LOAN AGREEMENT
This Loan Agreement (as amended,
supplemented or otherwise modified from time to time, this
“Agreement”), dated as of March 14, 2007, is by and
between SiriCOMM, Inc., a Delaware corporation (the
“Company”), and Sunflower Capital, LLC, a Missouri
limited liability company (“Sunflower”).
WHEREAS, the Company has requested
that Sunflower extend a multi-draw loan to the Company of up to
$500,000 for working capital and other general corporate purposes
(the “Loan”);
WHEREAS, Sunflower is willing to
make advances to the Company of the Loan upon the terms and
conditions set forth herein; and
WHEREAS, the Company has agreed to
secure its obligations under the Loan Documents (as defined below)
by granting to Sunflower a security interest in and lien upon all
of its existing and after-acquired personal and real
property;
NOW, THEREFORE, in consideration of
the foregoing and the mutual covenants herein, and other good and
valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Company and Sunflower hereby agree as
follows:
1.
Definitions . Capitalized terms used in this Agreement and,
unless otherwise defined therein, the other Loan Documents shall
have the following respective meanings:
“Advance Request” has
the meaning ascribed to it in Section 3(b)(i).
“Agreement” has the
meaning ascribed to it in the preamble hereof.
“Business Day” means any
day that is not a Saturday, a Sunday or a day on which banks are
required or permitted to be closed in the State of
Missouri.
“Collateral Documents”
means (a) that certain Security Agreement, dated as of the date
hereof, executed by the Company in favor of Sunflower; (b) that
certain Intellectual Property Security Agreement, dated as of the
date hereof, executed by the Company in favor of Sunflower; (c)
those certain assignments of material agreements, dated as of the
date hereof, executed by the Company in favor of Sunflower; and (d)
all similar agreements executed in favor of Sunflower and
guaranteeing payment of, or granting a Lien upon property as
security for payment of, the Obligations.
“Company” has the
meaning ascribed to it in the preamble hereof.
“Default” means any
Event of Default and any event that, with the passing of time or
the giving of notice or both, would become an Event of
Default.
“Event of Defaults” has
the meaning ascribed to it in Section 8(a).
“Lien” means any
mortgage or deed of trust, pledge, hypothecation, assignment,
deposit arrangement, lien, charge, claim, security interest,
easement or encumbrance, or preference,
priority or other security agreement
or preferential arrangement of any kind or nature whatsoever
(including any lease or title retention agreement, any financing
lease having substantially the same economic effect as any of the
foregoing and the filing of, or agreement to give, any financing
statement perfecting a security interest under the Uniform
Commercial Code or comparable law of any jurisdiction).
“Loan” has the meaning
ascribed to it in the recitals of this Agreement.
“Loan Documents” means
this Agreement, the Note, the Warrant Amendment, the Collateral
Documents and all other agreements, instruments, documents and
certificates executed and delivered to, or in favor of, Sunflower,
whether heretofore, now or hereafter, by or on behalf of the
Company in connection with this Agreement or the Loan.
“Material Adverse
Effect” means a material adverse effect on (a) the business,
assets, operations, prospects or financial or other condition of
the Company (including the cessation by the Company of normal
business operations), (b) the Company’s ability to pay the
Loan or to pay or perform any of the other Obligations in
accordance with the terms of the Loan Documents, (c) the collateral
securing the Obligations or Sunflower’s Lien thereon
(including any such material adverse effect result from the
termination of any agreement with a material supplier or service
provider), or (d) Sunflower’s rights and remedies under the
Loan Documents.
“Note” has the meaning
ascribed to it in Section 3(c).
“Obligations” means all
loans, advances, debts, liabilities and obligations for the
performance of covenants, tasks or duties or for payment of
monetary amounts (whether or not such performance is then required
or contingent, or such amounts are liquidated or determinable)
owing by the Company to Sunflower and all covenants and duties
regarding such amounts, of any kind or nature, present or future,
whether or not evidenced by any note, agreement or other
instrument, arising under any Loan Document. The Obligations
include all principal, interest (including all interest that
accrues after the commencement of any case or proceeding by or
against the Company in bankruptcy, whether or not allowed in such
case or proceeding), expenses, attorneys’ fees and any other
sum chargeable to the Company under any Loan Document.
