Document:

Exhibit 10.2

 

EXECUTION VERSION

 

PROXY AND RIGHT OF FIRST REFUSAL AGREEMENT

 

This Proxy and Right of First Refusal Agreement, dated as of [    ], (this “Agreement”), is by and among Liberty Broadband Corporation, a Delaware corporation (“Liberty”), Advance/Newhouse Partnership, a New York general partnership (“A/N”), and, for the limited purposes of the proviso to Section 2(e) and Section 7(k), Charter (as defined below).  For purposes of this Agreement, capitalized terms used and not defined herein shall have the respective meanings ascribed to such terms in the Stockholders Agreement, dated as of March 31, 2015 (the “Stockholders Agreement”), by and among Liberty, A/N, Charter Communications, Inc., a Delaware corporation (“Charter”), and CCH I, LLC, a Delaware limited liability company (“New Charter”), as such Stockholders Agreement is in effect on the date hereof and without giving effect to any amendments or modifications thereto unless it has been amended or modified in accordance with its terms.

 

WHEREAS, pursuant to the Contribution Agreement, dated March 31, 2015 (the “Contribution Agreement”), by and among A/N, A/NPC Holdings LLC, Charter, New Charter and Charter Communications Holdings, LLC (“Charter Holdco”), A/N is contributing (a) all of the issued and outstanding limited liability company membership interests of Bright House Networks, LLC, a Delaware limited liability company, to Charter Holdco in exchange for (i) cash, (ii) preferred units of Charter Holdco (the “Preferred Units”), (iii) common units of Charter Holdco (the “Common Units,” and together with the Preferred Units, the “Holdco Units”) and (b) certain specified assets in exchange for shares of Class B Common Stock;

 

WHEREAS, the Holdco Units are exchangeable into approximately [    ] shares of Class A Common Stock (the number of shares into which the Holdco Units and shares of Class B Common Stock are convertible or exchangeable is hereinafter sometimes referred to as the “A/N Notional Shares”);

 

WHEREAS, the shares of Class B Common Stock issued to A/N will have variable voting rights which will reflect the votes attributable to the A/N Notional Shares as if all Holdco Units and shares of Class B Common Stock had been exchanged into Class A Common Stock immediately prior to any Record Date;

 

WHEREAS, as a condition to Liberty’s execution of the Stockholders Agreement, A/N has agreed to grant to Liberty a proxy to vote a portion of the votes represented by the Common Shares and a right of first refusal with respect to a Transfer of shares of Class A Common Stock (or shares of Class A Common Stock underlying any Common Units) that A/N proposes to Transfer under certain circumstances, all as provided herein; and

 

WHEREAS, A/N and Liberty are entering into this Agreement in order to set forth the terms and conditions of the A/N Proxy and the other matters as provided herein.

 

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

 

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1.                                      CERTAIN DEFINITIONS.

 

As used in this Agreement, the following terms have the respective meanings set forth below.

 

“40 Act” means the Investment Company Act of 1940, as amended, and the rules and regulations promulgated thereunder.

 

“40 Act Event” means any action, event, change in Law, change in composition of assets or other occurrence which in the reasonable opinion of Liberty’s outside counsel results or will result in Liberty becoming required to register as an investment company under the 40 Act; provided, that in making such determination any potential grace period between the date that Liberty determines that it is required to register as an investment company under the 40 Act (or the date the applicable Governmental Entity makes such a determination with respect to Liberty) and the date such registration is required to become effective under the 40 Act shall be disregarded.

 

“Acquisition Cap” means the greater of (a) 26% and (b) the Voting Cap of Liberty.

 

“Agreement” has the meaning set forth in the Preamble.

 

“A/N” has the meaning set forth in the Preamble.

 

“A/N Notional Shares” has the meaning set forth in the Recitals.

 

“Beneficial Owner” and “Beneficial Ownership” has the meaning set forth in the Stockholders Agreement; provided, that, for purposes of this Agreement, (i) each holder of Holdco Units will be deemed to Beneficially Own the shares of Class A Common Stock and Class B Common Stock issuable upon the exchange of such Holdco Units (regardless of whether such Holdco Units are then directly or indirectly exchangeable for Class A Common Stock or Class B Common Stock), and (ii) shares of Class A Common Stock issuable upon exercise, conversion or exchange of any Convertible Security (other than Holdco Units and Class B Common Stock) will not be deemed Beneficially Owned by the holder of such Convertible Security until such shares are issued and outstanding following the exercise, conversion or exchange of such Convertible Security.  Notwithstanding the foregoing, for purposes of determining the voting power of the Voting Securities of Charter Beneficially Owned (x) by Liberty, the voting power attributable to the Proxy Shares will be excluded from such calculation, and (y) by A/N, the voting power of the Voting Securities Beneficially Owned by it will be determined without duplication as among the different type of securities owned. For the avoidance of doubt, references to the Beneficial Ownership by Liberty or A/N of any securities or control of any voting power will be deemed to refer to the ownership of such securities or control of such voting power by the Liberty Parties collectively or the A/N Parties collectively, as the case may be. “Board” means the Board of Directors of Charter.

 

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

 

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“Certificate” means the Amended and Restated Certificate of Incorporation of Charter, as in effect at the Effective Time (as the same may be amended from time to time).

 

A “Change of Control” means,

 

(i)                                     with respect to Charter, the occurrence of an event described in clause (i) of Company Change of Control; and

 

(ii)                                  with respect to Liberty, a Liberty Change of Control.

 

“Charter” has the meaning set forth in the Preamble, provided that Charter means (a) until immediately prior to the closing of the Comcast Transactions, Charter, and (b) from and thereafter, New Charter, unless the context otherwise requires.

 

“Charter Holdco” has the meaning set forth in the Preamble.

 

“Class A Common Stock” means the Class A Common Stock, par value $0.001 per share, of Charter as it will be constituted immediately following the Effective Time, and any capital stock into which such Class A Common Stock may thereafter be changed (whether as a result of a recapitalization, reorganization, merger, consolidation, share exchange or other transaction or event).

 

“Class B Common Stock” means the Class B Common Stock of Charter as it will be constituted immediately following the Effective Time, and any capital stock into which such Class B Common Stock may thereafter be changed (whether as a result of a recapitalization, reorganization, merger, consolidation, share exchange or other transaction or event, other than any conversion of shares of Class B Common Stock into Class A Common Stock pursuant to the Amended and Restated Certificate).

 

“Common Shares” means, collectively, the Class A Common Stock and the Class B Common Stock.

 

“Common Units” has the meaning set forth in the Recitals.

 

“Contribution Agreement” has the meaning set forth in the Recitals.

 

“Convertible Securities” means (x) any securities of a Person that are convertible into or exercisable or exchangeable for any shares of any class or series of common stock of such Person or any other Person, whether upon conversion, exercise, or exchange, pursuant to antidilution provisions of such securities or otherwise (other than, for purposes of this Agreement, the Class B Common Stock), and (y) any subscriptions, options, rights, warrants or calls (or any similar securities) or agreements or arrangements of any character, in each case to acquire common stock, preferred stock or other capital stock.

 

“Covered First Securities” means the first Common Units or shares of Class A Common Stock (but not Preferred Units or any Common Units into which the Preferred Units may be converted) proposed to be Transferred by A/N up to and including the number of such shares of Class A Common Stock underlying such Common Units and such shares of Class A

 

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Common Stock that constitute 6.0% of the Total Voting Power calculated immediately following the Effective Time; provided, that for the avoidance of doubt, following the Transfer of Class A Common Stock to Liberty or a Prospective Purchaser, such shares of Common Stock so Transferred will cease to be Covered First Securities.

 

“Covered Last Securities” means those Common Units or shares of Class A Common Stock constituting the last 6% of the Total Voting Power Beneficially Owned by A/N (disregarding for this purpose any Preferred Units or any Common Units into which the Preferred Units may be converted).

