Preview
FILED: NEW YORK COUNTY CLERK 01/10/2023 10:09 PM INDEX NO. 652343/2018
NYSCEF DOC. NO. 735 RECEIVED NYSCEF: 01/11/2023
Exhibit J
June 22, 2018, Email from John Schetz (Cresco) Attaching Summary of Terms of Cresco’s
June 2018 Offer
Index No. 652343/2018 Motion Seq. Nos. 11 & 12
FILED: NEW YORK COUNTY CLERK 01/10/2023 10:09 PM INDEX NO. 652343/2018
NYSCEF DOC. NO. 735 RECEIVED NYSCEF: 01/11/2023
From: HelselM@gtlaw.com
Sent: Friday, June 22, 2018 05:09 PM
To: susan@fpnys.com; eric@fpnys.com
Cc: leftonR@Izowerfeldman.com; rizower@izowerfeldman.com; santosco@gtlaw.com
Subject: FW: Cresco Indication of Interest
Attachments: Figaro Indication of Interest (6.22.18).docx
From: John Schetz [ ]
Sent: Friday, June 22, 2018 5:01 PM
To: Helsel, Michael (Shld-NY-CP)
Cc: Charlie Bachtell ; Rafey Balabanian ; Ken Amann
Subject: Cresco Indication of Interest
Michael -
Good to meet you by phone. As discussed, attached is Cresco's indication of interest. Due to file size, the rest of the
package will follow this email.
Best, John
John Schetz | General Counsel
520 W. Erie Street | Suite 220 | Chicago, IL 60654
Mobile: (312) 925.9290
If you are not an intended recipient of confidential and privileged information in this email, please delete it,
notify us immediately at postmaster@gtlaw.com, and do not use or disseminate such information.
1
CONFIDENTIAL D019199
FILED: NEW YORK COUNTY CLERK 01/10/2023 10:09 PM INDEX NO. 652343/2018
NYSCEF DOC. NO. 735 RECEIVED NYSCEF: 01/11/2023
STRICTLY CONFIDENTIAL
CRESCO LABS, LLC
June 22, 2018
Figaro Pharmaceuticals, Inc.
c/o Michael Helsel
Greenberg Traurig LLP
200 Park Avenue
New York, NY 10166
Ladies and Gentlemen:
("Cresco"
Cresco Labs, LLC, an Illinois limited liability company or "we"), is pleased to present
this indication of interest regarding a potential acquisition of 100% of the outstanding capital
stock of the Company (the "Transaction") for consideration by Figaro Pharmaceuticals, Inc., a
"Company"
New York corporation (the or "y_ou"), and the Board of Directors of the Company.
In accordance with the Company's bid procedure letter dated June 14, 2018 (the "Process
Letter"), we submit this Indication of Interest ("IOI") which outlines our proposal for the
contemplated Transaction. This IOI (together with its enclosures) represents an expression of
intent only, and does not set forth all of the matters upon which agreement must be reached in
order for the proposed Transaction to be consummated. Nothing herein shall be deemed to
create any obligations on the part of Cresco, its affiliates or any of their respective equityholders,
directors, officers, managers, employees, advisors or representatives to you or to anyone with
respect to the Transaction.
1. Valuation, Timing and Form of Consideration. Through a wholly-owned subsidiary to be
merged with and into the Company, Cresco proposes to acquire 100% of the outstanding
capital stock of the Company for a total purchase price of $37,500,000 (the "Purchase
Price"). The Purchase Price would be paid in its entirety in cash upon closing of the
Transaction ("Closing"), is inclusive of the Deposit (as defined below), and assumes that
all indebtedness and liabilities of the Company to current and former employees and
shareholders would be paid directly by Cresco at Closing out of the Purchase Price and
that sellers would be entitled to the cash held by the Company at Closing. We would
expect to be in a position to execute an Agreement and Plan of Merger for the
Transaction ("Merger Agreement") within 15 days following your acceptance of this
proposal and to close the Transaction within 30 days following execution of the Merger
Agreement, subject to the timing of approval by the New York State Department of
Health ("NYSDOH"). As you know, we have previously made a good faith deposit in
the amount of $500,000 (the "Existing Deposit"). In connection with the Transaction
outlined herein, we would increase the Existing Deposit by an additional $1,000,000 for a
total good faith deposit of $1,500,000 (collectively, the "Deposit"). The Deposit would
be applied to the Purchase Price at Closing. In the event of termination of the Merger
Agreement, the Deposit would be returned to Cresco.