“Person” means any
individual, sole proprietorship, partnership, joint venture, trust,
unincorporated organization, association, corporation, limited
liability company, institution, public benefit corporation, other
entity or government (whether federal, state, county, city,
municipal, local, foreign, or otherwise, including any
instrumentality, division, agency, body or department
thereof).
“Solvent” means, with
respect to the Company on a particular date, that on such date (a)
the fair value of the property of the Company is greater than the
total amount of liabilities, including contingent liabilities, of
the Company; (b) the present fair salable value of the assets of
the Company is not less than the amount that will be required to
pay the probable liability of the Company on its debts as they
become absolute and matured; (c) the Company does not intend to,
and does not believe that it will, incur debts or liabilities
beyond the Company’s ability to pay as such debts and
liabilities mature; and (d) the Company is not engaged in a
business or
transaction, and is not about to
engage in a business or transaction, for which the Company’s
property would constitute an unreasonably small capital.
“Sunflower” has the
meaning ascribed to it in the preamble hereof.
2.
Rules of Construction . Any reference to a Loan Document
shall include all appendices, exhibits and schedules thereto and
all amendments, restatements, supplements or other modifications
thereof. Undefined terms in any Loan Document that have meanings
provided by the Uniform Commercial Code shall have the meanings
provided by the Uniform Commercial Code, unless the context
otherwise requires. The words “herein,”
“hereof” and “hereunder” and other words of
similar import refer to this Agreement as a whole and not to any
particular Section, subsection or clause in this Agreement. Where
it appears appropriate from the context, each term stated in either
the singular or the plural shall include the singular and the
plural, and pronouns stated in the masculine, feminine or neuter
gender shall include the masculine, the feminine and the neuter
genders. The words “including,” “includes”
and “include” shall be deemed to be followed by the
words “without limitation”; the word “or”
is not exclusive; references to Persons include their respective
successors and assigns (to the extent and only to the extent
permitted by the Loan Documents) or, in the case of governmental
Persons, Persons succeeding to the relevant functions of such
Persons; and all references to statutes and related regulations
shall include any amendments of the same and any successor statutes
and regulations.
(a) Subject
to the terms and conditions of this Agreement and in reliance on
the representations and warranties set forth herein, from the date
hereof and continuing up to but not including the earliest of (i)
February 29, 2008, (ii) the date of termination of
Sunflower’s obligation to make advances or to permit the Loan
to remain outstanding pursuant to Section 8(b), and (iii) the date
of indefeasible prepayment in full by the Company of the Loan and
the termination of Sunflower’s obligations hereunder,
Sunflower agrees to make advances of the Loan available to the
Company in an aggregate amount not to exceed $500,000.
(b) Sunflower’s
obligation to make any advance is subject to the Company’s
satisfaction of the following conditions precedent:
(i) the
Company shall have requested such advance pursuant to a written
request in the form of Exhibit A hereto (an “Advance
Request”) delivered to Sunflower at least three Business
Days’ prior to such proposed advance, provided that an
initial Advance Request in the amount of up to $300,000 may be
delivered on the date hereof;
(ii) the
amount of such advance, together with any prior advances of the
Loan, shall not exceed $500,000;
(iii) Sunflower
shall be satisfied, based on such financial and business
information as Sunflower may request, that no Default exists at the
time of and after giving effect to such advance;
(iv) Sunflower
shall have reviewed and approved the Advance Request;
(v) no
Material Adverse Effect has occurred since the date hereof as
determined by Sunflower;
(vi) at
such time, Sunflower shall not believe that it will have difficulty
collecting the Loan or that the value of the collateral securing
the Loan has been significantly impaired;
(vii) Quest
Capital Alliance (or its affiliate) (“Quest”) shall
have committed to loan the Company an amount not less than
$1,200,000; and
(viii) the
amount of such advance, together with any prior advances of the
Loan, shall not exceed $500,000 multiplied by the quotient of the
outstanding amount of the loan made by Quest to the Company divided
by $1,200,000; provided that this clause (viii) shall not
apply to the initial advance of the Loan made on the date hereof,
but, at the time of the initial funding of the Quest loan (and
subsequent fundings if required), the balance of this Loan shall be
paid down in an amount adequate to cause the foregoing formula to
be in balance.