 

“Covered Securities” has the meaning set forth in Section 3(a).

 

“DGCL” means the General Corporation Law of the State of Delaware.

 

“Effective Time” means the time of the Closing.

 

“Equity Security” means any Class A Common Stock or Common Units.

 

“Excluded Matters” has the meaning set forth in the Stockholders Agreement, provided that any proposed change to the terms of the Class B Common Stock also shall be deemed an Excluded Matter for purposes hereof.

 

“Expiration Date” has the meaning set forth in Section 6(i).

 

“Holdco Units” has the meaning set forth in the Recitals.

 

“Liens” has the meaning set forth in Section 4(a)(ii).

 

“Liberty Elected Shares” has the meaning set forth in Section 3(b)(ii).

 

“Liberty Notice” has the meaning set forth in Section 3(b)(ii).

 

“Permitted Transferee” means any A/N Party (i) to whom Common Shares or Common Units are Transferred and (ii) who executes an A/N Assumption Instrument in connection with such Transfer.

 

“Preferred Units” has the meaning set forth in the Recitals.

 

“Prospective Purchaser” has the meaning set forth in Section 3(b)(i).

 

“Proxy” has the meaning set forth in Section 2(a)(ii).

 

“Proxy Percentage” means, as of any date of determination, the difference, if any, between the Target Percentage and the Voting Interest of Liberty (which, for the avoidance of doubt, shall exclude any Proxy Shares granted pursuant to this Agreement and any shares of Class A Common Stock which Liberty may purchase pursuant to any pending Preemptive Share Purchase); provided, however, that (x) in no event will the Proxy Percentage be greater than 6.0% (and any excess votes reflected by a percentage above 6% shall inure to the A/N Parties,

 

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subject to the Voting Cap of A/N) and (y) in the event the Proxy Percentage as calculated would be a negative number, the Proxy Percentage will be deemed to be zero.

 

“Proxy Shares” means the shares of Class A Common Stock and Class B Common Stock to the extent that Liberty has the right to vote such shares pursuant to this Agreement; provided, that the number of Proxy Shares shall equal the number of shares of Class A Common Stock and Class B Common Stock that would cause the Voting Interest of Liberty to equal the Target Percentage; provided, further, that the maximum number of Proxy Shares shall not exceed the Proxy Percentage.

 

“Record Date” means the date for the determination of stockholders entitled to receive notice of, and to vote at, any meeting of the stockholders of Charter, or in any other circumstances upon which stockholders are entitled to vote, consent or otherwise grant approval (including by written consent) occurs.

 

“ROFR” has the meaning set forth in Section 3(a).

 

“ROFR Notice” has the meaning set forth in Section 3(b)(i).

 

“Stockholders Agreement” has the meaning set forth in the Preamble.

 

“Subject Shares” has the meaning set forth in Section 3(b)(i).

 

“Target Percentage” means 25.01%; provided, that if the number of Common Shares having voting power equal to 25.01% of the Total Voting Power is not a whole number of shares, the number of Common Shares necessary to achieve the Target Percentage will be rounded up to the nearest whole number.

 

“Trading Day” means any day on which The Nasdaq Stock Market is open for regular trading of the Class A Common Stock.

 

“Transfer” has the meaning ascribed thereto in the Stockholders Agreement; provided, however, that if any Permitted Transferee ceases to meet the requirements to be an A/N Party, such Person shall cease to be a Permitted Transferee and the cessation of such qualification shall constitute a Transfer to a Person other than a Permitted Transferee for purposes of Section 3.

 

“Transferor” has the meaning set forth in Section 3(b).

 

“VWAP” means, for any Trading Day, a price per share of Class A Common Stock equal to the volume-weighted average price of the Rule 10b-18 eligible trades in the shares of Class A Common Stock for the entirety of such Trading Day as determined by reference to the screen entitled “CHTR <EQUITY> AQR SEC” as reported by Bloomberg L.P. (without regard to pre-open or after hours trading outside of any regular trading session for such Trading Day).

 

“VWAP Price” has the meaning set forth in Section 3(b)(i).

 

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2.                                      PROXY AND OTHER GOVERNANCE MATTERS.

 

(a)                                 Irrevocable Proxy Granted to Liberty.

 

(i)                                     A/N hereby irrevocably constitutes and appoints Liberty and any officer(s) or directors of Liberty designated as proxy or proxies by Liberty as its attorney-in-fact and proxy in accordance with the DGCL (with full power of substitution and re-substitution), for and in the name, place and stead of A/N (which, for the avoidance of doubt, includes any Permitted Transferee), to vote all Proxy Shares (at any meeting of stockholders of Charter however called or at any adjournment or postponement thereof), which will be deemed, for all purposes of this Agreement, to include the right to execute and deliver a written consent in respect of such Proxy Shares from time to time.

 

(ii)                                  The proxy granted pursuant to clause (i) (the “Proxy”) above is valid and irrevocable and is coupled with an interest for purposes of Section 212 of the DGCL and will terminate automatically pursuant to Section 6.  The Proxy will be binding upon A/N, its successors and assigns (including, for the avoidance of doubt, any Permitted Transferee which acquires Beneficial Ownership of Common Shares), including any successor or surviving corporation resulting from any merger, consolidation or other business combination involving A/N.  A/N represents that any and all other proxies heretofore given in respect of the Proxy Shares are revocable, and that such other proxies either have been revoked or are hereby revoked.

 

(iii)                               Notwithstanding the foregoing, the Proxy shall not apply (and Liberty will have no right to vote the Proxy Shares) in connection with any vote on (or consent to approve) any matter that is an Excluded Matter.  For the avoidance of doubt, to the extent that more than one proposal is presented to stockholders of Charter for their consideration at a meeting (or through an action by written consent), Liberty will continue to have the right to vote the Proxy Shares on all proposals other than those relating to the Excluded Matters.  Any attempt by Liberty to vote the Proxy Shares on any Excluded Matter shall be void ab initio.

 

(b)                                 Notwithstanding anything to the contrary set forth herein, the A/N Proxy is personal to Liberty and may not be assigned by Liberty by operation of law or otherwise; provided, that (i) Liberty may assign the A/N Proxy and its rights pursuant to Section 7(f) and (ii) the exercise of the A/N Proxy by any duly authorized officer of Liberty (on behalf of Liberty) will not be deemed an assignment of the A/N Proxy.

 

(c)                                  Voting on Certain Matters.  Each of Liberty and A/N agrees to vote or act by written consent with respect to all Common Shares with respect to which it has the power to vote (whether by proxy or otherwise) in accordance with Section 3.2(h) of the Stockholders Agreement.

 

(d)                                 Restrictions on Other Agreements.  Liberty and A/N agree to the restrictions set forth in Section 4.2(b), (d), (e) and (g) of the Stockholders Agreement.

 

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(e)                                  A/N Covenant.

 

(i)                                     During the term of this Agreement, A/N agrees that it will not vote in favor of the approval of any amendment to Charter’s Certificate that would (i) reasonably be expected to result in a 40 Act Event occurring or (ii) prevent A/N from performing its obligations hereunder with respect to the A/N Proxy.

 

(ii)                                  In the event of a change in Law that would reasonably be expected to result in a 40 Act Event occurring during the term of this Agreement, A/N will in good faith consider any amendments to the terms of the A/N Proxy as proposed by Liberty to prevent the occurrence of such 40 Act Event; provided, that any such amendment shall require the prior written consent of Charter pursuant to Section 7(k).

 

3.                                      RIGHT OF FIRST REFUSAL.

 

(a)                                 Grant.

