Exhibit 10.1
METRO ONE TELECOMMUNICATIONS, INC.
SECURITIES PURCHASE AGREEMENT
June 5, 2007
METRO ONE TELECOMMUNICATIONS, INC.
SECURITIES PURCHASE
AGREEMENT
This Securities Purchase Agreement (the
“ Agreement ”) is made as of June 5, 2007 by and among Metro One
Telecommunications, Inc. (the “ Company ”) and the purchasers
listed on Exhibit A
attached to this Agreement (each a “
Purchaser ” and
together the “ Purchasers
”).
RECITALS
A.
The Company has authorized the sale and issuance
of shares of the Company’s Series A
Convertible Preferred Stock (the “ Preferred Stock ”), warrants
for the purchase of shares of Preferred Stock, in substantially the
form attached to this Agreement as Exhibit
B (each a “ Warran t”, and collectively,
the “ Warrants
”) and senior secured convertible revolver
bridge notes in substantially the form attached to this Agreement
as Exhibit C (each, a “ Note
”, and collectively, the “
Notes ”, and
together with the Preferred Stock and Warrants, the “
Securities ”);
B.
The Purchasers desire to purchase, and the Company
desires to issue and sell, the Securities on the terms and
conditions set forth herein.
C.
In connection with the issuance and sale of the
Securities, the Company and the Purchasers also intend to enter
into (i) a Registration Rights Agreement of even date herewith (the
“ Registration Rights
Agreement ”) and (ii) a Security
Agreement of even date herewith (the “ Security Agreement ,” and
together with this Agreement, the Warrants, the Notes, and the
Registration Rights Agreement, the “ Transaction Documents ”). In
addition, the Purchasers intend to enter into an Intercreditor
Agreement (the “ Intercreditor
Agreement ”).
AGREEMENT
In consideration of the mutual promises contained
herein and other good and valuable consideration, receipt of which
is hereby acknowledged, the parties to this Agreement agree as
follows:
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1.
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Purchase and Sale of Securities
.
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(a)
Initial Closing . The purchase
and sale of an aggregate of two hundred twenty (220)
shares of Preferred Stock, Warrants for the purchase
of seventy-seven (77) shares of Preferred
Stock (the “ Initial
Warrants ”), and up to seven
million eight hundred thousand dollars ($7,800,000)
principal amount of Notes shall take place at the
offices of Heller Ehrman LLP, 701 Fifth Avenue, Seattle,
Washington, at 10:00 a.m., on June 5, 2007, or at such other time
and place and such other manner as the Company and the Purchasers
mutually agree upon, orally or in writing, including by electronic
means (which time and place are designated as the “
Initial Closing ”). Subject to the terms and conditions of this
Agreement, each Purchaser agrees, severally and not jointly, to
purchase at the Initial Closing and the Company agrees to sell and
issue to each Purchaser (i) the number of shares of Preferred Stock
set forth opposite such Purchaser’s name on
Exhibit A as the
Initial Closing Preferred Stock, with each share of
Preferred Stock having a purchase price per share of
ten thousand dollars ($10,000), (ii) the Initial Warrant to
purchase the number of shares of Preferred Stock set forth opposite
such Purchaser’s name on Exhibit
A as the Initial Warrant Amount and (iii)
a Note in the principal amount set forth opposite such
Purchaser’s name on Exhibit
A . Subject to the terms and conditions
of this Agreement, at the Initial Closing, the Company will deliver
to each Purchaser the shares of Preferred Stock, the Initial
Warrant and the Note to be purchased by such Purchaser against
payment of the “Initial Closing Investment Amount” set
forth on Exhibit A therefor by wire transfer to a bank account designated by the
Company.
