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): November 12, 2015
|
Synergy
CHC Corp. |
|
|
(Exact
name of registrant as specified in its charter) |
|
Nevada |
|
000-55098 |
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99-0379440 |
(State
or other jurisdiction
of incorporation) |
|
(Commission
File Number) |
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(IRS
Employer
ID Number) |
865
Spring Street, Westbrook, ME |
|
04092 |
(Address
of principal executive offices) |
|
(Zip
Code) |
Registrant’s
telephone number, including area code (615) 939-9004
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) |
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|
[ ] |
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.
UrgentRx
Stock Purchase Agreement
On
November 12, 2015 (the “UrgentRx Closing Date”), we entered into a Stock Purchase Agreement (the “UrgentRx SPA”)
with Breakthrough Products, Inc., a Delaware corporation (the “Company”), URX ACQUISITION TRUST, a Delaware statutory
trust, (the “Trust”), Jordan Eisenberg, the chief executive officer and a shareholder of the Company (“Eisenberg”),
and the other shareholders of the Company (Eisenberg and such other shareholders collectively referred to as the “UrgentRx
Sellers”) for the purchase of all the issued and outstanding capital stock of the Company for 6,000,000 shares of our common
stock (“UrgentRx Equity Consideration”).
In
addition to the UrgentRx Equity Consideration, we have agreed to pay a royalty to the Trust, for the benefit of the UrgentRx Sellers,
equal to 5% of gross sales of the UrgentRx (as defined below) following the first $5,000,000 in gross sales by the UrgentRx Products,
on a quarterly basis for a period of seven years from the UrgentRx Closing Date.
The
Company is engaged in the business of developing and selling medications for headache, heart burn, allergy attack, ache and pain,
and upset stomach in the form of powders (“UrgentRx”).
The
UrgentRx SPA contains customary representations and warranties and covenants by the respective parties.
Flat
Tummy Tea Stock Purchase Agreement
On
November 15, 2015 (the “Flat Tummy Tea Closing Date”), we entered into a Stock Purchase Agreement (the “Flat
Tummy Tea SPA”) with TPR Investments Pty Ltd ACN 128 396 654 as trustee for Polmear Family Trust (the “Flat Tummy
Tea Seller”), Timothy Polmear and Rebecca Polmear and NomadChoice Pty Limited ACN 160 729 939 trading as Flat Tummy Tea,
an Australian proprietary limited company (“NomadChoice”) for the purchase of all the issued and outstanding capital
stock of NomadChoice for $4,000,000 (AUD) in cash consideration (the “Cash Consideration”) and 3,571,428 shares of
our common stock (“Flat Tummy Tea Equity Consideration”).
In
addition to the Cash Consideration and the Flat Tummy Tea Equity Consideration, we have also agreed to pay the Flat Tummy Tea
Seller certain earn-out payments of up to $3,500,000 (AUD) in aggregate upon certain EBITDA thresholds are met as of June 30,
2016, as described in the Flat Tummy Tea SPA.
Flat
Tummy Tea is engaged in the business of developing, manufacturing, and selling herbal detox tea (“Flat Tummy Tea”).
The
Flat Tummy Tea SPA contains customary representations and warranties and covenants by the respective parties.
Loan
and Warrants
In
connection with the UrgentRx SPA and the Flat Tummy Tea SPA, on November 12, 2015 we entered into a first amendment to loan agreement
(the “New Loan Agreement”) with a subsidiary of Knight Therapeutics Inc. (“Knight”) for $5,500,000. The
New Loan Agreement amended the loan agreement we entered into with Knight on January 21, 2015 for $6,000,000, as we disclosed
on a Form 8-K filed January 27, 2015 and Amended on February 9, 2015. The New Loan Agreement’s borrowings were used in acquiring
UrgentRx and Flat Tummy Tea.
This
New Loan Agreement bears interest at 15% per annum plus other additional consideration. The interest rate will decrease to 13%
if we meet certain equity-fundraising targets. The New Loan Agreement matures on November 11, 2017.
In
connection with the New Loan Agreement, we issued Knight a warrant that entitles Knight to purchase 5,550,625 shares of our common
stock (“Knight Warrant Shares”) representing approximately 6.5% of our fully diluted capital, which Knight exercised
in full on November 12, 2015. Knight also received a 10-year warrant entitling Knight to purchase up to 4,547,243 shares of our
common stock at $0.49 per share (“Knight Warrants”). In addition, Knight obtained the exclusive sales rights to Flat
Tummy Tea and UrgentRx in Canada, Israel, Romania, Russia and Sub-Saharan Africa.
The
foregoing descriptions of the UrgentRx SPA, the Flat Tummy Tea SPA and the New Loan Agreement are not complete and are qualified
in their entirety by reference to the UrgentRx SPA, the Flat Tummy Tea SPA and the New Loan Agreement, which are filed as Exhibits
10.13, 10.14 and 10.15, respectively, to this Current Report on Form 8-K, and are incorporated into this report by reference.
Item
2.01. Completion of Acquisition or Disposition of Assets.
The
information in Item 1.01 of this Report under “UrgentRx Stock Purchase Agreement” and “Flat Tummy Tea Stock
Purchase Agreement” is incorporated herein by reference.
Item
2.03. Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
The
information in Item 1.01 of this Report under “Loan and Warrants” is incorporated herein by reference.
Item
3.02. Unregistered Sale of Equity Securities.
The
information regarding the issuance of shares of our common stock that constitute UrgentRx Equity Consideration and Flat Tummy
Tea Equity Consideration in Item 1.01 of this Report is incorporated herein by reference. The shares of common stock issued to
the UrgentRx Sellers and the Flat Tummy Tea Seller were sold in a transaction exempt from registration under the Securities Act
of 1933, as amended (the “Securities Act”), in reliance on Section 4(a)(2) thereof. The shares of our common stock
issued to the UrgentRx Sellers and the Flat Tummy Tea Seller may not be offered or sold in the United States absent registration
or exemption from registration under the Securities Act of 1933, as amended, and any applicable state securities laws.
The
information regarding the Knight Warrant Shares and the Knight Warrants under the caption “Loan and Warrants” in Item
1.01 of this Report is incorporated herein by reference. The Knight Warrant Shares, the warrant to purchase the Knight Warrant
Shares and the Knight Warrants were sold in a transaction exempt from registration under the Securities Act, in reliance on Section
4(a)(2) thereof. None of the Knight Warrant Shares, the warrant to purchase the Knight Warrant Shares or the Knight Warrants may
be offered or sold in the United States absent registration or exemption from registration under the Securities Act and any applicable
state securities laws.
Item
8.01 Other Events.
On
November 16, 2015, we issued a press release announcing our entry into the UrgentRx SPA. A copy of the press release is attached
hereto as Exhibit 99.1.
On
November 16, 2015, we issued a press release announcing our entry into the Flat Tummy Tea SPA. A copy of the press release is
attached hereto as Exhibit 99.2.
Item
9.01. Financial Statements and Exhibits.
(a) Financial
Statements of Businesses Acquired.
If
and to the extent required, the financial statements required by Item 9.01(a) of Form 8-K will be filed by amendment no later
than 71 calendar days after the date this Current Report on Form 8-K is required to be filed.
(b) Pro
Forma Financial Information.
If
and to the extent required, the financial statements required by Item 9.01(b) of Form 8-K will be filed by amendment no later
than 71 calendar days after the date this Current Report on Form 8-K is required to be filed.
(d) Exhibits
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Exhibit
No. |
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Description |
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4.4 |
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Synergy
CHC Corp. Common Stock Purchase Warrant, dated November 12, 2015. |
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4.5 |
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Synergy
CHC Corp. Common Stock Purchase Warrant (10-Year Warrant), dated November 12, 2015. |
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10.13 |
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Stock
Purchase Agreement, dated November 12, 2015, by and between Synergy CHC Corp., Breakthrough Products, Inc., URX ACQUISITION
TRUST, Jordan Eisenberg, and the other shareholders listed on Exhibit A thereto. |
|
|
|
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10.14 |
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Stock
Purchase Agreement, dated November 15, 2015, by and between Synergy CHC Corp., TPR Investments
Pty Ltd ACN 128 396 654 as trustee for Polmear Family Trust, Timothy Polmear and Rebecca
Polmear, and NomadChoice Pty Limited ACN 160 729 939. |
|
|
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10.15 |
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First
Amendment to Loan Agreement, dated November 12, 2015, between Knight Therapeutics (Barbados)
Inc. and Synergy Strips Corp. |
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99.1 |
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Press
release dated November 16, 2015. |
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99.2 |
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Press
release dated November 16, 2015. |
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.
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SYNERGY CHC CORP. |
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|
Date:
November 18, 2015 |
/s/
Jack Ross |
|
Jack Ross |
|
President and
Chief Executive Officer |
THIS
WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
NO REGISTRATION OF TRANSFER OF THIS WARRANT OR THE SECURITIES ISSUABLE UPON THE EXERCISE HEREOF WILL BE MADE ON THE BOOKS OF THE
ISSUER UNLESS SUCH TRANSFER IS MADE IN CONNECTION WITH AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT OR PURSUANT TO AN EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT OR SUCH ACT DOES NOT APPLY.
COMMON
STOCK PURCHASE WARRANT
SYNERGY
chc CORP.
Warrant
Shares: 5,550,625 |
Issue
Date: November 12, 2015 |
THIS
COMMON STOCK PURCHASE WARRANT (the “Warrant”) certifies that, for value received, Knight Therapeutics (Barbados)
Inc. (the “Holder”) is entitled, upon the terms and subject to the limitations on exercise and the conditions
set forth in this Warrant, at any time on or after November 12, 2015 (the “Exercise Date”) and on or prior
to the close of business on December 31, 2015 (the “Termination Date”) but not thereafter, to subscribe for
and purchase from Synergy CHC Corp, a Nevada corporation (the “Company”), 5,550,625 fully paid and nonassessable
shares (the “Warrant Shares”) of the Company’s Common Stock (the “Common Stock”),
represent six and one-half percent (6.5%) of the Company’s issued and outstanding Common Stock on a Fully Diluted Basis.
The purchase price for the Common Stock under this Warrant is equal to the Exercise Price.
Section
1. Exercise.
(a)
Exercise of the purchase rights represented by this Warrant may be made, in whole or in part, at any time on or after the Exercise
Date and on or before the Termination Date by delivery to the Company (or such other office or agency of the Company as it may
designate by notice in writing to the registered Holder at the address of the Holder appearing on the books of the Company) of
a duly executed facsimile copy of the Notice of Exercise Form annexed hereto. Prior to the sending of a Notice of Exercise Form,
the Holder may request, and the Company shall be obligated to deliver, a certificate signed by a senior officer of the Company
setting forth the number of issued and outstanding shares of Common Stock on a Fully Diluted Basis at such time, and any such
other evidence as may be reasonably requested by the Holder in order to establish the number of Warrant Shares that the Holder
is entitled to purchase hereunder at such time. On the date of exercise, the Holder shall deliver the Exercise Price for the Common
Stock and shall surrender this Warrant to the Company for cancellation within three (3) Trading Days of the date on which the
Notice of Exercise is delivered to the Company. The Company shall deliver any objection to any Notice of Exercise Form within
one (1) Business Day of receipt of such notice.
(b)
Exercise Price. The exercise price for the purchase of all of the shares of Common Stock under this Warrant is US$1.00
in the aggregate and not on a per share basis, (the “Exercise Price”).
(c)
Mechanics of Exercise.
i.
Delivery of Warrant Shares Upon Exercise. The Company shall use best efforts to cause the Warrant Shares purchased hereunder
to be issued in book-entry format on the records of the transfer agent and registrar of the Company, or, if the Warrant Shares
cannot be issued in book-entry format, then by physical delivery of a stock certificate to the address specified by the Holder
in the Notice of Exercise, by the date that is three (3) Trading Days after the latest of (A) the delivery to the Company of the
Notice of Exercise, (B) surrender of this Warrant (if required) and (C) payment of the Exercise Price as set forth above (such
date, the “Warrant Share Delivery Date”). The Warrant Shares will be deemed to have been issued, and the Holder
or any other person so designated to be named therein will be deemed to have become a holder of record of such shares for all
purposes, as of the date on which the Warrant has been exercised, with payment to the Company of the Exercise Price and all taxes
required to be paid by the Holder, if any, pursuant to Section 1(d)(iv) prior to the issuance of such shares having been paid.
ii.
No Fractional Shares or Scrip. No fractional shares or scrip representing fractional shares may be issued upon the exercise
of this Warrant. As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such exercise, the
Company shall round up to the next whole share.
iii.
Charges, Taxes and Expenses. Issuance of Warrant Shares will be made without charge to the Holder for any issue or transfer
tax or other incidental expense in respect of the issuance of such Warrant Shares, all of which taxes and expenses will be paid
by the Company, and such Warrant Shares will be issued in the name of the Holder or in such name or names as may be directed by
the Holder; provided, however, that in the event Warrant Shares are to be issued in a name other than the name of
the Holder, this Warrant when surrendered for exercise must be accompanied by the Assignment Form attached hereto duly executed
by the Holder and the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer
tax incidental thereto. The Company shall pay all Transfer Agent fees required for same-day processing of any Notice of Exercise.
Section
2. Fundamental Transaction
(a)
Fundamental Transaction. The Company may not enter into or be a party to a Fundamental Transaction without providing the
Holder with the opportunity to exercise this Warrant in advance of consummating such Fundamental Transaction.
Section
3. Transfer of Warrant.
(a)
Transferability. This Warrant and all rights hereunder are transferable upon surrender of this Warrant at the principal
office of the Company or its designated agent, together with a written assignment of this Warrant substantially in the form attached
hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making
of such transfer. Upon such surrender and, if required, such payment, the Company shall execute and deliver a new Warrant in the
name of the assignee specified in such instrument of assignment, and this Warrant shall promptly be cancelled. The Warrant, if
properly assigned in accordance herewith, may be exercised by a new holder for the purchase of Warrant Shares without having a
new Warrant issued.
(b)
Transfer to Comply with the Securities Act. This Warrant may not be exercised, and neither this Warrant nor any of the
Warrant Shares may be disposed of except in compliance with applicable United States federal and state securities or “blue
sky” laws and the terms and conditions hereof. Any new Warrant issued upon transfer of this Warrant will bear a legend in
substantially the same form as the legend set forth on the first page of this Warrant, unless the Holder delivers to the Company
an opinion of counsel reasonably satisfactory to the Company that such new Warrant need no longer be subject to the restriction
contained herein. Each certificate for Warrant Shares issued upon exercise of this Warrant (or subsequently issued in substitution
or exchange for such Warrant Shares), unless either (i) at the time of exercise such Warrant Shares are registered under the Securities
Act of 1933, as amended (the “Securities Act”), or (ii) the Warrant Shares are no longer subject to the restriction
contained herein, will bear a legend substantially in the following form:
THE
SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. NO REGISTRATION
OF TRANSFER OF SUCH SECURITIES WILL BE MADE ON THE BOOKS OF THE ISSUER UNLESS SUCH TRANSFER IS MADE IN CONNECTION WITH AN EFFECTIVE
REGISTRATION STATEMENT UNDER SUCH ACT OR PURSUANT TO AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT OR SUCH ACT DOES
NOT APPLY.
(c)
The provisions of this Section 3 are binding upon all subsequent holders of certificates for Warrant Shares bearing the above
legend and all subsequent holders of this Warrant, if any.
(d)
New Warrants. This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office
of the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued,
signed by the Holder or its agent or attorney. Subject to compliance with Section 3(a), as to any transfer which may be involved
in such division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or
Warrants to be divided or combined in accordance with such notice. All Warrants issued on transfers or exchanges will be dated
the initial issuance date of this Warrant and will be identical to this Warrant except as to the number of Warrant Shares issuable
pursuant thereto.
(e)
Warrant Register. The Company shall register this Warrant, upon records to be maintained by the Company for that purpose
(the “Warrant Register”), in the name of the record Holder hereof from time to time. The Company may deem and
treat the registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution
to the Holder, and for all other purposes, absent actual notice to the contrary.
Section
4. Definitions. For purposes of this Warrant, the following capitalized terms have the meanings specified in this Section
4:
(a)
“Business Day” means a day other than Saturday, Sunday, or any other day on which commercial banks in New York,
New York are authorized or required to by law to close.
(b)
A “Fully-Diluted Basis” means the number of shares of Common Stock outstanding at a given time plus that number
of shares of Common Stock that are issuable upon the conversion, exercise or exchange of all securities of the Company that are
convertible or exchangeable or excercisable into shares of Common Stock based on the applicable conversion, exchange or exercise
rate, including any warrants and any options to purchase shares of Common Stock granted by the Company.
(c)
A “Fundamental Transaction” occurs if (i) the Company, directly or indirectly, in one or more related transactions
effects any merger or consolidation of the Company with or into another Person, (ii) the Company, directly or indirectly, effects
any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets in one
or a series of related transactions, (iii) any direct or indirect purchase offer, tender offer or exchange offer (whether by the
Company or another Person) is completed pursuant to which holders of Common Stock are permitted to sell, tender or exchange their
shares for other securities, cash or property and has been accepted by the holders of 50% or more of the outstanding Common Stock,
(iv) the Company, directly or indirectly, in one or more related transactions effects any reclassification, reorganization or
recapitalization of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted
into or exchanged for other securities, cash or property, or (v) the Company, directly or indirectly, in one or more related transactions
consummates a stock or share purchase agreement or other business combination (including, without limitation, a reorganization,
recapitalization, spin-off or scheme of arrangement) with another Person or group of Persons whereby such other Person or group
(other than Alan M. Meckler and his affiliates) acquires more than 50% of the outstanding shares of Common Stock (not including
any shares of Common Stock held by the other Person or other Persons making or party to, or associated or affiliated with the
other Persons making or party to, such stock or share purchase agreement or other business combination).
(d)
“Person” means an individual, a limited liability company, a partnership, a joint venture, a corporation, a
trust, an unincorporated organization, any other entity or a government or any department or agency thereof.
(e)
“Successor Entity” means the Person formed by, resulting from or surviving any Fundamental Transaction or the
Person with which such Fundamental Transaction has been entered into.
(f)
“Trading Day” means a day on which the principal Trading Market is open for trading.
(g)
“Trading Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted
for trading on the date in question: the NYSE MKT, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select
Market, the New York Stock Exchange or the OTC Bulletin Board (or any successors to any of the foregoing).
Section
5. Miscellaneous.
(a)
No Rights as Stockholder Until Exercise. This Warrant does not entitle the Holder to any voting rights, dividends or other
rights as a stockholder of the Company prior to the exercise hereof as set forth in Section 1, except as expressly set forth in
Section 2.
(b)
Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant
Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it, and upon surrender
and cancellation of such Warrant or stock certificate, if mutilated, the Company will make and deliver a new Warrant or stock
certificate of like tenor, in lieu of such Warrant or stock certificate.
(c)
Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right
required or granted herein is not a Business Day, then such action may be taken or such right may be exercised on the next succeeding
Business Day.
(d)
Authorized Shares.
The
Company covenants that, during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common
Stock a sufficient number of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights
under this Warrant. If at any time the number of authorized but unissued shares of Common Stock is not sufficient to effect in
full the exercise of this Warrant, in addition to such other remedies as are available to the Holder, the Company will promptly
take such corporate action as may, in the opinion of its counsel, be necessary to increase the number of authorized but unissued
shares of Common Stock to such number of shares as are sufficient for such purposes, including, without limitation, using its
best efforts to obtain the requisite shareholder approval necessary to increase the number of authorized shares of Common Stock.
The Company further covenants that its issuance of this Warrant constitutes full authority to its officers who are charged with
the duty of executing stock certificates to execute and issue the necessary Warrant Shares upon the exercise of the purchase rights
under this Warrant. The Company will take all such reasonable action as may be necessary to assure that such Warrant Shares may
be issued as provided herein without violation of any applicable law or regulation, or of any requirements of the Trading Market
upon which the Common Stock may be listed. The Company covenants that all Warrant Shares which may be issued upon the exercise
of the purchase rights represented by this Warrant will, upon exercise of the purchase rights represented by this Warrant and
payment for such Warrant Shares in accordance herewith, be duly authorized, validly issued, fully paid and nonassessable and free
from all taxes, liens and charges created by the Company in respect of the issue thereof (other than taxes in respect of any transfer
occurring contemporaneously with such issue).
Except
and to the extent as waived or consented to by the Holder, the Company may not by any action, including, without limitation, amending
its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue
or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms
of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such
actions as may be necessary or appropriate to protect the rights of Holder as set forth in this Warrant against impairment.
(e)
Jurisdiction. The validity, interpretation, construction and performance of this Warrant, and all acts and transactions
pursuant hereto and the rights and obligations of the parties hereto, shall be governed, construed and interpreted in accordance
with the laws of the state of New York.
(f)
Nonwaiver and Expenses. No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder
shall operate as a waiver of such right or otherwise prejudice the Holder’s rights, powers or remedies. Without limiting
any other provision of this Warrant, if the Company willfully and knowingly fails to comply with any provision of this Warrant,
which results in any material damages to the Holder, the Company shall pay to the Holder such amounts as shall be sufficient to
cover any costs and expenses including, but not limited to, reasonable attorneys’ fees, including those of appellate proceedings,
incurred by the Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies
hereunder.
(g)
Notices. Any notice, consent or report required or permitted to be given or made under this Warrant by one Party to the
other Party will be in writing, delivered personally or by U.S. first class mail or express courier providing evidence of receipt,
postage prepaid (where applicable), or by electronic mail, to the address set forth on the signature page hereto. All such notices
will be effective upon receipt.
(h)
Limitation of Liability. No provision hereof, in the absence of any affirmative action by the Holder to exercise this Warrant
to purchase Warrant Shares, and no enumeration herein of the rights or privileges of the Holder, will give rise to any liability
of the Holder for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is asserted
by the Company or by creditors of the Company.
(i)
Remedies. The Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages,
will be entitled to specific performance of its rights under this Warrant. The Company agrees that monetary damages would not
be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees
to waive and not to assert the defense in any action for specific performance that a remedy at law would be adequate.
(j)
Successors and Assigns. Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby
will inure to the benefit of and be binding upon the successors and permitted assigns of the Company and the successors and permitted
assigns of Holder. The provisions of this Warrant are intended to be for the benefit of any Holder from time to time of this Warrant
and are enforceable by the Holder or any holder of Warrant Shares.
(k)
Amendment. This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company
and the Holder.
(l)
Severability. Wherever possible, each provision of this Warrant must be interpreted in such manner as to be effective and
valid under applicable law, but if any provision of this Warrant is prohibited by or invalid under applicable law, such provision
will be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or
the remaining provisions of this Warrant.
(m)
Headings. The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be
deemed a part of this Warrant.
********************
(Signature
Page Follows)
IN
WITNESS WHEREOF, each of the Company and the Holder has caused this Warrant to be executed as of the date first above indicated.
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Synergy CHC corp. |
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By: |
/s/ Jack Ross |
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Name: |
Jack Ross |
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Title: |
President and Chief Executive Officer |
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Address: |
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Attn: |
President |
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KNIGHT THERAPEUTICS (BARBADOS)
INC. |
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By: |
/s/
Michel Loustric |
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Name: |
Michel Loustric |
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Title: |
President |
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Address: |
The Business Centre, Upton, St. Michael
BB11103, Barbados, WI |
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With a copy to: |
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Davies Ward Phillips & Vineberg LLP |
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900 Third Avenue, 24th Floor |
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New York, NY 10022 |
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Attention: Hillel W. Rosen |
NOTICE
OF EXERCISE
To:
synergy CHC corp.
(1)
The undersigned hereby elects to purchase all of the Warrant Shares of the Company pursuant to the terms of the attached Warrant,
and tenders herewith payment of US$1.00, representing the aggregate exercise price in full, together with all applicable transfer
taxes, if any.
(2)
Please issue said Warrant Shares in the name of the undersigned or in such other name as is specified below:
_______________________________
The
Warrant Shares shall be delivered as follows:
_______________________________
_______________________________
_______________________________
If
an Individual (Print Name): _________________________________________________
If
an Entity (Print Name of Investing Entity): ______________________________________
Signature
of Authorized Signatory of Investing Entity: ________________________________________________________________________
Name
of Authorized Signatory: ________________________________________________
Title
of Authorized Signatory: _________________________________________________
Date:
____________________________________________________________________
ASSIGNMENT
FORM
(To
assign the foregoing warrant, execute
this form and supply required information.
Do not use this form to exercise the warrant.)
FOR
VALUE RECEIVED, _______ shares of the foregoing Warrant and all rights evidenced thereby are hereby assigned to
_______________________________________________
whose address is
_______________________________________________________________.
_______________________________________________________________
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Dated: ______________, _______ |
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Holder’s Signature: |
__________________________________ |
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Holder’s Address: |
__________________________________ |
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__________________________________ |
Signature Guaranteed: ___________________________________________ |
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NOTE:
The signature to this Assignment Form must correspond with the name as it appears on the face of the Warrant, without alteration
or enlargement or any change whatsoever, and must be guaranteed by a bank or trust company. Officers of corporations and those
acting in a fiduciary or other representative capacity should file proper evidence of authority to assign the foregoing Warrant.
THIS
WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
NO REGISTRATION OF TRANSFER OF THIS WARRANT OR THE SECURITIES ISSUABLE UPON THE EXERCISE HEREOF WILL BE MADE ON THE BOOKS OF THE
ISSUER UNLESS SUCH TRANSFER IS MADE IN CONNECTION WITH AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT OR PURSUANT TO AN EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT OR SUCH ACT DOES NOT APPLY.
COMMON
STOCK PURCHASE WARRANT
(10-YEAR
WARRANT)
SYNERGY
CHC CORP.
Warrant
Shares: 4,547,243 |
Issue Date: November 12, 2015 |
THIS
COMMON STOCK PURCHASE WARRANT (the “Warrant”) certifies that, for value received, Knight Therapeutics (Barbados)
Inc. (the “Holder”) is entitled, upon the terms and subject to the limitations on exercise and the conditions
set forth in this Warrant, at any time on or after the date hereof (the “Issue Date”) and on or prior to the
close of business on the tenth anniversary following the Issue Date (the “Termination Date”) but not thereafter,
to subscribe for and purchase from Synergy CHC Corp, a Nevada corporation (the “Company”), up to 4,547,243
fully paid and nonassessable shares (as subject to adjustment hereunder, the “Warrant Shares”) of the Company’s
Common Stock (the “Common Stock”), represent 5% of the Company’s Common Stock on a Fully Diluted Basis.
The purchase price of one share of Common Stock under this Warrant is equal to the Exercise Price, as defined in Section 1(b).
Section
1. Exercise.
(a)
Exercise of the purchase rights represented by this Warrant may be made, in whole or in part, at any time or times on or after
the Issue Date and on or before the Termination Date by delivery to the Company (or such other office or agency of the Company
as it may designate by notice in writing to the registered Holder at the address of the Holder appearing on the books of the Company)
of a duly executed facsimile copy of the Notice of Exercise Form annexed hereto. Except for cashless exercises pursuant to Section
1(c) below, on the date of exercise, the Holder shall deliver the aggregate Exercise Price for the shares specified in the applicable
Notice of Exercise by wire transfer or cashier’s check drawn on a United States or Canadian chartered bank. Notwithstanding
anything herein to the contrary, the Holder is not required to physically surrender this Warrant to the Company until the Holder
has purchased all of the Warrant Shares available hereunder and the Warrant has been exercised in full, in which case the Holder
shall surrender this Warrant to the Company for cancellation within three (3) Trading Days of the date on which the final Notice
of Exercise is delivered to the Company. Partial exercises of this Warrant resulting in purchases of a portion of the total number
of Warrant Shares available hereunder will have the effect of lowering the outstanding number of Warrant Shares purchasable hereunder
in an amount equal to the applicable number of Warrant Shares purchased. The Holder and the Company shall maintain records showing
the number of Warrant Shares purchased and the date of such purchases. The Company shall deliver any objection to any Notice of
Exercise Form within one (1) Business Day of receipt of such notice. The Holder and any assignee, by acceptance of this Warrant,
acknowledge and agree that, by reason of the provisions of this paragraph, following the purchase of a portion of the Warrant
Shares hereunder, the number of Warrant Shares available for purchase hereunder at any given time may be less than the amount
stated on the face hereof.
(b)
Exercise Price. The exercise price per share of the Common Stock under this Warrant is US$0.49, subject to adjustment hereunder
(the “Exercise Price”).
(c)
Cashless Exercise. Upon the prior written approval of the Company, which approval may be withheld or conditioned in its
sole discretion, this Warrant may be exercised, in whole or in part, by means of a “cashless exercise” in which the
Holder will be entitled to receive a number of Warrant Shares equal to the quotient obtained by dividing [(A-B) (X)] by (A), where:
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(A) = |
the Closing Price on the
Trading Day immediately preceding the date on which Holder elects to exercise this Warrant by means of a “cashless exercise,”
as set forth in the applicable Notice of Exercise; |
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(B) = |
the Exercise Price of this Warrant,
as adjusted hereunder; and |
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(X) = |
the number of Warrant Shares that would
be issuable upon exercise of this Warrant in accordance with the terms of this Warrant if such exercise were by means of a
cash exercise rather than a cashless exercise. |
(d)
Mechanics of Exercise.
i.
Delivery of Warrant Shares Upon Exercise. The Company shall use best efforts to cause the Warrant Shares purchased hereunder
to be issued in book-entry format on the records of the transfer agent and registrar of the Company, or, if the Warrant Shares
cannot be issued in book-entry format, then by physical delivery of a stock certificate to the address specified by the Holder
in the Notice of Exercise, by the date that is three (3) Trading Days after the latest of (A) the delivery to the Company of the
Notice of Exercise, (B) surrender of this Warrant (if required) and (C) payment of the aggregate Exercise Price as set forth above
(including by cashless exercise, if permitted) (such date, the “Warrant Share Delivery Date”). The Warrant
Shares will be deemed to have been issued, and the Holder or any other person so designated to be named therein will be deemed
to have become a holder of record of such shares for all purposes, as of the date on which the Warrant has been exercised, with
payment to the Company of the Exercise Price (or by cashless exercise, if permitted) and all taxes required to be paid by the
Holder, if any, pursuant to Section 1(d)(iv) prior to the issuance of such shares having been paid.
ii.
Delivery of New Warrants Upon Exercise. If this Warrant is exercised in part, the Company shall, at the request of a Holder
and upon surrender of this Warrant certificate, at the time of delivery of the Warrant Shares, deliver to the Holder a new Warrant
evidencing the rights of the Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant will
be, in all other respects, identical with this Warrant.
iii.
No Fractional Shares or Scrip. No fractional shares or scrip representing fractional shares may be issued upon the exercise
of this Warrant. As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such exercise, the
Company shall, at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction
multiplied by the Exercise Price or round up to the next whole share.
iv.
Charges, Taxes and Expenses. Issuance of Warrant Shares will be made without charge to the Holder for any issue or transfer
tax or other incidental expense in respect of the issuance of such Warrant Shares, all of which taxes and expenses will be paid
by the Company, and such Warrant Shares will be issued in the name of the Holder or in such name or names as may be directed by
the Holder; provided, however, that in the event Warrant Shares are to be issued in a name other than the name of
the Holder, this Warrant when surrendered for exercise must be accompanied by the Assignment Form attached hereto duly executed
by the Holder and the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer
tax incidental thereto. The Company shall pay all Transfer Agent fees required for same-day processing of any Notice of Exercise.
Section
2. Certain Adjustments.
(a)
Stock Dividends and Splits. If the Company, at any time while this Warrant is outstanding: (i) declares or pays a stock
dividend or otherwise makes a distribution or distributions on shares of its Common Stock or any other equity or equity-equivalent
securities payable in shares of Common Stock (which, for avoidance of doubt, does not include any shares of Common Stock issued
by the Company upon exercise of this Warrant), (ii) subdivides outstanding shares of Common Stock into a larger number of shares,
(iii) combines (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or
(iv) issues by reclassification of shares of the Common Stock any shares of capital stock of the Company, then in each case the
Exercise Price will be multiplied by a fraction, the numerator of which is the number of shares of Common Stock (excluding treasury
shares, if any) outstanding immediately before such event and the denominator of which is the number of shares of Common Stock
outstanding immediately after such event, and the number of shares issuable upon exercise of this Warrant will be proportionately
adjusted such that the aggregate Exercise Price of all shares of Common Stock for which this Warrant is then exercisable remains
unchanged. Any adjustment made pursuant to this Section 2(a) will become effective immediately after the record date for the determination
of stockholders entitled to receive such dividend or distribution and will become effective immediately after the effective date
in the case of a subdivision, combination or re-classification.
(b)
Issuance of Common Stock. If, at any time while this Warrant has not been exercised in full, the Company issues (i) shares
of Common Stock for consideration per share less than a price equal to the Exercise Price or (ii) warrants to purchase shares
of Common Stock at an exercise price that is lower than the Exercise Price (the foregoing price per share of Common Stock and/or
exercise price being hereinafter referred to as the “Dilutive Price”), the Exercise Price shall be reduced
to the Dilutive Price. For greater certainty, the Exercise Price shall at all times be the lowest Dilutive Price at which shares
of Common Stock or warrants to purchase shares of Common Stock have been issued by the Company, as the case may be.
(c)
Fundamental Transaction. The Company may not enter into or be a party to a Fundamental Transaction unless the Successor
Entity makes appropriate provision for the continuation of this Warrant by either assumption of this Warrant or by substitution
of this Warrant with an equivalent right, in either case pursuant to written agreements in form and substance satisfactory to
the Holder and approved by the Holder prior to such Fundamental Transaction, such approval not to be unreasonably withheld, conditioned
or delayed.
(d)
Calculations. No adjustment in the number of Warrant Shares purchasable hereunder is required unless such adjustment would
result in an increase or decrease of at least 0.1% of the number of Warrant Shares for which this Warrant is exercisable; provided
that any adjustments which by reason of this Section 2(c) are not required to be made will be carried forward and taken into
account in any subsequent adjustment. All calculations under this Section 3 shall be made to the nearest cent or the nearest 1/1000th
of a share, as the case may be. For purposes of this Section 2, the number of shares of Common Stock deemed to be issued and outstanding
as of a given date shall be the sum of the number of shares of Common Stock (excluding treasury shares, if any) issued and outstanding
on a Fully Diluted Basis.
(e)
Notice to Holder.
i.
Adjustment to Exercise Price. Whenever the Exercise Price is adjusted pursuant to any provision of this Section 2, the
Company shall promptly mail to the Holder a notice setting forth the Exercise Price after such adjustment and any resulting adjustment
to the number of Warrant Shares and setting forth a brief statement of the facts requiring such adjustment.
ii.
Notice to Allow Exercise by Holder. If (A) the Company declares or pays a dividend (or any other distribution in whatever
form) on the Common Stock, (B) the Company declares or pays a special nonrecurring cash dividend on or a redemption of the Common
Stock, (C) the Company authorizes the granting to all holders of the Common Stock rights or warrants to subscribe for or purchase
any shares of capital stock of any class or of any rights, (D) the approval of any stockholders of the Company is required in
connection with any Fundamental Transaction, or (E) the Company authorizes the voluntary or involuntary dissolution, liquidation
or winding up of the affairs of the Company, then, in each case, the Company shall cause to be mailed to the Holder at its last
address as it appears upon the Warrant Register of the Company, at least five calendar days prior to the applicable record or
effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend,
distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common
Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined, or (y) the
date on which such Fundamental Transaction is expected to become effective or close, and the date as of which it is expected that
holders of the Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other
property deliverable upon such Fundamental Transaction; provided that the failure to mail such notice or any defect therein or
in the mailing thereof shall not affect the validity of the corporate action required to be specified in such notice. The Holder
shall remain entitled to exercise this Warrant during the period commencing on the date of such notice to the effective date of
the event triggering such notice except as may otherwise be expressly set forth herein.
