SUBSCRIPTION AGREEMENT

 

To:	KeyOn Communications, Inc.

4067 Dean Martin Drive

Las Vegas, NV 89103

Attn: Jonathan Snyder, President and Chief Executive Officer

This Subscription Agreement (this “Agreement”) is being delivered to the purchaser identified on the signature page to this Agreement (the “Subscriber”) in connection with its investment in a to be identified public company (“Pubco”) that will acquire all of the issued and outstanding capital stock of KeyOn Communications, Inc., a Nevada corporation (“KeyOn”), and succeed to the business of KeyOn as its sole line of business (on a combined, post-acquisition basis, Pubco and its subsidiary, KeyOn, are collectively referred to as the “Company”). The Company is conducting a private placement (the “Offering”) of up to $2,500,000 of units (“Units”), but in no event less than $1,500,000; provided, however, that the Company may, in its sole discretion, accept subscriptions for more than $2,500,000 of Units. Each Unit shall consist of (i) 1 share of common stock, par value $0.001 per share (the “Shares”) and (ii) a callable five year warrant to purchase 0.5 of one share of common stock at an exercise price $3.35 per share, substantially in the form attached hereto as Exhibit A (the “Warrants”). For purposes of this Agreement, the term “Securities” shall refer to the Units, the Shares, the Warrants, and the shares of common stock underlying the Warrants (the “Warrant Shares”). The exercise price of the Warrants shall be reduced from $3.35 per share to $2.00 per share if the Company does not record at least $8.5 million in consolidated pro forma revenue during the year ending December 31, 2007. The purchase price per Unit shall be fixed at $2.00 (the “Purchase Price”). All funds received in the Offering prior to the closing of the Offering (the “Closing”) shall be held in escrow by Signature Bank (the “Escrow Agent”) and, upon fulfillment of the other conditions precedent set forth herein, shall be released from escrow and delivered to the Company at which time the Units subscribed for as further described below shall be delivered, subject to Section 9 hereof, to the Subscriber.

 

1. SUBSCRIPTION AND PURCHASE PRICE

 

(a) Subscription. Subject to the conditions set forth in Section 2 hereof, the Subscriber hereby subscribes for and agrees to purchase the number of Units indicated on page 9 hereof on the terms and conditions described herein.

 

(b) Purchase of Units. The Subscriber understands and acknowledges that the purchase price to be remitted to the Company in exchange for the Units shall be set at $2.00 per Unit, for an aggregate purchase price as set forth on page 9 hereof (the “Aggregate Purchase Price”). The Subscriber’s delivery of this Agreement to the Company shall be accompanied by payment for the Units subscribed for hereunder, payable in United States Dollars, by wire transfer of immediately available funds delivered contemporaneously with the Subscriber’s delivery of this Agreement to the Company in accordance with the instructions provided on Exhibit B. The Subscriber understands and agrees that, subject to Section 2 and applicable laws, by executing this Agreement, it is entering into a binding agreement.

 

2. ACCEPTANCE, OFFERING TERM AND CLOSING PROCEDURES

 

(a) Acceptance or Rejection. The obligation of the Subscriber to purchase the Units shall be irrevocable, and the Subscriber shall be legally bound to purchase the Units subject to the terms set forth in this Agreement. The Subscriber understands and agrees that the Company reserves the right to reject this subscription for Units in whole or part in any order at any time prior to the Closing for any reason, notwithstanding the Subscriber’s prior receipt of notice of acceptance of the Subscriber’s subscription. In the event of rejection of this subscription by the Company in accordance with this Section 2, or if the sale of the Units is not consummated by the Company for any reason, this Agreement and any other agreement entered into between the Subscriber and the Company relating to this subscription shall thereafter have no force or effect, and the Company shall promptly return or cause to be returned to the Subscriber the purchase price remitted to the Escrow Agent, without interest thereon or deduction therefrom.

 

(b) Offering Term. The subscription period for the Offering will begin as of July 20, 2007, and will terminate upon the occurrence of the earlier of (i) August 5, 2007, unless extended by the Company for up to an additional 2-week period, (ii) the Company’s acceptance of subscriptions for $2,500,000 of Units and the receipt of payment therefore, subject to the Company’s discretion to accept subscriptions for more than $2,500,000 of Units or (iii) the Company’s decision to terminate the Offering sooner.