(c) The
commitment of Sunflower to make the Loan shall be evidenced by that
certain Convertible Promissory Note in the principal amount of
$500,000, dated the date hereof (the “Note”). The Note
represents the obligation of the Company to pay the amount of the
Loan, together with interest thereon, to Sunflower. Subject to the
payment required pursuant to Section 3(b)(viii) above and
Sunflower’s right to convert the Obligations or any portion
thereof to the Company’s capital stock pursuant to the Note,
the entire unpaid balance of the Loan, all accrued interest thereon
and all other non-contingent Obligations shall be immediately due
and payable in full in immediately available funds on the earliest
of (i) February 29, 2008, (ii) the date of termination of
Sunflower’s obligation to make advances or to permit the Loan
to remain outstanding pursuant to Section 8(b), and (iii) the date
of indefeasible prepayment in full by the Company of the Loan and
the termination of Sunflower’s obligations hereunder. Except
for any portion of the initial advance repaid pursuant to Section
3(b)(viii) above, once repaid, the Loan and each advance thereof
may not be reborrowed.
(d) On
fifteen days’ notice to Sunflower, the Company may terminate
Sunflower’s obligations to make additional advances
hereunder; provided that, upon such termination, the Loan
and other Obligations shall be immediately, indefeasibly paid in
full by the Company. The Company’s notice pursuant to the
preceding sentence shall obligate the Company to either terminate
Sunflower’s obligations and indefeasibly pay the Obligations
in full or pay Sunflower’s out-of-pocket costs and damages
incurred as a result of the Company’s failure to make such
payment on the date specified in such notice. Notwithstanding the
foregoing, at any time after the receipt of such notice by
Sunflower and on and after the February 29, 2008, Sunflower shall
have the right to elect an Optional Conversion pursuant to and as
defined in the Note. In the event that (i) an Optional Conversion
is elected, (ii) an initial advance has been made and some part or
all of that initial advance has been prepaid pursuant to the
provisions of Section 3(b)(viii) and (ii)
Sunflower has not re-advance funds
in an amount such that the outstanding balnace of the Loan equals
or exceeds the initial advance, then, on the Optional Conversion
date, Sunflower also shall be entitled to a Differential Warrant
pursuant to and as defined in the Note.
(e) Immediately
upon receipt by the Company of the proceeds of any sale or other
disposition of any personal or real property, the Company shall
prepay in full, without penalty, the Loan and Sunflower’s
obligations to make additional advances hereunder shall be
automatically terminate without notice or any other action of any
kind.
(f) Sunflower
shall be entitled to rely upon and shall be fully protected in
relying upon any Advance Request believed by Sunflower to be
genuine. Sunflower may assume that each Person executing and
delivering any notice in accordance with this Agreement was duly
authorized to do so.
(g) The
Company shall pay interest on the Loan to Sunflower at the rate of
10% per annum from the date hereof until the Loan is indefeasibly
paid in full or converted in full to the Company’s capital
stock pursuant to the Note. All computations of interest shall be
made on the basis of a 360-day year for the actual number of days
occurring in the period for which such interest is payable. So long
as any Default is continuing, the interest rate applicable to the
Loan shall be increased to 18% per annum (the “Default
Rate”), and all outstanding Obligations shall bear interest
at such rate from the initial date of such Default until cured or
waived and shall be payable upon demand.
