UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

_____________________________

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported): October 8, 2015 (October 2, 2015)

 

TWINLAB CONSOLIDATED HOLDINGS, INC.

 

 (Exact name of registrant as specified in its charter)

 

 

Nevada   000-55181   46-3951742
(State or other jurisdiction of    (Commission File Number)   (IRS Employer
incorporation)       Identification No.)

 

632 Broadway, Suite 201, New York, NY   10012
(Address of principal executive offices)    (Zip Code)

 

 

Registrant’s telephone number, including area code (212) 651-8500

 

 

 

(Former name or former address, if changed since last report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

   

 

 

Item 1.01 Entry into a Material Definitive Agreement.

 

    Golisano Holdings LLC

 

On October 2, 2015, Twinlab Consolidated Holdings, Inc. (the “Company”) entered into a Securities Purchase Agreement (the “SPA”) with Golisano Holdings LLC, a New York limited liability company (“Golisano LLC”).

 

Pursuant to the SPA, on October 5, 2015 the Company issued and sold to Golisano LLC 88,711,241 shares of the Company’s common stock, par value $0.001 per share (“Common Stock”), for an aggregate purchase price of $25,000,000. The foregoing shares constitute as of immediately following such sale thirty percent (30%) of the Company’s issued and outstanding Common Stock.

 

The Company was required to use the new proceeds from the sale of the shares solely for funding the purchase price due from the Company for the acquisition discussed in Item 2.01 below.

 

At any time commencing on October 5, 2015 and ending at such time that all of the shares of Common Stock owned by Golisano LLC may be sold without the requirement for the Company to be in compliance with Rule 144(c)(1) under the Securities Act of 1933, as amended (the “Securities Act”), and otherwise without restriction or limitation pursuant to Rule 144, if the Company fails for any reason to satisfy the current public information requirement under Rule 144(c) (a “Public Information Failure”) then the Company must pay Golisano LLC, in cash, by reason of any such delay in or reduction of its ability to sell such shares, an amount equal to two percent (2%) of the aggregate purchase price paid for the shares held by Golisano LLC on the day of a Public Information Failure and on every thirtieth (30th) day (pro-rated for periods totaling less than thirty days) thereafter until the earlier of (i) the date such Public Information Failure is cured, and (ii) such time that such public information is no longer required for Golisano LLC to transfer its shares pursuant to Rule 144. In addition to the foregoing payment, Golisano LLC has the right to pursue actual damages for the Public Information Failure and to pursue all remedies available to it at law or in equity. 

 

In addition to the 88,771,241 shares of Common Stock sold to Golisano LLC, the Company issued Golisano LLC a warrant (the “Warrant”), which Warrant is intended to maintain, following each future issuance of shares of Common Stock pursuant to the conversion, exercise or exchange of certain currently outstanding warrants to purchase shares of Common Stock held by third-parties (the “Oustanding Warrants”), Golisano LLC’s proportional ownership of the Company’s issued outstanding Common Stock so that it is the same thereafter as on October 5, 2015. The Company has reserved 12,697,977 shares of Common Stock for issuance under the Warrant. The purchase price for any shares of Common Stock issuable upon exercise of the Warrant is $.001 per share. The Warrant is exercisable immediately and up to and including the date which is sixty (60) days after the later to occur of the termination, expiration, conversion, exercise or exchange of all of the Outstanding Warrants and the Company’s delivery of notice thereof to Golisano LLC.

 

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The Warrant is also subject to customary adjustments upon any recapitalization, capital reorganization or reclassification, consolidation, merger or transfer of all or substantially all of the assets of the Company. In addition, if any payments are made to a holder of an Outstanding Warrant in consideration for the termination of or agreement not to exercise such Outstanding Warrant, Golisano LLC will be entitled to equal treatment.

 

The Company and Golisano LLC have entered into a Registration Rights Agreement, dated as of October 5, 2015 (the “Registration Rights Agreement”), granting Golisano LLC certain registration rights for the shares of Common Stock (i) sold pursuant to the SPA and (ii) issuable on exercise of the Warrant.

 

Golisano LLC also has the right to participate in certain future issuances of equity securities (including rights, options or warrants to purchase such equity securities or securities that are convertible or exchangeable into or exercisable for such equity securities) of the Company up to an amount equal to its then-proportional ownership interest in the Company.

 

The Company was required to pay Golisano LLC’s reasonable fees and expenses incurred in connection with the SPA.

 

Golisano LLC, Thomas A. Tolworthy, the President and Chief Executive Officer of the Company, Little Harbor, LLC (“LH”), GREAT HARBOR CAPITAL, LLC (“GH”), the David L. Van Andel Trust U/A dated November 30, 1993 (the “DVA Trust”) and the Company entered into a Voting Agreement, dated as of October 5, 2015 (the “Golisano Voting Agreement”).

 

Pursuant to the Golisano Voting Agreement, each of Mr. Tolworthy, LH, GH and the DVA Trust agreed in favor of Golisano LLC to vote their shares of Common Stock, or shares over which such holder has voting control: (a) in favor of increasing the number of authorized shares of Common Stock of the Company to a sufficient number of shares of Common Stock as may be required at any time in order for the Company to issue all of the shares of Common Stock issuable pursuant to the Warrant; (b) against any proposal or any other corporate action or agreement that would result in a breach of any covenant, representation or warranty or any other obligation or agreement of the Company under the Warrant or which could result in any of the conditions to the Company’s obligations under the Warrant not being fulfilled; (c) for so long as Golisano LLC continues to own beneficially at least ten percent (10%) of the outstanding shares of Common Stock of the Company (including shares of Common Stock issued or issuable upon exercise of the Warrant), to ensure that the size of the Board of Directors of the Company (the “Board”) shall be set and remain at seven (7) directors from October 5, 2015 and continuing thereafter until December 31, 2015, and shall be set and remain at six (6) directors from January 1, 2016 and thereafter; and (d) for so long as Golisano LLC continues to own beneficially at least ten percent (10%) of the outstanding shares of Common Stock of the Company (including shares of Common Stock issued or issuable upon conversion of the Warrant), to ensure that two persons designated by Golisano LLC (each a “Golisano Designee” and collectively the “Golisano Designees”), shall be elected to the Board. One of the initial Investor Designees is B. Thomas Golisano and the other will be appointed by Golisano LLC at a later date.

 

Each of Mr. Tolworthy, LH, GH and the DVA Trust also agreed in favor of Golisano LLC to vote all of its shares to ensure that: (a) no director elected by Golisano LLC may be removed from office unless (i) such removal is directed or approved by the affirmative vote of Golisano LLC or (ii) Golisano LLC is no longer so entitled to designate or approve such director; (b) any vacancies created by the resignation, removal or death of a director elected by Golisano LLC shall be filled pursuant to the provisions of the Golisano Voting Agreement; and (c) upon the request of Golisano LLC to remove the Golisano Designee as director, such Golisano Designee shall be removed.

 

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The Company agreed to use its best efforts, within the requirements of applicable law, to ensure that the rights granted under the Golisano Voting Agreement are effective.

 

The Golisano Voting Agreement remains in effect until terminated by the parties or the first date that Golisano LLC is no longer entitled to elect the Golisano Designees as directors of the Company in accordance with the terms of the Golisano Voting Agreement.

 

The forgoing descriptions of the (i) SPA; (ii) Warrant; (iii) Registration Rights Agreement; and (iv) Golisano Voting Agreement are qualified in their entirety by reference to the full text of such documents, which documents are exhibits to this Report.

 

Great Harbor Capital, LLC

 

Golisano LLC, Mr. Tolworthy, LH, GH, the DVA Trust and the Company entered into a Voting Agreement, dated as of October 5, 2015 (the “GH Voting Agreement”). Pursuant to the GH Voting Agreement, each of Mr. Tolworthy, LH, Golisano LLC and the DVA Trust agreed in favor of GH to vote their shares of Common Stock, or shares over which such holder has voting control: (a) for so long as GH continues to own beneficially at least ten percent (10%) of the outstanding shares of Common Stock of the Company, to ensure that the size of the Board shall be set and remain at seven (7) directors from October 5, 2015 and continuing thereafter until December 31, 2015, and shall be set and remain at six (6) directors from January 1, 2016 and thereafter; and (b) for so long as GH continues to own beneficially at least ten percent (10%) of the outstanding shares of Common Stock of the Company, to ensure that two persons designated by GH (each a “GH Designee” and collectively the “GH Designees”), shall be elected to the Board. One of the initial GH Designees is David L. Van Andel and the other will be appointed by GH at a later date.

 

Each of Mr. Tolworthy, LH, Golisano LLC and the DVA Trust also agreed in favor of GH to vote all of its shares to ensure that: (a) no director elected by GH may be removed from office unless (i) such removal is directed or approved by the affirmative vote of GH or (ii) GH is no longer so entitled to designate or approve such director; (b) any vacancies created by the resignation, removal or death of a director elected by GH shall be filled pursuant to the provisions of the GH Voting Agreement; and (c) upon the request of GH to remove the GH Designee as director, such GH Designee shall be removed.

 

The Company agreed to use its best efforts, within the requirements of applicable law, to ensure that the rights granted under the GH Voting Agreement are effective.

 

The GH Voting Agreement remains in effect until terminated by the parties or the first date that GH is no longer entitled to elect the GH Designees as directors of the Company in accordance with the terms of the GH Voting Agreement.

 

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The foregoing description of the GH Voting Agreement is qualified in its entirety by reference to the full text of such document, which document is an exhibit to this Report.

 

    Thomas A. Tolworthy

 

As previously reported in the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission (“SEC”) on September 22, 2014, Twinlab Consolidation Corporation (“TCC”) and Thomas A. Tolworthy entered into a Subscription and Surrender Agreement, dated as of September 3, 2014 (the “Original Surrender Agreement”). The Company assumed the Original Surrender Agreement on September 16, 2014.

 

On October 5, 2015, the Company and Mr. Tolworthy entered into a Surrender Agreement (the “New Surrender Agreement”). Pursuant to the New Surrender Agreement, Mr. Tolworthy agreed to surrender an aggregate of 60,470,957 shares of Common Stock including 26,564,030 shares of Common Stock in addition to the shares subject to surrender pursuant to the Original Surrender Agreement. The New Surrender Agreement provides that of the aggregate 60,470,957 shares of Common Stock to be surrendered (i) 33,906,927 shares of Common Stock shall be surrendered pursuant to the Original Surrender Agreement; (ii) 26,564,030 shares of Common Stock shall be surrendered pursuant to the New Surrender Agreement; and (iii) 9,306,898 shares of Common Stock held by Mr. Tolworthy shall remain subject to surrender to the Company pursuant to the Original Surrender Agreement. The shares of Common Stock surrendered pursuant to the (i) Original Surrender Agreement and (ii) New Surrender Agreement were required to be used in connection with the issuance of the shares of Common Stock pursuant to the (a) SPA, (b) Stock Purchase Agreement by and between the Company and GH disclosed in the Company’s Current Report on Form 8-K filed with the SEC on October 7, 2015 and (c) exercise of the Company’s Warrants Nos. 2015-15 and 2015-16 by LH and the DVA Trust, respectively, as previously reported in the Company’s Current Report on Form 8-K filed on October 5, 2015.

 

The foregoing description of the New Surrender Agreement is qualified in its entirety by reference to the full text of such document, which document is an exhibit to this Report.

 

Midcap Funding X Trust

 

As previously reported by the Company in the Company’s (i) Current Report on Form 8-K filed with the SEC on January 28, 2015, (ii) Current Report on Form 8-K filed with the SEC on February 9, 2015, (iii) Current Report on Form 8-K filed with the SEC on May 6, 2015, (iv) Current Report on Form 8-K filed with the SEC on July 7, 2015, and (v) Current Report filed with the SEC on September 15, 2015, the Company and its direct and indirect wholly owned subsidiaries, TCC, Twinlab Holdings, Inc. (“THI”), Twinlab Corporation (“Twinlab”), ISI Brands Inc. (“ISI”), NutraScience Labs, Inc. (“NSL”) and NutraScience Labs IP Corporation (“NSLIP” and with the Company, TCC, THI, Twinlab, ISI and NSL collectively, the “Twinlab Companies”), entered into a Credit and Security Agreement, dated January 22, 2015, with MidCap Financial Trust (“MidCap Trust”), with respect to which Credit and Security Agreement and all related agreements MidCap Trust immediately thereafter assigned all of its rights and interests to MidCap Funding X Trust (“MidCap”), an affiliate of MidCap Trust (as so assigned and subsequently amended by that certain Amendment No. 1 to Credit and Security Agreement and Limited Consent, dated as of February 4, 2015, that certain Amendment No. 2 to Credit Agreement and Limited Consent dated as of April 7, 2015, that certain Amendment No. 3 to Credit and Security Agreement and Limited Consent dated as of April 30, 2015, that certain Amendment No. 4 to Credit and Security Agreement and Limited Waiver dated as of June 30, 2015, dated as of June 30, 2015, that certain Amendment No. 5 to Credit and Security Agreement and Limited Consent, dated as of June 30, 2015, and that certain Amendment No. 6 to Credit and Security Agreement, Limited Consent and Limited Waiver dated as of September 9, 2015, the “Credit Agreement”).

 

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On October 5, 2015, the Twinlab Companies and MidCap entered into an Amendment No. 7 and Joinder Agreement to Credit and Security Agreement (the “MidCap Seventh Amendment”). Pursuant to the MidCap Seventh Amendment, (i) each of Organic Holdings, LLC, Reserve Life Organics, LLC, Resvitale, LLC, Re-Body, LLC, Innovitamin Organics, LLC, Organics Management LLC, Cocoawell, LLC, Fembody, LLC, Reserve Life Nutrition, L.L.C., Innovita Specialty Distribution, LLC and Joie Essance, LLC, each such entity a newly acquired direct or indirect subsidiary of TCC, as the case may be (the “New Subsidiaries”), were made parties to the Credit Agreement and became a Borrower (as defined in the Credit Agreement) thereunder and granted a security interest in their assets to MidCap; and (ii) the provisions of the Credit Agreement concerning the (a) deferred revolving loan origination fee; (b) Adjusted EBITDA (as defined in the Credit Agreement); (c) Fixed Charge Coverage Ratio (as defined in the Credit Agreement); and (c) Total Funded Debt (as defined in the Credit Agreement) to Adjusted EBITDA ratio were amended. The Company was charged a modification fee of $150,000 for the MidCap Seventh Amendment.

 

Each of the Twinlab Companies and the New Subsidiaries executed a First Amended and Restated Revolving Loan Note, dated October 5, 2015, in the amount of $15,000,000 (the “Amended Note”). The Amended Note replaces in its entirety the Revolving Loan Note, dated as of January 22, 2015, made by certain of the Twinlab Companies in favor of MidCap.

 

The foregoing descriptions of the (i) MidCap Seventh Amendment and (ii) Amended Note are qualified in their entirety by reference to the full text of such documents, which documents are exhibits to this Report.

 

    Penta Mezzanine SBIC Fund I, L.P.

 

As previously reported in the Company’s (i) Current Report on Form 8-K filed with the SEC on November 18, 2014, (ii) Current Report on Form 8-K filed with the SEC on January 28, 2015, (iii) Current Report on Form 8-K filed with the SEC on February 9, 2015, (iv) Current Report on Form 8-K filed with the SEC on May 6, 2015, (v) Current Report on Form 8-K filed with the SEC on July 7, 2015, and (vi) Current Report on Form 8-K filed with the SEC on September 15, 2015, the Twinlab Companies entered into a Note and Warrant Purchase Agreement, dated as of November 13, 2014, as amended by the First Amendment to Note and Warrant Purchase Agreement, Consent and Joinder dated as of January 22, 2015, as further amended by the Second Amendment to Note and Warrant Purchase Agreement and Consent dated as of February 4, 2015, as further amended by the Third Amendment to Note and Warrant Purchase Agreement and Consent dated as of April 30, 2015, as further amended by the Fourth Amendment to Note and Warrant Agreement, Limited Consent and Limited Waiver dated as of June 30, 2015, and as further amended by the Fifth Amendment to Note and Warrant Purchase Agreement and Limited Consent dated as of September 9, 2015 (as so amended, the “Penta NWPA”), with Penta.

 

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On October 5, 2015, the Twinlab Companies and Penta entered into a Sixth Amendment to Note and Warrant Agreement (the “Sixth Penta Amendment”). Pursuant to the Sixth Penta Amendment, the Penta NWPA was amended to reflect the same changes to the (i) minimum Adjusted EBITDA (as defined in the Penta NWPA) covenant; (ii) Fixed Charge Coverage Ratio (as defined in the Penta NWPA) covenant; and (iii) Total Funded Debt (as defined in the Penta NWPA) to Adjusted EBITDA covenant as were agreed upon in the MidCap Seventh Amendment. The Company was charged a modification fee of $25,000 for the Sixth Penta Amendment.

 

Pursuant to a Limited Waiver to Note Warrant and Purchase Agreement, dated as of October 2, 2015, by and between the Twinlab Companies and Penta (the “Penta Waiver”), (i) Penta allowed the New Subsidiaries to join the Penta NWPA as Companies (as defined in the Penta NWPA) and grant liens in substantially all of their assets to secure the Obligations (as defined in the Penta NWPA); and (ii) Penta waived the Company’s failure to meet the minimum Adjusted EBITDA covenant for July 2015 and August 2015.

 

The foregoing descriptions of the (i) Sixth Penta Amendment and (ii) Penta Waiver are qualified in their entirety by reference to the full texts of such documents, which documents are exhibits to this Report.

 

    JL-Mezz Utah, LLC

 

As previously reported in the Company’s (i) Current Report on Form 8-K filed with the SEC on January 28, 2015, (ii) Current Report on Form 8-K filed with the SEC on February 9, 2015, (iii) Current Report on Form 8-K filed with the SEC on May 6, 2015; (iv) Current Report on Form 8-K filed with the SEC on July 7, 2015, and (v) Current Report on Form 8-K filed with the SEC on September 15, 2015, the Twinlab Companies entered into a Note and Warrant Purchase Agreement, dated as of January 22, 2015, as amended by the First Amendment to Note and Warrant Purchase Agreement and Consent dated as of February 4, 2015, as further amended by the Second Amendment to Note and Warrant Purchase Agreement and Consent dated as of April 30, 2015, as further amended by the Third Amendment to Note and Warrant Agreement, Limited Consent and Limited Waiver dated as of June 30, 2015, and as further amended by the Fourth Amendment to Note and Warrant Purchase Agreement and Limited Consent (as so amended, the “JL NWPA”), with JL-Mezz Utah, LLC (f/k/a JL-BBNC Mezz Utah, LLC) (“JL”).

 

On October 5, 2015, the Twinlab Companies and JL entered into a Fifth Amendment to Note and Warrant Agreement (the “Fifth JL Amendment”). Pursuant to the Fifth JL Amendment, the JL NWPA was amended to reflect the same changes to the (i) minimum Adjusted EBITDA (as defined in the JL NWPA) covenant; (ii) Fixed Charge Coverage Ratio (as defined in the JL NWPA) covenant; and (iii) Total Funded Debt (as defined in the JL NWPA) to Adjusted EBITDA covenant as were agreed upon in the MidCap Seventh Amendment. The Company was charged a modification fee of $25,000 for the Fifth JL Amendment.

 

Pursuant to a Limited Waiver to Note Warrant and Purchase Agreement, dated as of October 2, 2015, by and between the Twinlab Companies and JL (the “JL Waiver”), (i) JL allowed the New Subsidiaries to join the JL NWPA as Companies (as defined in the JL NWPA) and grant liens in substantially all of their assets to secure the obligations (as defined in the JL NWPA); and (ii) JL waived the Company’s failure to meet the minimum Adjusted EBITDA covenant for July 2015 and August 2015.

 

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The foregoing descriptions of the (i) Fifth JL Amendment and (ii) JL Waiver are qualified in their entirety by reference to the full text of such documents, which documents are exhibits to this Report.

 

    Capstone Financial Group, Inc.

 

As previously reported in the Company’s Current Report on Form 8-K filed with the SEC on June 3, 2015, the Company and Capstone Financial Group, Inc. (“Capstone”) entered into a Compromise Agreement and Release (the “Compromise Agreement”). Pursuant to the Compromise Agreement, Capstone granted the Company call rights regarding certain shares of Common Stock owned by Capstone if certain liquidity conditions are met.

 

On October 1, 2015, the Company and Capstone entered into Amendment No. 1 to Agreement for Limited Waiver of Non-Circumvention Provision and to Compromise Agreement and Release (the “Capstone Waiver”). Pursuant to the Capstone Waiver, the Company and Capstone agreed to terminate the contingent call rights granted pursuant to the Compromise Agreement.

 

The foregoing description of the Capstone Waiver is qualified in its entirety by reference to the full text of such document, which document is an exhibit to this Report.

 

Item 2.01 Completion of Acquisition or Disposition of Assets.

 

As previously reported in the Company’s (i) Current Report on Form 8-K filed with the SEC on September 22, 2014 and (ii) Current Report on Form 8-K filed with the SEC on August 19, 2015, TCC entered into an option agreement in September 2014 (as further amended, the “Option Agreement”) that gave TCC an exclusive option to acquire all of the outstanding equity of a marketer and distributor of nutritional products. Pursuant to the exercise of the option, effective August 13, 2015, TCC entered into a Unit Purchase Agreement, as amended (the “Purchase Agreement”) with Naomi L. Balcombe and Robert G. Whittel (the “Sellers”), pursuant to which at the closing of the acquisition TCC would acquire all of the outstanding equity interests of Organic Holdings LLC, a Delaware limited liability company (“Organic”) from the Sellers and the other members of Organic.

 

The transactions contemplated by the Purchase Agreement were consummated on October 5, 2015. Under the terms of the Purchase Agreement, TCC acquired all of the Units for a purchase price of $37,000.000.

 

Organic, through its subsidiaries, is engaged in the business of developing and selling premium nutritional supplements, including under the well-known Reserveage(TM) Nutrition family of brands.

 

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TCC and the Sellers each provided customary representations, warranties and covenants in the Purchase Agreement, and the Sellers agreed to be bound by certain non-compete and non-solicitation provisions. The Sellers also agreed to customary indemnification of TCC and its affiliates for certain losses and damages, by way of the cancellation of shares of Common Stock owned by Health, KP LLC (“Health”), an affiliate of the Sellers.

 

The Company has agreed to grant Health certain registration rights for the shares of Common Stock of the Company owned by Health.

 

Upon the October 5, 2015 closing of the Organic acquisition, Organic’s founder, Naomi L. Balcombe (the “Executive”), was appointed as an executive of TCC. TCC and the Executive entered into an Employment Agreement, dated as of October 2, 2015 (the “Employment Agreement”). The Employment Agreement, effective as of October 5, 2015, provides that the Executive’s employment is at-will and is subject to termination by TCC or the Executive at any time for any reason or no reason, with or without cause, provided, however, that if TCC terminates the Executive’s employment without Cause (as defined in the Employment Agreement) or if the Executive terminates her employment for Good Reason (as defined in the Employment Agreement), the Executive will be eligible for Severance Pay (as defined in the Employment Agreement).

 

The Executive will receive a base salary of (i) $100,000 per year from October 5, 2015 through October 4, 2017 and (ii) $300,000 per year for each year of employment thereafter. The Executive will be eligible to participate in any performance-based bonus program provided by TCC to its similarly situated key executives. If the Executive continues employment with the Company for at least two (2) years from October 5, 2015, the Company shall pay the Executive a retention bonus as follows: (i) $400,000 and (ii) a payment of 200% of the aggregate performance bonuses paid to the Executive for the first two years of the Executive’s employment.

 

The Executive has agreed to certain confidentiality, non-compete and non-solicitation obligations during the term of the Executive’s employment with TCC and for twelve (12) months immediately thereafter.

 

The foregoing descriptions of the (i) Purchase Agreement; and (ii) Employment Agreement are qualified in their entirety by reference to the full text of such documents, which documents are exhibits to this Report.

 

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Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

 

(a) The information set forth in Item 1.01 regarding the Amended Note is hereby incorporated by reference in answer to Item 2.03(a).

 

Item 3.02 Unregistered Sales of Equity Securities.

 

The information set forth in Item 1.01 regarding the SPA is hereby incorporated by reference in answer to Item 3.02.

 

The Company issued the above-referenced (i) shares of Common Stock and (ii) Warrant to Golisano LLC in reliance upon the exemption from registration under Section 4(a)(2) of the Securities Act for private offerings not involving a public distribution. The Company believes that the issuance and sale of the shares of (i) Common Stock and (ii) Warrant were exempt from the registration and prospectus delivery requirements of the Securities Act by virtue of Section 4(a)(2) of the Securities Act. The shares of (i) Common Stock and (ii) Warrant were issued directly by the Company and did not involve a public offering or general solicitation. Golisano LLC was afforded an opportunity for effective access to the files and records of the Company that contained the relevant information needed to make its investment decision, including the Company’s financial statements and periodic reports under the Securities Exchange Act of 1934, as amended. The Company reasonably believed that Golisano LLC, immediately prior to the issuance of the above-referenced (i) shares of Common Stock and (ii)Warrant, had such knowledge and experience in the Company’s financial and business matters that it was capable of evaluating the merits and risks of its investment. Golisano LLC had the opportunity to speak with the Company’s management on several occasions prior to its investment decision. There were no commissions paid on the issuance of the above-referenced shares of (i) Common Stock and (ii) Warrant.

 

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Item 9.01 Financial Statements and Exhibits.

 

(d) Exhibits. (d)
   
Exhibit 10.90 Securities Purchase Agreement, dated as of October 2, 2015, by and between Twinlab Consolidated Holdings, Inc. and Golisano Holdings LLC.
   
Exhibit 10.91 Common Stock Purchase Warrant, dated October 5, 2015, by and between Twinlab Consolidated Holdings, Inc. and Golisano Holdings LLC.  
   
Exhibit 10.92 Registration Rights Agreement, dated as of October 5, 2015, by and between Twinlab Consolidated Holdings, Inc. and Golisano Holdings LLC.
   
Exhibit 10.93 Voting Agreement, dated as of October 5, 2015, among Twinlab Consolidated Holdings, Inc., Golisano Holdings LLC, and Thomas A. Tolworthy, Little Harbor, LLC, Great Harbor Capital, LLC and the David L. Van Andel Trust U/A dated November 30, 1993.
   
Exhibit 10.94 Voting Agreement, dated as of October 2, 2015, among Twinlab Consolidated Holdings, Inc., Great Harbor Capital, LLC and Golisano Holdings LLC, Thomas A. Tolworthy, Little Harbor, LLC, and the David L. Van Andel Trust U/A dated November 30, 1993.
   
Exhibit 10.95 Surrender Agreement, dated as of October 5, 2015, between Twinlab Consolidated Holdings, Inc. and Thomas A. Tolworthy.
   
Exhibit 10.96 Amendment No. 7 and Joinder Agreement to Credit and Security Agreement, dated as of October 5, 2015, by and among Twinlab Consolidated Holdings, Inc., Twinlab Consolidation Corporation, Twinlab Holdings, Inc., ISI Brands Inc., Twinlab Corporation, NutraScience Labs, Inc., NutraScience Labs IP Corporation, Organic Holdings, LLC, Reserve Life Organics, LLC, Resvitale, LLC, Re-Body, LLC, Innovitamin Organics, LLC, Organics Management LLC, Cocoawell, LLC, Fembody, LLC, Reserve Life Nutrition, L.L.C., Innovita Specialty Distribution, LLC and Joie Essance, LLC and MidCap Funding X Trust.
   
Exhibit 10.97 First Amended and Restated Revolving Loan Note, dated October 5, 2015, by Twinlab Consolidated Holdings, Inc., Twinlab Consolidation Corporation, Twinlab Holdings, Inc., ISI Brands Inc., Twinlab Corporation, NutraScience Labs, Inc., NutraScience Labs IP Corporation, Organic Holdings, LLC, Reserve Life Organics, LLC, Resvitale, LLC, Re-Body, LLC, Innovitamin Organics, LLC, Organics Management LLC, Cocoawell, LLC, Fembody, LLC, Reserve Life Nutrition, L.L.C., Innovita Specialty Distribution, LLC and Joie Essance, LLC.
   
Exhibit 10.98 Sixth Amendment to Note and Warrant Purchase Agreement, dated as of October 5, 2015, by and between Twinlab Consolidated Holdings, Inc., Twinlab Consolidation Corporation, Twinlab Holdings, Inc., ISI Brands Inc., Twinlab Corporation, NutraScience Labs, Inc., NutraScience Labs IP Corporation and Penta Mezzanine SBIC Fund I, L.P.
   
Exhibit 10.99 Limited Waiver to Note Warrant and Purchase Agreement, dated as of October 2, 2015, by and between Twinlab Consolidated Holdings, Inc., Twinlab Consolidation Corporation, Twinlab Holdings, Inc., ISI Brands Inc., Twinlab Corporation, NutraScience Labs, Inc., NutraScience Labs IP Corporation and Penta Mezzanine SBIC Fund I, L.P.
   
Exhibit 10.100 Fifth Amendment to Note and Warrant Purchase Agreement, dated as of October 5, 2015, by and between Twinlab Consolidated Holdings, Inc., Twinlab Consolidation Corporation, Twinlab Holdings, Inc., ISI Brands Inc., Twinlab Corporation, NutraScience Labs, Inc., NutraScience Labs IP Corporation and JL-Mezz Utah LLC (f/k/a JL-BBNC Mezz Utah, LLC).
   
Exhibit 10.101 Limited Waiver to Note Warrant and Purchase Agreement, dated as of October 2, 2015, by and between Twinlab Consolidated Holdings, Inc., Twinlab Consolidation Corporation, Twinlab Holdings, Inc., ISI Brands Inc., Twinlab Corporation, NutraScience Labs, Inc., NutraScience Labs IP Corporation and JL-Mezz Utah LLC (f/k/a JL-BBNC Mezz Utah, LLC).
   
Exhibit 10.102 Amendment No. 1 to Agreement for Limited Waiver of Non-Circumvention Provision and to Compromise Agreement and Release, dated as of October 1, 2015, by and between Twinlab Consolidated Holdings, Inc. and Capstone Financial Group, Inc.
   
Exhibit 10.103 Unit Purchase Agreement, dated as of September 2, 2014, by and among Naomi L. Balcombe, Robert Whittel and Twinlab Consolidation Corporation.
   
Exhibit 10.104 Amendment No. 1 to Unit Purchase Agreement, dated as of July 17, 2015, by and among Naomi L. Balcombe, Robert Whittel and Twinlab Consolidation Corporation.
   
Exhibit 10.105 Employment Agreement, dated as of October 2, 2015, between Twinlab Consolidation Corporation and Naomi L. Balcombe.

 

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SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

Date: October 8, 2015 TWINLAB CONSOLIDATED HOLDINGS, INC.
     
  By: /s/ Thomas A. Tolworthy
    Thomas A. Tolworthy
    President and Chief Executive Officer

 

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EXHIBIT INDEX

 

 

Exhibit No. Description
   
Exhibit 10.90 Securities Purchase Agreement, dated as of October 2, 2015, by and between Twinlab Consolidated Holdings, Inc. and Golisano Holdings LLC.
   
Exhibit 10.91 Common Stock Purchase Warrant, dated October 5, 2015, by and between Twinlab Consolidated Holdings, Inc. and Golisano Holdings LLC.  
   
Exhibit 10.92 Registration Rights Agreement, dated as of October 5, 2015, by and between Twinlab Consolidated Holdings, Inc. and Golisano Holdings LLC.
   
Exhibit 10.93 Voting Agreement, dated as of October 5, 2015, among Twinlab Consolidated Holdings, Inc., Golisano Holdings LLC, and Thomas A. Tolworthy, Little Harbor, LLC, Great Harbor Capital, LLC and the David L. Van Andel Trust U/A dated November 30, 1993.
   
Exhibit 10.94 Voting Agreement, dated as of October 2, 2015, among Twinlab Consolidated Holdings, Inc., Great Harbor Capital, LLC and Golisano Holdings LLC, Thomas A. Tolworthy, Little Harbor, LLC, and the David L. Van Andel Trust U/A dated November 30, 1993.
   
Exhibit 10.95 Surrender Agreement, dated as of October 5, 2015, between Twinlab Consolidated Holdings, Inc. and Thomas A. Tolworthy.
   
Exhibit 10.96 Amendment No. 7 and Joinder Agreement to Credit and Security Agreement, dated as of October 5, 2015, by and among Twinlab Consolidated Holdings, Inc., Twinlab Consolidation Corporation, Twinlab Holdings, Inc., ISI Brands Inc., Twinlab Corporation, NutraScience Labs, Inc., NutraScience Labs IP Corporation, Organic Holdings, LLC, Reserve Life Organics, LLC, Resvitale, LLC, Re-Body, LLC, Innovitamin Organics, LLC, Organics Management LLC, Cocoawell, LLC, Fembody, LLC, Reserve Life Nutrition, L.L.C., Innovita Specialty Distribution, LLC and Joie Essance, LLC and MidCap Funding X Trust.
   
Exhibit 10.97 First Amended and Restated Revolving Loan Note, dated October 5, 2015, by Twinlab Consolidated Holdings, Inc., Twinlab Consolidation Corporation, Twinlab Holdings, Inc., ISI Brands Inc., Twinlab Corporation, NutraScience Labs, Inc., NutraScience Labs IP Corporation, Organic Holdings, LLC, Reserve Life Organics, LLC, Resvitale, LLC, Re-Body, LLC, Innovitamin Organics, LLC, Organics Management LLC, Cocoawell, LLC, Fembody, LLC, Reserve Life Nutrition, L.L.C., Innovita Specialty Distribution, LLC and Joie Essance, LLC.
   
Exhibit 10.98 Sixth Amendment to Note and Warrant Purchase Agreement, dated as of October 5, 2015, by and between Twinlab Consolidated Holdings, Inc., Twinlab Consolidation Corporation, Twinlab Holdings, Inc., ISI Brands Inc., Twinlab Corporation, NutraScience Labs, Inc., NutraScience Labs IP Corporation and Penta Mezzanine SBIC Fund I, L.P.
   
Exhibit 10.99 Limited Waiver to Note Warrant and Purchase Agreement, dated as of October 2, 2015, by and between Twinlab Consolidated Holdings, Inc., Twinlab Consolidation Corporation, Twinlab Holdings, Inc., ISI Brands Inc., Twinlab Corporation, NutraScience Labs, Inc., NutraScience Labs IP Corporation and Penta Mezzanine SBIC Fund I, L.P.
   
Exhibit 10.100 Fifth Amendment to Note and Warrant Purchase Agreement, dated as of October 5, 2015, by and between Twinlab Consolidated Holdings, Inc., Twinlab Consolidation Corporation, Twinlab Holdings, Inc., ISI Brands Inc., Twinlab Corporation, NutraScience Labs, Inc., NutraScience Labs IP Corporation and JL-Mezz Utah LLC (f/k/a JL-BBNC Mezz Utah, LLC).
   
Exhibit 10.101 Limited Waiver to Note Warrant and Purchase Agreement, dated as of October 2, 2015, by and between Twinlab Consolidated Holdings, Inc., Twinlab Consolidation Corporation, Twinlab Holdings, Inc., ISI Brands Inc., Twinlab Corporation, NutraScience Labs, Inc., NutraScience Labs IP Corporation and JL-Mezz Utah LLC (f/k/a JL-BBNC Mezz Utah, LLC).
   
Exhibit 10.102 Amendment No. 1 to Agreement for Limited Waiver of Non-Circumvention Provision and to Compromise Agreement and Release, dated as of October 1, 2015, by and between Twinlab Consolidated Holdings, Inc. and Capstone Financial Group, Inc.
   
Exhibit 10.103 Unit Purchase Agreement, dated as of September 2, 2014, by and among Naomi L. Balcombe, Robert Whittel and Twinlab Consolidation Corporation.
   
Exhibit 10.104 Amendment No. 1 to Unit Purchase Agreement, dated as of July 17, 2015, by and among Naomi L. Balcombe, Robert Whittel and Twinlab Consolidation Corporation.
   
Exhibit 10.105 Employment Agreement, dated as of October 2, 2015, between Twinlab Consolidation Corporation and Naomi L. Balcombe.

 

 

 

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Exhibit 10.90

 

SECURITIES PURCHASE AGREEMENT

 

This Securities Purchase Agreement (this “ Agreement ”) is dated as of October 2, 2015 (the “ Execution Date ”), by and between Twinlab Consolidated Holdings, Inc., a Nevada corporation (the “ Company ”), and Golisano Holdings LLC, a New York limited liability company (the “ Purchaser ”).

 

Recitals

 

A.           The Company and the Purchaser are executing and delivering this Agreement in reliance upon the exemption from securities registration afforded by Section 4(a)(2) of the Securities Act of 1933, as amended (the “ Securities Act ”), and, if necessary, Rule 506 of Regulation D (“ Regulation D ”) as promulgated by the United States Securities and Exchange Commission (the “ Commission ”) under the Securities Act.

 

B.           The Purchaser wishes to purchase, and the Company wishes to sell, upon the terms and conditions stated in this Agreement, 88,711,241 shares of common stock (the “ Closing Shares ”), par value $0.001 per share (the “ Common Stock ”) of the Company which constitutes as of immediately following the Closing (as defined below) thirty percent (30%) of the Company’s issued and outstanding Common Stock and a Common Stock Purchase Warrant (the “ Warrant ”) to purchase additional shares of Common Stock in substantially the form attached hereto as  Exhibit A . The shares of Common Stock issuable upon exercise of or otherwise pursuant to the Warrant collectively are referred to herein as the “ Warrant Shares ” and together with the Closing Shares, the “ Shares .”

 

C.           Contemporaneously with the execution and delivery of this Agreement, the parties hereto are executing and delivering a Registration Rights Agreement, substantially in the form attached hereto as Exhibit B (as amended, modified, restated or supplemented from time to time, the “ Registration Rights Agreement ”) pursuant to which, among other things, the Company will agree to provide certain registration rights with respect to the Shares under the Securities Act and the rules and regulations promulgated thereunder and applicable state securities laws, and will agree to provide certain other rights to the Purchaser.

 

D.           Contemporaneously with the execution and delivery of this Agreement, the Company, certain of the Company’s stockholders (the “ Voting Stockholders ”) and the Purchaser are executing and delivering a Voting Agreement, substantially in the form attached hereto as Exhibit C (as amended, modified, restated or supplemented from time to time, the “ Voting Agreement ”), pursuant to which the Voting Stockholders have agreed to vote their shares of Common Stock in favor of electing the Purchaser’s nominee to the Company’s Board of Directors and certain other matters.

 

Now, Therefore, in consideration of the mutual covenants contained in this Agreement, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Company and the Purchaser hereby agree as follows:

 

 

 

 

Article 1

DEFINITIONS

 

1.1           Definitions . In addition to the terms defined elsewhere in this Agreement, for all purposes of this Agreement, the following terms shall have the meanings indicated in this Section 1.1:

 

Acquisition ” means the acquisition by the Company of all of the issued and outstanding membership or other equity interests of the Target Company as contemplated by the Acquisition Agreement.

 

Acquisition Agreement ” means collectively, (a) the Option Agreement, (b) the Option Notice dated August 13, 2015, executed by the Company and delivered to the Target Company and (c) the Unit Purchase Agreement dated September 2, 2014 (including the Disclosure Schedules and Exhibits thereto), as amended, among the Company, the Target Company and its members.

 

Acquisition Documents ” means the Acquisition Agreement and the annexes and exhibits attached thereto, and any other documents or agreements executed in connection with the transactions contemplated thereunder.

 

Action ” means any action, suit, inquiry, notice of violation, proceeding (including any partial proceeding such as a deposition) or investigation pending or, to the Company’s Knowledge, threatened in writing against the Company or any of its Subsidiaries or any of their properties or any officer, director or employee of the Company or any of its Subsidiaries acting in his or her capacity as an officer, director or employee of the Company or any of its Subsidiaries before or by any federal, state, county, local or foreign court, arbitrator, governmental or administrative agency, regulatory authority, stock market, stock exchange or trading facility.

 

Affiliate ” means, with respect to any Person, any other Person that, directly or indirectly through one or more intermediaries, Controls, is controlled by or is under common control with such Person, as such terms are used in and construed under Rule 405. With respect to the Purchaser, any investment fund or managed account that is managed on a discretionary basis by the same investment manager as the Purchaser will be deemed to be an Affiliate of the Purchaser.

 

Agreement ” has the meaning set forth in the Preamble.

 

Board of Directors ” means the board of directors of the Company.

 

Business Day ” means a day, other than a Saturday or Sunday, on which banks in New York City are open for the general transaction of business.

 

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Capstone Agreement ” means (a) the Agreement for Limited Waiver of Non-Circumvention Provision, dated as of July 5, 2015 (the “ Capstone Waiver Agreement ”), whereby Capstone Financial Group, Inc. (" Capstone "), for a fee as set forth therein, agreed to provide the Company with a limited waiver of the “Noncircumvention Provision” (as defined in the Capstone Waiver Agreement) with respect to a particular “Investor” (as defined in the Capstone Waiver Agreement); and (b) the Compromise Agreement and Release, dated as of May 28, 2015 whereby, among other things, Capstone granted to the Company three separate contingent call option rights to acquire from Capstone, at a call option exercise price of $0.01 per share with respect to a number of shares of outstanding shares of Common Stock owned by Capstone .

 

Closing ” means the closing of the purchase by the Purchaser and sale by the Company of Shares to the Purchaser pursuant to this Agreement on the Closing Date as provided in Section 2.1(a) hereof.

 

Closing Date ” means the date on which the last to be satisfied or waived of the conditions set forth in Sections 2.1, 2.2, 5.1 and 5.2 (other than those to be satisfied at the Closing) shall have been satisfied or waived.

 

Closing Shares ” has the meaning set forth in the Recitals.

 

Commission ” has the meaning set forth in the Recitals.

 

Common Stock ” has the meaning set forth in the Recitals, and also includes any securities into which the Common Stock may hereafter be reclassified or changed.

 

Common Stock Proportional Ownership ” means on each date, the ratio, as of such date, of (i) the shares of Common Stock owned by Purchaser and its Affiliates on such date, to (ii) all shares of Common Stock which are issued and outstanding on such date. As of the Closing Date, the Purchaser’s Common Stock Proportional Ownership is 0.30.

 

Company ” has the meaning set forth in the preamble to this Agreement.

 

Company Counsel ” means Wilk Auslander LLP.

 

Company Deliverables ” has the meaning set forth in Section 2.2(a).

 

Company’s Knowledge ” means with respect to any statement made to the knowledge of the Company, that the statement is based upon the actual knowledge of the Company’s CEO and any officers of the Company who have responsibility for the matter or matters that are the subject of the statement, prov ided, however , that the CEO and such officers have conducted reasonable investigation and due inquiry of such matter or matters.

 

Company Material Adverse Effect ” means any state of facts, change, development, event, effect, condition, occurrence, action or omission that, individually or in the aggregate, has resulted in or would reasonably be expected to result in (a) a material adverse effect on the results of operations, assets, liabilities, business or financial condition of the Company and/or its Subsidiaries, taken as a whole, except that any of the following, either alone or in combination, shall not be deemed a Company Material Adverse Effect: (i) effects caused by changes or circumstances affecting general market conditions in the U.S. economy or which are generally applicable to the industry in which the Company and/or its Subsidiaries operates provided that such effects are not borne disproportionately by the Company and/or its Subsidiaries, (ii) effects resulting from or relating to the announcement or disclosure of the sale of the Securities or other transactions contemplated by this Agreement, or (iii) effects caused by any event, occurrence or condition resulting from or relating to the taking of any action in accordance with this Agreement; or (b) any inability of the Company to perform its obligations under this Agreement, any of the other Golisano Investment Documents or to consummate the Acquisition in accordance with the terms of the Acquisition Documents.

 

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Control ” (including the terms “ controlling ”, “ controlled ” by or “under common control with”) means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise.

 

Derivative Securities ” means any securities of the Company which would entitle the holder thereof to acquire at any time shares of Common Stock, including, without limitation, any debt, preferred stock, right, option, warrant or other instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock.

 

Disclosure Materials ” means (a) the Disclosure Schedules and (b) the SEC Reports, provided, however, that (i) any information contained in any part of any SEC Reports shall not be deemed to be an exception to any representation or warranty by the Company in Section 3.1 unless the relevance of such item as an exception is reasonably apparent on its face and (ii) in no event shall any risk factor disclosure under the heading “Risk Factors” or disclosure set forth in any “forward looking statements” disclaimer or other general statements to the extent they are predictive or forward looking in nature that are included in any part of any SEC Report be deemed to be an exception to any representation or warranty, or, as applicable, a disclosure for purposes of, any provision in this Agreement.

 

Disclosure Schedules ” means the disclosure schedules attached to this Agreement.

 

Disposition ” has the meaning set forth in Section 4.12.

 

Environmental Laws ” has the meaning set forth in Section 3.1(l).

 

Evaluation Date ” has the meaning set forth in Section 3.1(v).

 

Exchange Act ” means the Securities Exchange Act of 1934, as amended, or any successor statute, and the rules and regulations promulgated thereunder.

 

" Excluded Securities " means (a) any shares of Common Stock issued pursuant to the "Qualified Derivative Securities" which are referred to in the Warrant, (b) any shares of Common Stock issued pursuant to an employee and director stock incentive plan approved by the Board of Directors and (c) any shares of Common Stock that are issued contemporaneously with the surrender of outstanding shares by Thomas A. Tolworthy for no consideration.

 

Execution Date ” has the meaning set forth in the Preamble.

 

FDA ” has the meaning set forth in Section 3.1(o).

 

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Future Equity Issuance ” has the meaning set forth in Section 4.14(a).

 

Future Equity Issuance Notice ” has the meaning set forth in Section 4.14(b).

 

GAAP ” means U.S. generally accepted accounting principles, as applied by the Company.

 

Great Harbor Securities Purchase Agreement ” means that certain Stock Purchase Agreement dated October 1, 2015 between the Company and Great Harbor Capital, LLC, pursuant to which Great Harbor Capital, LLC agreed to purchase 41,379,310 shares of Common Stock for a purchase price of $12,000,000.

 

Great Harbor Equity Financing Documents ” means the Great Harbor Securities Purchase Agreement and the annexes and exhibits attached thereto, and any other documents or agreements executed in connection with such document.

 

Great Harbor Equity Financing Transactions ” means the transactions contemplated by the Great Harbor Equity Financing Documents.

 

Golisano Investment Documents ” means this Agreement, the Registration Rights Agreement, the Voting Agreement, the Warrant, the Irrevocable Transfer Agent Instructions, the annexes and exhibits attached hereto and thereto and any other documents or agreements executed in connection with the transactions contemplated hereunder.

 

Governmental Body ” shall mean any: (a) nation, state, commonwealth, province, territory, county, municipality, district or other jurisdiction of any nature; (b) federal, state, local, municipal, foreign or other government; (c) governmental or quasi-governmental authority of any nature (including any governmental division, department, agency, commission, instrumentality, official, ministry, fund, foundation, center, organization, unit or body and any court or other tribunal); or (d) self-regulatory organization.

 

Indemnified Person ” has the meaning set forth in Section 4.8(b).

 

Intellectual Property ” has the meaning set forth in Section 3.1(r).

 

Irrevocable Transfer Agent Instructions ” means, with respect to the Company, the Irrevocable Transfer Agent Instructions, in the form of Exhibit D , executed by the Company and delivered to and acknowledged in writing by the Transfer Agent.

 

Lien ” means any lien, charge, claim, encumbrance, security interest, priority, right or preferential treatment of any kind, right of first refusal, preemptive right or other restrictions of any kind.

 

Material Contract ” means any contract of the Company or any Subsidiary that has been filed or is required to be filed as an exhibit to the SEC Reports pursuant to Item 601(b)(4) or Item 601(b)(10) of Regulation S-K (including, for purposes hereof, any contracts that are required to be filed as an exhibit to a Form 10).

 

5  

 

 

Material Permits ” has the meaning set forth in Section 3.1(p).

 

" New Securities ” means, collectively, equity securities of the Company, whether or not currently authorized, as well as rights, options, or warrants to purchase such equity securities, or securities of any type whatsoever that are, or may become, convertible or exchangeable into or exercisable for such equity securities.

 

New York Courts ” means the state and federal courts sitting in the State of New York.

 

Option Agreement ” means the Option Agreement dated September 2, 2014 (including the Disclosure Schedules and Exhibits thereto), as amended by Amendment No.1 dated July 13, 2015, Amendment No. 2 dated July 14, 2015, Amendment No. 3 dated July 15, 2015, Amendment No. 4 dated July 16, 2015 and Amendment No. 5 dated July 17, 2015, each of which are among the Company, the Target Company and its members.

 

Order ” means any charge, order, writ, injunction, judgment, decree, ruling, determination, directive, award or settlement, whether civil, criminal or administrative and whether formal or informal, applicable to the Company or the Purchaser.

 

Outside Date ” means November 15, 2015.

 

Person ” means an individual, corporation, partnership, limited liability company, trust, business trust, association, joint stock company, joint venture, sole proprietorship, unincorporated organization, governmental authority or any other form of entity not specifically listed herein.

 

Pre-Equity Issuance Notice ” has the meaning set forth in Section 4.14(b).

 

Principal Trading Market ” means the Trading Market on which the Common Stock is primarily listed on or quoted for trading, which, as of the date of this Agreement and the Closing Date, shall be the OTC Bulletin Board.

 

Press Release ” has the meaning set forth in Section 4.6.

 

Public Information Failure has the meaning set forth in Section 4.3(b).

 

Public Information Failure Payments ” has the meaning set forth in Section 4.3(b).

 

Purchase Price ” means $25,000,000.

 

Purchaser ” has the meaning set forth in the preamble to this Agreement.

 

Purchaser Deliverables ” has the meaning set forth in Section 2.2(b).

 

Purchaser Party ” has the meaning set forth in Section 4.8(a).

 

Registration Rights Agreement ” has the meaning set forth in the Recitals.

 

Regulation D ” has the meaning set forth in the Recitals.

 

6  

 

 

Reporting Period ” has the meaning set forth in Section 4.3(a).

 

Required Approvals ” has the meaning set forth in Section 3.1(e).

 

Rule 144 ” means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same effect as such Rule.

 

SEC Report s ” has the meaning set forth in Section 3.1(h).

 

Secretary’s Certificate ” has the meaning set forth in Section 2.2(a)(vii).

 

Securities ” means the Closing Shares and the Warrant.

 

Securities Act ” has the meaning set forth in the Recitals.

 

Shares ” has the meaning set forth in the Recitals.

 

Short Sales ” include, without limitation, (a) all “short sales” as defined in Rule 200 promulgated under Regulation SHO under the Exchange Act, whether or not against the box, and all types of direct and indirect stock pledges, forward sale contracts, options, puts, calls, short sales, swaps, “put equivalent positions” (as defined in Rule 16a-1(h) under the Exchange Act) and similar arrangements (including on a total return basis), and (b) sales and other transactions through non-U.S. broker dealers or foreign regulated brokers.

 

Solvent ” means the Company (a) owns property whose fair saleable value is greater than the amount required to pay all of the Company’s liabilities (including contingent liabilities, discounted by the probability of such debts becoming due and payable), (b) is able to pay all of its liabilities as such liabilities become due and (c) has capital sufficient to carry on its business and transactions and all business and transactions in which it is about to engage.

 

Stock Certificates ” has the meaning set forth in Section 2.2(a)(vi).

 

Subsidiary ” means any entity in which the Company, directly or indirectly, owns capital stock or holds an equity or similar interest.

 

Target Company ” means Organic Holdings, LLC, a Delaware limited liability company.

 

Target Material Adverse Effect ” means any state of facts, change, development, event, effect, condition, occurrence, action or omission that, individually or in the aggregate, has resulted in or would reasonably be expected to result in a material adverse effect on the results of operations, assets, liabilities, business or financial condition of the Target Company and/or its Subsidiaries, taken as a whole, except that any of the following, either alone or in combination, shall not be deemed a Target Material Adverse Effect: (i) effects caused by changes or circumstances affecting general market conditions in the U.S. economy or which are generally applicable to the industry in which the Target Company and/or its Subsidiaries operates provided that such effects are not borne disproportionately by the Target Company and/or its Subsidiaries, (ii) effects resulting from or relating to the announcement or disclosure of the Acquisition or other transactions contemplated by the Acquisition Agreement, or (iii) effects caused by any event, occurrence or condition resulting from or relating to the taking of any action in accordance with the Acquisition Agreement or its ability to consummate the transactions contemplated by the Acquisition Agreement.

 

7  

 

 

Tolworthy Share Surrender Transaction ” means that Thomas A. Tolworthy shall have surrendered to the Company for no consideration 53,892,009 shares of Common Stock pursuant to a surrender agreement that is in form and substance satisfactory to Purchaser in its sole discretion.

 

Trading Affiliate ” has the meaning set forth in Section 3.2(h).

 

Trading Day ” means (i) a day on which the Common Stock is listed or quoted and traded on its Principal Trading Market (unless the Principal Trading Market is the OTC Bulletin Board or the “pink sheets”), or (ii) if the Common Stock is not listed on a Trading Market (other than the OTC Bulletin Board or the OTC QB, OTC QX or “pink sheets” tier of the OTC Markets Group, Inc.), a day on which the Common Stock is traded in the over-the-counter market, as reported by the OTC Bulletin Board, or (iii) if the Common Stock is not quoted on any Trading Market (other than the OTC QB, OTC QX or “pink sheets” tier of the OTC Markets Group, Inc.), a day on which the Common Stock is quoted in the over-the-counter market as reported by the OTC QB, OTC QX or “pink sheets” tier of the OTC Markets Group, Inc. (or any similar organization or agency succeeding to its functions of reporting prices); provided , that in the event that the Common Stock is not listed or quoted as set forth in (i), (ii) and (iii) hereof, then Trading Day shall mean a Business Day.

 

Trading Market ” means whichever of the New York Stock Exchange, the NYSE-MKT, the Nasdaq Global Select Market, the Nasdaq Global Market, the Nasdaq Capital Market, the OTC Bulletin Board, the OTC QB, OTC QX or “pink sheets” tier of the OTC Markets Group, Inc. (or any similar organization or agency succeeding to its functions of reporting prices) on which the Common Stock is listed or quoted for trading on the date in question.

 

Transaction Documents ” means the Acquisition Documents, the Great Harbor Equity Financing Documents and the Golisano Investment Documents.

 

Transactions ” means collectively (a) the Acquisition, (b) the Great Harbor Equity Financing Transaction, (c) the Tolworthy Share Surrender Transaction, (d) the transactions contemplated hereby and (e) the payment of fees and expenses related thereto and hereto. 

 

Transfer Agent ” means West Coast Stock Transfer, Inc., or any successor transfer agent for the Company.

 

Voting Agreement ” has the meaning set forth in the Recitals.

 

Voting Stockholders ” has the meaning set forth in the Recitals.

 

Warrant ” has the meaning set forth in the Recitals.

 

Warrant Shares ” has the meaning set forth in the Recitals.

 

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Article 2

 

PURCHASE AND SALE

 

2.1          Closing .

 

(a)           Purchase and Sale . Subject to the terms and conditions set forth in this Agreement, the Purchaser agrees to purchase from the Company, and the Company agrees to sell to the Purchaser, the Securities at the Purchase Price.

 

(b)           Closing . The Closing of the purchase and sale of the Securities shall take place remotely by exchange of documents delivered by facsimile transmission or other electronic means as the parties may mutually agree.

 

(c)           Purchase Price Payment; Issuance of Stock Certificate . On the Closing Date, (i) the Purchaser shall wire an amount equal to the Purchase Price, in United States dollars and in immediately available funds, by wire transfer to the Company’s account, as set forth in instructions previously provided to the Purchaser, and (ii) the Company shall irrevocably instruct the Transfer Agent to deliver to the Purchaser one or more stock certificates, free and clear of all restrictive and other legends except as expressly provided in Section 4.1(b) hereof or in the Golisano Investment Documents, evidencing the Closing Shares and the Company shall issue to the Purchaser the Warrant executed on behalf of the Company by an authorized officer of the Company and registered in the name of the Purchaser.

 

2.2          Closing Deliveries .

 

(a)           Company Deliverables . On or prior to the Closing, the Company shall issue, deliver or cause to be delivered to the Purchaser the following (the “ Company Deliverables ”):

 

(i)          this Agreement, duly executed by the Company;

 

(ii)         the Warrant duly executed by the Company;

 

(iii)        the Voting Agreement, duly executed by the Company and the Voting Stockholders;

 

(iv)        the Registration Rights Agreement, duly executed by the Company;

 

(v)         the documentary evidence required by Sections 5.1(g), 5.1(h), 5(i), 5(j), and 5.1(k);

 

(vi)        a copy of the duly executed Irrevocable Transfer Agent Instructions delivered to the Transfer Agent, relating to the issuance of stock certificates, free and clear of all restrictive and other legends except as provided in Section 4.1(b) hereof or the Golisano Investment Documents, evidencing the Closing Shares subscribed for by the Purchaser hereunder to be registered in the Purchaser’s name (the “ Stock Certificate ”) with the original Stock Certificate to be delivered to the address set forth in Section 6.3 following the Closing;

 

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(vii)       a certificate of the Secretary of the Company (the “ Secretary’s Certificate ”), dated as of the Closing Date, (a) certifying the resolutions adopted by the Board of Directors of the Company or a duly authorized committee thereof approving the transactions contemplated by this Agreement and the other Transaction Documents and the issuance of the Securities, (b) certifying the current versions of the articles of incorporation, as amended, and bylaws of the Company and (c) certifying as to the signatures and authority of persons signing the Transaction Documents and related documents on behalf of the Company, in the form attached hereto as Exhibit E ;

 

(viii)      a certificate evidencing the formation and good standing of the Company issued by the Secretary of State of the State of Nevada, as of a date within five (5) days of the Closing Date;

 

(ix)         a certificate evidencing the Company’s qualification as a foreign corporation and good standing issued by the Secretary of State of the State of New York as of a date within five days of the Closing Date; and

 

(xi)         a certified copy of the Articles of Incorporation, as certified by the Secretary of State of the State of Nevada, as of a date within ten (10) days of the Closing Date;

 

(xii)        a compliance certificate , dated as of the Closing Date and signed by the Company’s Chief Executive Officer, certifying to the fulfillment of the conditions specified in Sections 5.1(a), (b), (c), (d), (e), (f), (g), (h), (i), (j), (k), (l) and (m), provided that (m) may be based on the CEO’s actual knowledge, in substantially the form attached hereto as Exhibit F ; and

 

(xiii)       a legal opinion of Company Counsel, dated as of the Closing Date and in substantially the form attached hereto as  Exhibit G , executed by such counsel and addressed to the Purchaser.

 

(b)           Purchaser Deliverables . On or prior to the Closing, the Purchaser shall deliver or cause to be delivered to the Company the following (the “Purchaser Deliverables ”):

 

(i)          this Agreement, duly executed by the Purchaser;

 

(ii)         the Registration Rights Agreement duly executed by the Purchaser;

 

(iii)        the Voting Agreement duly executed by the Purchaser; and

 

(iv)        the Purchase Price in United States dollars and in immediately available funds, by wire transfer to the Company’s account as previously provided to the Purchaser.

 

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Article 3

REPRESENTATIONS AND WARRANTIES

 

3.1          Representations and Warranties of the Company . The Company hereby represents and warrants as of Execution Date and the Closing Date (except for the representations and warranties that speak as of a specific date, which shall be made as of such date), to the Purchaser that, except as disclosed in the Disclosure Materials, which shall be deemed a part hereof and shall qualify only the representations made by the Company herein which specifically reference the applicable Disclosure Materials and then only to the extent of the applicable disclosure made in such Disclosure Materials:

 

(a)           Subsidiaries . The Company has no direct or indirect Subsidiaries other than Twinlab Consolidation Corporation, a Delaware corporation, Twinlab Holdings, Inc., a Michigan corporation, Twinlab Corporation, a Delaware corporation, ISI Brands Inc., a Michigan corporation, NutraScience Labs, Inc., a Delaware corporation, and NutraScience Labs IP Corporation, a Delaware corporation. Except as set forth on Section 3.1(a) of the Disclosure Schedules , t he Company owns, directly or indirectly, all of the capital stock or other equity interests of each  Subsidiary  free and clear of any Liens, and all of the issued and outstanding shares of capital stock of each  Subsidiary  are validly issued and are fully paid, non-assessable, free of preemptive and similar rights to subscribe for or purchase securities and there are no commitments for the purchase or sale of, and no options, warrants or other rights to subscribe for or purchase, any securities of any such Subsidiary.

 

(b)           Organization and Qualification . The Company and each of its Subsidiaries is an entity duly incorporated, validly existing and in good standing under the laws of the state of its incorporation, with the requisite corporate power and authority to own or lease and use its properties and assets and to carry on its business as currently conducted. Neither the Company nor any of its Subsidiaries is in violation of any of the provisions of its articles of incorporation or certificate of incorporation or bylaws or other organizational documents. The Company and each of its Subsidiaries is duly qualified to conduct business and is in good standing as a foreign corporation or other entity in each jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary, except where the failure to be so qualified or in good standing, as the case may be, would not have a Company Material Adverse Effect, and no Action has been instituted, is pending, or, to the Company’s Knowledge, has been threatened in any such jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or curtail such power and authority or qualification.

 

(c)           Authorization; Enforcement; Validity . The Company has the requisite corporate power and authority to enter into and to consummate the transactions contemplated by each of the Transaction Documents to which it is a party and otherwise to carry out its obligations hereunder and thereunder. The execution and delivery of each of the Transaction Documents to which the Company is a party and the consummation by it of the transactions contemplated hereby and thereby (including, but not limited to, the sale and delivery of the Securities) have been duly authorized by all necessary corporate action on the part of the Company, and no further corporate action is required by the Company, its Board of Directors or its stockholders in connection therewith other than in connection with the Required Approvals. Each of the Transaction Documents to which it is a party has been (or upon delivery will have been) duly executed by the Company and is, or when delivered in accordance with the terms hereof, will, constitute the legal, valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally the enforcement of, creditors’ rights and remedies or by other equitable principles of general application or insofar as indemnification and contribution provisions may be limited by applicable law.

 

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(d)           No Conflicts . The execution, delivery and performance by the Company of this Agreement and all of the other Transaction Documents to which it is a party and the consummation by the Company of the transactions contemplated hereby or thereby (including, without limitation, the issuance of the Securities, the issuance of shares of Common Stock pursuant to the Great Harbor Equity Financing Transaction Documents and the consummation of the Acquisition) do not and will not (i) conflict with or violate any provisions of the Company’s or any Subsidiaries’ articles of incorporation, certificates of incorporation or bylaws or otherwise result in a violation of the organizational documents of the Company or any Subsidiary, (ii) conflict with, or constitute a default (or an event that with notice or lapse of time or both would become a default) under, result in the creation of any Lien upon any of the properties or assets of the Company or any Subsidiary or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any Material Contract or (iii) subject to the Required Approvals, result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Company or any Subsidiary is subject (including federal and state securities laws and regulations and the rules and regulations, assuming the correctness of the representations and warranties made by the Purchaser herein, of any self-regulatory organization to which the Company or its securities are subject, including all applicable Trading Markets), or by which any property or asset of the Company or any Subsidiary is bound or affected), except in the case of clause (iii) would not individually or in the aggregate have a Company Material Adverse Effect.

 

(e)           Filings, Consents and Approvals . The Company is not required to obtain any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other Person in connection with the execution, delivery and performance by the Company of the Transaction Documents (including the issuance of the Securities), other than (i) the filing with the Commission of one or more Registration Statements in accordance with the requirements of the Registration Rights Agreement, (ii) filings required by applicable state securities laws, (iii) the filing, if necessary, of a Notice of Sale of Securities on Form D with the Commission under Regulation D of the Securities Act, (iv) the filing of any requisite notices and/or application(s) to the Principal Trading Market for the issuance and sale of the Shares and the listing of the Shares for trading or quotation, as the case may be, thereon in the time and manner required thereby, (v) the filings required in accordance with Section 4.6 of this Agreement and (vi) those set forth in Section 3.1(e) of the Disclosure Schedules, all of which have been made or obtained prior to the Execution Date and copies of which have been provided to Purchaser (collectively, the “ Required Approvals ”).

 

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(f)           Issuance of the Securities .

 

(i)          The Securities have been duly authorized and, when issued and paid for in accordance with the terms of the Golisano Investment Documents, will be duly and validly issued, fully paid and non-assessable and free and clear of all Liens, other than restrictions on transfer provided for in the Golisano Investment Documents or imposed by applicable securities laws, and shall not be subject to preemptive or similar rights. The Company has reserved from its duly authorized capital stock the maximum number of shares of Common Stock which may be issued as Warrant Shares under the Warrant.

 

(ii)         Assuming the accuracy of the representations and warranties of the Purchaser in this Agreement, the Securities will be issued in compliance with all applicable federal and state securities laws.

 

(g)           Capitalization .

 

(i)           The authorized capital stock of the Company is as follows:

 

(A)         The authorized capital stock of the Company consists of (1) 5,000,000,000 shares of Common Stock, of which 219,505,594 shares are issued and outstanding, and (2) 5,000,000 shares of preferred stock, par value $0.0001 (“ Preferred Stock ”) of which no shares are outstanding.

 

(B)         Immediately following the Closing after giving effect to the Transactions, the authorized capital stock of the Company shall consist of (1) 5,000,000,000 shares of Common Stock, of which 295,704,136 shares will be issued and outstanding, and (2) 5,000,000 shares of Preferred Stock, of which no shares will be issued and outstanding.

 

(ii)  (A) all of the issued and outstanding shares of capital stock of the Company are and immediately following the Closing will have been duly authorized, validly issued, fully paid and non-assessable, (B) all of the issued and outstanding shares of capital stock of the Company are and immediately following the Closing will have been issued in compliance with all applicable federal and state securities laws, (C) none of the issued and outstanding shares of capital stock of the Company have been and immediately following the Closing will have been issued in violation of any agreement, arrangement or commitment to which the Company or any of its Affiliates is a party or is subject to or in violation of any preemptive or similar rights of any Person. The issued and outstanding shares of capital stock in the Company immediately following the Closing will be held by the stockholders in the amounts shown in Section 3.1(g)(ii) of the Disclosure Schedules .

 

(iii)         Section 3.1(g)(iii) of the Disclosure Schedules sets forth, as of immediately following the Closing after giving effect to the transactions contemplated by this Agreement and the other Transaction Documents, all outstanding or authorized stock options and warrants relating to the capital stock of the Company. Except as set forth on  Section 3.1(g)(iii) of the Disclosure Schedules , there are no outstanding options, warrants, scrip rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities, rights or obligations convertible into or exercisable or exchangeable for, or giving any Person any right to subscribe for or acquire, any shares of Common Stock, or contracts, commitments, understandings or arrangements by which the Company or any Subsidiary is or may become bound to issue additional shares of capital stock or any other interest in the Company or such Subsidiary, as applicable. Any warrants shown on Section 3.1(g)(iii) of the Disclosure Schedules as having been exercised are of no further force or effect, and the named holder of such exercised warrants has no further rights under such warrants.

 

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(iv)        The issuance and sale of the Securities will not obligate the Company to issue shares of Common Stock or other securities to any Person (other than the Purchaser) and will not result in a right of any holder of Company securities to adjust the exercise, conversion, exchange or reset price under any of such securities. Except as set forth in the Great Harbor Securities Purchase Agreement, no Person has any right of first refusal, preemptive right, right of participation, or any similar right to participate in the transactions contemplated by the Golisano Investment Documents that have not been effectively waived as of the Closing.

 

(v)         Except for the Golisano Investment Documents and except as set forth on Section 3.1(g)(v) of the Disclosure Schedules , there are no voting trusts, stockholder agreements, proxies or other agreements, understandings or obligations in effect with respect to the voting, transfer or sale (including any rights of first refusal, rights of first offer or drag-along rights), issuance (including any pre-emptive or anti-dilution rights), redemption or repurchase (including any put or call or buy-sell rights), or registration (including any related lock-up or market standoff agreements) of any shares of capital stock or other securities of the Company.

 

(vi)        Except as set forth in Section 3.1(g)(vi) of the Disclosure Schedules , (A) there are no outstanding debt securities, notes, credit agreements, credit facilities or other agreements, documents or instruments evidencing indebtedness of the Company or by which the Company is or may become bound; (B) there are no financing statements securing obligations in any material amounts, either singly or in the aggregate, filed in connection with the Company; (C) there are no outstanding securities or instruments of the Company which contain any redemption or similar provisions, and there are no contracts, commitments, understandings or arrangements by which the Company is or may become bound to redeem a security of the Company; (D)  the Company does not have any stock appreciation rights or “phantom stock” plans or agreements or any similar plan or agreement; (E) the Company does not have any agreements or arrangements pursuant to which Company warrants or other securities of the Company would be adjusted based on failure to meet any earnings or EBITDA targets; and (F) the Company has no liabilities or obligations required to be disclosed in the SEC Reports (including, for purposes hereof, any liabilities that are required to be disclosed in a Form 10-K) but not so disclosed in the SEC Reports except liabilities or obligations incurred in the ordinary course of business and consistent with past practice since the date of the last balance sheet included in the SEC Reports.

