Form of Warrant issued to Corbel Capital Partners SBIC, L.P. dated February 7, 2020

 

THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR QUALIFIED UNDER ANY STATE OR FOREIGN SECURITIES LAWS AND MAY NOT BE OFFERED FOR SALE, SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED OR ASSIGNED UNLESS (I) A REGISTRATION STATEMENT COVERING SUCH SHARES IS EFFECTIVE UNDER THE ACT AND IS QUALIFIED UNDER APPLICABLE STATE AND FOREIGN LAW OR (II) THE TRANSACTION IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS UNDER THE ACT AND THE QUALIFICATION REQUIREMENTS UNDER APPLICABLE STATE AND FOREIGN LAW.

 

Original Issue Date: February 7, 2020

 

FOR VALUE RECEIVED, NOBLE ROMANS, INC., an Indiana corporation (the “Company”), hereby certifies that Corbel Structured Equity Partners, SBIC, L.P. or its registered assigns (“Holder”) is entitled to purchase from the Company Two Million Two Hundred Fifty Thousand (2,250,000) duly authorized, validly issued, fully paid and non-assessable shares of Common Stock (subject to adjustment as provided herein) at a purchase price of (a) $0.57 per share, in the case of 1,200,000 of such Warrant Shares (such 1,200,000 Warrant Shares, the “Tranche 1 Shares”), (b) $0.72 per share, in the case of 900,000 of such Warrant Shares (such 900,000 Warrant Shares, the “Tranche 2 Shares”) and (c) $0.97 per share, in the case of 150,000 of such Warrant Shares (such 150,000 Warrant Shares, the “Tranche 3 Shares”) (each respective purchase price, subject to adjustment as provided herein, the “Exercise Price”), all subject to the terms, conditions and adjustments set forth below in this Warrant. Certain capitalized terms used herein are defined in Section 1 hereof. This Warrant was issued to Holder pursuant to the Purchase Agreement.

 

 

“Aggregate Exercise Price” means an amount equal to the product of (a) the number of Warrant Shares in respect of which this Warrant is then being exercised pursuant to Section 3 hereof, multiplied by (b) the Exercise Price applicable to such Warrant Shares in effect as of the applicable Exercise Date in accordance with the terms of this Warrant.

 

“Attribution Parties” has the meaning set forth in Section 3(j)(i).

 

“Beneficial Ownership Limitation” has the meaning set forth in Section 3(j)(iv). “Board” means the board of directors of the Company.

“Business Day” means any day, except a Saturday, Sunday or legal holiday, on which banking institutions in the city of Los Angeles, California or Indianapolis, Indiana are authorized or obligated by law or executive order to close.

 

“Common Stock” means the common stock, no par value, of the Company, and any capital stock into which such Common Stock shall have been converted, exchanged or reclassified following the date hereof.

 

“Common Stock Deemed Outstanding” means, at any given time, the sum of (a) the number of shares of Common Stock actually outstanding at such time, plus (b) the number of shares of Common Stock issuable upon exercise of Options actually outstanding at such time, plus

(c) the number of shares of Common Stock issuable upon conversion or exchange of Convertible Securities actually outstanding at such time (treating as actually outstanding any Convertible Securities issuable upon exercise of Options actually outstanding at such time), in each case, regardless of whether the Options or Convertible Securities are actually exercisable at such time in accordance with their terms; provided, that Common Stock Deemed Outstanding at any given time shall not include treasury or other shares owned or held by or for the account of the Company or any of its subsidiaries.

 

 

“Excluded Issuances” means any issuance or sale (or deemed issuance or sale in accordance with Section 4(d)) by the Company after the Original Issue Date of: (1) any Warrant Shares issued upon the exercise of this Warrant; (2) shares of Common Stock issued upon the exercise or conversions of any Options or Convertible Securities outstanding on the Original Issue Date; and (3) up to 550,000 shares of Common Stock (adjusted proportionately for stock splits, stock dividends, recapitalizations and the like) issued on the exercise of Options granted by the Board to officers, directors, employees or service providers to the Company and its subsidiaries.

 

“Exercise Date” means, for any given exercise of this Warrant, the date on which the conditions to such exercise as set forth in Section 3 shall have been satisfied at or prior to 5:00 p.m., Eastern time, on a Business Day, including, without limitation, the receipt by the Company of the Exercise Agreement, the Warrant and the Aggregate Exercise Price payable with respect to the Warrant Shares in question.

