Company is a duly organized and validly
existing corporation under the laws of the State of Nevada. The
Company has the requisite corporate power and authority to own
its properties and to carry on its business in all material
respects as it is now being conducted and as proposed to be
conducted. The Company has no subsidiaries or direct or indirect
ownership interest in any firm, corporation, association or
business except that the Company does have an interest in the
assets of Southern Minnesota Communications, Inc. pursuant to a
purchase agreement described in Section 13(d) below. The Company
has the requisite corporate power and authority to authorize,
issue, sell and deliver the Securities and to otherwise perform
its obligations under this Agreement. The Company is qualified
to do business in each jurisdiction in which the conduct of its
business or the ownership of its properties requires such
qualification. The SEC Filings (as defined below) contain true
copies of the articles of incorporation and by-laws of the
Company as currently in effect.
b. GOOD STANDING. The Company is in good standing under the laws of
the State of Nevada, and there are no proceedings or actions
pending to limit or impair any of its powers, rights and
privileges, or to dissolve it.
c. CORPORATE AUTHORIZATION. The execution and delivery of this
Agreement and the consummation of the transactions contemplated
hereby have been duly authorized by proper corporate action of
the Company. This Agreement has been duly executed and delivered
by authorized officers of the Company and is a valid and binding
agreement on the part of the Company that is enforceable against
the Company in accordance with its terms, except as the
enforceability thereof may be limited by applicable bankruptcy,
insolvency, moratorium, reorganization or other laws of general
application affecting enforcement of creditors' rights or by
general principles of equity.
d. SHARES. The Shares, when issued and paid for pursuant to the
terms of this Agreement, will be duly and validly authorized,
validly issued and outstanding, fully paid, nonassessable shares
and will be free and clear of all pledges, liens, encumbrances
and restrictions, except as set forth in Section 8 below.
e. NO BROKERS OR FINDERS. Except for Burns, Heenan & Smith, no
person, firm or corporation has or will have, as a result of any
act or omission of the Company, any right, interest or valid
claim against the Company or any Subscriber for any commission,
fee or other compensation as a finder or broker in connection
with the transactions contemplated by this Agreement. The
Company shall be solely
<PAGE>
responsible for paying the compensation of Burns, Heenan & Smith
for services rendered in connection with the transactions
contemplated by this Agreement.
f. GOVERNMENTAL CONSENTS. Based in part upon the representations of
the Subscribers in this Agreement, no consent, approval,
qualification, or order or authorization of, or filing with, any
local, state or federal governmental authority is required on
the part of the Company in connection with the Company's valid
execution, delivery or performance of this Agreement, the offer,
sale, issuance or delivery of the Securities by the Company, or
the performance by the Company of its obligations in respect
thereof except such filings as have been made, except any
notices of sale required to be filed with the Commission (as
defined below) under Regulation D of the Act (as defined below),
or such post-closing filings as may be required under applicable
state securities laws, which will be timely filed by the Company
at its expense within the applicable periods therefor.
g. NO CONFLICTS. Neither the execution, delivery nor performance by
the Company of this Agreement, nor compliance with the terms and
provisions hereof nor the consummation of the transactions
contemplated hereby will (i) contravene any applicable law,
statute, rule, regulation, order, writ, injunction or decree of
any Federal, state or local government, court or governmental
department, commission, board, bureau, agency or
instrumentality, (ii) conflict or be inconsistent with, or
result in any breach of any of the terms, covenants, conditions
or provisions of, or constitute a default (either immediately or
with notice or the passage of time or both) under, any
indenture, mortgage, deed of trust, credit agreement or
instrument or any other material agreement or instrument to
which the Company is a party or by which it may be bound or to
which any of the foregoing may be subject or (iii) violate any
provisions of the Articles of Incorporation or Bylaws of the
Company.
h. LITIGATION. Except as described in Exhibit C attached hereto,
there are no legal actions, suits, arbitrations or other legal,
administrative or governmental proceedings pending or, to the
best of the Company's knowledge, threatened against the Company
or its properties, assets or business which, if determined
adversely, would have a material adverse effect on the Company
or its properties, assets or business and neither the Company
nor any of its officers is aware of any facts which might result
in or form the basis for any such action, suit or other
proceeding. The Company is not in material default with respect
to any judgment, order or decree of any court or any
governmental agency or instrumentality. In the event the Company
is found liable in any lawsuit arising from the potential claim
described in Exhibit C, the Company shall, without additional
cost, promptly issue additional Common Stock to each Stock
Subscriber. The number of additional shares to be issued shall
be the number determined by the Board of Directors in its
reasonable discretion to be sufficient to give each Stock
Subscriber an investment in the Company after giving effect to
the result in the lawsuit with a value equivalent to the value
their investment would have had if the result in the lawsuit had
been favorable to the Company. By way of illustration but not
limitation, if the Company is required only to issue equity
interests in the Company as damages to any party as a result of
the lawsuit, the Company shall issue additional Common Stock to
the Stock Subscribers
<PAGE>
so that the Stock Subscribers have the same percentage ownership
interest in the Company immediately after the issuance of such
equity interests as immediately before the issuance of such
equity interests. As a further illustration, if the Company is
required to make a monetary payment as damages to any party as a
result of the lawsuit, the Company shall issue additional Common
Stock to the Stock Subscribers so that the book value of the
Common Stock held by the Stock Subscribers is the same
immediately after the issuance of such equity interests as
immediately before the issuance of such equity interests.
i. SECURITIES LAWS FILINGS. The Company has furnished to Subscriber
complete and accurate copies of its initial Registration on Form
10-SB and its annual report on Form 10-KSB for the year ended
December 31, 1996, and quarterly report on Form 10-QSB for the
quarter ended March 31, 1997 (the "SEC Filings"), in each case
as filed with the Securities and Exchange Commission (the
"Commission"). The Company has not filed with the Commission any
registration statement, report, proxy or information statement
or other information under the Act (as defined below), or the
Securities Exchange Act of 1934, as amended (the "Exchange
Act"), since the date of the filing of the 10-KSB, except the
other SEC Filings, nor has it amended any of the SEC Filings.
