Document:

wdka_ex1013.htm

EXHIBIT 10.13

 

THIS AGREEMENT AND THE SHARES OF COMMON STOCK AND OTHER WARRANT SECURITIES ISSUABLE UPON THE EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT AND UNDER APPLICABLE STATE SECURITIES LAWS OR UNLESS THE COMPANY SHALL HAVE RECEIVED AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT THE REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES ACT AND UNDER THE PROVISIONS OF APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED.

WARRANT AGREEMENT

This WARRANT AGREEMENT (this “Warrant Agreement” or “Agreement”), dated as of June 11, 2014, is between PANACHE BEVERAGE, INC., a Delaware corporation (the “Company”), and CONSILIUM INVESTMENT PARTNERS, LLC (“Holder”) (the Company and the Holder are sometimes referred to as the “parties” collectively and as a “party” individually).

RECITALS:

 

WHEREAS, pursuant to that certain Restructuring Agreement, dated as of June 11, 2014 (the “Restructuring Agreement”), by and among the Panache Parties, Lender and the Shareholders (each as defined in the Restructuring Agreement”), the Company agreed to issue to the Holder, warrants (the “Warrants”) in certificated form to purchase 2,500,000 shares of the Company’s common stock (the “Warrant Shares”) exercisable at any time up until June 11, 2017 at 5:30 pm for a stipulated price of $0.15 per Share. The “Warrants” are also referred to as the “Warrants” and the “Warrant Shares” or the “Shares” are also referred to as the “Warrant Securities”;

 

NOW, THEREFORE, in consideration of the premises, the agreements set forth in the Restructuring Agreement and this Agreement and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

 

1.  Grant and Period.

 

The above recitals are true and correct. This Agreement, relating to the purchase of the Warrant Securities, is entered into pursuant to the Restructuring Agreement.

 

Pursuant to this Agreement, the Holder is hereby granted the right to purchase from the Company up to the aggregate sum of 2,500,000 Warrant Shares. The Holder’s right to purchase the Warrant Securities or Warrant Shares pursuant to this Agreement shall terminate at 5:30 p.m., Eastern Time on June 11, 2017 (the “Expiration Time”). The initial purchase price per Warrant Share or for each of the Warrant Securities (subject to adjustment as provided in Sections 2, 4, 5 and 6) shall be $0.15 each (the “Warrant Price”), subject to the terms and conditions of this Agreement.

  

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Except as specifically otherwise provided in this Agreement, the Warrant Shares shall bear the same terms and conditions as designated in the Company’s Certificate of Incorporation and any amendments thereto, and the Holder shall not be provided any registration rights and the Company shall not have any obligation to register the Warrants or the Warrant Shares (or Warrant Securities) under the Securities Act of 1933, as amended (the “Act”).

2.  Method of Exercise; Payment; Issuance of New Warrants; Transfer and Exchange.

(a) Time of Exercise. The Warrants that become exercisable pursuant to this Agreement may be exercised in whole or in part at any time on or before the Expiration Time. The Warrants shall vest according to the following Vesting Schedule (the "Vesting Schedule"):

(i) 625,000 Warrants on December 11, 2014;

(ii) 625,000 Warrants on June 11, 2015;

(iii) 625,000 Warrants on December 11, 2015; and

(iv) 625,000 Warrants on June 11, 2016.

Notwithstanding the foregoing, upon a "Significant Transaction", all of the Warrants shall immediately vest. A “Significant Transaction” shall mean (i) any transaction which Company and/or its subsidiaries or Affiliates enter into that values in the aggregate Company’s business and any of its respective equity interests in its subsidiaries at a composite enterprise value equal to or greater than $30,000,000 as determined by Lender in its sole discretion (absent manifest error). In said event Company at Lender’s option shall repay the Obligations (as defined in the Restructuring Agreement) within 15 business days following consummation of said transaction, if said transaction results in the Company receiving cash proceeds of at least $20,000,000; (ii) any transaction which involves a sale by the Company’s Wodka, LLC subsidiary of one or more of its trademarks which results in a valuation of said company of at least $30,000,000 and a distribution to its members in any twelve (12) month period of at least $15,000,000

 

(b) Method of Exercise. Subject to the Vesting Schedule, this Warrant may be exercised by the Holder, in whole or in part, by the surrender of the Warrant Certificate (with the exercise form attached hereto duly executed) at the principal office of the Company, and by the payment to the Company of an amount of consideration therefor equal to the Warrant Price in effect on the date of such exercise multiplied by the number of shares of Warrant Stock with respect to which the Warrants is then being exercised, payable at such Holder’s election by certified or official bank check or by wire transfer to an account designated by the Company.

 

(c) Intentionally Omitted.

(d) Issuance of Stock Certificates. In the event of any exercise of the Warrants in accordance with and subject to the terms and conditions hereof and the Warrant Certificate, (i) certificates for the shares of Warrant Stock so purchased shall be dated the date of such exercise and delivered to the Holder hereof within a reasonable time, not exceeding five (5) business days after the exercise notice is delivered to the Company (the “Delivery Date”) and the Holder hereof shall be deemed for all purposes to be the holder of the shares of Warrant Stock so purchased as of the date of such exercise and (ii) unless the Warrants have expired, a new Warrant Certificate representing the number of shares of Warrant Stock, if any, with respect to which the presented Warrant Certificate shall not then have been exercised (less any amount thereof which shall have been canceled in payment or partial payment of the Warrant Price as hereinabove provided) shall also be issued to the Holder hereof at the Company’s expense within such time.

  

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(e) Transferability of Warrants. Subject to Section 2(f) hereof, the Warrants may be transferred by a Holder only with the prior written consent of the Company, which consent will not be unreasonably withheld. If transferred pursuant to this section, the Warrants may be transferred on the books of the Company by the Holder hereof upon surrender of the Warrant Certificate at the principal office of the Company, properly endorsed by the Holder and upon payment by the Holder of any necessary transfer tax or other governmental charge imposed upon such transfer. The Warrant Certificates are exchangeable at the principal office of the Company for Warrant Certificates to purchase the same aggregate number of shares of Warrant Stock, each new Warrant Certificate to represent the right to purchase such number of shares of Warrant Stock as the Holder of the Warrant Certificate shall designate at the time of such exchange. All Warrant Certificates issued on transfers or exchanges shall be dated the date of this Agreement and shall be identical to the presented Warrant Certificate except as to the number of shares of Warrant Stock issuable pursuant thereto.

(f)  Compliance with Securities Laws.

a. The Holder of a Warrant Certificate, by acceptance hereof, acknowledges and agrees that the Warrant Certificate and the shares of Warrant Stock to be issued upon exercise hereof are being acquired solely for the Holder’s own account and not as a nominee for any other party, and for investment purposes only and not with a view to the resale or distribution of any part thereof, and that the Holder will not offer, sell or otherwise dispose of the Warrants or any shares of Warrant Stock to be issued upon the exercise hereof except pursuant to an effective registration statement, or an exemption from registration, under the Securities Act and any applicable state securities laws. The Holder represents and warrants to the Company that the Holder is an “accredited investor” as such term is defined in Rule 501 of Regulation D promulgated under the Securities Act.

b. Subject to the satisfaction of the conditions set forth in this Section 2(f), the Company agrees to reissue Warrant Certificates or certificates representing any of the Warrant Stock, without the legend set forth above if at such time, prior to making any transfer of any such securities, the Holder shall give written notice to the Company describing the manner and terms of such transfer. Such proposed transfer will not be effected until:

 

i. either (a) the Company has received an opinion of counsel reasonably satisfactory to the Company, to the effect that the registration of such securities under the Securities Act is not required in connection with such proposed transfer, (b) a registration statement under the Securities Act covering such proposed disposition has been filed by the Company with the Securities and Exchange Commission (of which the Company shall not be obligated to do so) and has become effective under the Securities Act, or (c) the Holder provides the Company with reasonable assurances that such security can be sold pursuant to Rule 144 under the Securities Act; or

  

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ii. either (a) the Company has received an opinion of counsel reasonably satisfactory to the Company, to the effect that registration or qualification under the securities or “blue sky” laws of any state is not required in connection with such proposed disposition, or (b) compliance with applicable state securities or “blue sky” laws has been effected or a valid exemption exists with respect thereto. The Company will respond to any such notice from a holder as soon as is practicable, but in no event later than five (5) business days after the Company’s receipt of such notice. In the case of any proposed transfer under this Section 2(f)(b), the Company will use reasonable efforts to comply with any such applicable state securities or “blue sky” laws, but shall in no event be required, (x) to qualify to do business in any state where it is not then qualified, (y) to take any action that would subject it to tax or to the general service of process in any state where it is not then subject, or (z) to comply with state securities or “blue sky” laws of any state for which registration by coordination is unavailable to the Company.