 

“Exercise Agreement” has the meaning set forth in Section 3(a)(i). “Exercise Period” has the meaning set forth in Section 2.

“Exercise Price” has the meaning set forth in the preamble, as applicable to the Tranche 1 Shares, Tranche 2 Shares or Tranche 3 Shares in question.

 

“Fair Market Value” means, as of any particular date: (a) the average of the closing sales prices of the Common Stock for such day on all domestic securities exchanges on which the Common Stock may at the time be listed; (b) if there have been no sales of the Common Stock on

 

any such exchange on any such day, the average of the highest bid and lowest asked prices for the Common Stock on all such exchanges at the end of such day; (c) if on any such day the Common Stock is not listed on a domestic securities exchange, the closing sales price of the Common Stock as quoted on the OTC Bulletin Board, the Pink OTC Markets or similar quotation system or association for such day; or (d) if there have been no sales of the Common Stock on the OTC Bulletin Board, the Pink OTC Markets or similar quotation system or association on such day, the average of the highest bid and lowest asked prices for the Common Stock quoted on the OTC Bulletin Board, the Pink OTC Markets or similar quotation system or association at the end of such day; in each case, averaged over three (3) consecutive Business Days ending on the Business Day immediately prior to the day as of which “Fair Market Value” is being determined; provided, that if the Common Stock is listed on any domestic securities exchange, the term “Business Day” as used in this sentence means Business Days on which such exchange is open for trading. If at any time the Common Stock is not listed on any domestic securities exchange or quoted on the OTC Bulletin Board, the Pink OTC Markets or similar quotation system or association, the “Fair Market Value” of the Common Stock shall be the fair market value per share as determined jointly by the Board and the Holder.

 

 

“Options” means any warrants or other rights or options to subscribe for or purchase Common Stock or Convertible Securities.

 

“OTC Bulletin Board” means the Financial Industry Regulatory Authority OTC Bulletin Board electronic inter-dealer quotation system.

 

“Person” means any individual, sole proprietorship, partnership, limited liability company, corporation, joint venture, trust, incorporated organization or government or department or agency thereof.

 

“Pink OTC Markets” means the OTC Markets Group Inc. electronic inter-dealer quotation system, including OTCQX, OTCQB and OTC Pink.

 

“Purchase Agreement” means the Senior Secured Promissory Note and Warrant Purchase Agreement, dated as of the date hereof, between the Company, as the “Issuer”, the “Purchasers” named therein, and Holder as the “Agent” for the Purchasers thereunder.

 

“Put Notes” means Senior Secured Promissory Notes, in substantially the form and with substantially the same terms as those applicable to the Senior Notes (including the terms applicable to the “Notes” as defined and as set forth in the Purchase Agreement), other than those providing for the accrual and payment of PIK Interest on such Senior Notes and the maturity date for such Put Notes shall be the second anniversary of the date of issuance of the Put Notes in question.

 

“Put Notice” has the meaning set forth in Section 6. “Securities Act” has the meaning set forth in Section 11.

“Senior Notes” means the Senior Secured Promissory Notes issued and sold to Holder or the other “Purchasers” named in, and as provided in, the Purchase Agreement.

 

“Tranche 1 Shares” has the meaning set forth in the preamble. “Tranche 2 Shares” has the meaning set forth in the preamble. “Tranche 3 Shares” has the meaning set forth in the preamble.

“Warrant” means this Warrant and all warrants issued upon division or combination of, or in substitution for, this Warrant.

 

 

“Warrant Shares” means the shares of Common Stock or other capital stock of the Company then purchasable upon exercise of this Warrant in accordance with the terms of this Warrant.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

the Holder a certificate or certificates representing the Warrant Shares issuable upon such exercise, together with cash in lieu of any fraction of a share as provided in Section 3(d) hereof, if applicable. The stock certificate or certificates so delivered shall be in such denomination or denominations as the exercising Holder shall reasonably request in the Exercise Agreement and shall be registered in the name of the Holder or such other Person’s name as shall be designated in the Exercise Agreement. This Warrant shall be deemed to have been exercised and such certificate or certificates of Warrant Shares shall be deemed to have been issued, and the Holder or any other Person so designated to be named therein shall be deemed to have become a holder of record of such Warrant Shares for all purposes, as of the Exercise Date.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(A) on the domestic securities exchanges on which the Common Stock is listed on the applicable date(s) or (B) if on any such applicable date(s) the Common Stock or other applicable capital stock then issuable upon exercise of this Warrant is not listed on a domestic securities exchange, the dollar volume-weighted trading average price of the Common Stock on the OTC Bulletin Board, the Pink OTC Markets or similar quotation system or association for such applicable date(s).

