Document:

Form of RSEA Agreement - 01

Exhibit 10.1

    
RESTRICTED STOCK EQUIVALENT AWARD AGREEMENT
In consideration of the mutual covenants contained herein, Energizer Holdings, Inc. (“Company”), and «Name» (“Recipient”) hereby agree as follows:
ARTICLE I
COMPANY COVENANTS
Company hereby covenants:
1.    Award.
The Company, pursuant to its Second Amended and Restated 2009 Incentive Stock Plan (the “Plan”), grants to Recipient a Restricted Stock Equivalent Award (“Restricted Equivalents”) of «Shares» restricted common stock equivalents (“Total Restricted Equivalents”). This Award Agreement is subject to the provisions of the Plan and to the following terms and conditions, and is granted on November 13, 2014 (“Date of Grant”).
2.    Vesting; Payment.
Provided that such Restricted Equivalents have not been forfeited pursuant to Section 5 below, the Equivalents granted to Recipient will vest on November 13, 2016, subject to the provisions of this Award Agreement (each such date is hereinafter referred to as a “Vesting/Payment Date”).
Upon the Vesting/Payment Date, the Company shall transfer to the Recipient or his or her beneficiary one share of the Company’s $0.01 par value Common Stock (“Common Stock”) for each Restricted Equivalent that so vests.  Such shares of Common Stock shall be issued to the Recipient or his or her beneficiary on, or as soon as practicable after the Vesting/Payment Date, but in no event later than the last day of the calendar year in which such Vesting/Payment Date occurs, or, if later, the 15th day of the third month following the end of the month in which such Vesting/Payment Date occurs.
3.    Additional Cash Payment.
On the Vesting/Payment Date on which Restricted Equivalents vest, the Company shall pay the Recipient or his or her beneficiary an amount equal to the amount of cash dividends, if any, that would have been paid to the Recipient between the Date of Grant and such Vesting/Payment Date had vested shares of Common Stock been issued to the recipient in lieu of the Restricted Equivalents that so vested as well as any cash dividends for which the record date has passed but the payment date has not yet occurred.  Such amounts shall be paid in a single lump-sum as soon as practicable following such Vesting/Payment Date or accelerated vesting date described in paragraph 4, but in no event later than the last day of the calendar year in which the Vesting/Payment Date or accelerated vesting date occurs, or, if later, the 15th day of the third month following the end of the month in which such Vesting/Payment Date or accelerated payment date occurs.  No interest shall be included in the calculation of such additional cash payment.

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4.    Acceleration.
Notwithstanding the provisions of paragraph 2 above, all Restricted Equivalents then outstanding will immediately vest, in the event of:
(a)    the Recipient’s death; 
(b)    the Recipient’s Disability; or 
(c)    a Change of Control of the Company.
Upon vesting, as described in this Section 4, the Company shall transfer to the Recipient or his or her beneficiary one share of the Company’s Common Stock for each Restricted Equivalent that so vests.  Such shares of Common Stock shall be issued to the Recipient or his or her beneficiary on, or as soon as practicable after, the date of the Recipient’s death, determination of Disability, or the date of the Change of Control, but in no event later than the 15th day of the third month following the end of the calendar year in which such vesting occurs.  
5.    Forfeiture.
All rights in and to any and all Restricted Equivalents granted pursuant to this Award Agreement, and to any shares of Common Stock that would be issued to the Recipient in connection with the vesting of such Restricted Equivalent, which have not vested by the Vesting/Payment Date, as described in paragraph 2 above, or as described in paragraph 4 above, shall be forfeited. In addition, all rights in and to any and all Restricted Equivalents granted pursuant to this Award Agreement which have not vested in accordance with the terms hereof, and to any shares of Common Stock that would be issued to the Recipient in connection with the vesting of such Restricted Equivalent, shall be forfeited upon:
		
	(a)
	the Recipient’s voluntary or involuntary Termination of Employment; or

		
	(b)
	a determination by the Committee that the Recipient engaged in competition with the Company or other conduct contrary to the best interests of the Company in violation of Article II of this Agreement.