 

(h)           SEC Reports .

 

(i)          The Company has filed all reports, schedules, forms, statements and other documents required to be filed by it under the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for twelve (12) months preceding and including the last day prior to the Execution Date or such shorter period as the Company was required by law or regulation to file such material (the foregoing materials, including the exhibits thereto and documents incorporated by reference therein, being collectively referred to herein as the “ SEC Reports ”) on a timely basis or has received a valid extension of such time of filing and has filed any such SEC Reports prior to the expiration of any such extension.

 

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(ii)         As of their respective filing dates, or to the extent corrected by a subsequent amendment, the SEC Reports complied in all material respects with the requirements of the Securities Act and the Exchange Act and the rules and regulations of the Commission promulgated thereunder, and none of the SEC Reports, when filed, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. The Company has never been an issuer subject to Rule 144(i) under the Securities Act.

 

(iii)        Each of the Material Contracts to which the Company or any Subsidiary is a party or to which the property or assets of the Company or any of its Subsidiaries are subject has been filed (or incorporated by reference) as an exhibit to the SEC Reports. Without limiting the foregoing, to the extent not filed as an exhibit the Company has provided the Purchaser with true, correct and complete copies of all waivers and amendments to all debt securities, notes, credit agreements, credit facilities or other agreements, documents or instruments evidencing indebtedness of the Company or by which the Company is or may become bound. The description of the Material Contracts, documents or other agreements contained in the SEC Reports (as the case may be) reflect in all material respects the terms of the underlying contract, document or other agreement. Each such Material Contract, document or other agreement is in full force and effect and is valid and enforceable by and against the Company or the Subsidiaries, as applicable, in accordance with its terms. Except as described in the SEC Reports, neither the Company nor any of its Subsidiaries is in default in the observance or performance of any term or obligation to be performed by it under any such agreement, and no event has occurred which with notice or lapse of time or both would constitute such a default, in any such case which default or event, individually or in the aggregate, would result in a Company Material Adverse Effect.

 

(iv)        To the Company’s Knowledge there is no event occurring on or prior to the Closing Date (other than the transactions contemplated by the Transaction Documents) that requires the filing of a Current Report on Form 8-K after the Closing.

 

(i)           Financial Statements . The consolidated financial statements of the Company and its consolidated Subsidiaries included in the SEC Reports comply in all material respects with applicable accounting requirements and the rules and regulations of the Commission with respect thereto as in effect at the time of filing. Such consolidated financial statements have been prepared in accordance with GAAP applied on a consistent basis during the periods involved, except as may be otherwise specified in such financial statements or the notes thereto and except that unaudited financial statements may not contain all footnotes required by GAAP, and fairly present in all material respects the financial position of the Company and its consolidated Subsidiaries taken as a whole as of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the case of unaudited statements, to normal, year-end audit adjustments which are not material either individually or in the aggregate.

 

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(j)           Tax Matters . The Company and each of its Subsidiaries (i) has prepared and filed all foreign, federal and state income and all other tax returns, reports and declarations required by any jurisdiction to which it is subject, (ii) has paid all taxes and other governmental assessments and charges that are material in amount, shown or determined to be due on such returns, reports and declarations, except those being contested in good faith, with respect to which adequate reserves have been set aside on the books of the Company or the applicable Subsidiary and (iii) has set aside on its books provisions reasonably adequate for the payment of all taxes for periods subsequent to the periods to which such returns, reports or declarations apply, except where the failure to so pay or file or set aside provisions for any such tax, assessment, charge or return would not have or reasonably be expected to have a Company Material Adverse Effect.

 

(k)           Material Changes . Since March 31, 2015, except as specifically disclosed in the SEC Reports, (i) there have been no events, occurrences or developments, either individually or in the aggregate that have had or would reasonably be expected to have a Company Material Adverse Effect, (ii) neither the Company nor any Subsidiary has incurred any material liabilities (contingent or otherwise) other than (A) trade payables, accrued expenses and other liabilities incurred in the ordinary course of business consistent with past practice and (B) liabilities not required to be reflected in the Company’s consolidated financial statements pursuant to GAAP or to be disclosed in filings made with the Commission, (iii) the Company has not materially altered its method of accounting or the manner in which it keeps its accounting books and records, (iv) the Company has not declared or made any dividend or distribution of cash or other property to its stockholders or purchased, redeemed or made any agreements to purchase or redeem any shares of its capital stock (other than in connection with repurchases of unvested stock issued to employees of the Company), (v) the Company has not issued any equity securities to any officer, director or Affiliate, except Common Stock issued in the ordinary course pursuant to existing Company stock option or stock purchase plans or executive and director corporate arrangements disclosed in the SEC Reports and (vi) there has not been any material change or amendment to, or any waiver of any material right under, any Material Contract under which the Company or any Subsidiary or any of their respective assets is bound or subject. The Company does not have pending before the Commission any request for confidential treatment of information. Except for the issuance of the Securities contemplated by this Agreement, no event, liability or development has occurred or exists with respect to the Company or its business, properties, operations or financial condition that would be required to be disclosed by the Company under applicable securities laws at the time this representation is made that has not been publicly disclosed in the SEC Reports.

 

(l)           Environmental Matters . The Company (i) is not in violation of any statute, rule, regulation, decision or order of any governmental agency or body or any court, domestic or foreign, relating to the use, disposal or release of hazardous or toxic substances or relating to the protection or restoration of the environment or human exposure to hazardous or toxic substances (collectively, “ Environmental Laws ”), (ii)  to the Company’s Knowledge does not own or operate any real property contaminated with any substance that is in violation of any Environmental Laws, (iii) is not liable for any off-site disposal or contamination pursuant to any Environmental Laws, and (iv) to the Company’s Knowledge is not subject to any claim relating to any Environmental Laws; which violation, contamination, liability or claim has had or would reasonably be expected to have a Company Material Adverse Effect; and there is no pending or, to the Company’s Knowledge, threatened investigation that might lead to such a claim.

 

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(m)           Litigation . There is no Action which (i) adversely affects or challenges the legality, validity or enforceability of any of the Transaction Documents or the Securities, (ii) except as set forth on Section 3.1(m)(ii) of the Disclosure Schedules , involves a claim of violation of or liability under any federal, state, local or foreign laws governing the operations of the Company and its Subsidiaries, including without limiting the generality of the foregoing, laws regulating the protection of human health, including without limiting the generality of the foregoing, laws relating to the manufacture, processing, packaging, labeling, marketing, distribution, use, inspection, treatment, storage, disposal, transport or handling of the Company’s or its Subsidiaries’ products, and regulated or hazardous substances, as well as all authorizations, codes, decrees, demands or demand letters, injunctions, judgments, licenses, notices or notice letters, orders, permits, plans or regulations issued, entered, promulgated or approved thereunder, all as may be in effect from time to time and all successors, replacements and expansions thereof, (iii) involves injury to or death of any person arising from or relating to any of the products of the Company or its Subsidiaries or (iv) could, if there were an unfavorable decision, either individually or in the aggregate, have or reasonably be expected to result in a Company Material Adverse Effect. During the past five years, neither the Company nor any Subsidiary, nor to the Company’s Knowledge any director or officer thereof, is or has been the subject of any Action involving a claim of violation of or liability under federal or state securities laws or a claim of breach of fiduciary duty. There has not been, and to the Company’s Knowledge there is not pending or contemplated, any investigation by the Commission involving the Company or any current or former director or officer of the Company. During the past five years, the Commission has not issued any stop order or other order suspending the effectiveness of any registration statement filed by the Company under the Exchange Act or the Securities Act.

 

(n)           Employment Matters . No material labor dispute exists or, to the Company’s Knowledge, is imminent with respect to any of the employees of the Company which would have or reasonably be expected to result in a Company Material Adverse Effect. None of the Company’s or any Subsidiaries’ employees is a member of a union that relates to such employee’s relationship with the Company, and neither the Company nor any Subsidiary is a party to a collective bargaining agreement, and the Company believes that its relationship with its employees is good. No executive officer of the Company (as defined in Rule 501(f) of the Securities Act) has notified the Company or any of its Subsidiaries that such officer intends to leave the Company or any such Subsidiary or otherwise terminate such officer’s employment with the Company or any such Subsidiary. To the Company’s Knowledge, no executive officer or key employee of the Company or any Subsidiary, is, or is now expected to be, in violation of any material term of any employment contract, confidentiality, disclosure or proprietary information agreement or non-competition agreement, or any other contract or agreement or any restrictive covenant in favor of any third party, and to the Company’s Knowledge, the continued employment of each such executive officer or key employee does not subject the Company or any Subsidiary to any liability with respect to any of the foregoing matters, except, in each case, matters that, individually or in the aggregate, would not reasonably be expected to result in a Company Material Adverse Effect. The Company and each Subsidiary is in compliance with all U.S. federal, state, local and foreign laws and regulations relating to employment and employment practices, terms and conditions of employment and wages and hours, except where the failure to be in compliance would not, individually or in the aggregate, result in, or reasonably be expected to result in, a Company Material Adverse Effect.

 

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(o)           Compliance . Neither the Company nor any of its Subsidiaries (i) is in default under or in violation of (and no event has occurred that has not been waived that, with notice or lapse of time or both, would result in a default by the Company or any of its Subsidiaries under or a violation of), any indenture, loan or credit agreement or any other Material Contract (whether or not such default or violation has been waived), (ii) is not in violation of any order of any court, arbitrator or governmental body having jurisdiction over the Company or any Subsidiary or their respective properties or assets and (iii) is or has been in violation of, or, except as set forth in Section 3.1(o) of the Disclosure Schedules , in receipt of notice that it is in violation of, any statute, rule or regulation of any governmental authority applicable to the Company, including without limitation, all applicable rules and regulations of the Food and Drug Administration (the “ FDA ”), and all applicable laws, statutes, ordinances, rules or regulations (including, without limitation, the Federal Food, Drug and Cosmetic Act of 1938, as amended and similar foreign laws and regulations) enforced by the FDA or equivalent foreign authorities, except in each case as would not, individually or in the aggregate, have or reasonably be expected to result in a Company Material Adverse Effect.

 

(p)           Regulatory Permits . The Company and each of its Subsidiaries possesses all certificates, authorizations and permits issued by the appropriate federal, state, local or foreign regulatory authorities necessary to conduct its business as described in the SEC Reports, including without limitation the FDA, except where the failure to possess such permits, individually or in the aggregate, has not had and would not have or would not reasonably be expected to result in a Company Material Adverse Effect (“ Material Permits ”). Neither the Company, nor any Subsidiary has received any notice of Actions relating to the revocation or modification of any such Material Permits and, to the Company’s Knowledge, there are no facts or circumstances that the Company or any Subsidiary would reasonably expect to give rise to the revocation or modification of any Material Permits.

 

(q)           Title to Assets . The Company and each of its Subsidiaries has good and marketable title to all real property and tangible personal property owned by it which is material to the business of the Company and the Subsidiaries, in each case free and clear of all Liens except liens of the Company’s senior and subordinated lenders as disclosed in the SEC Reports and except such as do not materially affect the value of such property and do not materially interfere with the use made and proposed to be made of such property by the Company and its Subsidiaries and except for Liens for the payment of federal, state or other taxes for which appropriate reserves have been made in accordance with GAAP and the payment of which is not delinquent or subject to penalties. Any real property and facilities held under lease by the Company or any Subsidiary are held by it under valid, subsisting and enforceable leases with such exceptions as are not material and do not interfere with the use made of such property and buildings by the Company and its Subsidiaries.

 

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(r)           Intellectual Property . The Company and each of its Subsidiaries owns, possesses, licenses or has other rights to use all foreign and domestic patents, patent applications, trade and service marks, trade and service mark applications and registrations, trade names, copyrights, licenses, inventions, trade secrets, technology, know-how and other intellectual and proprietary rights and processes (collectively, the “ Intellectual Property ”) necessary or material for the conduct of its businesses as now conducted as described in the SEC Reports and, with respect to material activities, as now contemplated to be conducted as described in the SEC Reports and which the failure to so own, possess, license or have other rights to use would not have or reasonably be expected to result in a Company Material Adverse Effect. Except where any such violations or infringements would not have a Company Material Adverse Effect, (i) to the Company’s Knowledge, the Company’s or its Subsidiaries’ use of any such Intellectual Property in the conduct of its business as presently conducted as described in the SEC Reports and, with respect to material activities, as now contemplated to be conducted as described in the SEC Reports does not violate or infringe upon the patent, trademark, copyright, trade secret or other proprietary rights of any third parties; (ii) to the Company’s Knowledge, there is no infringement by third parties of any such Intellectual Property; (iii) there is no Action challenging the Company’s or any Subsidiary’s rights in or to any such Intellectual Property; (iv) there is no Action challenging the validity or scope of any such Intellectual Property; and (v) there is no Action that the Company or any Subsidiary infringes or otherwise violates any patent, trademark, copyright, trade secret or other proprietary rights of other. There is no pending or, to the Company’s Knowledge, threatened Action challenging the Company’s or any Subsidiary’s rights in or to any Intellectual Property, or challenging inventorship, validity or scope of any such Intellectual Property. The Company and each of its Subsidiaries have taken reasonable security measures to protect the secrecy, confidentiality and value of all of its and its Subsidiaries’ Intellectual Property, except where failure to do so would not, individually or in the aggregate, reasonably be expected to result in a Company Material Adverse Effect. None of the technology employed by the Company or any of its Subsidiaries has been obtained or is being used by the Company or any Subsidiary in violation of any contractual obligation binding on the Company or any Subsidiary or, to the Company’s Knowledge, any of its or its Subsidiaries’ officers, directors or employees or otherwise in violation of the rights of any Person, which violations would have or would reasonably be expected to have a Company Material Adverse Effect.

 

(s)           Insurance . The Company and each of its Subsidiaries is insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as the Company believes to be prudent in the businesses and locations in which the Company and its Subsidiaries are engaged. Neither the Company nor any Subsidiary has received any notice of cancellation of any such insurance, nor to the Company’s Knowledge will it be unable to renew its existing insurance coverage for the Company or any Subsidiary as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business without a significant increase in cost.

 

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(t)           Acquisition; Great Harbor Equity Financing; and Solvency.

 

(i)          A true, complete and correct executed copy of the Acquisition Documents and the Great Harbor Equity Financing Documents have been provided to the Purchaser. Except for any amendments or modifications as have been approved in writing by the Purchaser, the Acquisition Documents nor the Great Harbor Equity Financing Documents have been amended or modified, no such amendment or modification is contemplated, there are no side letters or other agreements, contracts or arrangements related to Acquisition or the Great Harbor Equity Financing Transactions other than as expressly set forth therein. The Acquisition Agreement and the Great Harbor Equity Financing Documents are in full force and effect and are the legal, valid, binding and enforceable obligations of the Company and, to the Company’s Knowledge, each of the other parties thereto, except as such enforceability may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws of general application relating to or affecting creditors’ rights generally and subject to general equitable principles (whether considered in a proceeding in equity or at law). There are no conditions or other contingencies related to the transactions contemplated by the Acquisition Agreement or the Great Harbor Equity Financing Documents other than as expressly set forth therein. No event has occurred that, with or without notice, lapse of time or both, would or would reasonably be expected to constitute a default or breach on the part of the Company or, to the Company’s Knowledge, any other party thereto under the Acquisition Agreement or the Great Harbor Equity Financing Documents.

 

(ii)         To the Company’s Knowledge all of the representations and warranties made in the Acquisition Agreement by the Target and those Persons owning equity in the Target are true, correct and complete in all respects.

 

(iii)        Assuming the satisfaction of the conditions set forth in Article 5 of this Agreement, the Company has no reason to believe that any condition to the Closing will not be satisfied. Assuming the satisfaction of the conditions set forth in Article 5 of this Agreement the Company will have as of the Closing Date funds sufficient to pay the purchase price due the Persons holding equity interests in the Target.

 

(iv)        On the Closing Date and immediately after the consummation of the Transactions the Company and its Subsidiaries will be Solvent.

 

(u)           Transactions With Affiliates and Employees . Except as set forth in the SEC Reports, none of the executive officers or directors of the Company or any Subsidiary and, to the Company’s Knowledge, none of the employees of the Company or any Subsidiary is presently a party to any transaction with the Company or any Subsidiary (other than for services as employees, officers and directors) that would be required to be disclosed pursuant to Item 404 of Regulation S-K promulgated under the Securities Act.

 

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(v)          Sarbanes-Oxley; Internal Accounting Controls . Except as disclosed below in this Section 3.1(v), the Company and the Subsidiaries are in compliance with any and all applicable requirements of the Sarbanes-Oxley Act of 2002 that are effective as of the Execution Date, and any and all applicable rules and regulations promulgated by the Commission thereunder that are effective as of Execution Date and as of the Closing Date.  The Company and the Subsidiaries maintain a system of internal accounting controls sufficient to provide reasonable assurance that: (i) transactions are executed in accordance with management’s general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset accountability, (iii) access to assets is permitted only in accordance with management’s general or specific authorization, and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences. The Company and the Subsidiaries have established disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and the Subsidiaries that are designed to ensure that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms. The Company’s certifying officers have evaluated the effectiveness of the disclosure controls and procedures of the Company and its Subsidiaries as of the end of the period covered by the most recently filed periodic report under the Exchange Act (such date, the “ Evaluation Date ”). The Company presented in its most recently filed periodic report under the Exchange Act the conclusions of the certifying officers that at the end of the period covered by that report, such disclosure controls and procedures were not effective. This was due to the Company's lack of documentation or testing and correction procedures of current internal control procedures. Since the Evaluation Date, there have been no changes in the internal control over financial reporting (as such term is defined in the Exchange Act) of the Company and its Subsidiaries that have materially affected, or are reasonably likely to materially affect, the internal control over financial reporting of the Company and its Subsidiaries except that the Company has engaged an experienced public accountant to assist it in assessing the Company's controls and financials and consulted with a Sarbanes-Oxley consultant in order to assess the Company's timeline for full compliance.

 

(w)           Certain Fees . No brokerage or finder’s fees or commissions are or will be payable by the Company or any Subsidiary to any person or entity as a result of the transactions contemplated by this Agreement or any of the other Transaction Documents, no Person will have any valid right, interest or claim against or upon the Company or the Purchaser for any commission, fee or other compensation pursuant to any agreement, arrangement or understanding entered into by or on behalf of the Company. The Company shall indemnify, pay, and hold the Purchaser harmless against, any liability, loss or expense (including, without limitation, reasonable attorneys’ fees and out-of-pocket expenses) arising in connection with any such right, interest or claim.

 

(x)           Private Placement . Assuming the accuracy of the Purchaser’s representations and warranties set forth in Section 3.2 of this Agreement (without giving effect to any materiality qualifiers therein), no registration under the Securities Act is required for the offer and sale of the Securities by the Company to the Purchaser under the Golisano Investment Documents.

 

(y)           Registration Rights . Except as set forth in Section 3.1(y) of the Disclosure Schedules , no Person has any right to cause the Company to effect the registration under the Securities Act of any securities of the Company. None of the Persons listed on Section 3.1(y) of the Disclosure Schedules has piggyback or other registration rights which would entitle them to have the shares of Common Stock held by them registered under a registration statement that the Company is required to file with the Commission for the Purchaser pursuant to the Registration Rights Agreement.

 

(z)           No Directed Selling Efforts or General Solicitation . Neither the Company nor any Person acting on its behalf has conducted any “general solicitation” or “general advertising” (as those terms are used in Regulation D) in connection with the offer or sale of any of the Securities.

 

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(aa)          No Integrated Offering . Assuming the accuracy of the Purchaser’s representations and warranties set forth in Section 3.2 (without giving effect to any materiality qualifiers therein), except as disclosed in the SEC Reports and except for the Great Harbor Equity Financing Transactions, neither the Company nor any Person acting on its behalf has, directly or indirectly, at any time within the past six (6) months, made any offers or sales of any Company security or solicited any offers to buy any security under circumstances that would (i) eliminate the availability of the exemption from registration under Regulation D under the Securities Act in connection with the offer and sale by the Company of the Securities as contemplated hereby or (ii) cause the offering of the Securities pursuant to the Transaction Documents to be integrated with prior offerings by the Company for purposes of any applicable law, regulation or shareholder approval provisions, including, without limitation, under the rules and regulations of any Trading Market on which any of the securities of the Company are listed or designated.

 

(bb)          Disclosure . All disclosure furnished by or on behalf of the Company to the Purchaser regarding the Company, its business and the transactions contemplated hereby, including the Disclosure Schedules to this Agreement, is true and correct and does not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading. The Company acknowledges and agrees that the Purchaser has not made any representations or warranties with respect to the transactions contemplated hereby other than those specifically set forth in Section 3.2 hereto.

 

(cc)          Listing and Maintenance Requirements . The Common Stock is registered pursuant to Section 12(b) or 12(g) of the Exchange Act, and the Company has taken no action designed to, or which to the Company’s Knowledge is likely to have the effect of, terminating the registration of the Common Stock under the Exchange Act nor has the Company received any notification that the Commission is contemplating terminating such registration. The Company has not, in the 12 months preceding the Execution Date, received written notice from any Trading Market on which the Common Stock is listed or quoted to the effect that the Company is not in compliance with the listing or maintenance requirements of such Trading Market. The Company is, and has no reason to believe that it will not in the foreseeable future continue to be in compliance with all listing and maintenance requirements of the Principal Trading Market.

 

(dd)          Subsidiary Rights . The Company or one of its Subsidiaries has the unrestricted right to vote, and (subject to limitations imposed by applicable law) to receive dividends and distributions on, all capital securities of its Subsidiaries as owned by the Company or such Subsidiary.

 

(ee)          Investment Company . The Company is not, and is not an Affiliate of, and immediately following the Closing, will not be an “investment company” within the meaning of the Investment Company Act of 1940, as amended. The Company shall conduct its business in a manner so that it will not become an “investment company” subject to registration under the Investment Company Act of 1940, as amended.

 

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(ff)          Application of Takeover Protections; Rights Agreements . The Company and the Board of Directors have taken all necessary action, if any, in order to render inapplicable any control share acquisition, business combination, poison pill (including any distribution under a rights agreement) or other similar anti-takeover provision under the Company’s charter documents or the laws of the State of Nevada that is or could become applicable to the Purchaser as a result of the Purchaser and the Company fulfilling their obligations or exercising their rights under the Transaction Documents, including, without limitation, the Company’s issuance of the Securities and the Purchaser’s ownership of the Securities. The Company has not adopted a stockholder rights plan or similar arrangement relating to accumulations of beneficial ownership of Common Stock or a change in control of the Company.

 

(gg)          Off Balance Sheet Arrangements . There is no transaction, arrangement, or other relationship between the Company and an unconsolidated or other off balance sheet entity that is required to be disclosed by the Company in its SEC Reports (including, for purposes hereof, any that are required to be disclosed in a Form 10) and is not so disclosed or that otherwise would have or could be reasonably expected to have a Company Material Adverse Effect.

 

(hh)          Acknowledgment Regarding the Purchaser’s Purchase of Securities . The Company acknowledges and agrees that the Purchaser is acting solely in the capacity of an arm’s length purchaser with respect to the Transaction Documents and the transactions contemplated thereby. The Company further acknowledges that the Purchaser is not acting as a financial advisor or fiduciary of the Company (or in any similar capacity) with respect to the Transaction Documents and the transactions contemplated thereby and any advice given by the Purchaser or its representatives or agents in connection with the Transaction Documents and the transactions contemplated thereby is merely incidental to the Purchaser’s purchase of the Securities.

 

(ii)           Foreign Corrupt Practices . Neither the Company nor the Subsidiaries, nor to the Company’s Knowledge, any agent or other person acting on behalf of the Company or any of the Subsidiaries, has: (i) directly or indirectly, used any funds for unlawful contributions, gifts, entertainment or other unlawful expenses related to foreign or domestic political activity, (ii) made any unlawful payment to foreign or domestic government officials or employees or to any foreign or domestic political parties or campaigns from corporate funds, (iii) failed to disclose fully any contribution made by the Company or any Subsidiary (or made by any person acting on its behalf of which the Company is aware) which is in violation of law or (iv) violated in any material respect any provision of the Foreign Corrupt Practices Act of 1977, as amended

 

3.2          Representations and Warranties of the Purchaser . The Purchaser hereby represents and warrants as of Execution Date and as of the Closing Date to the Company as follows:

 

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(a)           Organization; Authority . The Purchaser is an entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization with the requisite limited liability company power and authority to enter into and to consummate the transactions contemplated by the Golisano Investment Documents to which it is a party and otherwise to carry out its obligations hereunder and thereunder. The execution, delivery and performance by the Purchaser of the transactions contemplated by this Agreement have been duly authorized by all necessary limited liability company action on the part of the Purchaser. Each Golisano Investment Document to which it is a party has been duly executed by the Purchaser, and when delivered by the Purchaser in accordance with the terms hereof, will constitute the valid and legally binding obligation of the Purchaser, enforceable against it in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally the enforcement of, creditors’ rights and remedies or by other equitable principles of general application or insofar as indemnification and contribution provisions may be limited by applicable law.

 

(b)           No Conflicts . The execution, delivery and performance by the Purchaser of the Golisano Investment Documents to which it is a party and the consummation by the Purchaser of the transactions contemplated hereby and thereby will not (i) result in a violation of the Articles of Organization or the Operating Agreement of the Purchaser, (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any material agreement, indenture or instrument to which the Purchaser is a party or (iii) result in a violation of any law, rule, regulation, order, judgment or decree (including federal and state securities laws) applicable to the Purchaser, except in the case of clauses (ii) and (iii) above, for such conflicts, defaults, rights or violations which would not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the ability of the Purchaser to perform its obligations hereunder.

 

(c)           Investment Intent . The Purchaser understands that the Securities are “restricted securities” and have not been registered under the Securities Act or any applicable state securities law and that it is acquiring the Securities as principal for its own account and not with a view to, or for distributing or reselling such Securities or any part thereof in violation of the Securities Act or any applicable state securities laws, provided, however , that by making the representations herein, the Purchaser does not agree to hold any of the Securities for any minimum period of time and reserves the right, subject to the provisions of this Agreement, at all times to sell or otherwise dispose of all or any part of such Securities pursuant to an effective registration statement under the Securities Act or under an exemption from such registration and in compliance with applicable federal and state securities laws. The Purchaser is acquiring the Securities hereunder in the ordinary course of its business. The Purchaser does not presently have any agreement, plan or understanding, directly or indirectly, with any Person to distribute or effect any distribution of any of the Securities (or any securities which are derivatives thereof) to or through any person or entity; the Purchaser is not a registered broker-dealer under Section 15 of the Exchange Act or an entity engaged in a business that would require it to be so registered as a broker-dealer.

 

(d)           Purchaser Status . At the time the Purchaser was offered the Securities, it was, and at Execution Date, it is, an “accredited investor” as defined in Rule 501(a) under the Securities Act.

 

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(e)           General Solicitation . The Purchaser is not purchasing the Securities as a result of any advertisement, article, notice or other communication regarding the Securities published in any newspaper, magazine or similar media or broadcast over television or radio or presented at any seminar or any other general advertisement.

 

(f)           Experience of the Purchaser . The Purchaser, either alone or together with its representatives, has such knowledge, sophistication and experience in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment in the Securities, and has so evaluated the merits and risks of such investment. The Purchaser is able to bear the economic risk of an investment in the Securities and, at the present time, is able to afford a complete loss of such investment.

 

(g)           Access to Information . The Purchaser acknowledges that it has had the opportunity to review the Disclosure Materials and has been afforded (i) the opportunity to ask such questions as it has deemed necessary of, and to receive answers from, officers of the Company concerning the terms and conditions of the offering of the Securities and the merits and risks of investing in the Securities; (ii) access to information about the Company and its respective financial condition, results of operations, business, properties, management and prospects sufficient to enable it to evaluate its investment; and (iii) the opportunity to obtain such additional information that the Company possesses or can acquire without unreasonable effort or expense that is necessary to make an informed investment decision with respect to the investment. Neither such inquiries nor any other investigation conducted by or on behalf of the Purchaser or its representatives or counsel shall modify, amend or affect the Purchaser’s right to rely on the truth, accuracy and completeness of the Disclosure Materials and the Company’s representations and warranties contained in the Golisano Investment Documents (as qualified by the Disclosure Materials).

 

(h)           Certain Trading Activities . Other than with respect to the transactions contemplated herein, since the time that the Purchaser was first contacted by the Company or any other Person regarding the transactions contemplated hereby, neither the Purchaser nor, to the knowledge of the Purchaser, any Affiliate of the Purchaser which (i) had knowledge of the transactions contemplated hereby, (ii) has or shares discretion relating to the Purchaser’s investments or trading or information concerning the Purchaser’s investments, including in respect of the Securities and (iii) is subject to the Purchaser’s review or input concerning such Affiliate’s investments or trading (collectively, “ Trading Affiliate s ”) has directly or indirectly, nor has any Person acting on behalf of or pursuant to any understanding with the Purchaser or Trading Affiliate, effected or agreed to effect any transactions in the securities of the Company (including, without limitation, any Short Sales involving the Company’s securities). Notwithstanding the foregoing, and except as otherwise provided in Section 4.12, neither the Purchaser nor any of its Trading Affiliates makes any representation, warranty or covenant hereby that it will not engage in Short Sales in the securities of the Company after the effectiveness of the Registration Statement.

 

(i)            Brokers and Finders . No Person will have, as a result of the transactions contemplated by this Agreement, any valid right, interest or claim against or upon the Company or any Purchaser for any commission, fee or other compensation pursuant to any agreement, arrangement or understanding entered into by or on behalf of the Purchaser.

 

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(j)            Independent Investment Decision . The Purchaser has independently evaluated the merits of its decision to purchase Securities pursuant to the Golisano Investment Documents. The Purchaser understands that nothing in this Agreement or any other materials presented by or on behalf of the Company to the Purchaser in connection with the purchase of the Securities constitutes legal, tax or investment advice. The Purchaser has consulted such legal, tax and investment advisors as it, in its sole discretion, has deemed necessary or appropriate in connection with its purchase of the Securities.

 

(k)           Reliance on Exemptions . The Purchaser understands that the Securities are being offered and sold to it in reliance on specific exemptions from the registration requirements of United States federal and state securities laws and that the Company is relying in part upon the truth and accuracy of, and the Purchaser’s compliance with, the representations, warranties, agreements, acknowledgements and understandings of the Purchaser set forth herein in order to determine the availability of such exemptions and the eligibility of the Purchaser to acquire the Securities.

 

(l)            No Governmental Review . The Purchaser understands that no United States federal or state agency or any other government or governmental agency has passed on or made any recommendation or endorsement of the Securities or the fairness or suitability of the investment in the Securities nor have such authorities passed upon or endorsed the merits of the offering of the Securities.

 

(m)          Regulation M . The Purchaser is aware that the anti-manipulation rules of Regulation M under the Exchange Act may apply to sales of Common Stock and other activities with respect to the Common Stock by the Purchaser.

 

(n)           Residency . The Purchaser’s principal executive offices are in the State of New York.

 

(o)           Trading Market . The Purchaser acknowledges that the Securities are quoted over-the-counter, and that no securities issued by the Company are listed on a national securities exchange.

 

The Company and the Purchaser acknowledge and agree that no party to this Agreement has made or makes any representations or warranties with respect to the transactions contemplated hereby other than those specifically set forth in this Article III and the Golisano Investment Documents.

 

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Article 4

 

OTHER AGREEMENTS OF THE PARTIES

 

4.1          Transfer Restrictions .

 

(a)           Compliance with Laws . Notwithstanding any other provision of the Golisano Investment Documents, the Purchaser covenants that the Shares, may only be disposed of pursuant to an effective registration statement under, and in compliance with the requirements of, the Securities Act, or pursuant to an available exemption from, or in a transaction not subject to, the registration requirements of the Securities Act, and in compliance with any applicable state and federal securities laws. In connection with any transfer of the Shares other than (i) pursuant to an effective registration statement, (ii) to the Company, (iii) to an Affiliate of the Purchaser, (iv) pursuant to Rule 144 ( provided that the Purchaser provides the Company with reasonable assurances (in the form of seller and broker representation letters if required) that the Securities may be sold pursuant to such rule) or Rule 144A, (v) pursuant to Rule 144 without the requirement that the Company be in compliance with the current public information requirements of Rule 144 and without other restriction following the applicable holding period or (vi) in connection with a bona fide pledge, the Company may require the transferor thereof to provide to the Company an opinion of counsel selected by the transferor and reasonably acceptable to the Company, the form and substance of which opinion shall be reasonably satisfactory to the Company, to the effect that such transfer does not require registration of such transferred Shares under the Securities Act. As a condition of transfer, any such transferee shall agree in writing to be bound by the terms of this Agreement and the Registration Rights Agreement and shall have the rights of the Purchaser under this Agreement and the Registration Rights Agreement.

 

(b)           Legends . Certificates evidencing the Closing Shares and, upon issuance the Warrant Shares, shall bear any legend as required by the “Blue Sky” laws of any state and a restrictive legend in substantially the following form until such time as they are not required under Section 4.1(c) (and a stock transfer order may be placed against transfer of the certificates for the Securities):

 

THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ SECURITIES ACT ”), OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OR (B) AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY.

 

In addition, if the Purchaser is an Affiliate of the Company, certificates evidencing the Shares issued to the Purchaser shall bear a customary “affiliates” legend.

 

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(c)           Removal of Legends . Subject to the Company’s right to request an opinion of counsel as set forth in Section 4.1(a), the legend set forth in Section 4.1(b) above shall be removable and the Company shall issue or cause to be issued a certificate without such legend or any other legend (except for any “affiliates” legend as set forth in Section 4.1(b)) to the holder of the applicable Shares upon which it is stamped if (i) such Shares are registered for resale under the Securities Act (provided that, if the Purchaser is selling pursuant to the effective registration statement registering the Shares for resale, the Purchaser agrees to only sell such Shares during such time that such registration statement is effective and not withdrawn or suspended, and only as permitted by such registration statement), (ii) such Shares are sold or transferred in compliance with Rule 144 (if the transferor is not an Affiliate of the Company), including without limitation in compliance with the current public information requirements of Rule 144 if applicable to the Company at the time of such sale or transfer, and the holder and its broker have delivered customary documents reasonably requested by the Transfer Agent and/or Company Counsel in connection with such sale or transfer, or (iii) such Shares are eligible for sale under Rule 144 without the requirement that the Company be in compliance with the current public information requirements of Rule 144 and without other restriction and Company Counsel has provided written confirmation of such eligibility to the Transfer Agent. Any fees (with respect to the Transfer Agent, Company Counsel or otherwise) associated with the removal of such legend shall be borne by the Company. At such time as a legend is no longer required for certain Shares, the Company will no later than three (3) Trading Days following the delivery by the Purchaser to the Company or the Transfer Agent (with concurrent notice and delivery of copies to the Company) of a legended certificate representing such Shares (endorsed or with stock powers attached, signatures guaranteed, and otherwise in form necessary to affect the reissuance and/or transfer, and together with such other customary documents as the Transfer Agent and/or Company Counsel shall reasonably request), deliver or cause to be delivered to the transferee of the Purchaser or the Purchaser, as applicable, a certificate representing such Shares that is free from all restrictive and other legends. The Company may not make any notation on its records or give instructions to the Transfer Agent that enlarge the restrictions on transfer set forth in this Section 4.1.

 

(d)           Irrevocable Transfer Agent Instructions . The Company shall issue Irrevocable Transfer Agent Instructions to its Transfer Agent, and any subsequent Transfer Agent. The Company represents and warrants that no instruction other than the Irrevocable Transfer Agent Instructions or instructions consistent therewith or otherwise contemplated hereby or thereby or by the other Transaction Documents or such other documents as the Transfer Agent may request in connection with any such instructions will be given by the Company to its Transfer Agent in connection with this Agreement, and that the Shares shall otherwise be freely transferable on the books and records of the Company as and to the extent provided in and subject to the terms of this Agreement, the other Golisano Investment Documents and applicable law.

 

(e)           Acknowledgement . The Purchaser hereunder acknowledges its primary responsibilities under the Securities Act and accordingly will not sell or otherwise transfer the Shares or any interest therein without complying with the requirements of the Securities Act. Purchaser acknowledges that the delivery of the Irrevocable Transfer Agent Instructions and any removal of any legends from certificates representing the Shares as set forth in this Section 4.1 is predicated on the Company’s reliance upon the Purchaser’s acknowledgement in this Section 4.1(e).

 

4.2          Acknowledgment of Dilution . The Company acknowledges that the issuance of the Shares may result in dilution of the outstanding shares of Common Stock. The Company further acknowledges that its obligations under the Golisano Investment Documents, including without limitation its obligation to issue the Shares pursuant to the Golisano Investment Documents, are, subject to the terms and conditions expressly set forth in this Agreement, with respect to the Closing Shares, and the Warrant, with respect to the Warrant Shares, unconditional and absolute and not subject to any right of set-off, counterclaim, delay or reduction, regardless of the effect of any such dilution or any claim the Company may have against the Purchaser and regardless of the dilutive effect that such issuance may have on the ownership of the other stockholders of the Company.

 

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4.3          Furnishing of Information .

 

(a)           Until such time that the Purchaser no longer owns Securities (the “ Reporting Period ”), the Company covenants to maintain the registration of the Common Stock under Section 12(b) or 12(g) of the Exchange Act and to timely file (or obtain extensions in respect thereof and file within the applicable grace period) all reports required to be filed by the Company after Execution Date pursuant to the Exchange Act even if the Company is not then subject to the reporting requirements of the Exchange Act. Without limiting any of the Company’s obligations under the Registration Rights Agreement, during the Reporting Period, if the Company is not required to file reports pursuant to such laws, it will prepare and furnish to the Purchaser and make publicly available in accordance with Rule 144(c) such information as is required for the Purchaser to sell the Shares under Rule 144. Without limiting any of the Company’s obligations under the Registration Rights Agreement, the Company further covenants that it will take such further action as any holder of the Shares may reasonably request, to the extent required from time to time to enable such Person to sell the Shares without registration under the Securities Act, including without limitation, within the requirements of the exemption provided by Rule 144.

 

(b)           At any time commencing on the Closing Date and ending at such time that all of the Shares may be sold without the requirement for the Company to be in compliance with Rule 144(c)(1) and otherwise without restriction or limitation pursuant to Rule 144, if the Company shall fail for any reason to satisfy the current public information requirement under Rule 144(c) (a “ Public Information Failure ”) then, in addition to the Purchaser’s other available remedies, the Company shall pay to a Purchaser, in cash, as partial liquidated damages and not as a penalty, by reason of any such delay in or reduction of its ability to sell the Securities, an amount in cash equal to two percent (2%) of the aggregate Purchase Price paid for the Shares held by the Purchaser on the day of a Public Information Failure and on every thirtieth (30th) day (pro-rated for periods totaling less than thirty days) thereafter until the earlier of (i) the date such Public Information Failure is cured, and (ii) such time that such public information is no longer required for the Purchaser to transfer the Shares pursuant to Rule 144. The payments to which a Purchaser shall be entitled pursuant to this Section 4.3(b) are referred to herein as “ Public Information Failure Payments. ” Public Information Failure Payments shall be paid on the earlier of (A) the last day of the calendar month during which such Public Information Failure Payments are incurred and (B) the third (3rd) Business Day after the event or failure giving rise to the Public Information Failure Payments is cured. In the event the Company fails to make Public Information Failure Payments in a timely manner, such Public Information Failure Payments shall bear interest at the rate of 1.5% per month (prorated for partial months) until paid in full. Nothing herein shall limit the Purchaser’s right to pursue actual damages for the Public Information Failure, and the Purchaser shall have the right to pursue all remedies available to it at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief. 

 

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4.4          Form D and Blue Sky . The Company agrees to timely file a Form D with respect to the Securities as and if required under Regulation D and to provide a copy thereof to the Purchaser, if the Purchaser so requests in writing, promptly after such filing. The Company shall take such action as the Company shall reasonably determine is necessary in order to qualify the Securities for sale to the Purchaser at the Closing pursuant to this Agreement under applicable securities or “Blue Sky” laws of the states of the United States (or to obtain an exemption from such qualification), which, subject to the accuracy of the Company’s and the Purchaser’s representations and warranties set forth herein, shall consist of the submission of all filings and reports relating to the offer and sale of the Securities pursuant to Rule 506 of Regulation D required under applicable securities or “Blue Sky” laws of the states of the United States following the Closing Date, and shall provide evidence of any such action so taken to the Purchaser, if Purchaser so requests, in writing.

 

4.5          No Integration . The Company shall not, and shall use its commercially reasonable efforts to ensure that the Affiliates of the Company shall not, sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any security (as defined in Section 2 of the Securities Act) that will be integrated with the offer or sale of the Securities in a manner that would require the registration under the Securities Act of the sale of the Securities to the Purchaser, or that will be integrated with the offer or sale of the Securities for purposes of the rules and regulations of any Trading Market such that it would require stockholder approval prior to the closing of such other transaction unless stockholder approval is obtained before the closing of such subsequent transaction.

 

4.6          Securities Laws Disclosure; Publicity . Within the time required by the Exchange Act, the Company will file a Current Report on Form 8-K with the Commission describing the terms of the Transaction Documents (and including as exhibits to such Current Report on Form 8-K the material Transaction Documents). From and after the filing of the Form 8-K, Purchaser shall not be in possession of any material, non-public information received from the Company or any of its respective officers, directors, employees or agents, that is not disclosed in the Form 8-K unless the Purchaser shall have executed a written agreement regarding the confidentiality and use of such information. Purchaser covenants that until such time as the transactions contemplated by this Agreement are publicly disclosed by the Company as described in this Section 4.6, to maintain the confidentiality of all disclosures made to it in connection with such transactions (including the existence and terms of such transactions).

 

4.7          Non-Public Information . Except with respect to the material terms and conditions of the Transactions, the Company shall not and shall cause each of its officers, directors, employees and agents, not to, provide any Purchaser with any information the Company believes is material, non-public information regarding the Company from and after the filing of the Press Release without the express written consent of the Purchaser, unless prior thereto the Purchaser shall have executed a written agreement regarding the confidentiality and use of such information.

 

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4.8          Indemnification .

 

(a)           Indemnification of the Purchaser . Subject to this Section 4.8, the Company will indemnify and hold the Purchaser and its managers, officers, members, employees and agents (and any other Persons with a functionally equivalent role of a Person holding such titles notwithstanding a lack of such title or any other title), each Person who controls the Purchaser (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, shareholders, agents, members, partners or employees (and any other Persons with a functionally equivalent role of a Person holding such titles notwithstanding a lack of such title or any other title) of such controlling Person (each, a “ Purchaser Party ”) harmless from any and all losses, liabilities, obligations, claims, contingencies, damages, costs and expenses, including all judgments, amounts paid in settlements, court costs and reasonable attorneys’ fees and costs of investigation that any the Purchaser Party may suffer or incur, as a result of, relating to or arising out of (a) any breach of any of the representations, warranties, covenants or agreements made by the Company in this Agreement or in the other Golisano Investment Documents or (b) any action instituted against the Purchaser Parties in any capacity, or any of them or their respective Affiliates, by any stockholder of the Company who is not an Affiliate of such Purchaser Party, with respect to any of the transactions contemplated by the Golisano Investment Documents (except to the extent such action is based upon a breach of such Purchaser Party’s representations, warranties or covenants under this Agreement or in the other Golisano Investment Documents). The representations, warranties, covenants and obligations of the Company, and the rights and remedies that may be exercised by a Purchaser Party, shall not be limited or otherwise affected by or as a result of any information furnished to, or any investigation made by or knowledge of, any Purchaser Party or any representative of any Purchaser Party.

 

(b)           Conduct of Proceedings Involving Indemnification . Promptly after receipt by any Person (the “ Indemnified Person ”) of notice of any demand, claim or circumstances which would or might give rise to a claim or the commencement of any Action in respect of which indemnity may be sought pursuant to Section 4.8(a), such Indemnified Person shall promptly notify the Company in writing and the Company shall have the right to assume the defense thereof, including the employment of counsel reasonably satisfactory to such Indemnified Person and the assumption of the payment of all fees and expenses; provided, however , that the failure of any Indemnified Person so to notify the Company shall not relieve the Company of its obligations hereunder except to the extent that the Company is actually and materially prejudiced by such failure to notify. In any such Action, any Indemnified Person shall have the right to retain its own counsel, but the fees and expenses of such counsel shall be at the expense of such Indemnified Person unless: (i) the Company and the Indemnified Person shall have mutually agreed to the retention of such counsel; (ii) the Company shall have failed promptly to assume the defense of such Action and to employ counsel reasonably satisfactory to such Indemnified Person in such Action; or (iii) in the reasonable judgment of counsel to such Indemnified Person representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them, in which case the Company shall be responsible for the reasonable fees and expenses of no more than one such separate counsel. The Company shall not be liable for any settlement of any Action effected without its written consent, which consent shall not be unreasonably withheld, delayed or conditioned. Without the prior written consent of the Indemnified Person, which consent shall not be unreasonably withheld, delayed or conditioned, the Company shall not effect any settlement of any pending or threatened Action in respect of which any Indemnified Person is a party, unless such settlement includes an unconditional release of such Indemnified Person from all liability arising out of such Action.

 

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(c)           Other Indemnification Terms . The indemnification required by this Section 4.8 shall be made by periodic payments of the amount thereof during the course of the investigation or defense, as and when bills are received or are incurred. The indemnity agreements contained herein shall be in addition to any cause of action or similar right of any Purchaser Party against the Company or others and any liabilities the Company may be subject to pursuant to law.

 

4.9          Reservation of Shares of Common Stock . As of the date hereof, the Company has reserved and the Company shall continue to reserve and keep available at all times, free of preemptive rights, a sufficient number of shares of Common Stock for the purpose of enabling the Company to issue Shares pursuant to this Agreement and Warrant Shares pursuant to any exercise of the Warrant.

 

4.10        Listing of Securities . In the time and manner required by the Principal Trading Market, the Company shall prepare and file with such Trading Market any additional shares listing application that may be required by such Trading Market covering all of the Shares and shall use its commercially reasonable efforts to take all steps necessary to maintain, so long as any other shares of Common Stock shall be so listed, such listing.

 

4.11        Use of Proceeds . The Company shall use the net proceeds from the sale of the Securities hereunder solely for funding the purchase price due from the Company under the Acquisition Agreement.

 

4.12        Dispositions and Confidentiality After Execution Date . The Purchaser shall not, and shall cause its Trading Affiliates not to: (a) sell, offer to sell, solicit offers to buy, dispose of, loan, pledge or grant any right with respect to (collectively, a Disposition ”) the Shares; or (b) engage in any hedging or other transaction which is designed or could reasonably be expected to lead to or result in a Disposition of the Shares by the Purchaser or a Trading Affiliate, except, in each case, for Dispositions pursuant to an available exemption from, or in a transaction not subject to, the registration requirements of the Securities Act, and in compliance with any applicable state and federal securities laws. In addition, the Purchaser agrees that for so long as it owns any Common Stock, it will not enter into any Short Sale of Shares executed at a time when the Purchaser has no equivalent offsetting long position in the Common Stock. For purposes of determining whether the Purchaser has an equivalent offsetting long position in the Common Stock, shares that the Purchaser is entitled to receive within sixty (60) days (whether pursuant to contract or upon conversion or exercise of convertible securities) will be included as if held long by the Purchaser. The Purchaser covenants that neither it nor any Person acting on its behalf or pursuant to any understanding with it will engage in any transactions in the Company’s securities (including, without limitation, any Short Sales involving the Company’s securities) during the period from Execution Date until the earlier of such time as (i) the transactions contemplated by this Agreement are first publicly announced as described in Section 4.6 or (ii) this Agreement is terminated in full pursuant to Section 6.16. The Purchaser understands and acknowledges that the Commission currently takes the position that covering a short position established prior to effectiveness of a resale registration statement with shares included in such registration statement would be a violation of Section 5 of the Securities Act, as set forth in Division of Corporation Financing Compliance and Disclosure Interpretation 239.10 regarding short selling.

 

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4.13        Acquisition and Great Harbor Equity Financing Transactions .

 

(a)           The Company shall not permit any amendment or modification to be made to, or any waiver of any provision or remedy under, the Acquisition Documents or the Great Harbor Equity Financing Documents without Purchaser’s prior written consent.

 

(b)           The Company shall give the Purchaser prompt notice: (i) of any breach or default (or any event or circumstance that, with or without notice, lapse of time or both, could reasonably be expected to give rise to any breach) by any party to the Acquisition Documents or the Great Harbor Equity Financing Documents; (ii) of the receipt of any written notice or other written communication from any Person with respect to (A) any breach, default, termination or repudiation by any party to the Acquisition Documents or the Great Harbor Equity Financing Documents , or (B) any dispute or disagreement between or among any parties to the Acquisition Documents or the Great Harbor Equity Financing Documents ; and (iii) if, for any reason, the Company believes in good faith that there is a dispute or disagreement between or among any parties to the Acquisition Documents or the Great Harbor Equity Financing Documents .

 

4.14        Participation in Future Financing.

 

(a)          Upon any issuance by the Company of New Securities (other than the Excluded Securities) for cash consideration, Indebtedness or a combination thereof (a “ Future Equity Issuance ” ), the Purchaser shall have the right to participate in the Future Equity Issuance up to an amount equal to its Common Stock Proportional Ownership of the New Securities on the same terms, conditions and price provided for in the Future Equity Issuance. This right of participation in any Future Equity Issuance shall be in addition to the Purchaser’s right to purchase additional shares of Common Stock under the Warrant.

 

(b)          No less than fifteen (15) Business Days prior to the expected consummation of a Future Equity Issuance, the Company shall deliver to the Purchaser a written notice of its intention to effect a Future Equity Issuance (“ Pre-Equity Issuance Notice ”), which Pre-Equity Issuance Notice shall ask the Purchaser if it wants to review the details of such equity issuance (such additional notice, a “ Future Equity Issuance Notice ”). Upon the Purchaser’s request, and only upon a request by the Purchaser, for a Future Equity Issuance Notice, the Company shall within two days after such request, deliver to the Purchaser a Future Equity Issuance Notice. The Future Equity Issuance Notice shall describe in reasonable detail the proposed terms of the Future Equity Issuance, the amount of proceeds intended to be raised thereunder, the intended use of proceeds and the Person or Persons through or with whom such Future Equity Issuance is proposed to be effected and shall include as an attachment a term sheet or similar document relating thereto setting forth all of the material terms of the Future Equity Issuance.

 

(c)          If the Purchaser desires to participate in a Future Equity Issuance it must provide written notice to the Company by not later than 5:00 p.m. (New York City time) on the 10 th Business Day after it has received the Future Equity Issuance Notice that such Purchaser is willing to participate in the Future Equity Issuance, and stating the amount of the Purchaser’s participation.

 

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(d)          I f the Company does not receive from the Purchaser a request for a Future Equity Issuance Notice as of the deadline set forth in Section 4.14(b) above or if a request is made for the Future Equity Issuance Notice and the Company does not receive an election to participate in the Future Equity Issuance as of the deadline set forth in Section 4.14(c) above, then the Purchaser shall be deemed to have notified the Company that it does not elect to participate in the Future Equity Issuance pursuant to this Section 4.14.

 

(e)          If by 5:00 p.m. (New York City time) on the 10 th Business Day after the Purchaser has received a Future Equity Issuance Notice, it does not receive a notification by the Purchaser of its willingness to participate in the Future Equity Issuance in an amount that is for the Purchaser’s full Common Stock Proportional Ownership amount of the New Securities being issued in the Future Equity Issuance, then the Company may effect the that portion of such Future Equity Issuance that could have been purchased by the Purchaser (together with the remaining balance of the Future Equity Issuance) on the terms and with those Persons set forth in the Future Equity Issuance Notice.

 

(f)          The Company and the Purchaser agree that if the Purchaser elects to participate in a Future Equity Issuance, the transaction documents related to the Future Equity Issuance shall not include any term or provision whereby the Purchaser shall be required to agree to any restrictions on trading as to any of the securities purchased pursuant to this Section 4.14 or be required to consent to any amendment to or termination of, or grant any waiver, release or the like under or in connection with, this Agreement or any of the other Golisano Investment Documents, without the prior written consent of the Purchaser.

 

(g)          Notwithstanding anything to the contrary in this Section 4.14 and unless otherwise agreed to by the Purchaser, the Company shall either confirm in writing to the Purchaser that the transaction with respect to the Future Equity Issuance has been abandoned or shall publicly disclose its intention to issue the securities in the Future Equity Issuance, in either case in such a manner such that the Purchaser will not be in possession of any material, non-public information, by the twentieth (20th) Business Day following delivery of the Future Equity Issuance Notice. If by such twentieth (20th) Business Day, no public disclosure regarding a transaction with respect to the Future Equity Issuance has been made, and no notice regarding the abandonment of such transaction has been received by the Purchaser, then such transaction shall be deemed to have been abandoned and the Purchaser shall not be deemed to be in possession of any material, non-public information with respect to the Company or any of its Subsidiaries that relates to the Future Equity Issuance.

 

Article 5

CONDITIONS PRECEDENT TO CLOSING

 

5.1          Conditions Precedent to the Obligations of the Purchaser to Purchase Securities at the Closing . The obligation of the Purchaser to acquire Securities at the Closing is subject to the fulfillment to the Purchaser’s satisfaction, on or prior to the Closing Date, of each of the following conditions, any of which may be waived by the Purchaser:

 

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(a)           Representations and Warranties . The representations and warranties of the Company contained herein shall be true and correct in all material respects (except for those representations and warranties which are qualified as to materiality, in which case such representations and warranties shall be true and correct in all respects) as of the date when made and as of the Closing Date, as though made on and as of such date, except for such representations and warranties that speak as of a different specified date.

 

(b)           Performance . The Company shall have performed, satisfied and complied in all material respects with all covenants, agreements and conditions required by the Golisano Investment Documents to be performed, satisfied or complied with by it at or prior to the Closing.

 

(c)           No Injunction . No statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by any court or governmental authority of competent jurisdiction that prohibits the consummation of any of the transactions contemplated by the Transaction Documents.

 

(d)           Consents . The Company shall have obtained in a timely fashion any and all consents, permits, approvals, registrations and waivers necessary for consummation of the purchase and sale of the Securities at the Closing (including all Required Approvals, except for those set forth in clauses (i), (ii), (iii) and (v) of Section 3.1(e), which may be obtained after the Closing), all of which shall be and remain so long as necessary in full force and effect.

 

(e)           No Suspensions of Trading in Common Stock . The Common Stock shall not have been suspended, as of the Closing Date, by the Commission.

 

(f)           Company Deliverables . The Company shall have delivered the Company Deliverables in accordance with Section 2.2(a).

 

(g)           Tolworthy Surrender of Shares of Common Stock . The Tolworthy Share Surrender Transaction shall have been consummated, and Thomas A. Tolworthy shall have confirmed in writing to the Company and the Purchaser that he has no further right to purchase additional shares of Common Stock pursuant to any existing contractual agreement except for (i) shares that he may be eligible to receive pursuant to applicable employee stock incentive programs pursuant to his employment agreement with the Company, and (ii) any pre-emptive right agreement approved by both the Board and the Purchaser.

 

(h)           Amendments to Derivative Securities to Remove Anti-Dilution Adjustment . All Derivative Securities issued by the Company as of or prior to the Execution Date (including those issued by the Company in June 2015) shall be amended, on terms and conditions satisfactory to Purchaser in its sole discretion to remove any ratchet anti - dilution or similar provisions that would result in a price or share adjustment and copies of all such amendments shall have been provided to Purchaser and be satisfactory to Purchaser; provided, however this shall not apply to warrants originally represented by Warrant No. W-2 issued to Penta Mezzanine SBIC Fund I, LP on February 6, 2015 for the purchase of 4,960,740 shares of Common Stock, Warrant Nos. 2015-2 and 2015-3 issued to JL-BBNC Mezz Utah, LLC on January 22, 2015 for the purchase of 1,164,700 shares of Common Stock respectively, or Warrant No. 2015-13 issued to JL Properties, Inc. on April 30, 2015 for the purchase of 465,880 shares of Common Stock. Without limiting the foregoing, none of the Derivative Securities (other than the warrants originally represented by Warrant Nos. W-2, 2015-2, 2015-3, and 2015-13) shall have any anti-dilution adjustment as a result of the Transaction.

 

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(i)            Capstone Agreement Amendment . The Capstone Agreement shall have been amended in form and substance acceptable to Purchaser in its sole discretion and copy of the fully executed amendment shall have been provided to the Purchaser.

 

(j)            Consummation of Great Harbor Equity Financing . The Great Harbor Equity Financing Transactions shall have been consummated pursuant to the Great Harbor Equity Financing Documents without giving effect to any modifications, consents, amendments or waivers thereto unless the Purchaser shall have provided its written consent thereto, and the Company shall have provided Purchaser with duplicate copies of the executed Great Harbor Equity Financing Documents evidencing such consummation.

 

(k)           Consummation of Acquisition . The Acquisition shall have been (or, substantially contemporaneously with the Closing hereunder, will be) consummated pursuant to the Acquisition Agreement without giving effect to any modifications, consents, amendments or waivers thereto unless the Purchaser shall have provided its written consent thereto, and the Company shall have provided Purchaser with duplicate copies of the executed Acquisition Documents evidencing such consummation.

 

(l)            No Company Material Adverse Effect . Since March 31, 2015, there shall not have been any effect, change, condition, fact, development, occurrence or event that has had, or would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Company or its Subsidiaries.

 

(m)          No Target Company Material Adverse Effect . Since March 31, 2015, there shall not have been any effect, change, condition, fact, development, occurrence or event that has had, or would reasonably be expected to have, individually or in the aggregate, a Target Company Material Adverse Effect.

 

(n)           Due Diligence . Purchaser shall have completed and be satisfied in its sole discretion its financial, business and legal due diligence with respect to the Company and its Subsidiaries and the Target Company.

 

(o)           Debt Waiver and Amendments .

 

(i)          The Company shall have received waivers of any and all defaults or events of default under its credit facilities with MidCap Funding X Trust, Penta Mezzanine SBIC Fund I, L.P. and JL-Mezz Utah, LLC (f/k/a JL-BBNC Mezz Utah, LLC), and amendments to the credit agreements, loan agreements or any other agreements of any kind with such lenders, and fully executed copies thereof and waivers and amendments satisfactory in form and substance to the Purchaser shall be provided to the Purchaser.

 

(ii)         The Purchaser shall have received a certificate in the form of Exhibit H hereto executed by the Company’s General Counsel.

 

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(p)           Termination. This Agreement shall not have been terminated in accordance with Section 6.16 herein.

 

5.2          Conditions Precedent to the Obligations of the Company to sell Securities at the Closing . The Company’s obligation to sell and issue the Securities to the Purchaser at the Closing is subject to the fulfillment to the satisfaction of the Company on or prior to the Closing Date of the following conditions, any of which may be waived by the Company:

 

(a)           Representations and Warranties . The representations and warranties made by the Purchaser in Section 3.2 hereof shall be true and correct in all material respects (except for those representations and warranties which are qualified as to materiality, in which case such representations and warranties shall be true and correct in all respects) as of the date when made, and as of the Closing Date as though made on and as of such date, except for representations and warranties that speak as of a different specified date.

 

(b)           Performance . The Purchaser shall have performed, satisfied and complied in all material respects with all covenants, agreements and conditions required by the Golisano Investment Documents to be performed, satisfied or complied with by the Purchaser at or prior to the Closing Date.

 

(c)           No Injunction . No statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by any court or governmental authority of competent jurisdiction that prohibits the consummation of any of the transactions contemplated by the Golisano Investment Documents.

 

(d)           Purchaser Deliverables . The Purchaser shall have delivered its Purchaser Deliverables in accordance with Section 2.2(b).

 

(e)           Termination . This Agreement shall not have been terminated in accordance with Section 6.16 herein.

 

Article 6

MISCELLANEOUS

 

6.1          Fees and Expenses .

 

(a)           The Company shall pay and be responsible for all of its own fees and expenses, including its advisers, counsel, accountants and other experts, if any, and all other expenses incurred by Company in connection with the negotiation, preparation, execution, delivery and performance of this Agreement.

 

(b)           Without regard to whether the Closing occurs, the Company shall pay and be responsible for all of Purchaser’s reasonable fees and expenses, including its advisers, counsel, accountants and other experts, if any, and all other expenses incurred by Purchaser in connection with the negotiation, preparation, execution, delivery and performance of this Agreement. The Company shall pay all of such fees and expenses incurred by Purchaser prior to the Closing, at the time of Closing and thereafter within ten (10) days following a request therefor by Purchaser which is accompanied by written invoice documenting in reasonable detail such fees and expenses of Purchaser (but not requiring detail time entries by the Purchaser's counsel) . The Company shall pay all Transfer Agent fees, stamp taxes and other taxes and duties levied in connection with the sale and issuance of the Securities to the Purchaser .

 

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6.2          Entire Agreement . The Golisano Investment Documents, together with the exhibits and schedules thereto, contain the entire understanding of the parties with respect to the subject matter thereof and supersede all prior agreements, understandings, discussions and representations, oral or written, with respect to such matters, which the parties acknowledge have been merged into such documents, exhibits and schedules. At or after the Closing, and without further consideration, the Company and the Purchaser will execute and deliver to the other such further documents as may be reasonably requested in order to give practical effect to the intention of the parties under the Golisano Investment Documents.

 

6.3          Notices . Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of (a) the Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service with next day delivery specified, or (b) upon actual receipt by the party to whom such notice is required to be given. The address for such notices and communications shall be as follows:

 

If to the Company: Twinlab Consolidated Holdings, Inc.
  632 Broadway, Suite 201
  New York, New York 10012
  Attention: General Counsel
   
With a copy to (which shall not Wilk Auslander LLP
constitute notice to the Company): 1515 Broadway
  New York, New York, 10036
  Attention:  Joel I. Frank
   
If to the Purchaser: Golisano Holdings LLC
One Fishers Road
  Pittsford, New York 14534
  Attention:  B. Thomas Golisano, Member
   
With a copy to (which shall not Woods Oviatt Gilman, LLP
constitute notice to the Purchaser): Two State Street
  Rochester, New York 14614
  Attention:  Gordon E. Forth

 

or such other address as may be designated in writing hereafter, in the same manner, by such Person.

 

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6.4          Amendments; Waivers; No Additional Consideration . No provision of this Agreement may be waived or amended except in a written instrument signed, in the case of an amendment, by the Company and the Purchaser or, in the case of a waiver, by the party against whom enforcement of any such waiver is sought. No waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any subsequent default or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of either party to exercise any right hereunder in any manner impair the exercise of any such right.

 

6.5          Construction . The headings herein are for convenience only, do not constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof. The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rules of strict construction will be applied against any party. This Agreement shall be construed as if drafted jointly by the parties, and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provisions of this Agreement or any of the Golisano Investment Documents.

 

6.6          Successors and Assigns . The provisions of this Agreement shall inure to the benefit of and be binding upon the parties and their successors and permitted assigns. This Agreement, or any rights or obligations hereunder, may not be assigned by the Company without the prior written consent of the Purchaser (other than by merger or consolidation or to an entity which acquires the Company, including by way of acquiring all or substantially all of the Company’s assets). The Purchaser may assign its rights hereunder in whole or in part to any Person to whom the Purchaser assigns or transfers any Securities in compliance with the Golisano Investment Documents and applicable law, provided such transferee shall agree in writing to be bound, with respect to the transferred Securities, by the terms and conditions of this Agreement that apply to the “ Purchaser.

 

6.7          No Third-Party Beneficiaries . Except with respect to Section 4.8, which may be enforced by any Purchaser Party, this Agreement is intended for the benefit of the parties hereto and their respective successors and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person.

 

6.8          Governing Law . All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflicts of law thereof; provided, however, that, the laws of the State of Delaware will govern (i) whether a Target Material Adverse Effect has occurred, (ii) compliance with any representations regarding the Acquisition Documents and (iii) whether the Acquisition has been consummated in accordance with the terms of the Acquisition Documents. Each party agrees that all Actions concerning the interpretations, enforcement and defense of the transactions contemplated by this Agreement and any other Golisano Investment Documents (whether brought against a party hereto or its respective Affiliates, employees or agents) shall be commenced exclusively in the New York Courts. Each party hereto hereby irrevocably submits to the exclusive jurisdiction of the New York Courts for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of any of the Golisano Investment Documents), and hereby irrevocably waives, and agrees not to assert in any Action, any claim that it is not personally subject to the jurisdiction of any such New York Court, or that such Action has been commenced in an improper or inconvenient forum. Each party hereto hereby irrevocably waives personal service of process and consents to process being served in any such Action by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL ACTION ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

 

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6.9          Survival . The representations and warranties contained herein shall survive the Closing and the delivery of the Securities. The agreements and covenants contained herein shall survive the Closing for the applicable statute of limitations.

 

6.10        Execution . This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party, it being understood that the parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission, or by e-mail delivery of a “ .pdf ” format data file, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or “ .pdf ” signature page were an original thereof.

 

6.11        Severability . If any provision of this Agreement is held to be invalid or unenforceable in any respect, the validity and enforceability of the remaining terms and provisions of this Agreement shall not in any way be affected or impaired thereby and the parties will attempt to agree upon a valid and enforceable provision that is a reasonable substitute therefor and achieves that same or substantially the same effect or result, and upon so agreeing, shall incorporate such substitute provision in this Agreement.

 

6.12        Replacement of Securities . If any certificate or instrument evidencing any Securities is mutilated, lost, stolen or destroyed, the Company shall issue or cause to be issued in exchange and substitution for and upon cancellation thereof, or in lieu of and substitution therefor, a new certificate or instrument, but only upon receipt of evidence reasonably satisfactory to the Company and the Transfer Agent of such loss, theft or destruction and the execution by the holder thereof of a customary lost certificate affidavit of that fact and an agreement to indemnify and hold harmless the Company and the Transfer Agent for any losses in connection therewith or, if required by the Transfer Agent, a bond in such form and amount as is required by the Transfer Agent. The applicants for a new certificate or instrument under such circumstances shall also pay any reasonable third-party costs associated with the issuance of such replacement Securities. If a replacement certificate or instrument evidencing any Securities is requested due to a mutilation thereof, the Company may require delivery of such mutilated certificate or instrument as a condition precedent to any issuance of a replacement.

 

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6.13        Remedies . In addition to being entitled to exercise all rights provided herein or granted by law, including recovery of damages, the Purchaser and the Company will be entitled to specific performance under the Golisano Investment Documents. The parties agree that monetary damages may not be adequate compensation for any loss incurred by reason of any breach of obligations described in the foregoing sentence and hereby agree to waive in any action for specific performance of any such obligation (other than in connection with any action for a temporary restraining order) the defense that a remedy at law would be adequate.

 

6.14        Payment Set Aside . To the extent that the Company makes a payment or payments to Purchaser pursuant to any Golisano Investment Document or the Purchaser enforces or exercises its rights thereunder, and such payment or payments or the proceeds of such enforcement or exercise or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside, recovered from, disgorged by or are required to be refunded, repaid or otherwise restored to the Company, a trustee, receiver or any other Person under any law (including, without limitation, any bankruptcy law, state or federal law, common law or equitable cause of action), then to the extent of any such restoration the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such enforcement or setoff had not occurred.

 

6.15        Adjustments in Share Numbers and Prices . In the event of any stock split, subdivision, dividend or distribution payable in shares of Common Stock (or other securities or rights convertible into, or entitling the holder thereof to receive directly or indirectly shares of Common Stock), combination or other similar recapitalization or event occurring after the Execution Date, each reference in any Golisano Investment Document to a number of shares or a price per share shall be deemed to be amended to appropriately account for such event.

 

6.16        Termination .

 

(a)           This Agreement may be terminated and the sale and purchase of the Securities abandoned at any time after the Execution Date and prior to the Closing by:

 

(i)           mutual written consent of the Company and the Purchaser; or

 

(ii)         either the Company or the Purchaser, upon written notice to the other, if the Acquisition Agreement is terminated at any time;

 

(iii)        either the Company or the Purchaser, upon written notice to the other, if the Closing has not been consummated on or prior to 5:00 p.m., New York City time, on the earlier of (i) the Outside Date, or (ii) October 30, 2015, unless the Purchaser has provided written consent to an extension in its sole discretion; provided, however , that the right to terminate this Agreement under this Section 6.16 shall not be available to any Person whose failure to comply with its obligations under this Agreement has been the cause of or resulted in the failure of the Closing to occur on or before such time.

 

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6.17        Effect of Termination. In the event of the termination of this Agreement as provided in Section 6.16, this Agreement shall be of no further force or effect provided, however, that: (a) this Article 6 shall survive the termination of this Agreement and shall remain in full force and effect, and (b) the termination of this Agreement shall not relieve any party from any liability for any breach of this Agreement or fraud or impair the right of any party to compel specific performance by any other party of its obligations under this Agreement or the other Golisano Investment Documents.

 

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In Witness Whereof , the parties hereto have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as of the date first indicated above.

 

  TWINLAB CONSOLIDATED HOLDINGS, INC.
     
