Document:

Exhibit 10.2

 

October 18, 2013

 

Mr. Bryan Edmiston

Gleacher & Company - Corporate Headquarters

1290 Avenue of the Americas

New York, NY 10104

 

Re:          Key Employee Retention Agreement

 

Dear Bryan:

 

On behalf of Gleacher & Company, Inc. (together with its successors and assigns, the “Company”), I am pleased to provide you with this key employee retention agreement (the “Agreement”), which sets forth the terms of your compensation for the Retention Period.  The terms of the Agreement are as follows:

 

1.             Retention Period.  The retention period is the period beginning on January 1, 2013, and ending on November 30, 2014 (the “Retention Period”).

 

2.             Duties.  Your position and title will continue to be controller or such additional senior executive positions and titles to which the Board may appoint you, as long as you are employed by the Company.  You acknowledge that, as the Company has experienced and will continue to experience a business and strategic transition, your duties have changed and will continue to change to adapt to the needs of the Company at any point in time.  It is the Company’s intention that, as your duties change, they will remain commensurate with the duties that would reasonably be expected of an experienced corporate controller in the context of the Company’s strategic direction at the relevant time.

 

3.             Base Salary; Nature of Employment.  While you are employed by the Company during the Retention Period, your base salary will be paid at a rate of $200,000 per year through May 31, 2013, and at a rate of $250,000 per year beginning June 1, 2013, payable in accordance with the Company’s general policies regarding compensation of executives.  Your employment is “at will” and may be terminated by either party at any time without notice to the party, provided, however, that the Company will provide you with at least sixty (60) days’ advance written notice if, on or following a Material Corporate Event, it terminates your employment involuntarily without Cause.  Subject to your signing and not timely revoking a release in accordance with paragraph 9, if you experience a Qualifying Termination before a Material Corporate Event, the Company will pay you, in a lump sum during the sixty (60) day period beginning on the date of your Qualifying Termination, the unpaid portion of the base salary that you would have earned had you remained employed by the Company through the end of the Retention Period.

 

 

Mr. Bryan Edmiston

Page 2

 

4.             Bonuses.

 

(a)           Sign-On Bonus.  In lieu of any discretionary bonus for 2013, you will receive a sign-on bonus of $200,000.  The Company will pay the sign-on bonus in a lump sum during the ten (10) business day period beginning on the date you execute this Agreement.

 

(b)           Fixed Bonuses.  You will be entitled to receive the following fixed bonus amounts (the “Fixed Bonuses”), subject only to the terms and conditions of this Agreement:

 

	
Amount
    	
 
    	
Payment Date
    	
 
    
	
$
    	
150,000
    	
 
    	
November 30, 2013
    	
 
    
	
$
    	
150,000
    	
 
    	
May 31, 2014
    	
 
    
	
$
    	
75,000
    	
 
    	
August 31, 2014
    	
 
    
	
$
    	
75,000
    	
 
    	
November 30, 2014
    	
 
    

 

To receive any Fixed Bonus, you must be employed by the Company on the applicable payment date.  The Company will pay each Fixed Bonus to which you become entitled in a lump sum during the ten (10) business day period beginning on the applicable payment date.  Notwithstanding the preceding two sentences, subject to your signing and not timely revoking a release in accordance with paragraph 9, if a Qualifying Termination or a Material Corporate Event occurs, the Company will pay you, in a lump sum during the sixty (60) day period beginning on the earlier of the date of your Qualifying Termination or the Material Corporate Event (as applicable), any Fixed Bonus that has not previously been paid.

 

(c)           Final Bonus.  You are entitled to receive a final bonus of $650,000 (the “Final Bonus”), subject only to the terms and conditions of this Agreement.  To receive the Final Bonus, you must be employed by the Company on the last day of the Retention Period, in which event the Company will pay it to you in a lump sum during the thirty (30) day period beginning on the last day of the Retention Period.  In addition to your rights under the previous two sentences, and subject to your signing and not timely revoking a release in accordance with paragraph 10, (1) if a Qualifying Termination occurs before the last day of the Retention Period, the Company will pay you the Final Bonus in a lump sum during the sixty (60) day period beginning on the date of your Qualifying Termination, and (2) if a Material Corporate Event occurs before the last day of the Retention Period, the Company will pay you 50% of the Final Bonus in a lump sum during the sixty (60) day period beginning on the date of the Material Corporate Event and 50% of the Final Bonus in a lump sum during the sixty (60) day period beginning on the earlier of your Qualifying Termination or the end of the Retention Period.  Notwithstanding the preceding sentences, if, before the end of the Retention Period, you voluntarily terminate your employment without Good Reason or the Company terminates your employment for Cause, you will not receive any portion of the Final Bonus that is not paid, or due to be paid, as of the date of your termination of employment.

 

 

Mr. Bryan Edmiston

Page 3

 

(d)           Discretionary Bonuses.  You will be eligible to receive additional bonuses based on such factors as your performance in achieving and bringing to resolution the Company’s chosen strategic plan.  The amount and timing of payment of any such bonus is within the sole discretion of the Board; provided, however, that if you become entitled to receive the Final Bonus, the Board will in all events review your performance for payment of a discretionary bonus (in addition to the Final Bonus), such bonus (if any) to be paid at the same time that your Final Bonus is paid.

 

5.             Benefits.  You will be entitled to participate in the standard employee benefit plans, programs and policies available to employees of the Company, all in accordance with the terms of such plans as they are in effect from time to time.  If, during the Retention Period, the Company fails to provide you with any material health or welfare benefit that it provides as of the date of this letter, you will receive periodic payments, in advance and no less frequently than monthly, sufficient (on an after-tax basis) for you to purchase the discontinued benefit.

 

6.             Expense Reimbursement.  You will be promptly reimbursed for all business expenses reasonably incurred by you.

 

7.             Vested and Unvested Equity Awards.  You will retain all vested and unvested equity awards previously awarded to you, subject to their existing terms and conditions.

 

8.             Other Benefits.  Subject to your signing and not timely revoking a release in accordance with paragraph 9, if (a) you experience a Qualifying Termination, (b) your employment is not extended by mutual agreement at the end of the Retention Period, or (c) a Material Corporate Event occurs, the Company will provide the following benefits: (x) the Company will pay you a lump sum equal to $16,000 during the sixty (60) day period beginning on the date of your termination of employment to assist you in obtaining health insurance for you and your beneficiaries, (y) the Company will pay you $4,000 per month (on the first day of each such month) for health insurance for you and your beneficiaries during the period that begins on the first day of the fifth month following your termination of employment and continues for fourteen months or, if earlier, until the date on which you and your dependents become eligible for comparable employer-provided or employer-subsidized group health insurance, and (z) all of your equity awards that are not fully vested on the earliest of such dates will immediately vest and be settled promptly thereafter, and will otherwise be treated in accordance with the terms applicable to vested awards.