 

 

(c) Closing. The Closing shall take place at the offices of the Company at 4061 Dean Martin Drive, Las Vegas, Nevada 89103 or such other place as determined by the Company. The Closing shall take place on a Business Day promptly following the satisfaction of the conditions set forth in Section 9 below, as determined by the Company. “Business Day” shall mean from the hours of 9:00 a.m. (Pacific Time) through 5:00 p.m. (Pacific Time) of a day other than a Saturday, Sunday or other day on which commercial banks in New York, New York are authorized or required to be closed. The Shares and Warrants purchased by the Subscriber will be delivered by the Company promptly following the Closing.

 

(d) Acceptance or Rejection. The Subscriber acknowledges and agrees that this Agreement and any other documents delivered in connection herewith will be held by the Company. In the event that this Agreement is not accepted by the Company for whatever reason, which the Company expressly reserves the right to do, this Agreement, the Aggregate Purchase Price received (without interest thereon) and any other documents delivered in connection herewith will be returned to the Subscriber at the address of the Subscriber as set forth in this Agreement. If this Agreement is accepted by the Company, the Company is entitled to treat the Aggregate Purchase Price received as an interest free loan to the Company until such time as the Subscription is accepted.

 

3. THE SUBSCRIBER’S REPRESENTATIONS, WARRANTIES AND COVENANTS

 

The Subscriber hereby acknowledges, agrees with and represents, warrants and covenants to the Company, as follows:

 

(a) The Subscriber has full power and authority to enter into this Agreement, the execution and delivery of which has been duly authorized, if applicable, and this Agreement constitutes a valid and legally binding obligation of the Subscriber.

 

(b) The Subscriber acknowledges its understanding that the Offering and sale of the Securities is intended to be exempt from registration under the Securities Act of 1933, as amended (the “Securities Act”), by virtue of Section 4(2) of the Securities Act and the provisions of Regulation D promulgated thereunder (“Regulation D”). In furtherance thereof, the Subscriber represents and warrants to the Company and its affiliates as follows:

 

(i) The Subscriber realizes that the basis for the exemption from registration may not be available if, notwithstanding the Subscriber’s representations contained herein, the Subscriber is merely acquiring the Securities for a fixed or determinable period in the future, or for a market rise, or for sale if the market does not rise. The Subscriber does not have any such intention.

 

(ii) The Subscriber realizes that the basis for exemption would not be available if the Offering is part of a plan or scheme to evade registration provisions of the Securities Act or any applicable state or federal securities laws.

 

(iii) The Subscriber is acquiring the Securities solely for the Subscriber’s own beneficial account, for investment purposes, and not with a view towards, or resale in connection with, any distribution of the Securities.

 

(iv) The Subscriber has the financial ability to bear the economic risk of the Subscriber’s investment, has adequate means for providing for its current needs and contingencies, and has no need for liquidity with respect to an investment in the Company.

 

(v) The Subscriber and the Subscriber’s attorney, accountant, purchaser representative and/or tax advisor, if any (collectively, the “Advisors”) has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of a prospective investment in the Securities. If other than an individual, the Subscriber also represents it has not been organized solely for the purpose of acquiring the Securities.

 

 

(vi) The Subscriber (together with its Advisors, if any) has received all documents requested by the Subscriber, if any, has carefully reviewed them and understands the information contained therein, prior to the execution of this Agreement.

 

(c) The Subscriber acknowledges its understanding that the Company may, in its sole discretion, engage one or more registered broker-dealers in connection with the sale of the Units to act as placement agents. Each placement agent shall receive a cash fee in an amount up to 7% of the aggregate proceeds from sales of Units by such placement agent and warrants to purchase a number of shares equal to 3% of the aggregate number of Shares included in the Units sold by such placement agent.

 

(d) The Subscriber is not relying on the Company or any of its employees, agents, sub-agents or advisors with respect to economic considerations involved in this investment. The Subscriber has relied on the advice of, or has consulted with, only its Advisors. Each Advisor, if any, is capable of evaluating the merits and risks of an investment in the Securities, and each Advisor, if any, has disclosed to the Subscriber in writing (a copy of which is annexed to this Agreement) the specific details of any and all past, present or future relationships, actual or contemplated, between the Advisor and the Company or any affiliate or sub-agent thereof.

 

(e) The Subscriber has carefully considered the potential risks relating to the Company and a purchase of the Securities, and fully understands that the Securities are a speculative investment that involve a high degree of risk of loss of the Subscriber’s entire investment.