The SEC Filings are incorporated into this Agreement by
reference and the Company represents that each of the SEC
Filings was true and correct at the time it was filed.
j. CHANGES. There has been no material adverse change in the
financial condition or business, assets or properties of the
Company since December 31, 1996, and March 31, 1997.
k. CAPITALIZATION AND VOTING RIGHTS. The authorized capital of the
Company consists of (a) 25,000,000 shares of common stock,
$0.001 par value (the "Common Stock"), of which there are
3,318,291 fully paid and nonassessable shares duly issued and
outstanding and no other shares issued and outstanding, and (b)
500,000 undesignated shares, none of which is outstanding. All
of the outstanding shares of Common Stock have been validly
issued and are fully paid and nonassessable. No class of capital
stock of the Company is entitled to preemptive or similar rights
to purchase any securities of the Company. Except as listed in
Exhibit D attached hereto, there are no securities of the
Company subject to conversion rights and there are no warrants
or options to purchase securities of the Company.
l. FINANCIAL STATEMENTS. The financial statements of the Company as
included in the SEC Filings, are in accordance with the books
and records of the Company, have been prepared in conformity
with generally accepted accounting principles consistently
applied and present fairly the financial condition of the
Company as of the dates stated in the SEC Filings, and the
results of the operations of the Company for the financial
periods then ended, and from December 31, 1996 to the date
hereof there has been no materially adverse change in such
financial condition.
m. TAXES. The Company has filed all federal, state and local tax
returns which are required to be filed, and has paid all taxes
shown on such returns to be due and all
<PAGE>
other tax assessments received by it to the extent that such
assessments have become due. The Company is not subject to any
pending, or, to its knowledge, threatened, audit with respect to
any of such tax returns.
n. COMPLIANCE WITH LAWS. The Company is in substantial compliance
with all material Federal, state and local laws, rules and
regulations binding upon it.
o. FCC LICENSES. The Company is the named license holder of not
fewer than 250 Federal Communications Commissions ("FCC")
licenses used in the Company's operations. The Company has the
exclusive right to use those licenses free and clear of all
claims and restrictions (other than those restrictions imposed
by the FCC) and is not aware of any act or omission which would
cause the FCC to terminate or decline to renew those licenses.
p. FULL DISCLOSURE. Nothing in this Agreement or in the SEC Filings
contains an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances in
which they were made, not misleading.
5. REPRESENTATIONS AND WARRANTIES OF THE SUBSCRIBERS. In consideration of
the Company's agreement to issue the Securities, the Subscribers hereby
represent and warrant to the Company as follows:
a. INFORMATION ABOUT THE COMPANY. Each Subscriber represents and
warrants that it has (i) received the SEC Filings, (ii) had the
opportunity to ask questions of, and receive answers from, the
Company, or an agent of the Company, concerning the terms and
conditions of the investment and the business and affairs of the
Company and to obtain any additional information necessary to
verify such information, and (iii) received such additional
information concerning the Company as it considers necessary or
advisable in order to form a decision concerning an investment
in the Company.
b. HIGH DEGREE OF RISK. Each Subscriber represents and warrants
that it realizes that the Securities are speculative and involve
a high degree of risk, including the risks of receiving no
return on the investment and of losing the investment in the
Company.
c. ABILITY TO BEAR THE RISK. Each Subscriber represents and
warrants that it is able to bear the economic risk of investment
in the Securities, including the total loss of such investment.
d. APPROPRIATE INVESTMENT. Each Subscriber represents and warrants
that it believes, in light of the information provided pursuant
this Agreement and the SEC Filings, that subscribing for the
Securities pursuant to the terms of this Agreement is an
appropriate and suitable investment for it.
<PAGE>
e. BUSINESS SOPHISTICATION. Each Subscriber represents and warrants
that it is experienced and knowledgeable in financial and
business matters, capable of evaluating the merits and risks of
purchasing securities of the Company.
f. RESIDENCY. Each Subscriber represents and warrants that he is a
resident of the State listed for that Subscriber in the
"Subscriber Information" sheet attached to this Agreement.
g. EXEMPTION. The Company reserves the right to request information
from each Subscriber from time to time to permit the Company to
verify that the issuance of the Securities is exempt under the
Act and any applicable state law.
6. INVESTMENT PURPOSE IN ACQUIRING THE UNITS. Each Subscriber and the
Company acknowledge that none of the Securities has been registered
under the Securities Act of 1933, as amended (the "Act"), or applicable
state securities laws and that such Securities will be issued to the
Subscribers in reliance on exemptions from the registration requirements
of the Act and applicable state securities laws and in reliance on the
Subscribers' and the Company's representations and agreements contained
herein. Each Subscriber represents and warrants that it is subscribing
to acquire the Securities for its account for investment purposes only
and not with a view to their resale or distribution. Each Subscriber
represents and warrants that it has no present intention to divide its
participation with others or to resell or otherwise dispose of all or
any part of the Securities. In making these representations, each
Subscriber understands that, in the view of the Commission, exemption of
the Securities from the registration requirements of the Act would not
be available if, notwithstanding the representations of the Subscribers,
the Subscribers have in mind merely acquiring the Securities for resale
upon the occurrence or nonoccurrence of some predetermined event.
7. COMPLIANCE WITH SECURITIES ACT. Each Subscriber agrees that if the
Securities or any part thereof are sold or distributed in the future,
each Subscriber must sell or distribute them pursuant to the
requirements of the Act and applicable state securities laws. Each
Subscriber agrees that it will not transfer any part of the Securities
without (a) obtaining an opinion of counsel satisfactory in form and
substance to the counsel for the Company to the effect that such
transfer is exempt from the registration requirements under the Act and
applicable state securities laws or (b) such registration.
8. RESTRICTIVE LEGEND. Each Subscriber agrees that Company may place a
restrictive legend on the certificates representing the Securities
containing substantially the following language:
"The securities represented by this certificate have not been registered
under the Securities Act of 1933, as amended, or any state securities
laws. They may not be sold, offered for sale, or transferred in the
absence of either an effective registration under the Securities Act of
1933, as amended, and under the applicable state securities laws, or an
opinion of counsel satisfactory to the Company that such transaction is
exempt from registration
<PAGE>
under the Securities Act of 1933, as amended, and under the applicable
state securities laws."
