Document:

Exhibit 10.9

 

AMENDMENT NO. 3 AND WAIVER TO CREDIT AGREEMENT

 

This Amendment No. 3 and Waiver to Credit Agreement (this “Agreement”) dated as of September 19, 2014 (the “Effective Date”) is among JP Energy Partners LP, a Delaware limited partnership (the “Borrower”), JP Energy Refined Products, LLC, a Delaware limited liability company, JP Energy ATT, LLC, a Delaware limited liability company, JP Energy Caddo, LLC, a Delaware limited liability company, Pinnacle Propane, LLC, a Texas limited liability company, Pinnacle Propane Express, LLC, a Delaware limited liability company, Alliant Gas, LLC, a Texas limited liability company, JP Energy Crude Oil Services, LLC, a Delaware limited liability company. JP Falco, LLC, a Delaware limited liability company, JP Energy Storage, LLC, a Oklahoma limited liability company, JP Energy Permian, LLC, a Delaware limited liability company, JP Energy Products Supply, LLC, a Delaware limited liability company, and JP Liquids, LLC, a Delaware limited liability company, (each a “Guarantor”), the undersigned Lenders (as defined below) and Bank of America, N.A., as Administrative Agent for the Lenders (in such capacity, the “Administrative Agent”), Swing Line Lender and L/C Issuer.

 

INTRODUCTION

 

A.                             The Borrower, the financial institutions party thereto as Lenders (the “Lenders”), and the Administrative Agent have entered into the Credit Agreement dated as of February 12, 2014 (as amended, restated, or modified from time to time, the “Credit Agreement”).

 

B.                             The Borrower has notified the Administrative Agent that the Consolidated Total Leverage Ratio of the Borrower may be greater than 4.50 to 1.00 as at the last day of the fiscal quarter ending September 30, 2014, which would constitute an Event of Default under Section 8.01(b) of the Credit Agreement with respect to Section 7.11(c) of the Credit Agreement (the “Financial Covenant Default” and together with any Default or Event of Default that would arise solely (a) from any failure of the Borrower to give notice of the Financial Covenant Default pursuant to Section 6.03(a) of the Credit Agreement or (b) from any breach of the representation and warranty contained in Section 5.07 of the Credit Agreement that would arise solely from the existence of the Financial Covenant Default, the “Subject Default”).

 

C.                             The Borrower has requested that the Administrative Agent, the Lenders, the L/C Issuer and the Swing Line Lender grant certain waivers with respect to the Subject Default, and such parties have agreed to make certain amendments to the Credit Agreement in connection therewith, as set forth herein.

 

THEREFORE, in fulfillment of the foregoing, the Borrower, the Administrative Agent, the L/C Issuer, the Swing Line Lender and each of the undersigned Lenders hereby agree as follows:

 

Section 1.                                    Definitions; References. Unless otherwise defined in this Agreement, each term used in this Agreement which is defined in the Credit Agreement has the meaning assigned to such term in the Credit Agreement.

 

Section 2.                                    Waiver. The Lenders hereby waive the Subject Default, which waiver shall be effective as of the date of occurrence of the Subject Default; PROVIDED THAT SUCH WAIVER OF THE SUBJECT DEFAULT SHALL AUTOMATICALLY EXPIRE AT 5:00 p.m.

 

 

EASTERN TIME ON NOVEMBER 14, 2014 (THE “IPO CONDITION DATE”) UNLESS THE PERMANENT WAIVER CONDITIONS SET FORTH BELOW ARE SATISFIED ON OR BEFORE SUCH DATE. If, and only if, the Permanent Waiver Conditions are satisfied on or before the IPO Condition Date, then this waiver will not expire, and will instead become and constitute a permanent waiver of the Subject Defaults.

