Item 1.01 Entry into a Material Definitive Agreement.
(a)$2,750,000 Promissory Note between LFTD Partners Inc., Lifted Liquids, Inc
and Nicholas S. Warrender
On or about January 3, 2022, Nicholas S. Warrender, our Vice Chairman and COO,
loaned $2,750,000 to LFTD Partners Inc. f/k/a Acquired Sales Corp. ("LSFP") and
Lifted Liquids, Inc. d/b/a Lifted Made ("Lifted") (collectively "Payors"). The
$2,750,000 loan is governed by the terms of a promissory note which sets out
annual interest at the rate of 2.5% ("Promissory Note"). The principal of the
Promissory Note shall be paid off by Payors in five semi-annual payments to
Nicholas S. Warrender of $458,333 and a sixth and final semi-annual payment to
Nicholas S. Warrender of $458,335, in each case plus accrued interest, starting
on June 30, 2022. All remaining principal and all accrued interest on the
Promissory Note shall be subject to mandatory prepayment by Payors to Nicholas
S. Warrender within two business days following the closing of any debt or
equity capital raise by Payors following the date of this Promissory Note in the
amount of $8,000,000 or more. The Promissory Note is secured by stock pursuant
to a Collateral Stock Pledge Agreement described below.
Collateral Stock Pledge Agreement
On or about January 3, 2022, LSFP, Lifted, and Nicholas S. Warrender entered
into a Collateral Stock Pledge Agreement that provides the following collateral
to Mr. Warrender in connection with the Promissory Note: (i) a first lien
security interest in all of the assets of LSFP and Lifted ("Pledgors"); (ii) all
of the common stock of Lifted, Bendistillery Inc., Bend Spirits, Inc., and Ablis
Holding Company that is owned by Pledgors; and (iii) all of the capital stock of
any other entity owned by any Pledgor or any of its subsidiaries.
The foregoing description is qualified in its entirety by reference to the
Promissory Note which is filed as Exhibit 10.65 and the Collateral Stock Pledge
Agreement which is filed as Exhibit 10.66 to this Current Report on Form 8-K and
are incorporated herein by reference.
(b)Omnibus Agreement
On December 30, 2021, LSFP, Nicholas S. Warrender, 95th Holdings, LLC
("Holdings"), Gerard M. Jacobs, our Chairman and CEO, and William C. "Jake"
Jacobs our President and CFO, entered into an agreement effective as of December
30, 2021 ("Omnibus Agreement") that, as further described in the sections below,
(i) amends certain parts of the Agreement and Plan of Merger by and among LSFP,
Lifted, Gerard M. Jacobs, William C. Jacobs, Warrender Enterprise Inc. and
Nicholas S. Warrender dated February 24, 2020 (the "Merger Agreement"); (ii)
amends that certain Compensation Agreement dated as of June 19, 2019 (the
"Compensation Agreement"), and that certain Amendment No. 1 to Compensation
Agreement dated as of December 1, 2020 (the "Amendment No. 1") (together the
"Amended Compensation Agreement"); (iii) amends those certain Executive
Employment Agreements dated February 24, 2020 between LSFP and Gerard M. Jacobs,
William C. Jacobs and Nicholas S. Warrender, respectively (collectively the
"Executive Employment Agreements");(iv) creates quarterly board compensation;
and, (v) requires Lifted to purchase a building leased by Lifted from an
affiliate of our Vice Chairman and COO Nicholas S. Warrender on or before
December 31, 2022, for a fixed purchase price equal to $1,375,000.
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Payment of Deferred Compensation pursuant to the Amended Compensation Agreement
The Compensation Agreement contemplated an aggregate of $350,000 being paid by
LSFP to Gerard M. Jacobs and William C. Jacobs upon the closing of LSFP's
acquisition of Lifted and an aggregate of $350,000 being paid by LSFP to Gerard
M. Jacobs and William C. Jacobs upon December 1, 2020, but such payments were
not timely made, and pursuant to the Amendment No. 1 such aggregate of $700,000
of compensation was deferred and made due and payable by LSFP to Gerard M.
Jacobs and William C. Jacobs together with interest accrued at the rate of 2%
annually commencing January 1, 2021, upon demand by Gerard M. Jacobs and William
C. Jacobs, and to date only $58,438.50 of such deferred compensation has been
paid to date to Gerard M. Jacobs (the remaining unpaid deferred compensation
together with accrued interest is hereby referred to as the "Deferred
Compensation"). Pursuant to the Omnibus Agreement, the Deferred Compensation
shall be paid by LSFP to Gerard M. Jacobs and William C. Jacobs on or before
January 6, 2022.
Payment of $300,000 Bonus to William C. Jacobs
Pursuant to the Omnibus Agreement and simultaneously with such payment of the
Deferred Compensation as set out above, LSFP shall pay William C. Jacobs a bonus
of $300,000.
Payment of on Aggregate $500,000 in Bonuses to Gerard M. Jacobs and William C.
Jacobs
The Amended Compensation Agreement provides that an aggregate of $350,000 shall
be paid by LSFP to Gerard M. Jacobs and William C. Jacobs on December 1, 2021,
but has not yet been paid (the "December 1, 2021 Compensation"). The December 1,
2021 Compensation is hereby terminated.
Pursuant to the Omnibus Agreement, provided that Gerard M. Jacobs and William C.