If the Recipient incurs a voluntary Termination of Employment (i) more than twelve (12) months after the Date of Grant and (ii) the Recipient (a) is at least 55 years of age and (b) has ten (10) or more Years of Service as of the date of Termination of Employment, the Recipient shall not forfeit a portion of the Restricted Equivalents equal to the number of Restricted Equivalents subject to this Award Agreement multiplied by a fraction, the numerator of which is the number of months in the period which begins on the Date of Grant and ends on the date of the Recipient’s Termination of Employment, and the denominator of which is the number of months from the Date of Grant to the Vesting/Payment Date.  The Company shall transfer to such Recipient one share of the Company’s Common Stock for each Restricted Equivalent that so vests.  Such shares of Common Stock (and any cash payments under paragraph 3) shall be issued to the Recipient on the date which is six (6) months after the date of such Termination of Employment.
6.    Shareholder Rights; Adjustment of Equivalents.
Recipient shall not be entitled, prior to the issuance of shares of Common Stock in connection with the vesting of a Restricted Equivalent, to any rights as a shareholder with respect to such shares of Common Stock, including the right to vote, sell, pledge, transfer or otherwise dispose of the shares.  Recipient shall, however, have the right to designate a beneficiary to receive such shares of Common Stock under this Award Agreement, 

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subject to the provisions of Section V of the Plan.  The number of Restricted Equivalents credited to Recipient shall be adjusted in accordance with the provisions of Section VI(F) of the Plan.
7.    Other.
The Company reserves the right, as determined by the Nominating and Executive Compensation Committee of the Board of Directors of the Company (the “Committee”), to convert the Restricted Equivalents granted pursuant to this Award Agreement to a substantially equivalent award and to make any other modification it may consider necessary or advisable to comply with any applicable law or governmental regulation, or to preserve the tax deductibility of any payments hereunder.  Notwithstanding the foregoing, the Company shall not so convert such Restricted Equivalents to the extent such conversion could result in the imposition of negative tax consequences for the Recipient under Code Section 409A. Shares of Common Stock shall be withheld in satisfaction of federal, state, and local or other international withholding tax obligations arising upon the vesting of Equivalents.  Shares of Common Stock tendered as payment of required withholding shall be valued at the Fair Market Value of the Company’s Common Stock on the date such withholding obligation arises.
8.    Code Section 409A.
It is intended that this Award Agreement be exempt from the requirements of Code Section 409A. The Plan will be administered and interpreted in a manner consistent with this intent, and any provision that would cause the Agreement to fail to satisfy Code Section 409A will have no force and effect until amended to comply therewith (which amendment may be retroactive to the extent permitted by Code Section 409A).
9.    Definitions.
Affiliates shall mean all entities within the controlled group that includes the Company, as defined in Code Sections 414(b) and 414(c) and the regulations thereunder, provided that the language “at least 50 percent” shall be used instead of “at least 80 percent” each place it appears in such definition.
Change of Control shall mean either of the following, provided that the following constitutes a “change in the ownership” of the Company or “change in the ownership of a substantial portion of the Company’s assets” within the meaning of Code Section 409A:
		
	(i)
	The acquisition by one person, or more than one person acting as a group, of ownership of stock (including Common Stock) of the Company that, together with stock held by such person or group, constitutes more than 50% of the total fair market value or total voting power of the stock of the Company. Notwithstanding the above, if any person or more than one person acting as a group, is considered to own more than 50% of the total fair market value or total voting power of the stock of the Company, the acquisition of additional stock by the same person or persons will not constitute a Change of Control; or

		
	(ii)
	A majority of the members of the Company’s Board of Directors is replaced during any twelve-month period by directors whose appointment or election is not endorsed by a majority of the members of the Company’s Board of Directors before the date of the appointment or election.

