Execution Version THIS WARRANT AND THE EQUITY INTERESTS THAT MAY BE PURCHASED HEREUNDER HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE SECURITIES LAWS OF ANY STATE, AND MAY NOT BE SOLD OR TRANSFERRED, OR OFFERED...
Exhibit 10.41
Execution Version
THIS WARRANT AND THE EQUITY INTERESTS THAT MAY BE PURCHASED HEREUNDER HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE SECURITIES LAWS OF ANY STATE, AND MAY NOT BE SOLD OR TRANSFERRED, OR OFFERED FOR SALE OR TRANSFER, EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION THEREUNDER OR PURSUANT TO AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS THEREOF.
TWINLAB CONSOLIDATED HOLDINGS, INC.
No. W-3 | January 22, 2015 |
Warrant
This Warrant (the “Warrant”) certifies that, for value received, PENTA MEZZANINE SBIC FUND I, LP, a Delaware limited partnership, and its permitted transferees, successors and assigns (the “Holder”), is entitled to purchase from TWINLAB CONSOLIDATED HOLDINGS, INC., a Nevada corporation (the “Company”), 869,618 shares of common stock of the Company issuable upon the full exercise of this Warrant at the purchase price of $1.00 per share (the “Exercise Price”), at any time prior to 5:00 P.M. on November 13, 2019 (the “Expiration Date”).
This Warrant has been issued pursuant to the Note and Warrant Purchase Agreement, dated as of November 13, 2014, by and among the Company, Twinlab CONSOLIDATION Corporation, a Delaware corporation, Twinlab Holdings, Inc., a Michigan corporation, ISI Brands Inc., a Michigan corporation, Twinlab Corporation, a Delaware corporation, and the Holder (as amended by the First Amendment to Note and Warrant Purchase Agreement, Consent and Joinder, dated as of the date hereof, the “Purchase Agreement”), and is subject to the terms and conditions, and entitled to the benefits, thereof, including provisions providing certain information and other rights. A copy of the Purchase Agreement is available for inspection at the principal office of the Company and will be furnished without charge to the Holder upon written request to the Company.
ARTICLE I
“Adjusted EBITDA” shall mean EBITDA plus any expenses relating to Acquisitions (as defined in the Purchase Agreement) following the Effective Date (as defined in the Purchase Agreement) of the Purchase Agreement, plus severance payments and other costs relating to permanent headcount reductions, all as determined by GAAP.
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“Applicable Law” means all provisions of laws, statutes, ordinances, rules, regulations, permits, certificates or orders of any Governmental Authority applicable to the Person in question or any of its assets or property, and all judgments, injunctions, orders and decrees of all courts and arbitrators in proceedings or actions in which the Person in question is a party or by which any of its assets or properties are bound.
“Assignment Form” shall mean the assignment form attached as Annex 2 hereto.
“Business Day” shall have the meaning set forth in the Purchase Agreement.
“Change in Control” shall have the meaning set forth in the Purchase Agreement.
“Current Holder’s Equity Interest” means 869,618 shares of common stock of the Company issuable upon the full exercise of this Warrant, minus any Equity Interest previously issued pursuant to the exercise of this Warrant.
“Company” shall have the meaning set forth in the Preamble.
“Delivery Date” shall have the meaning given to such term in Section 3.2.
“EBITDA” shall have the meaning set forth in the Purchase Agreement.
“Equity Interest” shall have the meaning set forth in the Purchase Agreement.
“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended from time to time, and any successor statute.
“Exchange Form” shall mean the exchange form attached as Annex 3 hereto.
“Executive Officer” shall mean, with respect to the Company, its Chief Executive Officer, President, Chief Financial Officer or Chief Operating Officer.
“Exercise Form” shall mean the exercise form attached as Annex 1 hereto.
“Exercise Price” shall have the meaning set forth in the Preamble.
“Expiration Date” shall have the meaning set forth in the Preamble.
“Fiscal Year” shall have the meaning set forth in the Purchase Agreement.
“Fully-Diluted Basis” shall have the meaning set forth in the Purchase Agreement.
“Governmental Authority” shall have the meaning set forth in the Purchase Agreement.
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“Holder” shall have the meaning set forth in the Preamble.
“Holder's Equity Interest” shall have the meaning given to such term in Section 3.3.
“Indebtedness” shall have the meaning set forth in the Purchase Agreement.
“NASDAQ” shall mean the NASDAQ Stock Market.
“Organizational Documents” shall mean, with respect to any Person, each instrument or other document that (a) defines the existence of such Person, including its articles or certificate of incorporation, formation or organization, as filed or recorded with an applicable Governmental Authority or (ii) governs the internal affairs of such Person, including its by-laws or its operating, partnership or limited liability company agreement, in each case as amended, supplemented or restated.