(b)
Note Takedown Closings
. From time to time
prior to (A) the conversion of the Notes to Preferred Stock or (B)
maturity of the Notes, the Company may request additional amounts
(each, an “ Additional
Amount ”) to be drawn under the
Notes. The Company may only draw an Additional Amount when its
non-restricted cash balance as reflected on its balance sheet is
less than three million dollars ($3,000,000) and in each such case
only up to the amount necessary to raise the Company’s
non-restricted cash balance as reflected on its balance sheet to
three million five-hundred thousand dollars ($3,500,000);
provided ;
however ; that the
Additional Amounts, in the aggregate, shall not exceed seven
million eight hundred thousand dollars ($7,800,000) (the
“ Total Note Amount
”). If the Company desires and is eligible to
draw an Additional Amount, the Company shall deliver to each
Purchaser a written request (“ Additional Request ”) for such
Purchaser’s Pro Rata Percentage (as set forth in
Exhibit A ) of the
Additional Amount. The payment by Purchaser by wire transfer to a
bank designated by the Company of such Purchaser’s Pro Rata
Percentage of the Additional Amount (each, a “
Note Takedown Closing ”) shall occur on a date as soon as reasonably possible,
but no later than three (3) business days after the date specified
in the Additional Request (each such date, a “
Note Takedown Closing Date ”). At each Note Takedown Closing, the Company will
amend Exhibit A hereto to reflect the credit extended by each of the Purchasers
to the Company in the Note Takedown Closing and such
Purchasers’ aggregate credit extended under the Note as of
such date.
(c)
Second Closing .
Within one (1) business day following approval by the
Company’s shareholders of the issuance of Preferred Stock
upon the conversion of the Notes, the Company shall deliver to each
Purchaser a written request for such Purchaser’s remaining
amount available under the Note as set forth on
Exhibit A (the
“ Remaining Amount
Available ”). Subject to the terms
and conditions of this Agreement, each Purchaser agrees, severally
and not jointly, to make payment by wire transfer to a bank
designated by the Company of such Purchaser’s Remaining
Amount Available (the “ Second
Closing ”), which shall occur on a
date as soon as reasonably possible but no later than two (2)
business days after the date specified in the written request (the
“ Second Closing Date
”). Subject to the terms and conditions of
this Agreement and the Notes, at the Second Closing, the Company
will deliver to each Purchaser (A) (i) the shares of Preferred
Stock set forth opposite such Purchaser’s name on
Exhibit A as the Second
Closing Preferred Stock, (ii) additional shares of Preferred Stock
representing payment of interest on the Note and (iii) a Warrant to
purchase the number of shares of Preferred Stock set forth opposite
such Purchaser’s name on Exhibit
A as the Note Conversion Warrants, and
(B) a payment by wire transfer, in lieu of any fractional shares of
Preferred Stock, in respect of interest accrued and payable under
the Note.
2.
Senior Security Interest
. The indebtedness
represented by the Notes shall be secured by assets of the Company
in accordance with the provisions of the Security Agreement among
the Company and the Purchasers in the form attached to this
Agreement as Exhibit E
, which shall, among other things, provide for
certain affirmative and negative covenants of the Company and a
first priority, perfected security interest in such assets of the
Company.
3.
Representations and Warranties of the
Company . The Company hereby represents, warrants and covenants to each
Purchaser that:
(a)
Organization, Good Standing and
Qualification .
The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of
Oregon, has qualified to do business in all jurisdictions in which
the absence of such qualification would have a material adverse
effect on the assets, condition (financial or otherwise), affairs,
earnings, business or operations of the Company (a “Material
Adverse Effect”) and has all necessary power and authority to
enter into this Agreement, to carry out its obligations hereunder
and to consummate the transactions contemplated hereby and to
conduct its business. Except for the shareholder approval
contemplated by Section 5(a), the execution and delivery of this
Agreement by the Company, the performance by the Company of its
obligations hereunder and the consummation by the Company of the
transactions contemplated hereby have been duly authorized by all
requisite corporate action on the part of the Company. This
Agreement has been duly executed and delivered by the Company, and
(assuming due authorization, execution and delivery by the
Purchaser) this Agreement constitutes a legal, valid and binding
obligation of the Company enforceable against the Company in
accordance with its terms, except as limited by applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance, and any other laws of general application affecting
enforcement of creditors’ rights generally, and as limited by
laws relating to the availability of a specific performance,
injunctive relief, or other equitable remedies.