9. REMOVAL OF LEGEND. Upon the sale of any of the Securities in accordance
with Rule 144 or any similar rule then in effect, or pursuant to an
effective registration statement, the Company shall instruct its
transfer agent to issue new certificates for the Securities without the
restrictive legend described in Section 8. In addition, if any
Subscriber delivers to the Company an opinion of counsel satisfactory to
the Company to the effect that no subsequent transfer of such Securities
will require registration under the Act, the Company will promptly upon
such contemplated transfer deliver new certificates evidencing such
Securities that do not bear the legend set forth in Section 8.
10. STOP TRANSFER ORDER. Each Subscriber agrees that, during all times that
the Securities are subject to restrictions as provided in Section 8, the
Company may place a stop transfer order with its registrar and stock
transfer agent covering all certificates representing the Securities.
11. KNOWLEDGE OF RESTRICTIONS UPON TRANSFER OF THE SECURITIES. Each
Subscriber understands that the Securities are not freely transferable
and may in fact be prohibited from sale for an extended period of time
and that, as a consequence thereof, the Subscribers must bear the
economic risk of investment in the Securities for an indefinite period
of time and may have extremely limited opportunities to dispose of the
Securities. Each Subscriber understands that Rule 144 under the Act
permits the transfer of "restricted securities" of the type here
involved only under certain conditions, including a minimum holding
period and the availability to the public of certain information
concerning the Company.
12. REGISTRATION RIGHTS.
a. GENERAL. In the event the Company files a registration statement
under the Act during the Registration Period (as defined below)
for any Common Stock, the Company will use its best efforts to
permit each Subscriber to register its Securities on a piggyback
basis as part of such registration. The Company may require that
each Subscriber pay all incremental costs associated with such
piggyback registration. The Company may restrict the volume of
the Subscribers' piggyback registration if the Company
reasonably determines that such a reduction is necessary to
avoid a material adverse impact on the registration and if, in
connection with such reduction, the Company treats all holders
of unregistered securities in an equivalent manner. In addition,
during the Registration Period, any Subscriber may demand that
the Company proceed, at the Company's cost, to file a
registration statement under the Act with respect to the
Securities held by that Subscriber. Upon such demand, the
Company shall proceed promptly to file such a registration
statement. The "Registration Period" with respect to any
Security shall be the period beginning on the 120th day after
the issuance of such Security to the Subscriber and continuing
until all holding period under Rule 144 shall have expired as to
the Subscriber. In
<PAGE>
the case of a Warrant, issuance shall be deemed to have occurred
upon issuance of Common Stock upon exercise of the Warrant.
b. INDEMNIFICATION. In the event that any Securities held by a
Subscriber are included in a registration statement under this
Section:
(i) The Company will indemnify and hold harmless the
Subscriber, and any underwriter (as defined in the Act)
for the Subscriber and each person, if any, who controls
the Subscriber or such underwriter within the meaning of
the Act from and against any and all loss, damage,
liability, cost and expense (or actions, proceedings or
settlements in respect thereof) to which the Subscriber
or any such underwriter or controlling person may become
subject under the Act or otherwise, arising out of or
based upon any statement or alleged untrue statement of
any material fact by the Company contained in such
registration statement, any prospectus contained therein
or any amendment or supplement thereto or any document
incident to any registration, qualification or
compliance, or arising out of or based upon the omission
or alleged omission by the Company to state therein a
material fact required to be stated therein or necessary
to make the statements therein, in light of the
circumstances in which they were made, not misleading
and will reimburse the Subscriber and each person
controlling the Subscriber, each such underwriter, and
each person who controls any such underwriter, for any
legal and any other expenses reasonably incurred in
connection with investigating and defending or settling
any such claim, loss, damage, liability, or action;
provided, however, that the Company will not be liable
in any such case to the extent that any such loss,
damage, liability, cost or expense arises out of or is
based upon an untrue statement or alleged untrue
statement or omission or alleged omission so made in
conformity with information furnished by the Subscriber,
such underwriter or such controlling person. It is
agreed that the indemnity agreement contained in this
Section shall not apply to amounts paid in settlement of
any such loss, claim, damage, liability, or action if
such settlement is effected without the consent of the
Company (which consent has not been unreasonably
withheld).
(ii) The Subscriber will indemnify and hold harmless the
Company, and each of its officers and directors, and any
underwriter (as defined in the Act) and each person, if
any, who controls the Company or such underwriter within
the meaning of the Act from and against any and all
loss, damage, liability, cost and expense (or actions,
proceedings or settlements in respect thereof) to which
the Company or any such underwriter or controlling
person may become subject under the Act or otherwise,
arising out of or based upon any untrue or alleged
untrue statement of any material fact by the Subscriber
contained in such registration statement, any prospectus
contained therein or any amendment of supplement thereto
or any document incident to any registration,
qualification or compliance, or arising out of or based
upon the omission or the alleged omission by the
Subscriber to state therein a material fact required to
be stated therein or necessary to make the statements
therein,
<PAGE>
in light of the circumstances in which they were made,
not misleading or any violation by the Subscriber of the
Act or any rule or regulation thereunder applicable to
the Subscriber and relating to action or inaction
required of the Subscriber in connection with any such
registration, qualification, or compliance, and will
reimburse the Company and each person controlling the
Company, each such underwriter, and each person who
controls any such underwriter, for any legal and any
other expenses reasonably incurred in connection with
investigating and defending or settling any such claim,
loss, damage, liability, or action; provided, however,
that the Subscriber shall be liable in the case of any
such untrue statement or alleged untrue statement or
omission or alleged omission only to the extent that any
such untrue statement or alleged untrue statement or
omission or alleged omission was so made in reliance
upon and in conformity with information furnished to the
Company by the Subscriber. It is agreed that the
indemnity agreement contained in this Section shall not
apply to amounts paid in settlement of any such loss,
claim, damage, liability, or action if such settlement
is effected without the consent of the Subscriber (which
consent shall not be unreasonably withheld).