  By: /s/ Thomas A. Tolworthy
  Name:  Thomas A. Tolworthy
  Title:  President and Chief Executive Officer
     
  GOLISANO HOLDINGS LLC
     
  By: /s/ B. Thomas Golisano
  Name:  B. Thomas Golisano
  Title:    Member

 

 

 

 

EXHIBITS:

 

A: Form of Warrant
B: Form of Registration Rights Agreement
C: Form of Voting Agreement
D Irrevocable Transfer Agent Instructions
E: Form of Secretary’s Certificate
F: Form of Compliance Certificate
G: Form of Legal Opinion
H: Form of Section 5.1(o) Officer’s Certificate

 

 

 

 

EXHIBIT A

Form of WARRANT

 

See attached.

 

 

 

 

EXHIBIT b

Form of REGISTRATION RIGHTS Agreement

 

See attached.

 

 

 

 

EXHIBIT C

Form of VOTING Agreement

 

See attached.

 

 

 

 

EXHIBIT d

Form of Irrevocable Transfer Agent Instructions

 

[_________], 2015

[Transfer Agent]
____________________

____________________

____________________

Attn: [____________]

 

Ladies and Gentlemen:

 

Reference is made to that certain Securities Purchase Agreement, dated as of _________, 2015 (the “ Agreement ”), by and between Twinlab Consolidated Holdings, Inc., a Nevada corporation (the “ Company ”), and [__________________] (including permitted transferees, the “ Holders ”), pursuant to which the Company is issuing to the Holders shares (the “ Shares ”) of Common Stock of the Company, par value $0.001 per share (the “ Common Stock ”).

 

This letter shall serve as our irrevocable authorization and direction to you (provided that you are the transfer agent of the Company at such time and the conditions set forth in this letter are satisfied), subject to any stop transfer instructions that we may issue to you from time to time, if any, to (i) issue, promptly following the date hereof, certificates representing the Shares bearing the legend set forth herein below, in the names of the Holders and the number of Shares as set forth in the attachments delivered herewith, and to deliver such certificates within three (3) business days after the date hereof to the address for each such Holder as set forth on such attachments delivered herewith, and (ii) issue certificates representing shares of Common Stock upon transfer or resale of the Shares, which certificates shall or shall not bear the legend set forth herein below as described below.

 

You acknowledge and agree that so long as you have received (a) written confirmation from the Company’s legal counsel that a registration statement covering resales of the Shares has been declared effective by the Securities and Exchange Commission (the “ Commission ”) under the Securities Act of 1933, as amended (the “ Securities Act ”), a copy of such registration statement and any other documents reasonably requested by you from the applicable Holder (and provided that you have not received written instruction from the Company or its legal counsel that such registration statement has been suspended or is no longer effective), (b) written confirmation from the Company’s legal counsel that the Shares are eligible for sale in conformity with Rule 144 under the Securities Act (“ Rule 144 ”) and customary documentation from a Holder and its broker with respect to a sale pursuant to Rule 144, or (c) written confirmation from the Company’s legal counsel that the Shares are eligible for sale without the requirement that the Company be in compliance with the current public information requirements of Rule 144 and without other restriction in conformity with Rule 144, then, unless otherwise required by law, within three (3) business days of your receipt of certificate of Common Stock and documentation required pursuant to clause (a) or (b) above, as applicable, or a request from a Holder for the issuance of an unlegended certificate in the event that you have received the written confirmation set forth in clause (c) above, you shall issue the certificates representing the Shares registered in the names of the purchaser of such Shares or the Holder, as the case may be, and such certificates shall not bear any legend restricting transfer of the Shares thereby and should not be subject to any stop-transfer restriction.

 

 

 

 

All certificates representing the Shares issued pursuant to the instruction set forth in clause (i) of the second paragraph of this letter shall bear the following legend (and, solely to the extent instructed to you by the Company or its legal counsel, a customary “affiliates” legend), and, in the event that you have not received the documentation required pursuant to clause (a), (b) or (c) of the immediately preceding paragraph, then the certificates representing any shares of Common Stock issued pursuant to the instruction set forth in clause (ii) of the second paragraph of this letter shall bear the following legend:

 

THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ SECURITIES ACT ”), OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OR (B) AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY.

 

Please be advised that the Holders are relying upon this letter as an inducement to enter into the Agreement and, accordingly, each Holder is a third party beneficiary to these instructions.

 

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Please execute this letter in the space indicated to acknowledge your agreement to act in accordance with these instructions.

 

  Very truly yours,
   
  TWINLAB CONSOLIDATED HOLDINGS, INC.
     
  By:
  Name:  Thomas A. Tolworthy
  Title:  President and Chief Executive Officer

 

Acknowledged and Agreed:

 

TRANSFER AGENT:

 

By:  
Name:   
Title:    

 

Date:   

 

 

 

 

EXHIBIT e

Form of Secretary’s Certificate

 

Date: October ___, 2015

 

The undersigned hereby certifies that he is the duly elected, qualified and acting Secretary of Twinlab Consolidated Holdings, Inc., a Nevada corporation (the “ Company ”), and that as such he is authorized to execute and deliver this certificate in the name and on behalf of the Company and in connection with the Securities Purchase Agreement, dated as of October ___, 2015, by and between the Company and the Purchaser party thereto (the “ Securities Purchase Agreement ”), and further certifies in his official capacity, in the name and on behalf of the Company, the items set forth below. Capitalized terms used but not otherwise defined herein shall have the meaning set forth in the Securities Purchase Agreement.

 

1.          Attached hereto as Exhibit A is a true, correct and complete copy of the resolutions duly adopted by the Board of Directors of the Company at a meeting of the Board of Directors held on, or by unanimous written consent dated __________ , 2015. Such resolutions have not in any way been amended, modified, revoked or rescinded, have been in full force and effect since their adoption to and including the date hereof and are now in full force and effect.

 

2.          Attached hereto as Exhibit B is a true, correct and complete copy of the Articles of Incorporation of the Company, together with any and all amendments thereto currently in effect, and no action has been taken to further amend, modify or repeal such Articles of Incorporation, the same being in full force and effect in the attached form as of the date hereof.

 

3.          Attached hereto as Exhibit C is a true, correct and complete copy of the Bylaws of the Company and any and all amendments thereto currently in effect, and no action has been taken to further amend, modify or repeal such Bylaws, the same being in full force and effect in the attached form as of the date hereof.

 

4.          Each person listed below has been duly elected or appointed to the position(s) indicated opposite his name and is duly authorized to sign the Securities Purchase Agreement and each of the Transaction Documents on behalf of the Company, and the signature appearing opposite such person’s name below is such person’s genuine signature.

 

Name   Position   Signature
         
Thomas A. Tolworthy   President and Chief Executive Officer    
         
         

 

 

 

 

In Witness Whereof , the undersigned has executed this Secretary’s Certificate as of the date first written above.

 

 
  Richard H. Neuwirth
  Secretary

 

I, Thomas A. Tolworthy, President and Chief Executive Officer of the Company, hereby certify that Richard H. Neuwirth is the duly elected, qualified and acting Secretary of the Company and that the signature set forth above is his true signature.

 

 
  Thomas A. Tolworthy
  President and Chief Executive Officer

 

 

 

 

EXHIBIT f

COMPLIANCE CERTIFICATE

 

See attached.

 

 

 

 

EXHIBIT G

Form of legal opinion

 

See attached.

 

 

 

 

EXHIBIT H

Section 5.1(o) Officer’s Certificate

 

See attached.

 

 

 

 

Exhibit 10.91

 

“THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE SECURITIES LAWS. NO SALE OR DISPOSITION MAY BE EFFECTED WITHOUT (i) EFFECTIVE REGISTRATION STATEMENTS RELATED THERETO, (ii) AN OPINION OF COUNSEL OR OTHER EVIDENCE, REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATIONS ARE NOT REQUIRED, (iii) RECEIPT OF NO-ACTION LETTERS FROM THE APPROPRIATE GOVERNMENTAL AUTHORITIES, OR (iv) OTHERWISE COMPLYING WITH THE PROVISIONS OF SECTION 9 OF THE WARRANT UNDER WHICH THESE SECURITIES WERE ISSUED, DIRECTLY OR INDIRECTLY.”

 

No. _______ October 5, 2015 (“ Issuance Date ”)

 

TWINLAB CONSOLIDATED HOLDINGS, INC.

 

COMMON STOCK PURCHASE WARRANT

 

THIS CERTIFIES THAT, for value received, TWINLAB CONSOLIDATED HOLDINGS, INC., a Nevada corporation (the Company ”), grants to GOLISANO HOLDINGS LLC, a New York limited liability company (“ GHL ” and together with any successors and assigns “ Holder ) the right to purchase shares of the Company’s common stock, par value $0.001 per share (the “ Common Stock ), on the terms and conditions set forth herein. This Warrant is being issued pursuant to that certain Securities Purchase Agreement dated the date hereof (as amended from time to time the “ Purchase Agreement ) by between the Company and GHL .

 

This Warrant is intended to maintain, following each future issuance of shares of Common Stock pursuant to the conversion, exercise or exchange of any Qualified Derivative Securities (as defined below), the Holder’s proportional ownership of the Company’s issued outstanding Common Stock (“ Common Stock Proportional Ownership ”) so that it is the same thereafter as it was on the Issuance Date. On each date, the Holder’s Common Stock Proportional Ownership shall equal the ratio, as of such date, of (i) the shares of Common Stock acquired by GHL pursuant to the Purchase Agreement on the Closing Date (as defined therein) (which is 88,711,241 shares and subject to proportional and appropriate adjustment for all stock splits, dividends, combinations, recapitalizations and the like ), to (ii) all shares of Co mm on Stock which are issued and outstanding on such date. As of the Issuance Date, the Holder’s Common Stock Proportional Ownership is 0.30. After the Issuance Date, if the number of shares of Common Stock of the Company which are issued and outstanding increases due to the issuance of shares of Common Stock pursuant to the conversion, exercise or exchange of Qualified Derivative Securities, then Holder shall be entitled to purchase under this Warrant a sufficient number of additional shares of Common Stock so that the ratio of the figures set forth in (i) to (ii) above as of such date returns to 0.30. Accordingly, this Warrant is exercisable upon each issuance of shares of Common Stock pursuant to a conversion, exercise or exchange of any Qualified Derivative Securities, or as otherwise specifically provided herein and on the terms and conditions set forth below.

 

 

 

 

1.           Issue . Upon exercise of this Warrant in accordance with Section 6 below, the Company shall, subject to adjustment as provided in Section 7 below, issue to the Holder the number of fully paid and non-assessable shares of Common Stock specified in Section 2 below.

 

2.           Number of Shares of Common Stock . From and after the Issuance Date, the Holder shall be entitled to receive upon each exercise of this Warrant the number of shares of Common Stock computed according to the following formula:

 

A = (B x C) / (1-C)

 

Where,

 

A = the number of shares of Common Stock that may be purchased by the Holder upon each exercise of this Warrant,

 

B = the number of shares of Common Stock issued by the Company from time to time on and after the Issuance Date pursuant to a conversion, exercise or exchange of any Qualified Derivative Securities and with respect to which this Warrant has not previously been exercised, and

 

C = the Holder’s Issuance Date Common Stock Proportional Ownership which is 0.30.

 

Notwithstanding any provision contained in this Warrant to the contrary, the Company shall not issue fractional Warrant Shares (as defined below) upon exercise of this Warrant. If the Holder is entitled to purchase Warrant Shares hereunder and based on the foregoing formula the Holder would be entitled to purchase a fractional Warrant Share, then such purchase right shall be rounded up to the nearest whole number.

 

For example, if after the Issuance Date the Company issues 17,342,105 shares of Common Stock pursuant to the conversion, exercise or exchange of Qualified Derivative Securities, then the Holder shall be entitled to purchase 7,432,331 shares of Common Stock. If thereafter the Company issues another 403,509 shares pursuant to a conversion, exercise or exchange of any Qualified Derivative Securities, then the Holder shall be entitled to purchase another 172,933 shares of Common Stock. The table attached hereto as Exhibit D is hereby incorporated by reference.

 

3.            Definitions . As used herein, the following terms apply:

 

(a)           Derivative Securities means any securities of the Company or the Subsidiaries which would entitle the holder thereof to acquire at any time Common Stock, including, without limitation, any debt, preferred stock, right, option, warrant or other instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock.

 

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(b)           Qualified Derivative Securities ” means all Derivative Securities granted prior to the Issuance Date or which are issued in exchange for or in replacement of such Derivative Securities. The Company represents and warrants to the Holder that the Qualified Derivative Securities that are outstanding on the Issuance Date are set forth on Exhibit A hereto.

 

(c)          “ Warrant Shares ” means the shares of Common Stock (or other securities or property) that may be purchased under this Warrant.

 

4.             Exercise Price . Subject to adjustment as provided in Section 7 below, the exercise price for the purchase of each Warrant Share hereunder is $.001 per share or such lesser amount as equals the par value of the Common Stock upon exercise of this Warrant (the Exercise Price ”). The aggregate Exercise Price due upon each exercise of this Warrant shall be the Exercise Price multiplied by the number of Warrant Shares being purchased upon such exercise.

 

5.             Exercise Period . This Warrant may be exercised at any time and from time to time in accordance with Section 6 below from the Issuance Date, up to and including the date which is sixty (60) days after the later to occur of the termination, expiration, conversion, exercise or exchange of all the Qualified Derivative Securities and the Company’s delivery of written notice thereof to the Holder in accordance with Section 12 below, provided as of such date and the Company has honored all of its obligations hereunder (the “ Exercise Period ”). For avoidance of doubt, this Warrant may be exercised at any time on and after any Qualified Derivative Securities are exercised, converted or exchanged for shares of Common Stock. All rights to purchase Warrant Shares shall expire and lapse as of 12:00 midnight on the last day of the Exercise Period provided the Company has honored all of its obligations hereunder as of such time. Upon expiration of the Exercise Period, the Holder shall surrender to the Company the original of this Warrant.

 

6.             Exercise of Warrant; Issuance of Certificates .

 

(a)          This Warrant may be exercised, in whole or in part, upon each issuance of shares of Common Stock pursuant to a conversion, exercise or exchange of any Qualified Derivative Securities.

 

(b)          The Holder may exercise this Warrant by the Holder’s actual delivery of (i) the aggregate Exercise Price due with respect to the Warrant Shares being purchased in cash or by check, and (ii) a duly executed Warrant Exercise Form, a copy of which is attached to this Warrant as Exhibit B , properly executed by the Holder. Notwithstanding the foregoing, this Warrant shall be deemed exercised upon the consummation of any Major Transaction (as defined below) if any Qualified Derivative Securities are exercised, converted or exchanged in connection with a Major Transaction (as defined below),

 

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(c)          Any Warrant Shares purchased hereunder shall be deemed to be issued to the Holder as of the date of the exercise, conversion or exchange of the Qualified Derivative Securities or the consummation of the Major Transaction, in each case that gave rise to the Holder’s right to purchase such Warrant Shares or receive payment pursuant hereto. The payment and any required Warrant Exercise Form must be delivered to the Company’s offices either in person or as set forth in Section 11.

 

(d)          Certificates for the Warrant Shares purchased hereunder shall be delivered to the Holder within a reasonable time, not exceeding five (5) business days, after this Warrant is deemed exercised. The certificates so delivered shall be in such denominations as may be requested by the Holder and shall be registered in the name of the Holder or such other name as shall be designated by the Holder.

 

7.             Certain Transactions .

 

(a)           Major Transactions . If there shall occur any recapitalization (including a combination or subdivision of outstanding shares of Common Stock), capital reorganization or reclassification of the issued and outstanding shares of Common Stock, or any consolidation or merger of the Company or any subsidiary of the Company with or into another corporation, or a transfer of all or substantially all of the assets of the Company and/or any subsidiary resulting in payment to the holders of the issuance and outstanding shares of Common Stock, or the payment of a liquidating distribution to the holders of issued and outstanding shares of Common Stock (each a “ Major Transaction ”), then the following provisions shall apply:

 

(i)          As part of any Major Transaction, lawful provision shall be made so that the Holder shall have the right to receive, upon the exercise of the portion of this Warrant then exercisable, the kind and amount of shares of stock or other securities or property (including cash) that the Holder would have been entitled to receive if, immediately before or concurrently with the consummation of any such Major Transaction, the Holder had held the number of shares of Common Stock which could then have been purchased upon the exercise of this Warrant. Upon receipt of any such shares of stock or other securities or property (including cash) that portion of the Warrant with respect to which the Holder received such shares of stock or other securities or property (including cash) shall be deemed exercised.

 

(ii)         If, as part of a Major Transaction, the surviving entity in any such Major Transaction or purchaser of assets (each a “ Surviving Entity ”) plans to assume any Qualified Derivative Securities after such Major Transaction is consummated (the “ Assumed Warrants/Options ”), then lawful provision shall be made so that (A) the portion of the purchase rights hereunder that correspond to the Assumed Warrants/Options will also be assumed and honored by the Surviving Entity and (B) the Holder will be entitled with respect thereto to purchase the same types of shares and securities for which the Assumed Warrants/Options are exercisable on the same relative terms and Exercise Price as provided herein.

 

(iii)        If a Major Transaction is not a merger, consolidation or sale of substantially all of the assets of the Company and/or one or more of its subsidiaries, then this Warrant shall continue to remain in effect as provided herein after consummation of such Major Transaction to the extent any purchase rights hereunder correspond to any portion of any Qualified Derivative Securities which also so remain in effect.

 

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(iv)        If the Company or any Surviving Entity, or their respective agents or representatives, makes a payment to any holder of Qualified Derivative Securities (“ Terminated Qualified Derivative Securities ”) at any time in consideration for the termination of, agreement not to exercise, or any similar undertaking with respect to, such Qualified Derivative Securities, then legal provision shall be made so that payment is also made to Holder at the same time with respect to the portion of the purchase rights under this Warrant which correspond to the Terminated Qualified Derivative Securities. Such payment to Holder will be calculated in accordance with the formula set forth in Section 2, except variable A will equal the payment to Holder under this Section 7(a)(iv) and variable B will equal the aggregate payment to holders of Terminated Qualified Derivative Securities described in the preceding sentence. Upon receipt of any such payment that portion of the Warrant with respect to which the Holder received such payment shall be deemed exercised.

 

(v)         With respect to the foregoing, appropriate adjustment shall be made in the application of the provisions set forth herein with respect to the rights and interests thereafter of the Holder such that the provisions set forth in this Section 7 (including provisions with respect to adjustment of the Exercise Price) shall thereafter be applicable, as nearly as is reasonably practicable, in relation to any shares of stock or other securities or property thereafter deliverable upon the exercise of the Warrants. Without limiting the foregoing, the Company acknowledges and agrees that more than one of the foregoing subsections of this Section 7 may apply to this Warrant in a Major Transaction if the Qualified Derivative Securities do not have uniform terms and complete exercise of purchase rights in connection therewith. For purposes hereof, purchase rights under this Warrant “correspond” to Qualified Derivative Securities based on the number of shares which are or may be purchasable with respect thereto in accordance with the formula set forth in Section 2 above.

 

(b)           Certain Other Events . If any event occurs of the type contemplated by the provisions of this Section 7 but not expressly provided for by such provisions which are not otherwise provided for herein, then the Company shall make appropriate adjustment to the terms hereof so as to protect the rights of the Holder so that it receives an economically equivalent value as it would otherwise have been entitled to hereunder; provided, however, that no such adjustment will increase the Exercise Price as otherwise determined pursuant to this Section 7.

 

(c)           Certificate as to Adjustments . Upon the occurrence of each adjustment or readjustment pursuant to this Section 7, the Company at its expense shall promptly compute such adjustment or readjustment in accordance with the terms hereof and furnish to the Holder a certificate setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based and shall file a copy of such certificate with its corporate records.

 

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8.             Certain Company Undertakings.

 

(a)           No Impairment . The Company will not, by amendment of its Articles of Incorporation or By-Laws or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action involving the Company and/or one or more of its subsidiaries, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Company, but will at all times in good faith assist in the carrying out of all the provisions of this Warrant and in the taking of all such actions as may be necessary or appropriate in order to protect the exercise privilege of the Holder against dilution or other impairment, consistent with the tenor and purpose of this Warrant. Without limiting the generality of the foregoing, the Company (i) will not increase the par value of any shares of Common Stock receivable upon the exercise of this Warrant above the Exercise Price then in effect, and (ii) will take all such actions as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and non-assessable shares of Common Stock upon the exercise of this Warrant.

 

(b)           Notice.

 

(i)          Promptly following receipt of notice of the conversion, exercise or exchange of any Qualified Derivative Securities, the Company shall deliver to the Holder a written certificate signed by an officer of the Company (“ Warrant Purchase Rights Notice Certificate ”) which sets forth therein the number of such shares of Common Stock being issued pursuant thereto, the date on which issuance will occur, the number of Warrant Shares which the Holder of this Warrant is entitled purchase upon exercise hereof, the aggregate Exercise Price due therefor and all supporting facts and calculations. The Company shall keep a copy of each Warrant Purchase Rights Notice Certificate with the Company’ corporate records. The Company shall promptly provide the Holder with a copy of each Warrant Purchase Rights Notice Certificate upon any request therefor by the Holder.

 

(ii)         In the event that the Company proposes to engage in a Major Transaction, then the Company shall provide written notice (a “ Major Transaction Notice”) thereto to the Holder which shall state the date on which the Major Transaction is scheduled to be consummated and terms of such Major Transaction, including the effect of the conversion, exercise or exchange of any Qualified Derivative Securities and the adjustment to this Warrant as a result thereof as provided in Section 7 herein (e.g., the number of Warrant Shares or other securities or property (including cash) that the Holder is entitled to receive and the aggregate Exercise Price due from the Holder as a result thereof). Within 10 days following the consummation of the Major Transaction, the Company shall deliver to the Holder a written certificate signed by an officer of the Company or the Surviving Entity if applicable (“Major Transaction Consummation Notice Certificate ”) thereto to the Holder of the consummation of the Major Transaction and any variations of the terms disclosed in the Major Transaction Notice as well as the other information required by Section 7(a) above.

 

9.             Compliance with Act; Disposition of Warrant or Shares of Common Stock .

 

(a)          The Holder, by acceptance hereof, agrees that this Warrant, and the Warrant Shares to be issued upon exercise hereof are being acquired for investment and that the Holder will not offer, sell or otherwise dispose of this Warrant, or any Warrant Shares to be issued upon exercise hereof except under circumstances which will not result in a violation of the Securities Act or any applicable state securities laws. Upon exercise of this Warrant, unless the Warrant Shares being acquired are registered under the Securities Act and any applicable state securities laws or an exemption from such registration is available, the Holder shall confirm in writing that the Warrant Shares so purchased are being acquired for investment and not with a view toward distribution or resale in violation of the Act and shall confirm such other matters related thereto as may be reasonably requested by the Company. This Warrant and all Warrant Shares issued upon exercise of this Warrant (unless registered under the Act and any applicable state securities laws) shall be stamped or imprinted with a legend in substantially in the form required by the Purchase Agreement.Said legend shall be removed by the Company, upon the written request of the Holder, at such time as the restrictions on the transfer of the applicable security shall have terminated.

 

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(b)          With respect to any offer, sale or other disposition of this Warrant or any Warrant Shares acquired pursuant to the exercise of this Warrant prior to registration of such Warrant or Warrant Shares, the Holder agrees to give written notice to the Company prior thereto, describing briefly the manner thereof, together with a written opinion of counsel, if requested by the Company, or other evidence, if reasonably satisfactory to the Company, to the effect that such offer, sale or other disposition may be effected without registration or qualification (under the Act as then in effect or any federal or state securities law then in effect) of this Warrant or such Warrant Shares of Common Stock and indicating whether or not under the Act certificates for this Warrant or such Warrant Shares to be sold or otherwise disposed of require any restrictive legend as to applicable restrictions on transferability in order to ensure compliance with such law. Upon receiving such written notice and reasonably satisfactory opinion or other evidence, the Company shall be deemed to have consented to such transfer, which shall not be unreasonably withheld, delayed or conditioned (except with respect to any transfer to any affiliate of the Holder as described more fully in Section 9(c) below, in which case no consent shall be required) (any such transfer as to which no consent is required or consent has been deemed granted, a “ Permitted Transfer ”). If a determination has been made pursuant to this Section 9(b) that the opinion of counsel or other evidence is not reasonably satisfactory to the Company, the Company shall so notify the Holder promptly with details thereof after such determination has been made. Notwithstanding the foregoing, , if applicable, this Warrant or such Warrant Shares may, as to such federal laws, be offered, sold or otherwise disposed of in accordance with Rule 144 or 144A under the Act, provided that the Company shall have been furnished with such information as the Company may reasonably request to provide a reasonable assurance that the provisions of Rule 144 or 144A have been satisfied. Each certificate representing this Warrant or the shares of Common Stock thus transferred (except a transfer pursuant to Rule 144 or 144A) shall bear a legend as to the applicable restrictions on transferability in order to ensure compliance with such laws, unless in the aforesaid opinion of counsel for the Holder, such legend is not required in order to ensure compliance with such laws. The Company may issue stop transfer instructions to its transfer agent in connection with such restrictions.

 

(c)          Neither any restrictions of any legend described in this Warrant nor the requirements of Section 9(b) above shall apply to any transfer of, or grant of a security interest in, this Warrant (or the Warrant Shares) or any part hereof (i) to a partner of the Holder if the Holder is a partnership or to a member of or other holder of an interest in the Holder if the Holder is a limited liability company, (ii) to a partnership of which the Holder is a partner or to a limited liability company of which the Holder is a member or other holder of an interest, or (iii) to any affiliate of the Holder if the Holder is a corporation; provided, however, in any such transfer, if applicable, the transferee shall on the Company’s request agree in writing to be bound by the terms of this Warrant as if an original holder hereof.

 

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10.           Registration Rights . The Warrant Shares are “Registerable Shares” under the Registration Rights Agreement dated as of October [●] , 2015 between the Company and GHL, as amended and/or restated from time to time (the “ Registration Rights Agreement ”).

 

11.           Reservation of Underlying Shares.

 

(a)          The Company covenants at all times to reserve and keep available out of its authorized shares of Common Stock, free from preemptive rights, solely for the purpose of issue upon exercise of the Warrant as herein provided, the maximum number of shares of Common Stock as shall then be issuable upon the exercise of this Warrant. As of the date hereof, the Company has reserved 12,697,977 shares of Common Stock for issuance under this Warrant.

 

(b)          The Company covenants that all shares of Common Stock issued upon exercise of the Warrant which shall be so issuable shall, when issued, be duly and validly issued and fully paid and non-assessable, free from all taxes, liens and charges with respect to the purchase and the issuance of the shares, and shall not have any legend or restrictions on resale, except as required by the Purchase Agreement or hereby.

 

12.          Notices . All notices to be given or otherwise made to any party, to this Warrant shall be deemed to be sufficient if contained in a written instrument, delivered by hand in person, or by express overnight courier service, or by registered or certified mail, return receipt requested, postage prepaid, addressed to such party at the following addresses or at such other address as may hereafter be designated in writing by the addressee to the addressor listing all parties.

 

(a) If to the Company:

 

TWINLAB CONSOLIDATED HOLDINGS, INC.
632 Broadway, Suite 201
New York, NY 10012
Attn: Richard H. Neuwirth, Chief Legal Officer
Email: RNeuwirth@twinlab.com

 

with a copy to (which copy shall not constitute notice):

 

Wilk Auslander LLP

1515 Broadway, 43rd Floor

New York, NY 10036

Attn: Joel I. Frank, Esq.

 

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(b) If to GHL:

 

Golisano Holdings LLC

c/o Fishers Asset Management

1 Fishers Road

Pittsford, NY 14534

Facsimile: (585) 340-1202

 

with a copy to (which shall not constitute notice):

 

Woods Oviatt Gilman LLP

700 Crossroads Building

2 State Street

Rochester, New York 14614

Attn: Gordon E. Forth, Esq.

 

All such notices shall, when delivered by over-night courier or mailed, be effective when received or when attempted delivery is refused.

 

13.          Compliance with Governmental Requirements . The Company covenants that if any shares of Common Stock required to be reserved for purposes of exercise of this Warrant require registration with or approval of any governmental authority under any Federal or state law, or any national securities exchange, before such shares may be issued upon exercise, the Company will use its best efforts to cause such shares to be duly registered or approved, as the case may be, provided, however, that the Company shall not be required in connection therewith or as a condition thereto to qualify to do business or file a general consent to service of process in any such state or jurisdiction.

 

14.          Payment Of Tax Upon Issue or Transfer . The issuance of certificates for Warrant Shares upon exercise of this Warrant shall be made without charge to the Holder for any documentary stamp or similar taxes that may be payable in respect of the issue or delivery of such certificate, provided that the Company shall not be required to pay any tax that may be payable in respect of any transfer involved in the issuance and delivery of any such certificate upon exercise in a name other than that of the Holder and the Company shall not be required to issue or deliver such certificates unless or until the person or persons requesting the issuance thereof shall have paid to the Company the amount of such tax or shall have established to the satisfaction of the Company that such tax has been paid.

 

15.          Effect Of Headings: References . The section headings herein are for convenience only and shall not affect the construction hereof. References herein to Sections are to Sections of this Warrant, unless otherwise expressly provided.

 

16.          No Rights As Stockholder . This Warrant shall not entitle the Holder to any rights as a stockholder of the Company with respect to the Warrant Shares, including, without limitation, the right to vote, to receive dividends and other distributions, or to receive notice of, or to attend, meetings of stockholders or any other proceedings of the Company solely based on the Warrant Shares, unless and to the extent exercised for Warrant Shares in accordance with the terms hereof.

 

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17.          Successors and Assigns . This Warrant shall be binding upon and inure to the benefit of the Holder and its successors and assigns, and shall be binding upon any entity succeeding to the Company by merger or acquisition of all or substantially all the assets of the Company. This Warrant may be only assigned in whole by the Holder. Upon the execution and delivery to the Company of a Warrant Assignment Form substantially in the form of Exhibit C attached hereto together with this Warrant, the Company shall issue to the assignee a warrant as appropriate in accordance with such assignment.

 

18.          Entire Agreement: Amendments . The Purchase Agreement, the Warrant and the Exhibits attached hereto and the Registration Rights Agreement contain the entire agreement between the parties with respect to the subject matter hereof and supersede all prior and contemporaneous arrangements or undertakings with respect thereto. This Warrant may only be amended and the observance of any terms of this Warrant may only be waived by a written instrument executed by both the Company and the Holder.

 

19.          Governing Law.

 

(a)           This Warrant shall be governed by and construed and enforced in accordance with the internal laws of the State of New York without regard to the principles of conflicts of law thereof, except to the extent that the laws of the State of Nevada shall apply to the issuance of shares of Common Stock by the Company.

 

(b)          Each party hereby irrevocably submits to the nonexclusive jurisdiction of the state and federal courts sitting in Monroe County, New York, for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is improper. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address for such notices to it under this Warrant and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

 

[SIGNATURE PAGE FOLLOWS]

 

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IN WITNESS WHEREOF, the Company and the Holder have caused this Warrant to be executed as of the date first set forth above.

 

  TWINLAB CONSOLIDATED HOLDINGS, INC.
     
  By: /s/ Thomas A. Tolworthy
  Name:   Thomas A. Tolworthy
  Title: President and Chief Executive Officer

 

Accepted:

 

Golisano Holdings LLC

 

By: /s/ B. Thomas Golisano
  B. Thomas Golisano, Member

 

 

 

 

EXHIBIT A

 

QUALIFIED DERIVATIVE SECURITIES EXISTING AS OF THE ISSUANCE DATE

 

See attached.

 

 

 

 

EXHIBIT B

 

WARRANT EXERCISE FORM

 

To: TWINLAB CONSOLIDATED HOLDINGS, INC.

 

The undersigned hereby: (1) irrevocably subscribes for and offers to purchase ____ shares of Common Stock of Twinlab Consolidated Holdings, Inc., pursuant to that certain Common Stock Purchase Warrant dated October 2 , 2015 issued to Golisano Holdings LLC; (2) encloses a payment of $_______________ for these shares at a price of $.001 per share (as adjusted pursuant to the provisions of the Warrant); and (3) requests that a certificate for the shares be issued in the name of the undersigned and delivered to the undersigned at the address specified below.

 

  Golisano Holdings LLC
   
  Signature of Holder
  B. Thomas Golisano
   
  Address:
   
   
   

 

 

 

 

EXHIBIT C

 

WARRANT ASSIGNMENT FORM

 

To: TWINLAB CONSOLIDATED HOLDINGS, INC.

 

Reference is made to the enclosed Common Stock Purchase Warrant dated October 2 , 2015, issued by Twinlab Consolidated Holdings, Inc. to Golisano Holdings LLC (the “ Assigned Warrant ”). All capitalized terms used herein shall have the meanings given thereto in the Assigned Warrant.

 

For consideration received, the undersigned does hereby assign and transfer to the person whose name and address appears below (the Assignee ”) all of the undersigned’s right to purchase shares of the Common Stock of Twinlab Consolidated Holdings, Inc. (the “ Corporation ”) pursuant to the Assigned Warrant. The undersigned hereby appoints ______________________________ as my attorney, with full power of substitution, to affect the transfer of the Assigned Warrant of the books of the Corporation. The undersigned hereby requests that a new warrant in the form of the Assigned Warrant be issued to the Assignee with such changes thereto as may be necessary to reflect this Assignment.

 

Name and Address of Assignee:  
   
   
   
   
   
   

 

  Assignor:
   
   

 

 

 

 

Exhibit D

 

Table

 

See attached.

 

 

 

 

Exhibit 10.92

 

REGISTRATION RIGHTS AGREEMENT

 

This Registration Rights Agreement (this “ Agreement ”), is made and entered into as of October 5th, 2015, by and between Twinlab Consolidated Holdings, Inc., a Nevada corporation (the “ Company ”), and Golisano Holdings LLC, a New York limited liability company (the “ Investor ”).

 

A.           In connection with the Securities Purchase Agreement by and between the parties hereto, dated as of October ___, 2015 (the “ SPA ” ), the Company has agreed, upon the terms and subject to the conditions of the SPA, to issue and sell to the Investor (i) 88,711,241 shares (the “ Purchased Shares ”) of the Company’s common stock, $0.001 par value (“ Common Stock ”), and (ii) the Warrant (as defined in the SPA) which will be exercisable to purchase Warrant Shares (as defined in the SPA) in accordance with the terms of the Warrant.

 

B.           To induce the Investor to consummate the transactions contemplated by the SPA, the Company has agreed to provide certain registration rights under the Securities Act of 1933, as amended, and the rules and regulations thereunder, or any similar successor statute (collectively, the “ Securities Act ” ), and applicable state securities laws.

 

NOW, THEREFORE, in consideration of the foregoing and the mutual and dependent covenants hereinafter set forth, the parties agree as follows:

 

1.            Defined Terms . Capitalized terms used herein and not otherwise defined herein shall have the respective meanings set forth in the SPA. As used in this Agreement, the following terms shall have the following meanings:

 

Business Day ” means any day other than Saturday, Sunday or any other day on which commercial banks in New York, New York are authorized or required by law to remain closed.

 

Affiliate ” of a Person means any other Person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such Person. The term “control” (including the terms “controlled by” and “under common control with”) means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise.

 

Agreement ” has the meaning set forth in the preamble.

 

Board ” means the board of directors of the Company (and any successor governing body of the Company or any successor of the Company).

 

Closing Date ” has the meaning set forth in the SPA. 

 

 

 

 

Commission ” means the Securities and Exchange Commission or any other federal agency administering the Securities Act and the Exchange Act at the time.

 

Common Shares ” means any shares of Common Stock.

 

Common Stock ” has the meaning set forth in the Recitals and also includes any other common equity securities issued by the Company, and any other shares of stock issued or issuable with respect thereto (whether by way of a stock dividend or stock split or in exchange for or upon conversion of such shares or otherwise in connection with a combination of shares, distribution, recapitalization, merger, consolidation or other corporate reorganization).

 

Company ” has the meaning set forth in the preamble and includes the Company's successors by merger, acquisition, reorganization or otherwise.

 

Demand Registration ” has the meaning set forth in Section 2(a) .

 

Exchange Act ” means the Securities Exchange Act of 1934, as amended, or any successor federal statute, and the rules and regulations thereunder, which shall be in effect from time to time.

 

Governmental Authority ” means any federal, state, local or foreign government or political subdivision thereof, or any agency or instrumentality of such government or political subdivision, or any self-regulated organization or other non-governmental regulatory authority or quasi-governmental authority (to the extent that the rules, regulations or orders of such organization or authority have the force of law), or any arbitrator, court or tribunal of competent jurisdiction.

 

Investor ” has the meaning set forth in the preamble.

 

Person ” means an individual, corporation, partnership, joint venture, limited liability company, Governmental Authority, unincorporated organization, trust, association or other entity.

 

Prospectus ” means the prospectus or prospectuses included in any Registration Statement, as amended or supplemented by any prospectus supplement with respect to the terms of the offering of any portion of the Registrable Securities covered by such Registration Statement and by all other amendments and supplements to the prospectus, including post-effective amendments and all material incorporated by reference in such prospectus or prospectuses.

 

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Registrable Securities ” means (a) any Common Shares beneficially owned by the Investor, including, but not limited to the Purchased Shares and the Warrant Shares, and (b) any capital stock of the Company issued or issuable with respect to the Common Shares beneficially owned by the Investor as a result of any stock split, stock dividend, recapitalization, exchange or similar event or otherwise or into which any Common Shares beneficially owned by the Investor are converted or exchanged and shares of capital stock of a Successor Entity (as defined in the Warrant) into which Common Shares owned by the Investor are converted or exchanged, in each case, without regard to any limitations on exercise of the Warrant (it being understood that for purposes of this Agreement, a Person shall be deemed to be a holder of Registrable Securities whenever such Person has the right to then acquire or obtain from the Company any Registrable Securities, whether or not such acquisition has actually been effected). As to any particular Registrable Securities, such securities shall cease to be Registrable Securities when (i) a Registration Statement covering such securities has been declared effective by the Commission and such securities have been disposed of pursuant to such effective Registration Statement, (ii) such securities are sold under circumstances in which all of the applicable conditions of Rule 144 (or any similar provisions then in force) under the Securities Act are met, (iii) such securities are otherwise transferred and such securities may be resold without subsequent registration under the Securities Act, or (iv) such securities shall have ceased to be outstanding.

 

Registration Statement ” means any registration statement of the Company which covers any of the Registrable Securities pursuant to the provisions of this Agreement, including the Prospectus, amendments and supplements to such Registration Statement, including post-effective amendments, all exhibits and all materials incorporated by reference in such Registration Statement.

 

Rule 144 ” means Rule 144 promulgated under the Securities Act or any successor rule thereto or any complementary rule thereto (such as Rule 144A).

 

Securities Act ”  has the meaning given thereto in the Recitals.

 

Selling Expenses ” means all underwriting discounts, selling commissions and stock transfer taxes applicable to the sale of Registrable Securities, and fees and disbursements of counsel for any holder of Registrable Securities.

 

“SPA” has the meaning set forth in the Recitals.

 

2.            Demand Registration .

 

(a)          The Company shall use its best efforts to qualify and remain qualified to register securities under the Securities Act pursuant to a Registration Statement on Form S-3 or any successor form thereto. At such time as the Company shall have qualified for the use of a Registration Statement on Form S-3, the holder of Registrable Securities shall have the right to request an unlimited number of registrations under the Securities Act of all or any portion of its Registrable Securities pursuant to a Registration Statement on Form S-3 or any similar short-form Registration Statement (each a “ Demand Registration ”). Each request for a Demand Registration shall specify the approximate number of Registrable Securities requested to be registered. The Company shall cause a Registration Statement on Form S-3 (or any successor form) to be filed within ten (10) days after the date on which a Demand Registration request is given and shall use its reasonable best efforts to cause such Registration Statement to be declared effective by the Commission as soon as practicable thereafter and remain effective until the date on which the Investor has disposed of all of the Common Shares it requested to be registered in such Demand Registration.

 

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(b)          The Company may postpone for up to ninety (90) days the filing or effectiveness of a Registration Statement for a Demand Registration if the Company's Board determines in its reasonable good faith judgment that such Demand Registration would (i) materially interfere with a significant acquisition, corporate organization or other similar transaction involving the Company; (ii) require premature disclosure of material information that the Company has a bona fide business purpose for preserving as confidential; or (iii) render the Company unable to comply with requirements under the Securities Act or Exchange Act.

 

(c)          If the holder of the Registrable Securities requesting a Demand Registration elects to distribute the Registrable Securities covered by its request in an underwritten offering, it shall so advise the Company as a part of their request made pursuant to Section 2(a) . The holder of the Registrable Securities requesting the Demand Registration shall select the investment banking firm or firms to act as the managing underwriter or underwriters in connection with such offering; provided , that such selection shall be subject to the consent of the Company, which consent shall not be unreasonably withheld or delayed.

 

(d)          The Company shall not grant registration rights to any other holder of the Company’s securities for a period of twelve (12) months from the date of this Agreement.

 

(e)          The Company shall not include in any Demand Registration any securities which are not Registrable Securities without the prior written consent of the Investor, which consent shall not be unreasonably withheld or delayed. If a Demand Registration involves an underwritten offering and the managing underwriter of the requested Demand Registration advises the Company and Investor in writing that in its reasonable and good faith opinion the number of Common Shares proposed to be included in the Demand Registration, including all Registrable Securities and all other Common Shares proposed to be included in such underwritten offering, exceeds the number of shares of Common Shares which can be sold in such underwritten offering and/or the number of shares of Common Shares proposed to be included in such Demand Registration would adversely affect the price per share of the Common Shares proposed to be sold in such underwritten offering, the Company shall include in such Demand Registration (i) first, the Common Shares that the Investor proposes to sell, and (ii) second, the Common Shares proposed to be included therein by any other Persons (including Common Shares to be sold for the account of the Company and/or other holders of Common Shares) allocated among such Persons in such manner as they may agree.

 

(f)          Nothing contained in this Agreement shall prevent the Company from filing a registration statement solely for the Company’s account including without limitation, a registration statement relating to any employee benefit plan filed on Form S-8 or similar form or, with respect to any corporate reorganization or other transaction under Rule 145 of the Securities Act, a registration statement on Form S-4 or similar form, or any registration statement relating to the registration of securities issued to raise financing for the Company.

 

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3.            Lock-up Agreement . Each holder of Registrable Securities agrees that in connection with any public offering of the Company's Common Stock or other equity securities, and upon the request of the managing underwriter in such offering, such holder shall not, without the prior written consent of such managing underwriter, during the thirty (30) days prior to the effective date of such registration and ending on the date specified by such managing underwriter (such period not to exceed ninety (90) days in the case of any registration) (a) offer, pledge, sell, contract to sell, grant any option or contract to purchase, purchase any option or contract to sell, hedge the beneficial ownership of or otherwise dispose of, directly or indirectly, any Common Shares or any securities convertible into, exercisable for or exchangeable for Common Shares (whether such shares or any such securities are then owned by the Holder or are thereafter acquired), or (b) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of such securities, whether any such transaction described in clause (a) or (b) above is to be settled by delivery of Common Stock or such other securities, in cash or otherwise. The foregoing provisions of this Section 3 shall not apply to sales of Registrable Securities to be included in such offering pursuant to Section 2(a) and shall be applicable to the holder of Registrable Securities only if all officers and directors of the Company and all stockholders owning more than ten (10%) percent of the Company's outstanding Common Stock are subject to the same restrictions. Each holder of Registrable Securities agrees to execute and deliver such other agreements as may be reasonably requested by the Company or the managing underwriter which are consistent with the foregoing or which are necessary to give further effect thereto. Notwithstanding anything to the contrary contained in this Section 3 , each holder of Registrable Securities shall be released, pro rata, from any lock-up agreement entered into pursuant to this Section 3 in the event and to the extent that the managing underwriter or the Company permit any discretionary waiver or termination of the restrictions of any lock-up agreement pertaining to any officer, director or holder of greater than ten (10%) percent of the outstanding Common Stock.

 

4.            Registration Procedures . If and whenever the holders of Registrable Securities request that any Registrable Securities be registered pursuant to the provisions of this Agreement, the Company shall use its reasonable best efforts to effect the registration and the sale of such Registrable Securities in accordance with the intended method of disposition thereof, and pursuant thereto the Company shall as soon as reasonably practicable:

 

(a)          subject to Section 2(a) prepare and file with a Registration Statement with respect to such Registrable Securities and use its reasonable best efforts to cause such Registration Statement to become effective;

 

(b)          prepare and file with the Commission such amendments, post-effective amendments and supplements to such Registration Statement and the Prospectus used in connection therewith as may be necessary to keep such Registration Statement effective until all of such Registrable Securities have been disposed of and to comply with the provisions of the Securities Act with respect to the disposition of such Registrable Securities in accordance with the intended methods of disposition set forth in such Registration Statement;

 

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(c)          within a reasonable time before filing such Registration Statement, Prospectus or amendments or supplements thereto, furnish to counsel selected by the holder of such Registrable Securities copies of such documents proposed to be filed, which documents shall be subject to the review, comment and approval of such counsel;

 

(d)          notify the selling holder of Registrable Securities, promptly after the Company receives notice thereof, of the time when such Registration Statement has been declared effective or a supplement to any Prospectus forming a part of such Registration Statement has been filed;

 

(e)          furnish to the selling holder of Registrable Securities such number of copies of the Prospectus included in such Registration Statement (including each preliminary Prospectus) and any supplement thereto (in each case including all exhibits and documents incorporated by reference therein) and such other documents as such selling holder of Registrable Securities may reasonably request in order to facilitate the disposition of the Registrable Securities owned by such it; provided , that the Company shall have no such obligation to deliver the Prospectus or Prospectuses that are available on the Commission’s EDGAR system;

 

(f)          use its reasonable best efforts to register or qualify such Registrable Securities under such other securities or “blue sky” laws of such jurisdictions as the selling holder reasonably requests and do any and all other acts and things which may be reasonably necessary or advisable to enable such holders to consummate the disposition in such jurisdictions of the Registrable Securities owned by such holder; provided , that the Company shall not be required to qualify generally to do business, subject itself to general taxation or consent to general service of process in any jurisdiction where it would not otherwise be required to do so but for this Section 4(f) ;

 

(g)          notify the selling holder of such Registrable Securities, at any time when a Prospectus relating thereto is required to be delivered under the Securities Act, of the happening of any event as a result of which the Prospectus included in such Registration Statement contains an untrue statement of a material fact or omits any fact necessary to make the statements therein not misleading, and, at the request of such holder, the Company shall prepare a supplement or amendment to such Prospectus so that, as thereafter delivered to the purchasers of such Registrable Securities, such Prospectus shall not contain an untrue statement of a material fact or omit to state any fact necessary to make the statements therein not misleading;

 

(h)          make available for inspection by the selling holder of Registrable Securities, any underwriter participating in any disposition pursuant to such Registration Statement and any attorney, accountant or other agent retained by such holder or underwriter (collectively, the “ Inspectors ”), all financial and other records, pertinent corporate documents and properties of the Company (collectively, the “ Records ”), and cause the Company's officers, directors and employees to supply all information reasonably requested by any such Inspector in connection with such Registration Statement;

 

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(i)          provide a transfer agent and registrar (which may be the same entity) for all such Registrable Securities not later than the effective date of such registration;

 

(j)          use its reasonable best efforts to cause such Registrable Securities to be listed on each securities exchange on which the Common Stock is then listed;

 

(k)          in connection with an underwritten offering, enter into such customary agreements (including underwriting and lock-up agreements in customary form) and take all such other customary actions as the holders of such Registrable Securities or the managing underwriter of such offering reasonably request in order to expedite or facilitate the disposition of such Registrable Securities (including, without limitation, making appropriate officers of the Company available to participate in “road show” and other customary marketing activities (including one-on-one meetings with prospective purchasers of the Registrable Securities);

 

(l)          otherwise use its reasonable best efforts to comply with all applicable rules and regulations of the Commission and make available to its stockholders an earnings statement (in a form that satisfies the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder) no later than thirty (30) days after the end of the 12-month period beginning with the first day of the Company's first full fiscal quarter after the effective date of such Registration Statement, which earnings statement shall cover said 12-month period, and which requirement will be deemed to be satisfied if the Company timely files complete and accurate information on Forms 10-Q, 10-K and 8-K under the Exchange Act and otherwise complies with Rule 158 under the Securities Act; and

 

(m)         furnish to the selling holder of Registrable Securities and each underwriter, if any, with (i) a legal opinion of the Company's outside counsel, dated the effective date of such Registration Statement (and, if such registration includes an underwritten public offering, dated the date of the closing under the underwriting agreement), in form and substance as is customarily given in opinions of the Company's counsel to underwriters in underwritten public offerings; and (ii) a “comfort” letter signed by the Company's independent certified public accountants in form and substance as is customarily given in accountants' letters to underwriters in underwritten public offerings;

 

(n)          without limiting Section 4(f) above, use its reasonable best efforts to cause such Registrable Securities to be registered with or approved by such other governmental agencies or authorities as may be necessary by virtue of the business and operations of the Company to enable the holder of such Registrable Securities to consummate the disposition of such Registrable Securities in accordance with its intended method of distribution thereof;

 

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(o)          notify the holder of Registrable Securities promptly of any request by the Commission for the amending or supplementing of such Registration Statement or Prospectus or for additional information;

 

(p)          advise the holder of Registrable Securities, promptly after it shall receive notice or obtain knowledge thereof, of the issuance of any stop order by the Commission suspending the effectiveness of such Registration Statement or the initiation or threatening of any proceeding for such purpose and promptly use its reasonable best efforts to prevent the issuance of any stop order or to obtain its withdrawal at the earliest possible moment if such stop order should be issued;

 

(q)          permit any holder of Registrable Securities which holder, in its sole and exclusive judgment, might be deemed to be an underwriter or a controlling person of the Company, to participate in the preparation of such Registration Statement and to require the insertion therein of language, furnished to the Company in writing, which in the reasonable judgment of such holder and its counsel should be included;

 

(r)          cooperate with the selling holder of Registrable Securities to facilitate the timely preparation and delivery of certificates representing the Registrable Securities to be sold pursuant to such Registration Statement or Rule 144, subject to compliance with the requirements thereof and, if requested by the Company, the provision of an opinion of counsel reasonably acceptable to the Company as to such compliance and related matters, free of any restrictive legends and representing such number of Common Shares and registered in such names as Investor may reasonably request a reasonable period of time prior to sales of Registrable Securities pursuant to such Registration Statement or Rule 144; provided , that the Company may satisfy its obligations hereunder without issuing physical stock certificates through the use of The Depository Trust Company’s Direct Registration System (the “ DTCDRS ”); and

 

(s)          otherwise use its reasonable best efforts to take all other steps necessary to effect the registration of such Registrable Securities contemplated hereby.

 

5.            Expenses . All expenses (other than Selling Expenses) incurred by the Company in complying with its obligations pursuant to this Agreement and in connection with the registration and disposition of Registrable Securities, including, without limitation, all registration and filing fees, underwriting expenses (other than fees, commissions or discounts), expenses of any audits incident to or required by any such registration, fees and expenses of complying with securities and “blue sky” laws, printing expenses and fees and expenses of the Company’s counsel and accountants shall be borne by the Company. All Selling Expenses relating to Registrable Securities registered pursuant to this Agreement shall be borne and paid by the holder of such Registrable Securities.

 

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6.            Indemnification .

 

(a)          The Company shall indemnify and hold harmless, to the fullest extent permitted by law, the holder of Registrable Securities, such holder's officers, directors, managers, members, partners, stockholders and Affiliates, each underwriter, broker or any other Person acting on behalf of such holder of Registrable Securities and each other Person, if any, who controls any of the foregoing Persons within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act, against all losses, claims, actions, damages, liabilities and expenses, joint or several, to which any of the foregoing Persons may become subject under the Securities Act or otherwise, insofar as such losses, claims, actions, damages, liabilities or expenses arise out of or are based upon any untrue or alleged untrue statement of a material fact contained in any Registration Statement, Prospectus, preliminary Prospectus, free writing prospectus (as defined in Rule 405 promulgated under the Securities Act) or any amendment thereof or supplement thereto or any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading, or any violation or alleged violation by the Company of the Securities Act or any other similar federal or state securities laws or any rule or regulation promulgated thereunder applicable to the Company and relating to action or inaction required of the Company in connection with any such registration, qualification or compliance; and shall reimburse such Persons for any legal or other expenses reasonably incurred by any of them in connection with investigating or defending any such loss, claim, action, damage or liability, except insofar as the same are caused by or contained in any information furnished in writing to the Company by such holder expressly for use therein or by such holder's failure to deliver a copy of the Registration Statement, Prospectus, free-writing prospectus (as defined in Rule 405 promulgated under the Securities Act) or any amendments or supplements thereto (if the same was required by applicable law to be so delivered) after the Company has furnished such holder with a sufficient number of copies of the same prior to any written confirmation of the sale of Registrable Securities.

 

(b)          In connection with any registration in which a holder of Registrable Securities is participating, such holder shall furnish to the Company in writing such information and affidavits as the Company reasonably requests for use in connection with any such Registration Statement or Prospectus and, to the extent permitted by law, shall indemnify and hold harmless, the Company, each director of the Company, each officer of the Company who shall sign such Registration Statement, each underwriter, broker or other Person acting on behalf of the holders of Registrable Securities and each Person who controls any of the foregoing Persons within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act against any losses, claims, actions, damages, liabilities or expenses resulting from any untrue or alleged untrue statement of material fact contained in the Registration Statement, Prospectus, preliminary Prospectus, free writing prospectus (as defined in Rule 405 promulgated under the Securities Act) or any amendment thereof or supplement thereto or any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading, but only to the extent that such untrue statement or omission is contained in any information or affidavit so furnished in writing by such holder; provided , that the obligation to indemnify shall be limited to the net proceeds (after underwriting fees, commissions or discounts) actually received by such holder from the sale of Registrable Securities pursuant to such Registration Statement.

 

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(c)          Promptly after receipt by an indemnified party of notice of the commencement of any action involving a claim referred to in this Section 6 , such indemnified party shall, if a claim in respect thereof is made against an indemnifying party, give written notice to the latter of the commencement of such action. The failure of any indemnified party to notify an indemnifying party of any such action shall not (unless such failure shall have a material adverse effect on the indemnifying party) relieve the indemnifying party from any liability in respect of such action that it may have to such indemnified party hereunder. In case any such action is brought against an indemnified party, the indemnifying party shall be entitled to participate in and to assume the defense of the claims in any such action that are subject or potentially subject to indemnification hereunder, jointly with any other indemnifying party similarly notified to the extent that it may wish, with counsel reasonably satisfactory to such indemnified party, and after written notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, the indemnifying party shall not be responsible for any legal or other expenses subsequently incurred by the indemnified party in connection with the defense thereof; provided , that if (i) any indemnified party shall have reasonably concluded that there may be one or more legal or equitable defenses available to such indemnified party which are additional to or conflict with those available to the indemnifying party, or that such claim or litigation involves or could have an effect upon matters beyond the scope of the indemnity provided hereunder, or (ii) such action seeks an injunction or equitable relief against any indemnified party or involves actual or alleged criminal activity, the indemnifying party shall not have the right to assume the defense of such action on behalf of such indemnified party without such indemnified party's prior written consent (but, without such consent, shall have the right to participate therein with counsel of its choice) and such indemnifying party shall reimburse such indemnified party and any Person controlling such indemnified party for that portion of the fees and expenses of any counsel retained by the indemnified party which is reasonably related to the matters covered by the indemnity provided hereunder. If the indemnifying party is not entitled to, or elects not to, assume the defense of a claim, it shall not be obligated to pay the fees and expenses of more than one counsel for all parties indemnified by such indemnifying party with respect to such claim, unless in the reasonable judgment of any indemnified party a conflict of interest may exist between such indemnified party and any other of such indemnified parties with respect to such claim. In such instance, the conflicting indemnified parties shall have a right to retain one separate counsel, chosen by the holder of the Registrable Securities included in the registration, at the expense of the indemnifying party.

 

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(d)          If the indemnification provided for hereunder is held by a court of competent jurisdiction to be unavailable to an indemnified party with respect to any loss, claim, damage, liability or action referred to herein, then the indemnifying party, in lieu of indemnifying such indemnified party hereunder, shall contribute to the amounts paid or payable by such indemnified party as a result of such loss, claim, damage, liability or action in such proportion as is appropriate to reflect the relative fault of the indemnifying party on the one hand and of the indemnified party on the other in connection with the statements or omissions which resulted in such loss, claim, damage, liability or action as well as any other relevant equitable considerations; provided , that the maximum amount of liability in respect of such contribution shall be limited, in the case of the holder of Registrable Securities, to an amount equal to the net proceeds (after underwriting fees, commissions or discounts) actually received by such seller from the sale of Registrable Securities effected pursuant to such registration. The relative fault of the indemnifying party and of the indemnified party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the indemnifying party or by the indemnified party and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The parties agree that it would not be just and equitable if contribution pursuant hereto were determined by pro rata allocation or by any other method or allocation which does not take account of the equitable considerations referred to herein. No Person guilty or liable of fraudulent misrepresentation shall be entitled to contribution from any Person.

 

7.            Participation in Underwritten Registrations . No Person may participate in any registration hereunder which is underwritten unless such Person (a) agrees to sell such Person's securities on the basis provided in any underwriting arrangements approved by the Person or Persons entitled hereunder to approve such arrangements and (b) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents required under the terms of such underwriting arrangements.

 

8.            Rule 144 Compliance . With a view to making available to the holder of Registrable Securities the benefits of Rule 144 under the Securities Act and any other rule or regulation of the Commission that may at any time permit a holder to sell securities of the Company to the public without registration or pursuant to a registration on Form S-3 (or any successor form), the Company shall:

 

(a)          make and keep public information available, as those terms are understood and defined in Rule 144 under the Securities Act, at all times after the Registration Date;

 

(b)          use reasonable best efforts to file with the Commission in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act, at any time after the Company has become subject to such reporting requirements; and

 

(c)          furnish to the holder so long as the holder owns Registrable Securities, promptly upon request, a written statement by the Company as to its compliance with the reporting requirements of Rule 144 under the Securities Act and of the Securities Act and the Exchange Act, a copy of the most recent annual or quarterly report of the Company, and such other reports and documents so filed or furnished by the Company as such holder may reasonably request in connection with the sale of Registrable Securities without registration.

 

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9.            Preservation of Rights . The Company shall not without the prior written consent of the Investor: (a) grant any registration rights to third parties which are more favorable than or inconsistent with the rights granted hereunder, or (b) enter into any agreement, take any action, or permit any change to occur, with respect to its securities that violates or subordinates the rights expressly granted to the holders of Registrable Securities in this Agreement.

 

10.           Termination . This Agreement shall terminate and be of no further force or effect when there shall no longer be any Registrable Securities outstanding; provided , that the provisions of Section 5, Section 6, Section 11 and Sections 12 through 19 shall survive any such termination.

 

11.           Notices . All notices, requests, consents, claims, demands, waivers and other communications hereunder shall be in writing and shall be deemed to have been given (a) when delivered by hand (with written confirmation of receipt); (b) when received by the addressee if sent by a nationally recognized overnight courier (receipt requested); or (c) on the fifth day after the date mailed, by certified or registered mail, return receipt requested, postage prepaid. Such communications must be sent to the respective parties at the addresses indicated below (or at such other address for a party as shall be specified in a notice given in accordance with this Section 11 ).

 

If to the Company:  

Twinlab Consolidated Holdings, Inc.
632 Broadway, Suite 201
New York, NY 10012
Attention: General Counsel 

 

with a copy to (which shall not constitute notice to the Company):   Wilk Auslander LLP
1515 Broadway
New York, NY 10036
Attention: Joel I. Frank, Esq.

 

If to the Registered Owner:

 

 

Golisano Holdings LLC

One Fisher Road

Pittsford, NY 14534

Attention: B. Thomas Golisano, Member

 

with a copy to (which shall not constitute notice to the Registered Owner):

 

 

Woods Oviatt Gilman, LLP

Suite 700

Two State Street

Rochester, NY 14614

Attention: Gordon E. Forth, Esq.

 

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12.           Entire Agreement . This Agreement, together with the SPA, and any related exhibits and schedules thereto, constitutes the sole and entire agreement of the parties to this Agreement with respect to the subject matter contained herein, and supersedes all prior and contemporaneous understandings and agreements, both written and oral, with respect to such subject matter. Notwithstanding the foregoing, in the event of any conflict between the terms and provisions of this Agreement and those of the SPA, the terms and conditions of this Agreement shall control.

 

13.           Successor and Assigns . This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and permitted assigns. The Company may assign this Agreement at any time in connection with a sale or acquisition of the Company, whether by merger, consolidation, sale of all or substantially all of the Company’s assets, or similar transaction, without the consent of the Investor; provided , that the successor or acquiring Person agrees in writing to assume all of the Company’s rights and obligations under this Agreement.  Investor may assign its rights hereunder to any purchaser or transferee of Registrable Securities; provided , that such purchaser or transferee shall, as a condition to the effectiveness of such assignment, be required to execute a counterpart to this Agreement agreeing to be treated as a holder of Registrable Securities whereupon such purchaser or transferee shall have the benefits of, and shall be subject to the restrictions contained in, this Agreement as if such purchaser or transferee was originally included in the definition of an Investor herein and had originally been a party hereto.

 

14.           No Third-Party Beneficiaries . This Agreement is for the sole benefit of the parties hereto and their respective successors and permitted assigns and nothing herein, express or implied, is intended to or shall confer upon any other Person any legal or equitable right, benefit or remedy of any nature whatsoever, under or by reason of this Agreement.

 

15.           Headings . The headings in this Agreement are for reference only and shall not affect the interpretation of this Agreement.

 

16.           Amendment, Modification and Waiver . The provisions of this Agreement may only be amended, modified, supplemented or waived with the prior written consent of the Company and the holder of the Registrable Securities. No waiver by any party or parties shall operate or be construed as a waiver in respect of any failure, breach or default not expressly identified by such written waiver, whether of a similar or different character, and whether occurring before or after that waiver. Except as otherwise set forth in this Agreement, no failure to exercise, or delay in exercising, any right, remedy, power or privilege arising from this Agreement shall operate or be construed as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege.

 

17.           Severability . If any term or provision of this Agreement is invalid, illegal or unenforceable in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other term or provision of this Agreement or invalidate or render unenforceable such term or provision in any other jurisdiction. Upon such determination that any term or other provision is invalid, illegal or unenforceable, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the greatest extent possible.

 

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18.           Remedies . The holder of Registrable Securities, in addition to being entitled to exercise all rights granted by law, including recovery of damages, shall be entitled to specific performance of its rights under this Agreement. The Company acknowledges that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Agreement and the Company hereby agrees to waive the defense in any action for specific performance that a remedy at law would be adequate.

 

19.           Governing Law; Submission to Jurisdiction . This Agreement shall be governed by and construed in accordance with the internal laws of the State of New York without giving effect to any choice or conflict of law provision or rule (whether of the State of New York or any other jurisdiction). Any legal suit, action or proceeding arising out of or based upon this Agreement or the transactions contemplated hereby may be instituted in the federal courts of the United States or the courts of the State of New York in each case located in the State of New York, and each party irrevocably submits to the exclusive jurisdiction of such courts in any such suit, action or proceeding. Service of process, summons, notice or other document by mail to such party's address set forth herein shall be effective service of process for any suit, action or other proceeding brought in any such court. The parties irrevocably and unconditionally waive any objection to the laying of venue of any suit, action or any proceeding in such courts and irrevocably waive and agree not to plead or claim in any such court that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum.

 

20.           Waiver of Jury Trial . Each party acknowledges and agrees that any controversy which may arise under this Agreement is likely to involve complicated and difficult issues and, therefore, each such party irrevocably and unconditionally waives any right it may have to a trial by jury in respect of any legal action arising out of or relating to this Agreement or the transactions contemplated hereby. Each party to this Agreement certifies and acknowledges that (a) no representative of any other party has represented, expressly or otherwise, that such other party would not seek to enforce the foregoing waiver in the event of a legal action, (b) such party has considered the implications of this waiver, (c) such party makes this waiver voluntarily, and (d) such party has been induced to enter into this Agreement by, among other things, the mutual waivers and certifications in this Section 20 .

 

21.           Counterparts . This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall be deemed to be one and the same agreement. A signed copy of this Agreement delivered by facsimile, e-mail or other means of electronic transmission shall be deemed to have the same legal effect as delivery of an original signed copy of this Agreement.

 

[SIGNATURE PAGE FOLLOWS]

 

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IN WITNESS WHEREOF, the parties hereto have executed this Registration Rights Agreement as of the date first written above.

 

  TWINLAB CONSOLIDATED HOLDINGS, INC.
   
  By: /s/ Thomas A. Tolworthy
  Name: Thomas A. Tolworthy
  Title: President and Chief Executive Officer
   
  GOLISANO HOLDINGS LLC
     
  By: /s/ B. Thomas Golisano
  Name: B. Thomas Golisano
  Title: Member

 

 

 

 

Exhibit 10.93

 

VOTING AGREEMENT

 

THIS VOTING AGREEMENT (this “ Agreement ”), is made and entered into as of this 5th day of October, 2015 (the “ Effective Date ”), among Twinlab Consolidated Holdings, Inc., a Nevada corporation (the “ Company ”), Golisano Holdings LLC, a New York limited liability company (the “ Investor ”), and Thomas A. Tolworthy, Little Harbor, LLC, Great Harbor Capital, LLC and the David L. Van Andel Trust U/A dated November 30, 1993 (collectively, the “ Key Holders ”).

 

RECITALS

 

A.           Concurrently with the execution of this Agreement, the Company and the Investor are entering into a Securities Purchase Agreement (the “ Purchase Agreement ”) which provides for the sale to the Investor of 88,711,241 shares of the Company’s Common Stock, par value $.001 (the “ Common Stock ”) and a Contingent Adjustment Warrant (the “ Warrant ”).

 

B.           As of the date hereof, the Key Holders own in the aggregate 164,559,926 shares of Common Stock, which immediately following the closing of the transactions contemplated by the Purchase Agreement represents in the aggregate 55.664% of the total issued and outstanding shares of Common Stock.

 

C.           As a condition to the willingness of the Investor to enter into the Purchase Agreement and to consummate the transactions contemplated thereby, the Investor has required that the Key Holders agree, and in order to induce the Investor to enter into the Purchase Agreement, the Key Holders have agreed, to enter into this Agreement with respect to all the shares of Common Stock now owned by them and which they may hereafter acquire (including through stock splits, stock dividends, reclassifications, recapitalizations, similar events or otherwise) and any other securities, if any, which they are currently entitled to vote, or after the date hereof become entitled to vote, at any meeting of the stockholders of the Company (all such shares and any other securities shall collectively be referred to herein as the “ Shares ”).

 

NOW, THEREFORE , the parties agree as follows:

 

1.            Voting.

 

1.1           Authorized Shares and Other Votes . Each Key Holder agrees in favor of the Investor to vote, or cause to be voted, all Shares at any meeting of the stockholders of the Company, however called, and in any action by written consent of the Company’s stockholders: (a) in favor of increasing the number of authorized shares of Common Stock of the Company to a sufficient number of shares of Common Stock as may be required at any time in order for the Company to issue all of the Warrant Shares (as defined in the Warrant) as may be purchased at any time by the Investor (or its successors or assigns) pursuant to the Warrant; and (b) against any proposal or any other corporate action or agreement that would result in a breach of any covenant, representation or warranty or any other obligation or agreement of the Company under the Warrant or which could result in any of the conditions to the Company’s obligations under the Warrant not being fulfilled. The Key Holders acknowledge receipt and review of a copy of the Warrant.

 

 

 

 

1.2           Size of the Board . For so long as the Investor continues to own beneficially at least ten percent (10%) of the outstanding shares of Common Stock of the Company (including shares of Common Stock issued or issuable upon exercise of the Warrant), each Key Holder agrees in favor of the Investor to vote, or cause to be voted, all Shares owned by such Key Holder, or over which such Key Holder has voting control, from time to time and at all times, in whatever manner as shall be necessary to ensure that the size of the Board of Directors of the Company (the “ Board ”) shall be set and remain at seven (7) directors from the Effective Date and continuing thereafter until December 31, 2015, and shall be set and remain at six (6) directors from January 1, 2016 and thereafter.

 

1.3           Board Composition. For so long as the Investor continues to own beneficially at least ten percent (10%) of the outstanding shares of Common Stock of the Company (including shares of Common Stock issued or issuable upon conversion of warrants), each Key Holder agrees in favor of the Investor to vote, or cause to be voted, all Shares owned by such Key Holder, or over which such Key Holder has voting control, from time to time and at all times, in whatever manner as shall be necessary to ensure that at each annual or special meeting of stockholders at which an election of directors is held or pursuant to any written consent of the stockholders, two persons designated by the Investor (each an “ Investor Designee ” and collectively the “ Investor Designees ”), shall be elected to the Board. One of the initial Investor Designees shall be B. Thomas Golisano and the other will be appointed by the Investor at a later date.

 

1.4           Failure to Designate Board Members. In the absence of any designation from the Investor as specified above, the directors previously designated by the Investor and then serving as the Investor Designees shall be reelected if still eligible to serve as provided herein.