Persons will not be considered to be acting as a group solely because they purchase or own stock of the same corporation at the same time, or as a result of the same public offering. However, persons will be considered 

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to be acting as a group if they are owners of a corporation that enters into a merger, consolidation, purchase or acquisition of stock, or similar business transaction with the Company.
Disability shall mean the Recipient is unable to perform the required duties in relation to their current occupation by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months, provided that such disability results in the Recipient being considered “disabled” for purposes of Code Section 409A
Termination of Employment shall mean a “separation from service” with the Company and its Affiliates, within the meaning of Code Section 409A.
Years of Service shall mean the number of years of service the Recipient is credited with for vesting purposes under any U.S. qualified plan maintained by the Company, regardless of whether the Recipient is a participant in such plan.

ARTICLE II
RECIPIENT COVENANTS
Recipient hereby covenants:
1.    Confidential Information.
By executing this Award Agreement, I agree that I shall not, directly or indirectly, use, make available, sell, disclose or otherwise communicate to any person, other than in the course of my assigned duties and for the benefit of the Company, either during the period of my employment or at any time thereafter, any nonpublic, proprietary or confidential information, knowledge or data relating to the Company, any of its affiliates, or their businesses, which I shall have obtained during my employment by the Company or an affiliate. The foregoing shall not apply to information that (a) was known to the public prior to its disclosure to me; (b) becomes known to the public subsequent to disclosure to me through no wrongful act of mine or any of my representatives; or (c) I am required to disclose by applicable law, regulation or legal process (provided that I provide the Company with prior notice of the contemplated disclosure and reasonably cooperate with the Company at its expense in seeking a protective order or other appropriate protection of such information). Notwithstanding clauses (a) or (b) of the preceding sentence, my obligation to maintain such disclosed information in confidence shall not terminate if only portions of the information are in the public domain.
2.    Non-Competition.
By executing this Award Agreement, I acknowledge that my services are of a unique nature for the Company that are irreplaceable, and that my performance of such services for a competing business will result in irreparable harm to the Company and its affiliates. Accordingly, during my employment with the Company or any affiliate and for the one (1) year period thereafter, I agree that I will not, directly or indirectly, own, manage, operate, control, be employed by (whether as an employee, consultant, independent contractor or otherwise, and whether or not for compensation) or render services to any person, firm, corporation or other entity, in whatever form, engaged in any business of the same type as any business in which the Company or any of its affiliates is engaged on the date of termination or in which they have proposed, on or prior to such date, to be engaged in on or after such date and in which I have been involved to any extent (on other than a de minimus basis) at any time during the one (1) year period ending with my date of termination, in any locale of any country in which the Company or any of its affiliates conducts business. This subsection shall not prevent me from owning not more than one percent of the total shares of all classes of stock outstanding of any publicly 

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held entity engaged in such business.  I agree that the foregoing restrictions are reasonable, necessary, and enforceable for the protection of the goodwill and business of the Company.
3.    Non-Solicitation.
During my employment with the Company or an affiliate and for the two (2) year period thereafter, I agree that I will not, directly or indirectly, individually or on behalf of any other person, firm, corporation or other entity, knowingly solicit, aid or induce (a) any employee of the Company or any affiliate to leave such employment in order to accept employment with or render services to or with any other person, firm, corporation or other entity unaffiliated with the Company or knowingly take any action to hire or to materially assist or aid any other person, firm, corporation or other entity in identifying or hiring any such employee, or (b) any customer of the Company or any affiliate to purchase goods or services then sold by the Company or any affiliate from another person, firm, corporation or other entity or assist or aid any other persons or entity in identifying or soliciting any such customer.  I agree that the foregoing restrictions are reasonable, necessary, and enforceable in order to protect the Company’s trade secrets, confidential and proprietary information, goodwill, and loyalty.
4.    Non-Disparagement.
I agree not to make any statements that disparage the Company or its affiliates or their respective employees, officers, directors, products or services, and the Company, by its execution of this Award Agreement agrees that it and its affiliates and their respective executive officers and directors shall not make any such statements regarding me. Notwithstanding the foregoing, statements made in the course of sworn testimony in administrative, judicial or arbitral proceedings (including, without limitation, depositions in connection with such proceedings) shall not be subject to this subsection.
5.    Reasonableness.
In the event any of the provisions of this Article II shall ever be deemed to exceed the time, scope or geographic limitations permitted by applicable laws, then such provisions shall be reformed to the maximum time, scope or geographic limitations, as the case may be, permitted by applicable laws.
6.    Equitable Relief.
		
