Item 1.01 Entry into a Material Definitive Agreement.

Vitamin Shoppe Term Loan

On December 16, 2019, Vitamin Shoppe Industries, LLC, a New York limited liability company ("Vitamin Shoppe Industries") and an indirect subsidiary of Franchise Group, Inc., and the direct and indirect subsidiaries of Vitamin Shoppe Industries (together with Vitamin Shoppe Industries, collectively, the "Borrowers") and Valor Acquisition, LLC ("Parent"), the direct parent of Vitamin Shoppe Industries, entered into a Loan and Security Agreement (the "Term Loan Agreement") with the lenders from time to time party thereto (the "Term Loan Lenders") and GACP Finance Co., LLC, as agent ("Term Loan Agent"). The Term Loan Agreement provided for a $70.0 million senior secured term loan (the "Term Loan") to be made by the Term Loan Lenders to the Borrowers on December 16, 2019. The proceeds of the Term Loan were used to consummate the Merger (as defined below) and to pay fees and expenses in connection with the Merger and the Term Loan.

Each Borrower's obligations under the Term Loan Agreement are guaranteed by Parent and each other Borrower pursuant to a Guaranty Agreement (the "Term Loan Guaranty"), dated December 16, 2019, among the Borrowers, Parent and the Term Loan Agent. The obligations of the Borrowers under the Term Loan Agreement are secured by substantially all of the assets of the Borrowers and Parent pursuant to the Term Loan Agreement and a Pledge Agreement (the "Term Loan Pledge"), dated December 16, 2019, among the Borrowers, Parent and the Term Loan Agent. An Intercreditor Agreement (the "Intercreditor Agreement"), dated December 16, 2019, sets forth the relative priorities of the security interests granted with respect to the Term Loan and those granted with respect to the ABL Revolver (as defined below). The security interest granted to the Term Loan Agent (for itself and the Term Loan Lenders) is senior that that granted to the ABL Agent (as defined below) (for itself and the ABL Lenders (as defined below)) with respect to, among other assets, fixtures, equipment, equity interests in subsidiaries of Vitamin Shoppe Industries and intellectual property.

The Term Loan will mature on December 16, 2022, unless the maturity is accelerated subject to the terms set forth in the Term Loan Agreement. The Term Loan will bear interest at a rate per annum based on LIBOR for an interest period of one month (or, during the continuance of an event of default, an alternate base rate determined as provided in the Term Loan Agreement), plus an interest rate margin of 9.0%, with a 2.0% LIBOR (or alternate base rate) floor. Interest is payable in arrears on the first business day of each calendar month.

The Borrowers are required to repay the Term Loan in equal fiscal quarterly installments of $4.25 million on the last business day of each fiscal quarter, commencing with the fiscal quarter ending March 28, 2020. Further, the Borrowers are required to prepay the Term Loan (i) with 60% of consolidated excess cash flow on a fiscal quarterly basis (less voluntary prepayments already made), up to a maximum of $12.5 million in any fiscal year, and (ii) subject to the Intercreditor Agreement, with the net cash proceeds of certain other customary prepayment events (subject to certain customary reinvestment rights). Such fixed quarterly installments and excess cash flow prepayments cease to be required (subject to certain exceptions) if the then outstanding aggregate principal amount of the term loan is less than or equal to the lesser of $25 million and a specified borrowing base based on the Borrowers' eligible credit card receivables, accounts, inventory and equipment, less certain reserves. All repayments or prepayments (whether voluntary or mandatory) of the Term Loan, other than the fixed quarterly installments and excess cash flow prepayments, are subject to early repayment fees.

If the outstanding aggregate principal amount of the Term Loan at any time exceeds a specified borrowing base, set at $70.0 million until January 10, 2020, and thereafter based on Borrowers' eligible credit card receivables, accounts, inventory, equipment and intellectual property, less certain reserves, the Agent must instruct the ABL Agent to implement a reserve against the borrowing base under the ABL Agreement (as defined below) in the amount of such excess, and if such reserve is not implemented, the Borrowers are required to repay the amount of such excess.

