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): July 7, 2015 (June 30, 2015)

 

TWINLAB CONSOLIDATED HOLDINGS, INC.

 

(Exact name of registrant as specified in its charter)

 

Nevada   000-55181   46-3951742
(State or other jurisdiction of incorporation)   (Commission File Number)   (IRS Employer 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. 

 

Midcap Funding X Trust

 

As previously reported by Twinlab Consolidated Holdings, Inc. (the “Company”) in the Company’s (i) Current Report on Form 8-K filed with the Securities and Exchange Commission (the “SEC”) on January 28, 2015, (ii) Current Report on Form 8-K filed with the SEC on February 9, 2015, and (iii) Current Report on Form 8-K filed with the SEC on May 6, 2015, the Company and its direct and indirect wholly owned subsidiaries, Twinlab Consolidation Corporation (“TCC”), Twinlab Holdings, Inc. (“THI”), Twinlab Corporation (“Twinlab”), ISI Brands Inc. (“ISI”), NutraScience Labs, Inc. (f/k/a TCC CM Subco I, Inc.) (“NSL”) and NutraScience Labs IP Corporation (f/k/a TCC CM Subco II, Inc.) (“NSLIP” and with the Company, TCC, THI, Twinlab, ISI and NSL collectively, the “Twinlab Companies”), entered into a Credit and Security Agreement, dated January 22, 2015, with MidCap Financial Trust (“MidCap Trust”), with respect to which Credit and Security Agreement and all related agreements MidCap Trust immediately thereafter assigned all of its rights and interests to MidCap Funding X Trust (“MidCap”), an affiliate of MidCap Trust (as so assigned and subsequently amended by that certain Amendment No. 1 to Credit and Security Agreement and Limited Consent, dated as of February 4, 2015, that certain Amendment No. 2 to Credit Agreement and Limited Consent dated as of April 7, 2015, and that certain Amendment No. 3 to Credit and Security Agreement and Limited Consent dated as of April 30, 2015, the “Credit Agreement”). As previously reported in the Company’s Report on Form 10-Q filed with the SEC on May 14, 2015, the Company’s adjusted EBITDA (as defined in the Credit Agreement) as of March 31, 2015 was not in compliance with the Minimum Adjusted EBITDA (as defined in the Credit Agreement) covenants in the Credit Agreement.

 

On June 30, 2015, the Twinlab Companies and MidCap entered into an Amendment No. 4 to Credit and Security Agreement and Limited Waiver (the “MidCap Fourth Amendment”). Pursuant to the MidCap Fourth Amendment, MidCap provided a limited waiver of the Company’s failure to comply with the Minimum Adjusted EBITDA covenant as of March 31, 2015, and the Credit Agreement was amended such that Minimum Adjusted EBITDA covenants previously in place for the periods ending June 30, September 30 and December 31, 2015 were replaced with a new Minimum Adjusted EBITDA covenant of negative $700,000 for each of the months of July and August 2015. The Company was charged a modification fee of $100,000 fee for the MidCap Fourth Amendment.

 

On June 30, 2015, the Twinlab Companies and MidCap Funding entered into an Amendment No. 5 to Credit and Security Agreement and Limited Consent (the “MidCap Fifth Amendment”). Pursuant to the MidCap Fifth Amendment, MidCap provided its limited consent to Twinlab’s entry into the First Essex Lease and the Second Essex Lease (as such terms are defined and described in Item 2.01 below), which consent included MidCap’s agreement to release its liens on the equipment subject to such Leases, and the Credit Agreement was amended to reflect within its definitions and applicable covenants these Leases as well as the Amended Note (as defined below) with Nutricap Labs, LLC (“Nutricap”). No fee was associated with the Fifth MidCap Amendment.

 

The foregoing descriptions of the MidCap Fourth Amendment and the MidCap Fifth Amendment are qualified in its entirety by reference to the full text of such documents, which documents are exhibits to this Report.

 

2
 

  

Penta Mezzanine SBIC Fund I, L.P.

 

On June 30, 2015, the Company and Penta Mezzanine SBIC Fund I, L.P., a Delaware limited partnership (“Penta”), entered into a Stock Purchase Agreement (the “Penta SPA”). Pursuant to the Penta SPA, the Company sold 807,018 shares of the Company’s common stock, par value $0.001 per share (“Common Stock”), at $0.76 per share or an aggregate price of $613,333.00. Penta delivered to the Company the purchase price for the shares in the form of Penta’s irrevocable agreement to accept the shares issued by the Company pursuant to the Penta SPA in lieu of $613,333.00 worth of periodic payments otherwise due Penta under that certain Initial Note, dated November 13, 2014, as amended, and that certain Deferred Draw Note, dated February 1, 2015, each by and between Penta on the one hand and the Company and its subsidiaries on the other hand (the Initial Note and the Deferred Draw Note collectively, the “Penta Notes”). The purchase price for the 807,018 shares of Common Stock sold to Penta equals six (6) months of interest payments due Penta under the Penta Notes for the period beginning on May 1, 2015 and ending on October 31, 2015.