The restrictions on transfer contained in this Section 2(f) shall be in addition to, and not by way of limitation of, any other restrictions on transfer contained in any other section of this Agreement. Notwithstanding any other provision in this Agreement, the Company shall not be obligated to register the Warrant Stock under the Securities Act or under any state securities act or laws. Furthermore, the Company shall not be obligated to execute or file any general consent to service of process or to qualify as a foreign corporation to do business under the laws of any state or other jurisdiction, nor shall the officers, directors and five percent (5%) or greater shareholders be required to deposit in escrow any securities of the Company owned by them or subject such securities to any form of lockup arrangement in connection with any registration of the Warrant Stock. The Company shall use its good faith reasonable efforts to cause such Warrant Stock covered by such registration statement to be registered with or approved by such other governmental agencies or authorities of the United States or any state thereof as may be reasonably necessary to enable the Holder or Holders thereof to consummate the disposition of such Warrant Stock.

3. Stock Fully Paid; Reservation of Shares; Covenants.

(a) Stock Fully Paid; Reservation of Shares. The Company represents, warrants, covenants and agrees that all shares of Warrant Stock that may be issued upon the exercise of the Warrants or otherwise hereunder will, when issued in accordance with the terms of this Agreement and the Warrant Certificates, be duly authorized, validly issued, fully paid and non-assessable and free from all liens and encumbrances created by or through the Company, other than those imposed by applicable federal or state securities laws. The Company further covenants and agrees that during the period within which the Warrants may be exercised, the Company will at all times have authorized and reserved for the purpose of issuance upon exercise of the Warrants a number of shares of Common Stock equal to at least one hundred twenty percent (120%) of the aggregate number of shares of Common Stock required to provide for the exercise of the Warrants.

  

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(b) Covenants. The Company shall not by any action, including, without limitation, amending its Certificate of Incorporation or the by-laws, or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other action, avoid or seek to avoid the observance or performance of any of the terms of this Agreement. Without limiting the generality of the foregoing, the Company will (i) not permit the par value, if any, of its Common Stock to exceed the then effective Warrant Price, (ii) not amend or modify any provision of its Certificate of Incorporation or by-laws in any manner that would adversely affect the rights of the Holders of the Warrant Certificates, (iii) take all such action as may be reasonably necessary in order that the Company may validly and legally issue fully paid and non-assessable shares of Company Common Stock, free and clear of any liens and encumbrances (other than as provided herein) upon the exercise of the Warrants, and (iv) use its best efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof as may be reasonably necessary to enable the Company to perform its obligations under this Agreement.

(c) Loss, Theft, Destruction of Warrants. Upon receipt of evidence satisfactory to the Company of the ownership of and the loss, theft, destruction or mutilation of any Warrant and, in the case of any such loss, theft or destruction, upon receipt of indemnity or security satisfactory to the Company or, in the case of any such mutilation, upon surrender and cancellation of such Warrant, the Company will make and deliver, in lieu of such lost, stolen, destroyed or mutilated Warrant, a new Warrant of like tenor and representing the right to purchase the same number of shares of Common Stock.

4.  Effect of Reorganization, Etc.

(a) Reorganization, Consolidation, Merger, Etc. In case at any time or from time to time, the Company shall with the express written consent of the Holder (i) effect a reorganization, (ii) consolidate with or merge into any other Person, or (iii) 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 provision shall be made by the Company whereby the Holder, on the exercise hereof 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 (from the surviving entity or the parent of the surviving entity in a reorganization, consolidation or merger), in lieu of the Warrant Stock issuable on such exercise prior to such consummation or such effective date, the stock and other securities and property to which such Holder would have been entitled upon the consummation of such reorganization, consolidation or merger (the amount of which shall be computed on the basis of the actual exchange ratio on which such transaction was predicated) or in connection with such dissolution, as the case may be, if such Holder had so exercised the Warrants, immediately prior thereto.

(b) Assumption of Warrant; Continuation of Terms. Upon any reorganization, consolidation, merger or transfer referred to in this Section 4, approved by the Holder, this Agreement shall be assumed by the surviving entity or the parent of the surviving entity (as applicable) in any such reorganization, consolidation or merger (as applicable), shall continue in full force and effect and the terms hereof shall be applicable to the shares of stock and other securities and property receivable on the exercise of the Warrants after the consummation of such reorganization, consolidation or merger, as the case may be, and shall be binding upon the Company of any such stock or other securities, including, in the case of any such transfer, the Person acquiring all or substantially all of the properties or assets of the Company, whether or not such person shall have expressly assumed the terms of this Agreement.

  

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5. Extraordinary Events Regarding Common Stock. In the event that the Company shall with the consent of the Holder (a) issue additional shares of the Common Stock as a dividend or other distribution on outstanding Common Stock issued by the Company (b) subdivide its outstanding shares of Common Stock, or (c) combine its outstanding shares of the Common Stock into a smaller number of shares of the Common Stock, then, in each such event, the Warrant Price shall, simultaneously with the happening of such event, be adjusted by multiplying the then Warrant Price by a fraction, the numerator of which shall be the number of shares of Common Stock outstanding immediately prior to such event and the denominator of which shall be the number of shares of Common Stock outstanding immediately after such event, and the product so obtained shall thereafter be the Warrant Price then in effect. The Warrant Price, as so adjusted, shall be readjusted in the same manner upon the happening of any successive event or events described herein in this Section 5. The number of shares of Warrant Stock that the Holder shall thereafter, on the exercise hereof as provided in Section 2, be entitled to receive shall be adjusted to a number determined by multiplying the number of shares of Warrant Stock that would otherwise (but for the provisions of this Section 5) be issuable on such exercise by a fraction of which (a) the numerator is the Warrant Price that would otherwise (but for the provisions of this Section 5) be in effect, and (b) the denominator is the Warrant Price in effect on the date of such exercise (taking into account the provisions of this Section 5). Notwithstanding the foregoing, in no event shall the Exercise Price be less than the par value of the Common Stock.

 

6. Issuance of Additional Shares of Common Stock.

 

(a) In the event the Company, with the consent of the Holder, shall at any time following the Original Issue Date issue any Additional Shares of Common Stock (otherwise than as provided in Section 4 and 5, and other than in connection with the purchase or acquisition of the assets, other than cash and cash equivalents, of another Person), at a price per share less than the Warrant Price then in effect or without consideration (a “Dilutive Issuance”), then the Warrant Price upon each such issuance shall be adjusted to that price determined in accordance with the following formula:

 

	  	  	
Adjusted Warrant Price =

	(OS x WP) + NI	 
	  	  	OS+ NS	 
	  	  	  
	
Where

	  	
OS = Outstanding shares of Common Stock prior to the Dilutive Issuance:

	  	  	
WP = Warrant Price in effect prior to the Dilutive Issuance.

	  	  	  
	  	  	
NI = Aggregate consideration received by the Company upon the Dilutive Issuance in dollars.

	  	  	  
	  	  	
NS = Number of Additional Shares of Common Stock issued in the Dilutive Issuance.

  

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(b) No Adjustment for Exercise of Common Stock Equivalents. No adjustment of the number of shares of Common Stock for which the Warrants shall be exercisable shall be made under Section 6(a) upon the issuance of any Additional Shares of Common Stock that are issued pursuant to the exercise of any Common Stock Equivalents, if any such adjustment shall previously have been made upon the issuance of such Common Stock Equivalents (or upon the issuance of any warrant or other rights therefor) pursuant to Section 6(c).

(c) Issuance of Common Stock Equivalents. If at any time the Company shall issue or sell any Common Stock Equivalents, with the consent of the Holder, whether or not the rights to exchange or convert thereunder are immediately exercisable, and the aggregate price per share for which Common Stock is issuable upon such conversion or exchange plus the consideration received by the Company for issuance of such Common Stock Equivalent divided by the number of shares of Common Stock issuable pursuant to such Common Stock Equivalent (the “Aggregate Per Common Share Price”) shall be less than the Warrant Price then in effect, or if, after any such issuance of Common Stock Equivalents, the price per share for which Additional Shares of Common Stock may be issuable thereafter is amended or adjusted, and such price as so amended shall make the Aggregate Per Common Share Price be less than the Warrant Price in effect at the time of such amendment or adjustment, then the Warrant Price upon each such issuance or amendment shall be adjusted as provided in Section 6(a). No further adjustment of the Warrant Price then in effect shall be made under this Section 6(c) upon the issuance of any Common Stock Equivalents which are issued pursuant to the exercise of any warrants or other subscription or purchase rights therefor, if any such adjustment shall previously have been made upon the issuance of such warrants or other rights pursuant to this Section 6(c). No further adjustments of the Warrant Price then in effect shall be made upon the actual issue of such Common Stock upon conversion or exchange of such Common Stock Equivalents.