Section
3. Transfer of Warrant.
(a)
Transferability. This Warrant and all rights hereunder are transferable, in whole or in part, upon surrender of this Warrant
at the principal office of the Company or its designated agent, together with a written assignment of this Warrant substantially
in the form attached hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes
payable upon the making of such transfer. Upon such surrender and, if required, such payment, the Company shall execute and deliver
a new Warrant or Warrants in the name of the assignee or assignees, as applicable, and in the denomination or denominations specified
in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so
assigned, and this Warrant shall promptly be cancelled. The Warrant, if properly assigned in accordance herewith, may be exercised
by a new holder for the purchase of Warrant Shares without having a new Warrant issued.
(b)
Transfer to Comply with the Securities Act. This Warrant may not be exercised, and neither this Warrant nor any of the
Warrant Shares may be disposed of, in whole or in part, except in compliance with applicable United States federal and state securities
or “blue sky” laws and the terms and conditions hereof. Any new Warrant issued upon transfer of this Warrant will
bear a legend in substantially the same form as the legend set forth on the first page of this Warrant, unless the Holder delivers
to the Company an opinion of counsel reasonably satisfactory to the Company that such new Warrant need no longer be subject to
the restriction contained herein. Each certificate for Warrant Shares issued upon exercise of this Warrant (or subsequently issued
in substitution or exchange for such Warrant Shares), unless either (i) at the time of exercise such Warrant Shares are registered
under the Securities Act of 1933, as amended (the “Securities Act”), or (ii) the Warrant Shares are no longer
subject to the restriction contained herein, will bear a legend substantially in the following form:
THE
SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. NO REGISTRATION
OF TRANSFER OF SUCH SECURITIES WILL BE MADE ON THE BOOKS OF THE ISSUER UNLESS SUCH TRANSFER IS MADE IN CONNECTION WITH AN EFFECTIVE
REGISTRATION STATEMENT UNDER SUCH ACT OR PURSUANT TO AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT OR SUCH ACT DOES
NOT APPLY.
(c)
The provisions of this Section 3 are binding upon all subsequent holders of certificates for Warrant Shares bearing the above
legend and all subsequent holders of this Warrant, if any.
(d)
New Warrants. This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office
of the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued,
signed by the Holder or its agent or attorney. Subject to compliance with Section 3(a), as to any transfer which may be involved
in such division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or
Warrants to be divided or combined in accordance with such notice. All Warrants issued on transfers or exchanges will be dated
the Issue Date and will be identical to this Warrant except as to the number of Warrant Shares issuable pursuant thereto.
(e)
Warrant Register. The Company shall register this Warrant, upon records to be maintained by the Company for that purpose
(the “Warrant Register”), in the name of the record Holder hereof from time to time. The Company may deem and
treat the registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution
to the Holder, and for all other purposes, absent actual notice to the contrary.
Section
4. Definitions. For purposes of this Warrant, the following capitalized terms have the meanings specified in this Section
4:
(a)
“Business Day” means a day other than Saturday, Sunday, or any other day on which commercial banks in New York,
New York are authorized or required to by law to close.
(b)
“Closing Price” means, for any date, the price determined by the first of the following clauses that applies:
(a) if the Common Stock is then listed or quoted on a Trading Market, the closing price of the Common Stock for such date (or
the nearest preceding date) on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg
L.P. (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) if the OTC Bulletin Board
is not a Trading Market, the closing price of the Common Stock for such date (or the nearest preceding date) on the OTC Bulletin
Board, (c) if the Common Stock is not then listed or quoted for trading on the OTC Bulletin Board and if prices for the Common
Stock are then reported in the “Pink Sheets” published by OTC Markets Group, Inc. (or a similar organization or agency
succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported, or (d)
in all other cases, the fair market value of a share of Common Stock as determined by a majority of the independent directors
of the Company in their reasonable good faith judgment.
(c)
A “Fully-Diluted Basis” means the number of shares of Common Stock outstanding at a given time plus that number of
shares of Common Stock that are issuable upon the conversion, exercise or exchange of all securities of the Company that are convertible
or exchangeable or exercisable into shares of Common Stock based on the applicable conversion, exchange or exercise rate, including
any warrants and any options to purchase shares of Common Stock granted by the Company.
(d)
A “Fundamental Transaction” occurs if (i) the Company, directly or indirectly, in one or more related transactions
effects any merger or consolidation of the Company with or into another Person, (ii) the Company, directly or indirectly, effects
any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets in one
or a series of related transactions, (iii) any direct or indirect purchase offer, tender offer or exchange offer (whether by the
Company or another Person) is completed pursuant to which holders of Common Stock are permitted to sell, tender or exchange their
shares for other securities, cash or property and has been accepted by the holders of 50% or more of the outstanding Common Stock,
(iv) the Company, directly or indirectly, in one or more related transactions effects any reclassification, reorganization or
recapitalization of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted
into or exchanged for other securities, cash or property, or (v) the Company, directly or indirectly, in one or more related transactions
consummates a stock or share purchase agreement or other business combination (including, without limitation, a reorganization,
recapitalization, spin-off or scheme of arrangement) with another Person or group of Persons whereby such other Person or group
acquires more than 50% of the outstanding shares of Common Stock (not including any shares of Common Stock held by the other Person
or other Persons making or party to, or associated or affiliated with the other Persons making or party to, such stock or share
purchase agreement or other business combination).
(e)
“Person” means an individual, a limited liability company, a partnership, a joint venture, a corporation, a
trust, an unincorporated organization, any other entity or a government or any department or agency thereof.
(f)
“Successor Entity” means the Person formed by, resulting from or surviving any Fundamental Transaction or the
Person with which such Fundamental Transaction has been entered into.
(g)
“Trading Day” means a day on which the principal Trading Market is open for trading.
(h)
“Trading Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted
for trading on the date in question: the NYSE MKT, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select
Market, the New York Stock Exchange or the OTC Bulletin Board (or any successors to any of the foregoing).
Section
5. Miscellaneous.
(a)
No Rights as Stockholder Until Exercise. This Warrant does not entitle the Holder to any voting rights, dividends or other
rights as a stockholder of the Company prior to the exercise hereof as set forth in Section 1, except as expressly set forth in
Section 2.
(b)
Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant
Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it, and upon surrender
and cancellation of such Warrant or stock certificate, if mutilated, the Company will make and deliver a new Warrant or stock
certificate of like tenor, in lieu of such Warrant or stock certificate.
(c)
Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right
required or granted herein is not a Business Day, then such action may be taken or such right may be exercised on the next succeeding
Business Day.
(d)
Authorized Shares.
The
Company covenants that, during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common
Stock a sufficient number of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights
under this Warrant. If at any time the number of authorized but unissued shares of Common Stock is not sufficient to effect in
full the exercise of this Warrant, in addition to such other remedies as are available to the Holder, the Company will promptly
take such corporate action as may, in the opinion of its counsel, be necessary to increase the number of authorized but unissued
shares of Common Stock to such number of shares as are sufficient for such purposes, including, without limitation, using its
best efforts to obtain the requisite shareholder approval necessary to increase the number of authorized shares of Common Stock.
The Company further covenants that its issuance of this Warrant constitutes full authority to its officers who are charged with
the duty of executing stock certificates to execute and issue the necessary Warrant Shares upon the exercise of the purchase rights
under this Warrant. The Company will take all such reasonable action as may be necessary to assure that such Warrant Shares may
be issued as provided herein without violation of any applicable law or regulation, or of any requirements of the Trading Market
upon which the Common Stock may be listed. The Company covenants that all Warrant Shares which may be issued upon the exercise
of the purchase rights represented by this Warrant will, upon exercise of the purchase rights represented by this Warrant and
payment for such Warrant Shares in accordance herewith, be duly authorized, validly issued, fully paid and nonassessable and free
from all taxes, liens and charges created by the Company in respect of the issue thereof (other than taxes in respect of any transfer
occurring contemporaneously with such issue).
Except
and to the extent as waived or consented to by the Holder, the Company may not by any action, including, without limitation, amending
its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue
or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms
of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such
actions as may be necessary or appropriate to protect the rights of Holder as set forth in this Warrant against impairment.
Before
taking any action which would result in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or
in the Exercise Price, the Company shall obtain all such authorizations thereof, exemptions therefor, or consents thereto as may
be necessary from any public regulatory body or bodies having jurisdiction thereof.
(e)
Jurisdiction. The validity, interpretation, construction and performance of this Warrant, and all acts and transactions
pursuant hereto and the rights and obligations of the parties hereto, shall be governed, construed and interpreted in accordance
with the laws of the state of New York.
(f)
Nonwaiver and Expenses. No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder
shall operate as a waiver of such right or otherwise prejudice the Holder’s rights, powers or remedies. Without limiting
any other provision of this Warrant, if the Company willfully and knowingly fails to comply with any provision of this Warrant,
which results in any material damages to the Holder, the Company shall pay to the Holder such amounts as shall be sufficient to
cover any costs and expenses including, but not limited to, reasonable attorneys’ fees, including those of appellate proceedings,
incurred by the Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies
hereunder.
(g)
Notices. Any notice, consent or report required or permitted to be given or made under this Warrant by one Party to the
other Party will be in writing, delivered personally or by U.S. first class mail or express courier providing evidence of receipt,
postage prepaid (where applicable), or by electronic mail, to the address set forth on the signature page hereto. All such notices
will be effective upon receipt.
(h)
Limitation of Liability. No provision hereof, in the absence of any affirmative action by the Holder to exercise this Warrant
to purchase Warrant Shares, and no enumeration herein of the rights or privileges of the Holder, will give rise to any liability
of the Holder for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is asserted
by the Company or by creditors of the Company.
(i)
Remedies. The Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages,
will be entitled to specific performance of its rights under this Warrant. The Company agrees that monetary damages would not
be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees
to waive and not to assert the defense in any action for specific performance that a remedy at law would be adequate.
(j)
Successors and Assigns. Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby
will inure to the benefit of and be binding upon the successors and permitted assigns of the Company and the successors and permitted
assigns of Holder. The provisions of this Warrant are intended to be for the benefit of any Holder from time to time of this Warrant
and are enforceable by the Holder or any holder of Warrant Shares.
(k)
Amendment. This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company
and the Holder.
(l)
Severability. Wherever possible, each provision of this Warrant must be interpreted in such manner as to be effective and
valid under applicable law, but if any provision of this Warrant is prohibited by or invalid under applicable law, such provision
will be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or
the remaining provisions of this Warrant.
(m)
Headings. The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be
deemed a part of this Warrant.
********************
(Signature
Page Follows)
IN
WITNESS WHEREOF, each of the Company and the Holder has caused this Warrant to be executed as of the date first above indicated.
|
Synergy
CHC corp. |
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By: |
/s/ Jack Ross |
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Name: |
Jack Ross |
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Title: |
President and Chief Executive Officer |
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Address: |
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Attn: |
President |
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KNIGHT THERAPEUTICS (BARBADOS)
INC. |
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By: |
/s/ Michel Loustric |
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Name: |
Michel Loustric |
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Title: |
President |
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Address: |
The Business Centre, Upton, St. Michael BB11103, Barbados, WI |
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With a copy to: |
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Davies Ward Phillips & Vineberg
LLP |
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900 Third Avenue, 24th Floor |
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New York, NY 10022 |
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Attention: Hillel W. Rosen |
NOTICE
OF EXERCISE
To:
synergy CHC corp.
(1)
The undersigned hereby elects to purchase ________ Warrant Shares of the Company pursuant to the terms of the attached Warrant
(only if exercised in full), and tenders herewith payment of the exercise price in full, together with all applicable transfer
taxes, if any.
(2)
Payment shall take the form of (check applicable box):
[ ] in lawful money of the United States; or
[ ] if permitted, the cancellation of such number of Warrant Shares as is necessary, in accordance with the formula set forth in
subsection 1(c) of the Warrant, to exercise this Warrant with respect to the maximum number of Warrant Shares purchasable pursuant
to the “cashless exercise” procedure set forth in such subsection 1(c).
(3)
Please issue said Warrant Shares in the name of the undersigned or in such other name as is specified below:
_______________________________
The
Warrant Shares shall be delivered as follows:
_______________________________
_______________________________
_______________________________
If
an Individual (Print Name): _____________________________________________________
If
an Entity (Print Name of Investing Entity): ____________________________________________________________________________
Signature
of Authorized Signatory of Investing Entity: ____________________________________________________________________________
Name
of Authorized Signatory: ____________________________________________________________________________
Title
of Authorized Signatory: _____________________________________________________
Date:
________________________________________________________________________
ASSIGNMENT
FORM
(To
assign the foregoing warrant, execute
this form and supply required information.
Do not use this form to exercise the warrant.)
FOR
VALUE RECEIVED, _______ shares of the foregoing Warrant and all rights evidenced thereby are hereby assigned to
_______________________________________________
whose address is
_______________________________________________________________.
_______________________________________________________________
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Signature
Guaranteed: ___________________________________________
NOTE:
The signature to this Assignment Form must correspond with the name as it appears on the face of the Warrant, without alteration
or enlargement or any change whatsoever, and must be guaranteed by a bank or trust company. Officers of corporations and those
acting in a fiduciary or other representative capacity should file proper evidence of authority to assign the foregoing Warrant.
STOCK
PURCHASE AGREEMENT
THIS
STOCK PURCHASE AGREEMENT (the “Agreement”) dated as of November 12, 2015, by and among Breakthrough
Products, Inc., a Delaware corporation (the “Company”), URX ACQUISITION TRUST, a Delaware statutory
trust, (the “Trust”), Jordan Eisenberg, the chief executive officer and a shareholder of the Company
(“Eisenberg”), the other shareholders of the Company listed on Exhibit A (Eisenberg and such
other shareholders being sometimes collectively referred to as the “Sellers,” and individually as a
“Seller”), and Synergy CHC Corp., a Nevada corporation (the “Buyer”). Company,
Trust, Sellers, and Buyer are sometimes referred to collectively as the “Parties” and individually as
a “Party”.
BACKGROUND
Sellers,
either directly or indirectly, collectively own all of the issued and outstanding capital stock of the Company.
The
Company, operating as UrgentRx, is engaged in the business of developing and selling medications for headache, heart burn, allergy
attack, ache and pain, and upset stomach in the form of powders (the “Products”) (the Products and the
business related to the manufacture, sale, marketing and distribution of the Products is collectively the “Business”).
Buyer
desires to purchase all of the outstanding capital stock of the Company (the “Stock Purchase”), and
Sellers desire to sell such outstanding capital stock to Buyer, in each case upon the terms and subject to the conditions set
forth in this Agreement.
The
Trust was formed for the sole purpose of holding, collecting, and managing the Purchase Consideration (as defined below) payable
with respect to the Stock Purchase (including voting the shares issued as purchase price consideration and exercising all shareholder
rights with respect thereto while being held by the Trust), enforcing the rights of the Sellers with respect to this Agreement,
payment of any expenses and any liabilities of the Sellers under this Agreement, and distributing the assets of the Trust to the
Sellers.
In
consideration of the foregoing and the respective covenants and agreements hereinafter contained, the Parties hereto hereby agree
as follows:
1. Definitions.
As used in this Agreement (including the recitals and Disclosure Schedules hereto), the following selected terms shall have
the following meanings (such meanings to be applicable equally to both singular and plural forms of the terms defined):
“Action”
means any claim, action, cause of action, demand, lawsuit, arbitration, audit, notice of violation, proceeding, litigation, citation,
summons, subpoena or investigation of any nature, civil, criminal, administrative, regulatory or otherwise, whether formal or
informal, whether public or private and whether at law or in equity;
“Affiliate”
shall mean, as to any Person, any other Person which directly or indirectly controls, or is under common control with, or is controlled
by, such Person. As used in this definition, “control” (including, with its correlative meanings, “controlled
by” and “under common control with”) shall mean possession, directly or indirectly, of the power to direct or
cause the direction of management or policies (whether through ownership of securities or partnership or other ownership interests,
by Contract or otherwise) of such Person;
“Closing”
shall mean the consummation of the transactions contemplated by this Agreement;
“Code”
means the Internal Revenue Code of 1986, as amended;
“Commercially
Reasonable Efforts” means the commercially reasonable efforts that a prudent Person desirous of achieving
a result and having an incentive to and interest in achieving such result would use to achieve that result as expeditiously as
reasonably possible under the circumstances;
“Company
Equityholder” means the holder of any capital stock of the Company or any options, warrants, purchase rights, subscription
rights, conversion rights, exchange rights, or other Contracts or commitments that could require the Company to issue, sell, or
otherwise cause to become outstanding any of its capital stock;
“Contract”
means any agreement, contract, indenture, instrument, obligation, promise or undertaking (whether written or oral and whether
express or implied) that is legally binding;
“Customers”
means all of the customers of Company during each of Company’s 2012, 2013, and 2014 fiscal years and during the period ended
as of September 30, 2015;
“Disclosure
Schedules” means the disclosure letter delivered by Sellers concurrently with the execution and delivery of this
Agreement;
“Employee”
means an employee of Company employed in connection with the Business;
“Employee
Benefit Plan” means any pension, profit sharing, retirement, deferred compensation, stock purchase, stock option
or other equity based compensation plans, incentive, bonus, vacation, employment agreement, independent contractor agreement,
severance, disability, hospitalization, sickness, death, medical insurance, dental insurance, life insurance and any other material
employee benefit plan (whether provided on a funded or unfunded basis, or through insurance or otherwise), agreement, program,
policy, trust, fund, Contract or arrangement;
“Environmental
Laws” means all Laws concerning pollution or protection of the environment and natural resources, including without
limitation all those relating to the presence, use, production, generation, handling, transportation, treatment, storage, control
or cleanup of any hazardous materials, substances or wastes, pesticides, pollutants or byproducts, asbestos, polychlorinated biphenyls,
or radiation, each as amended and as now or hereafter in effect;
“Fundamental
Representations” shall mean the representations and warranties set forth in (i) Sections 3(a), 3(b), 3(c), and 3(d);
(ii) Sections 4(a), 4(c), 4(d), and 4(e); (iii) Sections 5(a), 5(b), 5(c), 5(d), 5(g), 5(h), (5(i) and 5(j); and Sections 6(a),
6(b), 6(c), and 6(d).
“Government”
shall mean any agency, division, subdivision, audit group or procuring office of the Government of the United States, any state
of the United States, including the employees or agents thereof;
“Guarantee”
means any Contract of guarantee, indemnification, assumption or endorsement or any other like commitment of the obligations, liabilities
(fixed, contingent or otherwise) or indebtedness of another Person;
“Intellectual
Property” means all intellectual property rights whether protected, created or arising under the Laws of the United
States or any other jurisdiction, including the following: (i) patents and patent applications; (ii) trademarks and service marks,
including all applications and registrations and goodwill related to the foregoing; (iii) copyrights, including all applications
and registrations related to the foregoing (including, without limitation, for all designs); (iv) Internet domain names; (v) telephone
numbers, electronic mail addresses and social media accounts and registrations, including but not limited to accounts and registrations
with Facebook, LinkedIn, Twitter, and other similar services; and (vi) trade secrets, know-how, ideas, creative works, inventions,
discoveries, methods, processes, technical data, specifications, research and development information, technology, software or
computer programs, and data base;
“Knowledge
of Company” or “Company’s Knowledge” or a similar phrase shall mean, with respect
to any matter, the actual knowledge the Eisenberg, Lynn Millheiser (COO), Kimber Ward (VP Marketing), and Genevieve Bucsek (Controller),
or facts regarding such matter which reasonably should have been known by such persons after making a diligent inquiry with respect
to such matter;
“Laws”
means all statutes, laws, codes, ordinances, regulations, rules, orders, judgments, writs, injunctions, acts or decrees of any
Government entity;
“Liability”
means any liability or obligation of whatever kind or nature (whether known or unknown, whether asserted or unasserted, whether
absolute or contingent, whether accrued or unaccrued, whether liquidated or unliquidated, and whether due or to become due), including
without limitation any liability for Taxes;
“Lien”
shall mean any mortgage, pledge, security interest, encumbrance, lien (statutory or other) or conditional sale agreement, and
including claims on title and liens in favor of contractors, carriers, warehousemen, mechanics, materialmen, and subcontractors
and statutory or common law liens to secure claims for labor, materials or supplies, and other similar liens and encumbrances;
“Material
Adverse Effect” shall mean, when used in connection with an entity means any change, event, circumstance, condition
or effect that is or is reasonably likely to be, individually or in the aggregate, materially adverse to: (i) the condition (financial
or otherwise), capitalization, properties, prospects, products, assets (including intangible assets), Intellectual Property, liabilities,
business, operations or results of operations of such entity and its subsidiaries, taken as a whole, or (ii) such entity’s
ability to consummate the Stock Purchase or to perform its obligations under this Agreement;
“Material
Adverse Event” means any untoward or negative occurrence (including, without limitation, physical injury) related
to the Business or the use of the Products that would result in a Material Adverse Effect;
“Person”
shall mean and include any individual, corporation, limited liability company, partnership, joint venture, association, joint-stock
company, trust, and any other unincorporated organization or Government;
“Regulations”
means the Treasury Regulations (including Temporary Regulations) promulgated by the United States Department of Treasury with
respect to the Code;
“Taxes”
shall mean (i) all federal, state, local or foreign taxes, including, but not limited to, income, gross income, gross receipts,
capital, production, excise, employment, sales, use, transfer, transfer gain, ad valorem, premium, profits, license, capital stock,
franchise, severance, stamp, withholding, Social Security, employment, unemployment, disability, worker’s compensation,
payroll, utility, windfall profit, custom duties, personal property, real property, environmental, registration, alternative or
add-on minimum, estimated and other taxes, governmental fees or like charges of any kind whatsoever, and (ii) any interest, penalties,
fines, loss, damages, liability, expense or additions thereto whether disputed or not; and (iii) any transference liability in
respect of any items described in clauses (i) or (ii) payable by reason of contract assumption, transference liability, operation
of law, or otherwise;
“Tax
Return” means any return, declaration, report, claim for refund, information return or statement relating to any
taxes, including any schedule or attachment thereto and including any amendment therof;
“Transaction
Documents” shall mean this Agreement, the Share certificates, and the other exhibits and schedules hereto and thereto,
and all other agreements, instruments, certificates and other documents to be entered into or delivered by any Party in connection
with the transactions contemplated to be consummated pursuant to any of the foregoing.
2. Stock
Purchase.
(a) Purchase
and Sale of the Company’s Capital Stock. Upon the terms and subject to the conditions herein set forth, Sellers agree
to sell, convey, transfer, assign and deliver to Buyer, and Buyer agrees to purchase and accept from Sellers, at the Closing,
all of the issued and outstanding capital stock of the Company (the “Shares”).
(b) Consideration.
(i) Upon
the terms and subject to the conditions set forth in this Agreement, in reliance on the representations, warranties, covenants
and agreements of Sellers contained herein, the consideration payable to Sellers for the Stock Purchase shall be the right to
receive the corpus of the Trust pursuant to the governing documents of the Trust.
(ii) In
consideration of the Stock Purchase, Buyer shall:
| 1. | Issue
and deliver to the Trust for the benefit of the Sellers Six Million (6,000,000) shares
of the common stock of Buyer, with a deemed value of $0.85 per share (the “Equity
Consideration”); and |
| 2. | Following
the first Five Million Dollars ($5,000,000) in gross sales of the Products by Buyer or
its Affiliates (including the Company), on a quarterly basis for a period of seven (7)
years from the date of this Agreement, pay a royalty to the Trust for the benefit of
the Sellers equal to five percent (5%) of gross sales of the Products by Buyer or its
Affiliates (including the Company) (the “Royalty Consideration”
and together with the Equity Consideration, the “Purchase Consideration”).
For purposes of clarity, the $5 million gross sales threshold before Royalty Consideration
becomes due and payable shall only apply once during the seven year period when Royalty
Consideration is or may become due and payable by Buyer. |
(c) Closing.
The Closing will take place contemporaneously with the execution of this Agreement at the offices of Smith, Gambrell & Russell,
LLP, 1230 Peachtree Street, N.E., Suite 3100, Atlanta, Georgia 30309. The Parties agree that the Closing may occur electronically
through the delivery of facsimile or electronic copies of any and all other ancillary documents or documents required to be delivered
under the terms of this Agreement, unless specifically set forth herein.
(d) Closing
Deliverables. At the Closing:
(i) Each
Seller will deliver to Buyer either (i) the certificates representing all of the Shares owned by such Seller, duly endorsed in
blank or with appropriate stock powers with respect thereto duly endorsed in blank, or (ii) if such certificates are not available
at Closing, stock powers for such unavailable certificates, duly endorsed in blank. All certificates will be delivered to Buyer
no later than ten (10) days following the Closing. If any certificates cannot be located, such Seller will deliver to the Buyer,
no later than ten (10) days following the Closing, an affidavit of such Seller reasonably satisfactory to Buyer stating that the
certificates representing all of the Shares owned by such Seller have been lost, stolen or otherwise cannot be located.
(ii) The
Company will deliver to Buyer evidence that the officers and directors of the Company in office immediately prior to the Closing
have resigned as officers and directors of the Company effective as of the Closing, unless otherwise requested by Buyer; excluding
Jordan Eisenberg, who shall have entered into an employment agreement with the Company.
(iii) The
Company will deliver to Buyer evidence that the Shares can be transferred from the Sellers to Buyer free from any rights of first
refusal, registration rights, rights of co-sale or other restrictions or conditions relating to transfer of the Shares.
(iv) The
Company will deliver to Buyer evidence that all options, warrants, purchase rights, subscription rights, conversion rights, exchange
rights, or other Contracts or commitments that could require the Company to issue, sell, or otherwise cause to become outstanding
any of its capital stock have been terminated.
(v) The
Company will deliver to Buyer a Release Agreement in the form of Exhibit B duly executed by each Company Equityholder who
is not also a Seller.
(vi) The
Company will deliver to Buyer a certificate executed by the authorized person of the Company certifying as to the truthfulness,
completeness and accuracy of attached copies of resolutions of the directors and shareholders of the Company authorizing this
Agreement and the transactions contemplated hereby; and such other documents relating to the transactions contemplated
by the Transaction Documents to be consummated at the Closing as counsel to Buyer shall reasonably request in order to complete
the Stock Purchase by Buyer.
(vii) The
Company will deliver to Buyer a certificate of the State of Delaware dated reasonably close to the Closing Date, as to the legal
existence and good standing of Company in Delaware.
(viii) The
Trust will deliver to Buyer its duly executed governing instrument(s).
(ix) The
Trust will deliver to Buyer a certificate executed by its trustee, certifying the satisfaction by the Company of the conditions
specified in Section 5 and certifying as to the truthfulness, completeness and accuracy of attached copies the Trust Documents
(as defined below) authorizing this Agreement and the transactions contemplated hereby; and such other documents relating
to the transactions contemplated by the Transaction Documents to be consummated at the Closing as counsel to Buyer shall reasonably
request in order to complete the Stock Purchase by Buyer.
(x) Buyer
shall issue and deliver to the Trust for the benefit of the Sellers the Equity Consideration.
3. Representations
And Warranties Of Sellers. As a material inducement to Buyer to enter into this Agreement and to consummate the transactions
contemplated hereby, each Seller severally represents and warrants to the Buyer that the statements contained in this Section
3 are true and correct as of the date hereof, with respect to itself, except as set forth in the Disclosure Schedules.
(a) Authority
of Sellers. Each Seller has all requisite power and authority to enter into the Transaction Documents to which such
Seller is a party and to carry out such Seller’s obligations thereunder. The execution and delivery of the Transaction Documents
and the performance of each Seller’s obligations thereunder have been duly authorized by all necessary corporate, shareholder,
partnership or member action of such Seller (if such Seller is a corporation or an entity with shareholders, partners or members),
and no other proceedings on the part or in respect of such Seller is necessary to authorize such execution, delivery and performance.
The Transaction Documents to which a Seller is identified as a party thereto have been duly executed by or on behalf of such Seller
and assuming due authorization, execution and delivery by the other parties thereto, constitute such Seller’s valid and
binding obligations, enforceable against such Seller in accordance with their respective terms, except as may be limited by applicable
bankruptcy, insolvency, moratorium or similar laws of general application relating to or affecting creditors’ rights generally
and except for the limitations imposed by general principles of equity.
(b) No
Conflicts; Consents. The execution, delivery and performance by Seller of the Transaction Documents to which such Seller
is a party does not and will not: (a) result in a violation or breach of any provision of the governing documents of Seller, if
applicable; (b) result in a violation or breach of any provision of any Law or Governmental order, judgment or decree applicable
to Seller; or (c) require the consent, notice or other action by any Person under, conflict with, result in a violation or breach
of, constitute a default under, or result in the acceleration of any agreement to which Seller is a party. No consent, waiver,
approval, order, or authorization of, or registration, declaration, or filing with, any court, administrative agency, or commission
or other governmental authority or instrumentality (“Governmental Entity”), or any other Person, is
required by or with respect to Seller in connection with the execution and delivery of the Transaction Documents to which Seller
is a party or the consummation of the transactions contemplated hereby.
(c) Title
to Shares. Seller is the legal owner of the number and class of the Shares listed on Exhibit A hereto with respect
to such Seller, free and clear of all Encumbrances.
(d) Legal
Proceedings. There are no actions, suits, claims, investigations or other legal proceedings pending or, to Seller’s
knowledge, threatened against or by Seller that challenge or seek to prevent, enjoin or otherwise delay the transactions contemplated
by this Agreement.
(e) Brokers.
Except for Creo Capital Advisors LLC, who was hired by the Company, 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 based
upon arrangements made by or on behalf of Seller.
4. Representations
and Warranties of the Company. As a material inducement to Buyer to enter into this Agreement and to consummate the transactions
contemplated hereby, the Company represents and warrants to the Buyer that the statements contained in this Section 4 are
true and correct as of the date hereof, except as set forth in the Disclosure Schedules.
(a) Corporate
Organization. The Company is a corporation duly organized, validly existing and in good standing under the laws of its jurisdiction
of formation. The organizational documents which have been furnished to Buyer reflect all amendments made thereto at any time
prior to the date of this Agreement and are correct and complete. The minute books and other books and records of the Company,
to the extent such minutes exist, have been furnished to Buyer. The Trust is a statutory trust duly organized, validly existing
and in good standing under the laws of its jurisdiction of formation.
(b) Qualification
to Do Business. The Company has full corporate power and authority to carry on its business as now being conducted and is
entitled to own, lease, or operate the properties and assets now owned, leased, or operated by it. The Company is qualified to
do business, is in good standing, and has all required and appropriate licenses in each jurisdiction except jurisdictions in which
failure to obtain or maintain such qualification, good standing, or licensing would not, individually or in the aggregate, have
a Material Adverse Effect. The Company is duly qualified to conduct the Business as presently conducted by the Company as a foreign
corporation in the jurisdictions listed in the Disclosure Schedule. No consent, waiver, approval, order, or authorization of,
or registration, declaration, or filing with, any Governmental Entity or any other Person, is required to be made or obtained
by the Company in connection with the execution and delivery of this Agreement by the Company, or the consummation by the Company
of the transactions contemplated hereby, except for such consents, authorizations, filings, approvals and registrations that,
if not obtained or made, would not have a Material Adverse Effect on the Company.
(c) Authorization
and Validity of Agreement. The Company has all requisite power and authority to enter into the Transaction Documents to which
it is a party and to carry out its obligations thereunder. The execution and delivery of the Transaction Documents and the performance
of the Company’s obligations thereunder have been duly authorized by all necessary corporate action of the Company, and
no other proceedings on the part or in respect of the Company is necessary to authorize such execution, delivery and performance.
The Transaction Documents to which the Company is a party have been duly executed by or on behalf of the Company and assuming
due authorization, execution and delivery by the other parties thereto constitute the valid and binding obligations of, and enforceable
in accordance with their respective terms against, the Company, except as may be limited by applicable bankruptcy, insolvency,
moratorium or similar laws of general application relating to or affecting creditors’ rights generally and except for the
limitations imposed by general principles of equity.
(d) No
Conflict or Violation. Subject to obtaining any consents and approvals identified in the Disclosure Schedules, the execution,
delivery and performance by the Company of the Transaction Documents to which it is a party does not and will not (i)(A) conflict
with or result in a breach of the terms, conditions, or provisions of, (B) constitute a default under (whether with or without
the passage of time, the giving of notice or both), (C) give any third party the right to modify, terminate or accelerate any
obligation under, (D) result in a violation of, or (E) require any consent, exemption or other action by or notice or declaration
to, or filing with, any third party of any Government Entity pursuant to (1) any organizational documents of Company; (2) any
provision of law, rule or regulation, or any order, judgment or decree of any court or other governmental or regulatory authority;
or (3) any Contract, lease, sublease, occupancy agreement, loan agreement, mortgage, security agreement, trust indenture or other
agreement or instrument to which Company is a party or by which Company is bound or to which any of Company’s properties
or assets is subject; (ii) result in the creation of any Lien or Tax upon the equity or assets of Company; or (iii) otherwise
interfere in any material manner with the Business. All of the Contracts and Permits of Company will continue without penalty,
adjustment, breach of any such Contract or Permit, or the right of the customer or any Governmental Entity to terminate or modify
any such Contract or Permit as a result of the Stock Purchase.
(e) Capitalization.
The authorized capital stock of the Company, the issued and outstanding shares of capital stock of the Company, and the par value
per share of all of the authorized capital stock of the Company, are set forth in the Disclosure Schedule. All of the Shares are
duly authorized, validly issued, fully paid and nonassessable. There are no outstanding or authorized options, warrants, purchase
rights, subscription rights, conversion rights, exchange rights, or other Contracts or commitments that could require the Company
to issue, sell, or otherwise cause to become outstanding any of its capital stock. Except as set forth in the Disclosure Schedule,
there is no outstanding or authorized stock appreciation, phantom stock, profit participation, or similar rights with respect
to the Company. Except as described in the Disclosure Schedule, there are no voting trusts, proxies, or other agreements or understandings
with respect to the voting of the capital stock of the Company. Following the Closing, Buyer may freely terminate any voting trusts,
proxies, or other agreements or understandings with respect to the voting of the capital stock of the Company. All actions have
been properly authorized such that the Shares can be transferred to Buyer free from any rights of first refusal, registration
rights, rights of co-sale or other restrictions or conditions relating to transfer of the Shares. All holders of Company capital
stock are able to receive the Equity Consideration by virtue of an exemption to the Securities Act of 1933, as amended (the “1933
Act”).
(f) Assets.
The Company has good and marketable title to, or a valid leasehold interest in, all of its assets and properties, free and
clear of all Encumbrances, except those identified in the Disclosure Schedule, and except for liens for Taxes not yet due and
payable, and mechanics’ liens, materialmen’s liens, and other liens arising by operation of law, which liens do not
in any case materially and adversely affect the Company’s title to its assets, the Company’s use of its assets or
the value of such assets. Except as set forth on the Disclosure Schedule, the obligations giving rise to the Encumbrances identified
in the Disclosure Schedule may be prepaid at any time by the Company without penalty, premium or other special charge Except as
disclosed in the Disclosure Schedule, to the Company’s Knowledge, the Company’s assets which are tangible personal
property are in reasonably good and serviceable condition, normal wear and tear excepted, have been maintained in accordance with
normal industry practice, and are suitable for the purposes for which they are presently used. The Company owns or leases all
equipment or other tangible assets that are necessary for the conduct of the Business as presently conducted. No assets are used
in the Business that are not owned or leased or licensed by the Company and not included in the Assets. The Company operates no
business other than the Business and related activities.
(g) Subsidiaries.
The Company does not own, directly or indirectly, any stock or other interests in any other entity.
(h) Financial
Statements. Set forth in the Disclosure Schedules and provided to the Buyer are the Company’s most recent unaudited
balance sheet, and unaudited income statement, as of October 31, 2015 (the “Financial Statements”).
The Financial Statements have been prepared in accordance with Generally Accepted Accounting Principles (“GAAP”),
are complete and fairly represent in all material respects all of the assets, liabilities, transactions, and results of operations
of the Business and the Company as of the dates thereof; subject, however, to normal year-end adjustments consistent with past
practice, and further subject to the absence of footnotes, statements of cash flow, and changes in equity. The Company shall have
a minimum cash balance of One Million Five Hundred Seventy-Five Thousand Dollars ($1,575,000) at Closing after payment of, or
reservation on the Financial Statements for, all debts, fees, liabilities, payables, Taxes, claims, costs and expenses of or against
the Company including, without limitation, all costs, expenses, payables, debts and liabilities arising out of the operations
of the Company incurred or arising prior to the Closing.