(iii) If the indemnification provided for in Subsections (i)
or (ii) above is held by a court of competent
jurisdiction to be unavailable to the indemnified party
with respect to any loss, liability, claim, damage, or
expense referred to therein, then the indemnifying
party, in lieu of indemnifying such indemnified party
hereunder, shall contribute to the amount paid or
payable by such indemnified party as a result of such
loss, liability, claim, damage, or expense in such
proportion as appropriate to reflect the relative fault
of the indemnifying party on the one hand and of the
indemnified party on the other in connection with the
statements or omissions that resulted in such loss,
liability, claim, damage, or expense as well as any
other relevant equitable considerations. The relative
fault of the indemnifying party and of the indemnified
party shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement
of a material fact or omission to state a material fact
relates to information supplied by the indemnifying
party or by the indemnified party and the parties'
relative intent, knowledge, access to information, and
opportunity to correct or prevent such statement or
omission.
13. CONDITIONS OF EACH SUBSCRIBER'S OBLIGATION. The obligation of each
Subscriber to purchase and pay for the Shares that that Subscriber has
agreed to purchase is subject to the fulfillment of the following
conditions, any of which may be waived in whole or in part by that
Subscriber:
a. NO ERRORS, ETC. The representations and warranties of the
Company under this Agreement will be true in all material
respects as of the date hereof with the same effect as though
made on and as of such date.
<PAGE>
b. COMPLIANCE WITH AGREEMENT. The Company shall have performed and
complied in all material respects with all agreements or
conditions required by this Agreement to be performed and
complied with by it prior to the date hereof.
c. REQUIRED FILINGS. All material governmental filings,
authorizations and approvals that are required for the
consummation of the transactions contemplated hereby will have
been duly made and obtained.
d. SOUTHERN MINNESOTA COMMUNICATIONS CLOSING. The Company shall
have completed all transactions to be completed by it in
connection with its purchase of certain assets from Alan Hansel
and Southern Minnesota Communications, Inc., provided that the
Company need not have paid that portion of the purchase price
for those assets which is not due until after the date of this
Agreement. The Company shall have received executed deeds, bills
of sale and lien releases as are required to vest the acquired
assets in the Company subject only to a security interest in
favor of Alan Hansel with respect to certain equipment and real
estate acquired from Alan Hansel. To the extent the completion
of the transactions described in this subsection requires the
payment of money to or on behalf of Alan Hansel or Southern
Minnesota Communications, Inc., the Company may use up to
$300,000.00 in proceeds of the sale of Shares under this
Agreement for such payment. Any such use of proceeds of sale of
Shares shall be in the form of the issuance of one or more
checks payable to Alan Hansel, Southern Minnesota
Communications, Inc. and/or Shirley Hansel and such checks may
be delivered by the Company only in contemporaneous exchange for
the deeds, bills of sale and lien releases to be executed by the
recipients of such checks. All proceeds of sale of Shares shall
be held in the trust account of Moss & Barnett and may be
disbursed only in the form of checks to Alan Hansel, Southern
Minnesota Communications, Inc. and/or Shirley Hansel as
described above until all transactions with Alan Hansel and
Southern Minnesota Communications, Inc. (other than the payment
of that portion of the purchase price which is not due until
after the date of this Agreement) are complete. Upon completion
of such transactions, Moss & Barnett may disburse all remaining
proceeds of sale of Shares to the Company. In the event all
required transactions with Alan Hansel, Southern Minnesota
Communications, Inc. and/or Shirley Hansel are not completed by
5:00 p.m. on July 11, 1997, all proceeds of sale of Shares
shall, at the option of the Subscribers, be refunded to the
Subscribers, all Shares and Warrants shall be returned by
Subscribers to the Company and this Agreement shall be
terminated in its entirety.
e. BOARD OF DIRECTORS. Three members of the Company's Board of
Directors shall have resigned and the Board of Directors shall
have elected Gary Kohler, Charles J. Burns and Ivan Arenson (the
"New Board Members") to replace the resigning members. The New
Board Members shall have slots on the Company's staggered Board
ending in 1998, 1998 and 1997, respectively. As an express
inducement to the Subscribers to enter into this Agreement, the
Company agrees that at the end of the first term of each New
Board Member, the Company will include that New
<PAGE>
Board Member on the slate of directors recommended by the
Company for election by shareholders for one full three year
term.
f. OPINION LETTER. Moss & Barnett, counsel for the Company, shall
have provided to the Subscribers an opinion letter to the effect
that (i) the Company is duly organized and in good standing;
(ii) the Company has duly authorized, executed and delivered
this Agreement; (iii) this Agreement is enforceable against the
Company subject to standard limitations and exceptions; and (iv)
this Agreement is not in conflict with laws binding on the
Company or with other agreements to which the Company is a
party.
14. CONDITIONS TO THE COMPANY'S OBLIGATIONS. The obligation of the Company
to consummate the transactions contemplated by this Agreement is subject
to the satisfaction of the following conditions, any of which may be
waived in whole or in part by the Company:
a. NO ERRORS, ETC. The representations and warranties of each
Subscriber under this Agreement will be true in all material
respects as of the date hereof as though made on and as of such
date.
b. COMPLIANCE WITH AGREEMENT. Each Subscriber will have performed
and complied in all material respects with all agreements
required by this Agreement to be performed and complied with by
it prior to the date hereof.
c. REQUIRED FILINGS. All material governmental filings,
authorizations and approvals that are required for, or as a
result of, the consummation of the transactions contemplated
hereby will have been duly made and obtained.
15. MUTUAL CONDITIONS. All obligations of the Company and the Subscribers to
consummate the transactions contemplated by this Agreement are subject
to the satisfaction of the following conditions as of the date hereof,
any of which may be waived in whole or in part by the Company and the
Subscribers:
a. PENDING PROCEEDINGS. There will not be threatened, instituted or
pending any action or proceeding before any court or
governmental authority or agency, domestic or foreign, (i)
challenging or seeking to make illegal, delay or otherwise
directly or indirectly restrain or prohibit the consummation of
the transactions contemplated hereby or seeking to obtain
material damages in connection with such transactions, (ii)
seeking to invalidate or render unenforceable any material
provision of this Agreement or (iii) otherwise relating to and
materially adversely affecting the transactions contemplated
hereby.
b. GOVERNMENTAL ACTIONS. There will not be any action taken or any
statute, rule, regulation, judgment, order or injunction,
enacted, entered, enforced, promulgated, issued or deemed
applicable to the transactions contemplated hereby by any
federal, state or foreign court, government or governmental
authority or agency that could
<PAGE>
reasonably be expected to result, directly or indirectly, in any
of the consequences referred to in Section 15(a).