 

(i)                                     Subject to and on the terms and conditions set forth in this Agreement, A/N hereby grants to Liberty a right of first refusal (the “ROFR”), as provided in Section 3(b) of this Agreement, over the Covered First Securities and Covered Last Securities (collectively, the “Covered Securities”) and makes the covenants for the benefit of Liberty set forth herein.  Notwithstanding the foregoing, (x) Liberty shall not have a ROFR with respect to any Transfer of Covered Securities in any transaction or series of transactions constituting a Change of Control of Charter, and (y) Liberty shall not be entitled to acquire a number of Covered Securities under this Section 3 which when combined with Voting Securities of Charter Beneficially Owned by Liberty would cause Liberty to exceed the Acquisition Cap, provided, that Liberty shall be entitled to purchase up to that number of Covered Securities which would cause Liberty not to exceed the Acquisition Cap.

 

(ii)                                  Notwithstanding the foregoing, A/N may Transfer Equity Securities comprising any Covered Securities at any time during the term of this Agreement to Permitted Transferees, and Permitted Transferees may thereafter Transfer any such Equity Securities to other Permitted Transferees, provided that any Permitted Transferee shall, prior to taking ownership of such Equity Securities, execute and deliver to Liberty the A/N Assumption Agreement, in which such Permitted Transferee agrees to be bound to the terms of this Agreement (including the Proxy) with respect to such Equity Securities.  Any purported Transfer to a Permitted Transferee in violation of the foregoing sentence shall be void ab initio.

 

(b)                                 Terms and Procedures.  During the term of this Agreement, but subject at all times to the ability to satisfy a put of Common Units from A/N for cash in lieu of exchanging such Common Units for shares of Class A Common Stock pursuant to the LLC Agreement and Exchange Agreement (it being understood that, if and when such cash-out right is exercised in respect of Common Units, Liberty shall be entitled to purchase shares of Class A Common Stock on the terms set forth in Section 4.9 of the Stockholders Agreement), A/N (including any Permitted Transferee) (as applicable, the “Transferor”) shall not Transfer any Covered

 

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Securities, except to a Permitted Transferee (subject to Section 3(a)(ii)), unless it shall first comply with the following provisions.

 

(i)                                     If a Transferor determines to Transfer any Equity Securities comprising Covered Securities in a bona fide transaction to a third party purchaser or offeror, in each case, that is not a Permitted Transferee (a “Prospective Purchaser”), the Transferor will provide written notice of such determination to Liberty (a “ROFR Notice”).  For the avoidance of doubt, a Transferor may provide a ROFR Notice to Liberty upon its intention to sell Covered Securities to Liberty notwithstanding the absence of a Prospective Purchaser.  Such ROFR Notice will specify (A) the total number and type of Equity Securities determined to be Transferred, (B) the number of shares of Class A Common Stock or Common Units comprising the Covered Securities determined to be Transferred (the “Subject Shares”), and (C) the VWAP of the Class A Common Stock for the two (2) full Trading Days immediately prior to the date of the ROFR Notice (the “VWAP Price”).  The ROFR Notice will constitute a binding, irrevocable offer by the Transferor to sell any or all Subject Shares to Liberty at the VWAP Price per Subject Share.

 

(ii)                                  Within three (3) Trading Days following Liberty’s receipt of the ROFR Notice, Liberty may agree, by written notice to the Transferor (the “Liberty Notice”), to acquire the number and type of Subject Shares specified in the Liberty Notice (the “Liberty Elected Shares”) at a cash price per share equal to the VWAP Price.  If a Liberty Notice meeting the requirements specified above is not delivered within such three Trading Day period, then Liberty will be deemed to have rejected the offer of the Subject Shares.  For the avoidance of doubt, during such three Trading Day period, the Transferor may not effect the proposed Transfer to a Prospective Purchaser (unless prior to the expiration thereof, Liberty provides written notice to the Transferor that it is expressly rejecting the offer of the Subject Shares).

 

(iii)                               Upon delivery of a Liberty Notice meeting the requirements specified above within the specified period, the Transferor will be obligated to sell, and Liberty will be obligated to buy, all of the Liberty Elected Shares at the VWAP Price, payable in cash by wire transfer of immediately available funds.  The closing of such purchase and sale shall occur at such time and place as the parties thereto may agree, but in any event no later than the tenth (10th) Business Day after the Liberty Notice is delivered.  At the closing, each of the Transferor and Liberty will represent and warrant to the other that (a) it has all requisite power and authority to consummate the purchase and sale, (b) there are no consents or notices required to be obtained or delivered to third parties or Governmental Entities (including under the HSR Act) in connection with such purchase and sale, and (c) no injunction of any Governmental Entities exists that would prevent or delay such transactions from occurring, and the Transferor will represent and warrant to Liberty that the Transferor is transferring valid title to the Liberty Elected Shares free and clear of any Lien or restriction, other than applicable federal or state securities Laws or those created by this Agreement.

 

(iv)                              If Liberty rejects or is deemed to reject the offer of the Subject Shares (or a portion of such Subject Shares) set forth in the ROFR Notice, then the Transferor will

 

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be free to Transfer or otherwise sell on the market the Subject Shares which are not Liberty Elected Shares during the period of forty-five (45) calendar days following the date of the rejection or deemed rejection of the ROFR Notice, without restriction as to price or manner of sale.  If the Transferor does not complete the sale of such Subject Shares within five (5) Business Days of the expiration of such forty-five-day period, the Transferor must again comply with the terms of this Section 3 with respect to any proposed Transfer of such Subject Shares.

 

(v)                                 Each Transferor covenants and agrees that, subject to the terms of the LLC Agreement and the Exchange Agreement, prior to any Transfer of Common Units to Liberty pursuant to this Section 3, the Transferor shall cause such Common Units to be exchanged for shares of Class A Common Stock pursuant to the terms of the LLC Agreement and the Exchange Agreement such that Liberty shall receive shares of Class A Common Stock (in lieu of Common Units) at the closing of the transactions contemplated by the applicable ROFR Notice.

 

4.                                      REPRESENTATIONS AND WARRANTIES OF A/N; ACKNOWLEDGEMENT.

 

(a)                                 A/N hereby represents and warrants to Liberty that:

 

(i)                                     Authority for this Agreement.  A/N is a general partnership duly organized, validly existing and in good standing under the Laws of the State of New York and has all necessary partnership power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby.  The execution and delivery of this Agreement by A/N and the consummation by A/N of the transactions contemplated hereby (i) will not violate or constitute a breach of or conflict with its partnership agreement and (ii) have been duly and validly authorized, and no other proceedings on the part of A/N are necessary to authorize this Agreement or to consummate the transactions contemplated hereby.  This Agreement has been duly and validly executed and delivered by A/N and, assuming it has been duly and validly authorized, executed and delivered by Liberty, constitutes a legal, valid and binding obligation of A/N enforceable against A/N in accordance with its terms, except to the extent that enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or other similar Laws relating to or affecting enforcement of creditors’ rights generally, and general principles of equity (regardless of whether enforcement is considered in a proceeding at law or in equity).

 

(ii)                                  Ownership of Shares.  A/N is the Beneficial Owner of all Holdco Units and Common Shares (including the Proxy Shares) received pursuant to the terms of the Contribution Agreement, in each case, free and clear of all pledges, liens, proxies, claims, charges, security interests, preemptive rights, voting trusts, voting agreements, options, rights of first offer or refusal and any other encumbrances whatsoever (collectively, “Liens”) with respect to the ownership, transfer or other voting of such securities, other than encumbrances created by this Agreement and any Transaction Agreement and any restrictions on transfer under applicable federal and state securities Laws.  A/N has the sole authority to direct the voting of the Common Shares in accordance with the provisions of this Agreement and the sole power of disposition with respect to the

 

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Common Shares and Holdco Units, with no restrictions (other than restrictions created by this Agreement or any Transaction Agreement and any restrictions on transfer under applicable federal and state securities Laws).  Except for the Common Shares and the Holdco Units, as of the date hereof, A/N does not Beneficially Own nor owns of record (i) any other equity securities of Charter or Charter Holdco or (ii) any securities that are convertible into or exercisable or exchangeable for such equity securities.

