UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported): October 6, 2014 (September 30, 2014)

 

TWINLAB CONSOLIDATED HOLDINGS, INC.
(Exact name of registrant as specified in its charter)

 

Nevada   000-55181   46-3951742
(State or other jurisdiction of   (Commission File Number)   (IRS Employer
incorporation)       Identification No.)

 

632 Broadway, Suite 201, New York, NY   10012
(Address of principal executive offices)   (Zip Code)

 

Registrant’s telephone number, including area code (212) 651-8500
 
(Former name or former address, if changed since last report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 
 

 

Item 1.01 Entry into a Material Definitive Agreement.

 

Twinlab Consolidated Holdings, Inc. (the “Company”) issued a Series A Warrant (the “First Warrant”) to Capstone Financial Group, Inc. (“Capstone”), effective as of September 30, 2014. Pursuant to the First Warrant, Capstone has the right to purchase up to 52,631,579 shares of the Company’s common stock, par value $0.001 per share (“Common Stock”), at an exercise price of $0.76 per share of Common Stock. The First Warrant is exercisable from October 1, 2014 through October 31, 2017. The First Warrant provides for equitable adjustments in the event of a stock split, stock dividend, reclassification, consolidation or merger. The Company has agreed with Capstone that if the Company issues a security (i) exercisable or exchangeable for or (ii) convertible into shares of Common Stock at a date after October 1, 2014 and such security provides for anti-dilution protection, the shares of Common Stock issuable under the First Warrant shall enjoy the same anti-dilution protection as that first issued security.

 

The Company also issued a Series B Warrant (the “Second Warrant”) to Capstone, effective as of September 30, 2014. Pursuant to the Second Warrant, Capstone has the right to purchase up to 22,368,421 shares of Common Stock at an exercise price of $0.76 per share of Common Stock. The Second Warrant is exercisable from October 1, 2014 through October 31, 2017 but only to the extent and in the same proportions as exercised by Capstone of the First Warrant. The Second Warrant provides for equitable adjustments in the event of a stock split, stock dividend, reclassification, consolidation or merger. The Company has agreed with Capstone that if the Company issues a security (i) exercisable or exchangeable for or (ii) convertible into shares of Common Stock at a date after October 1, 2014 and such security provides for anti-dilution protection, the shares of Common Stock issuable under the Second Warrant shall enjoy the same anti-dilution protection as that first issued security.

 

The Company and Capstone entered into a Common Stock Put Agreement, dated as of September 30, 2014 (the “Put Agreement”). Pursuant to the Put Agreement, Capstone indicated its intent to exercise the First Warrant at a rate of no less than 1,461,988 shares of Common Stock (the “Minimum Amount”) per month over the term of the First Warrant (the “Minimum Rate”). In the event that Capstone does not exercise the First Warrant by November 15, 2014 or any subsequent Periodic Exercise Date (as defined in the Put Agreement) such that as of the applicable Exercise Date, Capstone’s cumulative purchases of Common Stock pursuant to the First Warrant has not been at a rate that is equal to or in excess of the Minimum Rate, then the Company has the right to notify Capstone not earlier than 30 days and not later than 40 days after the applicable Exercise Date of the Company’s exercise of its put rights under the Put Agreement (the “Put Notice”). Upon receipt of the Put Notice, Capstone is required to exercise the First Warrant to (i) purchase the Minimum Amount by a date identified in the Put Notice that is no earlier than 10 days after and no later than 30 days after the date of the Put Notice (the “Put Date”), or if Capstone has previously exercised the First Warrant to purchase shares in excess of the Minimum Rate, then such lesser amount of Common Stock as would, if purchased as of the applicable Exercise Date, have made Capstone’s purchases of Common Stock pursuant to the First Warrant as of such Exercise Date equal to the Minimum Rate (the “Initial Mandatory Purchase”), and (ii) purchase by a date that is no later than each subsequent Periodic Exercise Date an amount of Common Stock such that as of each such Periodic Exercise Date, Capstone’s cumulative purchases of Common Stock pursuant to the First Warrant through that date has been at a rate that is no less than the Minimum Rate (the “Periodic Mandatory Purchases”). Following delivery of the Put Notice by TCH, Capstone’s failure to make the Initial Mandatory Purchase by the Put Date shall be an “Event of Default”. Following the delivery of the Put Notice by TCH, Capstone’s failure to make when due any Periodic Mandatory Purchase is a breach of the Put Agreement, and if such breach is not timely cured by Capstone, such uncured breach shall be deemed an Event of Default. Upon the occurrence of an Event of Default as described above, (i) Capstone’s right to purchase all shares of Common Stock remaining unpurchased under the First Warrant is converted into an obligation, accelerated and immediately due and (ii) the Second Warrant immediately terminates as to any shares of Common Stock remaining exercisable under the Second Warrant. In the event the Company invokes its right pursuant to the Put Notice to require Capstone to exercise the First Warrant, the purchase price per share of Common Stock thereunder is $0.775 per share. In the event that the Company converts and accelerates Capstone’s obligations to purchase the shares of Common Stock remaining unexercised under the First Warrant, Capstone has the right to surrender issued and outstanding shares of Common Stock to the Company to be credited towards Capstone’s obligations, with such surrendered shares valued at $0.76 per share of Common Stock.

 

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The Company and Capstone entered into a Registration Rights Agreement, dated as of September 30, 2014 (the “Registration Agreement”). Pursuant to the Registration Agreement, Capstone can require the Company to register the shares of Common Stock acquired upon exercise of the First Warrant and the Second Warrant at such time as the Company is eligible to register securities on a Registration Statement on Form S-3 and thereafter file additional registration statements if requested by Capstone on a quarterly basis. The Registration Agreement contains terms and conditions customary for the grant of registration rights.

 

The foregoing descriptions of the (i) Series A Warrant; (ii) Series B Warrant; (iii) Put Agreement and (iv) Registration Agreement are qualified in their entirety by reference to the full text of such documents, which documents are exhibits to this Report.

 

Item 9.01 Financial Statements and Exhibits.

 

(d) Exhibits.

 

Exhibit 10.10 Series A Warrant, dated as of September 30, 2014, issued by Twinlab Consolidated Holdings, Inc. to Capstone Financial Group, Inc.

 

Exhibit 10.11 Series B Warrant, dated as of September 30, 2014, issued by Twinlab Consolidated Holdings, Inc. to Capstone Financial Group, Inc.

 

Exhibit 10.12 Common Stock Put Agreement, dated as of September 30, 2014, by and between Twinlab Consolidated Holdings, Inc. and Capstone Financial Group, Inc.

 

Exhibit 10.13 Registration Rights Agreement, dated as of September 30, 2014, by and between Twinlab Consolidated Holdings, Inc. and Capstone Financial Group, Inc.

 

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SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

Date:   October 6, 2014 TWINLAB CONSOLIDATED HOLDINGS, INC.
     
  By: /s/ Thomas A. Tolworthy
    Thomas A. Tolworthy
    President and Chief Executive Officer

 

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EXHIBIT INDEX

 

  Exhibit No.   Description
       
  Exhibit 10.10   Series A Warrant, dated as of September 30, 2014, issued by Twinlab Consolidated Holdings, Inc. to Capstone Financial Group, Inc.
       
  Exhibit 10.11   Series B Warrant, dated as of September 30, 2014, issued by Twinlab Consolidated Holdings, Inc. to Capstone Financial Group, Inc.
       
  Exhibit 10.12   Common Stock Put Agreement, dated as of September 30, 2014, by and between Twinlab Consolidated Holdings, Inc. and Capstone Financial Group, Inc.
       
  Exhibit 10.13   Registration Rights Agreement, dated as of September 30, 2014, by and between Twinlab Consolidated Holdings, Inc. and Capstone Financial Group, Inc.

 

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Exhibit 10.10

 

SERIES A WARRANT

 

THE SECURITY EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR QUALIFIED UNDER ANY APPLICABLE STATE SECURITIES LAW, AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR QUALIFICATION OR AN EXEMPTION THEREFROM UNDER THE ACT OR ANY APPLICABLE STATE SECURITIES LAWS. AS A CONDITION TO SALE OR OTHER TRANSFER OF THE SECURITY, THE COMPANY MAY, AT ITS OPTION, REQUIRE THE PROPOSED TRANSFEROR HEREOF TO DELIVER TO THE COMPANY AN OPINION OF COUNSEL, WHICH OPINION AND WHICH COUNSEL SHALL BE SATISFACTORY TO THE COMPANY, TO THE EFFECT THAT SUCH REGISTRATION OR QUALIFICATION IS NOT REQUIRED FOR SUCH PROPOSED SALE OR OTHER TRANSFER.

 

To Purchase 52,631,579 Shares of Common Stock ($0.001 par value)

 

Warrant Number: A-CAP-001

 

TWINLAB CONSOLIDATED HOLDINGS, INC.

 

Incorporated Under the Laws of Nevada

 

Warrant

 

1.  Basic Terms . This certifies that, for value received, the Registered Owner (the “Registered Owner”) is entitled, subject to the terms and conditions of this Warrant, at any time and from time to time, in whole or in part, from the time set forth in Paragraph 3 below until the expiration date, to purchase shares of the common stock, par value $0.001 per share (the “Common Stock”), of Twinlab Consolidated Holdings, Inc. (“TCH” or the “Company”) from the Company at the purchase price set forth in Paragraph 2 below, on delivery of this Warrant to the Company with the exercise form duly executed and payment of the purchase price (as further described in Paragraph 6 below) for each share purchased.

 

Registered Owner: Capstone Financial Group, Inc., a Nevada corporation

 

2.  Purchase Price . The purchase price per share shall be $0.76.

 

3.  When Exercisable. This Warrant shall be exercisable at any time from and after October 1, 2014 and shall expire at 5:00 p.m., New York Time, October 31, 2017 (the “Expiration Date”) unless terminated sooner under Paragraph 16 of this Warrant. This Warrant shall expire, become void, and be of no further force or effect after the Expiration Date.

 

4. Company’s Covenants as to Common Stock. Shares of the Common Stock deliverable on the exercise of this Warrant shall, at delivery, be fully paid and non-assessable, and free from taxes, liens, and charges with respect to their purchase. The Company shall take any necessary steps to assure that the par value per share of the Common Stock issuable hereunder is at all times equal to or less than the then current purchase price per share of the Common Stock issuable pursuant to this Warrant. The Company shall at all times reserve and hold available sufficient shares of Common Stock to satisfy all conversion and purchase rights of all outstanding convertible securities, options, and warrants, including, without limitation, this Warrant.

 

 
 

  

5. Method of Exercise. The purchase rights represented by this Warrant are exercisable at the option of the Registered Owner in whole at any time, or in part, from time to time, within the period above specified. In case of the exercise of this Warrant for less than all shares purchasable, the Company shall cancel the Warrant and execute and deliver a new Warrant of like tenor and date for the balance of the shares purchasable.

 

6.  Payment for Shares. The Registered Owner shall notify the Company of the number of shares that it desires to purchase and deliver with such notice cash, immediately available funds or a certified bank check payable to the Company for the purchase price of the shares being purchased.

 

7.  Fractional Shares . The Company shall not be required to issue a fractional share of Common Stock upon exercise of the Warrant. As to any fraction of a share of Common Stock that the Registered Owner would otherwise be entitled to purchase upon such exercise, the Company shall pay to such Registered Owner an amount in cash (by delivery of a certified or official bank check or by wire transfer of immediately available funds) equal to the product of (i) such fraction multiplied by (ii) the fair market value of one share of Common Stock on the exercise date. The Board of Directors of the Company, acting in good faith, shall determine the fair market value of the share of Common Stock.

 

8. Taxes . The Company shall pay all expenses in connection with, and all taxes and other governmental charges that may be imposed with respect to, the issuance or delivery of shares of Common Stock upon exercise of this Warrant; provided , that the Company shall not be required to pay any tax or governmental charge that may be imposed with respect to any applicable withholding or the issuance or delivery of the shares of Common Stock to any person other than the Registered Owner, and no such issuance or delivery shall be made unless and until the person requesting such issuance has paid to the Company the amount of any such tax, or has established to the satisfaction of the Company that such tax has been paid.

 

9.  Limited Rights of Owner. This Warrant does not entitle the Registered Owner to any voting rights or other rights as a shareholder of the Company, or to any other rights whatsoever except the rights herein expressed. No dividends are payable or will accrue on this Warrant or the shares purchasable hereunder until, and except to the extent that, this Warrant is exercised.