 

1.5           Removal of Board Members . Each Key Holder also agrees in favor of the Investor to vote, or cause to be voted, all of its Shares at all times, in whatever manner as shall be necessary to ensure that:

 

(a)          no director elected pursuant to Section 1.3 of this Agreement may be removed from office unless (i) such removal is directed or approved by the affirmative vote of the Investor; or (ii) the Investor is no longer so entitled to designate or approve such director;

 

(b)          any vacancies created by the resignation, removal or death of a director elected pursuant to Section 1.3 shall be filled pursuant to the provisions of this Section 1.5 ; and

 

(c)          upon the request of the Investor to remove the Investor Designee as director, such Investor Designee shall be removed.

 

The Key Holders agree to execute any written consents required to perform the obligations of this Agreement, and the Company agrees at the request of the Investor to call a special meeting of stockholders for the purpose of electing directors.

 

For purposes of this Agreement, an individual, firm, corporation, partnership, association, limited liability company, trust or any other entity (collectively, a “ Person ”) shall be deemed an “ Affiliate ” of another Person who, directly or indirectly, controls, is controlled by or is under common control with such Person, including, without limitation, any general partner, managing member, officer or director of such Person or any venture capital fund now or hereafter existing that is controlled by one or more general partners or managing members of, or shares the same management company with, such Person.

 

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1.6           No Liability for Election of Recommended Directors . Neither the Investor, nor any Affiliate of the Investor, shall have any liability as a result of designating a person for election as a director for any act or omission by such designated person in his or her capacity as a director of the Company, nor shall the Investor have any liability as a result of voting for any such designee in accordance with the provisions of this Agreement.

 

2.            Remedies.

 

2.1           Covenants of the Company . The Company agrees to use its best efforts, within the requirements of applicable law, to ensure that the rights granted under this Agreement are effective and that the parties enjoy the benefits of this Agreement. Such actions include, without limitation, the use of the Company’s best efforts to cause the nomination and election of the directors as provided in this Agreement.

 

2.2           Irrevocable Proxy and Power of Attorney . The Key Holders hereby constitute and appoint as the proxies of the Key Holders, and each hereby grants a power of attorney to the President of the Company, and a designee of the Investor, and each of them, with full power of substitution, with respect to the matters set forth herein, including, without limitation, amending the Company’s Articles of Incorporation to increase the number of shares of the Company’s authorized Common Stock in accordance with Section 1.1, establishing the size of the Board in accordance with Section 1.2 and electing the Investor Designees to the Board in accordance with Section 1.3 hereto, and hereby authorizes each of them to represent and vote, if and only if the Key Holder fails to vote, or  attempts to vote (whether by proxy, in person or by written consent), in a manner which is inconsistent with the terms of this Agreement. Each of the proxy and power of attorney granted pursuant to the immediately preceding sentence is given in consideration of the agreements and covenants of the Investor in connection with the transactions contemplated by the Purchase Agreement and, as such, each is coupled with an interest and shall be irrevocable unless and until this Agreement terminates or expires pursuant to Section 4 hereof. Each Key Holder hereby revokes any and all previous proxies or powers of attorney with respect to its Shares and shall not hereafter, unless and until this Agreement terminates or expires pursuant to Section 4 hereof, purport to grant any other proxy or power of attorney with respect to any of the Shares, deposit any of the Shares into a voting trust or enter into any agreement (other than this Agreement), arrangement or understanding with any person, directly or indirectly, to vote, grant any proxy or give instructions with respect to the voting of any of the Shares, in each case, with respect to any of the matters set forth herein.

 

2.3           Specific Enforcement . The Key Holders acknowledge and agree that the Investor will be irreparably damaged in the event any of the provisions of this Agreement are not performed by the Key Holders in accordance with their specific terms or are otherwise breached. Accordingly, it is agreed that the Investor shall be entitled to an injunction to prevent breaches of this Agreement, and to specific enforcement of this Agreement and its terms and provisions in any action instituted in any court of the United States or any state having subject matter jurisdiction.

 

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2.4           Remedies Cumulative . All remedies, either under this Agreement or by law or otherwise afforded to the Investor shall be cumulative and not alternative.

 

3.            Representations and Warranties of Key Holders . Each Key Holder hereby represents and warrants, severally but not jointly, to the Company and the Investor as follows:

 

3.1           Authority Relative to this Agreement . Such Key Holder has all necessary power and authority to execute and deliver this Agreement, to perform his or its obligations hereunder and to consummate the transactions contemplated hereby. This Agreement has been duly executed and delivered by such Key Holder and constitutes a legal, valid and binding obligation of such Key Holder, enforceable against such Key Holder in accordance with its terms, except (a) as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium or similar laws now or hereafter in effect relating to, or affecting generally, the enforcement of creditors’ and other obligees’ rights and (b) where the remedy of specific performance or other forms of equitable relief may be subject to certain equitable defenses and principles and to the discretion of the court before which the proceeding may be brought.

 

3.2           No Conflict .

 

(a)          The execution and delivery of this Agreement by such Key Holder does not, and the performance of this Agreement by such Key Holder shall not, (i) conflict with or violate any federal, state or local law, statute, ordinance, rule, regulation, order, judgment or decree applicable to such Key Holder or by which its Shares are bound or affected or (ii) result in any breach of or constitute a default (or an event that with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, or result in the creation of a lien or encumbrance on any of the Shares owned by such Key Holder pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease, license, permit, franchise or other instrument or obligation to which such Key Holder is a party or by which such Key Holder or the Shares owned by such Key Holder is bound.

 

(b)          The execution and delivery of this Agreement by such Key Holder does not, and the performance of this Agreement by such Key Holder shall not, require any consent, approval, authorization or permit of, or filing with or notification to, any governmental entity by such Key Holder, other than an amendment to each Key Holder’s Statement on Schedule 13D disclosing the execution of this Agreement.

 

3.3           Title to the Stock . As of the date hereof, such Key Holder is the owner of the number of Shares set beneath its name on the signature page hereto and is entitled to vote such Shares, without restriction, on all matters brought before the Company’s stockholders. Those Shares are all the securities of the Company owned, either of record or beneficially, by such Key Holder. Such Shares are owned free and clear of all security interests, liens, claims, pledges, options, rights of first refusal, agreements, limitations on such Key Holder’s voting rights, charges and other encumbrances of any nature whatsoever; provided that, as of the date hereof 4,333,348 shares of Common Stock held by Tolworthy are subject to vesting and 9,306,898 shares of Common Stock held by Tolworthy may be surrendered to the Company in order to establish a stock incentive plan for directors and employees. Such Key Holder has not appointed or granted any proxy, which appointment or grant is still effective, with respect to any of its Shares.

 

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4.            Term . This Agreement shall be effective as of the date hereof and shall continue in effect until terminated in accordance with Section 5.7 below or the first date that the Investor is no longer entitled to elect the Investor Designees as directors of the Company in accordance with the terms hereof.

 

5.            Miscellaneous.

 

5.1            Transfers . Each transferee or assignee of any Shares subject to this Agreement shall continue to be subject to the terms hereof, and, as a condition precedent to the Company’s recognizing such transfer, each transferee or assignee shall agree in writing to be subject to each of the terms of this Agreement by executing and delivering an Adoption Agreement substantially in the form attached hereto as Exhibit A . Upon the execution and delivery of an Adoption Agreement by any transferee, such transferee shall be deemed to be a Key Holder and a party hereto as if such transferee were the transferor and such transferee’s signature appeared on the signature pages of this Agreement. The Company shall not permit the transfer of the Shares subject to this Agreement on its books or issue a new certificate representing any such Shares unless and until such transferee shall have complied with the terms of this Section 5.1. Each certificate or instrument representing the Shares subject to this Agreement if issued on or after the date of this Agreement shall be notated by the Company with the legend set forth in Section 5.11.

 

5.2            Successors and Assigns . The terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective successors and assigns of the parties hereto. Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and assigns any rights, remedies, obligations, or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement.

 

5.3            Governing Law . This Agreement shall be governed by the internal law of the State of New York except to the extent that the corporate laws of the State of Nevada otherwise apply.

 

5.4            Counterparts . This Agreement may be executed in two (2) or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Counterparts may be delivered via facsimile, electronic mail (including pdf or any electronic signature complying with the U.S. federal ESIGN Act of 2000, e.g. , www.docusign.com) or other transmission method and any counterpart so delivered shall be deemed to have been duly and validly delivered and be valid and effective for all purposes.

 

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5.5            Titles and Subtitles . The titles and subtitles used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement.

 

5.6            Notices . All notices and other communications given or made pursuant to this Agreement shall be in writing and shall be deemed effectively given upon the earlier of actual receipt or (a) personal delivery to the party to be notified, (b) five (5) business days after having been sent by registered or certified mail, return receipt requested, postage prepaid, or (c) one (1) business day after the business day of deposit with a nationally recognized overnight courier, freight prepaid, specifying next business day delivery, with written verification of receipt. All communications shall be sent to the respective parties at the addresses set forth in the following sentence or to such address as subsequently modified by written notice given in accordance with this Section 5.6. If notice is given to the Company, a copy shall also be sent to TWINLAB CONSOLIDATED HOLDINGS, INC., 632 Broadway, Suite 201, New York, NY 10012, Attention: Richard H. Neuwirth, Chief Legal Officer, and if notice is given to the Investor to GOLISANO HOLDINGS LLC, One Fisher Road, Pittsford, NY 14534, Attention: B. Thomas Golisano, Member, and a copy shall also be given to Woods Oviatt Gilman LLP, 700 Crossroads Building, 2 State Street, Rochester, NY 14614, Attention: Gordon E. Forth, Esq. Facsimile (585) 987-2901.

 

5.7            Consent Required to Amend, Terminate or Waive . This Agreement may be amended or terminated and the observance of any term hereof may be waived (either generally or in a particular instance and either retroactively or prospectively) only by a written instrument executed by (a) the Company; (b) the Key Holders; and (c) the Investor. Notwithstanding the foregoing, any provision hereof may be waived by the waiving party on such party’s own behalf, without the consent of any other party.

 

5.8            Delays or Omissions . No delay or omission to exercise any right, power or remedy accruing to any party under this Agreement, upon any breach or default of any other party under this Agreement, shall impair any such right, power or remedy of such non-breaching or non-defaulting party nor shall it be construed to be a waiver of any such breach or default, or an acquiescence therein, or of or in any similar breach or default thereafter occurring; nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default previously or thereafter occurring. Any waiver, permit, consent or approval of any kind or character on the part of any party of any breach or default under this Agreement, or any waiver on the part of any party of any provisions or conditions of this Agreement, must be in writing and shall be effective only to the extent specifically set forth in such writing. All remedies, either under this Agreement or by law or otherwise afforded to any party, shall be cumulative and not alternative.

 

5.9            Severability . The invalidity or unenforceability of any provision hereof shall in no way affect the validity or enforceability of any other provision.

 

5.10          Entire Agreement . This Agreement (including the Exhibits and other attachments hereto), and the other Golisano Investment Documents (as defined in the Purchase Agreement) constitute the full and entire understanding and agreement between the parties hereto with respect to the subject matter hereof, and any other written or oral agreement relating to the subject matter hereof existing between the parties is expressly canceled.

  

6  

 

 

5.11          Share Certificate Legend . Each certificate or instrument representing any Shares issued after the date hereof shall be notated by the Company with a legend reading substantially as follows:

 

“The Shares REPRESENTED hereby are subject to a Voting Agreement, AS MAY BE AMENDED FROM TIME TO TIME, (a copy of which may be obtained upon written request from the Company), and by accepting any interest in such Shares the person accepting such interest shall be deemed to agree to and shall become bound by all the provisions of that Voting Agreement, including certain restrictions on transfer and ownership set forth therein.”

 

The Company, by its execution of this Agreement, agrees that it will cause the certificates or instruments evidencing the Shares issued after the date hereof to be notated with the legend required by this Section 5.11 of this Agreement, and it shall supply, free of charge, a copy of this Agreement to any holder of such Shares upon written request from such holder to the Company at its principal office. The parties to this Agreement do hereby agree that the failure to cause the certificates or instruments evidencing the Shares to be notated with the legend required by this Section 5.11 herein and/or the failure of the Company to supply, free of charge, a copy of this Agreement as provided hereunder shall not affect the validity or enforcement of this Agreement.

 

5.12          Stock Splits, Stock Dividends, etc. In the event of any issuance of Shares of the Company’s voting securities hereafter to any Person (including, without limitation, in connection with any stock split, stock dividend, recapitalization, reorganization, or the like), such Shares shall become subject to this Agreement and shall be notated with the legend set forth in Section 5.11.

 

5.13          Manner of Voting . The voting of Shares pursuant to this Agreement may be effected in person, by proxy, by written consent or in any other manner permitted by applicable law. For the avoidance of doubt, voting of the Shares pursuant to the Agreement need not make explicit reference to the terms of this Agreement.

 

5.14          Further Assurances . At any time or from time to time after the date hereof, the parties agree to cooperate with each other, and at the request of any other party, to execute and deliver any further instruments or documents and to take all such further action as the other party may reasonably request in order to evidence or effectuate the consummation of the transactions contemplated hereby and to otherwise carry out the intent of the parties hereunder.

 

7  

 

 

5.15          Dispute Resolution . The parties (a) hereby irrevocably and unconditionally submit to the jurisdiction of the state courts of New York and to the jurisdiction of the United States District Court for the District of Western New York for the purpose of any suit, action or other proceeding arising out of or based upon this Agreement, (b) agree not to commence any suit, action or other proceeding arising out of or based upon this Agreement except in the state courts of NY or the United States District Court for the District of Western New York, and (c) hereby waive, and agree not to assert, by way of motion, as a defense, or otherwise, in any such suit, action or proceeding, any claim that it is not subject personally to the jurisdiction of the above-named courts, that its property is exempt or immune from attachment or execution, that the suit, action or proceeding is brought in an inconvenient forum, that the venue of the suit, action or proceeding is improper or that this Agreement or the subject matter hereof may not be enforced in or by such court.

 

Waiver of Jury Trial : EACH PARTY HEREBY WAIVES ITS RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT, THE OTHER TRANSACTION DOCUMENTS, THE SECURITIES OR THE SUBJECT MATTER HEREOF OR THEREOF. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS TRANSACTION, INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS (INCLUDING NEGLIGENCE), BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. THIS SECTION HAS BEEN FULLY DISCUSSED BY EACH OF THE PARTIES HERETO AND THESE PROVISIONS WILL NOT BE SUBJECT TO ANY EXCEPTIONS. EACH PARTY HERETO HEREBY FURTHER WARRANTS AND REPRESENTS THAT SUCH PARTY HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT SUCH PARTY KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL.

 

[Signature Page Follows]

 

8  

 

 

IN WITNESS WHEREOF, the parties have executed this Voting Agreement as of the date first written above.

 

  COMPANY:
   
  TWINLAB CONSOLIDATED HOLDINGS INC.
     
  By: /s/ Thomas A. Tolworthy
  Name:  Thomas A. Tolworthy
  Title: President and Chief Executive Officer
     
  Address: 632 Broadway, Suite 201
    New York, NY 10012
     
  KEY HOLDERS:
     
  Signature:  /s/ Thomas A. Tolworthy
    Thomas A. Tolworthy
     
  No. of Shares: 39,000,000
     
  Address: C/O Twinlab Corporation
    632 Broadway, Suite 201
    New York, NY 10012
     
  Little Harbor, LLC
     
  By: /s/ Mark Bugge
  Name: Mark Bugge
  Title: Secretary
     
  No. of Shares: 33,168,948
     
  Address: 3133 Orchard Vista Drive SE
    Grand Rapids, MI 49546
     
  GREAT Harbor CAPITAL, LLC
     
  By: /s/ Mark Bugge
  Name: Mark Bugge
  Title: Secretary
     
  No. of Shares: 48,332,266
     
  Address: 3133 Orchard Vista Drive SE
    Grand Rapids, MI 49546

 

[SIGNATURE PAGE NO.1 TO VOTING AGREEMENT]

 

 

 

  

  David L. Van Andel Trust U/A dated November 30, 1993
     
  By: /s/ David L. Van Andel
  Name: David L. Van Andel
  Title:  
     
  No. of Shares: 34,791,814
     
  Address: 3133 Orchard Vista Drive SE
    Grand Rapids, MI 49546
     
  Accepted and Agreed
   
  INVESTOR:
   
  GOLISANO HOLDINGS LLC
     
  By: /s/ B. Thomas Golisano
  Name: B. Thomas Golisano
  Title: Member
     
  Address:  C/o Fishers Asset Management
    1 Fishers Road
    Pittsford, NY 14534
    Facsimile: (585) 340-1202

 

[SIGNATURE PAGE NO.2 TO VOTING AGREEMENT]

 

 

 

 

EXHIBIT A

 

ADOPTION AGREEMENT

 

This Adoption Agreement (“ Adoption Agreement ”) is executed on ___________________, 20__, by the undersigned (the “ Holder ”) pursuant to the terms of that certain Voting Agreement dated as of [_____ __, 20___] (the “ Agreement ”), by and among the Company and certain of its stockholders referred to therein as Key Holders (as such Agreement may be amended or amended and restated hereafter) in favor of Golisano Holdings LLC, a New York limited liability company. Capitalized terms used but not defined in this Adoption Agreement shall have the respective meanings ascribed to such terms in the Agreement. By the execution of this Adoption Agreement, the Holder agrees as follows.

 

1.1           Acknowledgement . Holder acknowledges that Holder is acquiring certain shares of the capital stock of the Company (the “ Stock ”) or options, warrants, or other rights to purchase such Stock (the “ Options ”), for one of the following reasons (Check the correct box):

 

¨ As a transferee of Shares from a party in such party’s capacity as an “Investor” bound by the Agreement, and after such transfer, Holder shall be considered an “Investor” for all purposes of the Agreement.

 

¨ As a transferee of Shares from a party in such party’s capacity as a “Key Holder” bound by the Agreement, and after such transfer, Holder shall be considered a “Key Holder” for all purposes of the Agreement.

 

¨ In accordance with Section 5.1 of the Agreement, as a new party who is not a new Investor, in which case Holder will be a deemed a “Key Holder” for all purposes of the Agreement.

 

1.2           Agreement . Holder hereby (a) agrees that the Stock and Options, and any other shares of capital stock or securities required by the Agreement to be bound thereby, shall be bound by and subject to the terms of the Agreement and (b) adopts the Agreement with the same force and effect as if Holder were originally a party thereto.

 

1.3           Notice . Any notice required or permitted by the Agreement shall be given to Holder at the address or facsimile number listed below Holder’s signature hereto.

 

HOLDER: _______________________________ ____   ACCEPTED AND AGREED:
     
By: _____________________________________ _____   TWINLAB CONSOLIDATED HOLDINGS, INC.
Name and Title of Signatory    
     
Address: _________________________________ _____   By:  
       
______________________________________________   Title:  
     
Facsimile Number: __________________________ ____    

 

 

 

 

 

 

Exhibit 10.94

 

VOTING AGREEMENT

 

THIS VOTING AGREEMENT (this “ Agreement ”), is made and entered into as of this 2nd day of October, 2015 (the “ Effective Date ”), among Twinlab Consolidated Holdings, Inc., a Nevada corporation (the “ Company ”), Great Harbor Capital, LLC, a Delaware limited liability company (the “ Investor ”), and Golisano Holdings LLC, Thomas A. Tolworthy, Little Harbor, LLC and the David L. Van Andel Trust U/A dated November 30, 1993 (collectively, the “ Key Holders ”).

 

RECITALS

 

A.           Concurrently with the execution of this Agreement, the Company and the Investor are entering into a Stock Purchase Agreement (the “ Purchase Agreement ”) which provides for the sale to the Investor of 41,379,310 shares of the Company’s Common Stock, par value $.001 (the “ Common Stock ”).

 

B.           As of the date hereof, the Key Holders own in the aggregate 204,978,901 shares of Common Stock, which immediately following the closing of the transactions contemplated by the Purchase Agreement represents in the aggregate 69.319% of the total issued and outstanding shares of Common Stock.

 

C.           As a condition to the willingness of the Investor to enter into the Purchase Agreement and to consummate the transactions contemplated thereby, the Investor has required that the Key Holders agree, and in order to induce the Investor to enter into the Purchase Agreement, the Key Holders have agreed, to enter into this Agreement with respect to all the shares of Common Stock now owned by them and which they may hereafter acquire (including through stock splits, stock dividends, reclassifications, recapitalizations, similar events or otherwise) and any other securities, if any, which they are currently entitled to vote, or after the date hereof become entitled to vote, at any meeting of the stockholders of the Company (all such shares and any other securities shall collectively be referred to herein as the “ Shares ”).

 

NOW, THEREFORE , the parties agree as follows:

 

1.            Voting .

 

1.1           Size of the Board . For so long as the Investor continues to own beneficially at least ten percent (10%) of the outstanding shares of Common Stock of the Company (including shares of Common Stock issued or issuable upon exercise of the Warrant), each Key Holder agrees in favor of the Investor to vote, or cause to be voted, all Shares owned by such Key Holder, or over which such Key Holder has voting control, from time to time and at all times, in whatever manner as shall be necessary to ensure that the size of the Board of Directors of the Company (the “Board”) shall be set and remain at seven (7) directors from the Effective Date and continuing thereafter until December 31, 2015, and shall be set and remain at six (6) directors from January 1, 2016 and thereafter.

 

 

 

 

1.2           Board Composition . For so long as the Investor continues to own beneficially at least ten percent (10%) of the outstanding shares of Common Stock of the Company (including shares of Common Stock issued or issuable upon conversion of warrants), each Key Holder agrees in favor of the Investor to vote, or cause to be voted, all Shares owned by such Key Holder, or over which such Key Holder has voting control, from time to time and at all times, in whatever manner as shall be necessary to ensure that at each annual or special meeting of stockholders at which an election of directors is held or pursuant to any written consent of the stockholders, two persons designated by the Investor (each an “Investor Designee” and collectively the “Investor Designees”), shall be elected to the Board. One of the initial Investor Designees shall be David L. Van Andel and the other will be appointed by the Investor at a later date.

 

1.3           Failure to Designate Board Members . In the absence of any designation from the Investor as specified above, the directors previously designated by the Investor and then serving as the Investor Designees shall be reelected if still eligible to serve as provided herein.

 

1.4           Removal of Board Members . Each Key Holder also agrees in favor of the Investor to vote, or cause to be voted, all of its Shares at all times, in whatever manner as shall be necessary to ensure that:

 

(a)          no director elected pursuant to Section 1.2 of this Agreement may be removed from office unless (i) such removal is directed or approved by the affirmative vote of the Investor; or (ii) the Investor is no longer so entitled to designate or approve such director;

 

(b)          any vacancies created by the resignation, removal or death of a director elected pursuant to Section 1.2 shall be filled pursuant to the provisions of this Section 1.4; and

 

(c)          upon the request of the Investor to remove the Investor Designee as director, such Investor Designee shall be removed.

 

The Key Holders agree to execute any written consents required to perform the obligations of this Agreement, and the Company agrees at the request of the Investor to call a special meeting of stockholders for the purpose of electing directors.

 

For purposes of this Agreement, an individual, firm, corporation, partnership, association, limited liability company, trust or any other entity (collectively, a “Person”) shall be deemed an “Affiliate” of another Person who, directly or indirectly, controls, is controlled by or is under common control with such Person, including, without limitation, any general partner, managing member, officer or director of such Person or any venture capital fund now or hereafter existing that is controlled by one or more general partners or managing members of, or shares the same management company with, such Person.

 

1.5           No Liability for Election of Recommended Directors . Neither the Investor, nor any Affiliate of the Investor, shall have any liability as a result of designating a person for election as a director for any act or omission by such designated person in his or her capacity as a director of the Company, nor shall the Investor have any liability as a result of voting for any such designee in accordance with the provisions of this Agreement.

 

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2.            Remedies .

 

2.1           Covenants of the Company . The Company agrees to use its best efforts, within the requirements of applicable law, to ensure that the rights granted under this Agreement are effective and that the parties enjoy the benefits of this Agreement. Such actions include, without limitation, the use of the Company’s best efforts to cause the nomination and election of the directors as provided in this Agreement.

 

2.2           Irrevocable Proxy and Power of Attorney . The Key Holders hereby constitute and appoint as the proxies of the Key Holders, and each hereby grants a power of attorney to the President of the Company, and a designee of the Investor, and each of them, with full power of substitution, with respect to the matters set forth herein, including, without limitation, establishing the size of the Board in accordance with Section 1.1 and electing the Investor Designees to the Board in accordance with Section 1.2 hereto, and hereby authorizes each of them to represent and vote, if and only if the Key Holder fails to vote, or attempts to vote (whether by proxy, in person or by written consent), in a manner which is inconsistent with the terms of this Agreement. Each of the proxy and power of attorney granted pursuant to the immediately preceding sentence is given in consideration of the agreements and covenants of the Investor in connection with the transactions contemplated by the Purchase Agreement and, as such, each is coupled with an interest and shall be irrevocable unless and until this Agreement terminates or expires pursuant to Section 4 hereof. Each Key Holder hereby revokes any and all previous proxies or powers of attorney with respect to its Shares and shall not hereafter, unless and until this Agreement terminates or expires pursuant to Section 4 hereof, purport to grant any other proxy or power of attorney with respect to any of the Shares, deposit any of the Shares into a voting trust or enter into any agreement (other than this Agreement), arrangement or understanding with any person, directly or indirectly, to vote, grant any proxy or give instructions with respect to the voting of any of the Shares, in each case, with respect to any of the matters set forth herein.

 

2.3           Specific Enforcement . The Key Holders acknowledge and agree that the Investor will be irreparably damaged in the event any of the provisions of this Agreement are not performed by the Key Holders in accordance with their specific terms or are otherwise breached. Accordingly, it is agreed that the Investor shall be entitled to an injunction to prevent breaches of this Agreement, and to specific enforcement of this Agreement and its terms and provisions in any action instituted in any court of the United States or any state having subject matter jurisdiction.

 

2.4           Remedies Cumulative . All remedies, either under this Agreement or by law or otherwise afforded to the Investor shall be cumulative and not alternative.

 

3.            Representations and Warranties of Key Holders .

 

Each Key Holder hereby represents and warrants, severally but not jointly, to the Company and the Investor as follows:

 

  3

 

 

3.1           Authority Relative to this Agreement . Such Key Holder has all necessary power and authority to execute and deliver this Agreement, to perform his or its obligations hereunder and to consummate the transactions contemplated hereby. This Agreement has been duly executed and delivered by such Key Holder and constitutes a legal, valid and binding obligation of such Key Holder, enforceable against such Key Holder in accordance with its terms, except (a) as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium or similar laws now or hereafter in effect relating to, or affecting generally, the enforcement of creditors’ and other obligees’ rights and (b) where the remedy of specific performance or other forms of equitable relief may be subject to certain equitable defenses and principles and to the discretion of the court before which the proceeding may be brought.

 

3.2           No Conflict .

 

(a)          The execution and delivery of this Agreement by such Key Holder does not, and the performance of this Agreement by such Key Holder shall not, (i) conflict with or violate any federal, state or local law, statute, ordinance, rule, regulation, order, judgment or decree applicable to such Key Holder or by which its Shares are bound or affected or (ii) result in any breach of or constitute a default (or an event that with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, or result in the creation of a lien or encumbrance on any of the Shares owned by such Key Holder pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease, license, permit, franchise or other instrument or obligation to which such Key Holder is a party or by which such Key Holder or the Shares owned by such Key Holder is bound.

 

(b)          The execution and delivery of this Agreement by such Key Holder does not, and the performance of this Agreement by such Key Holder shall not, require any consent, approval, authorization or permit of, or filing with or notification to, any governmental entity by such Key Holder, other than an amendment to each Key Holder’s Statement on Schedule 13D disclosing the execution of this Agreement.

 

3.3           Title to the Stock . As of the date hereof, such Key Holder is the owner of the number of Shares set beneath its name on the signature page hereto and is entitled to vote such Shares, without restriction, on all matters brought before the Company’s stockholders. Those Shares are all the securities of the Company owned, either of record or beneficially, by such Key Holder. Such Shares are owned free and clear of all security interests, liens, claims, pledges, options, rights of first refusal, agreements, limitations on such Key Holder’s voting rights, charges and other encumbrances of any nature whatsoever; provided that, as of the date hereof 4,333,348 shares of Common Stock held by Tolworthy are subject to vesting and 9,306,898 shares of Common Stock held by Tolworthy may be surrendered to the Company in order to establish a stock incentive plan for directors and employees. Such Key Holder has not appointed or granted any proxy, which appointment or grant is still effective, with respect to any of its Shares.

 

4.            Term . This Agreement shall be effective as of the date hereof and shall continue in effect until terminated in accordance with Section 5.7 below or the first date that the Investor is no longer entitled to elect the Investor Designees as directors of the Company in accordance with the terms hereof.

 

  4

 

 

5.            Miscellaneous .

 

5.1           Transfers . Each transferee or assignee of any Shares subject to this Agreement shall continue to be subject to the terms hereof, and, as a condition precedent to the Company’s recognizing such transfer, each transferee or assignee shall agree in writing to be subject to each of the terms of this Agreement by executing and delivering an Adoption Agreement substantially in the form attached hereto as Exhibit A. Upon the execution and delivery of an Adoption Agreement by any transferee, such transferee shall be deemed to be a Key Holder and a party hereto as if such transferee were the transferor and such transferee’s signature appeared on the signature pages of this Agreement. The Company shall not permit the transfer of the Shares subject to this Agreement on its books or issue a new certificate representing any such Shares unless and until such transferee shall have complied with the terms of this Section 5.1. Each certificate or instrument representing the Shares subject to this Agreement if issued on or after the date of this Agreement shall be notated by the Company with the legend set forth in Section 5.11.

 

5.2           Successors and Assigns . The terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective successors and assigns of the parties hereto. Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and assigns any rights, remedies, obligations, or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement.

 

5.3           Governing Law . This Agreement shall be governed by the internal law of the State of New York except to the extent that the corporate laws of the State of Nevada otherwise apply.

 

5.4           Counterparts . This Agreement may be executed in two (2) or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Counterparts may be delivered via facsimile, electronic mail (including pdf or any electronic signature complying with the U.S. federal ESIGN Act of 2000, e.g., www.docusign.com) or other transmission method and any counterpart so delivered shall be deemed to have been duly and validly delivered and be valid and effective for all purposes.

 

5.5           Titles and Subtitles . The titles and subtitles used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement.

 

5.6           Notices . All notices and other communications given or made pursuant to this Agreement shall be in writing and shall be deemed effectively given upon the earlier of actual receipt or (a) personal delivery to the party to be notified, (b) five (5) business days after having been sent by registered or certified mail, return receipt requested, postage prepaid, or (c) one (1) business day after the business day of deposit with a nationally recognized overnight courier, freight prepaid, specifying next business day delivery, with written verification of receipt. All communications shall be sent to the respective parties at the addresses set forth in the following sentence or to such address as subsequently modified by written notice given in accordance with this Section 5.6. If notice is given to the Company, a copy shall also be sent to TWINLAB CONSOLIDATED HOLDINGS, INC., 632 Broadway, Suite 201, New York, NY 10012, Attention: Richard H. Neuwirth, Chief Legal Officer, and if notice is given to the Investor to GREAT HARBOR CAPITAL, LLC, 3133 Orchard Vista Drive SE, Grand Rapids, MI 49546; Attention: Mark Bugge.

 

  5

 

  

5.7           Consent Required to Amend, Terminate or Waive . This Agreement may be amended or terminated and the observance of any term hereof may be waived (either generally or in a particular instance and either retroactively or prospectively) only by a written instrument executed by (a) the Company; (b) the Key Holders; and (c) the Investor. Notwithstanding the foregoing, any provision hereof may be waived by the waiving party on such party’s own behalf, without the consent of any other party.

 

5.8           Delays or Omissions . No delay or omission to exercise any right, power or remedy accruing to any party under this Agreement, upon any breach or default of any other party under this Agreement, shall impair any such right, power or remedy of such non-breaching or non-defaulting party nor shall it be construed to be a waiver of any such breach or default, or an acquiescence therein, or of or in any similar breach or default thereafter occurring; nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default previously or thereafter occurring. Any waiver, permit, consent or approval of any kind or character on the part of any party of any breach or default under this Agreement, or any waiver on the part of any party of any provisions or conditions of this Agreement, must be in writing and shall be effective only to the extent specifically set forth in such writing. All remedies, either under this Agreement or by law or otherwise afforded to any party, shall be cumulative and not alternative.

 

5.9           Severability . The invalidity or unenforceability of any provision hereof shall in no way affect the validity or enforceability of any other provision.

 

5.10         Entire Agreement . This Agreement (including the Exhibits and other attachments hereto) constitutes the full and entire understanding and agreement between the parties hereto with respect to the subject matter hereof, and any other written or oral agreement relating to the subject matter hereof existing between the parties is expressly canceled.

 

5.11         Share Certificate Legend . Each certificate or instrument representing any Shares issued after the date hereof shall be notated by the Company with a legend reading substantially as follows:

 

“The Shares REPRESENTED hereby are subject to a Voting Agreement, AS MAY BE AMENDED FROM TIME TO TIME, (a copy of which may be obtained upon written request from the Company), and by accepting any interest in such Shares the person accepting such interest shall be deemed to agree to and shall become bound by all the provisions of that Voting Agreement, including certain restrictions on transfer and ownership set forth therein.”

 

The Company, by its execution of this Agreement, agrees that it will cause the certificates or instruments evidencing the Shares issued after the date hereof to be notated with the legend required by this Section 5.11 of this Agreement, and it shall supply, free of charge, a copy of this Agreement to any holder of such Shares upon written request from such holder to the Company at its principal office. The parties to this Agreement do hereby agree that the failure to cause the certificates or instruments evidencing the Shares to be notated with the legend required by this Section 5.11 herein and/or the failure of the Company to supply, free of charge, a copy of this Agreement as provided hereunder shall not affect the validity or enforcement of this Agreement.

 

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5.12         S tock Splits, Stock Dividends, etc . In the event of any issuance of shares of the Company’s voting securities hereafter to any person (including, without limitation, in connection with any stock split, stock dividend, recapitalization, reorganization, or the like), such shares shall become subject to this Agreement and shall be notated with the legend set forth in section

 

5.13         Manner of Voting . The voting of Shares pursuant to this Agreement may be effected in person, by proxy, by written consent or in any other manner permitted by applicable law. For the avoidance of doubt, voting of the shares pursuant to the agreement need not make explicit reference to the terms of this Agreement.

 

5.14         Further Assurances . At any time or from time to time after the date hereof, the parties agree to cooperate with each other, and at the request of any other party, to execute and deliver any further instruments or documents and to take all such further action as the other party may reasonably request in order to evidence or effectuate the consummation of the transactions contemplated hereby and to otherwise carry out the intent of the parties hereunder.

 

5.15         Dispute Resolution . The parties (a) hereby irrevocably and unconditionally submit to the jurisdiction of the state courts of New York and to the jurisdiction of the United States District Court for the district of Western New York for the purpose of any suit, action or other proceeding arising out of or based upon this agreement, (b) agree not to commence any suit, action or other proceeding arising out of or based upon this Agreement except in the state courts of New York or the United States District Court for the District of Western New York, and (c) hereby waive, and agree not to assert, by way of motion, as a defense, or otherwise, in any such suit, action or proceeding, any claim that it is not subject personally to the jurisdiction of the above-named courts, that its property is exempt or immune from attachment or execution, that the suit, action or proceeding is brought in an inconvenient forum, that the venue of the suit, action or proceeding is improper or that this Agreement or the subject matter hereof may not be enforced in or by such court

 

Waiver of Jury Trial : EACH PARTY HEREBY WAIVES ITS RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT, THE OTHER TRANSACTION DOCUMENTS, THE SECURITIES OR THE SUBJECT MATTER HEREOF OR THEREOF. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS TRANSACTION, INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS (INCLUDING NEGLIGENCE), BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. THIS SECTION HAS BEEN FULLY DISCUSSED BY EACH OF THE PARTIES HERETO AND THESE PROVISIONS WILL NOT BE SUBJECT TO ANY EXCEPTIONS. EACH PARTY HERETO HEREBY FURTHER WARRANTS AND REPRESENTS THAT SUCH PARTY HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT SUCH PARTY KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL.

 

[Signature Page Follows]

 

  7

 

 

IN WITNESS WHEREOF, the parties have executed this Voting Agreement as of the date first written above.

 

  COMPANY:
   
  TWINLAB CONSOLIDATED HOLDINGS INC.
     
  By: /s/ Thomas A. Tolworthy
  Name: Thomas A. Tolworthy
  Title: President and Chief Executive Officer
     
  Address:   632 Broadway, Suite 201
    New York, NY 10012
     
  KEY HOLDERS:
     
  Signature:  /s/ Thomas A. Tolworthy
    Thomas A. Tolworthy
     
  No. of Shares: 39,000,000
     
  Address: c/o Twinlab Corporation
    632 Broadway, Suite 201
    New York, NY 10012
     
  Little Harbor, LLC
     
  By: /s/ Mark Bugge
  Name: Mark Bugge
  Title: Secretary 
     
  No. of Shares: 33,168,948
     
  Address: 3133 Orchard Vista Drive SE
    Grand Rapids, MI  49546
     
  GOLISANO HOLDINGS LLC
     
  By: /s/ B. Thomas Golisano
  Name: B. Thomas Golisano
  Title: Member
     
  Address:  C/o Fishers Asset Management
    1 Fishers Road
    Pittsford, NY 14534
    Facsimile: (585) 340-1202
     
  No. of Shares: 88,711,241

 

[SIGNATURE PAGE NO.1 TO VOTING AGREEMENT]

 

 

 

 

  David L. Van Andel Trust U/A dated November 30, 1993
     
  By: /s/  David L. Van Andel
  Name:  David L. Van Andel
  Title:  
     
  No. of Shares: 34,791,814
     
  Address: 3133 Orchard Vista Drive SE
    Grand Rapids, MI  49546
     
  Accepted and Agreed
   
  INVESTOR:
     
  GREAT Harbor CAPITAL, LLC
     
  By: /s/ Mark Bugge  
  Name: Mark Bugge
  Title: Secretary
     
  Address:   3133 Orchard Vista Drive SE
    Grand Rapids, MI  49546

 

[SIGNATURE PAGE NO.2 TO VOTING AGREEMENT]

 

 

 

 

EXHIBIT A

 

ADOPTION AGREEMENT

 

This Adoption Agreement (“ Adoption Agreement ”) is executed on ___________________, 20__, by the undersigned (the “ Holder ”) pursuant to the terms of that certain Voting Agreement dated as of [_____ __, 20___] (the “ Agreement ”), by and among the Company and certain of its stockholders referred to therein as Key Holders (as such Agreement may be amended or amended and restated hereafter) in favor of Great Harbor Capital, LLC, a Delaware limited liability company. Capitalized terms used but not defined in this Adoption Agreement shall have the respective meanings ascribed to such terms in the Agreement. By the execution of this Adoption Agreement, the Holder agrees as follows.

 

1.1           Acknowledgement . Holder acknowledges that Holder is acquiring certain shares of the capital stock of the Company (the “ Stock ”) or options, warrants, or other rights to purchase such Stock (the “ Options ”), for one of the following reasons (Check the correct box):

 

¨ As a transferee of Shares from a party in such party’s capacity as an “Investor” bound by the Agreement, and after such transfer, Holder shall be considered an “Investor” for all purposes of the Agreement.

 

¨ As a transferee of Shares from a party in such party’s capacity as a “Key Holder” bound by the Agreement, and after such transfer, Holder shall be considered a “Key Holder” for all purposes of the Agreement.         

 

¨ In accordance with Section 5.1 of the Agreement, as a new party who is not a new Investor, in which case Holder will be a deemed a “Key Holder” for all purposes of the Agreement.

 

1.2           Agreement . Holder hereby (a) agrees that the Stock and Options, and any other shares of capital stock or securities required by the Agreement to be bound thereby, shall be bound by and subject to the terms of the Agreement and (b) adopts the Agreement with the same force and effect as if Holder were originally a party thereto.

 

1.3           Notice . Any notice required or permitted by the Agreement shall be given to Holder at the address or facsimile number listed below Holder’s signature hereto.

 

HOLDER: _______________________________ ____   ACCEPTED AND AGREED:
     
By: _____________________________________ _____   TWINLAB CONSOLIDATED HOLDINGS, INC.
Name and Title of Signatory    
     
Address: _________________________________ _____   By:  
       
______________________________________________   Title:  
     
Facsimile Number: __________________________ ____    

 

 

 

 

 

Exhibit 10.95

 

SURRENDER AGREEMENT

 

This SURRENDER AGREEMENT (this “ Agreement ”) dated as of October 5, 2015, by and between Twinlab Consolidated Holdings, Inc., a Nevada corporation (“ Company ”), and Thomas A. Tolworthy (“ Transferor ”).

 

WITNESSETH :

 

WHEREAS , the Company and Golisano Holdings LLC (“ GHL ”) are parties to a Securities Purchase Agreement dated October 2, 2015 (the " GHL Purchase Agreement ") pursuant to which the Company shall issue and sell to GHL 88,711,241 shares of the Company’s common stock, par value $.001 per share (the “ Common Stock ”), for a purchase price of $25,000,000;

 

WHEREAS , the Company and Great Harbor Capital, LLC (“ Great Harbor ”) are parties to a Stock Purchase Agreement (the " Great Harbor Purchase Agreement ") pursuant to which the Company shall issue and sell to Great Harbor 41,379,310 shares of the Common Stock for a purchase price of $12,000,000;

 

WHEREAS , Transferor is the holder of 108,777,855 shares of Common Stock of which 43,213,825 shares are subject to a Surrender Agreement between the Transferor and the Company, dated September 3, 2014 (the “ Original Surrender Agreement ”);

 

WHEREAS , it is a condition to the consummation of the transactions contemplated by the GHL Purchase Agreement that immediately prior to the consummation of the transactions contemplated thereby and the transactions contemplated by the Great Harbor Purchase Agreement that the Transferor contributes, transfers, assigns, conveys and delivers to the Company, and the Company accepts and acquires from Transferor, 60,470,957 shares of Common Stock pursuant to the terms of this Agreement; and

 

WHEREAS , in order to induce GHL to purchase the shares provided for by the GHL Purchase Agreement, the Transferor desires to surrender 60,470,957 shares of Common Stock held by him pursuant to the terms and conditions of this Agreement.

 

NOW, THEREFORE , in consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

 

1.            Surrender of Common Stock .

 

(a)           In consideration of one dollar ($1.00), the receipt and sufficiency of which are hereby acknowledged by Transferor, concurrently with the closing of the transactions contemplated by the GHL Purchase Agreement, Transferor hereby irrevocably agrees to contribute, transfer, assign, convey and deliver 60,470,957 shares of Common Stock (the “ Surrendered Shares ”), free and clear of any mortgage, pledge, lien, encumbrance, charge, security, security interest or other claim against title; it being agreed that of that total (i) 33,906,927 Surrendered Shares shall be surrendered pursuant to the Original Surrender Agreement, (ii) 26,564,030 Surrendered Shares shall be surrendered pursuant solely to this Agreement and not from shares subject to the Original Surrender Agreement, and (iii) 9,306,898 shares held by Transferor shall remain subject to surrender to the Company pursuant to the Original Surrender Agreement. As a result of such surrender and transfer, the parties hereto agree and affirm that Transferor shall have absolutely and irrevocably released any and all of his interests in all of the Surrendered Shares. Concurrently with the execution of this Agreement, the Transferor is delivering to the Company stock certificates which represent the Surrendered Shares and will execute a stock power if requested by the Company.

 

 

 

 

(b)           The Company agrees that the Surrendered Shares shall be used to issue shares of Common Stock to GHL and Great Harbor pursuant to the terms of the GHL Purchase Agreement and the Great Harbor Purchase Agreement, respectively.

 

2.            Acknowledgements, Representations, Warranties and Agreement of Transferor . In connection with the execution of this Agreement and in order to induce GHL and Great Harbor to consummate the transactions described above, Transferor hereby represents, warrants and agrees that Transferor has good and marketable title to the Surrendered Shares, free and clear of any mortgage, pledge, lien, encumbrance, charge, security, security interest or other claim against title, other than general restrictions under federal and state securities laws.

 

3.            Covenant of Transferor . From and after the date of this Agreement, Transferor shall execute and deliver (or cause to be executed and delivered) such further instruments of conveyance and transfer and take such additional action as the Company may reasonably request to effect, consummate, confirm or evidence the contribution to the Company of the Surrendered Shares. Transferor hereby agrees to indemnify and hold harmless the Company from any losses or damage, fees, costs or expenses that may be incurred by the Company due to a breach of this Agreement by Transferor.

 

4.            Miscellaneous .

 

(a)           Amendment . Neither this Agreement nor any provision hereof may be changed, waived, discharged or terminated orally or by course of dealing, but only by a statement in writing signed by the party against which enforcement of the change, waiver, discharge or termination is sought.

 

(b)           Notices . All notices, requests, consents, claims, demands, waivers and other communications hereunder shall be in writing and shall be deemed to have been given (a) when delivered by hand; (b) on the first business day following date sent if sent by a nationally recognized overnight courier (receipt requested); (c) on the date sent (if such date is a business day at the recipient’s address, otherwise on the next business day at the recipient’s address) by facsimile or e-mail of a PDF document (with confirmation of receipt by recipient); in each case a party’s refusal or willful avoidance of delivery shall be deemed to constitute delivery. Such communications must be sent to the respective parties at the following addresses (or at such other address for a party as shall be specified in a notice given in accordance with this Section 4(b)):

 

  2  

 

 

If to the Company: Twinlab Consolidated Holdings, Inc.
  632 Broadway, Suite 201
  New York, NY 10012
  Facsimile: (212) 505-5413
  E-mail: rneuwirth@twinlab.com
  Attention: General Counsel
   
To Transferor: Mr. Thomas Tolworthy
  4 Avenue at Port Imperial
  Apt. 4205
  West New York, NJ 07093
  Facsimile: (212) 505-5413
  E-mail: ttolworthy@twinlab.com

 

(c)           Parties in Interest . All the terms and provisions of this Agreement shall be binding upon and inure to the benefit of and be enforceable by the respective successors and assigns of the parties hereto, whether so expressed or not. GHL is made an express third party beneficiary of this Agreement and it may not be amended or modified without GHL’s prior written consent.

 

(d)           Headings . The headings of the sections and paragraphs of this Agreement have been inserted for convenience of reference only and do not constitute a part of this Agreement.

 

(e)           Choice of Law . It is the intention of the parties that the internal laws, and not the laws of conflicts, of the State of New York should govern the enforceability and validity of this Agreement, the construction of its terms and the interpretation of the rights and duties of the parties hereto.

 

(f)           Counterparts . This Agreement and any amendments hereto may be signed in counterparts and, to the extent signed and delivered by means of a facsimile machine or by .pdf, .tif, .gif, .jpeg or similar attachment to electronic mail, shall be treated in all manner and respects as an original contract and shall be considered to have the same binding legal effects as if it were the original signed version thereof delivered in person.

 

(g)           Entire Agreement . This Agreement constitutes the entire agreement between the Company and Transferor with respect to the subject matter hereof and supersedes all prior agreements and understandings related to such subject matter.

 

[ The Remainder of this Page Intentionally Left Blank ]

 

  3  

 

 

IN WITNESS WHEREOF, Transferor and the Company have executed this Agreement as of the date first written above.

 

  COMPANY:
   
  Twinlab Consolidated Holdings, Inc.
   
  By: /s/ Richard H. Neuwirth
    Name:  Richard H. Neuwirth
    Title:    Chief Legal Officer & Secretary
     
  TRANSFEROR:
   
  THOMAS A. TOLWORTHY
     
  By: /s/ Thomas A. Tolworthy

 

[ Signature Page to Subscription and Surrender Agreement ]

 

 

 

 

 

Exhibit 10.96

 

AMENDMENT NO. 7 AND JOINDER AGREEMENT

TO CREDIT AND SECURITY AGREEMENT

 

THIS AMENDMENT NO. 7 AND JOINDER AGREEMENT TO CREDIT AND SECURITY AGREEMENT (this “ Amendment ”) is made as of this 5 th day of October, 2015, by and among TWINLAB CONSOLIDATED HOLDINGS, INC. , a Nevada corporation (“ TCHI ”), TWINLAB CONSOLIDATION CORPORATION , a Delaware corporation (“ TCC ”), TWINLAB HOLDINGS, INC. , a Michigan corporation, ISI BRANDS INC. , a Michigan corporation, TWINLAB CORPORATION , a Delaware corporation (“ Twinlab Corporation ”), NUTRASCIENCE LABS, INC. , a Delaware corporation (formerly known as TCC CM Subco I, Inc.), and NUTRASCIENCE LABS IP CORPORATION , a Delaware corporation (formerly known as TCC CM Subco II, Inc.) ( each of the foregoing Persons being referred to herein individually as a “ Existing Borrower ”, and collectively as “ Existing Borrowers ”), ORGANIC HOLDINGS LLC , a Delaware limited liability company, RESERVE LIFE ORGANICS, LLC , a Delaware limited liability company, RESVITALE, LLC , a Delaware limited liability company, RE-BODY, LLC , a Delaware limited liability company, INNOVITAMIN ORGANICS, LLC , a Delaware limited liability company, ORGANICS MANAGEMENT LLC , a Delaware limited liability company, COCOAWELL, LLC , a Delaware limited liability company, FEMBODY, LLC , a Delaware limited liability company, RESERVE LIFE NUTRITION, L.L.C. , a Delaware limited liability company, INNOVITA SPECIALTY DISTRIBUTION, LLC , a Delaware limited liability company, and JOIE ESSANCE, LLC , a Delaware limited liability company (each of the foregoing Persons being referred to herein individually as a “ New Borrower ”, and collectively as “ New Borrowers ”; and together with Existing Borrowers and each Subsidiary joining the Credit Agreement as hereinafter defined as a Borrower, individually, each a “ Borrower ” and collectively, “ Borrowers ”), and MIDCAP FUNDING X TRUST, a Delaware statutory trust, as successor-by-assignment from MidCap Financial Trust (as Agent for Lenders, “ Agent ”, and individually, as a Lender), and the other financial institutions or other entities from time to time parties to the Credit Agreement referenced below, each as a Lender.

 

RECITALS

 

A.            Existing Borrowers, Agent and Lenders are parties to that certain Credit and Security Agreement dated as of January 22, 2015 by and among Borrowers, Agent and Lenders (as amended by that certain Amendment No. 1 to Credit and Security Agreement and Limited Consent dated as of February 4, 2015, by that certain Amendment No. 2 to Credit and Security Agreement dated as of April 7, 2015, by that certain Amendment No. 3 to Credit and Security Agreement and Limited Consent dated as of April 30, 2015, by that certain Amendment No. 4 to Credit and Security Agreement and Limited Consent dated as of June 30, 2015, by that certain Amendment No. 5 to Credit and Security Agreement and Limited Waiver dated as of June 30, 2015, by that certain Amendment No. 6 to Credit and Security Agreement, Limited Consent and Limited Waiver dated as of September 9, 2015 , as amended hereby and as it may be further amended, modified and restated from time to time, the “ Credit Agreement ”).  Capitalized terms used but not otherwise defined in this Amendment shall have the meanings set forth in the Credit Agreement.

 

 

 

 

B .             Pursuant to Section 4.11(c) of the Credit Agreement, the Existing Borrowers are required to cause New Borrowers to join the Credit Agreement each as a “Borrower”, and subject to and in accordance with the terms and conditions of this Amendment and the applicable requirements of the Credit Agreement, Borrowers, Agent and Lenders are willing to enter into this Amendment to join each New Borrower as a “Borrower” under the Credit Agreement and the other Financing Documents.

 

C .             Borrowers, Agent and Lenders have agreed to amend the Credit Agreement as set forth herein.

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the foregoing, the terms and conditions set forth in this Amendment, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Agent, Lenders and Borrowers hereby agree as follows:

 

1.            Recitals.    This Amendment shall constitute a Financing Document and the Recitals set forth above shall be construed as part of this Amendment as if set forth fully in the body of this Amendment.

 

2.            Joinder .  Subject to the satisfaction of the conditions precedent set forth in Section 8 hereof:

 

(a)          Each New Borrower hereby joins in, assumes, adopts and becomes a “Borrower” under the Credit Agreement and with respect to all Loans and Obligations made and incurred pursuant thereto.  Each New Borrower hereby becomes a party to the Credit Agreement, the Notes and the other Financing Documents applicable to it as a “Borrower” and all references to “Borrower” or “Borrowers” contained in the Financing Documents are hereby deemed for all purposes to also refer to and include such New Borrower, and such New Borrower hereby agrees to comply with all of the terms and conditions of the Financing Documents as if New Borrower was an original signatory thereto.

 

(b)          Without limiting the generality of the provisions of subparagraph (a) above, each New Borrower is thereby jointly and severally liable, along with all other Borrowers, for all existing and future Loans and other Obligations incurred at any time by any one or more Borrowers under the Financing Documents.

 

(c)          Notwithstanding anything to the contrary set forth herein, each Borrower acknowledges and agrees that, as of the date hereof, Agent has not completed its due diligence of New Borrowers, and therefore, the Accounts of New Borrowers shall not be deemed to be Eligible Accounts, and consequently, such Accounts shall not be included in the Borrowing Base unless and until Agent has determined, in its sole and absolute discretion, to include New Borrower’s Accounts, or a portion thereof, in the Borrowing Base as Eligible Accounts; provided, however, that notwithstanding Section 2.1(b)(ii)(B) of the Credit Agreement, in the event that Lender allows the New Borrower's Accounts to be included in the Borrowing Base, advances funds to the Borrowers based on such allowance and then deems such Accounts of the New Borrower to not be Eligible Accounts, the Borrowers shall have five (5) Business Days to pay the amount that the Revolving Loan Outstandings exceed the Revolving Loan Limit as a result of the Agent deeming such Accounts of the New Borrower to not be Eligible Accounts.  

 

 

 

 

3.            Amendment to Credit Agreement.   

 

(a)          The definition of “Seventh Amendment Closing Date” is hereby added to Section 1.01 in its alphabetical order:

 

“Seventh Amendment Closing Date” means October 5, 2015.

 

(b)          Section 2.2(f) of the Credit Agreement is hereby amended and restated in its entirety as follows:

 

Deferred Revolving Loan Origination Fee .  If Lenders’ funding obligations in respect of the Revolving Loan Commitment under this Agreement terminate for any reason (whether by voluntary termination by Borrowers, by reason of the occurrence of an Event of Default or otherwise) prior to the Commitment Expiry Date, Borrowers shall pay to Agent, for the benefit of all Lenders committed to make Revolving Loans on the Closing Date, a fee as compensation for the costs of such Lenders being prepared to make funds available to Borrowers under this Agreement, equal to an amount determined by multiplying the Revolving Loan Commitment by the following applicable percentage amount: 3.0% for the first and second year following the Closing Date and 2.0% thereafter. All fees payable pursuant to this paragraph shall be deemed fully earned and non-refundable as of the Closing Date.

 

(c)          Section 6.2 of the Credit Agreement is hereby amended and restated in its entirety, effective as of September 30, 2015, as follows:

 

Minimum Adjusted EBITDA .  Commencing with the month ending October 31, 2015 and until such time as all Obligations are paid, satisfied and discharged in full, the Borrowers shall not, as of the end of any measurement period set forth below, permit the Adjusted EBITDA for such measurement period to be less than the amount set forth in the table below opposite such measurement period.

  

Measurement Period Minimum Adjusted EBITDA
October 1, 2015 to December 31, 2015 $ -2,500,000
October 1, 2015 to March 31, 2016 $ -1,750,000

 

(d)          Section 6.3 of the Credit Agreement is hereby amended and restated in its entirety, effective as of September 30, 2015, as follows:

 

 

 

 

Fixed Charge Coverage Ratio .  Commencing June 30, 2016 and until such time as all Obligations are paid, satisfied and discharged in full, the Borrowers shall not, as of the end of any month, permit the Fixed Charge Coverage Ratio for the period of trailing twelve months most recently ended on or prior to such date to be less than 1.15x.  Notwithstanding the foregoing, it is hereby agreed that (i) the applicable measurement period for the month ending June 30, 2016 shall be from April 1, 2015 to June 30, 2016 (trailing three Months or T3M), (ii) the applicable measurement period for the month ending July 31, 2016 will be T4M, (iii) the applicable measurement period for the month ending August 31, 2016 will be T5M, and (iv) the applicable measurement periods shall so continue until T12M is achieved.

 

(e)          Section 6.4 of the Credit Agreement is hereby amended and restated in its entirety, effective as of September 30, 2015, as follows:

 

Total Funded Debt to Adjusted EBITDA Ratio .  Commencing with the fiscal quarter ending September 30, 2016 and until such time as all Obligations are paid, satisfied and discharged in full, the Companies shall not, as of the end of any fiscal quarter, permit the applicable ratio set forth in the table below to exceed the amount set forth therein:

 

Applicable Ratio: (A) Total Funded Debt (calculated without giving effect to any Indebtedness that is subordinate both to the Obligations and to the Penta Debt) to (B) Adjusted EBITDA for the period of four consecutive fiscal quarters most recently ended on or prior to such date to exceed 4.0x

 

For the purposes of this Section 6.4, Adjusted EBITDA (1) for the measurement period ending on September 30, 2016, shall equal the Adjusted EBITDA for the fiscal quarter ending September 30, 2016 multiplied by 4, (2) for the measurement period ending on December 31, 2016, shall equal the sum of Adjusted EBITDA for the fiscal quarters ending September 30, 2016 and December 31, 2016, multiplied by 2 and (3) for the measurement period ending on March 31, 2017, shall equal the sum of the Adjusted EBITDA for the fiscal quarters ending September 30, 2016, December 31, 2016 and March 31, 2017, multiplied by 4 and divided by 3.

 

4.            Confirmation of Representations and Warranties; Reaffirmation of Security Interest.    Each Existing Borrower hereby (a) confirms that all of the representations and warranties set forth in the Credit Agreement are true and correct with respect to such Borrower as of the date hereof, and (b) covenants to perform its respective obligations under the Credit Agreement.    Each Existing Borrower confirms and agrees that all security interests and Liens granted to Agent continue in full force and effect, and all Collateral remains free and clear of any Liens, other than those granted to Agent and Permitted Liens.  Nothing herein is intended to impair or limit the validity, priority or extent of Agent’s security interests in and Liens on the Collateral.   

 

 

 

 

5.            Enforceability.    This Amendment constitutes the legal, valid and binding obligation of each Borrower, and is enforceable against each Borrowers in accordance with its terms, except as the enforceability thereof may be limited by bankruptcy, insolvency or other similar laws relating to the enforcement of creditors’ rights generally and by general equitable principles.

 

6.            Costs and Fees . In consideration of Agent’s agreement to enter into this Amendment, Borrower shall pay to Agent a modification fee equal to One Hundred Fifty Thousand and No/100 Dollars ($150,000.00) due and payable on the date hereof.  Furthermore, Borrowers shall be responsible for the payment of all reasonable costs and fees of Agent’s counsel incurred in connection with the preparation of this Amendment and any related documents.  If Agent or any Lender uses in-house counsel for any of these purposes, Borrowers further agree that the Obligations include reasonable charges for such work commensurate with the fees that would otherwise be charged by outside legal counsel selected by Agent or such Lender for the work performed.  Borrowers hereby authorize Agent to deduct all of such fees set forth in this Section 6 from the proceeds of one or more Revolving Loans made under the Credit Agreement.

  

7.             Representations and Warranties; Covenants; Grant of Security Interest .

 

      (a)          Each New Borrower hereby (a) confirms that all of the representations and warranties set forth in the Credit Agreement are true and correct with respect to such New Borrower as of the date hereof subject to the New Borrowers providing updated Schedules to the Credit Agreement under Section 9 below, and (b) covenants to perform its respective obligations under the Credit Agreement.   

 

      (b)          Consistent with the intent of the parties and in consideration of the accommodations set forth herein, in addition to the grant of security set forth in Section 9.1 of the Credit Agreement and as further security for the prompt payment in full of all Obligations, and without limiting any other grant of a Lien and security interest in any Security Document, each New Borrower hereby assigns and grants to Agent, for the benefit of itself and Lenders, a continuing first priority Lien on and security interest in, upon, and to the now owned and hereafter acquired Collateral set forth on Exhibit A attached hereto and made a part hereof in which such New Borrower has rights.  Agent agrees that its Liens on the New Borrowers’ titled motor vehicles need not be perfected unless the Agent so requests after the Effective Date.  Each New Borrower hereby authorizes Agent to file UCC-1 financing statements against such New Borrower covering the Collateral owned by such New Borrower in such jurisdictions as Agent shall deem necessary, prudent or desirable to perfect and protect the liens and security interests granted to Agent hereunder.

 

      (c)          To the extent a New Borrower is authorized to file such statements, each of the New Borrowers hereby designates and authorizes Agent to file any and all Uniform Commercial Code Amendment Statements terminating the financing statements of record with the applicable filing office with any of the New Borrowers as debtor and Penta Mezzanine SBIC Fund I, LP or Siena Funding LLC, successor by assignment to Siena Lending Group LLC as secured party.

 

 

 

 

8.            Conditions to Effectiveness.    This Amendment shall become effective as of the date on which each of the following conditions has been satisfied (the “ Effective Date ”):

 

      (a)          Borrowers shall have delivered to Agent this Amendment and an Amended and Restated Revolving Loan Note, duly executed by an authorized officer of each Borrower;

 

      (b)          [Reserved];

 

      (c)          all representations and warranties of Borrowers contained herein shall be true and correct in all material respects as of the Effective Date (and such parties’ delivery of their respective signatures hereto shall be deemed to be its certification thereof);

 

      (d)          the Sole Manager of Organic Holdings LLC ("Organic") shall have delivered to Agent a duly executed certificate identifying the manager of Organic  who is duly authorized to execute and deliver this Amendment on behalf of itself and the other New Borrowers and any related documents, together with resolutions of the Sole Manager of Organic  authorizing the transactions contemplated by this Amendment on behalf of itself and the other New Borrowers; and

 

      (e)          Agent shall have received from Borrowers of all of the fees owing pursuant to this Amendment and Agent’s reasonable out-of-pocket legal fees and expenses.

 

9.            Post-Seventh Amendment Closing Requirements .   Borrowers shall complete each of the post-closing obligations and/or provide to Agent each of the documents, instruments, agreements and information listed on Schedule 7.4(B) attached hereto on or before the date set forth for each such item thereon, each of which shall be completed or provided in form and substance satisfactory to Agent.

 

10.          Release.   Each Borrower, voluntarily, knowingly, unconditionally and irrevocably, with specific and express intent, for and on behalf of itself and all of its respective parents, subsidiaries, affiliates, members, managers, predecessors, successors, and assigns, and each of their respective current and former directors, officers, shareholders, agents, and employees (collectively, “ Releasing Parties ”), does hereby fully and completely release, acquit and forever discharge each Indemnitee of and from any and all actions, causes of action, suits, debts, disputes, damages, claims, obligations, liabilities, costs, expenses and demands of any kind whatsoever, at law or in equity, whether matured or unmatured, liquidated or unliquidated, vested or contingent, choate or inchoate, known or unknown that the Releasing Parties (or any of them) has against the Indemnitees (or any of them) that directly or indirectly arise out of, are based upon or are in any manner connected with any Prior Related Event.  “ Prior Related Event ” means any transaction, event, circumstance, action, failure to act, occurrence of any type or sort, whether known or unknown, which occurred, existed, was taken, was permitted or begun in accordance with, pursuant to or by virtue of (a) any of the terms of this Amendment or any other Financing Document, (b) any actions, transactions, matters or circumstances related hereto or thereto, (c) the conduct of the relationship between any Indemnitee and any Borrower, or (d) any other actions or inactions by any Indemnitee, all on or prior to the Effective Date.  Each Borrower acknowledges that the foregoing release is a material inducement to Agent’s and Lender’s decision to enter into this Amendment and to agree to the modifications contemplated hereunder.

 

 

 

 

11.          No Waiver or Novation.   The execution, delivery and effectiveness of this Amendment shall not, except as expressly provided in this Amendment, operate as a waiver of any right, power or remedy of Agent, nor constitute a waiver of any provision of the Credit Agreement, the Financing Documents or any other documents, instruments and agreements executed or delivered in connection with any of the foregoing.  Nothing herein is intended or shall be construed as a waiver of any existing Defaults or Events of Default under the Credit Agreement or other Financing Documents or any of Agent’s rights and remedies in respect of such Defaults or Events of Default.  This Amendment (together with any other document executed in connection herewith) is not intended to be, nor shall it be construed as, a novation of the Credit Agreement.

 

12.          Affirmation.   Except as specifically amended pursuant to the terms hereof, the Credit Agreement and all other Financing Documents (and all covenants, terms, conditions and agreements therein) shall remain in full force and effect, and are hereby ratified and confirmed in all respects by Borrowers.  Each Borrower covenants and agrees to comply with all of the terms, covenants and conditions of the Credit Agreement (as amended hereby) and the Financing Documents, notwithstanding any prior course of conduct, waivers, releases or other actions or inactions on Agent’s or any Lender’s part which might otherwise constitute or be construed as a waiver of or amendment to such terms, covenants and conditions.

 

13.          Miscellaneous.

 

       (a)           Reference to the Effect on the Credit Agreement.    Upon the effectiveness of this Amendment, each reference in the Credit Agreement to “this Agreement,” “hereunder,” “hereof,” “herein,” or words of similar import shall mean and be a reference to the Credit Agreement, as amended by this Amendment.  Except as specifically amended above, the Credit Agreement, and all other Financing Documents (and all covenants, terms, conditions and agreements therein), shall remain in full force and effect, and are hereby ratified and confirmed in all respects by Borrowers.  

 

      (b)           Incorporation of Credit Agreement Provisions.   The provisions contained in Section 11.6 (Indemnification), Section 12.8 (Governing Law; Submission to Jurisdiction) and Section 12.9 (Waiver of Jury Trial) of the Credit Agreement are incorporated herein by reference to the same extent as if reproduced herein in their entirety.

 

      (c)           Headings.   Section headings in this Amendment are included for convenience of reference only and shall not constitute a part of this Amendment for any other purpose.

 

      (d)           Counterparts.   This Amendment may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument.  Signatures by facsimile or by electronic mail delivery of an electronic version (e.g., .pdf or .tif file) of an executed signature page shall be treated as delivery of an original and shall bind the parties hereto. This Amendment constitutes the entire agreement and understanding among the parties hereto and supersede any and all prior agreements and understandings, oral or written, relating to the subject matter hereof.

 

 

 

 

[SIGNATURES APPEAR ON FOLLOWING PAGES]

 

 

 

 

( Signature Page to Amendment No. 7 and Joinder Agreement to Credit and Security Agreement )

 

IN WITNESS WHEREOF , intending to be legally bound, and intending that this document constitute an agreement executed under seal, the undersigned have executed this Amendment under seal as of the day and year first hereinabove set forth.

 

AGENT: MIDCAP FUNDING X TRUST, a Delaware statutory trust, as successor-by-assignment from MidCap Financial Trust
     
  By: Apollo Capital Management, L.P.,
    its investment manager
     
  By: Apollo Capital Management GP, LLC,
  its general partner

 

  By: /s/ Maurice Amsellem (SEAL)
  Name:  Maurice Amsellem
  Title:   Authorized Signatory

 

LENDER: MIDCAP FUNDING X TRUST, a Delaware
statutory trust, as successor-by-assignment from
MidCap Financial Trust
     
  By: Apollo Capital Management, L.P.,
    its investment manager
     
  By: Apollo Capital Management GP, LLC,
  its general partner

 

  By: /s/ Maurice Amsellem (SEAL)
  Name:  Maurice Amsellem
  Title:   Authorized Signatory

 

 

 

 

( Signature Page to Amendment No. 7 and Joinder Agreement to Credit and Security Agreement )

   

 

EXISTING BORROWERS: TWINLAB CONSOLIDATION CORPORATION
   
  By: /s/ Thomas A. Tolworthy (Seal)
  Name: Thomas A. Tolworthy
  Title:   Chief Executive Officer and President

 

TWINLAB CONSOLIDATED HOLDINGS, INC.   TWINLAB HOLDINGS, INC.
     
By: /s/ Thomas A. Tolworthy (Seal)   By: /s/ Thomas A. Tolworthy (Seal)
Name:  Thomas A. Tolworthy   Name:  Thomas A. Tolworthy
Title:  Chief Executive Officer and President   Title:  Chief Executive Officer and President
     
TWINLAB CORPORATION   ISI BRANDS INC.
     
