As filed with the Securities and Exchange Commission on April 27, 2000.
Registration No.333-96027
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Pre-effective Amendment No. 2
FORM S-1
Registration Statement
under
The Securities Act of 1933
USURF America, Inc.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
NEVADA 7375 72-1346591
(STATE OR OTHER JURISDICTION (PRIMARY STANDARD INDUSTRIAL (IRS EMPLOYER
OF INCORPORATION OR CLASSIFICATION CODE NUMBER) IDENTIFICATION
NO.)
ORGANIZATION)
8748 Quarters Lake Road, Baton Rouge, Louisiana 70809
(225) 922-7744
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICE)
David M. Loflin, President
USURF America, Inc.
8748 Quarters Lake Road, Baton Rouge, Louisiana 70809
(225) 922-7744
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
Copies to:
Eric Newlan, Esq.
NEWLAN & NEWLAN
819 Office Park Circle
Lewisville, Texas 75057
Approximate date of commencement of proposed sale to public: As soon as
practicable after this Registration Statement is declared effective.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, check the following box: [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration number of the
earlier effective registration statement for the same offering: [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering: [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: [ ]
<PAGE>
CALCULATION OF REGISTRATION FEE
Proposed Proposed
maximum maximum
Title of each offering aggregate Amount of
class of securities Amount price per offering
registration
to be registered to be registered(1) unit price fee
- ------------------- ------------------- --------- -----------
- ------------
Common Stock 2,000,000 shares(3) $8.6875(2) $17,375,000
$4,587.00(13)
$.0001 par value 462,607 shares(4) $8.6875(2) $4,018,898 1,060.99(13)
per share 68,810 shares(4) $1.25(5) $86,012
22.71(13)
56,667 shares(4) $1.50(6) $85,000
22.41(13)
60,000 shares(4) $3.50(7) $210,000
55.44(13)
50,000 shares(4) $6.00(8) $300,000
79.20(13)
95,000 shares(4) $7.00(9) $665,000
175.56(13)
92,500 shares(4) $8.25(10) $763,125
201.46(13)
225,000 shares(4) $4.00(11) $900,000 237.60
65,000 shares(4) $7.50(12) $487,500 128.70
------------------- -----------
- -------------
Total 3,175,584 shares $24,890,535 $6,570.98
- -----------------
(1) Pursuant to Rule 416 under the Securities Act of 1933, as amended,
this Registration Statement covers such additional indeterminate shares of
Common Stock as may be issued by reason of adjustments in the number of
shares of Common Stock pursuant to anti-dilution provisions contained in
various Common Stock Purchase Warrants. Because such additional shares of
Common Stock will, if issued, be issued for no additional consideration, no
registration fee is required.
(2) Estimated in accordance with Rule 457(c) solely for the purpose of
calculating the registration fee on the basis of the average of the bid and
ask prices reported on the American Stock Exchange on January 25, 2000,
$8.6875 per share.
(3) May be offered and issued by Registrant from time to time in
connection with one or more acquisitive transactions by Registrant of
securities, businesses or assets.
(4) To be offered and sold by Selling Shareholders.
(5) Shares issuable upon exercise of common stock purchase warrants.
Pursuant to Rule 457(g) the fee is based upon the Warrant exercise price of
$1.25 per share.
(6) Shares issuable upon exercise of common stock purchase warrants.
Pursuant to Rule 457(g) the fee is based upon the Warrant exercise price of
$1.50 per share.
(7) Shares issuable upon exercise of common stock purchase warrants.
Pursuant to Rule 457(g) the fee is based upon the Warrant exercise price of
$3.50 per share.
(8) Shares issuable upon exercise of common stock purchase warrants.
Pursuant to Rule 457(g) the fee is based upon the Warrant exercise price of
$6.00 per share.
(9) Shares issuable upon exercise of common stock purchase warrants.
Pursuant to Rule 457(g) the fee is based upon the Warrant exercise price of
$7.00 per share.
(10) Estimated in accordance with Rule 457(c) solely for the purpose of
calculating the registration fee on the basis of the average of the bid and
ask prices reported on the American Stock Exchange on February 18, 2000,
$8.25 per share.
(11) Estimated in accordance with Rule 457(c) solely for the purpose of
calculating the registration fee on the basis of the closing price reported
on the American Stock Exchange on April 25, 2000, $4.00 per share.
(12) Shares issuable upon exercise of common stock purchase warrants.
Pursuant to Rule 457(g) the fee is based upon the Warrant exercise price of
$7.50 per share.
(13) Paid previously.
Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until Registrant shall file
a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a)
of the Securities Act of 1933, or until this Registration Statement shall
become effective on such date as the Commission, acting pursuant to Section
8(a), may determine.
<PAGE>
Information contained herein is subject to completion or amendment. A
Registration Statement relating to these securities has been filed with the
SEC. These securities may not be sold nor may offers to buy be accepted
prior to the time the Registration Statement becomes effective. This
Prospectus shall not constitute an offer to sell or the solicitation of an
offer to sell or the solicitation of an offer to buy nor shall there be any
sale of these securities in any state in which such offer, solicitation or
sale would be unlawful prior to registration or qualification under the
securities laws of any such state.
PROSPECTUS SUBJECT TO COMPLETION, DATED APRIL 25,
2000
3,175,584 Shares
USURF America, Inc.
Common Stock
$.0001 par value
THE SECURITIES AND EXCHANGE COMMISSION AND STATE SECURITIES REGULATORS HAVE
NOT APPROVED OR DISAPPROVED THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
USURF America is offering up to 2,000,000 shares of its common stock, which
we call the acquisition stock. We will offer and issue the shares of
acquisition stock from time to time in connection with mergers,
stock-for-stock exchanges or stock-for assets acquisitions. We intend to
search actively for compatible businesses to acquire. When we use shares
of acquisition stock, we expect them to be valued at or near the price
being paid for our common stock in the securities market at that time. We
may pay finder's fees in connection with the acquisition of a business by
issuing shares of acquisition stock. We have not entered into an agreement
that requires us to issue shares of acquisition stock. We cannot assure
you that we will ever acquire a business with the acquisition stock.
Persons other than USURF America also are offering for sale a total of
1,175,584 shares of our common stock, which we call the selling shareholder
stock. 780,107 of these shares have been issued by us and 395,477 of these
shares will be issued by us upon the exercise of common stock purchase
warrants. The selling shareholder stock will be offered and sold from time
to time by the owners of this stock, who we call the selling shareholders.
USURF America will receive none of the proceeds of any sales by the selling
shareholders.
USURF America is paying nearly all of the expenses of this offering.
Normal broker fees and any applicable transfer taxes will be paid by the
selling shareholders.
USURF Amerirca's common stock is traded on the American Stock Exchange
under the symbol "UAX". On April 25, 2000, the closing price of USURF
America's common stock was $4.00 per share.
INVESTING IN OUR COMMON STOCK INVOLVES RISK. PLEASE SEE "RISK FACTORS",
BEGINNING ON PAGE 5, FOR AN EXPLANATION OF SOME OF THESE RISKS.
The date of this Prospectus is _______________, 2000
<PAGE>
You should rely only on the information contained in this prospectus. We
have not authorized anyone to provide you with information different from
that contained in this prospectus. We are offering to sell, and seeking
offers to buy, shares of common stock only in jurisdictions where offers
and sales are permitted. The information contained in this prospectus is
accurate only as of the date of this prospectus, regardless of the time of
delivery of this prospectus or of any sale of our common stock.
TABLE OF CONTENTS
Page
SUMMARY
THE OFFERING
SUMMARY FINANCIAL DATA
RISK FACTORS
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
DILUTION
USE OF PROCEEDS
TRADING AND MARKET PRICES
DIVIDENDS
CAPITALIZATION
SELECTED FINANCIAL DATA
RECENT CHANGE OF INDEPENDENT AUDITOR
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
REGULATION
RECENT DEVELOPMENTS
BUSINESS
MANAGEMENT
CERTAIN TRANSACTIONS
PRINCIPAL SHAREHOLDERS
LITIGATION
PLAN OF DISTRIBUTION
SELLING SHAREHOLDERS
DESCRIPTION OF SECURITIES
LEGAL MATTERS
EXPERTS
WHERE YOU CAN FIND MORE INFORMATION
INDEX TO FINANCIAL STATEMENTS
SUMMARY
This summary highlights information contained elsewhere in this prospectus.
This summary may not contain all of the information that you should
consider before investing in our common stock. You should read the entire
prospectus carefully.
Our Business
We are a full-service Internet Service Provider (ISP) with over 30,000
customers. Today, we provide Internet access primarily by traditional
telephone line, or dial-up, connections. We also provide Internet access
through a wireless system to a small number of customers. Nearly all of
our dial-up customers are serviced by our CyberHighway subsidiary, which we
acquired in January 1999.
We own a proprietary wireless Internet access system, known as
"Quick-CellTM". Our management has committed all of our resources to the
commercial exploitation of our Quick-Cell products. We have begun a
full-scale sales and installation effort in Albuquerque, Santa Fe and Las
Vegas, New Mexico. It is our goal to establish Quick-Cell systems in 110
U.S. cities by the end of 2000. We believe we will be able to reach this
goal, but we may fall short of our goal, unless we obtain more operating
capital. You should read the risk factors, beginning on page 5, before you
buy USURF America common stock.
Our Services
In addition to our dial-up and wireless Internet access services, we offer
other Internet-related services. These other services include web hosting,
web page design and e-commerce solutions. We also own and operate
"www.e-tail.com", an Internet site with links to many of the Internet's
most popular commercial sites. However, we believe that any future success
of USURF America lies in the successful sales and installation of our
Quick-Cell wireless Internet products.
Our Market
We designed our Quick-Cell wireless Internet access products to permit us
to offer high-speed, high-quality Internet access at prices up to 60% below
local market prices for comparable traditional, hard-wire Internet access.
Our first full-scale sales and installation effort promotes our T-1 and DSL
(digital subscriber line) equivalent speed Internet connections. We
believe the small and medium size business market segments present the
greatest opportunity for us to achieve rapid sales of our Quick-Cell products.
For the foreseeable future, we intend to commit only minimal capital to our
dial-up business. Rather, we intend to attempt to expand our dial-up
business through customer referrals and minor advertising efforts.
As our company matures, we expect to start developing our e-tail.com
e-commerce web portal. Through e-tail.com, we will offer complete
e-commerce solutions for business. It is estimated that the amount of
commerce conducted over the Internet will exceed $1.0 trillion by 2003.
With the coupling of our Quick-Cell wireless Internet access services and
our e-tail.com web portal, we believe we are well-positioned to capitalize
on the opportunity presented by the rapid growth of the Internet.
Our Strategy
We believe the future of the Internet is in wireless access, as customers
demand increasing bandwidth capacities at more affordable costs.
Our goal is to become the leading provider of wireless Internet access
services. To achieve this objective, in as short a time-frame as possible,
we are actively pursuing the following strategies:
- Free Customer-Premises Wireless Modems.
- Free Installation and Set-up.
- Free First-Month's Wireless Internet Access Service.
We believe our ability to offer our Quick-Cell wireless Internet access for
no up-front cost provides a competitive advantage in gaining market share
in each of our local markets.
Our dial-up Internet access sales and e-tail.com services add depth to our
product line, giving us an ability to provide Internet access options or
Internet-related services that can be useful to the vast majority of
consumers.
Our Address
USURF America was organized as a Nevada corporation in November 1996, under
the name "Media Entertainment, Inc. In 1998, we changed our name to
"Internet Media Corporation", then to our current name in June 1999. Our
principal office is located at 8748 Quarters Lake Road, Baton Rouge,
Louisiana 70809. Our telephone number is (225) 922-7744; our fax number is
(225) 922-9123. Our web site can be located at www.usurf.com. Information
contained on our web site should not be considered a part of this prospectus.
THE OFFERING
We will offer shares of the acquisition stock from time to time in the
future for the purpose of acquiring businesses. The price per share of the
acquisition stock on any issuance will be negotiated; the consideration for
the acquisition stock will be stock or assets, not cash. We have not
agreed to issue any of the acquisition stock.
Selling shareholders are also offering for sale their respective shares of
selling shareholder stock, as described under "Plan of Distribution" and
"Selling Shareholders", beginning on page ___.
Common Stock offered by:
USURF America 2,000,000 shares
Selling Shareholders 1,175,584 shares(1)
Common Stock Outstanding Prior to this Offering 13,345,845 shares
Common Stock Outstanding After this Offering 15,641,322 shares(2)
American Stock Exchange Trading Symbol: UAX
___________
(1) 780,107 of these shares are currently issued and outstanding and
will be
offered and sold by the selling shareholders. 395,477 of these shares
may
be purchased from USURF America upon the exercise of certain common stock
purchase warrants and thereafter offered and sold.
(2) Assumes: (A) the issuance of all 2,000,000 shares of the acquisition
stock and (B) exercise of all 395,477 outstanding common stock purchase
warrants.
SUMMARY FINANCIAL DATA
Set forth below is our summary consolidated statements of operations data
for the years ended December 31, 1997, 1998 and 1999, and summary balance
sheet data as of December 31, 1998 and 1999.
This summary financial information should be read in conjunction with the
consolidated financial statements appearing elsewhere in this prospectus.
STATEMENT OF OPERATIONS DATA:
Year Ended December 31,
1999 1998 1997
(audited) (audited) (audited)
Revenue $2,547,225 $ 5,440 $ -
Cost of Goods Sold 1,152,721 - -
Expenses 11,860,758 1,034,464 619,385
Net Loss 10,930,163 1,037,626 624,804
Loss per share (0.96) (0.14) (0.10)
Weighted Average
Number of Shares
Outstanding 11,419,641 7,361,275 6,193,678
BALANCE SHEET DATA:
Year Ended December 31,
1999 1998
(audited) (audited)
Working Capital (Deficit) $(1,060,532) $(240,806)
Total Assets 19,545,169 333,659
Total Current Liabilities 1,221,650 249,071
Shareholders' Equity 14,440,309 84,588
RISK FACTORS
This offering involves a high degree of risk. You should consider
carefully the following risks before you decide to buy our common stock.
If any of the following risks actually occur, our business, financial
condition or results of operations could be materially and adversely
affected. This could cause the market price of our common stock to
decline, and you could lose all or part of your investment.
Risks Related to Our Business
Because we have a short operating history, there is a limited amount of
information about us upon which you can evaluate our business and potential
for future success.
We were incorporated in 1996 and have only a limited operating history
upon which you can evaluate our business and prospects. You must consider
the risks and uncertainties frequently encountered by early stage companies
in new and rapidly evolving markets, such as the market for Internet access
services. Some of these risks and uncertainties relate to our ability to:
- achieve customer acceptance of our Quick-Cell wireless Internet
access products;
- expand our subscriber base, wireless and dial-up, and
subscriber-related revenues;
- compete successfully in a highly competitive market;
- gain access to sufficient capital with which to support anticipated
growth;
- recruit and train qualified employees; and
- upgrade our network systems and infrastructure.
We cannot assure you that we will successfully address any of these
risks and uncertainties.
Our independent auditor expressed substantial doubt about our ability to
continue as a going concern.
In its opinion on our financial statements for the year ended December
31, 1999, our independent auditor, Postlethwaite & Netterville, expressed
substantial doubt about our ability to continue as a going concern. Please
review the Independent Auditor's Report and Note 16 to the consolidated
financial statements appearing elsewhere in this prospectus.
We had an accumulated deficit of $12,616,830 as of December 31, 1999, and
we expect to continue to incur losses for the foreseeable future.
We have had substantial losses since our inception and our operating
losses may continue in the future. As we pursue full-scale sales and
installation of our Quick-Cell wireless Internet products, we expect our
operating expenses to increase significantly, especially in the areas of
sales and marketing. As a result of these expected cost increases, we will
need to generate increased quarterly revenues to become profitable.
Accordingly, we cannot assure you that we will ever become or remain
profitable. If our revenues fail to grow at anticipated rates or our
operating expenses increase without a commensurate increase in our
revenues, our financial condition will be adversely affected. Our
inability to become profitable on a quarterly or annual basis would have a
materially adverse effect on our business and financial condition.
Our results of operations may vary from quarter to quarter in future
periods, and, as a result, we may fail to meet the expectations of our
investors and analysts, which could cause our stock price to fluctuate or
decline.
Our revenues and results of operations have fluctuated in the past and
could fluctuate significantly in the future, as we follow our commitment of
resources to exploiting our Quick-Cell wireless Internet products. A
variety of factors, many of which are beyond our control, could cause our
operating results to fluctuate. These factors include:
- market acceptance of our Quick-Cell wireless Internet access
products and enhanced versions of our dial-up products and services;
- the rate of new Internet access subscriber acquisition;
- Internet access subscriber retention;
- changes in our pricing policies or those of our competitors;
- capital expenditures and other costs relating to the expansion of
our operations;
- the timing of new product introductions and service announcements
made by us or our competitors;
- personnel changes;
- the introduction of alternative technologies;
- the effect of any acquisitions made by us;
- increased competition in our markets; and
- new and/or more restrictive governmental regulations.
A significant portion of our operating expense is related to personnel
costs, marketing programs and overhead, which cannot be adjusted quickly
and are, therefore, relatively fixed in the short term. Our operating
expense levels are based, in part, on our expectations of future revenue.
If actual revenues are below our expectations, our results of operations
and financial condition would be materially and adversely affected.
Due to all of the foregoing factors and the other risks discussed in
this prospectus, you should not rely on period-to-period comparisons of our
results of operations as an indication of future performance. It is
possible that, in some future periods, our results of operations may be
below the expectations of public market analysts and investors. In this
event, the market price of our common stock is likely to fall.
We may not be able to maintain our aggressive growth strategy, because we
may never obtain needed capital.
We have implemented a very aggressive growth strategy, as we attempt
to exploit our Quick-Cell wireless Internet products. This strategy is
expected to place a significant strain on our managerial, operational and
financial resources. In particular, our planned wireless Internet
expansion will require significant capital with which to purchase equipment
necessary for the construction and implementation of locations. We may not
ever obtain needed capital. We believe that the growth of our wireless
Internet access business will be impeded, if impeded at all, primarily by a
lack of capital, rather than by a lack of customer acceptance.
We are attempting to improve our operational systems, procedures and
controls, in order to manage our growth. Should we fail to improve our
systems and controls, the quality and reliability of our services may
decline and levels of customer satisfaction could be harmed.
Because we need significant capital to achieve our aggressive growth plan.
Our ability to grow will depend, in large measure, on our ability to
expand our wireless Internet access business. This will require
significant equipment expenditures and advance expenditures and commitments
for leased telecommunications facilities and advertising. Our operations
provide a level of funds that permits us to grow at a slow rate. For us to
grow quickly, we must obtain significant additional capital. We are
currently seeking an investment of approximately $10,000,000. We cannot
assure you that we will be able to obtain needed additional capital.
Should available sources of financing be insufficient or unavailable, we
would reduce the scope of our growth plans.
Because we depend heavily on outside suppliers, our business may suffer,
should our suppliers fail to perform in a timely manner.
We depend on third-party suppliers of hardware components and
telecommunications carriers to provide equipment and networking services.
We obtain our wireless-Internet-related equipment from a single source, and
acquire dial-up-related hardware components used in our network system from
just a few sources, including server/processors manufactured by Intel,
modems manufactured by Lucent Technologies and U.S. Robotics and high
performance routers, which are devices that receive and transmit data
between different networks, manufactured by Cisco Systems. We rely on a
few local telephone companies and others, such as U.S. West, Electric
Lightwave and GST, to lease data communications capacity via local
telecommunications lines and leased long-distance lines. We currently rely
on NaviNet, Inc., ioNET, Inc., a division of PSINet, Inc., and Electric
Lightwave for a significant portion of our Internet network, as well as
Internet backbone access in most markets.
We may not be able to manage successfully our growth, which could adversely
affect our business.
As we implement our wireless Internet growth strategy, we expect to
grow rapidly for the foreseeable future, both by hiring new employees and
serving new geographic markets. Our expected growth will place a
significant strain on our management and operating and financial systems.
Our personnel, systems, procedures and controls may be inadequate to
support our future operations. In order to accommodate our expected
increase in size of our operations, we will need to hire, train and retain
appropriate personnel to manage our operations. We will also need to
improve our financial and management controls, reporting systems and
operating systems. We currently intend to reform several internal systems,
including our recruiting and management systems. We may encounter
difficulties in developing and implementing these new systems, which could
have a materially adverse effect on our results of operations.
We have not yet built a redundant network operations center that could help
avoid service interruptions.
Nearly all of our computer equipment, including critical equipment
dedicated to our Internet access services, is presently located at a single
facility in Boise, Idaho, and we have not yet built a "mirror" site. A
"mirror" site is a redundant network operations center that can process
Internet access customers, in the event the Boise network operations center
experiences service interruption. Because we lack a mirror site, the
occurrence of a natural disaster or the failure of one or more systems at
this network operations center could cause interruptions in Internet services.
In the ISP industry, extensive or multiple interruptions in Internet
services are a primary reason for customer decisions to cancel the use of a
particular Internet access service. Accordingly, any disruption of our
services, due to system failure, could materially and adversely affect our
business, financial condition and operating results.
Our future success will depend on our ability to keep pace with the
Internet's rapid technological changes, evolving industry standards and
changing customer needs.
The Internet access market is susceptible to rapid changes, due
primarily to technology innovations, as well as evolving industry
standards, changes in subscriber needs and frequent new service and product
introductions. New services and products based on new technologies or new
industry standards expose us to risks of equipment obsolescence. We must
use leading technologies effectively, continue to develop our technical
expertise and enhance our existing services on a timely basis to remain
competitive in this industry. While the development of our proprietary
wireless Internet access and other wireless technologies are expected to
aid us in our efforts to remain on the leading edge of Internet-related
technology, we cannot assure you that this will be the case.
Our ability to compete successfully in our markets also depends on the
continued compatibility of our services with products and systems utilized
and sold by various third parties. Although we intend to support emerging
standards in the Internet access market, as well as in the enhanced
business services market, we may not be able to do so. Our failure to do
so could cause us to lose a competitive position in our markets.
Even though our Quick-Cell wireless Internet access technology is a
leading-edge Internet access delivery system, we cannot be certain that
this technology will permit us to remain competitive in our markets.
Nevertheless, we will continue to pursue the development of faster, more
efficient Internet access technologies, though we may be unable to support
future product development costs.
Our growth plans depend on the continued growth and development of the
Internet and its infrastructure.
During the past five or so years, the use of the Internet has grown
exponentially. Although we believe our Quick-Cell wireless Internet access
technology is positioned as a replacement for traditional, hard-wire-based
Internet access, a portion of our expected growth depends on the continued
growth of the Internet, the growth of the dial-up access market, and the
continued development of the Internet as a viable commercial medium. If
the use of the Internet does not continue to grow or evolves in a way that
we are unable to address effectively, it is likely that our business,
financial condition and operating results would be materially and adversely
affected.
We cannot assure you that the growth of the Internet will continue or
that a sufficient number of consumers will adopt and continue to use the
Internet. Internet usage may be inhibited for a number of reasons, including:
- inadequate Internet infrastructure;
- security concerns; and
- inconsistent quality of service.
We cannot assure you that the Internet infrastructure will be able to
support expected growth or that the reliability and performance of the
Internet will not decline as a result of this growth. If widespread
outages or delays occur in the Internet network infrastructure in the
future, web usage could grow more slowly than anticipated or decline.
We face risks associated with government regulation of and legal
uncertainties surrounding the Internet.
All Internet-related activities have increasingly come under scrutiny
by state and federal regulators. These regulators may, with or without
rational bases, adopt additional laws and regulations relating to content,
user privacy, pricing and copyright infringement.
Any new law of regulation pertaining to the Internet, or the
application or interpretation of existing laws, could increase our cost of
doing business or otherwise have a materially adverse effect on our
business, results of operations and financial condition. The laws
governing the Internet, however, remain largely unsettled, even in areas
where there has been some legislative action. It may take several years to
determine whether and how existing laws governing intellectual property,
copyright, privacy, obscenity, libel and taxation apply to the Internet.
In addition, the growth and development of e-commerce may prompt calls for
more stringent consumer protection laws, both in the United States and
overseas.
Our Quick-Cell wireless Internet access products operate in
unregulated spectra, primarily in the 2400 MHz spectrum, and we expect that
this spectrum will remain unregulated.
Breaches in security and computer viruses on the Internet may adversely
affect our business by slowing the growth of the Internet.
The need to transmit securely confidential information, such as credit
card and other personal information, over the Internet has been a
significant barrier to e-commerce and Internet communications. Any
well-publicized compromise of security could deter consumers and businesses
from using the Internet to conduct transactions that involve transmitting
confidential information, including purchases of goods and services.
Decreased Internet traffic as a result of general security concerns or
viruses could hurt our results of operations.
Consumers may not accept our Quick-Cell wireless Internet access products
and would fail to achieve our goals.
We intend to be the first wireless ISP of its kind in each of our
markets. While we expect that our wireless Internet access products will
be readily accepted by consumers, we cannot assure you that they will be
accepted by enough consumers to permit us to earn a profit.
Our operating results will suffer, should we fail to overcome the severe
competition for Internet access customers.
The market for Internet access services is extremely competitive and
highly fragmented. As there are no significant barriers to entry, we
expect that competition will intensify over time. We also believe that the
primary competitive factors determining success as an ISP are:
- a reputation for reliability and high-quality service;
- effective customer support;
- Internet access speed;
- pricing;
- effective marketing techniques for customer acquisition;
- ease of use; and
- scope of geographic coverage.
We believe we can, and in the future will, more effectively, compete
in our markets. However, if we cannot compete successfully in our markets,
our operating results and financial condition would be materially and
adversely affected.
Our competitors include many large, nationally-known companies, such
as America Online, Mindspring, Earthlink and Flashnet. These and other
companies possess greater resources, particularly access to capital
sources, market presence and brand name recognition than do we. In
addition, we will face competition from other wireless Internet access
providers, such as Metricom. We believe our Quick-Cell wireless Internet
access products are superior to other similar products.
We depend on our key personnel; the loss of any key personnel could disrupt
our operations, adversely affect our business and result in reduced revenues.
Our future success will depend on the continued services and on the
performance of our senior management and other key employees. In
particular, we depend on our president, David M. Loflin. While we have
entered into an employment agreement with Mr. Loflin, the loss of his
services for any reason could seriously impair our ability to execute our
business plan, which could reduce our revenues and have a materially
adverse effect on our business and results of operations. We have not
purchased any key-man life insurance.
Our ability to hire, train and retain qualified employees is crucial to our
ability to grow and to compete effectively.
To succeed, we must hire, train, motivate, retain and successfully
manage employees with skills related to the Internet and its rapidly
changing technologies. Because of the recent and rapid growth of the
Internet, professionals who have Internet expertise and can perform
required functions are, in many markets, scarce, and competition for these
individuals is intense. We might not be able to hire persons with needed
expertise or to train, motivate, retain and successfully manage the
employees we do hire. This could hinder our ability to compete
successfully in our markets. While our key employees are subject to
non-competition agreements, these agreements are difficult to enforce. As
a result, our employees may leave us for our competitors or start their own
companies in competition with us. If we fail to attract, train and retain
key personnel, our business would be materially and adversely affected.
Our directors and executive officers own enough of our common stock
effectively to control directors' elections and thereby control our
management policies.
Our directors and executive officers own approximately 30% of our
common stock. Three of our directors, as well as two other persons, have
entered into a voting agreement relating to the voting in elections of
directors. Currently, approximately 39% of our outstanding shares of
common stock are subject to this voting agreement. These shareholders will
be able effectively to control the outcome of corporate actions requiring
shareholder approval by majority action. Their stock ownership may have
the effect of delaying, deferring or preventing a change in control of
USURF America. A more complete description of this voting agreement may be
found under the heading "Certain Transactions", page ___.
We owe our president over $500,000; we owe our president and two of our
vice presidents back salary.
We currently owe our president, David M. Loflin, approximately
$520,000 (plus accrued interest) for money loaned to us over the past three
years. All of the funds loaned by Mr. Loflin are payable on demand and
bear interest at 8% per annum. Mr. Loflin has advised us that he does not
intend to demand repayment, until we are able to make the repayment without
adversely affecting our financial condition. We would experience a
materially adverse effect on our financial condition, should Mr. Loflin
change his intention.
Beginning in July 1999, a portion of the salaries of David M. Loflin
and one of our vice presidents, Waddell D. Loflin, began to accrue. The
collective rate of accrual is approximately $7,500 per month. The accrued
portion of their salaries will not be paid until payment would not
adversely affect our financial condition.
In addition, we have accrued $20,667 of the salary of our vice
president of corporate development, James Kaufman.
To exploit fully our wireless Internet access technologies and to remain
competitive in the future, we need financing, which may not be available on
terms acceptable to us, if at all.
We are attempting to secure approximately $10,000,000 in private
equity funding for use in implementing our business plan. Without a
significant level of funding, we will not be able to expand rapidly our
wireless Internet business. We will also require additional funding in the
future, to sustain our anticipated growth. We cannot assure you that we
will obtain needed funding. Should we fail to obtain needed funding, we
would be unable to generate significant revenue growth in the near term.
Our business plan is not based on independent market studies, so we cannot
assure you that our strategy will be successful.
Our plans for implementing our business strategy and achieving
profitability are based on the experience, judgment and certain assumptions
of our key management personnel, and upon other available information
concerning the communications industry. We have not commissioned any
independent market studies concerning the extent to which customers will
utilize our services and products. We cannot assure you that our
assumptions will prove correct.
Future acquisitions or investments could disrupt our ongoing business,
distract our management and employees, increase our expenses and adversely
affect our business.
We anticipate that a portion of any future growth will be accomplished
by acquiring existing businesses with acquisition stock. The success of
any acquisitions will depend upon, among other things, our ability to
integrate acquired personnel, operations, products and technologies into
our organization effectively, to retain and motivate key personnel of
acquired businesses and to retain customers of acquired firms. We cannot
assure you that we will be able to identify suitable acquisition
opportunities, obtain any necessary financing on acceptable terms or
successfully integrate acquired personnel and operations. These
difficulties could disrupt our ongoing business, distract our management
and employees, increase our expenses and materially and adversely affect
our results of operations. Any future acquisitions would involve certain
other risks, including the assumption of additional liabilities,
potentially dilutive issuances of equity securities and diversion of
management's attention from other business concerns. Our issuance of
acquisition stock will reduce your ownership percentage of our common stock.
We may not be able to protect our intellectual property rights, which could
adversely affect our business.
We currently rely on common law principles for the protection of our
copyrights and trademarks and trade secret laws to protect our proprietary
intellectual property rights. We expect to file patent applications
relating to our Quick-Cell wireless Internet access products in the near
future. We will file trademark applications relating to the "Quick-Cell"
brand name, the "US.RF Wireless Internet" brand name and the "USURF
America" brand name in the near future. Without patent or trademark
protection, the existing trade secret and copyright laws afford us only
limited protection. Third parties may attempt to disclose, obtain or use
our technologies. Others may independently develop and obtain patents or
copyrights for technologies that are similar or superior to our
technologies. If that happens, we may need to license these technologies
and we may not be able to obtain licenses on reasonable terms, if at all.
Risks Associated With This Offering
You will suffer substantial dilution in the net tangible book value of the
common stock you purchase.
Because we intend to issue shares of acquisition stock at market-level
prices, you will suffer substantial and immediate dilution, due to the
lower book value per share of our common stock compared to the purchase
price per share of our common stock. We cannot predict your actual
dilution, because dilution will be different for each business acquisition,
as well as for each sale of selling shareholder stock.
The market price of our common stock will continue to be volatile, and it
may drop unexpectedly.
The market price of our common stock has fluctuated significantly in
the past and we expect this volatility to continue in the future. Since
our common stock became listed on the American Stock Exchange in October
1999, the trading volume has become more consistent, though significant
periodic fluctuations in price still occur. Nevertheless, it is possible
that the market price of our common stock could fall below the price you
paid for your shares of our common stock.
In the past, securities class action litigation has often been brought
against a company following a period of volatility in the market price of
its securities. We may, in the future, be the target of similar
litigation. Securities litigation could result in substantial costs and
divert management's attention and resources, which could have a material
adverse effect on our business and the market price of our common stock.
We do not expect to pay cash dividends for the foreseeable future.
We do not anticipate the payment of cash dividends in the foreseeable
future. Rather we intend to re-invest any profits. We have acquired shares
of common stock of three private companies. Our board of directors
declared dividends as to all of the shares of each of these private companies.
We will not need shareholder approval for issuances of the acquisition
stock; our management will decide whether to acquire a particular business.
It is likely we will issue shares of the Acquisition stock without
prior approval of our shareholders. Our management, in their sole
discretion, will determine whether a proposed business acquisition is to be
completed. We cannot assure you that our management's decisions will
benefit our business.
Our directors' liability for monetary damages is limited.
Our Articles of Incorporation, as amended, significantly limit the
liability of our directors to our shareholders for breaches of fiduciary or
other duties owed by them to USURF America.
The future sale of substantial amounts of our common stock may negatively
affect our stock price.
Substantially all outstanding shares of our common stock, including
the selling shareholder stock, are eligible for resale to the public, under
the provisions of Rule 144 of the Rules and Regulations of the SEC. This
amount of common stock represents a significant overhang on the market for
our common stock. If a substantial number of shares comprising this
overhang were sold in a short period of time, the market price for our
common stock could fall.
In general, under Rule 144, a person who has beneficially owned his
restricted stock for at least one year, including persons who may be deemed
"affiliates", would be entitled to sell within any three-month period a
number of shares that does not exceed the greater of 1% of the
then-outstanding shares of our common stock (approximately 132,000 shares
based on the current number of outstanding shares) or the average weekly
trading volume of trading on all national securities exchanges and/or
reported through the automated quotation system of a registered securities
association of our common stock during the four calendar weeks preceding
the filing of the Form 144 with respect to such sale. Sales under Rule 144
are also subject to certain manner of sale provisions and notice
requirements, and to the availability of current public information about
USURF America. However, a person who is not deemed to have been an
affiliate at any time during the 90 days preceding a sale, and who has
beneficially owned his restricted shares for at least two years, would be
entitled to sell such shares under Rule 144 without regard to certain of
the requirements described above.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements that involve risks and
uncertainties. Discussions containing forward-looking statements may be
found in the material set forth under "Risk Factors", "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
and "Business", as well as in the prospectus generally. We generally use
words such as "believes", "intends", "expects", "anticipates", "plans" and
similar expressions to identify forward-looking statements. You should not
place undue reliance on these forward-looking statements. Our actual
results could differ materially from those anticipated in the
forward-looking statements for many reasons, including the risks described
above and elsewhere in this prospectus.
Although we believe that the expectations reflected in the forward-looking
statements are reasonable, they relate only to events as of the date on
which the statements are made, and we cannot assure you that our future
results, levels of activity, performance or achievements will meet these
expectations. Moreover, neither we nor any other person assumes
responsibility for the accuracy and completeness of the forward-looking
statements. We are under no duty to update any of the forward-looking
statements after the date of this prospectus to conform these statements to
actual results or to changes in our expectations.
DILUTION
A purchase of our common stock will result in substantial and immediate
dilution in your investment. Dilution is the reduction of a purchaser's
investment measured by the difference between the price per share of common
stock and the net tangible book value per share following the purchase. We
cannot predict the actual dilution you will incur when your purchase our
common stock.
USE OF PROCEEDS
We will not receive any cash proceeds from the issuance of shares of
acquisition stock. Similarly, we will not receive any of the proceeds of
sales of selling shareholder stock. However, should all of our currently
outstanding common stock purchase warrants be exercised, we would receive
cash proceeds of $1,833,513. We intent to apply all of these funds, if
received, to the commercial exploitation of our Quick-Cell wireless
Internet access products.
TRADING AND MARKET PRICES
From 1997 through October 14, 1999, our common stock was traded on the
NASD's OTC Bulletin Board, first under the symbol "MEME", then under the
symbol "USRF". The table below sets forth, for the periods indicated, the
high and low bid and asked prices for our common stock, as reported by the
OTCBB:
High High Low Low
Quarter/Period Ended: Bid Ask Bid Ask
December 31, 1997 $.75 $1.625 $.0625 $.21875
March 31, 1998 $2.00 $3.00 $.03125 $.08
June 30, 1998 $2.00 $2.0625 $.8125 $.875
September 30, 1998 $1.50 $1.625 $.75 $.84375
December 31, 1998 $5.3125 $5.50 $.50 $.53125
March 31, 1999 $13.50 $13.75 $3.34375 $2.00
June 30, 1999 $7.375 $5.6875 $3.5625 $3.60
September 30, 1999 $8.8125 $8.875 $3.28125 $3.4375
10/1/99 thru 10/14/99 $3.8125 $3.9375 $2.875 $3.00
These prices represented quotations between dealers without adjustment for
retail mark-ups, mark-downs or commissions, and may not have necessarily
represented actual transactions.
Beginning on October 15, 1999, our common stock began to be traded on the
American Stock Exchange, under the symbol "UAX". The table below sets
forth, for the period indicated, the high and low sales prices for our
common stock, as reported by the American Stock Exchange:
Quarter/Period Ended: High Low
10/15/99 thru 12/31/99 $5.875 $2.50
March 31, 2000 $11.00 $3.625
You should note that our common stock, like many newly-traded stocks, has
experienced significant fluctuations in its price and trading volume. We
cannot predict the future trading patterns of our common stock.
On April 25, 2000, the number of record holders of our common stock,
excluding nominees and brokers, was approximately 1,104, holding 13,345,845
shares.
DIVIDENDS
We have never paid cash dividends on our common stock. We intend to
re-invest any future earnings for the foreseeable future.
We have acquired shares of common stock of three private companies:
- 1,500,000 shares of New Wave Media Corp., in exchange for all of
our community-television-related assets;
- 400,000 shares of Argo Petroleum Corporation, in exchange for
10,000 shares of our common stock; and
- 800,000 shares of Woodcomm International, Inc., in exchange for
7,500 shares of our common stock.
Our board of directors declared dividends as to all of the shares of each
of these private companies. None of the three dividend distributions will
occur unless and until a registration statement relating to each
distribution transaction has been declared effective by the SEC.
CAPITALIZATION
The following table sets forth our capitalization as of December 31, 1999
and 1998. This table should be read in conjunction with our consolidated
financial statements included elsewhere in this prospectus.
As at As at
12/31/99 12/31/98
Long-Term Liabilities $ 3,883,210 $ -0-
Shareholders' Equity:
Common Stock - $.0001 par value;
100,000,000 shares authorized, 8,497,259
and 12,786,116 shares issued, respectively 1,279 850
Additional Paid-in Capital 28,918,638 2,874,189
Accumulated Deficit (12,616,830) (1,686,667)
Other (1,861,918) (1,102,924)
Subscriptions Receivable (860) (860)
Shareholders' Equity 14,440,309 84,588
Total Capitalization 18,323,519 84,588
SELECTED FINANCIAL DATA
The following selected financial data have been derived from our
consolidated financial statements, which appear elsewhere in this
prospectus. The selected financial data set forth below should be read in
conjunction with our financial statements, related notes and other
financial information included elsewhere in this prospectus.
STATEMENT OF OPERATIONS DATA:
Year Ended December 31,
1999 1998 1997
(audited) (audited) (audited)
Revenue $2,547,225 $ 5,440 $ -
Cost of Goods Sold 1,152,721 - -
Expenses 11,860,758 1,034,464 619,385
Net Loss 10,930,163 1,037,626 624,804
Loss per share (0.96) (0.14) (0.10)
Weighted Average
Number of Shares
Outstanding 11,419,641 7,361,275 6,193,678
BALANCE SHEET DATA:
Year Ended December 31,
1999 1998
(audited) (audited)
Working Capital (Deficit) $(1,060,532) $(240,806)
Total Assets 19,545,169 333,659
Total Current Liabilities 1,221,650 249,071
Shareholders' Equity 14,440,309 84,588
RECENT CHANGE OF INDEPENDENT AUDITOR
On January 11, 2000, we dismissed Weaver and Tidwell, L.L.P. as our
independent auditor. At the time of the dismissal, there was no
disagreement with respect to any matter of accounting principles or
practices, financial statement disclosure or auditing scope or procedure.
On January 24, 2000, we engaged Postlethwaite & Netterville as our new
independent auditor, which firm audited our financial statements for the
year ended December 31, 1999. The audit committee of our board of
directors recommended this change in auditors and the full board approved
the change.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Present Business Focus
In October 1999, our management determined to commit, for the foreseeable
future, all available capital to the commercial exploitation of our
Quick-Cell wireless Internet access products. We intend to continue to
pursue acquisitions of businesses complimentary to our core Internet access
business.
The results of operations discussed below reflect, on the whole, our
operating results based on our old business model. Because our Quick-Cell
wireless Internet access business permits us to operate on significantly
improved margins, as compared to operating margins in the dial-up Internet
access business, we expect our operating results, beginning with the second
quarter of Fiscal 2000, to show significant improvement. The level of
improved operating results cannot be predicted, however.
Background
In July 1999, we changed our name to "USURF America, Inc.", from "Internet
Media Corporation". We were incorporated on November 1, 1996, under the
name "Media Entertainment, Inc.", to act as a holding company in the
wireless cable and community (low power) television industries. Our
initial capitalization transaction included the purchase of Winter
Entertainment, Inc. and Missouri Cable TV Corp. Because USURF America,
Winter Entertainment and Missouri Cable TV were combined in a
reorganization of entities under common control, the presentation contained
in our consolidated financial statements, as they relate to Winter
Entertainment and Missouri Cable TV, have been prepared in a manner similar
to the pooling-of-interests method.
Due to current market conditions in the wireless cable industry, we have
abandoned our efforts to develop these wireless cable properties.
Nevertheless, in the opinion of our management, the licenses relating to
the various wireless cable frequencies continue to be of substantial future
value for use in our wireless Internet access business. We will be able to
utilize these frequencies at such time as the FCC approves two-way
communication on the wireless cable frequencies. Our management believes
this FCC approval of two-way communication to be imminent. However, our
wireless cable assets will become impaired, should the expected FCC
approval not be forthcoming. We can make no prediction with respect to the
FCC's actions in this regard.
In furtherance of our plan to focus on the exploitation of our Quick-Cell
wireless Internet access products and expansion of our other Internet
services, effective July 1, 1999, we assigned all of our community (low
power) television properties to New Wave Media Corp., in exchange for
1,500,000 shares of New Wave common stock. Our board of directors has
declared a dividend with respect to all 1,500,000 New Wave shares. These
shares of New Wave will be distributed to our shareholders, upon New Wave's
completion of a Securities Act registration of the distribution
transaction. This discussion includes the operations of our community
television segment through June 30, 1999.
Since our initial capitalization transactions and through December 31,
1999, we have made the acquisitions described below. Each of these
acquisitions has been accounted for as a purchase, not as a pooling of
interests, with their respective operating results being included in this
discussion from the various dates of acquisition:
- September 1998: we acquired the assets and going business of Desert
Rain Internet Services, a Santa Fe, New Mexico-based ISP, for $25,000 in cash.
- January 1999: we acquired CyberHighway, Inc., a Boise, Idaho-based
ISP for 2,000,000 shares of our common stock.
- June 1999: we acquired Santa Fe Trail Internet Plus, Inc., another
Santa Fe, New Mexico-based ISP, for 100,000 shares of our common stock.
- August 1999: we acquired the going business known as www.usurf.com,
for 150,000 shares of our common stock.
- August 1999: we acquired Premier Internet Services, Inc., an
Idaho-based ISP, for 127,000 shares of our common stock.
- August 1999: we acquired Net 1, Inc., an Alabama-based ISP, for
250,000 shares of our common stock. In September 1999, we tendered the
stock of Net 1 for rescission of the acquisition transaction. The
financial statements of Net 1 were not available to us from September 1,
1999, through December 31, 1999; therefore, the revenues and expenses of
Net 1 are not included in this discussion, nor are they included in our
statement of operations for Fiscal 99. Please refer to Notes 2 and 15 to
our financial statements appearing elsewhere in this Annual Report. Also,
please see the discussion below under Item 3. Legal Proceedings.
- November 1999: we acquired the customer base of Cyber Mountain,
Inc., a Denver, Colorado-based ISP, for 25,000 shares of our common stock.
- December 1999: we acquired a portion of the ISP-related equipment
and customer base of CyberHighway of North Georgia, Inc., a Demorest,
Georgia-based ISP, for 53,000 shares of our common stock.
The acquisition of CyberHighway fundamentally altered our outlook. Prior
to this acquisition, our growth plan called for either (1) the acquisition
of small, local ISPs located in certain key cities, then essentially
"plugging-in" our Quick-Cell wireless Internet access system into the
acquired ISP's network system and marketing the Quick-Cell system or (2)
the establishment of strategic relationships by licensing local ISPs in
certain key cities to exploit our Quick-Cell wireless Internet access
products. This growth strategy, while proving effective, proved also to be
slow and relatively expensive.
With the acquisition of CyberHighway, not only did we acquire approximately
27,000 dial-up customers and a state-of-the-art network operations center,
we also gained immediate access to customers in over 230 markets in which a
CyberHighway-owned or affiliate-ISP provides Internet services.
Acquisitions After December 31, 1999
Since December 31, 1999, we have completed two acquisitions:
- February 2000: we acquired The Spinning Wheel, Inc., an Idaho-based
ISP, for 81,063 shares of our common stock.
- February 2000: we acquired Internet Innovations, L.L.C., a Baton
Rouge, Louisiana-based web design firm, for 50,000 shares of our common stock.
Neither of these acquisitions is reflected in this discussion, as they were
treated as purchases and not as pooling-of-interests. Also, we do not
expect these acquisitions, on their own, to alter significantly our future
operating results.
Restructuring
In July 1999, sweeping changes were made to the management of CyberHighway.
These changes included completely replacing the board of directors and
officers of CyberHighway, as well as a significant workforce reduction.
Additional personnel reductions have been made. Certain business
functions, including customer support services, have been moved from the
Boise network operations center to our Santa Fe, New Mexico,
point-of-presence. The changes in the management of CyberHighway were made
due to differing managerial philosophies. Under the prior management,
CyberHighway had, during May 1999, begun to sustain operating losses,
primarily due to the addition of numerous salaried salespersons, who failed
to produce sales revenues. The new management of CyberHighway instituted
the restructuring and personnel reductions as the only means by which it
could return CyberHighway to a positive cash flow position. While
CyberHighway's cash flow returned, for a brief time, to a positive status,
in line with its 1998 cash flow results, CyberHighway has begun to operate
a loss of approximately $30,000 per month. We are attempting to reduce
operating expenses at CyberHighway so the operating losses will be
eliminated, or at least substantially eliminated.
Settlement Agreement
On November 30, 1999, we entered into a settlement agreement and mutual
release, which settled certain legal proceedings in which USURF America and
CyberHighway had been involved. The parties to the settlement agreement
were: USURF America, CyberHighway, Julius W. Basham, II, our former chief
operating officer and a current director, William Kim Stimpson and David W.
Brown. Messrs. Stimpson and Brown are former owner-employees of CyberHighway.
Pursuant to this settlement agreement, certain legal proceedings were
settled in full and we delivered to Messrs. Basham, Stimpson and Brown a
total of 340,000 shares of our common stock. We are paying the total sum
of $43,325 for reimbursement of attorneys' fees paid by Messrs. Basham,
Stimpson and Brown.
The 340,000 shares issued to Messrs. Basham, Stimpson and Brown were valued
at $2.6875 per share, or $913,750, in the aggregate. The price per share
assigned to the issued shares was the closing price of our common stock, as
reported by the American Stock Exchange, on November 30, 1999. The $43,325
being paid as reimbursement of attorneys' fees will be expensed in the year
ended December 31, 1999. With respect to the 340,000 shares, we will
suffer a charge against earnings in the amount of $913,750, or
approximately $.08 per share, which amount will be recognized in the year
ended December 31, 1999. The total charge against earnings in 1999
resulting from the settlement agreement was $957,075.
Shareholder Loans
Since our inception, our president, David M. Loflin, has made numerous
loans to us. During Fiscal 99, Mr. Loflin loaned us a total of $235,000
($25,000 of which was repaid during Fiscal 99), all of which is payable on
demand and bears interest at 8% per annum. In addition, during the first
quarter of Fiscal 2000, Mr. Loflin loaned us a total of $165,000 on the
same terms. The funds loaned during Fiscal 1999 were used primarily for
operating expenses, while the funds loaned during the first quarter of
Fiscal 2000 were used for the purchase of network equipment and for
operating expenses.
Mr. Loflin has advised us that he does not intend to demand payment of his
loans, until their repayment would not adversely affect our financial
position.
Results of Operations
Year Ended December 31, 1999, versus Year Ended December 31, 1998.
Prior to Fiscal 98, substantially all of our revenues were generated
by our community television segment. During Fiscal 98 and Fiscal 99, all
of our revenues were generated by our Internet segment. During 1999, we
derived our revenues from monthly customer payments for dial-up Internet
access, which average approximately $18.00 per customer. Also, we derive
revenue from per-customer royalty payments from our CyberHighway
affiliate-ISPs, which average approximately $1.75 per customer.
Our operating results for Fiscal 98 and Fiscal 99 are summarized in
the following table:
Fiscal 99 Fiscal 98
Revenues $ 2,547,225 $ 5,440
Cost of Goods Sold 1,152,721 -
Gross Profit 1,394,504 5,440
Operating Expenses 11,860,758 1,034,464
Other Expense 2,117,070 8,602
Loss from Operations 10,466,254 1,029,024
Net Loss 10,930,163 1,037,626
The dramatic increase in every line item, except "Other Expense", of
our statement of operations from Fiscal 98 to Fiscal 99 is attributable
primarily to our acquisition of CyberHighway, in January 1999, and to our
other 1999 acquisitions.
During both reporting periods, we issued a relatively large number of
shares of our common stock for consulting services. The value of the
consulting services received [number of shares issued multiplied by the per
share value assigned to the shares issued] under each agreement has been
expensed in equal monthly amounts over their respective terms.
Our net loss for Fiscal 98 is attributable in large measure to the
issuance of shares of our common stock pursuant to various consulting
agreements, as well as the payment of operating costs. During Fiscal 98, a
total of 1,655,759 shares were issued to consultants; these shares have
been valued for financial accounting purposes at $1,556,900, in the
aggregate. During Fiscal 98, $311,889 was expenses due to Fiscal 97
consulting agreements and $453,976 of the $1,556,900 in Fiscal 98
consulting agreements was expensed. Also, during Fiscal 98, we issued a
total of 80,000 shares of common stock to certain of our directors. These
shares were valued, for financial reporting purposes, at $.56 per share, or
$44,800, in the aggregate. During Fiscal 99, we expensed approximately
$92,000 each month, due to the Fiscal 98 consulting agreements.