 

9.             Release.  To receive any payments or other benefits that are subject to your signing and not revoking a release, you must, during the forty-five (45) day period following the end of the Retention Period, your Qualifying Termination, or the Material Corporate Event, as applicable, execute a release in substantially the form attached to this letter as Exhibit A.  We would advise you to review this draft release carefully with the assistance of an attorney.

 

 

Mr. Bryan Edmiston

Page 4

 

10.          Cooperation.  You will make yourself available to the Company and its counsel, on reasonable request and at mutually convenient times and places, to assist with any investigation, administrative proceeding, inquiry, arbitration, or litigation relating to any matter of which you have knowledge.  The Company will promptly pay, or reimburse you for, any expenses reasonably incurred by you in connection with your cooperation.

 

11.          Acknowledgement and Waiver; Entire Agreement.

 

(a)           This Agreement (including the Release) contains the entire understanding between you and the Company with respect to the subject matter of this Agreement and supersedes any prior agreements or understandings.

 

(b)           You acknowledge and agree that, except as described in this Agreement, you will have no rights to any further compensation from the Company or under any benefit, bonus, incentive, or equity compensation plan of the Company and/or any other arrangement or agreement with the Company and its affiliates, and you will not be entitled to any other payments or equity whatsoever from the Company.

 

(c)           You and the Company acknowledge and agree that you are waiving your rights and obligations pursuant to your participation agreement under the Gleacher & Company Senior Management Compensation and Retention Plan, effective August 17, 2012, and any of the Company’s other bonus, severance or retention plans, programs, policies, or arrangements; however, you are not waiving any benefits that you accrue under any of the Company’s other benefit plans, programs, policies or arrangements (including vested benefits under Gleacher Securities’ 401(k) plan, in accordance with the terms of such plan and applicable law) and reimbursement for any unreimbursed business expenses incurred by you (subject to and in accordance with the Firm’s reimbursement policies for which you are eligible).

 

(d)           You acknowledge and agree that no promises or representations regarding compensation, oral or written, have been made other than those expressly stated in this Agreement, and that you have not relied on any such promises or representations in signing this Agreement.

 

12.          Neutral Interpretation.  The language of this Agreement shall be construed as a whole, according to its fair meaning, and not strictly for or against either you or the Company, regardless of who drafted it.

 

13.          Modifications.  This Agreement can only be modified in a writing signed by you and an authorized representative of the Company that refers to this Agreement and specifically identifies the provisions being modified.

 

14.          Withholding.  The Company may withhold from the payments it makes to you under this Agreement any amounts that it reasonably concludes it is required to withhold by applicable law, but you are responsible for paying all taxes that you owe regardless of the extent to which the Company withholds.

 

 

Mr. Bryan Edmiston

Page 5

 

15.          Deferred Compensation/Section 409A of the Internal Revenue Code.  This Agreement shall be interpreted to ensure that the payments contemplated hereby are exempt from, or comply with, Section 409A of the Internal Revenue Code of 1986, as amended (“Section 409A”); provided, however, that nothing in this Agreement shall be interpreted or construed to transfer any liability for any tax (including a tax or penalty due as a result of a failure to comply with Section 409A) from you to the Company or to any other individual or entity.  Any payment under this Agreement that is subject to Section 409A and that is contingent on a termination of employment is contingent on a “separation from service” within the meaning of Section 409A (a “Separation from Service”).  Each such payment shall be considered to be a separate payment for purposes of Section 409A.  If, upon Separation from Service, you are a “specified employee” within the meaning of Section 409A, any payment under this Agreement that is subject to Section 409A and would otherwise be paid within six months after your separation from service will instead be paid in the seventh month following your separation from service (to the extent required by Section 409A(a)(2)(B)(i)).  Any taxable reimbursement due under the terms of this Agreement or any other Company Arrangement shall be paid no later than December 31 of the year after the year in which the expense is incurred and shall comply with Treas. Reg. § 1.409A-3(i)(1)(iv).  If the period during which you have the discretion to execute or revoke the Release straddles two calendar years, the Company shall make the payments that are conditioned upon the Release no earlier than January 1st of the second of such calendar years, regardless of which taxable year you actually deliver the executed Release to the Company.  Notwithstanding anything elsewhere to the contrary, you shall have no duties following any termination of your employment that are inconsistent with your having a Separation from Service on (or before) the date your employment terminates.

 

16.          Notifications.  Except as otherwise provided above, all notifications pursuant to this Agreement shall be made in writing by Federal Express overnight delivery as follows: (a) if to the Company, addressed to the Chairman of the Executive Compensation Committee or, if there is no Executive Compensation Committee, to the Chairman of the Board, Gleacher & Company, Inc., 1290 Avenue of the Americas, 4th Floor, New York, NY 10104 (as may be updated by the Company from time to time); or (b) if to you, at your principal residence as recorded on the records of the Company (as may be updated by you from time to time).

 

17.          Governing Law; Payment of Legal Fees.  This Agreement is governed and construed in accordance with its express terms, and otherwise (except to the extent that Federal law applies) the laws of the State of New York applicable to agreements made and to be performed wholly within such state, and as such will be construed under and in accordance with the laws of the State of New York without regard to conflicts of law.  The Company will promptly pay, or reimburse you for, all legal fees (including court costs and expenses) that you reasonably incur in connection with or as a result of any claim, action or proceeding brought by the Company or you with respect to this Agreement, if you prevail with respect to any part of the claim, action or proceeding.

 

18.          Indemnification; D&O Insurance.  The Company shall promptly indemnify you to the maximum extent permitted by law against all liabilities, losses, damages

 

 

Mr. Bryan Edmiston

Page 6

 

