|
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 INDUSTRIES, INC. THAT SUCH REGISTRATION IS
NOT REQUIRED.
Right to Purchase up to 2,200,000 Shares of Common Stock of FORTUNE
INDUSTRIES, INC. (subject to adjustment as provided herein)
COMMON STOCK PURCHASE WARRANT
|
No.
|
|
|
Issue Date: November 30, 2008
|
FORTUNE INDUSTRIES, INC., a corporation organized under
the laws of the State of Indiana (the
“Company”), hereby certifies that, for value
received, CARTER M. FORTUNE, 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., Eastern Standard time, through
the close of business November 30, 2018 (the
“Expiration Date”), up to 2,200,000 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
Industries, Inc. and any corporation which shall succeed, or assume
the obligations of, Fortune Industries, Inc. hereunder.
(b) The
term “Common Stock” includes (i) the
Company’s Common Stock, par value $0.10 per share; and
(ii) any other securities into which or for which any of the
securities described in the preceding clause (i) may be converted
or exchanged pursuant to a plan of recapitalization,
reorganization, merger, sale of assets or otherwise.
(c) The
term “Other Securities” refers to any stock
(other than Common Stock) and other securities of the Company or
any other person (corporate or otherwise) which the holder of the
Warrant at any time shall be entitled to receive, or shall have
received, on the exercise of the Warrant, in lieu of or in addition
to Common Stock, or which at any time shall be issuable or shall
have been issued in exchange for or in replacement of Common Stock
or Other Securities pursuant to Section 4 or otherwise.
(d) The
“Exercise Price” applicable under this Warrant,
and subject to adjustment as set forth herein, shall be a price of
Forty Cents ($.40) for each of the 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 render judgment
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 of Dissolution 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 of Dissolution, 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.
2
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 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.; Ad
|