 

10.  Exchange or Other Denominations. This Warrant is exchangeable, on its surrender by the Registered Owner to the Company, for new Warrants of like tenor and date representing in the aggregate the right to purchase the number of shares purchasable hereunder in denominations designated by the Registered Owner at the time of surrender.

 

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11. Transfer. Except as otherwise above provided, this Warrant is transferable only on the books of the Company by the Registered Owner in person or by attorney, on surrender of this Warrant, properly endorsed.

 

12. Recognition of Registered Owner. Prior to due presentment for registration of transfer of this Warrant, the Company may treat the Registered Owner as the person exclusively entitled to receive notices and otherwise to exercise rights hereunder.

 

13. Effect of Stock Split, etc. If the Company, by stock split, stock dividend, reverse split, reclassification of shares, or otherwise, changes as a whole the outstanding Common Stock into a different number or class of shares, then: (1) the number and/or class of shares as so changed shall, for the purposes of this Warrant, replace the shares outstanding immediately prior to the change; and (2) the purchase price in effect, and the number of shares purchasable under this Warrant, immediately prior to the date upon which the change becomes effective, shall be proportionately adjusted (the price to the nearest cent). Irrespective of any adjustment or change in the purchase price or the number of shares purchasable under this or any other Warrant of like tenor, the Warrants therefore and thereafter issued may continue to express the purchase price per share and the number of shares purchasable as the Warrant purchase price per share and the number of share purchasable were expressed in the Warrant when initially issued.

 

14.  Effect of Merger, etc. If the Company consolidates with or merges into another corporation, in each case which entitles the holders of Common Stock to receive (either directly or upon subsequent liquidation) stock, securities or assets with respect to or in exchange for Common Stock, the Registered Owner shall thereafter be entitled, upon exercise of this Warrant, to purchase, with respect to each share of Common Stock purchasable hereunder immediately before the consolidation or merger becomes effective, the securities or other consideration to which the Registered Owner is entitled in the consolidation or merger without any change in or payment in addition to the Warrant purchase price in effect immediately prior to the merger or consolidation. The Company shall take any necessary steps in connection with a consolidation or merger to assure that all the provisions of this Warrant shall thereafter be applicable, as nearly as reasonably may be, to any securities or other consideration so deliverable on exercise of this Warrant. The Company shall not consolidate or merge unless, prior to consummation, the successor corporation (if other than the Company) assumes the obligations of this paragraph by written instrument executed and mailed to the Registered Owner at the address of such owner on the books of the Company. A sale or lease of all or substantially all the assets of the Company for a consideration (apart from the assumption of obligations) consisting primarily of securities is a consolidation or merger for the foregoing purposes.

 

15.  Notice of Adjustment. On the happening of an event requiring an adjustment of the purchase price or the shares purchasable hereunder, the Company shall forthwith give written notice to the Registered Owner stating the adjusted purchase price and the adjusted number and kind of securities or other property purchasable hereunder resulting from the event and setting forth reasonable detail of the method of calculation and the facts upon which the calculation is based. The Board of Directors of the Company, acting in good faith, shall determine the calculation.

 

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16.  Notice and Effect of Dissolution, etc. In case a voluntary or involuntary dissolution, liquidation, or winding up of the Company (other than a connection with a consolidation or merger covered by Paragraph 14 above) is at any time proposed, the Company shall give at least 30 days’ prior written notice to the Registered Owner. Such notice shall contain: (1) the date on which the transaction is to take place; (2) the record date (which shall be at least 30 days after the giving of the notice) as of which the Registered Owner will be entitled to receive distributions as a result of the transaction; (3) a brief description of the transaction; (4) a brief description of the distributions made to the Registered Owner as a result of the transaction and (5) an estimate of the fair value of the distributions. On the date of the transaction, if it actually occurs, this Warrant and all rights hereunder shall terminate.

 

17.  Compliance with the Securities Act.

 

(A)          Agreement to Comply with the Securities Act; Legend . The Registered Owner, by acceptance of this Warrant, agrees to comply in all respects with the provisions of this Paragraph 17 and the restrictive legend requirements set forth on the face of this Warrant and further agrees that such Registered Owner shall not offer, sell or otherwise dispose of this Warrant or any shares of Common Stock to be issued upon exercise hereof except under circumstances that will not result in a violation of the Securities Act of 1933, as amended (the " Securities Act "). This Warrant and all shares of Common Stock issued upon exercise of this Warrant (unless registered under the Securities Act) shall be stamped or imprinted with a legend in substantially the following form:

 

"THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR QUALIFIED UNDER ANY STATE OR FOREIGN SECURITIES LAWS AND MAY NOT BE OFFERED FOR SALE, SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED OR ASSIGNED UNLESS (I) A REGISTRATION STATEMENT COVERING SUCH SHARES IS EFFECTIVE UNDER THE ACT AND IS QUALIFIED UNDER APPLICABLE STATE AND FOREIGN LAW OR (II) THE TRANSACTION IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS UNDER THE ACT AND THE QUALIFICATION REQUIREMENTS UNDER APPLICABLE STATE AND FOREIGN LAW AND, IF THE CORPORATION REQUESTS, AN OPINION SATISFACTORY TO THE CORPORATION TO SUCH EFFECT HAS BEEN RENDERED BY COUNSEL."

 

In addition, if the Registered Owner is an Affiliate (as defined in the Securities Act) of the Company, certificates evidencing the shares of Common Stock issued to the Registered Owner shall bear a customary “affiliates” legend.

 

(B)          Representations of the Registered Owner . In connection with the issuance of this Warrant, the Registered Owner specifically represents, as of the date hereof, to the Company by acceptance of this Warrant as follows:

 

 

(i)          The Registered Owner is an "accredited investor" as defined in Rule 501 of Regulation D promulgated under the Securities Act. The Registered Owner is acquiring this Warrant and the shares of Common Stock to be issued upon exercise hereof for investment for its own account and not with a view towards, or for resale in connection with, the public sale or distribution of this Warrant or the shares of Common Stock, except pursuant to sales registered or exempted under the Securities Act.

 

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(ii)         The Registered Owner understands and acknowledges that this Warrant and the shares of Common Stock to be issued upon exercise hereof are "restricted securities" under the federal securities laws inasmuch as they are being acquired from the Company in a transaction not involving a public offering and that, under such laws and applicable regulations, such securities may be resold without registration under the Securities Act only in certain limited circumstances. In addition, the Registered Owner represents that it is familiar with Rule 144 under the Securities Act, as presently in effect, and understands the resale limitations imposed thereby and by the Securities Act.

 

(iii)        The Registered Owner acknowledges that it can bear the economic and financial risk of its investment for an indefinite period, and has such knowledge and experience in financial or business matters that it is capable of evaluating the merits and risks of the investment in the Warrant and the shares of Common Stock. The Registered Owner has had an opportunity to ask questions and receive answers from the Company regarding the terms and conditions of the offering of the Warrant and the business, properties, prospects and financial condition of the Company.

 

18.  Registration Rights . The Registered Owner shall be entitled to register the shares of Common Stock issued upon exercise of this Warrant upon the terms and subject to the conditions of that certain Registration Rights Agreement, dated as of September 30, 2014, by and between Twinlab Consolidated Holdings, Inc. and Capstone Financial Group, Inc. (the “Registration Rights Agreement”).

 

19.  Anti-dilution . In the event that TCH issues a security (i) exercisable or exchangeable for or (ii) convertible into shares of Common Stock at a date after October 1, 2014 and such security provides for anti-dilution protection, the shares of Common Stock issuable hereunder shall enjoy the same anti-dilution protection as that first issued security.

 

20.  Warrant Register . The Company shall keep and properly maintain at its principal executive offices books for the registration of the Warrant and any transfers thereof. The Company may deem and treat the Person in whose name the Warrant is registered on such register as the Registered Owner thereof for all purposes, and the Company shall not be affected by any notice to the contrary, except any assignment, division, combination or other transfer of the Warrant effected in accordance with the provisions of this Warrant.

 

21.  Notices . All notices, requests, consents, claims, demands, waivers and other communications hereunder shall be in writing and shall be deemed to have been given: (a) when delivered by hand (with written confirmation of receipt); (b) when received by the addressee if sent by a nationally recognized overnight courier (receipt requested); (c) on the date sent by e-mail of a PDF document (with confirmation of transmission) if sent during normal business hours of the recipient, and on the next Business Day if sent after normal business hours of the recipient; or (d) on the fifth day after the date mailed, by certified or registered mail, return receipt requested, postage prepaid. Such communications must be sent to the respective parties at the addresses indicated below (or at such other address for a party as shall be specified in a notice given in accordance with this Paragraph 21).

 

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If to the Company:   Twinlab Consolidated Holdings, Inc.
632 Broadway, Suite 201
New York, NY 10012
E-mail: RNeuwirth@twinlab.com
Attention: General Counsel 
     
with a copy to (which shall not
constitute notice to the
Company):
  Wilk Auslander LLP
1515 Broadway
New York, NY 10036
E-mail: jfrank@wilkauslander.com
Attention: Joel I. Frank, Esq.
     
If to the Registered Owner:   Capstone Financial Group, Inc.
2600 Michelson Drive, Suite 700
Irvine, CA 92612
E-mail: dpastor@capstonefg.com
Attention: Darin R. Pastor
     
with a copy to (which shall not
constitute notice to the
Registered Owner):
  Stoecklein Law Group, LLP
401 West A Street, Suite 1150
San Diego, CA 92101
E-mail: djs@slgseclaw.com
Attention: Donald J. Stoecklein, Esq.

 

22. Equitable Relief . Each of the Company and the Registered Owner acknowledges that a breach or threatened breach by such party of any of its obligations under this Warrant would give rise to irreparable harm to the other party hereto for which monetary damages would not be an adequate remedy and hereby agrees that in the event of a breach or a threatened breach by such party of any such obligations, the other party hereto shall, in addition to any and all other rights and remedies that may be available to it in respect of such breach, be entitled to equitable relief, including a restraining order, an injunction, specific performance and any other relief that may be available from a court of competent jurisdiction.

 

23. Entire Agreement . This Warrant, together with the Registration Rights Agreement, the Common Stock Put Agreement, dated as of September 30, 2014, by and between the Company and the Registered Owner and the Series B Warrant, dated as of September 30, 2014, issued by the Company to the Registered Owner, constitutes the sole and entire agreement of the parties to this Warrant with respect to the subject matter contained herein, and supersedes all prior and contemporaneous understandings and agreements, both written and oral, with respect to such subject matter. In the event of any inconsistency between the statements in the body of this Warrant and the Registration Rights Agreement, the statements in the body of this Warrant shall control.

 

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24. Successor and Assigns . This Warrant and the rights evidenced hereby shall be binding upon and shall inure to the benefit of the parties hereto and the successors of the Company and the successors of the Registered Owner. Such successors of the Registered Owner shall be deemed to be a Registered Owner for all purposes hereunder. This Warrant may only be assigned with the mutual consent of the Registered Owner and the Company in writing.

 

25. No Third-Party Beneficiaries . This Warrant is for the sole benefit of the Company and the Registered Owner and their respective successors and, in the case of the Registered Owner, permitted assigns and nothing herein, express or implied, is intended to or shall confer upon any other Person any legal or equitable right, benefit or remedy of any nature whatsoever, under or by reason of this Warrant.

 

26. Headings . The headings in this Warrant are for reference only and shall not affect the interpretation of this Warrant.

 

27.  Amendment and Modification; Waiver . Except as otherwise provided herein, this Warrant may only be amended, modified or supplemented by an agreement in writing signed by each party hereto. No waiver by the Company or the Registered Owner of any of the provisions hereof shall be effective unless explicitly set forth in writing and signed by the party so waiving. No waiver by any party shall operate or be construed as a waiver in respect of any failure, breach or default not expressly identified by such written waiver, whether of a similar or different character, and whether occurring before or after that waiver. No failure to exercise, or delay in exercising, any rights, remedy, power or privilege arising from this Warrant shall operate or be construed as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege.

 

28. Severability . If any term or provision of this Warrant is invalid, illegal or unenforceable in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other term or provision of this Warrant or invalidate or render unenforceable such term or provision in any other jurisdiction.

 

29. Governing Law . This Warrant shall be governed by and construed in accordance with the internal laws of the State of Nevada without giving effect to any choice or conflict of law provision or rule (whether of the State of Nevada or any other jurisdiction) that would cause the application of laws of any jurisdiction other than those of the State of Nevada.

