Exhibit 10.4
WARRANT PURCHASE AGREEMENT
WARRANT PURCHASE AGREEMENT, dated April 11, 2005, by and between
SIRICOMM, INC., a Delaware corporation having its principal office at 0000 Xxxxx
Xxxxxxxxx, Xxxxx 000, Xxxxxx, Xxxxxxxx 00000 (the "Company") and Sunflower
Capital, LLC, having an office at 10801 Xxxxxx, Suite 920, Overland Park, Kansas
(the "Purchaser").
BACKGROUND INFORMATION
This Agreement sets forth the terms and conditions upon which Purchaser
is acquiring from the Company and the Company is selling and delivering to the
Purchaser, Four Hundred Thirteen Thousand Six Hundred and Five (413,605)
five-year warrants to purchase a like number of shares of the Company's common
stock for $3.00 per share (the "Warrants").
OPERATIVE PROVISIONS
ARTICLE 1
Purchase and Sale of Shares
1.1 Warrants to be Sold. Subject to the terms and conditions of this
Agreement, at the Closing referred to in Section 1.4 hereof, the Company shall
sell and deliver to the Purchaser good, valid and marketable title to the
Warrants by delivering to the Purchaser the Warrants registered in the name of
the Purchaser and executed by the Company.
1.2 Purchase Price of the Shares. The purchase price to be paid by the
Purchaser to the Company for the Warrants shall be Fifty Three Thousand Three
Hundred and Thirty Three and No/100 Dollars ($53,333.00) (the "Purchase Price").
1.3 Payment of Purchase Price. Subject to the terms and conditions of
this Agreement, in reliance on the representations, warranties and agreements of
the Company contained herein, and in consideration of the sale and delivery of
the Warrants, the Purchaser shall pay the Purchase Price at the Closing by
delivery of a certified or cashier's check, made payable to the Company, or by
wire transfer to a bank account designated by the Company.
1.4 Closing. The closing of the sale and purchase of the Warrants shall
take place at such time and place as may be agreed to by the parties but no
later than April 15, 2005 (the "Closing"). At the Closing, the Company shall
deliver to the Purchaser the Warrants. Simultaneously with such delivery, the
Purchaser shall deliver the Purchase Price to the Company. Each party shall be
responsible for all fees and costs incurred by it or on its behalf in connection
with the negotiation of this Agreement and the Closing.
If at the Closing the Company shall fail to tender the Warrants, or if
any of the conditions specified hereunder shall not have been fulfilled, the
Purchaser shall, at its option, be relieved of its obligations under this
Agreement without thereby waiving any rights it may have by reason of such
failure or non-fulfillment. Conversely, if the Purchaser fails to close the
transactions herein contemplated for any reason other than a default or breach
occasioned by the Company under the terms hereof, or a failure of performance of
any of the conditions recited in Article 2 below, the Company may pursue any
legal rights or remedies then available to it, expressly including the right to
require the Purchaser's specific performance of this Agreement.
ARTICLE 2
Representations and Warranties of the Company
The Company represents, warrants and agrees as follows:
2.1 Organization and Standing of the Company. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has all requisite corporate power and authority to
own and operate its properties and to carry on its business as now conducted and
as proposed to be conducted.
2.2 Authorization. When executed and delivered by the Company, this
Agreement will constitute the valid and binding obligation of the Company,
enforceable in accordance with its terms.
2.3 Securities Exchange Act Reports. All reports filed by the Company
pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, as
amended, are true and correct and contain no material misstatements or
omissions.
2.4 Consent. No consent, approval or authorization of or registration,
qualification, designation, declaration or filing with any governmental
authority or private person or entity on the part of the Company is required in
connection with the execution and delivery of this Agreement or the consummation
of any other transaction contemplated hereby, except as shall have been duly
taken or effected prior to the Closing.
2.5 Reservation and Authorization of Warrants and Common Stock. The
Warrants have been duly authorized and upon payment of Purchase Price will be
validly issued, fully paid and non-assessable. The shares of Common Stock
underlying the Warrants have been duly authorized and, upon payment of the
exercise price will be validly issued, fully paid and non-assessable. From and
after the Closing, the Company shall at all times reserve and keep available for
issue upon the exercise of the Warrants such number of its authorized but
unissued shares of Common Stock as will be sufficient to permit the exercise in
full of the Warrants.
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2.6 Compliance with Laws. The Company is and will be at Closing in
compliance with all applicable federal, state and local laws and the Company is
current in all of its reports required to be filed pursuant to Section 13 or
15(d) of the Securities Exchange Act of 1934, as amended.
