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CONVERTIBLE PROMISSORY NOTE

Convertible Promissory Note

CONVERTIBLE PROMISSORY NOTE | Document Parties: SIRICOMM INC | Sunflower Capital, LLC You are currently viewing:
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SIRICOMM INC | Sunflower Capital, LLC

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Title: CONVERTIBLE PROMISSORY NOTE
Governing Law: Missouri     Date: 3/21/2007
Industry: Communications Equipment     Law Firm: Sommer & Schneider LLP, Husch & Eppenberger, LLC     Sector: Technology

CONVERTIBLE PROMISSORY NOTE, Parties: siricomm inc , sunflower capital  llc
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THIS CONVERTIBLE PROMISSORY NOTE HAS BEEN ACCEPTED FOR INVESTMENT PURPOSES ONLY AND NOT FOR DISTRIBUTION AND MAY BE TRANSFERRED OR OTHERWISE DISPOSED OF ONLY IN COMPLIANCE WITH THE SECURITIES ACT OF l933, AS AMENDED (THE “ACT”). THIS LEGEND SHALL BE ENDORSED UPON ANY CONVERTIBLE PROMISSORY NOTE ISSUED IN EXCHANGE FOR THIS CONVERTIBLE PROMISSORY NOTE.

SIRICOMM, INC.

March 14, 2007

$500,000.00

CONVERTIBLE PROMISSORY NOTE

Due February 29, 2008

FOR VALUE RECEIVED, SIRICOMM, INC. , a Delaware corporation (the “Company”), hereby promises to pay to Sunflower Capital, LLC or order (the “Holder”) on February 29, 2008 (the “Maturity Date”) or, if earlier, such other date specified in the Loan Agreement (as hereinafter defined) at the offices of the Holder identified in Article 8 below, the principal sum of FIVE HUNDRED THOUSAND DOLLARS ($500,000.00) or, if less, the aggregate unpaid amount of all advances made to the Company under the Loan Agreement, in such coin or currency of the United States of America as at the time of payment shall be legal tender for the payment of public and private debts and to pay simple interest on said principal sum at the rate of 10% per annum from the date hereof through the Maturity Date. Interest on the principal balance of this Convertible Promissory Note (this “Note”) shall be payable on the Maturity Date or, if earlier, such other date specified in the Loan Agreement.

1.       Loan Agreement . This Note is the Note issued pursuant to that certain Loan Agreement, dated as of March 14, 2007, by and between the Company and Sunflower Capital, LLC (as amended, supplemented or otherwise modified from time to time, the “Loan Agreement”), and is entitled to the benefit and security of the Loan Documents referred to therein. All capitalized terms used but not otherwise defined herein have the meanings ascribed to them in the Loan Agreement. Reference is hereby made to the Loan Agreement for a statement of the terms and conditions under which the Loan evidenced by this Note is made and is to be repaid, all of which are incorporated herein as if fully and completely set forth in this Note.

2.             Registered Owner . The Company may consider and treat the person in whose name this Note shall be registered as the absolute owner thereof for all purposes whatsoever (whether or not this Note shall be overdue) and the Company shall not be affected by any notice to the contrary. Subject to the provisions hereof and the Loan Agreement, the registered owner of this Note shall have the right to transfer it by assignment and the transferee thereof, upon his registration as owner of this Note, shall become vested with all the powers and rights of the transferor. Registration of any new owner shall take place upon presentation of this Note to the Company at its offices together with the Note Assignment attached hereto duly executed. In case of transfers by operation of law, the transferee shall notify the Company of such transfer and of such transferee’s address and shall submit appropriate evidence regarding the transfer so that this

 

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Note may be registered in the name of the transferee. This Note is transferable only on the books of the Company by the Holder on the surrender hereof, duly endorsed. Communications sent to any registered owner shall be effective as against all holders or transferees of this Note not registered at the time of sending the communication.

 

3.

Conversion .

3.1          Optional Conversion . At any time and from time to time after the receipt of a notice from the Company pursuant to Section 3(d) of the Loan Agreement and on and after the Maturity Date, the Holder shall have the right to convert the then-outstanding principal amount of this Note, together with accrued interest thereon and any other Obligations outstanding under the Loan Agreement, or any portion thereof (an “Optional Conversion”) into shares of Common Stock of the Company (“Conversion Securities”) at a variable conversion price (the “Conversion Price”) determined by taking the lowest volume weighted average price of the Company’s Common Stock for any five consecutive trading days during the period from the date hereof to the date of the applicable Conversion Notice in the form attached hereto, which shall be sent by the Holder to the Company via facsimile or, if the Company’s Common Stock is no longer trading, the lesser of (a) the lowest volume weighted average price of the Company’s Common Stock for any five consecutive trading days during the period from the date five trading days prior to the date hereof to the date of the applicable Conversion Notice and (b) the fair market value of the Company’s Common Stock at the date of Optional Conversion, as reasonably determined by a qualified appraiser selected by the Company and approved by the Holder.

Differential Warrant . In addition to the foregoing, in the event that (i) an initial advance is made and some part or all of that initial advance is prepaid pursuant to the provisions of Section 3(b)(viii) of the Loan Agreement and (ii) Holder does not re-advance funds in an amount such that the outstanding balance of the loan equals or exceeds the initial advance, then, on the date of any Optional Conversion, Holder also shall be entitled to an additional warrant (“Differential Warrant”) based on any part of the initial advance that is prepaid and not re-advanced (“Funding Differential”). The number of shares to be set forth in the Differential Warrant will be equal to the amount of the Funding Differential divided by the Conversion Price. The exercise price of the Differential Warrant shall be equal to the Conversion Price. The warrants will be exercisable for a period of one year from the date of issuance and will be issued in the name or names designated by the Holder.

Funding Warrant . As consideration for making the commitment to make the Loan, the Company shall issue to the Holder a warrant (“Funding Warrant”) on the earlier of (i) the date of any Optional Conversion or prepayment prior to the Maturity Date or (ii) the Maturity Date. The number of shares to be set forth in the Funding Warrant will be equal to $500,000 divided by the Conversion Price (which, if not earlier determined, shall be determined as of the Maturity Date). The Funding Warrant shall be issued regardless of whether the Holder elects an Optional Conversion. The exercise price of the Funding Warrant shall be equal to the Conversion Price. The warrants will be exercisable for a period of five years from the date of issuance and will be issued in the name or names designated by the Holder.

 

3.2

Anti-Dilution Provisions .

 

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3.2.1       Adjustments for Stock Dividends; Combinations, Etc . (a) In the event that the Company, at any time or from time to time hereafter, shall (i) declare any dividend or other distribution on its Common Stock payable in Common Stock of the Company or in securities convertible into or exchangeable for Common Stock, including without limitation rights; (ii) effect a subdivision of its outstanding Common Stock into a greater number of shares of Common Stock by reclassification, stock split or otherwise than by payment of a dividend in shares of Common Stock; (iii) affect a combination or consolidation of its outstanding Common Stock into a lesser number of shares of Common Stock by reclassification, reverse split or otherwise; (iv) issue by reclassification, exchange or substitution of its Common Stock any shares of capital stock of the Company; or (v) affect any other transaction having similar effect, then the Conversion Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock outstanding before such event and of which the denominator shall be the number of shares of Common Stock outstanding after such event, including the maximum number of shares of Common Stock into which the convertible securities, including rights (provided


 
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