During Fiscal 99, however, our net loss is attributable in large
measure to the depreciation and amortization of acquired customer bases,
goodwill and other intangibles of $7,653,924, while an additional
$1,945,935 in professional fees, substantially all of which is attributable
to stock issuances under various consulting agreements, and $1,603,556 in
salary and commissions was expensed.
During Fiscal 99, we issued 566,000 shares of common stock under
consulting agreements; these shares have been valued for financial
accounting purposes at $2,216,000, in the aggregate. $2,000,000 of this
amount will be expensed in equal monthly amounts over five years, while the
remaining $216,000 of this amount will be expensed in equal monthly amounts
over periods ranging from three to six months.
Since Fiscal 99, we have issued 160,000 shares of common stock under
consulting agreements; these shares were valued at $3.00 per share, or
$480,000, in the aggregate, and will be expensed in equal monthly amounts
during Fiscal 2000.
During Fiscal 99, we incurred two significant charges against our
earnings, which appear in our statement of operations under the "Other
Income (Expense)" heading:
First, we suffered a charge of $1,164,561 arising out of our
acquisition, and subsequent tender for rescission, of Net 1.
However,
because we remain the legal owner of Net 1, we are required by
generally accepted accounting principles to record Net 1 as a
wholly-
owned subsidiary from the date of acquisition. The financial
statements of Net 1 from September 1 through December 31, 1999, were
unavailable to us; therefore, the revenues and expenses of Net 1 are
not included in our statement of operations for Fiscal 99. This is
considered a departure from generally accepted accounting
principles,
the effects of which have not yet been determined. The total
cost of
the acquisition of Net 1 was $1,164,561, which exceeded the fair
value
of the net assets of Net 1 by $1,164,561. This excess was deemed
to be
impaired at December 31, 1999, due to the change in the operating
environment, and was, thus, recorded in our statement of
operations as
an impairment loss. The future accounting treatment of the Net 1
acquisition is not certain.
Second, we suffered a charge of $957,075 arising out a settlement
agreement and mutual release, which settled certain legal
proceedings
in which USURF America and CyberHighway were involved. These legal
proceedings were settled in full by the issuance of 340,000
shares of
our common stock to the adverse parties and we are paying $43,325
for
reimbursement of their respective attorneys' fees. The 340,000
shares
were valued at $2.6875 per share, or $913,750, in the aggregate.
The
price per share assigned to these shares was the closing price of
our
common stock on November 30, 1999, as reported by the American Stock
Exchange.
For Fiscal 1999, our statement of operations reflects an income tax
benefit of $1,653,161, resulting from the difference in the bases of the
acquired customer bases for book versus tax purposes.
Internet Segment. During Fiscal 98, this segment began to generate
revenues, following the acquisition of Desert Rain Internet Services, in
September 1998. For all of Fiscal 98, this segment operated at a small
loss. For all of Fiscal 99, the Internet segment generated all of our
revenues and operated at a modest loss. This segment's operating loss is
due to the operating losses occurring prior to the change in CyberHighway's
management, one-time costs associated with the corporate restructuring at
CyberHighway, including attorneys' fees, and operating losses that returned
during the last two months of Fiscal 99.
Community Television Segment. During Fiscal 98 and Fiscal 99, this
segment had no revenues and suffered a nominal loss from operations. As
discussed above, effective July 1, 1999, we assigned all of our community
television properties to New Wave Media Corp.
Wireless Cable Segment. For Fiscal 98 and Fiscal 99, the wireless
cable segment had no operating activity. As described above, we have
ceased, for the foreseeable future, our wireless cable activities.
Pro Forma Results of Operations
Assuming that the CyberHighway acquisition had occurred on January 1, 1998,
USURF America would have had, on a pro forma basis for Fiscal 98, total
revenues of $2,454,596 (unaudited) and a net loss of $6,124,330
(unaudited). This loss is primarily attributable to the amortization of the
acquired customer base of CyberHighway. See Note 17 to our financial
statements included elsewhere in this Annual Report.
Liquidity and Capital Resources
December 31, 1999.
Historically, we have had a significant working capital deficit. At
December 31, 1999, our working capital deficit was $1,060,532, which is a
substantially larger deficit than our $240,806 deficit at December 31, 1998.
The following table sets forth our current assets and current
liabilities at December 31, 1999 and 1998:
Fiscal 99 Fiscal 98
Current Assets Cash $ 75,313 $ 7,232
Accounts Receivable 59,098 1,033
Inventory 21,207 -
Prepaids 5,500 -
Current Liabilities Notes payable -
current portion $ 5,910 $ -
Accounts payable 363,665 17,493
Accrued payroll 118,157 -
Other current
liabilities 216,650 2,159
Accounts payable -
affiliate - 10,069
Property dividends
payable 43,750 57,519
Accrued interest to
stockholder 29,741 15,416
Notes payable to
stockholder 356,239 146,415
Deferred revenue 87,538 -
The large increase in our accounts payable is attributable to our
expanded operations following the acquisition of CyberHighway coupled with
our lack of working capital with which to pay our accounts payable as
incurred.
Our accrued payroll at December 31, 1999, is attributable to accrued
salary of our president and two of our vice presidents.
The increase in other current liabilities is attributable to our
expanded operations as compared to our Fiscal 98 operations.
The increase in notes payable to stockholder from 1998 to 1999
represents loans made to us by our president, David M. Loflin. All of this
indebtedness is due on demand and bears interest at 8% per annum. In
addition, during the first quarter of Fiscal 2000, Mr. Loflin loaned us an
additional $165,000 on the same terms. The funds loaned during Fiscal 1999
were used primarily for operating expenses, while the funds loaned during
the first quarter of Fiscal 2000 were used primarily for use in the
roll-out of our Quick-Cell wireless Internet access products, particularly
in Santa Fe, New Mexico, and for working capital. Mr. Loflin has advised
us that he does not intend to demand payment of his loans, until their
repayment would not adversely affect our financial position.
Our working capital deficit deterioration from 1998 to 1999 has
occurred in spite of the receipt of a total of $882,322 during 1999 in
private sales of our securities:
- January 1999: we received $290,000 from the sale of securities.
These funds were applied to operating expenses.
- May 1999: we received $105,000 from the sale of securities. These
funds were applied to operating expenses and the purchase of needed equipment.
- June 1999: we received $310,000 from the exercise of certain
warrants. Approximately 40% of the funds received from the exercise of
these warrants was used for working capital and the balance of these funds
was used to purchase needed Quick-Cell wireless Internet equipment and
other Internet-related equipment.
- August 1999: we received $27,322 from the exercise of certain
warrants. These funds were used for working capital.
- November 1999: we received $150,000 from the sale of securities.
These funds were used for operating expenses and for the purchase of needed
equipment.
We expect that, prior to the end of the first half of 2000, certain
common stock purchase warrants, representing an additional approximately
$1,300,000, will be exercised. However, we cannot assure you that these
warrants will be exercised or, if exercised, that the timing of their
exercise would significantly improve our financial position.
Without substantial additional investment, we will continue to
experience a working capital deficit and be unable to implement our
aggressive growth plan. We are seeking additional investments for this
purpose, but we cannot assure you that we will be successful in our efforts.
Commitment to Wireless Internet Business. In October 1999, our
management determined to apply, for the foreseeable future, all available
capital to the exploitation of our Quick-Cell wireless Internet access
products. However, we cannot assure you that we will obtain sufficient
capital with which to implement fully our growth plan.
Growth Strategy; Proposed Acquisitions. During the past year, as we
refined our growth strategy, we have determined that, as a purveyor of
Internet access, for us to achieve the greatest growth and economies of
scale, it is necessary for us to offer traditional dial-up Internet access
and our Quick-Cell wireless Internet access products. Thus, to reach more
Internet users, we will continue to provide high quality dial-up Internet
access service as we continue to deploy our Quick-Cell wireless Internet
access products.
We will also seek acquisitions of businesses that complement our core
business. We have not agreed to any acquisition of this nature, and we
cannot assure you that we will ever acquire another business.
Quick-Cell Wireless Internet Strategy. We are attempting to implement
a plan designed to establish our Quick-Cell wireless Internet access
products in 110 U.S. cities by the end of 2000. We have reached an
tentative agreement with US West that would provide us with an extremely
cost-effective connection to the Internet in our chosen markets, into which
our Quick-Cell wireless Internet access systems would connect. We lack the
capital needed to implement completely our growth plan and we cannot assure
you that we will be successful in obtaining any capital.
USURF America National Reseller Program. With recently secured local
dial-up Internet access agreements with national backbone providers, we
have launched our "USURF America" high-quality dial-up Internet access
service. The marketing of its dial-up access service is being accomplished
by resellers, through our national reseller program. The resellers of our
dial-up Internet access services receive continuing commissions for
customers obtained through their efforts. This program has not yet begun
to yield meaningful subscriber growth and we cannot assure you that our
efforts in this regard will be successful.
Community Television Stations. In furtherance of our plan to focus on
the exploitation of our Quick-Cell wireless Internet access products, we
assigned all of our community (low power) television properties to New Wave
Media Corp., in exchange for 1,500,000 shares of New Wave common stock.
Our board of directors declared a dividend with respect to all 1,500,000
New Wave shares.
Cash Flows from Operating Activities. During Fiscal 99, our
operations used $546,097 in cash compared to cash used of $305,999 during
Fiscal 98. In both periods, the use of cash in operations was a direct
result of the lack of revenues compared to the operating expenses. While
the trend toward using increasing amounts of cash in operating activities
remained continued, the large increase in the dollar amounts from 1998 to
1999 is attributable to our increased activities, due primarily to our
acquisition of CyberHighway in January 1999. Should be continue to be
unable to obtain significant amounts of additional capital, we expect that
we will continue to use cash in operating activities at levels similar to
those experienced in 1999.
Cash Flows from Investing Activities. During Fiscal 99, our investing
activities used cash of $412,785 compared to $49,702 in Fiscal 98. During
Fiscal 99, in our investing activities, capital expenditures [purchases of
equipment] of $614,193 offset cash acquired in acquisitions and disposal of
fixed assets. During 1998, in our investing activities, the acquisition of
Desert Rain Internet Services [$24,666] and the purchase of equipment
[$25,605] offset the payment of organization costs. Because we lack
working capital, we cannot predict our cash flows from investing activities
for all of 2000.
Cash Flows from Financing Activities. For Fiscal 99, our financing
activities provided $1,026,963 in cash. Of this amount, $235,010 is
attributable to loans from our president, $545,000 is attributable to
private sales of securities and $337,322 is attributable to the receipt of
funds from the exercise of certain warrants. Payments on notes payable
represented a use of cash of $90,369. For Fiscal 98, our financing
activities provided $362,933 in cash, $30,133 of which is attributable to
loans from our president and $332,800 of which is attributable to the
private sale of securities. We cannot predict future levels of cash flows
from financing activities.
In March 2000, we received $325,000 in private sales of our
securities. 65,000 units of securities consisting of one share of our
common stock and one common stock purchase warrant [exercisable at $7.50
per share] were sold for $5.00 per unit.
Non-Cash Investing and Financing Activities. During Fiscal 99, we
issued 566,000 shares of common stock under consulting agreements; these
shares have been valued at $2,216,000, in the aggregate.
Since Fiscal 99, we have issued 160,000 shares of common stock under
consulting agreements; these shares were valued at $480,000, in the aggregate.
During Fiscal 98, non-cash investing and financing activities included
the issuance of 1,655,759 shares of our common stock issued for consulting
and legal services to be performed, valued at $1,556,900.
Pro Forma Liquidity and Capital Resources
Assuming that the CyberHighway acquisition had occurred on January 1, 1998,
USURF America would have had, on a pro forma basis, a working capital
deficit of $217,680 (unaudited), total assets of $21,816,500 (unaudited),
total liabilities of $5,792,653 (unaudited) and shareholders' equity of
$16,023,847 (unaudited). See Note 17 to our financial statements included
elsewhere in this Annual Report.
Management's Plans Relating to Future Liquidity
We continue to seek additional capital with which to operate and implement
our aggressive growth plan. In March 2000, we obtained a total of $325,000
in a private offering of our securities. Even with this capital, we remain
substantially illiquid. We require approximately $1,000,000 to become
relatively liquid and to pursue aggressively the installation and marketing
of our Quick-Cell wireless Internet access systems.
We expect that, prior to the end of the first half of 2000, warrants
representing an additional approximately $1,300,000 will be exercised. We
cannot assure you that any of these warrants will ever be exercised.
Our current operations will not be sufficient, on their own, to provide
operating capital and to provide capital with which to pursue our growth
strategy. We continue to seek capital with which to implement our growth
strategy. We cannot assure you that we will ever secure capital necessary
for our growth strategy to be implemented.
Capital Expenditures
During Fiscal 1999, we made $614,193 in equipment purchases. Currently, we
lack capital to make any significant capital expenditures. However, during
2000, we expect to apply substantially all of our available capital, if
any, to (1) the purchase of Quick-Cell wireless Internet equipment and the
construction of local Quick-Cell wireless Internet access systems and/or
(2) the acquisition of one or more businesses that compliment our core
business. We continue our aggressive pursuit of capital with which to
implement our growth strategy.
Year 2000 Issues
We experienced no problems related to Year 2000 issues. During our efforts
to become completely Year 2000 compliant, we incurred expenses of
approximately $75,000.
CERTAIN STATEMENTS CONTAINED IN THIS "MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS" ARE "FORWARD-LOOKING
STATEMENTS" WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM
ACT OF 1995 AND ARE, THUS, PROSPECTIVE. THESE FORWARD-LOOKING STATEMENTS
ARE SUBJECT TO RISKS, UNCERTAINTIES AND OTHER FACTORS WHICH COULD CAUSE
ACTUAL RESULTS TO DIFFER MATERIALLY FROM FUTURE RESULTS EXPRESSED OR
IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. THE MOST SIGNIFICANT OF SUCH
RISKS, UNCERTAINTIES AND OTHER FACTORS IS OUR ABILITY TO OBTAIN CAPITAL IN
AMOUNTS NECESSARY FOR US TO ACCOMPLISH OUR PLAN FOR THE EXPLOITATION OF OUR
QUICK-CELL WIRELESS INTERNET ACCESS PRODUCTS, AS WELL AS CONSUMER
ACCEPTANCE OF THESE PRODUCTS.
REGULATION
Quick-Cell Wireless Internet Access. Our Quick-Cell wireless Internet
access products operate in unregulated spectra, primarily in the 2400 MHz
spectrum, and we expect that such spectra will remain unregulated.
Regulation of Internet Access Services. We provide Internet access,
in part, using telecommunications services provided by third-party
carriers. Terms, conditions and prices for telecommunications services are
subject to economic regulation by state and federal agencies. As an
Internet access provider, we are not currently subject to direct economic
regulation by the FCC or any state regulatory body, other than the type and
scope of regulation that is applicable to businesses generally. In April
1998, the FCC reaffirmed that Internet access providers should be
classified as unregulated "information service providers" rather than
regulated "telecommunications providers" under the terms of the Federal
Telecommunications Act of 1996. As a result, we are not subject to federal
regulations applicable to telephone companies and similar carriers merely
because we provide our services using telecommunications services provided
by third-party carriers. To date, no state has attempted to exercise
economic regulation over Internet access providers.
Governmental regulatory approaches and policies to Internet access
providers and others that use the Internet to facilitate data and
communication transmissions are continuing to develop and, in the future,
we could be exposed to regulation by the FCC or other federal agencies or
by state regulatory agencies or bodies. In this regard, the FCC has
expressed an intention to consider whether to regulate providers of voice
and fax services that employ the Internet, or IP, switching as
"telecommunications providers", even though Internet access itself would
not be regulated. The FCC is also considering whether providers of
Internet-based telephone services should be required to contribute to the
universal service fund, which subsidizes telephone service for rural and
low income consumers, or should pay carrier access charges on the same
basis as applicable to regulated telecommunications providers. To the
extent that we engage in the provision of Internet or Internet
protocol-based telephony or fax services, we may become subject to
regulations promulgated by the FCC or states with respect to such
activities. We cannot assure you that these regulations, if adopted, would
not adversely affect our ability to offer certain enhanced business
services in the future.
Regulation of the Internet. Due to the increasing popularity and use
of the Internet by broad segments of the population, it is possible that
laws and regulations may be adopted with respect to the Internet pertaining
to content of Web sites, privacy, pricing, encryption standards, consumer
protection, electronic commerce, taxation, and copyright infringement and
other intellectual property issues. No one is able to predict the effect,
if any, that any future regulatory changes or developments may have on the
demand for our Internet access or other Internet-related services. Changes
in the regulatory environment relating to the Internet access industry,
including the enactment of laws or promulgation of regulations that
directly or indirectly affect the costs of telecommunications access or
that increase the likelihood or scope of competition from national or
regional telephone companies, could materially and adversely affect our
business, operating results and financial condition.
RECENT DEVELOPMENTS
We recently signed a letter of intent with US West. We expect to execute
final agreements with US West in the near future. US West, however,
already is providing services as though the final agreements had been
signed. US West will provide frame relay service, private line DS3
corporate backbone services, managed data services and access to radio
towers (as Quick-Cell server modem sites). Our alliance with US West is a
key to our ability to establish Quick-Cell systems at the rapid rate we are
pursuing. Our management is aware of nothing that would prevent us from
signing a final agreement with US West.
In recent months, we have negotiated contracts with two companies that
serve as Internet backbone providers. These companies are NaviNet, Inc.
and ioNET, Inc., a subsidiary of PSINet, Inc. These agreements, plus our
existing agreement with Electric Lightwave, have, in effect, transformed us
from a regional ISP to a national ISP, an ISP that can provide dial-up
Internet access in the vast majority of the 100 largest metropolitan
statistical areas in the United States. With these agreements in place, we
announced our national reseller program for our dial-up Internet access
service, marketed under the "USURF America" brand name. We expect that the
impact of this effort will begin to appear toward the end of the second
quarter of 2000. Through the national reseller program and potentially
through acquisitions of ISPs, we intend to continue to seek growth in our
dial-up Internet access business.
All available current and future capital of will be applied to the
commercial exploitation of our Quick-Cell wireless Internet access
products. It is these products upon which our future is based.
BUSINESS
History
In July 1999, we changed our name to "USURF America, Inc.", from "Internet
Media Corporation". We were incorporated on November 1, 1996, under the
name "Media Entertainment, Inc.", to act as a holding company in the
wireless cable and community (low power) television industries. Due to
current market conditions in the wireless cable industry, we have abandoned
efforts to develop our wireless cable properties. In furtherance of our
plan to focus on the exploitation of our Quick-Cell wireless Internet
access products, we assigned all of our community (low power) television
properties to New Wave Media Corp.
Since September 1998, we have acquired the following businesses:
- in September 1998, we acquired the assets and going business of
Desert Rain Internet Services, a Santa Fe, New Mexico-based ISP;
- in January 1999, we acquired CyberHighway, a Boise, Idaho-based ISP;
- in June 1999, we acquired Santa Fe Trail Internet Plus, Inc.,
another Santa Fe, New Mexico-based ISP;
- in July 1999, we acquired the business known as www.usurf.com, an
Internet e-commerce web portal;
- in August 1999, we acquired Net 1, Inc., an Alabama-based ISP; we
are seeking to rescind this transaction;
- in August 1999, we acquired Premier Internet Services, Inc., an
Idaho Falls, Idaho-based ISP;
- in November 1999, we acquired the customer base of Cyber Mountain,
Inc., a Denver, Colorado-based ISP, which was an affiliate-ISP in our
CyberHighway network;
- in December 1999, we acquired a portion of the customer base of
CyberHighway of North Georgia, Inc., a Demorest, Georgia-based ISP, which
was an affiliate-ISP in our CyberHighway network;
- in February 2000, we acquired The Spinning Wheel, Inc., a
Pocatello, Idaho-based ISP, which was an affiliate-ISP in our CyberHighway
network; and
- in February 2000, we acquired Internet Innovations, L.L.C., a Baton
Rouge, Louisiana-based web design firm.
Current Overview
Our management has committed all available current and future capital to
the commercial exploitation of our Quick-Cell wireless Internet access
products. It is these products upon which our future is based.
We will continue to pursue dial-up Internet access customer growth, but we
do not expect to commit any significant amount of capital to this effort.
Also, we will continue to develop our e-commerce business, through our web
portal e-tail.com, but we do not expect to commit any significant amount of
capital to this effort.
Recent Developments
We recently signed a letter of intent with US West. We expect to execute
final agreements with US West in the near future. US West, however,
already is providing services as though the final agreements had been
signed. Our alliance with US West is a key to our ability to establish
Quick-Cell systems at the rapid rate we are pursuing.
We have negotiated contracts with two companies that serve as Internet
backbone providers. These companies are NaviNet, Inc. and ioNET, Inc., a
subsidiary of PSINet, Inc. These agreements, plus our existing agreement
with Electric Lightwave, have, in effect, transformed us from a regional
ISP to a national ISP, an ISP that can provide dial-up Internet access in
the vast majority of the 100 largest metropolitan statistical areas in the
United States.
Proposed Transactions
We intend to search actively for business acquisitions, which may be in the
form of mergers, stock-for-stock exchanges or stock-for-assets
acquisitions. While we have established no specific criteria for
evaluating potential acquisition candidates, it is our management's
intention to pursue acquisition transactions with businesses with a history
of earnings or a potential for future growth, or both. We have filed a
registration statement on Form S-1 (SEC File No. 333-96027) to register
2,000,000 shares of our common stock for future issuance. We intend to
utilize the 2,000,000 shares so registered for this purpose in completing
any such acquisition. We have not agreed to acquire any particular
business with these shares. We cannot assure you that we will be able to
acquire any business through use of these shares, or otherwise.
Industry Background
Growth of the Internet; the World Wide Web. The Internet, commonly
known as the World Wide Web, or simply the Web, is a collection of
connected computer systems and networks that link millions of public and
private computers to form, essentially, the largest computer network in the
world. The Internet has experienced rapid growth in recent years and is
expected to continue its impressive growth, based on estimated increases in
the numbers of Web users, Web traffic and the number of Web sites.
International Data Corporation estimates that there were over 38 million
Web users in the United States and over 68 million worldwide at the end of
1997. International Data Corporation projects that the number of Web users
will increase to over 135 million in the United States and over 319 million
worldwide by the end of 2002. In April 1998, the U.S. Department of
Commerce estimated that traffic on the Internet is doubling every 100 days.
It is estimated that the number of Web sites in the United States will
increase from approximately 450,000 in 1997 to nearly four million in 2002.
The following factors are, in our estimation, contributing to the
Internet's continued rapid growth:
- the Internet has become, on a global scale, an accepted
communication medium, enabling people to obtain and share information and
conduct business electronically;
- the proliferation of affordable personal computers;
- advances in the performance and speed of personal computers, modems
and networking components;
- improvements in telecommunication network infrastructures;
- ease of access to the Internet; and
- the increasing use of the Internet by businesses as a competitive
tool.
Internet Access. Internet access services represent the means by
which ISPs interconnect business and consumer users to the Internet's
resources. Access services vary from dial-up modem access, like that
provided by us, for individuals and small businesses to high-speed
dedicated transmission lines for broadband access by large organizations to
wireless Internet access systems, like our Quick-Cell wireless Internet
access products. An ISP provides Internet access either by developing a
proprietary network infrastructure or by purchasing access service from a
wholesale access vendor, or through a combination of both. The rapid
development and growth of the Internet have resulted in a highly
competitive and fragmented industry consisting of approximately 4,500 ISPs
in the United States, with most having customer bases of less than 5,000
subscribers. The vast majority of U.S.-based ISPs conduct their operations
within a single city or state, with just a small number of ISPs, such as
EarthLink, providing nationwide coverage. Due to the disparity between the
large number of smaller ISPs with limited resources and the emergence of a
limited number of national ISPs with their associated economies of scale,
the ISP industry is expected to undergo substantial consolidation.
Electronic Commerce Over the Internet. The Internet has created a new
communication and sales channel that enables businesses to interact with
large numbers of geographically dispersed consumers and other businesses.
With the recent growth of the Internet, there have emerged many companies
that focus solely on the Internet as the medium for selling products or
delivering services directly to purchasers, bypassing traditional wholesale
and retail channels. Moreover, businesses are implementing sophisticated
Web sites to effect electronic commerce initiatives that offer competitive
advantages. These businesses are deploying an expanding variety of
Internet-enabled applications, ranging from Web-site marketing and
recruiting programs to on-line customer interaction systems,
telecommunications services, integrated purchase order and "just-in-time"
inventory solutions for key customers and suppliers. These on-line
capabilities require increasingly complex Web sites and accompanying
support operations. In addition, advances in on-line security and payment
mechanisms are more adequately addressing consumers' concerns associated
with conducting transactions over the Internet, thereby prompting more
consumers and businesses to use the Internet as a medium for commerce.
Also, businesses continue to offer an ever-greater selection of electronic
commerce services. International Data Corporation estimates that the
number of consumers buying goods and services on the Internet will grow
from 17.6 million in 1997 to over 128 million in 2002, and that the total
value of goods and services purchased over the Internet by consumers and
businesses will increase from approximately $12 billion in 1997 to over
$425 billion by 2002.
Contract Internet Operations. Electronic commerce, or e-commerce, is
growing at an explosive pace. More and more businesses are placing greater
emphasis on their Internet transaction and communication abilities and
operations. Increasingly, traditional businesses, as well as
Internet-based businesses, require non-congested and scalable Internet
operations that will permit them to engage in digital communication and
commercial transactions anywhere in the world, via the Internet.
Due to constraints posed by the lack of technical personnel with
Internet skills or experience, the high cost of advanced networking
equipment and the complexity of innovative Web solutions, many businesses
do not have the resources required to develop, maintain and update their
Internet facilities and systems, to maintain standards required for these
companies to conduct high levels of Internet-based business. As a result
of these constraints and other factors, many businesses are seeking to
contract for, or "outsource", their Internet facilities and systems
requirements as the preferred means for establishing and maintaining
electronic commerce solutions. To this end, we expect an increasing demand
is developing for:
- Dedicated and broadband Internet access services to support
reliable, high speed and/or constantly connected Internet access and
communication;
- Web hosting and co-location services which enable businesses to
obtain equipment, technical expertise and infrastructure for their Internet
needs on an outsourced basis; and
- Electronic commerce solutions to sell goods and services on the Web
in a transactionally-secure environment.
By outsourcing Internet facilities and systems needs, businesses can
then focus on improving their business results, rather than expending
financial resources on additional staff and Internet-related assets
necessary to support their Internet operations.
Internet Service Opportunities. The number of businesses and
consumers accessing the Internet is expected to continue to increase
significantly in the foreseeable future. According to Forrester Research,
the market for providing access to the Internet for businesses and
consumers is expected to be approximately $18.4 billion in 2000.
Additionally, as businesses and consumers are developing greater levels of
comfort in the use of the Internet for electronic commerce, businesses are
increasingly implementing sophisticated electronic commerce solutions
which, in turn, require significantly greater bandwidth and other business
services. In response to this demand, an increasing number of ISPs are
attempting to augment their basic Internet access services with a wide
range of business services. According to International Data Corporation,
the market for Web hosting and Internet security business services is the
fastest growing segment of the Internet services market, with revenues
expected to increase from approximately $350 million in 1997 to
approximately $7 billion in 2000.
Our management believes that ISPs that offer both Internet access to
broad segments of the population and that offer a broad selection of
business services will be positioned to attain greater economies of scale
through lower network expansion and marketing costs on a per-subscriber
basis. Our management further believes that only a few national ISPs will
be in a position to benefit fully from this continued growth in Internet
usage.
It is our management's opinion that the ISPs that will be in a
position to benefit most from the expected continued growth of the Internet
likely will be characterized by their:
- ability to respond quickly to market demands;
- ability to provide reliable coverage on a nationwide basis;
- superior technical skills and customer support capabilities;
- electronic commerce expertise and business services capabilities;
- brand name recognition and the ability to exploit multiple
marketing channels; and
- relatively lower network costs.
Strategic Relationships
We recently signed a letter of intent with US West. We expect to execute
final agreements with US West in the near future. US West, however,
already is providing services as though the final agreements had been
signed. US West will provide frame relay service, private line DS3
corporate backbone services, managed data services and access to radio
towers (as Quick-Cell server modem sites). Our alliance with US West is a
key to our ability to establish Quick-Cell systems at the rapid rate we are
pursuing. Our management is aware of nothing that would prevent us from
signing a final agreement with US West.
We have entered into agreements with NaviNet, Inc., ioNET, Inc., a division
of PSINet, Inc., and Electric Lightwave, with respect to such companies'
providing Internet backbone access throughout their respective networks.
Together, these companies provide Internet backbone access in a great
majority of U.S. markets. We pay these providers monthly per-customer
fees, which fees fluctuate, depending on the number of customers that
utilize these firms' access services. The services provided by these firms
to us are transparent to our customers, that is, our customers appear to
access the Internet directly through our point-of-presence. These
agreements are key to our ability to offer national dial-up access to our
customers.
Quick-Cell Wireless Internet Access
General. "Wireless Internet" is a new type of communications spectrum
recently designated by the FCC. Wireless Internet access requires a
transmission facility maintained by an ISP employing a wireless system and
the user's modem (a transmitter/receiver modem) equipped with an antenna.
Wireless Internet capability allows users to access the Internet from a
stationary computer or, in some situations, from a mobile, lap-top computer
located within the wireless ISP's transmission area.
Our proprietary wireless Internet access system is marketed under the
"Quick-Cell" and "US.RF Wireless Internet System" (US.RF stands for United
States Radio Frequency) trade names.
The Quick-Cell wireless Internet access system is a turn-key,
plug-and-play, system that is capable of delivering customers Internet
access at burstable T-1 equivalent speeds, at prices that range from 40% to
60% below those charged for traditional T-1 hardwire Internet access
service. A single-cell Quick-Cell system can be deployed in less than one
week. Additional Quick-Cells can be added to a local system on an
as-needed basis. We currently have one full-scale Quick-Cell wireless
Internet access system in operation in Santa Fe, New Mexico.
Once we determine to construct a full-scale Quick-Cell wireless
Internet access system in a particular market, the construction of that
full-scale system, one that covers an area 12 miles in diameter, takes
approximately four to six weeks, depending on local regulatory schemes.
Quick-Cell Wireless Internet Access System. Our proprietary
Quick-Cell wireless Internet access system operates primarily within a
broadcast signal in the 2400 MHz band using two-way modems (a
transmitter/receiver modem) outfitted with antennae. Thus, our Quick-Cell
wireless Internet access system differs substantially in design from the
wireless Internet access available through cellular telephones and differs
substantially from traditional telephone-line-based ISPs, because there is
no reliance on hard wire to transfer data. Nevertheless, our management
believes our Quick-Cell wireless Internet system is capable of greater
utility at lower cost than these other modes of Internet access.
It is the belief of our management that our Quick-Cell wireless
Internet access system provides the following competitive advantages for
attracting potential consumer and business customers over other Internet
access modes:
- Speed: the Quick-Cell system provides a minimum data transmission
speed of 64kbs, with data transmission speed capability of up to 10 Mbs;
- Lower Cost: the Quick-Cell system will, depending on the particular
market and desired Internet access speed, be offered at costs between 20%
to 60% less than available hard-wire Internet access (that is, less than
monthly ISP charges plus monthly telephone line charges) currently offered
by local telephone companies; the Quick-Cell system offers significant
savings over cellular-telephone-based Internet access methods;
- No Telephone Company Involvement: because the Quick-Cell system
does not utilize telephone lines, our customers will not be required to
incur the expense of a hard-wire telephone line through which to access the
Internet;
- Security/Encryption: the Quick-Cell system is designed to allow the
encryption (scrambling) of its broadcast signal, thereby offering a high
degree of security to customers, particularly business customers who wish
to transmit confidential information over the Internet;
- Mobility: the Quick-Cell system is able to permit service personnel
of a business to file contemporaneous reports, request and receive
technical assistance and perform other computer-based functions from a
customer's place of business or from a service vehicle, even if the service
vehicle is traveling to its next destination; and
- Ethernet/Networking Capability: the Quick-Cell system is compatible
with existing so-called "ethernet" systems. Generally, an ethernet can be
described as a self-contained network of desk-top computers, often located
in the same building, through which individual computer users can
communicate electronically (i.e., via e-mail), as well as access the
Internet. We can design and install an ethernet system in any existing
building by installing a wireless communications system that links all
computers, including computers that are to remain linked via hard wire, to
one another and provides all computer users access to the Internet.
We believe that our Quick-Cell wireless Internet access system is able
to satisfy any other special requirements of a potential customer, without
significantly adding to the system's cost to that customer.
Initially, we are marketing our Quick-Cell products to the business
sector. However, as each Quick-Cell system matures (within a six to nine
month period) we will begin to market heavily to home-based Internet users.
System Control Software. We have developed software that enables us
to control bandwidth speed of each Quick-Cell system, as well each
customer-premises modem, all from a single remote location. This software
allows us to increase or decrease bandwidth as necessary and to monitor
easily all bandwidth usage within each Quick-Cell system. These
capabilities allow us to provide cost efficiencies to our customers.
Potential Future Applications. It is our long-term objective to offer
a full array of video entertainment via our Quick-Cell systems. We believe
our plans are easily achievable, due to the fact that the Quick-Cell
Internet connection can be routed to the user's television, using existing,
relatively inexpensive technology. Assuming market conditions permit, we
expect that, by the year 2005, each of our Quick-Cell systems would be able
to offer its subscribers many video services, including some services that,
given the rapid evolution of technology, may not currently exist. The
video entertainment services that we expect to be able to offer include:
- Movies: we believe that we will be able to offer an ever-expanding
movie list, all of which would be available, in real time, at any time,
upon request of the subscriber. We expect that each movie would be sold,
or "rented", to subscribers at a cost that would be less than the same
movie were it to be rented from the local video rental store. The primary
impediment to our offering this service is its lack of capital with which
to acquire necessary equipment, as well as digitized copies of the desired
movies.
- Pay-Per-View Events: we believe that we will be able to offer to
its subscribers access to pay-per-view events, such as concerts and
sporting events, including boxing matches, such as are currently available
from time to time through local cable television systems. The primary
impediment to our offering this service is its lack of capital with which
to purchase necessary equipment, including satellite dishes.
- "Cable" Television: Although we expect that consumer acceptance
will be sluggish at first, our management believes that, with adequate
capital for equipment and advertising, as well as consumer education, we
will be able to provide a competitive offering of "cable" television
channels that would be equal to those offered by any local cable television
company and direct broadcast satellite systems. It is quite possible that
market forces will dictate that this type of service would not be
introduced to consumers for the foreseeable future.
These potential future services remain in the development stage and no
introduction date has been set by our management. All of the services
described appear to be feasible after initial tests, due to the high-speed
data transmission capabilities of our Quick-Cell system. Additional
applications are currently being developed by us. We cannot predict when
any or all of these services will be ready for commercial exploitation.
Current Markets. Our Quick-Cell wireless Internet access system is
operating in Santa Fe, New Mexico. Customers are being placed on the
Quick-Cell system daily. Our sales personnel are actively working an
interested-customer list of over 900. We have also begun sales and
installation efforts in Albuquerque and Las Vegas, New Mexico. It is our
goal to establish Quick-Cell systems in 110 U.S. cities by the end of 2000.
We believe we will be able to reach this goal, but we may fall short of
our goal, unless we obtain more operating capital.
Early in 1999, we licensed several ISPs to operate our Quick-Cell
systems. Since that time, however, we have determined not to pursue the
licensing of ISPs, in favor of our plan to own and operate all Quick-Cell
systems. The licensed Quick-Cell system in Casper, Wyoming, operated for a
period of three months, but was discontinued, due to the sale of the
licensee's ISP business. The Santa Fe, New Mexico, licensee (Santa Fe
Trail Internet Plus, Inc.) was acquired by us, in June 1999.
Competition; Consumer Acceptance. Our wireless Internet access
business faces the same severe competition for market share as does our
dial-up Internet access business. Our Quick-Cell wireless Internet access
products potentially must also overcome an initial lack of consumer
acceptance, given the new and relatively unproven (commercially) nature of
the Quick-Cell products.
Other Wireless Products. In January 1998, we delivered our first
proprietary wireless DataLink system. Our wireless DataLink system was
delivered to the Baton Rouge refinery of one of the largest international
oil companies, the refinery being the second largest in the U.S. The
wireless DataLink system was purchased to replace an existing hard-wire
(T-1 telephone line) data transmission system. The wireless DataLink
system transfers data at the rate of 2 megabytes per second. Since then,
our management has determined to focus all available resources on the
development of our Quick-Cell products, as a more efficient means of
achieving short-term market share and profitability. As we begin to
achieve success in our Quick-Cell wireless Internet access business, we
anticipate that we will begin to devote resources, if available, to the
exploitation of these other proprietary wireless products. Our management
believes our wireless DataLink system can address, on a wide-spread basis,
the needs of businesses to transmit ever-increasing volumes of data. We
cannot assure you that we will ever possess sufficient resources to exploit
our wireless DataLink system or that it will achieve wide-spread acceptance.
Dial-up Internet Access
In addition to our wireless Internet access business, we provide high
quality, full service dial-up Internet access to over 30,000 customers.
These dial-up customers are served primarily by our CyberHighway subsidiary.
Our Internet services include dial-up access, high speed access and other
value-added services, as well as Wireless Internet access to approximately
90 customers. Because CyberHighway began offering wireless Internet
service before its being acquired by us, the wireless Internet system
employed by CyberHighway is not the Quick-Cell system. However, we will,
over time, transfer all of the current wireless Internet customers onto our
Quick-Cell system.
Customers and Markets
We provide Internet access to approximately 30,000 customers, nearly
all of whom utilize our dial-up Internet access services. The largest
concentration of customers is in Idaho, where approximately 65% of our
customers reside. The bulk of the remaining Internet access customers are
located as follows: 10% in Wyoming, 5% in Georgia, 5% in Oregon, 5% in
Nevada, and 3% in Arizona, with the remaining subscriber base spread among
various other markets, including Denver, Colorado, and Jackson, Mississippi.
Based on data collected from certain of our customers, we believe that
our subscribers tend to reflect the typical Internet user composite which,
according to published surveys, indicates that over half of Internet users
are male, approximately 50% are between the ages of 25 and 45, about
one-third are college graduates and the average reported annual income of
users is substantially higher than the median U.S. level.
To date, our business customers have generally consisted of small and
medium-sized businesses. However, we expect that our Quick-Cell products
will allow us to compete effectively for larger business customers, who
tend to require larger amounts of bandwidth.
Sales and Marketing
Historically, CyberHighway's sales and marketing strategy was
comprised of three components: (1) direct response marketing, (2)
affiliate-ISP program and (3) corporate direct sales. Direct response
marketing and the affiliate-ISP program were responsible for most of
CyberHighway's growth in its subscriber base. However, the affiliate-ISP
program has been abandoned, and we are taking a more national approach, by
offering national service under the "USURF America" name, rather than the
"CyberHighway" name.
With our agreements with national Internet backbone providers, we have
begun a national reseller program for our dial-up Internet access service.
Participating resellers receive monthly per customer residuals, as
compensation for their sales efforts. We expect that our national reseller
program will be fully underway by the end of the second quarter of 2000.
We engage in a variety of direct response marketing and various
promotional activities to stimulate consumer awareness of its Internet
access services. These marketing efforts are directed both to consumers
who have not previously subscribed to Internet access services and to
Internet users who may switch to our service. Radio advertising and direct
mail distribution have been the principal media used for direct response
marketing to solicit new subscribers. As discussed above, our marketing
focus for our dial-up Internet service has been changed to the national
reseller program structure. Our management believes this strategy is the
most cost-effective way to develop our dial-up Internet access business,
while permitting us to concentrate substantially all of our resources on
the exploitation of the Quick-Cell wireless Internet access products.
Because it is our belief that a consumer's selection of an Internet
service provider is most often influenced by a personal referral, we strive
always to deliver superior customer service and support.
Affiliate-ISP Program
From its inception, CyberHighway employed an affiliate marketing
program, a technique designed to generate rapid expansion of CyberHighway's
subscriber base. Under this program, an existing ISP entered into a license
agreement with CyberHighway, wherein a local ISP obtained the right to use
the "CyberHighway" brand name and the local ISP allowed the connection of a
Kbps-speed frame relay data circuit to connect from the local ISP's POP to
CyberHighway's network operations center. In effect, under this license
arrangement, CyberHighway handles the local ISP's "backroom" operations,
that is, hardware and system management, thereby allowing the local ISP's
personnel to concentrate on marketing functions. In addition to certain
monthly circuit fees, the local ISP pays CyberHighway a monthly
per-customer royalty. These per-customer royalties average approximately
$1.75.
The affiliate-ISP program has been terminated.
Customer Service and Support
We are committed to the highest levels of customer satisfaction. We
believe that maintaining high levels of customer satisfaction will remain
as a key competitive factor that will differentiate us from other purveyors
of Internet-related services. We regularly review network utilization
rates, and refine and expand our network capabilities as necessary, to
ensure high levels of network performance and reliability.
We maintain customer support for telephone inquiries seven days a
week, with technical personnel available to address customer questions and
concerns, and we intend to begin to offer customer support 24 hours per
day, in the near future. We intend to continue to dedicate the resources
necessary to ensure that service calls are promptly answered and addressed
by a customer support representative, and that customer issues are resolved
promptly. Customers also can access customer support services through
e-mail correspondence or access trouble-shooting tips and configuration
information, as well as network status and performance reports, on our Web
site.
Consumer and business customers have very different support needs, as
do wireless Internet customers, especially as to technical requirements and
the sophistication of the user who makes the customer service inquiry. As
our subscriber base grows, we intend to implement a tiered customer support
system, where simple technical problems or other miscellaneous issues would
be handled by non-technical support staff and complex and/or time sensitive
technical questions would be referred to the trained technical support
staff for resolution.
Network Infrastructure
We have designed our network and related systems to provide fast and
reliable, high-quality Internet access services, while minimizing the
capital investment needed for infrastructure development. We continually
re-evaluate our network's structure and design so as to achieve maximum
capacity with available resources. We always seek innovative, cost-saving
measures as we expand our network, which is expected to provide maximum
flexibility as we pursue our growth strategy. We further believe that we
will be able to take advantage of market opportunities as they may develop,
whether due to technological advances or regulatory changes. Our objective
is to minimize both network costs and exposure to technological
obsolescence of equipment. We believe our agreements with NaviNet, PSINet,
Electric Lightwave and US West greatly enhance our ability to accomplish
these objectives.
Our current network consists of a state-of-the-art network operations
center located in Boise, Idaho, through which all subscribers log onto the
Internet. We do not have the capital to build a"mirror" network operations
center site, which would provide redundancy to our network and greatly
enhance the reliability of our the network.
We have almost completed an expansion of the Boise network operations
center, so that it will be able to process up to 150,000 customers without
further expansion.
Network Operations Center
Our network operation center monitors network traffic, quality of
services and security issues, as well as the performance of the equipment
located at each of our points-of-presence, to ensure reliable service. Our
network operations center is comprised of state-of-the-art equipment and an
uninterruptible power supply and is staffed 24 hours a day, seven days a
week, with technical and network security personnel. When an intruder, or
"hacker", enters our network, the network security personnel are able to
monitor the intruder's activities, create a report about such activities
and provide such information to customers who may have had their
proprietary information tampered with by the intruder. To date, neither we
nor any customer has incurred any material loss due to the efforts of hackers.
Other Internet Services
In addition to the services usually offered by ISPs, we offer a Web
site that facilitates e-commerce. This Web site is known as "e-tail.com".
During the last part of 2000, we will attempt to direct significant
Internet traffic to this site, but we lack capital to apply to the
development of this business. We intend, in the future, to have the
e-tail.com operations to specialize in business-to-business e-commerce
transactions, in addition to offering desirable products to consumers.
We have determined to focus on business-to-business Internet
solutions, due to our belief that this sector has not, historically, been
well served by Internet access and Internet-related service providers. We
cannot assure that our efforts in this area will be successful.
Competition
We will face severe competition from other wireless Internet access
providers, such as Metricom. However, we believe our Quick-Cell wireless
Internet access products are superior to other similar products.
The market for the provision of dial-up Internet access services is
extremely competitive and highly fragmented. Our competitors include many
large, nationally-known companies, such as America Online, Earthlink and
Flashnet. These and other companies possess greater resources,
particularly access to capital sources, market presence and brand name
recognition than do we. As there are no significant barriers to entry, we
expect that competition will intensify.
We also believe that the primary competitive factors determining
success as an ISP are:
- a reputation for reliability and high-quality service;
- effective customer support;
- access speed;
- pricing;
- effective marketing techniques for customer acquisition;
- ease of use; and
- scope of geographic coverage.
We believe that we can, and in the future will, more effectively
compete in our markets, due to (1) our commitment to providing fast and
reliable, high-quality Internet access and other Internet-related services,
as well as exemplary customer service and support, and (2) our Quick-Cell
wireless Internet access products. We cannot assure you that we will be
able to compete successfully.
Current and prospective competitors include many large,
nationally-known companies that possess substantially greater resources,
financial and otherwise, market presence and brand name recognition than do
we. With respect to our Internet access and other Internet-related
services, we currently compete, or expect to compete, for the foreseeable
future, with the following: national ISPs, numerous regional and local
ISPs, most of which have significant market share in their markets;
established on-line information service providers, such as America Online,
which provide basic Internet access, as well as proprietary information not
available through public Internet access; providers of web hosting,
co-location and other Internet-based business services; computer hardware
and software and other technology companies that provide Internet
connectivity with their products; telecommunications companies, including
global long distance carriers, regional Bell operating companies and local
telephone companies; operators that provide Internet access through
television cable lines; electric utility companies; communications
companies; companies that provide television or telecommunications through
participation in satellite systems; and, to a lesser extent, non-profit or
educational Internet access providers.
With respect to potential competitors, we believe that manufacturers
of computer hardware and software products, media and telecommunications
companies and others will continue to enter the Internet services market,
which will serve to intensify competition. In addition, as more consumers
and businesses increase their Internet usage, we expect existing
competitors to increase further their emphasis on Internet access and
electronic commerce initiatives, resulting in even greater competition.
The ability of competitors or others to enter into business combinations,
strategic alliances or joint ventures, or to bundle their services and
products with Internet access, could place us at a significant competitive
disadvantage.
Moreover, we expect to face competition in the future from companies
that provide connections to consumers' homes, such as telecommunications
providers, cable companies and electrical utility companies. For example,
recent advances in technology have enabled cable television operators to
offer Internet access through their cable facilities at significantly
higher speeds than existing analog modem speeds. These types of companies
could include Internet access in their basic bundle of services or offer
such access for a nominal additional charge. Any such developments could
materially and adversely affect our business, operating results and
financial condition.
Properties
General. We own all of the equipment necessary to conduct our ISP
operations, including servers, routers and modems. In addition, we own
office equipment necessary to conduct our business.
We lease approximately 650 square feet for our executive offices in
Baton Rouge, Louisiana, for a monthly rental of $776. CyberHighway leases
two separate facilities in the Boise, Idaho, area, for a combined monthly
rental of approximately $3,000. We lease approximately 500 square feet in
Santa Fe, New Mexico, for a monthly rental of approximately $800.
Wireless Cable Properties. We own the rights to wireless cable
channels in Poplar Bluff, Missouri, Lebanon, Missouri, Port Angeles,
Washington, The Dalles, Oregon, Sand Point, Idaho, Fallon, Nevada, and
Astoria, Oregon. We have abandoned our efforts to develop these wireless
cable properties, due to current market conditions. Rather, we intend to
develop these properties into operating wireless Internet systems, at such
time as two-way data transmission on these frequencies is permitted.
Intellectual Property. We are nearing completion of patent
applications relating to our Quick-Cell wireless Internet access system.
These patent applications are to be filed as soon as they have been
completed. Although we believe the Quick-Cell system, or aspects thereof,
to be patentable, we have no assurance that a patent or patents will be
granted. Also, we cannot assure you that the steps taken by us will be
adequate to prevent misappropriation of our proprietary wireless Internet
technologies or that third parties, including competitors, will not
independently develop technologies that are substantially equivalent or
superior to our proprietary wireless Internet technologies.
We are preparing U.S. trademark applications for the following
trademarks: "Quick-Cell", "US.RF Wireless Internet", "US.RF Quick-Cell" and
"USURF America".
We have received authorization to use the products of each
manufacturer of software that is bundled in its software for users with
personal computers operating on the Windows or Macintosh platforms. While
certain of the applications included in our start-up kit for Internet
access services subscribers are shareware that we have obtained permission
to distribute or that are otherwise in the public domain and freely
distributable, certain other applications included in our start-up kit have
been licensed where necessary. We currently intend to maintain or
negotiate renewals of all existing software licenses and authorizations as
necessary. We may also enter into licensing arrangements for other
applications, in the future.
Employees
We have 24 employees, including five officers. Most of our hourly
employees are employed by CyberHighway. All of our officers have entered
into employment agreements.
None of our employees is covered by any collective bargaining
agreement, nor have we ever experienced a work stoppage. Our management
believes employee relations to be good. Much of our future success will
depend, in large measure, upon our ability to continue to attract and
retain highly skilled technical, sales, marketing and customer support
personnel.
MANAGEMENT
Directors and Officers
The following table sets forth the officers and directors of USURF America.
Name Age Position(s)
David M. Loflin(1) 42 President and Director
Waddell D. Loflin(1) 50 Vice President, Secretary and Director
Christopher L. Wiebelt 41 Vice President - Finance and
Chief Financial Officer
James Kaufman 36 Vice President - Corporate Development
Darrell D. Davis 36 Vice President - U.S. Internet Operations
Richard N. Gill 42 Director
Ross S. Bravata 41 Director
Michael Cohn 42 Director
_____________
(1) David M. Loflin and Waddell D. Loflin are brothers.
Our current officers and directors serve until the next annual meeting of
our board of directors or until their respective successors are elected and
qualified. All officers serve at the discretion of our board of directors.
Family relationships between our officers and directors are noted above.
Certain information regarding the backgrounds of each of the officers and
directors is set forth below.
David M. Loflin, President and Director, has, for more than the past
five years, owned and operated Gulf Atlantic Communications, Inc., a Baton
Rouge, Louisiana-based wireless technology firm specializing in development
of wireless cable systems and broadcast television stations. Gulf Atlantic
has designed, constructed and operated two wireless cable systems: (1)
Baton Rouge, Louisiana, and (2) Selma, Alabama. Mr. Loflin developed and
currently operates one television station, WTVK-TV11, Inc. (a Warner
Brothers Network affiliate), Channel 11 in Baton Rouge, Louisiana. For
over ten years, Mr. Loflin has served as a consultant for Wireless One, one
of the largest wireless communications firms in the United States. Mr.
Loflin is a member of the Wireless Cable Association International and the
Community Broadcasters Association.