 

(f) The Subscriber represents, warrants and agrees that the Subscriber will not sell or otherwise transfer any Securities without registration under the Securities Act or an exemption therefrom, and fully understands and agrees that the Subscriber must bear the economic risk of its purchase because, among other reasons, the Securities have not been registered under the Securities Act or under the securities laws of any state and, therefore, cannot be resold, pledged, assigned or otherwise disposed of unless they are subsequently registered under the Securities Act and under the applicable securities laws of such states, or an exemption from such registration is available. In particular, the Subscriber is aware that the Securities are “restricted securities,” as such term is defined in Rule 144 promulgated under the Securities Act (“Rule 144”), and they may not be sold pursuant to Rule 144 unless all of the conditions of Rule 144 are met. The Subscriber also understands that, except as otherwise provided in Section 5 hereof, the Company is under no obligation to register the Securities on behalf of the Subscriber or to assist the Subscriber in complying with any exemption from registration under the Securities Act or applicable state securities laws. The Subscriber understands that any sales or transfers of the Securities are further restricted by state securities laws and the provisions of this Agreement.

 

(g) No oral or written representations or warranties have been made to the Subscriber by the Company or any of its officers, employees, agents, sub-agents, affiliates, advisors or subsidiaries, other than any representations of the Company contained herein, and in subscribing for the Units, the Subscriber is not relying upon any representations other than those contained herein.

 

(h) The Subscriber’s overall commitment to investments that are not readily marketable is not disproportionate to the Subscriber’s net worth, and an investment in the Securities will not cause such overall commitment to become excessive.

 

(i) The Subscriber understands and agrees that the certificates for the Securities shall bear substantially the following legend until (i) such Securities shall have been registered under the Securities Act and effectively disposed of in accordance with a registration statement that has been declared effective or (ii) in the opinion of counsel for the Company, such Securities may be sold without registration under the Securities Act, as well as any applicable “blue sky” or state securities laws:

 

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY APPLICABLE STATE SECURITIES LAWS. SUCH SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT PURPOSES AND MAY NOT BE OFFERED FOR SALE, SOLD, DELIVERED AFTER SALE, TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FILED BY THE ISSUER WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION COVERING SUCH SECURITIES UNDER THE SECURITIES ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER THAT SUCH REGISTRATION IS NOT REQUIRED.

 

 

(j) Neither the Securities and Exchange Commission (the “SEC”) nor any state securities commission has approved the Securities or passed upon or endorsed the merits of the Offering. There is no government or other insurance covering any of the Securities.

 

(k) The Subscriber and its Advisors, if any, have had a reasonable opportunity to ask questions of and receive answers from a person or persons acting on behalf of the Company concerning the Offering and the business, financial condition, results of operations and prospects of the Company, and all such questions have been answered to the full satisfaction of the Subscriber and its Advisors, if any.

 

(l) The Subscriber is unaware of, is in no way relying on, and did not become aware of the Offering through or as a result of, any form of general solicitation or general advertising including, without limitation, any article, notice, advertisement or other communication published in any newspaper, magazine or similar media or broadcast over television or radio, or electronic mail over the Internet, in connection with the Offering and is not subscribing for Units and did not become aware of the Offering through or as a result of any seminar or meeting to which the Subscriber was invited by, or any solicitation of a subscription by, a person not previously known to the Subscriber in connection with investments in securities generally.

 

(m) The Subscriber has taken no action that would give rise to any claim by any person for brokerage commissions, finders’ fees or the like relating to this Agreement or the transactions contemplated hereby.

 

(n) The Subscriber is not relying on the Company or any of its employees, agents, or advisors with respect to the legal, tax, economic and related considerations of an investment in the Securities, and the Subscriber has relied on the advice of, or has consulted with, only its own Advisors.

 

(o) The Subscriber acknowledges that any estimates or forward-looking statements or projections furnished by the Company to the Subscriber were prepared by the management of the Company in good faith, but that the attainment of any such projections, estimates or forward-looking statements cannot be guaranteed by the Company or its management and should not be relied upon.

 

(p) No oral or written representations have been made, or oral or written information furnished, to the Subscriber or its Advisors, if any, in connection with the Offering that are in any way inconsistent with the information contained herein.

 

(q) (For ERISA plans only) The fiduciary of the ERISA plan (the “Plan”) represents that such fiduciary has been informed of and understands the Company’s investment objectives, policies and strategies, and that the decision to invest “plan assets” (as such term is defined in ERISA) in the Company is consistent with the provisions of ERISA that require diversification of plan assets and impose other fiduciary responsibilities. The Subscriber or Plan fiduciary (i) is responsible for the decision to invest in the Company; (ii) is independent of the Company and any of its affiliates; (iii) is qualified to make such investment decision; and (iv) in making such decision, the Subscriber or Plan fiduciary has not relied primarily on any advice or recommendation of the Company or any of its affiliates.

