Exhibit 10.3
NEITHER THIS SECURITY NOR THE SECURITIES
INTO WHICH THIS SECURITY IS EXERCISABLE HAVE BEEN REGISTERED WITH
THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION
OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES
LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR
TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY
ACCEPTABLE TO THE COMPANY. THIS SECURITY AND THE SECURITIES
ISSUABLE UPON EXERCISE OF THIS SECURITY MAY BE PLEDGED IN
CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY
SUCH SECURITIES.
COMMON STOCK PURCHASE
WARRANT
To Purchase 578,870 Shares of Common
Stock of
GULFSTREAM
INTERNATIONAL GROUP, INC.
THIS COMMON STOCK PURCHASE WARRANT (the
“ Warrant ”) certifies that, for value received,
Shelter Island Opportunity Fund, LLC or its registered assigns (the
“ Holder ”), is entitled, upon the terms and
subject to the conditions hereinafter set forth, at any time on or
after the date hereof (the “ Initial Exercise Date
”) and on or prior to the close of business on the sixth
anniversary of the Initial Exercise Date (the “
Termination Date ”) to purchase up to 578,870 shares
(representing an amount equal to 15% of the Common Stock at the
date hereof calculated on a fully-diluted as-if converted basis)
(such greater amount being the “ Warrant Shares
”) of Common Stock, par value $0.01 per share (the “
Common Stock ”), of Gulfstream International Group,
Inc., a Delaware corporation (the “ Company ”).
The purchase price of one share of Common Stock under this
Warrant shall be equal to the Exercise Price, as defined in Section
2(b).
Section 1 .
Definitions . Capitalized terms used and not otherwise
defined herein shall have the meanings set forth in that certain
Securities Purchase Agreement, dated as of the date hereof (the
“ Agreement ”), between the Company and the
initial Holder and in the Transaction Documents referred to
therein.
Section 2 .
Exercise .
a)
Exercise of Warrant
. Exercise of the purchase rights
represented by this Warrant may be made, in whole or in part, at
any time or times on or after the Initial Exercise Date and on or
before the Termination Date by delivery to the Company of
a
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duly executed facsimile copy of the
Notice of Exercise Form annexed hereto (or to such other office or
agency of the Company as it may designate by notice in writing to
the registered Holder at the address of such Holder appearing on
the books of the Company); and, within five Business Days of the
date said Notice of Exercise is delivered to the Company, the
Company shall have received payment of the aggregate Exercise Price
of the shares thereby purchased by wire transfer or cashier’s
check drawn on a United States bank. Notwithstanding anything
herein to the contrary, the Holder shall not be required to
physically surrender this Warrant to the Company until the Holder
has purchased all of the Warrant Shares available hereunder and the
Warrant has been exercised in full, in which case, the Holder shall
surrender this Warrant to the Company for cancellation within three
Business Days of the date the final Notice of Exercise is delivered
to the Company. Partial exercises of this Warrant resulting
in purchases of a portion of the total number of Warrant Shares
available hereunder shall have the effect of lowering the
outstanding number of Warrant Shares purchasable hereunder in an
amount equal to the applicable number of Warrant Shares purchased.
The Holder and the Company shall maintain records showing the
number of Warrant Shares purchased and the date of such purchases.
The Company shall deliver any objection to any Notice of
Exercise Form within two Business Days of receipt of such notice.
In the event of any dispute or discrepancy, the records of
the Company shall be controlling and determinative in the absence
of manifest error, negligence or willful misconduct. The Holder, by
acceptance of this Warrant, acknowledges and agrees that the number
of Warrant Shares available for purchase hereunder at any given
time may be less than the amount stated on the face hereof.
In lieu of the payment of the aggregate
Exercise Price, the Holder shall have the right (but not the
obligation), to require the Company to convert this Warrant, in
whole or in part, into shares of Common Stock (the “
Cashless Exercise Right ”). Upon exercise of the
Cashless Exercise Right, the Company shall deliver to the Holder
(without payment of the Exercise Price) that number of shares of
Common Stock equal to the quotient obtained by dividing (i) the
value of this Warrant or portion thereof at the time the Cashless
Exercise Right is exercised (determined by subtracting the
aggregate Exercise Price at the time of the exercise of the
Cashless Exercise Right from the aggregate VWAP of the shares of
Common Stock to be issued upon such exercise) by (ii) the VWAP of
one share of Common Stock at the time of the exercise of the
Cashless Exercise Right. The Cashless Exercise Right may be
exercised by surrendering this Warrant to the Company, with an
executed Notice of Exercise with the Cashless Exercise Right
completed and specifying the total number of shares of Common Stock
that the Holder will be issued pursuant to the exercise of such
Cashless Exercise Right.
b)
Exercise Price . The exercise price per share of the Common
Stock under this Warrant shall be $1,000.00 for all Warrant Shares
(or a pro rata portion thereof, with respect to less than all of
the Warrant Shares) (the “ Exercise Price
”).
c)
Mechanics of Exercise
.
i.