(h) Notwithstanding
anything to the contrary herein, if a court of competent
jurisdiction determines in a final order that the rate of interest
payable hereunder exceeds the highest rate of interest permissible
under law (the “Maximum Lawful Rate”), then so long as
the Maximum Lawful Rate would be so exceeded, the rate of interest
payable hereunder shall be equal to the Maximum Lawful Rate;
provided , however , that if at any time thereafter
the rate of interest payable hereunder is less than the Maximum
Lawful Rate, the Company shall continue to pay interest hereunder
at the Maximum Lawful Rate until such time as the total interest
received by Sunflower is equal to the total interest that would
have been received had the interest rate payable hereunder been
(but for the operation of this Section 3(h)) the interest rate
payable since the date hereof as otherwise provided in this
Agreement. Thereafter, interest hereunder shall be paid at the rate
of interest and in the manner provided above, unless and until the
rate of interest again exceeds the Maximum Lawful Rate, and at that
time this Section 3(h) shall again apply. In no event shall the
total interest received by Sunflower pursuant to the terms hereof
exceed the amount that Sunflower could lawfully have received had
the interest due hereunder been calculated for the full term hereof
at the Maximum Lawful Rate. If the Maximum Lawful Rate is
calculated pursuant to this Section 3(h), such interest shall be
calculated at a daily rate equal to the Maximum Lawful Rate divided
by 360. Notwithstanding the provisions of this Section 3(h), if a
court of competent jurisdiction shall finally determine that
Sunflower has received interest hereunder in excess of the Maximum
Lawful Rate, then to the extent permitted by applicable law,
Sunflower shall promptly apply such excess to the principal amount
of the Loan and thereafter shall
refund any excess to the Company or
as a court of competent jurisdiction may otherwise
order.
(i) Sunflower
shall have the absolute right to determine the order in which
payments received by Sunflower under the Loan Documents shall be
applied to the Obligations, regardless of any application
designated by the Company.
(j) As
consideration for making the commitment to make the Loan, Sunflower
also shall be entitled to a Funding Warrant pursuant to and as
defined in the Note.
(a) The
Company shall indemnify and hold harmless each of Sunflower and its
respective affiliates, officers, directors, employees, attorneys,
agents and representatives (each, an “Indemnified
Person”) from and against any and all suits, actions,
proceedings, claims, damages, losses, liabilities and expenses
(including reasonable attorneys’ fees and disbursements and
other costs of investigation or defense, including those incurred
upon any appeal) that may be instituted or asserted against or
incurred by any such Indemnified Person as the result of credit
having been extended, suspended or terminated under this Agreement
and the other Loan Documents and the administration of such credit,
and in connection with or arising out of the transactions
contemplated hereunder and thereunder and any actions or failures
to act in connection therewith, including any and all environmental
liabilities and legal costs and expenses arising out of or incurred
in connection with disputes between or among any parties to any
Loan Document (collectively, the “Indemnified
Liabilities”); provided that the Company shall not be
liable for any indemnification to an Indemnified Person to the
extent that any such suit, action, proceeding, claim, damage, loss,
liability or expense results from that Indemnified Person’s
gross negligence or willful misconduct. NO INDEMNIFIED PERSON SHALL
BE RESPONSIBLE OR LIABLE TO ANY OTHER PARTY TO ANY LOAN DOCUMENT,
ANY SUCCESSOR, ASSIGNEE OR THIRD PARTY BENEFICIARY OF SUCH PERSON
OR ANY OTHER PERSON ASSERTING CLAIMS DERIVATIVELY THROUGH SUCH
PARTY, FOR INDIRECT, PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES
WHICH MAY BE ALLEGED AS A RESULT OF CREDIT HAVING BEEN EXTENDED,
SUSPENDED OR TERMINATED UNDER ANY LOAN DOCUMENT OR AS A RESULT OF
ANY OTHER TRANSACTION CONTEMPLATED HEREUNDER OR
THEREUNDER.