16. BINDING EFFECT. Except as otherwise expressly provided in this Agreement
or the exhibits hereto, neither this Agreement nor any interest herein
shall be assignable by any Subscriber or the Company without the prior
written consent of all other parties. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto,
and their respective heirs, legal representatives, successors and
assigns.
17. REPRESENTATIONS TO SURVIVE DELIVERY. The covenants, representations,
warranties, agreements and statements of the Company and of the
Subscribers contained in this Agreement or in any certificate, statement
or document furnished in connection herewith or in connection with the
transactions contemplated hereby will remain operative and in full force
and effect and will survive any investigation at any time by the Company
or any Subscriber, the payment of the purchase price pursuant to this
Agreement and the delivery of certificates representing the Securities.
All statements contained in any certificate, instrument or other writing
(except legal opinions) delivered pursuant hereto or in connection with
the transactions contemplated herein shall constitute representations
and warranties hereunder made by the party hereto who is responsible for
such delivery.
18. INDEMNIFICATION.
a. INDEMNIFICATION BY THE COMPANY. Company agree to indemnify and
hold each Subscriber harmless from, against and in respect of
any and all losses, costs, expenses (including without
limitation, reasonable attorneys' fees and disbursements of
counsel) that any of them may at any time suffer or incur
arising out of: (i) the breach or falsity of any representation
or warranty made by the Company in this Agreement; and (ii) the
breach of any covenant or agreement made by the Company in this
Agreement.
b. INDEMNIFICATION BY THE SUBSCRIBERS. Each Subscriber agrees to
indemnify and hold the Company harmless from, against and in
respect of any and all losses, costs, expenses (including
without limitation, reasonable attorneys' fees and disbursements
of counsel) that the Company may at any time suffer or incur
arising out of: (i) the breach or falsity of any representation
or warranty made by that Subscriber in this Agreement; and (ii)
the breach of any covenant or agreement made by that Subscriber
in this Agreement.
c. PROCEDURE FOR INDEMNIFICATION. In the event a party (the
"Indemnified Party") intends to seek indemnification pursuant to
the provisions of this Section, the Indemnified Party shall
promptly give notice hereunder to the other party (the
"Indemnifying Party") after obtaining written notice of any
claim or the service of a summons or other initial legal process
in any action instituted against the Indemnified
Party as to which recovery may be sought against the
Indemnifying
<PAGE>
Party because of the indemnification provided for in this
Section, and, if such indemnity shall arise from the claim of a
third party, the Indemnified Party shall permit the Indemnifying
Party to assume the defense of any such claim and any litigation
resulting from such claim. Notwithstanding the foregoing, the
right to indemnification hereunder shall not be affected by any
failure of the Indemnified Party to give such notice (or by
delay by the Indemnified Party in giving such notice) unless,
and then only to the extent that, the rights and remedies of the
Indemnifying Party shall have been prejudiced as a result of the
failure to give, or delay in giving, such notice. Failure by the
Indemnifying Party to notify the Indemnified Party of its
election to defend any such claim or action by a third party
within 10 days after notice thereof shall have been given to the
Indemnifying Party shall be deemed a waiver by the Indemnifying
Party of its right to defend such claim or action. If the
Indemnifying Party assumes the defense of such claim or
litigation resulting therefrom, the obligations of the
Indemnifying Party hereunder as to such claim or litigation
shall include taking all steps necessary in the defense or
settlement of such claim or litigation and holding the
Indemnified Party harmless from and against any and all damages
caused by or arising out of any settlement approved by the
Indemnifying Party or any judgment entered in connection with
such claim or litigation. The Indemnifying Party shall not, in
the defense of such claim or any litigation resulting therefrom,
consent to entry of any judgment (other than a judgment of
dismissal on the merits without costs) except with the written
consent of the Indemnified Party or enter into any settlement
(except with the written consent of the Indemnified Party) which
does not include as an unconditional term thereof the giving by
the claimant or the plaintiff to the Indemnified Party a release
from all liability in respect to such claim or litigation. If
the Indemnifying Party assumes the defense of such claim or
litigation resulting therefrom, the Indemnified Party shall bear
the fees and expenses of any additional counsel retained by it
to conduct its defense. If the Indemnifying Party does not
assume the defense of any such claim by a third party or
litigation resulting therefrom after receipt of notice from the
Indemnified Party, the Indemnified Party may defend against such
claim or litigation in such manner as it deems appropriate, and
unless the Indemnifying Party shall deposit with the Indemnified
Party a sum equivalent to the total amount demanded in such
claim or litigation plus the Indemnified Party's estimate of the
cost (including attorneys' fees) of defending the same, the
Indemnified Party may settle such claim or litigation on such
terms as it may deem appropriate and the Indemnifying Party
shall promptly reimburse the Indemnified Party for the amount of
such settlement and for all costs (including attorneys' fees),
expenses and damages incurred by the Indemnified Party in
connection with the defense against or settlement of such claim
or litigation, or if any such claim or litigation is not so
settled, the Indemnifying Party shall promptly reimburse the
Indemnified Party for the
<PAGE>
amount of any judgment rendered with respect to any claim by a
third party in such litigation and for all costs (including
attorneys' fees), expenses and damage incurred by the
Indemnified Party in connection with the defense against such
claim or litigation, whether or not resulting from, arising out
of, or incurred with respect to, the act of a third party.
19. CHANGES, WAIVER, ETC. Neither this Agreement nor any provision hereof
may be changed, waived, discharged or terminated orally, but only by a
statement in writing signed by the party against which enforcement of
the change, waiver, discharge or termination is sought.