(i) Absence
of Certain Changes or Events. Except as otherwise provided in the Disclosure Schedule, since October 31, 2015, the Company
has conducted the Business only in the ordinary course consistent with past practices. Without limiting the generality of the
foregoing, since October 31, 2015, except as disclosed pursuant to the Disclosure Schedule:
(i) there
has been no increase in the compensation or benefits paid or payable by the Company, other than in the ordinary course of business
and consistent with past practices, to any of its officers, directors, employees, agents, consultants or shareholders, including
any grant of severance or termination pay to any director, officer or employee of the Company, or any deferred compensation or
similar agreement (or any amendment to any such existing agreement) with any director, officer or employee of the Company;
(ii) there
has been no declaration, setting aside, or payment of dividends or distributions in respect of the capital stock of the Company,
any split up or other recapitalization in respect of the capital stock of the Company or any direct or indirect redemption, purchase
by the Company, or other acquisition by the Company of any such capital stock, except dividends declared and paid, or distributions
made, prior to the Closing Date to Seller in the ordinary course of business consistent with the past practices of the Company;
(iii) the
Company has not waived or compromised any right of material value or any payment, direct or indirect, of any material debt, liability,
or other obligation;
(iv) there
has been no Material Adverse Effect on the Company;
(v) there
has been no issuance, transfer, sale, or pledge by the Company of any shares of its capital stock or other securities or any commitment,
option, right, or privilege under which the Company is or may become obligated to issue any shares of its capital stock or other
securities; there has been no indebtedness for borrowed money incurred by the Company except such as may have been incurred or
entered into in the ordinary course of business; no loan has been made or agreed to be made by the Company, nor has the Company
become liable or agreed to become liable as a guarantor with respect to any loan or other indebtedness of the Company or Seller,
or any third party;
(vi) the
Company has not waived or compromised any right of material value or any payment, direct or indirect, of any material debt, liability,
or other obligation;
(vii) there
has been no sale, assignment, or transfer of, or royalty arrangement with respect to the Company’s trade names, trademarks,
service marks, domain names, web addresses, copyrights (or any interest therein), patent, or logos of material value, or any patent,
trademark, service mark, domain name or web address or copyright applications (or any interest therein) used (or that were, or
are intended to be used) in the operations of the Business;
(viii) there
has been no sale, lease or disposition of, any material property or asset, tangible or intangible, of the Company;
(ix) there
has been no actual or, to the Company’s Knowledge, threatened termination or loss of any (A) material contract, lease, license,
permit or other agreement to which the Company was or is a party other than terminations of contracts upon completion of work;
(ii) certificate, license, or other authorization required for the continued operation by the Company of any material portion
of the Business; or (B) customer or other revenue source, which termination or loss could reasonably be expected to result in
loss or revenues to the Company in excess of Twenty-five Thousand Dollars ($25,000.00) per year, and there is no event known to
the Company (including, without limitation, the transactions contemplated hereby) that could reasonably be expected to result
in any such termination or loss;
(x) there
has been no resignation or termination of employment of any key officer or employee of the Company or, to any Company’s
Knowledge, any impending resignation or termination of employment of any such officer or employee;
(xi) there
has been no agreement or commitment by the Company or Seller to do any of the things described in this Section 4(i).
(j) Tax
Matters.
(i) The
Company has timely filed all material Tax Returns that it was required to file. All such Tax Returns as so filed are materially
accurate, and, to the Company’s Knowledge, disclose all Taxes required to be paid for the periods covered thereby. All material
Taxes due and owing by the Company (whether or not shown on any Tax Return) have been paid. The Company is not currently the beneficiary
of any extension of time within which to file any Tax Return. There are no Liens for Taxes (other than Taxes not yet due and payable)
upon any of the assets of the Company. The Company has withheld and paid all Taxes required to have been withheld and paid in
connection with amounts paid or owing to any employee, independent contractor, creditor, stockholder, or other third party, and
all Tax Returns and forms required with respect thereto have been properly completed and timely filed.
(ii) There
is no material dispute or claim concerning any Tax liability of the Company either (A) claimed or raised by any authority in writing
or (B) to the Knowledge of Company.
(iii) The
Disclosure Schedule identifies all federal, state, local and foreign income Tax returns filed with respect to the Company for
taxable periods ended on or after December 31, 2011, indicates those Tax Returns that have been audited, and indicates those Tax
Returns that currently are the subject of audit. The Company has delivered to Buyer correct and complete copies of all federal
income Tax Returns, examination reports, and statements of deficiencies assessed against or agreed to by the Company since December
31, 2011. The Company has not waived any statute of limitations in respect of Taxes or agreed to any extension of time with respect
to a Tax assessment or deficiency.
(iv) The
Company has not made any material payments, is not obligated to make any material payments, and is not a party to any agreement
that under certain circumstances (including without limitation the performance of the transactions contemplated by this Agreement)
could obligate it to make any material payments that will not be deductible under Code section 280G. The Company is not a party
to any Tax allocation or sharing agreement. The Company (A) has not been a member of an affiliated group (within the meaning of
Code section 1504(a)) filing a consolidated federal income Tax Return (other than a group the common parent of which was the Company)
and (B) does not have any liability for the Taxes of any Person under Regulations section 1.1502-6 (or any similar provision of
state, local, or foreign law), as a transferee or successor, by contract, or otherwise.
(v)
The unpaid Taxes of the Company (A) did not, as of the most recent fiscal month end, exceed the reserve for Tax liability (rather
than any reserve for deferred Taxes established to reflect timing differences between book and Tax income) set forth on the face
of the most recent Financial Statements (rather than in any notes thereto) and (B) will not exceed that reserve as adjusted for
operations and transactions through the Closing Date in accordance with the past custom and practice of the Company in filing
its Tax Returns.
(vi) The
Company has not distributed stock of another Person, or has had its stock distributed by another Person, in a transaction that
was purported or intended to be governed in whole or in part by Code section 355 or Code section 361.
(vii) At
all times since its formation, the Company has been classified as a corporation for federal, state, local and foreign income Tax
purposes.
(viii) The
Company is not a “foreign person” as that term is used in Regulations section 1.1445-2.
(k) Absence
of Undisclosed Liabilities; Indebtedness. Except as identified pursuant to the Disclosure Schedule, or reflected on the Financial
Statements, or incurred in the ordinary course of business, the Company has no indebtedness or liability, absolute or contingent,
involving, affecting or relating to the Business or the Products.
(l) Intellectual
Property.
(i) “IP
Assets” shall mean all of the following materials owned or licensed by the Company with respect to the Business:
(A) the proprietary formulas for the Products; (B) the domain names listed on Schedule 4(l) (collectively, the “Domain
Names”); (C) all the content on and accessible through the websites associated with the Domain Names, including
demos (collectively, the “Website Content”); and (D) the entire Business marketing database consisting
of all available customer information and all marketing, advertising and promotional materials, including logos, colors, videos,
booklet designs, catalogs, solicitations, email templates, advertisements and all other Business marketing materials (whether
in draft or final form) (collectively, the “Marketing Materials”).
(ii) Schedule
4(l) lists all patented, registered, applied-for, and other Intellectual Property used in the Business and all Intellectual
Property of the Company licensed to any third Person (collectively, the “Business Intellectual Property”),
including the registration and application information, date of application or issuance and relevant jurisdiction as to each,
and whether or not the Business Intellectual Property is owned or licensed. Business Intellectual Property that is licensed by
the Company from a third party is “Licensed Intellectual Property”.
(iii) The
Company owns all right, title and interest in and to or has a valid and enforceable license to use, all IP Assets, Business Intellectual
Property, and the Licensed Intellectual Property, free and clear of all Liens, and all patented or registered Business Intellectual
Property is valid and enforceable. To the Company’s Knowledge, it has taken commercially reasonable steps to maintain the
confidentiality of all information that constitutes a trade secret of the Business.
(iv) Except
as set forth on Schedule 4(l), (A) the conduct of the Business, including the delivery and distribution of the Products,
has not infringed and does not infringe on any Intellectual Property or any other proprietary rights of any Person, including
but not limited to the rights of privacy or publicity; (B) to the Knowledge of the Company, no Person is infringing, violating
or misappropriating any Business Intellectual Property; (C) the Company has not taken any action, or failed to take any action,
during prosecution of any application that could reasonably be expected to result in the invalidation or unenforceability of any
registered Business Intellectual Property; (D) the Company is not currently a party to any pending suit, claiming any alleged
infringement or misappropriation of any Business Intellectual Property; (E) the Company has not received within the prior three
(3) years any written notice, and is not currently a party to any pending suit, claiming any alleged infringement or misappropriation
of the Intellectual Property rights of other Persons with respect to its or their use of Intellectual Property or the Products;
(F) the Company has not entered into any Contract that includes a forbearance to sue or settlement Contract with respect to any
Intellectual Property and (G) the Company has not received any written notice of any claim within the prior three (3) years, and
is not currently a party to any pending suit, which challenges the validity or enforceability of, the Company’s ownership
of or right to use, any Intellectual Property (excluding, for clarity, office actions) or the Products. The Company has secured,
and has in place a policy to secure, valid written confidentiality Contracts and assignments of Intellectual Property from all
consultants, contractors, Employees and customers who contribute or have contributed to the creation, conception, reduction to
practice or other development of any Intellectual Property developed on behalf of Company.
(v) No
Product provided or distributed by the Company in its conduct of the Business: (A) violates any material Law; (B) includes any
information or material that, to the Knowledge of the Company, is defamatory; or (C) infringes any right of privacy of any Person.
Each Person whose name, image, voice or likeness is incorporated into any Marketing Materials has executed a written release consenting
to the Company’s use of such Person’s name, image, voice and/or likeness (as applicable) and releasing the Company
from any claims with respect thereto (a “Release”), each of such Releases are fully assignable to Buyer
without further consent of any Person.
(vi) The
Company has operated the Business and provided all Products in compliance with any posted privacy policies and all applicable
Laws relating to privacy, data protection, anti-spam, telemarketing, personally identifiable information and similar consumer
protection Laws (“Information Privacy Laws”). The Company has not received written notice of any claims
or been charged with violation of any Information Privacy Law. To the Knowledge of Company, the Company is not under investigation
with respect to any violation of any Information Privacy Laws.
(m) Compliance
with Law. Except as identified in the Disclosure Schedule, the manufacture and sale of the Products and the operation of the
Business has been conducted in material compliance with all applicable material Laws and other requirements of all courts and
other governmental or regulatory authorities having jurisdiction over the Company and its assets, properties and operations. Except
as set forth in the Disclosure Schedule, the Company has not received notice of any violation (or possible violation) of any such
Law or other legal requirement, and the Company is not in default with respect to any order, writ, judgment, award, injunction
or decree of any federal, state or local court or Governmental Entity or regulatory authority, applicable to the Company, the
Business, the Products or the Shares. Without limiting the foregoing, the Company has not received any warning letter or untitled
letter, report of inspectional observations, including FDA Form 483s, establishment inspection reports, notices of violation,
clinical holds, enforcement notices or other documents from the FDA or any other similar Governmental entity or any institutional
review board or independent ethics committee alleging a lack of material compliance by Company with any Laws. The Company holds
all Permits required for the conduct of the Business and the ownership of its properties except where the absence thereof would
not result in a Material Adverse Effect. No written notices have been received by the Company alleging the failure to hold any
Permit. The Company is in material compliance with all terms and conditions of all such Permits. All of such Permits shall be
available for use by Buyer immediately after the Closing. Without limiting the foregoing, the Company has not received any warning
letter or untitled letter, report of inspectional observations, establishment inspection reports, notices of violation, clinical
holds, enforcement notices or other documents from any Governmental Entity or any institutional review board or independent ethics
committee alleging a lack of material compliance by Company with any Laws. No “bulk sales” or similar Law applies
to the transactions contemplated by this Agreement.
(n) Litigation.
Except as set forth on Schedule 4(n), there are no claims, Actions, suits, proceedings, complaints or investigations pending
or, to the Knowledge of Company, threatened before any federal, state, provincial, court or governmental or regulatory authority,
domestic or foreign, or before any arbitrator of any nature, brought by or against the Company or any of its officers, directors,
employees, agents or Affiliates, or the Sellers, involving, affecting or relating to the Company, the Business, the Products,
the Shares, or the transactions contemplated by the Transaction Documents.
(o) Brokers.
Except for Creo Capital Advisors LLC, who was hired by the Company, 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 based
upon arrangements made by or on behalf of the Company.
(p) Insurance.
The Company is currently insured by insurers unaffiliated with the Company with respect to its properties, assets and operation
of the Business in such amounts and against such risks which to the Knowledge of Company are appropriate and customary for the
type of business conducted by the Company with customary deductibles and retained amounts. In addition, the Company has maintained
comparable insurance for all prior periods. With respect to each insurance policy held by the Company (the “Insurance
Policies”) (i) to the Knowledge of Company such Insurance Policy is legal, valid, binding and in full force and
effect; (ii) the Company is not in default under such Insurance Policy; and (iii) the Company has delivered a true and correct
copy of such Insurance Policy to Buyer. There are no claims by the Company pending under any such Insurance Policies and the Company
has not been informed that coverage has been questioned, denied or disputed by the underwriters of such Insurance Policies with
respect to any such claims.
(q) Employment
Matters.
(i) The
Disclosure Schedule identifies all of the Employees as of the date hereof, including for each such Employee: name, job title,
FLSA classification, work location (identified by street address), current compensation paid or payable, all wage and fringe benefit
arrangements. Except as set forth on the Disclosure Schedule, each Employee is employed by the Company at will and may be terminated
by the Company without cause on thirty (30) days or less notice without penalty or severance. To the Knowledge of Company, no
Employee is a party to, or is otherwise bound by, any Contract or arrangement, including any confidentiality or non-competition
Contract, that in any way adversely affects or restricts the performance of such Employee’s duties. Each current Employee
has executed a nondisclosure and assignment-of-rights Contract for the benefit of the Company vesting all rights in work product
created by the Employee, during the Employee’s employment or affiliation with the Company, in the Company. To the Knowledge
of Company and except as set forth in the Disclosure Schedule, no Employee intends to terminate his or her employment with the
Company. In accordance with its normal payroll policies the Company has paid all salaries, bonuses, commissions, wages, and severance
that are owed to the Employees as of the Closing and maintained adequate reserves, as reflected in the Financial Statements, for
all salaries, bonuses, commissions, wages, and severance not yet due and payable as of the Closing. The Company is in compliance,
in all material respects, with all Laws governing the employment of labor.
(ii)
Except as identified in the Disclosure Schedule, to the Knowledge of Company, each Employee is (i) a United States citizen, (ii)
a lawful permanent resident of the United States, or (iii) an alien authorized to work in the United States either specifically
for the Company or for any United States employer. The Company is in compliance in all material respects with applicable Law,
has completed a Form I-9 (Employment Eligibility Verification) for each Employee and each such Form I-9 has since been updated
as required by applicable Law and, to the Knowledge of the Company, is correct and complete as of the date hereof.
(iii) The
Company is in compliance, in all material respects, with all Laws governing the employment of labor, including but not limited
to, all such Laws relating to wages, hours, leaves of absence, affirmative action, collective bargaining, discrimination, civil
rights, safety and health, workers’ compensation and the collection and payment of withholding and/or Social Security Taxes
and similar Taxes, including, but not limited to, the Age Discrimination in Employment Act, as amended, Title VII of the Civil
Rights Act of 1964, as amended, the Civil Rights Act of 1991, the Employee Retirement Income Security Act, the Fair Labor Standards
Act (29 U.S.C. 201, et seq.) (“FLSA”), the Americans with Disabilities Act, the Sarbanes-Oxley Act of
2002, the Worker Adjustment and Retraining Notification Act, as amended, the Occupational Safety and Health Act, as amended, the
Family and Medical Leave Act (29 U.S.C. 2601, et seq.), as amended, the National Labor Relations Act of 1935, as amended, Executive
Order 11246 and any other executive orders or regulations governing affirmative action, EEO and VETS-100 reporting obligations,
the Immigration Nationality Act (8 U.S.C. 1324a, et seq.), as amended, and all similar applicable Laws (collectively the “Labor
Laws”). The Company has, during the five (5) year period prior to the date hereof, conducted the Business in material
compliance with all applicable Labor Laws. The Company has withheld all amounts required by Law or Contract to be withheld from
the wages or salaries of its Employees and is not liable for the payment of any arrears of wages or other Taxes, penalties, fines
or other compensation of any kind, however designated, for failure to comply with any of the foregoing. The Company has maintained
adequate and suitable records regarding the service of each Employee including records of working time, where available. Each
Employee of the Company has been properly classified as “exempt” or “non-exempt” under the FLSA and all
other applicable Laws. The Company is not, and in the last three (3) years has not been, a government contractor.
(iv) The
Company has not at any time during the last three (3) years had, nor to the Knowledge of Company is there now threatened, any
walkout, strike, union activity, picketing, work stoppage, work slowdown, any effort to organize or any other similar occurrence
or any attempt to organize or represent the labor force of the Company. There are no controversies pending or overtly threatened
between the Company, on the one hand, and any of its Employees (or former Employees) or any labor union or other collective bargaining
unit representing or purporting to represent any of its Employees, on the other hand. The Company is not a party to, bound by,
or subject to any collective bargaining agreement or other Contract, written or oral, with any union representing or purporting
to represent the Company’s Employees. No union or other collective bargaining unit or Employee organizing entity has been
certified or recognized by Seller as representing any of its Employees.
(v) No
investigation, review, complaint or proceeding by any Government entity or Employee or former Employee with respect to the Company
in relation to any actual or alleged violation of any Labor Laws is pending or, to the Knowledge of Company, threatened, nor has
the Company or Seller received any notice from any Government entity indicating an intention to conduct the same.
(vi) Within
the past five (5) years, the Company has not implemented any mass layoff, plant closing, or other termination of employees that
could implicate the Worker Adjustment and Retraining Notification Act (WARN Act) or any similar state or local Law.
(vii) The
Company has identified in the Disclosure Schedule and provided to Buyer all employment, change in control, severance, retention,
termination, non-competition, non-solicitation and other similar Contracts, arrangements or policies, whether written or oral,
between Seller and any individual other than at-will employment arrangements but including all Contracts, arrangements or policies
that affect at-will Employees. The Company is in material compliance with its obligations under all such Contracts.
(r) Contractor
Matters. The Company has identified in the Disclosure Schedule the name and contact information of each independent contractor,
consultant, freelancer or other service provider (i) utilized by the Company as of the date hereof or (ii) utilized by the Company
relating to the development, modification or creation of any proprietary formulas for the Products within the three (3) years
immediately preceding such date (collectively, “Contractors”). A copy of each Contract relating to the
services any Contractor provides or provided to the Business has been made available to the Buyer. To the Knowledge of Company,
no Contractor used by the Company is a party to, or is otherwise bound by, any Contract or arrangement with any third party, including
any confidentiality or non-competition Contract, that in any way adversely affects or restricts the performance of such Contractor’s
duties for Seller. Each Contractor ever retained by the Company to create, modify or develop with respect to the proprietary formulas
for the Products has executed a nondisclosure and assignment-of-rights Contract for the benefit of the Company and the Company
is the owner of all rights in and to all Intellectual Property created by such Contractor in performing services for the Company
vesting all rights in work product created in the Company. All individuals who have been treated by the Company as independent
contractors in the five (5) years immediately preceding the date hereof were, to the Knowledge of Company, correctly classified
as such for purposes of the Code and all other applicable Laws.
(s) Employee
Benefits.
(i) The
Disclosure Schedule lists all Employee Benefit Plans maintained or contributed to by the Company or under which the Company has
or could have any obligations (other than obligations to make current wage or salary payments or sales commissions terminable
on notice of thirty (30) days or less) or liabilities, actual or contingent, whether or not legally binding, in respect of any
of the current or former officers, Employees or independent contractors of the Company who provided services in respect of the
Business or their dependents or beneficiaries (individually referred to as a “Company Benefit Plan”
and collectively referred to as the “Company Benefit Plans”). The Company has delivered or provided
to Buyer true and complete copies of the plan documents, as they may have been amended through the date hereof, for each company
Employee Benefit Plan, as well as, to the extent applicable, Forms 5500 and actuarial valuations for the last three plan years,
plan documents, trust agreements, insurance Contracts, administrative services agreements, most recent determination letters and
other documents required under ERISA.
(ii) Each
Company Benefit Plan has been established, maintained and administered in accordance with its terms and in material compliance
with all applicable provisions of (including rules and regulations thereunder) ERISA, the Code and other applicable Law, and neither
the Company nor any “party in interest” or any “disqualified person” with respect to any Company Benefit
Plan has engaged in a “prohibited transaction” within the meaning of Section 4975 of the Code or Section 406 of ERISA
with respect to any Company Benefit Plan. Each Company Benefit Plan that is intended to be qualified within the meaning of Section
401(a) of the Code has received a favorable determination letter from the Internal Revenue Service (or, if such plan is a prototype
or volume submitter plan document, such prototype or volume submitter plan document has received a favorable opinion from the
IRS that the form meets the tax qualification requirements) to the effect that such Company Benefit Plan satisfies the requirements
of Section 401(a) of the Code and that its related trust is exempt from taxation under Section 501(a) of the Code and there are
no facts or circumstances that could reasonably be expected to cause the loss of such qualification or the imposition of Liability,
penalty or Tax under ERISA, the Code or other applicable Laws (including the rules and regulations under any of them).
(iii)
No Company Benefit Plan is, and neither the Company nor any of its ERISA Affiliates has ever sponsored an Employee Benefit Plan
that is or was, subject to Title IV of ERISA. No Company Benefit Plan is, and neither the Company nor any of its ERISA Affiliates
has ever contributed, or been obligated to contribute, to any “multiemployer plan” (within the meaning of Sections
3(37) or 4001(a)(3) of ERISA) under Subtitle E of ERISA.
(iv) The
Disclosure Schedule identifies each Company Benefit Plan that is a “non-qualified deferred compensation plan”, within
the meaning of Section 409A of the Code (each, a “Section 409A Plan”), and identifies
each Section 409A Plan in connection with which the Company or it successors may have Liability with respect to Employees, Contractors
or directors. No such plan has assets set aside directly or indirectly in the manner described in Section 409A(b)(1) of the Code
or contains a provision that would be subject to Section 409A(b)(2) of the Code. Each Section 409A Plan (i) was, since the date
of the inception of such Company Benefit Plan, (or since January 1, 2005, if later) administered in good faith compliance with
the requirements of Section 409A of the Code and applicable guidance issued thereunder, (ii) has been, since the date of inception
of such Company Benefit Plan (or since January 1, 2005, if later), administered in compliance, in all material respects, with
the requirements of Section 409A of the Code and the final regulations issued and outstanding thereunder. In the event of an audit
by the IRS of either the Company or any individual participating in such Company Benefit Plan, the additional Tax described in
Section 409A(a)(1)(B) would not be assessed against any such participant with respect to benefits due or accruing under such Company
Benefit Plan.
(v) Except
as identified in the Disclosure Schedule, neither the execution and delivery of this Agreement nor the consummation of the transactions
contemplated hereby will (either alone or in combination with another event): (i) result in any payment becoming due, or increase
the amount of any compensation due, to any Employee; (ii) increase any benefits otherwise payable under any Company Benefit Plan;
or (iii) result in the acceleration of the time of payment or vesting of any such compensation or benefits.
(vi) The
Company does not currently sponsor any Company Benefit Plan that is intended to be qualified within the meaning of Section 401(a)
of the Code, including but not limited to any 401(k) plan. Company Employees are currently able to participate in a 401(k) plan
sponsored by a professional employer organization (TriNet Group, Inc., or one of its affiliates), subject to the terms of such
plan.
(t) Environmental
and Safety Matters. The Company has complied in all material respects and is in material compliance with all Environmental
Laws, including but not limited to all Permits required by Environmental Laws for the conduct of the business operations of the
Company and the disposition of all hazardous materials in accordance with all applicable Environmental Laws. The Company has not
received any outstanding and unresolved written or oral notices, reports or other information regarding any actual or alleged
violation of Environmental Laws by the Company, or any Liabilities or potential Liabilities, including any remedial obligations,
relating to any of them or their facilities arising under Environmental Laws. The Company is not a potentially responsible party
under the federal Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended, or any analogous
state, local or foreign applicable Laws arising out of events occurring prior to the Closing Date. To the Knowledge of Company,
no facts, events or conditions relating to the past or present facilities, properties or operations of the Company, or any geologically
or hydrologically adjoining properties, shall prevent, hinder or limit the Company’s continued compliance with Environmental
Laws, give rise to any remedial obligations of the Company pursuant to Environmental Laws, or give rise to any other Liabilities
of the Company pursuant to Environmental Laws, including, without limitation, any relating to onsite or offsite releases or threatened
releases of hazardous materials, personal injury, property damage or natural resources damage. To the Knowledge of Company, there
have not been in the past and are not now any underground tanks or underground improvements, including treatment or storage tanks,
sumps, or water, gas or oil wells; polychlorinated biphenyls; or asbestos or asbestos-containing materials at, on or under any
of the Leased Real Property. The Company has delivered to Buyer true and complete copies and results of any reports, studies,
analyses, tests, or monitoring possessed or initiated by the Company pertaining to hazardous materials in, on, under, or migrating
to or from any of the Leased Real Property, or concerning compliance by the Company, or any other Person for whose conduct the
Company is or may be held responsible, under Environmental Law.
(u) Real
Property. The Disclosure Schedule identifies the address of each leased real property of the Company (the “Leased
Real Property”). Seller has provided to Buyer a true and complete copy of all leases and subleases (including all
amendments, extensions, renewals, Guarantees and other Contracts with respect thereto) for each such Leased Real Property (the
“Leases”), and in the case of any oral Lease, a written summary of the material terms of such Lease.
With respect to each of the Leases except as disclosed pursuant to the Disclosure Schedule: (i) to the Knowledge of Company, such
Lease is legal, valid, binding, enforceable and in full force and effect; (ii) the transactions set forth in this Agreement do
not require the consent of any other Person to such Lease, or such consent has been obtained, shall not result in a breach of
or default under such Lease, or otherwise cause such Lease to cease to be legal, valid, binding, enforceable and in full force
and effect on identical terms following the Closing; (iii) Seller’s possession and quiet enjoyment of the Leased Real Property
under such Lease has not been disturbed, and there are no disputes with respect to such Lease; (iv) the Company, and any other
party to the Lease, is not in breach or default under such Lease, and no event has occurred or circumstance exists which, with
the delivery of notice, the passage of time or both, would constitute such a breach or default, or permit the termination, modification
or acceleration of rent under such Lease; (v) no security deposit or portion thereof deposited with respect to such Lease has
been applied in respect of a breach or default under such Lease which has not been redeposited in full; (vi) the Company does
not owe, or shall owe in the future, any brokerage commissions or finder’s fees with respect to such Lease; (vii) the other
party to such Lease is not an Affiliate of, and otherwise does not have any economic interest in, the Company; (viii) the Company
has not subleased, licensed or otherwise granted any Person the right to use or occupy such Leased Real Property or any portion
thereof; (ix) the Company has not collaterally assigned or granted any other security interest in such Lease or any interest therein;
(x) there are no Liens on the estate or interest created by such Lease; and (xi) to the Knowledge of Company, all buildings, structures,
improvements, fixtures, building systems and equipment, and all components thereof, included in the applicable Leased Real Property
are in good condition and repair (reasonable wear and tear excepted). The Company does not own any real property, nor has it ever
owned any real property.
(v)
Affiliate Transactions. Except as identified in the Disclosure Schedule, to the Knowledge of Company, no shareholder, officer,
director, member or Affiliate of a Seller or any individual related by blood, marriage or adoption to any such individual or any
entity in which any such Person or individual owns any beneficial interest, is a party to any Contract or transaction with Seller
or has any interest in any real, tangible or intangible asset or property used by Seller.
(w) Customer
and Vendor Relations. The Disclosure Schedule identifies a correct and complete list of the names of the top ten (10) Customers
and Vendors and the amount of net revenues to or purchases from each such Customer or Vendor during the each of the 2013 and 2014
fiscal years and the period ended as of September 30, 2015 (each a “Key Relationship”). The Company
maintains commercially reasonable relations with each of its Key Relationships and no event has occurred that would reasonably
be expected to affect materially and adversely the Company’s relations with any Key Relationship. Except as disclosed pursuant
to the Disclosure Schedule, no Customer or Vendor has during the last twelve (12) months cancelled, terminated, materially decreased
the rate of, materially altered the terms with respect to or, to the Knowledge of Company, made any threat to cancel or otherwise
terminate any of its Contracts with the Company or to decrease its usage or supply of the Company’s services or products,
excluding for avoidance of doubt, discrete projects performed by the Company for Customers, for which the Company’s services
terminated solely by virtue of the Company’s having completed the project to the Customers’ satisfaction. To the Knowledge
of Company, except as identified in the Disclosure Schedule no current Customer or Vendor may terminate or materially alter its
business relations with the Company, either as a result of the transactions contemplated hereby or otherwise.
(x) Product
and Service Warranties; Adverse Events. Except as set forth in the Disclosure Schedule, the Company has made no express warranty
or Guarantee to any Customer (or end user of the Company’s goods) as to services or goods provided by the Company. There
is no pending or, to the Knowledge of Company, threatened claim alleging any breach of any warranty or Guarantee. The Company
does not have any Liability under any such a warranty or Guarantee that would reasonably be expected to result in Liability to
the Company, individually or in the aggregate, in excess of $10,000. There have not been any Material Adverse Events with respect
to the Products or the Business.
(y) Guaranties.
The Company is not a guarantor or otherwise liable for any liability, indebtedness or other obligation of any other Person.
(z) Disclosure.
No representation or warranty by the Company contained in this Agreement, and no statement contained in the Disclosure Schedules
or any other document, certificate or other instrument delivered to or to be delivered by or on behalf of the Company pursuant
to this Agreement, contains or will contain any untrue statement of a material fact or omits or will omit to state any material
fact necessary, in light of the circumstances under which it was or will be made, in order to make the statements herein or therein
not misleading.
(aa) Inventory.
All inventory of the Company, whether or not reflected in the Balance Sheet, consists of a quality and quantity usable and salable
in the ordinary course of business consistent with past practice, except for obsolete, damaged, defective or slow-moving items
that have been written off or written down to fair market value or for which adequate reserves have been established. All such
inventory is owned by the Company free and clear of all encumbrances, and no inventory is held on a consignment basis. The quantities
of each item of inventory are not excessive, but are reasonable in the present circumstances of the Company.
(bb) Contracts;
Agreements.
(i) Except
as disclosed in the Disclosure Schedule, the Company is not a party to or bound by:
| 1. | any
customer, license, sale, distribution, commission, marketing, agent, franchise, technical
assistance or similar Contract relating to or providing for the marketing and/or sale
of products or services to which the Company is a party or by which it is otherwise bound; |
| | |
| 2. | any
Contract involving the license of any patent, copyright, trade secret or other proprietary
right constituting Intellectual Property to or from the Company; |
| 3. | any
Contract providing for the development of any software, content (including textual content
and visual, photographic or graphics content), technology or intellectual property for
(or for the benefit or use of) use by the Company, or providing for the purchase by or
license to (or for the benefit or use of) it of any hardware, software, content (including
textual content and visual, photographic or graphics content), technology or intellectual
property, which hardware, integrated circuits, software, content, technology or intellectual
property is in any manner used or incorporated (or is contemplated by it to be used or
incorporated) in connection with any aspect or element of any product or service provided
by or technology used by the Company; |
| | |
| 4. | any
agreement, contract or commitment relating to the acquisition or disposition of any business
(whether by merger, sale of stock, sale of assets or otherwise); |
| | |
| 5. | (A)
any agreement relating to Indebtedness or (B) any mortgages, indentures, loans or credit
agreements, security agreements or other agreements or instruments relating to indebtedness; |
| | |
| 6. | any
joint venture or partnership or other similar agreement; |
| | |
| 7. | any
agreement with any Affiliate of the Company, with any director or officer of the Company,
or with any “associate” or any member of the “immediate family”
(as such terms are respectively defined in Rules 12b-2 and 16a-1 of the 1934 Act) of
any such director or officer, other than employment, invention assignment and equity-related
agreements provided to Buyer; |
| | |
| 8. | any
employment or consulting agreement, contract or commitment with an employee or individual
consultant or salesperson or consulting or sales agreement, contract or commitment with
a firm or other organization not otherwise disclosed on the Disclosure Schedule or not
cancellable on thirty (30) days notice or less without penalty; |
| | |
| 9. | any
agreement or plan, including, without limitation, any stock option plan, stock appreciation
rights plan or stock purchase plan, any of the benefits of which will be increased, or
the vesting of benefits of which will be accelerated, by the occurrence of any of the
transactions contemplated by this Agreement or the value of any of the benefits of which
will be calculated on the basis of any of the transactions contemplated by this Agreement
not otherwise disclosed on the Disclosure Schedule; |
| | |
| 10. | any
other oral or written Contract or obligation that individually has a value in excess
of $15,000 or is otherwise material to the Company or its businesses, operations, financial
condition, properties or assets. |
(ii) Each
agreement, contract, plan, lease, arrangement or commitment required to be disclosed, and which would be required to be disclosed
absent disclosure elsewhere, pursuant to Section 4(bb)(i) above (each, a “Material Contract”)
is a valid and binding agreement the Company and is in full force and effect with respect to the Company and, to the Knowledge
of Company, each other party thereto, and neither the Company, nor to the Knowledge of Company, any other party thereto, is in
default or breach in any material respect under the terms of any such Material Contract, and, to the Knowledge of Company, no
event or circumstance has occurred that, with notice or lapse of time or both, would reasonably be expected to constitute any
event of default thereunder. True and complete copies of each such Material Contract have been provided to Buyer. The Company
has fulfilled all material obligations required pursuant to each Material Contract to have been performed by the Company prior
to the date hereof.
(iii) Except
in the ordinary course of business, no Person is renegotiating or seeking to renegotiate, or, to the Knowledge of Company, has
a right (absent any default or breach of a Material Contract) pursuant to the terms of any Material Contract to renegotiate, any
material amount paid or payable to the Company under any Material Contract or any other material term or provision of any Material
Contract. The Company has not received any written indication or, to the Knowledge of the Company, verbal indication of an intention
to terminate or renegotiate the terms of any of the Material Contracts by any of the parties to any of the Material Contracts.
(cc) Trust.
No representation or warranty by the Trust contained in this Agreement, and no statement contained in the Disclosure Schedules
or any other document, certificate or other instrument delivered to or to be delivered by or on behalf of the Trust pursuant to
this Agreement, contains or will contain any untrue statement of a material fact or omits or will omit to state any material fact
necessary, in light of the circumstances under which it was or will be made, in order to make the statements herein or therein
not misleading.
5. Representations
And Warranties of the Trust. As a material inducement to Buyer to enter into this Agreement and to consummate the transactions
contemplated hereby, the Trust hereby represents and warrants to the Buyer that the statements contained in this Section 5
are true and correct as of the date hereof.
(a) Organization.
The Trust is a statutory trust duly organized, validly existing and in good standing under the laws of its jurisdiction of formation.
The Trust has provided to the Buyer duly executed copies of its organizational and governing documents (collectively, the “Trust
Documents”).
(b) Authorization
and Validity of Agreement. The Trust has full power and authority to carry out its purpose as now being conducted or contemplated
and is entitled to own, lease, or operate the assets it will own in accordance with this Agreement. No consent, waiver, approval,
order, or authorization of, or registration, declaration, or filing with, any Governmental Entity or other Person is required
to be made or obtained by the Trust in connection with the execution and delivery of this Agreement by the Trust, or the consummation
by the Trust of the transactions contemplated hereby, except for such consents, authorizations, filings, approvals and registrations
that, if not obtained or made, would not have a Material Adverse Effect on the Trust. The Trust has all requisite power and authority
to enter into the Transaction Documents to which it is a party and to carry out its obligations thereunder. The execution and
delivery of the Transaction Documents and the performance of the Trust’s obligations thereunder have been duly authorized
by all necessary trustee action of the Trust, and no other proceedings on the part or in respect of the Trust is necessary to
authorize such execution, delivery and performance. The Transaction Documents to which the Trust is a party have been duly executed
by or on behalf of the Trust and assuming due authorization, execution and delivery by the other parties thereto constitute the
valid and binding obligations of, and enforceable in accordance with their respective terms against, the Trust, except as may
be limited by applicable bankruptcy, insolvency, moratorium or similar laws of general application relating to or affecting creditors’
rights generally and except for the limitations imposed by general principles of equity.