(d) Superseding Adjustment. If, at any time after any adjustment of the number of shares of Common Stock for which the Warrants are exercisable and the Warrant Price then in effect shall have been made pursuant to Section 6(c) as the result of any issuance of Common Stock Equivalents, and (i) such Common Stock Equivalents, or the right of conversion or exchange in such Common Stock Equivalents, shall expire, and all or a portion of such or the right of conversion or exchange with respect to all or a portion of such Common Stock Equivalents, as the case may be, shall not have been exercised, or (ii) the consideration per share for which shares of Common Stock are issuable pursuant to such Common Stock Equivalents shall be increased, then such previous adjustment shall be rescinded and annulled and the Additional Shares of Common Stock which were deemed to have been issued by virtue of the computation made in connection with the adjustment so rescinded and annulled shall no longer be deemed to have been issued by virtue of such computation. Upon the occurrence of an event set forth in this Section 6(d), there shall be a recomputation made of the effect of such Common Stock Equivalents on the basis of: (i) treating the number of Additional Shares of Common Stock theretofore actually issued pursuant to the previous exercise of Common Stock Equivalents or any such right of conversion or exchange, as having been issued on the date or dates of any such exercise and for the consideration actually received and receivable therefor, and (ii) treating any such Common Stock Equivalents which then remain outstanding as having been granted or issued immediately after the time of such increase of the consideration per share for which Additional Shares of Common Stock are issuable under such Common Stock Equivalents; whereupon a new adjustment of the number of shares of Common Stock for which the Warrants are exercisable and the Warrant Price then in effect shall be made, which new adjustment shall supersede the previous adjustment so rescinded and annulled.

  

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7. Other Provisions applicable to Adjustments under Sections 4, 5 and 6. The following provisions shall be applicable to the making of adjustments of the number of shares of Common Stock for which the Warrants are exercisable and the Warrant Price then in effect provided for in Sections 4, 5 and 6:

(a) Computation of Consideration.

(i) To the extent that any Additional Shares of Common Stock or any Common Stock Equivalents (or any warrants or other rights therefor) shall be issued for cash consideration, the consideration received by the Company therefor shall be (1) the amount of the cash received by the Company therefor, or, (2) if such Additional Shares of Common Stock or Common Stock Equivalents are offered by the Company for subscription, the subscription price, or, (3) if such Additional Shares of Common Stock or Common Stock Equivalents are sold to underwriters or dealers for public offering without a subscription offering, the initial public offering price (in any such case subtracting any amounts paid or receivable for accrued interest or accrued dividends and without taking into account any compensation, discounts or expenses paid or incurred by the Company for and in the underwriting of, or otherwise in connection with, the issuance thereof).

(ii) In connection with any merger or consolidation, with the consent of the Holder, in which the Company is the surviving corporation (other than any consolidation or merger in which the previously outstanding shares of Common Stock of the Company shall be changed to or exchanged for the stock or other securities of another corporation), the amount of consideration therefore shall be, deemed to be the fair value, as determined reasonably and in good faith by the Board, of such portion of the assets and business of the non-surviving corporation as the Board may determine to be attributable to such shares of Common Stock or Common Stock Equivalents, as the case may be.

(iii) The consideration for any Additional Shares of Common Stock issuable pursuant to any warrants or other rights to subscribe for or purchase the same shall be the consideration received by the Company for issuing such warrants or other rights plus the additional consideration payable to the Company upon exercise of such warrants or other rights. The consideration for any Additional Shares of Common Stock issuable pursuant to the terms of any Common Stock Equivalents shall be the consideration received by the Company for issuing warrants or other rights to subscribe for or purchase such Common Stock Equivalents, plus the consideration paid or payable to the Company in respect of the subscription for or purchase of such Common Stock Equivalents, plus the additional consideration, if any, payable to the Company upon the exercise of the right of conversion or exchange in such Common Stock Equivalents.

(iv) In the event of any consolidation or merger of the Company, with the consent of the Holder, in which the Company is not the surviving corporation or in which the previously outstanding shares of Common Stock of the Company shall be changed into or exchanged for the stock or other securities of another corporation, or in the event of any sale of all or substantially all of the assets of the Company for stock or other securities of any corporation, the Company shall be deemed to have issued a number of shares of its Common Stock for stock or securities or other property of the other corporation computed on the basis of the actual exchange ratio on which the transaction was predicated, and for a consideration equal to the fair market value on the date of such transaction of all such stock or securities or other property of the other corporation.

  

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(v) In the event any consideration received by the Company for any securities consists of property other than cash, the fair market value thereof at the time of issuance or as otherwise applicable shall be as determined in good faith by the Board. In the event Common Stock is issued with other shares or securities or other assets of the Company for consideration which covers both, the consideration computed as provided in this Section 7(a) shall be allocated among such securities and assets as determined in good faith by the Board.

(b) When Adjustments to Be Made. The adjustments required by Section 4, 5 or 6 shall be made whenever and as often as any specified event requiring an adjustment shall occur, except that any adjustment of the number of shares of Warrant Stock for which the Warrants are exercisable that would otherwise be required may be postponed (except in the case of a subdivision or combination of shares of the Common Stock, as provided for in Section 5) up to, but not beyond the date of exercise if such adjustment either by itself or with other adjustments not previously made adds or subtracts less than one percent (1% ) of the shares of Warrant Stock for which the Warrants are exercisable immediately prior to the making of such adjustment. Any adjustment representing a change of less than such minimum amount (except as aforesaid) which is postponed shall be carried forward and made as soon as such adjustment, together with other adjustments required by this Section 7 and not previously made, would result in a minimum adjustment or on the date of exercise. 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.

(c) Fractional Interests. In computing adjustments under Sections 4, 5 and 6, fractional interests in Common Stock shall be taken into account to the nearest one one-hundredth (1/100th) of a share.

(d) 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, legally abandon its plan to pay or deliver such dividend, distribution, subscription or purchase rights, then thereafter no adjustment shall be required by reason of the taking of such record and any such adjustment previously made in respect thereof shall be rescinded and annulled.

(e) Form of Warrant after Adjustments. The form of the Warrant Certificate need not be changed because of any adjustments in the Warrant Price or the number and kind of Securities purchasable upon the exercise of the Warrants evidenced by the Warrant Certificate; however, all Warrant Certificates issued by the Company subsequent to any adjustments under Section 4, 5 or 6 shall reflect such adjustments.

  

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8. Notice of Adjustments. Whenever the Warrant Price or number of shares of Warrant Stock shall be adjusted pursuant to Sections 4, 5 and 6 hereof (for purposes of this Section 8, each an “adjustment”), the Company shall cause its Chief Financial Officer to prepare and execute a certificate setting forth, in reasonable detail, the event requiring the adjustment, the amount of the adjustment, the method by which such adjustment was calculated (including a description of the basis on which the Board made any determination hereunder), and the Warrant Price and Warrant Share number after giving effect to such adjustment, and shall cause copies of such certificate to be delivered to the Holder of the Warrant Certificates promptly after each adjustment. Absent manifest error, such certificate shall be final and binding on the parties hereto and the Holders.

9. Fractional Shares. No fractional shares of Warrant Stock will be issued in connection with any exercise hereof; however in lieu of such fractional share, the Company shall round the number of shares to be issued upon exercise up to the nearest whole number of shares.

10. Intentionally Omitted.

11. Dividends. No dividend or distribution or the like (collectively a “Distribution”) will be allowed without notification in writing to the Holder, delineating in detail the express terms of said proposed Distribution and at least ten (10) days time to allow the Holder the right to make an election to exercise the Warrants and thus participate in said Distribution. The Company further covenants and agrees that it will not during the period of such notice close its share transfer books or take any other corporate action which might deprive the Holder of the opportunity of exercising the Warrant and participating as a shareholder in such dividend or distribution.