 

30. Submission to Jurisdiction . Any legal suit, action or proceeding arising out of or based upon this Warrant or the transactions contemplated hereby may be instituted in the federal courts of the United States of America or the courts of the State of New York in each case located in the city of New York and County of New York, and each party irrevocably submits to the exclusive jurisdiction of such courts in any such suit, action or proceeding. Service of process, summons, notice or other document by certified or registered mail to such party's address set forth herein shall be effective service of process for any suit, action or other proceeding brought in any such court. The parties irrevocably and unconditionally waive any objection to the laying of venue of any suit, action or any proceeding in such courts and irrevocably waive and agree not to plead or claim in any such court that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum.

 

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31. Waiver of Jury Trial . Each party acknowledges and agrees that any controversy which may arise under this Warrant is likely to involve complicated and difficult issues and, therefore, each such party irrevocably and unconditionally waives any right it may have to a trial by jury in respect of any legal action arising out of or relating to this Warrant or the transactions contemplated hereby.

 

32. Counterparts . This Warrant may be executed in counterparts, each of which shall be deemed an original, but all of which together shall be deemed to be one and the same agreement. A signed copy of this Warrant delivered by facsimile, e-mail or other means of electronic transmission shall be deemed to have the same legal effect as delivery of an original signed copy of this Warrant.

 

33. No Strict Construction . This Warrant shall be construed without regard to any presumption or rule requiring construction or interpretation against the party drafting an instrument or causing any instrument to be drafted.

 

[SIGNATURE PAGE TO FOLLOW]

 

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IN WITNESS WHEREOF , the Company has caused this Warrant to be signed and delivered by a duly authorized representative as of the 30 th day of September, 2014.

 

    TWINLAB CONSOLIDATED HOLDINGS, INC.
     
    By: /s/ Thomas A. Tolworthy
      Thomas A. Tolworthy
      President and Chief Executive Officer

 

ACCEPTED AND AGREED TO AS OF THE DATE SET FORTH ABOVE:
 
CAPSTONE FINANCIAL GROUP, INC.
   
By: /s/ Darin R. Pastor  
  Darin R. Pastor  
  Chief Executive Officer  

 

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Exercise Form

 

(To be executed by the Registered Owner to purchase

 

Common Stock pursuant to the Warrant)

 

To: TWINLAB CONSOLIDATED HOLDINGS, INC.
632 Broadway, Suite 201
New York, NY 10012

 

The undersigned hereby: (1) irrevocably subscribes for ___________ shares of your Common Stock pursuant to this Warrant, and encloses payment of $ ____________therefor, (2) requests that a certificate for the shares be issued in the name of the undersigned and delivered to the undersigned at the address below; and (3) if such number of shares is not all of the shares purchasable hereunder, that a new Warrant of like tenor for the balance of the remaining shares purchasable hereunder be issued in the name of the undersigned and delivered to the undersigned at the address below.

 

Date:    

 

   
(Please sign exactly as name appears on Warrant )  

 

Address:    
     
     

 

Taxpayer ID No.    

 

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Exhibit 10.11

  

SERIES B WARRANT

 

THE SECURITY EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR QUALIFIED UNDER ANY APPLICABLE STATE SECURITIES LAW, AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR QUALIFICATION OR AN EXEMPTION THEREFROM UNDER THE ACT OR ANY APPLICABLE STATE SECURITIES LAWS. AS A CONDITION TO SALE OR OTHER TRANSFER OF THE SECURITY, THE COMPANY MAY, AT ITS OPTION, REQUIRE THE PROPOSED TRANSFEROR HEREOF TO DELIVER TO THE COMPANY AN OPINION OF COUNSEL, WHICH OPINION AND WHICH COUNSEL SHALL BE SATISFACTORY TO THE COMPANY, TO THE EFFECT THAT SUCH REGISTRATION OR QUALIFICATION IS NOT REQUIRED FOR SUCH PROPOSED SALE OR OTHER TRANSFER.

 

To Purchase 22,368,421 Shares of Common Stock ($0.001 par value)

 

Warrant Number: B-CAP-001

 

TWINLAB CONSOLIDATED HOLDINGS, INC.

 

Incorporated Under the Laws of Nevada

 

Warrant

 

1. Basic Terms . This certifies that, for value received, the Registered Owner (the “Registered Owner”) is entitled, subject to the terms and conditions of this Warrant, at any time and from time to time, in whole or in part, from the time set forth in Paragraph 3 below until the expiration date, to purchase shares of the common stock, par value $0.001 per share (the “Common Stock”), of Twinlab Consolidated Holdings, Inc. (“TCH” or the “Company”) from the Company at the purchase price set forth in Paragraph 2 below, on delivery of this Warrant to the Company with the exercise form duly executed and payment of the purchase price (as further described in Paragraph 6 below) for each share purchased.

 

Registered Owner: Capstone Financial Group, Inc., a Nevada corporation

 

2. Purchase Price . The purchase price per share shall be $0.76.

 

3. When Exercisable. This Warrant shall be exercisable at any time from and after October 1, 2014 and shall expire at 5:00 p.m., New York Time, October 31, 2017 (the “Expiration Date”) unless terminated sooner under (i) Paragraph 16 of this Warrant or (ii) in accordance with Section 2.1(c) of the Common Stock Put Agreement, dated as of September 30, 2014, by and between TCH and Capstone (the “Put Agreement”). This Warrant shall expire, become void, and be of no further force or effect after the Expiration Date.

 

 
 

 

4. Company’s Covenants as to Common Stock. Shares of the Common Stock deliverable on the exercise of this Warrant shall, at delivery, be fully paid and non-assessable, and free from taxes, liens, and charges with respect to their purchase. The Company shall take any necessary steps to assure that the par value per share of the Common Stock issuable hereunder is at all times equal to or less than the then current purchase price per share of the Common Stock issuable pursuant to this Warrant. The Company shall at all times reserve and hold available sufficient shares of Common Stock to satisfy all conversion and purchase rights of all outstanding convertible securities, options, and warrants, including, without limitation, this Warrant.

 

5. Method of Exercise. The purchase rights represented by this Warrant are exercisable at the option of the Registered Owner in whole at any time, or in part, from time to time, within the period above specified. In case of the exercise of this Warrant for less than all shares purchasable, the Company shall cancel the Warrant and execute and deliver a new Warrant of like tenor and date for the balance of the shares purchasable. Notwithstanding anything to the contrary contained elsewhere in this Warrant, this Series B Warrant may only be exercised to the extent and in the same cumulative proportions as the Series A Warrant, dated as of September 30, 2014, issued by the Company to the Registered Owner (“Series A Warrant”) has then been exercised by the Registered Owner.

 

6. Payment for Shares. The Registered Owner shall notify the Company of the number of shares that it desires to purchase and deliver with such notice cash, immediately available funds or a certified bank check payable to the Company for the purchase price of the shares being purchased.

 

7. Fractional Shares . The Company shall not be required to issue a fractional share of Common Stock upon exercise of the Warrant. As to any fraction of a share of Common Stock that the Registered Owner would otherwise be entitled to purchase upon such exercise, the Company shall pay to such Registered Owner an amount in cash (by delivery of a certified or official bank check or by wire transfer of immediately available funds) equal to the product of (i) such fraction multiplied by (ii) the fair market value of one share of Common Stock on the exercise date. The Board of Directors of the Company, acting in good faith, shall determine the fair market value of the share of Common Stock.

 

8. Taxes . The Company shall pay all expenses in connection with, and all taxes and other governmental charges that may be imposed with respect to, the issuance or delivery of shares of Common Stock upon exercise of this Warrant; provided , that the Company shall not be required to pay any tax or governmental charge that may be imposed with respect to any applicable withholding or the issuance or delivery of the shares of Common Stock to any person other than the Registered Owner, and no such issuance or delivery shall be made unless and until the person requesting such issuance has paid to the Company the amount of any such tax, or has established to the satisfaction of the Company that such tax has been paid.

 

9. Limited Rights of Owner. This Warrant does not entitle the Registered Owner to any voting rights or other rights as a shareholder of the Company, or to any other rights whatsoever except the rights herein expressed. No dividends are payable or will accrue on this Warrant or the shares purchasable hereunder until, and except to the extent that, this Warrant is exercised.

 

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10. Exchange or Other Denominations. This Warrant is exchangeable, on its surrender by the Registered Owner to the Company, for new Warrants of like tenor and date representing in the aggregate the right to purchase the number of shares purchasable hereunder in denominations designated by the Registered Owner at the time of surrender.

 

11. Transfer. Except as otherwise above provided, this Warrant is transferable only on the books of the Company by the Registered Owner in person or by attorney, on surrender of this Warrant, properly endorsed.

 

12. Recognition of Registered Owner. Prior to due presentment for registration of transfer of this Warrant, the Company may treat the Registered Owner as the person exclusively entitled to receive notices and otherwise to exercise rights hereunder.

 

13. Effect of Stock Split, etc. If the Company, by stock split, stock dividend, reverse split, reclassification of shares, or otherwise, changes as a whole the outstanding Common Stock into a different number or class of shares, then: (1) the number and/or class of shares as so changed shall, for the purposes of this Warrant, replace the shares outstanding immediately prior to the change; and (2) the purchase price in effect, and the number of shares purchasable under this Warrant, immediately prior to the date upon which the change becomes effective, shall be proportionately adjusted (the price to the nearest cent). Irrespective of any adjustment or change in the purchase price or the number of shares purchasable under this or any other Warrant of like tenor, the Warrants therefore and thereafter issued may continue to express the purchase price per share and the number of shares purchasable as the Warrant purchase price per share and the number of share purchasable were expressed in the Warrant when initially issued.

 

14. Effect of Merger, etc. If the Company consolidates with or merges into another corporation, in each case which entitles the holders of Common Stock to receive (either directly or upon subsequent liquidation) stock, securities or assets with respect to or in exchange for Common Stock, the Registered Owner shall thereafter be entitled, upon exercise of this Warrant, to purchase, with respect to each share of Common Stock purchasable hereunder immediately before the consolidation or merger becomes effective, the securities or other consideration to which the Registered Owner is entitled in the consolidation or merger without any change in or payment in addition to the Warrant purchase price in effect immediately prior to the merger or consolidation. The Company shall take any necessary steps in connection with a consolidation or merger to assure that all the provisions of this Warrant shall thereafter be applicable, as nearly as reasonably may be, to any securities or other consideration so deliverable on exercise of this Warrant. The Company shall not consolidate or merge unless, prior to consummation, the successor corporation (if other than the Company) assumes the obligations of this paragraph by written instrument executed and mailed to the Registered Owner at the address of such owner on the books of the Company. A sale or lease of all or substantially all the assets of the Company for a consideration (apart from the assumption of obligations) consisting primarily of securities is a consolidation or merger for the foregoing purposes.

 

15. Notice of Adjustment. On the happening of an event requiring an adjustment of the purchase price or the shares purchasable hereunder, the Company shall forthwith give written notice to the Registered Owner stating the adjusted purchase price and the adjusted number and kind of securities or other property purchasable hereunder resulting from the event and setting forth reasonable detail of the method of calculation and the facts upon which the calculation is based. The Board of Directors of the Company, acting in good faith, shall determine the calculation.

 

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16. Notice and Effect of Dissolution, etc. In case a voluntary or involuntary dissolution, liquidation, or winding up of the Company (other than a connection with a consolidation or merger covered by Paragraph 14 above) is at any time proposed, the Company shall give at least 30 days’ prior written notice to the Registered Owner. Such notice shall contain: (1) the date on which the transaction is to take place; (2) the record date (which shall be at least 30 days after the giving of the notice) as of which the Registered Owner will be entitled to receive distributions as a result of the transaction; (3) a brief description of the transaction; (4) a brief description of the distributions made to the Registered Owner as a result of the transaction and (5) an estimate of the fair value of the distributions. On the date of the transaction, if it actually occurs, this Warrant and all rights hereunder shall terminate.

 

17. Compliance with the Securities Act.

 

(A)          Agreement to Comply with the Securities Act; Legend . The Registered Owner, by acceptance of this Warrant, agrees to comply in all respects with the provisions of this Paragraph 17 and the restrictive legend requirements set forth on the face of this Warrant and further agrees that such Registered Owner shall not offer, sell or otherwise dispose of this Warrant or any shares of Common Stock to be issued upon exercise hereof except under circumstances that will not result in a violation of the Securities Act of 1933, as amended (the " Securities Act "). This Warrant and all shares of Common Stock issued upon exercise of this Warrant (unless registered under the Securities Act) shall be stamped or imprinted with a legend in substantially the following form:

 

"THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR QUALIFIED UNDER ANY STATE OR FOREIGN SECURITIES LAWS AND MAY NOT BE OFFERED FOR SALE, SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED OR ASSIGNED UNLESS (I) A REGISTRATION STATEMENT COVERING SUCH SHARES IS EFFECTIVE UNDER THE ACT AND IS QUALIFIED UNDER APPLICABLE STATE AND FOREIGN LAW OR (II) THE TRANSACTION IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS UNDER THE ACT AND THE QUALIFICATION REQUIREMENTS UNDER APPLICABLE STATE AND FOREIGN LAW AND, IF THE CORPORATION REQUESTS, AN OPINION SATISFACTORY TO THE CORPORATION TO SUCH EFFECT HAS BEEN RENDERED BY COUNSEL."