 

 

 

 

 

Stock then issued and outstanding. In any case, the number of issued and outstanding shares of Common Stock shall be determined after giving effect to any conversion, exercise or exchange of any Convertible Securities or Options in accordance with their terms, including this Warrant, held by the Holder, Holder’s affiliates or any applicable Attribution Parties since the date as of which such number of issued and outstanding shares of Common Stock was reported.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

the right to convert, exercise or exchange any Convertible Securities issuable upon the exercise of such Options are immediately exercisable, and the lowest price per share (determined as provided in this Section 4(d)(i) and Section 4(d)(iv)) for which any one share of Common Stock is issuable upon the exercise of any such Option or upon the conversion, exercise or exchange of any Convertible Security issuable upon the exercise of any such Option is less than any Exercise Price in effect immediately prior to the time of the granting or sale of such Options, then such share of Common Stock issuable upon the exercise of such Option or upon conversion, exercise or exchange of such Convertible Security issuable upon the exercise of such Option shall be deemed to have been issued as of the date of granting or sale of such Options (and thereafter shall be deemed to be outstanding for purposes of adjusting the Exercise Price under Section 4(a), at a price per share equal to such lowest price per share). For purposes of this Section 4(d)(i), the lowest price per share for which any one share of Common Stock is issuable upon the exercise of any such Option or upon the conversion, exercise or exchange of any Convertible Security issuable upon the exercise of any such Option shall be equal to the sum (which sum shall constitute the applicable consideration received for purposes of Section 4(a)) of the lowest amounts of consideration, if any, received or receivable by the Company as consideration with respect to any one share of Common Stock upon each of (A) the granting or sale of the Option, plus (B) the exercise of the Option, plus (C) in the case of an Option which relates to Convertible Securities, the issuance or sale of the Convertible Security and the conversion, exercise or exchange of the Convertible Security. Except as otherwise provided in Section 4(d)(iii), no further adjustment of the applicable Exercise Price(s) shall be made upon the actual issuance of Common Stock or of Convertible Securities upon exercise of such Options or upon the actual issuance of Common Stock upon conversion, exercise or exchange of such Convertible Securities issuable upon the exercise of such Options.

 

 

Company as consideration with respect to any one share of Common Stock upon each of

 

 

 

shall be the market price (as reflected on any securities exchange, quotation system or association or similar pricing system covering such security) for such securities as of the end of business on the date of receipt of such securities; (C) for no specifically allocated consideration in connection with an issuance or sale of other securities of the Company, together comprising one integrated transaction, the amount of the consideration therefor shall be deemed to be the fair value of such portion of the aggregate consideration received by the Company in such transaction as is attributable to such shares of Common Stock, Options or Convertible Securities, as the case may be, issued or deemed issued in such transaction; or (D) to the owners of the non-surviving entity in connection with any merger in which the Company is the surviving corporation, the amount of consideration therefor shall be deemed to be the fair value of such portion of the net assets and business of the non-surviving entity as is attributable to such shares of Common Stock, Options or Convertible Securities, as the case may be, issued or deemed issued to such owners. The net amount of any cash consideration and the fair value of any consideration other than cash or marketable securities shall be determined in each case in good faith by the Board.

 

 

 

 

and amount of securities of the Company, cash or other property which the Holder would have been entitled to receive had the Warrant been exercised in full into Warrant Shares immediately prior to such event (or the record date for such event, whichever is more favorable to the Holder) and had the Holder held such Warrant Shares through the time such dividend or distribution of securities, cash or property was made to the holders of Common Stock or other applicable capital stock.