 

5.                                      REPRESENTATIONS AND WARRANTIES OF LIBERTY. Liberty hereby represents and warrants to A/N that Liberty is a corporation duly organized, validly existing and in good standing under the Laws of the State of Delaware and has all necessary corporate power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby.  The execution and delivery of this Agreement by Liberty and the consummation by Liberty of the transactions contemplated hereby (i) will not violate or constitute a breach of or conflict with its certificate of incorporation or bylaws and (ii) have been duly and validly authorized by, and no other proceedings on the part of, Liberty are necessary to authorize this Agreement or to consummate the transactions contemplated hereby.  This Agreement has been duly and validly executed and delivered by Liberty and, assuming it has been duly and validly authorized, executed and delivered by A/N, constitutes a legal, valid and binding obligation of Liberty enforceable against Liberty in accordance with its terms, except to the extent that enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or other similar Laws relating to or affecting enforcement of creditors’ rights generally, and general principles of equity (regardless of whether enforcement is considered in a proceeding at law or in equity).

 

6.                                      TERM; TERMINATION.  This Agreement will terminate upon the first to occur of:

 

(i)                                     the fifth (5th) anniversary of the Effective Date (the “Expiration Date”; provided that such Expiration Date may be extended upon the agreement of A/N and Liberty, to a subsequent agreed upon date, in which case such subsequent date will be deemed the Expiration Date);

 

(ii)                                  upon written notice by Liberty to A/N, that a 40 Act Event, as determined in the reasonable opinion of Liberty’s counsel, has occurred;

 

(iii)                               upon written notice by A/N to Liberty, upon a material breach by Liberty of any of its covenants or agreements contained herein, provided that such breach shall not have been cured within ten (10) Business Days after written notice thereof shall have been received by Liberty;

 

(iv)                              a Liberty Change of Control;

 

(v)                                 a Transfer by any Liberty Party of any shares of Class A Common Stock, other than (A) a Permitted Transfer, provided, that in the case of a Transfer pursuant to clause (y) of Section 4.6(b)(ix) of the Stockholders Agreement, the Voting Interest of Liberty (including the Proxy Shares) shall equal no less than the Target Percentage following the completion of such Transfer, or within six (6) months following the completion of such Transfer, Liberty acquires such number of shares of Class A Common Stock as is necessary to cause the Voting Interest of

 

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Liberty (including the Proxy Shares) to be no less than the Target Percentage; (B) a Transfer of shares of Class A Common Stock constituting 1% or less of the Total Voting Power, provided, that, (x) Liberty shall have promptly notified A/N in writing of such Transfer, (y) A/N shall promptly have provided Liberty with written notice that this Agreement will terminate unless Liberty cures such breach within forty-five (45) calendar days and (z) within thirty (30) calendar days of receipt of notice from A/N, Liberty shall have (1) acquired such number of shares of Common Stock as is necessary to cause the Voting Interest of Liberty (including the Proxy Shares) to be no less than the Target Percentage and (2) certified in writing to A/N that the Voting Interest of Liberty (including the Proxy Shares) is no less than the Target Percentage; or (C) a Transfer by Liberty of any shares of Class A Common Stock following which Transfer Liberty retains no less than 19.01% of the Total Voting Power; or

 

(vi)                              upon the mutual written agreement of A/N and Liberty.

 

No party hereto will be relieved from any liability for breach of this Agreement by reason of such termination.

 

7.                                      MISCELLANEOUS.

 

(a)                                 Remedies.  The parties agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached.  It is accordingly agreed that the parties shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement in the Court of Chancery of the State of Delaware or any federal court sitting in the State of Delaware, without bond or other security being required, this being in addition to any other remedy to which they are entitled at law or in equity.

 

(b)                                 Further Assurances.  Each party shall cooperate and take such actions as may be reasonably requested by another party in order to carry out the provisions and purposes of this Agreement and the transactions contemplated hereby.

 

(c)                                  Expenses.  Except as otherwise expressly provided in this Agreement, all costs and expenses incurred in connection with the transactions contemplated by this Agreement shall be paid by the party incurring such costs and expenses.

 

(d)                                 Governing Law.  This Agreement shall be governed by and construed in accordance with the Laws of the State of Delaware.

 

(e)                                  Jurisdiction.  All actions and proceedings arising out of or relating to this Agreement shall be heard and determined in the Court of Chancery of the State of Delaware, or, if the Court of Chancery lacks subject matter jurisdiction, in any federal court sitting in the State of Delaware, and the parties hereto hereby irrevocably submit to the exclusive jurisdiction of such courts (and, in the case of appeals, appropriate appellate courts there from) in any such action or proceeding and irrevocably waive the defense of an inconvenient forum to the maintenance of any such action or proceeding.  The consents to jurisdiction set forth in this paragraph shall not constitute general consents to service of process in the State of Delaware and shall have no effect for any purpose except as provided in this paragraph and shall not be deemed

 

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to confer rights on any Person other than the parties hereto.  The parties hereto agree that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by applicable Law.  EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHTS TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT.

 

(f)                                   Assignment; Successors.  Neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned or delegated in whole or in part, by operation of Law, or otherwise, by any of the parties without the prior written consent of the other parties; provided, that Liberty may assign this Agreement to a Qualified Distribution Transferee.  Subject to the preceding sentence, this Agreement shall be binding upon, inure to the benefit of, and be enforceable by, the parties hereto and their respective successors and permitted assigns.  Any purported assignment or delegation not permitted under this Section 7(f) shall be null and void and shall not relieve the assigning or delegating party of any obligation hereunder.

 

(g)                                  Descriptive Headings.  Headings of Sections and subsections of this Agreement are for convenience of the parties only, and shall be given no substantive or interpretive effect whatsoever.

 

(h)                                 Entire Agreement; No Third-Party Beneficiaries.  This Agreement and the Stockholders Agreement constitutes the entire agreement of the parties hereto, and supersede all other prior agreements and understandings, both written and oral, among the parties, with respect to the subject matter hereof and thereof.  Nothing in this Agreement shall be construed as giving any Person, other than the parties hereto and their respective heirs, successors, legal representatives and permitted assigns, any right, remedy or claim under or in respect of this Agreement or any provision hereof.

 

(i)                                     Notices.  Any notices or other communications required or permitted under, or otherwise in connection with this Agreement, shall be in writing and shall be deemed to have been duly given (A) when delivered in person, (B) upon transmission by electronic mail or facsimile transmission as evidenced by confirmation of transmission to the sender (but only if followed by transmittal of a copy thereof by (x) national overnight courier or (y) hand delivery with receipt, in each case, for delivery by the second (2nd) Business Day following such electronic mail or facsimile transmission), (C) on receipt after dispatch by registered or certified mail, postage prepaid and addressed, or (D) on the next Business Day if transmitted by national overnight courier, in each case as set forth to the parties as set forth below:

 

If to A/N, to:

 

Advance/Newhouse Partnership

5823 Widewaters Parkway

East Syracuse, NY 13057

Facsimile:  

Attention:  Steven A. Miron

E-Mail:

 

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

 

Sullivan & Cromwell LLP

125 Broad Street

New York, NY 10004

Facsimile:  (212) 291-9067

Attention:  Brian E. Hamilton

E-Mail:  hamiltonb@sullcrom.com

 

If to Liberty, to:

 

Liberty Broadband Corporation

12300 Liberty Boulevard

Englewood, CO 80112

Facsimile:

Attention: Richard N. Baer

E-Mail:

 

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

 

Baker Botts L.L.P.