By: /s/ Thomas A. Tolworthy (Seal)   By: /s/ Thomas A. Tolworthy (Seal)
Name:  Thomas A. Tolworthy   Name:  Thomas A. Tolworthy
Title:  Chief Executive Officer and President   Title:  Chief Executive Officer and President
     
NUTRASCIENCE LABS, INC.   NUTRASCIENCE LABS IP CORPORATION
     
By: /s/ Thomas A. Tolworthy (Seal)   By: /s/ Thomas A. Tolworthy (Seal)
Name:  Thomas A. Tolworthy   Name:  Thomas A. Tolworthy
Title:  Chief Executive Officer and President   Title:  Chief Executive Officer and President

 

 

 

 

 

( Signature Page to Amendment No. 7 and Joinder Agreement to Credit and Security Agreement )

 

NEW BORROWERS:    
     
ORGANIC HOLDINGS LLC   RESERVE LIFE ORGANICS, LLC
     
By: /s/ Thomas A. Tolworthy (Seal)   By ORGANIC HOLDINGS LLC,
Name: Thomas A. Tolworthy   its sole Member
Title:  Sole Manager    
    By: /s/ Thomas A. Tolworthy (Seal)
    Name: Thomas A. Tolworthy
    Title:  Sole Manager
     
RESVITALE, LLC   RE-BODY, LLC
     
By ORGANIC HOLDINGS LLC,   By ORGANIC HOLDINGS LLC,
its sole Member   its sole Member
     
By: /s/ Thomas A. Tolworthy (Seal)   By: /s/ Thomas A. Tolworthy (Seal)
Name: Thomas A. Tolworthy   Name: Thomas A. Tolworthy
Title:  Sole Manager   Title:  Sole Manager
     
INNOVITAMIN ORGANICS, LLC   ORGANICS MANAGEMENT LLC
    By ORGANIC HOLDINGS LLC,
By ORGANIC HOLDINGS LLC,   its sole Member
its sole Member    
    By: /s/ Thomas A. Tolworthy (Seal)
By: /s/ Thomas A. Tolworthy (Seal)   Name: Thomas A. Tolworthy
Name: Thomas A. Tolworthy   Title:  Sole Manager
Title:  Sole Manager    
     
COCOAWELL, LLC   FEMBODY, LLC
     
By ORGANIC HOLDINGS LLC,   By ORGANIC HOLDINGS LLC,
its sole Member   its sole Member
     
By: /s/ Thomas A. Tolworthy (Seal)   By: /s/ Thomas A. Tolworthy (Seal)
Name: Thomas A. Tolworthy   Name: Thomas A. Tolworthy
Title:  Sole Manager   Title:  Sole Manager

 

 

 

 

( Signature Page to Amendment No. 7 and Joinder Agreement to Credit and Security Agreement )

 

RESERVE LIFE NUTRITION, L.L.C.   INNOVITA SPECIALTY DISTRIBUTION, LLC
     
By ORGANIC HOLDINGS LLC,   By ORGANIC HOLDINGS LLC,
its sole Member   its sole Member
     
By: /s/ Thomas A. Tolworthy (Seal)   By: /s/ Thomas A. Tolworthy (Seal)
Name: Thomas A. Tolworthy   Name: Thomas A. Tolworthy
Title:  Sole Manager   Title:  Sole Manager
     
JOIE ESSANCE, LLC    
By ORGANIC HOLDINGS LLC,    
its sole Member    
     
By: /s/ Thomas A. Tolworthy (Seal)    
Name: Thomas A. Tolworthy    
Title:  Sole Manager    

 

 

 

 

Exhibit A – Collateral

 

The Collateral consists of all of New Borrower’s assets, including without limitation, all of New Borrower’s right, title and interest in and to the following, whether now owned or hereafter created, acquired or arising:

 

(a) all goods, Accounts (including health-care insurance receivables), equipment (as defined in the UCC), Inventory, contract rights or rights to payment of money, leases, license agreements, franchise agreements, General Intangibles, commercial tort claims (as defined in the UCC), documents(as defined in the UCC), instruments (as defined in the UCC, including any promissory notes), chattel paper (as defined in the UCC, whether tangible or electronic), cash, money, deposit accounts(as defined in the UCC), securities accounts (as defined in the UCC), fixtures (as defined in the UCC), letter of credit rights (as defined in the UCC), letters of credit (as defined in the UCC, whether or not the letter of credit is evidenced by a writing), securities (as defined in the UCC), and all other investment property(as defined in the UCC), supporting obligations (as defined in the UCC), and financial assets (as defined in the UCC), whether now owned or hereafter acquired, wherever located;

 

(b) all of New Borrower’s books and records evidencing or relating to any of the foregoing; and

 

(c) any and rights, remedies, Guarantees, and security interests in respect of the foregoing, all rights of enforcement and collection, and all rights under the Financing Documents in respect of the foregoing, all information and data compiled or derived by New Borrower or to which New Borrower is entitled in respect of or related to the foregoing, and any and all claims, rights and interests in any of the above and all substitutions for, additions, attachments, accessories, accessions and improvements to and replacements, products, proceeds and insurance proceeds of any or all of the foregoing.

 

 

 

 

Schedule 7.4 (B) – Post Closing Requirements to Seventh Amendment Closing Date

 

Borrowers shall satisfy and complete each of the following obligations, or provide Agent each of the items listed below, as applicable, on or before the date indicated below, all to the satisfaction of Agent in its sole and absolute discretion:

 

1. As soon as possible, but in any case within five (5) Business Days of the Seventh Amendment Closing Date, Borrowers shall deliver or cause to be delivered to Agent:

 

a. updated Schedules to the Credit Agreement having been revised and updated to reflect the joinder of the New Borrowers each as a “Borrower” under the Financing Documents and shall be deemed to be given as of the Seventh Amendment Closing Date and replace the corresponding schedules to the Credit Agreement;

 

b. one or more fully completed and duly executed IRS Tax Form 8821 relating to each New Borrower in form and substance acceptable for filing with the IRS;

 

c. one or more Pledge Agreements with respect to all of the issued and outstanding equity interests of all New Borrowers in form and substance satisfactory to Agent in its sole and absolute discretion, including the delivery of any certificated equity interests along with instruments of transfer issued in blank;

 

d. one or more Grants of Security Interest in Patent and Trademarks with respect to all of the registered intellectual property of New Borrowers in form and substance satisfactory to Agent in its sole and absolute discretion ;

 

e. an amended and restated Certificate of Validity executed by an executive officer or the manager (as the case may be) of the Borrowers in form and substance satisfactory to Agent in its sole and absolute discretion;

 

f. complete and accurate copies of each Material Contract with respect to the New Borrowers including any amendments, supplements, restatements or modifications thereto;

 

g. a complete and accurate updated information certificate with respect to the Borrowers, in form and substance acceptable to Agent; and

 

h. the legal opinion of Varnum LLP covering the New Borrowers and the Amendment No. 7 and Joinder Agreement to the Credit and Security Agreement and such other matters deemed advisable by Agent in its sole discretion, in form and substance acceptable to Agent and its counsel.

 

 

 

 

2. As soon as possible, but in any case within ten (10) days of the Seventh Amendment Closing Date, Borrowers shall deliver or cause to be delivered to Agent:

 

a. evidence of the filed termination statements with respect to financing statements filed with the Delaware Secretary of State with the New Borrowers as debtors and Penta Mezzanine SBIC Fund I, LP or Siena Funding LLC, successor by assignment to Siena Lending Group LLC as secured party; and

 

b. evidence of insurance with respect to the New Borrowers, including but not limited to an Additional Insured and Lender’s Loss Payable endorsements and/or declaration pages acceptable to the Lender, all such insurances to be in compliance with Section 4.4 of the Credit Agreement.

 

3. As soon as possible, but in any case within fifteen (15) days of the Seventh Amendment Closing Date:

 

a. Borrowers shall deliver or cause to be delivered to Agent a landlord’s agreement, warehouseman’s agreement or other access agreement from the applicable lessor or warehouseman, in each case in form and substance satisfactory to Agent in its reasonable discretion for all leased properties of the New Borrowers;

 

b. Borrowers shall enter, cause to be entered into and deliver to the same to the Agent, a fully executed Deposit Account Control Agreement with respect to all a deposit accounts and securities accounts with the financial institutions with which New Borrowers maintain such accounts.

 

Nothing in this Schedule 7.4(B) shall act or be construed to limit any of the rights and remedies of the Agent and Lenders under this Agreement, including to withhold Borrowing Base reserves.  The failure of any Borrower or of Parent to complete and satisfy any of the above obligations on or before the date indicated above, or the failure of any Borrower or of Parent to deliver any of the above listed items on or before the date indicated above, shall constitute an immediate and automatic Event of Default, unless otherwise waived or extended by the Agent in its sole discretion.

 

 

 

 

Exhibit 10.97 

 

FIRST AMENDED AND RESTATED REVOLVING LOAN NOTE

 

$15,000,000.00 Bethesda, Maryland
October 5, 2015

 

FOR VALUE RECEIVED, each of TWINLAB CONSOLIDATED HOLDINGS, INC. , a Nevada corporation, TWINLAB CONSOLIDATION CORPORATION , a Delaware corporation, TWINLAB HOLDINGS, INC. , a Michigan corporation, ISI BRANDS INC. , a Michigan corporation, TWINLAB CORPORATION , a Delaware corporation, NUTRASCIENCE LABS, INC. , a Delaware corporation, NUTRASCIENCE LABS IP CORPORATION , a Delaware corporation, ORGANIC HOLDINGS LLC , a Delaware limited liability company, RESERVE LIFE ORGANICS, LLC , a Delaware limited liability company, RESVITALE, LLC , a Delaware limited liability company, RE-BODY, LLC , a Delaware limited liability company, INNOVITAMIN ORGANICS, LLC , a Delaware limited liability company, ORGANICS MANAGEMENT LLC , a Delaware limited liability company, COCOAWELL, LLC , a Delaware limited liability company, FEMBODY, LLC , a Delaware limited liability company, RESERVE LIFE NUTRITION, L.L.C. , a Delaware limited liability company, INNOVITA SPECIALTY DISTRIBUTION, LLC , a Delaware limited liability company, and JOIE ESSANCE, LLC , a Delaware limited liability company (individually, each a “ Borrower ” and collectively, the “ Borrowers ”), hereby jointly and severally unconditionally promises to pay to the order of MIDCAP FUNDING X TRUST, a Delaware statutory trust and successor by assignment from MidCap Financial Trust (together with its successors and assigns, “ Lender ”) at the office of Agent (as defined herein) at 7255 Woodmont Avenue, Suite 200, Bethesda, MD 20814, or at such other place as Agent may from time to time designate in writing, in lawful money of the United States of America and in immediately available funds, in the principal sum of Fifteen Million and No/100 Dollars ($15,000,000.00), or, if less, the aggregate unpaid principal amount of all Revolving Loans made or deemed made by Lender to Borrowers under the terms of that certain Credit and Security Agreement dated as of January 22, 2015 (as amended by that certain Amendment No. 1 to Credit and Security Agreement and Limited Consent dated as of February 4, 2015, by that certain Amendment No. 2 to Credit and Security Agreement dated as of April 7, 2015, by that certain Amendment No. 3 to Credit and Security Agreement and Limited Consent dated as of April 30, 2015, by that certain Amendment No. 4 to Credit and Security Agreement and Limited Consent dated as of June 30, 2015, by that certain Amendment No. 5 to Credit and Security Agreement and Limited Consent dated as of June 30, 2015, by that certain Amendment No. 6 to Credit and Security Agreement, Limited Consent and Limited Waiver dated as of September 9, 2015, by that certain Amendment No. 7 and Joinder Agreement to Credit and Security Agreement dated as of the date hereof and as further amended, restated, supplemented or otherwise modified from time to time, the “ Credit Agreement ”), by and among Borrowers, such other borrowers that may become “Borrowers” under the Credit Agreement, various financial institutions as are, or may from time to time become, parties thereto as lenders (including without limitation, Lender) and MidCap Funding X Trust, individually as a Lender, and as administrative agent (in such capacity and together with its successors and assigns, “ Agent ”). All capitalized terms used herein (which are not otherwise specifically defined herein) shall be used in this Revolving Loan Note (this “ Note ”) as defined in the Credit Agreement.

 

 

 

 

1.          The outstanding principal balance of the Revolving Loans evidenced by this Note shall be payable in full on the Termination Date, or on such earlier date as provided for in the Credit Agreement.

 

2.          This Note is issued in accordance with the provisions of the Credit Agreement and is entitled to the benefits and security of the Credit Agreement and the other Financing Documents, and reference is hereby made to the Credit Agreement for a statement of the terms and conditions under which the Revolving Loans evidenced hereby were made and are required to be repaid.

 

3.          Each Borrower promises to pay interest from the date hereof until payment in full hereof on the unpaid principal balance of the Revolving Loans evidenced hereby at the per annum rate or rates set forth in the Credit Agreement. Interest on the unpaid principal balance of the Revolving Loans evidenced hereby shall be payable on the dates and in the manner set forth in the Credit Agreement. Interest as aforesaid shall be calculated in accordance with the terms of the Credit Agreement.

 

4.          Upon the occurrence and during the continuance of an Event of Default, Agent may, and shall if requested by Required Lenders, (a) by notice to Borrower Representative suspend or terminate the Revolving Loan Commitment and the obligations of Agent and the Lenders with respect thereto, in whole or in part (and, if in part, each Lender’s Revolving Loan Commitment shall be reduced in accordance with its Pro Rata Share), and/or (b) by notice to Borrower Representative declare all or any portion of the Obligations, including the Revolving Loans evidenced by this Note, to be, and the Obligations shall thereupon become, immediately due and payable, with accrued interest thereon, without presentment, demand, protest or other notice of any kind, all of which are hereby waived by each Borrower and Borrowers will pay the same; provided , however , that in the case of any of the Events of Default specified in Section 10.1(e) or 10.1(f) of the Credit Agreement, without any notice to any Borrower or any other act by Agent or the Lenders, the Revolving Loan Commitment and the obligations of Agent and the Lenders with respect thereto shall thereupon immediately and automatically terminate and all of the Obligations, including the Revolving Loans evidenced by this Note, shall become immediately and automatically due and payable without presentment, demand, protest or other notice of any kind, all of which are hereby waived by each Borrower and Borrowers will pay the same.

 

5.          Payments received in respect of the Revolving Loans shall be applied as provided in the Credit Agreement.

 

6.          Presentment, demand, protest and notice of presentment, demand, nonpayment and protest are each hereby waived by Borrowers.

 

7.          No waiver by Agent or any Lender of any one or more defaults by the undersigned in the performance of any of its obligations under this Note shall operate or be construed as a waiver of any future default or defaults, whether of a like or different nature, or as a waiver of any obligation of Borrowers to any other lender under the Credit Agreement.

 

2
 

 

8.          No provision of this Note may be amended, waived or otherwise modified unless such amendment, waiver or other modification is in writing and is signed or otherwise approved by Borrowers, the Required Lenders and any other lender under the Credit Agreement to the extent required under Section 11.16 of the Credit Agreement.

 

9.           THIS NOTE SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF MARYLAND WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES.

 

10.         Whenever possible each provision of this Note shall be interpreted in such manner as to be effective and valid under applicable law, but in case any provision of or obligation under this Note shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provisions or obligations, or of such provision or obligation in any other jurisdiction, shall not in any way be affected or impaired thereby.

 

11.         Whenever in this Note reference is made to Agent, Lender or Borrowers, such reference shall be deemed to include, as applicable, a reference to their respective successors and assigns. The provisions of this Note shall be binding upon each Borrower and its successors and assigns, and shall inure to the benefit of Lender and its successors and assigns.

 

12.         In addition to and without limitation of any of the foregoing, this Note shall be deemed to be a Financing Document and shall otherwise be subject to all of the general terms and conditions contained in Article 12 of the Credit Agreement, mutatis mutandis .

 

13.         This Note replaces in its entirety and is in substitution for but not in payment of that certain Revolving Loan Note, dated as of January 22, 2015, made by certain Borrowers in favor of Lender (as successor-by-assignment from MidCap Financial Trust) in the maximum principal amount of $15,000,000.00 (the “ Prior Note ”), and does not and shall not be deemed to constitute a novation thereof. Such Prior Note shall be of no further force and effect upon the execution and delivery of this Note.

 

[SIGNATURES APPEAR ON FOLLOWING PAGE(S)]

 

3
 

 

IN WITNESS WHEREOF, intending to be legally bound, and intending that this agreement constitute an agreement executed under seal, the undersigned have executed this Note under seal as of the day and year first hereinabove set forth.

 

BORROWERS:   TWINLAB CONSOLIDATED HOLDINGS, INC.
     
    By: /s/ Thomas A. Tolworthy (Seal)
    Name:    Thomas A. Tolworthy
    Title:    Chief Executive Officer and President

 

TWINLAB CONSOLIDATION   TWINLAB HOLDINGS, INC.
CORPORATION    
     
By: /s/ Thomas A. Tolworthy (Seal)   By: /s/ Thomas A. Tolworthy (Seal)
Name:    Thomas A. Tolworthy   Name:    Thomas A. Tolworthy
Title:    Chief Executive Officer and President   Title:    Chief Executive Officer and President

 

TWINLAB CORPORATION   ISI BRANDS INC.
     
By: /s/ Thomas A. Tolworthy (Seal)   By: /s/ Thomas A. Tolworthy (Seal)
Name:    Thomas A. Tolworthy   Name:    Thomas A. Tolworthy
Title:    Chief Executive Officer and President   Title:    Chief Executive Officer and President

 

NUTRASCIENCE LABS, INC.   NUTRASCIENCE LABS IP CORPORATION
     
By: /s/ Thomas A. Tolworthy (Seal)   By: /s/ Thomas A. Tolworthy (Seal)
Name:    Thomas A. Tolworthy   Name:    Thomas A. Tolworthy
Title:    Chief Executive Officer and President   Title:    Chief Executive Officer and President

 

Signature Page to First Amended and Restated Revolving Loan Note (1 of 3)

 

 

 

 

ORGANIC HOLDINGS LLC   RESERVE LIFE ORGANICS, LLC
     
    By ORGANIC HOLDINGS LLC,
    its sole Member
     
By: /s/ Thomas A. Tolworthy (Seal)   By: /s/ Thomas A. Tolworthy (Seal)
Name:    Thomas A. Tolworthy     Name:    Thomas A. Tolworthy  
Title:    Sole Manager     Title:    Sole Manager
     

RESVITALE, LLC   RE-BODY, LLC
     
By ORGANIC HOLDINGS LLC,   By ORGANIC HOLDINGS LLC,
its sole Member   its sole Member
     
By: /s/ Thomas A. Tolworthy (Seal)   By: /s/ Thomas A. Tolworthy (Seal)
Name:    Thomas A. Tolworthy   Name:    Thomas A. Tolworthy
Title:    Sole Manager   Title:    Sole Manager

 

INNOVITAMIN ORGANICS, LLC   ORGANICS MANAGEMENT LLC
     
By ORGANIC HOLDINGS LLC,   By ORGANIC HOLDINGS LLC,
its sole Member   its sole Member
     
By: /s/ Thomas A. Tolworthy (Seal)   By: /s/ Thomas A. Tolworthy (Seal)
Name:    Thomas A. Tolworthy   Name:    Thomas A. Tolworthy
Title:    Sole Manager   Title:    Sole Manager

  

COCOAWELL, LLC   FEMBODY, LLC
     
By ORGANIC HOLDINGS LLC,   By ORGANIC HOLDINGS LLC,
its sole Member   its sole Member
     
By: /s/ Thomas A. Tolworthy (Seal)   By: /s/ Thomas A. Tolworthy (Seal)
Name:    Thomas A. Tolworthy   Name:    Thomas A. Tolworthy
Title:    Sole Manager   Title:    Sole Manager

  

RESERVE LIFE NUTRITION, L.L.C.   INNOVITA SPECIALTY DISTRIBUTION, LLC
     
By ORGANIC HOLDINGS LLC,   By ORGANIC HOLDINGS LLC,
its sole Member   its sole Member
     
By: /s/ Thomas A. Tolworthy (Seal)   By: /s/ Thomas A. Tolworthy (Seal)
Name:    Thomas A. Tolworthy   Name:    Thomas A. Tolworthy
Title:    Sole Manager   Title:    Sole Manager

 

Signature Page to First Amended and Restated Revolving Loan Note (2 of 3)

 

 

 

 

JOIE ESSANCE, LLC    
     
By ORGANIC HOLDINGS LLC,    
its sole Member    
     
By: /s/ Thomas A. Tolworthy (Seal)        
Name:    Thomas A. Tolworthy      
Title:    Sole Manager      

 

Signature Page to First Amended and Restated Revolving Loan Note (3 of 3) 

 

 

 

Exhibit 10.98

 

SIXTH AMENDMENT TO NOTE AND WARRANT PURCHASE AGREEMENT

 

This SIXTH AMENDMENT TO NOTE AND WARRANT AGREEMENT (this “ Amendment ”), dated as of October 5, 2015, is made by and between TWINLAB CONSOLIDATED HOLDINGS, INC., a Nevada corporation (“ Parent ”), TWINLAB CONSOLIDATION CORPORATION, a Delaware corporation (“ TCC ”), TWINLAB HOLDINGS, INC., a Michigan corporation (“ Twinlab Holdings ”), ISI BRANDS INC., a Michigan corporation (“ ISI Brands ”), and TWINLAB CORPORATION, a Delaware corporation (“ Twinlab Corporation ”), NUTRASCIENCE LABS, INC., a Delaware corporation, NUTRASCIENCE LABS IP CORPORATION., a Delaware corporation (each of the foregoing Persons being referred to herein individually as a “ Company ” and collectively as the “ Companies ”), and PENTA MEZZANINE SBIC FUND I, L.P., a Delaware limited partnership (the “ Purchaser ”).

 

WHEREAS, the Companies and the Purchaser are parties to a Note and Warrant Purchase Agreement dated as of November 13, 2014, as amended by that certain First Amendment to Note and Warrant Purchase Agreement, Consent and Joinder dated as of January 22, 2015, that certain Second Amendment to Note and Warrant Purchase Agreement and Consent dated as of February 4, 2015, that certain Third Amendment to Note and Warrant Purchase Agreement and Consent dated as of April 30, 2015 and that certain Fourth Amendment to Note and Warrant Purchase Agreement, Limited Consent and Limited Waiver dated as of June 30, 2015 and Fifth Amendment to Note and Warrant Agreement and Limited Consent dated as of September 9, 2015 (as the same may be further amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “ Note Purchase Agreement ”).

 

NOW, THEREFORE, in consideration of the promises and the mutual agreements contained in this Amendment, and subject to the terms and conditions set forth herein, each party hereto hereby agrees as follows:

 

1.           Capitalized Terms . Capitalized terms used but not defined herein shall have the meanings set forth in the Note Purchase Agreement.

 

2.           Amendments to Note Purchase Agreement . Subject to the satisfaction of the conditions precedent set forth herein and in reliance on the representations, warranties and covenants of the Companies set forth herein and in the Note Purchase Agreement, each party hereto hereby agrees that the Note Purchase Agreement be and hereby is, amended as follows:

 

2.1.        Amendment and Restatement of Existing Defined Terms . Section 5.12 of the Note Purchase Agreement is hereby amended and restated in its entirety effective as of September 30, 2015 as follows:

 

5.12        Financial Covenants.

 

(a)          Minimum Adjusted EBITDA . Commencing with the month ending October 31, 2015 and until such time as all Obligations are paid, satisfied and discharged in full, the Borrowers shall not, as of the end of any measurement period set forth below, permit the Adjusted EBITDA for such measurement period to be less than the amount set forth in the table below opposite such measurement period.

 

 

 

 

Measurement Period Minimum Adjusted EBITDA
October 1, 2015 to December 31, 2015 $ -2,500,000
October 1, 2015 to March 31, 2016 $ -1,750,000

 

(b)         Fixed Charge Coverage Ratio . Commencing June 30, 2016 and until such time as all Obligations are paid, satisfied and discharged in full, the Borrowers shall not, as of the end of any month, permit the Fixed Charge Coverage Ratio for the period of trailing twelve months most recently ended on or prior to such date to be less than 1.15x. Notwithstanding the foregoing, it is hereby agreed that (i) the applicable measurement period for the month ending June 30, 2016 shall be from April 1, 2015 to June 30, 2016 (trailing three Months or T3M), (ii) the applicable measurement period for the month ending July 31, 2016 will be T4M, (iii) the applicable measurement period for the month ending August 31, 2016 will be T5M, and (iv) the applicable measurement periods shall so continue until T12M is achieved.

 

(c)         Total Funded Debt to Adjusted EBITDA Ratio . Commencing with the fiscal quarter ending September 30, 2016 and until such time as all Obligations are paid, satisfied and discharged in full, the Companies shall not, as of the end of any fiscal quarter, permit the applicable ratio set forth in the table below to exceed the amount set forth therein:

 

Applicable Ratio: (A) Total Funded Debt (calculated without giving effect to any Indebtedness that is subordinate both to the Obligations) to (B) Adjusted EBITDA for the period of four consecutive fiscal quarters most recently ended on or prior to such date to exceed 4.0x

 

For the purposes of this Section 6.4, Adjusted EBITDA (1) for the measurement period ending on September 30, 2016, shall equal the Adjusted EBITDA for the fiscal quarter ending September 30, 2016 multiplied by 4, (2) for the measurement period ending on December 31, 2016, shall equal the sum of Adjusted EBITDA for the fiscal quarters ending September 30, 2016 and December 31, 2016, multiplied by 2 and (3) for the measurement period ending on March 31, 2017, shall equal the sum of the Adjusted EBITDA for the fiscal quarters ending September 30, 2016, December 31, 2016 and March 31, 2017, multiplied by 4 and divided by 3.

 

3.           Representations and Warranties; No Default . Each Company hereby represents and warrants that:

 

3.1.      The execution, delivery and performance by such Company of this Amendment (a) are within such Company’s corporate or similar powers and, at the time of execution hereof and have been duly authorized by all necessary corporate and similar action; (b) does not and will not result, in any breach or default under any other document, instrument or agreement to which a Company or any of its Subsidiaries is a party or to which a Company or any of its Subsidiaries, the Premises, the Collateral or any of the property of a Company or any of its Subsidiaries is subject or bound, except for such breaches or defaults which, individually or in the aggregate, have not had, and would not reasonably be expected to result in, a Material Adverse Effect and (c) will not violate any applicable law, statute, regulation, rule, ordinance, code, rule or order.

 

 

 

 

3.2.       This Amendment has been duly executed and delivered for the benefit of or on behalf of each Company and constitutes a legal, valid and binding obligation of each Company, enforceable against such Company in accordance with its terms except (a) as the same may be limited by bankruptcy, insolvency, reorganization moratorium or similar laws now or hereafter in effect relating to creditors rights generally and (b) that the remedy of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and to the discretion of the court before which any proceeding therefor may be brought.

 

3.3.       Both before and after giving effect to this Amendment on the date hereof (a) the representations and warranties of the Companies contained in Section 4.1 of the Note Purchase Agreement and the other Transaction Documents are true, correct and complete on and as of the date hereof as if made on such date (and to the extent any representations and warranties shall relate to the Effective Date or another earlier date, such representation and warranties shall be deemed to be amended to relate to the date hereof), and (b) no Default or Event of Default has occurred and is continuing.

 

4.           Ratification and Confirmation . The Companies hereby ratify and confirm all of the terms and provisions of the Note Purchase Agreement and the other Transaction Documents and agree that all of such terms and provisions, as amended hereby, remain in full force and effect, except as, and to the extent expressly set forth herein.

 

5.           Condition to Effectiveness . The effectiveness of this Amendment shall be subject to the satisfaction of the following conditions precedent:

 

5.1.       The Purchaser shall have received a fully executed copy of this Amendment.

 

5.2.       All representations and warranties of the Companies contained herein shall be true and correct in all material respects as of the date hereof (and such parties’ delivery of their respective signatures hereto shall be deemed to be its certification thereof).

 

5.3.       The Purchaser shall have received all fees and other amounts due and payable to the Purchaser and its counsel in connection with this Amendment, including a a modification fee equal to Twenty-Five Thousand and No/100 Dollars ($25,000.00) due and payable on the date hereof, and to the extent invoiced, reimbursement or payment of all out-of-pocket expenses required to be reimbursed or paid by the Companies under the Note Purchase Agreement.

 

6.           Miscellaneous .

 

6.1.       Except as otherwise expressly set forth herein, nothing herein shall be deemed to constitute an amendment, modification or waiver of any of the provisions of the Note Purchase Agreement, the Security Agreement or the other Transaction Documents, all of which remain in full force and effect as of the date hereof and are hereby ratified and confirmed. Each Company hereby acknowledges and agrees that nothing contained herein shall be deemed to entitle any Company to consent to, or a waiver, amendment or modification of, any of the terms, conditions, obligations, covenants or agreements contained in the Transaction Documents in similar or different circumstances. This Amendment (together with any other document executed in connection herewith) is not intended to be, nor shall it be construed as, a novation of the Note Purchase Agreement.

 

 

 

 

6.2.       This Amendment may be executed in any number of counterparts, each of which, when executed and delivered, shall be an original, but all counterparts shall together constitute one instrument. Delivery of an executed counterpart of a signature page of this Amendment by facsimile or electronic mail shall be equally effective as delivery of a manually executed counterpart of this Amendment.

 

6.3.       This Amendment shall be governed by the laws of the State of New York without giving effect to any conflict of law principles and shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.

 

6.4.       The Companies agree to pay all reasonable expenses, including legal fees and disbursements, incurred by Purchaser in connection with this Amendment and the transactions contemplated hereby.

 

6.5.       This Amendment shall be deemed a Transaction Document for all purposes of the Note Purchase Agreement and the other Transaction Documents. On and after the date hereof, each reference in the Note Purchase Agreement and the other Transaction Documents to the Note Purchase Agreement, shall mean and be a reference to the Note Purchase Agreement, as modified by this Amendment.

 

6.6.        Each Company, voluntarily, knowingly, unconditionally and irrevocably, with specific and express intent, for and on behalf of itself and all of its respective parents, subsidiaries, affiliates, members, managers, predecessors, successors, and assigns, and each of their respective current and former directors, officers, shareholders, agents, and employees (collectively, “ Releasing Parties ”), does hereby fully and completely release, acquit and forever discharge each Indemnified Party of and from any and all actions, causes of action, suits, debts, disputes, damages, claims, obligations, liabilities, costs, expenses and demands of any kind whatsoever, at law or in equity, whether matured or unmatured, liquidated or unliquidated, vested or contingent, choate or inchoate, known or unknown that the Releasing Parties (or any of them) has against the Indemnified Parties (or any of them) that directly or indirectly arise out of, are based upon or are in any manner connected with any Prior Related Event. “ Prior Related Event ” means any transaction, event, circumstance, action, failure to act, occurrence of any type or sort, whether known or unknown, which occurred, existed, was taken, was permitted or begun in accordance with, pursuant to or by virtue of (a) any of the terms of this Amendment or any other Transaction Document, (b) any actions, transactions, matters or circumstances related hereto or thereto, (c) the conduct of the relationship between the Purchaser and any Company, or (d) any other actions or inactions by the Purchaser, all on or prior to the date hereof. Each Company acknowledges that the foregoing release is a material inducement to the Purchaser’s decision to enter into this Amendment and to agree to the modifications contemplated hereunder.

 

[Signature Pages Follow.]

 

 

 

 

IN WITNESS WHEREOF, the parties hereto have executed this Amendment which shall be deemed to be a sealed instrument as of the date first above written.

 

  COMPANIES
   
  TWINLAB CONSOLIDATED HOLDINGS, INC.
   
  By: /s/ Thomas A. Tolworthy
  Name:    Thomas A. Tolworthy
  Title:    Chief Executive Officer and President
   
  TWINLAB HOLDINGS, INC.
   
  By: /s/ Thomas A. Tolworthy
  Name:     Thomas A. Tolworthy
  Title:    Chief Executive Officer and President
   
  TWINLAB CONSOLIDATION CORPORATION
   
  By: /s/ Thomas A. Tolworthy
  Name:    Thomas A. Tolworthy
  Title:    Chief Executive Officer and President
   
  TWINLAB CORPORATION
   
  By: /s/ Thomas A. Tolworthy
  Name:    Thomas A. Tolworthy
  Title:    Chief Executive Officer and President
   
  ISI BRANDS, INC.
   
  By: /s/ Thomas A. Tolworthy
  Name:    Thomas A. Tolworthy
  Title:    Chief Executive Officer and President

 

[Signature Page – Sixth Amendment to Note and Warrant Purchase Agreement]

 

 

 

 

  NUTRASCIENCE LABS, INC.
   
  By: /s/ Thomas A. Tolworthy
  Name:     Thomas A. Tolworthy
  Title:    Chief Executive Officer and President
   
  NUTRASCIENCE LABS IP CORPORATION
   
  By: /s/ Thomas A. Tolworthy
  Name:    Thomas A. Tolworthy
  Title:    Chief Executive Officer and President

 

[Signature Page – Sixth Amendment to Note and Warrant Purchase Agreement]

 

 

 

 

  PURCHASER :
   
  PENTA MEZZANINE SBIC FUND I, L.P.
   
  By: Penta Mezzanine SBIC Fund I GP, LLC, its General Partner
   
  By: /s/ Seth D. Ellis
  Name:      Seth D. Ellis
  Title:    Partner

 

[Signature Page – Sixth Amendment to Note and Warrant Purchase Agreement]

 

 

 

 

Exhibit 10.99

 

LIMITED WAIVER TO NOTE WARRANT AND PURCHASE AGREEMENT

 

This LIMITED WAIVER TO NOTE WARRANT AND PURCHASE AGREEMENT (this “ Agreement ”), dated as of October 2, 2015, is made by and between TWINLAB CONSOLIDATED HOLDINGS, INC., a Nevada corporation (“ Parent ”), TWINLAB CONSOLIDATION CORPORATION, a Delaware corporation (“ TCC ”), TWINLAB HOLDINGS, INC., a Michigan corporation (“ Twinlab Holdings ”), ISI BRANDS INC., a Michigan corporation (“ ISI Brands ”), and TWINLAB CORPORATION, a Delaware corporation (“ Twinlab Corporation ”), NUTRASCIENCE LABS, INC., a Delaware corporation, NUTRASCIENCE LABS IP CORPORATION., a Delaware corporation (each of the foregoing Persons being referred to herein individually as a “ Company ” and collectively as the “ Companies ”), and PENTA MEZZANINE SBIC FUND I, L.P., a Delaware limited partnership (the “ Purchaser ”).

 

WHEREAS, the Companies and the Purchaser are parties to a Note and Warrant Purchase Agreement dated as of November 13, 2014 (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “ Note Purchase Agreement ”);

 

WHEREAS, on the date hereof the Companies will purchase all of the outstanding equity interests of Target 1 and such acquisition is a Permitted Acquisition under the Purchase Agreement so long as no Default of Event of Default shall have occurred or would result from the consummation of the Target 1 Acquisition; and

 

NOW, THEREFORE, in consideration of the promises and the mutual agreements contained in this Agreement, and subject to the terms and conditions set forth herein, each party hereto hereby agrees as follows:

 

1.           Capitalized Terms . Capitalized terms used but not defined herein shall have the meanings set forth in the Note Purchase Agreement.

 

2.           Joinder of New Subsidiaries . At the request of and as an accommodation to the Companies and subject to the strict compliance with the terms, conditions and requirements set forth herein (including, without limitation, satisfaction of each of the conditions set forth in Section 6 below), the Purchaser hereby agrees to allow 30 days from the date hereof for Organic Holdings LLC and its Subsidiaries to join the Note Purchase Agreement as Companies, grant Liens in substantially all of their assets to secure the Obligations and otherwise comply with Section 5.4 of the Note Purchase Agreement.

 

3.           Limited Waiver to Note Purchase Agreement . At the request of and as an accommodation to the Companies and subject to the strict compliance with the terms, conditions and requirements set forth herein (including, without limitation, satisfaction of each of the conditions set forth in Section 6 below), the Purchaser hereby agrees to waive the Event of Default set forth on Schedule I attached hereto (the “ Specified Event of Default ”). The limited waiver set forth in this Section 3 is effective solely for the purposes set forth herein and shall be limited precisely as written and shall not be deemed to (a) except as expressly provided herein, be a consent to any amendment, waiver or modification of any term or condition of the Note Purchase Agreement or of any other Transaction Document; (b) prejudice any right that the Purchaser have or may have in the future under or in connection with the Note Purchase Agreement or any other Transaction Document; (c) waive any Event of Default (other than the Specified Event of Default) that exists as of the date hereof; or (d) establish a custom or course of dealing among any of the Companies, on the one hand, or the Purchaser on the other hand.

 

  1  
 

 

4.           Representations and Warranties; No Default . Each Company hereby represents and warrants that:

 

4.1.       The execution, delivery and performance by such Company of this Agreement (a) are within such Company’s corporate or similar powers and, at the time of execution hereof and have been duly authorized by all necessary corporate and similar action; (b) does not and will not result, in any breach or default under any other document, instrument or agreement to which a Company or any of its Subsidiaries is a party or to which a Company or any of its Subsidiaries, the Premises, the Collateral or any of the property of a Company or any of its Subsidiaries is subject or bound, except for such breaches or defaults which, individually or in the aggregate, have not had, and would not reasonably be expected to result in, a Material Adverse Effect and (c) will not violate any applicable law, statute, regulation, rule, ordinance, code, rule or order.

 

4.2.       This Agreement has been duly executed and delivered for the benefit of or on behalf of each Company and constitutes a legal, valid and binding obligation of each Company, enforceable against such Company in accordance with its terms except (a) as the same may be limited by bankruptcy, insolvency, reorganization moratorium or similar laws now or hereafter in effect relating to creditors rights generally and (b) that the remedy of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and to the discretion of the court before which any proceeding therefor may be brought.

 

4.3.       Both before and after giving effect to this Agreement on the date hereof (a) the representations and warranties of the Companies contained in Section 4.1 of the Note Purchase Agreement and the other Transaction Documents are true, correct and complete on and as of the date hereof as if made on such date (and to the extent any representations and warranties shall relate to the Effective Date or another earlier date, such representation and warranties shall be deemed to be amended to relate to the date hereof), and (b) except as set forth on Schedule I attached hereto, no Default or Event of Default has occurred and is continuing.

 

4.4.       The acquisition of all of the equity interests of Organic Holdings LLC and its Subsidiaries is a Permitted Acquisition.

 

5.           Ratification and Confirmation . The Companies hereby ratify and confirm all of the terms and provisions of the Note Purchase Agreement and the other Transaction Documents and agree that all of such terms and provisions, as amended hereby, remain in full force and effect, except as, and to the extent expressly set forth herein.

 

6.           Condition to Effectiveness . The effectiveness of this Agreement shall be subject to the satisfaction of the following conditions precedent:

 

6.1.       The Purchaser shall have received a fully executed copy of this Agreement.

 

6.2.       All representations and warranties of the Companies contained herein shall be true and correct in all material respects as of the date hereof (and such parties’ delivery of their respective signatures hereto shall be deemed to be its certification thereof).

 

6.3.       The Purchaser shall have received all fees and other amounts due and payable to the Purchaser and its counsel in connection with this Agreement, and to the extent invoiced, reimbursement or payment of all out-of-pocket expenses required to be reimbursed or paid by the Companies under the Note Purchase Agreement.

 

  2  
 

 

7.           Miscellaneous .

 

7.1.       Except as otherwise expressly set forth herein, nothing herein shall be deemed to constitute an amendment, modification or waiver of any of the provisions of the Note Purchase Agreement, the Security Agreement or the other Transaction Documents, all of which remain in full force and effect as of the date hereof and are hereby ratified and confirmed. Each Company hereby acknowledges and agrees that nothing contained herein shall be deemed to entitle any Company to consent to, or a waiver, amendment or modification of, any of the terms, conditions, obligations, covenants or agreements contained in the Transaction Documents in similar or different circumstances. This Agreement (together with any other document executed in connection herewith) is not intended to be, nor shall it be construed as, a novation of the Note Purchase Agreement.

 

7.2.       This Agreement may be executed in any number of counterparts, each of which, when executed and delivered, shall be an original, but all counterparts shall together constitute one instrument. Delivery of an executed counterpart of a signature page of this Agreement by facsimile or electronic mail shall be equally effective as delivery of a manually executed counterpart of this Agreement.

 

7.3.       This Agreement shall be governed by the laws of the State of New York without giving effect to any conflict of law principles and shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.

 

7.4.       The Companies agree to pay all reasonable expenses, including legal fees and disbursements, incurred by Purchaser in connection with this Agreement and the transactions contemplated hereby.

 

7.5.       This Agreement shall be deemed a Transaction Document for all purposes of the Note Purchase Agreement and the other Transaction Documents. On and after the date hereof, each reference in the Note Purchase Agreement and the other Transaction Documents to the Note Purchase Agreement, shall mean and be a reference to the Note Purchase Agreement, as modified by this Agreement.

 

7.6.        Each Company, voluntarily, knowingly, unconditionally and irrevocably, with specific and express intent, for and on behalf of itself and all of its respective parents, subsidiaries, affiliates, members, managers, predecessors, successors, and assigns, and each of their respective current and former directors, officers, shareholders, agents, and employees (collectively, “ Releasing Parties ”), does hereby fully and completely release, acquit and forever discharge each Indemnified Party of and from any and all actions, causes of action, suits, debts, disputes, damages, claims, obligations, liabilities, costs, expenses and demands of any kind whatsoever, at law or in equity, whether matured or unmatured, liquidated or unliquidated, vested or contingent, choate or inchoate, known or unknown that the Releasing Parties (or any of them) has against the Indemnified Parties (or any of them) that directly or indirectly arise out of, are based upon or are in any manner connected with any Prior Related Event. “ Prior Related Event ” means any transaction, event, circumstance, action, failure to act, occurrence of any type or sort, whether known or unknown, which occurred, existed, was taken, was permitted or begun in accordance with, pursuant to or by virtue of (a) any of the terms of this Agreement or any other Transaction Document, (b) any actions, transactions, matters or circumstances related hereto or thereto, (c) the conduct of the relationship between the Purchaser and any Company, or (d) any other actions or inactions by the Purchaser, all on or prior to the date hereof. Each Company acknowledges that the foregoing release is a material inducement to the Purchaser’s decision to enter into this Agreement and to agree to the modifications contemplated hereunder.

 

  3  
 

 

 

[Signature Pages Follow.]

 

  4  
 

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement which shall be deemed to be a sealed instrument as of the date first above written.

 

 

  COMPANIES
   
  TWINLAB CONSOLIDATED HOLDINGS, INC.
     
  By: /s/ Thomas A. Tolworthy
  Name:    Thomas A. Tolworthy
  Title:    Chief Executive Officer and President
     
  TWINLAB HOLDINGS, INC.
     
  By: /s/ Thomas A. Tolworthy
  Name:    Thomas A. Tolworthy
  Title:    Chief Executive Officer and President
     
     
  TWINLAB CONSOLIDATION CORPORATION
     
  By: /s/ Thomas A. Tolworthy
  Name:    Thomas A. Tolworthy
  Title:    Chief Executive Officer and President
     
  TWINLAB CORPORATION
     
  By: /s/ Thomas A. Tolworthy
  Name:    Thomas A. Tolworthy
  Title:    Chief Executive Officer and President
     
  ISI BRANDS, INC.
     
  By: /s/ Thomas A. Tolworthy
  Name:    Thomas A. Tolworthy
  Title:    Chief Executive Officer and President

 

[Signature Page – – Limited Waiver to Note Warrant and Purchase Agreement]

 

 

 

 

  NUTRASCIENCE LABS, INC.
     
  By: /s/ Thomas A. Tolworthy
  Name:    Thomas A. Tolworthy
  Title:    Chief Executive Officer and President
     
  NUTRASCIENCE LABS IP CORPORATION
     
  By: /s/ Thomas A. Tolworthy
  Name:    Thomas A. Tolworthy
  Title:    Chief Executive Officer and President

 

[Signature Page – – Limited Waiver to Note Warrant and Purchase Agreement]

 

 

 

 

  PURCHASER :
     
  PENTA MEZZANINE SBIC FUND I, L.P.
     
  By: Penta Mezzanine SBIC Fund I GP, LLC, its General Partner
     
  By: /s/ Seth D. Ellis
  Name:    Seth D. Ellis
  Title:    Partner
     
     

 

[Signature Page – – Limited Waiver to Note Warrant and Purchase Agreement]

 

 

 

 

Schedule I

 

Events of Default

 

The Company failed to meet its Minimum Adjusted EBITDA covenant for July 2015 and August 2015. These defaults create cross defaults within these agreements and the Company’s credit facility with MidCap.

 

 

 

 

Exhibit 10.100

 

FIFTH AMENDMENT TO NOTE AND WARRANT PURCHASE AGREEMENT

 

This FIFTH AMENDMENT TO NOTE AND WARRANT AGREEMENT (this “ Amendment ”), dated as of October 5, 2015, is made by and between TWINLAB CONSOLIDATED HOLDINGS, INC., a Nevada corporation (“ Parent ”), TWINLAB CONSOLIDATION CORPORATION, a Delaware corporation (“ TCC ”), TWINLAB HOLDINGS, INC., a Michigan corporation (“ Twinlab Holdings ”), ISI BRANDS INC., a Michigan corporation (“ ISI Brands ”), and TWINLAB CORPORATION, a Delaware corporation (“ Twinlab Corporation ”), NUTRASCIENCE LABS, INC., a Delaware corporation, NUTRASCIENCE LABS IP CORPORATION., a Delaware corporation (each of the foregoing Persons being referred to herein individually as a “ Company ” and collectively as the  “ Companies ”), and JL-MEZZ UTAH, LLC, an Alaska limited liability company, f/k/a JL-BBNC Mezz Utah, LLC (the “ Purchaser ”).

 

WHEREAS, the Companies and the Purchaser are parties to a Note and Warrant Purchase Agreement dated as of January 22, 2015, as amended by that certain First Amendment to Note and Warrant Purchase Agreement, Consent and Joinder dated as of February 4, 2015, that certain Second Amendment to Note and Warrant Purchase Agreement and Consent dated as of April 30, 2015 and that certain Third Amendment to Note and Warrant Purchase Agreement, Limited Consent and Limited Waiver dated as of June 30, 2015 and Fourth Amendment to Note and Warrant Agreement and Limited Consent dated as of September 9, 2015 (as the same may be further amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “ Note Purchase Agreement ”).

 

NOW, THEREFORE, in consideration of the promises and the mutual agreements contained in this Amendment, and subject to the terms and conditions set forth herein, each party hereto hereby agrees as follows:  

 

1.           Capitalized Terms .  Capitalized terms used but not defined herein shall have the meanings set forth in the Note Purchase Agreement.

 

2.           Amendments to Note Purchase Agreement .  Subject to the satisfaction of the conditions precedent set forth herein and in reliance on the representations, warranties and covenants of the Companies set forth herein and in the Note Purchase Agreement, each party hereto hereby agrees that the Note Purchase Agreement be and hereby is, amended as follows:

 

2.1.       Amendment and Restatement of Existing Defined Terms .  Section 5.12 of the Note Purchase Agreement is hereby amended and restated in its entirety effective as of September 30, 2015 as follows:

 

5.12       Financial Covenants.

 

(a)         Minimum Adjusted EBITDA .  Commencing with the month ending October 31, 2015 and until such time as all Obligations are paid, satisfied and discharged in full, the Borrowers shall not, as of the end of any measurement period set forth below, permit the Adjusted EBITDA for such measurement period to be less than the amount set forth in the table below opposite such measurement period.

 

 

 

 

Measurement Period Minimum Adjusted EBITDA
October 1, 2015 to December 31, 2015 $ -2,500,000
October 1, 2015 to March 31, 2016 $ -1,750,000

 

(b)           Fixed Charge Coverage Ratio .  Commencing June 30, 2016 and until such time as all Obligations are paid, satisfied and discharged in full, the Borrowers shall not, as of the end of any month, permit the Fixed Charge Coverage Ratio for the period of trailing twelve months most recently ended on or prior to such date to be less than 1.15x.  Notwithstanding the foregoing, it is hereby agreed that (i) the applicable measurement period for the month ending June 30, 2016 shall be from April 1, 2015 to June 30, 2016 (trailing three Months or T3M), (ii) the applicable measurement period for the month ending July 31, 2016 will be T4M, (iii) the applicable measurement period for the month ending August 31, 2016 will be T5M, and (iv) the applicable measurement periods shall so continue until T12M is achieved.

 

(c)           Total Funded Debt to Adjusted EBITDA Ratio .  Commencing with the fiscal quarter ending September 30, 2016 and until such time as all Obligations are paid, satisfied and discharged in full, the Companies shall not, as of the end of any fiscal quarter, permit the applicable ratio set forth in the table below to exceed the amount set forth therein:

 

Applicable Ratio: (A) Total Funded Debt (calculated without giving effect to any Indebtedness that is subordinate both to the Penta Debt) to (B) Adjusted EBITDA for the period of four consecutive fiscal quarters most recently ended on or prior to such date to exceed 4.0x

 

For the purposes of this Section 6.4, Adjusted EBITDA (1) for the measurement period ending on September 30, 2016, shall equal the Adjusted EBITDA for the fiscal quarter ending September 30, 2016 multiplied by 4, (2) for the measurement period ending on December 31, 2016, shall equal the sum of Adjusted EBITDA for the fiscal quarters ending September 30, 2016 and December 31, 2016, multiplied by 2 and (3) for the measurement period ending on March 31, 2017, shall equal the sum of the Adjusted EBITDA for the fiscal quarters ending September 30, 2016, December 31, 2016 and March 31, 2017, multiplied by 4 and divided by 3.

 

3.           Representations and Warranties; No Default .  Each Company hereby represents and warrants that:

 

3.1.       The execution, delivery and performance by such Company of this Amendment (a) are within such Company’s  corporate or similar powers and, at the time of execution hereof and have been duly authorized by all necessary corporate and similar action; (b) does not and will not result, in any breach or default under any other document, instrument or agreement to which a Company or any of its Subsidiaries is a party or to which a Company or any of its Subsidiaries, the Premises, the Collateral or any of the property of a Company or any of its Subsidiaries is subject or bound, except for such breaches or defaults which, individually or in the aggregate, have not had, and would not reasonably be expected to result in, a Material Adverse Effect and  (c) will not violate any applicable law, statute, regulation, rule, ordinance, code, rule or order.  

 

 

 

 

3.2.       This Amendment has been duly executed and delivered for the benefit of or on behalf of each Company and constitutes a legal, valid and binding obligation of each Company, enforceable against such Company in accordance with its terms except (a) as the same may be limited by bankruptcy, insolvency, reorganization moratorium or similar laws now or hereafter in effect relating to creditors rights generally and (b) that the remedy of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and to the discretion of the court before which any proceeding therefor may be brought.

 

3.3.       Both before and after giving effect to this Amendment on the date hereof (a) the representations and warranties of the Companies contained in Section 4.1 of the Note Purchase Agreement and the other Transaction Documents are true, correct and complete on and as of the date hereof as if made on such date (and to the extent any representations and warranties shall relate to the Effective Date or another earlier date, such representation and warranties shall be deemed to be amended to relate to the date hereof), and (b) no Default or Event of Default has occurred and is continuing.

 

4.           Ratification and Confirmation .  The Companies hereby ratify and confirm all of the terms and provisions of the Note Purchase Agreement and the other Transaction Documents and agree that all of such terms and provisions, as amended hereby, remain in full force and effect, except as, and to the extent expressly set forth herein.

 

5.           Condition to Effectiveness .  The effectiveness of this Amendment shall be subject to the satisfaction of the following conditions precedent:  

 

5.1.       The Purchaser shall have received a fully executed copy of this Amendment.

 

5.2.       All representations and warranties of the Companies contained herein shall be true and correct in all material respects as of the date hereof (and such parties’ delivery of their respective signatures hereto shall be deemed to be its certification thereof).

 

5.3.       The Purchaser shall have received all fees and other amounts due and payable to the Purchaser and its counsel in connection with this Amendment, including a a modification fee equal to Twenty-Five Thousand and No/100 Dollars ($25,000.00) due and payable on the date hereof, and to the extent invoiced, reimbursement or payment of all out-of-pocket expenses required to be reimbursed or paid by the Companies under the Note Purchase Agreement.

 

6.           Miscellaneous .

 

6.1.       Except as otherwise expressly set forth herein, nothing herein shall be deemed to constitute an amendment, modification or waiver of any of the provisions of the Note Purchase Agreement, the Security Agreement or the other Transaction Documents, all of which remain in full force and effect as of the date hereof and are hereby ratified and confirmed.  Each Company hereby acknowledges and agrees that nothing contained herein shall be deemed to entitle any Company to consent to, or a waiver, amendment or modification of, any of the terms, conditions, obligations, covenants or agreements contained in the Transaction Documents in similar or different circumstances.  This Amendment (together with any other document executed in connection herewith) is not intended to be, nor shall it be construed as, a novation of the Note Purchase Agreement.

 

 

 

 

6.2.       This Amendment may be executed in any number of counterparts, each of which, when executed and delivered, shall be an original, but all counterparts shall together constitute one instrument.  Delivery of an executed counterpart of a signature page of this Amendment by facsimile or electronic mail shall be equally effective as delivery of a manually executed counterpart of this Amendment.

 

6.3.       This Amendment shall be governed by the laws of the State of New York without giving effect to any conflict of law principles and shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.

 

6.4.       The Companies agree to pay all reasonable expenses, including legal fees and disbursements, incurred by Purchaser in connection with this Amendment and the transactions contemplated hereby.

 

6.5.       This Amendment shall be deemed a Transaction Document for all purposes of the Note Purchase Agreement and the other Transaction Documents.  On and after the date hereof, each reference in the Note Purchase Agreement and the other Transaction Documents to the Note Purchase Agreement, shall mean and be a reference to the Note Purchase Agreement, as modified by this Amendment.

 

6.6.        Each Company, voluntarily, knowingly, unconditionally and irrevocably, with specific and express intent, for and on behalf of itself and all of its respective parents, subsidiaries, affiliates, members, managers, predecessors, successors, and assigns, and each of their respective current and former directors, officers, shareholders, agents, and employees (collectively, “ Releasing Parties ”), does hereby fully and completely release, acquit and forever discharge each Indemnified Party of and from any and all actions, causes of action, suits, debts, disputes, damages, claims, obligations, liabilities, costs, expenses and demands of any kind whatsoever, at law or in equity, whether matured or unmatured, liquidated or unliquidated, vested or contingent, choate or inchoate, known or unknown that the Releasing Parties (or any of them) has against the Indemnified Parties (or any of them) that directly or indirectly arise out of, are based upon or are in any manner connected with any Prior Related Event.  “ Prior Related Event ” means any transaction, event, circumstance, action, failure to act, occurrence of any type or sort, whether known or unknown, which occurred, existed, was taken, was permitted or begun in accordance with, pursuant to or by virtue of (a) any of the terms of this Amendment or any other Transaction Document, (b) any actions, transactions, matters or circumstances related hereto or thereto, (c) the conduct of the relationship between the Purchaser and any Company, or (d) any other actions or inactions by the Purchaser, all on or prior to the date hereof.  Each Company acknowledges that the foregoing release is a material inducement to the Purchaser’s decision to enter into this Amendment and to agree to the modifications contemplated hereunder.

 

[Signature Pages Follow.]

 

 

 

 

IN WITNESS WHEREOF, the parties hereto have executed this Amendment which shall be deemed to be a sealed instrument as of the date first above written.

 

  COMPANIES
   
  TWINLAB CONSOLIDATED HOLDINGS, INC.
   
  By: /s/ Thomas A. Tolworthy
  Name:    Thomas A. Tolworthy
  Title:    Chief Executive Officer and President
   
  TWINLAB HOLDINGS, INC.
   
  By: /s/ Thomas A. Tolworthy
  Name:    Thomas A. Tolworthy
  Title:    Chief Executive Officer and President
   
  TWINLAB CONSOLIDATION CORPORATION
   
  By: /s/ Thomas A. Tolworthy
  Name:    Thomas A. Tolworthy
  Title:    Chief Executive Officer and President
   
  TWINLAB CORPORATION
   
  By: /s/ Thomas A. Tolworthy
  Name:    Thomas A. Tolworthy
  Title:    Chief Executive Officer and President
   
  ISI BRANDS, INC.
   
  By: /s/ Thomas A. Tolworthy
  Name:    Thomas A. Tolworthy
  Title:    Chief Executive Officer and President

 

[Signature Page – Fifth Amendment to Note and Warrant Purchase Agreement]

 

 

 

 

  NUTRASCIENCE LABS, INC.
   
  By: /s/ Thomas A. Tolworthy
  Name:    Thomas A. Tolworthy
  Title:    Chief Executive Officer and President
   
  NUTRASCIENCE LABS IP CORPORATION
   
  By: /s/ Thomas A. Tolworthy
  Name:    Thomas A. Tolworthy
  Title:    Chief Executive Officer and President

 

[Signature Page – Fifth Amendment to Note and Warrant Purchase Agreement]

 

 

 

 

  PURCHASER :
   
  JL-MEZZ UTAH, LLC
  a Alaska Limited Liability Company
   
  By: /s/ Joshua D. Hodes
  Name:    Joshua D. Hodes
  Title:    Authorized Representative

 

[Signature Page – Fifth Amendment to Note and Warrant Purchase Agreement]

 

 

 

 

Exhibit 10.101

 

LIMITED WAIVER TO NOTE WARRANT AND PURCHASE AGREEMENT

 

This LIMITED WAIVER TO NOTE WARRANT AND PURCHASE AGREEMENT (this “ Agreement ”), dated as of October 2, 2015, is made by and between TWINLAB CONSOLIDATED HOLDINGS, INC., a Nevada corporation (“ Parent ”), TWINLAB CONSOLIDATION CORPORATION, a Delaware corporation (“ TCC ”), TWINLAB HOLDINGS, INC., a Michigan corporation (“ Twinlab Holdings ”), ISI BRANDS INC., a Michigan corporation (“ ISI Brands ”), and TWINLAB CORPORATION, a Delaware corporation (“ Twinlab Corporation ”), NUTRASCIENCE LABS, INC., a Delaware corporation, NUTRASCIENCE LABS IP CORPORATION., a Delaware corporation (each of the foregoing Persons being referred to herein individually as a “ Company ” and collectively as the “ Companies ”), and JL-MEZZ UTAH, LLC, an Alaska limited liability company, f/k/a JL-BBNC Mezz Utah, LLC (the “ Purchaser ”).

 

WHEREAS, the Companies and the Purchaser are parties to a Note and Warrant Purchase Agreement dated as of January 22, 2015 (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “ Note Purchase Agreement ”);

 

WHEREAS, on the date hereof the Companies will purchase all of the outstanding equity interests of Target 1 and such acquisition is a Permitted Acquisition under the Purchase Agreement so long as no Default of Event of Default shall have occurred or would result from the consummation of the Target 1 Acquisition; and

 

NOW, THEREFORE, in consideration of the promises and the mutual agreements contained in this Agreement, and subject to the terms and conditions set forth herein, each party hereto hereby agrees as follows:

 

1.           Capitalized Terms . Capitalized terms used but not defined herein shall have the meanings set forth in the Note Purchase Agreement.

 

2.           Joinder of New Subsidiaries . At the request of and as an accommodation to the Companies and subject to the strict compliance with the terms, conditions and requirements set forth herein (including, without limitation, satisfaction of each of the conditions set forth in Section 6 below), the Purchaser hereby agrees to allow 30 days from the date hereof for Organic Holdings LLC and its Subsidiaries to join the Note Purchase Agreement as Companies, grant Liens in substantially all of their assets to secure the Obligations and otherwise comply with Section 5.4 of the Note Purchase Agreement.

 

3.           Limited Waiver to Note Purchase Agreement . At the request of and as an accommodation to the Companies and subject to the strict compliance with the terms, conditions and requirements set forth herein (including, without limitation, satisfaction of each of the conditions set forth in Section 6 below), the Purchaser hereby agrees to waive the Event of Default set forth on Schedule A attached hereto (the “ Specified Event of Default ”). The limited waiver set forth in this Section 3 is effective solely for the purposes set forth herein and shall be limited precisely as written and shall not be deemed to (a) except as expressly provided herein, be a consent to any amendment, waiver or modification of any term or condition of the Note Purchase Agreement or of any other Transaction Document; (b) prejudice any right that the Purchaser have or may have in the future under or in connection with the Note Purchase Agreement or any other Transaction Document; (c) waive any Event of Default (other than the Specified Event of Default) that exists as of the date hereof; or (d) establish a custom or course of dealing among any of the Companies, on the one hand, or the Purchaser on the other hand.

 

1
 

 

4.           Representations and Warranties; No Default . Each Company hereby represents and warrants that:

 

4.1.       The execution, delivery and performance by such Company of this Agreement (a) are within such Company’s corporate or similar powers and, at the time of execution hereof and have been duly authorized by all necessary corporate and similar action; (b) does not and will not result, in any breach or default under any other document, instrument or agreement to which a Company or any of its Subsidiaries is a party or to which a Company or any of its Subsidiaries, the Premises, the Collateral or any of the property of a Company or any of its Subsidiaries is subject or bound, except for such breaches or defaults which, individually or in the aggregate, have not had, and would not reasonably be expected to result in, a Material Adverse Effect and (c) will not violate any applicable law, statute, regulation, rule, ordinance, code, rule or order.

 

4.2.       This Agreement has been duly executed and delivered for the benefit of or on behalf of each Company and constitutes a legal, valid and binding obligation of each Company, enforceable against such Company in accordance with its terms except (a) as the same may be limited by bankruptcy, insolvency, reorganization moratorium or similar laws now or hereafter in effect relating to creditors rights generally and (b) that the remedy of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and to the discretion of the court before which any proceeding therefor may be brought.

 

4.3.       Both before and after giving effect to this Agreement on the date hereof (a) the representations and warranties of the Companies contained in Section 4.1 of the Note Purchase Agreement and the other Transaction Documents are true, correct and complete on and as of the date hereof as if made on such date (and to the extent any representations and warranties shall relate to the Effective Date or another earlier date, such representation and warranties shall be deemed to be amended to relate to the date hereof), and (b) except as set forth on Schedule A attached hereto, no Default or Event of Default has occurred and is continuing.

 

4.4.       The acquisition of all of the equity interests of Organic Holdings LLC and its Subsidiaries is a Permitted Acquisition.

 

5.           Ratification and Confirmation . The Companies hereby ratify and confirm all of the terms and provisions of the Note Purchase Agreement and the other Transaction Documents and agree that all of such terms and provisions, as amended hereby, remain in full force and effect, except as, and to the extent expressly set forth herein.

 

6.           Condition to Effectiveness . The effectiveness of this Agreement shall be subject to the satisfaction of the following conditions precedent:

 

6.1.       The Purchaser shall have received a fully executed copy of this Agreement.

 

6.2.       All representations and warranties of the Companies contained herein shall be true and correct in all material respects as of the date hereof (and such parties’ delivery of their respective signatures hereto shall be deemed to be its certification thereof).

 

6.3.       The Purchaser shall have received all fees and other amounts due and payable to the Purchaser and its counsel in connection with this Agreement, and to the extent invoiced, reimbursement or payment of all out-of-pocket expenses required to be reimbursed or paid by the Companies under the Note Purchase Agreement.

 

2
 

 

7.           Miscellaneous .

 

7.1.       Except as otherwise expressly set forth herein, nothing herein shall be deemed to constitute an amendment, modification or waiver of any of the provisions of the Note Purchase Agreement, the Security Agreement or the other Transaction Documents, all of which remain in full force and effect as of the date hereof and are hereby ratified and confirmed. Each Company hereby acknowledges and agrees that nothing contained herein shall be deemed to entitle any Company to consent to, or a waiver, amendment or modification of, any of the terms, conditions, obligations, covenants or agreements contained in the Transaction Documents in similar or different circumstances. This Agreement (together with any other document executed in connection herewith) is not intended to be, nor shall it be construed as, a novation of the Note Purchase Agreement.

 

7.2.       This Agreement may be executed in any number of counterparts, each of which, when executed and delivered, shall be an original, but all counterparts shall together constitute one instrument. Delivery of an executed counterpart of a signature page of this Agreement by facsimile or electronic mail shall be equally effective as delivery of a manually executed counterpart of this Agreement.

 

7.3.       This Agreement shall be governed by the laws of the State of New York without giving effect to any conflict of law principles and shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.

 

7.4.       The Companies agree to pay all reasonable expenses, including legal fees and disbursements, incurred by Purchaser in connection with this Agreement and the transactions contemplated hereby.

 

7.5.       This Agreement shall be deemed a Transaction Document for all purposes of the Note Purchase Agreement and the other Transaction Documents. On and after the date hereof, each reference in the Note Purchase Agreement and the other Transaction Documents to the Note Purchase Agreement, shall mean and be a reference to the Note Purchase Agreement, as modified by this Agreement.

 

7.6.        Each Company, voluntarily, knowingly, unconditionally and irrevocably, with specific and express intent, for and on behalf of itself and all of its respective parents, subsidiaries, affiliates, members, managers, predecessors, successors, and assigns, and each of their respective current and former directors, officers, shareholders, agents, and employees (collectively, “ Releasing Parties ”), does hereby fully and completely release, acquit and forever discharge each Indemnified Party of and from any and all actions, causes of action, suits, debts, disputes, damages, claims, obligations, liabilities, costs, expenses and demands of any kind whatsoever, at law or in equity, whether matured or unmatured, liquidated or unliquidated, vested or contingent, choate or inchoate, known or unknown that the Releasing Parties (or any of them) has against the Indemnified Parties (or any of them) that directly or indirectly arise out of, are based upon or are in any manner connected with any Prior Related Event. “ Prior Related Event ” means any transaction, event, circumstance, action, failure to act, occurrence of any type or sort, whether known or unknown, which occurred, existed, was taken, was permitted or begun in accordance with, pursuant to or by virtue of (a) any of the terms of this Agreement or any other Transaction Document, (b) any actions, transactions, matters or circumstances related hereto or thereto, (c) the conduct of the relationship between the Purchaser and any Company, or (d) any other actions or inactions by the Purchaser, all on or prior to the date hereof. Each Company acknowledges that the foregoing release is a material inducement to the Purchaser’s decision to enter into this Agreement and to agree to the modifications contemplated hereunder.

 

3
 

 

[Signature Pages Follow.]

 

4
 

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement which shall be deemed to be a sealed instrument as of the date first above written.

 

  COMPANIES
   
  TWINLAB CONSOLIDATED HOLDINGS, INC.
   
  By: /s/ Thomas A. Tolworthy
  Name:    Thomas A. Tolworthy
  Title:    Chief Executive Officer and President
   
  TWINLAB HOLDINGS, INC.
   
  By: /s/ Thomas A. Tolworthy
  Name:    Thomas A. Tolworthy
  Title:    Chief Executive Officer and President
   
  TWINLAB CONSOLIDATION CORPORATION
   
  By: /s/ Thomas A. Tolworthy
  Name:    Thomas A. Tolworthy
  Title:    Chief Executive Officer and President
   
  TWINLAB CORPORATION
   
  By: /s/ Thomas A. Tolworthy
  Name:    Thomas A. Tolworthy
  Title:    Chief Executive Officer and President
   
  ISI BRANDS, INC.
   
  By: /s/ Thomas A. Tolworthy
  Name:    Thomas A. Tolworthy
  Title:    Chief Executive Officer and President

 

[Signature Page – Limited Waiver to Note and Warrant Purchase Agreement]

 

 

 

 

  NUTRASCIENCE LABS, INC.
   
  By: /s/ Thomas A. Tolworthy
  Name:    Thomas A. Tolworthy
  Title:    Chief Executive Officer and President
   
  NUTRASCIENCE LABS IP CORPORATION
   
  By: /s/ Thomas A. Tolworthy
  Name:    Thomas A. Tolworthy
  Title:    Chief Executive Officer and President

 

[Signature Page – Limited Waiver to Note and Warrant Purchase Agreement]

 

 

 

 

  JL-MEZZ UTAH, LLC
  a Alaska Limited Liability Company
   
  By: /s/ Joshua D. Hodes
  Name:    Joshua D. Hodes
  Title:    Authorized Representative

 

[Signature Page – Limited Waiver to Note and Warrant Purchase Agreement]

 

 

 

 

Schedule A

 

Events of Default

 

The Company failed to meet its Minimum Adjusted EBITDA covenant for July 2015 and August 2015. These defaults create cross defaults within these agreements and the Company’s credit facility with MidCap.

 

 

 

 

Exhibit 10.102

 

AMENDMENT NO. 1 TO

AGREEMENT FOR LIMITED WAIVER OF NON-CIRCUMVENTION PROVISION AND TO COMPROMISE AGREEMENT AND RELEASE

 

THIS AMENDMENT NO. 1 TO AGREEMENT FOR LIMITED WAIVER OF NON-CIRCUMVENTION PROVISION AND TO COMPROMISE AGREEMENT AND RELEASE (the “ Amendment” ) is made as of this 1 st day of October, 2015, by and between Twinlab Consolidated Holdings, Inc., a Nevada corporation (the “ Company ”), and Capstone Financial Group, Inc., a Nevada corporation (“ Capstone ”).

 

WHEREAS, the Company and Capstone are parties to that certain Agreement for Limited Waiver of Non-Circumvention Provision, dated as of July 5, 2015 (the “ Waiver Agreement ”), whereby Capstone, for a fee as set forth therein, agreed to provide the Company with a limited waiver of the “Noncircumvention Provision” (as defined in the Waiver Agreement) with respect to a particular “Investor” (as defined in the Waiver Agreement);

 

WHEREAS, the Company and Capstone are also parties to that certain Compromise Agreement and Release, dated as of May 28, 2015 (the “ Compromise Agreement ” and, together with the Waiver Agreement, the “ Agreements ”), whereby, among other things, Capstone granted to the Company three separate contingent call option rights to acquire from Capstone, at a call option exercise price of $0.01 per share, a number of shares of outstanding Company Common Stock owned by Capstone;

 

WHEREAS , the Company has requested that Capstone waive any fee that might otherwise be due under the Waiver Agreement with respect to Investor;

 

WHEREAS , Capstone has requested the termination of all of the contingent call option rights under the Compromise Agreement;

 

WHEREAS , Capstone has agreed to waive its right to any fee with respect to Investor pursuant to the Waiver Agreement; and

 

WHEREAS , the Company has agreed to terminate all of the contingent call option rights under the Compromise Agreement.