 

(r) This Agreement is not enforceable by the Subscriber unless it has been accepted by the Company, and the Subscriber acknowledges and agrees that the Company reserves the right to reject any subscription for any reason.

 

(s) The Subscriber will indemnify and hold harmless the Company and, where applicable, its directors, officers, employees, agents, advisors, affiliates and shareholders, and each other person, if any, who controls any of the foregoing from and against any and all loss, liability, claim, damage and expense whatsoever (including, but not limited to, any and all fees, costs and expenses whatsoever reasonably incurred in investigating, preparing or defending against any claim, lawsuit, administrative proceeding or investigation whether commenced or threatened) (a “Loss”) arising out of or based upon any representation or warranty of the Subscriber contained herein or in any document furnished by the Subscriber to the Company in connection herewith being untrue in any material respect or any breach or failure by the Subscriber to comply with any covenant or agreement made by the Subscriber herein or therein; provided, however, that the Subscriber shall not be liable for any Loss that in the aggregate exceeds such Subscriber’s Aggregate Purchase Price tendered hereunder.

 

 

(t) The Subscriber is, and on each date on which the Subscriber continues to own restricted securities from the Offering, will be an “Accredited Investor” as defined in Rule 501(a) under the Securities Act. In general, an “Accredited Investor” is deemed to be an institution with assets in excess of $5,000,000 or individuals with net worth in excess of $1,000,000 or annual income exceeding $200,0000 or $300,000 jointly with his or her spouse.

 

(u) The Subscriber, either alone or together with its representatives, has such knowledge, sophistication and experience in business and financial matters so as to be capable of evaluating the merits and risks of the Offering, and has so evaluated the merits and risks of such investment. The Subscriber has not authorized any person or entity to act as its Purchaser Representative (as that term is defined in Regulation D of the General Rules and Regulations under the Securities Act) in connection with the Offering. The Subscriber is able to bear the economic risk of an investment in the Securities and, at the present time, is able to afford a complete loss of such investment.

 

(v) The foregoing representations, warranties and agreements shall survive the Closing.

 

4. THE COMPANY’S REPRESENTATIONS, WARRANTIES AND COVENANTS

 

The Company hereby acknowledges, agrees with and represents, warrants and covenants to the Subscriber, as follows:

 

(a) The Company has the corporate power and authority to execute and deliver this Agreement and to perform its obligations hereunder. This Agreement has been duly authorized, executed and delivered by the Company and is valid, binding and enforceable against the Company in accordance with its terms.

 

(b) The Securities to be issued to the Subscriber pursuant to this Agreement, when issued and delivered in accordance with the terms of this Agreement, will be duly and validly issued and will be fully paid and non-assessable.

 

(c) Neither the execution and delivery nor the performance of this Agreement by the Company will conflict with the Company’s organizational materials, as amended to date, or result in a breach of any terms or provisions of, or constitute a default under, any material contract, agreement or instrument to which the Company is a party or by which the Company is bound.

 

(d) After giving effect to the transactions contemplated by this Agreement and immediately after the Closing, the Company will have approximately the outstanding capital stock as set forth on Exhibit C attached hereto.

 

(e) Any information furnished by the Company in connection with the Offering is true and correct in all material respects as of its date, including, without limitation, the Investor Presentation attached hereto as Exhibit D.

 

(f) The Company acknowledges and agrees that the Subscriber is acting solely in the capacity of an arm’s length purchaser with respect to the Securities and the transactions contemplated hereby. The Company further acknowledges that the Subscriber is not acting as a financial advisor or fiduciary of the Company (or in any similar capacity) with respect to this Agreement and the transactions contemplated hereby and any advice given by the Subscriber or any of its representatives or agents in connection with this Agreement and the transactions contemplated hereby is merely incidental to the Subscriber’s purchase of the Units. The Company further represents to the Subscriber that the Company’s decision to enter into this Agreement has been based solely on the independent evaluation of the transactions contemplated hereby by the Company and its representatives.

 

(g) The Company will indemnify and hold harmless the Subscriber and, where applicable, its directors, officers, employees, agents, advisors and shareholders, from and against any and all loss, liability, claim, damage and expense whatsoever (including, but not limited to, any and all fees, costs and expenses whatsoever reasonably incurred in investigating, preparing or defending against any claim, lawsuit, administrative proceeding or investigation whether commenced or threatened) arising out of or based upon any representation or warranty of the Company contained herein or in any document furnished by the Company to the Subscriber in connection herewith being untrue in any material respect or any breach or failure by the Company to comply with any covenant or agreement made by the Company to the Subscriber in connection therewith; provided, however, that the Company’s liability shall not exceed the Subscriber’s Aggregate Purchase Price tendered hereunder.

