Exhibit 10.1
BRIDGE NOTE PURCHASE
AGREEMENT
This BRIDGE NOTE PURCHASE AGREEMENT (this “ Agreement
”) between each purchaser identified on the signature pages
hereto (each, including its successors and assigns, a “
Lender ” and collectively the “ Lenders
”) and KeyOn Communications Holdings, Inc., a Delaware
corporation (the “ Company ”), is made as of
November 6, 2007. The Lenders and the Company, each intending
to be legally bound, hereby agree as follows:
WITNESSETH
WHEREAS, in order to provide bridge financing for the Company, the
Company desires to (i) sell promissory notes in the aggregate
principal amount of up to Seven Hundred Fifty Thousand Dollars
($750,000), in substantially the form set forth on Exhibit A
hereto (each note, a “ Note ” and, multiple
notes, collectively, the “ Notes ”) and (ii)
issue Warrants (as hereinafter defined), in substantially the form
set forth on Exhibit B hereto, to purchase shares of the
Company’s common stock, $.001 par value per share (the
“ Common Shares ”), subject to the terms and
conditions set forth herein and therein (the “
Offering ”).
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth herein, the Company and the Lenders hereby
agree as follows.
1.
Commitments to Purchase Notes and Issue Warrants
.
1.1.
Subject to and upon the terms and conditions set forth herein, each
Lender with a Commitment (as hereinafter defined), severally and
not jointly, agrees to purchase from the Company a Note or Notes,
which Note or Notes shall be several, not joint, obligations of the
Lenders. For purposes hereof, “Commitment” shall mean,
for each Lender, an irrevocable commitment to provide the Company
with the amount set forth opposite such Lender’s name in
Schedule I directly below the heading entitled
“Commitment”. The Notes shall be due and payable on the
earlier of (a) November , 2008 or (b) upon
consummation of a transaction (or series of related transactions)
after the date of this Agreement in which the Company issues and
sells shares of its capital stock or securities convertible into
shares of capital stock in exchange for aggregate gross proceeds of
not less than $5 million (the “ Subsequent Offering
”).
1.2.
Subject to and upon the terms and conditions set forth herein, the
Company shall issue each of the Lenders listed on Schedule I
hereto, severally and not jointly, warrants (a) to purchase one (1)
share of the Company’s Common Shares for every Eight Dollars
($8.00) of such Lender’s Commitment and (b) having an
exercise price equal to the greater of (i) $6.70 per shares or (ii)
the price per Common Share sold to investors in a Subsequent
Offering that occurs on or before December 31, 2007 and term of
five (5) years (the “ Warrants ”).
The Notes and Warrants are
speculative, and investment therein involves a high degree of risk.
Each Lender is urged to carefully consider
the
business and prospects of the Company. Each Lender must be prepared
to bear the economic risk of its investment for an indefinite
period and be able to withstand a total loss of its
investment.
2.
Draw Down Notice . Each Lender shall fund its respective
Note upon three (3) business day’s prior written notice (a
“ Notice of Draw-Down ”). Moreover, no later
than 1:00 P.M. Eastern Time on the date specified in a Notice of
Draw-Down, the recipient of such Notice of Draw-Down shall deliver
to the Company, in immediately available funds, the amount set
forth in the Notice of Draw-Down (the “ Draw Down
Amount ”), up to such Lender’s unfunded Commitment.
The failure of any Lender to deliver the Draw Down Amount on the
date specified in any Notice of Draw-Down shall cause the automatic
forfeiture of such Lender’s unexercised Warrants.
Notwithstanding anything to the contrary contained herein, the
Company may not submit a Notice of Draw-Down following the Maturity
Date (as defined in the Note).
3.
Representations and Warranties of the Company . The
Company represents and warrants to Lenders as follows, in each case
as of the date hereof:
3.1.
The Company is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization
with full power and authority to own, lease, license and use its
properties and assets and to carry out the business in which it
proposes to engage.
3.2.
The Company has all requisite corporate power and authority to
execute, deliver and perform its obligations under this Agreement
and to issue and sell the Notes and Warrants hereunder, and
the Common Shares issuable upon exercise of the Warrants
(collectively, the “ Subject Securities ”). All
necessary proceedings of the Company have been duly taken to
authorize the execution, delivery, and performance of this
Agreement, the Notes and the Warrants (collectively, the “
Transaction Documents ”). The Transaction Documents
have been duly authorized by the Company and, when executed and
delivered by the Company, will constitute the legal, valid and
binding obligation of the Company enforceable against the Company
in accordance with their terms. The Subject Securities are duly
authorized, and when issued pursuant to the Transaction Documents,
will be validly issued.
3.3.
No consent of any party to any contract, agreement, instrument,
lease or license to which the Company is a party or to which any of
its properties or assets are subject is required for the execution,
delivery or performance by the Company of any of the Transaction
Documents or the issuance and sale of the Subject
Securities.
3.4.
The execution, delivery and performance of Transaction Documents
and the issuance and sale of the Subject Securities will not
violate or result in a breach of, or entitle any party (with or
without the giving of notice or the passage of time or both) to
terminate or call a default under any contract or agreement to
which the Company is a party or violate or result in a breach of
any term of the certificate of incorporation or by-laws of the
Company, or, assuming compliance with applicable state securities
or “blue sky” laws, violate any law, rule, regulation,
order, judgment or decree binding upon, the Company, or to which
any of its operations, businesses, properties or assets are
subject, the breach, termination or violation of which, or default
under which,
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would have a material adverse effect on the
operations, business, properties or assets of the
Company.
