WARRANT To Purchase Common Stock of SIRICOMM, INC

 

 

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: _________

 

                                     WARRANT

 

                           To Purchase Common Stock of

 

                                  SIRICOMM, INC.

 

         THIS IS TO CERTIFY THAT __________________ (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"),

_____________________ (_______) 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 $2.40 ("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

 

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constituted on the Closing Date, and any capital stock into which such Common

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 $2.40 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 January 31, 2008.

 

         "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

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

 

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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 stockholders thereof, lega