The Term Loan Agreement and Term Loan Pledge include customary affirmative, negative, and financial covenants binding on the Borrowers and Parent, including delivery of financial statements, borrowing base certificates and other reports. The negative covenants limit the ability of the Borrowers and Parent, among other things, to incur debt, incur liens, make investments, sell assets, pay . . .

Item 2.01 Completion of Acquisition or Disposition of Assets.

On December 16, 2019, pursuant to the terms of the Agreement and Plan of Merger, dated August 7, 2019 (as amended from time to time, the "Merger Agreement"), by and among Vitamin Shoppe, Inc., a Delaware corporation ("Vitamin Shoppe"), the Company, and Valor Acquisition, LLC, a Delaware limited liability company and an indirect subsidiary of the Company ("Merger Sub"), the Company and Vitamin Shoppe completed the merger of Vitamin Shoppe and Merger Sub, with Merger Sub surviving the merger as an indirect subsidiary of the Company (the "Merger"). Capitalized terms used herein but not otherwise defined have the meaning set forth in the Merger Agreement.

At the Effective Time, each:

(i) share of common stock, par value $0.01 per share, of Vitamin Shoppe ("Vitamin Shoppe Common Stock") that was issued and outstanding as of immediately prior to the Effective Time (other than Owned Vitamin Shoppe Shares, Converted Vitamin Shoppe Shares, or Dissenting Vitamin Shoppe Shares) was automatically cancelled, extinguished, and converted into the right to receive cash in an amount equal to $6.50, without interest thereon (the "Per Share Price"), and net of certain required withholding of taxes;

(ii) Vitamin Shoppe RSU outstanding as of immediately prior to the Effective Time, whether vested or unvested, was cancelled and converted into and became a right to receive an amount in cash, without interest and net of certain required withholding of taxes, equal to (a) the amount of the Per Share Price multiplied by (b) the total number of shares of Vitamin Shoppe Common Stock subject to such Vitamin Shoppe RSU;

(iii) Vitamin Shoppe PSU outstanding as of immediately prior to the Effective Time, whether vested or unvested, was cancelled and converted into and became a right to receive an amount in cash, without interest and net of certain required withholding of taxes, equal to (a) the amount of the Per Share Price multiplied by (b) the number of shares of Vitamin Shoppe Common Stock subject to such Vitamin Shoppe PSU, as determined in accordance with the applicable Vitamin Shoppe PSU award agreement;

(iv) Vitamin Shoppe Option outstanding as of immediately prior to the Effective Time, whether vested or unvested, was cancelled and converted into and became a right to receive an amount in cash, without interest and net of certain required withholding of taxes, equal to (a) the amount of the Per Share Price (less the exercise price per share attributable to such Vitamin Shoppe Option) multiplied by (b) the total number of shares of Company Common Stock issuable upon exercise in full of such Vitamin Shoppe Option (with Vitamin Shoppe Options whose exercise price was equal to or greater than the Per Share Price being cancelled for no consideration); and

(v) share of Vitamin Shoppe Restricted Stock outstanding as of immediately prior to the Effective Time, whether vested or unvested, was cancelled and converted into an amount in cash, without interest and net of certain required withholding of taxes, equal to (a) the amount of the Per Share Price multiplied by (b) the total number of shares of Vitamin Shoppe Restricted Stock.

To the extent required, the information set forth in Item 1.01 to this Current Report on Form 8-K is incorporated herein by reference.

--------------------------------------------------------------------------------

Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

To the extent required, the information set forth in Item 1.01 to this Current Report on Form 8-K is incorporated herein by reference.

Item 3.02 Unregistered Sales of Equity Securities.

Reference is made to the disclosure set forth under Item 1.01 of this Current Report on Form 8-K concerning the issuance of the Company's common stock in connection with the Equity Financing, which entitled the Investors to receive, in the aggregate, approximately 2,429,316 shares of the Company's common stock (the "Equity Securities").