Authorization of Warrant
Shares . The Company
covenants that all Warrant Shares which may be issued upon the
exercise of the
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purchase rights represented by this
Warrant will, upon exercise of the purchase rights represented by
this Warrant, be duly authorized, validly issued, fully paid and
nonassessable and free from all taxes, liens and charges created by
the Company in respect of the issue thereof (other than taxes in
respect of any transfer occurring contemporaneously with such
issue).
ii.
Delivery of Certificates Upon
Exercise . Certificates
for shares purchased hereunder shall be transmitted by the transfer
agent of the Company to the Holder by crediting the account of the
Holder’s prime broker with the Depository Trust Company
through its Deposit Withdrawal Agent Commission (“
DWAC ”) system if the Company is a participant in such
system, and otherwise by physical delivery to the address specified
by the Holder in the Notice of Exercise within fifteen Business
Days from the delivery to the Company of the Notice of Exercise
Form, surrender of this Warrant (if required) and payment of the
aggregate Exercise Price as set forth above (“ Warrant
Share Delivery Date ”). This Warrant shall be
deemed to have been exercised on the date the Exercise Price is
received by the Company. The Warrant Shares shall be deemed
to have been issued, and Holder or any other Person so designated
to be named therein shall be deemed to have become a holder of
record of such shares for all purposes, as of the date the Warrant
has been exercised by payment to the Company of the Exercise Price
and all taxes required to be paid by the Holder, if any, pursuant
to Section 2(c)(vi) prior to the issuance of such shares, have been
paid.
iii.
Delivery of New Warrants Upon
Exercise . If this
Warrant shall have been exercised in part, the Company shall, at
the request of a Holder and upon surrender of this Warrant
certificate, at the time of delivery of the certificate or
certificates representing Warrant Shares, deliver to Holder a new
Warrant evidencing the rights of Holder to purchase the unpurchased
Warrant Shares called for by this Warrant, which new Warrant shall
in all other respects be identical with this Warrant.
iv.
Rescission Rights
. If the Company fails to cause its
transfer agent to transmit to the Holder a certificate or
certificates representing the Warrant Shares pursuant to Section
2(c)(ii) by the Warrant Share Delivery Date, then the Holder will
have the right to rescind such exercise.
v.
No Fractional Shares or
Scrip . No fractional
shares or scrip representing fractional shares shall be issued upon
the exercise of this Warrant. As to any fraction of a share
which Holder would otherwise be entitled to purchase upon such
exercise, the Company shall at its election, either pay a cash
adjustment in respect of such final fraction in an amount equal to
such fraction multiplied by the Exercise Price or round up to the
next whole share.
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vi.
Charges, Taxes and Expenses
. Issuance of certificates for
Warrant Shares shall be made without charge to the Holder for any
issuance tax, transfer tax or other incidental expense in respect
of the issuance of such certificate, all of which taxes and
expenses shall be paid by the Company, and such certificates shall
be issued in the name of the Holder or in such name or names as may
be directed by the Holder; provided , however , that
in the event certificates for Warrant Shares are to be issued in a
name other than the name of the Holder, this Warrant when
surrendered for exercise shall be accompanied by the Assignment
Form attached hereto duly executed by the Holder; and the Company
may require, as a condition thereto, the payment of a sum
sufficient to reimburse it for any transfer tax incidental
thereto.
vii.
Closing of Books
. The Company will not close its
stockholder books or records in any manner which prevents the
timely exercise of this Warrant, pursuant to the terms
hereof.
viii. Compensation for Buy-In on
Failure to Timely Deliver Certificates Upon Exercise . In
addition to any other rights available to the Holder, if the
Company fails to cause its transfer agent to transmit to the Holder
a certificate or certificates representing the Warrant Shares
pursuant to an exercise on or before the Warrant Share Delivery
Date, and if after such date the Holder is required by its broker
to purchase (in an open market transaction or otherwise) shares of
Common Stock to deliver in satisfaction of a sale by the Holder of
the Warrant Shares which the Holder anticipated receiving upon such
exercise (a “ Buy-In” ), then the Company shall
(1) pay in cash to the Holder the amount by which (x) the
Holder’s total purchase price (including brokerage
commissions, if any) for the shares of Common Stock so purchased
exceeds (y) the amount obtained by multiplying (A) the number of
Warrant Shares that the Company was required to deliver to the
Holder in connection with the exercise at issue times (B) the price
at which the sell order giving rise to such purchase obligation was
executed, and (2) at the option of the Holder, either reinstate the
portion of the Warrant and equivalent number of Warrant Shares for
which such exercise was not honored or deliver to the Holder the
number of shares of Common Stock that would have been issued had
the Company timely complied with its exercise and delivery
obligations hereunder. For example, if the Holder purchases
Common Stock having a total purchase price of $11,000 to cover a
Buy-In with respect to an attempted exercise of shares of Common
Stock with an aggregate sale price giving rise to such purchase
obligation of $10,000, under clause (1) of the immediately
preceding sentence, the Company shall be required to pay the Holder
$1,000. The Holder shall provide the Company written notice
indicating the amounts payable to the Holder in respect of the
Buy-In, together with applicable confirmations and other evidence
reasonably requested by the Company. Nothing herein shall
limit a Holder’s right to pursue any other remedies available
to it
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hereunder, at law or in equity including,
without limitation, a decree of specific performance and/or
injunctive relief with respect to the Company’s failure to
timely deliver certificates representing shares of Common Stock
upon exercise of the Warrant as required pursuant to the terms
hereof.