12. Definitions. For the purposes of this Agreement, the following terms have the following meanings:

“Additional Shares of Common Stock” means all shares of Common Stock issued by the Company after the Original Issue Date, and all shares of Other Common, if any, issued by the Company after the Original Issue Date, except: (i) securities issued (other than for cash) in connection with a merger, acquisition, or consolidation, (ii) securities issued pursuant to the conversion or exercise of convertible or exercisable securities issued or outstanding on or prior to the Original Issue Date (iii) the Warrant Stock, (iv) securities issued in connection with bona fide strategic license agreements or other partnering arrangements so long as such issuances are not for the purpose of raising capital, (v) Common Stock issued or the issuance or grants of non-plan options to purchase Common Stock to consultants, directors and/or employees that have been approved by the Board, (vi) securities issued pursuant to, and/or in connection with, a bona fide firm underwritten public offering of the Company’s securities, (vii) the issuance of Common Stock upon the exercise or conversion of any securities described in clauses (i) through (vi) above.

“Affiliate” of a person means a person that directly or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, the first such person. 

“Board” shall mean the Board of Directors of the Company.

  

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“Capital Stock” means and includes (i) any and all shares, interests, participations or other equivalents of or interests in (however designated) corporate stock, including, without limitation, shares of preferred or preference stock, (ii) all partnership interests (whether general or limited) in any Person which is a partnership, (iii) all membership interests or limited liability company interests in any limited liability company, and (iv) all equity or ownership interests in any Person of any other type.

“Certificate of Incorporation” means the Certificate of Incorporation of the Company as in effect on the Original Issue Date, and as hereafter from time to time amended, modified, supplemented or restated in accordance with the terms hereof and thereof and pursuant to applicable law.

“Common Stock” means the Common Stock, $0.001 par value per share, of the Company and any other Capital Stock into which such stock may hereafter be changed.

“Common Stock Equivalent” means any Convertible Security or warrant, option or other right to subscribe for or purchase any Additional Shares of Common Stock or any Convertible Security.

“Company” means Panache Beverage, Inc., a Delaware corporation, and its successors.

“Convertible Securities” means evidences of indebtedness, shares of Capital Stock or other Securities that are or may be at any time convertible into or exchangeable for Additional Shares of Common Stock. The term “Convertible Security” means one of the Convertible Securities.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended, or any similar federal statute then in effect.

 

“Expiration Time” has the meaning specified in Section 1 hereof.

 

“Holders” mean the Persons who shall from time to time own any Warrant. The term “Holder” means one of the Holders.

 

“Majority Holders” means at any time the Holders of Warrants exercisable for a majority of the shares of Warrant Stock issuable under the Warrants at the time outstanding.

 

“Original Issue Date” means June 11, 2014.

 

“Other Common” means any other Capital Stock of the Company of any class which shall be authorized at any time after the Original Issue Date (other than Common Stock) and which shall have the right to participate in the distribution of earnings and assets of the Company without limitation as to amount.

 

“Person” means an individual, a corporation, a limited liability company, partnership, a joint stock company, a trust, an unincorporated organization, a joint venture, an enterprise having members or having outstanding shares of stock or other evidences of financial or beneficial interest therein (whether formed by agreement or under statutory authority or otherwise), a governmental authority, or other entity of whatever nature.

  

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“Securities” means any debt or equity securities of the Company, whether now or hereafter authorized, any instrument convertible into or exchangeable for Securities or a Security, and any option, warrant or other right to purchase or acquire any Security. “Security” means one of the Securities.

“Securities Act” means the Securities Act of 1933, as amended, or any similar federal statute then in effect.

“Warrant Price” initially refers to the price specified in Section 1 hereof, as such price may be adjusted from time to time as shall result from the adjustments specified in this Agreement, including Sections 2, 4, 5 and 6 hereto.

“Warrant Stock” means Common Stock issuable upon exercise of any Warrant or Warrants or otherwise issuable pursuant to any Warrant or Warrants.

 

13. Other Notices. In case at any time, with the written consent of the Holder, not to be unreasonably denied or delayed:

 

(a) the Company shall make any distributions to the holders of Common Stock; or

(b) the Company shall authorize the granting to all holders of its Common Stock of rights to subscribe for or purchase any shares of Capital Stock of any class or other rights; or

(c) there shall be any reclassification of the Capital Stock of the Company; or

(d) there shall be any capital reorganization by the Company; or

(e) there shall be any (i) consolidation or merger involving the Company or (ii) sale, transfer or other disposition of all or substantially all of the Company’s property, assets or business (except a merger or other reorganization in which the Company shall be the surviving corporation and its shares of Capital Stock shall continue to be outstanding and unchanged and except a consolidation, merger, sale, transfer or other disposition involving a wholly-owned subsidiary); or

(f) there shall be a voluntary or involuntary dissolution, liquidation or winding-up of the Company or any partial liquidation of the Company or distribution to holders of Common Stock;

(g) there shall be a dividend or distribution anticipated to be given to stock holders;

  

12

  

 

then, in each of such cases, the Company shall give written notice to the Holder of the date on which (i) the books of the Company shall close or a record shall be taken for such dividend, distribution or subscription rights or (ii) such reorganization, reclassification, consolidation, merger, disposition, dissolution, liquidation or winding-up, as the case may be, shall take place. Such notice also shall specify the date as of which the holders of Common Stock of record shall participate in such dividend, distribution or subscription rights, or shall be entitled to exchange their certificates for Common Stock for securities or other property deliverable upon such reorganization, reclassification, consolidation, merger, disposition, dissolution, liquidation or winding-up, as the case may be. Such notice shall be given at least twenty (20) days prior to the action in question and not less than ten (10) days prior to the record date or the date on which the Company’s transfer books are closed in respect thereto. Except as otherwise specifically provided herein, no Holder, as such, shall be entitled to vote or receive dividends or be deemed the holder of shares of the Company for any purpose, nor shall anything contained in this Agreement be construed to confer upon the holder hereof, as such, any of the rights of a stockholder of the Company or any right to vote, give or withhold consent to any corporate action (whether any reorganization, issue of stock, reclassification of stock, consolidation, merger, conveyance or otherwise), receive notice of meetings, receive dividends or subscription rights, or otherwise, prior to the issuance to the Holder of the Warrant Shares which the Holder shall then be entitled to receive upon the due exercise of the Warrants.

14. Amendment and Waiver. Any term, covenant, agreement or condition in this Agreement may be amended, or compliance therewith may be waived (either generally or in a particular instance and either retroactively or prospectively), by a written instrument or written instruments executed by the Company and the Majority Holders; provided, however, that no such amendment or waiver shall reduce the Warrant Share number, increase the Warrant Price, shorten the period that the Warrants are exercisable, or modify any provision of this Section 14 without the consent of the Holders. No consideration shall be offered or paid to any person to amend or consent to a waiver or modification of any provision of this Warrant unless the same consideration is also offered to all Holders of the Warrant Certificates.

15. Governing Law; Jurisdiction. This Agreement shall be governed by, and enforced in accordance with, the laws of the State of Florida, without regard to any choice of law principle requiring the application of the law of another jurisdiction. Each of the Parties consent to the jurisdiction of the Eleventh Judicial Circuit for Miami-Dade County, Florida, or of the U.S. District Court for the Southern District of Florida, and agree that the exclusive venue for any action or proceeding arising out of or in connection with this Agreement, and all parties hereby waive the defense of forum non-conveniens. This Agreement shall inure to the benefit of, and be binding upon, the Holder and the Company (including any present or future subsidiaries of the Company that are not signatories hereto), and their respective successors and assigns. Nothing in this Section 15 shall affect or limit any right to serve process in any other manner permitted by law. THE PARTIES HEREBY WAIVE ALL RIGHTS TO A TRIAL BY JURY.

16. Notices. Any notice, demand, request, waiver or other communication required or permitted to be given hereunder shall be in writing and shall be effective (a) upon hand delivery by telecopy or facsimile at the address or number designated below (if delivered on a business day during normal business hours where such notice is to be received), or the first business day following such delivery (if delivered other than on a business day during normal business hours where such notice is to be received) or (b) on the second business day following the date of mailing by express courier service, fully prepaid, addressed to such address, or upon actual receipt of such mailing, whichever shall first occur. The addresses for such communications shall be:

 

  

13

  

 

	If to Holder:	

Consilium Investment Partners, LLC

3101 N. Federal Hwy., Suite 502

Fort Lauderdale, FL 33316

Attn: Marta Novick

	 	 
	If to Company:	

Panache Beverage, Inc.