 

 

(h) The foregoing representations, warranties and agreements shall survive the Closing.

 

5. REGISTRATION RIGHTS

 

(a) If, at any time during the 2 year period commencing on the date of the Closing, the Company proposes to file a resale registration statement under the Securities Act with respect to an offering of equity securities or securities exercisable or exchangeable for, or convertible into, equity securities, by the Company solely for the account of stockholders of the Company, other than a registration statement (i) filed in connection with any employee stock option or other benefit plan, (ii) for an exchange offer or offering of securities solely to the Company’s existing stockholders, (iii) for an offering of debt that is convertible into equity securities of the Company or (iv) for a dividend reinvestment plan, then the Company shall (x) give written notice of such proposed filing to the Subscriber as soon as practicable but in no event less than twenty (20) days before the anticipated filing date, which notice shall describe the amount and type of securities to be included in such offering, the intended method(s) of distribution, and the name of the proposed managing underwriter or underwriters, if any, of the offering, and (y) subject to Section 5(b) below, offer to the Subscriber in such notice the opportunity to register the sale of such number of shares of Common Stock underlying the Securities (the “Registrable Securities”) as the Subscriber may request in writing within five (5) days following receipt of such notice (a “Resale Registration Statement”). Subject to Section 5(b) below, the Company shall cause such Registrable Securities to be included in such registration and shall use commercially reasonable efforts to cause the managing underwriter or underwriters of a proposed underwritten offering to permit the Registrable Securities requested to be included in a Resale Registration Statement, on the same terms and conditions as any similar securities of the Company to be sold by stockholders of the Company, and to permit the sale or other disposition of such Registrable Securities in accordance with the intended method(s) of distribution thereof. If the Subscriber proposes to distribute any Registrable Securities through a Resale Registration Statement that involves an underwriter or underwriters, the Subscriber shall enter into an underwriting agreement in customary form with the underwriter or underwriters selected for such Resale Registration Statement.

 

(b) Notwithstanding any other provision of this Agreement, if (i) the managing underwriter of a proposed underwritten offering, (ii) a placement agent or (iii) the Company determines that the inclusion of all Registrable Securities requested to be included in a Resale Registration Statement would adversely affect such offering, the Company may, in its discretion, limit the number of Registrable Securities to be included in such offering. Furthermore, in the event the Company is advised by the SEC, or any applicable self-regulatory or state securities agency, that the inclusion of any Registrable Securities will prevent, preclude or materially delay the effectiveness of a registration statement filed, the Company may amend such registration statement to exclude the Registrable Securities without thereby incurring any liability to the Subscriber.

 

6. ANTI-DILUTION PRICE PROTECTION

 

Until the earlier of (i) twelve (12) months following the closing, (ii) the filing of a registration statement with respect to which the Subscriber has registration rights under Section 5 above, or (iii) the closing of a “firm commitment” or “best efforts” registered public offering by the Company, in the event that the Company issues or sells any shares of any class of the Company’s common stock or any warrants or other convertible security pursuant to which shares of any class of the Company’s common stock may be acquired at a price less than $2.00 per share, other than “Excluded Securities,” then the Company shall promptly issue additional shares to the Subscriber in an amount sufficient that the subscription price paid hereunder, when divided by the total number of shares issued will result in an actual price paid by the Subscriber per share equal to such lower price (this is intended to be a “full ratchet” adjustment). Such adjustment shall be made successively whenever such an issuance is made. For purposes of this Agreement, “Excluded Securities” shall mean (i) options to purchase common stock or shares of common stock issued upon exercise of such options to employees, consultants, officers or directors (if in transactions with primarily non-financing purposes) of this Company directly or pursuant to any stock incentive plan approved by the Company’s board of directors, (ii) securities issued upon exercise or conversion of any convertible securities, options or warrants outstanding on the date hereof, (iii) securities issued or issuable in connection with bona fide strategic transactions entered into by the Company, whether by merger, consolidation, joint venture, acquisition, sale or purchase of assets, sale, purchase or exchange of stock or otherwise, in each case approved by the Company’s board of directors, (iv) securities issued to service providers (such as investor relations firms) or lessors in consideration for bona fide services provided to the Company in each case that are approved by the Company’s board of directors, (v) securities issued or issuable pursuant to stock dividends, stock splits or similar transactions.

 

 

7. USE OF PROCEEDS

 

The Company anticipates using the gross proceeds from the Offering as provided on Exhibit E hereto.