30 Rockefeller Plaza

New York, New York 10112

Facsimile: (212) 259-2500

Attention:                       Frederick H. McGrath

Renee L. Wilm

E-Mail:         frederick.mcgrath@bakerbotts.com

renee.wilm@bakerbotts.com

 

or such other address, email address or facsimile number as such party may hereafter specify by like notice to the other parties hereto.

 

(j)                                    Severability.  If any term or other provision of this Agreement is determined by a court of competent jurisdiction to be invalid, illegal or incapable of being enforced by any rule of law or public policy, all other terms, provisions and conditions of this Agreement shall nevertheless remain in full force and effect.  Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible to the fullest extent permitted by applicable Law in an acceptable manner to the end that the transactions contemplated hereby are fulfilled to the extent possible.

 

(k)                                 Amendments and Waivers.  The provisions of this Agreement, including the provisions of this sentence, may not be amended, modified or supplemented, and waivers of or consents to departures from the provisions hereof may not be given, unless approved in writing by Liberty and A/N; provided, that any amendment to the terms of the A/N Proxy (other than the extension on the same terms hereof pursuant to Section 6(i) hereof) shall require the prior written consent of Charter following the approval of such amendment by a majority of the Unaffiliated

 

13

 

Directors, which consent shall not be unreasonably withheld, conditioned or delayed, except that Charter may withhold such consent pursuant to the fiduciary duties of the Unaffiliated Directors under applicable Law.  For the avoidance of doubt, Charter shall have no rights as a party hereto (including any consent right with respect to any amendments to the terms of the ROFR or the execution of any purchases thereunder, subject to the compliance by Liberty and A/N with their respective obligations under the Stockholders Agreement), except those rights expressly set forth in Section 2(e) and this Section 7(k).

 

(l)                                     No Implied Waivers.  No action taken pursuant to this Agreement, including any investigation by or on behalf of any party, shall be deemed to constitute a waiver by the party taking such action of compliance with any representations, warranties, covenants or agreements contained herein or made pursuant hereto.  The waiver by any party hereto of a breach of any provision of this Agreement shall not operate or be construed as a waiver of any preceding or succeeding breach and no failure by any party to exercise any right or privilege hereunder shall be deemed a waiver of such party’s rights or privileges hereunder or shall be deemed a waiver of such party’s rights to exercise the same at any subsequent time or times hereunder.

 

(m)                             Interpretation.  When a reference is made in this Agreement to a Section, Exhibit or Schedule, such reference shall be to a Section of, or an Exhibit or Schedule to, this Agreement unless otherwise indicated.  The headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.  Whenever the words “include”, “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation”.  The words “hereof”, “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement.  When this Agreement contemplates a certain number of securities, whether Common Shares or otherwise, as of a particular date, such number of securities shall be deemed to be appropriately adjusted to account for stock splits, dividends, recapitalizations, combinations of shares or other change affecting the such securities.

 

(n)                                 Counterparts.  This Agreement may be executed in counterparts (each of which shall be deemed to be an original but all of which taken together shall constitute one and the same agreement) and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other parties.

 

[Signature Page Follows]

 

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IN WITNESS WHEREOF, each of the undersigned has executed this agreement as of the date first above written.

 

	
 
    	
LIBERTY   BROADBAND CORPORATION
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
ADVANCE/NEWHOUSE   PARTNERSHIP
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    	
 
    
	
 
    	
For the limited purposes of the proviso to   Section 2(e) and Section 7(k):
    
	
 
    	
 
    
	
 
    	
CHARTER   COMMUNICATIONS, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    
	
 
    	
CCH   I, LLC
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    

 

[Signature Page to Proxy and Right of First Refusal Agreement]AMENDMENT NO. 2 TO SENIOR NOTE PURCHASE AGREEMENT

EXHIBIT 10.1

AMENDMENT NO. 2 TO SENIOR NOTE PURCHASE AGREEMENT

THIS AMENDMENT (this “Amendment”), made as of March 31, 2015 by and among AS SEEN ON TV, INC., a Florida corporation (“ASTV”), INFUSION BRANDS, INC., a Nevada corporation (“Infusion”), EDIETS.COM, INC., a Delaware corporation (“eDiets”), TV GOODS HOLDING CORPORATION, a Florida corporation (“TV Goods”), TRU HAIR, INC., a Florida corporation (“Tru Hair”), RFL Enterprises, LLC, a Texas limited liability company (“RFLE”) and RONCO FUNDING, LLC, a Delaware limited liability company (“RFL” and collectively with ASTV, Infusion, eDiets, TV Goods, Tru Hair and RFLE, the “Credit Parties” and each individually, a “Credit Party”), and MIG7 INFUSION, LLC, a Florida limited liability company (the “Purchaser”), hereby amends that certain SENIOR NOTE PURCHASE AGREEMENT between the Credit Parties and Purchaser dated as of April 3, 2014 (as amended, restated, supplemented or otherwise modified from time to time, the “Loan Agreement”).

W I T N E S S E T H:

WHEREAS, Purchaser has previously advanced $10,180,000 to the Credit Parties, the repayment of which is evidenced by that certain Amended and Restated Senior Secured Promissory Note dated as of April 3, 2014 in the original principal amount of $10,180,000; 

WHEREAS, RFLE desires to become a Credit Party and become a party to all of the Transaction Documents; and 

WHEREAS, the Credit Parties wish to borrow an additional $1,900,000, with regard to which they agree to repay $2,280,000, and owe an additional $216,193 to Borrower and accordingly the parties hereto wish to increase the Maximum Investment Amount to $12,676,193;

NOW, THEREFORE, for and in consideration of the sum of $10.00, the mutual covenants and agreements contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

1.

Definitions. All capitalized terms contained in this Amendment that are not defined in this Amendment shall have the meanings ascribed to them in the Loan Agreement.

2.

Acknowledgment of Default. 

a.

Credit Parties hereby agree and acknowledge that they currently are in default of the Loan Agreement and Note and that an Event of Default currently exists because Credit Parties failed to achieve the revenue and EBITDA targets set forth in Section 6.1(xiv) and (xv) of the Loan Agreement, failed to deliver certain required reports, and other defaults specifically set forth in that certain Notice of Default dated December 10, 2014, from Purchaser to the Credit Parties (collectively, the “Existing Default”). For purposes of this Amendment, the term “Existing Default” includes any other Event of Default that may exist as of the date hereof, whether or not identified, other than any such other Event of Default which has, or could reasonably be expected to have, a Material Adverse Effect at the time the Event of Default is discovered by Purchaser or thereafter. 

b.

Notwithstanding such Existing Default, Purchaser agrees to forbear from exercising its rights arising from the Existing Default, on the terms set forth in Section 3 below.

3.

Forbearance. In reliance upon the representations, warranties and covenants of each of the Credit Parties contained in this Amendment, and subject to all of the other terms and conditions of this Amendment, from the date of this Amendment until the earlier of (a) the Maturity Date of the Second Restated Note (as defined below), as such Maturity Date may be extended as contemplated by Section 4(d) below, and (b) the date of the occurrence of an Event of Default other than the Existing Default (the earliest of such dates being referred to herein as the “Forbearance Termination Date”), Purchaser agrees to forbear from exercising its rights and remedies under the Transaction Documents which it otherwise would have the right to exercise as a result of the Existing Default. On the Forbearance Termination Date, the agreement of Purchaser to forbear set forth in this Section 3 shall automatically and without further action terminate and be of no force and effect, it being understood and agreed that the effect of such termination will be to permit Purchaser to immediately exercise its rights and remedies under the Transaction Documents, applicable law or otherwise, as if no such forbearance had occurred.

4.

Additional Funding/Amendment to Repayment Terms.

a.

The Maximum Investment Amount is hereby increased to $12,676,193.

b.