 

In addition, if the Registered Owner is an Affiliate (as defined in the Securities Act) of the Company, certificates evidencing the shares of Common Stock issued to the Registered Owner shall bear a customary “affiliates” legend.

 

(B)          Representations of the Registered Owner . In connection with the issuance of this Warrant, the Registered Owner specifically represents, as of the date hereof, to the Company by acceptance of this Warrant as follows:

 

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(i)          The Registered Owner is an "accredited investor" as defined in Rule 501 of Regulation D promulgated under the Securities Act. The Registered Owner is acquiring this Warrant and the shares of Common Stock to be issued upon exercise hereof for investment for its own account and not with a view towards, or for resale in connection with, the public sale or distribution of this Warrant or the shares of Common Stock, except pursuant to sales registered or exempted under the Securities Act.

 

(ii)         The Registered Owner understands and acknowledges that this Warrant and the shares of Common Stock to be issued upon exercise hereof are "restricted securities" under the federal securities laws inasmuch as they are being acquired from the Company in a transaction not involving a public offering and that, under such laws and applicable regulations, such securities may be resold without registration under the Securities Act only in certain limited circumstances. In addition, the Registered Owner represents that it is familiar with Rule 144 under the Securities Act, as presently in effect, and understands the resale limitations imposed thereby and by the Securities Act.

 

(iii)        The Registered Owner acknowledges that it can bear the economic and financial risk of its investment for an indefinite period, and has such knowledge and experience in financial or business matters that it is capable of evaluating the merits and risks of the investment in the Warrant and the shares of Common Stock. The Registered Owner has had an opportunity to ask questions and receive answers from the Company regarding the terms and conditions of the offering of the Warrant and the business, properties, prospects and financial condition of the Company.

 

18. Registration Rights . The Registered Owner shall be entitled to register the shares of Common Stock issued upon exercise of this Warrant upon the terms and subject to the conditions of that certain Registration Rights Agreement, dated as of September 30, 2014, by and between Twinlab Consolidated Holdings, Inc. and Capstone Financial Group, Inc. (the “Registration Rights Agreement”).

 

19. Anti-dilution . In the event that TCH issues a security (i) exercisable or exchangeable for or (ii) convertible into shares of Common Stock at a date after October 1, 2014 and such security provides for anti-dilution protection, the shares of Common Stock issuable hereunder shall enjoy the same anti-dilution protection as that first issued security.

 

20. Warrant Register . The Company shall keep and properly maintain at its principal executive offices books for the registration of the Warrant and any transfers thereof. The Company may deem and treat the Person in whose name the Warrant is registered on such register as the Registered Owner thereof for all purposes, and the Company shall not be affected by any notice to the contrary, except any assignment, division, combination or other transfer of the Warrant effected in accordance with the provisions of this Warrant.

 

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21. Notices . All notices, requests, consents, claims, demands, waivers and other communications hereunder shall be in writing and shall be deemed to have been given: (a) when delivered by hand (with written confirmation of receipt); (b) when received by the addressee if sent by a nationally recognized overnight courier (receipt requested); (c) on the date sent by e-mail of a PDF document (with confirmation of transmission) if sent during normal business hours of the recipient, and on the next Business Day if sent after normal business hours of the recipient; or (d) on the fifth day after the date mailed, by certified or registered mail, return receipt requested, postage prepaid. Such communications must be sent to the respective parties at the addresses indicated below (or at such other address for a party as shall be specified in a notice given in accordance with this Paragraph 21).

 

If to the Company:   Twinlab Consolidated Holdings, Inc.
632 Broadway, Suite 201
New York, NY 10012
E-mail: RNeuwirth@twinlab.com
Attention: General Counsel 
     
with a copy to (which shall not constitute notice to the Company):   Wilk Auslander LLP
1515 Broadway
New York, NY 10036
E-mail: jfrank@wilkauslander.com
Attention: Joel I. Frank, Esq.
     
If to the Registered Owner:   Capstone Financial Group, Inc.
2600 Michelson Drive, Suite 700
Irvine, CA 92612
E-mail: dpastor@capstonefg.com
Attention: Darin R. Pastor
     
with a copy to (which shall not constitute notice to the Registered Owner):   Stoecklein Law Group, LLP
401 West A Street, Suite 1150
San Diego, CA 92101
E-mail: djs@slgseclaw.com
Attention: Donald J. Stoecklein, Esq.

 

22. Equitable Relief . Each of the Company and the Registered Owner acknowledges that a breach or threatened breach by such party of any of its obligations under this Warrant would give rise to irreparable harm to the other party hereto for which monetary damages would not be an adequate remedy and hereby agrees that in the event of a breach or a threatened breach by such party of any such obligations, the other party hereto shall, in addition to any and all other rights and remedies that may be available to it in respect of such breach, be entitled to equitable relief, including a restraining order, an injunction, specific performance and any other relief that may be available from a court of competent jurisdiction.

 

23. Entire Agreement . This Warrant, together with the Registration Rights Agreement, Put Agreement and Series A Warrant, constitutes the sole and entire agreement of the parties to this Warrant with respect to the subject matter contained herein, and supersedes all prior and contemporaneous understandings and agreements, both written and oral, with respect to such subject matter. In the event of any inconsistency between the statements in the body of this Warrant and the Registration Rights Agreement, the statements in the body of this Warrant shall control.

 

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24. Successor and Assigns . This Warrant and the rights evidenced hereby shall be binding upon and shall inure to the benefit of the parties hereto and the successors of the Company and the successors of the Registered Owner. Such successors of the Registered Owner shall be deemed to be a Registered Owner for all purposes hereunder. This Warrant may only be assigned with the mutual consent of the Registered Owner and the Company in writing.

 

25. No Third-Party Beneficiaries . This Warrant is for the sole benefit of the Company and the Registered Owner and their respective successors and, in the case of the Registered Owner, permitted assigns and nothing herein, express or implied, is intended to or shall confer upon any other Person any legal or equitable right, benefit or remedy of any nature whatsoever, under or by reason of this Warrant.

 

26. Headings . The headings in this Warrant are for reference only and shall not affect the interpretation of this Warrant.

 

27. Amendment and Modification; Waiver . Except as otherwise provided herein, this Warrant may only be amended, modified or supplemented by an agreement in writing signed by each party hereto. No waiver by the Company or the Holder of any of the provisions hereof shall be effective unless explicitly set forth in writing and signed by the party so waiving. No waiver by any party shall operate or be construed as a waiver in respect of any failure, breach or default not expressly identified by such written waiver, whether of a similar or different character, and whether occurring before or after that waiver. No failure to exercise, or delay in exercising, any rights, remedy, power or privilege arising from this Warrant shall operate or be construed as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege.

 

28. Severability . If any term or provision of this Warrant is invalid, illegal or unenforceable in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other term or provision of this Warrant or invalidate or render unenforceable such term or provision in any other jurisdiction.

 

29. Governing Law . This Warrant shall be governed by and construed in accordance with the internal laws of the State of Nevada without giving effect to any choice or conflict of law provision or rule (whether of the State of Nevada or any other jurisdiction) that would cause the application of laws of any jurisdiction other than those of the State of Nevada.

 

30. Submission to Jurisdiction . Any legal suit, action or proceeding arising out of or based upon this Warrant or the transactions contemplated hereby may be instituted in the federal courts of the United States of America or the courts of the State of New York in each case located in the city of New York and County of New York, and each party irrevocably submits to the exclusive jurisdiction of such courts in any such suit, action or proceeding. Service of process, summons, notice or other document by certified or registered mail to such party's address set forth herein shall be effective service of process for any suit, action or other proceeding brought in any such court. The parties irrevocably and unconditionally waive any objection to the laying of venue of any suit, action or any proceeding in such courts and irrevocably waive and agree not to plead or claim in any such court that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum.

 

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31. Waiver of Jury Trial . Each party acknowledges and agrees that any controversy which may arise under this Warrant is likely to involve complicated and difficult issues and, therefore, each such party irrevocably and unconditionally waives any right it may have to a trial by jury in respect of any legal action arising out of or relating to this Warrant or the transactions contemplated hereby.

 

32. Counterparts . This Warrant may be executed in counterparts, each of which shall be deemed an original, but all of which together shall be deemed to be one and the same agreement. A signed copy of this Warrant delivered by facsimile, e-mail or other means of electronic transmission shall be deemed to have the same legal effect as delivery of an original signed copy of this Warrant.

 

33. No Strict Construction . This Warrant shall be construed without regard to any presumption or rule requiring construction or interpretation against the party drafting an instrument or causing any instrument to be drafted.

 

[SIGNATURE PAGE TO FOLLOW]

 

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IN WITNESS WHEREOF , the Company has caused this Warrant to be signed and delivered by a duly authorized representative as of the 30 th day of September, 2014.

 

  TWINLAB CONSOLIDATED HOLDINGS, INC.
     
  By: /s/ Thomas A. Tolworthy
    Thomas A. Tolworthy
    President and Chief Executive Officer

 

ACCEPTED AND AGREED TO AS OF THE DATE SET FORTH ABOVE:

 

CAPSTONE FINANCIAL GROUP, INC.  
   
By: /s/ Darin R. Pastor  
  Darin R. Pastor  
  Chief Executive Officer  

 

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Exercise Form

 

(To be executed by the Registered Owner to purchase

 

Common Stock pursuant to the Warrant)

 

To: TWINLAB CONSOLIDATED HOLDINGS, INC.
632 Broadway, Suite 201
New York, NY 10012

 

The undersigned hereby: (1) irrevocably subscribes for ___________ shares of your Common Stock pursuant to this Warrant, and encloses payment of $ ____________therefor, (2) requests that a certificate for the shares be issued in the name of the undersigned and delivered to the undersigned at the address below; and (3) if such number of shares is not all of the shares purchasable hereunder, that a new Warrant of like tenor for the balance of the remaining shares purchasable hereunder be issued in the name of the undersigned and delivered to the undersigned at the address below.

 

Date: ______________________

 

________________________________________________________________
(Please sign exactly as name appears on Warrant)

 

Address: ________________________________________________________________

________________________________________________________________

 

Taxpayer ID No. _____________________________________________

 

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EXHIBIT 10.12

 

COMMON STOCK PUT AGREEMENT

 

COMMON STOCK PUT AGREEMENT (this “Agreement”), dated as of September 30, 2014, between Twinlab Consolidated Holdings, Inc., a Nevada corporation (“TCH”), and Capstone Financial Group, Inc., a Nevada corporation (“Capstone”).

 

RECITALS :

 

WHEREAS, in consideration for the put rights granted herein TCH has issued Capstone a Series A Warrant, dated as of September 30, 2014 (the “Series A Warrant”) and a Series B Warrant, dated as of September 30, 2014 (the “Series B Warrant” and with the Series A Warrant, the “Warrants”), which Warrants provide Capstone the right to purchase shares of TCH’s common stock, par value $0.001 per share (“Common Stock”), at a price $0.76 per share over a period of 36 months in accordance with the terms and conditions of the Warrants;

 

WHEREAS, in consideration of the issuance of the Series A Warrant and the Series B Warrant Capstone intends by this Agreement to exercise the Series A Warrant at the rate of no less than 1,461,988 shares of Common Stock per month for a period of 36 months; and

 

WHEREAS, this Agreement is intended to create such rights and to set forth the terms and conditions under which TCH shall cause Capstone to exercise its rights to purchase shares of Common Stock pursuant to the Series A Warrant at the rate of no less than 1,461,988 shares of Common Stock per month.

