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
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.
3.1
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.
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3.2
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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