On the date hereof, Purchaser shall advance an additional $1,900,000 to the Credit Parties (the “Third Advance”), by a wire transfer of immediately available funds in accordance with the Credit Parties’ written instructions.

c.

Accordingly, the Credit Parties shall, on the date hereof, execute and deliver to Purchaser a Second Amended and Restated Promissory Note, in the form attached hereto as Exhibit A, evidencing the increased Loan amount of $12,676,193 (the “Second Restated Note”). The parties hereto acknowledge that the Second Restated Note is the Note referenced in the Loan Agreement.

d.

The Second Restated Note shall reflect that the Maturity Date is hereby extended to April 3, 2017; provided that the Maturity Date shall automatically be further extended to April 3, 2018 if ASTV undertakes an offering of its common stock within fifteen (15) months of the date of this Amendment that results in ASTV raising net proceeds of at least $14,000,000, at least $10,000,000 of which must be immediately applied to pay down a portion of the Second Restated Note (a “Qualified Offering”).

e.

The Second Restated Note also shall reflect that interest shall be paid as follows: (i) accrued interest as of April 27, 2015 in the amount of $113,793 is being added to the principal amount of the Second Restated Note, (ii) interest that accrues from April 28, 2015 through April 2, 2016 shall be paid on the Maturity Date; and (iii) all interest that accrues after April 2, 2016 shall be paid on a quarterly basis 

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on the fifth (5th) day of each calendar quarter until all amounts due hereunder are repaid in full.

5.

Use of Proceeds. 

a.

Notwithstanding anything to the contrary, the Credit Parties shall use the proceeds from the Third Advance solely to acquire the remaining interests in the debt (the “Ronco Secured Debt”) of Ronco Holdings, Inc. (“Ronco”) held by Ronco’s various lenders (other than RFL) and LV Administrative Services, Inc., as collateral and administrative agent to such lenders (“LV” and collectively with such lenders, the “Ronco Creditor Parties”) substantially as contemplated in the current draft of the Debt Acquisition Agreement provided to Purchaser on March 27, 2015 (the “Laurus Takeout”), with the balance used for working capital purposes. The purchaser of such remaining interests in the debt and equity of Ronco shall be RFLE. The Credit Parties shall proceed with due haste to complete the Laurus Takeout as soon as commercially reasonable and in any event prior to March 31, 2015, it being acknowledged that the Forbearance Agreement dated as of March 6, 2014 by and among Ronco, CD3 Holdings, Inc. and LV expires on March 31, 2015 (the “Ronco Forbearance Agreement”). 

b.

RFLE hereby agrees to become a Credit Party and, as such, agrees to be bound by all of the Transaction Documents and to undertake all of the obligations of the Credit Parties set forth in the Transaction Documents as if it had been an original signatory to each such Transaction Document, including without limitation the Security Agreement. Without limiting the foregoing, the Credit Parties hereby agree that all of the ownership interests of RFLE and all of RFLE’s assets, including without limitation all rights it may have to Ronco’s debt and equity, are Collateral as defined in the Security Agreement, and are subject to the terms of the Transaction Documents, including without limitation the Security Agreement, and Purchaser’s rights set forth therein. 

c.

The Credit Parties shall also take all commercially reasonable steps to promptly acquire all of the equity interests of Ronco on or before May 31, 2015. The parties hereby agree that the intent of the forgoing is that, once the forgoing transactions are finalized, ASTV will own, either directly or indirectly through other wholly-owned subsidiaries, 100% of Ronco (the operating company) (the “Ronco Acquisition”). 

6.

Liability Reduction. Within ninety (90) days of the date hereof, the Credit Parties shall, in good faith and to the extent they may do so in compliance with all applicable laws, use their commercially reasonable efforts to reduce to the extent commercially reasonable all liabilities and other obligations of each direct and indirect subsidiary of ASTV, including by dissolving and liquidating any subsidiaries with liabilities in excess of the value of such subsidiary’s assets or by coming to arrangements with the creditors of such subsidiaries that are acceptable to Purchaser (the “Liability Reduction”).

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7.

Recapitalization. 

a.

Within one hundred twenty (120) days of the date hereof, the Credit Parties shall issue (at no additional costs to Purchaser) shares of Convertible Preferred Stock of ASTV (such issuance to Purchaser, the “Recapitalization”), which shares must be senior to all other capital stock of ASTV and represent, immediately after the Recapitalization, sixty percent (60%) of the fully diluted shares of capital stock of ASTV (including, when calculating the fully diluted outstanding shares, all securities issued to the National Holders (as defined below) and employees and directors of the Credit Parties, whether vested or unvested including those contemplated by Section 7(b) below, whether or not issued); provided that such shares shall be reduced to an amount equal to fifty percent (50%) of the fully diluted shares of capital stock of ASTV (measured as of a date that is immediately after the Recapitalization, and including, when calculating the fully diluted outstanding shares, all securities issued to the National Holders and employees and directors of the Credit Parties, whether vested or unvested including those contemplated by Section 7(b) below, whether or not issued) if the Second Restated Loan is paid in full on or prior to the first anniversary of this Amendment. Each share of Convertible Preferred Stock shall have three (3) votes and shall (to the extent permitted by law) vote as a single class with all other classes of capital stock of ASTV, all of which other classes may not have more than one (1) vote per share. The shares of Convertible Preferred Stock shall be convertible at the option of Purchaser at any time, on a one-for-one basis (but subject to adjustment in the event of a stock split and similar events), into shares of ASTV common stock and shall have such other rights and preferences as are reasonably acceptable to Purchaser.

b.

In addition, it is anticipated that in connection with the Recapitalization or shortly thereafter ASTV will undertake actions that result in:

i.

The holders of warrants who previously acquired securities of ASTV placed by National Securities, via an exchange of restricted common stock for warrants (the “National Holders”), owning, immediately after the Recapitalization, restricted shares of common stock of ASTV representing, immediately after the Recapitalization, nine percent (9%) of the fully diluted shares of capital stock of ASTV; 

ii.

Management of ASTV being issued restricted shares of common stock of ASTV, representing, immediately after the Recapitalization, thirty percent (30%) of the fully diluted shares of capital stock of ASTV (provided that such shares may be increased to an amount equal to forty percent (40%) of the fully diluted shares of capital stock of ASTV if the Second Restated Loan is paid in full on or prior to the first anniversary of this Amendment), with half vesting immediately and the other half (the “Second Vesting Amount”) vesting over 2 years, with one-half of the Second Vesting Amount vesting on December 31, 2015 if the Credit Parties achieve at least $25,000,000 in revenues and $2,500,000 of Adjusted EBITDA for the fiscal year ended December 31, 2015 (such 

4

number of shares being forfeited if the Credit Parties fail to achieve either such revenue or Adjusted EBITDA target) and the remaining portion of the Second Vesting Amount vesting on December 31, 2016 if the Credit Parties achieve at least $45,000,000 in revenues and $4,500,000 of Adjusted EBITDA for the fiscal year ended December 31, 2016 (such number of shares being forfeited if the Credit Parties fail to achieve either such revenue or Adjusted EBITDA target). For purposes of this Amendment, “Adjusted EBITDA” shall be the EBITDA of the Credit Parties, reduced by 100% of the following amounts: all reasonable and documented expenses (including without limitation all legal fees and expenses of the Credit Parties and the Purchaser), reasonably acceptable to Purchaser, related to the Recapitalization or this Amendment (including, without limitation and for the avoidance of doubt, transactions and issuances of securities contemplated by Sections 7(b), 9(e) and 9(f)), including all third party audit expenses and the costs of public company securities filings, incurred from and after the date hereof with regard to either historical periods or future periods; and

iii.

The remaining existing shareholders of ASTV owning one percent (1%) of the fully diluted shares of capital stock of ASTV.

c.