Waddell D. Loflin, Vice President, Secretary and Director, has, for
more than the past five years, served as Vice President of Operations and
Treasurer of Gulf Atlantic Communications, Inc. and WTVK-TV11, Inc., both
in Baton Rouge, Louisiana. In addition, Mr. Loflin serves as Production
Manager and Film Director for WTVK-TV11, Inc. Mr. Loflin served as General
Manager for Baton Rouge Television Company, Baton Rouge, Louisiana, a
wireless cable system, where he directed the development and launch of such
wireless cable system. Also, Mr. Loflin has devoted over five years to
demographic research relating to the wireless cable industry. Mr. Loflin
is a member of the Wireless Cable Association International and the
Community Broadcasters Association. Mr. Loflin holds a B.A. degree in
Social Sciences from Oglethorpe University, Atlanta, Georgia.
Christopher L. Wiebelt, Vice President - Finance and Chief Financial
Officer, served as Vice President of Finance for Dynatech Corp. from 1994
through September 1997, and as President of a subsidiary of Dynatech Corp.
from March 1996 through September 1997. From September 1997 to March 1999,
Mr. Wiebelt served as President and Chief Financial Officer of Specialty
Lighting, Inc., a Baton Rouge, Louisiana-based private manufacturing firm.
From March 1999 to September 1999, Mr. Wiebelt conducted a private
accounting practice in Baton Rouge. Since September 1999, Mr. Wiebelt has
worked for USURF America, and, in February 2000, he became its Vice
President - Corporate Finance and Chief Financial Officer.
James Kaufman, Vice President - Corporate Development, received a B.S.
degree in Journalism from the University of Colorado, Boulder, Colorado.
From 1994 to 1995, Mr. Kaufman was a registered representative with D.E.
Fry, a Denver, Colorado-based broker-dealer. From 1995 to 1996, Mr.
Kaufman was a registered representative with A.G. Edwards, a St. Louis,
Missouri-based broker-dealer. From 1997 to February 1999, Mr. Kaufman
served as Director of Corporate Development for B. Edward Haun & Company, a
Denver, Colorado-based investment banking and research firm.
Darrell D. Davis, Vice President - U.S. Internet Operations, owned and
operated Santa Fe Trail Internet Plus, Inc., a Santa Fe, New Mexico-based
ISP, from 1996 to June 1999, when Santa Fe Trail was acquired by USURF
America. From 1994 to 1996, Mr. Davis was employed by Galaxy Computer
Services, Santa Fe, New Mexico. In 1995, Mr. Davis declared Chapter 7
bankruptcy.
Richard N. Gill, Director, has, for more than the past five years,
served as Chairman of the Board, President and General Manager of
Campti-Pleasant Hill Telephone Company, Inc., a Pleasant Hill,
Louisiana-based independent telecommunications company involved in the
cellular telephone service industry, the wireless cable industry and the
Internet service provider industry. Mr. Gill currently serves on the Board
of Directors of Artcrete, Inc., and is on the Advisory Board of Peoples
State Bank, Pleasant Hill, Louisiana. Mr. Gill currently serves as a
member of the Industry Telecommunication Advisory Committee for the
Electrical Engineering Department at the University of Southwestern
Louisiana, Lafayette, Louisiana. Mr. Gill is a past-Chairman and current
member of the Louisiana Telephone Association. Mr. Gill is also a member
of the United States Telephone Association and the National Telephone
Cooperative Association.
Ross S. Bravata, Director, has, since 1981, worked for Novartis
(formerly Ciba Corporation), in various positions, and currently serves as
a Senior Control Systems Technician. In such capacity, Mr. Bravata
supervises the service and maintenance of electronic instrumentation.
Since 1988, Mr. Bravata has served as a director and principal financial
officer of CG Federal Credit Union, Baton Rouge, Louisiana. Also, Mr.
Bravata has, since its inception in 1994, served as a director of Trinity's
Restaurant, Inc., in Baton Rouge, Louisiana.
Michael Cohn, Director, has, for over 20 years, owned and operated
Arrow Pest Control, Inc., Baton Rouge, Louisiana. In addition, Mr. Cohn
owns Arrow Pest Control of New Orleans, Wilson and Sons Exterminating in
Mobile, Alabama, and Premier Termite and Pest Control in Florida.
Executive Committee
Our board of directors created an Executive Committee to facilitate
management between meetings of the full board of directors. David M.
Loflin, Waddell D. Loflin and Ross S. Bravata comprise the Executive
Committee.
Our bylaws provide that the Executive Committee has the authority to
exercise all powers of the board of directors, except the power:
- Declare dividends;
- Sell or otherwise dispose of all or substantially all of our assets;
- Recommend to our shareholders any action requiring their approval; and
- Change the membership of any committee, fill the vacancies thereon
or discharge any committee.
The Executive Committee, in general, acts on all matters requiring approval
of our board of directors.
Audit Committee
In September 1999, our board of directors created an Audit Committee,
consisting of three members, the majority of whom must be outside
directors. The initial members of the Audit Committee are David M. Loflin,
Michael Cohn and Richard N. Gill. The Audit Committee has the
responsibility to review internal controls, accounting policies and
financial reporting practices, to review the financial statements, the
arrangements for, and scope of, the independent audit as well as the
results of the audit arrangement and to review the services and fees of the
independent auditors, their independence and recommend to the board of
directors for its approval and for the ratification by our shareholders the
engagement of the independent auditors to serve the following year in
examining our accounts. The Audit Committee has held one meeting, wherein
it recommended the recent change in our independent auditor.
Executive Compensation
The following table sets forth in summary form the compensation received
during each of the last three completed fiscal years by our Chief Executive
Officer and each executive officer who received total salary and bonus
exceeding $100,000 during any of the last three fiscal years.
Long-
term
Compen-
sation
Other Awards All
Annual of other
Name and Compen- Stock Compen-
Principal Salary Bonus sation Options sation
Position Year $ $ $ # $
- --------- ---- ------ ----- ------- ------- -------
David M. Loflin 1999 $62,500(1) $-0- $-0- 0 $-0-
President [Prin- 1998 $55,000 $-0- $-0- 0 $-0-
cipal Executive 1997 $-0- $-0- $-0- 0 $-0-
Officer]
Waddell D. Loflin 1999 $41,667(2) $-0- $-0- 0 $-0-
[Vice President 1998 $48,000 $-0- $-0- 0 $-0-
and Secretary] 1997 $-0- $-0- $-0- 0 $-0-
James Kaufman 1999 $103,333(3) $-0- $-0- 0 $-0-
[Vice President, 1998 $-0- $-0- $-0- 0 $-0-
Corporate Devel- 1997 $-0- $-0- $-0- 0 $-0-
opment]
Julius W.
Basham II 1999 $133,762 $-0- $-0- 0 $-0-
[Former Chief 1998 $-0- $-0- $-0- 0 $-0-
Operating 1997 $-0- $-0- $-0- 0 $-0-
Officer]
___________
(1) $27,083 of this amount has been accrued.
(2) $10,417 of this amount has been accrued.
(3) $20,667 of this amount has been accrued; $82,666 of this amount is
payable in shares of our stock.
Compensation of Directors
In March 1998, four of our directors, Waddell Loflin, Ross S. Bravata,
Richard N. Gill and Michael Cohn, were issued 20,000 shares each of our
common stock as a bonus for their services as directors. These shares were
valued at $.80 per share by the board of directors; however, for financial
reporting purposes, these shares were valued at $.56 per share, the last
closing bid price for our common stock prior to issuance.
No other compensation has been paid to any of our directors for their
services as directors. It is possible that our management could begin to
pay our directors for meetings attended or grant a small number of stock
options for their services. However, no specific determination in this
regard has been made.
Employment Contracts and Termination of Employment
and Change-in-Control Agreements
Each of our officers have entered into employment agreement, as well as
confidentiality agreements and agreements not to compete.
Name of Officer Position(s) Term Salary Date
- --------------- ----------- ---- ------ ----
David M. Loflin President 7 years $150,000(1) 6/1/99
Waddell D. Loflin Vice President 7 years $100,000(2) 6/1/99
and Secretary
Christopher L.
Wiebelt Vice President, 3 years $75,000 2/15/00
Finance and
Chief Financial
Officer
James Kaufman Vice President, 1 year $120,000(3) 3/22/99
Corporate (renew-
Development able)
Darrell Davis Vice President, 3 years $84,000 10/4/99
U.S. Internet
Operations
- ----------------
(1) Mr. Loflin has agreed to defer payment of a portion of his salary until
we are able to pay it. As at December 31, 1999, we owed Mr. Loflin
deferred salary in the amount of $27,083.
(2) Mr. Loflin has agreed to defer payment of a portion of his salary until
we are able to pay it. As at December 31, 1999, we owed Mr. Loflin
deferred salary in the amount of $10,417.
(3) Mr. Kaufman has agreed to defer payment of a portion of his salary
until we are able to pay it. As at December 31, 1999, we owed Mr. Kaufman
deferred salary in the amount of $20,667; $82,666 is payable in shares of
our stock.
In January 1999, we entered into an employment agreement with Julius W.
Basham, II, currently a director and our former chief operating officer.
Pursuant to the terms of a settlement agreement, Mr. Basham resigned as
chief operating officer on January 4, 2000.
We have no compensatory plan or arrangement that results or will result
from the resignation, retirement or any other termination of an executive
officer's employment or from a change in control or a change in an
executive officer's responsibilities following a change-in-control.
Option/SAR Grants in Last Fiscal Year
We have never granted any stock appreciation rights (SARs), nor do we
expect to grant any SARs in the foreseeable future.
Section 16(a) Beneficial Ownership Reporting Compliance
We became subject to the provisions of Sections 16(a) of the Securities
Exchange Act of 1934 on October 14, 1999. Section 16(a) requires
directors, executive officers and persons who own more than 10% of our
outstanding common stock to file with the SEC an Initial Statement of
Beneficial Ownership of Securities (Form 3) and Statements of Changes of
Beneficial Ownership of Securities (Form 4). Directors, executive officers
and greater-than-10% shareholders are required by SEC regulation to furnish
copies to us of all Section 16(a) forms they file.
Based on a review of copies of these reports furnished to us, we believe
that all of our directors, executive directors and greater-than-10%
beneficial owners filed their respective Form 3 reports; all of the Form 3
reports were filed late. However, the Form 3 report of Darrell Davis, one
of our officers, has not yet been filed. Form 5 reports for 1999 for all
officers and directors are due and have not yet been filed. Form 4 reports
for certain of our officers and directors are due and have not yet been
filed. We have requested that all of these persons file the required reports.
Based on a review of the copies of these reports furnished to us, it
appears that Julius W. Basham, II, a former officer, director and
10%-owner, is current in his filings of required Forms 4 and Form 5.
Indemnification of Directors and Officers
Article X of the Articles of Incorporation of USURF America provides that
no director or officer shall be personally liable to USURF America or its
shareholders for damages for breach of fiduciary duty as a director
officer; provided, however, that such provision shall not eliminate or
limit the liability of a director or officer for (1) acts or omissions
which involve intentional misconduct, fraud or a knowing violation of law
or (2) the payment of dividends in violation of law. Any repeal or
modification of Article X shall be prospective only and shall not adversely
affect any right or protection of a director or officer of USURF America
existing at the time of such repeal or modification for any breach covered
by Article X which occurred prior to any such repeal or modification. The
effect of Article X is that directors and officers will experience no
monetary loss for damages arising out of actions taken (or not taken) in
such capacities, except for damages arising out of intentional misconduct,
fraud or a knowing violation of law, or the payment of dividends in
violation of law.
As permitted by Nevada law, our bylaws provide that we will indemnify our
directors and officers against expense and liabilities they incur to
defend, settle or satisfy any civil, including any action alleging
negligence, or criminal action brought against them on account of their
being or having been directors or officers unless, in any such action, they
are judged to have acted with gross negligence or willful misconduct.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended, may be permitted to directors, officers or control
persons pursuant to the foregoing provisions, we have been informed that,
in the opinion of the SEC, such indemnification is against public policy as
expressed in the Securities Act of 1933 and is, therefore, unenforceable.
CERTAIN TRANSACTIONS
Founders
In November 1996, David M. Loflin purchased 1,600,000 shares of our common
stock for $1,600 and Waddell D. Loflin, purchased 200,000 shares of our
common stock for $200.
Loans by Officers
Since our inception, we have received loans and advances on open account
from David M. Loflin in the total amount of approximately $560,000. These
loans and advances bear interest at eight percent per annum and are payable
on demand. To date, $40,000 of these loans have been repaid to Mr. Loflin.
Mr. Loflin has advised us that he does not intend to demand further payment
of any of these loans and advances until such time as repayment would not
adversely affect our financial condition.
Subscription Agreements
Effective December 20, 1996, we entered into a subscription agreement with
David M. Loflin, whereby we issued 1,578,512 shares of our common stock to
Mr. Loflin in exchange for assignments of licenses and leases of licenses
of television channels and wireless cable television channels and options
to acquire these assets, as follows: Monroe/Rayville, Louisiana (channel
26), Natchitoches, Louisiana (channel 38), Port Angeles, Washington
(channels H1-2-3), Astoria, Oregon (channels H2-3), Sand Point, Utah
(channels B1-2-3; C1-2-3), The Dalles, Oregon (channels B1-2-3; C1-2-3),
and Fallon, Nevada (channels E1-2-3-4; H3)
These assets were valued at $1,826,873, which was determined pursuant to a
market report and appraisal prepared by Broadcast Services International,
Inc., Sacramento, California. A more complete description of this
appraisal appears below, under the heading "Appraisal". Mr. Loflin's total
acquisition costs of these assets are unknown. Accordingly, our financial
statements attribute no value to these assets.
Effective December 20, 1996, we entered into a subscription agreement with
Waddell D. Loflin, whereby we issued 104,249 shares of our common stock to
Mr. Loflin in exchange for an assignment of the license of television
channel 36 in Bainbridge, Georgia.
These assets were valued at $120,652, which was determined pursuant to the
appraisal described above. Mr. Loflin's acquisition costs of these assets
are unknown. Accordingly, our financial statements attribute no value to
these assets.
Reorganizations
Effective December 31, 1996, we entered into an agreement and plan of
reorganization, whereby we purchased television station K13VE Channel 13 in
Baton Rouge, Louisiana. In this transaction, David M. Loflin received
227,336 shares of our common stock for his ownership in this television
station. The television station was valued at $263,106, which was
determined pursuant to the appraisal described above. Mr. Loflin's
acquisition costs relating to the rights to K13VE Channel 13 were $6,750.
An additional $10,587 in costs was capitalized.
Effective December 31, 1996, we entered into an agreement and plan of
reorganization, whereby we purchased licenses and leases of licenses of
wireless cable television channels in Poplar Bluff, Missouri, and Lebanon,
Missouri. In this transaction, David M. Loflin received 1,179,389 shares
of our common stock valued at $1,364,553; Ross S. Bravata, one of our
directors, received 42,887 shares of our common stock valued at $49,620;
and Michael Cohn, one of our directors, received 53,608 shares of our
common stock valued at $62,024. The values assigned to the assets acquired
from Messrs. Loflin, Bravata and Cohn were determined pursuant to the
appraisal described above. The acquisition cost of these assets was
$179,611, which is reflected in our financial statements. At the time of
this transaction, Messrs. Bravata and Cohn were not directors.
Securities Purchases
In March 1997, Michael Cohn purchased 20,000 shares of our common stock for
$50,000 in cash. At the time of this transaction, Mr. Cohn was not a director.
In January 1999, Mr. Cohn purchased 30,000 units of our securities in a
private offering, at a purchase of $4.50 per unit, or $135,000 in the
aggregate. Each unit purchased by Mr. Cohn consisted of one share of our
common stock and one common stock purchase warrant to purchase one share of
our common stock at an exercise price of $7.00 per share. Mr. Cohn
purchased units on the same terms and conditions as were offered to
unaffiliated persons.
In November 1999, Mr. Cohn purchased 50,000 units of our securities in a
private offering, at a purchase of $3.00 per unit, or $150,000 in the
aggregate. Each unit purchased by Mr. Cohn consisted of one share of our
common stock and one common stock purchase warrant to purchase one share of
our common stock at an exercise price of $7.00 per share. Mr. Cohn
purchased units on the same terms and conditions as were offered to
unaffiliated investors.
Stock Bonus
In March 1998, four of our directors, Waddell Loflin, Ross S. Bravata,
Richard N. Gill and Michael Cohn, were issued 20,000 shares each of our
common stock as a bonus for their services as directors. These shares were
valued by the board of directors at $.80 per share. However, for financial
reporting purposes, these shares were valued at $.56 per share, the last
closing bid price for our common stock prior to issuance.
Employment Agreements
Each of our officers have entered into employment agreement, as well as
confidentiality agreements and agreements not to compete.
Name of Officer Position(s) Term Salary Date
- --------------- ----------- ---- ------ ----
David M. Loflin President 7 years $150,000(1) 6/1/99
Waddell D. Loflin Vice President 7 years $100,000(2) 6/1/99
and Secretary
Christopher L.
Wiebelt Vice President, 3 years $75,000 2/15/00
Finance and
Chief Financial
Officer
James Kaufman Vice President, 1 year $120,000(3) 3/22/99
Corporate (renew-
Development able)
Darrell Davis Vice President, 3 years $84,000 10/4/99
U.S. Internet
Operations
____________
(1) Mr. Loflin has agreed to defer payment of a portion of his salary until
we are able to pay it. As at December 31, 1999, we owed Mr. Loflin
deferred salary in the amount of $27,083.
(2) Mr. Loflin has agreed to defer payment of a portion of his salary until
we are able to pay it. As at December 31, 1999, we owed Mr. Loflin
deferred salary in the amount of $10,417.
(3) Mr. Kaufman has agreed to defer payment of a portion of his salary
until we are able to pay it. As at December 31, 1999, we owed Mr. Kaufman
deferred salary in the amount of $20,667; $82,666 is payable in shares of
our stock.
In January 1999, we entered into an employment agreement with Julius W.
Basham, II, currently a director and our former chief operating officer.
Pursuant to the terms of a settlement agreement, Mr. Basham resigned as
chief operating officer on January 4, 2000. During 1999, Mr. Basham
received total cash compensation of $133,762.
Voting Agreement
On January 29, 1999, David W. Loflin, Waddell D. Loflin, Julius W. Basham,
David W. Brown and Wm. Kim Stimpson entered into a voting agreement,
whereby all of these persons are required to vote all shares owned by them
for David M. Loflin and Waddell D. Loflin in all elections of directors of
USURF America. Currently, approximately 4,529,903 shares are subject to
this voting agreement.
Settlement Agreement
On November 30, 1999, we entered into a settlement agreement and mutual
release, which settled certain legal proceedings in which USURF America and
CyberHighway, had been involved. The parties to the settlement agreement
were: USURF America, CyberHighway, Julius W. Basham, II, William Kim
Stimpson and David W. Brown.
Under the settlement agreement, the following legal proceedings have been
settled in full: (1) David W. Brown, Plaintiff v. USURF America, Inc. and
Cyberhighway, Inc., Defendants, in the District Court of the Fourth
Judicial District of the State of Idaho, in and for the County of Ada,
Civil Case No. CV OC 9904230D; (2) Julius W. Basham, II, Individual
Plaintiff, David W. Brown, William Kim Stimpson, Individuals, Involuntary
Party Plaintiffs v. USURF America, Inc., formerly known as Internet Media,
Inc., in the District Court of the Fourth Judicial District of the State of
Idaho, in and for the County of Ada, Civil Case No. CVOC 9904382D; and (3)
David W. Brown, Claimant v. Cyberhighway, Inc., Respondent, Industrial
Commission, State of Idaho, IDOL 3362-1999.
Other material terms of the settlement agreement include
- each and every of the claims made in the legal proceedings
described above by Basham, Stimpson and Brown were dismissed with prejudice
and any other potential claims of Basham, Stimpson and Brown against USURF
America and/or CyberHIghway released;
- USURF America and CyberHighway released any and all claims against
Basham, Stimpson and Brown;
- Basham, Stimpson and Brown each reaffirmed their existing
agreements not to compete, with the exception that Brown is now able to
seek any employment opportunity, except that Brown remains prohibited from
working for any person or entity engaged in the 2.4 GHz wireless Internet
access industry;
- Basham, Stimpson and Brown each reaffirmed their existing
confidentiality agreements in their entirety;
- USURF America delivered a total of 340,000 shares of common stock,
as follows: 215,000 shares to Basham; 34,000 shares to Stimpson; and 91,000
shares to Brown;
- Basham resigned as chief operating officer of USURF America;
- USURF America shall, as reimbursement for attorneys fees incurred
by Basham, Stimpson and Brown, pay the total sum of $43,325, in 10 equal
installments payable every other week, to the law firm of Givens Pursley,
Boise, Idaho;
- each of Basham, Stimpson and Brown acknowledged that the voting
agreement among Basham, Stimpson, Brown, David M. Loflin and Waddell D.
Loflin remained in full force and effect; and
- nothing contained in the settlement agreement is construed as an
admission of liability by any party to the settlement agreement.
For a discussion on the financial impact of the settlement agreement,
please see "Management's Discussion and Analysis of Financial Condition and
Results of Operations".
The board of directors determined that entering into the settlement
agreement was in the best interest of USURF America.
H + N Partners
During 1998, we issued a total of 187,000 shares of our common stock to H +
N Partners, a fictitious name division of B. Edward Haun & Company, a
Denver, Colorado-based investment banking and research firm in which James
Kaufman, our Vice President - Corporate Development, was a partner. Mr.
Kaufman received a portion of the shares issued to H + N Partners. 37,000
of the shares were valued at $2.00 per share and 150,000 of the shares were
valued at $2.50 per share. All of the shares issued to H+N Partners were
the subject of effective registration statements filed with the SEC. Mr.
Kaufman was not an officer at the time of the stock issuances to H + N
Partners.
Also during 1998, in connection with a private offering of our securities,
we issued to H + N Partners 56,667 warrants to purchase a like number of
shares of our common stock at an exercise price of $1.25 per share and
56,667 warrants to purchase a like number of shares of our common stock at
an exercise price of $1.50 per share. H+N Partners is a selling
shareholder under this prospectus as to all of the shares underlying these
warrants. Mr. Kaufman was not an officer at the time of the warrant
issuances to H + N Partners.
Appraisal
Background. The appraisal referred to above was prepared by Broadcast
Services International, Inc., a Sacramento, California-based communications
appraisal firm. The report of Broadcast Services was based on 1990 Census
Data. With respect to the wireless cable markets, the engineering studies
relied upon by Broadcast Services indicate the number of households within
the broadcast radius using the 1200 MHZ frequency. The 1200 MHZ frequency
was assumed, due to Broadcast Service's experience that, given all of the
variables that may be present in a market-by-market system build-out, the
actual benchmark performance is more truly reflected by using the higher
(1200 MHZ) frequency, such that the signal attenuation is not over-stated.
Valuation formulas for the wireless cable markets were based on initial
public offerings within the wireless cable industry during the past three
years. The formulas used in evaluation of the broadcast channels were
based on recent sales and market evaluation techniques employed by the
Community Broadcasters Association, among others.
Use of Appraisal. At our inception, the board of directors adopted a
plan that provided that our initial capitalization be 6,000,000 shares.
1,800,000 of these shares were sold as founders' stock and 360,000 shares
were sold to a public company for distribution as a dividend. The balance
of these shares, 3,840,000 shares, were to be utilized to acquire assets,
which were acquired pursuant to the subscription agreements and the
reorganization agreements described above. The board of directors utilized
the appraisal as a means to allocate the 3,840,000 shares among the assets
acquired, as follows:
Appraised Value Shares of Common Historical Cost
Transaction of Assets Acquired Stock Issued of Assets
- ----------- ------------------ ---------------- ---------------
Subscription
Agreement
with David M.
Loflin $1,826,873 1,578,512 Unknown
Subscription
Agreement
with Waddell D.
Loflin 120,652 104,249 Unknown
First
Reorganization 263,106 227,336 $ 17,337
Second
Reorganization 2,233,555 1,929,903 $179,611
Total $4,444,186 3,840,000 $196,948
The apparent $1.157 per share value was determined by dividing the
3,840,000 shares of our common stock allocated by the board of directors
for asset acquisition into the $4,444,186 total appraised value of the
assets acquired. The board of directors utilized this apparent per share
value for corporate purposes, that is, the determination of consideration
received for the issuance of shares of our common stock. However, the
independent appraiser did not value the shares of our common stock issued
in consideration of the assets acquired. Rather, the independent appraiser
valued only the assets acquired by us in the various transactions. The
$1.157 per share figure was utilized by the board of directors primarily as
a means of allocating the 3,840,000 shares among the four asset acquisition
transactions consummated in completing its plan for our initial
capitalization. Thus, the $1.157 figure, while utilized in two ways by the
board of directors, was determined arbitrarily by the board of directors
and is not based on any accounting or other financial criteria.
The appraised value of the assets described above bears no relationship to
the costs of the assets to the affiliates from whom they were acquired.
PRINCIPAL SHAREHOLDERS
There are 13,345,845 shares of our common stock issued and outstanding.
The following table sets forth certain information regarding the current
beneficial ownership of our common stock, and after giving effect to (1)
the issuance of all 2,000,000 shares of acquisition stock and (2) the
issuance of all 395,477 shares of common stock underlying currently
outstanding options and warrants, by (i) persons known to be beneficial
owners of more than 5% of our common stock, (ii) each our officers and
directors and (iii) our officers and directors, as a group. Unless
otherwise noted, the address of the listed persons is 8748 Quarters Lake
Road, Baton Rouge, Louisiana 70809.
Name and Shares Shares
Address of Owned Percent Owned Percent
Beneficial Owner Beneficially Owned(1) Beneficially Owned(2)
David M. Loflin(3) 3,500,903 25.66% 3,500,903 22.38%
Waddell D. Loflin(3) 120,000 * 120,000 *
James Kaufman 452,500 3.32% 452,500 2.89%
665 W. Velarde Drive
Thousand Oaks,
California 91360
Christopher L.
Wiebelt 7,500 * 7,500 *
Darrell Davis 70,000 * 70,000 *
Richard N. Gill 20,000 * 20,000 *
Ross S. Bravata 32,000 * 32,000 *
Michael Cohn 213,000(4) 1.56% 83,000(5) *
Julius W. Basham,
II(3) 1,325,000 9.71% 1,325,000 8.47%
6176 Laurelwood
Drive
Reno, Nevada 89509
All officers and
directors as a
group (8 persons) 4,415,903 32.37% 4,335,903 27.72%
_______________
* Less than 1%.
(1) Based on 13,641,322 shares outstanding, assuming the issuance of all
395,477 shares underlying currently exercisable warrants, but prior to the
issuance of any shares of acquisition stock.
(2) Based on 15,641,322 shares outstanding, assuming the issuance of all
395,477 shares underlying currently exercisable warrants and all 2,000,000
shares of acquisition stock.
(3) All of the shares owned by this shareholder are subject to a voting
agreement and must be voted for David M. Loflin and Waddell D. Loflin, in
all elections of directors.
(4) 80,000 of these shares have not been issued, but underlie currently
exercisable warrants.
(5) Assumes 80,000 shares underlying warrants are purchased and sold, and
50,000 shares currently owned are sold, by Mr. Cohn under this prospectus.
LITIGATION
In September 1999, we tendered the acquired shares of capital stock of Net
1, Inc. for rescission. We made this tender of rescission, due to numerous
and material misrepresentations made by Net 1 and its principals. We had
intended to commence arbitration to pursue its rescission claim. However,
one of the former owners of Net 1, Knud Nielsen, III, has instituted
arbitration, through the American Arbitration Association, and is seeking
to enforce certain registration rights associated with a portion of the
shares of our common stock received by him in the acquisition transaction.
Now, we have presented the rescission claim as a counterclaim in the
pending arbitration proceeding. The counterclaim will be made against Net
1 and its former owners, including Mr. Nielsen, wherein we seek to rescind
the acquisition transaction that occurred in August 1999, and recover the
250,000 shares of common stock issued in connection with the acquisition.
We have alleged fraud and the failure to make statements necessary to make
statements made not misleading. Although we believe we will be successful
in this arbitration proceeding, no prediction in this regard can be made.
PLAN OF DISTRIBUTION
The shares of acquisition stock will be offered by us from time to time in
business combination transactions. It is our intention to search actively
for business combinations, which may be in the form of mergers,
stock-for-stock exchanges or stock-for-assets acquisitions. We will not
derive cash proceeds from any issuances of the acquisition stock. We have
made no commitments involving the issuance of the acquisition stock. The
price per share of the acquisition stock will be negotiated on a
transaction-by-transaction basis and we cannot predict the actual
negotiated price.
The selling shareholder stock is being offered for sale by the selling
shareholders. Consequently, the selling shareholders will receive the
proceeds from the sale of the selling shareholder stock. The shares of
selling shareholder stock may be sold to purchasers, from time to time, in
privately negotiated transactions directly by, and subject to, the
discretion of the selling shareholders. At the time of a particular offer
of the selling shareholder stock is made by or on the behalf of a selling
shareholder, a prospectus and, to the extent required, a prospectus
supplement, will be distributed. The selling shareholder stock may be sold
from time to time in one or more transactions: (i) at an offering price
which is fixed or which may vary from transaction to transaction depending
upon the time of sale or (ii) at prices otherwise negotiated at the time of
sale. The prices will be determined by the selling shareholders. We have
agreed to pay nearly all of the expenses incident to the registration of
the selling shareholder stock.
SELLING SHAREHOLDERS
The following table assumes that each selling shareholder is offering for
sale shares of common stock previously issued or issuable by us. We have
agreed to pay all expenses in connection therewith (other than brokerage
commissions and fees and expenses of counsel of the respective selling
shareholders). Except for Michael Cohn and Darrell Davis, none of the
selling shareholders has ever held any position with us or had any other
material relationship with us. The following table sets forth the
beneficial ownership of the shares of the selling shareholder stock by each
person who is a selling shareholder. We will not receive any proceeds from
the sale of the selling shareholder stock by the selling shareholders.
Shares of Shares of
Common Common
Stock Stock Percentage Owned
Beneficially Being Before After
Name of Beneficial Owner Owned Offered Offering(1)
Offering(2)
Dennis A. Faker 150,000 50,000 * *
Jeanne Rowzee 30,000 10,000 * *
Albert Gottlieb 30,000 10,000 * *
Rogers Family Trust 45,000 15,000 * *
Barbara V. Schiller 90,000 30,000 * *
Delaware Charter Guarantee
& Trust Company f/b/o
Clarence Yim IRA 60,000 20,000 * *
Delaware Charter Guarantee
& Trust Company f/b/o
R. Logan Kock IRA 60,000 20,000 * *
H + N Partners 113,334(3) 113,334 * *
Centex Securities, Inc. 12,143(3) 12,143 * *
Terry Lewis 21,857 21,857 * *
Michael Cohn 213,000(4) 130,000 1.56% *
Walter C. Schiller 20,000(5) 10,000 * *
Michael R. Van Geons 20,000(5) 10,000 * *
Harry P. Kunecki Trust 10,000(6) 5,000 * *
Frank L. Leyba 10,000(6) 5,000 * *
Shelter Capital, Ltd. 88,000(7) 63,000 * *
Walter Engler 30,000(8) 20,000 * *
Alan Taylor 122,405 31,750 * *
CyberHighway of North
Georgia, Inc. 53,000 53,000 * *
Mark Bove 150,000 30,000 1.10% *
Darrell Davis and
Deanna Davis 75,000 21,000 * *
Roger Davis and
Gloria Davis 30,000 9,000 * *
Peter Rochow 60,000 60,000 * *
Nostas/Faessel Group 60,000 60,000 * *
JF Mills/Worldwide 6,000 6,000 * *
The Research Works, Inc. 60,000(3) 60,000 * *
Cyber Mountain, Inc. 25,000 25,000 * *
Diggs W. Lewis, Jr. 64,272 20,000 * *
Ryan D. Thibodeaux 25,000 6,250 * *
Ryan G. Campanile 25,000 6,250 * *
The Humbolt Corporation 60,000 60,000 * *
Gordon Engler 10,000(6) 10,000 * *
Annie Rochow 10,000(6) 10,000 * *
Eden Park Homes Ltd. 10,000(6) 10,000 * *
G. Paul Dumas 10,000(6) 10,000 * *
Daniel E. Pisenti 10,000(6) 10,000 * *
Wolfgang and Helga Rochow 10,000(6) 10,000 * *
Geoffrey Page Flett 10,000(6) 10,000 * *
Donald Rayburn 12,000(9) 12,000 * *
Fair Market, Inc. 100,000 100,000 * *
- --------------------
(1) Based on 13,641,322 shares outstanding, assuming the issuance of a
total of 395,477 shares of common stock that can be acquired by any person
pursuant to any option, warrant or other right within 60 days of the date
of this prospectus, all of which are deemed outstanding for the purpose of
computing the percentage of existing shares beneficially owned by each
person listed, but prior to the issuance of the 2,000,000 shares of
acquisition stock.
(2) Based on 15,641,322 shares outstanding, assuming the issuance of all
395,477 shares of common stock that can be acquired by any person pursuant
to any option, warrant or other right within 60 days of the date of this
prospectus, all of which are deemed outstanding for the purpose of
computing the percentage of existing shares beneficially owned by each
person listed, and all 2,000,000 shares of acquisition stock.
(3) All of these shares underlie currently exercisable warrants; none of
these shares has been issued.
(4) 80,000 of these shares underlie currently exercisable warrants; only
133,000 of these shares have been issued.
(5) 10,000 of these shares underlie currently exercisable warrants; only
10,000 of these shares have been issued.
(6) 5,000 of these shares underlie currently exercisable warrants; only
5,000 of these shares have been issued.
(7) 44,000 of these shares underlie currently exercisable warrants; only
44,000 of these shares have been issued.
(8) 10,000 of these shares underlie currently exercisable warrants; only
10,000 of these shares have been issued.
(9) 6,000 of these shares underlie currently exercisable warrants; only
6,000 of these shares have been issued.
DESCRIPTION OF SECURITIES
Authorized Capital Stock
Our authorized capital stock consists of 100,000,000 shares of common
stock, $.0001 par value per share. The following description of certain
provisions of our common stock does not purport to be complete and is
subject to, and qualified in its entirety by, the provisions of the our
Articles of Incorporation, as amended.
Description of Common Stock
There are 13,345,845 shares of our common stock outstanding. An additional
395,477 shares of common stock have been reserved for issuance pursuant to
various warrants. Each share of common stock is entitled to one vote at
all meetings of shareholders. All shares of common stock are equal to each
other with respect to liquidation rights and dividend rights. There are no
preemptive rights to purchase any additional shares of common stock, nor
are there any subscription, conversion or redemption rights applicable to
the common stock. Our Articles of Incorporation, as amended, prohibit
cumulative voting in the election of directors. The absence of cumulative
voting means that holders of more than 50% of the shares voting for the
election of directors can elect all directors if they choose to do so. In
such event, the holders of the remaining shares of common stock will not be
entitled to elect any director. A majority of the shares entitled to vote,
represented in person or by proxy, constitutes a quorum at a meeting of
shareholders. In the event of liquidation, dissolution or winding up,
holders of shares of common stock will be entitled to receive, on a pro
rata basis, all assets remaining after satisfaction of all liabilities.
All outstanding shares of common stock are fully paid and non-assessable.
Transfer Agent and Registrar
Securities Transfer Corporation, Dallas, Texas, is the transfer agent and
registrar for our common stock.
LEGAL MATTERS
The law firm of Newlan & Newlan, Lewisville, Texas, has acted as our legal
counsel in connection with the registration statement of which this
prospectus forms a part and related matters. The partners of the firm of
Newlan & Newlan own a total of 378,166 shares of our common stock.
EXPERTS
Our financial statements for the year ended December 31, 1999, as indicated
in the report thereon, that appear in this prospectus have been audited by
Postlethwaite & Netterville, independent auditor. The financial statements
audited by Postlethwaite & Netterville, have been included in reliance on
its reports given as its authority as an expert in accounting and auditing.
Our financial statements for the years ended December 31, 1998 and 1997, as
indicated in the report thereon, that appear in this prospectus have been
audited by Weaver and Tidwell, L.L.P., independent auditor. The financial
statements audited by Weaver and Tidwell, L.L.P., have been included in
reliance on its reports given as its authority as an expert in accounting
and auditing.
On January 11, 2000, Weaver and Tidwell, L.L.P. was dismissed as our
independent auditor.
WHERE YOU CAN FIND MORE INFORMATION
We have filed a registration statement on Form S-1 (including its exhibits
and schedules) with the SEC under the Securities Act with respect to our
common stock to be sold in this offering. This prospectus, which is part
of the registration statement, does not contain all of the information
included in the registration statement. Certain information is omitted and
you should refer to the registration statement and its exhibits. With
respect to references made in this prospectus to any contract, agreement or
other document of USURF America, such references are not necessarily
complete and you should refer to the exhibits attached to the registration
statement for copies of the actual contract, agreement or other document.
You may review a copy of the registration statement, including exhibits, at
the SEC's public reference room at Room 1024, Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the regional offices of the
SEC located at Seven World Trade Center, Suite 1300, New York, New York
10048, or at Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. Please call 1-800-SEC-0330 for further information about
the operation of the public reference rooms. The registration statement
and our other SEC filings can also be reviewed by accessing the SEC's
Internet site at http://www.sec.gov, which contains reports, proxy and
information statements and other information regarding registrants that
file electronically with the SEC.
We file annual, quarterly and current reports, proxy statements and other
information with the SEC. You may read and copy any reports, statements or
other information on file at the public reference rooms. You can also
request copies of these documents, for a copying fee, by writing to the SEC.
We will furnish our shareholders with annual reports containing financial
statements audited by our independent auditors and to make available to our
shareholders quarterly reports containing unaudited financial data for the
first three quarters of each fiscal year.
<PAGE>
INDEX TO FINANCIAL STATEMENTS OF USURF AMERICA, INC.
Independent Auditors' Report
Independent Auditors' Report
Consolidated Balance Sheets as of December 31, 1999 and 1998
Consolidated Statements of Operations for the Years Ended December
31, 1999, 1998 and 1997
Consolidated Statements of Changes in Stockholders' Equity for
the Years Ended December 31, 1999, 1998 and 1997
Consolidated Statements of Cash Flows for the Years Ended December
31, 1999, 1998 and 1997
Notes to Consolidated Financial Statements
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders
USURF America, Inc. and Subsidiaries
Baton Rouge, Louisiana
We have audited the accompanying consolidated balance sheet of USURF
America, Inc. (formerly Internet Media Corporation) and Subsidiaries as of
December 31, 1999, and the related consolidated statements of operations,
changes in stockholders' equity and cash flows for the year then ended.
These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audit. The consolidated
balance sheet of USURF America, Inc. and Subsidiaries as of December 31,
1998, and the consolidated statements of operations, changes in
stockholders' equity, and cash flows for the years ended December 31, 1998
and 1997, were audited by other auditors whose report dated April 9, 1999,
on those statements included an explanatory paragraph that raised
substantial doubt about the Company's ability to continue as a going concern.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the consolidated financial
statements are free of material misstatement. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the
consolidated financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall consolidated financial statement
presentation. We believe that our audit provides a reasonable basis for
our opinion.
As described in Note 2 to the financial statements, the revenues and
expenses subsequent to the acquisition of a company acquired using the
purchase method of accounting have not been included in the accompanying
financial statements as required by generally accepted accounting
principles. The effects on the accompanying financial statements have not
been determined.
In our opinion, except for the effects on the 1999 financial statements
discussed in the preceding paragraph, the financial statements referred to
in the first paragraph present fairly, in all material respects, the
financial position of USURF America, Inc. and Subsidiaries as of December
31,1999, and the results of its operations and cash flows for the year then
ended in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 16 to the
consolidated financial statements, the Company has significant operating
losses. In addition, the Company has excess current liabilities over
current assets of approximately $1,060,000. These conditions raise
substantial doubt about its ability to continue as a going concern.
Management's plans regarding these matters are also described in Note 16.
The financial statements do not include any adjustments that might result
from the outcome of this uncertainty.
Postlethwaite and Netterville, APAC
Baton Rouge, Louisiana
April 8, 2000
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To the Board of Director's and Stockholders
Internet Media Corporation
We have audited the accompanying consolidated balance sheet of USURF
America, Inc., and subsidiaries, (formally Internet Media Corporation and
subsidiaries), as of December 31, 1998, and the related consolidated
statements of operations, changes in stockholders' equity and cash flows
for the years ended December 31, 1998 and 1997. These consolidated
financial statements are the responsibility of the company's management.
Our responsibility is to express an opinion on these consolidated financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the consolidated financial
statements are free of material misstatement. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the
consolidated financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall consolidated financial statement
presentation. We believe that our audits provide a reasonable basis for
our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial
position of USURF America, Inc. and subsidiaries as of December 31, 1998,
and the consolidated results of their operations and their cash flows for
the years ended December 31, 1998 and 1997, in conformity with generally
accepted accounting principles.
The accompanying consolidated financial statements have been prepared
assuming that the Company will continue as a going concern. As discussed
in Note 16, the Company has limited capital resources and a loss from
operations since inception, all of which raise substantial doubt about its
ability to continue as a going concern. Management's plans in regard to
these matters are also discussed in Note 16. The financial statements do
not include any adjustments that might result from the outcome of this
uncertainty.
WEAVER AND TIDWELL, L.L.P.
Fort Worth, Texas
April 9, 1999
<PAGE>
USURF AMERICA, INC. AND SUBSIDIARIES
BATON ROUGE, LOUISIANA
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1999 AND 1998
ASSETS
1999 1998
CURRENT ASSETS
Cash and cash equivalents $ 75,313 $ 7,232
Accounts receivable-net 59,098 1,033
Inventory 21,207 -
Prepaid expenses and
other current assets 5,500 -
161,118 8,265
PROPERTY AND EQUIPMENT
Cost 1,501,233 248,679
Less: accumulated depreciation (421,786) (1,412)
1,079,447 247,267
INVESTMENTS 68,029 43,750
OTHER ASSETS
Acquired customer base-net 11,764,650 10,932
Goodwill-net 5,681,992 -
Other intangibles-net 782,580 23,275
Other assets 7,353 170
18,236,575 34,377
TOTAL ASSETS $19,545,169 $ 333,659
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable-current portion $ 5,910 $ -
Accounts payable 363,665 17,493
Accrued payroll 118,157 -
Other current liabilities 216,650 2,159
Accounts payable-affiliate - 10,069
Property dividends payable 43,750 57,519
Accrued interest to stockholder 29,741 15,416
Notes payable to stockholder 356,239 146,415
Deferred revenue 87,538 -
1,221,650 249,071
LONG-TERM LIABILITIES
Deferred income taxes 3,883,210 -
5,104,860 249,071
STOCKHOLDERS' EQUITY
Common stock, $.0001 par value
Authorized: 100,000,000 shares
Issued and outstanding:
12,786,116 in 1999; 8,497,259
in 1998 1,279 850
Additional paid-in capital 28,918,638 2,874,189
Accumulated deficit (12,616,830) (1,686,667)
Subscriptions receivable (860) (860)
Deferred consulting (1,861,918) (1,102,924)
14,440,309 84,588
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $19,545,169 $ 333,659
The accompanying notes are an integral part of these statements.
<PAGE>
USURF AMERICA, INC. AND SUBSIDIARIES
BATON ROUGE, LOUISIANA
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
1999 1998 1997
REVENUES
Internet access revenues $2,268,511 $ 5,440 $ -
Equipment sales 278,714 - -
Internet access costs
and cost of goods sold (1,152,721) - -
Gross profit 1,394,504 5,440 -
OPERATING EXPENSES
Depreciation and
amortization 7,653,924 4,394 2,721
Professional fees 1,945,935 813,517 530,669
Rent 132,395 15,823 11,877
Salaries and commissions 1,603,556 154,924 44,733
Advertising 125,034 - -
Other 399,914 45,806 29,385
11,860,758 1,034,464 619,385
LOSS FROM OPERATIONS (10,466,254) (1,029,024) (619,385)
OTHER INCOME (EXPENSE)
Other income 23,875 - 596
Litigation settlement (957,075) - -
Impairment loss (1,164,561) - -
Interest expense (19,309) (8,602) (6,015)
(2,117,070) (8,602) (5,419)
LOSS BEFORE INCOME TAX (12,583,324) (1,037,626) (624,804)
INCOME TAX BENEFIT 1,653,161 - -
NET LOSS $(10,930,163) $(1,037,626) $ (624,804)
Net loss per common share $(0.96) $(0.14) $(0.10)
Weighted average number
of shares outstanding 11,419,641 7,361,275 6,193,678
The accompanying notes are an integral part of these statements.
<PAGE>
USURF AMERICA, INC. AND SUBSIDIARIES
BATON ROUGE, LOUISIANA
CONSOLIDATED STATEMENTS OF CHANGES IN
STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
Sub-
scrip-
Accum- tions Deferred
Common Paid-in ulated Receiv- Con-
Shares Stock Capital Deficit vable sulting Total
------ ----- ------- ------- ------- -------- -----
Balance,
Decem-
ber 31,
1996
6,000,000 $ 600 $ 198,508 $ (24,237) $ (2,160) $ - $172,711
Issuance of
common stock
for future
services
404,000 40 749,960 - - (750,000) -
Payment
on sub-
scription
receivable
- - - - 1,300 - 1,300
Issuance of
common
stock for
cash
20,000 2 49,998 - - - 50,000
Recognition
of services
performed
for stock
- - - - - 438,111 438,111
Net loss
- - - (624,804) - - (624,804)
Balance,
December
31, 1997
6,424,000 642 998,466 (649,041) (860) (311,889) 37,318
Issuance of
common
stock for
future
services
1,655,759 166 1,556,734 - - (1,556,900) -
Issuance of
common
stock for
cash
400,000 40 332,760 - - - 332,800
Issuance of
common
stock for
investments
17,500 2 43,748 - - - 43,750
Declared
dividends
- - (57,519) - - - (57,519)
Amortization
of deferred
consulting
- - - - - 765,865 765,865
Net loss
- - - (1,037,626) - -
(1,037,626)
Balance,
December
31, 1998
8,497,259 850 2,874,189 (1,686,667) (860) (1,102,924) 84,588
Issuance of
common
stock for
future
services
566,000 57 2,215,943 - - (2,216,000) -
Issuance of
common
stock for
acqui-
sitions
3,030,000 303 21,586,726 - - - 21,587,029
Issuance of
common
stock for
cash
115,000 11 394,989 - - - 395,000
Exercise of
warrants
176,857 18 337,304 - - - 337,322
Issuance of
subscription
agreement
50,000 5 149,995 - (150,000) - -
Proceeds
on sub-
scription
receivable
- - - - 150,000 - 150,000
Issuance of
stock per
employment
agreement
11,000 1 43,311 - - - 43,312
Expenses to
be paid by
issuance
of common
stock
- - 257,167 - - - 257,167
Issuance of
common
stock for
settlement
340,000 34 913,716 - - - 913,750
Stock
warrants
- - 145,298 - - - 145,298
Amortization
of deferred
consulting
- - - - - 1,457,006 1,457,006
Net loss
- - - (10,930,163) - - (10,930,163)
Balance,
December
31, 1999
12,786,116 $1,279 $28,918,638 $(12,616,830) $(860) $(1,861,918)
$14,440,309
The accompanying notes are an integral part of these statements.
<PAGE>
USURF AMERICA, INC. AND SUBSIDIARIES
BATON ROUGE, LOUISIANA
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
1999 1998 1997
CASH FLOWS FROM
OPERATING ACTIVITIES
Net loss $(10,930,163) $(1,037,626) $ (624,804)
Adjustment to
reconcile net loss
to net cash used
in operating
activities
Depreciation and
amortization 7,653,924 4,394 2,721
Consulting fees
recognized 1,457,006 765,865 438,111
Litigation settlement 913,750 - -
Impairment loss 1,164,561 - -
Legal fees 126,500 - -
Compensation expense 319,301 - -
Deferred income taxes (1,653,161) - -
Loss on disposal 280 - -
Changes in operating
assets and liabilities
Accounts receivable 35,537 (809) 85
Inventory 49,518 - -
Prepaid expenses and
other current assets 7,980 - -
Accounts payable (36,857) 1,787 -
Accrued payroll 118,157 (39,310) 71,767
Other current
liabilities 215,929 - -
Other assets and
liabilities (11,555) (300) -
Deferred revenue 23,196 - -
Net cash used in
operating activities (546,097) (305,999) (112,120)
CASH FLOWS FROM
INVESTING ACTIVITIES
Proceeds on disposal
of fixed assets 15,090 - -
Cash acquired in
acquisitions 186,318 (24,666) -
Payment of organization
costs - 569
Purchases of licenses
and rights to leases
of licenses - - (5,000)
Capital expenditures (614,193) (25,605) (14,964)
Net cash used in
investing activities (412,785) (49,702) (19,964)
CASH FLOWS FROM
FINANCING ACTIVITIES
Payments on notes
payable (65,369) - -
Payments on notes
payable-stockholder (25,000) - -
Payments on subscriptions
receivable 150,000 - 1,300
Proceeds from note
payable-stockholder 235,010 30,133 66,282
Issuance of common
stock for cash 395,000 332,800 50,000
Warrants exercised 337,322 - -
Net cash provided
by financing
activities 1,026,963 362,933 117,582
Net increase (decrease)
in cash and cash
equivalents 68,081 7,232 (14,502)
Cash and cash equivalents,
Beginning of period 7,232 - 14,502
Cash and cash equivalents,
End of period $75,313 $ 7,232 $ -
The accompanying notes are an integral part of these statements.
<PAGE>
USURF AMERICA, INC. AND SUBSIDIARIES
BATON ROUGE, LOUISIANA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
USURF America, Inc. (USURF), formerly Internet Media Corporation, was
incorporated as Media Entertainment, Inc. in the State of Nevada on
November 1, 1996. USURF currently operates as in internet service provider
(ISP), in the inter-mountain west region of the United States, with primary
operations in Boise, Idaho. USURF's original purpose was to operate as a
holding company in the wireless cable television and community (low power)
television industries, as well as other segments of the communications
industry. Until January 1999, the Company was in the development stage.
In 1998 the Company changed its focus to concentrate in the wireless
internet communications industry. The Company later ceased efforts to
develop the wireless cable and low power television business areas and
assigned all of its assets from the low power television activities to New
Wave Media Corp. in exchange for a 15% ownership interest in New Wave Media
Corp.