 

NOW, THEREFORE , for good and valuable consideration, the receipt and sufficiency of which are hereby expressly acknowledged, the parties agree as follows:

 

1.                   Section 1.2 of the Waiver Agreement is hereby deleted in its entirety and replaced with the following:

 

“Accordingly, for good and valuable consideration, the sufficiency and receipt of which are hereby expressly acknowledged, Capstone shall, and hereby does, waive the Noncircumvention Provision as to the Investor.”

 

2.                   Section 2 (inclusive of sub-sections 2.1 through 2.9) of the Waiver Agreement is hereby deleted in its entirety and replaced with the following:

 

“2. No Waiver Fee . Capstone is providing the waiver granted to Company herein with respect to the Investor free of charge (except for the consideration set forth in a certain Amendment to this Agreement dated October 1, 2015), and there shall be no waiver fee, or fee of any kind, due to Capstone with respect to the waiver granted herein or with respect to any investment at any time by Investor in the equity securities of the Company, including without limitation, options or convertible securities.”

 

 

 

 

3.                   In addition to and without limitation of the group of persons and entities currently identified and defined as “Investor” in Schedule A to the Waiver Agreement, the term Investor as used therein shall, and does hereby, also expressly include Golisano Holdings, LLC, a New York limited liability company.

 

4.                   Section 5 of the Compromise Agreement is hereby deleted in its entirety and replaced with the following: “[Reserved.]”

 

5.                  Exhibit B of and to the Compromise Agreement is hereby deleted in its entirety.

 

6.                   Each party hereto agrees to execute and perform such other documents and acts as are reasonably required in order to facilitate the terms of this Amendment, and the intent thereof, and to cooperate in good faith in order to effectuate the provisions of this Amendment.

 

7.                   Each party represents and warrants to the other party that its execution and delivery of this Amendment have been duly authorized by its Board of Directors and do not violate any law or any agreement between it and any third party. Each individual signing this Amendment on behalf of a party represents and warrants in his individual capacity to the other party that his execution and delivery of this Amendment on behalf of such first party has been duly authorized by such first party’s Board of Directors.

 

8.                   Except as expressly modified by this Amendment, all terms and conditions of the respective Agreements shall remain in full force and effect.

 

9.                   This Amendment may be executed in counterparts, each of which shall be deemed an original, but all of which together shall be deemed to be one and the same instrument. A signed, including electronically signed, copy of this Amendment delivered by facsimile, email or other means of electronic transmission shall be deemed to have the same legal effect as delivery of an original signed copy of this Amendment.

 

IN WITNESS WHEREOF , each of the undersigned has executed this Amendment No. 1 to Agreement for Limited Waiver of Non-Circumvention Provision and to Compromise Agreement and Release as of the day and year first written above.

 

 

COMPANY   CAPSTONE
     
Twinlab Consolidated Holdings, Inc.   Capstone Financial Group, Inc.
     
By:   /s/ Thomas Tolworthy   By:   /s/ Darin Pastor
  Thomas Tolworthy     Darin Pastor
  Chief Executive Officer     Chief Executive Officer

 

 

 

Exhibit 10.103

 

Execution Version

 

UNIT PURCHASE AGREEMENT

 

by and among

 

NAOMI L. BALCOMBE,
ROBERT G. WHITTEL
 

and

 

TWINLAB CONSOLIDATION CORPORATION

 

dated as of

 

September 2, 2014

 

 

 

 

TABLE OF CONTENTS

 

ARTICLE I Definitions 2
     
ARTICLE II Purchase and Sale 10
     
Section 2.01 Purchase and Sale 10
     
Section 2.02 Purchase Price. 11
     
ARTICLE III Closing 13
     
Section 3.01 Closing 13
     
Section 3.02 Closing Deliverables 13
     
ARTICLE IV Representations and warranties of sellerS 14
     
Section 4.01 Authorization 14
     
Section 4.02 Capitalization. 14
     
Section 4.03 No Conflicts; Consents 15
     
Section 4.04 Organization, Authority and Qualification of the Company and each Subsidiary 15
     
Section 4.05 Financial Statements 16
     
Section 4.06 Undisclosed Liabilities 16
     
Section 4.07 Absence of Certain Changes 16
     
Section 4.08 Material Contracts. 19
     
Section 4.09 Title to Assets 21
     
Section 4.10 Condition and Sufficiency of Assets 22
     
Section 4.11 Real Property. 22
     
Section 4.12 Intellectual Property. 24
     
Section 4.13 Inventory. 25
     
Section 4.14 Accounts Receivable 25
     
Section 4.15 Customers and Suppliers; Orders. 26
     
Section 4.16 Insurance 26
     
Section 4.17 Legal Proceedings; Governmental Orders. 27
     
Section 4.18 Compliance with Laws 27
     
Section 4.19 Environmental Matters. 28
     
Section 4.20 Employee Benefit Matters. 30

 

    i  

 

 

Section 4.21 Employment Matters. 32
     
Section 4.22 Taxes. 33
     
Section 4.23 Permits 35
     
Section 4.24 Brokers 36
     
Section 4.25 Product Warranty 36
     
Section 4.26 Products Liability 36
     
Section 4.27 Affiliate Interests 36
     
Section 4.28 NO OTHER REPRESENTATIONS OR WARRANTIES 37
     
ARTICLE V Representations and warranties of buyer 37
     
Section 5.01 Organization of Buyer 37
     
Section 5.02 Authority of Buyer 37
     
Section 5.03 No Conflicts; Consents 38
     
Section 5.04 Brokers 38
     
Section 5.05 Legal Proceedings 38
     
Section 5.06 Independent Review 38
     
ARTICLE VI Covenants 39
     
Section 6.01 Conduct of Business Prior to the Closing 39
     
Section 6.02 Access to Information 41
     
Section 6.03 No Solicitation of Other Bids. 41
     
Section 6.04 Notice of Certain Events. 42
     
Section 6.05 Confidentiality 42
     
Section 6.06 Non-competition; Non-solicitation 43
     
Section 6.07 Governmental Approvals and Consents 44
     
Section 6.08 Books and Records. 45
     
Section 6.09 Public Announcements 46
     
Section 6.10 Physical Inventory 46
     
Section 6.11 Additional Covenants of Sellers 46
     
Section 6.12 Further Assurances 47
     
Section 6.13 Product Liability Insurance 47
     
Section 6.14 Supplemental Disclosure 47
     
Section 6.15 Excluded Assets. 48

 

    ii  

 

 

ARTICLE VII Tax matters 48
     
Section 7.01 Tax Covenants. 48
     
Section 7.02 Termination of Existing Tax Sharing Agreements 49
     
Section 7.03 Tax Indemnification 49
     
Section 7.04 Straddle Period 50
     
Section 7.05 Refunds and Tax Benefits 50
     
Section 7.06 Amendments to Returns; Refund Claims 50
     
Section 7.07 Contests 50
     
Section 7.08 Cooperation and Exchange of Information 51
     
Section 7.09 Tax Treatment. 51
     
Section 7.10 Survival 52
     
Section 7.11 Overlap 52
     
ARTICLE VIII Conditions to closing 52
     
Section 8.01 No Obligation on Buyer to Close 52
     
Section 8.02 Conditions to Obligations of Sellers 53
     
ARTICLE IX Indemnification 54
     
Section 9.01 Survival 54
     
Section 9.02 Indemnification By Sellers 54
     
Section 9.03 Indemnification By Buyer 55
     
Section 9.04 Certain Limitations 55
     
Section 9.05 Indemnification Procedures 57
     
Section 9.06 Payments 59
     
Section 9.07 Tax Treatment of Indemnification Payments 60
     
Section 9.08 Effect of Investigation 60
     
Section 9.09 Exclusive Remedies 61
     
Section 9.10 Set Off Against Buyer Stock. 61
     
ARTICLE X Termination 61
     
Section 10.01 Termination 61
     
Section 10.02 Effect of Termination 62
     
ARTICLE XI Miscellaneous 62
     
Section 11.01 Expenses 62

 

    iii  

 

 

Section 11.02 Notices 62
     
Section 11.03 Interpretation 63
     
Section 11.04 Headings 64
     
Section 11.05 Severability 64
     
Section 11.06 Entire Agreement 64
     
Section 11.07 Successors and Assigns 64
     
Section 11.08 No Third-party Beneficiaries 65
     
Section 11.09 Amendment and Modification; Waiver 65
     
Section 11.10 Governing Law; Submission to Jurisdiction; Waiver of Jury Trial. 65
     
Section 11.11 Specific Performance 66
     
Section 11.12 Counterparts 66
     
Section 11.13 Effectiveness 66

 

    iv  

 

 

UNIT PURCHASE AGREEMENT

 

This Unit Purchase Agreement (this “ Agreement ”), dated as of September 2, 2014, which shall be effective as of the Option Exercise Date, subject to Section 11.13 , is entered into by and among Naomi L. Balcombe and Robert Whittel (each a “ Seller ” and collectively “ Sellers ”), and TWINLAB CONSOLIDATION CORPORATION, a Delaware corporation (“ Buyer ”).

 

RECITALS

 

WHEREAS, Sellers collectively own all of the issued and outstanding Units in Organic Holdings LLC, a Delaware limited liability company (the “ Company ”), other than (i) any Units issued pursuant to the exercise of any Mezzanine Warrants, (ii) the Management Incentive Units and (iii) any Units issued after the date hereof as permitted by Section 8(a)(i) of the Option Agreement and Section 6.01 of this Agreement;

 

WHEREAS, each entity set forth on Schedule A attached hereto is wholly owned by the Company (each a “ Subsidiary ” and collectively the “ Subsidiaries ”);

 

WHEREAS, the Company through its Subsidiaries is engaged in the business of developing and selling (a) nutritional supplements, which for purposes hereof includes both dietary supplements and functional foods, such as protein shakes, bars and meal replacements, but specifically excluding conventional foods and (b) vitamins (the “ Business ”);

 

WHEREAS, Sellers, the Company and Buyer have entered into an Option Agreement, dated of even date herewith (the “ Option Agreement ”), pursuant to which Buyer shall have an option (the “ Option ”) to purchase all of the outstanding Units pursuant to and in accordance with the terms set forth in this Agreement and the Option Agreement;

 

WHEREAS, Sellers wish to sell to Buyer, and Buyer wishes to purchase from Sellers, all the Units owned by Sellers, and Buyer wishes to purchase all other Units, including “cashing out” the Management Incentive Units, subject to the terms and conditions set forth herein; and

 

NOW, THEREFORE , in consideration of the mutual covenants and agreements hereinafter set forth and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

 

 

 

 

ARTICLE I

Definitions

 

The following terms have the meanings specified or referred to in this ARTICLE I :

 

Action ” means any claim, charge, action, hearing, cause of action, demand, lawsuit, arbitration, complaint, audit, notice of violation (which shall include any notice required by Law to be given prior to filing a lawsuit), proceeding, litigation, citation, summons, subpoena, or investigation, whether at law or in equity, by or before any Governmental Authority.

 

Affiliate ” of a Person means any other Person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such Person. The term “control” (including the terms “controlled by” and “under common control with”) means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise.

 

Business Day ” means any day except Saturday, Sunday or any other day on which commercial banks located in New York are authorized or required by Law to be closed for business.

 

Buyer Stock ” means the common stock, par value $0.0001 per share, of Buyer, and any equity into which such common stock is converted or exchanged by operation of law or otherwise.

 

Buyer’s Accountants ” means Tanner LLC.

 

CERCLA ” means the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended by the Superfund Amendments and Reauthorization Act of 1986, 42 U.S.C. §§ 9601 et seq.

 

Code ” means the Internal Revenue Code of 1986, as amended.

 

Contracts ” means all written or binding oral contracts, leases, mortgages, licenses, instruments, notes, commitments, undertakings, indentures, joint ventures and other agreements and commitments, in each case to the extent constituting legally binding arrangements.

 

Disclosure Schedules ” means, for purposes of this Agreement, the Disclosure Schedules delivered by Sellers pursuant to the Option Agreement and this Agreement.

 

Dollars or $ ” means the lawful currency of the United States.

 

  2  

 

 

Encumbrance ” means any charge, claim, pledge, equitable interest, lien (statutory or other), option, security interest, mortgage, or other similar encumbrance.

 

Environmental Claim   means any Action, Governmental Order, lien, fine, penalty, or, as to each, any settlement or judgment arising therefrom, by or from any Person alleging liability of whatever kind or nature (including liability or responsibility for the costs of enforcement proceedings, investigations, cleanup, governmental response, removal or remediation, natural resources damages, property damages, personal injuries, medical monitoring, penalties, contribution, indemnification and injunctive relief) arising out of, based on or resulting from: (a) the presence, Release of, or exposure to, any Hazardous Materials; or (b) any non-compliance with any Environmental Law or term or condition of any Environmental Permit.

 

Environmental Law ” means any applicable Law or Governmental Order: (a) relating to pollution (or the cleanup thereof) or the protection of human health or safety, or the environment (including ambient air, soil, surface water or groundwater, or subsurface strata); or (b) concerning the presence of, exposure to, or the management, manufacture, use, containment, storage, recycling, reclamation, reuse, treatment, generation, discharge, transportation, processing, production, disposal or remediation of any Hazardous Materials. The term “Environmental Law” includes the following (including their implementing regulations and any state analogs): the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended by the Superfund Amendments and Reauthorization Act of 1986, 42 U.S.C. §§ 9601 et seq.; the Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery Act of 1976, as amended by the Hazardous and Solid Waste Amendments of 1984, 42 U.S.C. §§ 6901 et seq.; the Federal Water Pollution Control Act of 1972, as amended by the Clean Water Act of 1977, 33 U.S.C. §§ 1251 et seq.; the Toxic Substances Control Act of 1976, as amended, 15 U.S.C. §§ 2601 et seq.; the Emergency Planning and Community Right-to-Know Act of 1986, 42 U.S.C. §§ 11001 et seq.; the Clean Air Act of 1966, as amended by the Clean Air Act Amendments of 1990, 42 U.S.C. §§ 7401 et seq.; and the Occupational Safety and Health Act of 1970, as amended, 29 U.S.C. §§ 651 et seq.

 

Environmental Notice ” means any written directive, written notice of violation or infraction, or other written notice respecting any Environmental Claim relating to actual or alleged non-compliance with any Environmental Law or any term or condition of any Environmental Permit.

 

Environmental Permit ” means any Permit, letter, clearance, consent, waiver or exemption required or issued under any Environmental Law.

 

ERISA ” means the Employee Retirement Income Security Act of 1974, as amended, and the regulations promulgated thereunder.

 

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ERISA Affiliate ” means, with respect to any Person, any other Person that, together with such first Person, would be treated as a single employer within the meaning of Section 414(b), (c), (m) or (o) of the Code.

 

“Escrow Agent ” means the entity designated to serve as escrow agent under the Escrow Agreement.

 

Escrow Agreement ” means the Escrow Agreement among Buyer, Sellers and the Escrow Agent, dated as of September 2, 2014, and attached hereto as Exhibit A .

 

Escrow Amount ” means the sum of Seven Hundred Fifty Thousand Dollars ($750,000.00) to be deposited with the Escrow Agent and held in escrow pursuant to the Escrow Agreement.

 

Fee Agreement ” means that certain letter agreement, dated as of May 28, 2014, between the Company and Buyer that relates to the payment by Buyer of certain of the Company’s and Sellers’ legal fees and expenses.

 

GAAP ” means United States generally accepted accounting principles in effect from time to time.

 

Governmental Authority ” means any federal, state, local or foreign government or political subdivision thereof, or any agency or instrumentality of such government or political subdivision, or any self-regulated organization or other non-governmental regulatory authority or quasi-governmental authority (to the extent that the rules, regulations or orders of such organization or authority have the force of Law), or any arbitrator, court or tribunal of competent jurisdiction.

 

Governmental Order ” means any order, writ, judgment, injunction, decree, stipulation, determination or award entered by or with any Governmental Authority.

 

“Hazardous Materials”  means: (a) any material, substance, chemical, waste, product, derivative, compound, mixture, solid, liquid, mineral or gas, in each case, whether naturally occurring or manmade, that is hazardous, acutely hazardous, toxic, or words of similar import or regulatory effect under Environmental Laws; and (b) any petroleum or petroleum-derived products, radon, radioactive materials or wastes, asbestos in any form, lead or lead-containing materials, urea formaldehyde foam insulation and polychlorinated biphenyls.

 

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Intellectual Property ” means all intellectual property rights pursuant to the Laws of any jurisdiction throughout the world, whether registered or unregistered, including any and all: (a) trademarks, service marks, trade names, brand names, logos, trade dress, design rights and other similar designations of source, together with the goodwill associated therewith, and all registrations, applications and renewals for any of the foregoing; (b) internet domain names, web addresses, websites and related content, accounts with Twitter, Facebook and other social media companies and the content found thereon and related thereto, and URLs; (c) works of authorship, expressions, designs and design registrations, whether or not copyrightable, including copyrights, author, performer, moral and neighboring rights, and all registrations, applications for registration and renewals of such copyrights; (d) inventions, discoveries, trade secrets, product specifications, formulas, formularies, business and technical information and know-how; (e) patents (including all reissues, divisionals, provisionals, continuations and continuations-in-part, re-examinations, renewals, substitutions and extensions thereof), patent applications, unpatented inventions and other patent rights; and (f) software and firmware, including data files, source code, object code, application programming interfaces, architecture, files, records, schematics, computerized databases and other related specifications and documentation.

 

Intellectual Property Agreements ” means all material licenses, sublicenses, consent to use agreements, settlements, coexistence agreements, covenants not to sue, permissions and other Contracts (including any right to receive or obligation to pay royalties or any other consideration) relating to any Intellectual Property that is used in the conduct of the Business as currently conducted to which the Company or any Subsidiary is a party (other than Contracts relating to unmodified, commercially available off-the-shelf software).

 

Intellectual Property Assets ” means all Intellectual Property owned by the Company or any of its Subsidiaries.

 

Intellectual Property Registrations ” means all Intellectual Property Assets that are subject to any issuance, registration, application or other filing by, to or with any Governmental Authority or authorized private registrar in any jurisdiction, including registered trademarks, domain names and copyrights, issued and reissued patents and pending applications for any of the foregoing.

 

“Knowledge of Buyer” or “Buyer’s Knowledge” or any other similar knowledge qualification, means the actual knowledge of Richard H. Neuwirth, F. Peter Brechter, Mark Jaggi and Tom Tolworthy.

 

Knowledge of Sellers” or “Sellers’ Knowledge ” or any other similar knowledge qualification, means the actual knowledge of Sellers and Robert Maru.

 

Law ” means any statute, law, ordinance, regulation, rule, code, order, constitution, common law, judgment, decree, other requirement or rule of law of any Governmental Authority.

 

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Liabilities ” means liabilities, obligations or commitments of any nature whatsoever, asserted or unasserted, known or unknown, absolute or contingent, accrued or unaccrued, matured or unmatured or otherwise.

 

Losses ” means losses, damages, liabilities, deficiencies, judgments, interest, awards, penalties, fines, fees, charges, assessments, costs or expenses of whatever kind and reasonable attorneys’ fees and expenses (including expenses of investigation, court costs, and reasonable fees and expenses of accountants and other experts).

 

Management Incentive Units ” has the meaning ascribed thereto in the Company LLC Agreement.

 

Material Adverse Effect ” means any event, occurrence, fact, condition or change that is, or is reasonably expected to become, individually or in the aggregate, materially adverse to (a) the business, results of operations, condition (financial or otherwise) or assets of the Business, (b) the value of the Company’s and the Subsidiaries’ assets taken as a whole, or (c) the ability of each Seller to consummate the transactions contemplated hereby on a timely basis; provided , however , that “Material Adverse Effect” shall not include the effect of any event, occurrence, fact, condition or change resulting from or relating to: (i) applicable economic or market conditions, including as related to the industry in which the Business operates, (ii) the announcement of the transactions contemplated by this Agreement, (iii) (A) the execution of, compliance with the terms of, or the taking of any action required by this Agreement or (B) the consummation of the transactions contemplated by this Agreement, (iv) any change in GAAP or any change in applicable Laws or the interpretation thereof, (v) changes in national or international political or social conditions, including the engagement by the United States in hostilities, whether or not pursuant to the declaration of a national emergency or war, or the occurrence of any military or terrorist attack, (vi) general financial or capital market conditions, including interest rates or market prices, or changes therein or (vii) Buyer’s efforts to obtain financing; provided , however , that any event, occurrence, fact, condition or change that is disclosed to Buyer pursuant to the Disclosure Schedules or a supplement to the Disclosure Schedules and is cured prior to the Closing Date shall not be considered a Material Adverse Effect.

 

Mezzanine Debt ” means the Secured Note and Security Agreement issued under the Mezzanine Note and Warrant Purchase Agreement.

 

Mezzanine Note and Warrant Purchase Agreement ” means that certain Note and Warrant Purchase Agreement, dated as of December 28, 2012, by and between Penta Mezzanine SBIC Fund I, L.P. and the Company.

 

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Mezzanine Warrants ” means all warrants to purchase “Membership Interests” of the Company held by Penta Mezzanine SBIC Fund I, L.P. or any of its Affiliates. For the avoidance of doubt, references to “Membership Interests” in both the Membership Interest Purchase Warrant W-1, dated December 28, 2012, issued by the Company to Penta Mezzanine SBIC Fund I, L.P. (“Penta”), and the Membership Interest Purchase Warrant W-2, dated July 1, 2013, issued by the Company to Penta, are intended to mean “Units” as defined hereunder.

 

Option Agreement Disclosure Schedules ” shall have the meaning set forth in the Option Agreement.

 

Option Exercise Date ” shall have the meaning set forth in the Option Agreement.

 

Option Notice ” shall have the meaning set forth in the Option Agreement.

 

Organizational Documents ” means (a) in the case of a Person that is a corporation, its articles or certificate of incorporation and its by-laws, regulations or similar governing instruments required by the laws of its jurisdiction of formation or organization; and (b) in the case of a Person that is a limited liability company, its articles or certificate of formation or organization, and its limited liability company agreement or operating agreement.

 

Permits ” means all permits, licenses, franchises, approvals, authorizations, registrations, certificates, variances and similar rights obtained, or required to be obtained, from Governmental Authorities.

 

Person ” means an individual, corporation, partnership, joint venture, limited liability company, Governmental Authority, unincorporated organization, trust, association or other entity.

 

Post-Closing Tax Period ” means any taxable period beginning after the Closing Date and, with respect to any taxable period beginning before and ending after the Closing Date, the portion of such taxable period beginning after the Closing Date.

 

Pre-Closing Tax Period ” means any taxable period ending on or before the Closing Date and, with respect to any taxable period beginning before and ending after the Closing Date, the portion of such taxable period ending on and including the Closing Date.

 

Pre-Closing Taxes ” means Taxes of the Company and each Subsidiary for any Pre-Closing Tax Period.

 

Purchase Expiration Date ” shall have the meaning set forth in the Option Agreement.

 

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Release   means any actual release, spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping or disposing into or through the environment (including ambient air (indoor or outdoor), surface water, groundwater, land surface or subsurface strata or within any building, structure, facility or fixture).

 

Representative ” means, with respect to any Person, any and all managers, directors, officers, employees, consultants, financial advisors, counsel, accountants and other agents of such Person.

 

Securities Act ” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

 

Sellers’ Accountants ” means Cross, Fernandez & Riley LLP.

 

Senior Debt ” means the senior debt of the Company, excluding any interest accrued thereon, but including any prepayment or similar penalties and expenses payable in connection with the prepayment of such debt.

 

Specified Seller Liabilities ” means those Liabilities set forth on Schedule B .

 

Tax ” and “ Taxes ” means all federal, state, local, foreign and other income, gross receipts, sales, use, production, ad valorem, transfer, documentary, franchise, registration, profits, license, lease, service, service use, withholding, payroll, employment, unemployment, estimated, excise, severance, environmental, stamp, occupation, premium, property (real or personal), real property gains, windfall profits, customs, duties or other taxes, fees, assessments or charges of any kind whatsoever, together with any interest, additions or penalties with respect thereto and any interest in respect of such additions or penalties.

 

Tax Return ” means any return, declaration, report, claim for refund, information return or statement or other document relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof.

 

Territory ” means worldwide.

 

Transaction Documents ” means this Agreement, the Option Agreement, the N. Balcombe Employment Agreement, the Escrow Agreement and the other agreements, instruments and documents required to be delivered at the Closing.

 

Units ” has the meaning ascribed thereto in the Company LLC Agreement. For the avoidance of doubt, the term “Units” includes the Management Incentive Units, and the “Membership Interests” issuable as Units pursuant to the Mezzanine Warrants, unless expressly stated otherwise, and excludes the Mezzanine Warrants.

 

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WARN Act ” means the federal Worker Adjustment and Retraining Notification Act of 1988, and similar state, local and foreign laws related to plant closings, relocations, mass layoffs and employment losses.

 

The following terms are defined in the following Sections of, or other locations in, this Agreement:

 

Term   Section/Location
       
Acquisition Proposal     6.03(a)
Agreement     Preamble
Audited Financial Statements     4.05
Balance Sheet     4.05
Balance Sheet Date     4.05
Basket     9.04(a)
Benefit Plan     4.20(a)
Business     Recitals
Buyer     Preamble
Buyer Closing Certificate     8.02(g)
Buyer Indemnitees     9.02
Buyer’s Secretary Certificate     8.02(h)
Cap     9.04(c)
Cash Payment     2.02(a)(i)
CFO Payment     2.02(a)(i)(D)
Closing     3.01
Closing Date     3.01
Company     Recitals
Company LLC Agreement     2.02(a)(i)(C)
Direct Claim     9.05(c)
Drag Along Right     4.02(a)
FDA     4.18(c)
Financial Statements     4.05
FIRPTA Certificate     6.11(f)
FTC     4.18(c)
Fundamental Representations     9.01
Gainesville Lease     4.11(d)
Gainesville Premises     4.11(d)
Gainesville Termination Date     4.11(d)
Indemnification Value     9.06(b)
Indemnified Party     9.05
Indemnifying Party     9.05
Independent Accountant     7.01(c)
Initial Buyer Stock Value     9.06(b)
Insurance Policies     4.16
Interim Balance Sheet     4.05
Interim Balance Sheet Date     4.05

 

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Interim Financial Statements     4.05
Inventory     4.13(a)
Lease and Leases     4.11(a)
Material Contracts     4.08(a)
Material Customers     4.15(a)
Material Suppliers     4.15(b)
Mezzanine Debt Payment     2.02(a)(i)(A)
Mezzanine Warrants Payment     2.02(a)(i)(E)
MIU Payment     2.02(a)(i)(C)
Multiemployer Plan     4.20(c)
N. Balcombe Employment Agreement     3.02(a)(iii)
Option     Recitals
Option Agreement     Recitals
Organics Management     4.11(d)
Other Authorities     4.18(c)
Permitted Encumbrances     4.09
Physical Inventory     6.10
Purchase Price     2.02(a)
Qualified Benefit Plan     4.20(c)
Real Property     4.11(a)
Restricted Period     6.06(a)
Seller and Sellers     Preamble
Sellers’ Closing Certificate     6.11(a)
Seller Indemnitees     9.03
Senior Debt Payment     2.02(a)(i)(B)
Special Environmental Losses     9.01
Straddle Period     7.04
Subsidiary and Subsidiaries     Preamble
Tax Claim     7.07
Third Party Claim     9.05(a)
Union     4.21(b)

   

ARTICLE II

Purchase and Sale

 

Section 2.01          Purchase and Sale. Subject to the exercise by Buyer of the Option, and subject to the terms and conditions set forth herein, for the consideration specified in Section 2.02, at the Closing (a) Sellers shall sell to Buyer, and Buyer shall purchase from Sellers, all of Sellers’ right, title and interest in and to the Units (including “cashing out” the Management Incentive Units) owned by Sellers, free and clear of all Encumbrances, other than the Encumbrances described in Section 7(b)(1) of the Option Agreement Disclosure Schedules, and (b) Sellers shall cause the other holders of Management Incentive Units, and the holders of any other Units, to sell (or, with respect to the Management Incentive Units, to “cash out”) to Buyer, and Buyer shall purchase (or “cash out”) from such holders of Management Incentive Units and such other Units, all of their right, title and interest in and to the Management Incentive Units and such other Units, free and clear of all Encumbrances, other than the Encumbrances described in Section 7(b)(1) of the Option Agreement Disclosure Schedules.

 

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Section 2.02          Purchase Price.

 

(a)          The aggregate consideration for the purchase of the outstanding Units shall be Thirty-Seven Million Dollars ($37,000,000.00) (the “ Purchase Price ”). The Purchase Price shall consist of the following:

 

(i)          Thirty-Seven Million Dollars ($37,000,000.00) less

 

(A)         the total amount necessary to pay, in full, the Mezzanine Debt (inclusive of principal, interest and any other amounts payable in respect of the Mezzanine Debt outstanding on the Closing Date), in an amount up to and not exceeding Five Million Dollars ($5,000,000) (the “ Mezzanine Debt Payment ”);

 

(B)         the amount in excess of Two Million Five Hundred Thousand Dollars ($2,500,000.00) (such $2,500,000.00 being the “ Senior Debt Payment ”) necessary to satisfy all of the Company’s obligations regarding the Senior Debt in full;

 

(C)         the amount required to be paid to purchase or “cash out” each outstanding Management Incentive Unit (vested or unvested) granted pursuant to the Organic Holdings LLC Limited Liability Company Agreement, dated October 1, 2009 (the “ Company LLC Agreement ”), in accordance with the terms of the Company LLC Agreement and the applicable award agreement relating to each such Management Incentive Unit (the “ MIU Payment ”);

 

(D)         any amount payable to Stephen Winslett, the former Chief Financial Officer of the Company, to the extent not paid prior to the Closing and in excess of Two Hundred Ten Thousand Dollars ($210,000) (the “ CFO Payment ”);

 

(E)         the amount to be paid to the holders of the Mezzanine Warrants in consideration of the cancellation of the Mezzanine Warrants or the repurchase of any equity interests issued with regard to the Mezzanine Warrants prior to the Closing Date in an amount up to and not exceeding One Million Five Hundred Thousand Dollars ($1,500,000) (the “ Mezzanine Warrants Payment ”), which amount shall include all prepayment penalties associated with the payment thereof; and

 

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(F)         any Specified Seller Liabilities not otherwise referred to in this Section 2.02(a)(i) ;

 

the amount remaining after such deductions being the “ Cash Payment ”, which shall be paid (less the Escrow Amount), as set forth in Section 2.02(b) ; and

 

(ii)         Buyer shall provide notice to Sellers at least three (3) Business Days prior to the Closing Date if it elects to assume the Mezzanine Debt. The Mezzanine Debt Payment shall be deducted from the Purchase Price pursuant to Section 2.02(a)(i) regardless of whether Buyer assumes the Mezzanine Debt.

 

(b)          On the Closing Date, Buyer shall deliver the Purchase Price as follows:

 

(i)          Buyer shall deliver to Sellers the Cash Payment (less the Escrow Amount), to such account designated in writing by Sellers, by wire transfer of immediately available funds;

 

(ii)         Buyer shall deliver to the Escrow Agent the Escrow Amount to be held and distributed in accordance with the terms of the Escrow Agreement;

 

(iii)        Buyer shall deliver the Mezzanine Debt Payment to the holders of the Mezzanine Debt, to such account designated in writing by the holders of the Mezzanine Debt, by wire transfer of immediately available funds, unless Buyer elects to assume the Mezzanine Debt in accordance with Section 2.02(a)(ii) ;

 

(iv)        Buyer shall deliver to the holder of the Senior Debt, to such account designated in writing by the holder of the Senior Debt, by wire transfer of immediately available funds, the amount, if any, in excess of the Senior Debt Payment, that is required to be paid to satisfy all of the Company’s obligations regarding the Senior Debt;

 

(v)         Buyer shall deliver the MIU Payment to the holders of the Management Incentive Units, to such accounts designated in writing by the holders of the Management Incentive Units, by wire transfer of immediately available funds;

 

(vi)        Buyer shall deliver the CFO Payment, if any, to the account designated in writing by the Company, by wire transfer of immediately available funds; and

 

(vii)       Buyer shall deliver the amount of any Specified Seller Liabilities outstanding at the Closing and not otherwise referred to in this Section 2.02(b) , to the holders thereof, to such accounts as they may designate in writing, in immediately available funds.

 

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(c)          At the Closing, Buyer shall deliver to the holder of the Senior Debt, to such account designated in writing by the holder of the Senior Debt, by wire transfer of immediately available funds, the Senior Debt Payment.

 

(d)          At the Closing, Buyer shall deliver (i) the Mezzanine Warrants Payment and (ii) any additional amount to be paid to the holders of the Mezzanine Warrants in consideration of the cancellation of the Mezzanine Warrants or the repurchase of any equity interests issued with regard to the Mezzanine Warrants prior to the Closing Date in excess of the Mezzanine Warrants Payment, in each case, to the holders of the Mezzanine Warrants, to such accounts designated in writing by the holders of the Mezzanine Warrants, by wire transfer of immediately available funds.

 

ARTICLE III

Closing

 

Section 3.01          Closing. Subject to the terms and conditions of this Agreement, the consummation of the transactions contemplated by this Agreement shall take place at a Closing (the “ Closing ”) to be held at the offices of Wilk Auslander LLP, 1515 Broadway, New York, New York 10036, at 12:00 pm, EST time, on the third Business Day after all of the conditions to Closing set forth in ARTICLE VIII are either satisfied or waived (other than conditions which, by their nature, are to be satisfied on the Closing Date, but subject to the satisfaction or waiver of such conditions), or at such other time, date or place as Sellers and Buyer may mutually agree upon in writing. The date on which the Closing is to occur is herein referred to as the “ Closing Date ”.

 

Section 3.02          Closing Deliverables .

 

(a)          At the Closing, Sellers shall deliver to Buyer (unless delivered previously) the following:

 

(i)          duly executed assignments of the outstanding Units other than the Management Incentive Units;

 

(ii)         a FIRPTA Certificate for each Seller;

 

(iii)        an Employment Agreement in the form of Exhibit B hereto (the “ N. Balcombe Employment Agreement ”), duly executed by Naomi L. Balcombe; and

 

(iv)        the Sellers’ Closing Certificate from Sellers.

 

(b)          At the Closing, Buyer shall deliver to Sellers the following:

 

(i)          the Cash Payment (in accordance with Section 2.02 );

 

(ii)         the N. Balcombe Employment Agreement, duly executed by Buyer;

 

(iii)        the Buyer Closing Certificate; and

 

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(iv)        the Buyer’s Secretary Certificate.

 

ARTICLE IV
Representations and warranties of sellerS

 

Each Seller jointly and severally represents and warrants to Buyer as follows, except as provided in the Disclosure Schedules:

 

Section 4.01          Authorization . Each Seller has the full and absolute legal right, capacity and power to (i) execute and deliver this Agreement and all other agreements contemplated hereby to which either Seller is a party and (ii) to perform his or her obligations hereunder and thereunder. This Agreement constitutes the valid and legally binding obligation of Sellers, enforceable against Sellers in accordance with its terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium, and similar laws affecting creditors’ rights and remedies generally, and, as to enforceability, to general principles of equity regardless of whether enforcement is sought in a proceeding at law or in equity.

 

Section 4.02          Capitalization.

 

(a)          Sellers are the record and beneficial owners of, and have good and valid title to all of the outstanding Units other than (i) the Management Incentive Units, (ii) any Units issued pursuant to the exercise of any Mezzanine Warrants and (iii) any Units issued after the date hereof as permitted by Section 8(a)(i) of the Option Agreement and Section 6.01 of this Agreement, free and clear of all Encumbrances, other than the Encumbrances described in Section 7(b)(1) of the Option Agreement Disclosure Schedules. The outstanding equity of the Company consists of (A) the Units owned by Sellers, (B) the Management Incentive Units owned by the holders thereof and (C) any Units issued after the date hereof as permitted by Section 8(a)(i) of the Option Agreement and Section 6.01 of this Agreement, as described in Section 4.02(a) of the Disclosure Schedules, and the Mezzanine Warrants. The Sellers have the contractual right to require each other holder of outstanding Units to sell such Units to Buyer (the “ Drag Along Right ”). All outstanding Units have been duly authorized and are validly issued, fully-paid and non-assessable. Upon consummation of the transactions contemplated by this Agreement, Buyer shall own all of the Units, free and clear of all Encumbrances.

 

(b)          All outstanding Units were issued in compliance with applicable Laws. No outstanding Units were issued in violation of the Organizational Documents of the Company or any other agreement, arrangement or commitment to which Sellers or the Company are a party and are not subject to or in violation of any preemptive or similar rights of any Person.

 

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(c)          Other than the Mezzanine Warrants and the Management Incentive Units described in Section 4.02(a) of the Disclosure Schedules, there are no outstanding or authorized options, warrants, convertible securities or other rights, agreements, arrangements or commitments of any character relating to any Units or other interests in the Company or any Subsidiary or obligating Sellers, the Company or any Subsidiary to issue or sell any Units, or any other interest, in the Company or any Subsidiary. Other than the Organizational Documents, there are no voting trusts, proxies or other agreements or understandings in effect with respect to the voting or transfer of any of the outstanding Units or any other interests in the Company or any Subsidiary.

 

Section 4.03          No Conflicts; Consents . The execution, delivery and performance by each Seller of this Agreement and the other Transaction Documents to which such Seller is a party, and the consummation of the transactions contemplated hereby and thereby, do not and will not: (a) conflict with or result in a violation or breach of, or default under, any provision of the organizational documents of the Company or any Subsidiary; (b) conflict with or result in a violation or breach of any provision of any Law or Governmental Order applicable to either Seller, the Company or any Subsidiary; (c) require notice to, or the consent, or other action by any Person under, conflict with, result in a violation or breach of, constitute a default or an event that, with or without notice or lapse of time or both, would constitute a default under, result in the acceleration of or create in any Person the right to accelerate, terminate, modify or cancel any Material Contract or Permit to which either Seller, the Company or any Subsidiary is a party or by which either Seller, the Company or any Subsidiary is bound; or (d) result in the creation or imposition of any Encumbrance on any of the assets of the Company or any Subsidiary, other than Permitted Encumbrances. No consent, approval, Permit, Governmental Order, declaration or filing with, or notice to, any Governmental Authority is required by or with respect to either Seller, the Company or any Subsidiary in connection with the execution and delivery of this Agreement or any of the other Transaction Documents and the consummation of the transactions contemplated hereby and thereby.

 

Section 4.04          Organization, Authority and Qualification of the Company and each Subsidiary . The Company and each Subsidiary is a limited liability company duly organized, validly existing and in good standing under the Laws of the state of Delaware and has full limited liability company power and authority to own, operate or lease the properties and assets now owned, operated or leased by it and to carry on the Business as currently conducted. Section 4.04 of the Disclosure Schedules sets forth each jurisdiction in which the Company and each Subsidiary is licensed or qualified to do business, and the Company and each Subsidiary is duly licensed or qualified to do business and is in good standing in each jurisdiction in which the properties and assets owned or leased by it or the operation of the Business as currently conducted makes such licensing or qualification necessary. All limited liability company actions taken by the Company and each Subsidiary in connection with this Agreement and the other Transaction Documents will be duly authorized on or prior to the Closing. The Company LLC Agreement is valid and binding on the parties thereto, has not been supplemented or amended, and is in full force and effect.

 

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Section 4.05          Financial Statements. Complete copies of the consolidated audited financial statements of the Company and each Subsidiary consisting of a balance sheet (a) if the Option Exercise Date occurs prior to April 1, 2015, as at December 31, 2013 or (b) if the Option Exercise Date occurs on or after April 1, 2015, as at December 31, 2014, and, in either case, the related statements of income and cash flow for the year then ended (the “ Audited Financial Statements ”) have been made available to Buyer, and the consolidated unaudited financial statements of the Company and each Subsidiary consisting of a balance sheet as at the last day of the month that ends three (3) complete months prior to the Option Exercise Date (for example, if the Option Exercise Date is November 15, 2014, such balance sheet would be as at July 31, 2014) and the related statements of income for the year-to-date period then ended (the “ Interim Financial Statements ”) are included in Section 4.05 of the Disclosure Schedules (the Interim Financial Statements, together with the Audited Financial Statements, being the “ Financial Statements ”). The Financial Statements have been prepared in accordance with GAAP applied on a consistent basis throughout the period involved, except as otherwise noted therein, subject, in the case of the Interim Financial Statements, to normal and recurring year-end adjustments and the absence of notes. The Financial Statements are based on the books and records of the Company and each Subsidiary, and fairly present in all material respects the consolidated financial condition of the Company and each Subsidiary as of their respective dates and the results of the operations of the Company’s and the Subsidiaries’ Business for the periods indicated. The consolidated balance sheet of the Company and each Subsidiary included in the Audited Financial Statements is referred to herein as the “ Balance Sheet ” and the date thereof as the “ Balance Sheet Date ” and the consolidated balance sheet of the Company and each Subsidiary as of the last day of the month that ends three (3) complete months prior to the Option Exercise Date is referred to herein as the “ Interim Balance Sheet ” and the date thereof as the “ Interim Balance Sheet Date ”.

 

Section 4.06          Undisclosed Liabilities. Neither the Company nor any Subsidiary has any Liabilities, except (a) those which are adequately reflected or reserved against on the Balance Sheet, (b) those which have been incurred in the ordinary course of business consistent with past practice since the Balance Sheet Date, (c) those liabilities arising under this Agreement and the Option Agreement, and (d) those liabilities which do not, individually or in the aggregate, exceed $100,000.00.

 

Section 4.07          Absence of Certain Changes. Since December 31, 2013, there has not been with respect to the Company or any Subsidiary any:

 

(a)           event, occurrence or development that has had, or could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect;

 

(b)           amendment of the Organizational Documents of the Company or any Subsidiary;

 

(c)           split, combination or reclassification of any Units or other interests in the Company or any Subsidiary;

 

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(d)           issuance, sale or other disposition (in any such case by Sellers, the Company or any Subsidiary) of, or creation of any Encumbrance, on any Units or other interests in the Company or any Subsidiary, or grant of any options, warrants or other rights to purchase or obtain (including upon conversion, exchange or exercise) any currently outstanding or to be issued Units or other interests in the Company or any Subsidiary;

 

(e)           declaration or payment of any distributions on or in respect of any Units or other interests in the Company or any Subsidiary or redemption, purchase or acquisition of any of the Company’s or any Subsidiary’s outstanding Units or other interests, other than Tax distributions to the equity holders of the Company (with regard to taxable income attributable to them from the Company or any Subsidiary) in the ordinary course of business;

 

(f)            material change in any method of accounting or accounting practice of Sellers, except as required by GAAP or as disclosed in the notes to the Financial Statements;

 

(g)           material change in cash management practices and policies, practices and procedures with respect to collection of accounts receivable, establishment of reserves for uncollectible accounts receivable, accrual of accounts receivable, inventory control, prepayment of expenses, payment of trade accounts payable, accrual of other expenses, deferral of revenue and acceptance of customer deposits, except as required by GAAP;

 

(h)           incurrence, assumption or guarantee of any indebtedness for borrowed money except unsecured current obligations and Liabilities incurred in the ordinary course of business consistent with past practice;

 

(i)            transfer, assignment, sale or other disposition of assets which, individually or in the aggregate, is material to the Company, except for cash and the sale of Inventory in the ordinary course of business;

 

(j)            cancellation of any debts or claims or amendment, termination or waiver of any rights of the Company or any Subsidiary;

 

(k)           transfer, assignment or grant of any license or sublicense of any rights under or with respect to any Intellectual Property Assets;

 

(l)            material damage, destruction or loss of any assets of the Company or any Subsidiary, whether or not covered by insurance;

 

(m)          acceleration, termination, or modification of any Material Contract or Permit;

 

(n)          capital expenditures greater than $50,000 individually or greater than $200,000 in the aggregate;

 

(o)          imposition of any Encumbrance upon any asset of the Company or any Subsidiary other than Permitted Encumbrances;

 

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(p)          (i) grant of any bonuses, whether monetary or otherwise, or increase in any wages, salary, severance, pension or other compensation or benefits in respect of any employees, officers, directors, independent contractors or consultants, other than as provided for in any written agreements, required by applicable Law or in the ordinary course of business consistent with past practice, or (ii) action to accelerate the vesting or payment of any compensation or benefit for any employee, officer, director, consultant or independent contractor;

 

(q)          hiring or promoting any person other than in the ordinary course of business;

 

(r)          adoption, modification or termination of any: (i) employment, severance, retention or other Contract with any current or former employee, officer, director, independent contractor or consultant, (ii) Benefit Plan, or (iii) collective bargaining or other agreement with a Union;

 

(s)          any loan to (or forgiveness of any loan to), or entry into any other transaction with, any of its members or current or former managers, officers and employees, except for salary, employee benefits and bonuses in the ordinary course of business;

 

(t)          entry into a new line of business outside the scope of the Business, or abandonment or discontinuance of any material part of the Business;

 

(u)          adoption of any plan of merger, consolidation, reorganization, liquidation or dissolution or filing of a petition in bankruptcy under any provisions of federal or state bankruptcy Law or consent to the filing of any bankruptcy petition against it under any similar Law;

 

(v)         purchase, lease or other acquisition of the right to own, use or lease any property or assets for an amount in excess of $50,000 individually (in the case of a lease, per annum) or $200,000 in the aggregate (in the case of a lease, for the entire term of the lease, not including any option term), except for purchases of Inventory or supplies in the ordinary course of business consistent with past practice;

 

(w)          acquisition by merger or consolidation with, or by purchase of a substantial portion of the assets, stock or other equity of, or by any other manner, any business or any Person or any division thereof;

 

(x)          action by the Company or any Subsidiary to make, change or rescind any Tax election, amend any Tax Return or take any position on any Tax Return (except to the extent consistent with past practice), or enter into any transaction (excluding any transaction entered into in the ordinary course of business), in each case that would have the effect of increasing the Tax liability or reducing any Tax asset of Buyer in respect of any Post-Closing Tax Period; or

 

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(y)          any Contract to do any of the foregoing, or any action or omission that would result in any of the foregoing.

 

Section 4.08          Material Contracts.

 

(a)           Section 4.08(a) of the Disclosure Schedules lists each of the following Contracts by which the Company, or any of the Subsidiaries, or any of the Company’s or its Subsidiaries’ assets are bound (such Contracts, together with all Contracts relating to Intellectual Property set forth in Section 4.12(b) of the Disclosure Schedules, being “ Material Contracts ”):

 

(i)          all Contracts involving any capital expenditures or series of related capital expenditures in excess of $50,000;

 

(ii)         all Contracts that provide for the indemnification by the Company or any Subsidiary of any Person, other than in the ordinary course of business, or the assumption of any (A) Tax Liability, (B) environmental Liability or (C) other Liability of any Person, solely with respect to clause (C), other than in the ordinary course of business;

 

(iii)        all Contracts that relate to the acquisition or disposition of any business, a material amount of equity or assets of any other Person (whether by merger, sale of stock, sale of assets or otherwise) pursuant to which the Company or any Subsidiary has any continuing obligations, or any continuing indemnification, “earn-out” or other liabilities (fixed, contingent or otherwise);

 

(iv)        all broker, distributor, dealer, manufacturer’s representative, franchise, agency, sales promotion, market research, marketing consulting, and public relations and advertising Contracts that provide for payment or receipt by the Company or any Subsidiary in connection with the Business in excess of $100,000 on an annual basis;

 

(v)         all Contracts with (A) managers, directors, officers or employees or (B) independent contractors or consultants that, solely with respect to clause (B), provide for payments in excess of $50,000 individually;

 

(vi)        all Contracts relating to indebtedness or the granting of security for indebtedness, and all guaranties;

 

(vii)       all Contracts with any Governmental Authority;

 

(viii)      all Contracts that limit or purport to limit the ability of the Company or any Subsidiary, to compete or engage in any line of business or with any Person or in any geographic area or during any period of time;

 

(ix)         all joint venture, partnership or similar Contracts;

 

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(x)          all Contracts for the sale of assets (excluding Inventory, but including any master agreements, regarding Inventory, with customers whose purchases of Inventory were at least $50,000 for the twelve (12) months prior to the Option Exercise Date) of the Company or any Subsidiary involving the receipt by the Company or any Subsidiary or for the grant to any Person of any option, right of first refusal or preferential or similar right to purchase any assets (excluding Inventory, but including any master agreements, regarding Inventory, with customers whose purchases of Inventory were at least $50,000 for the twelve (12) months prior to the Option Exercise Date) of the Company or any Subsidiary, in each case other than in the ordinary course of business;

 

(xi)         all powers of attorney;

 

(xii)        all collective bargaining agreements or Contracts with any Union;

 

(xiii)       all Contracts for the purchase or lease of real estate;

 

(xiv)      all Contracts for the acquisition of services, supplies, equipment, Inventory, or other personal property individually involving more than $50,000, other than purchase orders for Inventory in the ordinary course of business (but including any master agreements, regarding Inventory, with customers whose purchases of Inventory were at least $50,000 for the twelve (12) months prior to the Option Exercise Date);

 

(xv)       all Contracts with a member or other equity holder of the Company or any Subsidiary, or any Affiliate of the Company or Subsidiary;

 

(xvi)      all Contracts that relate to the settlement of any Action that occurred during the three (3) years prior to the Option Exercise Date or involve any material continuing obligations;

 

(xvii)     all Contracts with respect to the return of Inventory in the possession of customers by reason of alleged overshipment, defective merchandise or otherwise where the customer has requested such return but the return has not yet been fulfilled.

 

(b)          Each Material Contract is valid and binding on the Company or the applicable Subsidiary in accordance with its terms and is in full force and effect. Neither the Company nor any Subsidiary or, to Sellers’ Knowledge, any other party thereto is in breach of or default under (or is alleged to be in breach of or default under), or has provided or received any notice of any intention to terminate, any Material Contract, except for such breaches or defaults that would not be material to such Material Contract. No event or circumstance has occurred that, with notice or lapse of time or both, would constitute an event of default under any Material Contract or result in a termination thereof or would cause or permit the acceleration or other changes of any right or obligation or the loss of any benefit thereunder, except for such defaults, events or circumstances that would not constitute a material default under any such Material Contract. Complete and correct copies of each Material Contract (including all modifications, and supplements thereto and waivers thereunder) have been made available to Buyer by Sellers. There are no material disputes pending, or to Sellers’ Knowledge, threatened, under any Material Contract.

 

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Section 4.09          Title to Assets. The Company and the Subsidiaries collectively have good and valid title to, or a valid leasehold interest in, all personal property, Real Property and other assets reflected in the Audited Financial Statements as owned or leased by the Company or any of its Subsidiaries or acquired by the Company or any of its Subsidiaries after the Balance Sheet Date. All such property and assets are free and clear of Encumbrances except for the following (collectively referred to as “ Permitted Encumbrances ”):

 

(a)          those items set forth in Section 4.09 of the Disclosure Schedules;

 

(b)          Encumbrances related to the Mezzanine Debt, the Mezzanine Warrants or the Senior Debt;

 

(c)          Encumbrances imposed by Law for Taxes not yet due and payable or that are being properly contested and for which appropriate reserves have been established (to the extent required) in accordance with GAAP;

 

(d)          statutory Encumbrances of landlords not yet due and payable or that are being properly contested and for which appropriate reserves have been established (to the extent required) in accordance with GAAP;

 

(e)          pledges and deposits made in the ordinary course of business in compliance with workers’ compensation, unemployment insurance and other social security Laws;

 

(f)          deposits to secure the performance of bids, trade contracts, leases, statutory obligations, surety, indemnity and appeal of bonds, performance and return-of-money and fiduciary bonds and other obligations of a like nature, in each case in the ordinary course of business;

 

(g)          easements, zoning restrictions, rights-of-way, licenses, covenants, conditions, minor defects, encroachments or irregularities in title and similar encumbrances on or affecting any real property that do not secure any monetary obligations and do not unreasonably interfere with the conduct of the Business in the ordinary course at any real property subject to such Encumbrances;

 

(h)          any (i) interest or title of a lessor or sublessor, or lessee or sublessee, under any lease, (ii) restriction or Encumbrance that the interest or title of such lessor or sublessor, or lessee or sublessee, may be subject to or (iii) subordination of the interest of the lessee or sublessee under such lease to any restrictions or Encumbrances referred to in the preceding clause (ii);

 

(i)          Encumbrances on goods held by suppliers in the ordinary course of business for sums not yet delinquent or being contested in good faith;

 

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(j)          with respect to the Real Property, any defect or Encumbrance caused by or arising out of the failure to record the lease or a memorandum thereof in the applicable real property records in the jurisdiction where such real property is located;

 

(k)          the effect of any moratorium, eminent domain or condemnation proceedings; and

 

(l)          mechanics’, carriers’, workmen’s, repairmen’s or other like liens arising or incurred in the ordinary course of business consistent with past practice for amounts that are not delinquent by more than thirty (30) days or that are being properly contested and which are not, individually or in the aggregate, material to the Business.

 

Section 4.10          Condition and Sufficiency of Assets. The buildings, plants, structures, furniture, fixtures, machinery, equipment, vehicles and other items of tangible personal property of the Company and each Subsidiary are in good operating condition and repair, ordinary wear and tear excepted, and are adequate for the uses to which they are being put, and none of such buildings, plants, structures, furniture, fixtures, machinery, equipment, vehicles and other items of tangible personal property is in need of maintenance or repairs except for ordinary, routine maintenance and repairs that are not material in nature or cost. The buildings, plants, structures, furniture, fixtures, machinery, equipment, vehicles and other items of tangible personal property currently owned or leased by the Company and each Subsidiary, together with all other properties and assets of the Company and each Subsidiary, are sufficient for the continued conduct of the Business after the Closing in substantially the same manner as conducted by the Company and each Subsidiary prior to the Closing and constitute all of the rights, property and assets necessary to conduct the Business as currently conducted by the Company and each Subsidiary.

 

Section 4.11          Real Property.

 

(a)          Neither the Company nor any Subsidiary owns any real property. Section 4.11(a) of the Disclosure Schedules sets forth each parcel of real property leased and/or subleased by the Company and by each Subsidiary (collectively, the “ Real Property ”), and a true and complete list of all leases, subleases, consents, licenses, concessions and other agreements (whether written or oral), including all amendments, extensions, and other agreements with respect thereto, pursuant to which the Company or any Subsidiary holds any Real Property (each, a “ Lease ” and collectively, the “ Leases ”). Sellers have delivered to Buyer a complete and correct copy of each Lease. With respect to each Lease:

 

(i)          the Company and each Subsidiary (as applicable) has a valid leasehold interest in the Leases, the Leases are in full force and effect, and the Company or the applicable Subsidiary enjoys peaceful and undisturbed possession of the Real Property;

 

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(ii)         neither the Company nor any Subsidiary is in breach or default under such Lease, and no event has occurred or circumstance exists which, with the delivery of notice, passage of time or both, would constitute such a breach or default, and the Company or the applicable Subsidiary has paid all rent due and payable under such Lease, except for such breaches, defaults, events or circumstances that would not be material to the Business;

 

(iii)        neither the Company nor any Subsidiary has received nor given any notice of any default or event that with notice or lapse of time, or both, would constitute a default by the Company or the applicable Subsidiary under such Lease and, to the Knowledge of Sellers, no other party is in default thereof, and, neither the Company nor any Subsidiary has, and to the Knowledge of Sellers no other party to any Lease has, exercised any termination rights with respect thereto except for the Gainesville Lease, except for such defaults or events that would not be material to the Business;

 

(iv)        neither the Company nor any Subsidiary has subleased, assigned or otherwise granted to any Person the right to use or occupy such Real Property or any portion thereof; and

 

(v)         neither the Company nor any Subsidiary has pledged, mortgaged or otherwise granted an Encumbrance other than a Permitted Encumbrance on its leasehold interest in any Real Property.

 

(b)          Neither the Company nor any Subsidiary has received any written notice of (i) violations of building codes or zoning ordinances or other governmental or regulatory Laws affecting the Real Property, (ii) condemnation proceedings affecting the Real Property, or (iii) other matters which could reasonably be expected to adversely affect the ability to operate the Real Property as currently operated. Neither the whole nor any material portion of the Real Property has been damaged or destroyed by fire or other casualty.

 

(c)          The Real Property is sufficient for the continued conduct of the Business after the Closing in substantially the same manner as conducted by the Company and each Subsidiary prior to the Closing and constitutes all of the real property necessary to conduct the Business as currently conducted by the Company and each Subsidiary.

 

(d)          With respect to that certain office lease agreement dated as of May 10, 2010, as amended (the “ Gainesville Lease ”), between PK%, LLC, successor to Boca Gainesville, LLC, as landlord, and Organics Management LLC, as Tenant (“ Organics Management ”), with respect to premises located at 2627 N.W. 43rd Street, Gainesville, FL (the “ Gainesville Premises ”), Organics Management has terminated the Gainesville Lease and vacated and surrendered possession of the Gainesville Premises on or before March 31, 2014 (the “ Gainesville Termination Date ”) in accordance with the terms of the Gainesville Lease, and to the Knowledge of Sellers, (i) there are no outstanding claims against Organics Management by the landlord thereunder or any third party resulting from, or arising in connection with, the Gainesville Lease and/or Organics Management’s tenancy thereunder, and (ii) Organics Management paid all rent and other amounts due and performed all other obligations under the Gainesville Lease through the Gainesville Termination Date.

 

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Section 4.12          Intellectual Property.

 

(a)           Section 4.12(a) of the Disclosure Schedules lists all (i) Intellectual Property Registrations, and (ii) trademarks, service marks and trade names that are not registered but that are material to the operation of the Business. For those Intellectual Property Assets for which the Company or any Subsidiary has obtained Intellectual Property Registrations, all filings and fees related to the Intellectual Property Registrations and required to be filed or paid prior to the Closing have been timely filed with and paid to the relevant Governmental Authorities and authorized registrars, and all Intellectual Property Registrations are in good standing.

 

(b)           Section 4.12(b) of the Disclosure Schedules lists all Intellectual Property Agreements. Sellers have provided Buyer with true and complete copies of all such Intellectual Property Agreements, including all modifications thereto and waivers thereunder.

 

(c)          The Company and the Subsidiaries are the sole and exclusive record and beneficial owner of all right, title and interest in and to the Intellectual Property Assets, and, to the Knowledge of Sellers, have the valid right to use all other Intellectual Property used in the conduct of the Business as currently conducted by the Company and each Subsidiary, in each case, free and clear of Encumbrances other than Permitted Encumbrances. Sellers own no Intellectual Property that is used by the Company.

 

(d)          The Intellectual Property Assets and Intellectual Property licensed under the Intellectual Property Agreements are all of the material Intellectual Property necessary to operate the Business as presently conducted by the Company and each Subsidiary; provided , however , that the foregoing representation and warranty in this Section 4.12(d) shall not constitute or be deemed or construed as any representation or warranty with respect to infringement or violation of any Intellectual Property (which is addressed in Section 4.12(f) ). The consummation of the transactions contemplated hereunder will not result in the loss or impairment of or payment of any additional amounts with respect to, nor require the consent of any other Person in respect of, the Buyer’s right to own, use or hold for use any Intellectual Property as owned, used or held for use in the conduct of the Business as currently conducted by the Company and each Subsidiary.

 

(e)          The Company’s and each Subsidiary’s (as applicable) rights in the Intellectual Property Assets are valid, subsisting and enforceable. The Company and the Subsidiaries have collectively taken commercially reasonable steps common in their industry to maintain the Intellectual Property Assets and to protect and preserve the confidentiality of all trade secrets included in the Intellectual Property Assets.

 

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(f)          The conduct of the Business as currently conducted by the Company and the Subsidiaries, and the Intellectual Property Assets and Intellectual Property licensed under the Intellectual Property Agreements do not infringe or otherwise violate, the Intellectual Property or other rights of any Person. To Sellers’ Knowledge, no Person is currently infringing or otherwise violating any Intellectual Property Assets.

 

(g)          There are no Actions (including any oppositions, interferences or re-examinations) pending or to Sellers’ Knowledge, threatened (including in the form of written offers to obtain a license): (i) alleging any infringement or other violation of the Intellectual Property of any Person by the Company or any Subsidiary, (ii) challenging the validity, enforceability, registrability or ownership of any Intellectual Property Assets or the Company’s or any Subsidiary’s rights with respect to any Intellectual Property Assets; or (iii) by the Company or any Subsidiary or any other Person alleging any infringement or other violation by any Person of any Intellectual Property Assets. Neither the Company nor any Subsidiary is subject to any outstanding or prospective Governmental Order that does or would restrict or impair the use of any Intellectual Property Assets.

 

Section 4.13          Inventory.

 

(a)           Section 4.13 of the Disclosure Schedules contains a complete and correct list of the Company’s and each Subsidiary’s inventory, including finished goods, raw materials, works in progress, packaging, supplies, parts and other inventories (“ Inventory ”), as of the Option Exercise Date, and the value thereof in accordance with GAAP applied on a consistent basis with the Financial Statements. All Inventory is owned by the Company and the Subsidiaries free and clear of all Encumbrances other than Permitted Encumbrances, and no Inventory is held on a consignment basis. Except as set forth in Section 4.13 of the Disclosure Schedules, to Sellers’ Knowledge all of the products included in such Inventory substantially comply with current FDA and FTC requirements and the requirements of Other Authorities.

 

(b)          Expired, damaged or defective inventory (net of reserves) included within the Inventory will not materially and adversely impact the Company and its Subsidiaries.

 

Section 4.14          Accounts Receivable. Section 4.14 of the Disclosure Schedules contains a complete and current list of the Company’s and the Subsidiaries’ accounts receivable, and an aging schedule thereof, as of the Option Exercise Date. The accounts receivable reflected on the Interim Balance Sheet and the accounts receivable arising after the date thereof (a) have arisen from bona fide transactions entered into by the Company and the Subsidiaries involving the sale of goods or the rendering of services in the ordinary course of business, and on customary payment terms, consistent with past practice; and (b) constitute only valid, undisputed claims of the Company and the Subsidiaries not subject to claims of set-off or other defenses or counterclaims other than normal discounts accrued in the ordinary course of business consistent with past practice. The reserve for bad debts shown on the Interim Balance Sheet or, with respect to accounts receivable arising after the Interim Balance Sheet Date, on the accounting records of the Company and the Subsidiaries have been determined in accordance with GAAP, consistently applied, subject to normal year-end adjustments and the absence of disclosures normally made in footnotes. This representation is not a guarantee of collectability of accounts receivable of the Company or the Subsidiaries.

 

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Section 4.15          Customers and Suppliers; Orders.

 

(a)           Section 4.15(a) of the Disclosure Schedules sets forth for the years 2013 and 2014 (i) each customer who paid aggregate consideration to the Company and the Subsidiaries for goods or services rendered in an amount greater than $100,000 (collectively, the “ Material Customers ”); and (ii) the amount of consideration paid by each Material Customer during such year. Neither the Company nor any Subsidiary has received any written notice, nor do Sellers have any Knowledge, that any of the Material Customers have ceased, or intend to cease after the Closing, to purchase goods or services from the Company or any of the Subsidiaries or to otherwise terminate or materially reduce its relationship with the Company or any of the Subsidiaries.

 

(b)           Section 4.15(b) of the Disclosure Schedules sets forth for the years 2013 and 2014 (i) each supplier to whom the Company and the Subsidiaries paid consideration for goods or services rendered in an amount greater than $100,000 (collectively, the “ Material Suppliers ”); and (ii) the amount of purchases from each Material Supplier during such year. Neither the Company nor any Subsidiary has received any written notice that any of the Material Suppliers will cease to supply goods or services to the Company or any of the Subsidiaries or to otherwise terminate its relationship with the Company or any of the Subsidiaries.

 

(c)          The Company’s and the Subsidiaries’ pending orders arose from bona fide orders.

 

Section 4.16          Insurance. Section 4.16 of the Disclosure Schedules sets forth (a) a true and complete list of all current policies or binders of fire, liability, product liability, umbrella liability, real and personal property, workers’ compensation, vehicular, fiduciary liability and other casualty and property insurance maintained by the Company and each Subsidiary (collectively, the “ Insurance Policies ”); and (b) a list of all pending claims and the claims history for the Company and each Subsidiary during the three (3) years prior to the Option Exercise Date. There are no claims pending under any such Insurance Policies as to which coverage has been questioned or denied or in respect of which there is an outstanding reservation of rights. Neither the Company nor any Subsidiary has received any written notice of, nor do Sellers have any Knowledge of, any cancellation of, premium increase with respect to, or alteration of coverage under, any of such Insurance Policies. All premiums due on such Insurance Policies have been paid. All such Insurance Policies (x) are in full force and effect and enforceable in accordance with their terms; and (y) have not been subject to any lapse in coverage. Neither the Company nor any Subsidiary is in default under, or has otherwise failed to comply with, in any material respect, any provision contained in any such Insurance Policy. True and complete copies of the Insurance Policies have been made available to Buyer.

 

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Section 4.17          Legal Proceedings; Governmental Orders.

 

(a)          There are no Actions pending or, to Sellers’ Knowledge, threatened (a) against or by the Company or any Subsidiary; or (b) that challenge or seek to prevent, enjoin or otherwise delay the transactions contemplated by this Agreement, and, to Sellers’ Knowledge, no event has occurred or circumstances exist that may give rise to, or serve as a basis for, any such Action.

 

(b)          There are no outstanding Governmental Orders and no unsatisfied judgments, penalties or awards against, relating to or affecting the Company or any Subsidiary. The Company and each Subsidiary is in compliance in all material respects with the terms of each Governmental Order set forth in Section 4.17(b) of the Disclosure Schedules. To Sellers’ Knowledge, no event has occurred or circumstances exist that may constitute or result in (with or without notice or lapse of time) a violation in any material respect of any such Governmental Order.

 

Section 4.18          Compliance with Laws .

 

(a)          Except with regard to the matters described in Section 4.18(b) , to which the representations and warranties in Section 4.18(b) , rather than the representations and warranties set forth in this sentence, shall be applicable, the Company and its Subsidiaries for the last three (3) years have substantially complied, and are now in substantial compliance, with all applicable Laws (including applicable occupational health and safety laws and regulations). Neither the Company nor any Subsidiary has been charged or threatened in writing with any charge by any Governmental Authority concerning any violation of any provision of any Law. Neither the Company nor any Subsidiary is subject to any Governmental Order of any Governmental Authority. Without limiting the generality of the foregoing, there have been no product recalls, withdrawals or seizures with respect to any products developed, sold, licensed or delivered by the Company or any Subsidiary.

 

(b)          For the last three (3) years, the Company and its Subsidiaries have endeavored, by conducting their operations in accordance with customary industry practices, to be in substantial compliance, and the Company and its Subsidiaries are now endeavoring in the same manner to be in substantial compliance, with the Federal Food, Drug and Cosmetic Act, the Federal Trade Commission Act, the Fair Packaging and Labeling Act, Consumer Products Safety Commissions Poison Prevention Act and the Safe Drinking Water and Toxic Enforcement Act of 1986 or “Proposition 65.” The Company and its Subsidiaries endeavor to be in substantial compliance with all applicable regulations and requirements of the FDA, the FTC and Other Authorities relating to the Company’s and its Subsidiaries’ products, including any good manufacturing or handling practices, requirements for demonstrating and maintaining the safety and efficacy of the products, export or import requirements, certificates of export, requirements for investigating customer complaints and inquiries, labeling requirements and protocols.

 

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(c)          Neither the Company, any Subsidiary nor Sellers are in receipt of notice of, or subject to, any adverse inspection, finding of deficiency, finding of non-compliance, compelled or voluntary recall, investigation, penalty, fine, sanction, assessment, request for corrective or remedial action or other compliance or enforcement action, relating to any of the Company’s or any Subsidiary’s products or the ingredients thereof or to the facilities in which such products are designed, manufactured, merchandised, serviced, distributed, sold, delivered or handled, whether issued by the Food and Drug Administration (the “ FDA ”), the Federal Trade Commission (the “ FTC ”) or by any other federal, state, local or foreign authority having or asserting responsibility for the regulation of such products (“ Other Authorities ”).

 

(d)          Neither the Company nor any Subsidiary has knowingly made any false statement in, or omission from, the applications, approvals, reports or other submissions to the FDA, the FTC or the Other Authorities, or in or from any report, study or other documentation prepared in connection therewith, or any other records and documentation prepared or maintained to comply with the requirements of the FDA, the FTC or Other Authorities relating to its products.

 

(e)          Neither the Company nor any Subsidiary has directly or indirectly made or offered any payment, gratuity or other thing of value that is prohibited by any Law, including to personnel of the FDA, the FTC or Other Authorities in connection with the approval or regulatory status of the facilities in which its products are designed, manufactured, merchandised, serviced, distributed, sold, delivered or handled.