	(a)
	I acknowledge that the restrictions contained in this Article II are reasonable and necessary to protect the legitimate interests of the Company and its affiliates, that the Company would not have granted me this Award Agreement in the absence of such restrictions, and that any violation of any provisions of this Article II will result in irreparable injury to the Company and its affiliates. By agreeing to accept this Award Agreement, I represent that my experience and capabilities are such that the restrictions contained herein will not prevent me from obtaining employment or otherwise earning a living at the same general level of economic benefit as is currently the case. I further represent and acknowledge that I have been advised by the Company to consult my own legal counsel in respect of this Award Agreement, and I have had full opportunity, prior to agreeing to accept this Award Agreement, to review thoroughly its terms and provisions with my counsel.

		
	(b)
	I agree that the Company shall be entitled to preliminary and permanent injunctive relief, without the necessity of proving actual damages, as well as an equitable accounting of all earnings, profits and other benefits arising from any violation of this Article II, which 

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rights shall be cumulative and in addition to any other rights or remedies to which the Company may be entitled.
		
	(c)
	I irrevocably and unconditionally consent to the service of any process, pleadings notices or other papers in a manner permitted by law.

7.    Waiver; Survival of Provisions.
The failure by the Company to enforce at any time any of the provisions of this Article II or to require at any time performance by me of any provisions hereof, shall in no way be construed to be a release of me or waiver of such provisions or to affect the validity of this Award Agreement or any part hereof, or the right of the Company thereafter to enforce every such provision in accordance with the terms of this Award Agreement. The obligations contained in this Article II shall survive the termination of my employment with the Company or any affiliate and shall be fully enforceable thereafter.  On April 30, 2014, the Company announced that it intends to pursue a plan to separate the Company’s Household Products and Personal Care divisions into two independent, publically traded companies (the “Separation”).  For purposes of this Article II, the term Company shall be deemed to include Energizer Holdings, Inc., its affiliates, and either of the two independent, publicly traded companies that result from the Separation for whom I provide services following the Separation.
ARTICLE III
OTHER AGREEMENTS
1.    Governing Law.

All questions pertaining to the validity, construction, execution, and performance of this Award Agreement shall be construed in accordance with, and be governed by, the laws of the State of Missouri, without giving effect to the choice of law principles thereof.

2.    Notices.
Any notices necessary or required to be given under this Award Agreement shall be sufficiently given if in writing, and personally delivered or mailed by registered or certified mail, return receipt requested, postage prepaid, to the last known addresses of the parties hereto, or to such other address or addresses as any of the parties shall have specified in writing to the other party hereto.
3.    Entire Agreement.
This Award Agreement constitutes the entire agreement of the parties hereto with respect to the matters contained herein, and no modification, amendment, or waiver of any of the provision of this Award Agreement shall be effective unless in writing and signed by all parties hereto; provided that, no consent by the Recipient is required to the extent the Company desires to accelerate payment under this Award Agreement in accordance with the provisions of Treasury Regulation Section 1.409A-3(j)(4).  This Award Agreement constitutes the only agreement between the parties hereto with respect to the matters herein contained.