8. ESCROW RELEASE

 

The Subscriber acknowledges that the Company may act on the Subscriber’s behalf, solely for the sake of convenience, in connection with confirmation to the Escrow Agent that the Closing has occurred and thereby direct the Escrow Agent to disburse the Subscriber’s subscription funds held in escrow to the Company at such time. In doing so, however, the Company makes no representation or warranty to the Subscriber with respect to any due diligence investigations concerning the Company, all of which shall be and remain the Subscriber’s own responsibility.

 

9. CONDITIONS TO ACCEPTANCE OF SUBSCRIPTION

 

The Company’s right to accept the subscription of the Subscriber is conditioned upon satisfaction of the following conditions precedent on or before the date the Company accepts such subscription:

 

(a) As of the Closing, no legal action, suit or proceeding shall be pending that seeks to restrain or prohibit the transactions contemplated by this Agreement.

 

(b) The representations and warranties of the Company contained in this Agreement shall have been true and correct in all material respects on the date of this Agreement and shall be true and correct as of the Closing as if made on the date of the Closing.

 

(c) The Company shall have received subscriptions for at least $1,500,000 of Units in connection with the Offering.

 

(d) The Company shall have provided the Subscriber with a substantially completed draft of a Current Report on Form 8-K containing such information about KeyOn as would be required to be disclosed in a Registration Statement on Form 10-SB (the “Jumbo 8-K”), and following receipt of such Jumbo 8-K, the Subscriber shall have reconfirmed, in writing, its subscription hereunder.

 

(e) Pubco shall have consummated its acquisition of KeyOn’s issued and outstanding capital stock and Pubco shall have succeeded to KeyOn’s business as its sole line of business.

 

(f) The former shareholders of KeyOn shall have executed a twelve (12) month lock-up agreement, substantially in the Form of Exhibit F hereto.

 

10. NOTICES TO THE SUBSCRIBER

 

(a) THE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OR THE SECURITIES LAWS OF ANY STATE AND ARE BEING OFFERED AND SOLD IN RELIANCE ON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH LAWS. THE SHARES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SEC, ANY STATE SECURITIES COMMISSION OR OTHER REGULATORY AUTHORITY, NOR HAVE ANY OF THE FOREGOING AUTHORITIES PASSED UPON OR ENDORSED THE MERITS OF THIS OFFERING OR THE ACCURACY OR ADEQUACY OF ANY INFORMATION FURNISHED IN CONNECTION WITH THIS OFFERING. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.

 

(b) THE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE SECURITIES ACT, AND APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. THE SUBSCRIBER SHOULD BE AWARE THAT IT MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.

 

 

11.	MISCELLANEOUS PROVISIONS

 

(a) All parties hereto have been represented by counsel, and no inference shall be drawn in favor of or against any party by virtue of the fact that such party’s counsel was or was not the principal draftsman of this Agreement.

 

(b) Each of the parties hereto shall be responsible to pay the costs and expenses of its own legal counsel in connection with the preparation and review of this Agreement and related documentation.

 

(c) Neither this Agreement, nor any provisions hereof, shall be waived, modified, discharged or terminated except by an instrument in writing signed by the party against whom any waiver, modification, discharge or termination is sought.

 

(d) The representations, warranties and agreement of the Subscriber and the Company made in this Agreement shall survive the execution and delivery of this Agreement and the delivery of the Securities.

 

(e) Any party may send any notice, request, demand, claim or other communication hereunder to the Subscriber at the address set forth on the signature page of this Agreement or to the Company at the address set forth above using any means (including personal delivery, expedited courier, messenger service, fax, ordinary mail or electronic mail), but no such notice, request, demand, claim or other communication will be deemed to have been duly given unless and until it actually is received by the intended recipient. Any party may change the address to which notices, requests, demands, claims and other communications hereunder are to be delivered by giving the other parties written notice in the manner herein set forth.

 

(f) Except as otherwise provided herein, this Agreement shall be binding upon, and inure to the benefit of, the parties to this Agreement and their heirs, executors, administrators, successors, legal representatives and assigns. If the Subscriber is more than one person or entity, the obligation of the Subscriber shall be joint and several and the agreements, representations, warranties and acknowledgments contained herein shall be deemed to be made by, and be binding upon, each such person or entity and its heirs, executors, administrators, successors, legal representatives and assigns. This Agreement sets forth the entire agreement and understanding between the parties as to the subject matter thereof and merges and supersedes all prior discussions, agreements and understandings of any and every nature among them.

 

(g) This Agreement is not transferable or assignable by the Subscriber.

 

(h) This Agreement shall be governed by and construed in accordance with the laws of the State of Nevada, without giving effect to conflicts of law principles.