2.7 Litigation. Except as otherwise disclosed in the Company's reports
filed pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, as
amended, the Company is not a party or is not threatened to be made a party to
any action, suit, proceeding, hearing, or investigation of, in, or before any
court or agency of any federal, state or local jurisdiction or before any
arbitrator.
2.8 SEC Filings. The Company has furnished or made available to the
Buyer true and correct copies of the SEC Documents. The SEC Documents are the
only filings made by the Company since January 1, 2003 pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Exchange Act or pursuant to the Securities
Act. The Company has filed all reports, schedules, forms, statements and other
documents required to be filed by it under Sections 13(a), 13(c), 14 and 15(d)
of the Exchange Act since January 1, 2003 and prior to the date of this
Agreement.
2.9 Available Information. The Company has not provided to the Buyer
any information which according to applicable law, rule or regulation, should
have been disclosed publicly prior to the date hereof by the Company but which
has not been so disclosed. As of their respective dates, the SEC Documents
complied, and all similar documents filed with the SEC prior to the Closing will
comply, in all material respects with the requirements of the Securities Act or
the Exchange Act, as the case may be, and rules and regulations of the SEC
promulgated thereunder and other federal, state and local laws, rules and
regulations applicable to such SEC Documents, and no document similar to the SEC
Documents filed by the Company with the SEC prior to the Closing will contain,
any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The financial statements of the Company included in the SEC
Documents, as of the dates thereof, complied, and all similar documents filed
with the SEC prior to the Closing will comply, as to form in all material
respects with applicable accounting requirements and the published rules and
regulations of the SEC and other applicable rules and regulations with respect
thereto. Such financial statements were prepared in accordance with generally
accepted accounting principles applied on a consistent basis during the periods
involved (except (i) as may be otherwise indicated in such financial statements
or the notes thereto or (ii) in the case of unaudited interim statements, to the
extent they may not include footnotes or may be condensed or summary statements
as permitted by Form 10-Q as promulgated by the SEC) and fairly present in all
material respects the financial position of the Company and its consolidated
subsidiaries as of the dates thereof and the consolidated results of operations
and cash flows for the periods then ended (subject, in the case of unaudited
statements, to normal year-end audit adjustments)
2.10 Taxes.
(i) All federal, state, local and foreign tax returns and
reports required to be filed to date, and which are
properly open for examination under applicable
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statutes of limitation, with respect to the operation
of the Company have been accurately prepared and duly
filed, and all taxes shown as payable on such returns
and report have been paid when due, including,
without limitation income, withholding, payroll,
sales and use, and real and personal property taxes;
and
(ii) The Company has not executed or filed with any taxing
authority any agreement extending the period for
assessment or collection of any tax to a date
subsequent to the date hereof; and
(iii) No issue has been raised by any federal, state, local
or foreign taxing authority in connection with an
audit or examination of the tax returns, business or
properties of the Company that has not been settled
or resolved; and
(iv) There is no pending claim, asserted deficiency or
assessment for additional taxes that has not been
paid, nor is there any basis for the assertion of any
such claim, deficiency, or assessment; and
(v) No material special charges, penalties or fines have
ever been asserted against the Company with respect
to payment of or failure to pay any taxes.
ARTICLE 3
Representations, Warranties and Covenants of the Purchaser
The Purchaser represents and warrants to, and covenants with, the
Company as follows:
3.1 Authorization. When executed and delivered by the Purchaser, this
Agreement will constitute the valid and binding obligations of the Purchaser,
enforceable in accordance with their respective terms.
3.2 No Contractual Violation. Neither the execution, delivery nor
performance of this Agreement by the Purchaser, including the consummation by
the Purchaser of the transactions contemplated hereby, will constitute a
violation of or a default under, or conflict with, any term or provision of the
any contract, commitment, indenture or other agreement, or of any other private
restriction of any kind, to which the Purchaser is a party or by which it is
otherwise bound.
3.3 Access to Information. Purchaser has had access to all material and
relevant information concerning the Company, its management, financial
condition, capitalization, market information, properties and prospects
necessary to enable Purchaser to make an informed investment decision with
respect to its investment in the Warrants, Purchaser acknowledges that it has
had the opportunity to ask questions of and receive answers from and to obtain
additional information from the Company or its representatives concerning the
terms and conditions of the acquisition of the Warrants and the present and
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proposed business and financial condition of the Company and has had all such
questions answered to its satisfaction and has been supplied all information
requested.
3.4 SEC Reports. Purchaser acknowledges that it has been provided with
and has carefully reviewed a copy of the Company's periodic reports and
registration statements filed with the Securities and Exchange Commission since
January 1, 2003 (the "SEC Reports").