150 Fifth Avenue, 3rd Floor

New York, NY 10011 

Attn: Michael G. Romer

 

Any party hereto may from time to time change its address for notices by giving written notice of such changed address to the other party hereto or in the case of a Holder, by giving written notice to the parties hereto.

 

17. Warrant Agent. The Company may, by written notice to each Holder of the Warrant Certificates, appoint an agent for the purpose of issuing shares of Warrant Stock on the exercise of the Warrants pursuant to Section 2 hereof, exchanging the Warrant Certificates pursuant to Section 2 hereof or replacing Warrant Certificates pursuant to Section 3 hereof, or any of the foregoing, and thereafter any such issuance, exchange or replacement, as the case may be, shall be made at such office by such agent.

18. Remedies. The Company stipulates that the remedies at law available to the Holder of a Warrant Certificate in the event of any default or threatened default by the Company in the performance of or compliance with any of the terms of this Agreement or the Warrant Certificate are not and will not be adequate and that, to the fullest extent permitted by law, such terms may be specifically enforced by a decree for the specific performance of any agreement contained herein or by an injunction against a violation of any of the terms hereof or otherwise.

19. Successors and Assigns. This Agreement and the Warrant Certificates and the rights evidenced hereby shall inure to the benefit of and be binding upon the successors and assigns of the Company, the Holder hereof and (to the extent provided herein) the Holders of Warrant Stock issued pursuant hereto, and shall be enforceable by any such Holder or Holder of Warrant Stock.

20. Modification and Severability. If, in any action before any court or agency legally empowered to enforce any provision contained herein, any provision hereof is found to be unenforceable, then such provision shall be deemed modified to the extent necessary to make it enforceable by such court or agency. If any such provision is not enforceable as set forth in the preceding sentence, the unenforceability of such provision shall not affect the other provisions of this Agreement, but this Agreement shall be construed as if such unenforceable provision had never been contained herein.

20. Headings. The headings of the Sections of this Agreement are for convenience of reference only and shall not, for any purpose, be deemed a part of this Agreement.

 

  

14

  

 

(INTENTIONALLY LEFT BLANK

SIGNATURES ON FOLLOWING PAGE)

 

 

 

 

 

 

 

 

 

 

  

15

  

 

IN WITNESS WHEREOF, the Company has executed this Agreement as of the day and year first above written.

 

	 	PANACHE BEVERAGE, INC.	 
	 	 	 	 
	
 

	
By: 

	/s/ MICHAEL ROMER	 
	 	 	Michael Romer	 
	 	 	Interim Chief Executive Officer 	 

 

	 	CONSILIUM INVESTMENT PARTNERS, LLC	 
	 	 	 	 
	
 

	
By: 

	/s/ CHARLES T. CASSEL, III	 
	 	 	Charles T. Cassel, III	 
	 	 	Managing Director	 

 

  

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PANACHE BEVERAGE, INC.

WARRANT CERTIFICATE

 

THIS WARRANT CERTIFICATE AND THE SHARES OF COMMON STOCK AND OTHER WARRANT SECURITIES ISSUABLE UPON THE EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT AND UNDER APPLICABLE STATE SECURITIES LAWS OR UNLESS THE COMPANY SHALL HAVE RECEIVED AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES ACT AND UNDER THE PROVISIONS OF APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED.

EXERCISABLE ON OR BEFORE 5:30 P.M, EASTERN TIME JUNE 11, 2017

	
NO. 3

	  	
2,500,000 Holder Warrants

This Warrant Certificate certifies that Consilium Investment Partners, LLC, or registered assigns (the “Holder”), is the registered holder of 2,500,000 (subject to the Vesting Schedule) Holder Warrants of Panache Beverage, Inc. (the “Company”). The Holder has the right to purchase at any time on a partial or cumulative basis, subject to the terms and conditions of the Warrant Agreement, dated as of June 11, 2014 (the “Warrant Agreement”), until 5:30 p.m. Eastern Time at any time until June 11, 2017 (“Expiration Time”), for $0.15 per share the Company’s Common Stock at the initial exercise price, subject to adjustment in certain events (the “Exercise Price”).

Any exercise of Holder Warrants shall be effectuated by surrender of this Warrant Certificate and payment of the Exercise Price at an office or agency of the Company, but subject to the conditions set forth herein and in the Warrant Agreement. Payment of the Exercise Price shall be made by certified check or official bank check in New York Clearing House funds payable to the order of the Company. The Holder Warrants are also referred to as “Warrants”.

No Warrant may be exercised after the Expiration Time, at which time all Warrants evidenced hereby, unless exercised prior thereto, hereby shall thereafter be void.

The Warrants evidenced by this Warrant Certificate are part of a duly authorized issue of Warrants issued pursuant to the Warrant Agreement, which Warrant Agreement is hereby incorporated by reference in and made a part of this instrument and is hereby referred to for a description of the rights, limitation or rights, obligations, duties and immunities thereunder of the Company and the holders (the words “holders” or “holder” meaning the registered holders or registered holder) of the Warrants.

  

17

  

 

The Warrant Agreement provides that upon the occurrence of certain events, the Exercise Price and the type and/or number of the Company’s securities issuable thereupon may, subject to certain conditions, be adjusted. In such event, the Company will, at the request of the Holder, issue a new Warrant Certificate evidencing the adjustment in the Exercise Price and the number and/or type of securities issuable upon the exercise of the Warrants; provided, however, that the failure of the Company to issue such new Warrant Certificates shall not in any way change, alter, or otherwise impair, the rights of the Holder as set forth in the Warrant Agreement.

 

Upon due presentment for registration or transfer of this Warrant Certificate at an office or agency of the Company, a new Warrant Certificate or Warrant Certificates of like tenor and evidencing in the aggregate a like number of Warrants shall be issued to the transferee(s) in exchange for this Warrant Certificate, subject to the limitations provided herein and in the Warrant Agreement, without any charge except for any tax or other governmental charge imposed in connection with such transfer.

Upon the exercise of less than all of the Warrants evidenced by this Certificate, the Company shall forthwith issue to the Holder hereof a new Warrant Certificate representing such number of unexercised Warrants.

The Company may deem and treat the registered holder(s) hereof as the absolute owner(s) of this Warrant Certificate (notwithstanding any notation of ownership or other writing hereon made by anyone), for the purpose of any exercise hereof, and of any distribution to the holder(s) hereof, and for all other purposes, and the Company shall not be affected by any notice to the contrary.

All terms used in this Warrant Certificate which are defined in the Holder Warrant Agreement shall have the meanings assigned to them in the Holder Warrant Agreement.

  

18

  

 

IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be duly executed.

 

	 	PANACHE BEVERAGE, INC.	 
	 	 	 	 
	 	
By: 

	/s/ MICHAEL ROMER	 
	 	 	Michael Romer	 
	 	 	Interim Chief Executive Officer 	 

 

	 	CONSILIUM INVESTMENT PARTNERS, LLC	 
	 	 	 	 
	 	
By: 

	/s/ CHARLES T. CASSEL, III	 
	 	 	Charles T. Cassel, III	 
	 	 	Managing Director	 

 

  

19

  

 

EXERCISE OR ASSIGNMENT

(To be signed only upon exercise or assignment of the Warrants)

	  	  	  
	
TO:

	  	
Panache Beverage, Inc.

	  	  	
150 Fifth Avenue, 3rd Floor

	  	  	
New York, NY 10011

PARTIAL OR FULL CASH EXERCISE: The undersigned hereby irrevocably elects to exercise the purchase right provided by this Warrant Certificate for, and to purchase hereunder, _____________ shares of Warrant Shares, and herewith makes payment of $__________ therefor, and requests that the certificates for such securities be issued in the name of, and delivered to, ____________, whose address is ____________, all in accordance with the Warrant Agreement and this Warrant Certificate.

 

FORM OF ASSIGNMENT: FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto

 

(Print name and address of transferee)

 

this Warrant Certificate, together with all right, title and interest therein, and does hereby irrevocably constitute and appoint __________ Attorney, to transfer the within Warrant Certificate on the books of the, with full power of substitution.