20. EXPENSES. The Company will pay the expenses (including attorneys' and
accountants' fees) incurred by both the Company and the Subscribers in
connection with the negotiation and preparation of this Agreement and
the closing of the transactions contemplated by this Agreement. Except
as otherwise expressly provided for herein, each Subscriber and the
Company will pay all of their own expenses (including attorneys' and
accountants' fees) in connection with the performance of their
respective obligations hereunder and the consummation of the
transactions contemplated hereby (whether consummated or not).
21. RULE 144 REPORTING. With a view to maintaining the availability to the
Subscribers of Rule 144 under the Act, the Company agrees to use its
best efforts to:
a. Make and keep available public information regarding the Company
at all times as those terms are understood and defined in Rule
144 under the Act; and
b. File with the Commission in a timely manner all reports and
other documents required of the Company under the Act and the
Exchange Act at any time during which it is subject to such
reporting requirements.
c. Furnish to each Subscriber upon written request, so long as that
Subscriber owns any of the Securities, a copy of the most recent
annual or quarterly report of the Company, and such other
reports and documents as that Subscriber may reasonably request
in availing itself of any rule or regulation of the Commission
allowing that Subscriber to sell any such securities without
registration.
22. SEVERABILITY. If one or more provisions of this Agreement are held to be
unenforceable under applicable law, such provision shall be excluded
from this Agreement, and the balance of this Agreement shall be
interpreted as if such provision were so excluded and shall be
enforceable in accordance with its terms.
<PAGE>
23. COUNTERPARTS. This Agreement may be executed concurrently in one or more
counterparts, including facsimile counterparts, each of which will be
deemed an original, but all of which together will constitute one and
the same instrument.
24. ENTIRE AGREEMENT. This Agreement (including the exhibits hereto)
constitute the entire agreement of the parties hereto with respect to
the subject matter hereof (and thereof).
25. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Minnesota. The Company and the
Subscribers hereby submit to the jurisdiction of the State and Federal
courts located in Minnesota in connection with all disputes arising
under this Agreement and agree that venue in any such court is
appropriate.
-----------------------------------
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THE COMPANY HEREBY ACCEPTS THE SUBSCRIPTION
EVIDENCED BY THIS SUBSCRIPTION AND INVESTMENT
REPRESENTATION AGREEMENT:
21ST CENTURY WIRELESS GROUP, INC.
By _________________________________
Its ______________________________
[Signature Page to Subscription and Representation Agreement Dated July 3, 1997]
<PAGE>
SUBSCRIBER INFORMATION (Complete separately for each Subscriber)
_______________________________________________________________
(Please print name(s) in which the Securities are to be issued)
_______________________________________________________________
T.I.N. or S.S.N.
Address: ______________________________________________________
_______________________________________________________________
_______________________________________________________________
Telephone Number: _____________________________________________
Check One:
_____ Individual Ownership _____ Tenants in Common
_____ Joint Tenants (JTWROS) _____ Other (Specify: ______________)
Subscriber is (check either or both as applicable):
_______ (i) A natural person whose individual net worth (assets less
liabilities), or joint net worth with his or her spouse, exceeds $1,000,000.
_______ (ii) A natural person whose individual income was in excess of
$200,000, or whose joint income with his or her spouse was in excess of
$300,000, each of the two most recent years, and who has a reasonable
expectation of reaching the same income level for the current year.
<PAGE>
EXHIBIT A - FORM OF WARRANT
<PAGE>
EXHIBIT B - FORM OF MARKET MAKER LETTER
<PAGE>
EXHIBIT C - LIST OF PENDING OR THREATENED LITIGATION
The Company has received a letter from counsel for an entity known as
Digital Communications of Denver, Inc. ("DCID") claiming that DCID is the
beneficial holder of a 5% interest in certain assets acquired by the Company
from the Company's predecessor-in-interest, Twin Cities Third Mobile Associates
("TC3M"). DCID was one of the promoters which sold "partnership" units in TC3M
to Company shareholders. The Company is unaware of any basis for a claim of
ownership by DCID for any interest in excess of 2% of the assets acquired from
TC3M. As to the 2% interest, the Company is aware of a document purporting to
transfer a 2% interest to DCID but believes that any interest held by DCID is
subject to offset in its entirety by defenses held by the Company and its
investors arising out of DCID's actions during the promotion of TC3M. DCID's
purported claim does not affect assets acquired by the Company from sources
other than TC3M. These other assets include all of the Company's assets in
southern Minnesota and in the Memphis, Tennessee, area. DCID has not commenced
any action on its purported claim.
<PAGE>
EXHIBIT D - LIST OF CONVERSION RIGHTS, WARRANTS AND OPTIONS
1. Warrants held by initial Shareholders 474,150
2. Warrants held by Digital Communications, Inc. 60,000
3. Options issued to officers, directors and employees 430,300
NOTE: The Company has an agreement to issue additional warrants to Don Currie,
Sr. in connection with the purchase of certain assets of Currie
Communications. The number of warrants to be issued to Mr. Currie is
equal to $50,000 divided by the initial public trading price of the
Common Stock. That number cannot yet be established.
EXHIBIT 4.2
WARRANT TO PURCHASE SHARES OF COMMON STOCK OF
21ST CENTURY WIRELESS GROUP, INC.
This Warrant Certificate certifies that Circle F Ventures, LLC, or registered
assigns (the "Holder") are the owner of Warrants to subscribe for and purchase
from 21ST CENTURY WIRELESS GROUP, INC., a Nevada corporation (the "Company"),
50,000 shares of the common stock, par value $0.001 per share, of the Company
(the common stock, including any stock into which it may be changed,
reclassified or converted, is herein referred to as the "Common Stock") at a
purchase price per share (the "Exercise Price") of $1.00.
The Warrants represented by this Warrant Certificate are subject to the
following terms and conditions:
1. VESTING OF WARRANTS
The Holder shall be entitled to exercise the Warrants at any time during
the Exercise Period, as defined in Section 2 below.