 

(i) The Company and the Subscriber hereby agree that any dispute that may arise between them arising out of or in connection with this Agreement shall be adjudicated before a court located in Las Vegas, Nevada, and they hereby submit to the exclusive jurisdiction of the federal and state courts of the State of Nevada located in Las Vegas with respect to any action or legal proceeding commenced by any party, and irrevocably waive any objection they now or hereafter may have respecting the venue of any such action or proceeding brought in such a court or respecting the fact that such court is an inconvenient forum, relating to or arising out of this Agreement or any acts or omissions relating to the sale of the securities hereunder, and consent to the service of process in any such action or legal proceeding by means of registered or certified mail, return receipt requested, postage prepaid, in care of the address set forth herein or such other address as either party shall furnish in writing to the other.

 

(j) This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

 

[Signature Pages Follow]

 

 

IN WITNESS WHEREOF, the Subscriber has executed this Agreement on the ____ day of ____________ 2007.

 

________________________	x $2.00 for each Unit	= $_____________________.
Units subscribed for		Aggregate Purchase Price

Manner in which Title is to be held (Please Check One):

 

1.	___	Individual	7.	___	Trust/Estate/Pension or Profit sharing Plan Date Opened:______________
2.	___	Joint Tenants with Right of Survivorship	8.	___	As a Custodian for ________________________________ Under the Uniform Gift to Minors Act of the State of ________________________________
3.	___	Community Property	9.	___	Married with Separate Property
4.	___	Tenants in Common	10.	___	Keogh
5.	___	Corporation/Partnership/ Limited Liability Company	11.	___	Tenants by the Entirety
6.	___	IRA

ALTERNATIVE DISTRIBUTION INFORMATION

 

To direct distribution to a party other than the registered owner, complete the information below. YOU MUST COMPLETE THIS SECTION IF THIS IS AN IRA INVESTMENT.

 

Name of Firm (Bank, Brokerage, Custodian):

 

Account Name:

 

Account Number:

 

Representative Name:

 

Representative Phone Number:

 

Address:

 

City, State, Zip:

 

IF MORE THAN ONE SUBSCRIBER, EACH SUBSCRIBER MUST SIGN.

INDIVIDUAL SUBSCRIBERS MUST COMPLETE THIS PAGE 10.

SUBSCRIBERS WHICH ARE ENTITIES MUST COMPLETE PAGE 11.

 

 

_____________________________________________________________________________ Exact Name in Which Title is to be Held
_________________________________ Name (Please Print)		_________________________________ Name of Additional Purchaser
_________________________________ Residence: Number and Street		_________________________________ Address of Additional Purchaser
_________________________________ City, State and Zip Code		_________________________________ City, State and Zip Code
_________________________________ Social Security Number		_________________________________ Social Security Number
_________________________________ Telephone Number		_________________________________ Telephone Number
_________________________________ Fax Number (if available)		________________________________ Fax Number (if available)
_________________________________ E-Mail (if available)		________________________________ E-Mail (if available)
__________________________________ (Signature)		________________________________ (Signature of Additional Purchaser)
ACCEPTED this ___ day of _________ 2007, on behalf of the Company.
	By: _________________________________ Name: Title:

 

(Corporation, Partnership, LLC, Trust, Etc.)

 

_____________________________________________________________________________ Name of Entity (Please Print)
Date of Incorporation or Organization:
State of Principal Office:
Federal Taxpayer Identification Number: ____________________________________________ Office Address ____________________________________________ City, State and Zip Code ____________________________________________ Telephone Number ____________________________________________ Fax Number (if available) ____________________________________________ E-Mail (if available)
	By: _________________________________ Name: Title:
[seal] Attest: _________________________________ (If Entity is a Corporation)	_________________________________ _________________________________ Address
ACCEPTED this ____ day of __________ 2007, on behalf of the Company.
	By: _________________________________ Name: Title:

 

 

 

 

 