 

(a)                          If, on or before the IPO Condition Date, the following conditions (the “Permanent Waiver Conditions”) are satisfied, this waiver of the Subject Defaults will become a permanent waiver as provided above: (i) the IPO Closing Date shall have occurred, and (ii) on or before November 14, 2014, the Borrower shall have delivered to the Administrative Agent a duly completed Compliance Certificate, limited to the calculation of the Consolidated Total Leverage Ratio, signed by the chief executive officer, chief financial officer, treasurer or controller of the Borrower, and demonstrating that as of September 30, 2014, after giving effect to the mandatory prepayment required under Section 2.05(b)(iv) and the incurrence of the Revolving Tranche B Credit Loan and any other Loans incurred on the IPO Closing Date, on a pro forma basis as if they had occurred on September 30, 2014, the Consolidated Total Leverage Ratio does not exceed 4.50 to 1.00.

 

(b)                          This waiver is limited to the extent described herein and shall not be construed to be a waiver of any other terms, provisions, covenants, warranties or agreements contained in the Credit Agreement or any of the Loan Documents or a waiver of any Default or Event of Default that may have occurred or may hereafter occur (other than the Subject Default). Without limiting the foregoing, failure to observe or perform any agreement contained in Section 7.11 of the Credit Agreement shall constitute a Default and Event of Default. The Administrative Agent and the Lenders reserve the right to exercise any rights and remedies available to them in connection with any present or future defaults under the Credit Agreement or any other provision of any Loan Document other than the Subject Default.

 

Section 3.                                    Amendments to Credit Agreement.

 

(a)                          Section 1.01 of the Credit Agreement is hereby amended by inserting the following new defined terms in its appropriate alphabetical order as follows:

 

“Margin Adjustment Event” means that by November 14, 2014, either (a) the IPO Closing Date has not occurred or (b) the IPO Closing Date has occurred, but the Borrower has not delivered to the Administrative Agent a duly completed Permanent Waiver Compliance Certificate demonstrating that as of September 30, 2014, after giving effect to the mandatory prepayment required under Section 2.05(b)(iv) and the incurrence of the Revolving Tranche B Credit Loan and any other Loans incurred on the IPO Closing Date, on a pro forma basis as if they had occurred on September 30, 2014, the Consolidated Total Leverage Ratio does not exceed 4.50 to 1.00.

 

“Permanent Waiver Compliance Certificate” has the meaning specified in Section 6.02(a)(iii).

 

(b)                          The definition of “Applicable Rate” in Section 1.01 of the Credit Agreement is hereby amended and restated in its entirety as follows:

 

2

 

“Applicable Rate” means (a) from the Closing Date to the date on which the Administrative Agent receives a Compliance Certificate pursuant to Section 6.02(a) for the fiscal year ending December 31, 2013, 2.00% per annum for Base Rate Loans and 3.00% per annum for Eurodollar Rate Loans and Letter of Credit Fees and (b) thereafter, the applicable percentage per annum set forth below determined by reference to the Consolidated Total Leverage Ratio or the Consolidated Net Total Leverage Ratio, as applicable, as set forth in the most recent Compliance Certificate received by the Administrative Agent pursuant to Section 6.02(a).

 

Prior to the IPO Closing Date:

 

Applicable Rate

(Prior to the IPO Closing Date)

 

	
Pricing
    Level
    	
 
    	
Consolidated
   Total Leverage
   Ratio
    	
 
    	
Eurodollar
   Rate and
   Letters of
   Credit
    	
 
    	
Base
   Rate
    	
 
    	
Eurodollar
   Rate and
   Letters of
   Credit
    (if the
   Margin
   Adjustment
   Event has
   occurred)
    	
 
    	
Base Rate
   (if the
   Margin
   Adjustment
   Event has
   occurred)
    	
 
    
	
1
    	
 
    	
< 2.50 to 1.00
    	
 
    	
2.00
    	
%
    	
1.00
    	
%
    	
2.50
    	
%
    	
1.50
    	
%
    
	
2
    	
 
    	
> 2.50 to 1.00 but < 3.00 to 1.00
    	
 
    	
2.25
    	
%
    	
1.25
    	
%
    	
2.75
    	
%
    	
1.75
    	
%
    
	
3
    	
 
    	
> 3.00 to 1.00 but < 3.50 to 1.00
    	
 
    	
2.50
    	
%
    	
1.50
    	
%
    	
3.00
    	
%
    	
2.00
    	
%
    
	
4
    	
 
    	