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4.    Waiver.
No change or modification of this Award Agreement shall be valid unless the same is in writing and signed by all the parties hereto.  No waiver of any provision of this Award Agreement shall be valid unless in writing and signed by the party against whom it is sought to be enforced.
5.    Counterparts; Effect of Recipient’s Signature.
This Award Agreement may be executed in one or more counterparts, each of which shall be deemed an original, and all of which 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 party, it being understood that both parties need not sign the same counterpart. The provisions of this Award Agreement shall not be valid and in effect until such execution by both parties. By the execution of this Award Agreement, Recipient signifies that Recipient has fully read, completely understands, and voluntarily agrees with this Award Agreement consisting of eight (8) pages and knowingly and voluntarily accepts all of its terms and conditions.
6.    Effective Date.
This Award Agreement shall be deemed to be effective as of the date executed below by the Company.
IN WITNESS WHEREOF, the Company duly executed this Award Agreement as of November 13, 2014 and Recipient duly executed it as of ________________________, 2014.

ACKNOWLEDGED AND ACCEPTED:        ENERGIZER HOLDINGS, INC.

__________________________________        By: _______________________________
Recipient                                Ward M. Klein
Chief Executive Officer

7ex10-1.htm

Exhibit 10.1

 

September 29, 2014

 

 

Via E-mail Only

Gary Wilcox, CEO

Jerry McGuire, CFO

Cocrystal Pharma, Inc.

19805 North Creek Parkway

Bothell, WA 98011

Re:          Claim Letter Dated September 29, 2014

Dear Gary and Jerry:

 

As you know, we submitted the enclosed claim letter to Corporate Stock Transfer (the "Escrow Agent') on September 29, 2014, which letter sets forth the basis of our claims against those 600,000 MusclePharm Corporation ("MSLP") shares currently being held by the Escrow Agent (the "Claim Letter ").  The Claim Letter claims $4,675,928.84 (the "Claimed Amount ") or 372,881 shares (the "Claimed Shares").

 

	
•

	  	
In exchange for you conceding that 90,000 shares be released to MSLP, MSLP will withdraw the Claim Letter as it pertains to all matters stated therein, provided however, MSLP will not withdraw that portion of the Claim Letter. Claimed Amount, and/or Claimed Shares that relates in any way to the 580 Garcia Lease, including, without limitation, the lawsuit or any future known or unknown claim s that are not specifically stated in the Claim Letter that do not relate in anyway to 580 Garcia Lease. 1

	
•

	  	
MSLP will maintain the Claim Letter as it pertains to 580 Garcia Lease and will enforce its right to have $3,036,723.84 wo1th of MSLP's shares maintained in escrow until such time as MSLP and Cocrystal Pharma , Inc. can reach a mutually agreeable arrangement with respect to 580 Gar·cia Lease. We note that any such arrangement would require you to deliver notice and assurances to MSLP that the lawsuit has been dropped, with prejudice, and that the note holder and landlord will no longer seek to evict MSLP so long as MSLP continues to pay its rent on time.

 

By this letter we would like to propose the following mutually beneficial arrangement, subject to a definitive settlement agreement , to expedite resolution of the Claim Letter:

 

 

 

1 These 90,000 shares are intended to reimburse MSLP for expenses incurred by Cocrystal and paid for by MSLP, which expense and disbursement s MSLP has been indemnified  for.

  

  

  

    Gary Wilcox 

    Jerry McGuire

September 29, 2014

    Page 2 of 2

 

If you are agreeable to the foregoing terms, please file notice to the escrow agent and MSLP that you have conceded 90,000 shares be released to MSLP.  After we receive this notice we will modify the claim letter in accordance with the provisions above, and will deliver a definitive settlement agreement evidencing that that MSLP has released Cocrystal for the claims specifically stated in the Claim Letter , other than those that pe1tain to the 580 Garcia Lease.

 

This letter, and your acceptance of the aforementioned terms are, without waiver of any rights , agreements, understandings, indemnities, claims or causes of action in law or in equity , which may be asserted by MSLP in any court or tribunal , whether known or unknown , which have not specifically been stated in the Claim Notice, provided however, that all claims set forth in the Cl aims Notice pertaining to 580 Garcia Lease or any future known or unknown claims that are not specifically stated in the Cl aim Letter that do not relate in any way to 580 Garcia Lease are expressly reserved.

