COMMON STOCK PURCHASE WARRANT

 

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                                                                    Exhibit 10.3

 

THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS

WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,

OR ANY STATE SECURITIES LAWS. THIS WARRANT AND THE COMMON STOCK ISSUABLE UPON

EXERCISE OF THIS WARRANT MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR

HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THIS

WARRANT UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF

COUNSEL REASONABLY SATISFACTORY TO FORTUNE DIVERSIFIED INDUSTRIES, INC. THAT

SUCH REGISTRATION IS NOT REQUIRED.

 

            Right to Purchase up to 272,727 Shares of Common Stock of

                      FORTUNE DIVERSIFIED INDUSTRIES, INC.

                   (subject to adjustment as provided herein)

 

                          COMMON STOCK PURCHASE WARRANT

 

No. _________________                               Issue Date: November 21, 2005

 

     FORTUNE DIVERSIFIED INDUSTRIES, INC., a corporation organized under the

laws of the State of Indiana (the "Company"), hereby certifies that, for value

received, LAURUS MASTER FUND, LTD., or assigns (the "Holder"), is entitled,

subject to the terms set forth below, to purchase from the Company (as defined

herein) from and after the Issue Date of this Warrant and at any time or from

time to time before 5:00 p.m., New York time, through the close of business

November __, 2010 (the "Expiration Date"), up to 272,727 fully paid and

nonassessable shares of Common Stock (as hereinafter defined), $0.10 par value

per share, at the applicable Exercise Price per share (as defined below). The

number and character of such shares of Common Stock and the applicable Exercise

Price per share are subject to adjustment as provided herein.

 

     As used herein the following terms, unless the context otherwise requires,

have the following respective meanings:

 

          (a) The term "Company" shall include Fortune Diversified Industries,

     Inc. and any corporation which shall succeed, or assume the obligations of,

     Fortune Diversified Industries, Inc. hereunder.

 

          (b) The term "Common Stock" includes (i) the Company's Common Stock,

     par value $0.10 per share; and (ii) any other securities into which or for

     which any of the securities described in the preceding clause (i) may be

     converted or exchanged pursuant to a plan of recapitalization,

     reorganization, merger, sale of assets or otherwise.

 

          (c) The term "Other Securities" refers to any stock (other than Common

     Stock) and other securities of the Company or any other person (corporate

     or otherwise) which the holder of the Warrant at any time shall be entitled

     to receive, or shall have received, on the exercise of the Warrant, in lieu

     of or in addition to Common Stock, or

 

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     which at any time shall be issuable or shall have been issued in exchange

     for or in replacement of Common Stock or Other Securities pursuant to

     Section 4 or otherwise.

 

          (d) The "Exercise Price" applicable under this Warrant, and subject to

     adjustment as set forth herein, shall be a price of $6.60 for the all

     shares acquired hereunder.

 

     1.    Exercise of Warrant.

 

          1.1. Number of Shares Issuable upon Exercise. From and after the date

hereof through and including the Expiration Date, the Holder shall be entitled

to receive, upon exercise of this Warrant in whole or in part, by delivery of an

original or fax copy of an exercise notice in the form attached hereto as

Exhibit A (the "Exercise Notice"), shares of Common Stock of the Company,

subject to adjustment pursuant to Section 4.

 

          1.2. Fair Market Value. For purposes hereof, the "Fair Market Value"

of a share of Common Stock as of a particular date (the "Determination Date")

shall mean:

 

          (a) If the Company's Common Stock is traded on the American Stock

     Exchange or another national exchange or is quoted on the National or

     SmallCap Market of The Nasdaq Stock Market, Inc.("Nasdaq"), then the

     closing or last sale price, respectively, reported for the last business

     day immediately preceding the Determination Date.

 

          (b) If the Company's Common Stock is not traded on the American Stock

     Exchange or another national exchange or on the Nasdaq but is traded on the

     NASD Over the Counter Bulletin Board, then the mean of the average of the

     closing bid and asked prices reported for the last business day immediately

     preceding the Determination Date.

 

          (c) Except as provided in clause (d) below, if the Company's Common

     Stock is not publicly traded, then as the Holder and the Company agree or

     in the absence of agreement by arbitration in accordance with the rules

     then in effect of the American Arbitration Association, before a single

     arbitrator to be chosen from a panel of persons qualified by education and

     training to pass on the matter to be decided.