d)
Exercise Limitations.
The Company shall not effect any
exercise of this Warrant and a Holder shall not have the right to
exercise any portion of this Warrant, pursuant to Section 2(a) or
otherwise, to the extent that after giving effect to such issuance
after exercise, such Holder (together with such Holder’s
Affiliates, and any other person or entity acting as a group
together with such Holder or any of such Holder’s
Affiliates), as set forth on the applicable Notice of Exercise,
would beneficially own in excess of 4.99% of the number of shares
of the Common Stock outstanding immediately after giving effect to
such issuance. For purposes of the foregoing sentence, the
number of shares of Common Stock beneficially owned by such Holder
and its Affiliates shall include the number of shares of Common
Stock issuable upon exercise of this Warrant with respect to which
the determination of such sentence is being made, but shall exclude
the number of shares of Common Stock which would be issuable upon
(A) exercise of the remaining, unexercised portion of this Warrant
beneficially owned by such Holder or any of its Affiliates and (B)
exercise or conversion of the unexercised or unconverted portion of
any other securities of the Company (including, without limitation,
any Warrants) subject to a limitation on conversion or exercise
analogous to the limitation contained herein beneficially owned by
such Holder or any of its Affiliates. Except as set forth in
the preceding sentence, for purposes of this Section 2(d),
beneficial ownership shall be calculated in accordance with Section
13(d) of the Exchange Act and the rules and regulations promulgated
thereunder, it being acknowledged by the Holder that the Company is
not representing to such Holder that such calculation is in
compliance with Section 13(d) of the Exchange Act and the Holder is
solely responsible for any schedules required to be filed in
accordance therewith. To the extent that the limitation
contained in this Section 2(d) applies, the determination of
whether this Warrant is exercisable (in relation to other
securities owned by such Holder) and of which a portion of this
Warrant is exercisable shall be in the sole discretion of the
Holder, and the submission of a Notice of Exercise shall be deemed
to be the Holder’s determination of whether this Warrant is
exercisable (in relation to other securities owned by the Holder)
and of which portion of this Warrant is exercisable, in each case
subject to such aggregate percentage limitation, and the Company
shall have no obligation to verify or confirm the accuracy of such
determination. In addition, a determination as to any group status
as contemplated above shall be determined in accordance with
Section 13(d) of the Exchange Act and the rules and regulations
promulgated thereunder. For purposes of this Section 2(d), in
determining the number of outstanding shares of Common Stock, a
Holder may rely on the number of outstanding shares of Common Stock
as reflected in (x) the Company’s most recent Form 10-Q or
Form 10-K, as the case may be, (y) a more recent public
announcement by the Company or (z) any other notice by the Company
or the Company’s Transfer Agent setting forth the number of
shares of Common Stock outstanding. Upon the written or oral
request of the Holder, the Company shall within two Business Days
confirm orally and in writing to the Holder the number of shares of
Common Stock then outstanding. In any case, the number of
outstanding shares of
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Common Stock shall be determined after
giving effect to the conversion or exercise of securities of the
Company, including this Warrant, by the Holder or its Affiliates
since the date as of which such number of outstanding shares of
Common Stock was reported. The provisions of this Section
2(d) may be waived by the Holder, at the election of the Holder,
upon not less than 61 days’ prior notice to the Company, and
the provisions of this Section 2(d) shall continue to apply until
such 61 st day (or such later date, as determined by
such Holder, as may be specified in such notice of
waiver).
Section 3 .
Certain Adjustments .
a)
Stock Dividends and Splits
. If the Company, at any time while this
Warrant is outstanding: (A) pays a stock dividend or otherwise
makes a distribution or distributions on shares of its Common Stock
or any other equity or equity equivalent securities payable in
shares of Common Stock (which, for avoidance of doubt, shall not
include any shares of Common Stock issued by the Company upon
exercise of this Warrant), (B) subdivides outstanding shares of
Common Stock into a larger number of shares, (C) combin