> 3.50 to 1.00 but < 4.00 to 1.00
    	
 
    	
2.75
    	
%
    	
1.75
    	
%
    	
3.25
    	
%
    	
2.25
    	
%
    
	
5
    	
 
    	
> 4.00 to 1.00 but < 4.50 to 1.00
    	
 
    	
3.00
    	
%
    	
2.00
    	
%
    	
3.50
    	
%
    	
2.50
    	
%
    
	
6
    	
 
    	
> 4.50 to 1.00
    	
 
    	
3.25
    	
%
    	
2.25
    	
%
    	
3.75
    	
%
    	
2.75
    	
%
    

 

3

 

On and after the IPO Closing Date:

 

Applicable Rate

(On and after the IPO Closing Date)

 

	
Pricing
    Level
    	
 
    	
Consolidated
   Net Total
   Leverage Ratio
    	
 
    	
Eurodollar
   Rate and
   Letters of
   Credit
    	
 
    	
Base
    Rate
    	
 
    	
Eurodollar
   Rate and
   Letters of
   Credit
    (if the
   Margin
   Adjustment
   Event has
   occurred)
    	
 
    	
Base Rate
   (if the
   Margin
   Adjustment
   Event has
   occurred)
    	
 
    
	
1
    	
 
    	
< 2.50 to 1.00
    	
 
    	
1.75
    	
%
    	
0.75
    	
%
    	
2.25
    	
%
    	
1.25
    	
%
    
	
2
    	
 
    	
> 2.50 to 1.00 but < 3.00 to 1.00
    	
 
    	
2.00
    	
%
    	
1.00
    	
%
    	
2.50
    	
%
    	
1.50
    	
%
    
	
3
    	
 
    	
> 3.00 to 1.00 but < 3.50 to 1.00
    	
 
    	
2.25
    	
%
    	
1.25
    	
%
    	
2.75
    	
%
    	
1.75
    	
%
    
	
4
    	
 
    	
> 3.50 to 1.00 but < 4.00 to 1.00
    	
 
    	
2.50
    	
%
    	
1.50
    	
%
    	
3.00
    	
%
    	
2.00
    	
%
    
	
5
    	
 
    	
> 4.00 to 1.00 but < 4.50 to 1.00
    	
 
    	
2.75
    	
%
    	
1.75
    	
%
    	
3.25
    	
%
    	
2.25
    	
%
    
	
6
    	
 
    	
> 4.50 to 1.00
    	
 
    	
3.00
    	
%
    	
2.00
    	
%
    	
3.50
    	
%
    	
2.50
    	
%
    

 

Any increase or decrease in the Applicable Rate resulting from a change in the Consolidated Total Leverage Ratio or the Consolidated Net Total Leverage Ratio, as applicable, shall become effective as of the first Business Day immediately following the date a Compliance Certificate is delivered pursuant to Section 6.02(a); provided, however, that (x) if a Compliance Certificate is not delivered when due in accordance with Section 6.02(a)(i), then, upon the request of the Required Lenders, the applicable Pricing Level 6 shall apply as of the first Business Day after the date on which such Compliance Certificate was required to have been delivered and shall remain in effect until the date on which such Compliance Certificate is delivered, (y) if a Compliance Certificate is not delivered when due in accordance with Section 6.02(a)(ii), then the Applicable Rate then in effect shall remain in effect until the date on which such Compliance Certificate is delivered, and (z) if the Margin Adjustment Event occurs, the Applicable Rate shall be determined pursuant to the applicable columns set forth above effective as of October 1, 2014, with the initial such determination based upon the Consolidated Total Leverage Ratio set forth in the Permanent Waiver Compliance Certificate or the Compliance Certificate delivered to the Administrative Agent for the fiscal quarter ending September 30, 2014, as applicable.

 

4

 

Notwithstanding anything to the contrary contained in this definition, the determination of the Applicable Rate for any period shall be subject to the provisions of Section 2.10(b).