2. EXERCISE OF WARRANTS
The Warrants may be exercised by the Holder in whole, or in part, (but
not as to a fractional share of Common Stock), by surrender of this
Warrant Certificate at the office of the Company located at 406 Gateway
Boulevard, Burnsville, MN 55433 (or such other office or agency of the
Company as may be designated by notice in writing to the Holder at the
address of such Holder appearing on the books of the Company) with the
appropriate form attached hereto duly completed, at any time within the
period beginning on the date hereof and expiring at 3:00 p.m.
Minneapolis, Minnesota time, on the last business day on or before the
fifth anniversary date hereof (the "Exercise Period") together with
payment to the Company by certified check or cashier's check of the
Exercise Price for such shares. The Company agrees that the shares of
Common Stock so purchased shall be deemed to be issued to the Holder as
the record owner of such shares. Common Stock as of the close of
business on the date on which this Warrant Certificate shall have been
surrendered and payment made for such shares of Common Stock
Certificates representing the shares of Common Stock so purchased,
together with any cash for fractional shares of Common Stock paid
pursuant to Section 3(d), shall be delivered to the Holder promptly,
and, unless the Warrants have expired, a new Warrant Certificate
representing the number of Warrants represented by the surrendered
Warrant Certificate, if any, that shall not have been exercised shall be
delivered to the Holder within such time.
<PAGE>
3. ADJUSTMENTS
a) The Exercise Price and the number of shares of Common Stock
issuable upon exercise of the Warrants shall be subject to
adjustment from time to time as follows:
i) Adjustment Events. If the Company shall (a) pay a
dividend with respect to its Common Stock in shares of
capital stock or securities convertible into Common
Stock, (b) subdivide its outstanding shares of Common
Stock, (c) combine its outstanding shares of Common
Stock into a smaller number of shares of any class of
Common Stock or (d) issue any shares of its capital
stock in a reclassification of the Common Stock
(including any such reclassification in connection with
a consolidation or merger in which the Company is the
continuing corporation) (any one of which actions is
herein referred to as an "Adjustment Event"), the number
of shares of Common Stock purchasable upon exercise of
the Warrants immediately prior to the record date for
such Adjustment Event shall be adjusted so that the
Holder shall thereafter be entitled to receive the
number of shares of Common Stock or other securities of
the Company (such other securities thereafter enjoying
the rights of shares of Common Stock under this Warrant
Certificate) that such Holder would have been entitled
to receive after the happening of such Adjustment Event,
had the Warrants been exercised immediately prior to the
happening of such Adjustment Event or any record date
with respect thereto. An adjustment made pursuant to
this Section 3(a)(i) shall become effective immediately
after the effective date of such Adjustment Event
retroactive to the record date, if any, for such
Adjustment Event. An elimination of par value, a change
in par value, or a change from par value to no par value
shall not be an Adjustment Event.
ii) Adjustment of Exercise Price. Whenever the number of
shares of Common Stock purchasable upon the exercise of
the Warrants is adjusted pursuant to Section 3(a)(i),
the Exercise Price for each share of Common Stock
payable upon exercise of the Warrants shall be adjusted
by multiplying such Exercise Price immediately prior to
such adjustment by a fraction, the numerator of which
shall be the number of shares of Common Stock
purchasable upon the exercise of the Warrants
immediately prior to such adjustment, and the
denominator of which shall be the number of shares of
Common Stock so purchasable immediately thereafter.
iii) De Minimis Adjustments. No adjustment in the Exercise
Price shall be required unless such adjustment would
require an increase or decrease of at least $0.05. All
calculations of the number of shares of Common Stock
purchasable hereunder shall be made to the nearest full
share.
b) Notice of Adjustment. Whenever the number of shares of Common
Stock purchasable upon the exercise of the Warrants and whenever
the Exercise Price is
<PAGE>
adjusted, as herein provided, the Company shall promptly notify
the Holder in writing of such adjustment or adjustments and
shall deliver to such Holder a statement setting forth the
number of shares of Common Stock purchasable upon the exercise
of the Warrants and the Exercise Price after such adjustment,
setting forth a brief statement of the facts requiring such
adjustment and setting forth the computation by which such
adjustment was made.
c) Statement on Warrant Certificates. The form of this Warrant
Certificate need not be changed because of any change in the
Exercise Price or in the number or kind of shares purchasable
upon the exercise of the Warrants. However, the Company may at
any time in its sole discretion make any change in the form of
this Warrant Certificate that it may deem appropriate and that
does not affect the substance thereof and any Warrant
Certificate thereafter issued, whether in exchange or
substitution for any outstanding Warrant Certificate or
otherwise, may be in the form so changed.
d) Fractional Interest. The Company shall not be required to issue
fractional shares of Common Stock on the exercise of the
Warrants. The number of full shares of Common Stock which shall
be issuable upon such exercise shall be computed on the basis of
the aggregate number of whole shares of Common Stock purchasable
on the exercise of the Warrants so presented. If any fraction of
a share of Common Stock would, except for the provisions of this
Section 3(d) be issuable on the exercise of the Warrants, the
Company shall pay an amount in cash calculated by it to be equal
to the then fair value of one share of Common Stock, as
determined by the Board of Directors of the Company in good
faith, multiplied by such fraction commuted to the nearest whole
cent.
4. RESERVATION AND AUTHORIZATION OF COMMON STOCK
The Company covenants and agrees (a) that all shares of Common Stock
which may be issued upon the exercise of the Warrants, upon issuance and
when fully paid for, will be duly and validly authorized, validly issued
and outstanding, fully paid and nonassessable and free of all taxes,
liens, charges, encumbrances and security interests other than those
attaching by or through the Holder, (b) that during the Exercise Period,
the Company will at all times have authorized, and reserved for the
purpose of issue or transfer upon exercise of the Warrants, sufficient
shares of Common Stock to provide for the exercise of the Warrants and
(c) that, subject to Section 6, the Company will take all such action as
may be necessary to ensure that the shares of Common Stock issuable upon
the exercise of the Warrants may be so issued without violation of any
applicable law or regulation, or any requirement of any securities
exchange upon which any capital stock of the Company may be listed.