(b)
No Conflict . The execution, delivery and
performance of this Agreement, the Security Agreement and the
Registration Rights Agreement by the Company and the issuance of
the Securities contemplated hereby do not and will not: (i)
violate, conflict with or result in the breach of any provision of
the articles of incorporation or by-laws (or similar organizational
documents) of the Company as in effect on the date hereof; (ii)
materially conflict with or violate any law or governmental order
as in effect on the date hereof applicable to the Company, or any
of its assets, properties or businesses; or (iii) conflict with,
result in any breach of, constitute a default (or event which with
the giving of notice or lapse of time, or both, would become a
default) under, require any consent under, or give to others any
rights of termination, amendment, acceleration of performance
required by, suspension, revocation or cancellation of any rights
pursuant to, any material note, bond, mortgage or indenture,
contract, agreement, lease, sublease, license, permit, franchise or
other instrument or arrangement as in effect on the date hereof to
which the Company is a party or by which any of Company’s
assets or properties is bound or affected, which individually or in
the aggregate would have a Material Adverse Effect.
(c)
Issuance and Delivery of the
Securities .
The Securities have been duly authorized by the
Company and, when issued, sold and delivered in accordance with
this Agreement, the Securities will be (i) validly issued (in the
case of the Preferred Stock and the
Warrants), fully paid and nonassessable (in the case
of the Preferred Stock), (ii) free from all taxes, liens and
charges with respect to the issue thereof, and shall not be subject
to preemptive rights or other similar rights of shareholders of the
Company or any liens or encumbrances and (iii) entitled to the
rights set forth in the Amended and Restated Articles of
Incorporation, as amended through the date hereof (the
“ Articles ”)(in the case of the Preferred Stock). The shares of the
Company’s common stock (“ Common Stock ”) issuable upon
conversion of the Preferred Stock and the shares of Preferred Stock
issuable upon exercise of the Warrants and conversion of the Notes
have been duly authorized and reserved by the Company and, when
issued upon conversion or exercise in accordance with the Articles,
the Notes and Warrants, as applicable, will be validly issued,
fully paid and nonassessable.
(d)
Authorized Capital Stock
. As of the date hereof
and immediately prior to the issuance of the Preferred Stock and
Warrants hereunder, the authorized capital stock of the Company
consists of 50,000,000 shares of Common Stock, of which as of the
date hereof, 6,233,326 shares are issued and outstanding, and
10,000,000 shares of Preferred Stock, of which as of the date
hereof no shares are issued or outstanding. All of the outstanding
shares have been validly issued and are fully paid and
nonassessable. No shares of Common Stock are subject to preemptive
rights or any other similar rights or any liens or encumbrances
suffered or permitted by the Company. Except as set forth in the
SEC Reports (defined below), or as disclosed on
Schedule 3(h) , as of
the date hereof, (i) there are no outstanding options (except for
options granted under the Company’s existing equity incentive
plans), warrants, scrip, rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities
or rights convertible into, any shares of capital stock of the
Company, or contracts, commitments, understandings or arrangements
by which the Company is or may become bound to issue additional
shares of capital stock of the Company and (ii) there are no
agreements or arrangements under which the Company is obligated to
register the sale of any of its securities under the Securities Act
of 1933, as amended (the “ Securities Act ”). There are no
securities or instruments containing anti-dilution or similar
provisions that will be triggered by the issuance of any of the
Securities as described in this Agreement. The Company has
furnished to the Purchasers true and correct copies of the
Articles, and the Company's By-laws.
