(5) Long-term debt and other financing arrangements

The Company’s long-term borrowing consisted of the following:

Description	Interest rate		March 31, 2013		December 31, 2012
Convertible Subordinated Unsecured Promissory Note - Richmont Capital Partners V L.P. (including accrued interest)	4.00	%	$	20,238,904	$	20,041,644
Convertible Subordinated Unsecured Promissory Note - The Tamala L. Longaberger Recovable Trust	4.00	%	6,510,111		—
Term loan - KeyBank	7.93	%*	5,533,794		—
Promissory Note - payable to former shareholder of TLC	2.63	%	4,000,000		—
Other, equipment notes			54,988		—
Total debt			36,337,797		20,041,644
Less current maturities			1,494,142		—
Long-term debt			$	34,843,655	$	20,041,644

* Represents the weighted average interest rate at March 31, 2013. The interest rate is variable based on the agreement described below.

Convertible Subordinated Unsecured Promissory Note — Richmont Capital Partners V L.P.

On December 12, 2012 (the “Issuance Date”), the Company signed, closed, and received, as the maker, $20,000,000 in cash proceeds from Richmont Capital Partners V L.P., a Texas limited partnership (“RCP V”), pursuant to a Convertible Subordinated Unsecured Promissory Note, in the original principal amount of $20,000,000 (the “Note”), issued pursuant to a Convertible Subordinated Unsecured Note Purchase Agreement between the Company and RCP V (the “Purchase Agreement”). The Note is (i) an unsecured obligation of the Company and (ii) subordinated to any bank, financial institution, or other lender providing funded debt to the Company or any direct or indirect subsidiary of the Company, including any seller debt financing provided by the owners of any entity(ies) that may be acquired by the Company. Principal payments of $1,333,333 are due and payable on each anniversary of the Issuance Date beginning on the third anniversary of the Issuance Date. A final principal payment, equal to the then unpaid principal balance of the Note, is due and payable on the 10th anniversary of the Issuance Date. The Note bears interest at an annual rate of 4%, which interest is payable on each anniversary of the Issuance Date; provided, however, that interest payable through the third anniversary of the Issuance Date may, at the Company’s option, be paid in kind (“PIK Interest”) and any such PIK Interest will be added to the outstanding principal amount of the Note. Beginning 380 days from the Issuance Date, the Note may be prepaid, in whole or in part, at any time without premium or penalty.

The full amount of the Note (including any and all accrued interest thereon, whether previously converted to principal or otherwise) will be converted (the “Conversion”), into no more than 64,000,000 shares of Common Stock, par value $.0001, of the Company (“Common Stock”) on a date that is within 380 calendar days of the Issuance Date (the date of the Conversion being referred to as the “Conversion Date”), at a price of $0.33 per share of Common Stock. The Company has agreed, within 365 days of the Issuance Date, to either (i) amend the Company’s Articles of Incorporation to increase the number of unissued authorized shares of Common Stock, (ii) reincorporate in Delaware and, as part of such reincorporation, increase the number of unissued authorized shares of Common Stock, and/or (iii) cause the surrender by Rochon Capital of issued and outstanding shares of Common Stock, in each instance necessary to allow the Company to be able to effect the Conversion.

John Rochon, Jr. is the 100% owner, and is in control, of Richmont Street LLC, the sole general partner of RCP V. Michael Bishop, a director of the Company, is a limited partner of RCP V. John Rochon, Jr. is a director of the Company and the son of John P. Rochon, the Company’s Chairman and Chief Executive Officer.

Convertible Subordinated Unsecured Promissory Note — Tamala L. Longaberger Trust

As part of the Purchase Agreement with TLC dated March 18, 2013, the Company issued to the Tamala L. Longaberger Trust (the “Trust”) a Convertible Subordinated Unsecured Promissory Note in the amount of $6,500,000 (the “Convertible Note”). The Convertible Note bears interest at 4% per annum. Portions of the outstanding principal of the Convertible Note are due and payable on each anniversary of its execution date, beginning with the third anniversary of its execution date, with each such annual payment being in an amount equal to one-fifteenth (1/15) of the original principal amount of the Convertible Note, and with all unpaid and unconverted principal of the Convertible Note being due and payable on the tenth anniversary of its execution date. Interest on the Convertible Note is due annually, except that interest on the Convertible Note during the first three years of its term may, at the Company’s option, be PIK Interest and any such PIK Interest will be added to the then-outstanding principal amount of the Convertible Note.