(c) No
Conflict or Violation. The execution, delivery and performance by the Trust of the Transaction Documents to which it is a
party does not and will not (i)(A) conflict with or result in a breach of the terms, conditions, or provisions of, (B) constitute
a default under (whether with or without the passage of time, the giving of notice or both), (C) give any third party the right
to modify, terminate or accelerate any obligation under, (D) result in a violation of, or (E) require any consent, exemption or
other action by or notice or declaration to, or filing with, any third Person or any Government Entity pursuant to (1) any organizational
documents of the Trust; (2) any provision of law, rule or regulation, or any order, judgment or decree of any court or other governmental
or regulatory authority; or (3) any Contract, security agreement, trust indenture or other agreement or instrument to which the
Trust is a party or by which the Trust is bound or to which any of the Trust’s properties or assets is subject; (ii) result
in the creation of any Lien or Tax upon the equity or assets of Trust; or (iii) otherwise interfere in any material manner with
the Business.
(d) Governing
Documents. The Trust Documents provide that the Equity Consideration will be held by the Trust and not distributed to the
Sellers for a period of three (3) years from the Closing. The allocation scheme in the Trust documents for disbursement and distribution
of the Purchase Consideration is identical in all respects to the current Certificate of Incorporation of the Company, as amended,
such that all Sellers will receive the identical portion of the Purchase Consideration as would have been received had he Buyer
paid the Purchase Consideration directly to the Sellers, after adjust for any expenses of the Trust and indemnification claims
by Buyer.
(e) Assets.
The assets held by the Trust, until such time as no further Royalty Consideration is due, will consist solely of the Purchase
Consideration and remain free and clear of all Encumbrances.
(f) Legal
Proceedings. There are no actions, suits, claims, investigations or other legal proceedings pending or, to the Trust’s
knowledge, threatened against or by the Trust that challenge or seek to prevent, enjoin or otherwise delay the transactions contemplated
by this Agreement.
(g) Status
of Trust and Its Beneficiaries. (i) The Trust and its beneficiaries have had an opportunity to discuss the business, management
and financial affairs of Buyer, have had access to, the management of Buyer, and have had the opportunity to review the information
set forth in Buyer’s public filings and any other information requested by the Trust or any beneficiary, (ii) Buyer will
be relying upon the Trust’s representations and warranties set forth herein in offering the Equity Consideration to it in
its own right and for the benefit of Sellers, and (iii) the Trust and its beneficiaries recognize that ownership of the Equity
Consideration involves substantial risks, including a risk of total loss of the value of the Equity Consideration, and have taken
full cognizance of and understand all of the risk factors related to the ownership of the Equity Consideration; (iv) the Trust
and its beneficiaries have an adequate net worth and means of providing for its current needs and possible contingencies to sustain
a complete loss in the Equity Consideration; and (v) the Trust and its beneficiaries are able to receive the Equity Consideration
by virtue of an exemption to the 1933 Act.
(h) Acquisition
for Sellers’ Account. This Agreement is made with the Trust in reliance upon the Trust’s representations to Buyer,
that the Equity Consideration to be issued to and held by the Trust for the benefit of the Sellers (in accordance with the terms
of the Trust), was acquired for investment, and not with a view to the sale or distribution of any part thereof other than as
permitted under the 1933 Act and that the Trust has no present intention of selling, granting participation in, or otherwise distributing
the same other than what is permitted under the 1933 Act. Except as set forth in the Trust Documents, the Trust does not have
any contract, undertaking, agreement, or arrangement with any person to sell, transfer or grant participations to such person,
or to any third person, with respect to the Equity Consideration.
(i) No
Intention to Distribute. The Trust and its beneficiaries understand that the Equity Consideration shares have not been registered
under the 1933 Act on the grounds that the sale provided for in this Agreement and the issuance of the Equity Consideration is
exempt from registration under the 1933 Act, and that Buyer’s reliance on such exemption is predicated in part on the representations
set forth herein. The Trust and its beneficiaries realize that the basis for the exemption may not be present if, notwithstanding
such representations, the Trust and its beneficiaries have in mind merely acquiring the Equity Consideration for a fixed or determined
period in the future, or for a market rise, or for sale if the market does not rise. The Trust and its beneficiaries do not have
any such intention.
(j) No
Registration. The Trust and its beneficiaries understand that the Equity Consideration may not be sold, transferred or otherwise
disposed of without registration under the 1933 Act or an exemption therefrom, and that in the absence of an effective registration
statement covering the shares or an available exemption from registration under the 1933 Act, the Equity Consideration must be
held indefinitely. In particular, the Trust and its beneficiaries are aware that the shares may not be sold pursuant to Rule 144
promulgated under the 1933 Act unless all of the conditions of that Rule are met. Among the conditions for use of Rule 144 may
be the availability of current information to the public about Buyer. The Trust represents that, in the absence of an effective
registration statement covering the Equity Consideration shares, it will not sell, transfer, or otherwise dispose of such shares
except in a manner consistent with its representations set forth herein.
(k) Brokers.
Except for Creo Capital Advisors LLC, who was hired by the Company, 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 based
upon arrangements made by or on behalf of Seller.
(l) Disclosure.
No representation or warranty by the Trust contained in this Agreement, and no statement contained in the Disclosure Schedules
or any other document, certificate or other instrument delivered to or to be delivered by or on behalf of the Trust pursuant to
this Agreement, contains or will contain any untrue statement of a material fact or omits or will omit to state any material fact
necessary, in light of the circumstances under which it was or will be made, in order to make the statements herein or therein
not misleading.
6. Representations
And Warranties of the Buyer. As a material inducement to Buyer to enter into this Agreement and to consummate the transactions
contemplated hereby, Buyer hereby represents and warrants to Sellers and Trust as follows:
(a) Corporate
Organization. Buyer is a corporation duly organized, validly existing and in good standing under the laws of the State of
Nevada, and has all requisite power and authority and all necessary governmental authority to own, operate or lease the properties
that it purports to own, operate or lease and to carry on its businesses as now conducted. Buyer is duly qualified to do business
as a foreign company, and is in good standing in each jurisdiction where the character of its properties owned, operated or leased
or the nature of its activities makes such qualification necessary. Buyer’s capitalization is sufficient to satisfy is obligation
to issue the Equity Consideration.
(b) Authorization
and Validity of Agreement. Buyer has all requisite power and authority to enter into the Transaction Documents and to carry
out its obligations thereunder. The execution and delivery of the Transaction Documents and the performance of Buyer’s obligations
thereunder have been duly authorized by all necessary company action by Buyer, and no other proceedings on the part of Buyer are
necessary to authorize such execution, delivery and performance. Each of the Transaction Documents has been duly executed by Buyer
and, assuming due authorization, execution and delivery by the other parties thereto, constitutes its valid and binding obligation,
enforceable against it in accordance with its terms, except as may be limited by applicable bankruptcy, insolvency, moratorium
or similar laws of general application relating to or affecting creditors’ rights generally and except for the limitations
imposed by general principles of equity.
(c) No
Conflict or Violation. The execution, delivery and performance by Buyer of the Transaction Documents (i) does not and will
not violate or conflict with any provision of the organizational documents of Buyer; (ii) does not and will not violate any provision
of law, rule or regulation, or any order, judgment or decree of any court or other governmental or regulatory authority; (iii)
does not violate or will not result in a breach of or constitute (with due notice or lapse of time or both) a default under, or
give rise to any acceleration of remedies or any right of termination under, any Contract, lease, sublease, occupancy agreement,
loan agreement, mortgage, security agreement, trust indenture or other agreement or instrument to which Buyer is a party or by
which Buyer is bound or to which any of Buyer’s properties or assets is subject, except for such breaches, defaults and
accelerations as would not have a Material Adverse Effect on the ability of Buyer to consummate the transactions contemplated
hereby.
(d) Investment
Purpose. Buyer is acquiring the Shares solely for its own account for investment purposes and not with a view to, or for offer
or sale in connection with, any distribution thereof. Buyer acknowledges that the Shares are not registered under the Securities
Act of 1933, as amended, or any state securities laws, and that the Shares may not be transferred or sold except pursuant to the
registration provisions of the Securities Act of 1933, as amended or pursuant to an applicable exemption therefrom and subject
to state securities laws and regulations, as applicable.
(e) Litigation.
There are no claims, Actions, suits, proceedings, complaints or investigations pending or, to the knowledge of Buyer, threatened
before any federal, state, provincial, court or governmental or regulatory authority, domestic or foreign, or before any arbitrator
of any nature, brought by or against the Buyer or any of its officers, directors, employees, agents or Affiliates, involving,
affecting or relating to the Buyer, its business, the Equity Consideration, or the transactions contemplated by the Transaction
Documents. No event has occurred or circumstances exist that may give rise or serve as a basis for any such Action.
(f) SEC
Documents; Financial Statements. (a) Since [December 31, 2012], Buyer has filed with or furnished to the Securities and
Exchange Commission (the “SEC”) all reports, schedules, forms, statements and other documents required
to be so filed or furnished (the “Buyer SEC Documents”). All of the Buyer SEC Documents (other than
preliminary material), as of their respective filing dates, complied as to form in all material respects with all applicable requirements
of the Securities Act and the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and,
in each case, the rules and regulations promulgated thereunder applicable to such the Buyer SEC Documents. None of the Buyer SEC
Documents at the time of filing contained any untrue statement of a material fact or omitted to state any 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, except to the extent such statements have been modified or superseded by later Buyer SEC Documents. As of
their respective dates, the consolidated financial statements of Buyer included in the Buyer SEC Documents complied as to form
in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect
thereto, have been prepared in accordance with GAAP (except, in the case of unaudited statements, as permitted by Form 10-Q of
the SEC) applied on a consistent basis during the periods involved (except as may be indicated in the notes thereto) and fairly
presented in all material respects in accordance with the applicable requirements of GAAP, the financial position of Buyer as
of the dates thereof and the results of operations and cash flows for the periods then ended (subject, in the case of unaudited
statements, to notes and to normal and recurring year-end audit adjustments). There are no outstanding or unresolved comments
from the SEC with respect to any of the Buyer SEC Documents. Buyer and its subsidiaries maintain systems of “internal control
over financial reporting” (as defined in Rule 13a-15(f) of the Exchange Act) that comply in all material respects with the
requirements of the Exchange Act. No stop order suspending the sale of the Buyer’s securities in any jurisdiction has been
issued within the previous year, and no investigation or proceeding for that purpose has been commenced or is pending or threatened.
(g) Disclosure.
No representation or warranty by the Buyer contained in this Agreement, and no statement contained in the Buyer SEC Documents
or any other document, certificate or other instrument delivered to or to be delivered by or on behalf of the Buyer pursuant to
this Agreement, contains or will contain any untrue statement of a material fact or omits or will omit to state any material fact
necessary, in light of the circumstances under which it was or will be made, in order to make the statements herein or therein
not misleading.
7. Post
Closing Covenants.
(a) Noncompetition,
Nonsolicitation and Nondisparagement.
(i) Noncompetition.
Eisenberg acknowledge that (i) Buyer would not have entered into this Agreement but for the agreements and covenants contained
in this Section 7; and (ii) the agreements and covenants contained in this Section 7 are essential to protect the
Business and are reasonable and appropriate in scope; (iii) the Business is national in scope, and as such the “Territory”
for purposes of this Section 7 is the United States of America; and (iv) the business of Buyer is worldwide in time, territory,
scope and all other respects. To induce Buyer to enter into this Agreement, Eisenberg covenants and agrees that during the period
commencing on the Closing Date and ending on the third (3rd) anniversary of the Closing Date (the “Restricted Period”),
Eisenberg shall not (A) engage in any business or activity that competes with the Business in the Territory; (B) render any services
to any Person for use in competing with Company in the Territory in connection with the Business; (C) have an interest in any
Person engaged in any business that competes with Buyer in the Territory in connection with the Business, directly or indirectly,
in any capacity, including, without limitation, as a shareholder, officer, director, principal, agent, trustee or consultant or
any other relationship or capacity; or (D) interfere with business relationships (whether formed heretofore or hereafter) between
Company and customers, suppliers or prospects of the Business; provided, however, Eisenberg may own, directly or
indirectly, solely as an investment, securities of any Person which are publicly traded if Eisenberg (I) is not a controlling
Person of, or a member of a group which controls, such Person; and (II) does not, directly or indirectly, own two percent (2%)
or more of any class of securities of such Person.
(ii) Employees
of the Business. During the Restricted Period, Eisenberg shall not, directly or indirectly, solicit or encourage any Employee
or consultant performing services in connection with the Business to leave the employment or retention of the Company.
(iii) Customers
of the Business. During the Restricted Period, Eisenberg shall not, directly or indirectly, (i) persuade or attempt to persuade
any customer, prospective customer, client, prospective client, supplier or vendor of Company not to hire or do business with
Company or any successor thereto; or (ii) solicit for himself or any Person other than Company, the business of any Person who
is a customer, client, supplier or vendor of Company, or was its customer or supplier within one (1) year prior to the time of
such solicitation to the extent that such business is similar to the business conducted by such customer or supplier with Company.
(iv) Confidential
Information. From and after the Closing, Eisenberg shall keep secret and retain in strictest confidence, and shall not use
for the benefit of himself or others, all confidential matters relating to the Business, the Buyer or Company, including, but
not limited to, “know how”, trade secrets, customer lists, supplier lists, details of consultant and employment Contracts,
pricing policies, operational methods, marketing plans or strategies, product development techniques or plans, business acquisition
plans, technical processes, designs and design projects, processes, inventions, software, source codes, object codes, systems
documentation and research projects and other business affairs (“Confidential Information”), and shall
not disclose them to anyone outside of Buyer and its Affiliates (including Company); provided, however, this covenant
shall not apply to any information which is or becomes generally available to the public other than as a result of an improper
disclosure by Eisenberg. Eisenberg may disclose Confidential Information if required to do so in any legally required government
or securities filings, legal proceedings, subpoena, civil investigative demand or other similar process; provided, that
the Eisenberg (i) provides Buyer with prompt notice of such required disclosure so that Buyer may attempt to obtain a protective
order, (ii) cooperates with Buyer, at Buyer’s expense, in obtaining such protective order, and (iii) only discloses that
Confidential Information which it is absolutely required to disclose as advised by counsel.
(v)
Nondisparagement. After the Closing Date, Eisenberg will not disparage Buyer, any of Buyer’s Affiliates (including
Company) or any of such parties’ shareholders, directors, officers, employees or agents.
(vi) Tolling
of Covenant Periods. The Restricted Period provided in this Section 7 shall not include and shall be extended beyond,
any time during which Eisenberg is failing to comply with any provision of this Section 7, as finally determined by a court
of competent jurisdiction or arbitrator, with respect to such Party.
(vii) Blue
Penciling. If any term or other provision of this Section 7 is invalid, illegal, or incapable of being enforced by
any rule of Law or public policy, all other conditions and provisions of this Section 7 shall nevertheless remain in full
force and effect. Upon determination that any term or other provision is invalid, illegal, or incapable of being enforced, Eisenberg
and Buyer shall negotiate in good faith to, or the arbitrator making such a determination shall, modify this Section 7
so as to effect the original intent of Eisenberg and Buyer as closely as possible to the maximum extent allowed by Law to the
end that the transactions contemplated hereby are fulfilled to the extent possible.
(b) Employees.
Buyer agrees to offer, or cause the Company to offer, continued employment, on an “at will” basis to all the Employees
as of the Closing, including all management Employees, and if any such Employee accepts such offer of employment, he or she shall
become an employee of Buyer or Company, as applicable, after the Closing Date (such Employees are referred to hereinafter as the
“Retained Employees”). Retained Employees shall be credited for past service toward all benefits offered
by Buyer or Company for purposes of determining eligibility and benefit accrual.
(c) Securities
Law Compliance. The Trust agrees that it will not transfer or dispose of any of the Equity Consideration other than pursuant
to an effective registration statement under the Securities Act or a Rule 144 sale in compliance with the terms of such Rule or
pursuant to an exemption from the 1933 Act. Buyer shall file and maintain such additional Buyer SEC Documents as may be necessary
such that the representations and warranties set forth in Section 6(f) continue to remain true for all periods that the
Equity Consideration is held by the Trust or Sellers, and Buyer shall cooperate with the Trust (and any Seller receiving a distribution
of the any Equity Consideration) and any applicable transfer agent, in the removal of any legend on the shares constituting the
Equity Consideration to permit the trade or liquidation thereof in the marketplace as permitted under Rule 144 (as promulgated
under the Securities Act and in effect as of the applicable time), if requested by the Trust or applicable Seller.
(d) Trust
Operation. From and after the Closing, all undertakings and actions of the Trust will carried out as set forth in this Agreement
and the Trust Documents.
(e) Return
of Trust Property by Sellers. In the event the Trust distributes the assets of the Trust to the Sellers in violation of this
Agreement or the Trust Documents, each Seller covenants to promptly return such assets to the Trust.
(f) Product
Sales Information. Within thirty (30) days after the end of each calendar quarter, Buyer will furnish to Trust, a complete
and accurate written statement in a form reasonably acceptable to Trust, certified by Buyer’s authorized financial officer,
showing the total number of Products (the volume and sales of each Product expressed in dollars, volume, and SKUs) sold and distributed
by Buyer during the preceding calendar quarter. Buyer will keep at a location within the continental United States, reasonably
detailed, complete and accurate books of account and records covering all transactions relating to the Products. Upon at least
five (5) Business Days prior notice to Buyer, Trust and/or its authorized representatives will have the right, during regular
business hours, to examine and copy such books of account and records and all other documents and material in the possession or
under the control of Buyer insofar as they relate to the Products sold in the last two (2) years, in order to determine the accuracy
of the periodic statements delivered or which should have been delivered by Buyer to Trust as provided above. In the event such
examination indicates any under or overpayment of Royalty Consideration, an appropriate credit or refund will be promptly issued.
If any such examination reveals an underpayment of Royalty Consideration, of more than five percent (5%) of the amount paid by
Buyer, or if such examination is in connection with Buyer’s failure to deliver any periodic statement or pay any amounts
due hereunder, then Buyer will bear all costs and expenses incurred by Trust in connection with the examination and collection
of any such unpaid amounts (including, without limitation, all reasonable attorney’s fees and expenses). The full amount
of any underpayment of Royalty Consideration, and related costs and expenses will be due and payable upon demand by Trust. All
books of account and records of Buyer relating to the Products will be kept available for inspection by or on behalf of Trust
for at least two (2) years after the expiration or termination of the seven-year Royalty Consideration period. All information
received, reviewed and copied by Trust or its representatives in connection with or pursuant to this Section 7(f) shall
be kept confidential and not disclosed to any other Person.
(g) Adoption
of Release. By its execution hereof, each of the Sellers hereby agrees that it is bound by the terms of the Release Agreement
attached as Exhibit B, the terms of which are incorporated herein by this reference.
8. Indemnification.
(a) Indemnification
with Respect to a Seller’s Breach.
(i) To
the extent the assets of the Trust are sufficient but subject to Section 8(f), the Trust shall indemnify and save and hold
the Buyer, any Affiliate of the Buyer and their respective directors, officers, managers, employees, successors, and assigns (the
“Buyer Indemnitees”), harmless from and against any and all damages, claims, demands, obligations, Liabilities,
losses, costs, expenses (including all reasonable attorneys’ fees and expenses of investigation incurred by the Buyer Indemnitees
in any Action or proceeding between a Seller and the Buyer Indemnitees or between the Buyer Indemnitees and any other Person or
otherwise), deficiencies, interests, penalties, impositions, assessments and/ or fines (collectively, “Buyer Losses”),
whether or not in connection with a third-party claim, arising out of, resulting from, or related to (i) a breach of any representation
or warranty made by a Seller in this Agreement or the other Transaction Documents to which a Seller is a party; or (ii) a Seller’s
breach of any covenant made by a Seller in this Agreement or the other Transaction Documents to which such Seller is a party;
or (iii) any Liability relating to common law or statutory dissenter’s rights, appraisal rights, or any similar rights of
a Seller arising with respect to the transactions which are the subject of this Agreement; provided that such indemnification
shall not extend to the Covenantors breach of Section 7(a), or the breach of any employment agreement or the like to which
a Seller may be a party.
(ii) To
the extent the assets of the Trust are not sufficient to indemnify the Buyer Indemnitees for any Buyer Losses under Section
8(a)(i) above, but subject to Section 8(f), each Seller shall, severally but not jointly, indemnify and save and hold
the Buyer Indemnitees harmless from and against any and all Buyer Losses whether or not in connection with a third-party claim,
arising out of, resulting from, or related to (i) a breach of any representation or warranty made by such Seller in this Agreement
or the other Transaction Documents to which such Seller is a party; or (ii) such Seller’s breach of any covenant made by
a Seller in this Agreement or the other Transaction Documents to which such Seller is a party; or (iii) any Liability relating
to common law or statutory dissenter’s rights, appraisal rights, or any similar rights of such Seller arising with respect
to the transactions which are the subject of this Agreement; provided that such indemnification shall not extend to Eisenberg’s
breach of Section 7(a), or the breach of any employment agreement or the like to which such Seller may be a party.
(b) Indemnification
with Respect to the Company’s Breach.
(i) To
the extent the assets of the Trust are sufficient, but subject to Section 8(f), the Trust shall indemnify and save and
hold the Buyer Indemnitees, harmless from and against any and all Buyer Losses, whether or not in connection with a third-party
claim, arising out of, resulting from or related to (i) the Company’s breach of any representation or warranty made by the
Company in this Agreement or the other Transaction Documents to which the Company is a party; or (ii) any Liability relating to
common law or statutory dissenter’s rights, appraisal rights, or any similar rights of a Seller arising with respect to
the transactions which are the subject of this Agreement or of any party other than a Seller claiming to be a shareholder arising
with respect to the transactions which are the subject of this Agreement.
(ii) To
the extent the assets of the Trust are not sufficient to indemnify the Buyer Indemnitees for any Buyer Losses under Section
8(b)(i) above, but subject to Section 8(f), each Seller shall, severally but not jointly, indemnify and save and hold
the Buyer Indemnitees harmless from and against any and all Buyer Losses whether or not in connection with a third-party claim,
arising out of, resulting from, or related to (i) the Company’s breach of any representation or warranty made by the Company
in this Agreement or the other Transaction Documents to which the Company is a party; or (ii) any Liability relating to common
law or statutory dissenter’s rights, appraisal rights, or any similar rights of a Seller arising with respect to the transactions
which are the subject of this Agreement or of any party other than a Seller claiming to be a shareholder arising with respect
to the transactions which are the subject of this Agreement.
(c) Indemnification
with Respect to the Trust’s Breach. To the extent the assets of the Trust are sufficient, but subject to Section
8(f), the Trust shall indemnify and save and hold the Buyer Indemnitees, harmless from and against any and all Buyer Losses,
whether or not in connection with a third-party claim, arising out of, resulting from or related to (i) the Trust’s breach
of any representation or warranty made by the Trust in this Agreement or the other Transaction Documents to which the Trust is
a party; or (ii) the Trust’s breach of any covenant made by the Trust in this Agreement or the other Transaction Documents
to which the Trust is a party; or (iii) the Trust’s breach of the Trust Documents.
(d) Indemnification
by Buyer. Buyer shall indemnify and save and hold the Sellers, the Trust, any Affiliate of a Seller or the Trust and their
respective directors, officers, managers, trustees, employees, advisors, successors, and assigns (the “Seller Indemnitees”),
harmless from and against any and all damages, claims, demands, obligations, liabilities, losses, costs, expenses (including all
reasonable attorneys’ fees and expenses of investigation incurred by the Seller Indemnitees in any Action or proceeding
between the Buyer and the Seller Indemnitees or between the Seller Indemnitees and any third party or otherwise), deficiencies,
interests, penalties, impositions, assessments and/ or fines (collectively, “Seller Losses”), whether
or not in connection with a third-party claim, arising out of, resulting from or related to (i) Buyer’s breach of any representation
or warranty made by Buyer in this Agreement or the other Transaction Documents to which the Buyer is a party, or (ii) Buyer’s
breach of any covenant made by Buyer in this Agreement or the other Transaction Documents to which the Buyer is a party; or (iii)
any Liability relating to common law or statutory dissenter’s rights, appraisal rights, or any similar rights of a shareholder
of Buyer arising with respect to the transactions which are the subject of this Agreement.
(e) Set-Off
by Buyer. Amounts that (i) the Trust and the Buyer agree in writing are due or (ii) upon a final determination by a court
of competent jurisdiction or arbitrator that such amounts are due to the Buyer Indemnities under Sections 8(a) , (b)
and (c) may be satisfied by set-off by the Buyer Indemnities, at their sole election, against any Royalty Consideration
then due or to become due in the future.
(f) Limitations.
The indemnification provided for in Sections 8(a), (b) and (c) shall be subject to the following limitations
and provisions:
(i) The
Trust and the Sellers shall not be liable to the Buyer Indemnitees for indemnification (other than with respect to a claim for
indemnification based upon, arising out of, with respect to, or by reason of any inaccuracy in or breach of a Fundamental Representation
or fraud) until the aggregate amount of Buyer Losses in respect of indemnification exceeds $50,000 (the “Basket”),
in which event Trust and the Sellers, as applicable, shall be required to pay or be liable for the Buyer Losses in excess of the
Basket in accordance with this Section 8;
(ii) The
Trust and the Sellers shall not be liable to the Buyer Indemnitees for indemnification (other than with respect to a claim for
indemnification based upon, arising out of, with respect to or by reason of any inaccuracy in or breach of a Fundamental Representation
or fraud) for any Buyer Losses that, in the aggregate, are in excess of fifty percent (50%) of the Purchase Consideration.
(iii) The
Trust shall not be liable to the Buyer Indemnitees for indemnification (other than with respect to a claim for indemnification
based upon, arising out of, with respect to, or by reason of fraud) for any Buyer Losses that, in the aggregate, are in excess
of the Purchase Consideration.
(iv) Each
Seller shall not be liable to the Buyer Indemnitees for indemnification (other than with respect to a claim for indemnification
based upon, arising out of, with respect to, or by reason of fraud) for any Buyer Losses that, in the aggregate, are in excess
of the Purchase Consideration received by such Seller through distributions from the Trust.
(v) All
claims for indemnification shall be paid either from the Equity Consideration or the set-off in Section 8(e), if elected
by Buyer, unless the Trust elects to pay such claim in cash. For purposes of the foregoing each share of Equity Consideration
will be valued at the greater of $0.85, or its Fair Market Value on the date the claim is paid. For purposes hereof, the Fair
Market Value means, as of any particular date, (A) the volume weighted average of the closing sales prices of a security of the
type that comprises the Equity Consideration for such day on all domestic securities exchanges on which such security may at the
time be listed, (B) if there have been no sales of such security on any such exchange on any such day, the average of the highest
bid and lowest asked prices for such security on all such exchanges at the end of such day, (C) if on any such day such security
is not listed on a domestic securities exchange, the closing sales price of such security as quoted on the Financial Industry
Regulatory Authority OTC Bulletin Board electronic inter-dealer quotation system (the “OTC Bulletin Board”),
the OTC Markets Group Inc. electronic inter-dealer quotation system, including OTCQX, OTCQB and OTC Pink (the “Pink
OTC Markets”) or similar quotation system or association for such day or (D) if there have been no sales of such
security on the OTC Bulletin Board, the Pink OTC Markets or similar quotation system or association on such day, the average of
the highest bid and lowest asked prices for such security quoted on the OTC Bulletin Board, the Pink OTC Markets or similar quotation
system or association at the end of such day; in each case, averaged over twenty (20) consecutive Business Days ending on the
Business Day immediately prior to the day as of which “Fair Market Value” is being determined, and (ii) “Business
Day” means any day, except a Saturday, Sunday or legal holiday, on which banking institutions in the city of New
York, New York, are authorized or obligated by law or executive order to close; provided, that if such security is listed on any
domestic securities exchange, the term “Business Day” as used herein means Business Days on which such
exchange is open for trading. If at any time a security is not listed on any domestic securities exchange or quoted on the OTC
Bulletin Board, the Pink OTC Markets or similar quotation system or association, the market value of such security shall be the
fair market value per share as determined by mutual agreement of the Trust and Buyer; provided, that if the Trust and Buyer are
unable to agree on the market value per share of such security within 14 calendar days, such market value shall be determined
by a nationally recognized investment banking, accounting or valuation firm jointly selected by the Trust from a list of at least
three (3) provided by the Buyer. The determination of such firm shall be final and conclusive, and the fees and expenses of such
valuation firm shall be borne by the Party whose proposed valuation is furthest from that reach by the firm.
(vi) Prior
to or contemporaneously with, and as a condition to, pursuing any claim for indemnification for Buyer Losses under this Section
8 against any Seller or the Trust, a Buyer Indemnitee shall assert and pursue a claim for recovery under any policy of insurance
that provides coverage for such Buyer Losses. Any recovery by a Buyer Indemnitee under such policy of insurance shall offset and
reduce the amount of Buyer Losses for which the Trust or any Seller must indemnify the Buyer Indemnitee under this Section
8. To the extent any Seller or the Trust pays a Buyer Indemnitee for any Buyer Losses or Buyer exercises its right of set-off
under Section 8(e) and the Buyer Indemnitee also recovers under a policy of insurance for such Buyer Losses, the Buyer
Indemnitee shall promptly pay to the Trust or such Seller, as applicable, the amount (if any) by which the total recovery by Buyer
Indemnitee exceeds the amount of such Buyer Losses.
(vii) To
the extent such Buyer Losses arise from or were caused by acts or omissions by any of the Buyer Indemnitees after the Closing.
For purposes of clarity, the limitation of this Section 8(f)(vii) shall not apply to any products liability claims relating
to inventory of the Products existing as of the Closing and sold by the Company following the Closing in the ordinary course of
business and consistent with past practices.
(g) Survival.
All representations, warranties, covenants and obligations contained in this Agreement and the other Transaction Documents shall
survive the Closing for eighteen (18) months, except that: (i) all covenants and agreements which by their terms contemplate performance
after the Closing shall survive the Closing indefinitely, unless specified otherwise by their terms; (ii) for breaches of Sections
4(j) or 4(s), the survival shall be the applicable statute of limitations; (iii) for breaches of any Fundamental Representations,
the survival period shall be indefinite; and (iv) for breaches based upon, arising out of, with respect to, or by reason of fraud,
the survival period shall be the applicable statute of limitations. Notwithstanding the above, any claim for indemnification made
in accordance with this Section 8 prior to the expiration of the applicable indemnification period set forth in this paragraph
shall survive until such matter is resolved.
(h) Exclusive
Remedy. The indemnification afforded by this Section 8 shall be the sole and exclusive remedy of the Seller Indemnitees
and Buyer Indemnitees in respect of claims for any misrepresentation, breach of warranty or nonfulfillment or failure to be performed
of any covenant or agreement contained in this Agreement or the other Transaction Documents, except for (i) Eisenberg’s
breach of Section 7(a); (ii) the breach of any employment agreement or the like to which a Seller may be a party; (iii)
the Trust’s breach of any representations, warranties, covenants or obligations contained in this Agreement and the other
Transaction Documents which by their terms contemplate performance after the Closing; (iv) any Seller’s breach of the covenants
in Section 7(e); or (v) Buyer’s breach of the covenants in Section 7(f).
(i) Materiality.
For purposes of determining the amount of Buyer Losses under this Section 8, and not for purposes of determining whether
or not a breach has occurred, any inaccuracy in or breach of any representation or warranty shall be determined without regard
to any materiality, Material Adverse Effect or other similar qualification contained in or otherwise applicable to such representation
or warranty.
(j) Procedures
for Indemnification.
(i) Notice
of Claims. If any misrepresentation, breach of warranty or nonfulfillment or failure to be performed of any covenant or agreement
contained in this Agreement or the other Transaction Documents occurs or is alleged and either (i) a Buyer Indemnitee asserts
that Trust or any Seller(s), has become obligated to such Buyer Indemnitee pursuant to Section 8 hereof, or (ii) a Seller
Indemnitee asserts that Buyer, has become obligated to such Seller Indemnitee pursuant to Section 8 hereof (“Direct
Claim”), or if any suit, Action, investigation, claim or proceeding is threatened, begun, made or instituted by
a third party (a “Third Party Proceeding”) as a result of which the Trust or any Seller(s) may become
obligated to a Buyer Indemnitee hereunder, or Buyer may become obligated to a Seller Indemnitee, such Buyer Indemnitee or Seller
Indemnitee, as applicable, shall give written notice thereof to the Trust or Buyer, as the case may be (the “Claims
Notice”). For purposes of this Section 8(j) a Buyer Indemnitee or Seller Indemnitee sending a Claims Notice
shall be referred to as an “Indemnitee.” A failure or delay in providing a Claims Notice shall not relieve
Buyer, any Seller(s) or Trust of its indemnification obligations under this Section 8 except to the extent that such Party
is materially prejudiced as a result thereof.
(ii) Response
to Direct Claims. Any Seller(s), the Trust or Buyer as the indemnifying party under this Section 8 (the “Indemnitor”)
shall have thirty (30) days after receipt of the Claims Notice for a Direct Claim to reject or accept the claim as an indemnifiable
claim under Section 8. If, within thirty (30) days after receipt by the Indemnitor of such a Claims Notice, the Indemnitor
delivers notice to the Indemnitee containing a written objection to the claim (or a portion thereof) by the Indemnitee, stating
the nature of and grounds for such objection in reasonable detail, then such claim (or portion thereof) shall be deemed to be
a “Disputed Claim” and such claim shall be resolved in accordance with this Section 8(j). If,
within thirty (30) days after actual receipt by an Indemnitor of a Claims Notice for a Direct Claim, Indemnitor delivers notice
to the Indemnitee containing a written acceptance of the claim, (or a portion thereof) then such claim (or portion thereof) shall
be deemed an indemnifiable claim under this Section 8 (the “Indemnifiable Claim”), and unless
such notice includes a reservation of rights, Indemnitor will be conclusively deemed to have consented to recovery by the Indemnitee
of the full amount of Buyer Losses or Seller Losses, as applicable, subject to the limitations set forth in the Section 8,
as applicable.
(iii) Dispute
Resolution. Any disputes arising under this Section 8 shall be resolved as follows: (i) first, the Buyer and the Trust
shall attempt in good faith for thirty (30) days to resolve the dispute, and (ii) if the dispute remains unresolved after such
thirty (30) day period, the Buyer and the Trust agree that either the Buyer or the Trust may file suit in any court or other adjudicative
body having jurisdiction pursuant to this Agreement in order to resolve the dispute.
(iv) Third
Party Proceeding. Indemnitor shall have twenty (20) days from receipt of a Claims Notice for a Third Party Proceeding to provide
the Indemnitee with notice that it wishes to assume the defense in the Third Party Proceeding, in which event the Indemnitee shall
have the right to participate in the defense at its own expense; provided, however, that the Indemnitee is hereby
authorized prior to and during such time to file any motion, answer or other pleading that it shall deem necessary or appropriate
to protect its interests and that is not prejudicial to Indemnitor. If Indemnitor fails to give the Indemnitee timely notice as
provided herein, the Indemnitee shall have the right to defend against such Third Party Proceeding. If Indemnitor assumes the
defense in a Third Party Proceeding, the Indemnitor shall not agree to any settlement, compromise or discharge of a Third-Party
Claim without the Indemnitee’s prior written consent, which shall not be unreasonably withheld. If the Indemnitor does not
assume the defense of a Third-Party Claim, the Indemnitee shall be entitled to undertake any settlement, compromise or discharge
of such Third-Party Claim without the Indemnitor’s prior consent. Notwithstanding anything herein to the contrary, an Indemnitor
shall not be entitled to assume control of the defense in a Third Party Proceeding, and shall pay the reasonably documented fees
and expenses of legal counsel retained by the Indemnitee if: (i) Indemnitee reasonably believes that an adverse determination
of such claim could be detrimental to its interests; (ii) Indemnitee reasonably believes that the Indemnitor lacks the financial
capability to pay any adverse monetary judgment being sought in the Third Party proceeding; (iii) Indemnitee reasonably believes
that a conflict of interest exists or could reasonably arise which, under applicable principles of legal ethics, could prohibit
a single legal counsel from representing both the parties in such proceeding, other than a conflict which may exist due to the
underlying nature of the duty to indemnify; (iv) a court of competent jurisdiction rules that Indemnitor has failed or is failing
to prosecute or defend such claim; or (v) such claim seeks damages other than monetary damages.