and expenses (including but not limited to reasonable attorneys’, accountants’, investment or other advisor and expert witness fees) actually and reasonably incurred by you in connection with any claim or proceeding arising out of, or relating to, your services for the Company.  Expenses (including attorneys’ fees) that you incur in defending a threatened or pending civil, criminal, administrative or investigative action, suit or proceeding shall be paid by the Company in advance of the final disposition of such action, suit or proceeding within thirty (30) days after receipt by the Company of (a) a statement or statements from you requesting such advance or advances from time to time, and (b) an undertaking by you or on your behalf to repay such amount or amounts, only if, and to the extent that, it shall ultimately be determined that you are not entitled to be indemnified by the Company as authorized by this Agreement or otherwise.  Advances shall be unsecured and interest-free.  In the event that final disposition of any such action, suit or proceeding determines that you are not entitled to be indemnified for expenses for which you have received payment or reimbursement, you shall repay such amount to the Company within ninety (90) days of your receipt of an accounting in writing from the Company of the amount owing.  Promptly after your receipt of notice of the commencement of any action, suit or proceeding, you shall notify the Company of the commencement thereof.  Your failure to promptly notify the Company of the commencement of the action, suit or proceeding, or your request for indemnification, will not relieve the Company from any liability that it may have to you hereunder, except to the extent the Company is prejudiced in its defense of such action, suit or proceeding as a result of such failure.  In the event the Company is obligated to pay your expenses with respect to an action, suit or proceeding, as provided in this Agreement, the Company shall be entitled to assume the defense of such action, suit or proceeding, with counsel reasonably acceptable to you, upon the delivery to you of written notice of the Company’s election to do so.  After delivery of such notice, your approval of such counsel and the retention of such counsel by the Company, the Company will not be liable to you for any fees of counsel that you subsequently incur with respect to the same action, suit or proceeding, provided that (1) you shall have the right to employ your own counsel in such action, suit or proceeding at your expense and (2) if (i) your employment of counsel has been previously authorized in writing by the Company, (ii) counsel to the Company or you shall have reasonably concluded that there may be a conflict of interest or position, or reasonably believes that a conflict is likely to arise, on any significant issue between the Company and you in the conduct of any such defense or (iii) the Company shall not, in fact, have employed counsel to assume the defense of such action, suit or proceeding, then the fees and expenses of your counsel shall be at the Company’s expense, except as otherwise expressly provided by this Agreement.  The Company shall not be entitled, without your consent, to assume the defense of any claim brought by or in the right of the Company or as to which counsel for the Company or you shall have reasonably made the conclusion provided for in clause (ii) above.  Your rights under this paragraph shall apply both during your employment and at all times thereafter, and shall be in addition to, not in lieu of, any other rights to indemnification or advancement you may have under the Company’s organizational documents or insurance policies, or under applicable law or otherwise.  In addition, during your employment and for six years thereafter, you shall be entitled to directors’ and officers’ insurance coverage that is no less favorable to you in any respect than the coverage then enjoyed by any other individual with respect to his or her service as a director or officer during the Retention Period.

 

 

Mr. Bryan Edmiston

Page 7

 

19.          Severability.  If any portion of this Agreement (including the Release) is held to be unenforceable by any court of competent jurisdiction, the parties intend that such portion be modified to make it enforceable to the maximum extent permitted by law.  If any such portion (other than the Release) cannot be modified to be enforceable, such portion shall become null and void leaving the remainder of this Agreement in full force and effect.  The parties acknowledge that the Release is an essential part of this Agreement and therefore, if the Release cannot be modified to be enforceable, the parties agree to negotiate and sign a waiver that is enforceable to the fullest extent permissible by law.  If you breach any of your obligations under this Agreement, the Agreement (including the Release) shall remain in full force and effect.

 

20.          Third-Party Beneficiaries.  This Agreement shall be binding upon and inure to the benefit of (a) the Company and its successors and assigns (and, in the case of Section 10 only, all other Releasees), and (b) you and your heirs, testators, agents, estate and representatives, and any of their successors and assigns.  However, notwithstanding the foregoing, this Agreement is not assignable by you and any purported assignment by you shall be null and void, provided, however, that in the event of your death or a judicial determination of your incapacity, references to you in this Agreement shall be deemed (where appropriate) to be references to your heir(s), beneficiar(ies), authoritie(s), agent(s), estate, executor(s), or other legal representative(s).

 

21.          Confidentiality.  You agree to keep the terms and conditions of this Agreement confidential, except, and only to the extent that, the Company publicly discloses the terms and conditions, provided that you may reveal the terms and conditions of this Agreement to your spouse, attorneys, and financial and tax advisors, to a government agency in connection with any investigation it may conduct or is conducting, or as otherwise required by law (provided that you instruct, and otherwise use your best efforts to ensure that, each of the foregoing keep the terms of this Agreement confidential).  However, nothing in this Agreement precludes you from providing truthful information about this Agreement to any government agency; provided that in the event that you are subpoenaed for such information, you will promptly notify the Company only if and to the extent permitted by the subpoena, and reasonably cooperate if the Company elects to contest such legal process at its own expense.

 

22.          Definitions.  For purposes of this Agreement, the following terms shall have the meanings set forth below:

 

(a)           Qualifying Termination.  You will experience a “Qualifying Termination” if, during the Retention Period, (1) the Company terminates your employment involuntarily without Cause, (2) you terminate your employment with Good Reason, or (3) your employment terminates on account of your death or Disability.

 

(b)           Cause.  Cause means, as reasonably determined by the Company, your: (1) conviction of, or plea of guilty or “no contest” to, any felony; (2) conviction of, or plea of guilty or “no contest” to, a violation of criminal law involving the Company and its business; (3) commission of an act of fraud, theft, or material dishonesty in connection with the performance of your duties to the Company and its affiliates; or (4) willful refusal or gross

 

 

Mr. Bryan Edmiston

Page 8

 

neglect to perform the duties reasonably assigned to you and consistent with your position with the Company and its affiliates or otherwise to comply with the material terms of any agreement with the Company or any of its affiliates, which refusal or gross neglect continues for more than fifteen (15) days after you receive written notice from the Company providing reasonable detail of the asserted refusal or gross neglect (and which is not due to a physical or mental impairment);

 

(c)           Disability.  Disability means a disability within the meaning of the Company-sponsored long-term disability plan in which you participate or, if there is no such plan, your total disability as determined by the Social Security Administration.

 

(d)           Good Reason.  Good Reason means (1) any material breach by the Company of this Agreement; (2) any relocation of your principal office more than 30 miles from its current location in New York City; or (3) any adverse change in your titles or positions that occurs prior to a Material Corporate Event.  Notwithstanding the foregoing, no event shall constitute Good Reason unless (x) you notify the Company of the condition that is alleged to constitute Good Reason in writing within thirty (30) days of the first occurrence of the condition and (y) the Company fails to correct the condition within thirty (30) days of its receipt of such notice.  If the Company fails to remedy the condition constituting Good Reason during the thirty-day cure period, you must terminate employment within ninety (90) days following the end of the cure period in order for such termination to constitute a termination for Good Reason.