“Person” shall have the meaning set forth in the Purchase Agreement.
“Purchase Agreement” shall have the meaning set forth in the Preamble.
“Qualified Assignment” shall mean any of the following: (a) an assignment to a transferee acquiring at least 25% of the Equity Interests subject to the Warrant (subject to adjustment for stock splits, stock dividends, recapitalizations and similar events); or (b) an assignment to an Affiliate of the Holder.
“Rights Agreement” shall have the meaning given to such term in Section 4.1.
“Securities Act” shall mean the Securities Act of 1933, as amended from time to time, and any successor statute.
“Taxes” means all taxes, charges, fees, levies or other assessments, however denominated and whether imposed by a taxing authority within or without the United States, including all net income, gross income, gross receipts, sales, use, ad valorem, goods and services, capital, transfer, franchise, profits, license, withholding, payroll, employment, employer health, excise, estimated, severance, stamp, occupation, property or other taxes, custom duties, fees, assessments or charges of any kind whatsoever, together with any interest and any penalties, additions to tax or additional amounts imposed by any taxing authority whether arising before, on or after the date hereof.
“Warrant” or “Warrants” shall mean this Warrant.
“Warrant Register” shall have the meaning given to such term in Section 2.1.
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ARTICLE II
FORM; EXCHANGE FOR WARRANTS; TRANSFER; TAXES
SECTION 2.1 Warrant Register. Each Warrant issued, exchanged or transferred pursuant to the Purchase Agreement shall be registered in a warrant register (the “Warrant Register”). The Warrant Register shall set forth the number of each Warrant, the name and address of the holder thereof, and the Current Holder’s Equity Interest for which the Warrant is then exercisable. The Warrant Register will be maintained by the Company and will be available for inspection by the Holder at the principal office of the Company or such other location as the Company may designate to the Holder in the manner set forth in Section 5.1 hereof. The Company shall be entitled to treat the Holder as the owner in fact thereof for all purposes and shall not be bound to recognize any equitable or other claim to or interest in such Warrant on the part of any other Person.
SECTION 2.2 Exchange of Warrants for Warrants.
(a) The Holder may exchange this Warrant for another Warrant or Warrants of like kind and tenor representing in the aggregate the right to purchase the same Current Holder’s Equity Interest which could be purchased pursuant to the Warrant being so exchanged. In order to effect an exchange permitted by this Section 2.2, the Holder shall deliver to the Company such Warrant accompanied by an Exchange Form in the form attached hereto as Annex 3 signed by the Holder thereof specifying the number and denominations of Warrants to be issued in such exchange and the names in which such Warrants are to be issued. Within ten (10) Business Days of receipt of such a request, the Company shall issue, register and deliver to the Holder thereof each Warrant to be issued in such exchange.
(b) Upon receipt of evidence reasonably satisfactory to the Company (an affidavit of the Holder, including indemnification reasonably acceptable to the Company) of the ownership and the loss, theft, destruction or mutilation of any Warrant or, in the case of any such mutilation, upon surrender of such Warrant, the Company shall (at its expense) execute and deliver in lieu of such Warrant a new Warrant of like kind and tenor representing the same rights represented by and dated the date of such lost, stolen, destroyed or mutilated Warrant. Any such new Warrant shall constitute an original contractual obligation of the Company, whether or not the allegedly lost, stolen, mutilated or destroyed Warrant shall be at any time enforceable by any Person.
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(c) The Company shall pay all Taxes (other than any applicable income or similar Taxes payable by a Holder of a Warrant) attributable to an exchange of a Warrant pursuant to this Section 2.2; provided, however, that the Company shall not be required to pay any Tax which may be payable in respect of any transfer involved in the issuance of any Warrant in a name other than that of the Holder of the Warrant being exchanged.
SECTION 2.3 Transfer of Warrant.
(a) Subject to Section 2.3(c) hereof and the Purchase Agreement, each Warrant and the rights thereunder may be transferred by the Holder thereof by delivering to the Company such Warrant accompanied by a properly completed Assignment Form in the form of Annex 2. Within ten (10) Business Days of receipt of such Assignment Form the Company shall issue, register and deliver to the new Holder, subject to Section 2.3(c) hereof a new Warrant or Warrants of like kind and tenor representing in the aggregate the right to purchase the same Current Holder’s Equity Interest which could be purchased pursuant to the Warrant being transferred. In all cases of transfer by an attorney, the original power of attorney, duly approved, or a copy thereof, duly certified, shall be deposited and remain with the Company. In case of a transfer by executors, administrators, guardians or other legal representatives, duly authenticated evidence of their authority shall be produced and may be required to be deposited and remain with the Company in its discretion.