Effective December 31, 1996, USURF acquired all of the outstanding common
stock of Winter Entertainment, Inc., a Delaware corporation incorporated on
December 28, 1995 (WEI), and Missouri Cable TV Corp., a Louisiana
corporation incorporated on October 9, 1996 (MCTV). WEI operates a
community television station in Baton Rouge, Louisiana; MCTV owns wireless
cable television channels in Poplar Bluff, Missouri, which system has been
constructed and is ready for operation, and Lebanon, Missouri. Effective
October 8, 1998, the Company formed Santa Fe Wireless Internet, Inc. (Santa
Fe), a New Mexico corporation, to hold the assets acquired from Desert Rain
Internet Services. Santa Fe was organized to provide wireless internet
access. The acquisition of WEI and MCTV by USURF was accounted for as a
reorganization of companies under common control. The assets and
liabilities acquired were recorded at historical cost in a manner similar
to a pooling of interests. The acquisition of Santa Fe was accounted for
as a purchase whereby cost is allocated to the assets acquired.
On January 29, 1999, the Company acquired all the stock of CyberHighway,
Inc., a Boise, Idaho-based ISP, by issuing 2,000,000 shares of stock valued
at approximately $15,940,000. In addition, 325,000 shares of common stock
were issued in payment of a finder's fee arising out of this acquisition.
This acquisition fundamentally altered USURF's outlook, providing the
Company with an extensive dial-up customer base, as well as
technologically-advanced operations facilities and immediate access to
customers in internet services markets dominated by CyberHighway-owned or
affiliate service providers. This acquisition was accounted for as a
purchase business combination
In June 1999, USURF acquired all the stock of Santa Fe Trail Internet Plus,
Inc., a Santa Fe, New Mexico-based ISP, by issuing 100,000 shares of stock
valued at approximately $400,000. This acquisition was accounted for as a
purchase business combination. Disclosure of what operations would have
been as if the transaction had occurred at the beginning of the period, and
as of the beginning of the preceding period, are not shown due to the
transaction being immaterial to the financial statements taken as a whole.
In July 1999, USURF acquired all of the stock of Premier Internet Services,
Inc., an Idaho-based ISP, by issuing 127,000 shares of stock valued at
approximately $508,000. This acquisition was accounted for as a purchase
business combination. Disclosure of what operations would have been as if
the transaction had occurred at the beginning of the period, and as of the
beginning of the preceding period, are not shown due to the transaction
being immaterial to the financial statements taken as a whole.
In August 1999, USURF acquired the www.usurf.com domain by issuing 150,000
shares of stock valued at approximately $863,000.
In December 1999, USURF acquired a portion of the ISP-related equipment and
customer base of Cyber Highway of North Georgia, Inc., a Demorest,
Georgia-based ISP. In November 1999, the Company acquired the customer
base of Cyber Mountain, Inc., a Denver, Colorado-based ISP.
Principles of Consolidation
The accompanying consolidated financial statements include all the accounts
of USURF and all wholly owned subsidiaries. Intercompany transactions and
balances have been eliminated in the consolidation.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
A material estimate that is particularly susceptible to significant change
is the amortization of intangibles. In estimating the period over which to
amortize the acquired customer bases, management obtains information from
industry data.
Cash Equivalents
The Company considers all highly liquid investments with original
maturities of three months or less from the date of purchase to be cash
equivalents.
Inventory
Inventory consists of internet access equipment held for sale and is valued
at the lower of cost or market. Cost is determined using the specific
identification method.
Property and Equipment
Property and equipment are stated at cost and are depreciated principally
by the straight-line method over the estimated useful lives of the assets,
ranging from 3 to 15 years. Included in property and equipment are
wireless modems, most of which are not placed in service at December 31,
1999, and are therefore, not being depreciated.
Revenue Recognition
The Company maintains license agreements with affiliate ISP's to provide
internet access to affiliates' customers. License fees are typically
billed in the month the services are provided. The Company charges direct
customers (residential and business subscribers) monthly access fees to the
internet and recognizes the revenue in the month the access is provided.
For certain subscribers billed in advance, the Company recognizes the
revenue over the period the billing covers. Revenue for other services
provided, including set-up fees charged to customers and affiliates, and
equipment sales are recognized as the service is performed or the equipment
is delivered.
Costs of Access Revenues
Costs of access revenues primarily consist of telecommunications expenses
inherent in the network infrastructure. Costs of access revenues also
include fees paid for lease of the Company's backbone, as well as license
fees for Web browser software based on a per-user charge, other license
fees paid to third-party software vendors, product costs, and contractor
fees for distribution of software to new subscribers.
Income Taxes
Deferred income tax assets and liabilities are computed for differences
between financial statement and tax basis of assets and liabilities that
will result in taxable or deductible amounts in the future based on enacted
tax laws and rates applicable to the period in which the differences are
expected to affect taxable income. Valuation allowances are established
when realization is less than 50% probable. Income tax expense is the tax
payable or refundable for the period plus or minus the change during the
period in deferred tax assets and liabilities.
Financial Instruments and Concentration of Credit Risk
Financial instruments, which potentially subject the Company to
concentrations of credit risk, consist principally of cash and trade
receivables. The Company maintains its cash in bank deposit accounts,
which, at times, may exceed federally insured limits. The Company has not
experienced any losses in such accounts and believes it is not exposed to
any significant credit risk on cash.
Concentrations of credit risk with respect to trade receivables are limited
due to the large number of customers and markets, which comprise the
Company's customer base. The Company generally does not require
collateral, and receivables are generally due within 30 days.
Fair Values of Financial Instruments
The carrying amounts of financial instruments including cash, trade
receivables, accounts payable and accrued expenses approximate fair value
because of the immediate or short-term maturities of these instruments.
The difference between the carrying amount and fair value of the Company's
long-term debt is not significant.
Loss Per Common Share
Basic loss per common share has been computed by dividing the net loss by
the weighted average number of shares of common stock outstanding
throughout the period. Calculation of diluted loss per common share is not
presented because the effects of potential common stock issuable upon
exercise of stock options and contingently issuable shares would be
antidilutive.
Goodwill and Other Intangible Assets
Goodwill and other intangible assets, primarily acquired customer bases,
are stated on the basis of cost and are amortized, principally on a
straight-line basis, over the estimated future periods to be benefited
(generally 3 years). Goodwill and other intangible assets are periodically
reviewed for impairment to ensure they are appropriately valued. Conditions
which may indicate an impairment issue exists include a negative economic
downturn or a change in the assessment of future operations. In the event
that a condition is identified which may indicate an impairment issue
exists, an assessment is performed using a variety of methodologies,
including cash flow analysis, estimates of sales proceeds and independent
appraisals. Where applicable, an appropriate interest rate is utilized,
based on location specific economic factors. See Note 2.
Advertising
The Company expenses advertising costs as incurred. During the year ended
December 31, 1999, the Company incurred approximately $125,000, in
advertising costs.
Investments
Investments include minority interests held in three non-public companies
recorded at cost, which approximates fair value.
2. NET 1, INC. ACQUISITION
On August 23, 1999, the Company acquired Net 1, Inc. (Net 1) in a business
combination accounted for as a purchase. Net 1 is primarily engaged as an
ISP in Alabama. In September, 1999 the Company tendered the shares of
capital stock obtained in the acquisition of Net 1 for rescission of the
transaction (see Note 15). However, legally the Company is still the owner
of the outstanding shares of Net 1 and is required by generally accepted
accounting principles to record Net 1 as a wholly owned subsidiary from the
date of acquisition.
The financial statements of Net 1 were not available to the Company from
September 1, 1999 through December 31, 1999; therefore, the revenues and
expenses of Net 1 are not included in the accompanying statement of
operations for the year ended December 31, 1999. This is considered a
departure from generally accepted accounting principals, of which, the
effects on the Company have not been determined.
The total cost of the acquisition was $1,164,561, which exceeded fair value
of the net assets of Net 1 by $1,164,561. The excess was deemed to be
impaired at December 31, 1999 due to the change in the operating
environment and was recorded in the accompanying financial statements as an
impairment loss.
3. PROPERTY AND EQUIPMENT
Classifications of property and equipment and accumulated depreciation were
as follows at December 31, 1999 and 1998:
1999 1998
Wireless cable equipment $ 188,091 $ 188,091
Equipment 906,047 60,588
Furniture and fixtures 37,487 -
Office equipment 338,531 -
Leasehold improvements 31,077 -
1,501,233 248,679
Accumulated depreciation (421,786) (1,412)
Property and equipment, net $1,079,447 $247,267
4. INTANGIBLES
Classification of intangibles and accumulated amortization at December 31st
were as follows:
1999 1998
Acquired customer base $16,676,433 $ 11,818
Goodwill 8,126,616 -
Other 940,186 27,750
25,743,235 39,568
Accumulated amortization (7,514,013) (5,361)
$18,229,222 $ 34,207
5. WIRELESS CABLE ASSETS
Property and equipment includes wireless cable station equipment, which is
operational but has not been put into use. The equipment is recorded at
cost of approximately $188,000 and is not being depreciated. In addition,
the Company owns licenses in the wireless cable markets, which operate on
the same frequencies and will be used in the wireless internet market.
The Company's ability to provide two-way interactive internet service on
its current channel license agreements depends on pending Federal
Communication Commission (FCC) approval of two-way communication on the
related frequencies. Management believes approval by the FCC is imminent;
however, if such approval is not obtained, future recoverability of the
carrying value may become impaired.
6. LICENSES AND RIGHTS TO LEASES OF LICENSES
The Company owns licenses or rights to leases of licenses in the following
wireless cable and community television markets:
Wireless Cable Market Expiration Date
Poplar Bluff, Missouri October 16, 2006
Lebanon, Missouri October 16, 2006
Port Angeles, Washington December 21, 2003
Astoria, Oregon December 21, 2003
Sand Point, Idaho August 09, 2006
The Dalles, Oregon August 09, 2006
Fallon, Nevada August 09, 2006
Application for renewal of licenses must be filed within a certain period
prior to expiration.
7. NOTE PAYABLE TO STOCKHOLDER
1999 1998
Note payable to stockholder,
interest accrues at 8%,
due on demand and unsecured. $356,239 $146,415
8. NOTE PAYABLE
The note payable of $5,910 at December 31, 1999, consists of a note payable
to a bank with interest at 9.25%, due in monthly payments of $2,887, with
final payment due February 25, 2000, secured by accounts receivable,
inventory and equipment.
9. INCOME TAXES
The significant components of deferred tax assets and liabilities were as
follows at December 31:
1999 1998
Deferred tax liabilities
Amortization of intangibles $3,883,210 $ -
Deferred tax assets
Net operating loss
carryforwards 2,313,159 573,467
Less - valuation allowance (2,313,159) (573,467)
- -
Net deferred tax liability $3,883,210 $ -
The net changes in the valuation allowance for the periods ended December
31, 1999 and 1998 were $1,739,692 and $352,793, respectively.
The deferred tax liability results from the acquisitions of Cyberhighway,
Inc., Santa Fe Trail Internet Plus, Inc., and Premier Internet Services,
Inc. in tax free reorganizations, in which there is no tax basis in the
acquired customer base.
The Company has a net operating loss carry forward of approximately
$6,800,000 available to offset future income for income tax reporting
purposes, which will ultimately expire between 2011 and 2014 if not utilized.
10. SOURCES OF SUPPLIES
The Company relies on local telephone companies and other companies to
provide data communications. Although management believes alternative
telecommunications facilities could be found in a timely manner, any
disruption of these services could have an adverse effect on operating
results.
The Company maintains various vendors for required products, such as
modems, terminal services and high-performance routers, which are important
components of its network. Some of the Company's suppliers have limited
resources and production capacity. If the suppliers are unable to meet the
Company's needs as it is building out its network infrastructure, then
delays and increased costs in the expansion of the Company's network
infrastructure could result, having an adverse effect on operating results.
11. COMMITMENTS
The Company has contracts with various telephone companies and other
companies to provide data communication services. The terms on these
agreements range from month-to-month to five years. Future obligations
under these agreements as of December 31, 1999 are as follows for the years
ending December 31:
2000 $820,000
2001 540,000
2002 330,000
2003 140,000
2004 100,000
12. RELATED PARTY
The Company has issued stock pursuant to various consulting agreements.
Deferred consulting costs, which are valued at the stock price on the date
of the agreements, are recorded as a reduction of shareholder's equity and
will be amortized over the life of the agreements.
In March 1998, four directors of the Company were issued 20,000 shares each
of Company common stock as a bonus for their services as directors.
Compensation expense of approximately $45,000 was recorded based on the
fair value of the common stock on the date of issue.
13. WARRANTS
Warrants outstanding at December 31, 1999 consists of the following:
56,667 issued on May 18, 1999, pursuant to an Investment Banking Agreement,
with an exercise price of $1.25, exercisable for a period of four years
from issuance.
56,667 issued on May 18, 1999, pursuant to an Investment Banking Agreement,
with an exercise price of $1.50, exercisable for a period of four years
from issuance.
34,000 issued on May 18, 1999, pursuant to a Selling Agreement, with an
exercise price of $1.25, exercisable for a period of five years from
issuance, of which 21,857 were exercised during 1999.
60,000 issued on January 20, 1999, pursuant to a private offering, with an
exercise price of $7.00, exercisable for a period of two years from
issuance, redeemable by the Company at any time the bid price of the
Company's common stock has been at or above $8.50 per share for five
consecutive trading days.
35,000 issued on June 4, 1999, pursuant to a private offering, with an
exercise price of $7.00, exercisable for a period of one year from
issuance, redeemable by the Company at any time the bid price of the
Company's common stock has been at or above $10.00 per share for five
consecutive trading days.
60,000 issued on December 1, 1999, pursuant to a Consulting Agreement, with
an exercise price of $3.50, exercisable for a period of five years from
issuance. The Company does apply SFAS No. 123, Accounting for Stock-Based
Compensation, in accounting for the stock warrants issued to non-employees
in connection with the original stock issuance. The Company has recorded
expense of $145,298 pursuant to the issuance of these warrants. The fair
value of the warrants granted to non-employees is estimated on the date of
the grant using the assumption of an expected life of 5 years, and a
risk-free interest rate of 5.0%.
50,000 issued on August 27, 1999, pursuant to a Subscription Agreement,
with an exercise price of $6.00, exercisable for a period of three years
from issuance.
14. SETTLEMENT AGREEMENT
On November 30, l999, the Company entered into a settlement agreement and
mutual release, which settled certain legal proceedings in which USURF and
CyberHighway had been involved. The parties to the settlement agreement
were: USURF, CyberHighway, the former operating officer and a former
director, and two former owner-employees (collectively the plaintiffs) of
CyberHighway.
Pursuant to this settlement agreement, certain legal proceedings were
settled in full by issuance of 340,000 shares of USURF common stock to the
plaintiffs. The Company is paying the total sum of $43,325 for
reimbursement of attorneys' fees paid by the plaintiffs.
The 340,000 shares issued were valued at $2.6875 per share, or $913,750, in
the aggregate. The price per share assigned to the issued shares was the
closing price of the common stock, as reported by the American Stock
Exchange. The total charge against earnings in 1999 resulting from the
settlement agreement was $957,075.
15. COMMITMENTS AND CONTINGENCIES
In September l999, the Company tendered the shares of capital stock
obtained in the acquisition of Net 1, Inc. (See Note 2) for rescission of
the transaction. The Company had intended to commence arbitration to
pursue its rescission claim. However, one of the former owners of Net 1,
has instituted arbitration, through the American Arbitration Association,
and is seeking to enforce certain registration rights associated with a
portion of the shares of the Company's common stock received by him in the
acquisition transaction.
The Company will present the rescission claim as a counterclaim in the
pending arbitration proceeding. The counterclaim will be made against Net
1 and its former owners, wherein the Company will seek to rescind the
acquisition transaction that occurred in August 1999, and recover the
250,000 shares of common stock issued. Although the Company believes it
will be successful in this arbitration proceeding, no prediction in this
regard can be made.
16. GOING CONCERN
These financial statements are presented on the basis that the Company is a
going concern. Going concern contemplates the realization of assets and
the satisfaction of liabilities in the normal course of business over a
reasonable length of time. The accompanying financial statement shows that
current liabilities exceed current assets by approximately $1,060,000 at
December 31, 1999. The Company's president loaned the Company
approximately $210,000 during fiscal 1999 and loaned an additional $165,000
subsequent to year-end. The appropriateness of using the going concern
basis is dependent upon continued funding by the Company's president,
obtaining additional financing or equity capital and, ultimately, to
achieve profitable operations. The uncertainty about these conditions
raises substantial doubt about its ability to continue as a going concern.
The financial statements do not include any adjustments that might result
from the outcome of this uncertainty.
Management plans to raise capital by obtaining financing and eventually,
through public offerings. Management intends to use the proceeds from any
borrowings to acquire and develop markets to implement its Wireless
Internet Access System and sell its service. The Company believes that
these actions will enable it to carry out its business plan and ultimately
to achieve profitable operations.
17. SIGNIFICANT BUSINESS COMBINATION
On January 29, 1999, the Company acquired all of the capital stock of
CyberHighway, Inc. (CyberHighway), an Idaho corporation.
The acquisition was effected pursuant to a Plan and Agreement of
Reorganization dated January 20, 1999 between the Company and CyberHighway.
The Company paid the shareholders of CyberHighway approximately
$15,940,000 through the issuance of 2,000,000 shares of common stock. The
purchase price was based upon the weighted average closing price of the
Company's common stock for five days prior and subsequent to the
acquisition date.
The transaction was accounted for as a purchase. The purchase price was
allocated to the underlying assets purchased and liabilities assumed based
on their fair market values at the acquisition date.
The following table summarizes the net assets purchased in connection with
the CyberHighway acquisition and the amount attributable to cost in excess
of net assets acquired:
Net assets acquired $ 372,472
Acquired customer base 15,566,787
Other assets 5,260,690
Deferred tax liability (5,260,690)
The following shows the unaudited proforma condensed balance sheets of the
Company and CyberHighway as if the acquisition occurred on December 31, 1998:
Historical
Cyber- Proforma Proforma
USURF Highway Adjustments Consolidated
Current assets $ 8,265 $306,018 $ - $ 314,283
Property and
equipment, net 247,267 408,558 (72,692) 583,133
Other assets 43,920 13,480 - 57,400
Intangibles 34,207 - 20,827,477 20,861,684
Total assets $ 333,659 $728,056 $20,754,785 $21,816,500
Historical
Cyber- Proforma Proforma
USURF Highway Adjustments Consolidated
Current
liabilities $ 249,071 $ 282,892 $ - $ 531,963
Deferred tax
liability - - 5,260,690 5,260,690
Stockholders'
equity 84,588 445,164 15,494,095 16,023,847
Total
liabilities
and stock-
holders'
equity $ 333,659 $ 728,056 $20,754,785 $21,816,500
The following unaudited proforma condensed statements of operations assumes
the CyberHighway acquisition occurred on January 1, 1998. In the opinion
of management, all adjustments necessary to present fairly such unaudited
pro forma condensed statements of operations have been made.
Historical
Cyber- Proforma Proforma
USURF Highway Adjustments Consolidated
Revenues 5,440 $2,449,156 $ - $ 2,454,596
Expenses
Internet access
cost - 510,036 - 510,036
Equipment cost - 326,488 - 326,488
Depreciation and
amortization 4,394 138,674 6,918,262 7,061,330
General and
administrative 1,030,070 1,292,526 - 2,322,596
Selling - 110,397 - 110,397
Total
operating
expense 1,034,464 2,378,121 6,918,262 10,330,847
Operating income
(loss) (1,029,024) 71,035 (6,918,262) (7,876,251)
Other income
(expense) (8,602) 6,960 - (1,642)
Income (loss)
before taxes (1,037,626) 77,995 (6,918,262) (7,877,893)
Income tax
benefit - - (1,753,563) (1,753,563)
Net income
(loss) ($1,037,626) $ 77,995 ($5,164,699) ($6,124,330)
Net income
(loss) per
share ($0.14) $31.51 ($0.65)
Weighted average
number of
shares
outstanding 7,361,275 2,475 9,361,275
18. SUBSEQUENT EVENTS
On February 1, 2000, the Company through its wholly owned subsidiary,
CyberHighway, Inc., acquired the Spinning Wheel, Inc. for 81,063 shares of
common stock. This acquisition will be accounted for as a purchase
business combination. On February 8, 2000, the Company formed USURF
America Internet Design, Inc., a wholly owned subsidiary. On February 16,
2000, the Company through this subsidiary acquired Internet Innovations,
LLC for 50,000 shares of common stock. These acquisitions will be accounted
for as purchase business combinations. Disclosure of what operations would
have been as if the transaction had occurred at the beginning of the period
are not shown due to the transactions being immaterial to the financial
statements taken as a whole.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution.
Estimated expenses payable by the Company in connection with the
registration of Common Stock covered hereby are as follows:
Registration fee $ 6,570.98
Underwriter's unaccountable expense allowance 0.00
Printing and engraving expenses 3,000.00 *
Legal fees and expenses 25,000.00
Accounting fees and expenses 7,500.00 *
Blue Sky fees and expenses 0.00
Transfer agent and registrar fees and expenses 0.00
Miscellaneous 1,000.00 *
- --------------- ----------------
(* estimate) Total $43,070.98 *
Item 14. Indemnification of Directors and Officers.
Registrant is a Nevada corporation. Section 78.751 of Nevada Revised
Statutes (the "Nevada Act") empowers a corporation to indemnify its
directors and officers and to purchase insurance with respect to liability
arising out of their capacity as directors and officers. The Nevada Act
further provides that the indemnification permitted thereunder shall not be
deemed exclusive of any other rights to which the directors and officers
may be entitled under the corporation's bylaws, any agreement, vote of the
shareholders or otherwise.
Section VIII of Registrant's Bylaws, included as Exhibit 3.2 filed
herewith, which provides for the indemnification of directors and officers,
is incorporated herein by reference.
Registrant has purchased no insurance for indemnification of its officers
and directors, agents, etc., nor has there been any specific agreement for
indemnification made between Registrant and any of its officers and
directors, or others, with respect to indemnification for them arising out
of their duties to Registrant.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended, the Securities Exchange Act of 1934 or the Rules and
Regulations of the Securities and Exchange Commission thereunder may be
permitted under said indemnification provisions of the law, or otherwise,
Registrant has been advised that, in the opinion of the Securities and
Exchange Commission, any such indemnification is against public policy and
is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Nevada Act and will be governed by the
final adjudication of such issue.
Item 15. Recent Sales of Unregistered Securities.
1. (a) Securities Sold. On February 1, 1997, 150,000 shares of Company
Common Stock were issued.
(b) Underwriter or Other Purchasers. Such shares of Common Stock
were issued to Newlan & Newlan, Attorneys at Law.
(c) Consideration. Such shares of Common Stock were issued pursuant
to a Consulting and Legal Services Agreement, at a value of $.40 per share,
or $60,000, in the aggregate.
(d) Exemption from Registration Claimed. These securities are
exempt from registration under the Securities Act of 1933, as amended,
pursuant to the provisions of Section 4(2) thereof, as a transaction not
involving a public offering.
2. (a) Securities Sold. On March 7, 1997, 20,000 shares of Company
Common Stock were sold.
(b) Underwriter or Other Purchasers. Such shares of Common Stock
were issued to Michael Cohn.
(c) Consideration. Such shares of Common Stock were sold for cash
pursuant to a Stock Purchase Agreement, at a price of $2.50 per share, or
$50,000, in the aggregate.
(d) Exemption from Registration Claimed. These securities are exempt
from registration under the Securities Act of 1933, as amended, pursuant to
the provisions of Section 4(2) thereof, as a transaction not involving a
public offering.
3. (a) Securities Sold. On September 30, 1997, 60,000 shares of Company
Common Stock were sold.
(b) Underwriter or Other Purchasers. Such shares of Common Stock
were issued to The Humbolt Corporation.
(c) Consideration. Such shares of Common Stock were issued pursuant
to a Consulting Agreement, at a price of $2.50 per share, or $150,000, in
the aggregate.
(d) Exemption from Registration Claimed. These securities are exempt
from registration under the Securities Act of 1933, as amended, pursuant to
the provisions of Section 4(2) thereof, as a transaction not involving a
public offering.
4. (a) Securities Sold. On October 16, 1997, 10,000 shares of Company
Common Stock were sold.
(b) Underwriter or Other Purchasers. Such shares of Common Stock
were issued to Clarion Financial Services, Inc.
(c) Consideration. Such shares of Common Stock were issued pursuant
to a Consulting Agreement, at a price of $2.50 per share, or $25,000, in
the aggregate.
(d) Exemption from Registration Claimed. These securities are exempt
from registration under the Securities Act of 1933, as amended, pursuant to
the provisions of Section 4(2) thereof, as a transaction not involving a
public offering.
5. (a) Securities Sold. On October 29, 1997, 40,000 shares of Company
Common Stock were sold.
(b) Underwriter or Other Purchasers. Such shares of Common Stock
were issued to Tre Vega.
(c) Consideration. Such shares of Common Stock were issued pursuant
to a Consulting Agreement, at a price of $3.00 per share, or $120,000, in
the aggregate.
(d) Exemption from Registration Claimed. These securities are exempt
from registration under the Securities Act of 1933, as amended, pursuant to
the provisions of Section 4(2) thereof, as a transaction not involving a
public offering.
6. (a) Securities Sold. On November 12, 1997, 44,000 shares of Company
Common Stock were sold.
(b) Underwriter or Other Purchasers. Such shares of Common Stock
were issued to Langley Downey Entertainment, Inc.
(c) Consideration. Such shares of Common Stock were issued pursuant
to a Consulting Agreement, at a price of $1.25 per share, or $55,000, in
the aggregate.
(d) Exemption from Registration Claimed. These securities are exempt
from registration under the Securities Act of 1933, as amended, pursuant to
the provisions of Section 4(2) thereof, as a transaction not involving a
public offering.
7. (a) Securities Sold. On December 16, 1997, 100,000 shares of Company
Common Stock were sold.
(b) Underwriter or Other Purchasers. Such shares of Common Stock
were issued to Nibar Group, Inc.
(c) Consideration. Such shares of Common Stock were issued pursuant
to a Consulting Agreement, at a price of $.25 per share, or $25,000, in the
aggregate.
(d) Exemption from Registration Claimed. These securities are exempt
from registration under the Securities Act of 1933, as amended, pursuant to
the provisions of Section 4(2) thereof, as a transaction not involving a
public offering.
8. (a) Securities Sold. On February 17, 1998, 400,000 shares of Company
Common Stock were sold.
(b) Underwriter or Other Purchasers. Such shares of Common Stock
were issued to Newlan & Newlan, Attorneys at Law.
(c) Consideration. Such shares of Common Stock were issued pursuant
to a Consulting and Legal Services Agreement, at a price of $.10 per share,
or $40,000, in the aggregate.
(d) Exemption from Registration Claimed. These securities are exempt
from registration under the Securities Act of 1933, as amended, pursuant to
the provisions of Section 4(2) thereof, as a transaction not involving a
public offering.
9. (a) Securities Sold. On February 17, 1998, 36,092 shares of Company
Common Stock were sold.
(b) Underwriter or Other Purchasers. Such shares of Common Stock
were issued to Langley Downey Entertainment, Inc.
(c) Consideration. Such shares of Common Stock were issued pursuant
to a Consulting Agreement, at a price of $1.25 per share, or $45,115, in
the aggregate.
(d) Exemption from Registration Claimed. These securities are exempt
from registration under the Securities Act of 1933, as amended, pursuant to
the provisions of Section 4(2) thereof, as a transaction not involving a
public offering.
10. (a) Securities Sold. On March 20, 1998, 22,667 shares of Company
Common Stock were sold.
(b) Underwriter or Other Purchasers. Such shares of Common Stock
were issued to Geoff Newlan, d/b/a jara.com productions.
(c) Consideration. Such shares of Common Stock were issued pursuant
to a Consulting Agreement, at a price of $.375 per share, or $8,500, in the
aggregate.
(d) Exemption from Registration Claimed. These securities are exempt
from registration under the Securities Act of 1933, as amended, pursuant to
the provisions of Section 4(2) thereof, as a transaction not involving a
public offering.
11. (a) Securities Sold. On March 21, 1998, a total of 80,000 shares of
Company Common Stock were sold.
(b) Underwriter or Other Purchasers. Such shares of Common Stock
were issued to Waddell D. Loflin (20,000 shares), Ross S. Bravata (20,000
shares), Michael Cohn (20,000 shares) and Richard N. Gill (20,000 shares).
(c) Consideration. Such shares of Common Stock were issued as a
bonus for services rendered, at a price of $.80 per share, or $64,000, in
the aggregate.
(d) Exemption from Registration Claimed. These securities are exempt
from registration under the Securities Act of 1933, as amended, pursuant to
the provisions of Section 4(2) thereof, as a transaction not involving a
public offering.
12. (a) Securities Sold. On June 22, 1998, a total of 300,000 shares of
Company Common Stock were sold.
(b) Underwriter or Other Purchasers. Such shares of Common Stock
were issued to Dennis A. Faker (100,000 shares), Barbara V. Schiller
(60,000 shares), Jeanne M. Rowzee (20,000 shares), Alvin Gottlieb (20,000
shares), Rogers Family Trust (60,000 shares), Delaware Charter Guarantee &
Trust Company f/b/o Clarence Yim (20,000 shares) and Delaware Charter
Guarantee & Trust Company f/b/o R. Logan Kock (20,000 shares).
(c) Consideration. Such shares of Common Stock were sold for cash
pursuant to a private offering, at a price of $1.00 per share, or $300,000,
in the aggregate.
(d) Exemption from Registration Claimed. These securities are exempt
from registration under the Securities Act of 1933, as amended, pursuant to
the provisions of Section 4(2) thereof, as a transaction not involving a
public offering.
13. (a) Securities Sold. On June 22, 1998, a total of 150,000 common
stock purchase warrants of the Company were issued.
(b) Underwriter or Other Purchasers. Such warrants were issued to
Dennis A. Faker (50,000 warrants), Barbara V. Schiller (30,000 warrants),
Jeanne M. Rowzee (10,000 warrants), Alvin Gottlieb (10,000 warrants),
Rogers Family Trust (30,000 warrants), Delaware Charter Guarantee & Trust
Company f/b/o Clarence Yim (10,000 warrants) and Delaware Charter
Guarantee & Trust Company f/b/o R. Logan Kock (10,000 warrants).
(c) Consideration. Such warrants were issued for no additional
consideration as part of units of securities in a private offering.
(d) Exemption from Registration Claimed. These securities are exempt
from registration under the Securities Act of 1933, as amended, pursuant to
the provisions of Section 4(2) thereof, as a transaction not involving a
public offering.
(e) Terms of Conversion or Exercise. Exercise price of the warrants
is $2.00 per share and exercisable for a period of two years from issuance.
The warrants are redeemable by the Company at any time the bid price of
the Company's Common Stock has been at or above $4.00 per share for five
consecutive trading days.
14. (a) Securities Sold. On May 18, 1999, 56,667 common stock purchase
warrants of the Company were issued.
(b) Underwriter or Other Purchasers. Such warrants were issued to
H+N Partners.
(c) Consideration. Such warrants were issued pursuant to an
Investment Banking Agreement.
(d) Exemption from Registration Claimed. These securities are exempt
from registration under the Securities Act of 1933, as amended, pursuant to
the provisions of Section 4(2) thereof, as a transaction not involving a
public offering.
(e) Terms of Conversion or Exercise. Exercise price of the warrants
is $1.25 per share and exercisable for a period of four years from issuance.
15. (a) Securities Sold. On May 18, 1999, 56,667 common stock purchase
warrants of the Company were issued.
(b) Underwriter or Other Purchasers. Such warrants were issued to
H+N Partners.
(c) Consideration. Such warrants were issued pursuant to an
Investment Banking Agreement.
(d) Exemption from Registration Claimed. These securities are exempt
from registration under the Securities Act of 1933, as amended, pursuant to
the provisions of Section 4(2) thereof, as a transaction not involving a
public offering.
(e) Terms of Conversion or Exercise. Exercise price of the warrants
is $1.50 per share and exercisable for a period of four years from issuance.
16. (a) Securities Sold. On May 18, 1999, 34,000 common stock purchase
warrants of the Company were issued.
(b) Underwriter or Other Purchasers. Such warrants were issued to
Centex Securities, Inc.
(c) Consideration. Such warrants were issued pursuant to a Selling
Agreement.
(d) Exemption from Registration Claimed. These securities are exempt
from registration under the Securities Act of 1933, as amended, pursuant to
the provisions of Section 4(2) thereof, as a transaction not involving a
public offering.
(e) Terms of Conversion or Exercise. Exercise price of the warrants
is $1.25 per share and exercisable for a period of five years from issuance.
17. (a) Securities Sold. On June 15, 1998, 37,000 shares of Company
Common Stock were sold.
(b) Underwriter or Other Purchasers. Such shares of Common Stock
were issued to H+N Partners.
(c) Consideration. Such shares of Common Stock were issued pursuant
a Consulting Agreement, at a price of $2.00 per share, or $74,000, in the
aggregate.
(d) Exemption from Registration Claimed. These securities are exempt
from registration under the Securities Act of 1933, as amended, pursuant to
the provisions of Section 4(2) thereof, as a transaction not involving a
public offering.
18. (a) Securities Sold. On July 31, 1998, 10,000 shares of Company
Common Stock were sold.
(b) Underwriter or Other Purchasers. Such shares of Common Stock
were issued to Craig Boothe.
(c) Consideration. Such shares of Common Stock were issued as a
signing bonus pursuant a Business Acquisition Agreement, at a price of
$1.00 per share, or $10,000, in the aggregate.
(d) Exemption from Registration Claimed. These securities are exempt
from registration under the Securities Act of 1933, as amended, pursuant to
the provisions of Section 4(2) thereof, as a transaction not involving a
public offering.
19. (a) Securities Sold. On August 26, 1998, a total of 40,000 shares
of Company Common Stock were sold.
(b) Underwriter or Other Purchasers. Such shares of Common Stock
were issued to Delaware Charter Guarantee & Trust Company f/b/o Clarence
Yim (20,000 shares) and Delaware Charter Guarantee & Trust Company f/b/o R.
Logan Kock (20,000 shares).
(c) Consideration. Such shares of Common Stock were issued in a
private offering, at a price of $1.00 per share, or $40,000, in the aggregate.
(d) Exemption from Registration Claimed. These securities are exempt
from registration under the Securities Act of 1933, as amended, pursuant to
the provisions of Section 4(2) thereof, as a transaction not involving a
public offering.
20. (a) Securities Sold. On August 26, 1998, a total of 20,000 common
stock purchase warrants of the Company were issued.
(b) Underwriter or Other Purchasers. Such warrants were issued to
Delaware Charter Guarantee & Trust Company f/b/o Clarence Yim (10,000
warrants) and Delaware Charter Guarantee & Trust Company f/b/o R. Logan
Kock (10,000 warrants).
(c) Consideration. Such warrants were issued for no additional
consideration as part of units of securities in a private offering.
(d) Exemption from Registration Claimed. These securities are exempt
from registration under the Securities Act of 1933, as amended, pursuant to
the provisions of Section 4(2) thereof, as a transaction not involving a
public offering.
(e) Terms of Conversion or Exercise. Exercise price of the warrants
is $2.00 per share and exercisable for a period of two years from issuance.
The warrants are redeemable by the Company at any time the bid price of
the Company's Common Stock has been at or above $4.00 per share for five
consecutive trading days.
21. (a) Securities Sold. On September 9, 1998, 300,000 shares of
Company Common Stock were sold.
(b) Underwriter or Other Purchasers. Such shares of Common Stock
were issued to Capital Financial Consultants, Inc.
(c) Consideration. Such shares of Common Stock were issued pursuant
to a Consulting Agreement, at a price of $1.10 per share, or $330,000, in
the aggregate.
(d) Exemption from Registration Claimed. These securities are exempt
from registration under the Securities Act of 1933, as amended, pursuant to
the provisions of Section 4(2) thereof, as a transaction not involving a
public offering.
22. (a) Securities Sold. On September 1, 1998, 400,000 shares of
Company Common Stock were sold.
(b) Underwriter or Other Purchasers. Such shares of Common Stock
were issued to Newlan & Newlan, Attorneys at Law.
(c) Consideration. Such shares of Common Stock were issued pursuant
to a Consulting and Legal Services Consulting Agreement, at a price of
$1.00 per share, or $400,000, in the aggregate.
(d) Exemption from Registration Claimed. These securities are exempt
from registration under the Securities Act of 1933, as amended, pursuant to
the provisions of Section 4(2) thereof, as a transaction not involving a
public offering.
23. (a) Securities Sold. On October 14, 1998, 100,000 shares of Company
Common Stock were sold.
(b) Underwriter or Other Purchasers. Such shares of Common Stock
were issued to Peter Rochow.
(c) Consideration. Such shares of Common Stock were issued pursuant
to a Consulting Agreement, at a price of $.70 per share, or $70,000, in the
aggregate.
(d) Exemption from Registration Claimed. These securities are exempt
from registration under the Securities Act of 1933, as amended, pursuant to
the provisions of Section 4(2) thereof, as a transaction not involving a
public offering.
24. (a) Securities Sold. On August 14, 1998, 5,000 shares of Company
Common Stock were sold.
(b) Underwriter or Other Purchasers. Such shares of Common Stock
were issued to Darrell Davis.
(c) Consideration. Such shares of Common Stock were issued as a
signing bonus pursuant to an Agreement and Plan of Reorganization, at a
price of $1.00 per share, or $5,000, in the aggregate.
(d) Exemption from Registration Claimed. These securities are exempt
from registration under the Securities Act of 1933, as amended, pursuant to
the provisions of Section 4(2) thereof, as a transaction not involving a
public offering.
25. (a) Securities Sold. On November 3, 1998, 150,000 shares of Company
Common Stock were sold.
(b) Underwriter or Other Purchasers. Such shares of Common Stock
were issued to Fair Market Value, LLC.
(c) Consideration. Such shares of Common Stock were issued pursuant
to a Consulting Agreement, at a price of $.50 per share, or $75,000, in the
aggregate.
(d) Exemption from Registration Claimed. These securities are exempt
from registration under the Securities Act of 1933, as amended, pursuant to
the provisions of Section 4(2) thereof, as a transaction not involving a
public offering.
26. (a) Securities Sold. On December 30, 1998, 150,000 shares of
Company Common Stock were sold.
(b) Underwriter or Other Purchasers. Such shares of Common Stock
were issued to H+N Partners.
(c) Consideration. Such shares of Common Stock were issued pursuant
to a Consulting Agreement, at a price of $2.50 per share, or $375,000, in
the aggregate.
(d) Exemption from Registration Claimed. These securities are exempt
from registration under the Securities Act of 1933, as amended, pursuant to
the provisions of Section 4(2) thereof, as a transaction not involving a
public offering.
27. (a) Securities Sold. On December 30, 1998, 60,000 shares of Company
Common Stock were sold.
(b) Underwriter or Other Purchasers. Such shares of Common Stock
were issued to The Humbolt Corporation.
(c) Consideration. Such shares of Common Stock were issued pursuant
to a Consulting Agreement, at a price of $2.50 per share, or $150,000, in
the aggregate.
(d) Exemption from Registration Claimed. These securities are exempt
from registration under the Securities Act of 1933, as amended, pursuant to
the provisions of Section 4(2) thereof, as a transaction not involving a
public offering.
28. (a) Securities Sold. On January 29, 1999, a total of 2,000,000
shares of Company Common Stock were sold.
(b) Underwriter or Other Purchasers. Such shares of Common Stock
were issued to Julius W. Basham, II (1,394,000 shares), Wm. Kim Stimpson
(303,000 shares) and David W. Brown (303,000 shares).
(c) Consideration. Such shares of Common Stock were issued pursuant
to an Agreement and Plan of Reorganization, at a price of $7.97 per share,
or $15,940,000, in the aggregate.
(d) Exemption from Registration Claimed. These securities are exempt
from registration under the Securities Act of 1933, as amended, pursuant to
the provisions of Section 4(2) thereof, as a transaction not involving a
public offering.
29. (a) Securities Sold. On January 20, 1999, a total of 60,000 shares
of Company Common Stock were sold.
(b) Underwriter or Other Purchasers. Such shares of Common Stock
were issued to Michael Cohn (30,000 shares), Walter C. Schiller (10,000
shares), Michael R. Van Geons (10,000 shares), Harry P. Kunecki Trust
(5,000 shares) and Frank L. Leyba (5,000 shares).
(c) Consideration. Such shares of Common Stock were sold for cash
pursuant to a private offering, at a price of $4.50 per share, or $270,000,
in the aggregate.
(d) Exemption from Registration Claimed. These securities are exempt
from registration under the Securities Act of 1933, as amended, pursuant to
the provisions of Section 4(2) thereof, as a transaction not involving a
public offering.
30. (a) Securities Sold. On January 20, 1999, a total of 60,000 common
stock purchase warrants of the Company were issued.
(b) Underwriter or Other Purchasers. Such warrants were issued to
Michael Cohn (30,000 warrants), Walter C. Schiller (10,000 warrants),
Michael R. Van Geons (10,000 warrants), Harry P. Kunecki Trust (5,000
warrants) and Frank L. Leyba (5,000 warrants).
(c) Consideration. Such warrants were issued for no additional
consideration as part of units of securities in a private offering.
(d) Exemption from Registration Claimed. These securities are exempt
from registration under the Securities Act of 1933, as amended, pursuant to
the provisions of Section 4(2) thereof, as a transaction not involving a
public offering.
(e) Terms of Conversion or Exercise. Exercise price of the warrants
is $7.00 per share and exercisable for a period of two years from issuance.
The warrants are redeemable by the Company at any time the bid price of
the Company's Common Stock has been at or above $8.50 per share for five
consecutive trading days.
31. (a) Securities Sold. On February 5, 1999, 325,000 shares of Company
Common Stock were sold.
(b) Underwriter or Other Purchasers. Such shares of Common Stock
were issued to James Kaufman.
(c) Consideration. Such shares of Common Stock were issued as a
finder's fee, at a price of $7.97 per share, or $2,590,250, in the aggregate.
(d) Exemption from Registration Claimed. These securities are exempt
from registration under the Securities Act of 1933, as amended, pursuant to
the provisions of Section 4(2) thereof, as a transaction not involving a
public offering.
32. (a) Securities Sold. On June 2, 1999, a total of 100,000 shares of
Company Common Stock were sold.
(b) Underwriter or Other Purchasers. Such shares of Common Stock
were issued to Darrell Davis and Deanna Davis (74,000 shares) and Roger
Davis and Gloria C. Davis (26,000).
(c) Consideration. Such shares of Common Stock were issued pursuant
to an Agreement and Plan of Reorganization, at a price of $4.00 per share,
or $400,000, in the aggregate.
(d) Exemption from Registration Claimed. These securities are exempt
from registration under the Securities Act of 1933, as amended, pursuant to
the provisions of Section 4(2) thereof, as a transaction not involving a
public offering.
33. (a) Securities Sold. On June 4, 1999, a total of 35,000 shares of
Company Common Stock were sold.
(b) Underwriter or Other Purchasers. Such shares of Common Stock
were issued to Walter Engler (10,000 shares) and Shelter Capital Ltd.
(25,000 shares).
(c) Consideration. Such shares of Common Stock were sold for cash
pursuant to a private offering, at a price of $3.00 per share, or $105,000,
in the aggregate.
(d) Exemption from Registration Claimed. These securities are exempt
from registration under the Securities Act of 1933, as amended, pursuant to
the provisions of Section 4(2) thereof, as a transaction not involving a
public offering.
34. (a) Securities Sold. On June 4, 1999, a total of 35,000 common
stock purchase warrants of the Company were issued.
(b) Underwriter or Other Purchasers. Such warrants were issued to
Walter Engler (10,000 warrants) and Shelter Capital Ltd. (35000 warrants).
(c) Consideration. Such warrants were issued for no additional
consideration as part of units of securities in a private offering.
(d) Exemption from Registration Claimed. These securities are exempt
from registration under the Securities Act of 1933, as amended, pursuant to
the provisions of Section 4(2) thereof, as a transaction not involving a
public offering.
(e) Terms of Conversion or Exercise. Exercise price of the warrants
is $7.00 per share and exercisable for a period of one year from issuance.
Warrants are redeemable by the Company at any time the bid price of the
Company's Common Stock has been at or above $10.00 per share for five
consecutive trading days.
35. (a) Securities Sold. On June 4, 1999, 500,000 shares of Company
Common Stock were sold.
(b) Underwriter or Other Purchasers. Such shares of Common Stock
were issued to Interactive Business Channel.
(c) Consideration. Such shares of Common Stock were issued pursuant
to a Consulting Agreement, at a price of $4.00 per share, or $2,000,000, in
the aggregate.
(d) Exemption from Registration Claimed. These securities are exempt
from registration under the Securities Act of 1933, as amended, pursuant to
the provisions of Section 4(2) thereof, as a transaction not involving a
public offering.
36. (a) Securities Sold. In July, 1999, a total of 155,000 shares of
Company Common Stock were sold.
(b) Underwriter or Other Purchasers. Such shares of Common Stock
were issued to Dennis A. Faker (50,000 shares), Barbara V. Schiller (30,000
shares), Jeanne M. Rowzee (10,000 shares), Alvin Gottlieb (10,000 shares),
Rogers Family Trust (15,000 shares), Delaware Charter Guarantee & Trust
Company f/b/o Clarence Yim (20,000 shares) and Delaware Charter Guarantee &
Trust Company f/b/o R. Logan Kock (20,000 shares).
(c) Consideration. Such shares of Common Stock were issued upon the
exercise of warrants, at a price of $2.00 per share, or $310,000, in the
aggregate.
(d) Exemption from Registration Claimed. These securities are exempt
from registration under the Securities Act of 1933, as amended, pursuant to
the provisions of Section 4(2) thereof, as a transaction not involving a
public offering.
37. (a) Securities Sold. On February 5, 1999, 21,857 shares of Company
Common Stock were sold.
(b) Underwriter or Other Purchasers. Such shares of Common Stock
were issued to Terry Lewis.
(c) Consideration. Such shares of Common Stock were issued upon the
exercise of warrants, at a price of $1.25 per share, or $27,321, in the
aggregate.
(d) Exemption from Registration Claimed. These securities are exempt
from registration under the Securities Act of 1933, as amended, pursuant to
the provisions of Section 4(2) thereof, as a transaction not involving a
public offering.
38. (a) Securities Sold. On August 11, 1999, 150,000 shares of Company
Common Stock were sold.
(b) Underwriter or Other Purchasers. Such shares of Common Stock
were issued to Mark Bove.
(c) Consideration. Such shares of Common Stock were issued pursuant
to an Business Acquisition Agreement, at a price of $4.00 per share, or
$600,000, in the aggregate.
(d) Exemption from Registration Claimed. These securities are exempt
from registration under the Securities Act of 1933, as amended, pursuant to
the provisions of Section 4(2) thereof, as a transaction not involving a
public offering.
39. (a) Securities Sold. On August 23, 1999, 250,000 shares of Company
Common Stock were sold.
(b) Underwriter or Other Purchasers. Such shares of Common Stock
were issued to Knud Nielsen, III (127,500 shares) and Gary Stanley (122,500
shares).
(c) Consideration. Such shares of Common Stock were issued pursuant
to an Agreement and Plan of Reorganization, at a price of $4.00 per share,
or $1,000,000, in the aggregate.
(d) Exemption from Registration Claimed. These securities are exempt
from registration under the Securities Act of 1933, as amended, pursuant to
the provisions of Section 4(2) thereof, as a transaction not involving a
public offering.
40. (a) Securities Sold. On August 30, 1999, 127,000 shares of Company
Common Stock were sold.
(b) Underwriter or Other Purchasers. Such shares of Common Stock
were issued to Alan L. Taylor (122,405 shares), Brent Bates (518 shares),
Kim Jorgensen (475 shares), Chris Allison (472 shares), Robert Carlson
(1,423 shares) and Lane Virgin (1,707 shares).
(c) Consideration. Such shares of Common Stock were issued pursuant
to an Agreement and Plan of Reorganization, at a price of $4.00 per share,
or $508,000, in the aggregate.
(d) Exemption from Registration Claimed. These securities are exempt
from registration under the Securities Act of 1933, as amended, pursuant to
the provisions of Section 4(2) thereof, as a transaction not involving a
public offering.
41. (a) Securities Sold. On September 24, 1999, 11,000 shares of
Company Common Stock were sold.
(b) Underwriter or Other Purchasers. Such shares of Common Stock
were issued to Alonzo B. See, III.
(c) Consideration. Such shares of Common Stock were issued pursuant
to an Employment Agreement, at a price of $5.00 per share, or $40,000, in
the aggregate.
(d) Exemption from Registration Claimed. These securities are exempt
from registration under the Securities Act of 1933, as amended, pursuant to
the provisions of Section 4(2) thereof, as a transaction not involving a
public offering.
42. (a) Securities Sold. On November 12, 1999, 25,000 shares of Company
Common Stock were sold.
(b) Underwriter or Other Purchasers. Such shares of Common Stock
were issued to Cyber Mountain, Inc.
(c) Consideration. Such shares of Common Stock were issued pursuant
to a Letter Agreement, at a price of $4.00 per share, or $100,000, in the
aggregate.
(d) Exemption from Registration Claimed. These securities are exempt
from registration under the Securities Act of 1933, as amended, pursuant to
the provisions of Section 4(2) thereof, as a transaction not involving a
public offering.
43. (a) Securities Sold. On December 9, 1999, a total of 340,000 shares
of Company Common Stock were sold.
(b) Underwriter or Other Purchasers. Such shares of Common Stock
were issued to Julius W. Basham, II (215,000 shares), Wm. Kim Stimpson
(34,000 shares) and David W. Brown (91,000 shares).
(c) Consideration. Such shares of Common Stock were issued pursuant
to a Settlement Agreement and Mutual Release, at a price of $2.6875 per
share, or $913,750, in the aggregate.
(d) Exemption from Registration Claimed. These securities are exempt
from registration under the Securities Act of 1933, as amended, pursuant to
the provisions of Section 4(2) thereof, as a transaction not involving a
public offering.
44. (a) Securities Sold. On December 9, 1999, 30,000 shares of Company
Common Stock were sold.
(b) Underwriter or Other Purchasers. Such shares of Common Stock
were issued to Peter Rochow.
(c) Consideration. Such shares of Common Stock were issued pursuant
to a Consulting Agreement, at a price of $3.00 per share, or $90,000, in
the aggregate.
(d) Exemption from Registration Claimed. These securities are exempt
from registration under the Securities Act of 1933, as amended, pursuant to
the provisions of Section 4(2) thereof, as a transaction not involving a
public offering.
45. (a) Securities Sold. On December 13, 1999, 30,000 shares of Company
Common Stock were sold.
(b) Underwriter or Other Purchasers. Such shares of Common Stock
were issued to Nostas/Faesel Group.
(c) Consideration. Such shares of Common Stock were issued pursuant
to a Consulting Agreement, at a price of $3.00 per share, or $90,000, in
the aggregate.