 

In consideration of the mutual covenants and agreements set forth herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, the parties agree as follows:

 

ARTICLE I

Intent to Exercise

 

Section 1.1         Intent to Exercise . Capstone intends to exercise the Series A Warrant, in accordance with the terms and conditions of the Series A Warrant, at a rate of no less than 1,461,988 shares of Common Stock (the “Minimum Amount”) per month over the 36 month life of the Series A Warrant (the “Minimum Rate”) until the Series A Warrant has been fully exercised, with the first exercise being no later than November 15, 2014 (the “Initial Exercise Date”) and the remaining exercises on the 15th day of each month thereafter unless the 15th of any given month is not a business day, in which case the particular exercise shall be on the next business day after the 15th of such month (each, a “Periodic Exercise Date”). The foregoing notwithstanding, nothing contained herein shall prevent Capstone from exercising the Series A Warrant to purchase more than the Minimum Amount in any given month. To the degree that Capstone exercises the Series A Warrant to purchase more than the Minimum Amount in any given month, all Common Stock so purchased shall be accounted for in calculating whether in subsequent months Capstone has maintained the Minimum Rate. By way of example, if Capstone exercised the Series A Warrant to acquire 2,923,976 shares of Common Stock (2 times the Minimum Amount) by the Initial Exercise Date, then even if Capstone did not make an additional purchase by the next Periodic Exercise Date (i.e., during Month 2) Capstone would still be deemed to have maintained the Minimum Rate because as of the close of Month 2 it would have acquired Common Stock at a rate equal to the Minimum Amount per month for each of the first 2 months of the life of the Series A Warrant. Likewise, in the foregoing example, Capstone would be required to exercise the Series A Warrant to purchase no less than the Minimum Amount by the Month 3 Periodic Exercise Date in order to maintain the Minimum Rate as of the Month 3 Periodic Exercise Date.

 

 
 

 

ARTICLE II

PUT RIGHTS

 

Section 2.1         The Put . (a) In the event that Capstone does not exercise the Series A Warrant on the Initial Exercise Date or any subsequent Periodic Exercise Date such that as of the applicable Exercise Date, Capstone’s cumulative purchases of Common Stock pursuant to the Series A Warrant shall not have been at a rate that is equal to or in excess of the Minimum Rate, then TCH shall have the right to notify Capstone not earlier than 30 days and not later than 40 days after the applicable Exercise Date of TCH’s exercise of its put rights hereunder (the “Put Notice”). Upon receipt of the Put Notice, Capstone shall be required to exercise the Series A Warrant to (i) purchase the Minimum Amount by a date identified in the Put Notice that is no earlier than 10 days after and no later than 30 days after the date of the Put Notice (the “Put Date”), or if Capstone has previously exercised the Series A Warrant to purchase shares in excess of the Minimum Rate, then such lesser amount of Common Stock as would, if purchased as of the applicable Exercise Date, have made Capstone’s purchases of Common Stock pursuant to the Series A Warrant as of such Exercise Date equal to the Minimum Rate (the “Initial Mandatory Purchase”), and (ii) purchase by a date that is no later than each subsequent Periodic Exercise Date an amount of Common Stock such that as of each such Periodic Exercise Date, Capstone’s cumulative purchases of Common Stock pursuant to the Series A Warrant through that date shall have been at a rate that is no less than the Minimum Rate (the “Periodic Mandatory Purchases”).

 

(b)      Following delivery of the Put Notice by TCH, Capstone’s failure to make the Initial Mandatory Purchase by the Put Date shall be an “Event of Default” hereunder.

 

(c)      Following the delivery of the Put Notice by TCH, Capstone’s failure to make when due any Periodic Mandatory Purchase in accordance with clause (a) above shall be a breach of this Agreement, and if such breach is not cured by Capstone within 10 days of receipt of written notice by TCH of the breach, then such uncured breach shall be deemed an Event of Default.

 

(d)      Upon the occurrence of an Event of Default pursuant to either clause (b) or (c) above, (i) Capstone’s right to purchase all shares of Common Stock remaining unpurchased under the Series A Warrant shall be converted into an obligation, accelerated and immediately due and (ii) the Series B Warrant shall immediately terminate as to any shares of Common Stock remaining exercisable under the Series B Warrant.

 

(e)      Notwithstanding anything to be contrary contained in the Series A Warrant, in the event TCH has invoked its right pursuant to the Put Notice to require Capstone to exercise the Series A Warrant, the purchase price per share of Common Stock thereunder shall be $0.775 per share (the “Put Price”).

 

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(f)      In the event that TCH has so converted and accelerated Capstone’s obligations to purchase the shares of Common Stock remaining unexercised under the Series A Warrant, Capstone shall have the right to surrender issued and outstanding shares of Common Stock to TCH to be credited towards Capstone’s obligations hereunder, which surrendered shares shall be valued at $0.76 per share of Common Stock.

 

Section 2.2         Effect of Stock Split, etc . If TCH, by stock split, stock dividend, reverse split, reclassification of shares, or otherwise, changes as a whole the outstanding Common Stock into a different number or class of shares, then: (1) the number and/or class of shares as so changed shall, for the purposes of this Agreement, replace the shares outstanding immediately prior to the change; and (2) the Put Price in effect, and the number of shares purchasable under this Agreement, immediately prior to the date upon which the change becomes effective, shall be proportionately adjusted (the price to the nearest cent).

 

Section 2.3         Notice of Adjustment . On the happening of an event requiring an adjustment of the Put Price per share, TCH shall forthwith give written notice to Capstone stating the adjusted Put Price per share and the adjusted number and kind of securities or other property purchasable hereunder resulting from the event and setting forth reasonable detail of the method of calculation and the facts upon which the calculation is based. The Board of Directors of TCH, acting in good faith, shall determine the calculation.

 

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF TCH

 

TCH represents and warrants to Capstone as follows:

 

Section 3.1         Corporate Organization . TCH is a corporation duly incorporated, validly existing and subsisting under the laws of Nevada. Each TCH Subsidiary is a corporation duly incorporated, validly existing and in good standing under the laws of its respective state of incorporation. TCH and each of its Subsidiaries has all requisite power and authority to own, operate and lease its properties and to conduct its business as currently conducted. TCH and each of its Subsidiaries is duly qualified or licensed to do business and is in good standing in each jurisdiction in which its ownership or leasing of property or the conduct of its business requires such licensing or qualification, except to the extent that the failure to be so qualified or licensed would not have a Material Adverse Effect. As used in this Agreement, “Material Adverse Effect” means any event, circumstance or development which individually or in the aggregate could have a material adverse effect on the business, properties, operations, condition (financial or otherwise), assets, liabilities, tradability of the Common Stock, earnings or results of operations of TCH and its Subsidiaries taken as a whole or on the transactions contemplated hereby.

 

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Section 3.2         Authorization . TCH has all requisite power and full legal right to execute and deliver this Agreement and the Series A Warrant, the Series B Warrant and the Registration Rights Agreement (collectively, the “Ancillary Agreements”), and to perform all of its obligations hereunder and thereunder in accordance with the respective terms hereof and thereof. This Agreement and the Ancillary Agreements and the transactions contemplated hereby and thereby have been duly approved and authorized by all requisite corporate action on the part of TCH, and this Agreement has been duly executed and delivered by TCH and constitutes, and each of the Ancillary Agreements, when executed and delivered by TCH, will constitute, a legal, valid, and binding obligation of TCH, enforceable against it in accordance with its respective terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to the enforcement of creditors’ rights and remedies or by other equitable principles of general application. The execution, delivery, and performance by TCH of this Agreement and the Ancillary Agreements in accordance with their respective terms, and the consummation by TCH of the transactions contemplated hereby or thereby, will not result (with or without the giving of notice or the lapse of time or both) in any conflict, violation, breach, or default, or the creation of any Lien, or the termination, acceleration, vesting, or modification of any right or obligation, under or in respect of (x) the Certificate of Incorporation or By-laws of TCH and its Subsidiaries, (y) any judgment, decree, order, statute, rule or regulation binding on or applicable to TCH or its Subsidiaries, or (z) any agreement or instrument to which TCH or any of its Subsidiaries is a party or by which it or any of its assets is or are bound.

 

Section 3.3         No Undisclosed or Contingent Liabilities . Except as set forth in the SEC Reports, neither TCH nor its Subsidiaries has any liabilities or obligations of any nature (whether absolute, accrued, contingent or otherwise and whether due or to become due) which are not fully reflected or reserved against on the balance sheet as of June 30, 2014 in accordance with GAAP, except for liabilities and obligations incurred in the ordinary course of business and consistent with past practice since the date thereof.

 

Section 3.4         No Violation . Neither the execution and delivery of this Agreement or any of the Ancillary Agreements by TCH nor the performance by TCH of its obligations hereunder or thereunder will: (i) conflict with or result in any breach of any provision of its or its Subsidiaries’ respective Certificate of Incorporation or By-laws, (ii) result in a violation or breach of, or constitute (with or without due notice or lapse of time or both) a default or give rise to any Lien on TCH’s or its Subsidiaries’ properties or assets or any right of termination, cancellation or acceleration under any of the terms or conditions of any note, bond, mortgage, indenture, license, agreement or other instrument or obligation to which TCH or any of its Subsidiaries is a party or by which it or any of their respective material properties or assets may be bound, or require the consent of any person, (iii) violate any statute, law, rule, regulation, writ, injunction, judgment, order or decree of any court, administrative agency or governmental authority binding on TCH, it Subsidiaries or any of their respective properties or assets, or (iv) violate any provision (including those requiring the furnishing of notice prior to the taking of specific actions) of the rules of any marketplace on which the Common Stock of TCH is listed or quoted.

 

Section 3.5          Compliance with Applicable Law . TCH and each of its Subsidiaries is currently in compliance with all applicable laws (whether statutory or otherwise), rules, regulations, orders, ordinances, judgments, decrees, writs, requirements and injunctions of all governmental authorities, agencies, courts, and administrative tribunals, except for such noncompliance that, individually and in the aggregate, would not have a Material Adverse Effect.

 

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Section 3.6          Governmental Consents . Except for the filing of any forms required under the federal securities laws and any filings required under state “blue sky” laws, no consent, approval or authorization of, or declaration, filing or registration with, any governmental or regulatory authority is required to be made or obtained by TCH in connection with the execution and delivery of this Agreement or any of the Ancillary Agreements by TCH or the performance by TCH of its obligations hereunder and thereunder, or the continued conduct by TCH of its present business after the date hereof.

 

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF CAPSTONE

 

Section 4.1         Representations and Warranties . Capstone represents that (each of which representations and warranties are true as of the date hereof, as of the Initial Exercise Date and as of each Periodic Exercise Date):

 

(a)      Capstone is a corporation duly incorporated, validly existing and in good standing under the laws of Nevada. Capstone has all requisite power and authority to own, operate and lease its properties and to conduct its business as currently conducted. Capstone is duly qualified or licensed to do business and is in good standing in each jurisdiction in which its ownership or leasing of property or the conduct of its business requires such licensing or qualification.

 

(b)      It has all requisite power and full legal right to execute and deliver this Agreement and the Ancillary Agreements and to carry out its obligations hereunder and thereunder. The execution and delivery of this Agreement and the Ancillary Agreements, and the performance by it of its obligations hereunder and thereunder, have been duly approved and authorized by all requisite corporate action on the part of Capstone. This Agreement and each of the Ancillary Agreements has been duly executed and delivered by Capstone and constitute its valid and binding obligations, enforceable against it in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to the enforcement of creditors’ rights and remedies or by other equitable principles of general application. The execution, delivery, and performance by Capstone of this Agreement and the Ancillary Agreements in accordance with their respective terms, and the consummation by Capstone of the transactions contemplated hereby or thereby, will not result (with or without the giving of notice or the lapse of time or both) in any conflict, violation, breach, or default, or the creation of any Lien, or the termination, acceleration, vesting, or modification of any right or obligation, under or in respect of (x) the Certificate of Incorporation or By-laws of Capstone, (y) any judgment, decree, order, statute, rule or regulation binding on or applicable to Capstone, or (z) any agreement or instrument to which Capstone is a party or by which it or any of its assets is or are bound.

 

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(c)      Capstone will purchase any securities in connection herewith pursuant to the Warrants for its own account for investment only and not with a present view to the distribution thereof.

 

(d)      It has such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks of the investment contemplated by this Agreement and making an informed investment decision with respect thereto.

 

(e)      It has had the opportunity to ask questions and receive answers concerning the terms and conditions of the offering of securities purchased in connection herewith pursuant to the Warrants, as well as the opportunity to obtain additional information necessary to verify the accuracy of information furnished in connection with such offerings that TCH possesses or can acquire without unreasonable effort or expense.

 

(f)      There are no claims for investment banking fees, brokerage commissions, finder’s fees or similar compensation (other than professional fees to attorneys and accountants) in connection with the transactions contemplated by this Agreement or any of the Ancillary Agreements based on any arrangement or agreement made by or on behalf of Capstone.