5. NO RIGHTS OF STOCKHOLDER
The Holder shall not be entitled to vote or to receive dividends or
shall otherwise be deemed to be the holder of shares of Common Stock
for any purpose, nor shall anything
<PAGE>
contained herein be construed to confer upon the Holder any of the
rights of a stockholder of the Company or any right to vote upon or give
or withhold consent to any action of the Company (whether upon any
reorganization, issuance of securities, reclassification or conversion
of Common Stock, consolidation, merger, sale, lease, conveyance, or
otherwise), receive notice of meetings or other action affecting
stockholders (except for notices expressly provided for herein) or
receive dividends or subscription rights, until this Warrant Certificate
shall have been surrendered for exercise accompanied by full and proper
payment of the Exercise Price as provided herein and shares of Common
Stock hereunder shall have become issuable. The Holder shall not, upon
the exercise of Warrants, be entitled to any dividends if the record
date with respect to payment of such dividends shall be a date prior to
the date such shares of Common Stock became issuable upon the exercise
of the Warrants.
6. RESTRICTIONS ON TRANSFER
This Warrant Certificate, the Warrants and the underlying Common Stock
issued on exercise of the Warrants, may not be sold, transferred or
otherwise disposed of without (i) registration under the Securities Act
of 1933, as amended, any applicable State securities laws, or (ii) an
exemption therefrom for which the Company is provided an opinion of
counsel to the Holder, reasonably satisfactory to the Company, to the
effect that such transfer is not in violation of any of such securities
laws.
7. CLOSING OF BOOKS
The Company will at no time close its transfer books against the
transfer of any Warrant or of any shares of Common Stock or other
securities issuable upon the exercise of any Warrant in any manner which
interferes with the timely exercise of the Warrants.
8. WARRANTS EXCHANGEABLE; LOSS, THEFT
Subject to Section 6, this Warrant Certificate is exchangeable, upon the
surrender hereof by any Holder at the office or agency of the Company
referred to in Section 2, for new Warrant Certificates of like tenor
representing in the aggregate the right to subscribe for and purchase
the number of shares of Common Stock which may be subscribed for and
purchased hereunder, each such new Warrant Certificate to represent the
right to subscribe and purchase such number of shares of Common Stock as
shall be designated by the Holder at the time of such surrender. Upon
receipt of evidence satisfactory to the Company of the loss, theft,
destruction or mutilation, or upon surrender or cancellation of this
Warrant Certificate, the Company will issue to the Holder a new Warrant
Certificate of like tenor, in lieu of this Warrant Certificate,
representing the right to subscribe for and purchase the number of
shares of Common Stock which may be subscribed for and purchased
hereunder.
9. MERGERS, CONSOLIDATIONS
In the case of any consolidation or merger of the Company with another
corporation, the
<PAGE>
sale of all or substantially all of its assets to another person, or any
reorganization or reclassification of the capital stock of the Company
(except a split-up or combination, provision for which is made in
Section 3 hereof):
(a) As a condition of such consolidation, merger, sale,
reorganization, or reclassification, lawful and adequate
provision shall be made whereby the Holder shall thereafter have
the right to purchase upon the basis and upon the terms and
conditions specified herein and in lieu of the Common Stock
immediately theretofore purchasable hereunder, such shares of
stock, securities, or assets as may (by virtue of such
consolidation, merger, sale, reorganization, or
reclassification) be issued or payable with respect to, or in
exchange for, a number of outstanding shares of the Company's
Common Stock equal to the number of Common Stock immediately
theretofore so purchasable hereunder had such consolidation,
merger, sale, reorganization, or reclassification not taken
place, and in any such case appropriate provision shall be made
with respect to the rights and interests of the Holder to the
end that the provisions hereof (including, without limitation,
provisions for adjustments of the Exercise Price) shall
thereafter be applicable, as nearly as may be, in relation to
any shares of stock, securities, or assets thereafter
deliverable upon the exercise of this Warrant. The Company shall
not effect any such consolidation, merger, or sale unless, prior
to, or simultaneously with, the consummation thereof, the
successor person or persons purchasing such assets or succeeding
or resulting from such consolidation, merger, reorganization, or
reclassification shall assume by written instrument, executed
and mailed or delivered to the Holder, the obligation to deliver
to the Holder such shares of stock, securities, or assets as, in
accordance with the foregoing provisions, the Holder may be
entitled to receive.
(b) In the event that the Company shall make any
distribution of its assets upon, or with respect to, its Common
Stock, as a liquidating or partial liquidating dividend, or
other than as a dividend payable out of earnings or any surplus
legally available for dividends under the laws of the State of
Nevada, the Holder shall, upon the exercise of this Warrant
after the record date for such distribution or, in the absence
of a record date, after the date of such distribution, receive,
in addition to the Common Stock subscribed for, the amount of
such assets (or, at the option of the Company, a sum equal to
the value thereof at the time of distribution as determined in
good faith by the Board of Directors) that would have been
distributed to the Holder if the Holder had exercised this
Warrant immediately prior to the record date for such
distribution or, in the absence of a record date, immediately
prior to the date of such distribution.
<PAGE>
10. EXPENSES
The Company shall bear the cost of all underwriting discounts, selling
commissions and stock transfer taxes applicable to the issuance of this
Warrant and of the Common Stock underlying the Warrant.
Dated as of July 3, 1997 21ST CENTURY WIRELESS GROUP, INC.
By: ______________________________________
Its:______________________________________
<PAGE>
[FORM OF ELECTION TO PURCHASE]
(To be executed upon exercise of Warrant)
The undersigned hereby irrevocably elects to exercise the right, represented by
this Warrant Certificate, to purchase ________ shares of Common Stock and
herewith tenders in payment for such shares a certified check or cashiers check
payable to the order of 21ST CENTURY WIRELESS GROUP, INC. in the amount of
$______________, all in accordance with the terms hereof. The undersigned
requests that a certificate for such shares be registered in the name of
________________________whose address is _________________________________ whose
and social security or other identifying number is ______________________, and
that such certificate (or any payment in lieu thereof) be delivered to
______________________________ whose address is _______________________________.
Dated: _______________________________ _______________________________________
(Signature must conform in all respects
to name of Holder as specified on the
face of the Warrant Certificate)