 

          (d) If the Determination Date is the date of a liquidation,

     dissolution or winding up, or any event deemed to be a liquidation,

     dissolution or winding up pursuant to the Company's articles, then all

     amounts to be payable per share to holders of the Common Stock pursuant to

     the articles in the event of such liquidation, dissolution or winding up,

     plus all other amounts to be payable per share in respect of the Common

     Stock in liquidation under the articles , assuming for the purposes of this

     clause (d) that all of the shares of Common Stock then issuable upon

     exercise of the Warrant are outstanding at the Determination Date.

 

          1.3. Company Acknowledgment. The Company will, at the time of the

exercise of this Warrant, upon the request of the Holder hereof acknowledge in

writing its

 

 

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continuing obligation to afford to such Holder any rights to which such Holder

shall continue to be entitled after such exercise in accordance with the

provisions of this Warrant. If the Holder shall fail to make any such request,

such failure shall not affect the continuing obligation of the Company to afford

to such Holder any such rights.

 

          1.4. Trustee for Warrant Holders. In the event that a bank or trust

company shall have been appointed as trustee for the Holders of this Warrant

pursuant to Subsection 3.2, such bank or trust company shall have all the powers

and duties of a warrant agent (as hereinafter described) and shall accept, in

its own name for the account of the Company or such successor person as may be

entitled thereto, all amounts otherwise payable to the Company or such

successor, as the case may be, on exercise of this Warrant pursuant to this

Section 1.

 

     2.    Procedure for Exercise.

 

          2.1. Delivery of Stock Certificates, Etc., on Exercise. The Company

agrees that the shares of Common Stock purchased upon exercise of this Warrant

shall be deemed to be issued to the Holder as the record owner of such shares as

of the close of business on the date on which this Warrant shall have been

surrendered and payment made for such shares in accordance herewith. As soon as

practicable after the exercise of this Warrant in full or in part, and in any

event within three (3) business days thereafter, the Company at its expense

(including the payment by it of any applicable issue taxes) will cause to be

issued in the name of and delivered to the Holder, or as such Holder (upon

payment by such Holder of any applicable transfer taxes) may direct in

compliance with applicable securities laws, a certificate or certificates for

the number of duly and validly issued, fully paid and nonassessable shares of

Common Stock (or Other Securities) to which such Holder shall be entitled on

such exercise, plus, in lieu of any fractional share to which such holder would

otherwise be entitled, cash equal to such fraction multiplied by the then Fair

Market Value of one full share, together with any other stock or other

securities and property (including cash, where applicable) to which such Holder

is entitled upon such exercise pursuant to Section 1 or otherwise.

 

          2.2. Exercise.

 

     Payment may be made in cash or by certified check payable to the order of

     the Company equal to the applicable aggregate Exercise Price , for the

     number of Common Shares specified in such Exercise Notice (as such exercise

     number shall be adjusted to reflect any adjustment in the total number of

     shares of Common Stock issuable to the Holder per the terms of this

     Warrant) and the Holder shall thereupon be entitled to receive the number

     of duly authorized, validly issued, fully-paid and non-assessable shares of

     Common Stock (or Other Securities) determined as provided herein.

 

     3.    Effect of Reorganization, Etc.; Adjustment of Exercise Price.

 

          3.1. Reorganization, Consolidation, Merger, Etc. In case at any time

or from time to time, the Company shall (a) effect a reorganization, (b)

consolidate with or merge into any other person, or (c) transfer all or

substantially all of its properties or assets to any other person under any plan

or arrangement contemplating the dissolution of the Company, then, in each such

case, as a condition to the consummation of such a transaction, proper and

adequate

 

 

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provision shall be made by the Company whereby the Holder, on the exercise

hereof as provided in Section 1 at any time after the consummation of such

reorganization, consolidation or merger or the effective date of such

dissolution, as the case may be, shall receive, in lieu of the Common Stock (or

Other Securities) issuable on such exercise prior to such consummation or such

effective date, the stock and other securities and property (including cash) to

which such Holder would have been entitled upon such consummation or in

connection with such dissolution, as the case may be, if such Holder had so

exercised this Warrant, immediately prior thereto, all subject to further

adjustment thereafter as provided in Section 4.

 

          3.2. Dissolution. In the event of any dissolution of the Company

following the transfer of all or substantially all of its properties or assets,

the Company, concurrently with any distributions made to holders of its Common

Stock, shall at its expense deliver or cause to be delivered to the Holder the

stock and other securities and property (including cash, where applicable)

receivable by the Holder pursuant to Section 3.1, or, if the Holder shall so

instruct the Company, to a bank or trust company specified by the Holder and

having its principal office in New York, NY as trustee for the Holder (the

"Trustee").

 

          3.3. Continuation of Terms. Upon any reorganization, consolidation,

merger or transfer (and any dissolution following any transfer) referred to in

this Section 3, this Warrant shall co