The Recapitalization must be completed within one hundred twenty (120) days of the date of this Amendment, in compliance with all applicable laws; provided that, for the avoidance of doubt, ASTV shall use commercially reasonable efforts to complete the items enumerated in Section 7(b) above, but shall not be required to complete such items by such deadline. 

d.

All shares issued to ASTV management and the National Holders must be subject to customary lock-up restrictions, on terms reasonably acceptable to Purchaser. 

e.

The shares issued to Purchaser shall be issued (i) pursuant to a Certificate of Designation reasonably acceptable to Purchaser and (b) subject to a registration rights agreement with customary provisions including demand and piggy-back registration rights reasonably acceptable to Purchaser. 

8.

Warrant. Notwithstanding anything to the contrary, the expiration date of the Warrant is hereby extended until such date as the Credit Parties complete the Recapitalization. The Warrant shall automatically expire simultaneously with the closing of the Recapitalization. At such time, Purchaser shall return the Warrant for cancellation.

9.

Affirmative Covenants. In addition to the covenants contained in Section 4.4 of the Loan Agreement, so long as the Second Restated Note remains outstanding, each Credit Party shall, and shall cause each of its Subsidiaries and Affiliates to:

a.

If requested by Purchaser at any time prior to the completion of the Recapitalization, cause such number of Persons designated by Purchaser, in its discretion from time to time, to be elected to each Board of Directors of each Credit Party so that such Persons designated by Purchaser constitute at least a 

5

majority of the Directors on each such Board of Directors; provided that in any event, at least one seat on the Board of Directors shall be filled by a person designated by ASTV;

b.

Complete the Laurus Takeout on or before March 31, 2015;

c.

Complete the Ronco Acquisition on or before May 31, 2015;

d.

Complete the Recapitalization (including obtaining all necessary board and shareholder approvals) within one hundred twenty (120) days of the date of this Amendment;

e.

Undertake and complete, within one hundred eighty (180) days of the date of this Amendment, all actions necessary to reserve from ASTV’s authorized and unissued Common Stock a sufficient number of shares to provide for the conversion of all of the Convertible Preferred Stock of ASTV issued to Purchaser in connection with the Recapitalization; 

f.

Complete a Qualified Offering within fifteen (15) months from the date of this Amendment; and

g.

Apply at least Ten Million Dollars ($10,000,000) from the proceeds of a Qualified Offering to pay a portion of the Second Restated Note within fifteen (15) months from the date this Amendment.

10.

Event of Default. 

a.

Section 6.1(xiv) of the Loan Agreement shall be deemed to be replaced in its entirety by the following: “the Credit Parties’ (which shall include without limitation the revenues of Ronco Holdings, Inc.) consolidated revenues, as determined in accordance with GAAP, are less than $25,000,000.00 for the year ended December 31, 2015 or $45,000,000.00 for the year ended December 31, 2016.” Nothing in this Section 10(a), however, shall be deemed to be a waiver of the Existing Default, except to the extent set forth in Section 2 or Section 3 above. 

b.

Section 6.1(xv) of the Loan Agreement is hereby replaced in its entirety by the following: “the Credit Parties’ (which shall include without limitation the Adjusted EBITDA of Ronco Holdings, Inc.) consolidated Adjusted EBITDA is less than $2,500,000.00 for the year ended December 31, 2015 or $4,500,000.00 for the year ended December 31, 2016.” Nothing in this Section 10(b), however, shall be deemed to be a waiver of the Existing Default, except to the extent set forth in Section 2 or Section 3 above.

c.

In addition to the Events of Default set forth in the Loan Agreement, an “Event of Default” shall be deemed to have occurred, unless waived by or consented to in writing in advance by the Purchaser, if:

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i.

A Credit Party breaches, fails to perform or observe any material provision contained in this Amendment (including without limitation if ASTV fails to complete the Recapitalization within 120 days of the date of this Amendment) or any other Transaction Document including the Second Restated Note or any other instrument delivered pursuant hereto or thereto;

ii.

Any representation, warranty or information contained herein is materially false or misleading on the date made or furnished;

iii.

The Ronco Forbearance agreement expires or is terminated prior to the date of the Laurus Takeout.

iv.

At any time following the Recapitalization but prior to the date the Second Restated Note is repaid in full the shares of capital stock of ASTV owned by Purchaser equal an amount less than sixty percent (60%) (or fifty percent (50%) if the Second Restated Loan is paid in full on or prior to the first anniversary of this Amendment) of the fully diluted capital stock of ASTV, other than as a result of any dilution resulting from the closing of a Qualified Offering or from the issuance of additional shares in an issuance that is approved in advance by Purchaser, which approval will not be unreasonably withheld); 

v.

The aggregate liabilities of the Credit Parties (including without limitation all accounts payable and all Indebtedness of the Credit Parties) other than the Indebtedness evidenced by the Second Restated Note at any time exceed Eight Million Dollars ($8,000,000) (for the avoidance of doubt, the Ronco Secured Debt shall not count towards this cap); and

vi.

At any time prior to the Recapitalization being completed, Infusion Brands International, Inc. undergoes a Change in Control or any other event occurs that results in the current majority equity holders of Infusion Brands International, Inc. losing the ability to direct the vote of ASTV shares currently owned by Infusion Brands International, Inc.

11.

Representations, Warranties and Covenants; No Event of Default. 

a. 

The Credit Parties hereby represent and warrant to Purchaser as follows: 

i.

The representations and warranties contained in Section 5 of the Loan Agreement remain true and correct in all material respects on the date hereof.

ii.

ASTV owns 100% of the ownership interest of RFLE, free and clear of all Liens, and no other Person has any rights to such ownership interest.

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iii.

Each of the Credit Parties has all necessary power and authority to enter into this Amendment, to carry out its obligations hereunder and to consummate the transactions contemplated hereby.

iv.

This Amendment has been duly executed and delivered by each of the Credit Parties, and (assuming due authorization, execution and delivery by Purchaser) this Amendment constitutes a legal, valid and binding obligation of each of the Credit Parties, enforceable against each of them in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ rights generally and by general principles of equity (regardless of whether enforcement is sought in a proceeding at law or in equity).

v.

Copies of the Credit Parties’ consolidated financial statements consisting of the balance sheet of the Company as at February 28, 2015 and the related statements of income and retained earnings, stockholders’ equity and cash flow for the period then ended, all of which have been provided to Purchaser and fairly present in all material respects the financial condition and results of the operations of the Credit Parties as of February 28, 2015.

vi.

Except as set forth in Schedule 11(a)(vi) attached hereto, since February 28, 2015 there has not been any material adverse change in the financial condition, operating results, assets, liabilities, operations or prospects of the Credit Parties taken as a whole.

vii.

Once issued, all of the shares of Convertible Preferred Stock of ASTV to be issued to Purchaser in connection with the Recapitalization will be duly authorized, validly issued, fully paid and non-assessable. 

viii.

The execution, delivery and performance by the Credit Parties of this Amendment, and the consummation of the transactions contemplated hereby, do not and will not, except as set forth in Schedule 11(a)(vi) attached hereto, 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 with any such Person.

ix.

To the knowledge of the Credit Parties, no Event of Default currently exist other than the Existing Default.

b.

The Purchaser hereby represents and warrants to the Credit Parties as follows: 

i.

Purchaser has all necessary power and authority to enter into this Amendment, to carry out its obligations hereunder and to consummate the transactions contemplated hereby.

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ii.

This Amendment has been duly executed and delivered by the Purchaser, and (assuming due authorization, execution and delivery by Credit Parties) this Amendment constitutes a legal, valid and binding obligation of the Purchaser, enforceable in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ rights generally and by general principles of equity (regardless of whether enforcement is sought in a proceeding at law or in equity).

iii.

The execution, delivery and performance by the Purchaser of this Amendment, and the consummation of the transactions contemplated hereby, do not and will not, except as set forth in Schedule 11(b)(iii) attached hereto, 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 with any such Person.