 

(c)                           Section 2.10 of the Credit Agreement is hereby amended by creating new clause (c) as follows:

 

(c)                           If, as a result of the Margin Adjustment Event, the Applicable Margin for the period from October 1, 2014 through the date the Permanent Waiver Compliance Certificate or the Compliance Certificate for the fiscal quarter ending September 30, 2014, as applicable, is delivered to the Administrative Agent, is adjusted so that higher pricing was applicable for such period, the Borrower shall promptly upon receipt of an invoice therefor pay to the Administrative Agent for the account of the applicable Lenders, or the applicable L/C Issuer, an amount equal to the excess of the amount of interest and fees that should have been paid for such period over the amount of interest and fees actually paid for such period. This paragraph shall not limit the rights of the Administrative Agent, any Lender or any L/C Issuer, as the case may be, under Section 2.03(c)(iii), 2.03(i) or 2.08(b) or under Article VIII.

 

(d)                          Section 6.02(a) of the Credit Agreement is hereby amended by creating new clause (iii) as follows:

 

(iii)                        if the IPO Closing Date occurs prior to November 14, 2014, on or before November 14, 2014, a duly completed Compliance Certificate as of the end of the fiscal quarter ending September 30, 2014, limited to the calculation of the Consolidated Total Leverage Ratio, after giving effect to the mandatory prepayment required under Section 2.05(b)(iv) and the incurrence of the Revolving Tranche B Credit Loan and any other Loans incurred on the IPO Closing Date, on a pro forma basis as if they had occurred on September 30, 2014, signed by the chief executive officer, chief financial officer, treasurer or controller of the Borrower (the “Permanent Waiver Compliance Certificate”).

 

Section 4.                                    Reaffirmation of Liens; Reaffirmation of Guaranty.

 

(a)                          Each of the Borrower and each Guarantor (i) is party to certain Collateral Documents securing and supporting the Borrower’s obligations under the Loan Documents, (ii) represents and warrants that it has no defenses to the enforcement of the Collateral Documents and that according to their terms the Collateral Documents will continue in full force and effect to secure the Borrower’s obligations under the Loan Documents, as the same may be amended, supplemented, or otherwise modified, and (iii) acknowledges, represents, and warrants that the liens and security interests created by the Collateral Documents are valid and subsisting and create a perfected Lien in the Collateral to the extent, and with the priority, contemplated by the Collateral Documents to secure the Borrower’s obligations under the Loan Documents, as the same may be amended, supplemented, or otherwise modified.

 

(b)                          Each Guarantor hereby ratifies, confirms, and acknowledges that its obligations under the Loan Documents are in full force and effect and that such Guarantor continues to unconditionally and irrevocably guarantee the full and punctual payment and

 

5

 

performance, when due, whether at stated maturity or earlier by acceleration or otherwise, of all of the Obligations, as such Obligations may have been amended by this Agreement. Each Guarantor hereby acknowledges that its execution and delivery of this Agreement do not indicate or establish an approval or consent requirement by such Guarantor under the Credit Agreement in connection with the execution and delivery of amendments, modifications or waivers to the Credit Agreement or any of the other Loan Documents.

 

Section 5.                                    Representations and Warranties. The Borrower represents and warrants to the Administrative Agent and the Lenders that:

 

(a)                          the representations and warranties set forth in the Credit Agreement and in the other Loan Documents are true and correct in all material respects (except for such representations and warranties that have a materiality or Material Adverse Effect qualification, which shall be true and correct in all respects) as of the date of this Agreement except to the extent that such representations and warranties specifically refer to an earlier date, in which case they shall be true and correct in all material respects (except for such representations and warranties that have a materiality or Material Adverse Effect qualification, which shall be true and correct in all respects) as of such earlier date;

 

(b)                          (i) the execution, delivery, and performance of this Agreement are within the corporate, limited partnership or limited liability company power, as appropriate, and authority of the Borrower and the Guarantors and have been duly authorized by appropriate proceedings and (ii) this Agreement constitutes a legal, valid, and binding obligation of the Borrower and each Guarantor, enforceable against the Borrower and each such Guarantor in accordance with its terms, except as limited by applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws affecting the rights of creditors generally and general principles of equity; and

 

(c)                           as of the effectiveness of this Agreement and after giving effect thereto, no Default or Event of Default has occurred and is continuing.

