THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933. THEY MAY NOT BE SOLD, OFFERED FOR
SALE, PLEDGED, HYPOTHECATED, OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, OR AN OPINION
OF COUNSEL SATISFACTORY TO THE COMPANY THAT REGISTRATION IS NOT REQUIRED UNDER
SUCH ACT OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SUCH ACT.
STOCK PURCHASE WARRANT
This Stock Purchase Warrant (this Warrant), dated February 9, 2004, is
issued to Frost National Bank, Custodian, FBO Renaissance US Growth Investment
Trust PLC, Trust No. W00740100, a public limited company registered in England
and Wales (the Holder), by Obsidian Enterprises, Inc., a New York corporation
(the Company).
1. Purchase of Shares. Subject to the terms and conditions hereinafter set
forth, the Holder is entitled, upon surrender of this Warrant at the principal
office of the Company (or at such other place as the Company shall notify the
holder hereof in writing), to purchase from the Company 8,000 fully paid and
non-assessable shares of Common stock, no par value (the Common Stock), of the
Company (as adjusted pursuant to Section 7 hereof, the Shares) for the purchase
price specified in Section 2 below.
2. Purchase Price. The purchase price for the Shares is $0.20 per share.
Such price shall be subject to adjustment pursuant to Section 7 hereof (such
price, as adjusted from time to time, is herein referred to as the Warrant
Price).
3. Exercise Period. This Warrant is exercisable in whole or in part at any
time from the date hereof through February 9, 2007.
4. Method of Exercise. While this Warrant remains outstanding and
exercisable in accordance with Section 3 above, the Holder may exercise, in
whole or in part, the purchase rights evidenced hereby. Such exercise shall be
effected by:
(a) surrender of this Warrant, together with a duly executed copy of
the form of Exercise Notice attached hereto, to the Secretary of the
Company at its principal officer, and the payment to the Company of an
amount equal to the aggregate purchase price for the number of Shares being
purchased; or
(b) if the Company's Common Stock is publicly traded as of such date,
the instruction to retain that number of Shares having a value equal to the
aggregate exercise price of the Shares as to which this Warrant is being
exercised and to issue to the Holder the remainder of such Shares computed
using the following formula:
Y(A-B)
X = ----------
A
Where: X = the number of shares of Common Stock to be issued to the Holder.
Y = the number of shares of Common Stock as to which this Warrant is
being exercised.
A = the fair market value of one share of Common Stock.
B = the Warrant Price.
As used herein, the fair market value of one share of Common Stock
shall mean:
(1) Except in the circumstances described in clause (2) or (3)
hereof, the closing price of the Company's Common Stock, as reported
in the WALL STREET JOURNAL, on the trading day immediately prior to
the date of exercise;
(2) If such exercise is in conjunction with a merger,
acquisition, or other consolidation pursuant to which the Company is
not the surviving entity, the value received by the holders of the
Common Stock pursuant to such transaction for each share; or
(3) If such exercise is in conjunction with the initial public
offering of the Company, the price at which the Common Stock is sold
to the public in such offering.
5. Certificates for Shares. Upon the exercise of the purchase rights
evidenced by this Warrant, one or more certificates for the number of Shares so
purchased shall be issued as soon as practicable thereafter, and in any event
within thirty (30) days of the delivery of the subscription notice.
6. Reservation of Shares. The Company covenants that it will at all times
keep available such number of authorized shares of its Common Stock, free from
all preemptive rights with respect thereto, which will be sufficient to permit
the exercise of this Warrant for the full number of Shares specified herein. The
Company further covenants that such Shares, when issued pursuant to the exercise
of this Warrant, will be duly and validly issued, fully paid and non-assessable
and free from all taxes, liens and charges with respect to the issuance thereof.
7. Adjustment of Warrant Price and Number of Shares. The number and kind of
securities purchasable upon exercise of this Warrant and the Warrant Price shall
be subject to adjustment from time to time as follows:
(a) Stock Dividends, Subdivisions, Combinations and Other Issuances.
If the Company shall at any time prior to the expiration of this Warrant
subdivide its Common Stock, by stock split or otherwise, combine its Common
Stock or issue additional shares of its Common Stock as a dividend with
respect to any shares of its Common Stock, the number of Shares issuable on
the exercise of this Warrant shall forthwith be proportionately increased
in the case of a subdivision or stock dividend and proportionately
decreased in the case of a combination. Appropriate adjustments shall also
be made to the purchase price payable per share, but the aggregate purchase
price payable for the total number of Shares purchasable under this Warrant
(as adjusted) shall remain the same. Any adjustment under this Section 7(a)
shall become effective at the close of business on the date the subdivision
or combination becomes effective or as of the record date of such dividend,
or, in the event that no record date is fixed, upon the making of such
dividend.
(b) Reclassification, Reorganization, Merger, Sale or Consolidation.