(v)
Consent to Jurisdiction. Notwithstanding any other provision of this Section 8, Indemnitor hereby consents to the
nonexclusive jurisdiction of any court in which an Action or claim in respect of a Third Party Proceeding is brought against an
Indemnitee for purposes of any claim that an Indemnitee may have under this Agreement with respect to such Action or claim or
the matters alleged therein and agrees that process may be served on Indemnitor with respect to such a claim anywhere in the world.
(vi) Indemnification
Binds Successors and Assigns. All of the indemnification rights of the Parties arising pursuant to this Section 8 shall
survive any sale, assignment or other transfer by a Party of all or part of their respective title to or interest in all or part
of the Transaction Documents and shall apply to and bind each and every successor and assign of a Party hereto.
(vii) Fraud.
For purposes of this Section 8, the term “fraud” shall only be deemed to refer to willful and intentional
misrepresentations or omissions made, or intentional concealment performed, with the intent to deceive and shall not be deemed
to include negligent misrepresentation, omissions or similar claims.
9. Appointment
of the Trust as Representative of Sellers.
(a) By
approving this Agreement and the transactions contemplated hereby, each Seller shall have irrevocably authorized, directed and
appointed the Trust to act as sole and exclusive agent, attorney-in-fact and representative of such Seller, with full power of
substitution with respect to all matters under this Agreement and the transactions contemplated hereby, including, without limitation,
determining, giving and receiving notices and processes hereunder, receiving distributions of the Purchase Consideration to or
for the benefit of Sellers, contesting and settling any and all claims for indemnification pursuant to Article 8, resolving
any other disputes hereunder, performing the duties expressly assigned to the Trust hereunder and under the Trust Documents and
incur such other expenses as the Trust shall reasonably deem necessary or prudent in connection with the foregoing.
(b) The
Trust shall have the sole and exclusive right on behalf of each Seller to take any action or provide any waiver, or receive any
notice with respect to any claims for indemnification under Article 8 and to settle any claim or controversy arising with
respect thereto. Any such actions taken, exercises of rights, power or authority, and any decision or determination made by the
Trust, shall be absolutely and irrevocably binding on each Seller as if such Seller personally had taken such action, exercised
such rights, power or authority or made such decision or determination in such Seller’s individual capacity, and no Seller
shall have the right to object, dissent, protest or otherwise contest the same. Any action required to be taken by any Seller
hereunder or any action that any Seller, at its election, has the right to take hereunder, shall be taken only by the Trust and
no Seller acting on its own shall be entitled to take any such action. After Closing, Buyer shall be entitled to deal exclusively
with the Trust on all matters relating to this Agreement and shall be entitled to rely conclusively (without further evidence
of any kind whatsoever) on any document executed or purported to be executed on behalf of any Seller by the Trust, and on any
other action taken or purported to be taken on behalf of any Seller by the Trust, as being fully binding upon such Seller. Notices
or communications to or from the Trust shall constitute notice to or from each Seller. Any decision or action by the Trust hereunder,
including any agreement between the Trust and Buyer relating to the defense, payment or settlement of any claims for indemnification
hereunder, shall constitute a decision or action of any or all Sellers, as applicable, and shall be final, binding and conclusive
upon each such Seller. No Seller shall have the right to object to, dissent from, protest or otherwise contest the same. The provisions
of this Section 9, including the power of attorney granted hereby, are independent and severable, are irrevocable and coupled
with an interest and shall not be terminated by any act of any one or Sellers or by operation of Law.
(c) The
Trust may resign at any time; provided, however, in no event shall the Trust resign without having first appointed a new representative
to serve in the same capacity and with the same authority as the Trust, who shall assume such duties immediately upon the resignation
or removal of the Trust. Notice of the appointment of such new representative shall be sent to Buyer, such appointment to be effective
upon the later of the date indicated in such notice or the date such notice is received by Buyer; provided, that
until such notice is received, Buyer shall be entitled to rely on the decisions and actions of the Trust as described in Sections
9(a) and (b) above.
(d) The
Trust shall not be liable to any Seller for actions taken pursuant to this Agreement, except to the extent such actions shall
have been determined by a court of competent jurisdiction to have constituted gross negligence or involved fraud, intentional
misconduct or bad faith (it being understood that any act done or omitted pursuant to the advice of counsel, accountants and other
professionals and experts retained by the Trust shall be conclusive evidence of good faith).
10. Miscellaneous.
(a) Successors
and Assigns. Any Party hereto may assign this Agreement or any rights or obligations hereunder without the prior written consent
of the other Parties hereto; provided that this Agreement shall inure to the benefit of and shall be binding upon the successors
and assigns of the Parties hereto.
(b) Governing
Law; Jurisdiction. This Agreement shall be construed, performed and enforced in accordance with, and governed by, the laws
of the State of North Carolina, United States, without giving effect to the principles of conflicts of laws thereof. The Parties
hereto irrevocably consent to the jurisdiction of, the federal and state courts of the State of North Carolina located in Wake
County, North Carolina for such purpose.
(c) Expenses.
Except as otherwise provided herein, each of the Parties hereto shall pay all its own expenses in connection with this Agreement
and the transactions contemplated hereby, including, without limitation, any legal and accounting fees, whether or not the transactions
contemplated hereby are consummated.
(d) Severability.
In the event that any part of this Agreement is declared by any court or other judicial or administrative body to be null, void
or unenforceable, said provision shall survive to the extent it is not so declared, and all of the other provisions of this Agreement
shall remain in full force and effect.
(e) Notices.
All notices, requests, demands and other communications under this Agreement shall be in writing and shall be deemed to have been
duly given (i) on the date of service if served personally on the Party to whom notice is to be given, or (ii) on the day of delivery
by Federal Express or similar overnight courier or the Express Mail service maintained by the U.S. Postal Service, to the Party
as follows:
|
If to Trust: |
[Insert Address] |
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Copy
to: |
Smith, Gambrell
& Russell, LLP |
|
|
Suite 3100, Promenade |
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1230 Peachtree
Street, NE |
|
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Atlanta, Georgia
30309 |
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Attention: John
C. Ethridge, Jr. |
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|
|
|
If to Buyer: |
Synergy CHC Corp. |
|
|
865 Spring Street |
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Westbrook, ME
04092 |
|
|
Attn: President |
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Copy to: |
Wyrick Robbins
Yates & Ponton LLP |
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4101 Lake Boone
Trail, Suite 300 |
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Raleigh, North
Carolina 27607 |
|
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Attention: W.
David Mannheim |
Any
Party may change its address for the purpose of this Section by giving the other Party written notice of its new address in the
manner set forth above.
(f) Amendments;
Waivers. This Agreement may be amended or modified, and any of the terms, covenants, representations, warranties or conditions
hereof may be waived, only by a written instrument executed by the Parties hereto, or in the case of a waiver, by the Party waiving
compliance. Any waiver by any Party of any condition, or of the breach of any provision, term, covenant, representation or warranty
contained in this Agreement, in any one or more instances, shall not be deemed to be nor construed as further or continuing waiver
of any such condition, or of the breach of any other provision, term, covenant, representation or warranty of this Agreement.
(g) Public
Announcements. Sellers and the Trust shall not make any public statement regarding this Agreement or the transactions contemplated
herein without Buyer’s prior written approval. Buyer shall provide a copy of any public statement to the Trust prior to
the information being made public.
(h) Entire
Agreement. This Agreement, the exhibits and schedules hereto contains the entire understanding between the Parties hereto
with respect to the transactions contemplated hereby and thereby and supersede and replace all prior agreements and understandings,
oral or written, with regard to such transactions. All schedules and exhibits hereto and any documents and instruments delivered
pursuant to any provision hereof are expressly incorporated herein and made a part of this Agreement as fully as though completely
set forth herein. This Agreement shall only be binding on the Parties hereto upon execution and delivery of this Agreement by
each of the Parties.
(i) Parties
in Interest. Nothing in this Agreement is intended to confer any rights or remedies under or by reason of this Agreement on
any persons other than the Parties hereto and their respective successors and permitted assigns. Nothing in this Agreement is
intended to relieve or discharge the obligations or liability of any third persons to any of the Parties hereto. No provision
of this Agreement shall give any third persons any right as a third party beneficiary of this Agreement or provide any right of
subrogation or Action over or against a Party hereto.
(j) Section
and Paragraph Headings. The section and paragraph headings in this Agreement are for reference purposes only and shall not
affect the meaning or interpretation of this Agreement.
(k) Counterparts.
This Agreement may be executed in counterparts and via .pdf, each of which shall be deemed an original, but all of which shall
constitute the same instrument.
(l) Fulfillment
of Obligations. Any obligation of any Party to any other Party under this Agreement, which obligation is performed, satisfied
or fulfilled by an Affiliate of such Party, shall be deemed to have been performed, satisfied, or fulfilled by such Party.
(m) Remedies.
Except as expressly provided in this Agreement, any Person having any rights under any provision of this Agreement, including,
without limitation, Section 7, shall be entitled to enforce such rights specifically (without posting a bond or other security)
and to exercise all other rights granted by Laws. Except as expressly provided in this Agreement, all such rights and remedies
shall be cumulative and non-exclusive, and may be exercised singularly or concurrently. The Parties acknowledge that any breach
of this Agreement may cause substantial irreparable harm to the other Party. Therefore, this Agreement may be enforced in equity
by specific performance, temporary restraining order and/or injunction. The rights to such equitable remedies shall be in addition
to all other rights or remedies which a Party may have under this Agreement or under applicable law.
(n) Further
Actions. In case at any time after the Closing any further action is necessary to carry out the purposes of this Agreement,
each of the Parties shall take such further action (including the execution and delivery of such further instruments and documents)
as any other Party reasonably may request, all at the sole cost and expense of the requesting Party (unless the requesting Party
is entitled to indemnification therefore under Section 8). Without limiting the foregoing, after the Closing each Seller
will furnish Buyer with such information and documents in such Seller’s possession or under such Seller’s control
or that such Seller can execute or cause to be executed to further evidence Buyer’s ownership of the Shares.
[Signature
pages follow]
IN
WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed by their respective officers thereunto duly authorized
as of the date first above written.
|
/s/
Jordan Eisenberg |
|
JORDAN
EISENBERG |
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BREAKTHROUGH
PRODUCTS, INC. |
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By: |
/s/
Jordan Eisenberg |
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Name: |
Jordan
Eisenberg |
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Title: |
Chief
Executive officer |
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SYNERGY
CHC CORP. |
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By: |
/s/
Jack Ross |
|
Name: |
Jack
Ross |
|
Title: |
Chief
Executive Officer |
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URX
ACQUISITION TRUST |
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|
|
|
By: |
/s/
Michael Valentino |
|
Name: |
Michael
Valentino |
|
Title: |
Trustee |
Signature
Page to Stock Purchase Agreement - 1
[Form
of Seller Signature Page]
Seller:
(USE
THIS BLOCK IF AN INDIVIDUAL)
(USE
THIS BLOCK IF AN ENTITY)
By: |
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Name: |
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Title: |
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Address: |
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Signature
Page to Stock Purchase Agreement - 2
SHARE
PURCHASE AGREEMENT
THIS
SHARE PURCHASE AGREEMENT (the “Agreement”) dated as of November 15, 2015, between TPR Investments Pty
Ltd ACN 128 396 654 as trustee for Polmear Family Trust (the “Seller”), Timothy Polmear and Rebecca
Polmear (collectively, the “Principal Owners”), NomadChoice Pty Limited ACN 160 729 939 trading as Flat
Tummy Tea, an Australian proprietary limited company (the “Company”), and Synergy CHC Corp., a Nevada
corporation (the “Buyer”). Buyer and Seller are sometimes referred to collectively as the “Parties”
and individually as a “Party”.
BACKGROUND
Seller
and the Principal Owners, either directly or indirectly, collectively own, all of the issued fully paid ordinary shares of the
Company (the “Company Shares”).
The
Company is engaged in the business of developing, manufacturing, and selling herbal detox tea (the “Products”)
(the Products and the business related to the Products is collectively the “Business”). For the avoidance
of doubt, the “Business” shall be limited to the business known as “Flat Tummy Tea” and operated by the
Company.
Buyer
desires to purchase all of the Company Shares (the “Share Purchase”), and Seller and the Principal Owners
desire to sell such Company Shares to Buyer, in each case upon the terms and subject to the conditions set forth in this Agreement.
In
consideration of the foregoing and the respective covenants and agreements hereinafter contained, the Parties hereto hereby agree
as follows:
As
used in this Agreement (including the recitals and Disclosure Schedules hereto), the following selected terms shall have the following
meanings (such meanings to be applicable equally to both singular and plural forms of the terms defined):
“Action”
means any claim, action, cause of action, demand, lawsuit, arbitration, audit, notice of violation, proceeding, litigation, citation,
summons, subpoena or investigation of any nature, civil, criminal, administrative, regulatory or otherwise, whether formal or
informal, whether public or private and whether at law or in equity;
“Adjusted
EBITDA” shall mean, with respect to any applicable period, the net income before interest, taxes, depreciation and
amortization less any capital expenditures of the Company for such period, all as calculated on a consistent basis with the accounting
standards and general accounting principles applied in the financial statements attached as Schedule 4(h);
“Affiliate”
shall mean, as to any Person, any other Person which directly or indirectly controls, or is under common control with, or is controlled
by, such Person. As used in this definition, “control” (including, with its correlative meanings, “controlled
by” and “under common control with”) shall mean possession, directly or indirectly, of the power to direct or
cause the direction of management or policies (whether through ownership of securities or partnership or other ownership interests,
by Contract or otherwise) of such Person;
“Calculation
Period” means the period beginning on November 1, 2015 and ending on June 30, 2016;
“Calculation
Period EBITDA” means the Company’s Adjusted EBITDA during the Calculation Period;
“Clients”
means all of the clients of the Company during each of the Company’s 2012, 2013, and 2014 fiscal years and during the period
ended as of October 31, 2015;
“Closing”
shall mean the consummation of the transactions contemplated by this Agreement which shall occur on the Closing Date;
“Closing
Date” means 12 November 2015;
“Code”
means the Internal Revenue Code of 1986, as amended;
“Commercially
Reasonable Efforts” means the commercially reasonable efforts that a prudent Person desirous of achieving
a result and having an incentive to and interest in achieving such result would use to achieve that result as expeditiously as
reasonably possible under the circumstances;
“Contract”
means any agreement, contract, indenture, instrument, obligation, promise or undertaking (whether written or oral and whether
express or implied) that is legally binding;
“Disclosure
Schedules” means the disclosure letter delivered by Seller concurrently with the execution and delivery of this
Agreement;
“Earn-Out Multiple”
means two (2);
“Employee”
means an employee of the Company employed in connection with the Business;
“Employee
Benefit Plan” means any pension, profit sharing, retirement, deferred compensation, share purchase, share option
or other equity based compensation plans, incentive, bonus, vacation, employment, independent contractor, severance, disability,
hospitalization, sickness, death, medical insurance, dental insurance, life insurance and any other employee benefit plan (whether
provided on a funded or unfunded basis, or through insurance or otherwise), agreement, program, policy, trust, fund, Contract
or arrangement;
“Environmental
Laws” means all Laws concerning pollution or protection of the environment and natural resources, including without
limitation all those relating to the presence, use, production, generation, handling, transportation, treatment, storage, control
or cleanup of any hazardous materials, substances or wastes, pesticides, pollutants or byproducts, asbestos, polychlorinated biphenyls,
or radiation, each as amended and as now or hereafter in effect;
“Files
and Records” shall mean all files and records, whether in hard copy or digital, electronic, data, magnetic or other
format, of the Company relating to or used in connection with the Business;
“Event
of Insolvency” means, in relation to a corporation:
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(a)
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receiver,
manager, receiver and manager, trustee, administrator or similar officer is appointed in respect of a person or any material
asset of a corporation; |
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(b)
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a
liquidator or provisional or interim liquidator is appointed in respect of a corporation; |
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(c)
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any
application (not being an application withdrawn or dismissed within 7 days) is made to a court for an order, or an order is
made, or a meeting is convened, or a resolution is passed, for the purpose of: |
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(i)
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appointing
a person referred to in paragraphs (a) or (b); |
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(ii)
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winding
up the relevant corporation; or |
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(iii)
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proposing
or implementing a compromise with creditors (including a scheme of arrangement, other than to carry out a reconstruction or
amalgamation while solvent); |
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(d)
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a
final order, judgment or award is made against the corporation which it fails to satisfy within 7 days of being required to
do so; or |
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(e)
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the
corporation becomes, or admits in writing that it is, is declared to be, or is deemed under any applicable Law to be, insolvent
or unable to pay its debts; |
“Fundamental
Representations” shall mean the representations and warranties set forth in Sections 4(a), 4(b), 4(c), 4(d),
4(e), 4(f), 4(j), 4(l), and 4(o);
“Government”
shall mean any agency, division, subdivision, audit group or procuring office of the Government of Australia or the United States,
any state of Australia or the United States, including the employees or agents thereof;
“GST
Act” means as A New Tax System (Goods and Services Tax) Act 1999 (Cth);
“Guarantee”
means any Contract of guarantee, indemnification, assumption or endorsement or any other like commitment of the obligations, liabilities
(fixed, contingent or otherwise) or indebtedness of another Person;
“Intellectual
Property” means all intellectual property rights whether protected, created or arising under the Laws of the United
States, Australia, or any other jurisdiction, including the following: (i) patents and patent applications; (ii) trademarks and
service marks, including all applications and registrations and goodwill related to the foregoing; (iii) copyrights, including
all applications and registrations related to the foregoing (including, without limitation, for all designs); (iv) Internet domain
names; (v) telephone numbers, electronic mail addresses and social media accounts and registrations, including but not limited
to accounts and registrations with Facebook, LinkedIn, Twitter, and other similar services; and (vi) trade secrets, know-how,
ideas, creative works, inventions, discoveries, methods, processes, technical data, specifications, research and development information,
technology, software or computer programs, and data base;
“Knowledge
of the Seller” or “Seller’s Knowledge” or a similar phrase shall mean, with respect
to any matter, the actual knowledge of the Seller, or the Principal Owners as at the date of this agreement;
“Laws”
means all statutes, laws, codes, ordinances, regulations, rules, orders, judgments, writs, injunctions, acts or decrees of any
Government entity;
“Liability”
means any liability or obligation of whatever kind or nature (whether known or unknown, whether asserted or unasserted, whether
absolute or contingent, whether accrued or unaccrued, whether liquidated or unliquidated, and whether due or to become due), including
without limitation any liability for Taxes;
“Lien”
shall mean any mortgage, pledge, security interest, encumbrance, lien (statutory or other) or conditional sale agreement, and
including claims on title and liens in favor of contractors, carriers, warehousemen, mechanics, materialmen, and subcontractors
and statutory or common law liens to secure claims for labor, materials or supplies, and other similar liens and encumbrances;
“Material
Adverse Effect” when used in connection with an entity, means any change, event, circumstance, condition or effect
that is or is reasonably likely to be, individually or in the aggregate, materially adverse to: (i) the condition (financial or
otherwise), capitalization, properties, prospects, products, assets (including intangible assets), Intellectual Property, liabilities,
business, operations or results of operations of such entity and its subsidiaries, taken as a whole, or (ii) such entity’s
ability to consummate the Share Purchase or to perform its obligations under this Agreement;
“Material
Adverse Event” means any untoward or negative occurrence (including, without limitation, physical injury) related
to the Business or the use of the Products and which has a Material Adverse Effect;
“Person”
shall mean and include any individual, corporation, limited liability company, partnership, joint venture, association, joint-stock
company, trust, and any other unincorporated organization or Government;
“Taxes”
shall mean (i) all federal, state, local or foreign taxes, including, but not limited to, income, gross income, gross receipts,
capital, production, excise, employment, sales, use, transfer, transfer gain, ad valorem, premium, profits, license, capital stock,
franchise, severance, stamp, withholding, employment, unemployment, disability, worker’s compensation, payroll, utility,
windfall profit, custom duties, personal property, real property, environmental, registration, alternative or add-on minimum,
estimated and other taxes, governmental fees or like charges of any kind whatsoever, and (ii) any interest, penalties, fines,
loss, damages, liability, expense or additions thereto whether disputed or not; and (iii) any transference liability in respect
of any items described in clauses (i) or (ii) payable by reason of contract assumption, transference liability, operation of law,
or otherwise;
“Tax
Return” means any return, declaration, report, claim for refund, information return or statement relating to any
taxes, including any schedule or attachment thereto and including any amendment therof;
“Transaction
Documents” shall mean this Agreement, the Share certificates, and the other exhibits and schedules hereto and thereto,
and all other agreements, instruments, certificates and other documents to be entered into or delivered by any Party in connection
with the transactions contemplated to be consummated pursuant to any of the foregoing;
The
parties agree that for the purposes of calculating the Australian to US dollar conversion, the exchange rate will be $1.00:US$0.70.
| (a) | Purchase
and Sale of the Company Shares. Upon the terms and subject to the conditions herein
set forth, Seller agrees to sell, convey, transfer, assign and deliver to Buyer and Buyer
agrees to purchase and accept from Seller, on the Closing Date, the Company Shares as
set forth on Schedule 2(a), being all of the fully paid ordinary shares in the
capital of the Company. |
| (b) | Surrender
of the Company’s Share Certificates; Further Cooperation. At the Closing, Seller
will deliver to Buyer its certificates representing all of Company Shares owned by Seller.
From time to time after the Closing Date, without further consideration, Seller will
execute and deliver such other instruments of conveyance and transfer and take such other
action as Buyer reasonably may request to effectuate the transaction contemplated by
this Agreement. Seller will furnish Buyer with such information and documents in Seller’s
possession or under Seller’s control or that Seller can execute or cause to be
executed as will enable Buyer to prosecute any and all pending claims, applications and
the like which that be assigned hereunder. |
| (a) | Initial
Consideration. Upon the terms and subject to the conditions set forth in this Agreement,
in reliance on the representations, warranties, covenants and agreements of Seller contained
herein, the consideration payable to Seller for the Share Purchase shall be an amount
of (i) Three Million Four Hundred Fifty Thousand Australian dollars ($3,450,000 AUD),
which will be paid by Buyer at Closing (the “Cash Consideration”);
plus (ii) Three Million Five Hundred Seventy One Thousand Four Hundred and Twenty-Eight
(3,571,428) shares of the Common Stock of Buyer (the “Equity Consideration”)
(collectively, the “Purchase Price”). |
| (b) | Earn-out
Payment. As additional consideration for the Company Shares, at such times as provided
in this Section 3(b) if the Calculation Period EBITDA is $5,000,000 AUD or more,
Buyer shall pay to Seller an amount, if any (the “Earn-out Payment”),
equal to (i)(A) the Calculation Period EBITDA; multiplied by (B) the Earn-out
Multiple; minus (ii) the total of $6,500,000 AUD plus the Top Up EBITDA. In the
event that the number produced by the formula above is negative, no payment shall be
made. In no event shall Buyer be obligated to pay Seller more than Three Million Five
Hundred Thousand Dollars ($3,500,000 AUD) in the aggregate for Earn-out Payment. The
parties agree to release the Earn-out Payment from the Escrow Account and pay this amount
to Seller pursuant to the terms and conditions of this Agreement and the Escrow Agreement. |
| (c) | If
the Calculation Period EBITDA is initially less than $5,000,000 AUD (“Initial
Period EBITDA”), the parties agree that an amount equal to (A) $5,000,000
AUD, less (B) the Initial Period EBIDTA (“Top Up EBITDA”)
will count towards the Calculation Period EBITDA for the purposes of the Earn-out
Payment calculation in Section 3(b); provided, however, in no event will the Top
Up EBITDA exceed $2,357,912 AUD. |
| (d) | Procedures
Applicable to Determination of the Earn-out Payment. |
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| (i) | On
or before July 15, 2016 Buyer will prepare and deliver to Seller a written statement
(an “Earn-out Calculation Statement”) setting forth in reasonable
detail its determination of the Calculation Period EBITDA as of June 30, 2016 and its
calculation of any resulting Earn-out Payment (an “Earn-out Calculation”). |
|
| (ii) | Seller
will have twenty (20) days after receipt of the Earn-out Calculation Statement (the “Review
Period”) to review the Earn-out Calculation Statement. During the Review
Period, Seller will have the right to inspect the Company’s books and records for
the purposes reasonably related to the determinations of Adjusted EBITDA and the resulting
Earn-out Payment. Prior to the expiration of the Review Period, Seller may object to
the Earn-out Calculation set forth in the Earn-out Calculation Statement by delivering
a written notice of objection (an “Earn-out Calculation Objection Notice”)
to Buyer. Any Earn-out Calculation Objection Notice must specify the items in the applicable
Earn-Out Calculation disputed by Seller and must describe in reasonable detail the basis
for such objection, as well as the amount in dispute. If Seller fails to deliver an Earn-out
Calculation Objection Notice to Buyer prior to the expiration of the Review Period, then
the Earn-out Calculation set forth in the Earn-out Calculation Statement will be final
and binding on the Parties and: |
| 1. | the
Earn-Out Payment will be payable to the Seller within ten (10) days (or such other period
agreed by the parties) of the expiration of the Review Period; and |
| 2. | the
Buyer and the Seller agree and undertake to immediately provide executed written instruct
ions (in accordance with the requirements of the Escrow Agreement) to the Escrow Agent
to disburse an amount equal to the Earn-out Payment (in Australian dollars) to the Seller. |
|
| (iii) | If
Seller timely delivers an Earn-out Calculation Objection Notice, Buyer and Seller will
negotiate in good faith to resolve the disputed items and agree upon the resulting amount
of Adjusted EBITDA and the resulting Earn-out Payment. If Buyer and Seller are unable
to reach an agreement within seven (7) days after such Earn-out Calculation Objection
Notice has been given, all unresolved disputed items must be promptly referred to an
impartial internationally recognized firm of independent certified public accountants,
other than Seller’s and Buyer’s accountants (the “Independent
Accountant”). The Independent Accountant must be directed to render a written
report on the unresolved disputed items as promptly as practicable, but in no event greater
than seven (7) days after such submission to the Independent Accountant, and to resolve
only those unresolved disputed items set forth in the Earn-out Calculation Objection
Notice. If unresolved disputed items are submitted to the Independent Accountant, Buyer
and Seller must each furnish to the Independent Accountant such work papers, schedules
and other documents and information relating to the unresolved disputed items as the
Independent Accountant may reasonably request. The Independent Accountant must resolve
the disputed items based solely on the applicable definitions and other terms in this
Agreement and the presentations by Buyer and Seller, and not by independent review. The
resolution of the dispute and the calculation of Adjusted EBITDA that is the subject
of the applicable Earn-out Calculation Objection Notice by the Independent Accountant
will be final and binding on the Parties and: |
| 1. | the
Earn-Out Payment will be payable to the Seller within 10 days (or such other period agreed
by the parties) of the resolution of the dispute and calculation of the Adjusted EBITDA
by the Independent Accountant; and |
| 2. | the
Buyer and the Seller agree and undertake to immediately provide executed written instruct
ions (in accordance with the requirements of the Escrow Agreement) to the Escrow Agent
to disburse an amount equal to the Earn-out Payment (in Australian dollars) to the Seller. |
|
| (iv) | The
fees and expenses of the Independent Accountant will be borne equally by Seller and Buyer. |
| (e) | Post-closing
Operation of the Company. The Buyer acknowledges that given the method in which the
Earn-out Payment is calculated, it is critical that the Buyer preserves the essence and
character of the Business during the Calculation Period. |
| (f) | Subject
to the terms of this Agreement, subsequent to the Closing, Buyer will have sole discretion
with regard to all matters relating to the operation of the Company; provided,
that, during the Calculation Period (i) Buyer shall not change the name of the Company’s
product “Flat Tummy Tea”; (ii) Buyer shall operate the Business in the ordinary
course of business in the same or similar manner and style using methods, practices,
approaches and policies as have been used (or similar to those that have been used) by
the Seller and the Principal Owners in the period prior to Closing; (iii) Buyer shall
notify Seller as soon as reasonably practicable of any Material Adverse Effect on the
Company or the Business; (iv) Buyer shall not make any capital expenditure payments that
are unnecessary or larger than necessary in the context of the needs of the Business;
(v) the Buyer shall use all reasonable endeavours to manage and conduct the Business
as a going concern with all due care and in accordance with normal and prudent practice
(having regard to the nature of the Business and good commercial practice and so as to
comply with all applicable Laws), in order to preserve the value of the Company; and
(vi) Buyer shall protect and maintain the Business and the assets of the Company, in
order to properly preserve and grow their value. Buyer shall not, directly or indirectly,
take any actions in bad faith that would have the purpose of avoiding or reducing any
of the Earn-out Payments hereunder. |
| (g) | Right
to Set-off. Buyer will have the right to withhold and set off against any amount
otherwise due to be paid pursuant to this Section 3 the amount of Buyer’s
Losses to which any of the Buyer Indemnitees are finally determined to be entitled to
under Section 12. |
| (h) | Security.
The Parties understand and agree that (i) the contingent rights to receive any Earn-out
Payment shall not be represented by any form of certificate or other instrument, are
not transferable, except by operation of Laws relating to descent and distribution, divorce
and community property, and do not constitute an equity or ownership interest in Buyer
or the Company, (ii) Seller shall not have any rights as a security holder of Buyer or
the Company as a result of Seller’s contingent right to receive any Earn-out Payment
hereunder, and (iii) no interest is payable with respect to any Earn-out Payment. However,
the Buyer agrees that the amount deposited into the Escrow Account pursuant to clause
3(i) must not be secured by or form part of any secured property in any security document
or arrangement granted by either the Buyer or the Company. The Buyer also agrees that
any security granted by the Company or the Buyer, and the enforcement of any such security,
shall be subject to the Buyer’s obligations to pay the Earn-out Payment and to
deposit the amounts in accordance with clause 3(i). |
| (i) | Earn-Out
Account. During the Calculation Period the Buyer shall, in each month that the Company’s
Adjusted EBITDA exceeds four hundred thousand Australian dollars ($400,000 AUD), deposit
seventy percent (70%) of such month’s Adjusted EBITDA into an Australian dollar
denominated escrow account (the “Escrow Account”) established
pursuant to the terms and conditions of a customary escrow agreement (the “Escrow
Agreement”) with Wyrick Robbins Yates & Ponton LLP (the “Escrow
Agent”) and where the Escrow Agent, Seller and Buyer are parties thereto.
Each monthly deposit shall be made within thirty (30) days after the end of such month.
The parties agree that the Escrow Agreement shall be provided and executed at Closing.
The Escrow Agreement shall reflect in all material respects the terms and conditions
of release of the Escrow Amount to Seller or Buyer, as applicable, set forth in this
Section 3. The Escrow Amount shall be held in the Escrow Account until the final
determination of the Earn-Out Payment in accordance with this Section 3. To the
extent that there is a shortfall between the Earn-out Payment and the amount in the Escrow
Account, for any reason, including as a result of foreign currency exchange, the Buyer
must pay the difference to the Seller at the same time as the Earn-out Payment is released
by the Escrow Agent. |
| 4. | Representations
and Warranties of Seller and the Company. |
As
a material inducement to Buyer to enter into this Agreement and to consummate the transactions contemplated hereby, Seller, the
Principal Owners, and the Company jointly and severally represent and warrants as of the date hereof, except as set forth on the
Disclosure Schedules (or as disclosed in any other section, subsection or clause of the Disclosure Schedule to the extent that
the applicability to such other section, subsection or clause is reasonably apparent on its face) to Buyer as set forth below.
| (a) | Corporate
Organization. The Company is a proprietary limited company duly organized, validly
existing and in good standing under the laws of its jurisdiction of formation. The organizational
documents which have been furnished to Buyer reflect all amendments made thereto at any
time prior to the date of this Agreement and are correct and complete. The minute books
and other books and records of the Company, to the extent such minutes exist, have been
furnished to Buyer. |
| (b) | Qualification
to Do Business. The Company has full corporate power and authority to carry on its
business as now being conducted and is entitled to own, lease, or operate the properties
and assets now owned, leased, or operated by it. The Company is qualified to do business,
is in good standing, and to the Seller’s Knowledge has all required and appropriate
licenses in each jurisdiction except jurisdictions in which failure to obtain or maintain
such qualification, good standing, or licensing (i) would not, individually or in the
aggregate, have or reasonably could be expected to have a Material Adverse Effect or
(ii) would result in a material breach of any of the other representations, warranties,
or covenants set forth in this Agreement. The Company is duly qualified to conduct the
Business as presently conducted by the Company as an Australian corporation. No consent,
waiver, approval, order, or authorization of, or registration, declaration, or filing
with, any court, administrative agency, or commission or other governmental authority
or instrumentality (“Governmental Entity”), or any third party,
is required to be made or obtained by Seller or the Company in connection with the execution
and delivery of this Agreement by Seller or the consummation by Seller of the transactions
contemplated hereby, except for such consents, authorizations, filings, approvals and
registrations that, if not obtained or made, would not have a Material Adverse Effect
on the Company or such consents, authorizations, filings, approvals and registrations
that must occur following Closing. |
| (c) | Authorization
and Validity of Agreement. Seller and the Principal Owners have all requisite power
and authority to enter into the Transaction Documents and to carry out their obligations
thereunder. The execution and delivery of the Transaction Documents and the performance
of Seller’s and the Principal Owners’ obligations thereunder have been duly
authorized by all necessary corporate, shareholder or member action of Seller and the
Principal Owners, and no other proceedings on the part or in respect of Seller or the
Principal Owners is necessary to authorize such execution, delivery and performance.
The Transaction Documents have been duly executed by Seller and the Principal Owners
and constitute its valid and binding obligations, enforceable against Seller and the
Principal Owners in accordance with their respective terms, except as may be limited
by applicable bankruptcy, insolvency, moratorium or similar laws of general application
relating to or affecting creditors’ rights generally and except for the limitations
imposed by general principles of equity. |
| (d) | No
Conflict or Violation. Subject to obtaining any consents and approvals set forth
in Schedule 4(d), the execution, delivery and performance by Seller of the Principal
Owners of the Transaction Documents does not and will not to the Seller’s Knowledge
(i)(A) conflict with or result in a breach of the terms, conditions, or provisions of,
(B) constitute a default under (whether with or without the passage of time, the giving
of notice or both), (C) give any third party the right to modify, terminate or accelerate
any obligation under, (D) result in a violation of, or (E) require any consent, exemption
or other action by or notice or declaration to, or filing with, any third party of any
Government entity pursuant to (1) any organizational documents of the Company; (2) any
provision of law, rule or regulation, or any order, judgment or decree of any court or
other governmental or regulatory authority; or (3) any Contract, lease, sublease, occupancy
agreement, loan agreement, mortgage, security agreement, trust indenture or other agreement
or instrument to which the Company is a party or by which the Company is bound or to
which any of the Seller’s or Principal Owners’ properties or assets is subject;
(ii) result in the creation of any Lien or Tax upon the equity or assets of Seller or
the Principal Owners; or (iii) otherwise interfere in any material manner with the Business. |
| (e) | Capitalization.
The Company Shares are paid up. All of the Company Shares are duly authorized, validly
issued and fully paid. There are no outstanding or authorized options, warrants, purchase
rights, subscription rights, conversion rights, exchange rights, or other Contracts or
commitments that could require the Company to issue, sell, or otherwise cause to become
outstanding any of its shares. There is no outstanding or authorized share appreciation,
phantom shares, profit participation, or similar rights with respect to the Company.