 

 

 

account any limitations or restrictions on the exercisability of this Warrant); and, in such case, appropriate adjustment (in form and substance satisfactory to the Holder) shall be made with respect to the Holder’s rights under this Warrant to insure that the provisions of this Section 4 hereof shall thereafter be applicable, as nearly as possible, to this Warrant in relation to any shares of stock, securities or assets thereafter acquirable upon exercise of this Warrant (including, in the case of any consolidation, merger, sale or similar transaction in which the successor or purchasing Person is other than the Company, an immediate adjustment in the Exercise Price to the value per share for the Common Stock or other applicable capital stock reflected by the terms of such consolidation, merger, sale or similar transaction, and a corresponding immediate adjustment to the number of Warrant Shares acquirable upon exercise of this Warrant without regard to any limitations or restrictions on exercise, if the value so reflected is less than the Exercise Price(s) in effect immediately prior to such consolidation, merger, sale or similar transaction). The provisions of this Section 4(f) shall similarly apply to successive reorganizations, reclassifications, consolidations, mergers, sales or similar transactions. The Company shall not effect any such reorganization, reclassification, consolidation, merger, sale or similar transaction unless, prior to the consummation thereof, the successor Person (if other than the Company) resulting from such reorganization, reclassification, consolidation, merger, sale or similar transaction, shall assume, by written instrument substantially similar in form and substance to this Warrant and satisfactory to the Holder, the obligation to deliver to the Holder such shares of stock, securities or assets which, in accordance with the foregoing provisions, such Holder shall be entitled to receive upon exercise of this Warrant. Notwithstanding anything to the contrary contained herein, (I) with respect to any corporate event or other transaction contemplated by the provisions of this Section 4(f), the Holder shall have the right and shall be provided reasonable prior written notice from the Company and a reasonable opportunity to elect prior to the consummation of such event or transaction (or the record date applicable thereto, whichever is more favorable to the Holder), to give effect to the exercise rights contained in Section 2 instead of giving effect to the provisions contained in this Section 4(f) with respect to this Warrant; and (II) if such transaction consists of a merger pursuant to which the Company’s outstanding shares will be converted into the right to exclusively receive cash or other consideration with a value per share less than an applicable Exercise Price then in effect, upon the closing of such transaction, the unexercised portion of the Warrants covering those Warrant Shares with an Exercise Price less than the value of such per share merger consideration shall be cancelled and of no further force or effect.

 

 

 

 

 

 

 

 

 

then, and in each such case, the Company shall send or cause to be sent to the Holder at least fifteen

(15) days prior to the applicable record date or the applicable expected effective date, as the case may be and whichever is more favorable to the Holder, for the event, a written notice specifying, as the case may be, (A) the record date for such dividend, distribution, meeting or consent or other right or action, and a description of such dividend, distribution or other right or action to be taken at such meeting or by written consent, or (B) the effective date on which such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation or winding-up is proposed to take place, and the date, if any is to be fixed, as of which the books of the Company shall close or a record shall be taken with respect to which the holders of record of Common Stock (or such other capital stock or securities at the time issuable upon exercise of the Warrant) shall be entitled to exchange their shares of Common Stock (or such other capital stock or securities) for securities or other property deliverable upon such reorganization, reclassification, consolidation, merger, sale,

 

 

 

 

 

 

(ii) the average of the Weighted Average Prices of the Common Stock during the forty-five (45) consecutive trading days preceding the date of delivery of the applicable Put Notice and (b) in the case of Warrant Shares issued upon the election of the Holder to exercise this Warrant pursuant to Section 3(a), (ii) the average of the Weighted Average Prices of the Common Stock during the 10 consecutive trading days preceding the date of delivery of the applicable Put Notice.

 

 

 

 

 

 

 

 

 

“THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR QUALIFIED UNDER ANY STATE OR FOREIGN SECURITIES LAWS AND MAY NOT BE OFFERED FOR SALE, SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED OR ASSIGNED UNLESS (I) A REGISTRATION STATEMENT COVERING SUCH SHARES IS EFFECTIVE UNDER THE ACT AND IS QUALIFIED UNDER APPLICABLE STATE AND FOREIGN LAW OR (II) THE TRANSACTION IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS UNDER THE ACT AND THE QUALIFICATION REQUIREMENTS UNDER APPLICABLE STATE AND FOREIGN LAW.”

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TO: [Insert Name and Address of Holder] RE: Forced Exercise of Warrant

The undersigned, pursuant to the provisions set forth in the attached Warrant, hereby delivers notice of a forced exercise of the Warrant for [NUMBER] Warrant Shares. The undersigned represents and warrants to the Holder that the Conditions to Forced Exercise (as defined in the Warrant) applicable to the Warrant Shares subject to this Forced Exercise Notice have been satisfied and remain satisfied as of the date of delivery of this Forced Exercise Notice to Holder.

 

NOBLE ROMANS, INC.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

[Name of Transferor]