 

 

    We hope we can resolve these issues amicably and in the most expedient manner possible.

Sincerely yours,

/s/ Richard Estalella

Richard Estalella

(As President of MusclePharm Corporation)

    We ask that you indicate you acceptance and understanding of the foregoing terms by countersigning and returning a copy of this Letter to us no later than September 29, 2014.

 

/s/ Gerald A. McGuire

Gerald A. McGuire

Cocrystal Pharma Inc.

By: Gerald A. McGuire

Title: CFO

   cc: Edward Schauder

   Steven Rubin

  

  

  

 

September 29. 2014

 

Via Federal Express and Facsimile

 

Corporate Stock Transfer, Inc. 

Attention Carolyn Bell, President 

3200 Cherry Creek Drive South 

Denver , CO 80209

Attention: Carolyn Bell, President

 

Biozone Pharmaceuticals, Inc.

Attention: Elliot Maza, Chief Executive Officer 

550 Sylvan Avenue, Suite 1010

    Englewood Cliffs, N.J  07632

 

    Cocrysta1 Pharma, Inc.

Attention: Gary Wilcox, Chief Executive Officer

19805 North Creek Parkway 

Bothell , Washington 98011

Re:  Claims Notice: Claim to Excrowed Shares Pursuant to the Escrow Agreement Dated January 2, 20141

 

To the Above-Named  Persons:

 

Pursuant to Sections 1.3 and  1.4 of the Escrow Agreement , dated as of January 2, 2014, by and among MusclepharmCorporation , a Nevada corporation ("MSLP “); Biozone  Laboratories, Inc., a Nevada corporation and wholly owned subsidiary of MSLP; Biozone Pharmaceuticals , Inc. ("BZNE"), a Nevada corporation; Biozone Laboratories, lnc. a California corporation (collectively the "Sellers"); Baker Cummins, Corp., a Nevada corporation; and Corporate Stock Transfer , Inc. as escrow agent (term s defined in the Escrow Agreement have the same meaning when used herein), the undersigned hereby certifies that MSLP is entitled to indemnification for Indemnified Losses  pursuant to Article ITI of the APA in an amount equal to $4,675,928.84 (the “Claimed Amount”) or 372,881 shares base on the market price at the close of market on September 26,2014 (the “Claimed Shares"').  MSLP further certifies that the nature of the Claimed Amount is as follows:

 

 

 

 

 

1  This letter is without  waiver  to any claim for indemnity  for the benefit  of Musclepharm Corporation , even  if that claim  is not asserted  in this Letter.   Capitalized terms herein without definition take the meaning given to the them in the Escrow Agreement.

 

2 The APA defines Indemnified Losses as: “any and all actions, suits, proceedings, demands, liabilities, damages, claim s, deficiencies,  fines, penalties, interest , assessments, judgments, losses, Taxes, costs and expenses , including, without limitation, reasonable fees and disbursements  of counsel.”

  

  

  

    Corporate Stock Transfer 

Attn: Carolyn Bell. President 

Claims Notice

    September 29, 2014

    Page 2 of 6

INDEMNIFIED LOSSES RELATED TO BUSINESS AND OPERATIONS

Article 10 of the APA indemnifies MSLP for any “any and all Indemnified Losses related to the business operations of Sellers Prior to the Closing Date."

 

Unqualified Factoring Expenses

 

MSLP has incurred $365,822.47 of Indemnified Losses arising from improper use of a factoring agreement between Sellers and Midland American Capital Corp. dated in or about March 2013 (the "Factoring Agreement").

   

    In connection with the APA, MSLP and BZNE entered into a side agreement on January 2, 2014 that provided MSLP would pay off the factoring arrangement and collect the receivable s then due and owing to BZNE or Midland American Capital. The payoff amount included certain of seller's obligations unrelated to the Factoring Agreement. These obligations were related to business expenses before the closing date and so they were indemnified. Furthermore, these expenses included payroll and operating expenses totaling $365,822.74- expenses that were never covered by monies from the Factoring Agreement prior to MSLP 's agreement to settle BZNE account with Midland American Capital.