Jacobs have not resigned as officers of LSFP, on or before December 31, 2022, an
aggregate of $500,000 in bonuses shall be paid by LSFP to Gerard M. Jacobs and
William C. Jacobs. This aggregate of $500,000 in bonuses to Gerard M. Jacobs and
William C. Jacobs is in addition to the $300,000 bonus payable to William C.
Jacobs described in the preceding section.
Increase of Base Salaries of Executives Gerard M. Jacobs, William C. Jacobs and
Nicholas S. Warrender
Pursuant to the Omnibus Agreement, commencing January 1, 2022, the Base Salary
under each of the Executive Employment Agreements to be paid to Gerard M.
Jacobs, William C. Jacobs and Nicholas S. Warrender shall be increased from
$100,000 to $250,000 per year.
Allocation and Payment of Bonus Pool
The company-wide Bonus Pool for 2021 shall be $1,559,335 (the "Modified 2021
Bonus Pool Amount"), which is the aggregate amount that has already been accrued
for in LSFP's financial statements covering the period from January 1, 2021
through September 30, 2021, and such Modified 2021 Bonus Pool Amount shall be
paid by LSFP, and allocated and distributed in accordance with unanimous written
instructions from Gerard M. Jacobs, William C. Jacobs and Nicholas S. Warrender,
on or before March 15, 2022.
The amount by which the company-wide Bonus Pool for 2021 as calculated in
accordance with the Executive Employment Agreements as in effect prior to the
execution and delivery of this Agreement exceeds the Modified 2021 Bonus Pool
Amount shall be paid by LSFP, and allocated and distributed in accordance with
unanimous written instructions from Gerard M. Jacobs, William C. Jacobs and
Nicholas S. Warrender, in three equal quarterly payments, starting on June 30,
2022.
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Agreement to Purchase Property from Affiliate
Our Vice Chairman and COO Nicholas S. Warrender directly or indirectly controls
95th Holdings, LLC which owns approximately 11,238 square feet of office,
laboratory and warehouse space in a building located at 5511 95th Avenue, in the
City of Kenosha, State of Wisconsin (the "Premises"). On December 18, 2020,
Lifted as tenant entered into a Lease Agreement (the "Lease) with 95th Holdings,
LLC ("Landlord") for the Premises. The lease commencement date was January 1,
2021, and lease termination date is January 1, 2026. Lifted constructed
improvements including a clean room, and gradually moved into the Kenosha
Premises over the course of the first quarter of 2021. Under the terms of the
lease, Lifted has the option to purchase the property at any time prior to
December 31, 2025, and in any event, Lifted is obligated to purchase the
property on or before that date. Pursuant to the Lease, in all cases Lifted's
purchase price for the Premises shall be in an amount equal to the greater of:
(1) the fair market value of the Premises at the time Lifted purchases the
Premises; or (2) any remaining principal balance of any purchase-money mortgage
for the Premises existing at the time of the closing of Lifted's purchase, plus
the corresponding amount identified in the Additional Purchase Price Schedule
attached as Exhibit B to the Lease, which is an additional amount ranging
between $300,000 and $375,000 based on the number of years that have passed
between the commencement of the Lease and the purchase of the Premises by
Lifted.
Pursuant to the Omnibus Agreement, Lifted shall purchase the Property from
Landlord on or before December 31, 2022, for a fixed purchase price equal to
$1,375,000.
Director Bonus Compensation
Pursuant to the Omnibus Agreement, commencing on March 31, 2022, each of the
non-officer members of the board of directors of LSFP shall receive a quarterly
fee of $4,000 from LSFP.
Status of Agreements
Excepting only as expressly modified or amended pursuant to the Omnibus
Agreement, all other terms and conditions of the Merger Agreement, the Amended
Compensation Agreement, the Executive Employment Agreements, the Lease, and all
other agreements among any of the Parties shall remain in full force and effect
following the execution and delivery of this Agreement.
Negotiations of Agreements
. . .
Item 8.01 Other Events
Repayment of $3,750,000 promissory note between Nicholas S. Warrender and LSFP
dated February 24, 2020
On or about December 30, 2021, LSFP repaid all principal and interest due under
the $3,750,000 promissory note between Nicholas S. Warrender and LSFP dated
February 24, 2020 that was a portion of the Merger Consideration paid by LSFP to
Nicholas S. Warrender under the Merger Agreement. Pursuant to the terms of that
promissory note, the unpaid balance of the note accrued interest at the rate of
2% per annum.
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On or about January 3, 2022, Nicholas S. Warrender kept $1,000,000 of the
repayment, plus accrued interest, and reloaned $2,750,000 back to LSFP at the
rate of 2.5%. See Section 1.01 above.
Item 9.01 Financial Statements and Exhibits.
Exhibit 10.65 $2,750,000 Promissory Note dated January 3, 2022 between LFTD
Partners Inc., Lifted Liquids, Inc and Nicholas S.
Warrender
Exhibit 10.66 Collateral Stock Pledge Agreement dated January 3, 2022
between LFTD Partners Inc., Lifted Liquids, Inc., and Nicholas S.
Warrender
Exhibit 10.67 Omnibus Agreement dated December 30, 2021 between LFTD
Partners Inc. Nicholas S. Warrender, 95th Holdings, LLC, Gerard
M. Jacobs and William C. "Jake" Jacobs
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