There are no voting trusts, proxies, or other agreements or understandings with respect
to the voting of the shares of the Company. |
| (f) | Assets.
The Company has good and marketable title to, or a valid leasehold interest in, all
of its assets and properties, free and clear of all Encumbrances, except for liens for
Taxes not yet due and payable, and mechanics’ liens, materialmen’s liens,
and other liens arising by operation of law, which liens do not in any case materially
and adversely affect the Company’s title to its assets, the Company’s use
of its assets or the value of such assets. The Company’s assets which are tangible
personal property are in reasonably good and serviceable condition, normal wear and tear
excepted, have been maintained in accordance with normal industry practice, and are suitable
for the purposes for which they are presently used. The Company owns or leases all equipment
or other tangible assets that are necessary for the conduct of the Business as presently
conducted. No assets are used in the Business that are not owned or leased by the Company
and not included in the Assets. The Company operates no business other than the Business
and related activities. |
| (g) | Subsidiaries.
The Company does not own, directly or indirectly, any shares or other interests in
any other entity. |
| (h) | Financial
Statements. Attached hereto as Schedule 4(h) are: the Company’s most
recent balance sheet, and income statement as of October 31, 2015 (the “Financial
Statements”). The Financial Statements have been prepared using consistent
accounting principles, presentations, methods, standards, policies, practices, classifications,
estimation and adjustment methodologies, assumptions, and procedures. The Company’s
books of account and records are complete and correct and accurately reflect all of the
assets, liabilities, transactions, and results of operations of the business of the Company.
The Financial Statements fairly present in all material respects the results of operations
of the Business as of the dates thereof. Seller has delivered to Buyer or its representatives
copies of the Financial Statements. |
| (i) | Absence
of Certain Changes or Events. Since October 31, 2015, the Company has conducted the
Business only in the ordinary course consistent with past practices. Without limiting
the generality of the foregoing, since October 31, 2015: |
|
| (i) | there
has been no increase in the compensation or benefits paid or payable by the Company,
other than in the ordinary course of business and consistent with past practices, to
any of its officers, directors, employees, agents, consultants or shareholders, including
any grant of severance or termination pay to any director, officer or employee of the
Company, or any deferred compensation or similar agreement (or any amendment to any such
existing agreement) with any director, officer or employee of the Company; |
|
| (ii) | there
has been no declaration, setting aside, or payment of dividends or distributions in respect
of the Company Shares, any split up or other recapitalization in respect of the Company
Shares or any direct or indirect redemption, purchase by the Company, or other acquisition
by the Company of any such shares, except dividends declared and paid, or distributions
made, prior to the Closing Date to Seller in the ordinary course of business consistent
with the past practices of the Company; |
|
| (iii) | the
Company has not waived or compromised any right of material value or any payment, direct
or indirect, of any material debt, liability, or other obligation; |
|
| (iv) | there
has been no Material Adverse Effect on the Company; |
|
| (v) | there
has been no issuance, transfer, sale, or pledge by the Company of any Company Shares
or other securities or any commitment, option, right, or privilege under which the Company
is or may become obligated to issue any shares or other securities; there has been no
indebtedness for borrowed money incurred by the Company except such as may have been
incurred or entered into in the ordinary course of business; no loan has been made or
agreed to be made by the Company, nor has the Company become liable or agreed to become
liable as a guarantor with respect to any loan or other indebtedness of the Company or
Seller, or any third party; |
|
| (vi) | there
has been no sale, assignment, or transfer of, or royalty arrangement with respect to
the Company’s trade names, trademarks, service marks, domain names, web addresses,
copyrights (or any interest therein), patent, or logos of material value, or any patent,
trademark, service mark, domain name or web address or copyright applications (or any
interest therein) used (or that were, or are intended to be used) in the operations of
the Business; |
|
| (vii) | there
has been no sale, lease or disposition of, any material property or asset, tangible or
intangible, of the Company; |
|
| (viii) | there
has been no actual or, to any Seller’s Knowledge, threatened termination or loss
of any (A) material contract, lease, license, permit or other agreement to which the
Company was or is a party other than terminations of contracts upon completion of work;
(ii) certificate, license, or other authorization required for the continued operation
by the Company of any material portion of the Business; or (B) customer or other revenue
source, which termination or loss could reasonably be expected to result in loss or revenues
to the Company in excess of Twenty-five Thousand Dollars ($25,000.00) per year, and there
is no event known to Seller (including, without limitation, the transactions contemplated
hereby) that could reasonably be expected to result in any such termination or loss; |
|
| (ix) | there
has been no resignation or termination of employment of any key officer or employee of
the Company or, to any Seller’s Knowledge, any impending resignation or termination
of employment of any such officer or employee other than the Principal Owners which will
resign following the Calculation Period; |
|
| (x) | there
has been no agreement or commitment by the Company or Seller to do any of the things
described in this Section 4(i). |
|
| (i) | the
Company has timely filed all material Tax Returns that it was required to file. All such
Tax Returns as so filed disclose all Taxes required to be paid for the periods covered
thereby. All material Taxes due and owing by the Company (whether or not shown on any
Tax Return) have been paid or provided for in the Company’s balance sheet. The
Company is not currently the beneficiary of any extension of time within which to file
any Tax Return. There are no Liens for Taxes (other than Taxes not yet due and payable)
upon any of the assets of the Company. The Company has withheld and paid, or made provision
in its balance sheet for, all Taxes required to have been withheld and paid in connection
with amounts paid or owing to any employee, independent contractor, creditor, shareholder,
or other third party, and all Tax Returns and forms required with respect thereto have
been properly completed and timely filed. Upon and after the acquisition of the Company
Shares by Buyer, Buyer will have no, and will not be subject to any, liability, as a
successor or otherwise, for or with respect to any Taxes of or pertaining to (i) the
Company or (ii) the Business for any period or transactions arising before the Closing
other than as provided for on its balance sheet. For the avoidance of doubt, the Seller
and Principal Owners do not represent or warrant that there will not be any taxes payable
or liabilities arising on or after Closing in relation to the Share Purchase. |
|
| (ii) | There
is no material dispute or claim concerning any Tax liability of the Company either (A)
claimed or raised by any authority in writing or (B) to the Knowledge of the Company. |
| (k) | Absence
of Undisclosed Liabilities; Indebtedness. Except as set forth in the Company’s
balance sheet, the Company has no indebtedness or liability, absolute or contingent,
involving, affecting or relating to the Business, the Products, or the transactions contemplated
by the Transaction Documents. |
| (l) | Intellectual
Property. |
|
| (i) | “IP
Assets” shall mean all of the following materials owned or licensed by
the Company with respect to the Business: (A) the proprietary formulas for the Products;
(B) the domain names listed on Schedule 4(l) (collectively, the “Domain
Names”); (C) all the content on and accessible through the websites associated
with the Domain Names, including demos (collectively, the “Website Content”);
and (D) the entire Business marketing database consisting of all available customer information
and all marketing, advertising and promotional materials, including logos, colors, videos,
booklet designs, catalogs, solicitations, email templates, advertisements and all other
Business marketing materials (whether in draft or final form) (collectively, the “Marketing
Materials”). |
|
| (ii) | Schedule
4(l) lists all patented, registered, applied-for, and other Intellectual Property
used in the Business, and all Intellectual Property of the Company licensed to any third
Person (collectively, the “Business Intellectual Property”),
including the registration and application information, date of application or issuance
and relevant jurisdiction as to each, and whether or not the Business Intellectual Property
is owned or licensed. Business Intellectual Property that is licensed by the Company
from a third party is “Licensed Intellectual Property”. |
|
| (iii) | The
Company owns, or will own at Closing, all right, title and interest in and to or has
a valid and enforceable license or right to use, all IP Assets, Business Intellectual
Property, and the Licensed Intellectual Property, free and clear of all Liens, and all
patented or registered Business Intellectual Property is valid and enforceable. The Company
has taken commercially reasonable steps to maintain the confidentiality of all information
that constitutes a trade secret of the Business. The Company has the valid right to transfer
the Intellectual Property included in the Business to Buyer as contemplated hereunder. |
|
| (iv) | Except
as set forth on Schedule 4(l), (A) to the Knowledge of the Seller, the conduct
of the Business, including the delivery and distribution of the Products, has not infringed
and does not infringe on any Intellectual Property or any other proprietary rights of
any Person, including but not limited to the rights of privacy or publicity; (B) to the
Knowledge of the Seller, no Person is infringing, violating or misappropriating any Business
Intellectual Property; (C) to the Knowledge of the Seller the Company, has not taken
any action, or failed to take any action, during prosecution of any application that
could reasonably be expected to result in the invalidation or unenforceability of any
registered Business Intellectual Property; (D) the Company is not currently a party to
any pending suit, claiming any alleged infringement or misappropriation of any Business
Intellectual Property; (E) the Company has not received within the prior three (3) years
any written notice, and is not currently a party to any pending suit, claiming any alleged
infringement or misappropriation of the Intellectual Property rights of other Persons
with respect to its or their use of Intellectual Property or the Products; (F) the Company
has not entered into any Contract that includes a forbearance to sue or settlement Contract
with respect to any Intellectual Property and (G) the Company has not received any written
notice of any claim within the prior three (3) years, and is not currently a party to
any pending suit, which challenges the validity or enforceability of, the Company’s
ownership of or right to use, any Intellectual Property (excluding, for clarity, office
actions) or the Products. With respect to the material Intellectual Property of the Company
(e.g., product formulas, etc.), Seller has secured valid written confidentiality Contracts
and assignments of Intellectual Property from all consultants, contractors, Employees,
and customers who contribute or have contributed to the creation, conception, reduction
to practice or other development of such Intellectual Property developed on behalf of
Seller. |
|
| (v) | To
the Knowledge of the Seller, no Product provided or distributed by Seller in its conduct
of the Business: (A) violates any Law in any material respect; (B) includes any information
or material that is defamatory in any material respect; or (C) infringes any right of
publicity, privacy, or other right of any Person in any material respect. |
| (m) | Compliance
with Law. To the Knowledge of the Seller, the manufacture and sale of the Products
and the operation of the Business has been conducted in material compliance with all
applicable Laws and other requirements of all courts and other governmental or regulatory
authorities having jurisdiction over the Company and its assets, properties and operations.
The Company has not received notice of any violation (or possible violation) of any such
Law or other legal requirement, and the Company is not in default with respect to any
order, writ, judgment, award, injunction or decree of any federal, state or local court
or Governmental or regulatory authority, applicable to the Company, the Business, or
the Company Shares. To the Seller’s Knowledge, the Company holds all Permits required
for the conduct of the Business and the ownership of its properties. No written notices
have been received by the Company alleging the failure to hold any Permit. To the Seller’s
Knowledge, the Company is in compliance with all terms and conditions of all such Permits.
All of such Permits shall be available for use by Buyer immediately after the Closing.
Without limiting the foregoing, the Company has not received any warning letter or untitled
letter, report of inspectional observations, establishment inspection reports, notices
of violation, clinical holds, enforcement notices or other documents from the any governmental
entity or any institutional review board or independent ethics committee alleging a lack
of material compliance by Company with any Laws. No “bulk sales” or similar
Law applies to the transactions contemplated by this Agreement. |
| (n) | Litigation.
There are no claims, Actions, suits, proceedings, complaints or investigations pending
or, to the Knowledge of the Seller, threatened before any court or governmental or regulatory
authority, domestic or foreign, or before any arbitrator of any nature, brought by or
against the Company or any of its officers, directors, employees, agents or Affiliates,
or the Principal Owners, involving, affecting or relating to the Company, the Business,
the Company Shares, or the transactions contemplated by the Transaction Documents. |
| (o) | Brokerage.
Except for payment to be made to Go Capital set forth on Schedule 4(o), the Company
has not incurred, and shall not incur, any brokerage, finder’s or similar fee in
connection with the transactions contemplated by this Agreement. |
| (p) | Insurance.
The Company is currently insured by insurers unaffiliated with the Company with respect
to its properties, assets and operation of the Business in such amounts and against such
risks which are appropriate and customary for the type of business conducted by the Company
with customary deductibles and retained amounts. With respect to each insurance policy
held by the Company (the “Insurance Policies”) (i) such Insurance
Policy is legal, valid, binding and in full force and effect; (ii) the Company is not
in default under such Insurance Policy; and (iii) the Company has delivered a true and
correct copy of such Insurance Policy to Buyer. There are no claims by the Company pending
under any such Insurance Policies and the Company has not been informed that coverage
has been questioned, denied or disputed by the underwriters of such Insurance Policies
with respect to any such claims. |
| (q) | Employment
Matters. Schedule 4(q) separately sets forth all of the Employees as of the
date hereof, including for each such Employee: name, job title, designation, work location
(identified by street address), current compensation paid or payable, all wage arrangements,
fringe. No Employee is a party to, or is otherwise bound by, any Contract or arrangement,
including any confidentiality or non-competition Contract, that in any way adversely
affects or restricts the performance of such Employee’s duties. Each current Employee
has executed, or will have executed as of Closing, a nondisclosure and assignment-of-rights
Contract for the benefit of the Company vesting all rights in work product created by
the Employee, during the Employee’s employment or affiliation with the Company,
in the Company. To the Knowledge of the Seller and except as set forth on Schedule
4(q), no Employee other than the Principal Owners intends to terminate his or her
employment with the Company. The Company has, or will have no later than the Closing
Date, included provision for all accrued salaries, bonuses, commissions, wages, severance
and accrued vacation pay of the Employees due to be paid through the Closing Date in
the Company’s accounts / financial statements. The Company is in compliance, in
all material respects, with all Laws governing the employment of labor. |
| (r) | Contractor
Matters. The Seller has or will, prior to the Closing Date, disclose a list
of the name (if an entity, including the name of the individuals employed by or providing
service on behalf of such entity) and contact information of each material independent
contractor, consultant, freelancer or other service provider (collectively, “Contractors”)
used by the Company at any point during the prior one (1) year. A copy of each Contract
relating to the services any Contractor provides to the Business has been provided to
the Company. To the Knowledge of the Seller, no Contractor used by the Company is a party
to, or is otherwise bound by, any Contract or arrangement with any third party, including
any confidentiality or non-competition Contract, that in any way adversely affects or
restricts the performance of such Contractor’s duties for the Company. To the Knowledge
of the Seller, no current Contractor used by the Company intends to terminate his or
her or its relationship with the Company. The Company has no obligation or Liability
with respect to any Taxes (or the withholding thereof) in connection with any Contractor.
The Company has properly classified, pursuant to any applicable Law, all Contractors
used by the Company at any point. |
| (s) | Employee
Benefits. The Company does not maintain or contribute to any Employee Benefit Plans
other than in respect to the bonus and incentives available to its Employees. . |
| (t) | Environmental
and Safety Matters. The Company has complied and is in compliance with all Environmental
Laws, including but not limited to all Permits required by Environmental Laws for the
conduct of the business operations of the Company and the disposition of all hazardous
materials in accordance with all applicable Environmental Laws in all material respects.
The Company has not received any outstanding and unresolved written or oral notices,
reports or other information regarding any actual or alleged violation of Environmental
Laws by the Company, or any Liabilities or potential Liabilities, including any remedial
obligations, relating to any of them or their facilities arising under Environmental
Laws. |
| (u) | Real
Property. Schedule 4(u) sets forth the address of each leased real property
of the Company (the “Leased Real Property”), and a true and
complete list of all leases (including all amendments, extensions, renewals, Guarantees
and other Contracts with respect thereto) for each such Leased Real Property (including
the date and name of the parties to such lease or license document) (the “Leases”).
Seller has delivered to Buyer a true and complete copy of each Lease, and in the case
of any oral Lease, a written summary of the material terms of such Lease. With respect
to each of the Leases: (i) such Lease is legal, valid, binding, enforceable and in full
force and effect; (ii) the transactions set forth in this Agreement do not require the
consent of any other Person to such Lease, or such consent has been obtained, shall not
result in a breach of or default under such Lease, or otherwise cause such Lease to cease
to be legal, valid, binding, enforceable and in full force and effect on identical terms
following the Closing; (iii) the Company’s possession and quiet enjoyment of the
Leased Real Property under such Lease has not been disturbed, and there are no disputes
with respect to such Lease; (iv) the Company, and any other party to the Lease, is not
in breach or default under such Lease, and no event has occurred or circumstance exists
which, with the delivery of notice, the passage of time or both, would constitute such
a breach or default, or permit the termination, modification or acceleration of rent
under such Lease; (v) no security deposit or portion thereof deposited with respect to
such Lease has been applied in respect of a breach or default under such Lease which
has not been redeposited in full; (vi) the Company does not owe, or shall not owe in
the future, any brokerage commissions or finder’s fees with respect to such Lease;
(vii) the other party to such Lease is not an Affiliate of, and otherwise does not have
any economic interest in, the Company; (viii) the Company has not subleased, licensed
or otherwise granted any Person the right to use or occupy such Leased Real Property
or any portion thereof; (ix) the Company has not collaterally assigned or granted any
other security interest in such Lease or any interest therein; (x) there are no Liens
on the estate or interest created by such Lease; and (xi) all buildings, structures,
improvements, fixtures, building systems and equipment, and all components thereof, included
in the applicable Leased Real Property are in good condition and repair (fair wear and
tear excepted). The Company does not own any real property, nor has it ever owned any
real property. |
| (v) | Affiliate
Transactions. No shareholder, officer, director, member or Affiliate of the Company
or any individual related by blood, marriage or adoption to any such individual or any
entity in which any such Person or individual owns any beneficial interest, is a party
to any Contract or transaction with the Company or has any interest in any real, tangible
or intangible asset or property used by the Company. |
| (w) | Product
and Service Warranties; Adverse Events. The Company has made no express warranty
or Guarantee to any customer or Client as to services or goods provided by the Company
other than those required to be provided by Law. There is no pending or, to the Knowledge
of the Seller, threatened claim alleging any breach of any warranty or Guarantee. There
have not been any Material Adverse Events with respect to the Products or the Business. |
| (x) | Guaranties.
The Company is not a guarantor or otherwise liable for any liability, indebtedness or
other obligation of any other Person. |
| (y) | Status.
Seller represents and warrants that (i) it has had an opportunity to discuss the business,
management and financial affairs of Buyer, has had access to, the management of Buyer,
and has had the opportunity to review the information set forth in Buyer’s public
filings and any other information requested by Seller, (ii) Buyer will be relying upon
Seller’s representations and warranties set forth herein in offering the Company
Shares to it, and (iii) it has retained and consulted with a “Purchaser Representative,”
as such term is defined in Rule 501 of Regulation D promulgated under the Securities
Act of 1933, as amended (the “1933 Act”). Seller further
represents and warrants that: (i)(A) it recognizes that ownership of the Equity Consideration
involves substantial risks, including a risk of total loss of the value of the Equity
Consideration, and has taken full cognizance of and understands all of the risk factors
related to the ownership of the Equity Consideration; (B) it has sufficient knowledge
and experience in business and investments, including financial, business and tax matters,
to be capable of evaluating the merits and risks of ownership in the Buyer and making
an informed decision about ownership in the Buyer, and (C) it has an adequate net worth
and means of providing for its current needs and possible contingencies to sustain a
complete loss in the Equity Consideration; or (ii) it is an “accredited investor”
as such term is defined in Rule 501 of Regulation D. |
| (z) | Acquisition
for Own Account. This Agreement is made with Seller and Principal Owners in reliance
upon such parties’ representations to Buyer, which by its execution hereof Seller
and the Principal Owners hereby confirm that the Equity Consideration to be received
by it will be acquired for investment for Seller’s own account, not as a nominee
or agent, and not with a view to the sale or distribution of any part thereof other than
as permitted under the 1933 Act and that it has no present intention of selling, granting
participation in, or otherwise distributing the same other than what is permitted under
the 1933 Act. By executing this Agreement, Seller further represents that it does not
have any contract, undertaking, agreement, or arrangement with any person to sell, transfer
or grant participations to such person, or to any third person, with respect to the Equity
Consideration. |
| (aa) | No
Intention to Distribute. Seller and the Principal Owners understand that the Equity
Consideration shares have not been registered under the 1933 Act on the grounds that
the sale provided for in this Agreement and the issuance of securities hereunder is exempt
from registration under the 1933 Act, and that Buyer’s reliance on such exemption
is predicated in part on the representations set forth herein. Seller and the Principal
Owners realize that the basis for the exemption may not be present if, notwithstanding
such representations, Seller or the Principal Owners have in mind merely acquiring the
Equity Consideration shares for a fixed or determined period in the future, or for a
market rise, or for sale if the market does not rise. Seller and the Principal Owners
do not have any such intention. |
| (bb) | No
Registration. Seller and the Principal Owners understand that the Equity Consideration
may not be sold, transferred or otherwise disposed of without registration under the
1933 Act or an exemption therefrom, and that in the absence of an effective registration
statement covering the shares or an available exemption from registration under the 1933
Act, the Equity Consideration must be held indefinitely. In particular, Seller and the
Principal Owners are aware that the shares may not be sold pursuant to Rule 144 promulgated
under the 1933 Act unless all of the conditions of that Rule are met. Among the conditions
for use of Rule 144 may be the availability of current information to the public about
Buyer. The Seller and Principal Owners represent that, in the absence of an effective
registration statement covering the Equity Consideration shares, it will sell, transfer,
or otherwise dispose of such shares only in a manner consistent with its representations
set forth herein and then only in accordance with the provisions of this Agreement. |
| (cc) | Restrictions
on Transfer. Seller agrees that in no event will it make a transfer or disposition
of any of the Equity Consideration (other than pursuant to an effective registration
statement under the 1933 Act or a Rule 144 sale in compliance with the terms of such
Rule or pursuant to an exemption from the 1933 Act. Buyer shall cooperate with Seller
and Seller’s transfer agent in the removal of any legend on the shares constituting
the Equity Consideration to permit the trade or liquidation thereof in the marketplace
as permitted under Rule 144 of the 1933, if requested by Seller. |
| (dd) | Inventory.
All inventory of the Company, whether or not reflected in the Balance Sheet, consists
of a quality and quantity usable and salable in the ordinary course of business consistent
with past practice, except for obsolete, damaged, defective or slow-moving items that
have been written off or written down to fair market value or for which adequate reserves
have been established. All such inventory is owned by the Company free and clear of all
encumbrances, and no inventory is held on a consignment basis. The quantities of each
item of inventory are not excessive, but are reasonable in the present circumstances
of the Company. |
| (ee) | Customers.
The due diligence materials provided by the Company to Buyer includes information regarding
each customer who has paid consideration to the Company for goods or services rendered
for each of the last two (2) most recent fiscal years, and the amount of consideration
paid. |
| (ff) | Contracts;
Agreements. |
|
| (i) | Except
as disclosed in Schedule 4(ff), the Company is not a party to or bound by any oral or
written Contract or obligation that individually has a value in excess of $15,000, has
a term of greater than two (2) years or is otherwise material to the Company or its businesses,
operations, financial condition, properties or assets. |
|
| (ii) | Each
agreement, contract, plan, lease, arrangement or commitment required to be disclosed
pursuant to this Section 4(ff) (each, a “Material Contract”) is a valid and
binding agreement the Company and is in full force and effect with respect to the Company
and, to the Knowledge of the Seller, each other party thereto, and neither the Company,
nor to the Knowledge of the Seller, any other party thereto, is in default or breach
in any material respect under the terms of any such Material Contract, and, to the Knowledge
of the Seller, no event or circumstance has occurred that, with notice or lapse of time
or both, would reasonably be expected to constitute any event of default thereunder.
True and complete copies of each such Material Contract have been made available to Buyer.
The Company has fulfilled all material obligations required pursuant to each Material
Contract to have been performed by the Company prior to the date hereof, and, to the
Knowledge of the Seller, without giving effect to the Share Purchase and the other transactions
contemplated by this Agreement, the Company will be able to fulfill, when due, all of
its obligations under the Material Contracts that remain to be performed after the date
hereof. |
|
| (iii) | No
Person is renegotiating or seeking to renegotiate, or, to the Knowledge of the Seller,
has a right (absent any default or breach of a Material Contract) pursuant to the terms
of any Material Contract to renegotiate, any material amount paid or payable to the Company
under any Material Contract or any other material term or provision of any Material Contract.
The Company has not received any written indication or, to the Knowledge of the Company,
verbal indication of an intention to terminate or renegotiate the terms of any of the
Material Contracts by any of the parties to any of the Material Contracts. |
| (gg) | Seller
is a “non-U.S. Person” (as defined in Regulation S promulgated under the
1933 Act) and (i) the transaction contemplated by this Agreement constitutes an “offshore
transaction” (as such term is defined in Regulation S) and (ii) the Equity Consideration
will be for investment for the Seller’s own account, not as a nominee or agent,
and not with a view to the resale or distribution of any part thereof in the U.S. or
to a U.S. resident, and that Seller has no present intention of selling, granting any
participation in, or otherwise distributing the same. By executing this Agreement, Seller
further represents that it (A) does not have any contract, undertaking, agreement, or
arrangement with any person to sell, transfer, or grant participations to such person,
or to any third person in the U.S. or to a U.S. resident, with respect to any of the
Equity Consideration; (B) agrees to resell the Equity Consideration only in accordance
with the provisions of Regulation S of the 1933 Act, pursuant to registration under the
1933 Act, or pursuant to an available exemption from registration under the 1933 Act;
and (iii) agrees not to engage in hedging transactions with respect to such Equity Consideration
unless otherwise in compliance with the 1933 Act. Seller acknowledges that, to its knowledge,
neither the Buyer, nor any of its affiliates, nor any person acting on its or their behalf
has engaged in any directed selling efforts in violation of the requirements of Regulation
S. |
| 5. | Limitations
to representations and warranties of the Seller and the Company and Actions |
| (a) | The
Buyer acknowledges and agrees that the Seller, the Principal Owners and the Company have
disclosed or are deemed to have disclosed against the representations and warranties
of Seller and the Company, and the Buyer is aware of, and will be treated as having actual
knowledge of, all facts, matters and circumstances that: |
|
| (i) | are
within the actual knowledge of the Buyer or its advisers in relation to the Share Purchase;
and |
|
| (ii) | are
fairly disclosed in the Disclosure Schedules and the due diligence material in relation
to the Business and the Company that have been provided to the Buyer. |
| (b) | The
warranties and representations of the Seller and Principal Owners are given subject to
the disclosures or deemed disclosures described in Section 5(a). The Seller and the Principal
Owners will have no liability under the representation and warranty of Seller and the
Principal Owners to the extent that disclosure is made or is deemed to have been made
against the representations and warranties given under Section 4. |
| (c) | It
shall not be a breach of a representation and warranty of Seller and the Company, if
the facts, matters or circumstances giving rise to such Action are fairly disclosed or
are deemed to have been fairly disclosed under Section 5(a). |
| (d) | Neither
the Seller nor the Principal Owners are liable under an Action for any Liability to the
extent that the Buyer recovers, or is compensated for by any other means, from another
source whether by way of contract, indemnity or otherwise (including under a policy of
insurance or from a government agency). |
| (e) | This
Section 5 does not prevent the Buyer being entitled to commence an Action under this
Agreement or a Transaction Documents. However, if for any reason more than one amount
is paid in respect of the same Liability, the Buyer must procure that the amount in excess
of the amount of the Liability (less the costs and expenses of making the claim or commencing
the Action) is immediately repaid to the Seller to give full effect to this Section 5. |
|
| (i) | take
all reasonable actions (subject to being indemnified by Seller against all reasonable
costs and expenses incurred) to mitigate any Liability that may give rise to an Action,
including, if the Buyer is entitled to recover, or be compensated for by any other means,
any Liability from another source the Buyer must use all reasonable endeavours to recover
or be compensated for or procure that such Liability is recovered or compensated for
as soon as practicable from that source. The Buyer must notify its insurers of this Section
5(f). |
|
| (ii) | not
omit to take any reasonable action that would mitigate any Liability that may give rise
to an Action. |
| (g) | Neither
the Seller nor the Principal Owners are liable under any Action, other than Action in
respect of Tax, for any Liability to the extent that Liability: |
|
| (i) | (provisions
in accounts) has been included as a provision, allowance, reserve or accrual in the
Company’s accounts or financial statements that have been provided to the Buyer
or that arises in respect of a matter that has been noted in the Company’s accounts
or financial statements that have been provided to the Buyer; |
|
| (ii) | (contingent
losses): is contingent, unless and until the Liability becomes an actual Liability
and is due and payable; |
|
| (iii) | (change
of law or interpretation): arises from: |
|
| (iv) | the
enactment or amendment of any legislation or regulations; |
|
|
| (1) | a
change in the judicial or administrative interpretation of the law; or |
|
|
| | |
|
|
| (2) | a
change in the practice or policy of any governmental agency, |
after
the date of Closing, including legislation, regulations, amendments, interpretation, practice or policy that has a retrospective
effect;
|
| (v) | (consequential
loss): is special, indirect or consequential loss or damage including loss of profit
or loss of reputation; |
|
| (vi) | (post
Closing conduct):arises from anything done or not done after Closing by or on behalf
of the Buyer or its Affiliates that is outside the ordinary course of the Business and
the Buyer was aware or ought reasonably be aware would give rise to an Action against
the Seller or the Principal Owners; |
|
| (vii) | (promoted
claims): arises from an Action initiated by a third party that is attributable to
anything done or not done after Closing by or on behalf of the Buyer or its Affiliates
that was calculated or intended to cause the Action initiated by the third party to be
made; |
|
| (viii) | (change
in accounting policy): would not have arisen but for a change after Closing in any
accounting policy or practice of the Buyer that applied before Closing; |
|
| (ix) | (change
of Business): arises out of the cessation or alteration of the Business after Closing; |
|
| (x) | (legal
costs): is not a reasonable legal cost; and |
|
| (xi) | (remediable
loss): is remediable, provided it is remedied to the satisfaction of the Buyer, acting
reasonably, within 45 days after the Seller or Principal Owners receives written notice
of an Action or a Direct Claim in accordance with this Agreement. |
| 6. | Representations
And Warranties Of The Buyer. |
Buyer
hereby represents and warrants to Seller as follows:
| (a) | Corporate
Organization. Buyer is a corporation duly organized, validly existing and in good
standing under the laws of the State of Nevada, and has all requisite power and authority
and all necessary governmental authority to own, operate or lease the properties that
it purports to own, operate or lease and to carry on its businesses as now conducted.
Buyer is duly qualified to do business as a foreign company, and is in good standing
in each jurisdiction where the character of its properties owned, operated or leased
or the nature of its activities makes such qualification necessary. |
| (b) | Authorization
and Validity of Agreement. Buyer has all requisite power and authority to enter into
the Transaction Documents and to carry out its obligations thereunder. The execution
and delivery of the Transaction Documents and the performance of Buyer’s obligations
thereunder have been duly authorized by all necessary company action by Buyer, and no
other proceedings on the part of Buyer are necessary to authorize such execution, delivery
and performance. Each of the Transaction Documents has been duly executed by Buyer and
constitutes its valid and binding obligation, enforceable against it in accordance with
its terms, except as may be limited by applicable bankruptcy, insolvency, moratorium
or similar laws of general application relating to or affecting creditors’ rights
generally and except for the limitations imposed by general principles of equity. |
| (c) | No
Conflict or Violation. Subject to obtaining all consents and approvals set forth
herein, the execution, delivery and performance by Buyer of the Transaction Documents,
to the knowledge of Buyer, (i) does not and will not violate or conflict with any provision
of the organizational documents of Buyer; (ii) does not and will not violate any provision
of law, rule or regulation, or any order, judgment or decree of any court or other governmental
or regulatory authority; (iii) does not violate or will not result in a breach of or
constitute (with due notice or lapse of time or both) a default under, or give rise to
any acceleration of remedies or any right of termination under, any Contract, lease,
sublease, occupancy agreement, loan agreement, mortgage, security agreement, trust indenture
or other agreement or instrument to which Buyer is a party or by which Buyer is bound
or to which any of Buyer’s properties or assets is subject, except for such breaches,
defaults and accelerations as would not have a Material Adverse Effect on the ability
of Buyer to consummate the transactions contemplated hereby. |
| (d) | No
Event of Insolvency: no Event of Insolvency has occurred in relation to the Buyer,
nor is there any act which has occurred or to the best of its knowledge, is anticipated
to occur which is likely to result in an Event of Insolvency in relation to the Buyer. |
| (e) | No
litigation: the Buyer is not a party to any investigation, prosecution, litigation,
legal proceeding, arbitration, mediation or any other form of dispute resolution, and
to the best of its knowledge no such proceedings are pending or threatened and there
is no circumstance or fact that is likely to give rise to any such proceedings. |
| (f) | Compliance
with Applicable Law: To the knowledge of Buyer, Buyer is in compliance in all material
respects with the applicable Laws; and |
| (g) | Securities
Law: the Buyer: |
|
| (i) | is
a “reporting company” that is subject to the reporting requirements of the
Securities Exchange Act of 1934; |
|
| | |
|
| (ii) | has
complied with the periodic reporting requirements of the Securities Exchange Act of 1934;
and |
|
| | |
|
| (iii) | has
otherwise complied the requirements of Rule 144 promulgated under the 1933 Act so as
to ensure that the Equity Consideration to be received by the Seller will be eligible
for exemption from registration under Rule 144 of the 1933 Act and will be freely tradable
on the date which is 6 months following the issue of the Equity Consideration, provided
that Seller owns less than 10% of the voting securities of Buyer. |
| (a) | Seller
Covenants: The Seller covenants as follows: |
|
| (i) | Consents
and Approvals. Seller shall, at its cost and expense, use Commercially Reasonable Efforts
to obtain all necessary consents, waivers, authorizations and approvals of all governmental
and regulatory authorities, and of all other Persons required to be obtained in connection
with the execution, delivery and performance by it of the Transaction Documents. |
|
| | |
|
| (ii) | Post-Closing
Operation of Business. Following the Closing, Seller shall fully cooperate with Buyer
to transfer the Business assets and liabilities to Buyer in such a manner as to preserve
the value thereof. |
| (b) | Buyer
Covenants: The Buyer covenants as follows: |
|
| (i) | that
on the date which is 6 months following the issue of the Equity Consideration, it will
take such action as is required to ensure that the Equity Consideration is freely tradable,
including, without limitation, requesting removal of any restrictive legend attaching
to the Equity Consideration; and |
|
| (ii) | that
the Buyer must pay all relevant taxes for which the Company is liable for and which relate
to the period prior to Closing but which are due after Closing has occurred, on or before
the due date, subject to the sufficient provision being made for the tax/es in the Company’s
Financial Statements. |
| 8. | Noncompetition,
Nonsolicitation and Nondisparagement. |
| (a) | Noncompetition.
Seller and the Principal Owners acknowledge that (i) Buyer would not have entered into
this Agreement but for the agreements and covenants contained in this Section 8;
and (ii) the agreements and covenants contained in this Section 8 are essential
to protect the Business and are reasonable and appropriate in scope; (iii) the Business
is international in scope; and (iv) the business of Buyer is international in scope.