    Accordingly, MSLP claims $365,822.74 from the escrowed shares.

 

Expired lnventorv and Disposal Fees

MSLP has incurred $684,393.65 in Indemnified Losses related to fees incurred from the disposal of expired inventory. Since the Closing Date MSLP has identified $578,412 worth of inventory which had expired as of the Closing date, and spent an additional $105,981.65 in fees related to the disposal of this inventory - fees for which MSLP was indemnified.

 

    Accordingly, MSLP claim s $684,393.65 from the escrowed shares.

 

Uncollectable Accounts Receivable

    MSLP has incurred $32,116.77 in Indemnified Losses from uncollectable accounts receivable. Since the Closing Date MSLP has identified the following uncollectable invoices dated prior to the closing, which are uncollectable:

 

	
•

	  	
Invoice dated 10/3 1113 to Moko Therapeutics for 7,356.85;

	
•

	  	
Invoice dated 11/2013 to Beta Pharmaceutical for $2,763.12; and

	
•

	  	
Invoice dated 1 1125/ 13 to Life Extension for $21,996.80

Accordingly, MSLP claims $32,115.77 from the escrowed shares.

 

  

  

  

    Corporate Stock Transfer 

   Attn: Carolyn Bell, President C aims Notice

September 29. 20 l 4

    Page 3 of 6

Pre-Closing Accounts Receivable

 

    MSLP has incurred $296,711.44 in Indemnified Losses related to accounts receivable losses.  The triggering events that caused these losses Indemnified Losses before closing:

 

	
•  

	
Acella Credit- $16,550.00 refund for overpayment occurring prior to closing ;

 

	
•  

	
Acne.org- $372.00 pallet charge that was improperly billed prior to closing;

 

 

	
•  

	
B&A Health Products- $16,655.54, credit was given post -closing for the client 's financing of raw materials in 20 13;

 

	
•  

	
Blissworld- $128,089.42 for credits issued in 2013.  These credits were applied against invoices issued after closing ;

 

	
•  

	
BZNE-  $16.950 in cash deposits to Mechanics banks , which deposits were purchased by MSLP;

 

	
•  

	
Cosmetic Den11atology - $10,000 credit was applied post-closing due to a freight arrangement in place for 2013;

 

	
•  

	
Cosmetic Dermatology  - $50,000 credit for purchase  of raw materials in 2013, which was credit to the customer post-closing;

 

	
•  

	
Cosmetic Dermatology- $6,950.29 refund from a billing error in December 2013;

 

	
•  

	
J-Networks- $8,254.81 refund for raw material s purchased in November 2013;

 

	
•  

	
McKesson- $106.92 credit given post-closing related to 2013 invoices;

 

	
•  

	
Savvier Credit- $41 ,270.65 credit issued for payments made to Midland in Deceber 2013; and

 

 

	
•  

	
Your Energy Systems - $1,971.70 refund  for overpayment  for raw materials in 2013.

 

    Accordingly, MSLP claims $296,711.44 from the escrowed shares.

  

  

  

   Corporate Stock Transfer

   Attn:  Carolyn Bell. President 

   Claims Notice

   September 29. 2014

   Page 4 of 6

 

Pre-Closing Operating Expenses

 

    MSLP has incurred $207,723.84 in Indemnified Losses related to pre-closing operating expenses. These expenses are outlined in Schedule A to this letter, which is enclosed herewith.

 

INDEMNIFIED LOSSES RELATED TO BREACH  OF CONTRACT

 

MSLP has or will suffer $3,036,571.30 of Indemnified Losses arising from a lawsuit commenced against sellers titled: 580 Garcia Properties. LLC vs. Biozone Laboratories. Inc. et al. PS 14-0407, Superior Court of California, County of Contra Costa (the '·Lawsuit"). The Lawsuit pertains to a breach of the lease agreement between BZNE and 580 Garcia Properties, LLC (the “Landlord”), which was executed on March 1, 2004 (the '"Lease"). The Lease was assigned to MSLP in violation of its terms.