(b) Any
and all payments by the Company hereunder and under any Loan
Document shall be made free and clear of and without deduction for
any and all present or future taxes. If the Company shall be
required by law to deduct any taxes from or in respect of any sum
payable hereunder or under any Loan Document, (i) the sum payable
shall be increased as much as shall be necessary so that after
making all required deductions (including deductions applicable to
additional sums payable under this Section 4(b)) Sunflower receives
an amount equal to the sum it would have received had no such
deductions been made, (ii) the Company shall make such deductions
and (iii) the
Company shall pay the full amount
deducted to the relevant taxing or other authority in accordance
with applicable law. Within thirty days after the date of any
payment of taxes, the Company shall furnish to Sunflower the
original or a certified copy of a receipt evidencing payment
thereof. Sunflower shall not be obligated to return or refund any
amounts received pursuant to this Section 4(b). The Company shall
indemnify and pay, within ten days of demand therefor, Sunflower
for the full amount of taxes paid by Sunflower in connection with
the Loan, the Loan Documents and any transaction contemplated
thereby and any liability (including penalties, interest and
expenses) arising therefrom or with respect thereto, whether or not
such taxes were correctly or legally asserted.
5.
Conditions Precedent . This Agreement shall not be
effective, and Sunflower shall have no obligation to make any
advance of the Loan, unless and until the following conditions have
been satisfied or waived in writing by Sunflower:
(a) the
Loan Documents shall have been duly executed and delivered by the
Company to Sunflower, and Sunflower shall have received such
documents, instruments and agreements as it shall have requested in
connection with the transactions contemplated by the Loan
Documents, each in form and substance satisfactory to Sunflower, in
its sole discretion;
(b) Sunflower
and the Company shall have modified the existing warrants owned by
Sunflower upon terms satisfactory to Sunflower, and pursuant to
documentation satisfactory to and received by Sunflower (the
“Warrant Amendment”);
(c) Sunflower
shall have received evidence that it has a valid and perfected
first-priority security interest in substantially all of the
Company’s personal and real property, including such
documents duly executed by the Company as Sunflower may request to
perfect its security interest in such property;
(d) Sunflower
shall have received (i) a copy of the Company’s articles of
incorporation and any amendments thereto, certified by the Delaware
Secretary of State; (ii) a good standing certificate for the
Company, certified by the Delaware Secretary of State; (iii) a copy
of the Company’s by-laws, together with any amendments
thereto, and resolutions of the Company’s board of directors
authorizing the execution, delivery and performance of the Loan
Documents and the transactions contemplated thereby, and (iv) a
certificate of the Company’s secretary with respect to such
by-laws, resolutions and the authority of the officer signing the
Loan Documents on behalf of the Company;
(e) Sunflower
shall have received an opinion of the Company’s counsel, in
form and substance satisfactory to Sunflower, in its sole
discretion; and
(f) Sunflower
shall have received a copy of a commitment executed by Quest and
addressed to the Company, which describes Quest’s commitment
to make a loan to the Company in an amount of at least $1,200,000
on the terms approved by the Company’s board of directors on
March 9, 2007.
6.
Representations and Warranties . To induce Sunflower to make
the Loan, the Company hereby makes the following representations
and warranties to Sunflower on the date hereof and on the date of
each advance of the Loan, each of which shall survive the execution
and delivery of the Loan Documents:
(a) The
Company is a duly organized and validly existing corporation in
good standing under the laws of the State of Delaware. The Company
is duly qualified to do business as a foreign corporation and is in
good standing in each jurisdiction in which it does business,
except where the failure to so qualify would not have a material
adverse effect.
(b) The
Company has all necessary corporate power and authority to enter
into and perform its obligations under the Loan Documents and to
carry on the business now conducted or presently proposed to be
conducted by it. All corporate actions on the part of the Company
necessary for the due authorization, execution and delivery of the
Loan Documents and the consummation of the transactions
contemplated hereby have been taken. The Loan Documents have been
duly executed and delivered by the Company and are legally binding
on the Company, enforceable in accordance with their terms. The
execution, delivery and performance by the Company of the Loan
Documents and the transactions contemplated hereby (i) will not
result in any violation of or be in conflict with, or result in a
breach of or constitute a default under, any term or provision of
the Company’s articles of incorporation or by-laws or any
contract to which the Company is a party or by which it is bound,
except where such violation, conflict, breach or default would not
have a material adverse effect on the Company, (ii) will not result
in the creation or imposition of any Lien upon any property of the
Company other than Liens in favor of Sunflower, (iii) will not
violate any law or regulation or any order or decree of any court
or governmental authority,