(e)
Governmental Consents
. No consent, approval,
order or authorization of, or registration, qualification,
designation, declaration or filing with, any federal, state or
local governmental authority on the part of the Company is required
in connection with the consummation of the transactions
contemplated by this Agreement, except for the notification
pursuant to an Application for Listing of Additional Shares to The
Nasdaq Stock Market and filings pursuant to applicable state
securities laws and Regulation D of the Securities
Act.
(f)
Private Placement
. Subject to the truth
and accuracy of the Purchasers’ representations set forth in
this Agreement, the offer, sale and issuance of the Securities as
contemplated by this Agreement is exempt from the registration
requirements of the Securities Act, and neither the Company nor any
authorized agent acting on its behalf will take any action
hereafter that would cause the loss of such exemption.
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(g)
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SEC Reports; Financial
Statements .
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(i)
The Company has filed all forms, reports and
documents required to be filed by it with the United States
Securities and Exchange Commission (the “
Commission ”),
and has heretofore made available to the Purchaser (or in the case
of forms, reports and documents filed after the date hereof and
prior to the Second Closing, will make available to the Purchaser)
in the form filed with the Commission (excluding any exhibits
thereto) (i) its Annual Report on Form 10-K for the fiscal year
ended December 31, 2005, (ii) its Annual Report on Form 10-K for
the fiscal year ended December 31, 2006, (iii) its Quarterly Report
on Form 10-Q for the quarter ending March 31, 2007, (iv) its
Quarterly Reports on Form 10-Q filed after the date hereof and
prior to the Second Closing, and (v) its Current Reports on Form
8-K filed with the Commission on or after December 31, 2006 and
prior to the Second Closing (collectively, the “
SEC Reports ”).
(ii)
The SEC Reports were prepared in all material
respects in accordance with the requirements of the Securities
Exchange Act of 1934, as amended (the “ Exchange Act ”) and the rules
and regulations thereunder and did not at the time they were filed
contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order
to make the statements made therein, in light of the circumstances
under which they were made, not misleading.
(iii)
The financial statements (including, in each case,
any notes thereto) contained in the SEC Reports were prepared in
accordance with U.S. GAAP applied on a consistent basis throughout
the periods indicated (except as may be indicated in the notes
thereto), and each fairly presented the financial position, results
of operations and cash flows of the Company as at the respective
dates thereof and for the respective periods indicated
therein.
(h)
Absence of Certain Changes
. Since March 31, 2007,
except as disclosed on Schedule
3(h) or (A) with respect to the Initial
Closing, in the SEC Reports filed prior to the date of the Initial
Closing, (B) with respect to each Note Takedown Closing, in the SEC
Reports filed prior to each Note Takedown Closing Date, and (C)
with respect to the Second Closing, in the SEC Reports filed prior
to the Second Closing Date, there has not been:
(i)
any change in the assets, liabilities, condition
(financial or otherwise), affairs, earnings, business or operations
of the Company from that reflected in (A) the financial statements
referred to in Section 3(g)(iii) above and (B) the balance sheet,
dated April 30, 2007 and income statement and statement of cash
flows for the month ended April 30, 2007 provided to Purchasers,
except for changes in the ordinary course of business which, either
individually or in the aggregate, have not had, or may be
reasonably expected to result in, a Material Adverse
Effect;
(ii)
any incurrence of liabilities or obligations by the
Company, contingent or otherwise, whether due or to become due,
whether by way of guaranty, endorsement, indemnity, warranty, or
otherwise, except liabilities and obligations incurred in the
ordinary course of business, none of which has had, or is
reasonably likely to result in, a Material Adverse
Effect;
(iii)
any hiring by the Company of any new officer or any
material increase in compensation of any of its existing officers,
or the rate of pay of its employees as a group (except as part of
regular compensation increases in the ordinary course of business),
or any material change of such officers’ or employees’
employment agreements or of any benefit plan relating to the
Company’s employees;
(iv)
any resignation or termination of employment of any
officer of the Company and the Company has