Article 10(a)(iii) of the APA provides that Sellers agreed to indemnify MSLP for:

any and all Indemnified Losses related to or arising from claim for breach of contract existing on or prior to the Closing Date, and/or which are brought after the Closing Date for acts and omissions by Sellers, which occurred prior to the closing date .

Additionally, MSLP and ("BZNE'') executed a separate indemnity agreement dated January 2, 20 14 (the “Side“) regarding the subject matter of the lawsuit that provided:

BZNE agrees to unconditionally defend. indemnify and hold harmless MSLP and its Affiliates ... from against and in respect of any and all actions and causes of action, suits, claims, controversies, liabilities, damages, costs and reasonable attorney’s fees which the Indemnified Parties may suffer, expend or incur as a consequence of any actions, claims or proceedings brought by... [580 Garcia Properties, LLC] because of or based upon the failure of the parties to obtain Landlord’s consent to the transfer of the Garcia Lease. Such recoverable damages will include payment of all relocation expenses (which MSLP·s management has advised BZNE could exceed $3.0 million) if such relocation is necessary, including payment of moving expenses and any rental amounts at a new facility that are in excess of the rental amounts under the Garcia Lease and incurred during the period of the Garcia Lease would have been in effect.

*          *          *

  

  

  

	
 

 

Corporate Stock Transfer

Attn: Carolyn Bell. President

Claims Notice

September 29, 2014

    Page 5 of 6

 

In addition to, and without limiting, any other right or remedy at law or in equity that MSLP shall have in the event that BZN E shall breach its obligations hereunder, BZN E acknowledges that MSLP shall be able to make a claim for any breach of this Agreement against the Escrowed Stock Consideration.

This Lease \vas assigned to MSLP without the consent of the Landlord, which consent was required by the Lease. Based on the terms of the APA and the Side Indemnity, as set forth above, BZNE has indemnified MSLP for the lawsuit and any other damages that may arise .from Lease, including , relocation expenses. Despite MSLP's diligent good faith effort to resolve the lawsuit, the Landlord appears intent on evicting MSLP. Accordingly, Sellers must indemnify MSLP for the following amounts:

 

	
•  

	
Litigation fees of $36,571 .30 related to the Lawsuit: and

 

	
•  

	
Anticipated Relocation Expenses $3,000,000.

 

INDEMNIFIED LOSSES RELATED TO THE APA

 

The APA provided in paragraph 12.7 that each party was to cover its own costs related to the APA, including legal fees. Sellers agreed to indemnify for “·any and all Indemnified Losses arising from or in connection with any breach or violation of the covenants or agreement s of Sellers contained in the [APA]." In this respect, MSLP has incurred $52,589.10 of indemnified Losses in connection with Sellers breach of the APA itself as follows:

 

	
•  

	
Sellers· legal fees of $8, 179.10 charged to the old company prior to closing ; and

 

	
•  

	
Valuation fees of $44,4 10.00 paid to Gilford & Fong Associates.

  

  

  

	 

Corporate Stock Transfer

Attn: Carolyn Bell. President

Claims Notice

September 29, 20 I 4

    Page 6 of 6

 

    Accordingly, we request you contact us at 4721 Ironton Street, Building A, Denver, Colorado 80239, or by telephone at (303) 396-6113 on or before September 30, 2014 to arrange tender of the Claimed Shares.

 

 

Dated:  Denver. Colorado

             September 29, 2014

 

MusclePharm Corporation

 

/s/ Richard Estalella    

By: Richard Estalella

Title: President

 

cc: Nason Yeager , Gerson , White & Lioce, P.A.

          Sichenzia Ross Friedman Ference LLP

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