3.5 Financial Matters and Sophistication. Purchaser has such knowledge
and experience in business and financial matters, such that it is capable of
evaluating the merits and risks of purchasing the Units. Purchaser represents
that it is an "accredited investor," as such term is defined in Rule 501 under
the Securities Act.
3.6 Investment Intent. (i) Purchaser is acquiring the Warrants for its
own account and not on behalf of any other person; (ii) Purchaser is acquiring
the Warrants for investment and not with a view to distribution or with the
intent to divide its participation with others by reselling or otherwise
distributing the Warrants; and (iii) Purchaser will not sell the Warrants or the
shares underlying the Warrants without registration under the Act and any
applicable state securities laws, or unless the Company receives an opinion of
counsel reasonably acceptable to it (as to both counsel and the opinion) to the
effect that such registration is not necessary.
3.7 Understanding of Investment Risks. An investment in the Warrants
should not be made by a purchaser who cannot afford the loss of its entire
Purchase Price. The Purchaser acknowledges that the securities offered hereby
have not been approved or disapproved by the Securities and Exchange Commission,
or any state securities commission, nor has the Securities and Exchange
Commission or any state securities commission passed upon the adequacy or
accuracy of this Warrant Purchase Agreement. Prior to making an investment in
the Warrants, the Purchaser has fully considered, among other things, the risk
factors enumerated in the Company's filings with the Securities and Exchange
Commission, and acknowledges that these risk factors have been considered prior
to making this investment decision.
3.8 Understanding the Nature of Securities. Purchaser understands that:
(a) The Warrants and the shares underlying the Warrants have not been
registered under the Act or any state securities laws and are being issued and
sold in reliance upon certain of the exemptions contained in the Act and under
applicable state securities laws.
(b) The Warrants are "restricted securities" as that term is defined in
Rule 144 promulgated under the Act.
(c) The Warrants and the shares underlying the Warrants cannot be sold
or transferred without registration under the Act and applicable state
securities laws or unless the Company receives an opinion of counsel reasonably
acceptable to it (as to both counsel and the opinion) that such registration is
not necessary.
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(d) The Warrants, the shares underlying the Warrants and any
certificates issued in replacement therefor shall bear the following legend in
addition to any other legend required by law or otherwise:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN TAKEN BY
THE REGISTERED OWNER FOR INVESTMENT AND WITHOUT A VIEW TO
RESALE OR DISTRIBUTION THEREOF, AND MAY NOT BE TRANSFERRED OR
DISPOSED OF WITHOUT AN OPINION OF COUNSEL SATISFACTORY TO THE
ISSUER THAT SUCH TRANSFER OR DISPOSITION DOES NOT VIOLATE THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE RULES AND
REGULATIONS THEREUNDER."
(e) Only the Company can register the Warrants and the shares
underlying the Warrants under the Act and applicable state securities laws.
ARTICLE 4
Additional Agreements and Covenants
The parties further agree and covenant as follows:
4.1 Delivery of Additional Instruments on Request. Each party agrees to
execute and deliver or cause to be executed and delivered at the Closing, and at
such other times and places as shall be reasonably agreed to, such additional
instruments as the other party may reasonably request for the purpose of fully
effecting the transactions herein contemplated.
4.2 Preservation of Organization; No New Issuance. The Company shall
use its best efforts to preserve the business organization of the Company
intact, to operate prudently and in the ordinary course, and to maintain its
goodwill.
4.3 Agreements as to Conditions. Each party agrees to use its best
efforts to satisfy each and every of the conditions set forth in Sections 6. and
7., respectively, of this Agreement.
4.4 Brokerage Fee. Each party agrees to indemnify and hold harmless the
other from and against any and all claims, losses, liabilities or expenses which
may be asserted against or suffered by either as a result of any broker, finder
or other person claiming any fee or commission by reason of services rendered or
alleged to have been rendered for or at the instance of a particular party
hereto with respect to the negotiation or execution of this Agreement or to the
delivery of the consideration herein specified.
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ARTICLE 5
Conditions to Closing by the Purchaser
The obligation of the Purchaser to consummate the transactions herein
contemplated is subject to the satisfaction at or prior to the Closing of each
of the following conditions, and if the Purchaser shall not consummate such
transactions by reason of the failure of any of such conditions to be met as
herein provided, the Purchaser shall have no liability to the Company:
5.1 Truthfulness of Representations and Warranties. Each of the
representations and warranties of the Company contained in this Agreement shall
be true and correct to the best knowledge of the Company as of the Closing with
the same effect as though such representations and warranties had been made on
and as of such date. Each such representation and warranty shall survive the
consummation of the transactions contemplated by this Agreement and shall remain
in full force and effect thereafter.