(b) Each Warrant issued in accordance with this Section 2.3 shall bear the restrictive legend set forth on the face of this Warrant, unless the Holder or transferee thereof supplies to the Company an opinion of counsel, reasonably satisfactory to the Company, that the restrictions described in such legend are no longer applicable to such Warrant.
(c) The transfer of Warrants and any Equity Interest purchased thereunder shall be permitted, so long as such transfer is pursuant to a transaction that complies with, or is exempt from, the provisions of the Securities Act, and the Company may require an opinion of counsel in form and substance reasonably satisfactory to it to such effect prior to effecting any transfer of Warrants or any Equity Interest purchased thereunder.
ARTICLE III
EXERCISE OF WARRANT; EXCHANGE FOR EQUITY INTEREST
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SECTION 3.2 Issuance of Equity Interest.
(a) The Company represents and warrants that the authorized Equity Interest of the Company consists solely of (i) 5,000,000,000 shares of common stock, par value $0.001 per share, of which only 220,000,000 common shares have been issued as of the date hereof and (ii) 500,000,000 shares of preferred stock, of which no preferred shares have been issued as of the date hereof. The shares of common stock of the Company issued and outstanding as of the date hereof are duly authorized, validly issued, fully paid and non-assessable. The delivery to the Holder of certificates representing the Equity Interest that the Holder purchases pursuant to the exercise of this Warrant shall grant to the Holder good and valid title to the Equity Interest represented by such certificate, free and clear of any and all liens, pledges, security interests, charges or encumbrances of any kind or nature or any option, warrant or trust having the practical effect of any of the foregoing.
(b) Immediately upon the exercise of this Warrant in accordance with Section 3.1, the Company (the “Delivery Date”) shall issue the Equity Interest that the Holder has purchased pursuant to such exercise, deliver to the Holder the certificates representing such Equity Interest and reflect the issuance of such Equity Interest, which Equity Interest shall be duly authorized, validly issued, outstanding, fully paid and non-assessable, in the Company’s shareholder records (maintained by the Company or its duly appointed transfer agent), whereupon the Holder shall be deemed for all purposes, effective as of the Delivery Date, to be a holder of record and beneficial owner of the Equity Interest that it has purchased pursuant to such exercise.
(c) If a Holder shall exercise this Warrant for less than all of the Equity Interest which could be purchased or received hereunder, the Company shall issue to the Holder, within five (5) Business Days of the Delivery Date, a new Warrant of like kind and tenor to this Warrant evidencing the right to purchase the remaining Equity Interest represented by the Warrant. This Warrant shall be cancelled upon surrender thereof pursuant to Section 3.1.
(d) The Company shall pay all Taxes (other than any applicable income or similar Taxes payable by a Holder of a Warrant) attributable to the initial issuance of any Equity Interest upon the exercise or exchange of this Warrant or any successor Warrant; provided, however, that the Company shall not be required to pay any Tax which may be payable in respect of any transfer involved in the issuance of a successor to this Warrant in a name other than that of the Holder of the Warrant being exercised or exchanged.
(e) Except as set forth in any document that is un-redacted and publicly filed with the U.S. Securities and Exchange Commission, neither the Company nor its Subsidiaries has any liabilities or obligations of any nature (whether absolute, accrued, contingent or otherwise and whether due or to become due) which are not fully reflected or reserved against on the balance sheet as of June 30, 2014 in accordance with GAAP, except for liabilities and obligations incurred in the ordinary course of business and consistent with past practice since the date thereof.
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SECTION 3.3.2 Consolidations and Mergers; Dissolution.
(a) If, at any time after the date hereof, the Company shall consolidate with, merge with or into, or sell all or substantially all of its assets or property to, another Person, then the Company shall cause effective provision to be made so that each Warrant shall, effective as of the effective date of such event retroactive to the record date, if any, of such event, be exercisable or exchangeable for the kind and number of shares of stock, membership or other equity interests, other securities, cash or other property to which a holder of the Equity Interest deliverable upon exercise or exchange of such Warrant would have been entitled upon such event. The Company shall not consolidate or merge unless, prior to consummation, the successor corporation (if other than the Company) assumes the obligations of this paragraph by written instrument executed and mailed to the Holder at the Holder’s address set forth in Section 5.1. A sale or lease of all or substantially all the assets of the Company for a consideration (apart from the assumption of obligations) consisting primarily of securities is a consolidation or merger for the foregoing purposes.