 

(e)           Material Corporate Event.  A Material Corporate Event shall mean the first to occur of the following, if such event occurs while you are employed by the Company during the Retention Period:

 

(1)           The acquisition, after the date of this Agreement, by an individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 50% or more of either (A) the shares of Company Common Stock (the “Common Stock”), or (B) the combined voting power of the voting securities of the Company entitled to vote generally in the election of directors (the “Voting Securities”); provided, however, that the following acquisitions shall not constitute a Material Corporate Event: (i) any acquisition by any individual, entity or group (within meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) who, on the date of this Agreement, beneficially owned 12% or more of the Common Stock, (ii) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any of its subsidiaries, (iii) any acquisition by any underwriter in connection with any firm commitment underwriting of securities to be issued by the Company, or (iv) any acquisition by any corporation (or other entity) if, immediately following such acquisition, more than 50% of the then outstanding shares of common stock of such corporation (or other entity) and the combined voting power of the then outstanding voting securities of such corporation (or other entity) entitled to vote generally in the election of directors, is beneficially owned, directly or indirectly, by all or substantially all of the individuals and entities who, immediately prior to such acquisition, were the beneficial owners of the Common Stock and the

 

 

Mr. Bryan Edmiston

Page 9

 

Voting Securities in substantially the same proportions, respectively, as their ownership, immediately prior to such acquisition, of the Common Stock and Voting Securities;

 

(2)           Consummation of a merger or consolidation or sale or other disposition of all or substantially all of the assets of the Company, in a single transaction or a series of transactions, (a “Corporate Transaction”), other than a Corporate Transaction with respect to which all or substantially all of the individuals and entities who were the beneficial owners, immediately prior to such Corporate Transaction, of the Common Stock and Voting Securities beneficially own, directly or indirectly, immediately after such Corporate Transaction, more than 50% of the then outstanding common stock and voting securities (entitled to vote generally in the election of directors) of the corporation (or other entity) resulting from Corporate Transaction in substantially the same proportions as their respective ownership, immediately prior to such Corporate Transaction, of the Common Stock and the Voting Securities; or

 

(3)           Whether effected in one or a series of transactions, (A) any merger, consolidation, reorganization or other business combination pursuant to which the business of a potential target is combined with that of the Company or one or more persons formed by or affiliated with the Company, (B) the acquisition, directly or indirectly, by the Company or its affiliate by way of a tender or exchange offer, negotiated purchase or other means of a majority of a potential target’s voting securities, (C) the acquisition, directly or indirectly, by the Company or any of its affiliates of assets or equity interest(s), or of any right to all or a majority of the revenues or income, of a potential target by way of a negotiated purchase, joint venture, exchange or other means, or (D) any other reinvestment by the Company of a material portion of its cash or other liquid assets in new businesses or assets; provided, however, that with respect to clauses (B), (C) and (D) of this subsection (3), no transaction or series of transactions shall constitute a Material Corporate Event unless the Company uses a material portion of its securities, cash, or other liquid assets to effectuate the transaction(s).

 

*                              *                              *                              *                              *

 

Bryan, if you wish to accept this offer, you must sign in the space below within ten (10) business days of the date set forth above and return a copy to me.

 

	
 
    	
 
    	
Sincerely   yours,
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
/s/   Chris Pechock
    
	
 
    	
 
    	
Name:
    	
Chris Pechock
    
	
 
    	
 
    	
Title:
    	
Chairman, Executive Compensation Committee
    
	
Agreed   to:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
/s/   Bryan Edmiston
    	
 
    	
 
    
	
Bryan   Edmiston
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
10/18/13
    	
 
    	
 
    
	
Date
    	
 
    	
 
    

 

 

EXHIBIT A

 

RELEASE OF CLAIMS

 

1.           Release of Claims.  In consideration of the benefits under the agreement (the “Agreement”), dated October [      ], 2013, between Bryan Edmiston (the “Executive”) and Gleacher & Company, Inc., (the “Company”), Executive, for and on behalf of himself and his heirs and assigns, hereby waives and releases any employment, compensation or benefit-related common law, statutory or other complaints, claims, charges or causes of action of any kind whatsoever, both known and unknown, in law or in equity, whether under the Agreement, a compensation or benefit plan or otherwise, that Executive ever had, now has or may have against the Company and its shareholders, subsidiaries, predecessors, successors, assigns, directors, officers, partners, members, employees or agents (collectively, the “Releasees”) by reason of facts or omissions that have occurred on or before the date that Executive signs this Release, including, without limitation, any complaint, charge or cause of action arising under federal, state or local laws pertaining to employment, including the Age Discrimination in Employment Act of 1967 (“ADEA,” a law which prohibits discrimination on the basis of age), the National Labor Relations Act, the Civil Rights Act of 1991, the Americans With Disabilities Act of 1990, Title VII of the Civil Rights Act of 1964, all as amended; and all other federal, state and local laws and regulations.  By signing this Release, Executive acknowledges that he intends to waive and release any rights known or unknown that he may have against the Releasees under these and any other laws; provided, that Executive does not waive or release claims with respect to rights arising under, or preserved by, the Agreement (the “Unreleased Claims”).  Notwithstanding the foregoing, Executive does not release, discharge or waive any rights to indemnification (including advancement) that he may have under the Agreement, the certificate of incorporation, the by-laws or equivalent governing documents of the Company or its subsidiaries or affiliates, or under the laws of the State of New York or Delaware, with respect to actions taken by Executive in connection with the performance of his duties with the Company.

 

2.           Proceedings.  Executive acknowledges that he has not filed (and has not transferred his rights with respect to) any complaint, charge, claim or proceeding against any of the Releasees before any local, state or federal agency, court or other body based on any claim that is released under paragraph 1 of this Release (each individually a “Proceeding”), or that if he has commenced any such Proceeding he will promptly discontinue the portion of it relating to any such released claim.  Executive (a) acknowledges that he will not initiate or cause to be initiated on his behalf any Proceeding and will not participate in any such Proceeding, in each case, except as required by law; and (b) waives any right he may have to benefit in any manner from any relief (whether monetary or otherwise) arising out of any Proceeding, including any Proceeding conducted by the Equal Employment Opportunity Commission (“EEOC”), in each case to the extent that such Proceeding is based on any claim released under paragraph 1.  Further, Executive understands that, by executing this Release, he will be limiting the availability of certain remedies that he may have against the Company and limiting also his ability to pursue certain claims against the Releasees.  Notwithstanding the above, nothing in paragraph 1 of this Release shall prevent Executive from (1) initiating or causing to be initiated on his behalf any complaint, charge, claim or proceeding against the Company before any local, state or federal agency, court or other body challenging the validity of the waiver of his claims under the ADEA contained in paragraph 1 of this Release (but no other portion of such waiver); or (2) initiating or participating in an investigation or proceeding conducted by the EEOC.