3.5.
Except to the extent modified by the Offering, the Company’s
capitalization is disclosed in the SEC Filings (as defined
below).
3.6.
There are no brokerage commissions, finder’s fees or similar
fees or commissions payable by the Company in connection with the
sale of the Subject Securities to Lender based on any agreement,
arrangement or understanding with or known to the
Company.
3.7.
Except as would not reasonably be expected to have a Material
Adverse Effect (as defined below), the Company is not in violation
or default of any provisions of its certificate of incorporation or
bylaws, as may be amended, as applicable, any instrument, judgment,
order, writ or decree, or any material provision of any contract or
agreement, to which it is a party or by which it is bound or of any
provision of federal, state or local statute, rule or regulation
applicable to the Company or its business. Except as would
not reasonably be expected to have a Material Adverse Effect, the
execution, delivery and performance of the Transaction Documents
and the consummation of the transactions contemplated thereby will
not result in any such violation or be in conflict with or
constitute, with or without the passage of time and giving of
notice, either a default under any such provision, instrument,
judgment, order, writ, decree, contract or agreement, or require
any consent, waiver or approval thereunder, or constitute an event
which results in the creation of any lien, charge or encumbrance
upon any assets of the Company.
3.8.
Except as disclosed in the SEC Filings, the Company is not a party
to any litigation, action, suit, proceeding or investigation, nor,
to the knowledge of the Company, has any litigation, action, suit,
proceeding or investigation been threatened against the Company
where such litigation, action, suit, proceeding or investigation
would, if adversely determined, reasonably be expected to (a) have
a material adverse affect on the financial condition of the Company
or (b) have a material adverse effect on the ability of the Company
to perform its obligations under this Agreement or any of the other
Transaction Documents (either (a) or (b), a “ Material
Adverse Effect ”).
3.9.
The Company has good and marketable title to its properties and
assets held in each case free and clear of all liens, pledges,
security interests, encumbrances, attachments or charges of any
kind (each a “ Lien ”), except for (a) Liens for
taxes that are not yet due and payable, (b) Liens that do not or
are not reasonably likely to result in a Material Adverse Effect or
(c) Liens disclosed in the SEC Filings (Liens described in clauses
(a), (b) and (c) are referred to as “ Permitted Liens
”). With respect to the property and assets it leases,
the Company is in compliance with such leases and, to the best of
the Company’s knowledge, the Company holds valid leasehold
interests in such property and assets free and clear of any Liens
of any other party other than the lessors of such property and
assets, except for Permitted Liens.
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3.10.
Except as disclosed in the Financial Statements (as defined below),
incurred pursuant to the sale of the Subject Securities or incurred
in the ordinary course of business, the Company has no obligations
or liabilities of any kind (absolute or contingent, direct or
indirect) pursuant to any agreement of any kind related to any
indebtedness of any kind.
3.11.
The Company owns, free and clear of all Liens other than Permitted
Liens, or is licensed or otherwise possesses legally enforceable
rights to use, all patents, trademarks, trade names, service marks
and copyrights material to the operation of the Company’s
business, and any applications related to any of the
foregoing.
3.12.
All reports required to be filed by the Company since and including
the Company’s Current Report on Form 8-K filed with the
Securities and Exchange Commission on August 10, 2007, to and
including the date hereof (collectively, the “ SEC
Filings ”) have been duly filed with the Securities and
Exchange Commission, complied at the time of filing in all material
respects with the requirements of their respective forms and were
complete and correct in all material respects as of the dates at
which the information was furnished, and contained (as of such
dates) no untrue statement of a material fact or omitted to state a
material fact necessary in order to make the statements contained
therein, in light of the circumstances under which they were made,
not misleading.
3.13.
The financial statements and supporting schedules (the “
Financial Statements ”) included in the
Company’s Current Report on Form 8-K filed with the
Securities and Exchange Commission on August 10, 2007, as amended
on September 24, 2007, are complete and correct in all material
respects and present fairly the financial position of the Company
as of the dates specified and the results of operations for the
periods specified, in each case, in conformity with generally
accepted accounting principles applied on a consistent basis during
the periods involved, except as indicated therein or in the notes
thereto. Since June 30, 2007, there has not been, except where it
was either disclosed in the SEC Filings or would not reasonably be
expected to have a Material Adverse Effect, (a) any payment of
dividends on, or other distribution with respect to, or any direct
or indirect redemption, purchase or acquisition of, any shares of
the capital stock or other securities of the Company, (b) any
disposition of any tangible or intangible material asset of the
Company, (c) any damage, destruction or loss (whether or not
covered by insurance) of any material asset of the Company, or (d)
any change in the accounting methods, practices or policies
followed by the Company or any change in depreciation or
amortization policies or rates theretofore adopted, which has not
been adequately provided for or disclosed in the Financial
Statements.
4.
Representations, Warranties and Covenants of Lender .
Each Lender hereby represents and warrants to, and agrees with, the
Company as follows:
4.1.
The Subject Securities are being offered and issued pursuant to an
exemption from the registration requirements of the Securities Act
of 1933, as amended (the “ Securities Act ”),
provided by Section 4(2) of such Act. Such Lender is an
“Accredited Investor” (as defined in Rule 501
promulgated under the Securities Act), and
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the
Company is relying on the representations made such Lender in this
Agreement in determining the availability of such
exemption.
4.2.
Each of the Transaction Documents to which such Lender is party has
been duly executed and delivered by such Lender and constitutes the
legal, valid and binding obligation of such Lender, enforceable
against such Lender in accordance with its terms.
4.3.
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