 

Section 6.                                    Effectiveness. This Agreement shall become effective as of the date hereof upon the occurrence of all of the following:

 

(a)                          Documentation. The Administrative Agent shall have received this Agreement, duly and validly executed by the Required Lenders and the Borrower and delivered to the Administrative Agent, in form and substance satisfactory to the Administrative Agent and the Required Lenders, in sufficient copies for each Lender;

 

(b)                          Representations and Warranties. The representations and warranties in this Agreement and the other Loan Documents being true and correct in all material respects (except for such representations and warranties that have a materiality or Material Adverse Effect qualification, which shall be true and correct in all respects) as of the date of this Agreement except to the extent that such representations and warranties specifically refer to an earlier date, in which case they shall be true and correct in all material respects (except for such representations and warranties that have a materiality or Material Adverse Effect qualification, which shall be true and correct in all respects) as of such earlier date, and except that the

 

6

 

representations and warranties contained in Sections 5.05(a) and (b) of the Credit Agreement shall be deemed to refer to the most recent statements furnished pursuant to clauses (a) and (b), respectively, of Sections 6.01 of the Credit Agreement.

 

(c)                           No Default or Event of Default. After giving effect to this Agreement, there being no Default or Event of Default which has occurred and is continuing.

 

(d)                          Expenses. The Borrower having paid all costs, expenses, and fees which have been invoiced and are payable pursuant to Section 10.04 of the Credit Agreement or any other written agreement.

 

Section 7.                                    Effect on Loan Documents. Except as amended and waived herein, the Credit Agreement and the Loan Documents remain in full force and effect as originally executed, and nothing herein shall act as a waiver of any of the Administrative Agent’s or Lenders’ rights under the Loan Documents, as amended. This Agreement is a Loan Document for the purposes of the provisions of the other Loan Documents. Without limiting the foregoing, any breach of representations, warranties, and covenants under this Agreement may be a Default or Event of Default under other Loan Documents.

 

Section 8.                                    Choice of Law. This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of New York.

 

Section 9.                                    Counterparts. This Agreement may be signed in any number of counterparts, each of which shall be an original.

 

THIS WRITTEN AGREEMENT AND THE LOAN DOCUMENTS, AS DEFINED IN THE CREDIT AGREEMENT, REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

 

[The remainder of this page has been left blank intentionally.]

 

7

 

EXECUTED as of the date first set forth above.

 

	
 
    	
BORROWER:
    
	
 
    	
 
    
	
 
    	
JP   ENERGY PARTNERS LP
    
	
 
    	
By:   JP Energy GP II LLC, its general partner
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   J. Patrick Barley
    
	
 
    	
 
    	
J.   Patrick Barley
    
	
 
    	
 
    	
President   and Chief Executive Officer
    
	
 
    	
 
    
	
 
    	
GUARANTORS:
    
	
 
    	
 
    
	
 
    	
JP   ENERGY REFINED PRODUCTS, LLC 
    
	
 
    	
JP   ENERGY ATT, LLC
    
	
 
    	
JP   ENERGY CADDO, LLC
    
	
 
    	
JP   ENERGY CRUDE OIL SERVICES, LLC
    
	
 
    	
JP   FALCO, LLC
    
	
 
    	
JP   ENERGY STORAGE, LLC
    
	
 
    	
JP   ENERGY PERMIAN, LLC
    
	
 
    	
JP   ENERGY PRODUCTS SUPPLY, LLC
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   J. Patrick Barley
    
	
 
    	
 
    	
J.   Patrick Barley
    
	
 
    	
 
    	
President   and Chief Executive Officer
    
	
 
    	
 
    
	
 
    	
PINNACLE   PROPANE, LLC
    
	
 
    	
PINNACLE   PROPANE EXPRESS, LLC
    
	
 
    	
ALLIANT   GAS, LLC
    
	
 
    	
JP   LIQUIDS, LLC
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   J. Patrick Barley
    
	
 
    	
 
    	
J.   Patrick Barley
    
	
 
    	
 
    	
Chief   Executive Officer
    

 

 

	
 
    	
ADMINISTRATIVE AGENT:
    