To induce Buyer to enter into this Agreement, Seller and the Principal Owners covenant
and agree that during the period commencing on the Closing Date and ending on the fifth
(5th) anniversary of the Closing Date (the “Restricted Period”),
Seller, the Principal Owners, and their respective Affiliates shall not, directly or
indirectly, (A) engage in any business or activity that competes with the Business ;
(B) render any services to any Person for use in competing with Buyer in connection with
the Business; (C) have an interest in any Person engaged in any business that competes
with Buyer in connection with the Business, directly or indirectly, in any capacity,
including, without limitation, as a shareholder, officer, director, principal, agent,
trustee or consultant or any other relationship or capacity but, for the avoidance of
doubt, this shall not include the Seller or the Principal Owners’ engagement of
a non-Employee blogger or any other service provider or person for a purpose not related
to a business or activity that competes with the Business but who may promote a product
for a business that competes with the Business; provided, however, Seller
or the Principal Owners may own, directly or indirectly, solely as an investment, securities
of any Person which are publicly traded if Seller or the Principal Owner (I) is not a
controlling Person of, or a member of a group which controls, such Person and (II) does
not, directly or indirectly, own two percent (2%) or more of any class of securities
of such Person; or (III) interfere with business relationships (whether formed heretofore
or hereafter) between Buyer or any of its Affiliates and customers, suppliers or prospects
of the Business. |
| (b) | Employees
of the Business. During the Restricted Period, Seller, and the Principal Owners,
and their respective Affiliates shall not, directly or indirectly, (i) solicit or encourage
any Employee or consultant performing services in connection with the Business to leave
the employment or retention of Buyer or any of its Affiliates, or (ii) hire any such
Employee or consultant who was performing services in connection with the Business and
who has left the employment or retention of Buyer or any of its Affiliates within one
(1) year of the termination of such Employee’s employment or consultant’s
retention with Buyer or any of its Affiliates. |
| (c) | Customers
of the Business. During the Restricted Period, the Principal Owners and Seller, its
employees, officers, and directors shall not, directly or indirectly, (i) persuade or
attempt to persuade any customer, prospective customer, client, prospective client, supplier
or vendor of Buyer or any of its Affiliates not to hire or do business with Buyer or
any of its Affiliates or any successor thereto; (ii) solicit for himself or any Person
other than Buyer or any of its Affiliates, the business of any Person who is a customer,
client, supplier or vendor of Buyer or any of its Affiliates, or was its customer or
supplier within one (1) year prior to the time of such solicitation to the extent that
such business is similar to the business conducted by such customer or supplier with
Buyer. For the avoidance of doubt, this clause shall not prevent the Seller or the Principal
Owners from conducting such advertising or marketing for a business that does not compete
with the Business nor shall it prevent a previous customer, client, supplier or vendor
of the Business from initiating contact with and utilizing the services of any business
which is operated by the Seller or the Principal Owners which does not compete with the
Business. |
| (d) | Confidential
Information. From and after the Closing, the Principal Owners and Seller, its shareholders,
employees, officers, and directors shall keep secret and retain in strictest confidence,
and shall not use for the benefit of itself or others, all confidential matters relating
to the Business or Buyer and its Affiliates, including, but not limited to, “know
how”, trade secrets, customer lists, supplier lists, details of consultant and
employment Contracts, pricing policies, operational methods, marketing plans or strategies,
product development techniques or plans, business acquisition plans, technical processes,
designs and design projects, processes, inventions, software, source codes, object codes,
systems documentation and research projects and other business affairs (“Confidential
Information”), and shall not disclose them to anyone outside of Buyer and
its Affiliates; provided, however, this covenant shall not apply to any
information which is or becomes generally available to the public other than as a result
of disclosure by the Principal Owners or Seller or its respective Affiliates. The Principal
Owners and Seller and its respective Affiliates may disclose Confidential Information
if required to do so in any legally required government or securities filings, legal
proceedings, subpoena, civil investigative demand or other similar process; provided,
that Seller and the Principal Owners (i) provides Buyer with prompt notice of such required
disclosure so that Buyer may attempt to obtain a protective order, (ii) cooperates with
Buyer, at Buyer’s expense, in obtaining such protective order, and (iii) only discloses
that Confidential Information which it is absolutely required to disclose as advised
by counsel. Notwithstanding anything to the contrary in this Section 8(d), the
Principal Owners and Seller, its shareholders, employees, officers, and directors shall
be free to use for any purpose the residuals resulting from access to or work with the
Confidential Information, provided that such party shall not disclose the Confidential
Information except as expressly permitted pursuant to the terms of this Agreement. The
term “residuals” means information in intangible form (i.e., not written
or other documentary form, including tape or disk), which is incidentally and unintentionally
retained in memory by persons who have had access to the Confidential Information, including
ideas, concepts, know-how or techniques contained therein and where the source of the
Confidential Information has become remote (e.g., as a result of the passage of time
or the person’s subsequent exposure to information of a similar nature from other
sources) such that the person can no longer identify the Confidential Information’s
confidential source; provided, however, that no license to any Company intellectual property
is granted under this Section, this Section 8(d) will not supersede or alter any separate
agreement between such party and the Company, unless that agreement is acknowledged to
be expressly subject to this clause, and residuals do not include any Product formulations. |
| (e) | Nondisparagement.
After the Closing Date, Seller and the Principal Owners will not disparage Buyer, any
of Buyer’s Affiliates or any of such parties’ shareholders, directors, officers,
employees or agents. |
| (f) | Tolling
of Covenant Periods. The Restricted Period provided in this Section 8 shall not include
and shall be extended beyond, any time during which a party is failing to comply with
any provision of this Section 8 with respect to such party. |
| (g) | Blue
Penciling. If any term or other provision of this Section 8 is invalid, illegal,
or incapable of being enforced by any rule of Law or public policy, all other conditions
and provisions of this Section 8 shall nevertheless remain in full force and effect.
Upon determination that any term or other provision is invalid, illegal, or incapable
of being enforced, the Parties hereto shall negotiate in good faith to, or the arbitrator
making such a determination shall, modify this Section 8 so as to effect the original
intent of the Parties as closely as possible in an acceptable manner to the end that
the transactions contemplated hereby are fulfilled to the extent possible. |
During
the Calculation Period, the Buyer must retain all Employees including all management Employees with the Company and shall
not terminate their employment without the prior written consent of the Seller, such consent shall not be unreasonably withheld,
except that Buyer can terminate Employees for cause. Seller shall make all salary, commission, bonus, incentive, vacation
pay or other benefit accrual payments, in each case that relate to periods prior to and through the Closing, to Employees as they
become due. Buyer shall not be required to provide continuations of any of Seller’s salary arrangements, bonus or incentive
pay or other plans, commission arrangements or commission agreements or wage or salary or compensation incentives after the Closing
Date.
| 10. | Conditions
to Obligations of Seller. |
The
obligations of Seller to effect the Closing and to consummate the transactions contemplated by the Transaction Documents are subject
to the fulfillment, at or before the Closing Date, of each of the following conditions, any one or more of which may be waived
by Seller in its sole discretion:
| (a) | Representations
and Warranties of the Buyer. All representations and warranties made by Buyer in
this Agreement shall be true and correct in all material respects (except as to representations
and warranties which are qualified as to materiality, which representations and warranties
shall be true and correct in all respects) as of the date of this Agreement and on and
as of the Closing Date as if again made by Buyer on and as of such date. |
| (b) | Performance
of the Obligations of the Buyer. Buyer shall have performed in all material respects
all obligations required under this Agreement to be performed by it on or before the
Closing Date. |
| (c) | Buyer
Closing Deliverables. At the Closing, Buyer will: |
|
| (i) | Deliver
to Seller the Cash Consideration in immediately available AUS funds; |
|
| | |
|
| (ii) | Deliver
to Seller the Equity Consideration, including certificates therefor; |
|
| | |
|
| (iii) | Deliver
a certificate executed by the authorized person of the Buyer certifying as to the truthfulness,
completeness and accuracy of attached copies of resolutions of the directors of the Buyer
authorizing this Agreement and the transactions contemplated hereby; and |
|
| | |
|
| (iv) | Deliver
to the Seller the Escrow Agreement executed by the Buyer and the Escrow Agent. |
| (d) | Pay
to Go Capital Pty Ltd the payment set forth on Schedule 4(o) in immediately available
funds; |
| | |
| (e) | Deliver
to Seller a certificate of the Secretary of the State of Nevada, dated reasonably close
to the Closing Date, as to the legal existence and good standing of the Buyer in Nevada. |
| 11. | Conditions
to Obligations of Buyer. |
The
obligations of Buyer to consummate the transactions contemplated by the Transaction Documents are subject to the fulfillment,
at or before the Closing Date, of each of the following conditions, any one or more of which may be waived by Buyer in its sole
discretion:
| (a) | Representations
and Warranties of Seller. All representations and warranties made by Seller in this
Agreement shall be true and correct in all material respects (except as to representations
and warranties which are qualified as to materiality, which representations and warranties
shall be true and correct in all respects) as of the date of this Agreement and on and
as of the Closing Date as if again made by Seller on and as of such date. |
| | |
| (b) | Performance
of the Obligations of Seller. Seller has performed in all material respects all agreement,
covenants, and obligations required under this Agreement to be performed by it on or
before the Closing Date. |
| | |
| (c) | Satisfaction
of Liabilities and Obligations. All debts, fees, liabilities, payables, Taxes, claims,
costs and expenses of or against the Company including, without limitation, all costs,
expenses, payables, debts and liabilities arising out of the operations of the Company
incurred or arising prior to the Closing will be paid or satisfied by the Company at
or before Closing or the Purchase Price will be adjusted therefor at the Closing, except
with respect to creditors in the day-to-day operation of the Business with no Lien or
security interest in any of the Company’s assets. All cash in excess of zero working
capital requirements will have been paid into the Escrow Account established for the
segregation of Adjusted EBITDA from July 1, 2015 to October 31, 2015. |
| | |
| (d) | Seller
Closing Documents. Seller shall have delivered to Buyer the following documents:
|
|
| (i) | all
certificates representing all of the Company, duly endorsed in blank or with appropriate
share powers; |
|
| (ii) | a
certificate executed by the authorized person of Seller certifying as to the truthfulness,
completeness and accuracy of attached copies of resolutions of the of Seller authorizing
this Agreement and the transactions contemplated hereby; |
|
| | |
|
| (iii) | such
other documents relating to the transactions contemplated by the Transaction Documents
to be consummated at the Closing as counsel to Buyer shall reasonably request in order
to complete the share purchase by Buyer; |
|
| | |
|
| (iv) | a
extract of the register maintained by the Australian Securities and Investments Commission,
dated reasonably close to the Closing Date, as to the legal existence and good standing
of the Company in Australia; |
|
| | |
|
| (v) | resignations
of the officers and directors of the Company in office immediately prior to the Closing;
and |
|
| | |
|
| (vi) | deliver
to the Buyer the Escrow Agreement executed by the Seller. |
| (a) | Indemnification
by Buyer. Buyer shall indemnify and save and hold the Seller and Principal Owners,
successors, and assigns (the “Seller Indemnitees”), harmless
from and against any and all damages, claims, demands, obligations, liabilities, losses,
costs, expenses (including all reasonable attorneys’ fees and expenses of investigation
incurred by the Seller Indemnitees in any Action or proceeding between Buyer and the
Seller Indemnitees or between the Seller Indemnitees and any third party or otherwise),
deficiencies, interests, penalties, impositions, assessments and/ or fines (collectively,
“Seller Losses”), whether or not in connection with a third-party
claim, arising out of, resulting from or related to (each “Buyer’s
Events of Breach”): |
|
| (i) | any
breach of any representation or warranty made by the Buyer in this Agreement or the other
Transaction Documents; and |
|
| | |
|
| (ii) | all
acts and omissions in the conduct of the Company and the Business on and after Closing
and indemnifies, and must keep indemnified, the Seller Indemnitees against any loss arising
in respect of any such acts or omissions after Closing including liability arising out
of defects in products sold or services provided by the Buyer after Closing. This indemnity
extends to liability that may arise as a result of any of the products so sold or advice
given being defective; |
|
| | |
|
| (iii) | any
breach of any covenant or other agreement made by Seller in Section 7(b) of this Agreement, |
provided,
however, that Buyer shall not be liable to make any payment in respect of a claim for indemnification in respect of any
breach of any representation or warranty made by the Buyer in this Agreement or the other Transaction Documents until the aggregate
of such Seller Losses shall exceed $5,000 (“Threshold”). Once such Seller Losses shall exceed such $5,000
Threshold (“Basket”), the Seller Indemnitees shall have the right to indemnification hereunder, and
Buyer and/or its members shall be required to make payment to the Seller Indemnitees in respect of such claim to the full extent
of such Seller Losses without reference to or deduction for the $5,000 Threshold up to an aggregate liability cap equal to the
value of Cash Consideration as set out in this Agreement (“Cap”), provided, however, that
the Basket and Cap shall not apply (and Buyer and its members shall be fully liable) in the case of any claims based on fraud,
bad faith, criminal conduct, intentional misrepresentation, or willful misconduct (“Bad Conduct”) or
(ii) indemnification under Sections 12(a)(ii) and 12(a)(iii). Notwithstanding anything to the contrary in this Agreement, Seller
Indemnitees’ right to indemnification in this Section 12(a) will not apply to the extent that the Seller Losses arise out
of or in connection with a Seller Event of Breach.
| (b) | Indemnification
by Seller. Seller and each of the Principal Owners, jointly and severally, shall
indemnify and save and hold the Buyer, any Affiliate of the Buyer and their respective
directors, officers, managers, employees, successors, and assigns (the “Buyer
Indemnitees”), harmless from and against any and all damages, claims, demands,
obligations, liabilities, losses, costs, expenses (including all reasonable attorneys’
fees and expenses of investigation incurred by the Buyer Indemnitees in any Action or
proceeding between Seller and the Buyer Indemnitees or between the Buyer Indemnitees
and any third party or otherwise), deficiencies, interests, penalties, impositions, assessments
and/ or fines (collectively, “Buyer Losses”), whether or not
in connection with a third-party claim, arising out of, resulting from or related to
any and/or all of Seller’s Events of Breach. |
| | |
| (c) | As
used herein, “Seller’s Events of Breach” shall be and
mean any one or more of the following: |
|
| (i) | any
breach of any representation or warranty made by Seller or the Principal Owners in this
Agreement or the other Transaction Documents; |
|
| | |
|
| (ii) | any
Seller employee benefit plan in existence prior to the Closing Date, whether such Liability
arises before, on or after the Closing Date, including, without limitation, unfunded
Liabilities, Liability with respect to the termination of any such plan, any retiree
from employment with Seller, any unfunded Liability under any such plan, or any accrued
but unpaid claim under such Seller employee benefit plan; |
|
| | |
|
| (iii) | the
employment (including the initial hiring and all terms, conditions, and events relating
to the ongoing employment prior to the Closing Date) or termination of employment (including
constructive termination) by Seller of any individual (including without limitation the
Principal Owners and any current or former employee of Seller), including any compensation
due to the Employees or Contractors relating to periods ending on or prior to the Closing
Date, including, without limitation, severance, salary, commission, bonus, incentives,
vacation pay or other benefit accruals or any termination liability; and |
|
| (iv) | any
Liability relating to common law or statutory dissenter’s rights, appraisal rights,
or any similar rights of the shareholders or owners of Seller, |
|
| | |
|
| (v) | any
breach of any covenant or other agreement made by Seller in Section 7(a) or Section 8
of this Agreement, |
provided,
however, that neither Seller nor the Principal Owners shall be liable to make any payment in respect of a claim for indemnification
in respect of any Seller’s Events of Breach until the aggregate of such Buyer Losses shall exceed $5,000 (“Threshold”).
Once such Buyer Losses shall exceed such $5,000 Threshold (“Basket”), the Buyer Indemnitees shall have
the right to indemnification hereunder, and Seller and/or its members shall be required to make payment to the Buyer Indemnitees
in respect of such claim to the full extent of such Buyer Losses without reference to or deduction for the $5,000 Threshold up
to an aggregate liability cap equal to the Cash Consideration (“Cap”), provided, however,
that the Basket and Cap shall not apply (and Seller and its members shall be fully liable) in the case of any claims based on
(i) a breach of any Fundamental Representations, (ii) fraud, bad faith, criminal conduct, intentional misrepresentation, or willful
misconduct (“Bad Conduct”), or (iii) indemnification under Sections 12(c)(ii) through 12(c)(v).
| (d) | All
representations, warranties, covenants and obligations of Buyer, Seller and/or the Principal
Owners, and all other agreements or instruments contemplated hereby to which Buyer or
Seller, or the Principal Owners, is a party shall survive the Closing Date for twelve
(12) months, except that: (i) all covenants and agreements which by their terms contemplate
performance after the Closing Date shall survive the Closing for a period of four (4)
years, unless specified otherwise by their terms; and (ii) for breaches of any Fundamental
Representations or Bad Conduct, the survival period shall be four (4) years. Notwithstanding
the above, any claim for indemnification made in accordance with this Section 12
prior to the expiration of the applicable indemnification period set forth in this paragraph
shall survive until such matter is resolved. For the avoidance of any doubt, a Buyer’s
Claim Notice must have been received in accordance with clause Error! Reference source
not found.Error! Reference source not found. prior to the expiration of the applicable
indemnification period set forth in this paragraph in order for the claim to survive
the applicable indemnification period. |
| | |
| (e) | Following
the Closing, the indemnification afforded by this Section 12 shall be the sole
and exclusive remedy of the Buyer Indemnitees in respect of claims for Seller’s
Events of Breach. |
| (f) | For
purposes of this Section 12, any inaccuracy in or breach of any representation or warranty
shall be determined without regard to any materiality, Material Adverse Effect or other
similar qualification contained in or otherwise applicable to such representation or
warranty. |
| | |
| (g) | Procedures
for Indemnification by the Seller. |
|
| (i) | Notice
of Claims. If a Seller’s Event of Breach occurs or is alleged and a Buyer Indemnitee
asserts that Seller has become obligated to such Buyer Indemnitee pursuant to Section
12 hereof (“Direct Claim”), or if any suit, Action, investigation,
claim or proceeding (a “Third Party Proceeding”) is threatened,
begun, made or instituted by a third party as a result of which Seller may become obligated
to a Buyer Indemnitee hereunder, such Buyer Indemnitee shall give written notice thereof
to Seller which must contain full details of the Direct Claim or Third Party Proceeding
then known to the Buyer of the events, matters or circumstances giving rise to the claim
(the “Buyer’s Claims Notice”). The Buyer’s failure
or delay in providing the Buyer’s Claim Notice shall not relieve Seller or its
obligations under this Section except to the extent that Seller is materially prejudiced
as a result thereof. If a Buyers’ Event of Breach occurs or is alleged and a Seller
Indemnitee asserts that Buyer has become obligated to such Seller Indemnitee pursuant
to Section 12 hereof (“Seller Direct Claim”),
or if any Third Party Proceeding is threatened, begun, made or instituted by a third
party as a result of which Buyer may become obligated to a Seller Indemnitee hereunder,
such Seller Indemnitee shall give written notice thereof to Buyer which must contain
full details of the Seller Direct Claim or Third Party Proceeding then known to the Seller
of the events, matters or circumstances giving rise to the claim (the “Seller’s
Claims Notice”). The Seller’s failure or delay in providing the Seller’s
Claim Notice shall not relieve Buyer or its obligations under this Section except to
the extent that Buyer is materially prejudiced as a result thereof. |
|
| | |
|
| (ii) | Response
to Direct Claims. Seller shall have thirty (30) days after receipt of the Buyer’s
Claim Notice for a Direct Claim to reject or accept the claim as an indemnifiable claim
for Buyer Losses under Section 12. If, within thirty (30) days after receipt by
Seller of such a Buyer’s Claim Notice, Seller delivers notice to the Buyer Indemnitee
containing a written objection to the claim (or a portion thereof) by the Buyer Indemnitee,
stating the nature of and grounds for such objection in reasonable detail, then such
claim (or portion thereof) shall be deemed to be a “Disputed Claim”
and such claim shall be resolved in accordance with Section 12. If, within thirty
(30) days after actual receipt by Seller’s of the Buyer’s Claim Notice for
a Direct Claim, Seller delivers notice to the Buyer Indemnitee containing a written acceptance
of the claim, (or a portion thereof) then such claim (or portion thereof) shall be deemed
an indemnifiable claim under this Section 12 (the “Indemnifiable Claim”),
and Seller will be conclusively deemed to have consented to recovery by the Buyer Indemnitee
of the full amount of Buyer Losses subject to offset for the Basket in connection with
the claim, if applicable. |
| (h) | Dispute
Resolution. Any disputes arising under this Section 12 shall be resolved as
follows: (i) first, the Parties shall attempt in good faith for thirty (30) days to resolve
the dispute, and (ii) if the dispute remains unresolved after such thirty (30) day period,
the Parties agree that Section 14(c) will apply. |
| | |
| (i) | Third
Party Proceeding. Seller shall have twenty (20) days from receipt of a Buyer’s
Claim Notice for a Third Party Proceeding to provide the Buyer Indemnitee with notice
that it wishes to assume the defense in the Third Party Proceeding and acknowledges liability
for such damages, in which event the Buyer Indemnitee shall have the right to participate
in the defense at its own expense; provided, however, that the Buyer Indemnitee
is hereby authorized prior to and during such time to file any motion, answer or other
pleading that it shall deem necessary or appropriate to protect its interests and that
is not prejudicial to Seller. If Seller fails to give the Buyer Indemnitee timely notice
as provided herein, the Buyer Indemnitee shall have the right to defend against such
Third Party Proceeding. If Seller assumes the defense in a Third Party Proceeding, (i)
the Indemnifying Party shall not agree to any settlement, compromise or discharge of
a Third-Party Claim without the Indemnified Party’s prior written consent; and
(ii) the Buyer must provide the Seller and the Principal Owners with all reasonable assistance
requested by them in relation to the Third Party Proceeding, including providing access
to witnesses and documentary or other evidence relevant to the Third Party Proceedings,
allow them and their advisers to inspect and take copies of all relevant books, records,
files and documents, and providing them with reasonable access to the personnel, premises
and chattels of the Seller for the purposes of obtaining information in relation to the
Third Party Proceeding. |
| | |
| (j) | If
the Indemnifying Party does not assume the defense of a Third-Party Claim, the Indemnified
Party shall be entitled to undertake any settlement, compromise or discharge of such
Third-Party Claim without the Indemnifying Party’s prior consent. Notwithstanding
anything herein to the contrary, Seller and the Principal Owners shall not be entitled
to assume control of the defense in a Third Party Proceeding, and shall pay the reasonably
documented fees and expenses of legal counsel retained by the Buyer Indemnitees if: (i)
Buyer reasonably believes that an adverse determination of such claim could be detrimental
to the Buyer’s business; (ii) Buyer reasonably believes that a conflict of interest
exists or could reasonably arise which, under applicable principles of legal ethics,
could prohibit a single legal counsel from representing both the parties in such proceeding,
other than a conflict which may exist due to the underlying nature of the duty to indemnify;
(iii) a court of competent jurisdiction rules that Seller has failed or is failing to
prosecute or defend such claim; (iv) such claim seeks damages other than monetary damages;
or (v) such claim involves conduct of the Business both before and after the Closing. |
| (k) | Notwithstanding
the provisions of Section 12(g), Seller hereby consents to the nonexclusive jurisdiction
of any court in which an Action or claim in respect of a Third Party Proceeding is brought
against any Buyer Indemnitee for purposes of any claim that a Buyer Indemnitee may have
under this Agreement with respect to such Action or claim or the matters alleged therein
and agrees that process may be served on Seller with respect to such a claim anywhere
in the world. |
| | |
| (l) | Indemnification
Binds Successors and Assigns. All of the indemnification rights of the Buyer and
obligations of Seller arising pursuant to this Section 12 shall apply to and bind
each and every successor and assign of Buyer and Seller. |
| | |
| (m) | Dispute
Resolution Costs. Each Party shall bear all its own costs of any court Action or
other dispute resolution proceeding hereunder, including without limitation, the fees
and expenses of its own legal counsel and other filing fees and expenses of such Party
for such proceeding. |
| (a) | Conditions
of Termination. Notwithstanding anything to the contrary contained herein, this Agreement
may be terminated at any time before the Closing: |
|
| (i) | By
mutual consent of Seller and Buyer; |
|
| | |
|
| (ii) | By
either Seller or Buyer if the other Party shall have breached this Agreement in any material
respect and such breach continues for a period of ten (10) days after the receipt of
written notice of the breach from the non-breaching Party; or |
| (b) | Effect
of Termination. If this Agreement is terminated in accordance with Section 13
hereof, this Agreement shall become null and void and have no effect, with no liability
on the part of Seller or Buyer, or their Affiliates and their respective directors, managers,
officers, agents, members or shareholders, except for the obligations set forth in this
Section 13, Section 11, which shall survive any termination; and provided,
however, that notwithstanding the foregoing, nothing herein and no termination
hereof shall relieve any Party from liability for any breach of any of its representations,
warranties, covenants or agreements set forth in this Agreement which arise prior to
termination. |
| (a) | Successors
and Assigns. Any Party hereto may assign this Agreement or any rights or obligations
hereunder without the prior written consent of the other Parties hereto; provided that
this Agreement shall inure to the benefit of and shall be binding upon the successors
and assigns of the Parties hereto. |
| | |
| (b) | Governing
Law; Jurisdiction. This Agreement shall be construed, performed and enforced in accordance
with, and governed by, the laws of the State of New York, United States, without giving
effect to the principles of conflicts of laws thereof. |
| | |
| (c) | Dispute
Resolution. Subject to Section 3(c)(iii), any dispute or Action arising in connection
with this Agreement shall be referred to and finally resolved under the then applicable
rules of the Singapore International Arbitration Centre (SIAC) , which SIAC Rules
are deemed to be incorporated by reference into this clause. There shall be 3 (three)
arbitrators. The seat of the arbitration shall be Singapore. The language to be used
in the arbitral proceedings shall be English. |
| | |
| (d) | Expenses.
Except as otherwise provided herein, each of the Parties hereto shall pay all its own
expenses in connection with this Agreement and the transactions contemplated hereby,
including, without limitation, any legal and accounting fees, whether or not the transactions
contemplated hereby are consummated. Buyer shall be responsible for and shall pay all
applicable state and local sales, transfer, excise, value-added or other similar Taxes,
and all recording and filing fees that may be imposed by reason of the Share Purchase
(collectively, the “Transfer Taxes”). Each party agrees to
cooperate with such other party in the timely completion, execution and filing of any
documentation required by any local, state, federal or other Tax authority in connection
with the Transfer Taxes, including any documentation as may be requested to establish
an exemption from (or otherwise reduce) or make a report with respect to the Transfer
Taxes. |
| | |
| (e) | Goods
and Services Tax. |
|
|
(i) |
In this Section 14(e), the expressions
Input Tax Credit, Supply, Tax Invoice, Recipient and Taxable Supply have the meanings given
to those expressions in the GST Act. |
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(ii) |
With the exception of any amount payable
under this Section 14(e), unless otherwise expressly stated, all amounts stated to be payable in this Agreement are exclusive
of GST. |
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(iii) |
If GST is imposed on any Supply made
under or in accordance with this Agreement, the Recipient of the Taxable Supply must pay to the Supplier an additional amount
equal to the GST payable on or for the Taxable Supply. Payment of the additional amount will be made at the same time as payment
for the Taxable Supply is required to be made in accordance with this Agreement, subject to the provision of a Tax Invoice. |
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(iv) |
If this Agreement requires a party to pay for, reimburse or
contribute to any expense, loss, indemnity or outgoing (Reimbursable Expense) suffered or incurred by another party,
the amount required to be paid, reimbursed or contributed by the first party will be the sum of: |
|
|
| (1) | the
amount of the Reimbursable Expense less the Input Tax Credits (if any) to which the other
party is entitled in respect of the Reimbursable Expense; and |
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|
| | |
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| (2) | if
the other party’s recovery from the first party is a Taxable Supply, any GST payable
in respect of that Supply. |
| (f) | Severability.
In the event that any part of this Agreement is declared by any court or other judicial
or administrative body to be null, void or unenforceable, said provision shall survive
to the extent it is not so declared, and all of the other provisions of this Agreement
shall remain in full force and effect. |
| (g) | Notices.
All notices, requests, demands and other communications under this Agreement shall be
in writing and shall be deemed to have been duly given (i) on the date of service if
served personally on the Party to whom notice is to be given, or (ii) on the day of delivery
by Federal Express or similar overnight courier or the Express Mail service maintained
by the U.S. Postal Service, to the Party as follows: |
If
to Seller or any Principal Owner: |
|
|
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|
NomadChoice
Pty Limited trading as Flat Tummy Tea |
|
LVI
330 Churchill Ave. |
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Subiaco
WA 6008 Australia |
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Copy
to: |
Steinepreis
Paganin |
|
Level
4, the Read Buildings |
|
16
Milligan Street |
|
Perth,
WA 6000 Australia |
|
|
If
to Buyer: |
Synergy
CHC Corp. |
|
865
Spring Street |
|
Westbrook,
ME 04092 |
|
Attn:
President |
|
|
Copy
to: |
Wyrick
Robbins Yates & Ponton LLP |
|
4101
Lake Boone Trail, Suite 300 |
|
Raleigh,
North Carolina 27607 |
|
Attention:
W. David Mannheim |
Any
Party may change its address for the purpose of this Section by giving the other Party written notice of its new address in the
manner set forth above.
| (h) | Amendments;
Waivers. This Agreement may be amended or modified, and any of the terms, covenants,
representations, warranties or conditions hereof may be waived, only by a written instrument
executed by the Parties hereto, or in the case of a waiver, by the Party waiving compliance.
Any waiver by any Party of any condition, or of the breach of any provision, term, covenant,
representation or warranty contained in this Agreement, in any one or more instances,
shall not be deemed to be nor construed as further or continuing waiver of any such condition,
or of the breach of any other provision, term, covenant, representation or warranty of
this Agreement. |
|
| (i) | Public
Announcements. Seller shall not make any public statement regarding this Agreement
or the transactions contemplated herein without Buyer’s prior written approval.
Buyer shall provide a copy of any public statement to Seller prior to the information
being made public. |
|
| | |
|
| (ii) | Entire
Agreement. This Agreement, the exhibits and schedules hereto contains the entire
understanding between the Parties hereto with respect to the transactions contemplated
hereby and thereby and supersede and replace all prior agreements and understandings,
oral or written, with regard to such transactions. All schedules and exhibits hereto
and any documents and instruments delivered pursuant to any provision hereof are expressly
incorporated herein and made a part of this Agreement as fully as though completely set
forth herein. This Agreement shall only be binding on the Parties hereto upon execution
and delivery of this Agreement by each of the Parties. |
|
| | |
|
| (iii) | Parties
in Interest. Nothing in this Agreement is intended to confer any rights or remedies
under or by reason of this Agreement on any persons other than Seller and Buyer and their
respective successors and permitted assigns. Nothing in this Agreement is intended to
relieve or discharge the obligations or liability of any third persons to Seller or Buyer.
No provision of this Agreement shall give any third persons any right as a third party
beneficiary of this Agreement or provide any right of subrogation or Action over or against
Seller or Buyer. |
|
| | |
|
| (iv) | Section
and Paragraph Headings. The section and paragraph headings in this Agreement are
for reference purposes only and shall not affect the meaning or interpretation of this
Agreement. |
|
| | |
|
| (v) | Counterparts.
This Agreement may be executed in counterparts and via .pdf, each of which shall be deemed
an original, but all of which shall constitute the same instrument. |
|
| | |
|
| (vi) | Fulfillment
of Obligations. Any obligation of any Party to any other Party under this Agreement,
which obligation is performed, satisfied or fulfilled by an Affiliate of such Party,
shall be deemed to have been performed, satisfied, or fulfilled by such Party. |
|
| (vii) | Remedies.
Except as expressly provided in this Agreement, any Person having any rights under any
provision of this Agreement, including, without limitation, Section 8, shall be
entitled to enforce such rights specifically (without posting a bond or other security),
to require: (i) Seller and their respective Affiliates to account for and pay over to
Buyer; and (ii) Buyer and its respective Affiliates to account for and pay over to Seller,
all payments, profits, monies, accruals, increments or other benefits derived by such
party by reason of any breach of any provision of this Agreement, to recover damages
and to exercise all other rights granted by Laws. Except as expressly provided in this
Agreement, all such rights and remedies shall be cumulative and non-exclusive, and may
be exercised singularly or concurrently. The Parties acknowledge that any breach of this
Agreement may cause substantial irreparable harm to the other Party. Therefore, this
Agreement may be enforced in equity by specific performance, temporary restraining order
and/or injunction. The rights to such equitable remedies shall be in addition to all
other rights or remedies which a Party may have under this Agreement or under applicable
law. |
|
| | |
|
| (viii) | Further
Actions. In case at any time after the Closing any further action is necessary to
carry out the purposes of this Agreement, each of the Parties shall take such further
action (including the execution and delivery of such further instruments and documents)
as any other Party reasonably may request, all at the sole cost and expense of the requesting
Party (unless the requesting Party is entitled to indemnification therefore under Section
12). |
[Signature
page follows]
IN
WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed by their respective officers thereunto duly authorized
as of the date first above written.
EXECUTED
by TPR INVESTMENTS
PTY LIMITED
ACN 128 396 654 AS TRUSTEE FOR
THE POLMEAR FAMILY TRUST
in accordance with section 127 of the
Corporations Act 2001 (Cth): |
)
)
)
) |
|
/s/
Tim Polmear |
|
Signature of director |
|
|
|
Tim
Polmear |
|
Name of director |
|
*please
delete as applicable
EXECUTED
by NOMADCHOICE PTY
LIMITED
ACN 160 729 939
in accordance with section 127 of the
Corporations Act 2001 (Cth): |
)
)
)
) |
|
/s/
Timothy Polmear |
|
Signature of director |
|
|
|
Timothy
Polmear |
|
Name of director |
|
[Signature
Page to Stock Purchase Agreement]
SIGNED
by TIMOTHY POLMEAR
in the presence of: |
)
)
) |
|
|
|
|
/s/
Matthew Hawtin |
|
/s/
Timothy Polmear |
Signature of witness |
|
Signature |
|
|
|
Matthew
Hawtin |
|
|
Name of witness |
|
|
SIGNED
by REBECCA POLMEAR
in the presence of: |
)
)
) |
|
|
|
|
/s/
Matthew Hawtin |
|
/s/
Rebecca Polmear |
Signature of witness |
|
Signature |
|
|
|
Matthew
Hawtin |
|
|
Name of witness |
|
|
|
SYNERGY
CHC CORP. |
|
|
|
|
By: |
/s/
Jack Ross |
|
Name: |
Jack
Ross |
|
Title: |
Chief
Executive Officer |
FIRST
AMENDMENT TO LOAN AGREEMENT entered into as of the 12th day of November, 2015 (the “First Amendment”),
BETWEEN: |
KNIGHT
THERAPEUTICS (BARBADOS) INC., a corporation formed under the laws of Barbados; |
|
|
|
(hereinafter
called the “Lender”) |
|
|
AND: |
SYNERGY
CHC CORP., a corporation formed under the laws of the State of Nevada; |
|
|
|
(hereinafter
called the “Synergy”) |
WHEREAS
Synergy (then known as Synergy Strips Corp.) and the Lender are parties to that certain loan agreement (the “Loan
Agreement”) made as of the 21st day of January, 2015, pursuant to which the Lender has extended a loan to Synergy in
the principal amount of Six Million United States Dollars (US$6,000,000) (the “Original Loan”);
WHEREAS
Synergy has requested an additional loan in the principal amount of Five Million Five Hundred Thousand United States Dollars
(US$5,500,000) (the “Additional Loan”);
WHEREAS
the Lender and Synergy desire to amend the Loan Agreement to, inter alia, provide for the Additional Loan on the terms
and conditions set forth herein;
NOW,
THEREFORE, IN CONSIDERATION of these presents and of the mutual covenants hereinafter contained, the parties have agreed as
follows:
Article
1
interpretation
In
this First Amendment, capitalized terms not otherwise defined herein shall have the meanings ascribed to such terms in the Loan
Agreement as if amended to include the amendments set out in this First Amendment.
Article
2
amendments
2.1 | Amendments
to the Loan Agreement |
The
Borrower and the Lender hereby agree to amend the Loan Agreement as follows:
|
2.1.1 |
Section
1.1 of the Loan Agreement is amended by inserting or restating the following definitions (as the case may be). |
“2015
First Warrant” means that certain common share stock purchase warrant to be executed by the Borrower and the Lender
to give effect to the Lender’s 2015 Immediate Equity issuance.
“2015
Second Warrant” means that certain common share stock purchase warrant to be executed by the Borrower and the Lender
to give effect to the Lender’s 2015 Equity.
“Additional
Loan” means the loan to the Borrower by the Lender in the principal amount of Five Million Five Hundred Thousand United
States Dollars (US$5,500,000) pursuant to the First Amendment.
“Borrower”
means Synergy CHC Corp. (formerly known as Synergy Strips Corp.) a corporation incorporated under the laws of the State of Nevada
together with all of its Subsidiaries and also includes their respective permitted successors and assigns.
“Breakthrough”
means Breakthrough Products, Inc.