 

 

3.           Time to Consider.  Executive acknowledges that he has been advised that he has at least [twenty-one (21)/forty-five (45)] days to consider all the provisions of this Release, and that, although he may sign it at any time on or before the [21st/45th] day, he will sign it during the sixty-day period that begins on the effective date of his termination of employment or such earlier date as the Company and Executive may agree.  Executive agrees that any modifications to the Agreement or this Release, whether material or immaterial, will not restart the [21-day][45-day] period.  EXECUTIVE FURTHER ACKNOWLEDGES THAT HE HAS READ THIS RELEASE CAREFULLY, HAS BEEN ADVISED BY THE COMPANY TO, CONSULT AN ATTORNEY, AND FULLY UNDERSTANDS THAT BY SIGNING BELOW HE IS GIVING UP CERTAIN RIGHTS THAT HE MAY HAVE TO SUE OR ASSERT A CLAIM AGAINST ANY OF THE RELEASEES, AS DESCRIBED IN PARAGRAPH 1 OF THIS RELEASE AND THE OTHER PROVISIONS HEREOF.  EXECUTIVE ACKNOWLEDGES THAT HE HAS NOT BEEN FORCED OR PRESSURED IN ANY MANNER WHATSOEVER TO SIGN THIS RELEASE, AND EXECUTIVE AGREES TO ALL OF ITS TERMS VOLUNTARILY.

 

4.             Revocation.  Executive hereby acknowledges and understands that Executive shall have seven (7) days from the date of his execution of this Release to revoke this Release (including, without limitation, any and all claims arising under the ADEA) and that neither the Company nor any other person is, or shall be, obligated to provide any benefits to Executive pursuant to the Agreement that are conditioned on this Release until eight (8) days have passed since Executive’s signing of this Release without Executive having revoked this Release.  If Executive timely revokes this Release, Executive will be deemed not to have accepted the terms of this Release and the benefits under the Agreement that are conditioned on the Release, and no further action will be required of the Company.  However, Executive’s obligations under the Agreement will remain in effect.

 

5.             No Admission.  This Release does not constitute an admission of liability or wrongdoing of any kind by Executive or the Company.

 

6.             General Provisions.  A failure of any of the Releasees to insist on strict compliance with any provision of this Release shall not be deemed a waiver of such provision or any other provision hereof.  If any provision of this Release is determined to be so broad as to be unenforceable, such provision shall be interpreted to be only so broad as is enforceable, and in the event that any provision is determined to be entirely unenforceable, such provision shall be deemed severable, such that all other provisions of this Release shall remain valid and binding upon Executive and the Releasees.

 

7.             Governing Law.  The validity, interpretations, construction and performance of this Release shall be governed by the laws of the State of New York without giving effect to conflict of laws principles.

 

IN WITNESS WHEREOF, Executive has hereunto set Executive’s hand as of the day and year set forth opposite his signature below.

 

	
 
    	
 
    	
 
    
	
Bryan   Edmiston
    	
 
    	
Dateexhibit41.htm

Exhibit 4.1

 

 

 

AMENDED AND RESTATED PROMISSORY NOTE

 

	
$600,000.00

	
September 30, 2013

	
 

	
(“Effective Date”)

FOR VALUE RECEIVED, the undersigned, HEALTHWAREHOUSE.COM, INC., a Delaware corporation, HWAREH.COM, INC., a Delaware corporation, HOCKS.COM, INC., an Ohio corporation, and PAGOSA HEALTH LLC, an Indiana corporation, jointly and severally, (collectively, “Borrower”), with an address at 7107 Industrial Road, Florence, Kentucky  41042, hereby promise to pay to the order of MELROSE CAPITAL ADVISORS, LLC, an Ohio limited liability company (together with its successors and assigns, “Lender”), in lawful money of the United States of America in immediately available funds with an address at c/o Statman, Harris & Eyrich, LLC, 441 Vine Street, 37th Floor, Cincinnati, Ohio  45202, or at such other location as the Lender may designate from time to time, the principal sum of SIX HUNDRED THOUSAND AND 00/100 DOLLARS ($600,000.00) together with interest accruing from the date hereof at the rate or rates and in the manner hereinafter provided on the principal balance hereof from time to time outstanding, as provided below.

1.           Interest.  Interest will be charged on the unpaid principal balance of this Note until the full amount of principal has been paid at a floating rate equal to the Prime Rate plus 4.25% per annum.  As used herein, “Prime Rate” means the rate publicly announced by PNC Bank, N.A. from time to time as its prime rate.  The Prime Rate is determined from time to time by PNC Bank, N.A. as a means of pricing some loans to its borrowers.  The Prime Rate is not tied to any external rate of interest or index, and does not necessarily reflect the lowest rate of interest actually charged by PNC Bank, N.A. to any particular class or category of customers.  If and when the Prime Rate changes, the rate of interest on this Note will change automatically without notice to the Borrower, effective on the date of any such change.  In no event will the rate of interest hereunder exceed the maximum rate allowed by law.

2.           Payments.  Borrower will make monthly payments of accrued interest on the first day of every month, beginning on March 1, 2013, and continuing on the first day of each month thereafter.  On March 1, 2015 (“Maturity Date”), the entire unpaid principal balance of this Note and all accrued and unpaid interest shall be due and payable in full. The entire unpaid principal balance of this Note and all accrued and unpaid interest may be prepaid at any time prior to the Maturity Date by the Borrower.

3.           Loan Documents; Restatement.  This Note is executed in connection with and is secured by any and all documents and instruments now or in the future given to the Lender to evidence or secure the loans hereunder (collectively, the “Loan Documents”), including but not limited to the following: Security Agreement from HEALTHWAREHOUSE.COM, INC., HWAREH.COM, INC and HOCKS.COM, INC., dated March 28, 2013, and Security Agreement from PAGOSA HEALTH LLC of even date herewith, covering all business assets, including but not limited to accounts, inventory, equipment and general intangibles (the “Collateral”).

This Note amends and restates, and is in substitution for, that certain Promissory Note dated March 28, 2013 in the original principal amount of $500,000.00 payable to the order of the Lender (the "Existing Note").  However, this Note shall in no way extinguish, cancel or satisfy Borrower’s unconditional obligation to repay all indebtedness evidenced by the Existing Note or constitute a novation of the Existing Note.  Nothing herein is intended to extinguish, cancel  or impair the lien priority or effect of any security agreement with respect to the Borrower’s obligations hereunder and under any other document relating hereto.

 

 

 

 

  

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4.            Representations.  In order to induce Lender to extend the credit accommodations provided in this Note, Borrower hereby represents and warrants to Lender the following:

(a)           Each Borrower is duly incorporated, validly existing and in good standing under the laws of the State of its incorporation and has the power and authority to own and operate its assets and to conduct its business as now or proposed to be carried on, and is duly qualified, licensed and in good standing to do business in all jurisdictions where its ownership of property or the nature of its business requires such qualification or licensing and failure to be so qualified or licensed could reasonably be expected to materially adversely affect Borrower (on a consolidated basis).  Borrower is duly authorized to execute and deliver the Loan Documents, all necessary action to authorize the execution and delivery of the Loan Documents has been properly taken, and the Loan Documents, when executed and delivered by Borrower, will constitute the legal, valid and binding obligations of Borrower enforceable in accordance with their terms except as enforcement may be limited by equitable principles or by bankruptcy, insolvency, reorganization, moratorium, or similar laws relating to or limiting creditors’ rights generally.