(d) Exemption from Registration Claimed. These securities are exempt
from registration under the Securities Act of 1933, as amended, pursuant to
the provisions of Section 4(2) thereof, as a transaction not involving a
public offering.
46. (a) Securities Sold. On December 13, 1999, 53,000 shares of Company
Common Stock were sold.
(b) Underwriter or Other Purchasers. Such shares of Common Stock
were issued to CyberHighway of North Georgia, Inc.
(c) Consideration. Such shares of Common Stock were issued pursuant
to an Asset Acquisition Agreement, at a price of $4.00 per share, or
$212,000, in the aggregate.
(d) Exemption from Registration Claimed. These securities are exempt
from registration under the Securities Act of 1933, as amended, pursuant to
the provisions of Section 4(2) thereof, as a transaction not involving a
public offering.
47. (a) Securities Sold. On December 1, 1999, 60,000 common stock
purchase warrants of the Company were issued.
(b) Underwriter or Other Purchasers. Such warrants were issued to
The Research Works, Inc.
(c) Consideration. Such warrants were issued pursuant to a
Consulting Agreement.
(d) Exemption from Registration Claimed. These securities are exempt
from registration under the Securities Act of 1933, as amended, pursuant to
the provisions of Section 4(2) thereof, as a transaction not involving a
public offering.
(e) Terms of Conversion or Exercise. Exercise price of the warrants
is $3.50 per share and the warrants are exercisable for a period of two
years from issuance.
48. (a) Securities Sold. On February 18, 2000, 60,000 shares of Company
Common Stock were sold.
(b) Underwriter or Other Purchasers. Such shares of Common Stock
were issued to The Humbolt Corporation.
(c) Consideration. Such shares of Common Stock were issued pursuant
to a Business and Communications Consulting Services Agreement, at a price
of $3.00 per share, or $180,000, in the aggregate.
(d) Exemption from Registration Claimed. These securities are exempt
from registration under the Securities Act of 1933, as amended, pursuant to
the provisions of Section 4(2) thereof, as a transaction not involving a
public offering.
49. (a) Securities Sold. On February 18, 2000, 42,166 shares of Company
Common Stock were sold.
(b) Underwriter or Other Purchasers. Such shares of Common Stock
were issued to Newlan & Newlan, Attorneys at Law.
(c) Consideration. Such shares of Common Stock were issued for
services rendered, at a price of $3.00 per share, or $126,500, in the
aggregate.
(d) Exemption from Registration Claimed. These securities are exempt
from registration under the Securities Act of 1933, as amended, pursuant to
the provisions of Section 4(2) thereof, as a transaction not involving a
public offering.
50. (a) Securities Sold. On February 18, 2000, 100,000 shares of
Company Common Stock were sold.
(b) Underwriter or Other Purchasers. Such shares of Common Stock
were issued to Newlan & Newlan, Attorneys at Law.
(c) Consideration. Such shares of Common Stock were issued pursuant
to a Legal and Consulting Services Agreement, at a price of $3.00 per
share, or $300,000, in the aggregate.
(d) Exemption from Registration Claimed. These securities are exempt
from registration under the Securities Act of 1933, as amended, pursuant to
the provisions of Section 4(2) thereof, as a transaction not involving a
public offering.
51. (a) Securities Sold. On February 1, 2000, 81,063 shares of Company
Common Stock were sold.
(b) Underwriter or Other Purchasers. Such shares of Common Stock
were issued to the owners of The Spinning Wheel, Inc.
(c) Consideration. Such shares of Common Stock were issued pursuant
to an Agreement and Plan of Reorganization, at a price of $4.00 per share,
or $324,252, in the aggregate.
(d) Exemption from Registration Claimed. These securities are exempt
from registration under the Securities Act of 1933, as amended, pursuant to
the provisions of Section 4(2) thereof, as a transaction not involving a
public offering.
52. (a) Securities Sold. On February 18, 2000, 50,000 shares of Company
Common Stock were sold.
(b) Underwriter or Other Purchasers. Such shares of Common Stock
were issued to the owners of Internet Innovations, L.L.C.
(c) Consideration. Such shares of Common Stock were issued pursuant
to an Agreement and Plan of Reorganization, at a price of $4.00 per share,
or $200,000, in the aggregate.
(d) Exemption from Registration Claimed. These securities are exempt
from registration under the Securities Act of 1933, as amended, pursuant to
the provisions of Section 4(2) thereof, as a transaction not involving a
public offering.
53. (a) Securities Sold. In April 2000, 30,000 shares of Company Common
Stock were sold.
(b) Underwriter or Other Purchasers. Such shares of Common Stock
were issued to Peter Rochow.
(c) Consideration. Such shares of Common Stock were issued pursuant
to a Consulting Agreement, at a price of $3.00 per share, or $90,000, in
the aggregate.
(d) Exemption from Registration Claimed. These securities are exempt
from registration under the Securities Act of 1933, as amended, pursuant to
the provisions of Section 4(2) thereof, as a transaction not involving a
public offering.
54. (a) Securities Sold. In April 2000, 30,000 shares of Company Common
Stock were sold.
(b) Underwriter or Other Purchasers. Such shares of Common Stock
were issued to Nostas/Faeseel Group.
(c) Consideration. Such shares of Common Stock were issued pursuant
to a Consulting Agreement, at a price of $3.00 per share, or $90,000, in
the aggregate.
(d) Exemption from Registration Claimed. These securities are exempt
from registration under the Securities Act of 1933, as amended, pursuant to
the provisions of Section 4(2) thereof, as a transaction not involving a
public offering.
55. (a) Securities Sold. In April 2000, 100,000 shares of Company
Common Stock were sold.
(b) Underwriter or Other Purchasers. Such shares of Common Stock
were issued to Fair Market, Inc.
(c) Consideration. Such shares of Common Stock were issued pursuant
to a Consulting Agreement, at a price of $7.125 per share, or $712,500, in
the aggregate.
(d) Exemption from Registration Claimed. These securities are exempt
from registration under the Securities Act of 1933, as amended, pursuant to
the provisions of Section 4(2) thereof, as a transaction not involving a
public offering.
56. (a) Securities Sold. In April 2000, a total of 65,000 shares of
Company Common Stock were sold.
(b) Underwriter or Other Purchasers. Such shares of Common Stock
were issued to ten individual investors.
(c) Consideration. Such shares of Common Stock were sold for cash
pursuant to a private offering, at a price of $5.00 per share, or $325,000,
in the aggregate.
(d) Exemption from Registration Claimed. These securities are exempt
from registration under the Securities Act of 1933, as amended, pursuant to
the provisions of Section 4(2) thereof, as a transaction not involving a
public offering.
57. (a) Securities Sold. In April 2000, a total of 65,000 common stock
purchase warrants of the Company were issued.
(b) Underwriter or Other Purchasers. Such warrants were issued to
ten individual investors.
(c) Consideration. Such warrants were issued for no additional
consideration as part of units of securities in a private offering.
(d) Exemption from Registration Claimed. These securities are exempt
from registration under the Securities Act of 1933, as amended, pursuant to
the provisions of Section 4(2) thereof, as a transaction not involving a
public offering.
(e) Terms of Conversion or Exercise. Exercise price of the warrants
is $7.50 per share and exercisable for a period of two years from issuance.
Item 16. Exhibits and Financial Statements Schedules.
1. Exhibits.
Exhibit No. Description
# 3.1 Articles of Incorporation of Registrant.
+ 3.2 Bylaws of Registrant, as amended.
+ 3.3 Bylaws of Executive Committee of the Board of Directors of
Registrant.
+ 3.4 Bylaws of Audit Committee of the Board of Directors of
Registrant.
* 3.5 Articles of Amendment to Articles of Incorporation of
Registrant.
** 3.6 Articles of Amendment to Articles of Incorporation of
Registrant.
+ 4.1 Specimen Common Stock Certificate.
@ 5.1 Opinion of Newlan & Newlan, Attorneys at Law, re: Legality.
+ 10.1 Registration Rights Letter Agreement between Registrant and
Centex Securities, Inc., dated May 20, 1998.
+ 10.2 Finder's Fee Letter between Registrant and H+N Partners,
dated
March 27, 1998.
+ 10.3 Registration Rights Letter Agreement between Registrant and
Dennis A. Faker, dated June 19, 1998.
+ 10.4 Registration Rights Letter Agreement between Registrant and
Delaware Charter Guaranty and Trust Company, f/b/o R. Logan
Kock IRA, dated June 19, 1998.
+ 10.5 Registration Rights Letter Agreement between Registrant and
Alvin Gottlieb, dated June 19, 1998.
+ 10.6 Registration Rights Letter Agreement between Registrant and
Rogers Family Trust, dated June 19, 1998.
+ 10.7 Registration Rights Letter Agreement between Registrant and
Jeanne Rowzee, dated June 19, 1998.
+ 10.8 Registration Rights Letter Agreement between Registrant and
Barbara V. Schiller, dated June 19, 1998.
+ 10.9 Registration Rights Letter Agreement between Registrant and
Delaware Charter Guarantee and Trust Company f/b/o Clarence
Yim IRA, dated June 19, 1998.
+ 10.9.1 Warrant Agreement between Registrant and Securities Transfer
Corporation, dated May 18, 1998.
+ 10.10 Warrant Agreement between Registrant and Securities Transfer
Corporation, dated May 20, 1998.
+ 10.11 Warrant Agreement between Registrant and Securities Transfer
Corporation, dated May 20, 1998.
+ 10.12 Warrant Agreement between Registrant and Securities Transfer
Corporation dated January 19, 1999.
+ 10.13 Registration Rights Letter Agreement between Registrant and
Michael Cohn, dated January 19, 1999.
+ 10.14 Registration Rights Letter Agreement between Registrant and
Walter C. Schiller, dated January 19, 1999.
+ 10.15 Registration Rights Letter Agreement between Registrant and
Michael R. Van Geons, dated January 19, 1999.
+ 10.16 Registration Rights Letter Agreement between Registrant and
Harry P. Kunecki Trust, dated January 19, 1999.
+ 10.17 Registration Rights Letter Agreement between Registrant and
Frank L. Leyba, dated January 19, 1999.
+ 10.18 Warrant Agreement between Registrant and Securities Transfer
Corporation, dated May 3, 1999.
+ 10.19 Registration Rights Letter Agreement between Registrant and
Shelter Capital, Ltd., dated May 28, 1999.
+ 10.20 Registration Rights Letter Agreement between Registrant and
Walter Engler, dated May 28, 1999.
+ 10.21 Agreement and Plan of Reorganization, dated April 28, 1999,
among Registrant, Santa Fe Wireless Internet, Inc., Santa Fe
Trail Internet Plus, Inc., and Darrell Davis.
+ 10.21.1 Agreement of Merger, dated June 2, 1999, among Registrant,
Santa Fe Wireless Internet, Inc. and Santa Fe Trail Internet
Plus, Inc.
+ 10.22 Registration Rights Letter Agreement between Registrant and
Darrell Davis and Deanna Davis, dated June 2, 1999.
+ 10.23 Registration Rights Letter Agreement between Registrant and
Roger Davis and Gloria C. Davis, dated June 2, 1999.
+ 10.24 Business Acquisition Agreement between Registrant and Mark
Bove, dated July 14, 1999.
+ 10.25 Registration Rights Letter Agreement between Registrant and
Mark Bove, dated August 11, 1999.
+ 10.26 Agreement and Plan of Reorganization, dated August 24, 1999,
among Registrant, CyberHighway, Inc., Premier Internet
Services, Inc. and Alan Taylor.
+ 10.27 Agreement of Merger among Registrant, CyberHighway, Inc. and
Premier Internet Services, Inc., dated August 30, 1999.
+ 10.28 Confidentiality Agreement between Registrant and Alan
Taylor,
dated August 30, 1999.
+ 10.29 Agreement Not to Compete between Registrant and Alan Taylor,
dated August 30, 1999.
+ 10.30 Registration Rights Letter Agreement between Registrant and
Alan Taylor, dated August 30, 1999.
+ 10.31 Asset Purchase Agreement between Registrant and
CyberHighway of
North Georgia, Inc., dated October 29, 1999.
+ 10.32 Confidentiality Agreement among Registrant, CyberHighway of
North Georgia, Inc., Grady E. Brooks, Jr. and Anthony
Woodall,
dated December 20, 1999.
+ 10.33 Agreement Not to Compete among Registrant, CyberHighway of
North Georgia, Inc., Grady E. Brooks, Jr., and Anthony
Woodall,
dated December 20, 1999.
+ 10.34 Registration Rights Letter Agreement between Registrant and
CyberHighway of North Georgia, Inc., dated December 20,
1999.
+ 10.35 Employment Agreement between Registrant and James Kaufman,
dated March 22, 1999.
+ 10.36 Confidentiality Agreement between Registrant and James
Kaufman,
dated March 22, 1999.
+ 10.37 Agreement Not to Compete between Registrant and James
Kaufman,
dated March 22, 1999.
+ 10.38 Employment Agreement between Registrant and Darrell Davis,
dated October 4, 1999.
+ 10.39 Confidentiality Agreement between Registrant and Darrell
Davis,
dated October 4, 1999.
+ 10.40 Agreement Not to Compete between Registrant and Darrell
Davis,
dated October 4, 1999.
+ 10.41 Employment Agreement between Registrant and David M. Loflin,
dated August 1, 1999.
+ 10.42 Confidentiality Agreement between Registrant and David M.
Loflin, dated August 1, 1999.
+ 10.43 Agreement Not to Compete between Registrant and David M.
Loflin, dated August 1, 1999.
+ 10.44 Employment Agreement between Registrant and Waddell D.
Loflin,
dated August 1, 1999.
+ 10.45 Confidentiality Agreement between Registrant and Waddell
D. Loflin, dated August 1, 1999.
+ 10.46 Agreement Not to Compete between Registrant and Waddell D.
Loflin, dated August 1, 1999.
***10.47 Settlement Agreement and Mutual Release, dated November 30,
1999, among Registrant, CyberHighway, Inc., Julius W.
Basham,
II, Wm. Kim Stimpson and David W. Brown.
+ 10.48 Wholesale Customer - Dial Access Agreement between
Registrant
and ioNET, Inc. (a division of PSINet, Inc.), dated July 21,
1999.
+ 10.49 ISP Agreement between Registrant and NaviNet, Inc., dated
August 2, 1999.
+ 10.50 Warrant Agreement between Registrant and Securities Transfer
Corporation, dated November 1, 1999.
+ 10.50.1 Registration Rights Letter Agreement between Registrant and
Michael Cohn, dated November 1, 1999.
+ 10.51 Letter Agreement between Registrant and The Research Works,
Inc., dated December 1, 1999.
+ 10.51.1 Warrant Agreement between Registrant and Securities Transfer
Corporation, dated December 1, 1999.
+ 10.52 Financial Public Relations and Investor Relations Services
Agreement between Registrant and Peter Rochow, dated October
27, 1999.
+ 10.53 Consultation Agreement - Investor Relations between
Registrant
and Nostas/Faessel Group, dated October 23, 1999.
+ 10.54 Corporate Communications Services Agreement between
Registrant
and JFMills/Worldwide, dated November 1, 1999.
+ 10.55 Agreement and Plan of Reorganization, dated July 23, 1999,
among Registrant, USURF America (Alabama), Inc., Net 1, Inc.
and Gary Stanley.
+ 10.56 Agreement of Merger, dated August 23, 1999, among
Registrant,
USURF America (Alabama), Inc. and Net 1, Inc.
+ 10.57 Registration Rights Letter Agreement between Registrant and
Kund Nielsen, III, dated August 23, 1999.
+ 10.58 Registration Rights Letter Agreement between Registrant and
Gary Stanley, dated August 23, 1999.
+ 10.59 Confidentiality Agreement between Registrant and Kund
Nielsen,
III, dated August 23, 1999.
+ 10.60 Agreement Not to Compete between Registrant and Kund
Nielsen,
III, dated August 23, 1999.
+ 10.61 Agreement and Plan of Reorganization, dated February 1,
2000,
among Registrant, USURF America Internet Design, Inc.,
Internet
Innovations, L.L.C., Ryan D. Thibodeaux and Ryan G.
Campanile.
+ 10.62 Agreement of Merger, dated February 16, 2000, among
Registrant,
USURF America Internet Design, Inc. and Internet
Innovations,
L.L.C.
+ 10.63 Registration Rights Letter Agreement, dated February 16,
2000,
between Registrant and Ryan D. Thibodeaux.
+ 10.64 Registration Rights Letter Agreement, dated February 16,
2000,
between Registrant and Ryan G. Campanile.
+ 10.65 Employment Agreement, dated February 16, 2000, between
Registrant, USURF America Internet Design, Inc. and Ryan D.
Thibodeaux.
+ 10.66 Employment Agreement, dated February 16, 2000, between
Registrant, USURF America Internet Design, Inc. and Ryan G.
Campanile.
+ 10.67 Business and Communications Consulting Services Agreement,
dated as of January 1, 2000, between Registrant and The
Humbolt
Corporation.
+ 10.68 Legal and Consulting Services Agreement, dated as of
January 1,
2000, between Registrant and Newlan & Newlan, Attorneys
at Law.
+ 10.69 Agreement and Plan of Reorganization, dated October 26,
1999,
among Registrant, CyberHighway, Inc., The Spinning Wheel,
Inc.
and Diggs W. Lewis, Jr.
+ 10.70 Agreement of Merger, dated February 1, 2000, among
Registrant,
CyberHighway, Inc. and The Spinning Wheel, Inc.
+ 10.71 Registration Rights Letter Agreement, dated February 1,
2000,
between Registrant and Diggs W. Lewis, Jr.
+ 10.72 Agreement Not to Compete, dated February 1, 2000, between
Registrant and Diggs W. Lewis, Jr.
+ 10.73 Confidentiality Agreement, dated February 1, 2000, between
Registrant and Diggs W. Lewis, Jr.
@ 10.74 Warrant Agreement between Registrant and Securities Transfer
Corporation, dated as of March 29, 2000.
@ 10.75 Employment Agreement between Registrant and Christopher L.
Wiebelt, dated February 15, 2000.
@ 10.76 Confidentiality Agreement between Registrant and
Christopher L.
Wiebelt, dated February 15, 2000.
@ 10.77 Agreement Not to Compete between Registrant and
Christopher L.
Wiebelt, dated February 15, 2000.
@ 10.78 Management/Financial Consulting Agreement between Registrant
and Fair Market, Inc., dated March 15, 2000.
@ 10.79 Registration Rights Letter Agreement, dated March 29, 2000,
between Registrant and Shelter Capital Ltd.
@ 10.80 Registration Rights Letter Agreement, dated March 29, 2000,
between Registrant and Gordon Engler.
@ 10.81 Registration Rights Letter Agreement, dated March 29, 2000,
between Registrant and Annie Rochow.
@ 10.82 Registration Rights Letter Agreement, dated March 29, 2000,
between Registrant and Eden Park Homes Ltd.
@ 10.83 Registration Rights Letter Agreement, dated March 29, 2000,
between Registrant and G. Paul Dumas.
@ 10.84 Registration Rights Letter Agreement, dated March 29, 2000,
between Registrant and Daniel E. Pisenti.
@ 10.85 Registration Rights Letter Agreement, dated March 29, 2000,
between Registrant and Wolfgang and Helga Rochow.
@ 10.86 Registration Rights Letter Agreement, dated March 29, 2000,
between Registrant and Geoffrey Page Flett.
@ 10.87 Registration Rights Letter Agreement, dated March 29, 2000,
between Registrant and Donald Rayburn.
+ 22.1 Subsidiaries of Registrant.
@ 23.1 Consent of Weaver and Tidwell, L.L.P., independent auditor.
@ 23.2 Consent of Postlethwaite & Netterville, independent auditor.
@ 23.3 Consent of Newlan & Newlan, Attorneys at Law.
_______________________
@ Filed herewith.
+ Filed previously
# Incorporated by reference from Registrant's Registration Statement on
Form
S-1, Commission File No. 333-26385.
* Incorporated by reference from Registrant's Current Report on Form 8-K,
date of event: July 21 1998.
** Incorporated by reference from Registrant's Current Report on Form 8-K,
date of event: July 6, 1999.
*** Incorporated by reference from Registrant's Current Report on Form 8-K,
date of event: November 30, 1999.
2. Financial Statement Schedules.
All schedules are omitted since they are furnished elsewhere in the
Prospectus.
Item 17. Undertakings.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To included any prospectus required by Section 10(a)(3) of the
Securities Act of 1933, as amended (the "Act);
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement; and
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement.
(2) That, for the purpose of determining any liability under the Act, each
such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial bona fide
offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination
of the offering.
Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers and controlling persons of the registrant
pursuant to the foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of
expenses incurred or paid by a director, officer or controlling person of
the registrant in the successful defense of any action, suit or proceeding)
is asserted by such director, officer or controlling person in connection
with the securities being registered, the registrant will, unless in the
opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question
whether such indemnification by it is against public policy as expressed in
the Act and will be governed by the final adjudication of such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement on Form S-1 to be
signed on its behalf by the undersigned, thereunto duly authorized, in the
City of Baton Rouge, State of Louisiana, on April 25, 2000.
USURF AMERICA, INC.
By: /s/ David M. Loflin
David M. Loflin
President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to this Registration Statement on Form S-1 has been signed by the following
persons in the capacities and on the dates indicated:
Signatures Title Date
/s/ David M. Loflin President (Principal Executive April 25,
2000
David M. Loflin Officer) and Director
/s/ Waddell D. Loflin Vice President, Secretary and April 25,
2000
Waddell D. Loflin Director
/s/ Christopher L. Wiebelt Vice President - Finance and April 25,
2000
Christopher L. Wiebelt Chief Financial Officer
(Principal Accounting Officer)
/s/ Ross S. Bravata Director April 25,
2000
Ross S. Bravata
/s/ Richard N. Gill Director April 25,
2000
Richard N. Gill
/s/ Michael Cohn Director April 25,
2000
Michael Cohn
- -----------
EXHIBIT 5.1
- -----------
NEWLAN & NEWLAN
ATTORNEYS AT LAW
819 Office Park Circle
Lewisville, Texas 75057
972.353.3880
972.353.8304 (fax)
April 25, 2000
The Board of Directors
USURF America, Inc.
8748 Quarters Lake Road
Baton Rouge, Louisiana 70809
Gentlemen:
We have acted as counsel to USURF America, Inc., a Nevada corporation (the
"Company"), in connection with the preparation and filing of a Registration
Statement on Form S-1 (the "Registration Statement") with the Securities
and Exchange Commission under the Securities Act of 1933, as amended. The
Registration Statement covers the following securities of the Company:
A. Up to 2,000,000 shares of Company Common Stock, $.0001 par value per
share (the "Common Stock"), to be offered to the public in connection with
business combination transactions, which may be in the form of mergers,
stock-for-stock exchanges or stock-for-assets acquisitions (such 2,000,000
shares being referred to herein as the "Acquisition Stock");
B. Up to 780,107 shares of Company Common Stock, all of which are issued
and outstanding, and all of which are held by shareholders of the Company
(such 780,107 shares being referred to herein as the "Selling Shareholder
Stock"); and
C. Up to 395,477 shares of Company Common Stock underlying issued and
outstanding common stock purchase warrants of the Company (such 395,477
shares being referred to herein as the "Warrant Stock").
As counsel for the Company, we have examined the originals or copies
certified, or otherwise authenticated to our satisfaction, of the corporate
records of the Company and such other documents or certificates of public
officials as we have deemed necessary for the opinions expressed herein.
In rendering the opinions set forth herein, we have assumed (i) the legal
capacity of all natural persons, (ii) the authenticity of all documents
submitted to us as originals and (iii) the conformity to original documents
of all documents submitted to us as copies.
Based upon our examination of such documents, materials, certificates and
information as we have deemed appropriate or relevant for the purpose of
delivering this opinion, but subject to the qualifications set forth
herein, we are of the following opinion:
1. The Company is a corporation duly organized and lawfully existing and
in good standing under the laws of the State of Nevada.
2. The 2,000,000 shares of the Acquisition Stock, when issued and
delivered in accordance with the offering as set forth in the Prospectus
filed as part of the Registration Statement, the shares of Acquisition
Stock will be legally issued, fully paid and non-assessable shares of
Common Stock of the Company.
3. The 780,107 shares of the Selling Shareholder Stock owned by the
various shareholders named in the Prospectus filed as part of the
Registration Statement are validly issued and were duly authorized for
issuance by the Board of Directors of the Company at valid meetings
thereof, after due consideration by the Board of Directors of the facts and
circumstances surrounding such issuances, legally issued in accordance with
the laws of the State of Nevada, and appropriate stock certificates
representing such shares of Selling Shareholder Stock have been issued.
Also, such 780,107 shares of Selling Shareholder Stock are fully paid and
non-assessable.
4. The 395,477 shares of Warrant Stock issuable upon exercise of certain
outstanding common stock purchase warrants of the Company, when paid for
and issued in accordance with their respective terms, will be legally
issued, fully paid and non-assessable shares of Common Stock of the Company.
The foregoing is based solely on the facts stated herein. No opinion
contained herein shall be construed to infer an opinion relating to any
other situation, unless such opinion is stated expressly herein.
We hereby consent to the use of this opinion as an Exhibit to the
Registration Statement and to the use of our name in the Prospectus forming
part of the Registration Statement.
Sincerely,
/s/
NEWLAN & NEWLAN
- -------------
EXHIBIT 10.74
- -------------
WARRANT AGREEMENT
THIS AGREEMENT dated as of March 29, 2000, between USURF America, Inc., a
Nevada corporation (the "Company"), and Securities Transfer Corporation, a
Texas corporation (the "Warrant Agent").
RECITALS:
A. Pursuant to a private offering of up to 1,000,000 units of securities
(the "Units") by the Company, the Company proposes to issue to the
purchasers of the Units up to 1,000,000 Warrants (individually, a
"Warrant", and, collectively, the "Warrants"), to purchase an aggregate of
1,000,000 shares of Common Stock of the Company (the "Warrant Shares").
B. The Company desires to provide for the issuance of warrant
certificates (the "Warrant Certificates") representing the Warrants.
C. The Company desires the Warrant Agent to act on behalf of the
Company, and the Warrant Agent is willing to so act, in connection with the
issuance, registration, transfer and exchange of Warrant Certificates and
exercise of the Warrants.
NOW, THEREFORE, in consideration of the foregoing and the mutual agreements
hereinafter set forth and for the purpose of defining the terms and
provisions of the Warrant Certificates and the Warrants, and the respective
rights and obligations thereunder of the Company, the registered holders of
the Warrant Certificates and the Warrant Agent, the parties hereto agree as
follows:
1. Definitions. As used herein:
A. "Common Stock" shall mean shares of common stock of the Company,
$.0001 par value (the "Common Stock"), whether now or hereafter authorized,
which have the right to participate in the distribution of earnings and
assets of the Company without limit as to amount or percentage.
B. "Corporate Office" shall mean the place of business of the Warrant
Agent located in Dallas, Texas, or its successor (for the mailing address
of the Warrant Agent, see paragraph 13 hereof).
C. "Exercise Period" shall mean the period commencing on the date of
the issuance of the Warrants and ending on the Expiration Date.
D. "Exercise Price" shall mean a purchase price of $7.50 per share of
Common Stock (the "Warrant Exercise Price").
E. "Expiration Date" shall mean 5:00 p.m. Central Time, on the date
which is two (2) years from the date of execution hereof, or if such day
shall be a holiday or day on which banks are authorized to close, then 5:00
p.m. Central Time, whichever is in effect, on the next following day that
in the State of Texas is not a holiday or a day on which banks are
authorized to close.
F. "Registered Holder" shall mean the person in whose name any Warrant
Certificate shall be registered on the books maintained by the Warrant
Agent pursuant to this Agreement.
G. "Subsidiary" shall mean any corporation of which shares having
ordinary voting power to elect a majority of the Board of Directors of such
corporation (regardless of whether the shares of any other class or classes
of such corporation shall have or may have voting power by reason of the
happening of any contingency) are at the time directly or indirectly owned
by the Company or one or more subsidiaries of the Company.
H. "Transfer Agent" shall mean the Company's transfer agent,
Securities Transfer Corporation, or its successor.
I. "Warrant" or "Warrants" shall mean and include up to 1,000,000
Warrants to be issued to the purchasers of the Units to purchase a like
number of shares of the authorized and unissued Common Stock of the Company.
J. "Warrant Shares" shall mean and include up to 1,000,000 shares of
authorized and unissued Common Stock initially reserved for issuance on
exercise of the Warrants and any additional shares of Common Stock or other
property which may hereafter be issuable or deliverable on exercise of the
Warrants pursuant to paragraph 5 of this Agreement.
2. Appointment of Warrant Agent. The Company hereby appoints the
Warrant Agent to act as agent for the Company in accordance with the
instructions set forth hereafter in this Agreement, and the Warrant Agent
hereby accepts such appointment and agrees to perform the duties and
obligations required of it, as such duties and obligations are set forth
herein.
3. Warrants and Issuance of Warrant Certificates. Each Warrant shall
initially entitle the Registered Holder of the Warrant Certificate
representing such Warrant to purchase one shares of Common Stock on
exercise thereof, subject to modification and adjustment as hereinafter
provided in paragraph 10. The Warrant Certificates will be issued and
delivered by the Warrant Agent on written order of the Company signed by
its President and attested by its Secretary or Assistant Secretary. The
Warrant Agent shall deliver Warrant Certificates in required whole number
denominations to the persons entitled thereto in connection with any
transfer or exchange permitted under this Agreement.
4. Form and Execution of Warrant Certificates. The Warrant Certificates
representing the Warrants to be issued to the purchasers of the Units shall
be substantially in the form attached as Exhibit "A" and may have such
letters, numbers or other marks of identification and such legends,
summaries or endorsements printed, lithographed or engraved thereon as the
Company may deem appropriate and as are not inconsistent with the
provisions hereof.
The Warrant Certificates shall be dated as of the date of issuance,
whether on initial issuance, transfer, exchange or in lieu of mutilated,
lost, stolen or destroyed Warrant Certificates.
Warrant Certificates representing the Warrants to be issued to the
purchasers of the Units shall be numbered serially with the letters "WPOE"
preceding the number of each Warrant Certificate.
Warrant Certificates shall be executed on behalf of the Company by its
President and Secretary, by manual signatures or by facsimile signatures
printed thereon, and shall have imprinted thereon a facsimile of the
Company's seal. Warrant Certificates shall be manually countersigned by
the Warrant Agent and shall not be valid for any purpose unless so
countersigned. In the event any officer of the Company who executed the
Warrant Certificates shall cease to be an officer of the Company before the
date of issuance of the Warrant Certificates or before countersignature and
delivery by the Warrant Agent, such Warrant Certificates may be
countersigned, issued and delivered by the Warrant Agent with the same
force and effect as though the person who signed such Warrant Certificates
had not ceased to be an officer of the Company.
5. Exercise of Warrants. The Warrants shall be exercisable during the
Exercise Period. A Warrant shall be deemed to have been exercised
immediately prior to the close of business on the date of the surrender for
exercise (the "Exercise Date") of the Warrant Certificate. The exercise
form shall be executed by the Registered Holder thereof or his attorney
duly authorized in writing and shall be delivered together with payment to
the Warrant Agent, in cash or by official bank or certified check, of an
amount in lawful money of the United States of America. Such payment shall
be in an amount equal to the Exercise Price per Warrant as hereinabove
defined.
The person entitled to receive the number of Warrant Shares deliverable
on such exercise shall be treated for all purposes as the holder of such
Warrant Shares as of the close of business on the Exercise Date. The
Company shall not be obligated to issue any fractional share interests in
Warrant Shares issuable on exercise of a Warrant. If more than one Warrant
shall be exercised at one time by the same Registered Holder, the number of
full shares which shall be issuable on exercise thereof shall be computed
on the basis of the aggregate number of full shares issuable on such exercise.
As soon as practicable on or after the Exercise Date and in any event
within 30 days after such date, the Warrant Agent shall cause to be issued
and delivered to the person or persons entitled to receive the same, a
certificate or certificates for the number of Warrant Shares deliverable on
such exercise. No adjustment shall be made in respect of cash dividends on
Warrant Shares deliverable on exercise of any Warrant. The Warrant Agent
shall promptly notify the Company in writing of any exercise of any Warrant
and of the number of Warrant Shares delivered and shall cause payment of an
amount in cash equal to the Exercise Price to be made promptly to the order
of the Company. The parties contemplate such payments will be made by the
Warrant Agent to the Company as collected funds are received by the Warrant
Agent. The Warrant Agent shall hold any proceeds collected and not yet
paid to the Company in a Federally-insured escrow account at a commercial
bank selected by the Warrant Agent, at all times relevant hereto.
Following a determination by the Warrant Agent that collected funds have
been received, the Warrant Agent shall cause share certificates to be
issued representing the number of Warrants exercised by the holder.
Expenses incurred by the Warrant Agent hereunder, including
administrative costs, costs of maintaining records and other expenses,
shall be paid by the Company according to the standard fees imposed by the
Warrant Agent for such services.
A detailed accounting statement setting forth the number of Warrants
exercised, the net amount of exercised funds and all expenses incurred by
the Warrant Agent shall be transmitted to the Company on payment of each
exercise amount. Such accounting statement shall serve as an interim
accounting for the Company during the Exercise Period. The Warrant Agent
shall render to the Company a complete accounting setting forth the number
of Warrants exercised, the identity of persons exercising such Warrants,
the number of shares issued, the amounts to be distributed to the Company
and all other expenses incurred by the Warrant Agent, at the completion of
the Exercise Period.
6. Reservation of Shares and Payment of Taxes. The Company covenants
that it will, at all times, reserve and have available from its authorized
shares of Common Stock such number of shares of Common Stock as shall then
be issuable on exercise of all outstanding Warrants. The Company covenants
that all Warrant Shares, when issued, shall be duly and validly issued,
fully paid and non-assessable, and free from all taxes, liens and charges
with respect to the issue thereof.
If any Warrant Shares require registration with, or approval of, any
government authority under any Federal or state law before such shares may
be validly issued or delivered, the Company covenants it will, in good
faith and as expeditiously as possible, endeavor to secure such
registration or approval, as the case may be.
Warrantholders shall pay all documentary stamp or similar taxes and other
government charges that may be imposed with respect to the issuance of the
Warrants, or the issuance, transfer or delivery of any Warrant Shares on
exercise of the Warrants. In the event the Warrant Shares are to be
delivered in a name other than the name of the Registered Holder of the
Warrant Certificate, no such delivery shall be made unless the person
requesting the same has paid to the Warrant Agent the amount of any such
taxes or charges incident thereto.
The Warrant Agent is hereby irrevocably authorized to requisition
certificates for Warrant Shares from the Transfer Agent as required from
time to time. The Company has, contemporaneously with the execution of
this Agreement, authorized the Transfer Agent to comply with all such
requisitions. The Company will file with the Warrant Agent a statement
setting forth the name and address of its Transfer Agent for the Company's
Common Stock issuable on exercise of the Warrants and of any successor
Transfer Agent.
7. Registration of Transfer of Warrant Certificates. The Warrant
Certificates may not be transferred in whole or in part except as
authorized in this Agreement. Warrant Certificates to be exchanged shall
be surrendered to the Warrant Agent at its Corporate Office. The Company
shall execute, and the Warrant Agent shall countersign, issue and deliver
in exchange therefor, the Warrant Certificate or Certificates which the
holder making the transfer shall be entitled to receive.
The Warrant Agent shall keep transfer books at its Corporate Office in
which it shall register Warrant Certificates and the transfer thereof. On
due presentment for transfer of any Warrant Certificates at such office,
the Company shall execute, and the Warrant Agent shall issue and deliver to
the transferee or transferees, a new Warrant Certificate or Certificates
representing an equal aggregate number of Warrants.
The Warrants will not be publicly traded.
8. Loss or Mutilation. On receipt by the Company and the Warrant Agent
of evidence satisfactory as to the ownership of and the loss, theft,
destruction or mutilation of any Warrant Certificate, the Company shall
execute, and the Warrant Agent shall countersign and deliver in lieu
thereof, a new Warrant Certificate representing an equal aggregate number
of Warrants. In the case of loss, theft or destruction of any Warrant
Certificate, the individual requesting issuance of a new Warrant
Certificate shall be required to indemnify the Company and Warrant Agent in
an amount satisfactory to each of them. In the event a Warrant Certificate
is mutilated, such Certificate shall be surrendered and cancelled by the
Warrant Agent prior to delivery of a new Warrant Certificate. Applicants
for a substitute Warrant Certificate shall also comply with such other
regulations and pay such other reasonable charges as the Company may
prescribe.
9. Adjustment of Exercise Price and Shares.
A. In the event, prior to the expiration of the Warrants by exercise
or by their terms, the Company shall issue any of its Common Stock as a
stock dividend or shall subdivide the number of outstanding shares of
Common Stock into a greater number of shares, then, in either of such
events, the Exercise Price in effect at the time of such action shall be
reduced proportionately and the number of shares of Common Stock
purchasable pursuant to the Warrants shall be increased proportionately.
Conversely, in the event the Company shall reduce the number of its
outstanding shares of Common Stock by combining such shares into a smaller
number of shares, then, in such event, the Exercise Price in effect at the
time of such action shall be increased proportionately and the number of
shares of Common Stock at that time purchasable pursuant to the Warrants
shall be decreased proportionately. Such stock dividend paid or
distributed on the Common Stock in shares of any other class of the Company
or securities convertible into shares of Common Stock shall be treated as a
dividend paid or distributed in shares of Common Stock to the extent shares
of Common Stock are issuable on the payment or conversion thereof.
B. In the event, prior to the expiration of the Warrants by exercise
or by their terms, the Company shall be recapitalized by reclassifying its
outstanding shares of Common Stock into shares with a different par value,
or by changing its outstanding Common Stock to shares without par value or
in the event of any other material change of the capital structure of the
Company or of any successor corporation by reason of any reclassification,
recapitalization or conveyance, prompt, proportionate, equitable, lawful
and adequate provision shall be made whereby any holder of the Warrants
shall thereafter have the right to purchase, on the basis and the terms and
conditions specified in this Agreement, in lieu of the shares of Common
Stock of the Company theretofore purchasable on the exercise of any
Warrant, such securities or assets as may be issued or payable with respect
to, or in exchange for, the number of shares of Common Stock of the Company
theretofore purchasable on exercise of the Warrants had such
reclassification, recapitalization or conveyance not taken place; and, in
any such event, the rights of any holder of a Warrant to any adjustment in
the number of shares of Common Stock purchasable on exercise of such
Warrant, as set forth above, shall continue and be preserved in respect of
any stock, securities or assets which the holder becomes entitled to
purchase; provided, however, that a merger, acquisition of a going business
or a portion thereof (whether for cash, stock, notes, other securities, or
a combination of cash and securities), exchange of stock for stock,
exchange of stock for assets, or like transaction involving the Company
will not be considered a "material change" for purposes of this paragraph,
and no adjustment shall be made under this paragraph 10 by reason of any
such merger, acquisition, exchange of stock for stock, exchange of stock
for assets, or like transaction.
C. In the event the Company, at any time while the Warrants shall
remain unexpired and unexercised, shall sell all or substantially all of
its property, or dissolves, liquidates or winds up its affairs, prompt,
proportionate, equitable, lawful and adequate provision shall be made as
part of the terms of such sale, dissolution, liquidation or winding up such
that the holder of a Warrant may thereafter receive, on exercise of such
Warrant, in lieu of each share of Common Stock of the Company which such
holder would have been entitled to receive upon exercise of such Warrant,
the same kind and amount of any stock, securities or assets as may be
issuable, distributable or payable on any such sale, dissolution,
liquidation or winding up with respect to each share of Common Stock of the
Company; provided, however, that, in the event of any such sale,
dissolution, liquidation or winding up, the right to exercise the Warrants
shall terminate on a date fixed by the Company, such date to be not earlier
than 5:00 p.m., Central Time, on the 30th day next succeeding the date on
which notice of such termination of the right to exercise the Warrants has
been given by mail to the holders thereof at such addresses as may appear
on the books of the Company.
D. In the event, prior to the expiration of the Warrants by exercise
or by their terms, the Company shall take a record of the holders of its
Common Stock for the purpose of entitling them to purchase shares of its
Common Stock at a price per share more than 10% below the then-current
market price per share (as defined below) of its Common Stock at the date
of taking such record, then (i) the number of shares of Common Stock
purchasable pursuant to the Warrants shall be redetermined as follows: the
number of shares of Common Stock purchasable pursuant to a Warrant
immediately prior to such adjustment (taking into account fractional
interests to the nearest 1,000th of a share) shall be multiplied by a
fraction, the numerator of which shall be the number of shares of Common
Stock of the Company then outstanding (excluding the Common Stock then
owned by the Company) immediately prior to the taking of such record, plus
the number of additional shares offered for purchase, and the denominator
of which shall be the number of shares of Common Stock of the Company
outstanding (excluding the Common Stock owned by the Company) immediately
prior to the taking of such record, plus the number of shares which the
aggregate offering price of the total number of additional shares so
offered would purchase at such current market price; and (ii) the Exercise
Price per share of Common Stock purchasable pursuant to a Warrant shall be
redetermined as follows: the Exercise Price in effect immediately prior to
the taking of such record shall be multiplied by a fraction, the numerator
of which is the number of shares of Common Stock purchasable immediately
prior to the taking of such record, and the denominator of which is the
number of shares of Common Stock purchasable immediately after the taking
of such record as determined pursuant to clause (i) above. For the purpose
hereof, the current market price per share of Common Stock of the Company
at any date shall be deemed to be the average of (A) the highest bid and
asked prices as reported by NASDAQ if the Common Stock of the Company is
admitted to listing for trading thereon, or (B) the highest bid and asked
prices reported on the OTC Electronic Bulletin Board of the NASD, for 30
consecutive business days commencing 15 business days prior to the record
date.
E. On exercise of the Warrants by the holders, the Company shall not
be required to deliver fractions of shares of Common Stock; provided,
however, that prompt, proportionate, equitable, lawful and adequate
adjustment in the Exercise Price payable shall be made in respect of any
such fraction of one share of Common Stock on the basis of the Exercise
Price per share.
F. In the event, prior to expiration of the Warrants by exercise or by
their terms, the Company shall determine to take a record of the holders of
its Common Stock for the purpose of determining shareholders entitled to
receive any stock dividend, distribution or other right which will cause
any change or adjustment in the number, amount, price or nature of the
Common Stock or other stock, securities or assets deliverable on exercise
of the Warrants pursuant to the foregoing provisions, the Company shall
give to the Registered Holders of the Warrants at the addresses as may
appear on the books of the Company at least 15 days' prior written notice
to the effect that it intends to take such a record. Such notice shall
specify the date as of which such record is to be taken; the purpose for
which such record is to be taken; and the number, amount, price and nature
of the Common Stock or other stock, securities or assets which will be
deliverable on exercise of the Warrants after the action for which such
record will be taken has been completed. Without limiting the obligation
of the Company to provide notice to the Registered Holders of the Warrant
Certificates of any corporate action hereunder, the failure of the Company
to give notice shall not invalidate such corporate action of the Company.
G. The Warrant shall not entitle the holder thereof to any of the
rights of shareholders or to any dividend declared on the Common Stock,
unless the Warrant is exercised and the Warrant Shares purchased prior to
the record date fixed by the Board of Directors of the Company for the
determination of holders of Common Stock entitled to such dividend or other
right.
H. No adjustment of the Exercise Price shall be made as a result of,
or in connection with, (i) the establishment of one or more employee stock
option plans for employees of the Company, or the modification, renewal or
extension of any such plan, or the issuance of Common Stock on exercise of
any options pursuant to any such plan, (ii) the issuance of individual
warrants or options to purchase Common Stock, the issuance of Common Stock
upon exercise of such warrants or options, or the issuance of Common Stock
in connection with compensation arrangements for directors, officers,
employees, consultants or agents of the Company or any Subsidiary, and the
like, or (iii) the issuance of Common Stock in connection with a merger,
acquisition of a going business or a portion thereof (whether for cash,
stock, notes, other securities, or a combination of cash and securities),
exchange of stock for stock, exchange of stock for assets, or like
transaction.
10. Duties, Compensation and Termination of Warrant Agent. The Warrant
Agent shall act hereunder as agent and in a ministerial capacity for the
Company, and its duties shall be determined solely by the provisions
hereof. The Warrant Agent shall not, by issuing and delivering Warrant
Certificates or by any other act hereunder, be deemed to make any
representations as to the validity, value or authorization of the Warrant
Certificates or the Warrants represented thereby or of the Common Stock or
other property delivered on exercise of any Warrant. The Warrant Agent
shall not be under any duty or responsibility to any holder of the Warrant
Certificates to make or cause to be made any adjustment of the Exercise
Price or to determine whether any fact exists which may require any such
adjustments.
The Warrant Agent shall not (i) be liable for any recital or statement of
fact contained herein or for any action taken or omitted by it in reliance
on any Warrant Certificate or other document or instrument believed by it
in good faith to be genuine and to have been signed or presented by the
proper party or parties, (ii) be responsible for any failure on the part of
the Company to comply with any of its covenants and obligations contained
in this Agreement or in the Warrant Certificates, or (iii) be liable for
any act or omission in connection with this Agreement, except for its own
negligence or willful misconduct.
The Warrant Agent may, at any time, consult with counsel satisfactory to
it (who may be counsel for the Company) and shall incur no liability or
responsibility for any action taken or omitted by it in good faith in
accordance with such notice, statement, instruction, request, direction,
order or demand.
Any notice, statement, instruction, request, direction, order or demand
of the Company shall be sufficiently evidenced by an instrument signed by
its President and attested by its Secretary or Assistant Secretary. The
Warrant Agent shall not be liable for any action taken or omitted by it in
accordance with such notice, statement, instruction, request, direction,
order or demand.
The Company agrees to pay the Warrant Agent compensation for its services
hereunder and to reimburse the Warrant Agent for its reasonable expenses in
accordance with the terms of Exhibit "B" attached hereto and incorporated
herein by this reference. The Company further agrees to indemnify the
Warrant Agent against any and all losses, expenses and liabilities,
including judgments, costs and counsel fees, for any action taken or
omitted by the Warrant Agent in the execution of its duties and powers
hereunder, excepting losses, expenses and liabilities arising as a result
of the Warrant Agent's negligence or willful misconduct.
The Warrant Agent may resign its duties or the Company may terminate the
Warrant Agent and the Warrant Agent shall be discharged from all further
duties and liabilities hereunder (except liabilities arising as a result of
the Warrant Agent's own negligence or willful misconduct) on 30 days' prior
written notice to the other party. At least 15 days prior to the date such
resignation is to become effective, the Warrant Agent shall cause a copy of
such notice of resignation to be mailed to the Registered Holder of each
Warrant Certificate. On such resignation or termination, the Company shall
appoint a new Warrant Agent. If the Company shall fail to make such
appointment within a period of 30 days after it has been notified in
writing of the resignation by the Warrant Agent, then the Registered Holder
of any Warrant Certificate may apply to any court of competent jurisdiction
for the appointment of a new Warrant Agent. Any new Warrant Agent, whether
appointed by the Company or by such court, shall be a bank or trust company
having a capital and surplus, as shown by its last published report to its
shareholders, of not less than $1,000,000.
After acceptance in writing of an appointment of a new Warrant Agent is
received by the Company, such new Warrant Agent shall be vested with the
same powers, rights, duties and responsibilities as if it had been
originally named herein as the Warrant Agent, without any further
assurance, conveyance, act or deed; provided, however, if it shall be
necessary or expedient to execute and deliver any further assurance,
conveyance, act or deed, the same shall be done at the expense of the
Company and shall be legally and validly executed. The Company shall file a
notice of appointment of a new Warrant Agent with the resigning Warrant
Agent and shall forthwith cause a copy of such notice to be mailed to the
Registered Holder of each Warrant Certificate.
Any corporation into which the Warrant Agent or any new Warrant Agent may
be converted or merged, or any corporation resulting from any consolidation
to which the Warrant Agent or any new Warrant Agent shall be a party, or
any corporation succeeding to the corporate trust business of the Warrant
Agent shall be a successor Warrant Agent under this Agreement, provided
that such corporation is eligible for appointment as a successor to the
Warrant Agent. Any such successor Warrant Agent shall promptly cause
notice of its succession as Warrant Agent to be mailed to the Company and
to the Registered Holder of each Warrant Certificate. No further action
shall be required for establishment and authorization of such successor
Warrant Agent.
The Warrant Agent, its officers or directors and its subsidiaries or
affiliates may buy, hold or sell Warrants or other securities of the
Company and otherwise deal with the Company in the same manner and to the
same extent and with like effect as though it were not the Warrant Agent.
Nothing herein shall preclude the Warrant Agent from acting in any other
capacity for the Company.
11. Modification of Agreement. The Warrant Agent and the Company may,
by supplemental agreement, make any changes or corrections in this
Agreement they shall deem appropriate to cure any ambiguity or to correct
any defective or inconsistent provision or mistake or error herein
contained. Additionally, the parties may make any changes or corrections
deemed necessary which shall not adversely affect the interests of the
holders of Warrant Certificates; provided, however, this Agreement shall
not otherwise be modified, supplemented or altered in any respect, except
with the consent in writing of the Registered Holders of Warrant
Certificates representing not less than 66 2/3% of the Warrants
outstanding; provided, however, that no change in the number or nature of
the Warrant Shares purchasable on exercise of a Warrant, or the Exercise
Price or the Exercise Period thereof shall be made without the consent, in
writing, of the Registered Holder of the Warrant Certificate representing
such Warrant, other than such changes as are specifically prescribed by
this Agreement.
12. Notices. All notices, demands, elections, opinions or requests
(however characterized or described) required or authorized hereunder shall
be deemed given sufficiently in writing and sent via a nationally
recognized overnight courier service, by registered or certified mail,
return receipt requested and postage prepaid, or by facsimile to:
in the case of the Company: USURF America, Inc.
Attention: David M. Loflin
8748 Quarters Lake Road
Baton Rouge, Louisiana 70809
Facsimile: (225) 922-9123
with a copy to: Newlan & Newlan
Attorneys at Law
819 Office Park Circle
Lewisville, Texas 75057
Facsimile: (972) 353-3880
and, in the case of the
Warrant Agent: Securities Transfer Corporation
Attention: Kevin Halter, Jr.
16910 Dallas Parkway, Suite 100
Dallas, Texas 75248
Facsimile: (972) 447-9890
and, if to the Registered Holder of a Warrant Certificate, at the
address of such holder as set forth on the books maintained by the Warrant
Agent.
13. Persons Benefitting. This Agreement shall be binding upon and inure
to the benefit of the Company, the Warrant Agent and their respective
successors and assigns, and the holders from time to time of the Warrant
Certificates. Nothing in this Agreement is intended to or shall be
construed to confer on any other person any right, remedy or claim or to
impose on any other person any duty, liability or obligation.