o

You are (i) a bank, as defined in Section 3(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”), (ii) a savings and loan association or other institution, as defined in Section 3(a)(5)(A) of the Securities Act, whether acting in an individual or fiduciary capacity, (iii) a broker or dealer registered pursuant to Section 15 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), (iv) an insurance company as defined in Section 2(13) of the Securities Act, (v) an investment company registered under the Investment Company Act of 1940, as amended (the “Investment Company Act”), (vi) a business development company as defined in Section 2(a)(48) of the Investment Company Act, (vii) a Small Business Investment Company licensed by the U.S. Small Business Administration under Section 301 (c) or (d) of the Small Business Investment Act of 1958, as amended, (viii) a plan established and maintained by a state, its political subdivisions, or an agency or instrumentality of a state or its political subdivisions, for the benefit of its employees and you have total assets in excess of $5,000,000, or (ix) an employee benefit plan within the meaning of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”) and (1) the decision that you shall subscribe for and purchase shares of common stock and warrants to purchase common stock (the “Units”), is made by a plan fiduciary, as defined in Section 3(21) of ERISA, which is either a bank, savings and loan association, insurance company, or registered investment adviser, or (2) you have total assets in excess of $5,000,000 and the decision that you shall subscribe for and purchase the Shares is made solely by persons or entities that are accredited investors, as defined in Rule 501 of Regulation D promulgated under the Securities Act (“Regulation D”) or (3) you are a self-directed plan and the decision that you shall subscribe for and purchase the Units is made solely by persons or entities that are accredited investors.

 

o	You are a private business development company as defined in Section 202(a)(22) of the Investment Advisers Act of 1940, as amended.

 

o

You are an organization described in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended (the “Code”), a corporation, Massachusetts or similar business trust or a partnership, in each case not formed for the specific purpose of making an investment in the Units and its underlying securities in excess of $5,000,000.

 

o	You are a director or executive officer of KeyOn Communications, Inc.

 

o	You are a natural person whose individual net worth, or joint net worth with your spouse, exceeds $1,000,000 at the time of your subscription for and purchase of the Units.

 

o	You are a natural person who had an individual income in excess of $200,000 in each of the two most recent years or joint income with your spouse in excess of $300,000 in each of the two most recent years, and who has a reasonable expectation of reaching the same income level in the current year.

 

o	You are a trust, with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the Units and whose subscription for and purchase of the Units is directed by a sophisticated person as described in Rule 506(b)(2)(ii) of Regulation D.

 

o	You are an entity in which all of the equity owners are persons or entities described in one of the preceding paragraphs.

 

 

With respect to this investment in the Units, your:

 

Investment Objectives:   x Aggressive Growth  x Speculation

 

Risk Tolerance:    o Low Risk    o Moderate Risk   x High Risk

 

Are you associated with a NASD Member Firm?   o Yes   o No

 

 

____   ____   I/We understand that this investment is not guaranteed.

 

____   ____   I/We are aware that this investment is not liquid.

 

____   ____   I/We are sophisticated in financial and business affairs and are able to evaluate the risks and merits of an investment in this offering.

 

____   ____   I/We confirm that this investment is considered “high risk.” (This type of investment is considered high risk due to the inherent risks including lack of liquidity and lack of diversification.  Success or failure of private placements such as this is dependent on the corporate issuer of these securities and is outside the control of the investors. While potential loss is limited to the amount invested, such loss is possible.)

 

The Subscriber hereby represents and warrants that all of its answers to this Investor Questionnaire are true as of the date of its execution of the Subscription Agreement pursuant to which it purchased the Units.

 

___________________________________ Name of Purchaser [please print] ___________________________________ Signature of Purchaser (Entities please provide signature of Purchaser’s duly authorized signatory.) ___________________________________ Name of Signatory (Entities only) ___________________________________ Title of Signatory (Entities only)

___________________________________ Name of Co-Purchaser [please print] ___________________________________ Signature of Co-Purchaser

 

 

I state that I am familiar with the financial affairs and investment objectives of the investor named above and reasonably believe that a purchase of the securities is a suitable investment for this investor and that the investor, either individually or together with his or her purchaser representative, understands the terms of and is able to evaluate the merits of this offering. I acknowledge:

 

(a)

that I have reviewed the Subscription Agreement and forms of securities presented to me, and attachments (if any) thereto;

 

(b)

that the Subscription Agreement and attachments thereto have been fully completed and executed by the appropriate party; and

 

(c)

that the subscription will be deemed received by the Company upon acceptance of the Subscription Agreement.

 

Deposit securities from this offering directly to purchaser’s account?  o Yes   o No

 

If “Yes,” please indicate the account number : _____________________________________

 

_____________________________________  ____________________________________

Broker/Dealer          Account Executive

 

_____________________________________  ____________________________________

(Name of Broker/Dealer)        (Signature)

 

_____________________________________  ____________________________________

(Street Address of Broker/Dealer Office)          (Print Name)

 

_____________________________________  ____________________________________

(City of Broker/Dealer Office) (State) (Zip)           (Representative I.D. Number)

 

_____________________________________  ____________________________________

(Telephone Number of Broker/Dealer Office)       (Date)

 

_____________________________________   ____________________________________

(Fax Number of Broker/Dealer Office)            (E-mail Address of Account Executive)