 

(f)          Neither the Company nor any Subsidiary has received any written notification, or to Sellers’ Knowledge any oral notification, which remains unresolved as of the Option Exercise Date, from the FDA, the FTC, or Other Authorities indicating that the Company’s or any Subsidiary’s products are adulterated, unsafe or ineffective for their intended use, or have shipped or sold (or permitted to be shipped or sold) any products into any jurisdictions without first having obtained all requisite approvals, registrations and permissions from the FDA, the FTC and Other Authorities.

 

Section 4.19          Environmental Matters.

 

(a)          The operations of the Company and each Subsidiary are currently and have been for the three (3) years prior to the Option Exercise Date in compliance in all material respects with all Environmental Laws. Neither Sellers, the Company, nor any Subsidiary has received from any Person any: (i) Environmental Notice or Environmental Claim; or (ii) written request for information pursuant to Environmental Law, which, in each case, either remains pending or unresolved, or is the source of ongoing obligations or requirements as of the Option Exercise Date.

 

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(b)          The Company and each Subsidiary has obtained and is in material compliance with all Environmental Permits (each of which is disclosed in Section 4.19(b) of the Disclosure Schedules) necessary for the conduct of the Business as currently conducted by the Company and each Subsidiary or the ownership, lease, operation or use of the assets of the Company and the Subsidiaries and all such Environmental Permits are in full force and effect, and Sellers have no Knowledge of any condition, event or circumstance that might prevent or impede, after the Closing Date, the conduct of the Business as currently conducted by the Company and each Subsidiary or the ownership, lease, operation or use of the assets of the Company and each Subsidiary. Neither Sellers, the Company nor any Subsidiary has received any Environmental Notice or other written communication regarding any material adverse change in the status or terms and conditions of the same.

 

(c)          There has been no Release of Hazardous Materials in contravention of Environmental Law on any real property currently (or formerly, while occupied by the Company or any Subsidiary) leased or operated by the Company or any Subsidiary, and neither the Company, any Subsidiary nor Sellers have received an Environmental Notice that any real property currently (or formerly, while occupied by the Company or any Subsidiary) leased or operated by the Company or any Subsidiary has been contaminated with any Hazardous Material.

 

(d)           Section 4.19(d) of the Disclosure Schedules contains a complete and accurate list of all off-site Hazardous Materials treatment, storage, or disposal facilities or locations used by the Company and each Subsidiary and any predecessors as to which the Company or any Subsidiary may retain liability, and none of these facilities or locations has been placed or proposed for placement on the National Priorities List (or CERCLIS) under CERCLA, or any similar state list, and neither the Company, any Subsidiary nor Sellers has received any Environmental Notice regarding potential liabilities with respect to such off-site Hazardous Materials treatment, storage, or disposal facilities or locations used by the Company or any Subsidiary.

 

(e)          Neither the Company, any Subsidiary nor Sellers has retained or assumed, by contract or operation of Law, any liabilities or obligations of any other Person that remain in effect, valid or enforceable with respect to any material liability under any Environmental Law.

 

(f)          The Company and each Subsidiary has provided or otherwise made available to Buyer and listed in Section 4.19(d) of the Disclosure Schedules all environmental reports and other similar documents with respect to any real property currently (or formerly, while occupied by the Company or any Subsidiary) leased or operated by the Company or any Subsidiary which are in their possession or under their reasonable control.

 

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Section 4.20          Employee Benefit Matters.

 

(a)           Section 4.20(a) of the Disclosure Schedules contains a true and complete list of each material pension, benefit, retirement, compensation, profit-sharing, deferred compensation, incentive, performance award, phantom equity, change in control, retention, severance, vacation, paid time off, fringe-benefit, and other similar agreement, plan, policy, program or arrangement (and any amendments thereto), and each equity or equity-based agreement, plan, policy, program or arrangement (and any amendments thereto), in each case whether or not reduced to writing and whether funded or unfunded, including each “employee benefit plan” within the meaning of Section 3(3) of ERISA, whether or not tax-qualified and whether or not subject to ERISA, which is or has within the last six (6) years been maintained, sponsored, contributed to, or required to be contributed to by the Company or any Subsidiary for the benefit of any current or former employee, officer, director, retiree, independent contractor or consultant of the Company or any Subsidiary or any spouse or dependent of such individual, or under which the Company or any Subsidiary has any Liability, or with respect to which Buyer or any of its Affiliates would reasonably be expected to have any Liability, contingent or otherwise (as listed on Section 4.20(a) of the Disclosure Schedules, each, a “ Benefit Plan ”).

 

(b)          With respect to each Benefit Plan, Sellers have made available to Buyer accurate and complete copies of each of the following: (i) where the Benefit Plan has been reduced to writing, the plan document together with all amendments; (ii) where the Benefit Plan has not been reduced to writing, a written summary of all material plan terms; (iii) copies of any summary plan descriptions, summaries of material modifications, employee handbooks and any other material written communications relating to any Benefit Plan; (iv) in the case of any Benefit Plan that is intended to be qualified under Section 401(a) of the Code, a copy of the most recent determination, opinion or advisory letter from the Internal Revenue Service; (v) in the case of any Benefit Plan for which a Form 5500 is required to be filed, a copy of the most recently filed Form 5500, with schedules attached; (vi) reports related to any Benefit Plans with respect to the most recently completed fiscal years; and (vii) copies of material notices, letters or other correspondence from the Internal Revenue Service, Department of Labor or Pension Benefit Guaranty Corporation relating to the Benefit Plan.

 

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(c)          Each Benefit Plan (other than any multiemployer plan within the meaning of Section 3(37) of ERISA (each a “ Multiemployer Plan ”)) has been established, administered and maintained in all material respects in accordance with its terms and in material compliance with all applicable Laws (including ERISA and the Code). Each Benefit Plan that is intended to be qualified and that the Plan and the trust related thereto are exempt from federal income taxes under Sections 401(a) and 501(a), respectively, of the Code (a “ Qualified Benefit Plan ”) is so qualified and has received a favorable and current determination letter from the Internal Revenue Service, or with respect to a prototype plan, can rely on an opinion letter from the Internal Revenue Service to the prototype plan sponsor, to the effect that such Qualified Benefit Plan is so qualified and that the Plan and the Trust related thereto are exempt from Federal income taxes under Sections 401(a) and 501(a) of the Code, and, to the Knowledge of Sellers, nothing has occurred that could reasonably be expected to cause the revocation of such determination letter from the Internal Revenue Service or the unavailability of reliance on such opinion letter from the Internal Revenue Service, as applicable, nor has such revocation or unavailability been threatened in writing. To the Knowledge of Sellers, nothing has occurred with respect to any Seller Benefit Plan that has subjected or could reasonably be expected to subject the Company or any Subsidiary or, with respect to any period on or after the Closing Date, Buyer or any of its Affiliates, to a penalty under Section 502 of ERISA or to tax or penalty under Section 4975 of the Code. All benefits, contributions and premiums relating to each Benefit Plan have been timely paid in accordance in all material respects with the terms of such Benefit Plan and all applicable Laws and accounting principles, and all benefits accrued under any unfunded Benefit Plan have been paid, accrued or otherwise adequately reserved to the extent required by, and in accordance with, GAAP.

 

(d)          Neither the Company, any Subsidiary nor any of the Company’s or any Subsidiary’s ERISA Affiliates have (i) incurred or reasonably expect to incur, either directly or indirectly, any material Liability under Title I or Title IV of ERISA or related provisions of the Code relating to employee benefit plans; (ii) withdrawn from any Benefit Plan; or (iii) engaged in any transaction which would give rise to liability under Section 4069 or Section 4212(c) of ERISA.

 

(e)          With respect to each Benefit Plan (i) no such plan is a Multiemployer Plan, (ii) no such plan is a “multiple employer plan” within the meaning of Section 413(c) of the Code or a “multiple employer welfare arrangement” (as defined in Section 3(40) of ERISA); (iii) no Action has been initiated by the Pension Benefit Guaranty Corporation to terminate any such plan or to appoint a trustee for any such plan; (iv) no such plan is subject to the minimum funding standards of Section 302 of ERISA or Section 412 of the Code; and (v) no “reportable event,” as defined in Section 4043 of ERISA, has occurred with respect to any such plan.

 

(f)          Other than as required under Section 601 et. seq. of ERISA or other applicable Law, no Benefit Plan or other arrangement provides post-termination or retiree welfare (including medical) benefits to any individual for any reason.

 

(g)          There is no pending or, to Sellers’ Knowledge, threatened Action relating to a Benefit Plan (other than routine claims for benefits), and no Benefit Plan has been or is the subject of an examination or audit by a Governmental Authority or the subject of an application or filing under, or is a participant in, an amnesty, voluntary compliance, self-correction or similar program sponsored by any Governmental Authority.

 

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(h)          There has been no amendment to, announcement by the Company or any Subsidiary relating to, or change in employee participation or coverage under, any Benefit Plan that would materially increase the annual expense of maintaining such plan above the level of the expense incurred for the most recently completed fiscal year. Neither the Company nor any Subsidiary has any commitment or obligation or has made any representations, whether or not legally binding, to adopt, amend or modify any Benefit Plan or any collective bargaining agreement.

 

(i)          Each Benefit Plan that is subject to Section 409A of the Code has been operated in compliance in all material respects with such section and all applicable regulatory guidance (including, notices, rulings and proposed and final regulations).

 

(j)          Neither the execution of this Agreement nor any of the transactions contemplated by this Agreement will (either alone or upon the occurrence of any additional or subsequent events): (i) entitle any current or former manager, director, officer, employee, independent contractor or consultant of the Company or any Subsidiary to severance pay or any other payment; (ii) accelerate the time of payment, funding or vesting, or increase the amount of compensation due to any such individual; (iii) increase the amount payable under or result in any other material obligation pursuant to any Benefit Plan; or (iv) result in “excess parachute payments” within the meaning of Section 280G(b) of the Code.

 

Section 4.21          Employment Matters.

 

(a)           Section 4.21(a) of the Disclosure Schedules contains a list of all persons who are employees, independent contractors or consultants of the Company or any Subsidiary as of the Option Exercise Date, and sets forth for each such individual the following: (i) name; (ii) title or position (including whether full or part time); (iii) hire date; (iv) current annual base compensation rate; (v) commission, bonus or other incentive-based compensation; (vi) a description of the fringe benefits provided to each such individual as of the Option Exercise Date; and (vii) such individual’s accrued and unused paid time off. As of the Option Exercise Date, all compensation, including wages, commissions and bonuses payable to the Company’s and each Subsidiary’s employees, independent contractors or consultants for services performed on or prior to the Option Exercise Date have been paid in full and there are no outstanding agreements, understandings or commitments of the Company or any Subsidiary with respect to any compensation, commissions or bonuses.

 

(b)          Neither the Company nor any Subsidiary is, nor has been, a party to, bound by, or negotiating any collective bargaining agreement or other Contract with a union, works council or labor organization (collectively, “ Union ”), and there is not, and has not been, any Union representing or purporting to represent any employee of the Company or any Subsidiary, and, to Sellers’ Knowledge, no Union or group of employees is seeking or has sought to organize employees for the purpose of collective bargaining. There has never been, nor, to Seller’s Knowledge, has there been any threat of, any strike, slowdown, work stoppage, lockout, concerted refusal to work overtime or other similar labor disruption or dispute affecting the Company, any Subsidiary or any employees of the Company or any Subsidiary. Neither the Company nor any Subsidiary has a duty to bargain with any Union.

 

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(c)          The Company and each Subsidiary is in compliance in all material respects with the terms of the Contracts listed on Section 4.21(b) of the Disclosure Schedules, if any, and all applicable Laws pertaining to employment and employment practices, including all Laws relating to labor relations, equal employment opportunities, fair employment practices, employment discrimination, harassment, retaliation, reasonable accommodation, disability rights or benefits, immigration, wages, hours, overtime compensation, child labor, hiring, promotion and termination of employees, working conditions, meal and break periods, privacy, health and safety, workers’ compensation, leaves of absence and unemployment insurance. All individuals characterized and treated by the Company or any Subsidiary as consultants or independent contractors of Sellers are properly treated as independent contractors under all applicable Laws. All employees of the Company or any Subsidiary classified as exempt under the Fair Labor Standards Act and state and local wage and hour laws are properly classified. There are no Actions against the Company or any Subsidiary pending, or to Sellers’ Knowledge, threatened to be brought or filed, by or with any Governmental Authority or arbitrator in connection with the employment of any current or former applicant, employee, consultant, volunteer, intern or independent contractor of the Company or any Subsidiary, including any claim relating to unfair labor practices, employment discrimination, harassment, retaliation, equal pay, wages and hours or any other employment related matter arising under applicable Laws.

 

(d)          Neither the Company nor any Subsidiary is subject to the WARN Act with respect to the transactions contemplated by this Agreement.

 

Section 4.22          Taxes.

 

(a)          All income Tax Returns and all material non-income Tax Returns required to be filed on or before the Closing Date by the Company and each Subsidiary for any Pre-Closing Tax Period have been, or will be, timely filed. Such Tax Returns are, or will be, complete and correct in all material respects. All material Taxes due and required to be paid on or before the Closing Date by the Company and each Subsidiary (whether or not shown on any Tax Return) have been, or will be, timely paid.

 

(b)          The Company and each Subsidiary has withheld and paid each Tax required to have been withheld and paid in connection with amounts paid or owing to any employee, independent contractor, creditor, customer, member, shareholder or other party, and complied with all information reporting and backup withholding provisions of applicable Law.

 

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(c)          No claim has been made by any taxing authority in any jurisdiction where the Company or any Subsidiary does not file Tax Returns that it is, or may be, subject to Tax by that jurisdiction.

 

(d)          No extensions or waivers of statutes of limitations have been given or requested with respect to any Taxes of the Company or any Subsidiary.

 

(e)          The amount of the Company’s and each Subsidiary’s Liability for unpaid Taxes for all periods ending on or before the most recent Financial Statements does not, in the aggregate, exceed the amount of accruals for Taxes (excluding reserves for deferred Taxes) reflected on such Financial Statements. The amount of the Company’s and each Subsidiary’s Liability for unpaid Taxes for all periods through the Closing Date shall not, in the aggregate, exceed the amount of accruals for Taxes (excluding reserves for deferred Taxes) as adjusted for the passage of time in accordance with the past custom and practice of the Company and the Subsidiaries (and which accruals shall not exceed comparable amounts incurred in similar periods in prior years).

 

(f)          To the Knowledge of Sellers, Section 4.22(f) of the Disclosure Schedules sets forth (i) those years for which examinations by the taxing authorities have been completed with respect to sales Taxes of the Company and the Subsidiaries and (ii) those taxable years for which examinations are presently being conducted with respect to sales Taxes of the Company and the Subsidiaries.

 

(g)          All deficiencies asserted, or assessments made, against the Company or any Subsidiary as a result of any examinations by any taxing authority have been fully paid, accrued on the Audited Financial Statements, or finally settled.

 

(h)          Neither the Company nor any Subsidiary is a party to any Action by any taxing authority. There are no Actions pending, or to Sellers’ Knowledge, threatened, by any taxing authority against the Company or any Subsidiary.

 

(i)          Sellers have delivered to Buyer copies of all federal, state, local and foreign income, franchise and similar Tax Returns, examination reports, and statements of deficiencies assessed against, or agreed to by, the Company or by any Subsidiary for all Tax periods ending after December 31, 2009.

 

(j)          There are no Encumbrances for Taxes upon any of the Company’s or any Subsidiary’s assets nor, to any Sellers’ Knowledge, is any taxing authority in the process of imposing any Encumbrances for Taxes on any of the Company’s or any Subsidiary’s assets (other than for current Taxes not yet due and payable).

 

(k)          Neither the Company nor any Subsidiary is a party to, or bound by, any Tax indemnity, Tax-sharing or Tax allocation agreement.

 

(l)          No private letter rulings, technical advice memoranda or similar agreement or rulings have been requested, entered into or issued by any taxing authority with respect to the Company or any Subsidiary.

 

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(m)          Neither the Company nor any Subsidiary has been a member of an affiliated, combined, consolidated or unitary Tax group for Tax purposes. Neither the Company nor any Subsidiary has any Liability for Taxes of any Person (other than the Company) under Treasury Regulations Section 1.1502-6 (or any corresponding provision of state, local or foreign Law), as transferee or successor, by contract or otherwise.

 

(n)          The Company, together with its Subsidiaries, has been treated as a partnership for US federal income tax purposes in all Tax years since the date of formation. Neither the Company nor any Subsidiary is, or has ever made an election to be treated as, a corporation for U.S. federal, state, local or foreign tax purposes.

 

(o)          Neither the Company nor any Subsidiary will be required to include any item of income in, or exclude any item or deduction from, taxable income for any taxable period or portion thereof ending after the Closing Date as a result of:

 

(i)          any change in a method of accounting under Section 481 of the Code (or any comparable provision of state, local or foreign Tax Laws), or use of an improper method of accounting, for a taxable period ending on or prior to the Closing Date;

 

(ii)         an installment sale or open transaction occurring on or prior to the Closing Date;

 

(iii)        a prepaid amount received on or before the Closing Date;

 

(iv)        any closing agreement under Section 7121 of the Code, or similar provision of state, local or foreign Law; or

 

(v)         any election under Section 108(i) of the Code.

 

(p)          Neither the Company, any Subsidiary nor either Seller is a “foreign person” as that term is used in Treasury Regulations Section 1.1445-2.

 

(q)          Neither the Company, any Subsidiary nor either Seller is, nor has been, a party to, or a promoter of, a “reportable transaction” within the meaning of Section 6707A(c)(1) of the Code and Treasury Regulations Section 1.6011 4(b).

 

(r)          None of the assets of the Company or any Subsidiary is property that the Company or any Subsidiary is required to treat as being owned by any other person pursuant to the so-called “safe harbor lease” provisions of former Section 168(f)(8) of the Code.

 

(s)          None of the assets of the Company or any Subsidiary is tax-exempt use property within the meaning of Section 168(h) of the Code.

 

Section 4.23          Permits . All Permits required for the Company and each Subsidiary to carry on its operations as presently conducted have been obtained by the Company and such Subsidiary and are valid and in full force and effect, except, in each case, where the failure to have a particular Permit would not be material to the Company’s and the Subsidiaries’ Business. All fees and charges due and payable with respect to such Permits as of the Option Exercise Date have been paid in full. Section 4.23 of the Disclosure Schedules lists all current material Permits issued to the Company and each Subsidiary, including the names of such Permits and their respective dates of issuance and expiration. To Sellers’ Knowledge, no event has occurred that, with or without notice or lapse of time or both, would reasonably be expected to result in the revocation, suspension, lapse or limitation of any Permit set forth in Section 4.23 of the Disclosure Schedules.

 

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Section 4.24          Brokers . No broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission in connection with the transactions contemplated by this Agreement or any other Transaction Document based upon arrangements made by or on behalf of Sellers.

 

Section 4.25          Product Warranty . Each product manufactured, sold, leased, or delivered by the Company and each Subsidiary has been in conformity in all material respects with all applicable contractual commitments and all express and implied warranties, and neither the Company nor any Subsidiary has any Liability (and there is no basis for any present or future Action, against the Company or any Subsidiary giving rise to any Liability) for replacement thereof or other damages in connection therewith, subject only to the reserve for product warranty claims set forth on the Interim Balance Sheet as adjusted for the passage of time through the Closing Date in accordance with the past custom and practice of the Company and each Subsidiary. Section 4.25 of the Disclosure Schedules includes copies of the standard terms and conditions of sale of the Company and each Subsidiary (containing applicable guaranty, warranty, and indemnity provisions). No product manufactured, sold, leased, or delivered by the Company or any Subsidiary is subject to any guaranty, warranty, or other indemnity beyond the applicable standard terms and conditions of sale set forth in Section 4.25 of the Disclosure Schedules.

 

Section 4.26          Products Liability . Neither the Company nor any Subsidiary has any Liability (and, to the Knowledge of Sellers, there is no basis for any present or future Action or charge against any of them giving rise to any Liability) arising out of any injury to individuals or property as a result of the ownership, possession, or use of any product manufactured, sold or delivered by the Company or any Subsidiary, except for Liabilities that would not be material to the Company’s and the Subsidiaries’ Business, provided, that “Serious Adverse Event Reports” would be considered material.

 

Section 4.27          Affiliate Interests . Neither Sellers nor any manager, officer or director of the Company or any Subsidiary:

 

(a)          owns any interest in any Person which is a competitor, supplier or customer of the Company or any Subsidiary;

 

(b)          owns, in whole or in part, any property, asset or right used in connection with the Business;

 

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(c)          has an interest in any Contract pertaining to the Company or any Subsidiary;

 

(d)          has any contractual arrangements with the Company or any Subsidiary; or

 

(e)          owes any money to, or is owed any money by, the Company or any Subsidiary, other than for current wages, benefits, and compensation paid and provided in the ordinary course of business.

 

Section 4.28          NO OTHER REPRESENTATIONS OR WARRANTIES . SELLERS MAKE NO REPRESENTATION OR WARRANTY TO BUYER WITH RESPECT TO, AND BUYER WILL NOT BE ENTITLED TO RELY ON:

 

(a)          ANY PROJECTIONS, ESTIMATES OR BUDGETS HERETOFORE DELIVERED TO OR MADE AVAILABLE TO BUYER OR ANY INFORMATION REGARDING FUTURE REVENUES, EXPENSES OR RESULTS OF OPERATIONS OF THE BUSINESS; OR

 

(b)          EXCEPT AS EXPRESSLY COVERED BY A REPRESENTATION AND WARRANTY CONTAINED IN THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT, ANY OTHER INFORMATION OR DOCUMENTS (FINANCIAL OR OTHERWISE) MADE AVAILABLE TO BUYER OR ITS COUNSEL, ACCOUNTANTS OR ADVISERS WITH RESPECT TO THE COMPANY OR THE BUSINESS.

 

EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES CONTAINED IN THIS AGREEMENT AND THE OTHER TRANSACTION DOCUMENTS, SELLERS MAKE NO REPRESENTATIONS OR WARRANTIES IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.

 

ARTICLE V
Representations and warranties of buyer

 

Buyer represents and warrants to Sellers as follows:

 

Section 5.01          Organization of Buyer . Buyer is a corporation duly organized, validly existing and in good standing under the Laws of the state of Delaware, and has the corporate power and authority to own, lease and operate its properties and assets and to carry on its business as now being conducted.

 

Section 5.02          Authority of Buyer . Buyer has full corporate power and authority to enter into this Agreement and the other Transaction Documents to which Buyer is a party, to carry out its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby. The execution and delivery by Buyer of this Agreement and any other Transaction Document to which Buyer is a party, the performance by Buyer of its obligations hereunder and thereunder and the consummation by Buyer of the transactions contemplated hereby and thereby have been duly authorized by all requisite corporate action on the part of Buyer. This Agreement has been duly executed and delivered by Buyer, and constitutes a legal, valid and binding obligation of Buyer enforceable against Buyer in accordance with its terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium, and similar laws affecting creditors’ rights and remedies generally, and, as to enforceability, to general principles of equity regardless of whether enforcement is sought in a proceeding at law or in equity. When each other Transaction Document to which Buyer is or will be a party has been duly executed and delivered by Buyer, such Transaction Document will constitute a legal and binding obligation of Buyer enforceable against it in accordance with its terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium, and similar laws affecting creditors’ rights and remedies generally, and, as to enforceability, to general principles of equity regardless of whether enforcement is sought in a proceeding at law or in equity.

 

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Section 5.03          No Conflicts; Consents . The execution, delivery and performance by Buyer of this Agreement and the other Transaction Documents to which it is a party, and the consummation of the transactions contemplated hereby and thereby, do not and will not: (a) conflict with or result in a violation or breach of, or default under, any provision of the certificate of incorporation or by-laws of Buyer; (b) conflict with or result in a violation or breach of any provision of any Law or Governmental Order applicable to Buyer; or (c) require the consent, notice or other action by any Person under, violate conflict with or result in a default (or any event which, with notice or lapse of time or both, would constitute a default) under, or give rise to any right of termination, cancellation or acceleration under any Contract to which Buyer is a party or by which Buyer or any of its assets may be bound. No consent, approval, Permit, Governmental Order, declaration or filing with, or notice to, any Governmental Authority is required by or with respect to Buyer in connection with the execution and delivery of this Agreement and the other Transaction Documents and the consummation of the transactions contemplated hereby and thereby.

 

Section 5.04          Brokers . No broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission in connection with the transactions contemplated by this Agreement or any other Transaction Document based upon arrangements made by or on behalf of Buyer.

 

Section 5.05          Legal Proceedings . There are no Actions pending or, to Buyer’s Knowledge, threatened (a) against or by Buyer, or (b) that challenge or seek to prevent, enjoin or otherwise delay the transactions contemplated by this Agreement, and no event has occurred or circumstances exist that may give rise or serve as a basis for any such Action.

 

Section 5.06          Independent Review. Buyer has conducted its own independent review and analysis of the Business and its condition, cash flow and prospects, and acknowledges that Buyer has been provided access to the properties, premises and records of the Company and the Subsidiaries for this purpose. In entering into this Agreement, Buyer has relied upon its own investigation and analysis and the representations and warranties contained herein, and Buyer:

 

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(a)          acknowledges that it has had the opportunity to visit with the Company and the Subsidiaries and meet with its officers and other representatives to discuss the Business and its condition, cash flow and prospects;

 

(b)          acknowledges that it has undertaken such due diligence (including a review of the assets, liabilities, books, records and Contracts of the Company and the Subsidiaries) as Buyer deems adequate;

 

(c)          acknowledges that, except as set forth in ARTICLE IV, neither Sellers, nor any of the Company’s or its Subsidiaries’ respective officers, employees, Affiliates, agents or representatives, make any representation or warranty, either express or implied, as to the accuracy or completeness of any of the information provided or made available to Buyer or its agents or representatives prior to the execution of this Agreement; and

 

(d)          agrees, to the fullest extent permitted by Law and except as set forth in ARTICLE IX, that Sellers shall not have any liability or responsibility whatsoever to Buyer on any basis (including in contract or tort or otherwise) based upon any information provided or made available, or statements made, to Buyer prior to the execution of this Agreement.

 

Notwithstanding the foregoing, nothing in this Section 5.06, nor Buyer’s investigation, analysis, due diligence review, nor any information received by Buyer, shall (w) operate as a waiver or otherwise diminish any of Sellers’ representations and warranties and agreements given or made by Sellers in this Agreement or any of the other Transaction Documents, (x) be deemed to amend or supplement the Disclosure Schedules; (y) be deemed to be an acknowledgment or agreement on the part of Buyer that Sellers’ representations and warranties, or the Disclosure Schedules, are complete and correct; or (z) mean that Buyer’s Knowledge includes any facts or circumstances not expressly set forth in Sellers’ representations and warranties or in the Disclosure Schedules. Sellers agree that Buyer had no obligation to conduct any greater investigation, analysis or due diligence than it conducted.

 

ARTICLE VI
Covenants

 

Section 6.01          Conduct of Business Prior to the Closing . From the Option Exercise Date until the Closing Date, except as otherwise provided in this Agreement or consented to in writing by Buyer, Sellers shall cause the Company and each Subsidiary to (x) conduct the Business in the ordinary course of business consistent with past practice; and (y) use reasonable best efforts to maintain and preserve intact its current business organization, operations and franchise and to preserve the rights, goodwill and relationships of its employees, customers, lenders, suppliers, regulators and others having relationships with the Company and the Subsidiaries. Without limiting the foregoing, from the Option Exercise Date until the Closing Date, Sellers shall use their reasonable best efforts to cause the Company and each Subsidiary to:

 

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(a)          preserve and maintain all Permits required for the conduct of the Business as currently conducted and as conducted during the period between the Option Exercise Date and the Closing, by the Company and the Subsidiaries and the ownership and use of the Company’s and the Subsidiaries assets;

 

(b)          pay its debts, Taxes and other obligations when due, unless diligently contested in good faith by appropriate proceedings;

 

(c)          continue to collect accounts receivable in a manner consistent with past practice;

 

(d)          maintain the physical properties and assets owned by the Company and each Subsidiary in a state of repair and condition that is consistent with the requirements and normal use of such properties and assets;

 

(e)          continue in full force and effect without modification all Insurance Policies, except as requested by applicable Law;

 

(f)          perform all of its obligations under all Contracts in all material respects;

 

(g)          maintain the books and records of the Company and its Subsidiaries in accordance with past practice;

 

(h)          comply in all material respects with all applicable Laws; and

 

(i)          not take or permit any action that would cause any of the changes, events or conditions described in Section 4.07 to occur.

 

Notwithstanding anything herein to the contrary, (A) nothing in this Section 6.01 or Section 4.07 shall prevent the Company from issuing Units or granting options, warrants or other rights to purchase or obtain (including upon conversion, exchange or exercise) any currently outstanding or to-be-issued Units in the Company, (1) so long as the prospective purchasers of such Units, options, warrants or other rights are not competitors of the Company or its Subsidiaries and agree to be bound by, and sell such Units in accordance with, the terms of the Option Agreement, this Agreement (other than Section 6.06 ), customary confidentiality restrictions and such issuance or grant does not increase the Purchase Price to be paid by Buyer pursuant to this Agreement for all outstanding Units, or (2) in connection with the Mezzanine Warrants and any Units issued upon the exercise thereof, and (B) the Company’s repayment of all or a portion of the Senior Debt prior to the Closing from the Company’s cash generated from its ordinary course operations shall not be a breach of this Section 6.01 , provided that such payment does not directly or indirectly cause, and is not directly or indirectly related to, a breach of this Section 6.01 .

 

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Section 6.02          Access to Information. Subject to the restrictions of any applicable Law or contractual undertaking disclosed in Section 4.08(a) of the Disclosure Schedules, from the Option Exercise Date until the Closing, Sellers shall cause the Company and each Subsidiary to (a) upon reasonable advance notice received from Buyer, afford Buyer and its Representatives reasonable access to and the right to inspect all of the Real Property, properties, assets, premises, books and records of the Company and the Subsidiaries, Contracts and other documents and data of the Company and the Subsidiaries; (b) furnish Buyer and its Representatives with such financial, operating and other data and information of the Company and the Subsidiaries as Buyer or any of its Representatives may reasonably request; and (c) instruct the Representatives of the Company and each Subsidiary to cooperate with Buyer in its reasonable investigation of the Company and the Subsidiaries. Any investigation pursuant to this Section 6.02 shall be conducted during normal business hours under the supervision of the Company’s or each Subsidiary’s (as applicable) personnel and in such manner as to maintain the confidentiality of this Agreement and the transactions contemplated hereby and not to interfere unreasonably with the Company’s and the Subsidiaries’ conduct of the Business.

 

Section 6.03          No Solicitation of Other Bids.

 

(a)          From the date hereof until the earlier of (x) the Closing and (y) the termination of this Agreement, Sellers, the Company and each Subsidiary shall not, and shall not authorize or permit any of their respective Affiliates or Representatives to, directly or indirectly, (i) encourage, solicit, initiate, facilitate or continue inquiries regarding an Acquisition Proposal; (ii) enter into discussions or negotiations with, or provide any information to, any Person concerning a possible Acquisition Proposal; or (iii) enter into any agreements or other instruments (whether or not binding) regarding an Acquisition Proposal. Sellers, the Company and each Subsidiary shall immediately cease and cause to be terminated, and shall cause their respective Affiliates and Representatives to immediately cease and cause to be terminated, all existing discussions or negotiations with any Persons conducted heretofore with respect to, or that could lead to, an Acquisition Proposal. For purposes hereof, “ Acquisition Proposal ” means any inquiry, proposal or offer from any Person (other than Buyer or any of its Affiliates) relating to the direct or indirect disposition, whether by sale, merger or otherwise, of all or any material portion of the Company’s or any Subsidiary’s equity, Business or assets (other than the sale of assets in the ordinary course of the Business consistent with past practice).

 

(b)          In addition to the other obligations under this Section 6.03 , Sellers, the Company and each Subsidiary shall promptly (and in any event within two (2) Business Days after receipt thereof by such Seller, its Representatives, the Company or any Subsidiary) advise Buyer orally and in writing of any Acquisition Proposal, any request for information with respect to any Acquisition Proposal, or any inquiry with respect to or which could reasonably be expected to result in an Acquisition Proposal, the material terms and conditions of such request, Acquisition Proposal or inquiry, and the identity of the Person making the same.

 

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(c)          Sellers agree that the rights and remedies for noncompliance with this Section 6.03 shall include having such provision specifically enforced by any court having equity jurisdiction, without Buyer being required to post any bond or other security, it being acknowledged and agreed that any such breach or threatened breach shall cause irreparable injury to Buyer and that money damages would not provide an adequate remedy to Buyer.

 

Section 6.04          Notice of Certain Events.

 

(a)          From the Option Exercise Date until the Closing, Sellers shall promptly notify Buyer in writing of:

 

(i)          any fact or circumstances, the existence of which (A) has had, or could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, or (B) has resulted in, or could reasonably be expected to result in, any representation, warranty or covenant or agreement made by a Seller hereunder or under any other Transaction Document to be in breach as of the Option Exercise Date or the Closing Date;

 

(ii)         any notice or other communication from any Person alleging that the consent of such Person is or may be required in connection with the transactions contemplated by this Agreement;

 

(iii)        any notice or other communication from any Governmental Authority relating to the transactions contemplated by this Agreement; and

 

(iv)        any Actions commenced or, to Sellers’ Knowledge, threatened against, relating to or involving or otherwise affecting the Business, the assets of the Company or any Subsidiary that, if pending on the Option Exercise Date, would have been required to have been disclosed pursuant to Section 4.17, or that relates to the consummation of the transactions contemplated by this Agreement.

 

(b)          Buyer’s receipt of information pursuant to this Section 6.04 shall not (i) operate as a waiver or otherwise diminish any representation, warranty, covenant or agreement given or made by any Seller in this Agreement or any of the other Transaction Documents, (ii) be deemed to amend or supplement the Disclosure Schedules; or (iii) cure any breach of any such representation, warranty, covenant or agreement hereunder or under any other Transaction Document.

 

Section 6.05          Confidentiality . From and after the Closing until the fourth (4 th ) anniversary of the Closing, each Seller shall, and shall cause its respective Affiliates to, hold, and shall use reasonable best efforts to cause its respective Representatives to hold, in confidence any and all information, whether written or oral, concerning the Company, each Subsidiary, the Business and the assets of the Company and each Subsidiary, except to the extent that a Seller can show that such information is generally available to and known by the public through no fault of either Seller or any of his or her Affiliates or Representatives; or is required to be disclosed by Law or judicial or legal process. If either Seller, or any of their respective Affiliates or Representatives are compelled to disclose any such information by judicial or administrative process or by other requirements of Law, such Seller shall promptly notify Buyer in writing and shall disclose only that portion of such information which such compelled party is advised by its counsel in writing is legally required to be disclosed, provided , that such compelled party shall use reasonable best efforts to obtain an appropriate protective order or other reasonable assurance that confidential treatment will be accorded such information. Neither Seller, and no Affiliate thereof (except as expressly permitted in the N. Balcombe Employment Agreement), shall directly or indirectly use, or directly or indirectly assist any other Person in using, whether or not for compensation, any Confidential Information.

 

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Section 6.06          Non-competition; Non-solicitation. Except as set forth on Exhibit C hereto, Sellers and Buyer hereby agree as follows:

 

(a)          For a period of four (4) years commencing on the Closing Date (the “ Restricted Period ”), each Seller shall not, and shall not permit any of his or her Affiliates to, directly or indirectly, and whether or not for compensation, (i) engage in or assist others in engaging in the Business in the Territory; (ii) have an interest in any Person that engages directly or indirectly in the Business in the Territory in any capacity, including as a partner, shareholder, member, officer, director, employee, principal, agent, trustee or consultant; or (iii) cause, induce or encourage any customer, supplier or licensor of the Company or any Subsidiary that was a customer, supplier or licensor of the Company or any Subsidiary during the two (2) year period prior to the Closing or becomes a customer, supplier or licensor of the Company or any Subsidiary during the one (1) year period after the Closing, or any other Person who has a material business relationship with the Company or any Subsidiary during the two (2) year period prior to the Closing or during the one (1) year period after the Closing, to terminate or modify any such relationship. Notwithstanding the foregoing, Sellers collectively may own, directly or indirectly, solely as an investment, securities of any Person traded on any national securities exchange if neither Seller is a controlling Person of, or a member of a group which controls, such Person and Sellers collectively do not, directly or indirectly, own three percent (3%) or more of any class of securities of such Person.

 

(b)          During the Restricted Period, each Seller shall not, and shall not permit any of its Affiliates to, directly or indirectly, hire or solicit any person who is or was employed in the Business by Buyer during the Restricted Period, or encourage any such employee to leave such employment or hire any such employee who has left such employment, except pursuant to a general solicitation which is not directed specifically to any such employees.

 

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(c)          Each Seller acknowledges that a breach or threatened breach of this Section 6.06 would give rise to irreparable harm to Buyer, for which monetary damages would not be an adequate remedy, and hereby agrees that in the event of a breach or a threatened breach by a Seller of any such obligations, Buyer shall, in addition to any and all other rights and remedies that may be available to it in respect of such breach, be entitled to equitable relief, including a temporary restraining order, an injunction, specific performance and any other relief that may be available from a court of competent jurisdiction (without any requirement to post bond or other security).

 

(d)          Each Seller acknowledges that the restrictions contained in this Section 6.06 are reasonable and necessary to protect the legitimate interests of Buyer and constitute a material inducement to Buyer to enter into this Agreement and consummate the transactions contemplated by this Agreement. In the event that any covenant contained in this Section 6.06 should ever be adjudicated to exceed the time, geographic, product or service or other limitations permitted by applicable Law in any jurisdiction, then any court is expressly empowered to reform such covenant, and such covenant shall be deemed reformed, in such jurisdiction to the maximum time, geographic, product or service or other limitations permitted by applicable Law. The covenants contained in this Section 6.06 and each provision hereof are severable and distinct covenants and provisions. The invalidity or unenforceability of any such covenant or provision as written shall not invalidate or render unenforceable the remaining covenants or provisions hereof, and any such invalidity or unenforceability in any jurisdiction shall not invalidate or render unenforceable such covenant or provision in any other jurisdiction.

 

(e)          Sellers’ ownership of the Buyer Stock shall not be considered a breach or violation of any of the covenants in this Section 6.06 .

 

Section 6.07          Governmental Approvals and Consents . Following the Option Exercise Date:

 

(a)          Sellers shall, as promptly as possible, (i) make, or cause or be made, all filings and submissions required under any Law applicable to Sellers, the Company or any Subsidiaries or any of their Affiliates; and (ii) use reasonable best efforts to obtain, or cause to be obtained, all consents, authorizations, orders and approvals from all Governmental Authorities that, in each case, are necessary for its execution and delivery of this Agreement and the other Transaction Documents and the performance of their obligations pursuant to this Agreement and the other Transaction Documents. Sellers shall cooperate fully with Buyer and its Affiliates in promptly seeking to obtain all such consents, authorizations, orders and approvals. Sellers shall not willfully take any action that will have the effect of delaying, impairing or impeding the receipt of any required consents, authorizations, orders and approvals.

  

(b)          Sellers shall, and Sellers shall cause the Company and each Subsidiary to, use reasonable best efforts to give all notices to, and obtain all consents from, all third parties to which notice is required to be given or from which consent is required to be obtained that are described in Section 4.03 of the Disclosure Schedules.

 

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(c)          Without limiting the generality of Sellers’ undertakings pursuant to subsections (a) and (b) above, Sellers shall, and Sellers shall cause the Company and each Subsidiary to, use reasonable best efforts to:

 

(i)          respond to any inquiries by any Governmental Authority regarding antitrust or other matters with respect to the transactions contemplated by this Agreement or any other Transaction Document;

 

(ii)         avoid the imposition of any order or the taking of any action that would restrain, alter or enjoin the transactions contemplated by this Agreement or any other Transaction Document; and

 

(iii)        in the event any Governmental Order adversely affecting the ability of the parties to consummate the transactions contemplated by this Agreement or any other Transaction Document has been issued, to have such Governmental Order vacated or lifted.

 

(d)          All analyses, appearances, meetings, discussions, presentations, memoranda, briefs, filings, arguments, and proposals made by or on behalf of a party (or by the Company or any Subsidiary, which shall be deemed made on behalf of Sellers) before any Governmental Authority, in connection with the transactions contemplated hereunder (but not including any interactions between a Seller with Governmental Authorities in the ordinary course of business, and any disclosure which is not permitted by Law) shall be, except if prohibited or otherwise required by Law, disclosed to the other parties hereunder in advance of any filing, submission or attendance, it being the intent that the parties will consult and cooperate with one another, and consider in good faith the views of one another, in connection with any such analyses, appearances, meetings, discussions, presentations, memoranda, briefs, filings, arguments, and proposals. Buyer and Sellers shall give notice to the other with respect to any meeting, discussion, appearance or contact with any Governmental Authority or the staff or regulators of any Governmental Authority and shall give to the other a summary of such meeting promptly following its occurrence, except if prohibited by Law.

 

Section 6.08          Books and Records.

 

(a)          For a period of six (6) years after the Closing, Buyer shall cause the Company and each Subsidiary to:

 

(i)          retain the books and records (including personnel files) of the Company and its Subsidiaries relating to periods prior to the Closing; and

 

(ii)         upon reasonable notice, afford Sellers reasonable access (including the right to make, at Sellers’ expense, photocopies), during normal business hours, to such books and records.

 

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(b)          Buyer shall not be obligated to provide Sellers with access to any books or records (including personnel files) pursuant to this Section 6.08 where such access would violate any Law or Contract.

 

Section 6.09          Public Announcements . Unless otherwise required by applicable Law (based upon the reasonable advice of counsel), no party to this Agreement shall make any public announcements or other disclosure or otherwise communicate with any news media in respect of this Agreement, the Option Agreement or the transactions contemplated hereby or thereby. If any announcement, disclosure or other communication is determined to be required by applicable Law (based upon the reasonable advice of counsel), the parties shall reasonably cooperate as to the timing and contents of any such announcement, disclosure or other communication.

 

Section 6.10          Physical Inventory . Buyer shall have the right to notify Sellers that Buyer desires to take a physical count and inspection of the Inventory (the “ Physical Inventory ”). If so requested by Buyer, the Physical Inventory shall be conducted jointly by one or more representatives of Sellers and one or more representatives of Buyer, no later than five (5) days prior to the Closing Date. Any costs incurred by Buyer in taking the Physical Inventory shall be borne by Buyer.

 

Section 6.11          Additional Covenants of Sellers. At or prior to the Closing, Sellers shall:

 

(a)          deliver to Buyer a certificate, dated the Closing Date and signed by Sellers (the “ Sellers’ Closing Certificate ”), certifying that (i) the representations and warranties of Sellers contained in this Agreement, the other Transaction Documents and any certificate or other writing delivered pursuant hereto are complete and correct in all respects (in the case of any representation or warranty qualified by materiality or Material Adverse Effect) or in all material respects (in the case of any representation or warranty not qualified by materiality or Material Adverse Effect) at and as if made on the Closing Date; (ii) each Seller, the Company and each Subsidiary has duly performed and complied in all material respects with all agreements, covenants and conditions required by this Agreement and each of the other Transaction Documents to be performed or complied with by him, her or it prior to or on the Closing Date; and (iii) attached thereto are complete and correct copies of the Company’s Organizational Documents.

 

(b)          deliver to Buyer duly executed counterparts to the Transaction Documents (other than this Agreement) and such other documents and deliveries set forth in Section 3.02(a) ;

 

(c)          deliver to Buyer written evidence, in form and substance reasonably satisfactory to Buyer, of the release in full of all Encumbrances relating to the assets of the Company and each Subsidiary, other than Permitted Encumbrances;

 

(d)          deliver to Buyer payoff letters from the holders of the Mezzanine Debt and the Mezzanine Warrants evidencing the amount of the Mezzanine Debt and Mezzanine Warrants outstanding as of the Closing Date (including any interest accrued thereon and any prepayment or similar penalties and expenses associated with prepayment or cancellation thereof on the Closing Date) and an agreement that, if such aggregate amount so identified is paid to such holder on the Closing Date, the Mezzanine Debt and Mezzanine Warrants shall be repaid or cancelled in full and that all Encumbrances (except for Permitted Encumbrances) affecting any real or personal property of the Company or any of the Subsidiaries will be released;

 

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(e)          deliver to Buyer written evidence in form and substance reasonably satisfactory to Buyer confirming that upon payment of the respective amounts specified in such documentation Brookwood Associates, L.L.C. shall be paid in full with regard to the transaction contemplated by this Agreement and the other Transaction Documents;

 

(f)          deliver to Buyer a duly executed certificate from each Seller pursuant to Treasury Regulations Section 1.1445-2(b) (the “ FIRPTA Certificate ”) that such Seller is not a foreign person within the meaning of Section 1445 of the Code;

 

(g)          take all appropriate actions to exercise the Drag Along Right; and

 

(h)          deliver to Buyer such other documents or instruments as Buyer reasonably requests and are reasonably necessary to consummate the transactions contemplated by this Agreement.

 

Section 6.12          Further Assurances . Following the Closing, each of the parties hereto shall, and shall cause their respective Affiliates to, execute and deliver such additional documents, instruments, conveyances and assurances and take such further actions as may be reasonably required to carry out the provisions hereof and give effect to the transactions contemplated by this Agreement and the other Transaction Documents.

 

Section 6.13          Product Liability Insurance. Following the Closing, Buyer shall maintain product liability insurance coverage with terms and conditions substantially similar to the Company’s insurance coverage as of the Option Exercise Date for a period of eighteen (18) months following the Closing that covers periods prior to the Closing.

 

Section 6.14          Supplemental Disclosure . Sellers may, from time to time prior to or at the Closing, by notice in accordance with the terms of this Agreement, supplement or amend the Disclosure Schedules in order to add information or correct previously supplied information. It is specifically agreed that the Disclosure Schedules may be amended to add immaterial, as well as material, items thereto. If the Closing occurs, then any such supplement or amendment will be effective to cure and correct for all other purposes any breach of any representation, warranty or covenant that would have existed if Sellers had not made such supplement or amendment, and all references to any of the Disclosure Schedules that are supplemented or amended as provided in this Section 6.14 shall for all purposes after the Closing be deemed to be a reference to such Disclosure Schedules as so supplemented or amended.

 

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Section 6.15          Excluded Assets. Immediately prior to the Closing, the Company will transfer to either Seller or an Affiliate of either Seller the website “naomiwhittel.com”.

 

ARTICLE VII
Tax matters

 

Section 7.01          Tax Covenants.

 

(a)          Without the prior written consent of Buyer, Sellers (and, prior to the Closing, the Company, the Subsidiaries, their Affiliates and their respective Representatives) shall not make, change or rescind any Tax election, amend any Tax Return or take any position on any Tax Return (except to the extent consistent with past practices), or enter into any transaction (excluding any transaction entered into in the ordinary course of business), in each case that would have the effect of increasing the Tax liability or reducing any Tax asset of Buyer, the Company or any Subsidiary in respect of any Post-Closing Tax Period.

 

(b)          All transfer, documentary, sales, use, stamp, registration, value added and other such Taxes and fees (including any penalties and interest) incurred in connection with this Agreement and the other Transaction Documents (including any real property transfer Tax and any other similar Tax) shall be borne and paid by Buyer when due. Buyer shall, at its own expense, timely file any Tax Return or other document with respect to such Taxes or fees (and Sellers shall cooperate with respect thereto as necessary).

 

(c)          Buyer shall prepare, or cause to be prepared, all Tax Returns required to be filed by the Company after the Closing Date with respect to a Pre-Closing Tax Period, except for income Tax Returns which Sellers shall prepare or cause to be prepared. Any such Tax Return shall be prepared in a manner consistent with past practice (unless otherwise required by Law) and without a change of any election or any accounting method and shall be submitted by the preparing party to the other party (together with schedules, statements and, to the extent requested by the other party, supporting documentation) at least forty-five (45) days prior to the due date (including extensions) of such Tax Return. If Sellers or Buyer, as applicable, object to any item on any such Tax Return, the objecting party shall, within fifteen (15) days after delivery of such Tax Return, notify the preparing party in writing that they so object, specifying with particularity any such item and stating the specific factual or legal basis for any such objection. If a notice of objection shall be duly delivered, Buyer and Sellers shall negotiate in good faith and use their reasonable best efforts to resolve such items. If Buyer and Sellers are unable to reach such agreement within five (5) days after receipt of such notice, the disputed items shall be resolved by the New York office of Deloitte & Touche LLP or, if Deloitte & Touche is unable to serve, Buyer and Sellers shall appoint by mutual agreement the office of an impartial nationally recognized firm of independent certified public accountants other than Sellers’ Accountants or Buyer’s Accountants (the “ Independent Accountant ”) and any determination by the Independent Accountant shall be final. The Independent Accountant shall resolve any disputed items within twenty (20) days of having the item referred to it pursuant to such procedures as it may require. If the Independent Accountant is unable to resolve any disputed items before the due date for such Tax Return, the Tax Return shall be filed as prepared by Buyer or Sellers, as applicable, and then amended, if necessary, to reflect the Independent Accountant's resolution. The costs, fees and expenses of the Independent Accountant shall be borne 50/50 by Buyer and Sellers. The preparation and filing of any Tax Return of the Company and the Subsidiaries that does not relate to a Pre-Closing Tax Period shall be exclusively within the control of Buyer.

 

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Section 7.02          Termination of Existing Tax Sharing Agreements. Any and all existing Tax sharing agreements (whether written or not) binding upon the Company or any Subsidiary shall be terminated as of the Closing Date. After such date neither the Company, the Subsidiaries, Sellers nor any of Sellers’ Affiliates or their respective Representatives shall have any further rights or liabilities thereunder.

 

Section 7.03          Tax Indemnification . Subject to Section 9.04(c) , Sellers shall jointly and severally indemnify the Company, each Subsidiary, Buyer, and each Buyer Indemnitee and hold them harmless from and against (a) any Loss attributable to any breach of or inaccuracy in any representation or warranty made in Section 4.22 ; (b) any Loss attributable to any breach or violation of, or failure to fully perform, any covenant, agreement, undertaking or obligation of Sellers in this ARTICLE VII ; (c) all interest and penalties related to Taxes of the Company and each Subsidiary for all Pre-Closing Tax Periods to the extent such Taxes were required to have been paid by the Company or its Subsidiaries prior to the Closing and were not paid by the Company or any of its Subsidiaries prior to the Closing; (d) all Taxes of any member of an affiliated, consolidated, combined or unitary group of which the Company and each Subsidiary (or any predecessor of the Company or each Subsidiary) is or was a member on or prior to the Closing Date by reason of a liability under Treasury Regulation Section 1.1502-6 or any comparable provisions of foreign, state or local Law; and (e) any and all Taxes of any person imposed on the Company or any Subsidiary arising under the principles of transferee or successor liability or by contract, relating to an event or transaction occurring before the Closing Date, provided , however , that Sellers shall not have any liability for any Taxes resulting from any transaction engaged in by the Company or any Subsidiary of the Company not in the ordinary course of business on the Closing Date after Buyer’s purchase of all the outstanding Units. In each of the above cases, together with any reasonable out-of-pocket fees and expenses (including reasonable attorneys’ and accountants’ fees) incurred in connection therewith, Sellers shall jointly and severally reimburse Buyer for any Taxes of the Company or any Subsidiary that are the responsibility of Sellers pursuant to this Section 7.03 within ten (10) Business Days after payment of such Taxes by Buyer, the Company or any Subsidiary.

 

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Section 7.04          Straddle Period. In the case of Taxes that are payable with respect to a taxable period that begins before and ends after the Closing Date (each such period, a “ Straddle Period ”), the portion of any such Taxes that are treated as Pre-Closing Taxes for purposes of this Agreement shall be:

 

(a)          in the case of Taxes (i) based upon, or related to, income, receipts, profits, wages, capital or net worth, (ii) imposed in connection with the sale, transfer or assignment of property, or (iii) required to be withheld from any payment, deemed equal to the amount which would be payable if the taxable year ended on the Closing Date; and

 

(b)          in the case of other Taxes, deemed to be the amount of such Taxes for the entire period multiplied by a fraction the numerator of which is the number of days in the period ending on the Closing Date and the denominator of which is the number of days in the entire period.

 

Section 7.05          Refunds and Tax Benefits . Any Tax refunds that are received by Buyer, the Company or any Subsidiary of the Company, and any amounts credited against Taxes to which Buyer, the Company or any Subsidiary of the Company becomes entitled (including any interest paid or credited with respect thereto), that relate to Tax periods or portions thereof ending on or before the Closing Date shall be for the account of Buyer, provided that any amount payable by Sellers pursuant to Section 7.03 shall be reduced by the amount of any such refund or credit actually received or taken by Buyer. If Sellers make any payments to Buyer pursuant to Section 7.03 and Buyer subsequently receives a Tax refund related to such payment by Sellers, then Buyer shall promptly refund Sellers for any such payment to the extent of the Tax refund received and related to such payment.

 

Section 7.06          Amendments to Returns; Refund Claims . Unless required by any taxing authority, in which case Buyer shall promptly provide written notice to Sellers, following the Closing, Buyer shall not file an amended Tax Return for the Company or any Subsidiary of the Company for a Tax period ending on or before the Closing Date without the prior written consent of Sellers.

 

Section 7.07          Contests . Buyer agrees to give written notice to Sellers of the receipt of any written notice by the Company, each Subsidiary, Buyer or any of Buyer’s Affiliates which involves the assertion of any claim, or the commencement of any Action, in respect of which an indemnity may be sought by Buyer pursuant to this ARTICLE VII (a “ Tax Claim ”); provided , that failure to comply with this provision shall not affect Buyer’s right to indemnification hereunder except to the extent Sellers are materially prejudiced thereby. Except as provided in the following sentence, Buyer shall control the contest or resolution of any Tax Claim; provided , however , that Buyer shall obtain the prior written consent of Sellers (which consent shall not be unreasonably withheld or delayed) before entering into any settlement of a claim or ceasing to defend such claim; and, provided further , that Sellers shall be entitled to participate in the defense of such claim and to employ counsel of their choice for such purpose, the fees and expenses of which separate counsel shall be borne solely by Sellers. Sellers shall control the contest or resolution of any Tax Claim relating exclusively to a Pre-Closing Tax Period of the Company or any Subsidiary of the Company; provided , however , that if such Tax Claim could have the effect of increasing the Tax liability or reducing any Tax asset of Buyer in respect of any Post-Closing Tax Period, then Sellers shall obtain the prior written consent of Buyer (which consent shall not be unreasonably withheld or delayed) before entering into any settlement of such Tax Claim or ceasing to defend such Tax Claim and Buyer shall be entitled to participate in the defense of such Tax Claim and to employ counsel of its choice for such purpose, the fees and expenses of which separate counsel shall be borne solely by Buyer.

 

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Section 7.08          Cooperation and Exchange of Information . Sellers and Buyer shall provide each other with such cooperation and information as either of them reasonably may request of the other in filing any Tax Return pursuant to this ARTICLE VII or in connection with any audit or other proceeding in respect of Taxes of the Company or any Subsidiary. Such cooperation and information shall include providing copies of relevant Tax Returns or portions thereof, together with accompanying schedules, related work papers and documents relating to rulings or other determinations by tax authorities. Sellers and Buyer shall retain all Tax Returns, schedules and work papers, records and other documents in its possession relating to Tax matters of the Company or any Subsidiary for any taxable period beginning before the Closing Date until the expiration of the statute of limitations of the taxable periods to which such Tax Returns and other documents relate, without regard to extensions except to the extent notified by the other party in writing of such extensions for the respective Tax periods. Prior to transferring, destroying or discarding any Tax Returns, schedules and work papers, records and other documents in its possession relating to Tax matters of the Company or any Subsidiary for any taxable period beginning before the Closing Date, Sellers or Buyer (as the case may be) shall provide the other party with reasonable written notice and offer the other party the opportunity to take custody of such materials.

 

Section 7.09          Tax Treatment.

 

(a)          Any indemnification payments pursuant to this ARTICLE VII shall be treated as an adjustment to the Purchase Price by the parties for Tax purposes, unless otherwise required by Law.

 

(b)          The parties hereto acknowledge that the sale of the outstanding Units to Buyer shall be treated for U.S. federal income tax purposes (i) as to each Seller, as a sale of the Seller’s partnership interest in the Company and (ii) as to Buyer, as a deemed distribution of all of the Company’s assets to the Sellers followed immediately thereafter by the purchase by Buyer of such assets, in each case in accordance with Revenue Ruling 99-6.

 

(c)          The parties hereto acknowledge that the sale of the outstanding Units to Buyer will result in the termination of the Company as a partnership for federal income tax purposes under Code Section 708(b)(1)(A). As a result of such termination, the taxable year of the Company will end for U.S. federal income tax purposes (and any applicable state and local income tax purposes) on the Closing Date, and all income, gain, expense, loss, deduction or credit for the period from January 1 of the year in which the Closing occurs up to and including the Closing Date, which shall be determined using the closing of the books method, will be included on the final federal (and any applicable state and local) income Tax Returns of the Company.

 

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(d)          Buyer shall prepare an allocation of the Purchase Price (plus any additional amounts treated as consideration under Treasury Regulations Section 1.1060-1(c)) among the assets of the Company and its Subsidiaries. Such allocation shall be completed by Buyer in accordance with the requirements of Section 1060 of the Code and the Treasury Regulations thereunder.  Buyer agrees to complete such allocation within ninety (90) days after the Closing Date and shall submit such allocation in writing to Sellers.  If Sellers object to any item on such allocation, they shall, within ten (10) days after delivery of such allocation, notify Buyer in writing of their objection including the reasons therefor. If a notice of objection shall be duly delivered, Buyer and Sellers shall negotiate in good faith and use their reasonable best efforts to resolve such items. If Buyer and Sellers are unable to reach such agreement within ten (10) days after receipt by Buyer of such notice, the disputed items shall be resolved by the Independent Accountant in accordance with the procedures set forth in Section 7.01(c) . Buyer and Sellers covenant and agree to use the final allocation under this Section 7.09(d) in reporting the Tax consequences of the transactions contemplated by this Agreement.  Neither Buyer nor any Seller shall take any position (whether in connection with audits, Tax Returns or otherwise) that is inconsistent with such allocations, except as may be required pursuant to a “determination” within the meaning of Section 1313(a) of the Code (or similar provision of State, local or foreign Tax law).

 

Section 7.10          Survival . Notwithstanding anything in this Agreement to the contrary, the provisions of Section 4.22 and this ARTICLE VII shall survive for the full period of all applicable statutes of limitations (giving effect to any waiver, mitigation or extension thereof) plus sixty (60) days.

 

Section 7.11          Overlap . To the extent that any obligation or responsibility pursuant to ARTICLE IX may overlap with an obligation or responsibility pursuant to this ARTICLE VII , the provisions of this ARTICLE VII shall govern with respect to Tax matters.

 

ARTICLE VIII
Conditions to closing

 

Section 8.01          No Obligation on Buyer to Close . Sellers acknowledge and agree that under no circumstances shall Buyer be obligated to close on the transactions contemplated by this Agreement.

 

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Section 8.02          Conditions to Obligations of Sellers . The obligations of Sellers to consummate the transactions contemplated by this Agreement shall be subject to the fulfillment or Sellers’ waiver, at or prior to the Closing, of each of the following conditions:

 

(a)          No Governmental Authority shall have issued any Governmental Order which is in effect and has the effect of making the transactions contemplated by this Agreement illegal, otherwise restraining or prohibiting consummation of such transactions or causing any of the transactions contemplated hereunder to be rescinded following completion thereof.

 

(b)          No Action shall have been commenced against either Seller seeking to prevent the Closing.

 

(c)          All material consents of, or registrations, declarations or filings with, any Governmental Authority legally required for the consummation of the transactions contemplated by this Agreement shall have been obtained or filed.

 

(d)          The representations and warranties of Buyer contained in this Agreement, the other Transaction Documents and any certificate or other writing delivered pursuant hereto shall be complete and correct in all respects (in the case of any representation or warranty qualified by materiality or Material Adverse Effect) or in all material respects (in the case of any representation or warranty not qualified by materiality or Material Adverse Effect) at and as if made on the Closing Date.

 

(e)          Buyer shall have duly performed and complied in all material respects with all agreements, covenants and conditions required by this Agreement and each of the other Transaction Documents to be performed or complied with by it prior to or on the Closing Date, including payment of the Purchase Price on the terms and conditions provided herein.

 

(f)          Buyer shall have delivered to Sellers duly executed counterparts to the Transaction Documents (other than this Agreement) and such other documents and deliveries set forth in Section 3.02(b) .

 

(g)          Sellers shall have received a certificate, in form and substance reasonably satisfactory to Sellers, dated the Closing Date and signed by a duly authorized officer of Buyer, that each of the conditions set forth in Section 8.02(d) and Section 8.02(e) have been satisfied (the “ Buyer Closing Certificate ”).

 

(h)          Sellers shall have received a certificate in form and substance reasonably acceptable to Sellers (“ Buyer’s Secretary Certificate ”) executed by the secretary of Buyer attaching and certifying true and correct copies of (i) Buyer’s Certificate of Incorporation, (ii) Buyer’s Bylaws, and (iii) the resolutions of Buyer’s Board of Directors approving this Agreement and the transactions contemplated hereby.

 

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(i)          Buyer shall have delivered to Sellers such other documents or instruments as Sellers reasonably request and are reasonably necessary to consummate the transactions contemplated by this Agreement.

 

(j)          Buyer shall have exercised the Option pursuant to the Option Agreement.

 

ARTICLE IX
Indemnification

 

Section 9.01          Survival . Subject to the limitations and other provisions of this Agreement, the representations and warranties contained herein shall survive the Closing and shall remain in full force and effect until the eighteen (18) month anniversary of the Closing Date; provided , that the representations and warranties in Section 4.01 , Section 4.02, Section 4.04, the first sentence of Section 4.09 and Section 4.24 (the “ Fundamental Representations ”), Section 5.01 , and Section 5.02 shall survive indefinitely, and the representations and warranties set forth in Section 4.19(d) as to those claims asserted by Buyer after such eighteen (18) month period, of which the Sellers have Knowledge as of the Closing but did not disclose to Buyer prior to the Closing through the Disclosure Schedules or a supplement to the Disclosure Schedules and for which Losses exceed One Hundred Thousand Dollars ($100,000.00) per claim (“ Special Environmental Losses ”), shall survive for the full period of all applicable statutes of limitations (giving effect to any waiver, mitigation or extension thereof) that would apply to Third Party Claims regarding the subject matter of such representations and warranties plus sixty (60) days. All covenants and agreements of the parties contained herein shall survive the Closing for the period explicitly specified therein or if no period is explicitly specified, the period provided by the applicable statutory statute of limitations. Notwithstanding the foregoing, any claims asserted in good faith with reasonable specificity (to the extent known at such time) and in writing by notice from the non-breaching party to the breaching party prior to the expiration date of the applicable survival period shall not thereafter be barred by the expiration of the relevant representation or warranty and such claims shall survive until finally resolved; provided , that no claim may be asserted against any party unless written notice of such claim is received by such party, describing in reasonable detail the facts and circumstances with respect to the subject matter of such claim, on or prior to the date (a) on which the representation or warranty on which such claim is based ceases to survive as set forth or (b) that is twelve (12) months following the date by which such covenant or agreement is required to be performed.

 

Section 9.02          Indemnification By Sellers . Subject to the other terms and conditions of this ARTICLE IX , Sellers shall jointly and severally indemnify and defend Buyer and its Affiliates (including the Company and the Subsidiaries after the Closing) and their respective Representatives (collectively, the “ Buyer Indemnitees ”) against, and shall hold each of them harmless from and against, and shall pay and reimburse each of them for, any and all Losses incurred or sustained by, or imposed upon, the Buyer Indemnitees based upon, arising out of, with respect to or by reason of:

 

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(a)          any inaccuracy in or breach of any of the representations or warranties of Sellers contained in this Agreement or in any certificate or instrument delivered by or on behalf of either Seller pursuant to this Agreement;

 

(b)          any breach or non-fulfillment of any covenant, agreement or obligation to be performed by either Seller pursuant to this Agreement or any certificate or instrument delivered by or on behalf of either Seller pursuant to this Agreement; or

 

(c)          any Specified Seller Liabilities.

 

Section 9.03          Indemnification By Buyer . Subject to the other terms and conditions of this ARTICLE IX , Buyer shall indemnify and defend each Seller and its respective Affiliates and Representatives (collectively, the “ Seller Indemnitees ”) against, and shall hold each of them harmless from and against, and shall pay and reimburse each of them for, any and all Losses incurred or sustained by, or imposed upon, the Seller Indemnitees based upon, arising out of, with respect to or by reason of:

  

(a)          any inaccuracy in or breach of any of the representations or warranties of Buyer contained in this Agreement or any other Transaction Documents, or in any certificate or instrument delivered by or on behalf of Buyer pursuant to this Agreement, or any other Transaction Documents; or

 

(b)          any breach or non-fulfillment of any covenant, agreement or obligation to be performed by Buyer pursuant to this Agreement.

 

Section 9.04          Certain Limitations . The indemnification provided for in Section 9.02 and Section 9.03 shall be subject to the following limitations:

 

(a)          Except as otherwise expressly set forth herein, Sellers shall not be liable to the Buyer Indemnitees for indemnification under Section 9.02(a) or 9.02(b) until the aggregate amount of all Losses in respect of indemnification under Section 9.02(a) or 9.02(b) exceeds $250,000.00 (the “ Basket ”), in which event Sellers shall only be liable for any such Losses in excess of the Basket. Representations and warranties in ARTICLE IV that are qualified by the terms “material” or “Material Adverse Effect”, or other terms of similar impact or effect, other than the representations and warranties in Section 4.13(b) in which such terms shall remain in effect and shall not be read as if such words were deleted, shall be read without regard to such terms (i.e., as if such words were deleted from such representation or warranty), and if the Losses in respect of any breach of any such representation and warranty (as so modified) do not exceed $25,000.00, such Losses will not count toward the Basket or otherwise be indemnified; provided that, if the aggregate amount of all such Losses exceeds $100,000.00, then only such Losses in excess of $100,000.00 shall count toward the Basket, and towards indemnification of Losses once the Basket is exceeded. Notwithstanding anything in this Agreement to the contrary, Losses arising from Seller’s breach of any Fundamental Representation or Section 4.22 , or Section 6.06 , or Buyer’s payment of a Specified Seller Liability, or which arise as a result of any Special Environmental Losses, shall not be subject to the Basket or any other limitation set forth in this Section 9.04(a) .

 

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(b)          Buyer shall not be liable to the Seller Indemnities for indemnification under Section 9.03(a) until the aggregate amount of all Losses in respect of indemnification under Section 9.03(a) with regard to breaches of the representations set forth in Sections 5.03 and 5.05 exceeds the Basket, in which event Buyer shall only be liable for any such Losses in excess of the Basket.

 

(c)          Except as otherwise expressly set forth herein, the aggregate amount of Losses required to be paid by Sellers pursuant to Section 7.03 and Sections 9.02(a) and 9.02(b) shall not exceed an aggregate amount equal to (i) the Escrow Amount plus (ii) the Buyer Stock that was issued to Health KP, LLC pursuant to the Securities Purchase Agreement, dated August 1, 2014, between Health KP, LLC and Buyer (the “ Cap ”). Notwithstanding the foregoing, Losses arising from either Seller’s breach of any Fundamental Representation or Section 6.06 , or Buyer’s payment of a Specified Seller Liability, shall not be subject to the Cap.

 

(d)          For all purposes of this ARTICLE IX , Losses shall be net of any third party insurance proceeds or any indemnity, contributions or other similar payment actually paid to the Indemnified Party or its Affiliates in connection with the facts giving right to the right of indemnification. For the avoidance of doubt, an Indemnified Party shall be under no obligation to mitigate such Indemnified Party’s Losses.

 

(e)          In any case where a Buyer Indemnitee recovers from third Persons any amount in respect of a matter with respect to which Sellers have made an indemnification payment to such Buyer Indemnitee pursuant to this Agreement, such Buyer Indemnitee shall promptly pay over to Sellers the amount so recovered (after deducting therefrom the full amount of the expenses incurred by the Buyer Indemnitee in procuring such recovery), and any amount expended by Sellers in pursuing or defending any claim arising out of such matter, but not in excess of the amount of the indemnification payment previously paid by Sellers to or on behalf of such Buyer Indemnitee in respect of such matter.

 

(f)          Notwithstanding anything herein to the contrary, if after the six (6) month anniversary of the Closing Date, Buyer continues to use any advertising, labeling or other marketing materials that are substantially the same as any advertising, labeling or other marketing materials used by the Company or its Subsidiaries prior to the Closing, Buyer shall not have the right to bring any indemnification claim or other claim in respect of such advertising, labeling or other marketing materials.

 

(g)          No party shall have any liability under any provision of this Agreement for any punitive, consequential or special damages (including loss of profit or revenue or any multiple of earnings or revenue), except to the extent such damages are payable pursuant to a Third Party Claim.

 

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(h)          For the purposes of clarity, to the extent that Sellers do not deliver to Buyer 100% of their outstanding Units and Management Incentive Units, Buyer’s sole remedy shall be as set forth in Section 8(c) of the Option Agreement.