 

(g)      It has adequate means of providing for its current financial needs and foreseeable contingencies and has no need for liquidity of the investment in the Warrants for an indefinite period of time.

 

(h)      It is aware that entering into this Agreement and investment in the Common Stock involves a number of very significant risks.

 

(i)      It is an “accredited investor” as that term is defined in Regulation D under the Securities Act.

 

ARTICLE V

DEFINITIONS

 

Section 5.1          Certain Defined Terms . For purposes of this Agreement, the following terms shall have the meanings set forth in this Section 5:

 

GAAP ” means generally accepted accounting principles in the United States that are (i) consistent with the principles promulgated or adopted by the Financial Accounting Standards Board and its predecessors, (ii) applied on a basis consistent with prior periods, and (iii) such that, insofar as the use of accounting principles is pertinent, a certified public accountant could deliver an unqualified opinion with respect to financial statements in which such principles have been properly applied.

 

Person ” or “ person ” (regardless of whether capitalized) means any natural person, entity, or association, including without limitation any corporation, partnership, limited liability company, government (or agency or subdivision thereof), trust, joint venture or proprietorship.

 

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SEC ” means the Securities and Exchange Commission.

 

Securities Act ” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

 

Subsidiary ” or “ Subsidiaries ” means, with respect to any person, any corporation a majority (by number of votes) of the outstanding shares of any class or classes of which are at the time owned by such person or by a Subsidiary of such person, if the holders of the shares of such class or classes (a) are ordinarily, in the absence of contingencies, entitled to vote for the election of a majority of the directors (or persons performing similar functions) of the issuer thereof, even though the right so to vote has been suspended by the happening of such a contingency, or (b) are at the time entitled, as such holders, to vote for the election of a majority of the directors (or persons performing similar functions) of the issuer thereof, whether or not the right so to vote exists by reason of the happening of a contingency.

 

ARTICLE VI

MISCELLANEOUS

 

Section 6.1          Waivers and Consents . For the purposes of this Agreement and all agreements executed pursuant hereto, no course of dealing between TCH and Capstone and no delay on the part of any party hereto in exercising any rights hereunder or thereunder shall operate as a waiver of the rights hereof or thereof. No provision hereof may be waived except by a written instrument signed by the party so waiving such provision.

 

Section 6.2          Amendment and Modification . This Agreement shall not be amended or modified, except by an instrument in writing signed by TCH or Capstone.

 

Section 6.3          Governing Law; Jurisdiction; Venue etc . This Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of New York, without giving effect to the principles of conflicts of law thereof. The state and federal courts of the State of New York located in New York shall have exclusive jurisdiction to hear and determine any claims or disputes between Capstone and TCH pertaining directly or indirectly to this Agreement and all documents, instruments and agreements executed pursuant hereto, or to any matter arising therefrom (unless otherwise expressly provided for therein); the exclusive choice of forum set forth in this Section 6.3 shall not be deemed to preclude the enforcement of any judgment obtained in such forum or the taking of any action to enforce the same in any other appropriate jurisdiction. All of the parties hereto waive all rights to trial by jury in any action or proceeding instituted by any party against any other party arising out of, on or by reason of this Agreement or the documents and transactions contemplated herein.

 

Section 6.4          Headings . The descriptive headings in this Agreement have been inserted for convenience only and shall not be deemed to limit or otherwise affect the construction or interpretation of any provision thereof or hereof.

 

Section 6.5          Counterparts . This Agreement may be executed simultaneously in any number of counterparts, each of which when so executed and delivered shall be taken to be an original; but such counterparts shall together constitute but one and the same document.

 

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Section 6.6          Notices and Demands . Any notice or demand which is required or provided to be given under this Agreement shall be deemed to have been sufficiently given and received for all purposes when delivered by hand on a business day, one (1) business day after being sent by nationally recognized overnight courier on any day, or five (5) business days after being sent by certified or registered mail, postage and charges prepaid, return receipt requested, to the following addresses:

 

  If to TCH:

Twinlab Consolidated Holdings, Inc.
632 Broadway, Suite 201
New York, NY 10012
Attn:      Thomas A. Tolworthy

 

Twinlab Consolidated Holdings, Inc.
632 Broadway, Suite 201
New York, NY 10012
Attention: General Counsel

 

  with a copy to (which shall not constitute
notice to TCH):

Wilk Auslander LLP
1515 Broadway
New York, New York 10036
E-mail: jfrank@wilkauslander.com
Attention: Joel I. Frank, Esq.

 

  If to Capstone:

Capstone Financial Group, Inc.
2600 Michelson Drive, Suite 700
Irvine, California 92612
Attn: Darin Pastor

 

  With a copy to (which shall not constitute notice to Capstone): Stoecklein Law Group, LLP
401 West A Street, Suite 1150
San Diego, CA 92101
Attn: Donald J. Stoecklein, Esq.

 

Section 6.7          Severability . Whenever possible, each provision of this Agreement shall be interpreted in such a manner as to be effective and valid under applicable law, but if any provision of this Agreement shall be deemed prohibited or invalid under such applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, and such prohibition or invalidity shall not invalidate the remainder of such provision or the other provisions of this Agreement, provided, however, that no such severability shall be effective if it materially changes the economic benefit of this Agreement to any party.

 

Section 6.8          Integration . This Agreement, including the Ancillary Agreements and instruments referred to herein or therein, constitutes the entire agreement, and supersedes any other prior agreements and understandings, both written and oral, among the parties with respect to the subject matter hereof.

 

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Section 6.9          Publicity . TCH and Capstone shall have the right to approve before issuance of any press releases or any other public statements is sought to be made by the other with respect to the transactions contemplated hereby, except for any disclosures required in connection with obtaining any consents to the transactions contemplated by this Agreement. Notwithstanding the foregoing, TCH shall have the right to issue any press release or other public statement in connection with the transaction contemplated hereby, excluding the identity of Capstone, without the prior consent of Capstone, but may disclose the identity of Capstone upon prior written consent of Capstone, which shall not be unreasonably withheld. TCH shall also have the right to file this Agreement and the Ancillary Agreements with the SEC under the Securities Act or the Exchange Act if required by such acts or regulations thereunder.

 

Section 6.10          Expenses . TCH and Capstone will each bear their own costs and expenses and those of their respective advisors related to the transactions herein contemplated.

 

Section 6.11          Assignment . Neither TCH nor Capstone may assign this Agreement or its rights and obligations hereunder.

 

Section 6.12          Equitable Relief . Each of the parties acknowledges that any breach by such party of its obligations under this Agreement would cause substantial and irreparable damage to the other party and that money damages would be an inadequate remedy therefor. Accordingly, each party agrees that the other party will be entitled to an injunction, specific performance and/or other equitable relief to prevent the breach of such obligations.

 

Section 6.13          Usage . All pronouns and any variations thereof refer to the masculine, feminine or neuter, singular or plural, as the context may require. All terms defined in this Agreement in their singular or plural forms have correlative meanings when used herein in their plural or singular forms, respectively.

 

Section 6.14          Facsimile or Electronic Signatures . A facsimile signature on this Agreement or an original signature delivered by facsimile or an electronic signature or an original signature delivered by electronic transmission in the form of a .pdf, .tif, .jpeg or similar attachment to electronic mail shall be considered the same as an original.

 

[Signature page follows]

 

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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed and delivered as of the day and year first above written.

 

  TWINLAB CONSOLIDATED HOLDINGS, INC.
   
  By: /s/ Thomas A. Tolworthy
    Name: Thomas A. Tolworthy
    Title: President and Chief Executive Officer
     
  CAPSTONE FINANCIAL GROUP, INC.
     
  By: /s/ Darin R. Pastor
    Name: Darin R. Pastor
    Title: Chief Executive Officer

 

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Exhibit 10.13

 

REGISTRATION RIGHTS AGREEMENT

 

This Registration Rights Agreement (this “ Agreement ”), is made and entered into as of September 30, 2014, by and between Twinlab Consolidated Holdings, Inc., a Nevada corporation (the “ Company ”), and Capstone Financial Group, Inc., a Nevada corporation (the “ Investor ”).

 

WHEREAS, the Company has issued to the Investor a (i) Series A Warrant, dated as of September 30, 2014, pursuant to which the Investor can purchase up to 52,631,579 shares (the “Series A Warrant”) of Common Stock (as defined below) of the Company and (ii) Series B Warrant, dated as of September 30, 2014, pursuant to which the Investor can purchase up to 22,368,421 shares of Common Stock of the Company; and

 

WHEREAS, in connection with the consummation of the transactions contemplated by the Series A Warrant and the Series B Warrant, and pursuant to the terms of the Series A Warrant and the Series B Warrant, the parties desire to enter into this Agreement in order to grant certain registration rights to the Investor as set forth below.

 

NOW, THEREFORE, in consideration of the foregoing and the mutual and dependent covenants hereinafter set forth, the parties agree as follows:

 

1.            Defined Terms . As used in this Agreement, the following terms shall have the following meanings:

 

Affiliate ” of a Person means any other Person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such Person. The term “control” (including the terms “controlled by” and “under common control with”) means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise.

 

Agreement ” has the meaning set forth in the preamble.

 

Board ” means the board of directors of the Company (and any successor governing body of the Company or any successor of the Company).

 

Commission ” means the Securities and Exchange Commission or any other federal agency administering the Securities Act and the Exchange Act at the time.

 

Common Stock ” means the common stock, par value $0.001 per share, of the Company and any other common equity securities issued by the Company, and any other shares of stock issued or issuable with respect thereto (whether by way of a stock dividend or stock split or in exchange for or upon conversion of such shares or otherwise in connection with a combination of shares, distribution, recapitalization, merger, consolidation or other corporate reorganization).

 

 
 

 

Common Stock Put Agreement ” means the Common Stock Put Agreement, dated as of September 30, 2014, by and between the Company and Investor.

 

Company ” has the meaning set forth in the preamble and includes the Company's successors by merger, acquisition, reorganization or otherwise.

 

Demand Registration ” has the meaning set forth in Section 2(a) .

 

Exchange Act ” means the Securities Exchange Act of 1934, as amended, or any successor federal statute, and the rules and regulations thereunder, which shall be in effect from time to time.

 

Governmental Authority ” means any federal, state, local or foreign government or political subdivision thereof, or any agency or instrumentality of such government or political subdivision, or any self-regulated organization or other non-governmental regulatory authority or quasi-governmental authority (to the extent that the rules, regulations or orders of such organization or authority have the force of law), or any arbitrator, court or tribunal of competent jurisdiction.

 

Investor ” has the meaning set forth in the preamble.

 

Person ” means an individual, corporation, partnership, joint venture, limited liability company, Governmental Authority, unincorporated organization, trust, association or other entity.

 

Prospectus ” means the prospectus or prospectuses included in any Registration Statement, as amended or supplemented by any prospectus supplement with respect to the terms of the offering of any portion of the Registrable Securities covered by such Registration Statement and by all other amendments and supplements to the prospectus, including post-effective amendments and all material incorporated by reference in such prospectus or prospectuses.

 

Registrable Securities ” means (a) any shares of Common Stock held by the Investor or issuable upon conversion, exercise or exchange of the Warrants owned by the Investor at any time, and (b) any shares of Common Stock issued or issuable with respect to any shares described in subsection (a) above by way of a stock dividend or stock split or in connection with a combination of shares, recapitalization, merger, consolidation or other reorganization (it being understood that for purposes of this Agreement, a Person shall be deemed to be a holder of Registrable Securities whenever such Person has the right to then acquire or obtain from the Company any Registrable Securities, whether or not such acquisition has actually been effected). As to any particular Registrable Securities, such securities shall cease to be Registrable Securities when (i) a Registration Statement covering such securities has been declared effective by the Commission and such securities have been disposed of pursuant to such effective Registration Statement, (ii) such securities are sold under circumstances in which all of the applicable conditions of Rule 144 (or any similar provisions then in force) under the Securities Act are met, (iii) such securities are otherwise transferred and such securities may be resold without subsequent registration under the Securities Act, or (iv) such securities shall have ceased to be outstanding.

 

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Registration Statement ” means any registration statement of the Company which covers any of the Registrable Securities pursuant to the provisions of this Agreement, including the Prospectus, amendments and supplements to such Registration Statement, including post-effective amendments, all exhibits and all materials incorporated by reference in such Registration Statement.

 

Rule 144 ” means Rule 144 promulgated under the Securities Act or any successor rule thereto or any complementary rule thereto (such as Rule 144A).

 

Securities Act ” means the Securities Act of 1933, as amended, or any successor federal statute, and the rules and regulations thereunder, which shall be in effect from time to time.

