On September 11, 2015, FitLife Brands, Inc. (the "Company") loaned iSatori, Inc. ("iSatori") $750,000 pursuant to a Demand Promissory Note ("Note"), due and payable on demand after October 15, 2015, the proceeds from which are to be used by iSatori for the payment, in the ordinary course of business, of payroll and accounts payable. The Note bears interest at a rate of 2% per annum, which interest rate increases to 12% if the Note is not paid in full on or before six months after the date of the Note, or in the event of an uncured default under the terms of the Note.
As security for the payment of the Note when due, Stephen Adele and Stephen Adele Enterprises, Inc. (together, the "Grantor") granted to the Company a first priority security interest in all shares of iSatori common stock held by Grantor, under the terms of a Security Agreement, dated September 11, 2015.
In connection with the execution of the Note, iSatori agreed to establish certain reserves and write-offs totaling approximately $1.8 million, which write-offs are currently anticipated to result in a reduction of the exchange ratio under the terms of the Merger Agreement, dated May 18, 2015 executed by iSatori and the Company in connection with the previously announced merger of iSatori with the Company. In addition, iSatori agreed to certain negative covenants, including not making any payments in excess of $5,000.00 without the consent of the Company, other than standard payroll payments consistent with past practices.
See Exhibit Index.
The foregoing descriptions of the Note and Security Agreement do not purport to be complete, and are qualified in their entirety by reference to the form of Note and Security Agreement, attached hereto as Exhibits 10.1 and 10.2, respectively, and are incorporated by reference herein.
FitLife Brands, Inc. |
By: | /s/ Michael Abrams |
Name: Michael Abrams | |
Title: Chief Financial Officer |
Exhibit No.
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Description
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EX-10.1
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Promissory Note
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EX-10.2
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Security Agreement
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