CONFIDENTIAL D019200
FILED: NEW YORK COUNTY CLERK 01/10/2023 10:09 PM INDEX NO. 652343/2018
NYSCEF DOC. NO. 735 RECEIVED NYSCEF: 01/11/2023
2. Sources of Financing. Our expected sources of funds for the Purchase Price consist of
cash on hand held by Cresco (approximately $32 million) and cash on hand held by two
of our principals (approximately 5.5 million in the aggregate). Enclosed herewith are
certain bank statements (or excerpts thereof) and commitment letters demonstrating the
financial capacity of our funding sources. Our funding for the Purchase price is and will
remain fully committed at the time of execution of the Merger Agreement and our
consummation of the Transaction will not be contingent on obtaining financing or raising
capital.
3. Merger Agreement. As requested in the Process Letter, we enclose electronic mark-ups
of the Company's proposed Merger Agreement. We note that we have removed the
fiduciary out provisions of the Merger Agreement and related termination fee. We
believe the process conducted by the Company and the amount and structure of our
proposed Transaction eliminate the need for a fiduciary out. In addition, we propose that
the Company obtain the requisite shareholder approval of the Merger Agreement and
Transaction by written consent to be delivered at execution of the Merger Agreement.
Further, we propose to discuss with you the incorporation in the Merger Agreement of an
escrow fund to serve as an efficient source of recovery for any indemnification claims
made by Cresco under the agreement. Subject to completion of the Bring-Down Due
Diligence (as defined below) and any further discussions of the parties, we are prepared
to execute the Merger Agreement substantially in the form we have submitted.
4. Due Diligence. In order to complete our due diligence, we would expect only to request
and review any updates to the information and matters we previously reviewed and any
supplementary information related thereto (collectively, the "Bring-Down Due
Diligence").
5. Required Approvals. Other than the approval of the NYSDOH, we will need to obtain
the approval of our Board of Directors to execute the Merger Agreement and complete
the Transaction. We are not aware of any material obstacles to obtaining that approval.
6. Conditions to Closing. Our obligation to complete the Transaction would be subject to
customary closing conditions delineated in the Merger Agreement, including NYSDOH
approval. As indicated above, we would expect all of such conditions to be satisfied, and
to close the Transaction, within 30 days following execution of the Merger Agreement,
subject to the timing of NYSDOH approval.
7. NYSDOH Affidavits. As we have previously discussed with you, we propose to discuss
with NYSDOH the scope of individuals for whom affidavits must be submitted in
connection with NYSDOH approval. Based on the direction we receive from NYSDOH,
we will submit any and all affidavits required for purposes of its approval.
8. Confidentiality. The existence and terms of this IOI (including its enclosures), the
Transaction outlined herein, and any discussions between the parties related to the
CONFIDENTIAL D019201
FILED: NEW YORK COUNTY CLERK 01/10/2023 10:09 PM INDEX NO. 652343/2018
NYSCEF DOC. NO. 735 RECEIVED NYSCEF: 01/11/2023
Transaction will be considered confidential information under and protected in
accordance with the confidentiality agreement previously executed by the parties.
9. Exclusivity. Our proposal for the Transaction outlined herein is conditioned on the re-
affirmation of exclusivity. Upon acceptance of this proposal by the Company, the parties
will execute a letter agreement confirming our exclusivity.
10. Litigation; Reservation of Rights. Cresco hereby expressly reserves its rights and
remedies set forth in the lawsuit captioned Cresco Labs New York, LLC v. Fiorello
Pharmaceuticals, Inc., Index No. 652343/2018 (the "Litigation"), which Cresco has
instituted against the Company and certain others. Nothing in this IOI, the Process Letter,
any preceding negotiations or otherwise shall be deemed to waive, diminish or otherwise
affect such rights and remedies. Further, Cresco expressly reserves the right to pursue the
Litigation, to the extent this IOI is not accepted by the Company, including but not
limited to the right to seek specific performance of the Letter of Intent dated February 9,
2018, as well as a temporary restraining order, preliminary and permanent injunction,
enjoining the Company from pursuing the Transaction with a third party. Should the
Company accept this proposal and confirm exclusivity with Cresco, we would agree to
stay prosecution of the Litigation, and upon Closing of the Transaction, ultimately
dismiss the litigation and release and forever discharge the named-defendants.
Please contact the undersigned with any questions regarding our proposal for the Transaction or
any of the other matters addressed in this Indication of Interest or its enclosures.