(b)           There are no actions, suits, arbitrations, investigations, claims, inquiries, or proceedings pending or threatened against or affecting Borrower or its property,  and no proceedings before any governmental body are pending or threatened against Borrower or its property, except as set forth on Schedule 4(b).  None of such proceedings listed on Schedule 4(b) (if any) are reasonably expected to have a material adverse effect on Borrower (on a consolidated basis).

(c)           Borrower is in compliance with all material laws, regulations, rulings, orders, injunctions, decrees, conditions or other requirements applicable to or imposed upon Borrower by any law or by any governmental authority, court or agency with jurisdiction over Borrower.  Borrower has filed all required tax returns and reports that are now required to be filed by it in connection with any federal, state and local tax, duty or charge levied, assessed or imposed upon him or his assets, including unemployment, social security, and real estate taxes.  Borrower has paid all taxes which are now due and payable except those which currently are being contested in good faith by appropriate proceedings and for which Borrower has set aside adequate reserves or made other adequate provision with respect thereto.  No taxing authority has asserted or assessed any additional tax liabilities against Borrower which are outstanding on the Effective Date, and Borrower has not filed for any extension of time for the payment of any tax or the filing of any tax return or report.

(d)           All financial information relating to Borrower which has been or may hereafter be delivered by Borrower or on its behalf to Lender is true and correct and Borrower’s financial statements have been prepared in accordance with generally acceptable accounting principles consistently applied (except in the case of unaudited financial statements, for the lack of footnotes and being subject to year-end audit adjustments).  Borrower has no material obligations or liabilities of any kind not disclosed in that financial information, and there has been no material adverse change in the financial condition of Borrower nor has Borrower suffered any damage, destruction or loss which has adversely affected its business or assets since the submission of the most recent financial information to Lender.

(e)           There does not exist any Event of Default under this Note or any default or violation by Borrower of or under any of the terms, conditions or obligations of:  (i) its organizational documents; (ii) any indenture, mortgage, deed of trust, franchise, permit, contract, agreement, or other instrument to which it is a party or by which it is bound that is material to Borrower; or (iii) any law, ordinance, regulation, ruling, order, injunction, decree, condition or other requirement applicable to or imposed upon it by any law, the action of any court or any governmental authority or agency that could reasonably be expected to have a material adverse effect on Borrower (on a consolidated basis); and the consummation of the transactions set forth herein will not result in any such default or violation or Event of Default.

 

 

 

  

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(f)           Borrower has good and marketable title to the assets reflected on the most recent financial statements provided to Lender, free and clear of all liens and encumbrances, except for the following (“Permitted Liens”):  (i) current taxes and assessments not yet due and payable, (ii) liens to Amerisourcebergen Drug Corporation which are subordinated to the liens to Lender pursuant to a lien subordination agreement acceptable to Lender, (iii) liens to Smart Fill Management Group, Inc. which are junior to the liens to Lender, (iv) liens to Wells Fargo Bank, N.A. on specific equipment, and (v) liens to The Mission Bank on specific equipment.

(g)           None of the Loan Documents contains any untrue statement of material fact or omits a material fact necessary in order to make the statements contained in this Note or the Loan Documents not misleading.  There is no fact known to Borrower which materially adversely affects or, so far as Borrower can now reasonably foresee, could reasonably be expected to materially adversely affect the business, assets, operations,  condition (financial or otherwise) or results of operation of Borrower (on a consolidated basis) and which has not otherwise been fully set forth in this Note.

5.           Financial Information.   Borrower shall maintain books and records in accordance with generally accepted accounting principles consistently applied (“GAAP”), except in the case of unaudited financial statements, for the lack of footnotes and being subject to year-end audit adjustments, and shall give representatives of the Lender access thereto at all reasonable times, including permission to examine, copy and make abstracts from any of such books and records and such other information as the Lender may from time to time reasonably request, and Borrower will make available to the Lender for examination copies of any reports, statements and returns which Borrower may make to or file with any federal, state or local governmental department, bureau or agency. Borrower shall deliver the following to Lender during the entire time during which any amount is due under this Note:

(a)           As soon as practicable after the end of each calendar month in each year, beginning in August 31, 2013,, and in any event within thirty  (30) days thereafter, an internally prepared balance sheet of Borrower as of the end of such month, and statements of cash flows, shareholders' equity of Borrower for such month and income statements, certified as complete and correct by the principal financial officer of Borrower, subject to changes resulting from year-end adjustments;

 

(b)           As soon as practicable after the end of each calendar quarter beginning September 30, 2013, and in any event within forty five  (45) days thereafter, a consolidated balance sheet of Borrower as of the end of such quarter, and consolidated statements of cash flows, shareholders’ equity of Borrower  for such quarter, certified as complete and correct by the principal financial officer of Borrower, subject to changes resulting from year-end adjustments; provided, however, that Borrower may deliver its Form 10-Q filed with the SEC at the time required herein to satisfy this requirement.

 

Solely for the quarterly financial statements due for the quarters ending March 31, 2013 and June 30, 2013, Lender grants Borrower an extension of time to deliver such financial statements until  October 31, 2013. 

 

(c)           Within forty five (45) days after the end of each fiscal quarter beginning September 30, 2013, a statement signed by the President or Chief Operating Officer of Borrower setting forth and certifying the calculation of the Financial Covenants (as hereinafter defined);

 

Solely for the quarterly certification of the calculation of the Financial Covenants due for the quarters ending March 31, 2013 and June 30, 2013, Lender grants Borrower an extension of time to deliver such financial statements until October 31, 2013. 

 

 

 

 

  

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(d)           As soon as practicable after the end of each fiscal year, and in any event within one hundred twenty (120) days thereafter, audited financial statements of Borrower, including, a balance sheet of Borrower as of the end of such year, and statements of cash flows, owners' equity of Borrower for such year, setting forth in each case in comparative form the figures for the previous fiscal year, all in reasonable detail and accompanied by an audit report of independent certified public accountants, selected by Borrower and reasonably satisfactory to Lender, which report and opinion shall be prepared in accordance with generally accepted auditing standards; provided, however, that Borrower may deliver its Form 10-K filed with the SEC at the time required herein to satisfy this requirement.

 

(e)           With reasonable promptness, such other data and information as from time to time may be reasonably requested by Lender.

 

5.            Affirmative Covenants.  Borrower agrees that from the date of execution of this Agreement until this Note is repaid in full Borrower will:

(a)           Pay and discharge when due all indebtedness and all taxes, assessments, charges, levies and other liabilities imposed upon Borrower, its income, profits, property or business, except those which currently are being contested in good faith by appropriate proceedings and for which Borrower shall have set aside adequate reserves or made other adequate provision with respect thereto acceptable to the Lender in its reasonable discretion.