“Breakthrough
Acquisition” means the acquisition by the Borrower of all the issued and outstanding shares of Breakthrough Products,
Inc.
“Business”
means the business of the Borrower including the manufacture, distribution, sale of consumer health products, including the products
known as Synergy Strips, Flat Tummy Tea and UrgentRX Products.
“Equity
Financing” means the completion, on or prior to the first anniversary of the Second Closing Date, of an offering or
offerings of the Borrower’s equity securities or securities convertible into equity securities of at least Two Million Dollars
in the aggregate.
“First
Amendment” means the First Amendment to this Agreement entered into as of the 12th day of November, 2015.
“Lender’s
2015 Equity” means the issuance to the Lender of a ten (10) year warrant to purchase 5% of the common shares of the
Borrower, on a fully diluted basis after giving effect to the Lender’s 2015 Immediate Equity and to both the Breakthrough
Acquisition and the Nomad Acquisition, at a price per share equal to $0.70, including a full ratchet clause pegged at $0.70 a
share.
“Lender’s
2015 Immediate Equity” means the issuance to the Lender, for no additional consideration, of such number of common shares
of the Borrower that will result in the Lender receiving, on a fully diluted basis and after giving effect to (i) the Breakthrough
Acquisition, (ii) the Nomad Acquisition, and (iii) the Lender’s 2015 Equity, 6.5% of the common shares of the Borrower,
which shares will not be subject to any trading restrictions, other than as required under Applicable Law. For clarity, these
shares are in addition to shares of Borrower currently being held by Lender.
“Lender’s
Nomad Distribution Agreement” means the proposed license and distribution agreement among the Borrower, Nomad and the
Lender by which (i) Lender shall have exclusive distribution rights to all products of Nomad including the “Flat Tummy Tea”
products, in each of Canada, Israel, Romania, Russia and Sub Saharan Africa, and (ii) Lender shall sublicense the direct-to-consumer
channel for the said territory back to Nomad for a royalty equal to sixty percent (60%) of Gross Sales.
“Loan”
means, as the context requires, both the Original Loan and the Additional Loan, collectively.
“Maturity
Date” means: (i) with respect to the Original Loan, January 17, 2017 and (ii) with respect to the Additional Loan, November
11, 2017.
“Nomad”
means Nomadchoice Pty Ltd (ABN 41 160 729 939).
“Nomad
Acquisition” means the acquisition by the Borrower of all the issued and outstanding shares of Nomad.
“Nomad
Guarantee” means a guarantee agreement satisfactory to the Lender executed by Nomad in respect of the Obligations.
“Nomad
Purchase Agreement” means that certain Stock Purchase Agreement dated November 12, 2015 among the Borrower, Nomad, TPR
Investments Pty Ltd CAN 128 396 654, as trustee for Polmear Family Trust, Timothy Polmear and Rebecca Polmear, effecting the Nomad
Acquisition.
“Nomad
Security Documents” means the Security Documents to be granted by Nomad in respect of the Nomad Guarantee.
“Nomad
Vendors” means the vendor’s of the shares of Nomad pursuant to the Nomad Acquisition.
“Original
Loan” means the loan to the Borrower by the Lender in the principal amount of Six Million United States Dollars (US$6,000,000)
pursuant to this Agreement.
“Repayment
Schedule” means the Amended and Restated Schedule of Repayment of principal of the Original Loan and the Additional
Loan attached this Amendment as Schedule A.
“Second
Closing Date” means November 12, 2015 or such other date on which the Additional Loan is made concurrently with the
closing of the Nomad Acquisition.
“Warrant”
means the 2015 First Warrant and the 2015 Second Warrant, together or separately, as the context requires.
|
2.1.2 |
The
following definitions set forth in the Loan Agreement are amended: |
“Loan
Documents” is hereby amended to include this First Amendment, any additional, amended or restated Loan Documents delivered
to the Lender in connection with this First Amendment or otherwise in connection with the Loan Agreement, including any Loan Document
delivered to the Lender as general continuing collateral security for the payment and performance of the present and future Obligations
(including obligations relating to the Additional Loan), as well as any amendments, replacements, supplements or other modifications
hereto or thereto or any other documents or instruments contemplated hereby or thereby.
“Permitted
Debt” is amended to include:
“(vi)
Debt of a maximum of AUD$3,500,000 that may be owed to the Nomad Vendors pursuant to the Nomad Purchase Agreement.”
|
2.1.3 |
Section
1 of the Loan Agreement as currently stated shall be renumbered as Section 2.1(a) and refer to the Original Loan only. The
following shall be added as Section 2.1(b) in respect of the Additional Loan: |
“Subject
to the terms and conditions of this Agreement and the other Loan Documents, the Lender agrees to loan to the Borrower in lawful
money of the United States the Additional Loan on the terms hereof and the Borrower hereby irrevocably authorizes the Lender to
make the Additional Loan on the terms hereof. The Additional Loan shall bear interest as set forth in Section 4.1 of this Agreement.
The
Additional Loan shall be disbursed in two tranches. The first tranche of Three Million Two Hundred Fifty Thousand United States
Dollars (US$3,250,000) shall be disbursed upon the satisfaction of the conditions precedent set forth in Section 3.1 of this Agreement.
The
balance of the Additional Loan, being Two Million Two Hundred Fifty Thousand United States Dollars (US$2,250,000) shall be disbursed
upon satisfaction of the conditions precedent set forth in Section 3.2 of this Agreement.”
|
2.1.4 |
Section
2.2 of the Loan Agreement as currently stated shall be renumbered as Section 2.2(a) and refers to the Original Loan only.
The following shall be added as a new Section 2.2(b) in respect of the Additional Loan: |
“The
Maturity Date of the Additional Loan shall be November 11, 2017.”
|
2.1.5 |
Sections
3.2(a) and (b) of the Loan Agreement as currently stated shall be renumbered as Sections 3.2(a)(i) and 3.2(a)(ii) and refer
to the Original Loan only. The following shall be added as a new Section 3.2(b) in respect of the Additional Loan: |
“Subject
to the terms hereof, the Borrower may prepay the outstanding principal of the Additional Loan any time following the first anniversary
of the Second Closing Date. Such prepayments may only be for a minimum amount of One Million Dollars ($1,000,000) and in additional
increments of One Million Dollars ($1,000,000) unless the entire Additional Loan is being prepaid in full. Such prepayment must
be accompanied by a prepayment fee of five percent (5%) of the amount of the Additional Loan being prepaid at that time.”
|
2.1.6 |
Section
4.3 of the Loan Agreement is hereby amended by deleting the words: |
“the
interest rate otherwise payable pursuant to Section 4.1 plus five percent (5%)” and replacing same by “twenty percent
(20%)”
|
2.1.7 |
Section
6.1 of the Loan Agreement is hereby amended by adding the following: |
|
“(g) |
Guarantee
Agreement of the Obligations from Breakthrough; |
|
|
|
|
(h) |
Nomad
Guarantee; |
|
|
|
|
(i) |
General
Security Agreement from each of Borrowers’ Subsidiaries including Breakthrough and Nomad; |
|
|
|
|
(j) |
a
collateral assignment from each of Borrower’s Subsidiaries of its interest on all Material Contracts and Material Licenses; |
|
|
|
|
(k) |
Intellectual
Property Security Agreement of each of Borrower’s Subsidiaries; |
|
|
|
|
(l) |
Subordination
Agreement by Nomad Vendors in favour of Knight; |
|
|
|
|
(m) |
specific
security agreement granted by the Borrower in respect of the issued share capital in Nomad.” |
|
2.1.8 |
Section
7 of the Loan Agreement is amended by adding the following: |
|
“(jj) |
Nomad
Share Purchase Agreement. The accuracy and completeness of each of the representations and warranties set out in the Nomad
Purchase Agreement and all such representations and warranties are hereby incorporated into this Agreement by reference as
if same were herewith recited at length and made directly by the Borrower for the benefit of Lender. Such representations
and warranties shall survive for so long as the Obligations remain outstanding notwithstanding any shorter survival period
under the said share purchase agreement. |
|
(kk) |
Breakthrough
Share Purchase Agreement. The accuracy and completeness of each of the representations and warranties set out in the share
purchase agreement concerning the Breakthrough Acquisition and all such representations and warranties are hereby incorporated
into this Agreement by reference as if same were herewith recited at length and made directly by the Borrower for the benefit
of Lender. Such representations and warranties shall survive for so long as the Obligations remain outstanding notwithstanding
any shorter survival period under the said share purchase agreement.” |
|
2.1.9 |
Section
9.1 of the Loan Agreement is amended by adding the following: |
|
“(z) |
Borrower
must maintain separate financial records for the business conducted by Breakthrough (including a separate balance sheet, income
statement and cash flow statement); |
|
|
|
|
(aa) |
following
the release of Borrower’s financial statements for the quarter ended March 31, 2015 and at any time thereafter, Borrower
shall promptly (and in any event within three (3) Business Days) notify Knight should either (i) the business being conducted
by Breakthrough reflect negative EBITDA for the relevant quarter, or (ii) the working capital related to that business fall
below Five Hundred Thousand Dollars ($500,000). In such event, Knight may, in its sole discretion, direct Borrower to immediately
cease the UrgenRX business. For certainty, failure to do so upon receipt of such direction will be an Event of Default under
this Agreement. |
|
|
|
|
(bb) |
Borrower
must ensure that: |
|
(a) |
Nomad
completes a financial assistance whitewash procedure in relation to the Nomad Guarantee and Nomad Security Documents granted
in respect thereto in accordance with Section 260B of the Corporations Act 2001 (Cth) by no later than the date that
is 30 days after the Second Closing Date; and |
|
(b) |
the
Nomad Guarantee and Nomad Security Documents granted in respect thereto are effective no later than the date that is thirty
(30) days after the Second Closing Date. |
|
Failure
to comply with this clause will be an Event of Default if not cured within ten (10) Business Days of non-compliance.” |
|
2.1.10 |
Section
9.1(x)(i) of the Loan Agreement is hereby amended by adding the following at the end of that Section: |
“Commencing
with the six (6) month period ending on June 30, 2016, and for each six (6) month period ending on the last day of each Fiscal
Quarter thereafter, Borrower shall maintain a minimum EBITDA of One Million Dollars ($1,000,000).”
|
2.1.11 |
Section
9.1(x)(iii) of the Loan Agreement is hereby amended by requiring the amount of minimum cash balance to be One Million Dollars
($1,000,000) commencing on June 30, 2016. |
|
2.1.12 |
Section
9.2 of the Loan Agreement is amended by adding the following: |
| “(t) | Nomad.
Make any payment under the Nomad Purchase Agreement if a Default or Event of Default
has occurred and is continuing or would occur as a result of making such payment.” |
|
2.1.13 |
Article
11 of the Loan Agreement is amended by adding the following: |
|
“(u) |
If
the Borrower fails to make any of the “earn-out payments” pursuant to the Nomad Acquisition. |
|
|
|
|
(w) |
If
the Borrower does not complete the Equity Financing by the first anniversary of the Second Closing Date.” |
|
2.1.14 |
From
and after the Second Closing Date, (i) all references in the Loan Agreement to “this Agreement” shall mean the
Loan Agreement as amended by this First Amendment, and as may otherwise be amended, restated, supplemented or otherwise modified
from time to time, and (ii) all references in the other Loan Documents to the “Loan Agreement” (or words of similar
import) shall be deemed to be references to the Loan Agreement as amended by this First Amendment, and as may otherwise be
amended, restated, supplemented or otherwise modified from time to time. All references in any of the Loan Documents to the
“Loan Documents” shall mean the Loan Documents as amended by this First Amendment and as may otherwise be amended
restated, supplemented or otherwise modified from time to time. |
|
2.1.15 |
Except
as expressly amended by this First Amendment, all other provisions of the Loan Agreement and the Transaction Documents not
specifically amended hereby shall remain unchanged and in full force and effect. |
Article
3
CONDITIONS
PRECEDENT & closing date
3.1 |
Conditions
to Loan by the Lender |
The
effectiveness of this First Amendment and the Lender’s obligation to fund the Additional Loan amount shall be subject to
following conditions precedent having been met to the satisfaction of the Lender, or, alternatively, waived in writing by the
Lender:
|
3.1.1 |
the
Borrower will pay to the Lender an origination fee equal to One Hundred Ten Thousand United States Dollars (US$110,000), being
two percent (2%) of the Additional Loan amount, on the Second Closing Date; |
|
|
|
|
3.1.2 |
the
Borrower will pay to the Lender a work fee equal to Fifty Five Thousand United States Dollars (US$55,000), being one percent
(1%) of the Additional Loan amount, at the earlier of November 12, 2015 and the Second Closing Date, whether or not the Additional
Loan is advanced; |
|
|
|
|
3.1.3 |
this
Agreement shall have been executed and delivered by all parties hereto; |
|
|
|
|
3.1.4 |
the
Borrower and each of the Subsidiaries shall have executed and delivered to the Lender the Loan Documents to which each is
a party including, without limitation, the Security Documents; |
|
|
|
|
3.1.5 |
the
Lender shall have received certified copies of the resolutions authorizing the execution, delivery and performance of Borrower’s,
Nomad’s and Breakthrough’s respective obligations under the Loan Documents to which they are a party and the transactions
contemplated therein, and the incumbency of the officers of Borrower, Nomad and Breakthrough; |
|
|
|
|
3.1.6 |
certificates
of status or good standing, as applicable, for all relevant jurisdictions of Borrower shall have been delivered to the Lender; |
|
|
|
|
3.1.7 |
certificate
of incorporation and constituent documents of Nomad; |
|
|
|
|
3.1.8 |
Borrower
shall be in compliance in all material respects with all (if any) Material Contracts and Material Licences to the satisfaction
of the Lender and copies of all Material Contracts and Material Licences if any, applicable to Borrower, shall have been delivered
to the Lender; |
|
|
|
|
3.1.9 |
evidence
of repayment in full of all Debt that is not Permitted Debt owing by Borrower to any third party lenders to Borrower concurrent
with the Loan shall have been delivered to the Lender; |
|
|
|
|
3.1.10 |
evidence
that all necessary or required consents or approvals of any Governmental Authority or other Person in connection with the
completion of the Breakthrough Acquisition and the Nomad Acquisition and the delivery of the Loan Documents have been obtained; |
|
3.1.11 |
releases,
discharges, estoppels and postponements with respect to all Liens which are not Permitted Liens, if any, shall have been delivered
to the Lender; |
|
|
|
|
3.1.12 |
payment
of all amounts and fees payable to the Lender; |
|
|
|
|
3.1.13 |
duly
executed copies of the Security shall have been delivered to the Lender and such financing statements or other registrations
of such Security, or notice thereof, shall have been filed, registered, entered or recorded in all offices of public record
necessary or desirable in the opinion of the Lender to preserve or protect the charges and security interests created thereby; |
|
|
|
|
3.1.14 |
the
Borrower shall have delivered to the Lender original share certificates in respect of all of the issued share capital in Nomad
together with share transfer forms in respect of the shares in Nomad duly executed by the Borrower; |
|
|
|
|
3.1.15 |
evidence
satisfactory to the Lender that entry into the Security Documents to which Nomad is a party does not materially prejudice
the interests of Nomad or its shareholders and does not materially prejudice the ability of Nomad to pay its creditors (and
that the board of directors of Nomad have resolved that this is the case); |
|
|
|
|
3.1.16 |
evidence
that immediately prior to the acquisition by the Borrower of all the issued share capital in Nomad, the directors of Nomad
will be Jack Ross, Stephen Fryer and Timothy Polmeer and that appointment of such directors has been, or will be, notified
to the Australian Securities and Investments Commission; |
|
|
|
|
3.1.17 |
a
currently dated letter of opinion of counsel to the Borrower along with the opinions of local counsel for Borrower shall have
been delivered to the Lender. Such opinions shall, amongst other things, confirm that the existing Security delivered in connection
with the Original Loan is first ranking security in favour of the Lender in respect to all of the Obligations, including without
limitation, the Additional Loan; |
|
|
|
|
3.1.18 |
the
Borrower shall have delivered to the Lender certificates of insurance acceptable to the Lender showing, inter alia, the Lender
as a first loss payee as its interest may appear on all insurance policies that insure the assets to be secured by the Security; |
|
|
|
|
3.1.19 |
no
Default or Event of Default has occurred and is continuing on the Second Closing Date or would result from making the Additional
Loan and a senior officer of the Borrower shall have certified the same to the Lender; |
|
|
|
|
3.1.20 |
all
representations and warranties made by Borrower, Nomad and Breakthrough in the Loan Documents are true and correct in all
material respects; |
|
|
|
|
3.1.21 |
no
Material Adverse Effect has occurred; |
|
3.1.22 |
a
source and use of funds statement and an outline of the flow of funds from the Loan shall have been delivered to the Lender
evidencing that the Loan will be used solely for the Nomad Acquisition and for working capital purposes; |
|
|
|
|
3.1.23 |
the
Lender shall have received such additional evidence, documents or undertakings as the Lender shall reasonably request to establish
the consummation of the transactions contemplated hereby, and the Breakthrough Acquisition and the Nomad Acquisition and be
satisfied, acting reasonably, as to the taking of all proceedings in connection herewith in compliance with the conditions
set forth in this Agreement; |
|
|
|
|
3.1.24 |
the
Lender shall have completed all due diligence which it considers necessary or appropriate in its discretion in regard to Borrower
and its Property, the Breakthrough Acquisition and the Nomad Acquisition, books and records, operations, prospects and condition
(financial or otherwise), including, without limitation, in regards to past and ongoing compliance with Applicable Laws (including
Environmental Laws), union and labour relations and pension matters; |
|
|
|
|
3.1.25 |
the
Lender and the Borrower will have entered into, executed and delivered the Lender’s Nomad Distribution Agreement, all
on terms satisfactory to the parties, acting reasonably; |
|
|
|
|
3.1.26 |
concurrently
therewith, the Borrower shall complete the Breakthrough Acquisition and the Nomad Acquisition on terms and conditions satisfactory
to the Lender; |
|
|
|
|
3.1.27 |
the
execution and delivery of the 2015 First Warrant and the 2015 Second Warrant by the Borrower; and |
|
|
|
|
3.1.28 |
the
Second Closing Date occurs by no later than November 16, 2015; |
provided
that if and to the extent that any Loan Document or other condition precedent set forth in this Section 3.1 and relating specifically
and solely to Breakthrough or the Breakthrough Acquisition is not delivered at or prior to the Second Closing Date, then same
shall instead become a condition precedent to the Lender advancing the second tranche of the Additional Loan as set forth in Section
3.2 and shall not be a waiver of such unfulfilled condition.
3.2 |
Conditions
of Second Tranche |
The
effectiveness of the Lender’s obligation to fund the second tranche of the Additional Loan amount, as set forth in Section
2.1.4 of this Agreement, shall be subject to following conditions precedent having been met to the satisfaction of the Lender,
or, alternatively, waived in writing by the Lender:
|
3.2.1 |
Borrower
must ensure that: |
|
(a) |
Nomad
completes a financial assistance whitewash procedure in relation to the Nomad Guarantee and Nomad Security Documents granted
in respect thereto in accordance with Section 260B of the Corporations Act 2001 (Cth) by no later than the date that
is thirty (30) days after the Second Closing Date; and |
|
|
|
|
(b) |
the
Nomad Guarantee and Nomad Security Documents granted in respect thereto are effective no later than the date that is thirty
(30) days after the Second Closing Date. |
|
3.2.2 |
Borrower
shall have satisfied all those conditions precedent set forth in Section 3.1 that relate to Breakthrough and/or the Breakthrough
Acquisition that were not satisfied on or prior to the Second Closing Date; |
|
|
|
|
3.2.3 |
no
Default or Event of Default has occurred and is continuing on the date of disbursement or would result from making the second
tranche of the Additional Loan and a senior officer of the Borrower shall have certified the same to the Lender; |
|
|
|
|
3.2.4 |
all
representations and warranties made by Borrower in the Loan Documents are true and correct in all material respects; |
|
|
|
|
3.2.5 |
no
Material Adverse Effect has occurred. |
This
First Amendment shall automatically be terminated on November 18, 2015 if the conditions precedent set forth under Section 3.1
have not been met.
Article
4
MISCELLANEOUS
Each
of the Borrower and the Lender shall, from time to time hereafter and upon any reasonable request of the other party, execute
and deliver such further agreements and documents and do all such other acts and things as may be necessary or appropriate to
give effect to the foregoing.
Time
shall be of the essence of this First Amendment.
If
any provision of this First Amendment is found by final judgment of a court of competent jurisdiction to be invalid or unenforceable
in whole or in part, such provision (or part thereof, as the case may be) shall be severable and such finding shall not affect
the validity or enforceability of the remainder of such provision or of any other provision hereof.
This
First Amendment shall enure to the benefit of and be binding upon the parties hereto and their permitted assigns.
This
First Amendment may be executed in one or more counterparts, each of which shall be deemed an original and all of which, taken
together, shall constitute one and the same instrument.
In
the event of any conflict or inconsistency between the terms and conditions of this First Amendment and the terms and conditions
of any other Transaction Document, including the Loan Agreement, the terms and conditions of this First Amendment shall prevail
and be paramount to the extent of such conflict or inconsistency.
This
First Amendment will be governed by and construed in accordance with the laws of the Province of Quebec and the laws of Canada
applicable therein.
The
parties acknowledge that they have requested that this First Amendment and all ancillary documents be drawn up in the English
language only. Les parties reconnaissent avoir exigé que cette convention ainsi que tous les documents y reliés
soient rédigés en anglais seulement.
(signature
page follows)
IN
WITNESS WHEREOF the parties hereto have duly executed this First Amendment as of the date and at the place first hereinabove
set forth.
|
KNIGHT THERAPEUTICS (BARBADOS) INC. |
|
|
|
|
by: |
/s/ Michael Loustric |
|
Name: |
Michael Loustric |
|
Title: |
President |
|
SYNERGY
CHC CORP. |
|
|
|
|
by: |
/s/
Jack Ross |
|
Name: |
Jack
Ross |
|
Title: |
Chief
Executive Officer |
EMBARGOED
FOR USE BEFORE |
Contact: |
After
9am (Eastern) |
Jack
Ross, Chairman / CEO |
November
16, 2015 |
Synergy
CHC Corp |
|
Jack@synergychc.com |
|
615-939-9004 |
Synergy
CHC Corp Acquires Another Quality Brand in “UrgentRx”
Westbrook,
Maine, November 16, 2015 – Synergy CHC Corp (OTCQB: SNYR) a consumer health care company, today announced it has
acquired a 100% ownership stake in Breakthough Products, Inc. (UrgentRx). UrgentRx is engaged in the business of developing and
selling medications for headache, heart burn, allergy attack, ache and pain, and upset stomach in the form of powders.
Under
the terms of the agreement, Synergy purchased all the issued and outstanding capital stock of UrgentRx in exchange for 6,000,000
shares of Synergy common stock. In addition, Synergy agreed to pay a royalty to a trust for the benefit of the UrgentRx shareholders
equal to 5% of gross sales of the UrgentRx products following the first $5,000,000 in gross sales on a quarterly basis for a period
of seven years from the closing date.
“We
believe UrgentRx will continue to thrive as it joins Synergy’s expanding product portfolio while leveraging the momentum
of the platform and multiple economies of scale it provides,” said Jordan
Eisenberg, CEO of UrgentRx. “This is a tremendous opportunity for UrgentRx to continue
to be consumers’ best choice for fast, convenient relief. I am thrilled to join Jack Ross and the Synergy Management Team.
I believe we have a real opportunity to build a world-class consumer healthcare business bolstered by the most exciting and innovative
brands in the industry.”
“We
are pleased to add another unique offering to our portfolio; it is consistent with the company’s strategy to grow by further
acquisition. We are deliberately seeking to generate shareholder value through the addition of products that help improve the
lives of customers while leveraging our existing distribution relationships. We will continue to be active on the acquisition
trail,” said Jack Ross, President and CEO of Synergy.
About
UrgentRx
UrgentRx
produces a line of fast-acting, portable OTC medications that provide right now relief for today’s busy, on-the-go
consumer. UrgentRx® Fast Powders™ are innovative, fast-acting flavored powder medications in patented credit card-sized
packets. They can be taken without water, providing immediate relief for a wide variety of everyday ailments, whenever and
wherever they strike. UrgentRx produces medications to treat allergy attacks, headaches, aches and pains, heartburn, and
upset stomach, as well as a heart attack first aid that has helped save multiple lives.
UrgentRx
is successfully disrupting and bringing much-needed innovation to the OTC category by offering products that fit contemporary
consumers’ lifestyles. Answering these consumers’ unmet needs, UrgentRx is rapidly becoming the “go-to”
brand for on-the-go relief. The line is sold in over 35,000 stores nationwide, including many leading national food, drug, mass,
convenience and travel retailers. Notably, UrgentRx pioneered the use of “found space” displays that take advantage
of previously-unutilized space at checkout.
The
company was orginally funded by Sam Zell, David Bonderman, Herb Simon, Academy Award-winning actress Hilary Swank, worldwide
talent agency WME, as well as multiple family offices. UrgentRx has been featured on national talkshows The Doctors,
Ellen and The View and has received coverage in The New York Times, Entrepreneur, Fortune, CNN, The Wall
Street Journal, CNBC and Forbes. In 2015, UrgentRx won the prestigious Inc 5000 and was ranked as the 168th
fastest-growing company in America.
Based
in Denver, Colorado, UrgentRx was founded by two-time Goldman Sachs “Most Intriguing Entrepreneur” Jordan Eisenberg.
CREO
Capital Securities, LLC was the investment bank for UrgentRx and its shareholders in this transaction. Joel Montminy, President
& CEO of CREO said “The Synergy team adeptly analyzed and efficiently closed on this highly complementary combination.
Under their watch, we believe UrgentRX will achieve exciting performance in the years ahead.”
About
Synergy CHC Corp.
Synergy
CHC Corp. is a consumer health care company that is in the process of building a portfolio of best-in-class consumer product brands.
Synergy's strategy is to grow its portfolio both organically and by further acquisition. Synergy’s diversified portfolio
now includes FOCUSFactor™, Neuragen™, Hand MD™, and UrgentRx™.
For more information, please visit www.synergychc.com.
About
FOCUSfactor® “Another Synergy Brand”
FOCUSfactor
is sold at America’s leading retailers such as Costco, Sam’s Club, Wal-Mart, BJ’s Walgreens and The Vitamin
Shoppe. FOCUSfactor, America’s leading brain health supplement, is a nutritional supplement that includes a proprietary
blend of brain supporting vitamins, minerals, antioxidants and other nutrients. In December 2012, the United States Patent and
Trademark Office issued US Patent 8,329,227 covering FOCUSfactor’s proprietary formulation “for enhanced mental function.”
The issuance of the patent marked one of the few times a patent has been issued for a nationally branded nutritional supplement.
FOCUSfactor is clinically tested with results demonstrating improvements in focus, concentration and memory in healthy adults.
www.focusfactor.com
About
Neuragen® “Another Synergy Brand”
Neuragen®
is a topical product that works directly at the site of the pain as opposed to oral products. Neuragen® reduces the spontaneous
firing of damaged peripheral nerves. By calming these firings at the source, Neuragen® is clinically shown to reduce shooting
and burning pains quickly and without the side effects of orally taken medications. This is in part due to the small lipophilic
molecules found in Neuragen® which rapidly carry the active ingredients through the rough outer layer of the skin to the site
of the pain. Neuragen® is available over the counter in most local pharmacies either in the diabetic section or the analgesic
(pain) section. For more information, please visit www.neuragen.com.
About
Hand MD® “Another Synergy Brand’
Hand
MD is the world’s first anti-aging skincare line formulated specifically for the hands. Hands reveal a woman’s true
age and the rejuvenation of the hand has become women’s #1 aging concern. Developed by Kara Harshbarger and renowned celebrity
dermatologist Dr. Alex Khadavi, Hand MD’s extensive clinical trials show significant improvement in the appearance of fine
lines and wrinkles, skin hydration, hyper-pigmentation and radiance. HAND MD launched on QVC and sold out in an astonishing 5
minutes. www.hand-md.com.
Forward-Looking
Statements
This
press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that
are subject to risks and uncertainties. All statements, other than statements of historical facts, regarding management's expectations,
beliefs, goals, plans or Synergy’s prospects should be considered forward-looking. Readers are cautioned that actual results
may differ materially from projections or estimates due to a variety of important factors, including: Synergy’s ability
to integrate the Urgent Rx and other recently acquired product lines into its current operations; Synergy’s dependence
on third parties for its research and development, manufacturing and distribution functions; Synergy’s’ dependence
on its license relationships; the risks and uncertainties associated with Synergy’s ability to manage its limited cash resources;
obtaining additional financing to support Synergy’s operations; protecting the intellectual property developed by or licensed
to Synergy; and Synergy’s ability to build its operations to support its business strategy and promote its products. These
and other risks are described in greater detail in Synergy’s filings with the SEC, copies of which are available free of
charge at the SEC's website (www.sec.gov) or upon request from Synergy. Synergy may not actually achieve the goals or plans
described in its forward-looking statements, and investors should not place undue reliance on these statements. Synergy assumes
no obligation and does not intend to update these forward-looking statements, except as required by law.
EMBARGOED FOR USE BEFORE |
Contact: |
After 9am (Eastern) |
Jack Ross, Chairman / CEO |
November 16, 2015 |
Synergy CHC Corp |
|
Jack@synergychc.com |
|
615-939-9004 |
Synergy CHC Corp
Acquires “Flat Tummy Tea”, an Australian Company With Significant Social Media Presence
Westbrook, Maine, November 16, 2015
– Synergy CHC Corp (OTCQB: SNYR), a consumer health care company, today announced it has acquired a 100% ownership stake
in Nomad Choice PTY LTD, an Australian company who owns the brand Flat Tummy Tea, which has significant social media presence.
Under the terms of
the agreement, Synergy purchased of all the issued and outstanding capital stock of Flat Tummy Tea for a total purchase price of
$10,000,000, comprised of $4,000,000 (Australian dollars, AUD) in cash, 3,571,428 shares of its common stock, and possible earn-out
payments of up to $3,500,000 (AUD) in aggregate if certain EBITDA thresholds are met as of June 30, 2016.
“We are excited to
be partnering with Synergy through this acquisition” said Tim Polmear, Director at Flat Tummy Tea. “Over the last few
years, we’ve developed an innovative, unique and very effective way to reach targeted consumers through social media. We
see great potential for Synergy’s existing and future brands to tap into this intellectual property and extend their consumer
reach into the online world. On top of this, Synergy’s expertise and resources to take Flat Tummy Tea into a retail environment
make this a great match.”
“We
are pleased to add another unique offering to our portfolio which now gives Synergy global reach across multiple distribution platforms.
It is consistent with the company’s strategy to grow both organically and by further acquisition. We are deliberately seeking
to generate shareholder value through the addition of products that help improve the lives of customers while leveraging our existing
distribution relationships. We will continue to be active on the acquisition trail” said Jack Ross, CEO of Synergy.
About Flat Tummy Tea
Flat Tummy Tea’s uniquely formulated two-step
herbal detox tea works to naturally help speed metabolism, boost energy and reduce bloating to flatten your tummy. It’s currently
sold exclusively online to a global, 20-30 year old female, predominantly American market.
Since being founded in 2013,
Flat Tummy Tea has grown rapidly, largely attributed to the strength of their branding and their innovative and effective use of
social media. Their secret is a very specific process and ROI based algorithm used on various online platforms. To date, Flat Tummy
Tea has built a targeted social media following of over 500,000, many of whom are now customers.
Flat Tummy Tea has proven month on month growth
since inception at a rate of over 400% annually.
Flat Tummy Tea now has over 3000+ positive
written reviews on their website,flattummytea.com or visit their Instagram page.
Go Capital Pty Ltd was the corporate advisor for
Flat Tummy Tea and its shareholders in this transaction. Derek Gerrard, Director of GoCap said “Both Synergy and Flat Tummy
Tea worked with a can-do attitude through this transaction. This demonstrated the capability of both teams that will now create
a strong combination to accelerate the growth performance of the business moving forward.”
About Synergy CHC
Corp.
Synergy CHC Corp.
is a consumer health care company that is in the process of building a portfolio of best-in-class consumer product brands. Synergy’s
strategy is to grow its portfolio both organically and by further acquisition. Synergy’s diversified portfolio now includes
FOCUSFactor™, Neuragen™, Hand MD™, UrgentRx™ and Flat Tummy
Tea™ For more information, please visit www.synergychc.com.
About FOCUSfactor® “Another Synergy
Brand”
FOCUSfactor is sold at America’s leading
retailers such as Costco, Sam’s Club, Wal-Mart, BJ’s Walgreens and The Vitamin Shoppe. FOCUSfactor, America’s
leading brain health supplement, is a nutritional supplement that includes a proprietary blend of brain supporting vitamins, minerals,
antioxidants and other nutrients. In December 2012, the United States Patent and Trademark Office issued US Patent 8,329,227 covering
FOCUSfactor’s proprietary formulation “for enhanced mental function.” The issuance of the patent marked one
of the few times a patent has been issued for a nationally branded nutritional supplement. FOCUSfactor is clinically tested with
results demonstrating improvements in focus, concentration and memory in healthy adults. www.focusfactor.com.
About Neuragen® “Another Synergy
Brand”
Neuragen®
is a topical product that works directly at the site of the pain as opposed to oral products. Neuragen® reduces the spontaneous
firing of damaged peripheral nerves. By calming these firings at the source, Neuragen® is clinically shown to reduce shooting
and burning pains quickly and without the side effects of orally taken medications. This is in part due to the small lipophilic
molecules found in Neuragen® which rapidly carry the active ingredients through the rough outer layer of the skin to the site
of the pain. Neuragen® is available over the counter in most local pharmacies either in the diabetic section or the analgesic
(pain) section. For more information, please visit www.neuragen.com.
About Hand MD® “Another Synergy
Brand”
Hand MD is the world’s first anti-aging
skincare line formulated specifically for the hands. Hands reveal a woman’s true age and the rejuvenation of the hand has
become women’s #1 aging concern. Developed by Kara Harshbarger and renowned celebrity dermatologist Dr. Alex Khadavi, Hand
MD’s extensive clinical trials show significant improvement in the appearance of fine lines and wrinkles, skin hydration,
hyper-pigmentation and radiance. HAND MD launched on QVC and sold out in an astonishing 5 minutes. www.hand-md.com.
About UrgentRx®
“Another Synergy Brand”
UrgentRx produces a line of fast-acting, portable
OTC medications that provide right now relief for today’s busy, on-the-go consumer. UrgentRx® Fast
Powders™ are innovative, fast-acting flavored powder medications in patented credit card-sized packets. They can be taken
without water, providing immediate relief for a wide variety of everyday ailments, whenever and wherever they strike. UrgentRx®
produces medications to treat allergy attacks, headaches, aches and pains, heartburn, and upset stomach, as well as a heart
attack first aid that has helped save multiple lives. For additional information, please visit www.urgentrx.com.
Forward-Looking Statements
This press release contains forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of 1995 that are subject to risks and uncertainties.
All statements, other than statements of historical facts, regarding management’s expectations, beliefs, goals, plans or
Synergy’s prospects should be considered forward-looking. Readers are cautioned that actual results may differ materially
from projections or estimates due to a variety of important factors, including: Synergy’s ability to integrate the Flat
Tummy Tea, UrgentRx and Hand MD® product lines into its current operations; Synergy’s dependence on third parties
for its research and development, manufacturing and distribution functions; Synergy’s’ dependence on its license relationships;
the risks and uncertainties associated with Synergy’s ability to manage its limited cash resources; obtaining additional
financing to support Synergy’s operations; protecting the intellectual property developed by or licensed to Synergy; and
Synergy’s ability to build its operations to support its business strategy and promote its products. These and other risks
are described in greater detail in Synergy’s filings with the SEC, copies of which are available free of charge at the SEC’s
website (www.sec.gov) or upon request from Synergy. Synergy may not actually achieve the goals or plans described in its
forward-looking statements, and investors should not place undue reliance on these statements. Synergy assumes no obligation and
does not intend to update these forward-looking statements, except as required by law.
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