 

Section 9.05          Indemnification Procedures . The party making a claim under this ARTICLE IX is referred to as the “ Indemnified Party ”, and the party against whom such claims are asserted under this ARTICLE IX is referred to as the “ Indemnifying Party ”.

 

(a)           Third Party Claims. If any Indemnified Party receives notice of the threat, assertion or commencement of any Action made or brought by any Person who is not a party to this Agreement or an Affiliate of a party to this Agreement or a Representative of the foregoing (a “ Third Party Claim ”) against such Indemnified Party with respect to which an Indemnifying Party is obligated to provide indemnification under this Agreement, the Indemnified Party shall give the Indemnifying Party prompt written notice thereof, provided that the failure to so notify the Indemnifying Party shall not relieve the Indemnifying Party of its indemnification obligations, except and only to the extent that the Indemnifying Party is materially adversely affected by such failure. Such notice by the Indemnified Party shall describe the Third Party Claim in reasonable detail, shall include copies of all material written evidence thereof (to the extent in the possession of the Indemnified Party) and shall indicate the estimated amount, if reasonably practicable, of the Loss that has been or may be sustained by the Indemnified Party. The Indemnifying Party shall have the right to participate in, or by giving written notice to the Indemnified Party within thirty (30) days following the Indemnifying Party’s receipt of notice of a Third Party Claim, to assume the defense of any Third Party Claim at the Indemnifying Party’s expense and by the Indemnifying Party’s own counsel, and the Indemnified Party shall cooperate in good faith in such defense; provided , that if the Indemnifying Party is a Seller, such Indemnifying Party shall not have the right to defend or direct the defense of any such Third Party Claim that seeks an injunction or other equitable relief against the Indemnified Party. In the event that the Indemnifying Party assumes the defense of any Third Party Claim, subject to Section 9.05(b) , it shall have the right to take such action as it deems necessary to dispute, defend, appeal or make counterclaims pertaining to any such Third Party Claim in the name and on behalf of the Indemnified Party. The Indemnified Party shall have the right to participate in the defense of any Third Party Claim with counsel selected by it subject to the Indemnifying Party’s right to control the defense thereof. The fees and disbursements of such counsel shall be at the expense of the Indemnified Party, provided , that if in the reasonable opinion of counsel to the Indemnified Party, (A) there are legal defenses available to an Indemnified Party that are different from or additional to those available to the Indemnifying Party; or (B) there exists a conflict of interest between the Indemnifying Party and the Indemnified Party that cannot be waived, the Indemnifying Party shall be liable for the reasonable fees and expenses of counsel to the Indemnified Party, provided , however , that the Indemnifying Party will not be required to pay the fees and expenses of more than one counsel for all Indemnified Parties in any jurisdiction in any single Third Party Claim. If the Indemnifying Party elects not to compromise or defend such Third Party Claim, fails to notify the Indemnified Party in writing within the 30-day period noted above of its election to defend as provided in this Agreement, the Indemnified Party may, subject to Section 9.05(b) , pay, compromise, defend such Third Party Claim and seek indemnification for any and all Losses based upon, arising from or relating to such Third Party Claim. In any Third Party Claim with respect to which indemnification is being sought hereunder, the Indemnified Party or the Indemnifying Party, whichever is not assuming the defense of such Third Party Claim, shall have the right to participate in such matter and to retain its own counsel at such party’s own expense. The Indemnified Party and the Indemnifying Party shall cooperate with each other in all reasonable respects in connection with the defense of any Third Party Claim, including making available (subject to the provisions of Section 6.05 ) records relating to such Third Party Claim and furnishing, without expense (other than reimbursement of actual out-of-pocket expenses) to the defending party, management employees of the non-defending party as may be reasonably necessary for the preparation of the defense of such Third Party Claim and shall at all times use reasonable best efforts to keep the other party reasonably apprised of the status of any matter the defense of which they are maintaining.

 

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(b)           Settlement of Third Party Claims. Notwithstanding any other provision of this Agreement, the Indemnifying Party shall not enter into settlement of any Third Party Claim without the prior written consent of the Indemnified Party, except as provided in this Section 9.05(b) . If a firm offer is made to settle a Third Party Claim without leading to liability or the creation of a financial or other obligation or restriction on the part of the Indemnified Party and provides, in customary form, for the unconditional release of each Indemnified Party from all liabilities and obligations in connection with such Third Party Claim and the Indemnifying Party desires to accept and agree to such offer, the Indemnifying Party shall give written notice to that effect to the Indemnified Party. If the Indemnified Party fails to consent to such firm offer within ten (10) days after its receipt of such notice, the Indemnified Party may continue to contest or defend such Third Party Claim and in such event, the maximum liability of the Indemnifying Party as to such Third Party Claim shall not exceed the amount of such settlement offer. If the Indemnified Party fails to respond to such firm offer within ten (10) days after its receipt of notice and also fails to assume defense of such Third Party Claim, the Indemnifying Party may settle the Third Party Claim upon the terms set forth in such firm offer to settle such Third Party Claim. If the Indemnified Party has assumed the defense pursuant to Section 9.05(a) , it shall not agree to any settlement without the written consent of the Indemnifying Party (which consent shall not be unreasonably withheld or delayed).

 

(c)           Direct Claims. Any Action by an Indemnified Party on account of a Loss which does not result from a Third Party Claim (a “ Direct Claim ”) shall be asserted by the Indemnified Party giving the Indemnifying Party reasonably prompt written notice thereof, provided that the failure to give such prompt written notice shall not relieve the Indemnifying Party of its indemnification obligations, except and only to the extent that the Indemnifying Party is materially adversely affected by such failure. Such notice by the Indemnified Party shall describe the Direct Claim in reasonable detail, shall include copies of all material written evidence thereof (to the extent in the possession of the Indemnified Party) and shall indicate the estimated amount, if reasonably practicable, of the Loss that has been or may be sustained by the Indemnified Party. The Indemnifying Party shall have thirty (30) days after its receipt of such notice to respond in writing to such Direct Claim. The Indemnified Party shall allow the Indemnifying Party and its professional advisors to investigate the matter or circumstance alleged to give rise to the Direct Claim, and whether and to what extent any amount is payable in respect of the Direct Claim and the Indemnified Party shall assist the Indemnifying Party’s investigation by giving such information and assistance (including access to the Indemnified Party’s premises and personnel and the right to examine and copy any accounts, documents or records) as the Indemnifying Party or any of its professional advisors may reasonably request. If the Indemnifying Party does not so respond within such thirty (30) day period, the Indemnifying Party shall be deemed to have accepted such claim. If the Indemnifying Party rejects such claim, the Indemnified Party shall be free to pursue such remedies as may be available to the Indemnified Party on the terms and subject to the provisions of this Agreement.

 

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Section 9.06          Payments . Once a Loss is agreed to by the Indemnifying Party or finally adjudicated to be payable pursuant to this ARTICLE IX :

 

(a)          If the Indemnifying Party is Buyer, Buyer shall satisfy its obligations within fifteen (15) Business Days of such agreement or final, non-appealable adjudication by wire transfer of immediately available funds. The parties hereto agree that should Buyer not make full payment of any such obligations within such fifteen (15) Business Day period, any amount payable shall accrue interest from and including the date of agreement of Buyer or a final, non-appealable adjudication to and including the date such payment has been made at a rate per annum equal to ten percent (10%). Such interest shall be calculated daily on the basis of a 365 day year and the actual number of days elapsed, without compounding.

 

(b)          If the Indemnifying Party is a Seller, except as otherwise expressly provided herein, such indemnification obligations shall be satisfied solely from the Escrow Amount and by delivery by Health KP, LLC to Buyer of shares of the Buyer Stock. Notwithstanding the foregoing, a Seller shall be personally liable for Losses arising from such Seller’s breach of any Fundamental Representation or Section 6.06 , and Buyer’s payment (other than as a reduction of the Purchase Price) of a Specified Seller Liability, to the extent such Losses and payments exceed the then Escrow Amount and the Buyer Stock valued at the greater of (the “ Indemnification Value ”) (i) $2.29 per share of Buyer Stock, to be equitably adjusted as necessary to reflect the effect of any forward or reverse stock split, stock dividend, recapitalization or other similar change with respect to Buyer Stock which has an applicable record date occurring during the period commencing on the date of the Option Agreement and ending on the applicable date of valuation of such Buyer Stock (as adjusted, the “ Initial Buyer Stock Value ”); or (ii) (x) at the 60 day volume weighted average stock price of such Common Stock, provided that during such 60-day period, there have been a minimum 45 days on which trading has occurred and the average daily volume of trading over the 60 day period is at least 5% of the total number of shares of Buyer Stock available for trading or (y) in the event the requirements of the foregoing clause (x) are not met, the price per share of the Buyer Stock sold by Buyer during the 90 days prior to Closing in any arms’ length PIPE (private investment in public entity) financing transaction with proceeds of at least Five Million Dollars ($5,000,000), and in the event there is more than one such transaction, then the average price in such transactions; if there have been no such transactions, and the requirements of the foregoing clause (x) are not met, then the Indemnification Value shall be the Initial Buyer Stock Value. Sellers’ indemnification obligations shall be satisfied first from any portion of the Escrow Amount that is then being held in escrow pursuant to the Escrow Agreement, and if the indemnifiable Losses exceed such portion of the Escrow Amount (or if no part of the Escrow Amount is then being held in escrow), the balance of the indemnifiable Losses shall be paid by delivery to Buyer of all or a portion of the Buyer Stock, as determined pursuant to Section 9.10 ; and with regard to Losses for which the Sellers have personal liability, any balance of such indemnifiable Losses shall be paid by Sellers by wire transfer of immediately available funds to an account designated by Buyer. Notwithstanding anything else set forth herein, if Sellers do not make the payment provided for in item 8 of Schedule B within five (5) days of the date on which such payment is required to be made as provided in item 8 of Schedule B , such amount shall be paid from the Escrow Amount, and within five (5) days after such payment Sellers shall deliver to the Escrow Agent by wire transfer of immediately available funds an amount equal to such payment, which amount shall become part of the Escrow Amount and shall be held in escrow pursuant to the terms of this Agreement and the Escrow Agreement.

 

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Section 9.07          Tax Treatment of Indemnification Payments . All indemnification payments made under this Agreement shall be treated by the parties as an adjustment to the Purchase Price for Tax purposes, unless otherwise required by Law.

 

Section 9.08          Effect of Investigation . The representations, warranties and covenants of the Indemnifying Party and the Indemnified Party’s right to indemnification with respect to breaches thereof, shall not be affected or deemed waived by reason of any investigation made by or on behalf of the Indemnified Party (including by any of its Representatives) or by reason of the fact that the Indemnified Party or any of its Representatives knew or should have known that any such representation or warranty is, was or might be inaccurate or by reason of the Indemnified Party’s waiver of any condition set forth in Section 8.02 , as the case may be; provided , that Sellers shall have no liability for any breach of any representation or warranty in ARTICLE IV if Buyer had Knowledge of such breach prior to the Option Exercise Date.

 

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Section 9.09          Exclusive Remedies . Subject to Section 6.06 , Section 6.03 and Section 11.11 , the parties acknowledge and agree that after the Closing their sole and exclusive remedy with respect to any and all claims (other than claims arising from fraud), for any breach of any representation, warranty, covenant, agreement or obligation set forth herein, shall be pursuant to the indemnification provisions set forth in this ARTICLE IX . Nothing in this Section 9.09 shall limit any Person’s right to seek and obtain any equitable relief which any Person shall be entitled or to seek any remedy on account of any party’s fraudulent misconduct.

 

Section 9.10          Set Off Against Buyer Stock. Any claim for Losses by Buyer or a Buyer Indemnitee prior to the eighteen (18) month anniversary of the Closing Date that is to be satisfied by delivery of shares of the Buyer Stock, shall be satisfied by the delivery to Buyer from the escrowed Buyer Stock of such number of shares that, multiplied by the Indemnification Value as of the Closing Date, equals the amount of the Losses.

 

(b)          Any claim for Losses by Buyer or a Buyer Indemnitee on or after the eighteen (18) month anniversary of the Closing Date that is to be satisfied by delivery of shares of the Buyer Stock, shall be satisfied by Sellers’ delivery to Buyer of such number of shares of the Buyer Stock that, multiplied by the Indemnification Value as of the date on which the amount of such Losses is finally determined, equals the amount of the Losses.

 

ARTICLE X
Termination

 

Section 10.01          Termination . This Agreement may be terminated at any time prior to the Closing:

 

(a)          by the mutual written consent of Sellers and Buyer;

 

(b)          by Buyer, for any reason or no reason, by written notice to Sellers;

 

(c)          by Sellers by written notice to Buyer if:

 

(i)          Neither Seller is in material breach of any provision of this Agreement and there has been a breach, inaccuracy in or failure to perform any representation, warranty, covenant or agreement made by Buyer pursuant to this Agreement that would give rise to the failure of any of the conditions specified in ARTICLE VIII and such breach, inaccuracy or failure has not been cured by Buyer on or prior to the Purchase Expiration Date; or

 

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(ii)         any of the conditions set forth in Section 8.01 or Section 8.02 shall not have been, or if it becomes apparent that any of such conditions will not be, fulfilled on or prior to the Purchase Expiration Date, unless such failure shall be due to the failure of any Seller to perform or comply with any of the covenants, agreements or conditions hereof to be performed or complied with by it prior to the Closing;

 

(d)          by Buyer, or Sellers, in the event that (i) there shall be any Law that makes consummation of the transactions contemplated by this Agreement illegal or otherwise prohibited or (ii) any Governmental Authority shall have issued a Governmental Order restraining or enjoining the transactions contemplated by this Agreement, and such Governmental Order shall have become final and non-appealable; or

 

(e)          if the Option has not been exercised by the end of the Option Period (as defined in the Option Agreement), in which case this Agreement shall terminate immediately.

 

Section 10.02          Effect of Termination . In the event of the termination of this Agreement in accordance with this ARTICLE X , this Agreement shall forthwith become void and there shall be no liability on the part of any party hereto except:

 

(a)          as set forth in this ARTICLE X , Section 6.05 and Section 6.09 and ARTICLE XI hereof; and

 

(b)          that nothing herein shall relieve any party hereto from liability for any breach of any provision hereof.

 

ARTICLE XI
Miscellaneous

 

Section 11.01          Expenses . Except as otherwise expressly provided herein, in the Option Agreement or in the Fee Agreement, all costs and expenses, including fees and disbursements of counsel, financial advisors and accountants, incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the party incurring such costs and expenses, whether or not the Closing shall have occurred.

 

Section 11.02          Notices . All notices, requests, consents, claims, demands, waivers and other communications hereunder shall be in writing and shall be deemed to have been given (a) when delivered by hand (with written confirmation of receipt); (b) when received by the addressee if sent by a nationally recognized overnight courier (receipt requested); (c) on the date sent (if such date is a Business Day at the recipient’s address, otherwise on the next Business Day at the recipient’s address) by facsimile or e-mail of a PDF document (with confirmation of receipt by recipient); in each case a party’s refusal or willful avoidance of delivery shall be deemed to constitute delivery. Such communications must be sent to the respective parties at the following addresses (or at such other address for a party as shall be specified in a notice given in accordance with this Section 11.02 ):

 

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If to Sellers (which shall constitute notice to both Sellers):

Robert Whittel
2255 Glades Road, Suite 342W
Boca Raton, FL 33432

Facsimile:         (531) 443-2821

E-mail:               Robert@whittel.com

 

with a copy to (which copy shall not constitute notice):

King & Spalding

1180 Peachtree Street, NE

Atlanta, GA 30309

Facsimile:       (404) 572-5100

E-mail:             rpatel@kslaw.com

Attention:        Rahul Patel, Esq.

 

If to Buyer:

Twinlab Consolidation Corporation

632 Broadway, Suite 201

New York, New York 10012

Facsimile:       (212) 505-5413

E-mail:             rneuwirth@twinlab.com

Attention:        General Counsel

   
with a copy to (which copy shall not constitute notice):

Wilk Auslander LLP

1515 Broadway, 43 rd Floor

New York, New York 10036

Facsimile:        (212) 752-6380

E-mail:             salbert@wilkauslander.com

Attention:        Stephen A. Albert, Esq.

  

Section 11.03          Interpretation . For purposes of this Agreement, (a) the words “include,” “includes” and “including” shall be deemed to be followed by the words “without limitation”; (b) the word “or” is not exclusive; and (c) the words “herein,” “hereof,” “hereby,” “hereto” and “hereunder” refer to this Agreement as a whole. Unless the context otherwise requires, references herein: (x) to Articles, Sections, Disclosure Schedules and Exhibits mean the Articles and Sections of, and Disclosure Schedules and Exhibits attached to, this Agreement; (y) to an agreement, instrument or other document means such agreement, instrument or other document as amended, supplemented and modified from time to time to the extent permitted by the provisions thereof and (z) to a statute means such statute as amended from time to time and includes any successor legislation thereto and any regulations promulgated thereunder. This Agreement shall be construed without regard to any presumption or rule requiring construction or interpretation against the party drafting an instrument or causing any instrument to be drafted. The Disclosure Schedules and Exhibits referred to herein shall be construed with, and as an integral part of, this Agreement to the same extent as if they were set forth verbatim herein.

 

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Section 11.04          Headings . The headings in this Agreement are for reference only and shall not affect the interpretation of this Agreement.

 

Section 11.05          Severability . If any term or provision of this Agreement is invalid, illegal or unenforceable in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other term or provision of this Agreement or invalidate or render unenforceable such term or provision in any other jurisdiction. Except as provided in Section 6.06(d) , upon such determination that any term or other provision is invalid, illegal or unenforceable, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the greatest extent possible.

 

Section 11.06          Entire Agreement . This Agreement, the Option Agreement, the Fee Agreement and the other Transaction Documents constitute the sole and entire agreement of the parties to this Agreement with respect to the subject matter contained herein and therein, and supersede all prior and contemporaneous understandings and agreements, both written and oral, with respect to such subject matter (except for that certain Confidentiality Agreement, dated December 9, 2013, by and between the Company and Twinlab Corporation, which shall continue and remain in full force and effect). In the event of any inconsistency between the statements in the body of this Agreement and those in the other Transaction Documents (other than the Option Agreement and the Fee Agreement), the Exhibits and Disclosure Schedules (other than an exception expressly set forth as such in the Disclosure Schedules), the statements in the body of this Agreement will control.

 

Section 11.07          Successors and Assigns . This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and permitted assigns. None of the parties may assign its rights or obligations hereunder without the prior written consent of the other parties; provided , however , that prior to the Closing Date, Buyer may, without the prior written consent of Sellers, assign all or any portion of its rights and obligations under this Agreement to (a) one or more of its direct or indirect wholly-owned subsidiaries, or (b) any Person who acquires Buyer or its Business (whether by way of a sale of shares, a merger, the sale of all or substantially all of Buyer’s assets, or otherwise); in the event of any such assignment, the assignee shall be deemed to be “Buyer” for all purposes, with all of Buyer’s rights and obligations, under this Agreement, the Option Agreement, the Fee Agreement and the other Transaction Documents, including for purposes of providing the Buyer Stock. No assignment shall relieve the assigning party of any of its obligations hereunder.

 

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Section 11.08          No Third-party Beneficiaries . Except as provided in ARTICLE IX , this Agreement is for the sole benefit of the parties hereto and their respective successors and permitted assigns and nothing herein, express or implied, is intended to or shall confer upon any other Person or entity any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.

 

Section 11.09          Amendment and Modification; Waiver . This Agreement may only be amended or supplemented by an agreement in writing signed by each party hereto. No waiver by any party of any of the provisions hereof shall be effective unless explicitly set forth in writing and signed by the party so waiving. No waiver by any party shall operate or be construed as a waiver in respect of any failure, breach or default not expressly identified by such written waiver, whether of a similar or different character, and whether occurring before or after that waiver. No failure to exercise, or delay in exercising, any right, remedy, power or privilege arising from this Agreement shall operate or be construed as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege.

 

Section 11.10          Governing Law; Submission to Jurisdiction; Waiver of Jury Trial.

 

(a)          This Agreement shall be governed by and construed in accordance with the internal laws of the State of New York without giving effect to any choice or conflict of law provision or rule (whether of the State of New York or any other jurisdiction).

 

(b)          ANY LEGAL SUIT, ACTION OR PROCEEDING ARISING OUT OF OR BASED UPON THIS AGREEMENT, THE OTHER TRANSACTION DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY MAY BE INSTITUTED IN THE FEDERAL COURTS OF THE UNITED STATES OF AMERICA OR THE COURTS OF THE STATE OF NEW YORK IN EACH CASE LOCATED IN THE CITY OF NEW YORK AND COUNTY OF NEW YORK, AND EACH PARTY IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF SUCH COURTS IN ANY SUCH SUIT, ACTION OR PROCEEDING. SERVICE OF PROCESS, SUMMONS, NOTICE OR OTHER DOCUMENT BY MAIL TO SUCH PARTY'S ADDRESS SET FORTH HEREIN SHALL BE EFFECTIVE SERVICE OF PROCESS FOR ANY SUIT, ACTION OR OTHER PROCEEDING BROUGHT IN ANY SUCH COURT. THE PARTIES IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY OBJECTION TO THE LAYING OF VENUE OF ANY SUIT, ACTION OR ANY PROCEEDING IN SUCH COURTS AND IRREVOCABLY WAIVE AND AGREE NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.

 

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(c)          EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT OR THE OTHER TRANSACTION DOCUMENTS IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES AND, THEREFORE, EACH SUCH PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LEGAL ACTION ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE OTHER TRANSACTION DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. EACH PARTY TO THIS AGREEMENT CERTIFIES AND ACKNOWLEDGES THAT (A) NO REPRESENTATIVE OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT SEEK TO ENFORCE THE FOREGOING WAIVER IN THE EVENT OF A LEGAL ACTION, (B) SUCH PARTY HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (C) SUCH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (D) SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 11.10(c) .

 

Section 11.11          Specific Performance . The parties agree that irreparable damage would occur if any provision of this Agreement were not performed in accordance with the terms hereof and that the parties shall be entitled to specific performance of the terms hereof, in addition to any other remedy to which they are entitled at law or in equity.

 

Section 11.12          Counterparts . This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall be deemed to be one and the same agreement. A signed copy of this Agreement delivered by facsimile, e-mail or other means of electronic transmission shall be deemed to have the same legal effect as delivery of an original signed copy of this Agreement.

 

Section 11.13          Effectiveness . This Agreement shall not be considered effective until the Option Exercise Date and no party will have any obligation under this Agreement until the Option Exercise Date, provided, however, that upon the Option Exercise Date, this Agreement shall be automatically effective without any further action by any of the parties to this Agreement; provided that the accuracy of the representations and warranties in ARTICLE IV shall be subject in all respects to delivery of the Disclosure Schedules by Sellers.

 

[SIGNATURE PAGE FOLLOWS]

 

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above.

 

SELLERS :    
     
/s/ Naomi L. Balcombe   /s/ Robert Whittel
Naomi L. Balcombe   Robert Whittel
     
    BUYER:
     
    TWINLAB CONSOLIDATION CORPORATION
     
    By: /s/ Thomas A. Tolworthy
    Name:  Thomas A. Tolworthy
    Title:    CEO

 

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Exhibit 10.104

 

AMENDMENT NO. 1 TO UNIT PURCHASE AGREEMENT

 

THIS AMENDMENT NO. 1 TO UNIT PURCHASE AGREEMENT (the “ Amendment” ) is made as of this 17th day of July, 2015, by and among Naomi L. Balcombe, Robert Whittel (collectively, “ Sellers ”), on the one hand, and Twinlab Consolidation Corporation, a Delaware corporation (“ Buyer ”) on the other hand.

 

WHEREAS, Sellers and Buyer are parties to that certain Unit Purchase Agreement, dated September 2, 2014, the “ Purchase Agreement ”);

 

WHEREAS, Sellers and Buyer wish to amend the Purchase Agreement; and

 

WHEREAS , Sellers and Buyer wish to reflect their agreement regarding the Company entering into an employment agreement with Michael Bryce.

 

NOW, THEREFORE , for good and valuable consideration, the receipt and sufficiency of which are hereby expressly acknowledged, the parties agree as follows (capitalized terms not otherwise defined herein have the meanings ascribed thereto in the Purchase Agreement):

 

1.          The parties agree that no portion of the Purchase Price will be deposited into escrow under the Escrow Agreement, or otherwise. All references in the Purchase Agreement to the “Escrow Amount”, including, without limitation the defined term “Escrow Amount”, are hereby deleted, and the Purchase Agreement is hereby amended, mutatis mutandis, accordingly. The parties agree to work in good faith with each other and the Escrow Agent to amend the Escrow Agreement so as to conform it to the provisions of this Section 1.

 

2.          Section 2.02(b)(i) of the Purchase Agreement is hereby deleted in its entirety and replaced with the following:

 

(i)           Buyer shall deliver to Sellers the Cash Payment (less $100,000, such amount being the amount of the deposit paid by Buyer to Sellers pursuant to the Option Agreement), to such account designated in writing by Sellers, by wire transfer of immediately available funds.

 

3.          A new Section 10.03 is hereby inserted into the Purchase Agreement, to read in its entirely as follows:

 

Section 10.03 Breakup Fee. Notwithstanding any other provisions of this Agreement or the Option Agreement, including, without limitation, Section 10.02, and Section 4(c) of the Option Agreement, if Buyer exercises the Option and the Closing does not occur on or prior to the Purchase Expiration Date, Buyer shall pay to Sellers, no later than five (5) Business Days after the Purchase Expiration Date, a breakup fee in the amount of Five Hundred Thousand Dollars ($500,000), which breakup fee shall be delivered to an account designated in writing by Sellers, by wire transfer of immediately available funds; provided that such breakup fee shall not be payable if the Closing does not occur on account of any of the following:

 

(a)   this Agreement terminates pursuant to Section 10.01(a) or Section 10.01(d)(i);

 

  1  

 

(b)   Sellers fail to comply with the covenants set forth in Section 6.11;

 

(c)   there shall have occurred a Material Adverse Effect or a Material Adverse Event (as defined in the Option Agreement);

 

(d)   a Governmental Authority shall have issued any Governmental Order which is in effect and has the effect of making the transactions contemplated by this Agreement illegal, otherwise restraining or prohibiting consummation of such transactions or causing any of the transactions contemplated hereby to be rescinded following completion thereof; or

 

(e)   all material consents of, or registrations, declarations or filings with, any Governmental Authority required to be obtained by Sellers or the Company for the consummation of the transactions contemplated by this Agreement shall not have been obtained or filed.

 

For purposes of clarity, this Section 10.03 shall not restrict, limit or in any other way affect the provisions of Section 8.01 or Section 10.01(b), and Sellers agree that this Section 10.03 serves only to provide for a breakup fee as Sellers’ sole and exclusive remedy if Buyer exercises the Option and fails to close on the transactions contemplated hereby for any reason other than those set forth in this Section 10.03.

 

4.           Buyer agrees that the Company’s entering into an employment agreement (including the Management Incentive Unit Agreement attached thereto) attached hereto as Exhibit A shall not be deemed to be a breach or violation of any of the terms of the Purchase Agreement or the Option Agreement.

 

5.           Except as expressly modified by this Amendment, all terms and conditions of the Purchase Agreement shall remain in full force and effect.

 

6.           This Amendment may be executed in counterparts, each of which shall be deemed an original, but all of which together shall be deemed to be one and the same instrument. A signed, including electronically signed, copy of this Amendment delivered by facsimile, email or other means of electronic transmission shall be deemed to have the same legal effect as delivery of an original signed copy of this Amendment.

 

IN WITNESS WHEREOF , each of the undersigned has executed this Amendment as of the day and year first written above.

 

SELLERS:   BUYER:
     
/s/ Naomi L. Balcombe   TWINLAB CONSOLIDATION
Naomi L. Balcombe   CORPORATION
     
/s/ Robert G. Whittel    
Robert G. Whittel   By: /s/ Thomas A. Tolworthy
    Name: Thomas A. Tolworthy
    Title:    CEO

 

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Exhibit 10.105

 

EMPLOYMENT AGREEMENT

 

This Employment Agreement (the “Agreement”) is made as of October 2, 2015, between Twinlab Consolidation Corporation, a Delaware Corporation (the “Company”) and Naomi L. Balcombe (“Executive”).

 

In consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby expressly acknowledged, the parties hereto agree as follows:

 

1. Position, Duties, and Office Location .

 

(a)       The Company shall employ Executive, and Executive hereby accepts employment with the Company, as the Company’s President of Direct-To-Consumer. Executive shall report to the Company’s Chief Executive Officer, and shall render such administrative, sales, marketing, and other executive managerial services to the Company commensurate with Executive’s position and as the Company’s Chief Executive Officer may direct from time to time. The Company may, with Executive’s consent, transfer Executive to other executive level positions, if consistent with Executive’s skills and experience, within the Company or an affiliated company. This full-time position will commence on the date of the “Closing” (as defined in that certain Unit Purchase Agreement (the “Purchase Agreement”) between Executive, among others, on the one hand and the Company, on the other hand, regarding the acquisition by the Company of the outstanding units of Organic Holdings LLC) (the “Start Date”). The location at which Executive will perform services pursuant to this Agreement shall initially be the existing offices of Organic Holdings LLC, in Boca Raton, Florida, and is currently intended to thereafter, at the Company’s sole discretion, be the Company’s offices located in the greater Tampa Bay/St. Petersburg, Florida metropolitan area, subject in each case to reasonable travel required to perform such duties. A transfer to an office located outside the States of Florida, Connecticut, or New York shall be deemed a material change in the geographic location at which Executive must perform the services pursuant to this Agreement.

 

(b)      Executive will be loyal to the Company during the employment and devote Executive’s full-time business efforts and attention to Executive’s employment with the Company. Except as set forth on Schedule I to this Agreement, during Executive’s period of employment with the Company, Executive shall not serve as an officer or director of, or otherwise perform services for compensation for, any entity other than the Company or its Affiliates without the prior written consent of the Company’s Chief Executive Officer; provided that (1) Executive may serve as an officer or director or otherwise participate in civic, educational, social, and religious organizations and (2) Executive may attend to Executive’s personal matters and personal or family finances, investments and business affairs, in each case, so long as such activities do not interfere with Executive’s employment obligations to the Company. Executive shall be permitted to retain all compensation in respect of any of the services or activities referred to in this Section 1(b).

 

2. Base Salary . From the Start Date through the day prior to the two (2) year anniversary of the Start Date, Executive’s base salary shall be One Hundred Thousand Dollars ($100,000) per year. If Executive continues employment with the Company for more than two (2) years from Executive’s Start Date with the Company, then for any such period of employment beginning on or after the first (1 st ) day of the third (3 rd ) year of employment with the Company, Executive shall be paid a base salary of Three Hundred Thousand Dollars ($300,000) per year, subject to review at least annually by the Board of Directors of the Company (the “Board”) for increase. Executive’s base salary shall be paid in accordance with the Company’s normal payroll practices, currently bi-weekly pay periods, and from which the Company shall withhold taxes in accordance with applicable regulations. Except as mutually agreed by the parties in writing, any increase in Executive’s base salary shall not serve to limit or reduce any other obligation to Executive under this Agreement.

 

 

 

 

 

3. Bonus Programs .

 

(a)      Annual Performance Bonus . In addition to Executive’s base salary, Executive will be eligible to participate in any performance-based bonus program(s) that the Company provides for key executives at a bonus level commensurate with Executive’s position in the Company, except that for the first two years following the Start Date, if the bonus award amount available to Executive in a particular program is based on something other than a percentage of Base Salary, then such bonus award amount for Executive shall be one-third (1/3 rd ) of that available in the program to others with Executive’s position in the Company. The metrics upon which any performance-based bonus program is based shall be reviewed and may be modified annually by the Company in its sole discretion. At whatever time paid, any bonus paid to Executive will be paid, less any required taxes and withholding in accordance with applicable regulations.

 

(b)      Retention Bonus . If Executive continues employment with the Company for at least two (2) years from Executive’s Start Date, the Company shall pay Executive a retention bonus as follows: (i) Four Hundred Thousand Dollars ($400,000), and (ii) a payment of 200% of the aggregate performance bonuses paid to Executive under Section 3(a) for the first two years of Executive’s employment. The retention bonus provided by this Section shall be paid in two (2) equal installments on the Company’s first two (2) regularly scheduled payroll pay dates after the two (2) year anniversary of Executive’s Start Date.

 

4. Fringe Benefits . As a full-time employee, Executive will be entitled to participate in the Company’s comprehensive benefits programs available to employees and officers of the Company generally, including, but not limited to, Company holidays, which holidays will be scheduled by the Company in its sole discretion. The specific terms of all benefit programs are as set out in applicable policy statements, program documents, and insurance policies, and are subject to change at any time in the Company’s sole discretion. In addition to Company holidays, Executive will be entitled to twenty (20) paid-time-off (“PTO”) days per year, subject to the terms of the Company’s PTO policy.

 

5. Business Expenses . Executive will be reimbursed for business expenses incurred during Executive’s employment, including business related travel expenses, in accordance with the Company’s business expense policy and subject to documentation requirements as provided in that policy.

 

 

 

  

6. Terms of Employment . Executive’s employment relationship with the Company shall be at will and subject to termination by Executive or the Company at any time for any reason or no reason, with or without cause; provided , however , that if the Company terminates Executive’s employment other than for “Cause” (defined in Section 7(a) below) or if Executive terminates Executive’s employment with the Company at any time for “Good Reason” (defined in Section 7(b) below), during the term of this Agreement, Executive will receive “Severance Pay” as provided for in Section 7.

 

7. Severance Pay . Executive will be entitled to Severance Pay as described in Section 7(d) if the Company terminates Executive’s employment other than for “Cause” or if Executive terminates employment for “Good Reason”, both as defined below, and subject to the conditions set forth in this Section. Except for such Severance Pay as may be available to Executive pursuant to and in accordance with the terms of this Section, Executive will not be entitled to other compensation or benefits from the Company after termination of employment except any vested benefits accrued before the termination of employment under the terms of any Company qualified retirement plan or written benefit plan applicable to Executive (“Vested Rights”), reimbursement for any unreimbursed business expenses due pursuant to Section 5 hereof, and, to the degree provided for under applicable Company policy, unpaid salary, and accrued (in accordance with Company policy) but unused PTO through the date of termination. Without limiting the foregoing, Executive and Executive’s qualified beneficiaries shall continue to be entitled to elect continuation coverage under the federal law known as COBRA, in accordance with the terms of that law.

 

(a)       “Cause” for termination means termination due to Executive’s death or for any of the following reasons: (i) conviction, or a plea of “guilty” or “no contest” to, any crime (whether or not involving the Company) constituting a felony or involving moral turpitude in the jurisdiction involved; (ii) an act of physical violence causing bodily harm to another person on Company property or off Company property but in the performance of Executive’s duties as a Company employee (iii) reporting to work under the influence of alcohol or a controlled substance (except prescription drugs used as prescribed); (iv) gross neglect or willful misconduct in the performance of Executive’s duties, or willful failure or willful refusal to perform Executive’s duties; (v) conduct which is materially injurious or materially damaging to the Company or the reputation of the Company; (vi) a material violation of this Agreement or the Company’s policies (other than as otherwise specified in Sections 7(a)(i), (ii), (iii), (iv), (v), or (vii) hereof), which is not cured to the reasonable satisfaction of the CEO within thirty (30) days of written notice thereof to Executive, provided , however , that if the specified breach cannot be cured within such thirty (30) day period and Executive commences reasonable steps within such thirty (30) day period to remedy such breach and diligently continues such steps thereafter and does effect a cure for such breach within ninety (90) days of such notice, such violation shall not constitute “Cause” and the Executive’s employment shall not be terminated; or (vii) Executive is unable to substantially perform Executive’s job duties for a continuous period of ninety (90) days or for one hundred twenty (120) days in any twelve (12) month period due to physical or mental disability; provided that if any other Company executive is by contract provided a longer period of disability before they may be terminated for “Cause”, then such longer time period shall automatically apply to Executive for purposes of this provision Section 7(a)(vii). For purposes of this Agreement, no act or failure to act by Executive shall be considered “willful” unless it is done, or omitted to be done, in bad faith or without a reasonable belief that the act or omission was in the best interests of the Company. Any act or failure to act based upon the instructions of the Board or the Chairman of the Board or based upon the advice of counsel for the Company shall be conclusively presumed to be done, or omitted to be done, by Executive in good faith and in the best interests of the Company. Under no circumstances shall poor Company financial performance, whether generally or specifically in the business unit(s) managed by Executive, be deemed to constitute “Cause.”

 

 

 

  

(b)      “Good Reason” for termination by Executive means termination of employment as a result of any of the following, except when done with Executive’s consent: (i) A diminution in Executive’s base compensation, other than a proportional reduction pursuant to a Company-wide reduction of all executive salaries due to economic conditions, or a material reduction in the kind or level of employee benefits, fringe benefits or perquisites to which Executive is entitled, other than a proportional reduction pursuant to a Company-wide change in Company policies or benefit plans, or a failure to provide such benefits or perquisites when due; (ii) A material diminution in Executive’s authority, duties, titles, or responsibilities; (iii) A material change in the geographic location at which Executive must perform the services hereunder; or (iv) Any other action or inaction that constitutes a material breach of this Agreement by the Company.

 

In order for Executive to be entitled to terminate employment for “Good Reason”, Executive must first notify either the Company’s CEO or the Company’s Chief Legal Officer in writing of the specific act or omission constituting “Good Reason” within a period not to exceed ninety (90) days of Executive becoming aware of the existence of the condition, upon the notice of which the Company shall have thirty (30) days to remedy the condition. If the Company does not remedy or otherwise correct the condition noticed within the thirty (30) day period, Executive may terminate employment for “Good Reason” by written notice delivered to either the Company’s CEO or the Company’s Chief Legal Officer within the following thirty days.

 

(c)      “Change in Control” means (i) the sale of all or substantially all of the assets of the Company; or (ii) if the Company, or the Company’s parent company if such parent is publicly traded, is “taken private” through a transaction or series of transactions that results in the common stock of the Company, or its parent company as the case may be, no longer being traded on a public exchange.  In addition, notwithstanding anything contained in this Agreement to the contrary, if Executive’s employment is terminated prior to a Change of Control and Executive reasonably demonstrate that such termination was at the request of or in response to a third party who has indicated an intention or taken steps reasonably calculated to effect a Change of Control (a “Third Party”), and who subsequently effectuates a Change of Control, then for all purposes of this Agreement, the date of a Change of Control shall mean the date immediately prior to the date of Executive’s termination of employment.

 

(d)      “Severance Pay” will consist of:

 

(i) During the first two years of Executive’s employment:

 

A. If Executive’s employment is either terminated by the Company other than for Cause or by the Executive for Good Reason prior to the two (2) year anniversary of Executive’s Start Date, a payment made in two (2) equal installments on the Company’s first two (2) regularly scheduled payroll pay dates following the date on which Executive’s employment terminates, equal to the sum of (X) Six Hundred Thousand Dollars minus any base salary paid under this Agreement, plus (Y) 200% of the performance bonuses paid to Executive under Section 3(a) for Executive’s employment through the date of termination.

 

 

 

  

B. Notwithstanding the provisions of Section 7(a) hereof, if Executive’s employment is terminated prior to the two (2) year anniversary of Executive’s Start Date as the result of Executive’s death or due to disability as set forth in Section 7(a)(vii), a payment made in three (3) equal installments on the Company’s first three (3) regularly scheduled payroll pay dates following the date on which Executive’s employment terminates, equal to the sum of (X) Three Thousand Eight Hundred Forty-Six Dollars and Fifteen Cents ($3,846.15) multiplied by the number of weeks between Executive’s Start Date and termination date (with each business day in the first and final week of employment counting as 0.2 weeks), plus (Y) 200% of the performance bonuses paid to Executive under Section 3(a) for Executive’s employment through the date of termination. For purposes of clarity, Executive shall under no circumstances be entitled to Severance Pay pursuant to this Section 7(d)(i)(B) if Executive is otherwise entitled to Severance Pay pursuant to Section 7(d)(i)(A) hereof.

 

(ii) After the first two (2) years of Executive’s employment:

 

A. Continuation of Executive’s base salary for twenty-six (26) weeks following the date on which Executive’s employment terminates, in the event that both (A) Executive either is terminated by the Company other than for Cause or terminates employment for Good Reason, and (B) the date on which Executive’s employment terminates is not within six (6) months after the effective date of a Change of Control; or

 

B. Continuation of Executive’s base salary for fifty-two (52) weeks following the date on which Executive’s employment terminates, in the event that both (A) Executive either is terminated by the Company other than for Cause or terminates employment for Good Reason, and (B) the date on which Executive’s employment with the Company terminates is within six (6) months after the effective date of a Change of Control; and

 

 

 

  

(iii) In the event that Severance Pay is available pursuant to Section 7(d)(ii), the Company will, at its sole discretion, provide one of the following:

 

A. Contribution by the Company toward Executive’s COBRA premiums (for Executive and Executive’s qualified beneficiaries) at the same percentage rate of contribution as the Company made towards Executive’s medical and dental coverage premiums during Executive’s period of employment for the same time period as that for which Executive is entitled to salary continuation pursuant to this Sub-section (subject at all times to (1) Executive’s continued payment of the remaining COBRA premiums not covered by the Company contribution referenced above and (2) Executive’s continued eligibility for COBRA coverage).  To the extent required by law, or if the Company reasonably deems it necessary to avoid taxation of benefits to Executive, the Company may treat the contributions as taxable income, in which case they will be reported as W-2 compensation and subject to appropriate payroll tax withholding.

 

B. Reimbursement by the Company for a portion of Executive’s COBRA premiums (for Executive and Executive’s qualified beneficiaries).  The reimbursement amount will be a percentage of the COBRA premiums equal to the percentage rate of contribution as the Company made towards Executive’s medical and dental coverage premiums during Executive’s period of employment and will be paid for the same time period as that for which Executive is entitled to salary continuation pursuant to this Sub-section (subject at all times to (1) Executive’s continued payment of the COBRA premiums in full and (2) Executive’s continued eligibility for COBRA coverage).  To the extent required by law, or if the Company reasonably deems it necessary to avoid taxation of benefits to Executive, the Company may treat the reimbursements as taxable income, in which case they will be reported as W-2 compensation and subject to appropriate payroll tax withholding.

 

C. An increase in Executive’s salary continuation payments that, on a monthly basis, is equal to the contribution amount that the Company made on a monthly basis towards Executive’s medical and dental coverage premiums during Executive’s period of employment, continuing for the same time period as that for which Executive is entitled to salary continuation pursuant to this Sub-section but in no event any longer than the period for which COBRA continuation coverage would be available.  This amount is taxable income, and will be reported as W-2 compensation and subject to appropriate payroll tax withholding.

 

 

 

  

In the event of Executive’s death while receiving Severance Pay, Executive’s designated beneficiary (or, if none, Executive’s estate) will receive the remaining Severance Pay.

 

(e)      Conditions to Severance Pay . To be and remain eligible for Severance Pay, Executive must meet the following conditions: (i) Executive must execute, deliver to the Company, and not revoke a Release of Claims in substantially the same form attached hereto as Schedule II (as the same may be revised from time to time if such revision is necessary to ensure that such release is effective) (the “Release of Claims”), and any revocation period contained in such Release of Claims must expire; (ii) Executive must resign (upon written request by Company) from all positions with or representing the Company or any Affiliate, including but not limited to membership on boards of directors; (iii) Executive must provide the Company for a period of thirty (30) days after the employment termination date with consulting services regarding matters within the scope of Executive’s former duties, upon request by the Company’s CEO, provided that Executive will only be required to provide those services by telephone at Executive’s reasonable convenience and without substantial interference with Executive’s other activities or commitments, such services shall not exceed fifteen (15) hours per week, Executive shall be compensated for such services at a rate of $300 per hour and Executive shall be reimbursed for all expenses incurred by Executive in connection with providing such consulting services; and (iv) Executive must comply with all provisions of Section(s) 10, 11 and 13 below.

 

If Executive fails to execute the Release of Claims before the expiration of the earlier of the time frame specified by the Company or the end of the sixty (60) day period immediately following Executive’s termination of employment, or if Executive timely revokes Executive’s acceptance of such release following its execution, Executive shall not be entitled to Severance Pay. Further, to the extent that any portion of the Severance Pay is subject to, and not exempt or excepted from Code Section 409A (“409A Severance Pay”), any payment of any amount or provision of such 409A Severance Pay otherwise scheduled to occur prior to the sixtieth (60th) day following the date of Executive’s termination of employment hereunder, but for the condition on executing the Release of Claims as set forth herein, shall not be made until the first regularly scheduled payroll date following such sixtieth (60th) day, after which any remaining portion of the 409A Severance Pay shall thereafter be provided to Executive according to the applicable schedule set forth herein.

 

(f)      Offsets to Severance Pay . Severance Pay for any week will be reduced by: (i) any disability benefits to which Executive is entitled for that week under any disability insurance policy or program (including but not limited to worker’s disability compensation); (ii) any severance pay payable to Executive by the Company under any other agreement or Company policy; (iii) any payment due to Executive under the Federal Worker Adjustment and Retraining Notification Act or any comparable state statute or local ordinance; (iv) any unemployment compensation collected by Executive during the salary continuation period; and (v) any amounts that Executive agrees in writing that Executive owes to the Company.

 

8. Withholding and Deductions . All pay and benefits will be subject to withholding and deductions required by law or court order. The Company may offset any amounts Executive agrees in writing that Executive owes it against any amounts it owes Executive hereunder to the extent permitted by federal, state, and local law.

 

 

 

  

9. Indemnification; Directors’ and Officers’ Insurance .

 

(a)      During the term of this Agreement and thereafter, the Company agrees to indemnify and hold Executive and Executive’s heirs and representatives harmless, to the maximum extent permitted by law, against any and all damages, costs, liabilities, losses and expenses (including reasonable attorneys’ fees and expenses) (collectively, “Expenses”) as a result of any claim, demand, request, investigation, dispute, controversy, threat, discovery request or request for testimony or information (collectively, a “Claim”) or any proceeding (whether civil, criminal, administrative or investigative), or any threatened Claim or proceeding (whether civil, criminal, administrative or investigative), against Executive that arises out of or relates to Executive’s service as an officer, director or employee, as the case may be, of the Company, or Executive’s service in any such capacity or similar capacity with an affiliate of the Company or other entity at the request of the Company, both prior to and after the Commencement Date, including, without limitation, any Claim, class action litigation, regulatory investigation or other proceeding in connection with Executive’s actions as a spokesperson for the Company in any capacity, and to promptly advance to Executive or Executive’s heirs or representatives all such Expenses upon receipt by the Company of a written request with appropriate documentation of such Expenses and, if required by applicable law, an undertaking by Executive to repay the amount advanced if it shall ultimately be determined that Executive is not entitled to be indemnified by the Company against such Expenses. Neither the failure of the Company (including the Board or the Company’s independent legal counsel or stockholders) to have made a determination in connection with any request for indemnification or advancement under this Section 9(a) that Executive has satisfied any applicable standard of conduct, nor a determination by the Company (including the Board or the Company’s independent legal counsel or stockholders) that Executive has not met any applicable standard of conduct, shall create a presumption that Executive has not met an applicable standard of conduct. The indemnification and advancement rights in this Section 9(a) shall be in addition to (and shall not restrict) any indemnification or advancement rights otherwise applicable to Executive.

 

(b)      During the term of this Agreement, the Company also shall provide Executive with coverage under its current directors’ and officers’ liability policy that is no less favorable in any respect than the coverage then provided to any other executive, officer or director of the Company. If Executive shall have any knowledge of any actual or threatened action, suit or proceeding, whether civil, criminal, administrative or investigative, as to which Executive may request indemnity under this provision, Executive will give the Company prompt written notice thereof; provided , that the failure to give such notice shall not affect Executive’s right to indemnification. The Company shall be entitled to assume the defense of any such proceeding, and Executive will use reasonable efforts to cooperate with such defense. To the extent that Executive in good faith determines that there is an actual or potential conflict of interest between the Company and Executive in connection with the defense of a proceeding, Executive shall so notify the Company and shall be entitled to separate representation at the Company’s expense by counsel selected by Executive, which counsel shall reasonably cooperate, and reasonably coordinate the defense, with the Company’s counsel and reasonably minimize the expense of such separate representation to the extent consistent with Executive’s separate defense. The Company shall not be liable for any settlement of any proceeding effected without its prior written consent.

 

 

 

  

10. Confidentiality .

 

(a)       Confidential Information . Executive acknowledges that the continued success of the Company and its Affiliates depends upon the use and protection of a large body of confidential and proprietary information. All of such confidential and proprietary information now existing or to be developed in the future shall be referred to herein as “Confidential Information.” Confidential Information will be interpreted as broadly as possible to include all information of any sort (whether merely remembered or embodied in a tangible or intangible form) that is (i) related to the Company’s or its Affiliates’ current or potential business and (ii) is not generally or publicly known. Confidential Information includes, without limitation, (A) the information, observations and data obtained by Executive during the course of Executive’s performance under this Agreement concerning the business and affairs of the Company and its Affiliates, (B) information concerning acquisition opportunities in or reasonably related to the Company’s or its Affiliates’ business or industry of which Executive becomes aware through Executive’s employment with the Company, (C) the persons or entities that are current, former or prospective suppliers or customers of any one or more of them during Executive’s course of performance under this Agreement, and (D) solely with respect to the Company’s and its Affiliates’ business or businesses into which the Company is actively exploring expansion during Executive’s employment, product research and development, product formulations, and product formulation techniques and processes, as well as development, transition and transformation plans, methodologies and methods of doing business, strategic, marketing and expansion plans, including plans regarding planned and potential sales, financial and business plans, employee lists and telephone numbers, locations of sales representatives, new and existing programs and services, prices and terms, customer service, support and equipment, in each case, of which Executive becomes aware through Executive’s employment with the Company. Therefore, Executive agrees that Executive shall only use such Confidential Information as may be required on behalf of the Company or its Affiliates in connection with Executive’s performance under this Agreement and that Executive shall not disclose to any unauthorized person or for Executive’s use for Executive’s own account any of such Confidential Information without the prior written consent of the Company’s Chief Executive Officer, unless and to the extent that any Confidential Information (i) becomes generally known to and available for use by the public other than as a result of Executive’s acts or omissions, or (ii) is required to be disclosed pursuant to any applicable law or court order.

 

(b)      Third Party Information . Executive understands that the Company and its Affiliates will receive from third parties confidential or proprietary information (“Third Party Information”) subject to a duty on the Company’s and its Affiliates’ part to maintain the confidentiality of such information and to use it only for certain limited purposes. During Executive’s employment with the Company and thereafter, and without in any way limiting the provisions of Section 10(a) above, Executive will only use Third Party Information in connection with Executive’s performance under this Agreement, will hold Third Party Information in the strictest confidence, and will not disclose Third Party Information to anyone other than personnel of the Company and its Affiliates who need to know such information in connection with their work for the Company or as otherwise directed by the Company’s Chief Executive Officer.

 

 

 

  

(c)       Mandatory Disclosure . In the event Executive is requested or compelled by court order, decree, subpoena or other process or requirement of law to disclose Confidential Information or Third Party Information Executive shall to the extent permissible and practicable under the circumstances provide reasonably prompt written notice (unless such notice is prohibited by law) to the Company of any such requirement so that the Company may, at its option and expense, seek a protective order or other appropriate remedy. Executive agrees to cooperate with the Company in any such proceeding, at the expense of the Company, provided that the foregoing shall not be construed to require Executive to undertake litigation or other legal proceedings on its own behalf. In the event that such protective order or other remedy is not obtained, Executive agrees to furnish only that portion of the confidential information which Executive is advised by Executive’s own counsel (provided at the Company’s expense) should be disclosed and to use reasonable efforts to obtain assurance that confidential treatment will be accorded the information.

 

(d)       Return of Information and Property . Upon termination of Executive’s employment, or at any other time as the Company may request in writing, Executive agrees to deliver to the Company any and all property of the Company or any Affiliate and any and all materials and information (in whatever form) relating to the business of the Company or any Affiliate, including without limitation all Confidential Information, documents, keys, corporate credit cards and company provided computers, automobiles or other equipment. All such property will be returned promptly and in good condition except for normal wear.

 

11. Ideas, Concepts, Inventions and Other Intellectual Property .

 

(a)       All business ideas and concepts and all inventions, improvements, developments and other intellectual property made or conceived by Executive, either solely or in collaboration with others, during Executive’s employment, whether or not during working hours, and directly relating to the business of the Company (but, for purposes of clarity, not including any business ideas, concepts, inventions, improvements, developments or other intellectual property relating to any of the activities set forth on Schedule I), shall become and remain the exclusive property of the Company, and the Company’s successors and assigns. Executive shall disclose promptly in writing to the Company all such inventions, improvements, developments and other intellectual property, and will cooperate in confirming, protecting, and obtaining legal protection of the Company’s ownership rights. Executive’s commitments in this Section 11 will continue in effect after termination of Executive’s employment as to such ideas, concepts, inventions, improvements and developments, and other intellectual property to the extent and only to the extent conceived before the date Executive’s employment terminates (other than, for purposes of clarity, any business ideas, concepts, inventions, improvements or developments, or other intellectual property relating to any of the activities set forth on Schedule I).

 

(b)       The parties agree that any breach of Executive’s covenants in Section 10 or Section 11 would cause the Company irreparable harm and that money damages would not be an adequate remedy for any such breaches. Therefore, in the event of a breach or threatened breach of Executive’s covenants in Sections 10 or 11, the Company or its successors and assigns, in addition to other rights and remedies existing in their favor, shall be entitled to specific performance and/or injunctive or other equitable relief from a court of competent jurisdiction in order to enforce, or prevent any violations of, these provisions of this Agreement, without posting a bond or other security.

 

 

 

 

12. Non-Contravention . Executive represents and warrants that (a) Executive is not party to or bound by any employment, non-competition, confidentiality or other agreement that purports to prohibit or restrict Executive from engaging in employment with the Company pursuant hereto, or using expertise that Executive possesses (other than information constituting a trade secret of another person or entity under applicable law) for the benefit of the Company; and (b) that the execution, delivery, and performance of this Agreement by Executive do not and shall not conflict with, breach, violate or cause a default under any contract, agreement, instrument, order, judgment or decree to which Executive is a party or by which Executive is bound. Without limiting the foregoing, Executive will not use in the course of Executive’s employment, or disclose to the Company or its personnel, any information belonging to any other person or entity that constitutes a trade secret of such person or entity under applicable law.

 

13. Non-Competition, Non-Solicitation, Conflicts . Executive agrees as follows:

 

(a)       Non-Competition . Except as set forth on Schedule I, Executive will not, during the term of employment and for a period of twelve (12) months thereafter, (i) directly or indirectly compete with the Company, or (ii) be employed by, perform services for, advise or assist, own any interest in or loan or otherwise provide funds to any other business that is engaged (or seeking Executive’s services with a view to becoming engaged) in any Competitive Business. “Competitive Business” means the business of developing and selling (A) nutritional supplements, which for purposes hereof includes both dietary supplements and functional foods, such as protein shakes, bars and meal replacements, but specifically excluding conventional foods and (B) vitamins. Executive may submit a written request to the Company for a waiver of some or all of the restrictions provided by this Section 13. The Company agrees to consider such a request, but may grant or deny the request in its absolute discretion. In the event that the Company grants any such waiver, Executive agrees that the Company shall be released from any obligation to make further payments of Severance Pay upon Executive’s acceptance of employment with a Competitive Business, but that the release of such obligation shall not otherwise modify the terms of the Release of Claims signed by Executive in connection with the receipt of such Severance Pay and that such release shall remain in full force and effect.

 

(b)       Non-Solicitation . Executive will not during the term of employment and for a period of twelve (12) months thereafter, directly or indirectly, (i) induce or attempt to induce any employee of the Company to leave the employ of the Company, or in any way interfere with the relationship between the Company and such employee, (ii) hire any person who was an employee of the Company at any time during Executive’s term of employment, or (iii) induce or attempt to induce any customer, supplier, licensee, licensor, franchisee or other business relation of the Company to cease doing business with the Company, or in any way interfere with the relationship between any such customer, supplier, licensee, licensor, franchisee or other business relation and the Company (including, without limitation, making any negative or disparaging statements or communications regarding the Company). For purposes of this Section 13(b), the term “employee” shall include consultants and independent contractors of the Company.

 

 

 

  

(c)       Exceptions . Nothing in this Section 13 prohibits Executive from being a passive owner of not more than 5% of any class of securities of publicly traded entity (or any amount of any class of securities of the Company), provided that Executive does not engage in other activity prohibited by this Section 13.

 

(d)       No Contravention of Purchase Agreement . The terms of this Section 13 shall, where applicable, run concurrently with but separately from the terms of Section 6.06 of the Purchase Agreement, provided that notwithstanding anything to the contrary herein, nothing in this Section 13 or elsewhere in this Agreement shall supersede, modify, reduce, restrict or otherwise contravene in any way, the terms of Section 6.06 of the Purchase Agreement regarding non-competition and non-solicitation, including specifically but not limited to, the length of the “Restricted Period” as defined therein. To the extent anything in this Agreement conflicts with the terms of Section 6.06 of the Purchase Agreement, the terms of Section 6.06 of the Purchase Agreement shall prevail.

 

(e)      Conflicts of Interest . During Executive’s employment, and other than with respect to permitted activities set forth on Schedule I, Executive will not acquire any financial interest in, accept gifts or favors from, or establish any relationship other than on behalf of the Company with, any customer, supplier, distributor, or other person who does or seeks to do business with the Company, unless Executive has disclosed the financial interest, gift, favor, or relationship to the Company’s Chief Legal Officer in writing and has received written approval for that activity or transaction; provided , however , that this restriction does not apply to casual and normal social/business relationships that do not involve exchange of money, gifts or favors other than normal business expenditures such as lunches or event attendance without significant cost. If any member of Executive’s family engages or proposes to engage in any relationship or activity that would be covered by the preceding sentence if engaged in by Executive, Executive will immediately disclose that proposed or actual relationship or activity as provided above.

 

14. Mutual Non-Disparagement . Executive agrees not to intentionally make, or intentionally cause any other person to make, any public statement that is intended to criticize or disparage the Company or any of its senior executive officers or directors. Neither the Company nor its affiliates (which for purposes hereof shall mean only the corporate entities themselves and their respective officers and directors) shall intentionally make, or intentionally cause any other person to make, any public statement that is intended to criticize or disparage Executive. Nothing set forth herein shall be interpreted to prohibit either party from responding publicly to incorrect public statements, or making truthful statements when required by law, subpoena, court order, or the like and/or from responding to any inquiry about this Agreement or its underlying facts and circumstances by any regulatory or investigatory organization.

 

15. No Mitigation; No Set-Off . In the event of any termination of Executive’s employment, Executive shall be under no obligation to seek other employment or take any other action by way of mitigation of the amounts payable, or benefits provided, to Executive under any of the provisions of this Agreement. The Company’s obligation to make the payments, and provide the benefits, provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by (a) any set-off (except for such set-offs as expressly provided for herein), counterclaim, recoupment, defense or other claim, right or action that the Company may have against Executive or others, or (b) subject to Section 13(a) hereof, any remuneration or benefits attributable to any subsequent employment with an unrelated person, or any self-employment, that Executive may obtain. Any amounts due under this Section 15 are considered reasonable by the Company and are not in the nature of a penalty.

 

 

 

  

16. Interest on Late Payments . In the event that the Company refuses or otherwise fails to make a payment within ten (10) business days of when due and it is ultimately decided that Executive is entitled to such payment, such payment shall be increased to reflect an interest equivalent for the period of delay, compounded annually (with interpolation for partial years), equal to the prime lending rate as published in The Wall Street Journal and in effect as of the date the payment was first due.

 

17. Compliance with Section 409A .

 

(a)       All compensation and benefits payable under this Agreement are intended to comply with the requirements of Section 409A of the Internal Revenue Code (“Code Section 409A”) or any exceptions or exemptions to such requirements. The parties intend that to the maximum extent permitted this Agreement shall be interpreted in accordance with such intent. The Company shall have no liability to Executive if this Agreement or any amounts paid or payable hereunder are subject to Code Section 409A or the additional tax thereunder.

 

(b)       For purposes of Code Section 409A, the right to receive payments in the form of installment payments shall be treated as a right to receive a series of separate payments and, accordingly, each installment payment shall at all times be considered a separate and distinct payment.

 

(c)       Further, to the extent subject to Code Section 409A, in no event shall any reimbursements be made later than the end of the calendar year following the year in which the expense was incurred, the expenses eligible for reimbursement or in-kind benefits provided in a taxable year shall not affect the expenses eligible for reimbursement or in-kind benefits provided in any other taxable year, and the right to reimbursements or in-kind benefits is not subject to liquidation or exchange for any other benefit.

 

Notwithstanding any provisions to the contrary in this Agreement, if Executive is deemed on the date of termination to be a “specified executive” within the meaning of that term under Code Section 409A(a)(2)(B), then with regards to any payment or the provision of any benefit that is not exempt from Code Section 409A, such payment or benefit shall not be made or provided prior to the earliest of (A) the expiration of six (6)-month period measured from the date of Executive’s “separation from service” (as such term is defined under Code Section 409A), (B) the date of Executive’s death, or (C) the expiration of such other period as may be required to comply with regulations and/or guidance issued under Code Section 409A (the “Delay Period”). Upon the expiration of the Delay Period, all payments and benefits delayed pursuant to this Section 17 (whether they would have otherwise been payable in a single sum or in installments in absence of such delay) shall be paid to Executive in a lump sum, and any remaining payments and benefits due under this Agreement shall be paid or provided in accordance with the normal payment procedures.

 

 

 

  

18. Severability . Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision of this Agreement or any action in any other jurisdiction, but this Agreement shall be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein.

 

19. No Strict Construction . The language used in this Agreement shall be deemed to be the language chosen by the parties hereto to express their mutual intent, and no rule of strict construction shall be applied against any party.

 

20. Survival . Executive’s obligations under Sections 7 through 11 and 13 through 28 shall survive and continue in full force in accordance with their terms notwithstanding the expiration or termination of Executive’s employment with the Company.

 

21. Counterparts, Electronic Signatures . This Agreement may be executed in separate counterparts, each of which is deemed an original and all of which taken together constitute one and the same agreement. This Agreement may be signed by facsimile signatures or other electronic delivery of an image file reflecting the execution of the Agreement, and if so signed or delivered such electronic signatures shall be deemed to have the same legal effect as delivery of an original signature and may be relied on by each party as if the document were a manually signed original and will be binding on each party for all purposes.

 

22. Successors and Assigns . This Agreement is intended to bind and inure to the benefit of and be enforceable by Executive, the Company and their respective heirs successors and assigns, except that Executive may not assign Executive’s rights or delegate Executive’s duties or obligations hereunder without the prior consent of the Company. This Agreement may be assigned by the Company to any of its Affiliates or to any entity that acquires more than fifty-percent (50%) of the voting interests in the Company or all or substantially all of the assets of the Company.

 

23. Complete Agreement . This Agreement, including any Schedules thereto, embodies the complete agreement and understanding among the parties with respect to the subject matter hereof and supersedes and preempts any prior understandings, agreements or representations by or among the parties, whether written or oral, with respect to such subject matter, except that nothing in this Agreement shall supersede any agreements or obligations of, by or among the parties contained in the Purchase Agreement including, but not limited to, Section 6.06 of the Purchase Agreement.

 

24. Company’s Representations . The Company represents and warrants that (a) it is fully authorized, by action of any person or body whose action is required, to enter into this Agreement and to perform its obligations under it; (b) the execution, delivery and performance of this Agreement by the Company does not violate any applicable law, regulation, order, judgment or decree or any agreement, plan or corporate governance document of the Company or any of its affiliates; and (c) upon execution and delivery of this Agreement by both Executive and the Company, it shall be a valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except to the extent enforceability may be limited by applicable bankruptcy, insolvency or similar law affecting the enforcement of creditors’ rights generally.

 

 

 

 

25. Amendments and Waivers . This Agreement cannot be amended, and the obligations under this Agreement cannot be waived, unless the amendment or waiver is agreed to in writing by Executive and the Company’s CEO, and no course of conduct or failure or delay to enforce or exercise any rights under this Agreement (including, but not limited to, the Company’s right to terminate Executive for Cause) shall affect the validity, binding effect or enforceability of this Agreement or be deemed to be a waiver or implied waiver of any provision of this Agreement.

 

26. Arbitration . Any dispute or controversy between the parties hereto, whether during the employment term or thereafter, including without limitation, any and all matters relating to this Agreement, Executive’s employment with the Company and the cessation thereof, and all matters arising under any federal, state, or local statute, rule or regulation, or principle of contract law or common law, including but not limited to any medical leave statutes, wage payment statutes, employment discrimination statutes, employee benefit statutes, and any other equivalent federal, state, or local statute, will be settled by arbitration administered by the American Arbitration Association (“AAA”) in St. Petersburg, Florida, or such other venue as mutually agreed upon by the parties. The arbitration will be conducted pursuant to AAA’s National Rules for Resolution of Employment Disputes (or their equivalent), which arbitration will be confidential, final, and binding to the fullest extent permitted by law. There shall be one (1) arbitrator, selected jointly by the parties hereto, or if the parties cannot so agree on a single arbitrator, selected in accordance with AAA’s procedures. Each party hereto will be responsible for paying its attorney’s fees and costs incurred under this Section 26, except as may otherwise be provided by the arbitrator in order to comply with applicable substantive law. Further, the parties hereto will equally share any costs levied by the AAA, including the cost of the arbitrator and use of a hearing room, provided that Executive will not be obliged to pay for any portion of such costs beyond the maximum amount permitted in order that this arbitration provision be legally enforceable. The foregoing provisions of this Section 26 shall not be deemed (a) to preclude either party hereto from seeking preliminary injunctive relief to protect or enforce its rights hereunder, (b) to prohibit any court from making preliminary findings of fact in connection with granting or denying preliminary injunctive relief pending a final determination of factual issues by the arbitrator, or (c) to preclude either party from seeking permanent injunctive or other equitable relief after and in accordance with the decision and findings of the arbitrator.

 

27. Governing Law . This agreement shall be governed by and construed in accordance with the laws of the State of Florida without giving effect to its conflict of laws principles.

 

28. Notices . All notices, requests, consents, claims, demands, waivers and other communications hereunder shall be in writing and shall be deemed to have been given (a) when delivered by hand; (b) on the first business day following date sent if sent by a nationally recognized overnight courier (receipt requested); (c) on the date sent (if such date is a business day at the recipient’s address, otherwise on the next business day at the recipient’s address) by facsimile or e-mail of a PDF document (with confirmation of receipt by recipient); in each case a party’s refusal or willful avoidance of delivery shall be deemed to constitute delivery. Such communications must be sent to the respective parties at the following addresses (or at such other address for a party as shall be specified in a notice given in accordance with this Section 28):

 

 

 

 

If to the Company: Twinlab Consolidation Corporation
  632 Broadway, Suite 201
  New York, New York 10012
  Facsimile: (212) 505-5413
  E-mail: rneuwirth@twinlab.com
  Attention: General Counsel
   
   
If to Executive: Naomi L. Balcombe
  2255 Glades Road, Suite 342W
  Boca Raton, Florida 33432
  E-mail: naomiwhittel@reserveage.com
   
with a copy to (which copy shall
not constitute notice): King & Spalding LLP
  1180 Peachtree Street, NE
  Atlanta, GA 30309
  Facsimile: (404) 572-5100
  E-mail: rpatel@kslaw.com
  Attention: Rahul Patel, Esq.

 

29. Executive’s Name and Likeness . The Company agrees and acknowledges that Executive retains all rights in and to Executive’s name, likeness, photograph and biographical information (“Executive’s Publicity Rights”). Notwithstanding the foregoing, Executive grants to the Company the limited, non-exclusive right to use the Executive’s Publicity Rights solely in connection with the business of the Company and only during the period equal to the longer of (a) two (2) years following the date hereof and (b) nine (9) months following termination of Executive’s employment for any reason. The foregoing notwithstanding, the Company shall not be precluded at any time after the foregoing grant of Executive’s Publicity Rights has expired from (i) maintaining Company educational literature and/or press releases created in the normal course during Executive’s employment, and which include Executive’s name and likeness, on any Company website or social media site where the Company generally maintains a historical library of such press releases and/or educational literature; (ii) maintaining on any Company website or social media site a library showing copies of historical third-party publications in which the Company or its products have been featured, even if a particular publication contained therein features Executive’s name or likeness; or (iii) from referencing Executive’s name or biographical information in any S.E.C. or other regulatory filing where such historical reference to Executive’s employment with the Company is required; provided, in each case, the manner of such use does not indicate that Executive is currently employed by the Company or endorsing its products.

 

 

[ Signature page follows ]

 

 

 

 

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the 2 nd day of October, 2015 intending to be legally bound thereby.

 

TWINLAB CONSOLIDATION   EXECUTIVE  
CORPORATION      
         
         
/s/ Thomas A. Tolworthy   /s/ Naomi L. Balcombe  
By: Thomas A. Tolworthy   Naomi L. Balcombe  
Its: President and Chief Executive Officer