Very truly yours,
CRESCO LABS, LLC
Charles Bachtell
Chief Executive Officer
Enclosures
CONFIDENTIAL D019202
Preview
FILED: NEW YORK COUNTY CLERK 01/10/2023 10:09 PM INDEX NO. 652343/2018 NYSCEF DOC. NO. 735 RECEIVED NYSCEF: 01/11/2023 Exhibit J June 22, 2018, Email from John Schetz (Cresco) Attaching Summary of Terms of Cresco’s June 2018 Offer Index No. 652343/2018 Motion Seq. Nos. 11 & 12 FILED: NEW YORK COUNTY CLERK 01/10/2023 10:09 PM INDEX NO. 652343/2018 NYSCEF DOC. NO. 735 RECEIVED NYSCEF: 01/11/2023 From: HelselM@gtlaw.com Sent: Friday, June 22, 2018 05:09 PM To: susan@fpnys.com; eric@fpnys.com Cc: leftonR@Izowerfeldman.com; rizower@izowerfeldman.com; santosco@gtlaw.com Subject: FW: Cresco Indication of Interest Attachments: Figaro Indication of Interest (6.22.18).docx From: John Schetz [ ] Sent: Friday, June 22, 2018 5:01 PM To: Helsel, Michael (Shld-NY-CP) Cc: Charlie Bachtell ; Rafey Balabanian ; Ken Amann Subject: Cresco Indication of Interest Michael - Good to meet you by phone. As discussed, attached is Cresco's indication of interest. Due to file size, the rest of the package will follow this email. Best, John John Schetz | General Counsel 520 W. Erie Street | Suite 220 | Chicago, IL 60654 Mobile: (312) 925.9290 If you are not an intended recipient of confidential and privileged information in this email, please delete it, notify us immediately at postmaster@gtlaw.com, and do not use or disseminate such information. 1 CONFIDENTIAL D019199 FILED: NEW YORK COUNTY CLERK 01/10/2023 10:09 PM INDEX NO. 652343/2018 NYSCEF DOC. NO. 735 RECEIVED NYSCEF: 01/11/2023 STRICTLY CONFIDENTIAL CRESCO LABS, LLC June 22, 2018 Figaro Pharmaceuticals, Inc. c/o Michael Helsel Greenberg Traurig LLP 200 Park Avenue New York, NY 10166 Ladies and Gentlemen: ("Cresco" Cresco Labs, LLC, an Illinois limited liability company or "we"), is pleased to present this indication of interest regarding a potential acquisition of 100% of the outstanding capital stock of the Company (the "Transaction") for consideration by Figaro Pharmaceuticals, Inc., a "Company" New York corporation (the or "y_ou"), and the Board of Directors of the Company. In accordance with the Company's bid procedure letter dated June 14, 2018 (the "Process Letter"), we submit this Indication of Interest ("IOI") which outlines our proposal for the contemplated Transaction. This IOI (together with its enclosures) represents an expression of intent only, and does not set forth all of the matters upon which agreement must be reached in order for the proposed Transaction to be consummated. Nothing herein shall be deemed to create any obligations on the part of Cresco, its affiliates or any of their respective equityholders, directors, officers, managers, employees, advisors or representatives to you or to anyone with respect to the Transaction. 1. Valuation, Timing and Form of Consideration. Through a wholly-owned subsidiary to be merged with and into the Company, Cresco proposes to acquire 100% of the outstanding capital stock of the Company for a total purchase price of $37,500,000 (the "Purchase Price"). The Purchase Price would be paid in its entirety in cash upon closing of the Transaction ("Closing"), is inclusive of the Deposit (as defined below), and assumes that all indebtedness and liabilities of the Company to current and former employees and shareholders would be paid directly by Cresco at Closing out of the Purchase Price and that sellers would be entitled to the cash held by the Company at Closing. We would expect to be in a position to execute an Agreement and Plan of Merger for the Transaction ("Merger Agreement") within 15 days following your acceptance of this proposal and to close the Transaction within 30 days following execution of the Merger Agreement, subject to the timing of approval by the New York State Department of Health ("NYSDOH"). As you know, we have previously made a good faith deposit in the amount of $500,000 (the "Existing Deposit"). In connection with the Transaction outlined herein, we would increase the Existing Deposit by an additional $1,000,000 for a total good faith deposit of $1,500,000 (collectively, the "Deposit"). The Deposit would be applied to the Purchase Price at Closing. In the event of termination of the Merger Agreement, the Deposit would be returned to Cresco. CONFIDENTIAL D019200 FILED: NEW YORK COUNTY CLERK 01/10/2023 10:09 PM INDEX NO. 652343/2018 NYSCEF DOC. NO. 735 RECEIVED NYSCEF: 01/11/2023 2. Sources of Financing. Our expected sources of funds for the Purchase Price consist of cash on hand held by Cresco (approximately $32 million) and cash on hand held by two of our principals (approximately 5.5 million in the aggregate). Enclosed herewith are certain bank statements (or excerpts thereof) and commitment letters demonstrating the financial capacity of our funding sources. Our funding for the Purchase price is and will remain fully committed at the time of execution of the Merger Agreement and our consummation of the Transaction will not be contingent on obtaining financing or raising capital. 