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Exhibit 10.3
THIS WARRANT AND THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN
REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES
LAWS OF ANY
STATE, AND MAY NOT BE TRANSFERRED IN VIOLATION OF SUCH ACT, THE
RULES AND
REGULATIONS THEREUNDER OR ANY STATE SECURITIES LAWS OR THE
PROVISIONS OF THIS
WARRANT.
No. of Shares of Common Stock: 413,605
WARRANT
To Purchase Common Stock of
SIRICOMM, INC.
THIS IS TO CERTIFY THAT Sunflower Capital, LLC (the "Holder"),
or its
registered assigns, is entitled, at any time from the Warrant
Issuance Date (as
hereinafter defined) to the Expiration Date (as hereinafter
defined), to
purchase from SIRICOMM, INC., a Delaware corporation (the
"Company"), Four
Hundred Thirteen Thousand Six Hundred and Five (413,605) shares
of Common Stock
(as hereinafter defined and subject to adjustment as provided
herein), in whole
or in part, including fractional parts, at a purchase price per
share equal to
$3.00 ("Exercise Price") subject to any adjustments made to such
amount pursuant
to Section 4 hereto) on the terms and conditions and pursuant to
the provisions
hereinafter set forth.
1. DEFINITIONS
As used in this Warrant, the following terms have the
respective
meanings set forth below:
"Additional Shares of Common Stock" shall mean all shares of
Common
Stock issued by the Company after the Closing Date, other than
Warrant Stock.
"Book Value" shall mean, in respect of any share of Common Stock
on any
date herein specified, the consolidated book value of the
Company as of the last
day of any month immediately preceding such date, divided by the
number of Fully
Diluted Outstanding shares of Common Stock as determined in
accordance with GAAP
(assuming the payment of the exercise prices for such shares) by
a firm of
independent certified public accountants of recognized national
standing
selected by the Company and reasonably acceptable to the
Holder.
"Business Day" shall mean any day that is not a Saturday or
Sunday or a
day on which banks are required or permitted to be closed in the
State of New
York.
"Closing Date" shall have the meaning set forth in the
Subscription
Agreement.
"Commission" shall mean the Securities and Exchange Commission
or any
other federal agency then administering the Securities Act and
other federal
securities laws.
"Common Stock" shall mean (except where the context
otherwise
indicates) the Common Stock, par value $.001 per share, of the
Company as
constituted on the Closing Date, and any capital stock into
which such Common
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Stock may thereafter be changed, and shall also include (i)
capital stock of the
Company of any other class (regardless of how denominated)
issued to the holders
of shares of Common Stock upon any reclassification thereof
which is also not
preferred as to dividends or assets over any other class of
stock of the Company
and which is not subject to redemption and (ii) shares of common
stock of any
successor or acquiring corporation received by or distributed to
the holders of
Common Stock of the Company in the circumstances contemplated by
Section 4.4.
"Convertible Securities" shall mean evidences of indebtedness,
shares
of stock or other securities which are convertible into or
exchangeable, with or
without payment of additional consideration in cash or property,
for shares of
Common Stock, either immediately or upon the occurrence of a
specified date or a
specified event.
"Current Warrant Price" shall mean $3.00 subject to any
adjustments to
such amount made in accordance with Section 4 hereof.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as
amended, or any successor federal statute, and the rules and
regulations of the
Commission thereunder, all as the same shall be in effect from
time to time.
"Exercise Period" shall mean the period during which this
Warrant is
exercisable pursuant to Section 2.1.
"Expiration Date" shall mean April 15, 2010.
"Fully Diluted Outstanding" shall mean, when used with reference
to
Common Stock, at any date as of which the number of shares
thereof is to be
determined, all shares of Common Stock Outstanding at such date
and all shares
of Common Stock issuable in respect of this Warrant, outstanding
on such date,
and other options or warrants to purchase, or securities
convertible into,
including without limitation the shares of Common Stock
outstanding on such date
which would be deemed outstanding in accordance with GAAP for
purposes of
determining book value or net income per share.
"GAAP" shall mean generally accepted accounting principles in
the
United States of America as from time to time in effect.
"Holder" shall mean the Person in whose name the Warrant or
Warrant
Stock set forth herein is registered on the books of the
Company
maintained for such purpose.