	
 
    	
 
    
	
 
    	
BANK OF AMERICA, N.A.,
    
	
 
    	
as   Administrative Agent
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Don B. Pinzon
    
	
 
    	
Name:
    	
Don   B. Pinzon
    
	
 
    	
Title:
    	
Vice   President
    
	
 
    	
 
    

 

 

	
 
    	
LENDERS:
    
	
 
    	
 
    
	
 
    	
BANK OF AMERICA, N.A., as a Lender,   L/C 
    
	
 
    	
Issuer,   and Swing Line Lender
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Julie Castano
    
	
 
    	
Name:
    	
Julie   Castano
    
	
 
    	
Title:
    	
Senior   Vice President
    

 

 

	
 
    	
BANK OF MONTREAL, as a Lender
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Kevin Utsey
    
	
 
    	
Name:
    	
Kevin Utsey
    
	
 
    	
Title:
    	
Director
    

 

 

	
 
    	
DEUTSCHE BANK AG NEW YORK BRANCH, as a Lender
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:   
    	
/s/   Shai Bandner
    
	
 
    	
Name:   
    	
Shai   Bandner
    
	
 
    	
Title:
    	
Vice   President_
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:   
    	
/s/   Vanuza Pereira-Bravo
    
	
 
    	
Name:   
    	
Vanuza   Pereira-Bravo
    
	
 
    	
Title:   
    	
Assistant   Vice President
    

 

 

	
 
    	
AMEGY BANK NATIONAL ASSOCIATION,
    
	
 
    	
as   a Lender
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Jill McSorley
    
	
 
    	
Name:   
    	
Jill   McSorley
    
	
 
    	
Title:   
    	
Senior   Vice President
    

 

 

	
 
    	
ROYAL BANK OF CANADA,
    
	
 
    	
as   a Lender
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Jay T. Sartain
    
	
 
    	
Name:   
    	
Jay   T. Sartain
    
	
 
    	
Title:
    	
Authorized   Signatory
    

 

 

	
 
    	
CADENCE BANK, N.A., as a Lender
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:   
    	
/s/   William Brown
    
	
 
    	
Name:   
    	
William   Brown
    
	
 
    	
Title:
    	
Senior   Vice President
    

 

 

	
 
    	
BARCLAYS BANK PLC,
    
	
 
    	
as   a Lender
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:   
    	
/s/   Vanessa A. Kurbatskiy
    
	
 
    	
Name:   
    	
Vanessa   A. Kurbatskiy
    
	
 
    	
Title:   
    	
Vice   Presidenttcc-ssa.htm

EXHIBIT 4.1

 

SUBSCRIPTION AND SURRENDER AGREEMENT

 

This SUBSCRIPTION AND SURRENDER AGREEMENT (this “Agreement”) dated as of September 3, 2014, by and between Twinlab Consolidation Corporation, a Delaware Corporation (“Company”) and Thomas Tolworthy (“Purchaser”).

 

WITNESSETH:

 

WHEREAS, Purchaser desires to subscribe for, and Company desires to issue to Purchaser, a share of preferred stock in the Company pursuant to the terms set forth in this Agreement; and

 

WHEREAS, Purchaser is the holder of 104,000,000 shares of common stock of the Company (the “Common Stock”);

 

WHEREAS, Purchaser desires to contribute, transfer, assign, convey and deliver to the Company, and the Company desires to accept and acquire from Purchaser, a portion of its shares of Common Stock pursuant to the terms of this Agreement.

 

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

 

1. Subscription.  Subject to the terms and conditions of this Agreement, Purchaser hereby subscribes for one (1) share of Series A Redeemable Preferred Stock, $0.0001 par value per share, with rights and preferences as set forth in that certain Certificate of Designation, Preferences and Rights dated September 3, 2014 (“Series A Preferred Share”), of the Company, in exchange for a total consideration of $200,000 (the “Purchase Price”). At the closing of the transaction contemplated hereby, (i) Purchaser shall fulfill its subscription by paying the Purchase Price by wire transfer of immediately available funds to an account designated by the Company, and (ii) the Company shall deliver to Purchaser a stock certificate duly executed by the Company representing the Series A Preferred Share.