14. Further Instruments. The parties shall execute and deliver any and
all such other instruments and shall take any and all such other actions as
may be reasonable or necessary to carry out the intention of this Agreement.
15. Severability. If any provision of this Agreement shall be held,
declared or pronounced void, voidable, invalid, unenforceable or
inoperative for any reason by any court of competent jurisdiction,
government authority or otherwise, such holding, declaration or
pronouncement shall not affect adversely any other provision of this
Agreement, which shall otherwise remain in full force and effect and be
enforced in accordance with its terms, and the effect of such holding,
declaration or pronouncement shall be limited to the territory or
jurisdiction in which made.
16. Waiver. All the rights and remedies of either party under this
Agreement are cumulative and not exclusive of any other rights and remedies
as provided by law. No delay or failure on the part of either party in the
exercise of any right or remedy arising from a breach of this Agreement
shall operate as a waiver of any subsequent right or remedy arising from a
subsequent breach of this Agreement. The consent of any party where
required hereunder to any act or occurrence shall not be deemed to be a
consent to any other act or occurrence.
17. General Provisions. This Agreement shall be construed and enforced
in accordance with, and governed by, the laws of the State of Texas.
Except as otherwise expressly stated herein, time is of the essence in
performing hereunder. This Agreement embodies the entire agreement and
understanding between the parties and supersedes all prior agreements and
understandings relating to the subject matter hereof, and this Agreement
may not be modified or amended or any term or provision hereof waived or
discharged except in writing signed by the party against whom such
amendment, modification, waiver or discharge is sought to be enforced. The
headings of this Agreement are for convenience of reference only and shall
not limit or otherwise affect the meaning thereof. This Agreement may be
executed in any number of counterparts, each of which shall be deemed an
original, but all of which taken together shall constitute one and the same
instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above-mentioned.
USURF AMERICA, INC.
By: /s/ David M. Loflin
David M. Loflin, President
SECURITIES TRANSFER CORPORATION
By: /s/ Kevin Halter, Jr.
Kevin Halter, Jr., President
- -------------
EXHIBIT 10.75
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EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is made by and between USURF
America, Inc., a duly organized Nevada corporation ("Employer"), and
Christopher L. Wiebelt, a resident of the State of Louisiana ("Employee").
W I T N E S S E T H:
WHEREAS, Employer is in need of persons with expertise in corporate finance
and accounting systems; and
WHEREAS, Employee has a substantial amount of expertise in corporate
finance and accounting systems; and
WHEREAS, Employee is willing to be employed by Employer, and Employer is
willing to employ Employee, on the terms, covenants and conditions
hereinafter set forth; and
WHEREAS, Employer and its affiliates have accumulated valuable and
confidential information, including, without limitation, trade secrets and
know-how relating to technology, equipment, marketing plans, acquisition
plans, sources of supply, business strategies and other business records; and
WHEREAS, the giving of the covenants contained herein is a condition
precedent to the employment of Employee by Employer and Employee
acknowledges that the execution of this Agreement and the entering into of
these covenants is an express condition of his employment by Employer and
that said covenants are given in consideration for such employment and the
other benefits conferred upon him by this Agreement; and
NOW, THEREFORE, in consideration of such employment and other valuable
consideration, the receipt and adequacy of which is hereby acknowledged,
Employer and Employee hereby agree as follows:
SECTION I. EMPLOYMENT OF EMPLOYEE
Employer hereby employs, engages and hires Employee as Vice President Finance
and Chief Financial Officer of Employer, and Employee hereby
accepts and agrees to such hiring, engagement and employment, subject to
the general supervision and pursuant to the orders, advice and direction of
the Board of Directors of Employer. Employee shall perform duties as are
customarily performed by one holding such position in other, same or
similar businesses or enterprises as that engaged in by Employer, and shall
also additionally render such other and unrelated services and duties as
may be assigned to him from time to time by Employer.
Employee shall devote his full-time efforts to the performance of his
duties as Vice President Finance and Chief Financial Officer of Employer.
SECTION II. EMPLOYEE'S PERFORMANCE
Employee hereby agrees that he will, at all times, faithfully,
industriously and to the best of his ability, experience and talents,
perform all of the duties that may be required of and from him pursuant to
the express and implicit terms hereof, to the reasonable satisfaction of
Employer.
SECTION III. COMPENSATION OF EMPLOYEE
Employer shall pay Employee, and Employee shall accept from Employer, in
full payment for Employee's services hereunder, compensation as follows:
A. Bonus. In consideration of Employee's executing this Employment
Agreement, Employer shall issue to Employee, as a bonus, 7,500 shares of
its $.0001 par value common stock. It is agreed by Employer and Employee
that such bonus shares shall be valued at the average of the bid and asked
prices for Employer's common stock, as reported by the American Stock
Exchange, on the day immediately preceding the mutual execution of this
Employment Agreement.
B. Salary. Employee shall be paid as and for a salary the sum of
$75,000 per year, which salary shall be payable in equal installments on
the 1st and 15th days of each calendar month, in arrears, subject to
deduction of all lawful and required withholding.
C. Insurance and Other Benefits. As further consideration for the
covenants contained herein, Employer will provide Employee with such
insurance, welfare, sick leave and other benefits as may be established by
Employer from time to time with respect to its employees in accordance with
Employer's established procedures. Employee shall be entitled to
Directors' and Officers' indemnification insurance coverage to the same
extent as is provided to other persons employed as officers of Employer.
D. Other Compensation Plans. Employee shall be entitled to participate,
to the same extent as is provided to other persons employed by Employer, in
any future stock bonus plan, stock option plan or employee stock ownership
plan of Employer.
E. Expenses. It is acknowledged that, during the term of employment,
Employee will be required to incur ordinary and necessary business expenses
on behalf of Employer in connection with the performance of his duties
hereunder. Employer shall reimburse Employee promptly the amount of all
such expenses upon presentation of itemized vouchers or other evidence of
those expenditures. Any single expense item in excess of $500.00 shall be
approved by Employer prior to the incurrence of such expense.
F. Vacations. Employee shall be entitled to three (3) weeks paid
vacation each year for the term of this Agreement. Such vacations shall be
taken at such times as Employer designates as to time-of-year. Vacation
time can be accumulated year-to-year up to three years maximum.
SECTION IV. COMPANY POLICIES
Employee agrees to abide by the policies, rules, regulations or usages
applicable to Employee as established by Employer from time to time and
provided to Employee in writing.
SECTION V. CONFIDENTIALITY AGREEMENT; NON-COMPETITION AGREEMENT
A. In consideration of Employer's executing this Agreement, Employee
shall have executed, prior to the execution of this Agreement, a
Confidentiality Agreement (the "Confidentiality Agreement"), in the form
attached hereto as Exhibit "A".
B. In consideration of Employer's executing this Agreement, Employee
agrees, effective as of the date hereof, to sign and be bound by the
obligations of an Agreement Not to Compete (the "Non-Competition
Agreement"), in the form attached hereto as Exhibit "B".
C. The obligations under the Confidentiality Agreement and the
Non-Competition Agreement shall survive the termination of this Agreement.
SECTION VI. RELEASE
In the event Employee becomes entitled to payment pursuant to Section
VII(B) hereof, Employee shall, as a condition to such payments being made,
execute and deliver to Employer a general release in such form as is
reasonably satisfactory to Employer.
SECTION VII. TERM AND TERMINATION
A. Term. The term of this Agreement shall be a period of three years,
commencing on the date hereof. At the expiration date, this Agreement
shall be renewed for additional one-year periods, provided neither party
hereto submits a written notice of termination within sixty (60) days prior
to the termination of either the initial term hereof or any renewal term.
B. Termination. Employer agrees not to terminate this Agreement except
for "just cause", and agrees to give Employee written notice of its belief
that acts or events constituting "just cause" exist. Employee has the
right to cure, within thirty (30) days of Employer's giving of such notice,
the acts, events or conditions which led to Employer's notice. For
purposes of this Agreement, "just cause" shall mean (1) the willful failure
or refusal of Employee to implement or follow the written policies or
directions of Employer's Board of Directors, provided that Employee's
failure or refusal is not based upon Employee's belief in good faith, as
expressed to Employer in writing, that the implementation thereof would be
unlawful; (2) conduct which is inconsistent with Employee's position with
Employer and which results in a material adverse effect (financial or
otherwise) or misappropriation of assets of Employer; (3) conduct which
violates the provisions contained in the Confidentiality Agreement or the
Non-Competition Agreement; (4) the intentional causing of material damage
to Employer's physical property; and (5) any act involving personal
dishonesty or criminal conduct against Employer.
Although Employer retains the right to terminate Employee for any reason
not specified above, Employer agrees that if it discharges Employee for any
reason other than just cause, as is solely defined above, Employee will be
entitled to full compensation, including participation in all benefit
programs, for six (6) months or the remainder of the current term, original
or renewal, as the case may be, of employment, whichever is more.
If Employee should cease his employment hereunder voluntarily for any
reason, or is terminated for just cause, all compensation and benefits
payable to Employee shall thereupon, without any further writing or act,
cease, lapse and be terminated. However, all defined compensation,
benefits and reimbursements which accrued prior to Employee's ceasing
employment or termination, will become immediately due and payable.
Should Employee voluntarily cease his employment, Employee retains the
right to participate for the period of this Agreement in Employee's medical
insurance plan and will be responsible for 100% of the cost of participation.
SECTION VIII. COMPLETE AGREEMENT
This Agreement contains the complete agreement concerning the employment
arrangement between the parties hereto and shall, as of the effective date
hereof, supersede all other agreements between the parties. The parties
hereto stipulate that neither of them has made any representation with
respect to the subject matter of this Agreement or any representations
including the execution and delivery hereof, except such representations as
are specifically set forth herein and each of the parties hereto
acknowledges that he or it has relied on his or its own judgment in
entering into this Agreement. The parties hereto further acknowledge that
any payments or representations that may have heretofore been made by
either of them to the other are of no effect and that neither of them has
relied thereon in connection with his or its dealings with the other.
SECTION IX. WAIVER; MODIFICATION
The waiver by either party of a breach or violation of any provision of
this Agreement shall not operate as, or be construed to be, a waiver of any
subsequent breach hereof. No waiver or modification of this Agreement or
of any covenant, condition or limitation herein contained shall be valid
unless in writing and duly executed by the party to be charged therewith
and no evidence of any waiver or modification shall be offered or received
in evidence of any proceeding or litigation between the parties hereto
arising out of, or affecting, this Agreement, or the rights or obligations
of the parties hereunder, unless such waiver or modification is in writing,
duly executed as aforesaid, and the parties further agree that the
provisions of this Section IX may not be waived except as herein set forth.
SECTION X. SEVERABILITY
All agreements and covenants contained herein are severable, and in the
event any one of them, with the exception of those contained in Sections I,
III, IV and V hereof, shall be held to be invalid in any proceeding or
litigation between the parties, this Agreement shall be interpreted as if
such invalid agreements or covenants were not contained herein.
SECTION XI. NOTICES
Any and all notices will be sufficient if furnished in writing, sent by
registered mail to his last known residence, in case of Employee, or, in
case of Employer, to its principal office address.
SECTION XII. CORPORATE AUTHORITY OF EMPLOYER
The execution of this Agreement by Employer has been approved by the
Executive Committee of the Board of Directors of Employer have been so
approved and authorized.
SECTION XIII. REPRESENTATIONS OF EMPLOYEE
Employee hereby represents to Employer:
A. No Legal Disability. Employee is under no legal disability with
respect to his entering into this Agreement.
B. Receipt of Disclosure. Employee hereby represents and warrants that
he has received and reviewed (1) Employer's Annual Report on Form 10-KSB,
as filed with the Securities and Exchange Commission ("SEC"), (2)
Employer's Quarterly Reports on Form 10-QSB, as filed with the SEC, (3)
Employer's Current Reports on Form 8-K, as amended and as filed with the
SEC. With respect to such information, Employee further represents and
warrants that he has had an opportunity to ask questions of, and to receive
answers from, the officers of Employer.
C. Representations Relating to Employer Common Stock. Employee
represents and warrants to Employer that the shares of Employer common
stock being acquired pursuant to this Employment Agreement are being
acquired for his own account and for investment and not with a view to the
public resale or distribution of such shares and further acknowledges that
the shares being issued have not been registered under the Securities Act
or any state securities law and are "restricted securities", as that term
is defined in Rule 144 promulgated by the SEC, and must be held
indefinitely, unless they are subsequently registered or an exemption from
such registration is available.
D. Consent to Legend. Employee consents to the placement of a legend
restricting future transfer on the share certificates representing the
Employer common stock delivered hereunder, which legend shall be in the
following, or similar, form:
"THE STOCK REPRESENTED BY THIS CERTIFICATE HAS BEEN ISSUED IN RELIANCE UPON
THE EXEMPTION FROM REGISTRATION AFFORDED BY SECTION 4(2) OF THE SECURITIES
ACT OF 1933, AS AMENDED. THE STOCK MAY NOT BE TRANSFERRED WITHOUT
REGISTRATION EXCEPT IN TRANSACTIONS EXEMPT FROM SUCH REGISTRATION."
SECTION XIV. COUNTERPARTS
This Agreement may be executed in duplicate counterparts, each of which
shall be deemed an original and, together, shall constitute one and the
same agreement, with one counterpart being delivered to each party hereto.
SECTION XV. BENEFIT
The provisions of this Agreement shall extend to the successors, surviving
corporations and assigns of Employer and to any purchaser of substantially
all of the assets and business of Employer. The term "Employer" shall be
deemed to include Employer, any joint venture, partnership, limited
liability company, corporation or other juridical entity, in which Employer
shall have an interest, financial or otherwise.
SECTION XVI. ARBITRATION
The parties agree that any dispute arising between them related to this
Agreement or the performance hereof shall be submitted for resolution to
the American Arbitration Association for arbitration in the Dallas, Texas,
office of the Association under the then-current rules of arbitration. The
Arbitrator or Arbitrators shall have the authority to award to the
prevailing party its reasonable costs and attorneys fees. Any award of the
Arbitrators may be entered as a judgment in any court competent jurisdiction.
Notwithstanding the provisions contained in the foregoing paragraph, the
parties hereto agree that Employer may, at its election and without
delivering the notice to Employee required in Section VII(B) hereof, seek
injunctive or other equitable relief from a court of competent jurisdiction
for a violation or violations by Employee of the Confidentiality Agreement
or the Non-Competition Agreement.
SECTION XVII. LEGAL REPRESENTATION
Employer and Employee both acknowledge that each has utilized separate
legal counsel with respect to this Agreement. Specifically, Employee
acknowledges that the law firm of Newlan & Newlan has drafted this
Agreement on behalf of Employer. EMPLOYEE IS ADMONISHED TO SEEK HIS OWN
LEGAL COUNSEL.
SECTION XVIII. GOVERNING LAW
It is the intention of the parties hereto that this Agreement and the
performance hereunder and all suits and special proceedings hereunder be
construed in accordance with and under and pursuant to the laws of the
State of Louisiana, and that, in any action, special proceeding or other
proceeding that may be brought arising out of, in connection with or by
reason of this Agreement, the laws of the State of Louisiana shall be
applicable and shall govern to the exclusion of the law of any other forum,
without regard to the jurisdiction in which any such action or special
proceeding may be instituted.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the 15th day of February, 2000.
USURF AMERICA , INC.
By: /s/ David M. Loflin
David M. Loflin
President
/s/ Christopher L. Wiebelt
Christopher L. Wiebelt
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EXHIBIT 10.76
- -------------
February 15, 2000
USURF America, Inc.
8748 Quarters Lake Road
Baton Rouge, Louisiana 70809
Re: Confidentiality Agreement
Gentlemen:
In connection with the execution of an employment agreement (the
"Employment Agreement") between the undersigned and USURF America, Inc.
(together with affiliates, the "Company"), the Company will furnish to the
undersigned certain information concerning its business, financial
position, operations, business contacts, assets and liabilities, as well as
certain items of equipment useful in the Wireless Internet access business.
As a condition to such information's being furnished to the undersigned
and as a condition to the undersigned's entering into an employment
agreement with the Company, the undersigned agrees to treat any information
concerning the Company (whether prepared by the Company, its advisors, or
otherwise, and irrespective of the form of communication) which is
furnished to the undersigned now or in the future by or on behalf of the
Company (together with the material described below, herein collectively
referred to as the "Confidential Material") in accordance with the
provisions of this letter agreement, and to take or abstain from taking
certain other actions hereinafter set forth.
The undersigned understands that the term "Confidential Material" also
includes all notes, analysis, compilations, studies, interpretations or
other documents prepared by the Company or its representatives which
contain, reflect or are based upon, in whole or in part, the information
furnished to the undersigned. The term "Confidential Material" does not
include information which (A) is or becomes generally available to the
public other than as a result of a disclosure by the undersigned, or (B)
was lawfully within the undersigned's possession prior to its being
furnished to the undersigned by or on behalf of the Company, provided that
the source of such information was not known by the undersigned to be bound
by a confidentiality agreement with, or other contractual, legal or
fiduciary obligation of confidentiality to, the Company or any other party
with respect to such information, or (C) is disclosed to the undersigned by
a third party, provided that such third party was not known by the
undersigned to be bound by a confidentiality agreement with, or other
contractual, legal or fiduciary obligation of confidentiality to, the
Company or any other party with respect to such information.
The undersigned hereby agrees that he will use the Confidential Material
solely in connection with the undersigned's performance of his duties under
the employment agreement, that the Confidential Material will be kept
confidential and that the undersigned will not disclose any of the
Confidential Material in any manner whatsoever.
The undersigned hereby agrees that he shall not reverse engineer, reverse
assemble or otherwise attempt to recreate or duplicate any model or working
model capable of performing the functions of any portion or all of the
Company's Wireless Internet access system included in the Confidential
Material.
In addition, the undersigned agrees that, without the prior written consent
of the Company, the undersigned will not disclose to any other person the
fact that the Confidential Material has been made available to the
undersigned, that discussions or negotiations are taking place concerning a
possible transaction involving the Company, or any of the terms, conditions
or other facts with respect thereto (including the status thereof), unless,
in the opinion of the undersigned's counsel, such disclosure must be made
by the undersigned in order that the undersigned not commit a violation of
law. The term "person" as used in this letter agreement shall be broadly
interpreted to include the media and any corporation, partnership, group,
individual or other entity, but shall not include the Securities and
Exchange Commission or the Federal Trade Commission as to any required
filing with either such agency.
In the event that the undersigned is requested or required (by oral
questions, interrogatories, requests for information or documents in legal
proceedings, subpoena, civil investigative demand or other similar process)
to disclose any of the Confidential Material, the undersigned will provide
the Company with prompt written notice of any such request or requirement
so that the Company may seek a protective order or other appropriate remedy
and/or waive compliance with the provisions of this letter agreement. If,
in the absence of a protective order or other remedy or the receipt of a
waiver by the Company, the undersigned is, nonetheless, in the opinion of
counsel, legally compelled to disclose Confidential Material, the
undersigned may, without liability hereunder, disclose only that portion of
the Confidential Material specifically required by an order of Court.
Additionally, the undersigned shall make every reasonable effort and take
every reasonable action, including, without limitation, by cooperating with
the Company, to obtain an appropriate protective order or other reliable
assurance that confidential treatment will be accorded the Confidential
Material.
Upon termination of the Employment Agreement or at any time upon the
request of the Company, the undersigned will promptly deliver to the
Company or certify destruction of, at the Company's direction, all
Confidential Material (and all copies thereof) furnished to the undersigned
by or on behalf of the Company pursuant hereto. All oral Confidential
Material provided to the undersigned shall continue to be held confidential
hereunder. Notwithstanding the return or destruction of the Confidential
Material, the undersigned will continue to be bound by obligations of
confidentiality hereunder.
The undersigned agrees that the Company, without prejudice to any rights to
judicial relief he may otherwise have, shall be entitled to equitable
relief, including injunctive relief and specific performance, in the event
of any breach of the provisions of this letter agreement and that the
undersigned will not oppose the granting of such relief. The undersigned
also agrees that he will not seek and agrees to waive any requirement for
the securing and posting of a bond in connection with the Company's seeking
or obtaining such relief. In the event of litigation relating to this
letter agreement, if a court of competent jurisdiction determines that the
undersigned has breached this letter agreement, then the undersigned will
be liable to pay to the Company the reasonable legal fees incurred in
connection with such litigation, including any appeal therefrom. Also, in
the event a court of competent jurisdiction determines that the undersigned
has not breached this letter agreement, then the Company will be liable to
pay to the undersigned the reasonable legal fees incurred in connection
with such litigation, including any appeal therefrom.
This letter agreement is for the benefit of the Company, and shall be
construed (both as to validity and performance) and enforced in accordance
with, and governed by, the laws of the State of Louisiana applicable to
agreements made and to be performed wholly within such jurisdiction. This
letter agreement shall remain in full force and effect until terminated by
the Company.
Please confirm your agreement with the foregoing by signing and returning
one copy of this letter to the undersigned whereupon this letter agreement
shall become a binding agreement.
Very truly yours,
/s/ Christopher L. Wiebelt
Christopher L. Wiebelt
AGREED AND ACCEPTED as
of the date first written above:
USURF AMERICA, INC.
By: /s/ David M. Loflin
David M. Loflin
President
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EXHIBIT 10.77
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AGREEMENT NOT TO COMPETE
THIS AGREEMENT NOT TO COMPETE is entered into by and between USURF America,
Inc., a Nevada corporation ("Employer"), and Christopher L. Wiebelt
("Employee").
WHEREAS, Employee is employed by Employer as Vice President Finance and
Chief Financial Officer, pursuant to an employment agreement (the
"Employment Agreement"); and
WHEREAS, as a condition to such employment, Employee has agreed to sign and
be bound by this Agreement Not to Compete; and
NOW, THEREFORE, the parties agree as follows:
Section 1. Covenant Not to Compete. Employee acknowledges that, as a
key management employee of Employer, Employee will be involved, on a high
level, in the development, implementation and management of the national
and international business strategies and plans of Employer, which shall
consist of Employer and such other business units, divisions, subsidiaries
or other entities of Employer as Employer shall determine in its sole
discretion from time to time. By virtue of Employee's unique and sensitive
position and special background, employment of Employee by a competitor of
Employer represents a serious competitive danger to Employer, and the use
of Employee's talent and knowledge and information about Employer's
business, strategies and plans can and would constitute a valuable
competitive advantage over Employer. In view of the foregoing, Employee
covenants and agrees that, if (i) Employee's employment with Employer is
terminated for any reason at any time for just cause or (ii) if Employee
voluntarily resigns from his employment with Employer, then, for a period
of one year after the date of such termination, Employee will not engage or
be engaged as, in any capacity, directly or indirectly, including, but not
limited to, employee, agent, consultant, manager, executive, owner or
stockholder (except as a passive investor holding less than 1% equity
interest in any enterprise the securities of which are publicly traded) in
any business entity engaged in competition with any business conducted by
Employer on the date of termination. This Agreement Not to Compete shall
survive the termination or expiration of the Employment Agreement. If any
court determines that this Agreement Not to Compete, or any part hereof, is
unenforceable because the duration or geographic scope of such provision,
such court shall have the power to reduce the duration or scope of such
provision, as the case may be, and, in its reduced form, such provision
shall then be enforceable.
For purposes of this Agreement, "just cause" shall have the same meaning
as set forth in Section VII(B) of the Employment Agreement of even date
between the parties.
Section 2. Continuing Obligations. Employee agrees that, for one year
following (i) his termination of employment with Employer for just cause or
(ii) his resignation as an employee of Employer, Employee shall keep
Employer informed of the identification of Employee's employer and the
nature of such employment or of Employee's self-employment. Employer
agrees that, within fifteen days after receiving notice pursuant to this
Section 2 of the identification of the prospective employer, the nature of
the employment or self-employment or any change therein, Employer will
advise Employee as to whether such employment constitutes a violation of
Section 1 hereof.
Section 3. Injunctive Relief. Employee acknowledges that the violation
of the covenants contained in this Agreement would be detrimental and cause
irreparable injury to Employer and its affiliates which could not be
compensated by money damages. Employee agrees that an injunction from a
court of competent jurisdiction is the appropriate remedy for these
provisions, and consents to the entry of an appropriate judgment enjoining
Employee from violating these provisions in the event there is a find of
their breach.
Section 4. Severability of Covenants. Each of the covenants contained
in this Agreement are independent covenants, which may be available to or
relied upon by Employer and its affiliates in any court of competent
jurisdiction. If any one of the separate and independent covenants shall
be deemed to be unenforceable under the laws of any state of competent
jurisdiction, each of the remaining covenants shall not be affected
thereby. Notwithstanding the provisions of this Section 4, it is
understood that every benefit received by Employee by virtue of this
Agreement is consideration for each separate covenant contained herein.
Section 5. Governing Law. This Agreement shall be governed by the laws
of the State of Louisiana.
Section 6. Other Remedies. The undertakings herein shall not be
construed as any limitation upon the remedies Employer might, in the
absence of this Agreement, have at law or in equity.
INTENDING to be legally bound hereby, Employer and Employee hereby duly
execute this Agreement Not to Compete on the date indicated below.
USURF AMERICA, INC.
Date: February 15, 2000 By: /s/ David M. Loflin
David M. Loflin
President
Date: February 15, 2000 /s/ Christopher L. Wiebelt
Christopher L. Wiebelt
- -------------
EXHIBIT 10.78
- -------------
MANAGEMENT/FINANCIAL CONSULTING AGREEMENT
This Management/Financial Consulting Agreement (the "Agreement") is made
and entered into this 25th day of March, 2000, by and between Fair Market,
Inc., a Colorado Corporation (the "Company"), whose principal place of
business is 9745 East Hampden Avenue, Suite 440, Denver, CO 80231 and USURF
America, Inc. (the "Client") whose principal place of business is 8748
Quarters Lake Road, Baton Rouge, LA 70809.
WHEREAS:
1. The Consultant is willing and capable of providing on a "best efforts"
basis various consulting and financial advisory services for and on behalf
of the client.
2. The Client desires to retain the Consultant as an independent
consultant and the Consultant to be retained in that capacity upon the
terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and mutual covenants set
forth herein, it is agreed as follows:
1. Services. The Client hereby retains Consultant as a consultant and
consultant shall provide to the Company, when requested by the Client from
time to time, during normal hours, business consultation services
concerning, but not limited to, advisory services relative to interactions
with the investment community, the evaluation and structure of financings,
corporate reorganizations and expansion, and possible acquisition
opportunities relative to its capital structure.
2. Time, Place and Manner of Performance. The Consultant shall be
available for advice and counsel to the officers and directors of the
Client at such reasonable and convenient times and places as may be
mutually agreed upon. Exdept as aforesaid, the time, place and manner of
performance of the services hereunder, including the amount of time to be
allocated by the Consultant to any specific service, shall be determined in
the sole discretion of the Consultant.
3. Term of Agreement. The term of this Agreement shall be six (6)
months, commencing March 25th, 2000, and terminating on September 25th, 2000.
4. Compensation. In consideration of the services to be provided for
the Client by the Consultant, the Client hereby agrees to compensate the
consultant as follows:
A. On March 25th, 2000 the Client agrees to issue to the Consultant
100,000 shares of the client's $.0001 par value common stock. These shares
are to be registered as part of the Client's current registration
statement. The Client agrees to issue said shares to the Consultant or in
lieu thereof or in addition thereto, any person(s) whose names are
furnished to the Client on or prior to ninety (90) days after the date this
agreement.
5. Expenses. The Client shall reimburse the Consultant on demand for
all expenses and other disbursements, including but not limited to travel,
entertainment, mailing, printing and postage, incurred by the Consultant on
behalf of the Client in connection with the performance of the consulting
services pursuant to this Agreement. Monthly expenses and disbursements in
excess of $400.00 shall have the Client's prior approval.
6. Work Products. It is agreed that, prior to public distribution, all
information and materials produced for the Client shall be property of the
Consultant, free and clear of any claims thereto by the Client, and the
Client shall retain no claim of authorship therein.
7. Disclosure of Information. The Consultant recognizes and
acknowledges that it has and will have access to certain confidential
information of the client and its affiliates that are valuable, special and
unique assets and property of the Client and such affiliates. The
Consultant will not, during or after the term of the Agreement, disclose,
without prior written consent or authorization of the Client, any of such
information to any person, except to authorized representatives of the
Consultant or its affiliates, for any reason or purpose whatsoever. In
this regard, the Client agrees that such authorization or consent to
disclosure being made pursuant a secrecy agreement, protective order,
provision of statute, rule, regulation or procedure under which the
confidentiality of the information is maintained in the hands of the person
to whom the information is to be disclosed or in compliance with the terms
of a judicial order or administrative process.
8. Nature of Relationship. It is understood and acknowledged by the
parties that the Consultant is being retained by the Client in an
independent capacity and that in this connection, the Consultant hereby
agrees, except as provided in paragraph 4, herein above or unless the
Client shall have otherwise consented in writing, not to enter into any
agreement or incur any obligation on behalf of the client.
9. Conflict of Interest. The Consultant shall be free to perform
services for other persons. The Consultant will notify the Client of its
performance of consulting services for any other person which could
conflict with its obligations under this Agreement. Upon receiving such
notice, the Client may terminate this Agreement or consent to the
Consultant's outside consulting services; failure to terminate this
Agreement shall constitute Client's ongoing consent to the Consultant's
outside consulting services.
10. Indemnification for Securities Law Violations. The Client agrees to
indemnify and hold harmless the Consultant and each officer, direcgtor and
controlling person of the Consultant against any losses, claims, damages,
liabilities, and/or expenses (including legal or other expenses reasonably
incurred in investigating or defending any action or claim in respect
thereof to which the Consultant or such officer, director or controlling
person, may become subject under the Securities Act of 1933, as amended, or
the Securities Exchange Act of 1934, as amended, because of actions of the
Client or its agent(s).
11. Notices. Any Notices required or permitted to be given under this
Agreement shall be sufficient if in writing and delivered or sent by
registered or certified mail to the principal office of each party.
12. Waiver of Breach. Any waiver by the Consultant of a breach of any
provision of the Agreement by the Client shall not operate or be construed
as a waiver of any subsequent breach by the Client.
13. Assignment. This Agreement and the rights and obligations of the
parties hereunder shall inure to the benefit of and shall be binding upon
their successors and assigns.
14. Jurisdiction and Venue. It is the intention of the parties hereto
that this Agreement and the performance hereunder and all suits and special
proceedings hereunder be construed in accordance with and under and
pursuant to the laws of the State of Colorado.
15. Entire Agreement. This Agreement constitutes and embodies the
entire understanding and agreement of the parties in regards to
Management/Financial Consulting services and supercedes and replaces all
prior understandings, agreements, and negotiations between the parties.
16. Waiver and Modification. Any waiver, alteration or modification of
any of the provisions of this Agreement shall be made valid only if made in
writing and signed by the parties hereto. Each party hereto, from time to
time, may waive any of its rights hereunder without effecting a waiver with
respect to any subsequent occurrences or transactions hereof.
17. Invalid Provisions. In the event that any provision of this
Agreement is found invalid or otherwise unenforceable under any applicable
law, such invalidity or unenforceability shall not be construed as
rendering any other provision contained herein invalid or unenforceable,
and all such other provisions shall be given full force and affect to the
same extend as though the invalid or unenforceable provision were not
contained herein.
18. Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed an original but both of which taken together shall
constitute but one and the same document.
IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
this Agreement as of the day and year first above written.
CONSULTANT CLIENT
Fair Market, Inc. USURF America, Inc.
By: /s/ Eric Miller By: /s/ David M. Loflin
Its: President Its: President
Date: March 25, 2000 Date: March 25, 2000
March 29, 2000
Shelter Capital Ltd.
Registration Rights Letter Agreement
Gentlemen:
This letter will confirm our agreement and understanding with respect to
certain rights to register, under the Securities Act of 1933, as amended
(the "Act"), and applicable state securities laws ("Blue Sky Laws"), the
offer and sale of up to 19,000 shares of the $.0001 par value common stock
of USURF America, Inc., a Nevada corporation (the "Company"), which shares
of Common Stock underlie certain common stock purchase warrants (the
"Warrants") of the Company owned by you (such shares being referred to as
the "Subject Shares"). It is our understanding that:
1. Registration Rights. At any time after November 15, 2000, you may
demand on one occasion, in writing, the registration under the Act for sale
the Subject Shares underlying the Warrants owned by you. Upon the
Company's receipt of written demand by holders, including you, of more than
50% of the Warrants issued in the same private offering as your Warrants,
the Company will take steps to register your Subject Shares in a
registration statement (the "Registration Statement") under the Act. Your
right to such registration may be exercised one time only. Should the
Company elect to include the Subject Shares in a Registration Statement
prior to your demand having been made, the Company will notify you of such
fact. This election by the Company to include the Subject Shares shall be
deemed to satisfy your demand right of registration, whether or not you
elect to have the Subject Shares included in such Registration Statement.
2. Expenses. All expenses incurred in connection with the registration
of the Subject Shares requested pursuant to Section 1, including, without
limitation, all accounting and printing costs and fees, filing fees and
reasonable attorney fees incurred, shall be paid by the Company. In this
regard, the Company reserves the right to include additional selling
shareholders in any registration proceeding contemplated hereby.
3. Registration Procedures. At such time as the Company is required to
register any of the Subject Shares hereunder, the Company will promptly:
(a) prepare and file, in a timely manner, with the Securities and
Exchange Commission (the "Commission"), a Registration Statement with
respect to the Subject Shares and use its best efforts to cause such
Registration Statement to become effective, such Registration Statement to
comply as to form and content and in all material respects to the
Commission's forms, rules and regulations;
(b) prepare and file with the Commission such amendments and
supplements to the Registration Statement, the prospectus and any summary
or preliminary prospectus forming a part of, and used in connection
therewith, as may be necessary to keep such Registration Statement and
prospectus effective and current and to comply with the provisions of the
Act with respect to the disposition of all of the Subject Shares and other
securities, if any, covered by such Registration Statement until the
earlier of such time as all of such securities have been disposed of in
accordance with the intended methods of disposition by the seller or
sellers thereof set forth in such Registration Statement or the expiration
of 120 days after such Registration Statement becomes effective; and will
furnish to you prior to the filing thereof a copy of any amendment or
supplement to such Registration Statement or prospectus and shall not file
any such amendment or supplement to which you shall have reasonably
objected on the grounds that such amendment or supplement does not comply
in all material respects with the requirements of the Act or the rules or
regulations thereunder;
(c) furnish to you such number of conformed copies of such
Registration Statement and of each such amendment and supplement thereto
(in each case including all exhibits), such number of copies of the
prospectus included in such Registration Statement (including each
preliminary prospectus and any summary prospectus), all in conformity as to
form and substance with the requirements of the Act, such number of copies
of documents, if any, incorporated by reference in such Registration
Statement or prospectus, and such other documents, as you may reasonably
request;
(d) use its best efforts to register or qualify all the Subject Shares
covered by such Registration Statement under such other securities or blue
sky laws of such U.S. jurisdictions, as reasonably requested by you, that
permit "registration by coordination" of securities offerings (the Company
shall not be required to register or qualify the Subject Shares in any
state invoking merit review authority), to keep such registration or
qualification in effect for a minimum of 120 days after its initial
effective date, and do any and all other acts and things which may be
necessary or advisable to enable you to consummate the disposition in such
jurisdictions of your Subject Shares covered by such Registration
Statement, except that the Company shall not, for any such purpose, be
required to qualify generally to do business as a foreign corporation in
any jurisdiction wherein it would not, but for the requirements of this
subdivision (d), be obligated to be so qualified, or to subject itself to
taxation in any such jurisdiction or to consent to general service of
process in any such jurisdiction;
(e) furnish to you a signed counterpart, addressed to you, of (i) an
opinion of counsel for the Company, dated the effective date of such
Registration Statement, and (ii) a "comfort" letter, dated the effective
date of such Registration Statement, signed by the independent public
accountants who have certified the Company's financial statements included
in such Registration Statement, covering substantially the same matters
with respect to such Registration Statement (and the prospectus included
therein) and, in the case of such accountants' letter, with respect to
events subsequent to the date of such financial statements, as are
customarily covered in opinions of issuer's counsel and in accountants'
letters delivered to underwriters in underwritten public offerings of
securities and such other legal and financial matters, as you may
reasonably request;
(f) immediately notify you, at any time, when a prospectus relating
thereto is required to be delivered under the Act, upon discovery that, or
upon the happening of any event as a result of which, the prospectus
included in such Registration Statement, as then in effect, includes an
untrue statement of a material fact or omits to state any material fact
required to be stated therein or necessary to make the statements therein
not misleading in light of the circumstances then existing, and, at your
request, prepare and furnish to you a reasonable number of copies of a
supplement to, or an amendment of, such prospectus as may be necessary so
that, as thereafter delivered to the purchasers of the Subject Shares, such
prospectus shall not include any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary
to make the statements therein not misleading in the light of the
circumstances then existing;
(g) otherwise use its best efforts to comply with all applicable rules
and regulations of the Commission, and make available to its securities
holders, as soon as reasonably practicable, an earnings statement covering
the period of at least twelve months beginning with the first month of the
first fiscal quarter after the effective date of such Registration
Statement, which earnings statement shall satisfy the provisions of Section
11(a) of the Act; and
(h) provide and cause to be maintained a transfer agent and registrar
for the Subject Shares covered by such Registration Statement from and
after a date not later than the effective date of such Registration Statement.
The Company may require you to furnish the Company such information
regarding your sales of the Subject Shares as the Company may from time to
time reasonably request in writing and as shall be required by law or by
the Commission in connection therewith. Such information shall be
furnished in writing by you stating that it is for use in the preparation
of such Registration Statement and all prospectuses and supplements or
amendments thereto.
4. Preparation; Reasonable Investigation. In connection with the
preparation and filing of the Registration Statement registering your
Subject Shares under the Act, the Company will give you and your
underwriters, if any, and your counsel and accountants at your own expense,
the opportunity to participate in the preparation of such Registration
Statement, each prospectus included therein and filed with the Commission
and each amendment thereof or supplement thereto, and will give each of
them such access to its books and records and such opportunities to discuss
the business of the Company with its officers and the independent public
accountants who have certified its financial statements as shall be
necessary in the opinion of you and such underwriter or your respective
counsel, to conduct a reasonable investigation within the meaning of the Act.
5. Indemnification.
(a) Indemnification by the Company. In the event of registration of
your Subject Shares under the Act, the Company will, and hereby does,
indemnify and hold you harmless, against any and all losses, claims,
damages, liabilities or expenses, joint or several (including, without
limitation, the costs and expenses of investigating, preparing for and
defending any legal proceeding, including reasonable attorneys' fees) to
which you may become subject under the Act or otherwise, insofar as such
losses, claims, damages, liabilities or expenses (or actions or proceedings
in respect thereof) arise out of, or are based upon, (i) any untrue
statement or alleged untrue statement of any material fact contained in the
Registration Statement under which your Subject Shares were registered
under the Act, any preliminary prospectus, final prospectus or summary
prospectus contained therein, or any amendment or supplement thereto, or
any document incorporated by reference therein, or (ii) any omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, and the
Company will reimburse you for any legal or any other expenses reasonably
incurred by you in connection with investigating or defending any such
loss, claim, liability, action or proceeding; provided, however, that the
Company shall not be liable in any such case to the extent that any such
loss, claim, damage, liability or expense (or action or proceeding in
respect thereof) arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in such
Registration Statement, any such preliminary prospectus, final prospectus,
summary prospectus, amendment or supplement in reliance upon, and in
conformity with, written information furnished to the Company through an
instrument duly executed by you stating that it is for use in the
preparation thereof. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of you and shall
survive the transfer of the Subject Shares by you.
(b) Indemnification by You. In the event of registration of your
Subject Shares under the Act, pursuant to which you offer or sell Subject
Shares covered by such Registration Statement, you will, and hereby do,
indemnify and hold harmless (in the same manner and to the same extent as
set forth in subdivision (a) of this Section 5) the Company, each director
of the Company, each officer of the Company who shall sign such
Registration Statement and each other person, if any, who controls the
Company within the meaning of the Act, with respect to any statement in, or
omission from, such Registration Statement, any preliminary prospectus,
final prospectus or summary prospectus included therein, or any amendment
or supplement thereto, if such statement or omission was made in reliance
upon and in conformity with written information furnished to the Company
through an instrument duly executed by you specifically stating that it is
for use in the preparation of such Registration Statement, preliminary
prospectus, final prospectus, summary prospectus, amendment or supplement.
Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of the Company or any such director,
officer or controlling person and shall survive the transfer of Subject
Shares by you.
(c) Notice of Claims, etc. Promptly after receipt by an indemnified
party of notice of the commencement of any action or proceeding involving a
claim referred to in the preceding subdivisions of this Section 5, such
indemnified party will, if a claim in respect thereof is to be made against
an indemnifying party, give written notice to the latter of the
commencement of such action, provided, however, that the failure of any
indemnified party to give notice as provided herein shall not relieve the
indemnifying party of its obligations under the preceding subdivisions of
this Section 5. In case any such action is brought against an indemnified
party, unless in such indemnified party's reasonable judgment a conflict of
interest between such indemnified and indemnifying party may exist in
respect of such claim, the indemnifying party shall be entitled to
participate in, and to assume the defense thereof, jointly with any other
indemnifying party similarly notified, to the extent that it may wish, with
counsel reasonably satisfactory to such indemnified party, and after notice
from the indemnifying party to such indemnified party of its election so to
assume the defense thereof, the indemnifying party shall not be liable to
such indemnified party for any legal or other expenses subsequently
incurred by the latter in connection with the defense thereof other than
reasonable costs of investigation. No indemnifying party shall, without
the consent of the indemnified party, consent to entry of any judgment or
enter into any settlement of such proceedings which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a complete and unconditional release from all
liability in respect to such claim or litigation.
(d) Indemnification Payments. The indemnification required by this
Section 5 shall be made by periodic payments of the amount thereof during
the course of the investigation or defense, as and when bills are received
or expense, loss, damage or liability is incurred.
(e) Contribution. If the indemnification provided for in this Section
5 is held by a court of competent jurisdiction to be unavailable with
respect to any loss, liability, claim, damage or expense referred to
herein, 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, damage or
expense, in such manner as the underwriter(s) shall require in the
underwriting agreement and, to the extent not specified therein with
respect to any indemnified party contemplated by this Section 5 as entitled
to indemnification, in such proportion as is appropriate to reflect the
relative fault of the indemnifying party on the one hand and of such
indemnified party on the other in connection with the actual or alleged
statements or omissions which resulted in such loss, liability, damage or
expense, as well as any other relevant equitable considerations. The
relative fault of the indemnifying party and of such indemnified party
shall be determined by reference to, among other things, whether the untrue
or allegedly untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the
indemnifying party or by such indemnified party and the parties' relative
intent, knowledge, access to information and opportunities to correct or
prevent such statement or omission. The indemnity and contribution
provided herein shall be in addition to, and not in lieu of, any other
liability that one party may have to another.
6. Arbitration. In the event of any dispute between the parties arising
out of this Agreement, relating to any question of contract or tort,
including any claims allegedly based on a violation of any securities laws
or regulations, state or federal, both the Company and you agree to submit
such dispute through the American Arbitration Association (the
"Association") at the Association's Dallas, Texas, offices, in accordance
with the then-current rules of the Association; the award given by the
arbitrators shall be binding and a judgment can be obtained on any such
award in any court of competent jurisdiction. It is expressly agreed that
the arbitrators, as part of their award, can award attorneys fees to the
prevailing party.
7. Amendments and Waivers. This Agreement may be amended and the
Company may take any action herein prohibited, or omit to perform any act
herein required to be performed by it, only if the Company shall have
obtained your written consent to such amendment, action or omissions to act.
8. Notices. Notices and other communications under this Agreement shall
be in writing and shall be sent by registered mail, postage prepaid,
addressed:
(a) if to you, at the address shown above, unless you have advised the
Company in writing of a different address as to which notices shall be sent
under this Agreement; and
(b) if to the Company, at 8748 Quarters Lake Road, Baton Rouge,
Louisiana 70809, to the attention of Mr. David M. Loflin, President, or to
such other address as the Company shall have furnished to you.
9. Miscellaneous. This Agreement shall be binding upon and inure to the
benefit of and be enforceable by the respective successors and assigns of
the parties hereto, whether so expressed or not. This Agreement embodies
the entire agreement and understanding between the Company and you with
respect to the subject matter hereof and supersedes all prior agreements
and understandings relating to the subject matter hereof. This Agreement
shall be construed and enforced in accordance with, and governed by, the
law of the State of Louisiana. The headings in this Agreement are for
purposes of reference only and shall not limit or otherwise affect the
meaning hereof. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
Yours very truly,
USURF AMERICA, INC.
By: /s/ David M. Loflin
David M. Loflin
President
March 29, 2000
Mr. Gordon Engler
Registration Rights Letter Agreement
Dear Mr. Engler:
This letter will confirm our agreement and understanding with respect to
certain rights to register, under the Securities Act of 1933, as amended
(the "Act"), and applicable state securities laws ("Blue Sky Laws"), the
offer and sale of up to 5,000 shares of the $.0001 par value common stock
of USURF America, Inc., a Nevada corporation (the "Company"), which shares
of Common Stock underlie certain common stock purchase warrants (the
"Warrants") of the Company owned by you (such shares being referred to as
the "Subject Shares"). It is our understanding that:
1. Registration Rights. At any time after November 15, 2000, you may
demand on one occasion, in writing, the registration under the Act for sale
the Subject Shares underlying the Warrants owned by you. Upon the
Company's receipt of written demand by holders, including you, of more than
50% of the Warrants issued in the same private offering as your Warrants,
the Company will take steps to register your Subject Shares in a
registration statement (the "Registration Statement") under the Act. Your
right to such registration may be exercised one time only. Should the
Company elect to include the Subject Shares in a Registration Statement
prior to your demand having been made, the Company will notify you of such
fact. This election by the Company to include the Subject Shares shall be
deemed to satisfy your demand right of registration, whether or not you
elect to have the Subject Shares included in such Registration Statement.
2. Expenses. All expenses incurred in connection with the registration
of the Subject Shares requested pursuant to Section 1, including, without
limitation, all accounting and printing costs and fees, filing fees and
reasonable attorney fees incurred, shall be paid by the Company. In this
regard, the Company reserves the right to include additional selling
shareholders in any registration proceeding contemplated hereby.
3. Registration Procedures. At such time as the Company is required to
register any of the Subject Shares hereunder, the Company will promptly:
(a) prepare and file, in a timely manner, with the Securities and
Exchange Commission (the "Commission"), a Registration Statement with
respect to the Subject Shares and use its best efforts to cause such
Registration Statement to become effective, such Registration Statement to
comply as to form and content and in all material respects to the
Commission's forms, rules and regulations;
(b) prepare and file with the Commission such amendments and
supplements to the Registration Statement, the prospectus and any summary
or preliminary prospectus forming a part of, and used in connection
therewith, as may be necessary to keep such Registration Statement and
prospectus effective and current and to comply with the provisions of the
Act with respect to the disposition of all of the Subject Shares and other
securities, if any, covered by such Registration Statement until the
earlier of such time as all of such securities have been disposed of in
accordance with the intended methods of disposition by the seller or
sellers thereof set forth in such Registration Statement or the expiration
of 120 days after such Registration Statement becomes effective; and will
furnish to you prior to the filing thereof a copy of any amendment or
supplement to such Registration Statement or prospectus and shall not file
any such amendment or supplement to which you shall have reasonably
objected on the grounds that such amendment or supplement does not comply
in all material respects with the requirements of the Act or the rules or
regulations thereunder;
(c) furnish to you such number of conformed copies of such
Registration Statement and of each such amendment and supplement thereto
(in each case including all exhibits), such number of copies of the
prospectus included in such Registration Statement (including each
preliminary prospectus and any summary prospectus), all in conformity as to
form and substance with the requirements of the Act, such number of copies
of documents, if any, incorporated by reference in such Registration
Statement or prospectus, and such other documents, as you may reasonably
request;
(d) use its best efforts to register or qualify all the Subject Shares
covered by such Registration Statement under such other securities or blue
sky laws of such U.S. jurisdictions, as reasonably requested by you, that
permit "registration by coordination" of securities offerings (the Company
shall not be required to register or qualify the Subject Shares in any
state invoking merit review authority), to keep such registration or
qualification in effect for a minimum of 120 days after its initial
effective date, and do any and all other acts and things which may be
necessary or advisable to enable you to consummate the disposition in such
jurisdictions of your Subject Shares covered by such Registration
Statement, except that the Company shall not, for any such purpose, be
required to qualify generally to do business as a foreign corporation in
any jurisdiction wherein it would not, but for the requirements of this
subdivision (d), be obligated to be so qualified, or to subject itself to
taxation in any such jurisdiction or to consent to general service of
process in any such jurisdiction;
(e) furnish to you a signed counterpart, addressed to you, of (i) an
opinion of counsel for the Company, dated the effective date of such
Registration Statement, and (ii) a "comfort" letter, dated the effective
date of such Registration Statement, signed by the independent public
accountants who have certified the Company's financial statements included
in such Registration Statement, covering substantially the same matters
with respect to such Registration Statement (and the prospectus included
therein) and, in the case of such accountants' letter, with respect to
events subsequent to the date of such financial statements, as are
customarily covered in opinions of issuer's counsel and in accountants'
letters delivered to underwriters in underwritten public offerings of
securities and such other legal and financial matters, as you may
reasonably request;
(f) immediately notify you, at any time, when a prospectus relating
thereto is required to be delivered under the Act, upon discovery that, or
upon the happening of any event as a result of which, the prospectus
included in such Registration Statement, as then in effect, includes an
untrue statement of a material fact or omits to state any material fact
required to be stated therein or necessary to make the statements therein
not misleading in light of the circumstances then existing, and, at your
request, prepare and furnish to you a reasonable number of copies of a
supplement to, or an amendment of, such prospectus as may be necessary so
that, as thereafter delivered to the purchasers of the Subject Shares, such
prospectus shall not include any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary
to make the statements therein not misleading in the light of the
circumstances then existing;
(g) otherwise use its best efforts to comply with all applicable rules
and regulations of the Commission, and make available to its securities
holders, as soon as reasonably practicable, an earnings statement covering
the period of at least twelve months beginning with the first month of the
first fiscal quarter after the effective date of such Registration
Statement, which earnings statement shall satisfy the provisions of Section
11(a) of the Act; and
(h) provide and cause to be maintained a transfer agent and registrar
for the Subject Shares covered by such Registration Statement from and
after a date not later than the effective date of such Registration Statement.