"Market Price" per Common Share means the average of the closing
bid
prices of the Common Shares as reported on the National
Association of
Securities Dealers Automated Quotation System for the National
Market,
("NASDAQ") or, if such security is not listed or admitted to
trading on the
NASDAQ, on the principal national security exchange or quotation
system on which
such security is quoted or listed or admitted to trading, or, if
not quoted or
listed or admitted to trading on any national securities
exchange or quotation
system, the closing bid price of such security on the
over-the-counter market on
the day in question as reported by the National Association of
Security Dealers,
Inc., or a similar generally accepted reporting service, as the
case may be, for
the five (5) trading days immediately preceding the date of
determination.
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"Other Property" shall have the meaning set forth in Section
4.5.
"Outstanding" shall mean, when used with reference to Common
Stock, at
any date as of which the number of shares thereof is to be
determined, all
issued shares of Common Stock, except shares then owned or held
by or for the
account of the Company or any subsidiary thereof, and shall
include all shares
issuable in respect of outstanding scrip or any certificates
representing
fractional interests in shares of Common Stock.
"Person" shall mean any individual, sole proprietorship,
partnership,
joint venture, trust, incorporated organization, association,
corporation,
institution, public benefit corporation, entity or government
(whether federal,
state, county, city, municipal or otherwise, including, without
limitation, any
instrumentality, division, agency, body or department
thereof).
"Restricted Common Stock" shall mean shares of Common Stock
which are,
or which upon their issuance on the exercise of this Warrant
would be, evidenced
by a certificate bearing the restrictive legend set forth in
Section 9.1(a).
"Securities Act" shall mean the Securities Act of 1933, as
amended, or
any successor federal statute, and the rules and regulations of
the Commission
thereunder, all as the same shall be in effect at the time.
"Subscription Agreement" shall mean the Subscription Agreement
dated as
of a date even herewith by and between the Company and the
Holder, as it may be
amended from time to time.
"Transfer" shall mean any disposition of any Warrant or Warrant
Stock
or of any interest in either thereof, which would constitute a
sale thereof
within the meaning of the Securities Act.
"Transfer Notice" shall have the meaning set forth in Section
9.2.
"Warrant Issuance Date" shall mean any date on which Warrants
are
issued pursuant to the Subscription Agreement.
"Warrants" shall mean this Warrant and all warrants issued
upon
transfer, division or combination of, or in substitution for,
any thereof. All
Warrants shall at all times be identical as to terms and
conditions and date,
except as to the number of shares of Common Stock for which they
may be
exercised.
"Warrant Price" shall mean an amount equal to (i) the number of
shares
of Common Stock being purchased upon exercise of this Warrant
pursuant to
Section 2.1, multiplied by (ii) the Current Warrant Price as of
the date of such
exercise.
"Warrant Stock" shall mean the shares of Common Stock purchased
by the
holders of the Warrants upon the exercise thereof.
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2. EXERCISE OF WARRANT
2.1. Manner of Exercise. From and after the Warrant Issuance
Date and
until 5:00 P.M., New York City time, on the Expiration Date,
Holder may exercise
this Warrant, on any Business Day, for all or any part of the
number of shares
of Common Stock purchasable hereunder.
In order to exercise this Warrant, in whole or in part, Holder
shall
deliver to the Company at the office or agency designated by the
Company
pursuant to Section 12, (i) a written notice of Holder's
election to exercise
this Warrant, which notice shall specify the number of shares of
Common Stock to
be purchased, (ii) payment by cash, check or bank draft payable
to the Company
of the Warrant Price in cash or by wire transfer or cashier's
check drawn on a
United States bank for all shares then being purchased and (iii)
this Warrant.
Such notice shall be substantially in the form of the
subscription form
appearing at the end of this Warrant as Exhibit 1, duly executed
by Holder or
its agent or attorney. Upon receipt of the items referred to in
clauses (i),
(ii) and (iii) above, the Company shall, as promptly as
practicable, and in any
event within five (5) Business Days thereafter, execute or cause
to be executed
and deliver or cause to be delivered to Holder a certificate or
certificates
representing the aggregate number of full shares of Common Stock
issuable upon
such exercise, together with cash in lieu of any fraction of a
share, as
hereinafter provided. The stock certificate or certificates so
delivered shall
be, to the extent possible, in such denomination or
denominations as Holder
shall request in the notice and shall be registered in the name
of Holder or,
subject to Section 9, such other name as shall be designated in
the notice. This
Warrant shall be deemed to have been exercised and such
certificate or
certificates 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 Warrant Price. If
this Warrant shall
have been exercised in part, the Company shall, at the time of
delivery of the
certificate or certificates representing Warrant Stock, deliver
to Holder a new
Warrant evidencing the rights of Holder to purchase the
unpurchased shares of
Common Stock called for by this Warrant, which new Warrant shall
in all other
respects be identical with this Warrant.