(b) In case a voluntary or involuntary dissolution, liquidation, or winding up of the Company (other than in connection with a consolidation or merger covered by subsection (a) above) is at any time proposed, the Company shall give at least 30 days’ prior written notice to the Holder. Such notice shall contain: (1) the date on which the transaction is to take place; (2) the record date (which shall be at least 30 days after the giving of the notice) as of which the Holder will be entitled to receive distributions as a result of the transaction; (3) a brief description of the transaction; (4) a brief description of the distributions to be made to the Holder as a result of the transaction and (5) an estimate of the fair value of the distributions. On the date of the transaction, if it actually occurs, this Warrant and all rights hereunder shall terminate.
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ARTICLE IV
SECTION 4.1 Registration Rights.
(a) At any time at which this Warrant or the Equity Interest underlying the same remains outstanding, upon the request of the Holder, the Company will enter into a registration rights agreement with Holder (the “Rights Agreement”). Such Rights Agreement shall provide that beginning October 1, 2015, if the Company is eligible for the use of a registration statement on Form S-3, then the Holder shall have the right to request an initial registration and thereafter on a quarterly basis after such initial registration shall have been declared effective by the U.S. Securities and Exchange Commission, registration of its Equity Interests on Form S-3 or any similar short-form registration (each, a "Demand Registration"). The Rights Agreement will provide that each request for a Demand Registration shall specify the approximate number of Equity Interests requested to be registered and that the Company shall cause a registration statement on Form S-3 (or any successor form) to be filed within twenty (20) days after the date on which the initial request is given and shall use its reasonable best efforts to cause such Registration Statement to be declared effective by the Commission as soon as practicable thereafter. The Rights Agreement will provide that the Company may postpone for up to ninety (90) days the filing or effectiveness of a registration statement for a Demand Registration if the Company determines in its reasonable good faith judgment that such Demand Registration would (i) materially interfere with a significant acquisition, corporate reorganization or other similar transaction involving the Company; (ii) require premature disclosure of material information that the Company has a bona fide business purpose for preserving as confidential; or (iii) render the Company unable to comply with requirements under the Securities Act or Exchange Act. The Rights Agreement shall contain such other terms and conditions applicable to the Holder no less favorable to the Holder than registration rights made available to any other holder of any Equity Interest or other equity security of the Company.
(b) The rights to cause the Company to register Equity Interests pursuant hereto may be assigned (but only with all related obligations) by the Holder in a Qualified Assignment; provided, that, (i) the Company is, upon or within a reasonable time after such transfer, furnished with written notice of the name and address of such transferee and the securities with respect to which such registration rights are being assigned, (ii) such transferee or assignee agrees in writing to be bound by and subject to the terms and conditions of this Warrant, (iii) such assignment shall be effective only if immediately following such transfer the further disposition of such securities by transferee or assignee is restricted under the Securities Act, and (iv) such assignment shall be effective only if immediately following such transfer such Equity Interests continue to be Equity Interests of the Company.
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ARTICLE V
(a) | If to the Company, to: |
TWINLAB CONSOLIDATED CORPORATION | |
000 Xxxx Xxxxxxx Xxxxx | |
Xxxxxxxx Xxxx, XX 00000 | |
Attention: Xxxx Xxxxx, Chief Financial Officer | |
Facsimile: (000) 000-0000 | |
e-mail: XXxxxx@xxxxxxx.xxx | |
and | |
TWINLAB CONSOLIDATED CORPORATION | |
000 Xxxxxxxx, Xxxxx 000 | |
Xxx Xxxx, XX 00000 | |
Attention: Xxxxxxx Xxxxxxxx, Chief Legal Officer | |
Facsimile: (000) 000-0000 | |
e-mail: XXxxxx@xxxxxxx.xxx | |
with a copy to: XXxxxxxxx@xxxxxxx.xxx | |
with a copy to: | |
XXXXXX LLP | |
Xxxxxxxxxxx Xxxxx, X.X. Xxx 000 | |
Xxxxx Xxxxxx, XX 00000 | |
Attention: Xxxx Xxx Xxxxxx | |
Facsimile: (000) 000-0000 | |
e-mail: xxxxxxxx@xxxxxxxxx.xxx | |
and | |
XXXX XXXXXXXXX LLP | |
0000 Xxxxxxxx, 00xx Xxxxx | |
Xxx Xxxx, XX 00000 | |
Attention: Xxxx X. Xxxxx | |
Facsimile: (000) 000-0000 | |
e-mail: xxxxxx@xxxxxxxxxxxxx.xxx |
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(b) | If to the Holder, to: |
PENTA MEZZANINE SBIC FUND I, L.P. | |
00 X. Xxxxxx Xxx, Xxxxx 000 | |
Xxxxxxx, XX 00000 | |
Attention: Xxxx Xxxxx, Principal | |
Facsimile: (000) 000-0000 | |
e-mail: xxxxxx@xxxxxxxxxxx.xxx | |
with a copy to: | |
XXXXXX XXXXXX XXXXXXXX LLP | |
000 Xxxxxxx Xxxxxx | |
Xxx Xxxx, Xxx Xxxx 00000 | |
Attention: Xxxxxx Xxxxxxxxx, Esq. | |
e-mail: xxxxxx.xxxxxxxxx@xxxxxxxxx.xxx |
Unless otherwise specifically provided herein, any notice or other communication shall be deemed to have been given when delivered in person or by courier service, upon receipt of electronic mail or upon receipt of facsimile.