 

Selling Expenses ” means all underwriting discounts, selling commissions and stock transfer taxes applicable to the sale of Registrable Securities, and fees and disbursements of counsel for any holder of Registrable Securities.

 

Series A Warrant” has the meaning set forth in the recitals.

 

Series B Warrant” has the meaning set forth in the recitals.

 

“Warrants” means the Series Warrant and the Series B Warrant.

 

2.            Demand Registration .

 

(a)          The Company shall use its best efforts to qualify and remain qualified to register securities under the Securities Act pursuant to a Registration Statement on Form S-3 or any successor form thereto. At such time as the Company shall have qualified for the use of a Registration Statement on Form S-3, the holder of Registrable Securities shall have the right to request an initial registration and thereafter on a quarterly basis after the first Demand Registration shall have been declared effective by the Commission registrations of its Registrable Securities on Form S-3 or any similar short-form registration (each a “ Demand Registration ”). Each request for a Demand Registration shall specify the approximate number of Registrable Securities requested to be registered. The Company shall cause a Registration Statement on Form S-3 (or any successor form) to be filed within ten (10) days after the date on which the initial request is given and shall use its reasonable best efforts to cause such Registration Statement to be declared effective by the Commission as soon as practicable thereafter.

 

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(b)          The Company may postpone for up to ninety (90) days the filing or effectiveness of a Registration Statement for a Demand Registration if the Company's Board determines in its reasonable good faith judgment that such Demand Registration would (i) materially interfere with a significant acquisition, corporate organization or other similar transaction involving the Company; (ii) require premature disclosure of material information that the Company has a bona fide business purpose for preserving as confidential; or (iii) render the Company unable to comply with requirements under the Securities Act or Exchange Act.

 

(c)          If the holder of the Registrable Securities requesting a Demand Registration elects to distribute the Registrable Securities covered by its request in an underwritten offering, it shall so advise the Company as a part of their request made pursuant to Section 2(a) . The holder of the Registrable Securities requesting the Demand Registration shall select the investment banking firm or firms to act as the managing underwriter or underwriters in connection with such offering; provided , that such selection shall be subject to the consent of the Company, which consent shall not be unreasonably withheld or delayed.

 

(d)          The Company shall not grant registration rights to any other holder of the Company’s securities for a period of twelve (12) months from the date of this Agreement. Nothing contained in this Agreement shall prevent the Company from filing a registration statement solely for the Company’s account including without limitation, a registration statement relating to any employee benefit plan filed on Form S-8 or similar form or, with respect to any corporate reorganization or other transaction under Rule 145 of the Securities Act, a registration statement on Form S-4 or similar form, or any registration statement relating to the registration of securities issued to raise financing for the Company.

 

3.            Lock-up Agreement . Each holder of Registrable Securities agrees that in connection with any public offering of the Company's Common Stock or other equity securities, and upon the request of the managing underwriter in such offering, such holder shall not, without the prior written consent of such managing underwriter, during the thirty (30) days prior to the effective date of such registration and ending on the date specified by such managing underwriter (such period not to exceed ninety (90) days in the case of any registration) (a) offer, pledge, sell, contract to sell, grant any option or contract to purchase, purchase any option or contract to sell, hedge the beneficial ownership of or otherwise dispose of, directly or indirectly, any shares of Common Stock or any securities convertible into, exercisable for or exchangeable for shares of Common Stock (whether such shares or any such securities are then owned by the Holder or are thereafter acquired), or (b) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of such securities, whether any such transaction described in clause (a) or (b) above is to be settled by delivery of Common Stock or such other securities, in cash or otherwise. The foregoing provisions of this Section 3 shall not apply to sales of Registrable Securities to be included in such offering pursuant to Section 2(a) and shall be applicable to the holder of Registrable Securities only if all officers and directors of the Company and all stockholders owning more than ten (10%) percent of the Company's outstanding Common Stock are subject to the same restrictions. Each holder of Registrable Securities agrees to execute and deliver such other agreements as may be reasonably requested by the Company or the managing underwriter which are consistent with the foregoing or which are necessary to give further effect thereto. Notwithstanding anything to the contrary contained in this Section 3 , each holder of Registrable Securities shall be released, pro rata, from any lock-up agreement entered into pursuant to this Section 3 in the event and to the extent that the managing underwriter or the Company permit any discretionary waiver or termination of the restrictions of any lock-up agreement pertaining to any officer, director or holder of greater than ten (10%) percent of the outstanding Common Stock.

 

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4.            Registration Procedures . If and whenever the holders of Registrable Securities request that any Registrable Securities be registered pursuant to the provisions of this Agreement, the Company shall use its reasonable best efforts to effect the registration and the sale of such Registrable Securities in accordance with the intended method of disposition thereof, and pursuant thereto the Company shall as soon as reasonably practicable:

 

(a)          subject to Section 2(a) prepare and file with the a Statement with respect to such Registrable Securities and use its reasonable best efforts to cause such Registration Statement to become effective;

 

(b)          prepare and file with the Commission such amendments, post-effective amendments and supplements to such Registration Statement and the Prospectus used in connection therewith as may be necessary to keep such Registration Statement effective for a period of not less than ninety (90) days, or if earlier, until all of such Registrable Securities have been disposed of and to comply with the provisions of the Securities Act with respect to the disposition of such Registrable Securities in accordance with the intended methods of disposition set forth in such Registration Statement;

 

(c)          within a reasonable time before filing such Registration Statement, Prospectus or amendments or supplements thereto, furnish to counsel selected by the holder of such Registrable Securities copies of such documents proposed to be filed, which documents shall be subject to the review, comment and approval of such counsel;

 

(d)          notify the selling holder of Registrable Securities, promptly after the Company receives notice thereof, of the time when such Registration Statement has been declared effective or a supplement to any Prospectus forming a part of such Registration Statement has been filed;

 

(e)          furnish to the selling holder of Registrable Securities such number of copies of the Prospectus included in such Registration Statement (including each preliminary Prospectus) and any supplement thereto (in each case including all exhibits and documents incorporated by reference therein) and such other documents as such seller may reasonably request in order to facilitate the disposition of the Registrable Securities owned by such seller; provided , that the Company shall have no such obligation to deliver the Prospectus or Prospectuses that are available on the Commission’s EDGAR system.

 

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(f)          use its reasonable best efforts to register or qualify such Registrable Securities under such other securities or “blue sky” laws of such jurisdictions as the selling holder reasonably requests and do any and all other acts and things which may be reasonably necessary or advisable to enable such holders to consummate the disposition in such jurisdictions of the Registrable Securities owned by such holder; provided , that the Company shall not be required to qualify generally to do business, subject itself to general taxation or consent to general service of process in any jurisdiction where it would not otherwise be required to do so but for this Section 4(f) ;

 

(g)          notify the selling holder of such Registrable Securities, at any time when a Prospectus relating thereto is required to be delivered under the Securities Act, of the happening of any event as a result of which the Prospectus included in such Registration Statement contains an untrue statement of a material fact or omits any fact necessary to make the statements therein not misleading, and, at the request of such holder, the Company shall prepare a supplement or amendment to such Prospectus so that, as thereafter delivered to the purchasers of such Registrable Securities, such Prospectus shall not contain an untrue statement of a material fact or omit to state any fact necessary to make the statements therein not misleading;

 

(h)          make available for inspection by the selling holder of Registrable Securities, any underwriter participating in any disposition pursuant to such Registration Statement and any attorney, accountant or other agent retained by such holder or underwriter (collectively, the “ Inspectors ”), all financial and other records, pertinent corporate documents and properties of the Company (collectively, the “ Records ”), and cause the Company's officers, directors and employees to supply all information reasonably requested by any such Inspector in connection with such Registration Statement;

 

(i)          provide a transfer agent and registrar (which may be the same entity) for all such Registrable Securities not later than the effective date of such registration;

 

(j)          use its reasonable best efforts to cause such Registrable Securities to be listed on each securities exchange on which the Common Stock is then listed;

 

(k)          in connection with an underwritten offering, enter into such customary agreements (including underwriting and lock-up agreements in customary form) and take all such other customary actions as the holders of such Registrable Securities or the managing underwriter of such offering reasonably request in order to expedite or facilitate the disposition of such Registrable Securities (including, without limitation, making appropriate officers of the Company available to participate in “road show” and other customary marketing activities (including one-on-one meetings with prospective purchasers of the Registrable Securities);

 

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(l)          otherwise use its reasonable best efforts to comply with all applicable rules and regulations of the Commission and make available to its stockholders an earnings statement (in a form that satisfies the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder) no later than thirty (30) days after the end of the 12-month period beginning with the first day of the Company's first full fiscal quarter after the effective date of such Registration Statement, which earnings statement shall cover said 12-month period, and which requirement will be deemed to be satisfied if the Company timely files complete and accurate information on Forms 10-Q, 10-K and 8-K under the Exchange Act and otherwise complies with Rule 158 under the Securities Act; and

 

(m)         furnish to the selling holder of Registrable Securities and each underwriter, if any, with (i) a legal opinion of the Company's outside counsel, dated the effective date of such Registration Statement (and, if such registration includes an underwritten public offering, dated the date of the closing under the underwriting agreement), in form and substance as is customarily given in opinions of the Company's counsel to underwriters in underwritten public offerings; and (ii) a “comfort” letter signed by the Company's independent certified public accountants in form and substance as is customarily given in accountants' letters to underwriters in underwritten public offerings;

 

(n)          without limiting Section 4(f) above, use its reasonable best efforts to cause such Registrable Securities to be registered with or approved by such other governmental agencies or authorities as may be necessary by virtue of the business and operations of the Company to enable the holder of such Registrable Securities to consummate the disposition of such Registrable Securities in accordance with its intended method of distribution thereof;

 

(o)          notify the holder of Registrable Securities promptly of any request by the Commission for the amending or supplementing of such Registration Statement or Prospectus or for additional information;

 

(p)          advise the holder of Registrable Securities, promptly after it shall receive notice or obtain knowledge thereof, of the issuance of any stop order by the Commission suspending the effectiveness of such Registration Statement or the initiation or threatening of any proceeding for such purpose and promptly use its reasonable best efforts to prevent the issuance of any stop order or to obtain its withdrawal at the earliest possible moment if such stop order should be issued;

 

(q)          permit any holder of Registrable Securities which holder, in its sole and exclusive judgment, might be deemed to be an underwriter or a controlling person of the Company, to participate in the preparation of such Registration Statement and to require the insertion therein of language, furnished to the Company in writing, which in the reasonable judgment of such holder and its counsel should be included; and

 

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(r)          otherwise use its reasonable best efforts to take all other steps necessary to effect the registration of such Registrable Securities contemplated hereby.

 

5.            Expenses . All expenses (other than Selling Expenses) incurred by the Company in complying with its obligations pursuant to this Agreement and in connection with the registration and disposition of Registrable Securities, including, without limitation, all registration and filing fees, underwriting expenses (other than fees, commissions or discounts), expenses of any audits incident to or required by any such registration, fees and expenses of complying with securities and “blue sky” laws, printing expenses and fees and expenses of the Company’s counsel and accountants shall be borne by the Company. All Selling Expenses relating to Registrable Securities registered pursuant to this Agreement shall be borne and paid by the holder of such Registrable Securities.

 

6.            Indemnification .

 

(a)          The Company shall indemnify and hold harmless, to the fullest extent permitted by law, the holder of Registrable Securities, such holder's officers, directors, managers, members, partners, stockholders and Affiliates, each underwriter, broker or any other Person acting on behalf of such holder of Registrable Securities and each other Person, if any, who controls any of the foregoing Persons within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act, against all losses, claims, actions, damages, liabilities and expenses, joint or several, to which any of the foregoing Persons may become subject under the Securities Act or otherwise, insofar as such losses, claims, actions, damages, liabilities or expenses arise out of or are based upon any untrue or alleged untrue statement of a material fact contained in any Registration Statement, Prospectus, preliminary Prospectus, free writing prospectus (as defined in Rule 405 promulgated under the Securities Act) or any amendment thereof or supplement thereto or any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading, or any violation or alleged violation by the Company of the Securities Act or any other similar federal or state securities laws or any rule or regulation promulgated thereunder applicable to the Company and relating to action or inaction required of the Company in connection with any such registration, qualification or compliance; and shall reimburse such Persons for any legal or other expenses reasonably incurred by any of them in connection with investigating or defending any such loss, claim, action, damage or liability, except insofar as the same are caused by or contained in any information furnished in writing to the Company by such holder expressly for use therein or by such holder's failure to deliver a copy of the Registration Statement, Prospectus, free-writing prospectus (as defined in Rule 405 promulgated under the Securities Act) or any amendments or supplements thereto (if the same was required by applicable law to be so delivered) after the Company has furnished such holder with a sufficient number of copies of the same prior to any written confirmation of the sale of Registrable Securities.