(b)           Do all things necessary to (i) maintain, renew and keep in full force and effect its organizational existence and all rights, permits and franchises necessary to enable it to continue its business as currently conducted; (ii) continue in operation in substantially the same manner as at present; (iii) keep its properties in good operating condition and repair (normal wear and tear excepted); and (iv) make all necessary and proper repairs, renewals, replacements, additions and improvements thereto.

(c)           Maintain, with insurers reasonably satisfactory to Lender, insurance with respect to its property and business against such casualties and contingencies, of such types and in such amounts,  as is customary for established companies engaged in the same or similar business and similarly situated.

(d)           Comply in all material respects with all laws applicable to Borrower and to the operation of its business (including without limitation any statute, ordinance, rule or regulation relating to employment practices, pension benefits or environmental, occupational and health standards and controls).

6.            Negative Covenants.  Borrower agrees that from the date of execution of this Agreement until this Note is repaid in full Borrower will not, without the Lender’s prior written consent:

(a)           Create, incur, assume or suffer to exist any indebtedness for borrowed money other than:  (i) this Note; (ii) open account trade debt incurred in the ordinary course of business and not past due; (iii) existing indebtedness secured by the Permitted Liens; and (iv) indebtedness in respect of purchase money financings of equipment in an amount not in excess of $250,000.00 in the aggregate outstanding.

(b)           Create, assume, incur or permit to exist any mortgage, pledge, encumbrance, security interest, lien or charge of any kind upon any of its property, now owned or hereafter acquired, or acquire or agree to acquire any kind of property subject to any conditional sales or other title retention agreement, except for Permitted Liens and liens securing purchase money indebtedness permitted pursuant to Section 6(a) above, with the liens limited to the equipment purchased.

 

 

 

 

  

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(c)           Guarantee, endorse or become contingently liable for the obligations of any person, firm, corporation or other entity, except in connection with the endorsement and deposit of checks in the ordinary course of business for collection.

(d)           Purchase or hold beneficially any stock, other securities or evidences of indebtedness of, or make or have outstanding, any loans or advances to, or otherwise extend credit to, or make any investment or acquire any interest whatsoever in, any other person, firm, corporation or other entity; provided, however, that Borrower may do so with regards to any Borrower.

(e)           Liquidate or dissolve, or merge or consolidate with or into any person, firm, corporation or other entity, or sell, lease, transfer or otherwise dispose of all or any substantial part of its property, assets, operations or business, whether now owned or hereafter acquired.

(f)           Make or permit any change (i) in its form of corporate organization and (ii) in the nature of its business as carried on as of the date hereof.

(g)           Declare or pay any dividends on or make any distribution with respect to any class of its equity or ownership interest, or purchase, redeem, retire or otherwise acquire any of its equity, provided, however, that if Borrower is a limited liability company with pass through taxation, it may make distributions to its shareholders, partners or members, as the case may be, in an amount equal to the federal and state income tax of such principals of Borrower attributable to the earnings of Borrower as long as no Event of Default exists.

(h)           Make acquisitions of all or substantially all of the property or assets of any person, firm, corporation or other entity.

7.           Financial Covenants.  Borrower agrees that from the date of execution of this Note until this Note is repaid in full, Borrower will comply with the following financial covenants (“Financial Covenants”):

 

(a)          Borrower will not permit its Adjusted EBITDAS at the end of each fiscal quarter to be less than the following:

 

	
Fiscal Quarter Ending

	 	
Minimum 

Adjusted 

EBITDAS

	 
	  	 	 	 
	
 December 31, 2013

	 	$	0	 
	
March 31, 2014

	 	$	50,000	 
	
June 30, 2014

	 	$	100,000	 
	
September 30, 2014

	 	$	150,000	 
	
December 31, 2014

	 	$	200,000	 

 

(b)          Borrower will not permit its Adjusted EBITDAS at the end of each fiscal year to be less than the following:

 

	
Fiscal Year Ending

	 	
Minimum 

Adjusted 

EBITDAS

	 
	 	 	 	 
	
December 31, 2013

	 	$	(830,000	)
	
December 31, 2014

	 	$	500,000	 

For the purpose of this Section 7, Adjusted EBITDAS shall be defined as Net Income before interest expense, taxes, and non-cash expenses including depreciation and amortization and all stock based compensation.

 

 

 

  

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8.            Events of Default.  The following events shall constitute events of default under this Note (each, an “Event of Default”):

(i)           Borrower fails to make any payment of principal and/or interest when and as the same shall become due and payable and such amount remains unpaid five (5) days thereafter;

(ii)           any representation or warranty made by Borrower herein or in any of the other Loan Documents is incorrect in any material respect when made or reaffirmed;

(iii)           the filing by or against Borrower of any proceeding in bankruptcy, reorganization, debt adjustment or receivership, or any assignment by Borrower for the benefit of creditors; provided, that any involuntary bankruptcy filed against Borrower shall not be an Event of Default unless such involuntary bankruptcy case is not dismissed within 60 days.

(iv)           Borrower fails to observe or perform any covenant, undertaking or agreement set forth herein or in any of the other Loan Documents and such failure is not remedied within 10 days;

(v)           Borrower defaults under any other debt, liability or obligation to the Lender, or fails to pay or to otherwise observe and perform any obligations imposed upon Borrower under any indebtedness in excess of $100,000.00 (“Material Indebtedness”), if such default shall continue for more than the period of grace, if any, specified therein;

(vi)           if any other Event of Default (said term being defined in this Note as it is defined in the Loan Documents) should occur and shall continue for more than the period of grace, if any specified therein;

(vii)           any event occurs which could reasonably be expected to have a material adverse effect on the Collateral or on Borrower's financial condition, operations, assets or prospects;

(viii)           the entry of any judgment or lien against Borrower by or in favor of any third person in excess of $100,000.00 which judgment or lien is not satisfied, discharged or bonded off within thirty (30) days from the date of entry of said judgment or lien and which is not otherwise stayed or the subject of an appeal filed by Borrower in connection with same; and

(ix)           Borrower shall transfer assets to others (excluding any Borrower) for less than fair value or in other than the ordinary course of business, without Lender’s prior written consent.