The Convertible Note is an unsecured obligation of the Company. The Convertible Note is subordinated to certain obligations of the Company. The Convertible Note is not subordinated to the $20,000,000 Convertible Subordinated Unsecured Promissory Note, dated December 12, 2012, issued by the Company to Richmont Capital Partners V LP.

Under the Convertible Note, within 15 days of the date that shares of the Company’s Common Stock sufficient to effect the full conversion of the Convertible Note become available for issuance by the Company, the outstanding principal under the Convertible Note and all accrued interest thereon mandatorily will be converted into shares (the “Conversion Shares”) of the Company’s Common Stock, at a price of $0.20 per share, the closing price of our Common Stock on the commitment date of January 11, 2013. The Conversion Shares are subject to a cap of 32,500,000. Upon the Company’s issuance of the Conversion Shares pursuant to the Convertible Note, the Purchase Agreement requires the Trust to be made a party to the Registration Rights Agreement, dated September 25, 2012, between the Company and Rochon Capital. The Purchase Agreement also requires the Trust to execute a lock-up agreement, which prohibits, without the Company’s consent, any sale or transfer of the Conversion Shares for a one-year period. The lock-up agreement restricts, during a five-year period following the expiration of such one-year period, the number of Conversion Shares that the Trust may sell during each month of the five-year period, subject to certain conditions and exceptions.

Term loan — Key Bank

In conjunction with the Line of Credit described below, on October 23, 2012, TLC obtained a $6,500,000 term loan from Key Bank. The interest rate on the term loan is either Key Bank’s prime rate plus 5.75% or LIBOR plus 7.50%. The term note is due in monthly installments beginning April 1, 2013 and due in full on October 23, 2015. TLC has paid down the outstanding balance to approximately $5.5 million as of March 31, 2013 through proceeds of the sale of non-core assets, primarily real estate. TLC will continue to use any amounts it receives from sales of assets to reduce the balance on this loan. The term loan and line of credit described below are collateralized by substantially all assets of TLC. Under the agreement, TLC is subject to certain financial covenants, including a fixed charge coverage ratio and limitations on capital expenditures, additional indebtedness, and incurrence of liens. TLC was in compliance with the financial covenants at March 31, 2013.

Promissory Note — payable to former shareholder of TLC

On March 14, 2013, the Company issued a $4,000,000 Promissory Note in connection with the Purchase Agreement with TLC. The Promissory Note bears interest at 2.63% per annum, has a ten-year maturity, and is payable in equal monthly installments beginning April 14, 2013 of outstanding principal and interest.

Line of Credit—Key Bank

TLC has a line of credit agreement which expires on October 23, 2015. Under the agreement, TLC has available borrowings up to $15,000,000, limited to a formula primarily based on accounts receivable and inventory. The agreement provides for interest based on Key Bank’s prime rate plus 1.75% or LIBOR plus 3.50%. Interest at March 31, 2013 was 4.15%.

Outstanding Warrants

On May 15, 2012, the Company issued 2,666,666 shares of its restricted Common Stock to an investor in satisfaction of $250,000 principal and $16,666 interest due pursuant to a convertible note. In connection with the conversion of that note, the Company granted 1,277,537 warrants to the investor. Each warrant is exercisable into one share of the Company’s Common Stock at the price of $0.50 per share. The warrants are exercisable for a term of two years from the date of grant. Both the restricted common stock and warrants were assumed upon the Share Exchange Agreement.

On May 16, 2012, the Company issued 2,380,000 shares of its restricted Common Stock to an investor in satisfaction of $225,000 principal and $13,000 interest due pursuant to a convertible note. In connection with the conversion of this note, the Company granted 1,010,137 warrants to the investor. Each warrant is exercisable into one share of the Company’s Common Stock at the price of $0.50 per share. The warrants are exercisable for a term of two years from the date of grant. Both the restricted common stock and the warrants were assumed upon the Share Exchange Agreement.