The Holder shall be entitled to exercise the Warrant
notwithstanding
the commencement of any case under 11 U.S.C. ss. 101 et seq.
(the "Bankruptcy
Code"). In the event the Company is a debtor under the
Bankruptcy Code, the
Company hereby waives to the fullest extent permitted any rights
to relief it
may have under 11 U.S.C. ss. 362 in respect of the Holder's
exercise right. The
Company hereby waives to the fullest extent permitted any rights
to relief it
may have under 11 U.S.C. ss. 362 in respect of the exercise of
the Warrant. The
Company agrees, without cost or expense to the Holder, to take
or consent to any
and all action necessary to effectuate relief under 11 U.S.C.
ss. 362.
2.2. Payment of Taxes and Charges. All shares of Common Stock
issuable
upon the exercise of this Warrant pursuant to the terms hereof
shall be validly
issued, fully paid and nonassessable, and without any preemptive
rights. The
Company shall pay all expenses in connection with, and all taxes
and other
governmental charges that may be imposed with respect to, the
issue or delivery
thereof.
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2.3. Fractional Shares. The Company shall not be required to
issue a
fractional share of Common Stock upon exercise of any Warrant.
As to any
fraction of a share which Holder would otherwise be entitled to
purchase upon
such exercise, the Company shall pay a cash adjustment in
respect of such final
fraction in an amount equal to the same fraction of the Market
Price per share
of Common Stock on the relevant exercise date.
2.4. Continued Validity. A holder of shares of Common Stock
issued upon
the exercise of this Warrant, in whole or in part (other than a
holder who
acquires such shares after the same have been publicly sold
pursuant to a
Registration Statement under the Securities Act or sold pursuant
to Rule 144
thereunder), shall continue to be entitled with respect to such
shares to all
rights to which it would have been entitled as Holder under
Sections 9, 10 and
14 of this Warrant. The Company will, at the time of exercise of
this Warrant,
in whole or in part, upon the request of Holder, acknowledge in
writing, in form
reasonably satisfactory to Holder, its continuing obligation to
afford Holder
all such rights; provided, however, that if Holder shall fail to
make any such
request, such failure shall not affect the continuing obligation
of the Company
to afford to Holder all such rights.
3. TRANSFER, DIVISION AND COMBINATION
3.1. Transfer. Subject to compliance with Sections 9, transfer
of this
Warrant and all rights hereunder, in whole or in part, shall be
registered on
the books of the Company to be maintained for such purpose, upon
surrender of
this Warrant at the principal office of the Company referred to
in Section 2.1
or the office or agency designated by the Company pursuant to
Section 12,
together with a written assignment of this Warrant substantially
in the form of
Exhibit 2 hereto duly executed by Holder or its agent or
attorney. Upon such
surrender, the Company shall, subject to Section 9, execute and
deliver a new
Warrant or Warrants in the name of the assignee or assignees and
in the
denomination specified in such instrument of assignment, and
shall issue to the
assignor a new Warrant evidencing the portion of this Warrant
not so assigned,
and this Warrant shall promptly be cancelled. A Warrant, if
properly assigned in
compliance with Section 9, may be exercised by a new Holder for
the purchase of
shares of Common Stock without having a new Warrant issued.
3.2. Division and Combination. Subject to Section 9, this
Warrant may
be divided or combined with other Warrants upon presentation
hereof at the
aforesaid office or agency of the Company, together with a
written notice
specifying the names and denominations in which new Warrants are
to be issued,
signed by Holder or its agent or attorney. Subject to compliance
with Section
3.1 and with Section 9, as to any transfer which may be involved
in such
division or combination, the Company shall execute and deliver a
new Warrant or
Warrants in exchange for the Warrant or Warrants to be divided
or combined in
accordance with such notice.
3.3. Expenses. The Company shall prepare, issue and deliver at
its own
expense the new Warrant or Warrants under this Section 3.