In the event of any reclassification, capital reorganization or other
change in the Common Stock of the Company (other than as a result of a
subdivision, combination or stock dividend provided for in Section (a)
above) or in the event of a consolidation or merger of the Company with or
into, or the sale of all or substantially all of the properties and assets
of the Company, to any person, and the connection therewith consideration
is payable to holders of Common Stock in cash, securities or other
property, then as a condition of such reclassification, reorganization or
change, consolidation, merger or sale, lawful provision shall be made, and
duly executed documents evidencing the same shall be delivered to the
Holder, so that the Holder shall have the right at any time prior to the
expiration of this Warrant to purchase, at a total price equal to that
payable upon the exercise of this Warrant immediately prior to such event,
the kind and amount of cash, securities or other property receivable in
connection with such reclassification, reorganization or change,
consolidation, merger or sale, by a holder of the same number of shares of
Common Stock as were exercisable by the Holder immediately prior to such
reclassification, reorganization or change, consolidation, merger or sale.
In any such case, appropriate provisions shall be made with respect to the
rights and interest of the Holder so that the provisions hereof shall
thereafter be applicable with respect to any cash, securities or property
deliverable upon exercise hereof. Notwithstanding the foregoing, (i) if the
Company merges or consolidates with, or sells all or substantially all of
its property and assets to, any other person, and consideration is payable
to holders of Common Stock in exchange for their Common Stock in connection
with such merger, consolidation or sale which consists solely of cash, or
(ii) in the event of the dissolution, liquidation or winding up of the
Company, then the Holder shall be entitled to receive distributions on the
date of such event on an equal basis with holders of Common Stock as if
this Warrant had been exercised immediately prior to such event, less the
Warrant Price. Upon receipt of such payment, if any, the rights of the
Holder shall terminate and cease, and this Warrant shall expire. in case of
any such merger, consolidation or sale of assets, the surviving or
acquiring person and, in the event of any dissolution, liquidation or
winding up of the Company, the Company shall promptly, after receipt of
this surrendered Warrant, make payment by delivering a check in such amount
as is appropriate (or, in the case of consideration other than case, such
other consideration as is appropriate) to such person as it may be directed
in writing by the Holder surrendering this Warrant.
(c) Certain Distributions. In case the Company shall fix a record date
for the making of a dividend or distribution of cash, securities or
property to all holders of Common Stock (excluding any dividends or
distributions referred to in Sections 7(a) or 7(b) above, the number of
Shares purchasable upon an exercise of this Warrant after such record date
shall be adjusted to equal the product obtained by multiplying the number
of Shares purchasable upon an exercise of this Warrant immediately prior to
such record date by a fraction, the numerator of which shall be the Warrant
Price immediately prior to such distribution, and the denominator of which
shall be the Warrant Price immediately prior to such distribution, less the
fair market value per Share, as determined by the Holder, of the cash,
securities or property so distributed. Such adjustment shall be made
successively whenever any such distribution is made and shall become
effective on the effective date of distribution.
8. Pre-Exercise Rights. Prior to exercise of this Warrant, the Holder shall
not be entitled to any rights of a shareholder with respect to the Shares,
including without limitation, the right to vote such Shares, receive preemptive
rights or be notified of shareholder meetings, and the Holder shall not be
entitled to any notice or other communication concerning the business or affairs
of the Company.
9. Restricted Securities. The Holder understands that this Warrant and the
Shares purchasable hereunder constitute restricted securities under the federal
securities laws inasmuch as they are being, or will be, acquired from the
Company in transactions not involving a public offering and accordingly may not,
under such laws and applicable regulations, be resold or transferred without
registration under the Securities Act of 1933, as amended, or an applicable
exemption from registration. In this connection, the Holder acknowledges that
Rule 144 of the Securities and Exchange Commission is not now, and may not in
the future be, available for resales of the Shares purchased hereunder. The
Holder further acknowledges that the Shares and any other securities issued upon
exercise of this Warrant shall bear a legend substantially in the form of the
legend appearing on the face hereof.
10. Certification of Investment Purpose. Unless a current registration
statement under the Securities Act of 1933, as amended, shall be in effect with
respect to the securities to be issued upon exercise of this Warrant, the Holder
hereof, by accepting this Warrant, covenants and agrees that, at the time of
exercise hereof, the Holder will deliver to the Company a written certification
that the securiti4es acquired by the Holder are acquired for investment purposes
only and that such securities are not acquired with a view to, or for sale in
connection with, any distribution thereof.
11. Registration Rights. This Warrant and the Shares shall be subject to
the registration rights set forth in the Registration Rights Agreement dated
June 21, 2001 and the Amendment and Joinder to Registration Rights Agreement
dated July 19, 2001, by and among the Holder and the Company, and the Holder
shall be entitled to all rights and benefits thereof.
12. Successors and Assigns. The terms and provisions of this Warrant shall
inure to the benefit of, and be binding upon, the Company and the Holder and
their respective successors and assigns.
13. Governing Law. This Warrant shall be governed by the laws of the State
of Texas, excluding the conflicts of laws provisions thereof.
OBSIDIAN ENTERPRISES, INC.
By: /s/ Xxxxxxx X. Xxxxxx
------------------------------------------
Xxxxxxx X. Xxxxxx
Chairman and Chief Executive Officer
EXERCISE NOTICE
Dated ______________, _______
The undersigned hereby irrevocably elects to exercise the Stock Purchase
Warrant, dated February 9, 2004, issued by Obsidian Enterprises, Inc., a New
York corporation (the Companyto the undersigned to the extent of purchasing
_______________ shares of Common Stock and hereby makes payment of $____________
in payment of the aggregate Warrant Price of such Shares.
RENAISSANCE US GROWTH INVESTMENT
TRUST PLC
By: ___________________________________