Dated: _______, 20___

	  	  	  
	  	  	
(Signature must conform in all respects to name of Holder as specified on the face of the Warrant Certificate)

	  	  	  
	  	  	  
	  	  	  
	  	  	  
	  	  	  
	  	  	
(Address)

	  	  	  
	  	  	  
	  	  	
(Social Security Number or Tax Identification Number)

 

 

20RefinanceFirstAmendment

FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT 

THIS FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT ("Amendment"), dated effective as of June 11, 2014, is made and entered into by and among Thermon Industries, Inc., a Texas corporation (the “US Borrower”), Thermon Canada Inc., a Nova Scotia company (the “Canadian Borrower” and, together with the US Borrower, the “Borrowers” and each individually, a “Borrower”), the other undersigned Credit Parties (as defined in the Credit Agreement), JPMorgan Chase Bank, N.A., a national banking association, as US Agent, US Swingline Lender, a US L/C Issuer and a US Lender (as each is defined in the Credit Agreement), JPMorgan Chase Bank, N.A., Toronto Branch, as Canadian Agent, Canadian Swingline Lender, a Canadian L/C Issuer and a Canadian Lender (as each is defined in the Credit Agreement), and all other undersigned Lenders (as defined in the Credit Agreement).

RECITALS:

WHEREAS, all of the undersigned are parties to an Amended and Restated Credit Agreement dated as of April 19, 2013 (the "Credit Agreement"); and

WHEREAS, all of the undersigned have agreed, on the terms and conditions herein set forth in this Amendment, that the Credit Agreement be amended in certain respects.

AGREEMENTS:

NOW, THEREFORE, in consideration of the premises and the mutual agreements, representations and warranties herein set forth, and for other good and valuable consideration, the receipt and sufficiency which are hereby acknowledged and confessed, all of the undersigned do hereby agree as follows:

Section 1.General Definitions.  Capitalized terms used herein which are defined in the Credit Agreement shall have the same meanings when used herein.

Section 2.Extension of “Revolving Termination Date” and “US Term Loan Maturity Date” Definitions.  The definitions of “Revolving Termination Date” and “US Term Loan Maturity Date” contained in Section 11.1 of the Credit Agreement are hereby amended and restated in their entirety to hereafter be and read as follows:

“Revolving Termination Date” means April 19, 2019.

“US Term Loan Maturity Date” means April 19, 2019.

Section 3.Modification of “Applicable Margin” Definition. The definition of “Applicable Margin” contained in Section 11.1 of the Credit Agreement is hereby amended and restated in its entirety to hereafter be and read as follows:

“Applicable Margin” means, for any day, with respect to any LIBOR Rate Loan, CDOR Rate Loan, Base Rate Loan or Canadian Prime Rate Loan, or with respect to the Unused Commitment Fee, as the case may be, the applicable rate per annum set forth below under the caption “Adjusted LIBOR Rate Spread/CDOR Rate Spread”, “Base Rate Spread/Canadian Prime Rate Spread” or “Unused Commitment Fee Rate”, as the case may be, based upon the Leverage Ratio, provided that until the effective date of the first adjustment in the Applicable Margin occurring after June 5, 2014 in accordance with the terms set forth below, the “Applicable Margin” shall be the applicable rate per annum set forth below in Category 2.

	
				
	Leverage Ratio
	Adjusted LIBOR Rate Spread/CDOR Rate Spread/ Canadian Prime Rate Spread
	Base Rate Spread 
	Unused Commitment  Fee Rate

	Category 1:
≥ 2.25 to 1.0
	2.50%
	1.50%
	0.40%

	Category 2:
< 2.25 to 1.0, but
≥ 1.75 to 1.0
	2.25%
	1.25%
	0.35%

	Category 3:
< 1.75 to 1.0, but
≥ 1.25 to 1.0
	2.00%
	1.00%
	0.30%

	Category 4:
< 1.25 to 1.0
	1.75%
	0.75%
	0.25%

For purposes of the foregoing, (a) the Applicable Margin shall be determined as of the end of each Fiscal Quarter (commencing with the Fiscal Quarter ending June 30, 2014) based upon the Leverage Ratio during the most recently ended Fiscal Quarter and (b) each change in the Applicable Margin shall be effective on and including the fifth (5th) Business Day after the date of delivery to the US Agent of the consolidated financial statements of Holdings indicating such change.  Notwithstanding the foregoing, the “Applicable Margin” shall be the applicable rate per annum set forth above in Category 1 during the period that any Specified Event of Default exists.

Section 4.Modification of Amortization of US Term Loans.  Section 1.8(b) of the Credit Agreement is hereby amended and restated in its entirety to hereafter be and read as follows:

(b)    US Term Loans.  The US Borrower hereby unconditionally promises to pay to the US Agent for the account of the US Term Lenders the aggregate principal amount of the US Term Loans as follows:

(i)Equal quarterly principal installments of $3,375,000 each shall be due and payable on June 30, 2014 and on the last day of each subsequent September, December, March and June thereafter until and including March 31, 2017;

(ii)Equal quarterly principal installments of $5,062,500 each shall be due and payable on June 30, 2017 and on the last day of each subsequent September, December, March and June thereafter prior to the US Term Loan Maturity Date; and

(iii)To the extent not previously paid, the unpaid aggregate principal amount of the US Term Loans shall be payable in full on the US Term Loan Maturity Date.

Section 5.Modification of Certain Leverage Ratio Related Provisions.

(a)    Modification of Leverage Ratio Financial Covenant.   Section 6.1 of the Credit Agreement is hereby amended and restated in its entirety to hereafter be and read as follows:

6.1    Leverage Ratio.   As of the last day of the Fiscal Quarter ending March 31, 2013 and any Fiscal Quarter thereafter, the Credit Parties shall not permit the Leverage Ratio for the twelve fiscal month period ending on such date to be greater than 2.75 to 1.00.  “Leverage Ratio” shall be calculated in the manner set forth in Exhibit 4.2(b).

(b)    Modification of Leverage Ratio Requirement in “Permitted Acquisition” Definition.   Subparagraph (a) in the definition of “Permitted Acquisition” contained in Section 11.1 of the Credit Agreement is hereby amended and restated in its entirety to hereafter be and read as follows:

(a)    the US Borrowers shall have furnished to the Agents and Lenders at least ten (10) Business Days prior to the consummation of such Acquisition (or such shorter period to which US Agent may consent) (1) an executed term sheet and/or commitment letter (setting forth in reasonable detail the terms and conditions of such Acquisition) and, at the request of the US Agent and to the extent available, such other information and documents that the US Agent may reasonably request, including, without limitation, executed counterparts of the respective agreements, documents or instruments pursuant to which such Acquisition is to be consummated (including, without limitation, any related management, non-compete, employment, option or other material agreements), any schedules to such agreements, documents or instruments and all other material ancillary agreements, instruments and documents to be executed or delivered in connection therewith, (2) to the extent available, copies of the Target’s three (3) most recent annual income statements and balance sheets, audited by the Target’s independent accountants, if available, together with the most recent interim financial statements then available, (3) pro forma financial statements of Borrowers and their Subsidiaries after giving effect to the consummation of such Acquisition, (4) a certificate of a Responsible Officer of the Borrowers demonstrating that the Leverage Ratio of the Credit Parties as in effect on the date of consummation of such Permitted Acquisition (after giving effect thereto and using Adjusted EBITDA computed for the twelve month period ending on the last day of the most recent Fiscal Quarter for which financial statements have been delivered to Agents) after giving effect to the consummation of such Acquisition is less than or equal to 2.50 to 1.00, and (5) to the extent available, copies of such other agreements, instruments and other documents (including, without limitation, the Loan Documents required by Section 4.12) as the US Agent reasonably shall request; provided, the deliveries set forth in clauses (3) and (4) above shall not be required for Minor Acquisitions.

Section 6.Modification of Other Credit Agreement Provisions.

(a)    Modification of “LIBOR Rate” Definition.  The definition of “LIBOR Rate” contained in Section 11.1 of the Credit Agreement is hereby amended and restated in its entirety to hereafter be and read as follow:

“LIBOR Rate” means, with respect to any LIBOR Rate Loan for any applicable Interest Period, the London interbank offered rate administered by ICE Benchmark Administration (or any other Person that takes over the administration of such rate for dollar deposits) for a period equal in length to such Interest Period as displayed on pages LIBOR01 or LIBOR02 of the Reuters screen or, in the event such rate does not appear on a Reuters page or screen, on any successor or substitute page on such screen that displays such rate, or on the appropriate page of such other information service that publishes such rate as shall be selected by the US Agent from time to time in its reasonable discretion (the “LIBOR Screen Rate”) at approximately 11:00 a.m., London time, two (2) Business Days prior to the commencement of such Interest Period; provided that, (x) if any LIBOR Screen Rate shall be less than zero, such rate shall be deemed to be zero for purposes of this Agreement and (y) if the LIBOR Screen Rate shall not be available at such time for a period equal in length to such Interest Period (an “Impacted Interest Period”), then the LIBOR Rate shall be the Interpolated Rate at such time, subject to Section 10.5(a) in the event that the Administrative Agent shall conclude that it shall not be possible to determine such Interpolated Rate (which conclusion shall be conclusive and binding absent manifest error); provided, that, if any Interpolated Rate shall be less than zero, such rate shall be deemed to be zero for purposes of this Agreement.  Notwithstanding the above, to the extent that “LIBOR” or “Adjusted LIBOR Rate” is used in connection with a Base Rate Loan, such rate shall be determined as modified by the definition of Base Rate.