3.4. Maintenance of Books. The Company agrees to maintain, at
its
aforesaid office or agency, books for the registration and the
registration of
transfer of the Warrants.
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4. ADJUSTMENTS
The number of shares of Common Stock for which this Warrant
is
exercisable, or the price at which such shares may be purchased
upon exercise of
this Warrant, shall be subject to adjustment from time to time
as set forth in
this Section 4. The Company shall give Holder notice of any
event described
below which requires an adjustment pursuant to this Section 4 at
the time of
such event.
4.1. Stock Dividends, Subdivisions and Combinations. If at any
time the
Company shall:
(a) take a record of the holders of its Common Stock for the
purpose of entitling them to receive a dividend payable in, or
other
distribution of, Additional Shares of Common Stock,
(b) subdivide its outstanding shares of Common Stock into a
larger number of shares of Common Stock, or
(c) combine its outstanding shares of Common Stock into a
smaller number of shares of Common Stock,
then (i) the number of shares of Common Stock for which this
Warrant is
exercisable immediately after the occurrence of any such event
shall be adjusted
to equal the number of shares of Common Stock which a record
holder of the same
number of shares of Common Stock for which this Warrant is
exercisable
immediately prior to the occurrence of such event would own or
be entitled to
receive after the happening of such event, and (ii) the Current
Warrant Price
shall be adjusted to equal (A) the Current Warrant Price
multiplied by the
number of shares of Common Stock for which this Warrant is
exercisable
immediately prior to the adjustment divided by (B) the number of
shares for
which this Warrant is exercisable immediately after such
adjustment.
4.2. Certain Other Distributions.
In case the Company shall issue any Common Stock or any rights,
options
or warrants to all holders of record of its Common Stock
entitling all holders
to subscribe for or purchase shares of Common Stock at a price
per share less
than the Market Price per share of the Common Stock on the date
fixed for such
issue, the Current Warrant Price in effect immediately prior to
the close of
business on the date fixed for such determination shall be
reduced to the amount
determined by multiplying such Current Warrant Price by a
fraction, the
numerator of which shall be the number of shares of Common Stock
outstanding
immediately prior to the close of business on the date fixed for
such
determination plus the number of shares of Common Stock which
the aggregate of
the offering price of the total number of shares of Common Stock
so offered for
subscription or purchase would purchase at such Market Price and
the denominator
of which shall be the number of shares of Common Stock
outstanding immediately
prior to the close of business on the date fixed for such
determination plus the
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number of shares of Common Stock so offered for subscription or
purchase, such
reduced amount to become effective immediately after the close
of business on
the date fixed for such determination. For the purposes of this
clause (b), (i)
the number of shares of Common Stock at any time outstanding
shall not include
shares held in the treasury of the Company and (ii) in the case
of any rights,
options or warrants which expire by their terms not more than 60
days after the
date of issue, sale, grant or assumption thereof, no adjustment
of the Current
Warrant Price shall be made until the expiration or exercise of
all rights,
options or warrants, whereupon such adjustment shall be made in
the manner
provided in this clause (b), but only with respect to the shares
of Common Stock
actually issued pursuant thereto. Such adjustment shall be made
successively
whenever any event specified above shall occur. In the event
that any or all
rights, options or warrants covered by this clause (b) are not
so issued or
expire or terminate before being exercised, the Current Warrant
Price then in
effect shall be appropriately readjusted.
4.3. Other Provisions Applicable to Adjustments under this
Section. The
following provisions shall be applicable to the making of
adjustments of the
number of shares of Common Stock for which this Warrant is
exercisable and the
Current Warrant Price provided for in this Section 4:
(a) When Adjustments to Be Made. The adjustments required by
this Section 4 shall be made whenever and as often as any
specified event
requiring an adjustment shall occur. For the purpose of any
adjustment, any
specified event shall be deemed to have occurred at the close of
business on the
date of its occurrence.
(b) Fractional Interests. In computing adjustments under
this
Section 4, fractional interests in Common Stock shall be taken
into account to
the nearest 1/10th of a share.
(c) When Adjustment Not Required. If the Company shall take
a
record of the holders of its Common Stock for the purpose of
entitling them to
receive a dividend or distribution or subscription or purchase
rights and shall,
thereafter and before the distribution to stockholde
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