9.            Remedies.  Upon the occurrence of an Event of Default, in addition to any other action permitted to be taken by Lender hereunder or under any other of the Loan Documents:  (a) at the option of Lender for so long as any Event of Default shall continue to exist, the unpaid principal balance of this Note shall, for the period beginning with the date of the occurrence of the Event of Default and continuing for so long as any Event of Default exists, bear interest at a rate (the “Default Rate”) equal to five percent (5.0%) per annum above the otherwise applicable interest rate; and (b) Lender may, at its option, and regardless of whether Lender shall have exercised the option provided for in clause (a) of this paragraph, declare the entire unpaid principal balance of this Note and all accrued but unpaid interest hereon any other sums then payable in accordance with this Note to be immediately due and payable, whereupon all such sums shall be immediately due and payable and shall thereafter bear interest at the Default Rate and Lender shall have the remedies of a secured party under the laws of the State of Ohio with respect to all property mortgaged or pledged as security for this Note and all of the rights and remedies available under the Loan Documents.  No delay or omission on the Lender’s part to exercise any right or power arising hereunder will impair any such right or power or be considered a waiver of any such right or power, nor will the Lender’s action or inaction impair any such right or power.  All remedies provided for herein upon any default by Borrower shall be cumulative and not exclusive.

 

 

  

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Borrower hereby agrees that:  (a) in addition to any other right, after any Event of Default, Borrower will pay to Lender upon demand any and all reasonable costs, expenses and fees, including without limitation reasonable attorneys’ fees incurred before or after suit is commenced in enforcing payment hereof; (b) Borrower waives all setoffs and any and all applicable exemption rights; and (c) the acceptance by Lender of any late payment or other performance which does not strictly comply with the terms of this Note or of any Loan Document shall not be deemed to be a waiver of any rights of Lender arising as a result of such failure to comply.

10.           Waivers.  Borrower, and any endorsers and guarantors hereof, and all others who may become liable for all or any part of the indebtedness evidenced by this Note, severally waive diligence, presentment for payment, protests, notice of dishonor and of nonpayment and protest, and do hereby consent to any number of forbearances, renewals or extensions of the time of payment hereof, releases or substitutions of all or any part of the security for the payment hereof or release of any party liable for this obligation and waive all defenses based upon suretyship or impairment of collateral.  Any such extension or release may be made without notice to any of said parties and without discharging their liability. Borrower hereby waives all relief from any and all appraisement or exemption laws now in force or hereafter enacted.

11.           General.

 

If any provision of this Note is found to be invalid by a court, all the other provisions of this Note will remain in full force and effect.  In no event shall the interest rate charged on this Note exceed the maximum rate of interest permitted under applicable state and/or federal usury laws.  Any payment of interest that would be deemed unlawful under applicable laws for any reason shall be deemed received on account of, and will automatically be applied to reduce, the principal sum outstanding and any other sums (other than interest) due and payable to Lender under this Note, and the provisions hereof shall be deemed amended to provide for the highest rate of interest permitted under applicable law.

Borrower agrees that there are no conditions or understandings which are not expressed in this Note and the documents referred to herein.  No modification, amendment or waiver of, or consent to any departure by Borrower from, any provision of this Note will be effective unless made in a writing signed by the Lender and Borrower and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given.

Any and all references in this Note to any other document or documents shall be references to such other document or documents as the same may from time to time be modified, amended, renewed, consolidated or extended.

The term “Borrower” as used herein shall include the undersigned and its successors and assigns; provided, however, that Borrower may not assign its obligations hereunder and Lender may assign this Note at any time (i) to a person or entity related to Lender; (ii) with the prior written consent of Borrower, as long as no Event of Default exists and (iii) without the consent of Borrower if any Event of Default exists, but with prior written notice to Borrower (unless Lender is prohibited by law from sending such notice).  If there is more than one Borrower hereunder, their obligations shall be joint and several.

12.           Jurisdiction.  This Note shall be governed by Ohio law.  Borrower hereby submits to personal jurisdiction in the federal and state courts in Hamilton County, Ohio; waives any and all personal rights under the laws of any state or country to object to jurisdiction within the State of Ohio for the purposes of litigation to enforce this Note, or any other Loan Document; and consents to be sued in the federal and state courts in Hamilton County, Ohio. Nothing contained in this Note, however, shall prevent Lender from bringing any action or exercising any rights under this Note within any other state or country.  Borrower agrees that service of process may be made, and personal jurisdiction over Borrower obtained, by serving a copy of the Summons and Complaint upon Borrower at its address set forth in this Note in accordance with the applicable laws of the State of Ohio.

 

 

 

  

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13.           WAIVER OF JURY TRIAL.   BORROWER HEREBY WAIVES THE RIGHT TO TRIAL BY JURY OF ANY MATTERS ARISING OUT OF THIS NOTE.

14.           CONFESSION OF JUDGMENT.  Borrower authorizes any attorney to appear in any court of record in or of the State of Ohio, after this Note becomes due and payable, whether by its terms or upon default, to waive service of process and enter judgment by confession against Borrower in favor of the Lender or any holder hereof for the outstanding principal of and accrued but unpaid interest on this Note, plus all costs of collection, including, without limitation, court costs and reasonable attorney’s fees, and thereby to waive and release all errors in the proceedings and judgment, and all rights of appeal from such judgment and stay of execution.  Stay of execution and all exemptions are hereby waived.  Borrower also agrees that the attorney acting for Borrower as set forth in this paragraph may be compensated by Lender for such services, and Borrower waives any conflict of interest caused by such representation and compensation arrangement.  If an obligation is referred to an attorney for collection, and the payment is obtained without the entry of a judgment, the obligors will pay to Lender its attorneys' fees.

WARNING - BY SIGNING THIS PAPER, YOU GIVE UP YOUR RIGHT TO NOTICE AND COURT TRIAL.  IF YOU DO NOT PAY ON TIME, A COURT JUDGMENT MAY BE TAKEN AGAINST YOU WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF A COURT CAN BE USED TO COLLECT FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR WHETHER FOR RETURNED GOODS, FAULTY GOODS, FAILURE ON HIS PART TO COMPLY WITH THE AGREEMENT OR ANY OTHER CAUSE.

	
HEALTHWAREHOUSE.COM, INC.

	
PAGOSA HEALTH LLC,

	
a Delaware corporation

	
an Indiana corporation

	  	  
	  	  
	
By: /s/           Lalit Dhadphale                            

	
By: /s/           Lalit Dhadphale                             

	
Print Name:  Lalit Dhadphale

	
Print Name:   Lalit Dhadphale

	
Title:             President and CEO

	
Title:              President and CEO

	  	  
	
HWAREH.COM, INC.,

	
HOCKS.COM, INC.,

	
a Delaware corporation

	
an Ohio corporation

	  	  
	  	  
	
By: /s/           Lalit Dhadphale                             

	
By: /s/           Lalit Dhadphale                               

	
Print Name:  Lalit Dhadphale

	
Print Name:  Lalit Dhadphale

	
Title:             President and CEO

	
Title:             President and CEO

	  	  

 

 

 

 

  

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