(b)    Addition of New LIBOR Rate Related Definitions.   New definitions for the terms “Impacted Interest Period,” “Interpolated Rate” and “LIBOR Screen Rate” are hereby added in proper alphabetical order to Section 11.1 of the Credit Agreement to hereafter be and read as follows:

“Impacted Interest Period” has the meaning assigned to such term in the definition of “LIBOR Rate”.

“Interpolated Rate” means, at any time, for any Interest Period, the rate per annum (rounded upward to four decimal places) determined by the US Agent (which determination shall be conclusive and binding absent manifest error) to be equal to the rate that results from interpolating on a linear basis between: (a) the LIBOR Screen Rate for the longest period (for which the LIBOR Screen Rate is available) that is shorter than the Impacted Interest Period and (b) the LIBOR Screen Rate for the shortest period (for which the LIBOR Screen Rate is available) that exceeds the Impacted Interest Period, in each case, at such time. When determining the rate for a period which is less than the shortest period for which the LIBOR Screen Rate is available, the LIBOR Screen Rate for purposes of paragraph (a) above shall be deemed to be the overnight screen rate where “overnight screen rate” means the overnight rate determined by the US Agent from such service as the US Agent may select.

“LIBOR Screen Rate” has the meaning assigned to such term in the definition of “LIBOR Rate”.

(c)    Addition of New Anti-Corruption Laws and Sanctions Related Definitions.   New definitions for the terms “Anti-Corruption Laws,” “Sanctioned Country,” “Sanctioned Person” and “Sanctions” are hereby added in proper alphabetical order to Section 11.1 of the Credit Agreement to hereafter be and read as follows:

“Anti-Corruption Laws” means all laws, rules, and regulations of any jurisdiction applicable to any Credit Party or its Subsidiaries from time to time concerning or relating to bribery or corruption.

“Sanctioned Country” means, at any time, a country or territory which is the subject or target of any Sanctions.

“Sanctioned Person” means, at any time, (a) any Person listed in any Sanctions-related list of designated Persons maintained by the Office of Foreign Assets Control of the U.S. Department of the Treasury or the U.S. Department of State, (b) any Person operating, organized or resident in a Sanctioned Country or (c) any Person controlled by any such Person.

“Sanctions” means economic or financial sanctions or trade embargoes imposed, administered or enforced from time to time by the U.S. government, including those administered by the Office of Foreign Assets Control of the U.S. Department of the Treasury or the U.S. Department of State.

(d)    Modification of Anti-Corruption Laws and Sanctions Representations and Warranties.  Section 3.28 is hereby deleted in its entirety and Section 3.27 of the Credit Agreement is hereby amended and restated in its entirety to hereafter be and read as follows:

3.27    Anti-Corruption Laws and Sanctions.  Each Credit Party has implemented and maintains in effect policies and procedures designed to ensure compliance by such Credit Party, its Subsidiaries and their respective directors, officers, employees and agents with Anti-Corruption Laws and applicable Sanctions, and such Credit Party, its Subsidiaries and their respective officers and employees and to the knowledge of such Credit Party its directors and agents, are in compliance with Anti-Corruption Laws and applicable Sanctions in all material respects.  None of (a) any Credit Party, any Subsidiary or, to the knowledge of any such Credit Party or Subsidiary, any of their respective directors, officers or employees, or (b) to the knowledge of any such Credit Party or Subsidiary, any agent of such Credit Party or any Subsidiary that will act in any capacity in connection with or benefit from the credit facility established hereby, is a Sanctioned Person.  No Loan, Letter of Credit, use of proceeds thereof or other transaction contemplated by this Agreement or the other Loan Documents will violate Anti-Corruption Laws or applicable Sanctions.

(e)    Addition of New Anti-Corruption Laws and Sanctions Affirmative Covenant.   A new Section 4.16 is hereby added to the Credit Agreement to hereafter be and read as follows:

4.16    Compliance with Anti-Corruption Laws and Sanctions.  Each Credit Party will maintain in effect and enforce policies and procedures designed to ensure compliance by such Credit Party, its Subsidiaries and their respective directors, officers, employees and agents with Anti-Corruption Laws and applicable Sanctions.

(f)    Modification of Use of Proceeds Negative Covenant.   Section 5.8 of the Credit Agreement is hereby amended and restated in its entirety to hereafter be and read as follows:

5.8    Use of Proceeds.

(a)    No Credit Party shall, and no Credit Party shall suffer or permit any of its Subsidiaries to, use any portion of the Loan proceeds, directly or indirectly, to purchase or carry Margin Stock or repay or otherwise refinance Indebtedness of any Credit Party or others incurred to purchase or carry Margin Stock, or otherwise in any manner which is in contravention of any Requirement of Law or in violation of this Agreement.

(b)    No Borrower will request any Loan or Letter of Credit, and no Borrower shall use (or permit any of its Subsidiaries or any of their respective directors, officers, employees and agents to use) the proceeds of any Loan or Letter of Credit (i) in furtherance of an offer, payment, promise to pay, or authorization of the payment or giving of money, or anything else of value, to any Person in violation of any Anti-Corruption Laws, (ii) for the purpose of funding, financing or facilitating any activities, business or transaction of or with any Sanctioned Person, or in any Sanctioned Country, or (iii) in any manner that would result in the violation of any Sanctions applicable to any party hereto.

(g)    Modification of Creditor-Debtor Relationship and No Fiduciary Responsibility Provision.   Section 9.24 of the Credit Agreement is hereby amended and restated in its entirety to hereafter be and read as follows:

9.24    Creditor-Debtor Relationship; No Advisory or Fiduciary Responsibility.  The relationship between each Agent, each Lender and the L/C Issuer, on the one hand, and the Credit Parties, on the other hand, is solely that of creditor and debtor.  In connection with all aspects of each transaction contemplated hereby (including in connection with any amendment, waiver or other modification hereof or of any other Loan Document), the Credit Parties acknowledge and agree that:  (i) (A) the arranging and other services regarding this Agreement provided by any or all of the Secured Parties are arm’s-length commercial transactions between the Credit Parties and their Affiliates, on the one hand, and the Secured Parties and their Affiliates, on the other hand, (B) the Credit Parties have consulted their own legal, accounting, regulatory and tax advisors to the extent they have deemed appropriate, and (C) the Credit Parties are capable of evaluating, and understand and accept, the terms, risks and conditions of the transactions contemplated hereby and by the other Loan Documents; (ii) (A) each Secured Party and its respective Affiliates is and has been acting solely as a principal and, except as expressly agreed in writing by the relevant parties, has not been, is not, and will not be acting as an advisor, agent or fiduciary for any Credit Party or any of its Affiliates, or any other Person and (B) no Secured Party or any of its Affiliates has any obligation to any Credit Party or any of its Affiliates with respect to the transactions contemplated hereby except those obligations expressly set forth herein and in the other Loan Documents; and (iii) each of Secured Party and its respective Affiliates may be engaged in a broad range of transactions that involve interests that differ from those of the Credit Parties and their Affiliates, and no Secured Party or any of its Affiliates has any obligation to disclose any of such interests to any Credit Party or its Affiliates.  To the fullest extent permitted by law, each Credit Party hereby waives and releases any claims that it may have against each Secured Party and 

its Affiliates with respect to any breach or alleged breach of agency or fiduciary duty in connection with any aspect of any transaction contemplated hereby.