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SECTION 5.9 Governing law. THIS WARRANT SHALL BE GOVERNED BY AND CONSTRUED UNDER THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAWS RULES AND PRINCIPLES. THE PARTIES HEREBY EXPRESSLY AND IRREVOCABLY SUBMIT TO THE JURISDICTION OF THE STATE AND FEDERAL COURTS LOCATED IN NEW YORK COUNTY, NEW YORK FOR THE PURPOSE OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS WARRANT, AND IRREVOCABLY AGREE TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH SUCH LITIGATION. THE PARTIES HEREBY EXPRESSLY AND IRREVOCABLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH THEY MAY HAVE OR HEREAFTER MAY HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. TO THE EXTENT THAT ANY PARTY HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, THE PARTY HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS WARRANT.
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[Remainder of page intentionally left blank; signatures on following page]
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TWINLAB CONSOLIDATED HOLDINGS, INC., a Nevada corporation | ||
By: | /s/ Xxxxxx X. Xxxxxxxxx | |
Name: | Xxxxxx X. Xxxxxxxxx | |
Title: | Chief Executive Officer and President |
ACKNOWLEDGED AND AGREED: | ||||
PENTA MEZZANINE SBIC FUND I, L.P., | ||||
a Delaware limited partnership | ||||
By: | Penta Mezzanine SBIC Fund I GP, LLC, | |||
its General Partner | ||||
By: | /s/ Xxxxxxx X. Mount | |||
Name: | Xxxxxxx X. Mount | |||
Title: | Authorized Member | |||
[SIGNATURE PAGE TO WARRANT]
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ANNEX 1
(To Be Executed By the Holder of This Warrant
In Order to Exercise This Warrant)
The undersigned hereby irrevocably elects to exercise the right covered by this Warrant to purchase ____________________ of the Equity Interest of TWINLAB CONSOLIDATED HOLDINGS, INC., a Nevada corporation, according to the conditions hereof and herewith makes payment in full of the Exercise Price with respect to such Equity Interest.
Signature | ||
Address |
Dated: |
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ANNEX 2
ASSIGNMENT FORM
(To Be Executed By the Holder of This Warrant
In Order to Assign This Warrant)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto _____________________________ this Warrant and all rights evidenced thereby and does irrevocably constitute and appoint ___________________, attorney, to transfer the said Warrant on the books of TWINLAB CONSOLIDATED HOLDINGS, INC., a Nevada corporation.
Signature | ||
Address |
Dated: |
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ANNEX 3
EXCHANGE FORM
(To Be Executed By the Holder of This Warrant
In Order to Exchange and Assign This Warrant)
The undersigned hereby irrevocably elects to exchange this Warrant to purchase ________________, of the Equity Interest of TWINLAB CONSOLIDATED HOLDINGS, INC., a Nevada corporation, for ___________ Warrants to purchase the Equity Interest of TWINLAB CONSOLIDATED HOLDINGS, INC., a Nevada corporation, set forth below to the Persons named and hereby sells, assigns and transfers unto such Persons that portion of this Warrant represented by such new Warrants and all rights evidenced thereby and does irrevocably constitute and appoint ____________________, attorney, to exchange and transfer this Warrant as aforesaid on the books of TWINLAB CONSOLIDATED HOLDINGS, INC., a Nevada corporation.
Equity Interest | Assignee | ||||
Signature |
Address |
This Warrant No. __ cancelled (or transferred or exchanged) this ________ day of _____________, ____________ of the Equity Interest of TWINLAB CONSOLIDATED HOLDINGS, INC., a Nevada corporation, issued therefor in the name of ____ ___________ Warrant No. ___ for ________, of the Equity Interest of TWINLAB CONSOLIDATED HOLDINGS, INC., a Nevada corporation, in the name of _________________________.
Dated: |