12.

MIG Fee. Commencing on the date hereof and until the Second Restated Note is paid in full, the Credit Parties shall, jointly and severally, pay Mallitz Investment Group, LLC, a Florida limited liability company (“MIG”), a management fee equal to two percent (2%) per annum on the unpaid principal balance of the Second Restated Note (the “MIG Fee”), which MIG Fees shall be payable quarterly in arrears on June 30, September 30, December 31 and March 31 (provided that the MIG Fee will accrue for the first six months following the date of this Amendment with the accrued amount being paid on September 30, 2015). 

13.

Fees and Expenses. The Credit Parties shall jointly and severally reimburse Purchaser and MIG for all of their legal and professional fees and other costs and expenses incurred in connection with the preparation, negotiation and execution of this Amendment, the Second Restated Note, the Laurus Takeout, the Ronco Acquisition, the Recapitalization, the Qualified Offering  and all of the other agreements and transactions contemplated hereby, as well as all expenses incurred by Purchaser or MIG in connection with its collection efforts undertaken prior to the date hereof. To that end, within seven days of the date hereof, Purchaser shall provide to the Credit Parties an invoice from its counsel reflects its total legal fees and cost incurred through the date hereof and thereafter the Credit Parties shall jointly and severally reimburse such amount in twelve (12) equal, consecutive monthly installments, on or before the third day of each month, commencing on April 15, 2015, and shall reimburse all other amounts required to be reimbursed pursuant to this Section 12 as Purchaser and/or MIG incurs such costs and expenses; provided that if the Credit Parties obtain a new credit facility or additional financing in excess of $1,000,000, the Credit Parties shall reimburse all amounts remaining to be paid within seven days of the closing of such new credit facility or additional financing.

14.

Continuation of Obligations. Except as specifically amended pursuant to this Amendment, this Amendment does not reinstate, modify, amend, or extend any of the Transaction Documents, all of which remain in full force and effect in accordance with their terms (as specifically amended by this Amendment), and the obligations of the Credit Parties thereunder remain due and owing, and each party hereto hereby confirms 

9

and agrees to be bound by all of the terms and provisions thereof. Nothing in this Amendment shall constitute a waiver or otherwise limit the rights and remedies of Purchaser arising under any of the Transaction Documents, except as specifically set forth in this Amendment.

15.

No Novation. The Amendment is not a novation or refinancing of the indebtedness evidenced by the Note, but merely an amendment to the terms thereof. To the extent of any conflict between the terms and provisions of this Amendment and the terms and provisions of any of the other Transaction Documents, the terms and provisions of this Amendment shall govern and control.

16.

Acknowledgement of Current Indebtedness. The Credit Parties acknowledge and agree that immediately prior to the date of this Amendment, the Credit Parties owe Purchaser a total of $10,396,193, which consist of (a) the principal amount of the Note $10,180,000,(b) $113,793 of accrued interest through March 27, 2015, (c) the deferred loan origination fee contemplated by Section 3.6(iii) of the Loan Agreement in the amount $101,800, and (d) $600 to reimburse Purchaser for costs it incurred in connection with the non-judicial foreclosure contemplated in February, 2015. The foregoing obligations do not include the fees and costs reimbursable pursuant to Section 10 above. The Credit Parties acknowledge, represent, warrant, and agree that as of the date of this Amendment none of them hold any defenses, counterclaims, setoffs, or rights of recoupment against payment of such Indebtedness. Absent manifest error, the records of Purchaser regarding all such amounts owed shall be conclusive as to amounts borrowed and owed. 

17.

Miscellaneous.

a.

Release. Effective as of the date hereof, the Credit Parties, on behalf of themselves and their Affiliates and their respective successors and assigns, hereby fully remise, release, acquit, and forever discharge Purchaser and MIG and each of their Affiliates, successors and assigns, together with their respective past and present directors, officers, shareholders, employees, agents, attorneys and representatives (collectively, the “MIG Parties”) of and from, and agree not to sue and otherwise agree not to enforce, any and all losses, claims, debts, liabilities, demands, obligations, costs, expenses, actions, causes of action and claims for relief of every nature, whether known or unknown, whether arising at law or in equity, and whether direct or indirect (collectively, “Claims”), which the Credit Parties, either singly or jointly with others, may have had, may now have, or may hereafter have, against the MIG Parties by reason of any matter, cause, happening or thing arising prior to the date hereof.  The MIG Parties hereby fully remise, release, acquit, and forever discharge all of the directors, officers, shareholders, employees, agents, attorneys and representatives of the Credit Parties holding such positions as of the date of this Amendment (collectively, the “Released Parties”) of and from, and agree not to sue and otherwise agree not to enforce, any and all Claims which the MIG Parties, either singly or jointly with others, may have had, may now have, or may hereafter have, against the Released Parties by reason of any matter, cause, happening or thing arising prior to the date hereof.

10

b.

Counterparts. This Amendment may be executed in two or more counterparts, any one of which need not contain the signatures of more than one party, but all such counterparts taken together shall constitute one and the same agreement.

c.

Continuation of Obligations. Except as specifically amended pursuant to this Amendment, this Amendment does not reinstate, modify, amend, or extend the Loan Agreement, which shall remain in full force and effect in accordance with its terms. Each party hereto hereby confirms and agrees to be bound by all of the terms and provisions of the Loan Agreement, as amended by this Amendment. Nothing in this Amendment shall constitute a waiver or otherwise limit the rights and remedies of Purchaser arising under the Loan Agreement.

d.

National Securities. National Securities may be considered by ASTV to facilitate future block trades and financings. 

e.

Third Party Beneficiary. MIG and MIG7 Warrant, LLC, a Florida limited liability company are specifically made third party beneficiaries of this Amendment.

f.

Further Assurances. Each of the Credit Parties shall, and shall cause their respective Affiliates to, execute and deliver such additional documents, instruments, conveyances and assurances and take such further actions as may be reasonably required to carry out the provisions of this Amendment and give effect to the transactions contemplated by this Amendment.

g.

No Other Promises or Inducements. There are no other promises, representations, or inducements which have been made to any Credit Party to cause them to enter into this Amendment other than those set forth in this Amendment. The Credit Parties acknowledge they have read and reviewed this Amendment and that they have had the full benefit and advice of counsel, or the opportunity to obtain the benefit and advice of counsel, of their own selection, and that this Amendment has been entered into by them freely, voluntarily, with fully knowledge, and without duress.

h.

Notices. In accordance with Section 7.13 of the Loan Agreement, Purchaser hereby notifies the Credit Parties that its address has changed to: 8043 Cooper Creek Blvd, Suite #208, University Park FL 34201.

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IN WITNESS WHEREOF, the parties hereto have executed this Amendment on the date first written above.

CREDIT PARTIES:

		
	INFUSION BRANDS, INC.

By:

____________________________

Name:

____________________________

Title:

____________________________

	AS SEEN ON TV, INC.

By:

____________________________

Name:

____________________________

Title:

____________________________

	

EDIETS.COM, INC.

By:

____________________________

Name:

____________________________

Title:

____________________________

	

TV GOODS HOLDING CORPORATION

By:

____________________________

Name:

____________________________

Title:

____________________________

	

TRU HAIR, INC. 

By:

____________________________

Name:

____________________________

Title:

____________________________

	

RONCO FUNDING, LLC

By:

____________________________

Name:

____________________________

Title:

____________________________

	

RFL Enterprises, LLC 

By:

____________________________

Name:

____________________________

Title:

____________________________

	

PURCHASER:

MIG7 INFUSION, LLC

By: Mallitz Investment Group, LLC, Manager

By:

____________________________

Craig A. Mallitz, President

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Exhibit A – Form of Second Amended and Restated Note

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