 

2. Surrender of Common Stock.

 

(a) In consideration of one dollar ($1.00), the receipt and sufficiency of which are hereby acknowledged by Purchaser, Purchaser hereby irrevocably agrees to contribute, transfer, assign, convey and deliver up to a total amount of 65,306,102 shares of Common Stock (the “Surrendered Shares”) upon demand and pursuant to the directions of the board of directors of the Company from time to time. The Surrendered Shares shall be cancelled and returned to treasury by the Company. If certificated, the surrender of any Surrendered Shares shall be made by prompt delivery by Purchaser of the stock certificate(s) for such Surrendered Shares as directed by the board of directors of the Company.  As a result of such cancellation, the parties hereto agree and affirm that Purchaser shall have absolutely and irrevocably released any and all of his interests in all of the Surrendered Shares.

 

(b) The Company agrees that the Surrendered Shares shall be used for any lawful purposes of the Company, including, but not limited to, the following:

 

  

1

  

 

 

(i) Up to 17,312,492 Surrendered Shares shall be used as stock awards or stock grants pursuant to the terms and conditions of the 2013 Stock Incentive Plan of the Company and/or any other employee stock inventive plans the Company may from time to time institute;

 

(ii) Up to 200,000 Surrendered Shares shall be used as stock awards or grants to any independent member of the board of directors of the Company; and

 

(iii) the remainder of the Surrendered Shares shall be used for the consummation of any future issuance of capital stock, acquisitions of other companies, enterprises, going concerns or assets, or any other lawful purpose as the board of directors of the Company, in its discretion, may deem necessary, proper or advisable.

 

3. Acknowledgements, Representations, Warranties and Agreement of Purchaser.  In connection with the execution of this Agreement and to induce the Company to sell the Series A Preferred Share to Purchaser, Purchaser  hereby represents, warrants and agrees as follows:

 

(a) Purchaser is fully aware that the offering and sale of capital stock in the Company, including the Series A Preferred Share being acquired by such Purchaser, have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the “Securities Act”), or any other applicable securities laws of any national, provincial, state or local jurisdictions (whether U.S. or non-U.S.), and the offering has been made in reliance upon U.S. federal and state exemptions for transactions not involving a public offering.  In furtherance thereof, such Purchaser represents and warrants that it is an “accredited investor” as such term is defined in Rule 501(a) of Regulation D under the Securities Act.  Purchaser acknowledges that at no time was it presented with, or solicited by, any leaflet, public promotional meeting, newspaper or magazine article, radio or television advertisement or any other form of general advertising or general solicitation with respect to the offering of the Series A Preferred Share by the Company.

 

(b) Purchaser acknowledges that the Company has not been and will not be registered as an investment company under the U.S. Investment Company Act of 1940, as amended (the “Investment Company Act”).

 

(c) Purchaser is sufficiently knowledgeable and experienced (either alone or together with any advisors retained by Purchaser in connection with evaluating the merits and risks of the prospective investment in the Company) in financial and business matters to be capable of evaluating the merits and risks of investing in the Company and to make an informed decision relating thereto.  Purchaser has the financial capability for making the investment, can afford a complete loss of the investment, and the investment is a suitable one for such Purchaser.  Purchaser understands and recognizes that an investment in the Company involves certain risks and Purchaser understands and accepts such risks.

 

(d) Purchaser is aware of its inability to liquidate its investment readily in case of an emergency or otherwise and the fact that the Series A Preferred Share being purchased may have to be held for an indefinite period of time.  Purchaser’s overall commitment to investments which are not readily marketable is not excessive in view of its net worth and financial circumstances and the purchase of the Series A Preferred Share will not cause such commitment to become excessive.

 

  

2

  

 

(e) Purchaser is acquiring the Series A Preferred Share for its own account for the purpose of investment and not with a view to, or for sale in connection with, the distribution thereof, nor with any present intention of distributing or selling the Series A Preferred Share.  Purchaser hereby agrees not to make any sale, transfer or other disposition of any such Series A Preferred Share unless either (i) the Series A Preferred Share first shall have been registered under the Securities Act and all other applicable national, provincial, state and/or local jurisdiction’s securities laws (whether U.S. or non-U.S.), or (ii) an exemption from such registration is available, and the Company has received such documents and agreements from such Purchaser and the transferee as the Company reasonably requests at such time.