5.2 Performance. Each of the agreements of the Company to be performed
or complied with at or before the Closing pursuant to the terms hereof shall
have been duly performed or complied with.
5.3 Consents. All consents to the consummation of the transactions
contemplated herein which are required in order to prevent a breach of, or a
default under, the terms of any agreement to which the Company is a party or is
bound shall have been obtained.
5.4 No Litigation Threatened. No action or proceeding shall have been
instituted or, to the knowledge of the Company, shall have been threatened
before a court or other governmental body or by any public authority to restrain
or prohibit the transactions contemplated herein. No governmental agency or body
shall have taken any other action or made any request of the Purchaser or the
Company as a result of which the Purchaser deems it inadvisable to proceed with
the transaction.
ARTICLE 6
Conditions to Closing by the Company
The obligation of the Company to consummate the transactions herein
contemplated shall be subject to the satisfaction of the Company on or prior to
the Closing of each of the following conditions, and if the Company shall not
consummate such transactions by reason of the failure of any of such conditions
to be met as herein provided, the Company shall have no liability to the
Purchaser:
6.1 Truthfulness of Representations and Warranties. Each of the
representations and warranties of the Purchaser contained in this Agreement
shall be true and correct to the best knowledge of the Purchaser as of the
Closing with the same effect as though such representations and warranties had
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been made on and as of such date. Each such representation and warranty shall
survive the consummation of the transactions contemplated by this Agreement and
shall remain in full force and effect thereafter.
6.2 Performance. Each of the agreements of the Purchaser to be
performed or complied with on or before the Closing pursuant to the terms hereof
shall have been duly performed and complied with.
6.3 No Litigation Threatened. No action or proceeding shall have been
instituted or, to the knowledge of the Purchaser, shall have been threatened
before a court or other governmental body or by any public authority to restrain
or prohibit the transactions contemplated herein. No governmental agency or body
shall have taken any other action or made any request of the Company or
Purchaser as a result of which the Company deems it inadvisable to proceed with
the transaction.
ARTICLE 7
Miscellaneous Provisions
7.1 Notices. All notices or other communications required or permitted
to be given pursuant to this Agreement shall be in writing and shall be
considered as properly given or made if hand delivered, mailed from within the
United States by certified or registered mail, or sent by prepaid telegram to
the applicable address appearing in the preamble to this Agreement, or to such
other address as either party may have designated by like notice forwarded to
the other party hereto. All notices, except notices of change of address, shall
be deemed given when mailed or hand delivered and notices of change of address
shall be deemed given when received.
7.2 Binding Agreements; Assignability. Each of the provisions and
agreements herein contained shall be binding upon and inure to the benefit of
the personal representatives, heirs, devisees and successors of the respective
parties hereto and shall be assignable by the Purchaser without the prior
written consent of the Company.
7.3 Entire Agreement. This Agreement, and the other documents
referenced herein, constitute the entire understanding of the parties hereto
with respect to the subject matter hereof, and no amendment, modification or
alteration of the terms hereof shall be binding unless the same be in writing,
dated subsequent to the date hereof and duly approved and executed by each
party.
7.4 Severability. Every provision of this Agreement is intended to be
severable. If any term or provision hereof is illegal or invalid for any reason
whatever, such illegality or invalidity shall not affect the validity of the
remainder of this Agreement.
7.5 Headings. The headings of this Agreement are inserted for
convenience and identification only, and are in no way intended to describe,
interpret, define or limit the scope, extent or intent hereof.
7.6 Application of Missouri Law; Venue. This Agreement, and the
application or interpretation thereof, shall be governed exclusively by its
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terms and by the laws of the State of Missouri. Venue for any legal action which
may be brought hereunder shall be deemed to lie in the City of Joplin, Missouri.
7.7 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
7.8 Legal Fees and Costs. If a legal action is initiated by any party
to this Agreement against another, arising out of or relating to the alleged
performance or non-performance of any right or obligation established hereunder,
or any dispute concerning the same, any and all fees, costs and expenses
reasonably incurred by each successful party or his, her or its legal counsel in
investigating, preparing for, prosecuting, defending against, or providing
evidence, producing documents or taking any other action in respect of, such
action shall be the joint and several obligation of and shall be paid or
reimbursed by the unsuccessful party(ies).
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
Purchaser Sunflower Capital, LLC
/s/ Xxxxxxx X. Xxxxx
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By: Xxxxxxx X. Xxxxx, Managing Member
The Company SIRICOMM, INC.
By: /s/ Xxxxx X. Xxxxxxx
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Its: President
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