The Company may require you to furnish the Company such information
regarding your sales of the Subject Shares as the Company may from time to
time reasonably request in writing and as shall be required by law or by
the Commission in connection therewith. Such information shall be
furnished in writing by you stating that it is for use in the preparation
of such Registration Statement and all prospectuses and supplements or
amendments thereto.
4. Preparation; Reasonable Investigation. In connection with the
preparation and filing of the Registration Statement registering your
Subject Shares under the Act, the Company will give you and your
underwriters, if any, and your counsel and accountants at your own expense,
the opportunity to participate in the preparation of such Registration
Statement, each prospectus included therein and filed with the Commission
and each amendment thereof or supplement thereto, and will give each of
them such access to its books and records and such opportunities to discuss
the business of the Company with its officers and the independent public
accountants who have certified its financial statements as shall be
necessary in the opinion of you and such underwriter or your respective
counsel, to conduct a reasonable investigation within the meaning of the Act.
5. Indemnification.
(a) Indemnification by the Company. In the event of registration of
your Subject Shares under the Act, the Company will, and hereby does,
indemnify and hold you harmless, against any and all losses, claims,
damages, liabilities or expenses, joint or several (including, without
limitation, the costs and expenses of investigating, preparing for and
defending any legal proceeding, including reasonable attorneys' fees) to
which you may become subject under the Act or otherwise, insofar as such
losses, claims, damages, liabilities or expenses (or actions or proceedings
in respect thereof) arise out of, or are based upon, (i) any untrue
statement or alleged untrue statement of any material fact contained in the
Registration Statement under which your Subject Shares were registered
under the Act, any preliminary prospectus, final prospectus or summary
prospectus contained therein, or any amendment or supplement thereto, or
any document incorporated by reference therein, or (ii) any omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, and the
Company will reimburse you for any legal or any other expenses reasonably
incurred by you in connection with investigating or defending any such
loss, claim, liability, action or proceeding; provided, however, that the
Company shall not be liable in any such case to the extent that any such
loss, claim, damage, liability or expense (or action or proceeding in
respect thereof) arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in such
Registration Statement, any such preliminary prospectus, final prospectus,
summary prospectus, amendment or supplement in reliance upon, and in
conformity with, written information furnished to the Company through an
instrument duly executed by you stating that it is for use in the
preparation thereof. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of you and shall
survive the transfer of the Subject Shares by you.
(b) Indemnification by You. In the event of registration of your
Subject Shares under the Act, pursuant to which you offer or sell Subject
Shares covered by such Registration Statement, you will, and hereby do,
indemnify and hold harmless (in the same manner and to the same extent as
set forth in subdivision (a) of this Section 5) the Company, each director
of the Company, each officer of the Company who shall sign such
Registration Statement and each other person, if any, who controls the
Company within the meaning of the Act, with respect to any statement in, or
omission from, such Registration Statement, any preliminary prospectus,
final prospectus or summary prospectus included therein, or any amendment
or supplement thereto, if such statement or omission was made in reliance
upon and in conformity with written information furnished to the Company
through an instrument duly executed by you specifically stating that it is
for use in the preparation of such Registration Statement, preliminary
prospectus, final prospectus, summary prospectus, amendment or supplement.
Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of the Company or any such director,
officer or controlling person and shall survive the transfer of Subject
Shares by you.
(c) Notice of Claims, etc. Promptly after receipt by an indemnified
party of notice of the commencement of any action or proceeding involving a
claim referred to in the preceding subdivisions of this Section 5, such
indemnified party will, if a claim in respect thereof is to be made against
an indemnifying party, give written notice to the latter of the
commencement of such action, provided, however, that the failure of any
indemnified party to give notice as provided herein shall not relieve the
indemnifying party of its obligations under the preceding subdivisions of
this Section 5. In case any such action is brought against an indemnified
party, unless in such indemnified party's reasonable judgment a conflict of
interest between such indemnified and indemnifying party may exist in
respect of such claim, the indemnifying party shall be entitled to
participate in, and to assume the defense thereof, jointly with any other
indemnifying party similarly notified, to the extent that it may wish, with
counsel reasonably satisfactory to such indemnified party, and after notice
from the indemnifying party to such indemnified party of its election so to
assume the defense thereof, the indemnifying party shall not be liable to
such indemnified party for any legal or other expenses subsequently
incurred by the latter in connection with the defense thereof other than
reasonable costs of investigation. No indemnifying party shall, without
the consent of the indemnified party, consent to entry of any judgment or
enter into any settlement of such proceedings which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a complete and unconditional release from all
liability in respect to such claim or litigation.
(d) Indemnification Payments. The indemnification required by this
Section 5 shall be made by periodic payments of the amount thereof during
the course of the investigation or defense, as and when bills are received
or expense, loss, damage or liability is incurred.
(e) Contribution. If the indemnification provided for in this Section
5 is held by a court of competent jurisdiction to be unavailable with
respect to any loss, liability, claim, damage or expense referred to
herein, 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, damage or
expense, in such manner as the underwriter(s) shall require in the
underwriting agreement and, to the extent not specified therein with
respect to any indemnified party contemplated by this Section 5 as entitled
to indemnification, in such proportion as is appropriate to reflect the
relative fault of the indemnifying party on the one hand and of such
indemnified party on the other in connection with the actual or alleged
statements or omissions which resulted in such loss, liability, damage or
expense, as well as any other relevant equitable considerations. The
relative fault of the indemnifying party and of such indemnified party
shall be determined by reference to, among other things, whether the untrue
or allegedly untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the
indemnifying party or by such indemnified party and the parties' relative
intent, knowledge, access to information and opportunities to correct or
prevent such statement or omission. The indemnity and contribution
provided herein shall be in addition to, and not in lieu of, any other
liability that one party may have to another.
6. Arbitration. In the event of any dispute between the parties arising
out of this Agreement, relating to any question of contract or tort,
including any claims allegedly based on a violation of any securities laws
or regulations, state or federal, both the Company and you agree to submit
such dispute through the American Arbitration Association (the
"Association") at the Association's Dallas, Texas, offices, in accordance
with the then-current rules of the Association; the award given by the
arbitrators shall be binding and a judgment can be obtained on any such
award in any court of competent jurisdiction. It is expressly agreed that
the arbitrators, as part of their award, can award attorneys fees to the
prevailing party.
7. Amendments and Waivers. This Agreement may be amended and the
Company may take any action herein prohibited, or omit to perform any act
herein required to be performed by it, only if the Company shall have
obtained your written consent to such amendment, action or omissions to act.
8. Notices. Notices and other communications under this Agreement shall
be in writing and shall be sent by registered mail, postage prepaid,
addressed:
(a) if to you, at the address shown above, unless you have advised the
Company in writing of a different address as to which notices shall be sent
under this Agreement; and
(b) if to the Company, at 8748 Quarters Lake Road, Baton Rouge,
Louisiana 70809, to the attention of Mr. David M. Loflin, President, or to
such other address as the Company shall have furnished to you.
9. Miscellaneous. This Agreement shall be binding upon and inure to the
benefit of and be enforceable by the respective successors and assigns of
the parties hereto, whether so expressed or not. This Agreement embodies
the entire agreement and understanding between the Company and you with
respect to the subject matter hereof and supersedes all prior agreements
and understandings relating to the subject matter hereof. This Agreement
shall be construed and enforced in accordance with, and governed by, the
law of the State of Louisiana. The headings in this Agreement are for
purposes of reference only and shall not limit or otherwise affect the
meaning hereof. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
Yours very truly,
USURF AMERICA, INC.
By: /s/ David M. Loflin
David M. Loflin
President
- -------------
EXHIBIT 10.81
- -------------
March 29, 2000
Mr. Annie Rochow
Registration Rights Letter Agreement
Dear Ms. Rochow:
This letter will confirm our agreement and understanding with respect to
certain rights to register, under the Securities Act of 1933, as amended
(the "Act"), and applicable state securities laws ("Blue Sky Laws"), the
offer and sale of up to 5,000 shares of the $.0001 par value common stock
of USURF America, Inc., a Nevada corporation (the "Company"), which shares
of Common Stock underlie certain common stock purchase warrants (the
"Warrants") of the Company owned by you (such shares being referred to as
the "Subject Shares"). It is our understanding that:
1. Registration Rights. At any time after November 15, 2000, you may
demand on one occasion, in writing, the registration under the Act for sale
the Subject Shares underlying the Warrants owned by you. Upon the
Company's receipt of written demand by holders, including you, of more than
50% of the Warrants issued in the same private offering as your Warrants,
the Company will take steps to register your Subject Shares in a
registration statement (the "Registration Statement") under the Act. Your
right to such registration may be exercised one time only. Should the
Company elect to include the Subject Shares in a Registration Statement
prior to your demand having been made, the Company will notify you of such
fact. This election by the Company to include the Subject Shares shall be
deemed to satisfy your demand right of registration, whether or not you
elect to have the Subject Shares included in such Registration Statement.
2. Expenses. All expenses incurred in connection with the registration
of the Subject Shares requested pursuant to Section 1, including, without
limitation, all accounting and printing costs and fees, filing fees and
reasonable attorney fees incurred, shall be paid by the Company. In this
regard, the Company reserves the right to include additional selling
shareholders in any registration proceeding contemplated hereby.
3. Registration Procedures. At such time as the Company is required to
register any of the Subject Shares hereunder, the Company will promptly:
(a) prepare and file, in a timely manner, with the Securities and
Exchange Commission (the "Commission"), a Registration Statement with
respect to the Subject Shares and use its best efforts to cause such
Registration Statement to become effective, such Registration Statement to
comply as to form and content and in all material respects to the
Commission's forms, rules and regulations;
(b) prepare and file with the Commission such amendments and
supplements to the Registration Statement, the prospectus and any summary
or preliminary prospectus forming a part of, and used in connection
therewith, as may be necessary to keep such Registration Statement and
prospectus effective and current and to comply with the provisions of the
Act with respect to the disposition of all of the Subject Shares and other
securities, if any, covered by such Registration Statement until the
earlier of such time as all of such securities have been disposed of in
accordance with the intended methods of disposition by the seller or
sellers thereof set forth in such Registration Statement or the expiration
of 120 days after such Registration Statement becomes effective; and will
furnish to you prior to the filing thereof a copy of any amendment or
supplement to such Registration Statement or prospectus and shall not file
any such amendment or supplement to which you shall have reasonably
objected on the grounds that such amendment or supplement does not comply
in all material respects with the requirements of the Act or the rules or
regulations thereunder;
(c) furnish to you such number of conformed copies of such
Registration Statement and of each such amendment and supplement thereto
(in each case including all exhibits), such number of copies of the
prospectus included in such Registration Statement (including each
preliminary prospectus and any summary prospectus), all in conformity as to
form and substance with the requirements of the Act, such number of copies
of documents, if any, incorporated by reference in such Registration
Statement or prospectus, and such other documents, as you may reasonably
request;
(d) use its best efforts to register or qualify all the Subject Shares
covered by such Registration Statement under such other securities or blue
sky laws of such U.S. jurisdictions, as reasonably requested by you, that
permit "registration by coordination" of securities offerings (the Company
shall not be required to register or qualify the Subject Shares in any
state invoking merit review authority), to keep such registration or
qualification in effect for a minimum of 120 days after its initial
effective date, and do any and all other acts and things which may be
necessary or advisable to enable you to consummate the disposition in such
jurisdictions of your Subject Shares covered by such Registration
Statement, except that the Company shall not, for any such purpose, be
required to qualify generally to do business as a foreign corporation in
any jurisdiction wherein it would not, but for the requirements of this
subdivision (d), be obligated to be so qualified, or to subject itself to
taxation in any such jurisdiction or to consent to general service of
process in any such jurisdiction;
(e) furnish to you a signed counterpart, addressed to you, of (i) an
opinion of counsel for the Company, dated the effective date of such
Registration Statement, and (ii) a "comfort" letter, dated the effective
date of such Registration Statement, signed by the independent public
accountants who have certified the Company's financial statements included
in such Registration Statement, covering substantially the same matters
with respect to such Registration Statement (and the prospectus included
therein) and, in the case of such accountants' letter, with respect to
events subsequent to the date of such financial statements, as are
customarily covered in opinions of issuer's counsel and in accountants'
letters delivered to underwriters in underwritten public offerings of
securities and such other legal and financial matters, as you may
reasonably request;
(f) immediately notify you, at any time, when a prospectus relating
thereto is required to be delivered under the Act, upon discovery that, or
upon the happening of any event as a result of which, the prospectus
included in such Registration Statement, as then in effect, includes an
untrue statement of a material fact or omits to state any material fact
required to be stated therein or necessary to make the statements therein
not misleading in light of the circumstances then existing, and, at your
request, prepare and furnish to you a reasonable number of copies of a
supplement to, or an amendment of, such prospectus as may be necessary so
that, as thereafter delivered to the purchasers of the Subject Shares, such
prospectus shall not include any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary
to make the statements therein not misleading in the light of the
circumstances then existing;
(g) otherwise use its best efforts to comply with all applicable rules
and regulations of the Commission, and make available to its securities
holders, as soon as reasonably practicable, an earnings statement covering
the period of at least twelve months beginning with the first month of the
first fiscal quarter after the effective date of such Registration
Statement, which earnings statement shall satisfy the provisions of Section
11(a) of the Act; and
(h) provide and cause to be maintained a transfer agent and registrar
for the Subject Shares covered by such Registration Statement from and
after a date not later than the effective date of such Registration Statement.
The Company may require you to furnish the Company such information
regarding your sales of the Subject Shares as the Company may from time to
time reasonably request in writing and as shall be required by law or by
the Commission in connection therewith. Such information shall be
furnished in writing by you stating that it is for use in the preparation
of such Registration Statement and all prospectuses and supplements or
amendments thereto.
4. Preparation; Reasonable Investigation. In connection with the
preparation and filing of the Registration Statement registering your
Subject Shares under the Act, the Company will give you and your
underwriters, if any, and your counsel and accountants at your own expense,
the opportunity to participate in the preparation of such Registration
Statement, each prospectus included therein and filed with the Commission
and each amendment thereof or supplement thereto, and will give each of
them such access to its books and records and such opportunities to discuss
the business of the Company with its officers and the independent public
accountants who have certified its financial statements as shall be
necessary in the opinion of you and such underwriter or your respective
counsel, to conduct a reasonable investigation within the meaning of the Act.
5. Indemnification.
(a) Indemnification by the Company. In the event of registration of
your Subject Shares under the Act, the Company will, and hereby does,
indemnify and hold you harmless, against any and all losses, claims,
damages, liabilities or expenses, joint or several (including, without
limitation, the costs and expenses of investigating, preparing for and
defending any legal proceeding, including reasonable attorneys' fees) to
which you may become subject under the Act or otherwise, insofar as such
losses, claims, damages, liabilities or expenses (or actions or proceedings
in respect thereof) arise out of, or are based upon, (i) any untrue
statement or alleged untrue statement of any material fact contained in the
Registration Statement under which your Subject Shares were registered
under the Act, any preliminary prospectus, final prospectus or summary
prospectus contained therein, or any amendment or supplement thereto, or
any document incorporated by reference therein, or (ii) any omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, and the
Company will reimburse you for any legal or any other expenses reasonably
incurred by you in connection with investigating or defending any such
loss, claim, liability, action or proceeding; provided, however, that the
Company shall not be liable in any such case to the extent that any such
loss, claim, damage, liability or expense (or action or proceeding in
respect thereof) arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in such
Registration Statement, any such preliminary prospectus, final prospectus,
summary prospectus, amendment or supplement in reliance upon, and in
conformity with, written information furnished to the Company through an
instrument duly executed by you stating that it is for use in the
preparation thereof. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of you and shall
survive the transfer of the Subject Shares by you.
(b) Indemnification by You. In the event of registration of your
Subject Shares under the Act, pursuant to which you offer or sell Subject
Shares covered by such Registration Statement, you will, and hereby do,
indemnify and hold harmless (in the same manner and to the same extent as
set forth in subdivision (a) of this Section 5) the Company, each director
of the Company, each officer of the Company who shall sign such
Registration Statement and each other person, if any, who controls the
Company within the meaning of the Act, with respect to any statement in, or
omission from, such Registration Statement, any preliminary prospectus,
final prospectus or summary prospectus included therein, or any amendment
or supplement thereto, if such statement or omission was made in reliance
upon and in conformity with written information furnished to the Company
through an instrument duly executed by you specifically stating that it is
for use in the preparation of such Registration Statement, preliminary
prospectus, final prospectus, summary prospectus, amendment or supplement.
Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of the Company or any such director,
officer or controlling person and shall survive the transfer of Subject
Shares by you.
(c) Notice of Claims, etc. Promptly after receipt by an indemnified
party of notice of the commencement of any action or proceeding involving a
claim referred to in the preceding subdivisions of this Section 5, such
indemnified party will, if a claim in respect thereof is to be made against
an indemnifying party, give written notice to the latter of the
commencement of such action, provided, however, that the failure of any
indemnified party to give notice as provided herein shall not relieve the
indemnifying party of its obligations under the preceding subdivisions of
this Section 5. In case any such action is brought against an indemnified
party, unless in such indemnified party's reasonable judgment a conflict of
interest between such indemnified and indemnifying party may exist in
respect of such claim, the indemnifying party shall be entitled to
participate in, and to assume the defense thereof, jointly with any other
indemnifying party similarly notified, to the extent that it may wish, with
counsel reasonably satisfactory to such indemnified party, and after notice
from the indemnifying party to such indemnified party of its election so to
assume the defense thereof, the indemnifying party shall not be liable to
such indemnified party for any legal or other expenses subsequently
incurred by the latter in connection with the defense thereof other than
reasonable costs of investigation. No indemnifying party shall, without
the consent of the indemnified party, consent to entry of any judgment or
enter into any settlement of such proceedings which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a complete and unconditional release from all
liability in respect to such claim or litigation.
(d) Indemnification Payments. The indemnification required by this
Section 5 shall be made by periodic payments of the amount thereof during
the course of the investigation or defense, as and when bills are received
or expense, loss, damage or liability is incurred.
(e) Contribution. If the indemnification provided for in this Section
5 is held by a court of competent jurisdiction to be unavailable with
respect to any loss, liability, claim, damage or expense referred to
herein, 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, damage or
expense, in such manner as the underwriter(s) shall require in the
underwriting agreement and, to the extent not specified therein with
respect to any indemnified party contemplated by this Section 5 as entitled
to indemnification, in such proportion as is appropriate to reflect the
relative fault of the indemnifying party on the one hand and of such
indemnified party on the other in connection with the actual or alleged
statements or omissions which resulted in such loss, liability, damage or
expense, as well as any other relevant equitable considerations. The
relative fault of the indemnifying party and of such indemnified party
shall be determined by reference to, among other things, whether the untrue
or allegedly untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the
indemnifying party or by such indemnified party and the parties' relative
intent, knowledge, access to information and opportunities to correct or
prevent such statement or omission. The indemnity and contribution
provided herein shall be in addition to, and not in lieu of, any other
liability that one party may have to another.
6. Arbitration. In the event of any dispute between the parties arising
out of this Agreement, relating to any question of contract or tort,
including any claims allegedly based on a violation of any securities laws
or regulations, state or federal, both the Company and you agree to submit
such dispute through the American Arbitration Association (the
"Association") at the Association's Dallas, Texas, offices, in accordance
with the then-current rules of the Association; the award given by the
arbitrators shall be binding and a judgment can be obtained on any such
award in any court of competent jurisdiction. It is expressly agreed that
the arbitrators, as part of their award, can award attorneys fees to the
prevailing party.
7. Amendments and Waivers. This Agreement may be amended and the
Company may take any action herein prohibited, or omit to perform any act
herein required to be performed by it, only if the Company shall have
obtained your written consent to such amendment, action or omissions to act.
8. Notices. Notices and other communications under this Agreement shall
be in writing and shall be sent by registered mail, postage prepaid,
addressed:
(a) if to you, at the address shown above, unless you have advised the
Company in writing of a different address as to which notices shall be sent
under this Agreement; and
(b) if to the Company, at 8748 Quarters Lake Road, Baton Rouge,
Louisiana 70809, to the attention of Mr. David M. Loflin, President, or to
such other address as the Company shall have furnished to you.
9. Miscellaneous. This Agreement shall be binding upon and inure to the
benefit of and be enforceable by the respective successors and assigns of
the parties hereto, whether so expressed or not. This Agreement embodies
the entire agreement and understanding between the Company and you with
respect to the subject matter hereof and supersedes all prior agreements
and understandings relating to the subject matter hereof. This Agreement
shall be construed and enforced in accordance with, and governed by, the
law of the State of Louisiana. The headings in this Agreement are for
purposes of reference only and shall not limit or otherwise affect the
meaning hereof. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
Yours very truly,
USURF AMERICA, INC.
By: /s/ David M. Loflin
David M. Loflin
President
- -------------
EXHIBIT 10.82
- -------------
March 29, 2000
Eden Park Homes Ltd.
Registration Rights Letter Agreement
Gentlemen:
This letter will confirm our agreement and understanding with respect to
certain rights to register, under the Securities Act of 1933, as amended
(the "Act"), and applicable state securities laws ("Blue Sky Laws"), the
offer and sale of up to 5,000 shares of the $.0001 par value common stock
of USURF America, Inc., a Nevada corporation (the "Company"), which shares
of Common Stock underlie certain common stock purchase warrants (the
"Warrants") of the Company owned by you (such shares being referred to as
the "Subject Shares"). It is our understanding that:
1. Registration Rights. At any time after November 15, 2000, you may
demand on one occasion, in writing, the registration under the Act for sale
the Subject Shares underlying the Warrants owned by you. Upon the
Company's receipt of written demand by holders, including you, of more than
50% of the Warrants issued in the same private offering as your Warrants,
the Company will take steps to register your Subject Shares in a
registration statement (the "Registration Statement") under the Act. Your
right to such registration may be exercised one time only. Should the
Company elect to include the Subject Shares in a Registration Statement
prior to your demand having been made, the Company will notify you of such
fact. This election by the Company to include the Subject Shares shall be
deemed to satisfy your demand right of registration, whether or not you
elect to have the Subject Shares included in such Registration Statement.
2. Expenses. All expenses incurred in connection with the registration
of the Subject Shares requested pursuant to Section 1, including, without
limitation, all accounting and printing costs and fees, filing fees and
reasonable attorney fees incurred, shall be paid by the Company. In this
regard, the Company reserves the right to include additional selling
shareholders in any registration proceeding contemplated hereby.
3. Registration Procedures. At such time as the Company is required to
register any of the Subject Shares hereunder, the Company will promptly:
(a) prepare and file, in a timely manner, with the Securities and
Exchange Commission (the "Commission"), a Registration Statement with
respect to the Subject Shares and use its best efforts to cause such
Registration Statement to become effective, such Registration Statement to
comply as to form and content and in all material respects to the
Commission's forms, rules and regulations;
(b) prepare and file with the Commission such amendments and
supplements to the Registration Statement, the prospectus and any summary
or preliminary prospectus forming a part of, and used in connection
therewith, as may be necessary to keep such Registration Statement and
prospectus effective and current and to comply with the provisions of the
Act with respect to the disposition of all of the Subject Shares and other
securities, if any, covered by such Registration Statement until the
earlier of such time as all of such securities have been disposed of in
accordance with the intended methods of disposition by the seller or
sellers thereof set forth in such Registration Statement or the expiration
of 120 days after such Registration Statement becomes effective; and will
furnish to you prior to the filing thereof a copy of any amendment or
supplement to such Registration Statement or prospectus and shall not file
any such amendment or supplement to which you shall have reasonably
objected on the grounds that such amendment or supplement does not comply
in all material respects with the requirements of the Act or the rules or
regulations thereunder;
(c) furnish to you such number of conformed copies of such
Registration Statement and of each such amendment and supplement thereto
(in each case including all exhibits), such number of copies of the
prospectus included in such Registration Statement (including each
preliminary prospectus and any summary prospectus), all in conformity as to
form and substance with the requirements of the Act, such number of copies
of documents, if any, incorporated by reference in such Registration
Statement or prospectus, and such other documents, as you may reasonably
request;
(d) use its best efforts to register or qualify all the Subject Shares
covered by such Registration Statement under such other securities or blue
sky laws of such U.S. jurisdictions, as reasonably requested by you, that
permit "registration by coordination" of securities offerings (the Company
shall not be required to register or qualify the Subject Shares in any
state invoking merit review authority), to keep such registration or
qualification in effect for a minimum of 120 days after its initial
effective date, and do any and all other acts and things which may be
necessary or advisable to enable you to consummate the disposition in such
jurisdictions of your Subject Shares covered by such Registration
Statement, except that the Company shall not, for any such purpose, be
required to qualify generally to do business as a foreign corporation in
any jurisdiction wherein it would not, but for the requirements of this
subdivision (d), be obligated to be so qualified, or to subject itself to
taxation in any such jurisdiction or to consent to general service of
process in any such jurisdiction;
(e) furnish to you a signed counterpart, addressed to you, of (i) an
opinion of counsel for the Company, dated the effective date of such
Registration Statement, and (ii) a "comfort" letter, dated the effective
date of such Registration Statement, signed by the independent public
accountants who have certified the Company's financial statements included
in such Registration Statement, covering substantially the same matters
with respect to such Registration Statement (and the prospectus included
therein) and, in the case of such accountants' letter, with respect to
events subsequent to the date of such financial statements, as are
customarily covered in opinions of issuer's counsel and in accountants'
letters delivered to underwriters in underwritten public offerings of
securities and such other legal and financial matters, as you may
reasonably request;
(f) immediately notify you, at any time, when a prospectus relating
thereto is required to be delivered under the Act, upon discovery that, or
upon the happening of any event as a result of which, the prospectus
included in such Registration Statement, as then in effect, includes an
untrue statement of a material fact or omits to state any material fact
required to be stated therein or necessary to make the statements therein
not misleading in light of the circumstances then existing, and, at your
request, prepare and furnish to you a reasonable number of copies of a
supplement to, or an amendment of, such prospectus as may be necessary so
that, as thereafter delivered to the purchasers of the Subject Shares, such
prospectus shall not include any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary
to make the statements therein not misleading in the light of the
circumstances then existing;
(g) otherwise use its best efforts to comply with all applicable rules
and regulations of the Commission, and make available to its securities
holders, as soon as reasonably practicable, an earnings statement covering
the period of at least twelve months beginning with the first month of the
first fiscal quarter after the effective date of such Registration
Statement, which earnings statement shall satisfy the provisions of Section
11(a) of the Act; and
(h) provide and cause to be maintained a transfer agent and registrar
for the Subject Shares covered by such Registration Statement from and
after a date not later than the effective date of such Registration Statement.
The Company may require you to furnish the Company such information
regarding your sales of the Subject Shares as the Company may from time to
time reasonably request in writing and as shall be required by law or by
the Commission in connection therewith. Such information shall be
furnished in writing by you stating that it is for use in the preparation
of such Registration Statement and all prospectuses and supplements or
amendments thereto.
4. Preparation; Reasonable Investigation. In connection with the
preparation and filing of the Registration Statement registering your
Subject Shares under the Act, the Company will give you and your
underwriters, if any, and your counsel and accountants at your own expense,
the opportunity to participate in the preparation of such Registration
Statement, each prospectus included therein and filed with the Commission
and each amendment thereof or supplement thereto, and will give each of
them such access to its books and records and such opportunities to discuss
the business of the Company with its officers and the independent public
accountants who have certified its financial statements as shall be
necessary in the opinion of you and such underwriter or your respective
counsel, to conduct a reasonable investigation within the meaning of the Act.
5. Indemnification.
(a) Indemnification by the Company. In the event of registration of
your Subject Shares under the Act, the Company will, and hereby does,
indemnify and hold you harmless, against any and all losses, claims,
damages, liabilities or expenses, joint or several (including, without
limitation, the costs and expenses of investigating, preparing for and
defending any legal proceeding, including reasonable attorneys' fees) to
which you may become subject under the Act or otherwise, insofar as such
losses, claims, damages, liabilities or expenses (or actions or proceedings
in respect thereof) arise out of, or are based upon, (i) any untrue
statement or alleged untrue statement of any material fact contained in the
Registration Statement under which your Subject Shares were registered
under the Act, any preliminary prospectus, final prospectus or summary
prospectus contained therein, or any amendment or supplement thereto, or
any document incorporated by reference therein, or (ii) any omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, and the
Company will reimburse you for any legal or any other expenses reasonably
incurred by you in connection with investigating or defending any such
loss, claim, liability, action or proceeding; provided, however, that the
Company shall not be liable in any such case to the extent that any such
loss, claim, damage, liability or expense (or action or proceeding in
respect thereof) arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in such
Registration Statement, any such preliminary prospectus, final prospectus,
summary prospectus, amendment or supplement in reliance upon, and in
conformity with, written information furnished to the Company through an
instrument duly executed by you stating that it is for use in the
preparation thereof. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of you and shall
survive the transfer of the Subject Shares by you.
(b) Indemnification by You. In the event of registration of your
Subject Shares under the Act, pursuant to which you offer or sell Subject
Shares covered by such Registration Statement, you will, and hereby do,
indemnify and hold harmless (in the same manner and to the same extent as
set forth in subdivision (a) of this Section 5) the Company, each director
of the Company, each officer of the Company who shall sign such
Registration Statement and each other person, if any, who controls the
Company within the meaning of the Act, with respect to any statement in, or
omission from, such Registration Statement, any preliminary prospectus,
final prospectus or summary prospectus included therein, or any amendment
or supplement thereto, if such statement or omission was made in reliance
upon and in conformity with written information furnished to the Company
through an instrument duly executed by you specifically stating that it is
for use in the preparation of such Registration Statement, preliminary
prospectus, final prospectus, summary prospectus, amendment or supplement.
Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of the Company or any such director,
officer or controlling person and shall survive the transfer of Subject
Shares by you.
(c) Notice of Claims, etc. Promptly after receipt by an indemnified
party of notice of the commencement of any action or proceeding involving a
claim referred to in the preceding subdivisions of this Section 5, such
indemnified party will, if a claim in respect thereof is to be made against
an indemnifying party, give written notice to the latter of the
commencement of such action, provided, however, that the failure of any
indemnified party to give notice as provided herein shall not relieve the
indemnifying party of its obligations under the preceding subdivisions of
this Section 5. In case any such action is brought against an indemnified
party, unless in such indemnified party's reasonable judgment a conflict of
interest between such indemnified and indemnifying party may exist in
respect of such claim, the indemnifying party shall be entitled to
participate in, and to assume the defense thereof, jointly with any other
indemnifying party similarly notified, to the extent that it may wish, with
counsel reasonably satisfactory to such indemnified party, and after notice
from the indemnifying party to such indemnified party of its election so to
assume the defense thereof, the indemnifying party shall not be liable to
such indemnified party for any legal or other expenses subsequently
incurred by the latter in connection with the defense thereof other than
reasonable costs of investigation. No indemnifying party shall, without
the consent of the indemnified party, consent to entry of any judgment or
enter into any settlement of such proceedings which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a complete and unconditional release from all
liability in respect to such claim or litigation.
(d) Indemnification Payments. The indemnification required by this
Section 5 shall be made by periodic payments of the amount thereof during
the course of the investigation or defense, as and when bills are received
or expense, loss, damage or liability is incurred.
(e) Contribution. If the indemnification provided for in this Section
5 is held by a court of competent jurisdiction to be unavailable with
respect to any loss, liability, claim, damage or expense referred to
herein, 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, damage or
expense, in such manner as the underwriter(s) shall require in the
underwriting agreement and, to the extent not specified therein with
respect to any indemnified party contemplated by this Section 5 as entitled
to indemnification, in such proportion as is appropriate to reflect the
relative fault of the indemnifying party on the one hand and of such
indemnified party on the other in connection with the actual or alleged
statements or omissions which resulted in such loss, liability, damage or
expense, as well as any other relevant equitable considerations. The
relative fault of the indemnifying party and of such indemnified party
shall be determined by reference to, among other things, whether the untrue
or allegedly untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the
indemnifying party or by such indemnified party and the parties' relative
intent, knowledge, access to information and opportunities to correct or
prevent such statement or omission. The indemnity and contribution
provided herein shall be in addition to, and not in lieu of, any other
liability that one party may have to another.
6. Arbitration. In the event of any dispute between the parties arising
out of this Agreement, relating to any question of contract or tort,
including any claims allegedly based on a violation of any securities laws
or regulations, state or federal, both the Company and you agree to submit
such dispute through the American Arbitration Association (the
"Association") at the Association's Dallas, Texas, offices, in accordance
with the then-current rules of the Association; the award given by the
arbitrators shall be binding and a judgment can be obtained on any such
award in any court of competent jurisdiction. It is expressly agreed that
the arbitrators, as part of their award, can award attorneys fees to the
prevailing party.
7. Amendments and Waivers. This Agreement may be amended and the
Company may take any action herein prohibited, or omit to perform any act
herein required to be performed by it, only if the Company shall have
obtained your written consent to such amendment, action or omissions to act.
8. Notices. Notices and other communications under this Agreement shall
be in writing and shall be sent by registered mail, postage prepaid,
addressed:
(a) if to you, at the address shown above, unless you have advised the
Company in writing of a different address as to which notices shall be sent
under this Agreement; and
(b) if to the Company, at 8748 Quarters Lake Road, Baton Rouge,
Louisiana 70809, to the attention of Mr. David M. Loflin, President, or to
such other address as the Company shall have furnished to you.
9. Miscellaneous. This Agreement shall be binding upon and inure to the
benefit of and be enforceable by the respective successors and assigns of
the parties hereto, whether so expressed or not. This Agreement embodies
the entire agreement and understanding between the Company and you with
respect to the subject matter hereof and supersedes all prior agreements
and understandings relating to the subject matter hereof. This Agreement
shall be construed and enforced in accordance with, and governed by, the
law of the State of Louisiana. The headings in this Agreement are for
purposes of reference only and shall not limit or otherwise affect the
meaning hereof. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
Yours very truly,
USURF AMERICA, INC.
By: /s/ David M. Loflin
David M. Loflin
President
- -------------
EXHIBIT 10.83
- -------------
March 29, 2000
G. Paul Dumas
Registration Rights Letter Agreement
Dear Mr. Dumas:
This letter will confirm our agreement and understanding with respect to
certain rights to register, under the Securities Act of 1933, as amended
(the "Act"), and applicable state securities laws ("Blue Sky Laws"), the
offer and sale of up to 5,000 shares of the $.0001 par value common stock
of USURF America, Inc., a Nevada corporation (the "Company"), which shares
of Common Stock underlie certain common stock purchase warrants (the
"Warrants") of the Company owned by you (such shares being referred to as
the "Subject Shares"). It is our understanding that:
1. Registration Rights. At any time after November 15, 2000, you may
demand on one occasion, in writing, the registration under the Act for sale
the Subject Shares underlying the Warrants owned by you. Upon the
Company's receipt of written demand by holders, including you, of more than
50% of the Warrants issued in the same private offering as your Warrants,
the Company will take steps to register your Subject Shares in a
registration statement (the "Registration Statement") under the Act. Your
right to such registration may be exercised one time only. Should the
Company elect to include the Subject Shares in a Registration Statement
prior to your demand having been made, the Company will notify you of such
fact. This election by the Company to include the Subject Shares shall be
deemed to satisfy your demand right of registration, whether or not you
elect to have the Subject Shares included in such Registration Statement.
2. Expenses. All expenses incurred in connection with the registration
of the Subject Shares requested pursuant to Section 1, including, without
limitation, all accounting and printing costs and fees, filing fees and
reasonable attorney fees incurred, shall be paid by the Company. In this
regard, the Company reserves the right to include additional selling
shareholders in any registration proceeding contemplated hereby.
3. Registration Procedures. At such time as the Company is required to
register any of the Subject Shares hereunder, the Company will promptly:
(a) prepare and file, in a timely manner, with the Securities and
Exchange Commission (the "Commission"), a Registration Statement with
respect to the Subject Shares and use its best efforts to cause such
Registration Statement to become effective, such Registration Statement to
comply as to form and content and in all material respects to the
Commission's forms, rules and regulations;
(b) prepare and file with the Commission such amendments and
supplements to the Registration Statement, the prospectus and any summary
or preliminary prospectus forming a part of, and used in connection
therewith, as may be necessary to keep such Registration Statement and
prospectus effective and current and to comply with the provisions of the
Act with respect to the disposition of all of the Subject Shares and other
securities, if any, covered by such Registration Statement until the
earlier of such time as all of such securities have been disposed of in
accordance with the intended methods of disposition by the seller or
sellers thereof set forth in such Registration Statement or the expiration
of 120 days after such Registration Statement becomes effective; and will
furnish to you prior to the filing thereof a copy of any amendment or
supplement to such Registration Statement or prospectus and shall not file
any such amendment or supplement to which you shall have reasonably
objected on the grounds that such amendment or supplement does not comply
in all material respects with the requirements of the Act or the rules or
regulations thereunder;
(c) furnish to you such number of conformed copies of such
Registration Statement and of each such amendment and supplement thereto
(in each case including all exhibits), such number of copies of the
prospectus included in such Registration Statement (including each
preliminary prospectus and any summary prospectus), all in conformity as to
form and substance with the requirements of the Act, such number of copies
of documents, if any, incorporated by reference in such Registration
Statement or prospectus, and such other documents, as you may reasonably
request;
(d) use its best efforts to register or qualify all the Subject Shares
covered by such Registration Statement under such other securities or blue
sky laws of such U.S. jurisdictions, as reasonably requested by you, that
permit "registration by coordination" of securities offerings (the Company
shall not be required to register or qualify the Subject Shares in any
state invoking merit review authority), to keep such registration or
qualification in effect for a minimum of 120 days after its initial
effective date, and do any and all other acts and things which may be
necessary or advisable to enable you to consummate the disposition in such
jurisdictions of your Subject Shares covered by such Registration
Statement, except that the Company shall not, for any such purpose, be
required to qualify generally to do business as a foreign corporation in
any jurisdiction wherein it would not, but for the requirements of this
subdivision (d), be obligated to be so qualified, or to subject itself to
taxation in any such jurisdiction or to consent to general service of
process in any such jurisdiction;
(e) furnish to you a signed counterpart, addressed to you, of (i) an
opinion of counsel for the Company, dated the effective date of such
Registration Statement, and (ii) a "comfort" letter, dated the effective
date of such Registration Statement, signed by the independent public
accountants who have certified the Company's financial statements included
in such Registration Statement, covering substantially the same matters
with respect to such Registration Statement (and the prospectus included
therein) and, in the case of such accountants' letter, with respect to
events subsequent to the date of such financial statements, as are
customarily covered in opinions of issuer's counsel and in accountants'
letters delivered to underwriters in underwritten public offerings of
securities and such other legal and financial matters, as you may
reasonably request;
(f) immediately notify you, at any time, when a prospectus relating
thereto is required to be delivered under the Act, upon discovery that, or
upon the happening of any event as a result of which, the prospectus
included in such Registration Statement, as then in effect, includes an
untrue statement of a material fact or omits to state any material fact
required to be stated therein or necessary to make the statements therein
not misleading in light of the circumstances then existing, and, at your
request, prepare and furnish to you a reasonable number of copies of a
supplement to, or an amendment of, such prospectus as may be necessary so
that, as thereafter delivered to the purchasers of the Subject Shares, such
prospectus shall not include any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary
to make the statements therein not misleading in the light of the
circumstances then existing;
(g) otherwise use its best efforts to comply with all applicable rules
and regulations of the Commission, and make available to its securities
holders, as soon as reasonably practicable, an earnings statement covering
the period of at least twelve months beginning with the first month of the
first fiscal quarter after the effective date of such Registration
Statement, which earnings statement shall satisfy the provisions of Section
11(a) of the Act; and
(h) provide and cause to be maintained a transfer agent and registrar
for the Subject Shares covered by such Registration Statement from and
after a date not later than the effective date of such Registration Statement.
The Company may require you to furnish the Company such information
regarding your sales of the Subject Shares as the Company may from time to
time reasonably request in writing and as shall be required by law or by
the Commission in connection therewith. Such information shall be
furnished in writing by you stating that it is for use in the preparation
of such Registration Statement and all prospectuses and supplements or
amendments thereto.
4. Preparation; Reasonable Investigation. In connection with the
preparation and filing of the Registration Statement registering your
Subject Shares under the Act, the Company will give you and your
underwriters, if any, and your counsel and accountants at your own expense,
the opportunity to participate in the preparation of such Registration
Statement, each prospectus included therein and filed with the Commission
and each amendment thereof or supplement thereto, and will give each of
them such access to its books and records and such opportunities to discuss
the business of the Company with its officers and the independent public
accountants who have certified its financial statements as shall be
necessary in the opinion of you and such underwriter or your respective
counsel, to conduct a reasonable investigation within the meaning of the Act.
5. Indemnification.
(a) Indemnification by the Company. In the event of registration of
your Subject Shares under the Act, the Company will, and hereby does,
indemnify and hold you harmless, against any and all losses, claims,
damages, liabilities or expenses, joint or several (including, without
limitation, the costs and expenses of investigating, preparing for and
defending any legal proceeding, including reasonable attorneys' fees) to
which you may become subject under the Act or otherwise, insofar as such
losses, claims, damages, liabilities or expenses (or actions or proceedings
in respect thereof) arise out of, or are based upon, (i) any untrue
statement or alleged untrue statement of any material fact contained in the
Registration Statement under which your Subject Shares were registered
under the Act, any preliminary prospectus, final prospectus or summary
prospectus contained therein, or any amendment or supplement thereto, or
any document incorporated by reference therein, or (ii) any omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, and the
Company will reimburse you for any legal or any other expenses reasonably
incurred by you in connection with investigating or defending any such
loss, claim, liability, action or proceeding; provided, however, that the
Company shall not be liable in any such case to the extent that any such
loss, claim, damage, liability or expense (or action or proceeding in
respect thereof) arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in such
Registration Statement, any such preliminary prospectus, final prospectus,
summary prospectus, amendment or supplement in reliance upon, and in
conformity with, written information furnished to the Company through an
instrument duly executed by you stating that it is for use in the
preparation thereof. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of you and shall
survive the transfer of the Subject Shares by you.
(b) Indemnification by You. In the event of registration of your
Subject Shares under the Act, pursuant to which you offer or sell Subject
Shares covered by such Registration Statement, you will, and hereby do,
indemnify and hold harmless (in the same manner and to the same extent as
set forth in subdivision (a) of this Section 5) the Company, each director
of the Company, each officer of the Company who shall sign such
Registration Statement and each other person, if any, who controls the
Company within the meaning of the Act, with respect to any statement in, or
omission from, such Registration Statement, any preliminary prospectus,
final prospectus or summary prospectus included therein, or any amendment
or supplement thereto, if such statement or omission was made in reliance
upon and in conformity with written information furnished to the Company
through an instrument duly executed by you specifically stating that it is
for use in the preparation of such Registration Statement, preliminary
prospectus, final prospectus, summary prospectus, amendment or supplement.
Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of the Company or any such director,
officer or controlling person and shall survive the transfer of Subject
Shares by you.
(c) Notice of Claims, etc. Promptly after receipt by an indemnified
party of notice of the commencement of any action or proceeding involving a
claim referred to in the preceding subdivisions of this Section 5, such
indemnified party will, if a claim in respect thereof is to be made against
an indemnifying party, give written notice to the latter of the
commencement of such action, provided, however, that the failure of any
indemnified party to give notice as provided herein shall not relieve the
indemnifying party of its obligations under the preceding subdivisions of
this Section 5. In case any such action is brought against an indemnified
party, unless in such indemnified party's reasonable judgment a conflict of
interest between such indemnified and indemnifying party may exist in
respect of such claim, the indemnifying party shall be entitled to
participate in, and to assume the defense thereof, jointly with any other
indemnifying party similarly notified, to the extent that it may wish, with
counsel reasonably satisfactory to such indemnified party, and after notice
from the indemnifying party to such indemnified party of its election so to
assume the defense thereof, the indemnifying party shall not be liable to
such indemnified party for any legal or other expenses subsequently
incurred by the latter in connection with the defense thereof other than
reasonable costs of investigation. No indemnifying party shall, without
the consent of the indemnified party, consent to entry of any judgment or
enter into any settlement of such proceedings which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a complete and unconditional release from all
liability in respect to such claim or litigation.
(d) Indemnification Payments. The indemnification required by this
Section 5 shall be made by periodic payments of the amount thereof during
the course of the investigation or defense, as and when bills are received
or expense, loss, damage or liability is incurred.
(e) Contribution. If the indemnification provided for in this Section
5 is held by a court of competent jurisdiction to be unavailable with
respect to any loss, liability, claim, damage or expense referred to
herein, 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, damage or
expense, in such manner as the underwriter(s) shall require in the
underwriting agreement and, to the extent not specified therein with
respect to any indemnified party contemplated by this Section 5 as entitled
to indemnification, in such proportion as is appropriate to reflect the
relative fault of the indemnifying party on the one hand and of such
indemnified party on the other in connection with the actual or alleged
statements or omissions which resulted in such loss, liability, damage or
expense, as well as any other relevant equitable considerations. The
relative fault of the indemnifying party and of such indemnified party
shall be determined by reference to, among other things, whether the untrue
or allegedly untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the
indemnifying party or by such indemnified party and the parties' relative
intent, knowledge, access to information and opportunities to correct or
prevent such statement or omission. The indemnity and contribution
provided herein shall be in addition to, and not in lieu of, any other
liability that one party may have to another.
6. Arbitration. In the event of any dispute between the parties arising
out of this Agreement, relating to any question of contract or tort,
including any claims allegedly based on a violation of any securities laws
or regulations, state or federal, both the Company and you agree to submit
such dispute through the American Arbitration Association (the
"Association") at the Association's Dallas, Texas, offices, in accordance
with the then-current rules of the Association; the award given by the
arbitrators shall be binding and a judgment can be obtained on any such
award in any court of competent jurisdiction. It is expressly agreed that
the arbitrators, as part of their award, can award attorneys fees to the
prevailing party.
7. Amendments and Waivers. This Agreement may be amended and the
Company may take any action herein prohibited, or omit to perform any act
herein required to be performed by it, only if the Company shall have
obtained your written consent to such amendment, action or omissions to act.
8. Notices. Notices and other communications under this Agreement shall
be in writing and shall be sent by registered mail, postage prepaid,
addressed:
(a) if to you, at the address shown above, unless you have advised the
Company in writing of a different address as to which notices shall be sent
under this Agreement; and
(b) if to the Company, at 8748 Quarters Lake Road, Baton Rouge,
Louisiana 70809, to the attention of Mr. David M. Loflin, President, or to
such other address as the Company shall have furnished to you.
9. Miscellaneous. This Agreement shall be binding upon and inure to the
benefit of and be enforceable by the respective successors and assigns of
the parties hereto, whether so expressed or not. This Agreement embodies
the entire agreement and understanding between the Company and you with
respect to the subject matter hereof and supersedes all prior agreements
and understandings relating to the subject matter hereof. This Agreement
shall be construed and enforced in accordance with, and governed by, the
law of the State of Louisiana. The headings in this Agreement are for
purposes of reference only and shall not limit or otherwise affect the
meaning hereof. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
Yours very truly,
USURF AMERICA, INC.
By: /s/ David M. Loflin
David M. Loflin
President
- -------------
EXHIBIT 10.84
- -------------
March 29, 2000
Mr. Daniel E. Pisenti
Registration Rights Letter Agreement
Dear Mr. Pisenti:
This letter will confirm our agreement and understanding with respect to
certain rights to register, under the Securities Act of 1933, as amended
(the "Act"), and applicable state securities laws ("Blue Sky Laws"), the
offer and sale of up to 5,000 shares of the $.0001 par value common stock
of USURF America, Inc., a Nevada corporation (the "Company"), which shares
of Common Stock underlie certain common stock purchase warrants (the
"Warrants") of the Company owned by you (such shares being referred to as
the "Subject Shares"). It is our understanding that:
1. Registration Rights. At any time after November 15, 2000, you may
demand on one occasion, in writing, the registration under the Act for sale
the Subject Shares underlying the Warrants owned by you. Upon the
Company's receipt of written demand by holders, including you, of more than
50% of the Warrants issued in the same private offering as your Warrants,
the Company will take steps to register your Subject Shares in a
registration statement (the "Registration Statement") under the Act. Your
right to such registration may be exercised one time only. Should the
Company elect to include the Subject Shares in a Registration Statement
prior to your demand having been made, the Company will notify you of such
fact. This election by the Company to include the Subject Shares shall be
deemed to satisfy your demand right of registration, whether or not you
elect to have the Subject Shares included in such Registration Statement.
2. Expenses. All expenses incurred in connection with the registration
of the Subject Shares requested pursuant to Section 1, including, without
limitation, all accounting and printing costs and fees, filing fees and
reasonable attorney fees incurred, shall be paid by the Company. In this
regard, the Company reserves the right to include additional selling
shareholders in any registration proceeding contemplated hereby.