 

(f) Purchaser has good and marketable title to the Surrendered Shares, free and clear of any mortgage, pledge, lien, encumbrance, charge, security, security interest or other claim against title, other than general restrictions under federal and state securities laws or the charter documents of the Company. Upon consummation of the transactions contemplated by Section 2 hereof, Purchaser will deliver to the Company, from time to time (as applicable), good and marketable title to the Surrendered Shares, free and clear of any mortgage, pledge, lien, encumbrance, charge, security  interest or other claim against title, other than general transfer restrictions under federal and state securities laws.

 

4. Covenant of Purchaser.   From and after the date of this Agreement, Purchaser shall execute and deliver (or cause to be executed and delivered) such further instruments of conveyance and transfer and take such additional action as the Company may reasonably request to effect, consummate, confirm or evidence the contribution to the Company of the Surrendered Shares.

 

5. Representations and Warranties of the Company.  The Company represents and warrants to Purchaser as follows:

 

(a) Organization, Authority, etc.  The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware, has all requisite power and authority to own or lease and operate its properties and assets and to carry on its business as now conducted and as proposed to be conducted.  The Company has all requisite power and authority to execute, deliver and perform its obligations under this Agreement.

 

(b) Binding Effect.  This Agreement is a legal, valid and binding obligation of the Company, enforceable in accordance with its terms, except that the enforcement thereof may be subject to bankruptcy, insolvency, reorganization, moratorium or other similar laws now or hereafter in effect relating to creditors’ rights generally and to general principles of equity (regardless of whether such enforcement is considered in a proceeding in equity or at law).

 

(c) No Solicitation.  No form of general solicitation or general advertising was used by the Company or its representatives in connection with the offer or sale of the Series A Preferred Share.  No registration of the Series A Preferred Share pursuant to the provisions of the Securities Act, or any state securities or “blue sky” laws, will be required by the offer, sale or issuance of the Series A Preferred Share.

 

  

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6. Miscellaneous.

 

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

 

(b) Notices.  All notices, requests, consents, claims, demands, waivers and other communications hereunder shall be in writing and shall be deemed to have been given (a) when delivered by hand; (b) on the first business day following date sent if sent by a nationally recognized overnight courier (receipt requested); (c) on the date sent (if such date is a business day at the recipient’s address, otherwise on the next business day at the recipient’s address) by facsimile or e-mail of a PDF document (with confirmation of receipt by recipient); in each case a party’s refusal or willful avoidance of delivery shall be deemed to constitute delivery.  Such communications must be sent to the respective parties at the following addresses (or at such other address for a party as shall be specified in a notice given in accordance with this Section 6(b)):

 

If to the Company:               Twinlab Consolidation Corporation

632 Broadway, Suite 201

New York, New York 10012

Facsimile: (212) 505-5413

E-mail: rneuwirth@twinlab.com

Attention: General Counsel

To Purchaser:                       Mr. Thomas Tolworthy

4 Avenue at Port Imperial

Apt. 4205

West New York, NJ 07093

Facsimile: (212) 505-5413

E-mail: ttolworthy@twinlab.com

 

(c) Parties in Interest.  All the terms and provisions of this Agreement shall be binding upon and inure to the benefit of and be enforceable by the respective successors and assigns of the parties hereto, whether so expressed or not.

 

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

 

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

 

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

 

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

 

[The Remainder of this Page Intentionally Left Blank]

 

  

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

 

 

COMPANY:

TWINLAB CONSOLIDATION CORPORATION

By:   /S/ Richard H. Neuwirth            

                                                                                   Name:  Richard H. Neuwirth

Title:    Chief Legal Officer & Secretary

 

 

PURCHASER:

 

THOMAS A. TOLWORTHY

 

 

By:   /S/ Thomas A. Tolworthy           

[Signature Page to Subscription and Surrender Agreement]

  

5

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