The Company relied on an exemption from registration for the issuances and sales described above pursuant to Section 4(a)(2) and/or Rule 506 of Regulation D of the United States Securities Act of 1933, as amended (the "Securities Act"), because the foregoing issuances and sales did not involve a public offering, the Investors are "accredited investors" and/or had access to similar documentation and information as would be required in a registration statement under the Securities Act and the Investors acquired the Equity Securities for investment only and not with a view towards, or for resale in connection with, the public sale or distribution thereof. The Equity Securities were offered without any general solicitation by the Company or its representatives. No underwriters or agents were involved in the foregoing issuances and sales and the Company paid no underwriting discounts or commissions. The Equity Securities issued and sold, are subject to transfer restrictions, and the certificates evidencing each Equity Security, if any, will contain an appropriate legend stating that such Equity Security has not been registered under the Securities Act and may not be offered or sold absent registration or pursuant to an exemption therefrom. The Equity Securities were not registered under the Securities Act and such Equity Securities may not be offered or sold in the United States absent registration or an exemption from registration under the Securities Act and any applicable state securities laws.

To the extent required, the information set forth in Item 1.01 to this Current Report on Form 8-K is incorporated herein by reference.




Item 8.01 Other Events.

Press Releases

On December 16, 2019, the Company issued a press release announcing the consummation of the Merger. A copy of the press release announcing the consummation of the Merger is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

On December 17, 2019, the Company issued a press release announcing entry into the Asset Purchase Agreement. A copy of the press release announcing entry into the Asset Purchase Agreement is attached hereto as Exhibit 99.2 and is incorporated herein by reference.

Item 9.01. Financial Statements and Exhibits.

(a) Financial Statements of Business Acquired.

The financial statements required by this item with respect to the Merger will be filed as soon as practicable, and in any event not later than 71 days after the date on which this Current Report on Form 8-K is required to be filed pursuant to Item 2.01.

(b) Pro Forma Financial Information

The pro forma financial information required by this item with respect to the Merger will be filed as soon as practicable, and in any event not later than 71 days after the date on which this Current Report on Form 8-K is required to be filed pursuant to Item 2.01.

--------------------------------------------------------------------------------

(c) Exhibits

The following exhibits are filed with this Current Report on Form 8-K:





2.1     Asset Purchase Agreement, dated as of December 16, 2019, by and among
        Franchise Group Newco R, LLC, the sellers listed on Schedule I thereto,
        and Revolution Financial, Inc. as the representative of the sellers. *

10.1    Loan and Security Agreement dated as of December 16, 2019, by and between
        GACP II, LP, a Delaware limited partnership ("Lender(s)"), Vitamin Shoppe
        Industries LLC, a New York limited liability company ("VSI"), Vitamin
        Shoppe Mariner, LLC, a Delaware limited liability company ("VSM"), Vitamin
        Shoppe Global, LLC, a Delaware limited liability company ("VSG"), Vitamin
        Shoppe Florida, LLC, a Delaware limited liability company ("VSF"),
        Betancourt Sports Nutrition, LLC, a Florida limited liability company
        ("BSN") and Vitamin Shoppe Procurement Services, LLC, a Delaware limited
        liability company ("VSP") ("VSP" together with VSI, VSM, VSF, and BSN, the
        "Borrowers"), Valor Acquisition, LLC, a Delaware corporation
        ("Guarantor"), and GACP Finance Co., LLC, a Delaware limited liability
        company ("Agent").

10.2    Intercreditor Agreement dated as of December 16, 2019, by and between
        Lender, Borrowers, Guarantor, Agent, and GACP Finance Co., LLC, a Delaware
        limited liability company.

10.3    Second Amended and Restated Loan and Security Agreement dated as of
        December 16, 2019, by and between Lenders, Borrowers, Guarantor, and
        Agent.

10.4    Forms of Subscription Agreement.

10.5    Amendment to Equity Commitment Letter dated as of December 16, 2019.

10.6    Amendment No. 3 to Registration Rights Agreement dated as of December 16,
        2019.

99.1    Press Release, dated December 16, 2019.

99.2    Press Release, dated December 17, 2019.




*   Pursuant to Item 601(b)(2) of Regulation S-K, the schedules to the Asset
    Purchase Agreement have been omitted from this Report and will be furnished
    supplementally to the Securities and Exchange Commission upon request by the
    Commission.

--------------------------------------------------------------------------------

© Edgar Online, source Glimpses