3. Registration Procedures. At such time as the Company is required to
register any of the Subject Shares hereunder, the Company will promptly:
(a) prepare and file, in a timely manner, with the Securities and
Exchange Commission (the "Commission"), a Registration Statement with
respect to the Subject Shares and use its best efforts to cause such
Registration Statement to become effective, such Registration Statement to
comply as to form and content and in all material respects to the
Commission's forms, rules and regulations;
(b) prepare and file with the Commission such amendments and
supplements to the Registration Statement, the prospectus and any summary
or preliminary prospectus forming a part of, and used in connection
therewith, as may be necessary to keep such Registration Statement and
prospectus effective and current and to comply with the provisions of the
Act with respect to the disposition of all of the Subject Shares and other
securities, if any, covered by such Registration Statement until the
earlier of such time as all of such securities have been disposed of in
accordance with the intended methods of disposition by the seller or
sellers thereof set forth in such Registration Statement or the expiration
of 120 days after such Registration Statement becomes effective; and will
furnish to you prior to the filing thereof a copy of any amendment or
supplement to such Registration Statement or prospectus and shall not file
any such amendment or supplement to which you shall have reasonably
objected on the grounds that such amendment or supplement does not comply
in all material respects with the requirements of the Act or the rules or
regulations thereunder;
(c) furnish to you such number of conformed copies of such
Registration Statement and of each such amendment and supplement thereto
(in each case including all exhibits), such number of copies of the
prospectus included in such Registration Statement (including each
preliminary prospectus and any summary prospectus), all in conformity as to
form and substance with the requirements of the Act, such number of copies
of documents, if any, incorporated by reference in such Registration
Statement or prospectus, and such other documents, as you may reasonably
request;
(d) use its best efforts to register or qualify all the Subject Shares
covered by such Registration Statement under such other securities or blue
sky laws of such U.S. jurisdictions, as reasonably requested by you, that
permit "registration by coordination" of securities offerings (the Company
shall not be required to register or qualify the Subject Shares in any
state invoking merit review authority), to keep such registration or
qualification in effect for a minimum of 120 days after its initial
effective date, and do any and all other acts and things which may be
necessary or advisable to enable you to consummate the disposition in such
jurisdictions of your Subject Shares covered by such Registration
Statement, except that the Company shall not, for any such purpose, be
required to qualify generally to do business as a foreign corporation in
any jurisdiction wherein it would not, but for the requirements of this
subdivision (d), be obligated to be so qualified, or to subject itself to
taxation in any such jurisdiction or to consent to general service of
process in any such jurisdiction;
(e) furnish to you a signed counterpart, addressed to you, of (i) an
opinion of counsel for the Company, dated the effective date of such
Registration Statement, and (ii) a "comfort" letter, dated the effective
date of such Registration Statement, signed by the independent public
accountants who have certified the Company's financial statements included
in such Registration Statement, covering substantially the same matters
with respect to such Registration Statement (and the prospectus included
therein) and, in the case of such accountants' letter, with respect to
events subsequent to the date of such financial statements, as are
customarily covered in opinions of issuer's counsel and in accountants'
letters delivered to underwriters in underwritten public offerings of
securities and such other legal and financial matters, as you may
reasonably request;
(f) immediately notify you, at any time, when a prospectus relating
thereto is required to be delivered under the Act, upon discovery that, or
upon the happening of any event as a result of which, the prospectus
included in such Registration Statement, as then in effect, includes an
untrue statement of a material fact or omits to state any material fact
required to be stated therein or necessary to make the statements therein
not misleading in light of the circumstances then existing, and, at your
request, prepare and furnish to you a reasonable number of copies of a
supplement to, or an amendment of, such prospectus as may be necessary so
that, as thereafter delivered to the purchasers of the Subject Shares, such
prospectus shall not include any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary
to make the statements therein not misleading in the light of the
circumstances then existing;
(g) otherwise use its best efforts to comply with all applicable rules
and regulations of the Commission, and make available to its securities
holders, as soon as reasonably practicable, an earnings statement covering
the period of at least twelve months beginning with the first month of the
first fiscal quarter after the effective date of such Registration
Statement, which earnings statement shall satisfy the provisions of Section
11(a) of the Act; and
(h) provide and cause to be maintained a transfer agent and registrar
for the Subject Shares covered by such Registration Statement from and
after a date not later than the effective date of such Registration Statement.
The Company may require you to furnish the Company such information
regarding your sales of the Subject Shares as the Company may from time to
time reasonably request in writing and as shall be required by law or by
the Commission in connection therewith. Such information shall be
furnished in writing by you stating that it is for use in the preparation
of such Registration Statement and all prospectuses and supplements or
amendments thereto.
4. Preparation; Reasonable Investigation. In connection with the
preparation and filing of the Registration Statement registering your
Subject Shares under the Act, the Company will give you and your
underwriters, if any, and your counsel and accountants at your own expense,
the opportunity to participate in the preparation of such Registration
Statement, each prospectus included therein and filed with the Commission
and each amendment thereof or supplement thereto, and will give each of
them such access to its books and records and such opportunities to discuss
the business of the Company with its officers and the independent public
accountants who have certified its financial statements as shall be
necessary in the opinion of you and such underwriter or your respective
counsel, to conduct a reasonable investigation within the meaning of the Act.
5. Indemnification.
(a) Indemnification by the Company. In the event of registration of
your Subject Shares under the Act, the Company will, and hereby does,
indemnify and hold you harmless, against any and all losses, claims,
damages, liabilities or expenses, joint or several (including, without
limitation, the costs and expenses of investigating, preparing for and
defending any legal proceeding, including reasonable attorneys' fees) to
which you may become subject under the Act or otherwise, insofar as such
losses, claims, damages, liabilities or expenses (or actions or proceedings
in respect thereof) arise out of, or are based upon, (i) any untrue
statement or alleged untrue statement of any material fact contained in the
Registration Statement under which your Subject Shares were registered
under the Act, any preliminary prospectus, final prospectus or summary
prospectus contained therein, or any amendment or supplement thereto, or
any document incorporated by reference therein, or (ii) any omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, and the
Company will reimburse you for any legal or any other expenses reasonably
incurred by you in connection with investigating or defending any such
loss, claim, liability, action or proceeding; provided, however, that the
Company shall not be liable in any such case to the extent that any such
loss, claim, damage, liability or expense (or action or proceeding in
respect thereof) arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in such
Registration Statement, any such preliminary prospectus, final prospectus,
summary prospectus, amendment or supplement in reliance upon, and in
conformity with, written information furnished to the Company through an
instrument duly executed by you stating that it is for use in the
preparation thereof. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of you and shall
survive the transfer of the Subject Shares by you.
(b) Indemnification by You. In the event of registration of your
Subject Shares under the Act, pursuant to which you offer or sell Subject
Shares covered by such Registration Statement, you will, and hereby do,
indemnify and hold harmless (in the same manner and to the same extent as
set forth in subdivision (a) of this Section 5) the Company, each director
of the Company, each officer of the Company who shall sign such
Registration Statement and each other person, if any, who controls the
Company within the meaning of the Act, with respect to any statement in, or
omission from, such Registration Statement, any preliminary prospectus,
final prospectus or summary prospectus included therein, or any amendment
or supplement thereto, if such statement or omission was made in reliance
upon and in conformity with written information furnished to the Company
through an instrument duly executed by you specifically stating that it is
for use in the preparation of such Registration Statement, preliminary
prospectus, final prospectus, summary prospectus, amendment or supplement.
Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of the Company or any such director,
officer or controlling person and shall survive the transfer of Subject
Shares by you.
(c) Notice of Claims, etc. Promptly after receipt by an indemnified
party of notice of the commencement of any action or proceeding involving a
claim referred to in the preceding subdivisions of this Section 5, such
indemnified party will, if a claim in respect thereof is to be made against
an indemnifying party, give written notice to the latter of the
commencement of such action, provided, however, that the failure of any
indemnified party to give notice as provided herein shall not relieve the
indemnifying party of its obligations under the preceding subdivisions of
this Section 5. In case any such action is brought against an indemnified
party, unless in such indemnified party's reasonable judgment a conflict of
interest between such indemnified and indemnifying party may exist in
respect of such claim, the indemnifying party shall be entitled to
participate in, and to assume the defense thereof, jointly with any other
indemnifying party similarly notified, to the extent that it may wish, with
counsel reasonably satisfactory to such indemnified party, and after notice
from the indemnifying party to such indemnified party of its election so to
assume the defense thereof, the indemnifying party shall not be liable to
such indemnified party for any legal or other expenses subsequently
incurred by the latter in connection with the defense thereof other than
reasonable costs of investigation. No indemnifying party shall, without
the consent of the indemnified party, consent to entry of any judgment or
enter into any settlement of such proceedings which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a complete and unconditional release from all
liability in respect to such claim or litigation.
(d) Indemnification Payments. The indemnification required by this
Section 5 shall be made by periodic payments of the amount thereof during
the course of the investigation or defense, as and when bills are received
or expense, loss, damage or liability is incurred.
(e) Contribution. If the indemnification provided for in this Section
5 is held by a court of competent jurisdiction to be unavailable with
respect to any loss, liability, claim, damage or expense referred to
herein, 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, damage or
expense, in such manner as the underwriter(s) shall require in the
underwriting agreement and, to the extent not specified therein with
respect to any indemnified party contemplated by this Section 5 as entitled
to indemnification, in such proportion as is appropriate to reflect the
relative fault of the indemnifying party on the one hand and of such
indemnified party on the other in connection with the actual or alleged
statements or omissions which resulted in such loss, liability, damage or
expense, as well as any other relevant equitable considerations. The
relative fault of the indemnifying party and of such indemnified party
shall be determined by reference to, among other things, whether the untrue
or allegedly untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the
indemnifying party or by such indemnified party and the parties' relative
intent, knowledge, access to information and opportunities to correct or
prevent such statement or omission. The indemnity and contribution
provided herein shall be in addition to, and not in lieu of, any other
liability that one party may have to another.
6. Arbitration. In the event of any dispute between the parties arising
out of this Agreement, relating to any question of contract or tort,
including any claims allegedly based on a violation of any securities laws
or regulations, state or federal, both the Company and you agree to submit
such dispute through the American Arbitration Association (the
"Association") at the Association's Dallas, Texas, offices, in accordance
with the then-current rules of the Association; the award given by the
arbitrators shall be binding and a judgment can be obtained on any such
award in any court of competent jurisdiction. It is expressly agreed that
the arbitrators, as part of their award, can award attorneys fees to the
prevailing party.
7. Amendments and Waivers. This Agreement may be amended and the
Company may take any action herein prohibited, or omit to perform any act
herein required to be performed by it, only if the Company shall have
obtained your written consent to such amendment, action or omissions to act.
8. Notices. Notices and other communications under this Agreement shall
be in writing and shall be sent by registered mail, postage prepaid,
addressed:
(a) if to you, at the address shown above, unless you have advised the
Company in writing of a different address as to which notices shall be sent
under this Agreement; and
(b) if to the Company, at 8748 Quarters Lake Road, Baton Rouge,
Louisiana 70809, to the attention of Mr. David M. Loflin, President, or to
such other address as the Company shall have furnished to you.
9. Miscellaneous. This Agreement shall be binding upon and inure to the
benefit of and be enforceable by the respective successors and assigns of
the parties hereto, whether so expressed or not. This Agreement embodies
the entire agreement and understanding between the Company and you with
respect to the subject matter hereof and supersedes all prior agreements
and understandings relating to the subject matter hereof. This Agreement
shall be construed and enforced in accordance with, and governed by, the
law of the State of Louisiana. The headings in this Agreement are for
purposes of reference only and shall not limit or otherwise affect the
meaning hereof. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
Yours very truly,
USURF AMERICA, INC.
By: /s/ David M. Loflin
David M. Loflin
President
- -------------
EXHIBIT 10.85
- -------------
March 29, 2000
Wolfgang and Helga Rochow
Registration Rights Letter Agreement
Dear Mr. and Mrs. Rochow:
This letter will confirm our agreement and understanding with respect to
certain rights to register, under the Securities Act of 1933, as amended
(the "Act"), and applicable state securities laws ("Blue Sky Laws"), the
offer and sale of up to 5,000 shares of the $.0001 par value common stock
of USURF America, Inc., a Nevada corporation (the "Company"), which shares
of Common Stock underlie certain common stock purchase warrants (the
"Warrants") of the Company owned by you (such shares being referred to as
the "Subject Shares"). It is our understanding that:
1. Registration Rights. At any time after November 15, 2000, you may
demand on one occasion, in writing, the registration under the Act for sale
the Subject Shares underlying the Warrants owned by you. Upon the
Company's receipt of written demand by holders, including you, of more than
50% of the Warrants issued in the same private offering as your Warrants,
the Company will take steps to register your Subject Shares in a
registration statement (the "Registration Statement") under the Act. Your
right to such registration may be exercised one time only. Should the
Company elect to include the Subject Shares in a Registration Statement
prior to your demand having been made, the Company will notify you of such
fact. This election by the Company to include the Subject Shares shall be
deemed to satisfy your demand right of registration, whether or not you
elect to have the Subject Shares included in such Registration Statement.
2. Expenses. All expenses incurred in connection with the registration
of the Subject Shares requested pursuant to Section 1, including, without
limitation, all accounting and printing costs and fees, filing fees and
reasonable attorney fees incurred, shall be paid by the Company. In this
regard, the Company reserves the right to include additional selling
shareholders in any registration proceeding contemplated hereby.
3. Registration Procedures. At such time as the Company is required to
register any of the Subject Shares hereunder, the Company will promptly:
(a) prepare and file, in a timely manner, with the Securities and
Exchange Commission (the "Commission"), a Registration Statement with
respect to the Subject Shares and use its best efforts to cause such
Registration Statement to become effective, such Registration Statement to
comply as to form and content and in all material respects to the
Commission's forms, rules and regulations;
(b) prepare and file with the Commission such amendments and
supplements to the Registration Statement, the prospectus and any summary
or preliminary prospectus forming a part of, and used in connection
therewith, as may be necessary to keep such Registration Statement and
prospectus effective and current and to comply with the provisions of the
Act with respect to the disposition of all of the Subject Shares and other
securities, if any, covered by such Registration Statement until the
earlier of such time as all of such securities have been disposed of in
accordance with the intended methods of disposition by the seller or
sellers thereof set forth in such Registration Statement or the expiration
of 120 days after such Registration Statement becomes effective; and will
furnish to you prior to the filing thereof a copy of any amendment or
supplement to such Registration Statement or prospectus and shall not file
any such amendment or supplement to which you shall have reasonably
objected on the grounds that such amendment or supplement does not comply
in all material respects with the requirements of the Act or the rules or
regulations thereunder;
(c) furnish to you such number of conformed copies of such
Registration Statement and of each such amendment and supplement thereto
(in each case including all exhibits), such number of copies of the
prospectus included in such Registration Statement (including each
preliminary prospectus and any summary prospectus), all in conformity as to
form and substance with the requirements of the Act, such number of copies
of documents, if any, incorporated by reference in such Registration
Statement or prospectus, and such other documents, as you may reasonably
request;
(d) use its best efforts to register or qualify all the Subject Shares
covered by such Registration Statement under such other securities or blue
sky laws of such U.S. jurisdictions, as reasonably requested by you, that
permit "registration by coordination" of securities offerings (the Company
shall not be required to register or qualify the Subject Shares in any
state invoking merit review authority), to keep such registration or
qualification in effect for a minimum of 120 days after its initial
effective date, and do any and all other acts and things which may be
necessary or advisable to enable you to consummate the disposition in such
jurisdictions of your Subject Shares covered by such Registration
Statement, except that the Company shall not, for any such purpose, be
required to qualify generally to do business as a foreign corporation in
any jurisdiction wherein it would not, but for the requirements of this
subdivision (d), be obligated to be so qualified, or to subject itself to
taxation in any such jurisdiction or to consent to general service of
process in any such jurisdiction;
(e) furnish to you a signed counterpart, addressed to you, of (i) an
opinion of counsel for the Company, dated the effective date of such
Registration Statement, and (ii) a "comfort" letter, dated the effective
date of such Registration Statement, signed by the independent public
accountants who have certified the Company's financial statements included
in such Registration Statement, covering substantially the same matters
with respect to such Registration Statement (and the prospectus included
therein) and, in the case of such accountants' letter, with respect to
events subsequent to the date of such financial statements, as are
customarily covered in opinions of issuer's counsel and in accountants'
letters delivered to underwriters in underwritten public offerings of
securities and such other legal and financial matters, as you may
reasonably request;
(f) immediately notify you, at any time, when a prospectus relating
thereto is required to be delivered under the Act, upon discovery that, or
upon the happening of any event as a result of which, the prospectus
included in such Registration Statement, as then in effect, includes an
untrue statement of a material fact or omits to state any material fact
required to be stated therein or necessary to make the statements therein
not misleading in light of the circumstances then existing, and, at your
request, prepare and furnish to you a reasonable number of copies of a
supplement to, or an amendment of, such prospectus as may be necessary so
that, as thereafter delivered to the purchasers of the Subject Shares, such
prospectus shall not include any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary
to make the statements therein not misleading in the light of the
circumstances then existing;
(g) otherwise use its best efforts to comply with all applicable rules
and regulations of the Commission, and make available to its securities
holders, as soon as reasonably practicable, an earnings statement covering
the period of at least twelve months beginning with the first month of the
first fiscal quarter after the effective date of such Registration
Statement, which earnings statement shall satisfy the provisions of Section
11(a) of the Act; and
(h) provide and cause to be maintained a transfer agent and registrar
for the Subject Shares covered by such Registration Statement from and
after a date not later than the effective date of such Registration Statement.
The Company may require you to furnish the Company such information
regarding your sales of the Subject Shares as the Company may from time to
time reasonably request in writing and as shall be required by law or by
the Commission in connection therewith. Such information shall be
furnished in writing by you stating that it is for use in the preparation
of such Registration Statement and all prospectuses and supplements or
amendments thereto.
4. Preparation; Reasonable Investigation. In connection with the
preparation and filing of the Registration Statement registering your
Subject Shares under the Act, the Company will give you and your
underwriters, if any, and your counsel and accountants at your own expense,
the opportunity to participate in the preparation of such Registration
Statement, each prospectus included therein and filed with the Commission
and each amendment thereof or supplement thereto, and will give each of
them such access to its books and records and such opportunities to discuss
the business of the Company with its officers and the independent public
accountants who have certified its financial statements as shall be
necessary in the opinion of you and such underwriter or your respective
counsel, to conduct a reasonable investigation within the meaning of the Act.
5. Indemnification.
(a) Indemnification by the Company. In the event of registration of
your Subject Shares under the Act, the Company will, and hereby does,
indemnify and hold you harmless, against any and all losses, claims,
damages, liabilities or expenses, joint or several (including, without
limitation, the costs and expenses of investigating, preparing for and
defending any legal proceeding, including reasonable attorneys' fees) to
which you may become subject under the Act or otherwise, insofar as such
losses, claims, damages, liabilities or expenses (or actions or proceedings
in respect thereof) arise out of, or are based upon, (i) any untrue
statement or alleged untrue statement of any material fact contained in the
Registration Statement under which your Subject Shares were registered
under the Act, any preliminary prospectus, final prospectus or summary
prospectus contained therein, or any amendment or supplement thereto, or
any document incorporated by reference therein, or (ii) any omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, and the
Company will reimburse you for any legal or any other expenses reasonably
incurred by you in connection with investigating or defending any such
loss, claim, liability, action or proceeding; provided, however, that the
Company shall not be liable in any such case to the extent that any such
loss, claim, damage, liability or expense (or action or proceeding in
respect thereof) arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in such
Registration Statement, any such preliminary prospectus, final prospectus,
summary prospectus, amendment or supplement in reliance upon, and in
conformity with, written information furnished to the Company through an
instrument duly executed by you stating that it is for use in the
preparation thereof. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of you and shall
survive the transfer of the Subject Shares by you.
(b) Indemnification by You. In the event of registration of your
Subject Shares under the Act, pursuant to which you offer or sell Subject
Shares covered by such Registration Statement, you will, and hereby do,
indemnify and hold harmless (in the same manner and to the same extent as
set forth in subdivision (a) of this Section 5) the Company, each director
of the Company, each officer of the Company who shall sign such
Registration Statement and each other person, if any, who controls the
Company within the meaning of the Act, with respect to any statement in, or
omission from, such Registration Statement, any preliminary prospectus,
final prospectus or summary prospectus included therein, or any amendment
or supplement thereto, if such statement or omission was made in reliance
upon and in conformity with written information furnished to the Company
through an instrument duly executed by you specifically stating that it is
for use in the preparation of such Registration Statement, preliminary
prospectus, final prospectus, summary prospectus, amendment or supplement.
Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of the Company or any such director,
officer or controlling person and shall survive the transfer of Subject
Shares by you.
(c) Notice of Claims, etc. Promptly after receipt by an indemnified
party of notice of the commencement of any action or proceeding involving a
claim referred to in the preceding subdivisions of this Section 5, such
indemnified party will, if a claim in respect thereof is to be made against
an indemnifying party, give written notice to the latter of the
commencement of such action, provided, however, that the failure of any
indemnified party to give notice as provided herein shall not relieve the
indemnifying party of its obligations under the preceding subdivisions of
this Section 5. In case any such action is brought against an indemnified
party, unless in such indemnified party's reasonable judgment a conflict of
interest between such indemnified and indemnifying party may exist in
respect of such claim, the indemnifying party shall be entitled to
participate in, and to assume the defense thereof, jointly with any other
indemnifying party similarly notified, to the extent that it may wish, with
counsel reasonably satisfactory to such indemnified party, and after notice
from the indemnifying party to such indemnified party of its election so to
assume the defense thereof, the indemnifying party shall not be liable to
such indemnified party for any legal or other expenses subsequently
incurred by the latter in connection with the defense thereof other than
reasonable costs of investigation. No indemnifying party shall, without
the consent of the indemnified party, consent to entry of any judgment or
enter into any settlement of such proceedings which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a complete and unconditional release from all
liability in respect to such claim or litigation.
(d) Indemnification Payments. The indemnification required by this
Section 5 shall be made by periodic payments of the amount thereof during
the course of the investigation or defense, as and when bills are received
or expense, loss, damage or liability is incurred.
(e) Contribution. If the indemnification provided for in this Section
5 is held by a court of competent jurisdiction to be unavailable with
respect to any loss, liability, claim, damage or expense referred to
herein, 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, damage or
expense, in such manner as the underwriter(s) shall require in the
underwriting agreement and, to the extent not specified therein with
respect to any indemnified party contemplated by this Section 5 as entitled
to indemnification, in such proportion as is appropriate to reflect the
relative fault of the indemnifying party on the one hand and of such
indemnified party on the other in connection with the actual or alleged
statements or omissions which resulted in such loss, liability, damage or
expense, as well as any other relevant equitable considerations. The
relative fault of the indemnifying party and of such indemnified party
shall be determined by reference to, among other things, whether the untrue
or allegedly untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the
indemnifying party or by such indemnified party and the parties' relative
intent, knowledge, access to information and opportunities to correct or
prevent such statement or omission. The indemnity and contribution
provided herein shall be in addition to, and not in lieu of, any other
liability that one party may have to another.
6. Arbitration. In the event of any dispute between the parties arising
out of this Agreement, relating to any question of contract or tort,
including any claims allegedly based on a violation of any securities laws
or regulations, state or federal, both the Company and you agree to submit
such dispute through the American Arbitration Association (the
"Association") at the Association's Dallas, Texas, offices, in accordance
with the then-current rules of the Association; the award given by the
arbitrators shall be binding and a judgment can be obtained on any such
award in any court of competent jurisdiction. It is expressly agreed that
the arbitrators, as part of their award, can award attorneys fees to the
prevailing party.
7. Amendments and Waivers. This Agreement may be amended and the
Company may take any action herein prohibited, or omit to perform any act
herein required to be performed by it, only if the Company shall have
obtained your written consent to such amendment, action or omissions to act.
8. Notices. Notices and other communications under this Agreement shall
be in writing and shall be sent by registered mail, postage prepaid,
addressed:
(a) if to you, at the address shown above, unless you have advised the
Company in writing of a different address as to which notices shall be sent
under this Agreement; and
(b) if to the Company, at 8748 Quarters Lake Road, Baton Rouge,
Louisiana 70809, to the attention of Mr. David M. Loflin, President, or to
such other address as the Company shall have furnished to you.
9. Miscellaneous. This Agreement shall be binding upon and inure to the
benefit of and be enforceable by the respective successors and assigns of
the parties hereto, whether so expressed or not. This Agreement embodies
the entire agreement and understanding between the Company and you with
respect to the subject matter hereof and supersedes all prior agreements
and understandings relating to the subject matter hereof. This Agreement
shall be construed and enforced in accordance with, and governed by, the
law of the State of Louisiana. The headings in this Agreement are for
purposes of reference only and shall not limit or otherwise affect the
meaning hereof. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
Yours very truly,
USURF AMERICA, INC.
By: /s/ David M. Loflin
David M. Loflin
President
- -------------
EXHIBIT 10.86
- -------------
March 29, 2000
Mr. Geoffrey Page Flett
Registration Rights Letter Agreement
Dear Mr. Flett:
This letter will confirm our agreement and understanding with respect to
certain rights to register, under the Securities Act of 1933, as amended
(the "Act"), and applicable state securities laws ("Blue Sky Laws"), the
offer and sale of up to 5,000 shares of the $.0001 par value common stock
of USURF America, Inc., a Nevada corporation (the "Company"), which shares
of Common Stock underlie certain common stock purchase warrants (the
"Warrants") of the Company owned by you (such shares being referred to as
the "Subject Shares"). It is our understanding that:
1. Registration Rights. At any time after November 15, 2000, you may
demand on one occasion, in writing, the registration under the Act for sale
the Subject Shares underlying the Warrants owned by you. Upon the
Company's receipt of written demand by holders, including you, of more than
50% of the Warrants issued in the same private offering as your Warrants,
the Company will take steps to register your Subject Shares in a
registration statement (the "Registration Statement") under the Act. Your
right to such registration may be exercised one time only. Should the
Company elect to include the Subject Shares in a Registration Statement
prior to your demand having been made, the Company will notify you of such
fact. This election by the Company to include the Subject Shares shall be
deemed to satisfy your demand right of registration, whether or not you
elect to have the Subject Shares included in such Registration Statement.
2. Expenses. All expenses incurred in connection with the registration
of the Subject Shares requested pursuant to Section 1, including, without
limitation, all accounting and printing costs and fees, filing fees and
reasonable attorney fees incurred, shall be paid by the Company. In this
regard, the Company reserves the right to include additional selling
shareholders in any registration proceeding contemplated hereby.
3. Registration Procedures. At such time as the Company is required to
register any of the Subject Shares hereunder, the Company will promptly:
(a) prepare and file, in a timely manner, with the Securities and
Exchange Commission (the "Commission"), a Registration Statement with
respect to the Subject Shares and use its best efforts to cause such
Registration Statement to become effective, such Registration Statement to
comply as to form and content and in all material respects to the
Commission's forms, rules and regulations;
(b) prepare and file with the Commission such amendments and
supplements to the Registration Statement, the prospectus and any summary
or preliminary prospectus forming a part of, and used in connection
therewith, as may be necessary to keep such Registration Statement and
prospectus effective and current and to comply with the provisions of the
Act with respect to the disposition of all of the Subject Shares and other
securities, if any, covered by such Registration Statement until the
earlier of such time as all of such securities have been disposed of in
accordance with the intended methods of disposition by the seller or
sellers thereof set forth in such Registration Statement or the expiration
of 120 days after such Registration Statement becomes effective; and will
furnish to you prior to the filing thereof a copy of any amendment or
supplement to such Registration Statement or prospectus and shall not file
any such amendment or supplement to which you shall have reasonably
objected on the grounds that such amendment or supplement does not comply
in all material respects with the requirements of the Act or the rules or
regulations thereunder;
(c) furnish to you such number of conformed copies of such
Registration Statement and of each such amendment and supplement thereto
(in each case including all exhibits), such number of copies of the
prospectus included in such Registration Statement (including each
preliminary prospectus and any summary prospectus), all in conformity as to
form and substance with the requirements of the Act, such number of copies
of documents, if any, incorporated by reference in such Registration
Statement or prospectus, and such other documents, as you may reasonably
request;
(d) use its best efforts to register or qualify all the Subject Shares
covered by such Registration Statement under such other securities or blue
sky laws of such U.S. jurisdictions, as reasonably requested by you, that
permit "registration by coordination" of securities offerings (the Company
shall not be required to register or qualify the Subject Shares in any
state invoking merit review authority), to keep such registration or
qualification in effect for a minimum of 120 days after its initial
effective date, and do any and all other acts and things which may be
necessary or advisable to enable you to consummate the disposition in such
jurisdictions of your Subject Shares covered by such Registration
Statement, except that the Company shall not, for any such purpose, be
required to qualify generally to do business as a foreign corporation in
any jurisdiction wherein it would not, but for the requirements of this
subdivision (d), be obligated to be so qualified, or to subject itself to
taxation in any such jurisdiction or to consent to general service of
process in any such jurisdiction;
(e) furnish to you a signed counterpart, addressed to you, of (i) an
opinion of counsel for the Company, dated the effective date of such
Registration Statement, and (ii) a "comfort" letter, dated the effective
date of such Registration Statement, signed by the independent public
accountants who have certified the Company's financial statements included
in such Registration Statement, covering substantially the same matters
with respect to such Registration Statement (and the prospectus included
therein) and, in the case of such accountants' letter, with respect to
events subsequent to the date of such financial statements, as are
customarily covered in opinions of issuer's counsel and in accountants'
letters delivered to underwriters in underwritten public offerings of
securities and such other legal and financial matters, as you may
reasonably request;
(f) immediately notify you, at any time, when a prospectus relating
thereto is required to be delivered under the Act, upon discovery that, or
upon the happening of any event as a result of which, the prospectus
included in such Registration Statement, as then in effect, includes an
untrue statement of a material fact or omits to state any material fact
required to be stated therein or necessary to make the statements therein
not misleading in light of the circumstances then existing, and, at your
request, prepare and furnish to you a reasonable number of copies of a
supplement to, or an amendment of, such prospectus as may be necessary so
that, as thereafter delivered to the purchasers of the Subject Shares, such
prospectus shall not include any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary
to make the statements therein not misleading in the light of the
circumstances then existing;
(g) otherwise use its best efforts to comply with all applicable rules
and regulations of the Commission, and make available to its securities
holders, as soon as reasonably practicable, an earnings statement covering
the period of at least twelve months beginning with the first month of the
first fiscal quarter after the effective date of such Registration
Statement, which earnings statement shall satisfy the provisions of Section
11(a) of the Act; and
(h) provide and cause to be maintained a transfer agent and registrar
for the Subject Shares covered by such Registration Statement from and
after a date not later than the effective date of such Registration Statement.
The Company may require you to furnish the Company such information
regarding your sales of the Subject Shares as the Company may from time to
time reasonably request in writing and as shall be required by law or by
the Commission in connection therewith. Such information shall be
furnished in writing by you stating that it is for use in the preparation
of such Registration Statement and all prospectuses and supplements or
amendments thereto.
4. Preparation; Reasonable Investigation. In connection with the
preparation and filing of the Registration Statement registering your
Subject Shares under the Act, the Company will give you and your
underwriters, if any, and your counsel and accountants at your own expense,
the opportunity to participate in the preparation of such Registration
Statement, each prospectus included therein and filed with the Commission
and each amendment thereof or supplement thereto, and will give each of
them such access to its books and records and such opportunities to discuss
the business of the Company with its officers and the independent public
accountants who have certified its financial statements as shall be
necessary in the opinion of you and such underwriter or your respective
counsel, to conduct a reasonable investigation within the meaning of the Act.
5. Indemnification.
(a) Indemnification by the Company. In the event of registration of
your Subject Shares under the Act, the Company will, and hereby does,
indemnify and hold you harmless, against any and all losses, claims,
damages, liabilities or expenses, joint or several (including, without
limitation, the costs and expenses of investigating, preparing for and
defending any legal proceeding, including reasonable attorneys' fees) to
which you may become subject under the Act or otherwise, insofar as such
losses, claims, damages, liabilities or expenses (or actions or proceedings
in respect thereof) arise out of, or are based upon, (i) any untrue
statement or alleged untrue statement of any material fact contained in the
Registration Statement under which your Subject Shares were registered
under the Act, any preliminary prospectus, final prospectus or summary
prospectus contained therein, or any amendment or supplement thereto, or
any document incorporated by reference therein, or (ii) any omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, and the
Company will reimburse you for any legal or any other expenses reasonably
incurred by you in connection with investigating or defending any such
loss, claim, liability, action or proceeding; provided, however, that the
Company shall not be liable in any such case to the extent that any such
loss, claim, damage, liability or expense (or action or proceeding in
respect thereof) arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in such
Registration Statement, any such preliminary prospectus, final prospectus,
summary prospectus, amendment or supplement in reliance upon, and in
conformity with, written information furnished to the Company through an
instrument duly executed by you stating that it is for use in the
preparation thereof. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of you and shall
survive the transfer of the Subject Shares by you.
(b) Indemnification by You. In the event of registration of your
Subject Shares under the Act, pursuant to which you offer or sell Subject
Shares covered by such Registration Statement, you will, and hereby do,
indemnify and hold harmless (in the same manner and to the same extent as
set forth in subdivision (a) of this Section 5) the Company, each director
of the Company, each officer of the Company who shall sign such
Registration Statement and each other person, if any, who controls the
Company within the meaning of the Act, with respect to any statement in, or
omission from, such Registration Statement, any preliminary prospectus,
final prospectus or summary prospectus included therein, or any amendment
or supplement thereto, if such statement or omission was made in reliance
upon and in conformity with written information furnished to the Company
through an instrument duly executed by you specifically stating that it is
for use in the preparation of such Registration Statement, preliminary
prospectus, final prospectus, summary prospectus, amendment or supplement.
Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of the Company or any such director,
officer or controlling person and shall survive the transfer of Subject
Shares by you.
(c) Notice of Claims, etc. Promptly after receipt by an indemnified
party of notice of the commencement of any action or proceeding involving a
claim referred to in the preceding subdivisions of this Section 5, such
indemnified party will, if a claim in respect thereof is to be made against
an indemnifying party, give written notice to the latter of the
commencement of such action, provided, however, that the failure of any
indemnified party to give notice as provided herein shall not relieve the
indemnifying party of its obligations under the preceding subdivisions of
this Section 5. In case any such action is brought against an indemnified
party, unless in such indemnified party's reasonable judgment a conflict of
interest between such indemnified and indemnifying party may exist in
respect of such claim, the indemnifying party shall be entitled to
participate in, and to assume the defense thereof, jointly with any other
indemnifying party similarly notified, to the extent that it may wish, with
counsel reasonably satisfactory to such indemnified party, and after notice
from the indemnifying party to such indemnified party of its election so to
assume the defense thereof, the indemnifying party shall not be liable to
such indemnified party for any legal or other expenses subsequently
incurred by the latter in connection with the defense thereof other than
reasonable costs of investigation. No indemnifying party shall, without
the consent of the indemnified party, consent to entry of any judgment or
enter into any settlement of such proceedings which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a complete and unconditional release from all
liability in respect to such claim or litigation.
(d) Indemnification Payments. The indemnification required by this
Section 5 shall be made by periodic payments of the amount thereof during
the course of the investigation or defense, as and when bills are received
or expense, loss, damage or liability is incurred.
(e) Contribution. If the indemnification provided for in this Section
5 is held by a court of competent jurisdiction to be unavailable with
respect to any loss, liability, claim, damage or expense referred to
herein, 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, damage or
expense, in such manner as the underwriter(s) shall require in the
underwriting agreement and, to the extent not specified therein with
respect to any indemnified party contemplated by this Section 5 as entitled
to indemnification, in such proportion as is appropriate to reflect the
relative fault of the indemnifying party on the one hand and of such
indemnified party on the other in connection with the actual or alleged
statements or omissions which resulted in such loss, liability, damage or
expense, as well as any other relevant equitable considerations. The
relative fault of the indemnifying party and of such indemnified party
shall be determined by reference to, among other things, whether the untrue
or allegedly untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the
indemnifying party or by such indemnified party and the parties' relative
intent, knowledge, access to information and opportunities to correct or
prevent such statement or omission. The indemnity and contribution
provided herein shall be in addition to, and not in lieu of, any other
liability that one party may have to another.
6. Arbitration. In the event of any dispute between the parties arising
out of this Agreement, relating to any question of contract or tort,
including any claims allegedly based on a violation of any securities laws
or regulations, state or federal, both the Company and you agree to submit
such dispute through the American Arbitration Association (the
"Association") at the Association's Dallas, Texas, offices, in accordance
with the then-current rules of the Association; the award given by the
arbitrators shall be binding and a judgment can be obtained on any such
award in any court of competent jurisdiction. It is expressly agreed that
the arbitrators, as part of their award, can award attorneys fees to the
prevailing party.
7. Amendments and Waivers. This Agreement may be amended and the
Company may take any action herein prohibited, or omit to perform any act
herein required to be performed by it, only if the Company shall have
obtained your written consent to such amendment, action or omissions to act.
8. Notices. Notices and other communications under this Agreement shall
be in writing and shall be sent by registered mail, postage prepaid,
addressed:
(a) if to you, at the address shown above, unless you have advised the
Company in writing of a different address as to which notices shall be sent
under this Agreement; and
(b) if to the Company, at 8748 Quarters Lake Road, Baton Rouge,
Louisiana 70809, to the attention of Mr. David M. Loflin, President, or to
such other address as the Company shall have furnished to you.
9. Miscellaneous. This Agreement shall be binding upon and inure to the
benefit of and be enforceable by the respective successors and assigns of
the parties hereto, whether so expressed or not. This Agreement embodies
the entire agreement and understanding between the Company and you with
respect to the subject matter hereof and supersedes all prior agreements
and understandings relating to the subject matter hereof. This Agreement
shall be construed and enforced in accordance with, and governed by, the
law of the State of Louisiana. The headings in this Agreement are for
purposes of reference only and shall not limit or otherwise affect the
meaning hereof. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
Yours very truly,
USURF AMERICA, INC.
By: /s/ David M. Loflin
David M. Loflin
President
- -------------
EXHIBIT 10.87
- -------------
March 29, 2000
Mr. Donald Rayburn
Registration Rights Letter Agreement
Dear Mr. Rayburn:
This letter will confirm our agreement and understanding with respect to
certain rights to register, under the Securities Act of 1933, as amended
(the "Act"), and applicable state securities laws ("Blue Sky Laws"), the
offer and sale of up to 6,000 shares of the $.0001 par value common stock
of USURF America, Inc., a Nevada corporation (the "Company"), which shares
of Common Stock underlie certain common stock purchase warrants (the
"Warrants") of the Company owned by you (such shares being referred to as
the "Subject Shares"). It is our understanding that:
1. Registration Rights. At any time after November 15, 2000, you may
demand on one occasion, in writing, the registration under the Act for sale
the Subject Shares underlying the Warrants owned by you. Upon the
Company's receipt of written demand by holders, including you, of more than
50% of the Warrants issued in the same private offering as your Warrants,
the Company will take steps to register your Subject Shares in a
registration statement (the "Registration Statement") under the Act. Your
right to such registration may be exercised one time only. Should the
Company elect to include the Subject Shares in a Registration Statement
prior to your demand having been made, the Company will notify you of such
fact. This election by the Company to include the Subject Shares shall be
deemed to satisfy your demand right of registration, whether or not you
elect to have the Subject Shares included in such Registration Statement.
2. Expenses. All expenses incurred in connection with the registration
of the Subject Shares requested pursuant to Section 1, including, without
limitation, all accounting and printing costs and fees, filing fees and
reasonable attorney fees incurred, shall be paid by the Company. In this
regard, the Company reserves the right to include additional selling
shareholders in any registration proceeding contemplated hereby.
3. Registration Procedures. At such time as the Company is required to
register any of the Subject Shares hereunder, the Company will promptly:
(a) prepare and file, in a timely manner, with the Securities and
Exchange Commission (the "Commission"), a Registration Statement with
respect to the Subject Shares and use its best efforts to cause such
Registration Statement to become effective, such Registration Statement to
comply as to form and content and in all material respects to the
Commission's forms, rules and regulations;
(b) prepare and file with the Commission such amendments and
supplements to the Registration Statement, the prospectus and any summary
or preliminary prospectus forming a part of, and used in connection
therewith, as may be necessary to keep such Registration Statement and
prospectus effective and current and to comply with the provisions of the
Act with respect to the disposition of all of the Subject Shares and other
securities, if any, covered by such Registration Statement until the
earlier of such time as all of such securities have been disposed of in
accordance with the intended methods of disposition by the seller or
sellers thereof set forth in such Registration Statement or the expiration
of 120 days after such Registration Statement becomes effective; and will
furnish to you prior to the filing thereof a copy of any amendment or
supplement to such Registration Statement or prospectus and shall not file
any such amendment or supplement to which you shall have reasonably
objected on the grounds that such amendment or supplement does not comply
in all material respects with the requirements of the Act or the rules or
regulations thereunder;
(c) furnish to you such number of conformed copies of such
Registration Statement and of each such amendment and supplement thereto
(in each case including all exhibits), such number of copies of the
prospectus included in such Registration Statement (including each
preliminary prospectus and any summary prospectus), all in conformity as to
form and substance with the requirements of the Act, such number of copies
of documents, if any, incorporated by reference in such Registration
Statement or prospectus, and such other documents, as you may reasonably
request;
(d) use its best efforts to register or qualify all the Subject Shares
covered by such Registration Statement under such other securities or blue
sky laws of such U.S. jurisdictions, as reasonably requested by you, that
permit "registration by coordination" of securities offerings (the Company
shall not be required to register or qualify the Subject Shares in any
state invoking merit review authority), to keep such registration or
qualification in effect for a minimum of 120 days after its initial
effective date, and do any and all other acts and things which may be
necessary or advisable to enable you to consummate the disposition in such
jurisdictions of your Subject Shares covered by such Registration
Statement, except that the Company shall not, for any such purpose, be
required to qualify generally to do business as a foreign corporation in
any jurisdiction wherein it would not, but for the requirements of this
subdivision (d), be obligated to be so qualified, or to subject itself to
taxation in any such jurisdiction or to consent to general service of
process in any such jurisdiction;
(e) furnish to you a signed counterpart, addressed to you, of (i) an
opinion of counsel for the Company, dated the effective date of such
Registration Statement, and (ii) a "comfort" letter, dated the effective
date of such Registration Statement, signed by the independent public
accountants who have certified the Company's financial statements included
in such Registration Statement, covering substantially the same matters
with respect to such Registration Statement (and the prospectus included
therein) and, in the case of such accountants' letter, with respect to
events subsequent to the date of such financial statements, as are
customarily covered in opinions of issuer's counsel and in accountants'
letters delivered to underwriters in underwritten public offerings of
securities and such other legal and financial matters, as you may
reasonably request;
(f) immediately notify you, at any time, when a prospectus relating
thereto is required to be delivered under the Act, upon discovery that, or
upon the happening of any event as a result of which, the prospectus
included in such Registration Statement, as then in effect, includes an
untrue statement of a material fact or omits to state any material fact
required to be stated therein or necessary to make the statements therein
not misleading in light of the circumstances then existing, and, at your
request, prepare and furnish to you a reasonable number of copies of a
supplement to, or an amendment of, such prospectus as may be necessary so
that, as thereafter delivered to the purchasers of the Subject Shares, such
prospectus shall not include any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary
to make the statements therein not misleading in the light of the
circumstances then existing;
(g) otherwise use its best efforts to comply with all applicable rules
and regulations of the Commission, and make available to its securities
holders, as soon as reasonably practicable, an earnings statement covering
the period of at least twelve months beginning with the first month of the
first fiscal quarter after the effective date of such Registration
Statement, which earnings statement shall satisfy the provisions of Section
11(a) of the Act; and
(h) provide and cause to be maintained a transfer agent and registrar
for the Subject Shares covered by such Registration Statement from and
after a date not later than the effective date of such Registration Statement.
The Company may require you to furnish the Company such information
regarding your sales of the Subject Shares as the Company may from time to
time reasonably request in writing and as shall be required by law or by
the Commission in connection therewith. Such information shall be
furnished in writing by you stating that it is for use in the preparation
of such Registration Statement and all prospectuses and supplements or
amendments thereto.
4. Preparation; Reasonable Investigation. In connection with the
preparation and filing of the Registration Statement registering your
Subject Shares under the Act, the Company will give you and your
underwriters, if any, and your counsel and accountants at your own expense,
the opportunity to participate in the preparation of such Registration
Statement, each prospectus included therein and filed with the Commission
and each amendment thereof or supplement thereto, and will give each of
them such access to its books and records and such opportunities to discuss
the business of the Company with its officers and the independent public
accountants who have certified its financial statements as shall be
necessary in the opinion of you and such underwriter or your respective
counsel, to conduct a reasonable investigation within the meaning of the Act.
5. Indemnification.
(a) Indemnification by the Company. In the event of registration of
your Subject Shares under the Act, the Company will, and hereby does,
indemnify and hold you harmless, against any and all losses, claims,
damages, liabilities or expenses, joint or several (including, without
limitation, the costs and expenses of investigating, preparing for and
defending any legal proceeding, including reasonable attorneys' fees) to
which you may become subject under the Act or otherwise, insofar as such
losses, claims, damages, liabilities or expenses (or actions or proceedings
in respect thereof) arise out of, or are based upon, (i) any untrue
statement or alleged untrue statement of any material fact contained in the
Registration Statement under which your Subject Shares were registered
under the Act, any preliminary prospectus, final prospectus or summary
prospectus contained therein, or any amendment or supplement thereto, or
any document incorporated by reference therein, or (ii) any omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, and the
Company will reimburse you for any legal or any other expenses reasonably
incurred by you in connection with investigating or defending any such
loss, claim, liability, action or proceeding; provided, however, that the
Company shall not be liable in any such case to the extent that any such
loss, claim, damage, liability or expense (or action or proceeding in
respect thereof) arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in such
Registration Statement, any such preliminary prospectus, final prospectus,
summary prospectus, amendment or supplement in reliance upon, and in
conformity with, written information furnished to the Company through an
instrument duly executed by you stating that it is for use in the
preparation thereof. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of you and shall
survive the transfer of the Subject Shares by you.
(b) Indemnification by You. In the event of registration of your
Subject Shares under the Act, pursuant to which you offer or sell Subject
Shares covered by such Registration Statement, you will, and hereby do,
indemnify and hold harmless (in the same manner and to the same extent as
set forth in subdivision (a) of this Section 5) the Company, each director
of the Company, each officer of the Company who shall sign such
Registration Statement and each other person, if any, who controls the
Company within the meaning of the Act, with respect to any statement in, or
omission from, such Registration Statement, any preliminary prospectus,
final prospectus or summary prospectus included therein, or any amendment
or supplement thereto, if such statement or omission was made in reliance
upon and in conformity with written information furnished to the Company
through an instrument duly executed by you specifically stating that it is
for use in the preparation of such Registration Statement, preliminary
prospectus, final prospectus, summary prospectus, amendment or supplement.
Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of the Company or any such director,
officer or controlling person and shall survive the transfer of Subject
Shares by you.
(c) Notice of Claims, etc. Promptly after receipt by an indemnified
party of notice of the commencement of any action or proceeding involving a
claim referred to in the preceding subdivisions of this Section 5, such
indemnified party will, if a claim in respect thereof is to be made against
an indemnifying party, give written notice to the latter of the
commencement of such action, provided, however, that the failure of any
indemnified party to give notice as provided herein shall not relieve the
indemnifying party of its obligations under the preceding subdivisions of
this Section 5. In case any such action is brought against an indemnified
party, unless in such indemnified party's reasonable judgment a conflict of
interest between such indemnified and indemnifying party may exist in
respect of such claim, the indemnifying party shall be entitled to
participate in, and to assume the defense thereof, jointly with any other
indemnifying party similarly notified, to the extent that it may wish, with
counsel reasonably satisfactory to such indemnified party, and after notice
from the indemnifying party to such indemnified party of its election so to
assume the defense thereof, the indemnifying party shall not be liable to
such indemnified party for any legal or other expenses subsequently
incurred by the latter in connection with the defense thereof other than
reasonable costs of investigation. No indemnifying party shall, without
the consent of the indemnified party, consent to entry of any judgment or
enter into any settlement of such proceedings which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a complete and unconditional release from all
liability in respect to such claim or litigation.
(d) Indemnification Payments. The indemnification required by this
Section 5 shall be made by periodic payments of the amount thereof during
the course of the investigation or defense, as and when bills are received
or expense, loss, damage or liability is incurred.
(e) Contribution. If the indemnification provided for in this Section
5 is held by a court of competent jurisdiction to be unavailable with
respect to any loss, liability, claim, damage or expense referred to
herein, 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, damage or
expense, in such manner as the underwriter(s) shall require in the
underwriting agreement and, to the extent not specified therein with
respect to any indemnified party contemplated by this Section 5 as entitled
to indemnification, in such proportion as is appropriate to reflect the
relative fault of the indemnifying party on the one hand and of such
indemnified party on the other in connection with the actual or alleged
statements or omissions which resulted in such loss, liability, damage or
expense, as well as any other relevant equitable considerations. The
relative fault of the indemnifying party and of such indemnified party
shall be determined by reference to, among other things, whether the untrue
or allegedly untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the
indemnifying party or by such indemnified party and the parties' relative
intent, knowledge, access to information and opportunities to correct or
prevent such statement or omission. The indemnity and contribution
provided herein shall be in addition to, and not in lieu of, any other
liability that one party may have to another.
6. Arbitration. In the event of any dispute between the parties arising
out of this Agreement, relating to any question of contract or tort,
including any claims allegedly based on a violation of any securities laws
or regulations, state or federal, both the Company and you agree to submit
such dispute through the American Arbitration Association (the
"Association") at the Association's Dallas, Texas, offices, in accordance
with the then-current rules of the Association; the award given by the
arbitrators shall be binding and a judgment can be obtained on any such
award in any court of competent jurisdiction. It is expressly agreed that
the arbitrators, as part of their award, can award attorneys fees to the
prevailing party.
7. Amendments and Waivers. This Agreement may be amended and the
Company may take any action herein prohibited, or omit to perform any act
herein required to be performed by it, only if the Company shall have
obtained your written consent to such amendment, action or omissions to act.
8. Notices. Notices and other communications under this Agreement shall
be in writing and shall be sent by registered mail, postage prepaid,
addressed:
(a) if to you, at the address shown above, unless you have advised the
Company in writing of a different address as to which notices shall be sent
under this Agreement; and
(b) if to the Company, at 8748 Quarters Lake Road, Baton Rouge,
Louisiana 70809, to the attention of Mr. David M. Loflin, President, or to
such other address as the Company shall have furnished to you.
9. Miscellaneous. This Agreement shall be binding upon and inure to the
benefit of and be enforceable by the respective successors and assigns of
the parties hereto, whether so expressed or not. This Agreement embodies
the entire agreement and understanding between the Company and you with
respect to the subject matter hereof and supersedes all prior agreements
and understandings relating to the subject matter hereof. This Agreement
shall be construed and enforced in accordance with, and governed by, the
law of the State of Louisiana. The headings in this Agreement are for
purposes of reference only and shall not limit or otherwise affect the
meaning hereof. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
Yours very truly,
USURF AMERICA, INC.
By: /s/ David M. Loflin
David M. Loflin
President
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EXHIBIT 23.1
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CONSENT OF INDEPENDENT AUDITOR
As independent auditors, we hereby consent to the incorporation by
reference in this Form S-1 Registration Statement Amendment No. 2 dated
April 25, 2000, of our report dated April 9, 1999, relating to the
consolidated financial statements of USURF America, Inc. and subsidiaries
(formally Internet Media Corporation) as of December 31, 1998 and the
related consolidated statement of operations, changes in stockholders'
equity and cash flows for the years ended December 31, 1998 and 1997
included in the Annual Report on Form 10-KSB of USURF America, Inc., filed
with the Securities and Exchange Commission on April 14, 2000. We also
consent to the reference to this firm under the heading "Experts" in this
Registration Statement.
/s/
WEAVER AND TIDWELL, L.L.P.
Fort Worth, Texas
April 26, 2000
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EXHIBIT 23.2
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CONSENT AND REPORT OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANT
We hereby consent to the use in this Registration Statement of our report
dated April 8, 2000, relating to the consolidated financial statements of
USURF America, Inc. and subsidiaries, and to the reference to our Firm
under the caption "Experts" in the Prospectus.
/s/
Postlethwaite & Netterville
Baton Rouge, LA
April 26, 2000
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EXHIBIT 23.3
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Consent of Newlan & Newlan is included in the Opinion filed as Exhibit 5.1
hereto.