3. Merger Agreement. As requested in the Process Letter, we enclose electronic mark-ups of the Company's proposed Merger Agreement. We note that we have removed the fiduciary out provisions of the Merger Agreement and related termination fee. We believe the process conducted by the Company and the amount and structure of our proposed Transaction eliminate the need for a fiduciary out. In addition, we propose that the Company obtain the requisite shareholder approval of the Merger Agreement and Transaction by written consent to be delivered at execution of the Merger Agreement. Further, we propose to discuss with you the incorporation in the Merger Agreement of an escrow fund to serve as an efficient source of recovery for any indemnification claims made by Cresco under the agreement. Subject to completion of the Bring-Down Due Diligence (as defined below) and any further discussions of the parties, we are prepared to execute the Merger Agreement substantially in the form we have submitted. 4. Due Diligence. In order to complete our due diligence, we would expect only to request and review any updates to the information and matters we previously reviewed and any supplementary information related thereto (collectively, the "Bring-Down Due Diligence"). 5. Required Approvals. Other than the approval of the NYSDOH, we will need to obtain the approval of our Board of Directors to execute the Merger Agreement and complete the Transaction. We are not aware of any material obstacles to obtaining that approval. 6. Conditions to Closing. Our obligation to complete the Transaction would be subject to customary closing conditions delineated in the Merger Agreement, including NYSDOH approval. As indicated above, we would expect all of such conditions to be satisfied, and to close the Transaction, within 30 days following execution of the Merger Agreement, subject to the timing of NYSDOH approval. 7. NYSDOH Affidavits. As we have previously discussed with you, we propose to discuss with NYSDOH the scope of individuals for whom affidavits must be submitted in connection with NYSDOH approval. Based on the direction we receive from NYSDOH, we will submit any and all affidavits required for purposes of its approval. 8. Confidentiality. The existence and terms of this IOI (including its enclosures), the Transaction outlined herein, and any discussions between the parties related to the CONFIDENTIAL D019201 FILED: NEW YORK COUNTY CLERK 01/10/2023 10:09 PM INDEX NO. 652343/2018 NYSCEF DOC. NO. 735 RECEIVED NYSCEF: 01/11/2023 Transaction will be considered confidential information under and protected in accordance with the confidentiality agreement previously executed by the parties. 9. Exclusivity. Our proposal for the Transaction outlined herein is conditioned on the re- affirmation of exclusivity. Upon acceptance of this proposal by the Company, the parties will execute a letter agreement confirming our exclusivity. 10. Litigation; Reservation of Rights. Cresco hereby expressly reserves its rights and remedies set forth in the lawsuit captioned Cresco Labs New York, LLC v. Fiorello Pharmaceuticals, Inc., Index No. 652343/2018 (the "Litigation"), which Cresco has instituted against the Company and certain others. Nothing in this IOI, the Process Letter, any preceding negotiations or otherwise shall be deemed to waive, diminish or otherwise affect such rights and remedies. Further, Cresco expressly reserves the right to pursue the Litigation, to the extent this IOI is not accepted by the Company, including but not limited to the right to seek specific performance of the Letter of Intent dated February 9, 2018, as well as a temporary restraining order, preliminary and permanent injunction, enjoining the Company from pursuing the Transaction with a third party. Should the Company accept this proposal and confirm exclusivity with Cresco, we would agree to stay prosecution of the Litigation, and upon Closing of the Transaction, ultimately dismiss the litigation and release and forever discharge the named-defendants. Please contact the undersigned with any questions regarding our proposal for the Transaction or any of the other matters addressed in this Indication of Interest or its enclosures. Very truly yours, CRESCO LABS, LLC Charles Bachtell Chief Executive Officer Enclosures CONFIDENTIAL D019202