 

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(b)          In connection with any registration in which a holder of Registrable Securities is participating, such holder shall furnish to the Company in writing such information and affidavits as the Company reasonably requests for use in connection with any such Registration Statement or Prospectus and, to the extent permitted by law, shall indemnify and hold harmless, the Company, each director of the Company, each officer of the Company who shall sign such Registration Statement, each underwriter, broker or other Person acting on behalf of the holders of Registrable Securities and each Person who controls any of the foregoing Persons within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act against any losses, claims, actions, damages, liabilities or expenses resulting from any untrue or alleged untrue statement of material fact contained in the Registration Statement, Prospectus, preliminary Prospectus, free writing prospectus (as defined in Rule 405 promulgated under the Securities Act) or any amendment thereof or supplement thereto or any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading, but only to the extent that such untrue statement or omission is contained in any information or affidavit so furnished in writing by such holder; provided , that the obligation to indemnify shall be limited to the net proceeds (after underwriting fees, commissions or discounts) actually received by such holder from the sale of Registrable Securities pursuant to such Registration Statement.

 

(c)          Promptly after receipt by an indemnified party of notice of the commencement of any action involving a claim referred to in this Section 6 , such indemnified party shall, if a claim in respect thereof is made against an indemnifying party, give written notice to the latter of the commencement of such action. The failure of any indemnified party to notify an indemnifying party of any such action shall not (unless such failure shall have a material adverse effect on the indemnifying party) relieve the indemnifying party from any liability in respect of such action that it may have to such indemnified party hereunder. In case any such action is brought against an indemnified party, the indemnifying party shall be entitled to participate in and to assume the defense of the claims in any such action that are subject or potentially subject to indemnification hereunder, jointly with any other indemnifying party similarly notified to the extent that it may wish, with counsel reasonably satisfactory to such indemnified party, and after written notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, the indemnifying party shall not be responsible for any legal or other expenses subsequently incurred by the indemnified party in connection with the defense thereof; provided , that if (i) any indemnified party shall have reasonably concluded that there may be one or more legal or equitable defenses available to such indemnified party which are additional to or conflict with those available to the indemnifying party, or that such claim or litigation involves or could have an effect upon matters beyond the scope of the indemnity provided hereunder, or (ii) such action seeks an injunction or equitable relief against any indemnified party or involves actual or alleged criminal activity, the indemnifying party shall not have the right to assume the defense of such action on behalf of such indemnified party without such indemnified party's prior written consent (but, without such consent, shall have the right to participate therein with counsel of its choice) and such indemnifying party shall reimburse such indemnified party and any Person controlling such indemnified party for that portion of the fees and expenses of any counsel retained by the indemnified party which is reasonably related to the matters covered by the indemnity provided hereunder. If the indemnifying party is not entitled to, or elects not to, assume the defense of a claim, it shall not be obligated to pay the fees and expenses of more than one counsel for all parties indemnified by such indemnifying party with respect to such claim, unless in the reasonable judgment of any indemnified party a conflict of interest may exist between such indemnified party and any other of such indemnified parties with respect to such claim. In such instance, the conflicting indemnified parties shall have a right to retain one separate counsel, chosen by the holder of the Registrable Securities included in the registration, at the expense of the indemnifying party.

 

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(d)          If the indemnification provided for hereunder is held by a court of competent jurisdiction to be unavailable to an indemnified party with respect to any loss, claim, damage, liability or action referred to herein, then the indemnifying party, in lieu of indemnifying such indemnified party hereunder, shall contribute to the amounts paid or payable by such indemnified party as a result of such loss, claim, damage, liability or action in such proportion as is appropriate to reflect the relative fault of the indemnifying party on the one hand and of the indemnified party on the other in connection with the statements or omissions which resulted in such loss, claim, damage, liability or action as well as any other relevant equitable considerations; provided , that the maximum amount of liability in respect of such contribution shall be limited, in the case of the holder of Registrable Securities, to an amount equal to the net proceeds (after underwriting fees, commissions or discounts) actually received by such seller from the sale of Registrable Securities effected pursuant to such registration. The relative fault of the indemnifying party and of the indemnified party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the indemnifying party or by the indemnified party and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The parties agree that it would not be just and equitable if contribution pursuant hereto were determined by pro rata allocation or by any other method or allocation which does not take account of the equitable considerations referred to herein. No Person guilty or liable of fraudulent misrepresentation shall be entitled to contribution from any Person.

 

7.            Participation in Underwritten Registrations . No Person may participate in any registration hereunder which is underwritten unless such Person (a) agrees to sell such Person's securities on the basis provided in any underwriting arrangements approved by the Person or Persons entitled hereunder to approve such arrangements and (b) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents required under the terms of such underwriting arrangements.

 

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8.            Rule 144 Compliance . With a view to making available to the holder of Registrable Securities the benefits of Rule 144 under the Securities Act and any other rule or regulation of the Commission that may at any time permit a holder to sell securities of the Company to the public without registration or pursuant to a registration on Form S-3 (or any successor form), the Company shall:

 

(a)          make and keep public information available, as those terms are understood and defined in Rule 144 under the Securities Act, at all times after the Registration Date;

 

(b)          use reasonable best efforts to file with the Commission in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act, at any time after the Company has become subject to such reporting requirements; and

 

(c)          furnish to the holder so long as the holder owns Registrable Securities, promptly upon request, a written statement by the Company as to its compliance with the reporting requirements of Rule 144 under the Securities Act and of the Securities Act and the Exchange Act, a copy of the most recent annual or quarterly report of the Company, and such other reports and documents so filed or furnished by the Company as such holder may reasonably request in connection with the sale of Registrable Securities without registration.

 

9.            Preservation of Rights . The Company shall not enter into any agreement, take any action, or permit any change to occur, with respect to its securities that violates or subordinates the rights expressly granted to the holders of Registrable Securities in this Agreement.

 

10.          Termination . This Agreement shall terminate and be of no further force or effect when there shall no longer be any Registrable Securities outstanding; provided , that the provisions of Section 5 and Section 6 shall survive any such termination.

 

11.           Notices . All notices, requests, consents, claims, demands, waivers and other communications hereunder shall be in writing and shall be deemed to have been given (a) when delivered by hand (with written confirmation of receipt); (b) when received by the addressee if sent by a nationally recognized overnight courier (receipt requested); (c) on the date sent by e-mail of a PDF document (with confirmation of transmission) if sent during normal business hours of the recipient, and on the next Business Day if sent after normal business hours of the recipient or (d) on the fifth day after the date mailed, by certified or registered mail, return receipt requested, postage prepaid. Such communications must be sent to the respective parties at the addresses indicated below (or at such other address for a party as shall be specified in a notice given in accordance with this Section 11 ).

 

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If to the Company:   Twinlab Consolidated Holdings, Inc.
632 Broadway, Suite 201
New York, NY 10012
E-mail: RNeuwirth@twinlab.com
Attention: General Counsel 
     
with a copy to (which shall not constitute notice to the Company):   Wilk Auslander LLP
1515 Broadway
New York, NY 10036
E-mail: jfrank@wilkauslander.com
Attention: Joel I. Frank, Esq.
     
If to the Registered Owner:   Capstone Financial Group, Inc.
2600 Michelson Drive, Suite 700
Irvine, CA 92612
E-mail: dpastor@capstonefg.com
Attention: Darin R. Pastor
     
with a copy to (which shall not constitute notice to the Registered Owner):   Stoecklein Law Group, LLP
401 West A Street, Suite 1150
San Diego, CA 92101
E-mail: djs@slgseclaw.com
Attention: Donald J. Stoecklein, Esq.

 

12.          Entire Agreement . This Agreement, together with the Warrants, the Common Stock Put Agreement and any related exhibits and schedules thereto, constitutes the sole and entire agreement of the parties to this Agreement with respect to the subject matter contained herein, and supersedes all prior and contemporaneous understandings and agreements, both written and oral, with respect to such subject matter. Notwithstanding the foregoing, in the event of any conflict between the terms and provisions of this Agreement and those of the Warrants, the terms and conditions of this Agreement shall control.

 

13.          Successor and Assigns . This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and permitted assigns. Investor may assign its rights hereunder to any purchaser or transferee of Registrable Securities; provided , that such purchaser or transferee shall, as a condition to the effectiveness of such assignment, be required to execute a counterpart to this Agreement agreeing to be treated as an Investor whereupon such purchaser or transferee shall have the benefits of, and shall be subject to the restrictions contained in, this Agreement as if such purchaser or transferee was originally included in the definition of an Investor herein and had originally been a party hereto.

 

14.          No Third-Party Beneficiaries . This Agreement is for the sole benefit of the parties hereto and their respective successors and permitted assigns and nothing herein, express or implied, is intended to or shall confer upon any other Person any legal or equitable right, benefit or remedy of any nature whatsoever, under or by reason of this Agreement.

 

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15.          Headings . The headings in this Agreement are for reference only and shall not affect the interpretation of this Agreement.

 

16.          Amendment, Modification and Waiver . The provisions of this Agreement may only be amended, modified, supplemented or waived with the prior written consent of the Company and the holder of the Registrable Securities. No waiver by any party or parties shall operate or be construed as a waiver in respect of any failure, breach or default not expressly identified by such written waiver, whether of a similar or different character, and whether occurring before or after that waiver. Except as otherwise set forth in this Agreement, no failure to exercise, or delay in exercising, any right, remedy, power or privilege arising from this Agreement shall operate or be construed as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege.

 

17.          Severability . If any term or provision of this Agreement is invalid, illegal or unenforceable in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other term or provision of this Agreement or invalidate or render unenforceable such term or provision in any other jurisdiction. Upon such determination that any term or other provision is invalid, illegal or unenforceable, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the greatest extent possible.

 

18.          Remedies . The holder of Registrable Securities, in addition to being entitled to exercise all rights granted by law, including recovery of damages, shall be entitled to specific performance of its rights under this Agreement. The Company acknowledges that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Agreement and the Company hereby agrees to waive the defense in any action for specific performance that a remedy at law would be adequate.

 

19.          Governing Law; Submission to Jurisdiction . This Agreement shall be governed by and construed in accordance with the internal laws of the State of Nevada without giving effect to any choice or conflict of law provision or rule (whether of the State of Nevada or any other jurisdiction). Any legal suit, action or proceeding arising out of or based upon this Agreement or the transactions contemplated hereby may be instituted in the federal courts of the United States or the courts of the State of New York in each case located in the city of New York and County of New York, and each party irrevocably submits to the exclusive jurisdiction of such courts in any such suit, action or proceeding. Service of process, summons, notice or other document by mail to such party's address set forth herein shall be effective service of process for any suit, action or other proceeding brought in any such court. The parties irrevocably and unconditionally waive any objection to the laying of venue of any suit, action or any proceeding in such courts and irrevocably waive and agree not to plead or claim in any such court that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum.

 

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20.          Waiver of Jury Trial . Each party acknowledges and agrees that any controversy which may arise under this Agreement is likely to involve complicated and difficult issues and, therefore, each such party irrevocably and unconditionally waives any right it may have to a trial by jury in respect of any legal action arising out of or relating to this Agreement or the transactions contemplated hereby. Each party to this Agreement certifies and acknowledges that (a) no representative of any other party has represented, expressly or otherwise, that such other party would not seek to enforce the foregoing waiver in the event of a legal action, (b) such party has considered the implications of this waiver, (c) such party makes this waiver voluntarily, and (d) such party has been induced to enter into this Agreement by, among other things, the mutual waivers and certifications in this Section 20 .

 

21.          Counterparts . This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall be deemed to be one and the same agreement. A signed copy of this Agreement delivered by facsimile, e-mail or other means of electronic transmission shall be deemed to have the same legal effect as delivery of an original signed copy of this Agreement.

 

[SIGNATURE PAGE FOLLOWS]

 

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IN WITNESS WHEREOF, the parties hereto have executed this Registration Rights Agreement as of the date first written above.

 

 

TWINLAB CONSOLIDATED HOLDINGS, INC.

   
  By: /s/ Thomas A. Tolworthy
  Name: Thomas A. Tolworthy
  Title: President and Chief Executive Officer
   
  CAPSTONE FINANCIAL GROUP, INC.
   
  By: /s/ Darin R. Pastor
  Name: Darin R. Pastor
  Title: Chief Executive Officer

 

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