Section 7.Representations and Warranties.  The Credit Parties, jointly and severally, represent and warrant to the Agents, the L/C Issuers and the Lenders that the representations and warranties contained in Article III of the Credit Agreement and in all of the other Loan Documents are true and correct in all material respects on and as of the effective date hereof as though made on and as of such effective date, except to the extent any such representation or warranty is stated to relate solely to an earlier date. The Credit Parties hereby certify that no event has occurred and is continuing which constitutes a Default or an Event of Default under the Credit Agreement.  Additionally, the Credit Parties, jointly and severally, hereby represent and warrant to the Agents, the L/C Issuers and the Lenders that the resolutions of the board of directors of each of the Credit Parties previously delivered to the Agents by the Credit Parties in connection with the execution and delivery of the Credit Agreement (i) remain in full force and effect as of the effective date hereof and have not been modified, amended, superseded or revoked, and (ii) authorize the execution of this Amendment by each of the Credit Parties without the requirement of any further consents, resolutions or authorizations of any of the directors of any of the Credit Parties.

Section 8.Conditions Precedent to Effectiveness of this Amendment.  Notwithstanding any provisions to the contrary set forth in this Amendment, the effectiveness of this Amendment is expressly conditioned upon the satisfaction of each of the following:

(a)    the US Agent (or its counsel) shall have received (i) from each party hereto either (A) a counterpart of this Amendment executed on behalf of such party or (B) written evidence satisfactory to the US Agent (which may include facsimile or other electronic transmission of a signed signature page of this Amendment) that such party has signed a counterpart of this Agreement, and (ii) either (A) a counterpart of that certain Amended and Restated Guaranty and Security Agreement of even effective date herewith executed on behalf of each US Credit Party and the US Agent or (B) written evidence satisfactory to the US Agent (which may include facsimile or other electronic transmission of a signed signature page thereof) that each such party has signed a counterpart of such Amended and Restated Guaranty and Security Agreement;

(b)    the US Agent shall have received a good standing certificate for each Credit Party from its jurisdiction of organization or the substantive equivalent available in the jurisdiction of organization for each Credit Party from the appropriate governmental officer in such jurisdiction;

(c)    no Default or Event of Default shall have occurred and be continuing as of the effective date of this Amendment; and

(d)    all fees and expenses due and payable by the Borrowers under the terms of the fee letter entered into between the US Agent and the Borrowers in connection with the amendment and modification of the Credit Agreement evidenced by this Amendment shall have been paid in full, and the Agents and the Lenders shall have received all fees required to be paid, and all expenses for which invoices have been presented (including the reasonable fees and expenses of legal counsel), on or before the effective date of this Amendment. 

Section 9.Limitations.  The amendments set forth herein are limited precisely as written and shall not be deemed to (a) be a consent to, or waiver or modification of, any other term or condition of the Credit Agreement or any of the other Loan Documents, or (b) except as expressly set forth herein, prejudice any right or rights which the Lenders may now have or may have in the future under or in connection with the Credit Agreement, the Loan Documents or any of the other documents referred to therein.  Except as expressly modified hereby or by express written amendments thereof, the terms and provisions of the Credit Agreement and any other Loan Documents or any other documents or instruments executed in connection with any of the foregoing are and shall remain in full force and effect.  In the event of a conflict between this Amendment and any of the foregoing documents, the terms of this Amendment shall be controlling.

Section 10.Ratification.  Except as expressly amended hereby, the Credit Agreement and the other Loan Documents shall remain in full force and effect.  The Credit Agreement, as amended hereby, and all rights and powers created thereby or thereunder and under the other Loan Documents are in all respects ratified and confirmed and remain in full force and effect.  The Credit Parties hereby (a) confirm that each of the respective Collateral Documents previously executed by any US Credit Party apply and shall continue to apply to all Obligations evidenced by or arising pursuant to the Credit Agreement, as amended hereby, or any other Loan Documents, (b) confirm that each of the respective Collateral Documents previously executed by the Canadian Borrower apply and shall continue to apply to all Canadian Obligations evidenced by or arising pursuant to the Credit Agreement, as amended hereby, or any other Loan Documents, and (c) acknowledge that without this ratification and confirmation, the Agents, the Issuing Banks and the Lenders would not agree to the modifications of the Credit Agreement which are evidenced by this Amendment.

Section 11.Payment of Expenses.  The Credit Parties agree to pay, as set forth in Sections 9.5 and 9.6 of the Credit Agreement, all costs and expenses arising in connection with the preparation, execution and delivery of this Amendment, including, without limitation, the fees and expenses of legal counsel for the Agents.  

Section 12.Descriptive Headings, etc.  The descriptive headings of the several Sections of this Amendment are inserted for convenience only and shall not be deemed to affect the meaning or construction of any of the provisions hereof.

Section 13.Entire Agreement.  This Amendment and the documents referred to herein represent the entire understanding of the parties hereto regarding the subject matter hereof and supersede all prior and contemporaneous oral and written agreements of the parties hereto with respect to the subject matter hereof, including, without limitation, any commitment letters regarding the transactions contemplated by this Amendment.

Section 14.Counterparts.  This Amendment may be executed in any number of counterparts and by different parties on separate counterparts and all of such counterparts shall together constitute one and the same instrument.  Complete sets of counterparts shall be lodged with the Borrowers, the Lenders and the Administrative Agents.

Section 15.References to Credit Agreement.  As used in the Credit Agreement (including all Exhibits thereto) and all other Loan Documents, on and subsequent to the effective date hereof, the term "Agreement" shall mean the Credit Agreement, as amended by this Amendment.

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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered by their respective duly authorized officers as of the date first above written.

NOTICE PURSUANT TO TEX. BUS. & COMM. CODE §26.02

THIS AMENDMENT AND ALL OTHER LOAN DOCUMENTS EXECUTED BY ANY OF THE PARTIES BEFORE OR SUBSTANTIALLY CONTEMPORANEOUSLY WITH THE EXECUTION HEREOF TOGETHER CONSTITUTE A WRITTEN CREDIT AGREEMENT AND REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRA-DICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREE-MENTS OF THE PARTIES.  THERE ARE NO UNWRITTEN ORAL AGREE-MENTS BETWEEN THE PARTIES.

US BORROWER:

THERMON INDUSTRIES, INC. 

By: ________________________________
Name: Rodney Bingham
Title: President

CANADIAN BORROWER:

THERMON CANADA INC.

By: ________________________________
Name: Rodney Bingham
Title: Treasurer

OTHER CREDIT PARTIES:

THERMON HOLDING CORP. 

By: ________________________________
Name: Rodney Bingham
Title: President

THERMON MANUFACTURING COMPANY

By: ____________________________________
Name: Rodney Bingham
Title: President

THERMON HEAT TRACING SERVICES, INC.

By: ____________________________________
Name: Rodney Bingham
Title: President

THERMON HEAT TRACING SERVICES-II, INC.

By: ____________________________________
Name: Rodney Bingham
Title: President

THERMON HEAT TRACING SERVICES-I, INC.

By: ____________________________________
Name: Rodney Bingham
Title: President

AGENTS, ISSUING BANKS     AND LENDERS:
JPMORGAN CHASE BANK, N.A., as US Agent,
US Swingline Lender, a US L/C Issuer and
a US Lender

By:___________________________________
Name: ________________________________
Title:  ________________________________

JPMORGAN CHASE BANK, N.A., TORONTO
BRANCH, as Canadian Agent, Canadian
Swingline Lender, a Canadian L/C Issuer and a Canadian Lender

By: ___________________________________
Name: ________________________________
Title: ________________________________

WELLS FARGO BANK, NATIONAL ASSOCIATION, as a US Term Lender

By: __________________________________
Name: ________________________________
Title: ________________________________

WELLS FARGO BANK, N.A., CANADIAN BRANCH, as a US Revolving Lender and a Canadian Lender

By: __________________________________
Name: ________________________________
Title: ________________________________

BANK OF MONTREAL, as a US Lender

By: __________________________________
Name: ________________________________
Title: ________________________________

BANK OF MONTREAL, as a Canadian Lender

By: __________________________________
Name: ________________________________
Title:  ________________________________

COMPASS BANK, as a US Lender

By: __________________________________
Name: ________________________________
Title:  ________________________________

COMPASS BANK, 
as a Canadian Lender

By: __________________________________
Name: ________________________________
Title:  ________________________________

BRANCH BANKING AND TRUST COMPANY, 
as a US Lender

By: __________________________________
Name: ________________________________
Title:  ________________________________

BRANCH BANKING AND TRUST COMPANY, 
as a Canadian Lender

By: __________________________________
Name: ________________________________
Title:  ________________________________

COMERICA BANK, as a US Lender

By: __________________________________
Name: ________________________________
Title:  ________________________________

COMERICA BANK, as a Canadian Lender

By: __________________________________
Name: ________________________________
Title:  ________________________________

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