 

The Penta SPA also provided for the issuance to Penta of a warrant to purchase shares of Common Stock (the “Penta Warrant”). Pursuant to the Penta Warrant, Penta has the right to acquire an aggregate 807,018 shares of Common Stock at a price of $0.01 per share at any time prior to the close of business on June 30, 2020. In addition to adjustments on terms and conditions customary for a transaction of this nature in the event of (i) reorganization, recapitalization, stock split-up, combination of shares, mergers, consolidations and (ii) sale of all or substantially all of the Company’s assets or property, the number of shares of Common Stock issuable pursuant to the Penta Warrant shall be adjusted as follows: In the event that 50% of the Fair Market Value (as defined in the Penta Warrant) of the Common Stock (i) in a private placement by the Company completed prior to December 18, 2018 (but excluding certain specified placements), (ii) as of December 31, 2018, or (iii) on the date of any partial or whole exercise of the Penta Warrant prior to December 31, 2018, is less than $0.385 per share, then in each case the existing Current Holder’s Equity Interest (as defined in the Penta Warrant) applicable to the Penta Warrant at such time (or in the case of a partial exercise, then with respect to the number of shares so exercised) shall increase (but not decrease) to a new Current Holder’s Equity Interest pursuant to the following formula: New Holder’s Equity Interest = [(2 x Existing Current Holder’s Equity Interest) x ($0.385 ÷ 50% of FMV)] – Existing Current Holder’s Equity Interest.

 

The Company granted Penta certain registration rights, commencing October 1, 2015, for the shares of Common Stock issuable upon exercise of the Penta Warrant.

 

The foregoing descriptions of the (i) Penta SPA and (ii) Penta Warrant are qualified in their entirety by reference to the full text of such documents, which documents are exhibits to this Report. The foregoing description of the Penta Notes is qualified in its entirety by reference to the full text of such documents, which documents were filed as exhibits to and/or described in the Company’s Current Reports on Form 8-K listed in the following paragraph.

 

As previously reported in the Company’s (i) Current Report on Form 8-K filed with the SEC on November 18, 2014, (ii) Current Report on Form 8-K filed with the SEC on January 28, 2015, (iii) Current Report on Form 8-K filed with the SEC on February 9, 2015, and (iv) Current Report on Form 8-K filed with the SEC on May 6, 2015, the Twinlab Companies entered into a Note and Warrant Purchase Agreement, dated as of November 13, 2014, as amended by the First Amendment to Note and Warrant Purchase Agreement, Consent and Joinder dated as of January 22, 2015, as further amended by the Second Amendment to Note and Warrant Purchase Agreement and Consent dated as of February 4, 2015, and as further amended by the Third Amendment to Note and Warrant Purchase Agreement and Consent dated as of April 30, 2015 (as so amended, the “Penta NWPA”), with Penta.

 

3
 

On June 30, 2015, the Twinlab Companies and Penta entered into a Fourth Amendment to Note and Warrant Agreement, Limited Consent and Limited Waiver (the “Fourth Penta Amendment”). Pursuant to the Fourth Penta Amendment, (i) Penta provided a limited consent to the conversion of interest payments under the Penta Notes into Common Stock and the Penta Warrant pursuant to the Penta SPA; (ii) Penta provided a limited consent to the First Essex Lease and the Second Essex Lease, which consent included Penta’s agreement to release its liens on the equipment subject to such leases, (iii) Penta provided a limited waiver of the Company’s failure to comply with the Minimum Adjusted EBITDA (as defined in the Penta NWPA) covenant of the Penta NWPA as of March 31, 2015 and (iv) the Penta NWPA was amended to reflect the same changes to the Minimum Adjusted EBITDA covenants as were agreed upon in the MidCap Fourth Amendment and also to incorporate into its definitions and applicable covenants the First Essex Lease, the Second Essex Lease and the Amended Note.

 

The foregoing description of the Fourth Penta Amendment is qualified in its entirety by reference to the full text of such document, which document is an exhibit to this Report.

 

JL-BBNC Mezz Utah, LLC

 

On June 30, 2015 the Company and JL-BBNC Mezz Utah, LLC, an Alaska limited liability company (“JL”), entered into a Stock Purchase Agreement (the “JL SPA”). Pursuant to the JL SPA, the Company sold 403,509 shares of Common Stock at $0.76 per share or an aggregate price of $306,667.00. JL delivered to the Company the purchase price for the shares in the form of JL’s irrevocable agreement to accept the shares issued by the Company pursuant to the JL SPA in lieu of $306,667.00 worth of periodic payments otherwise due JL under that certain Note, dated January 22, 2015, as amended, by JL on the one hand and the Company and its subsidiaries on the other hand (the “JL Note”). The purchase price for the shares sold to JL equals six (6) months of interest payments due JL under the JL Note for the period beginning on May 1, 2015 and ending on October 31, 2015.

 

The JL SPA also provided for the issuance to JL of a warrant to purchase shares of Common Stock (the “JL Warrant”). Pursuant to the JL Warrant, JL has the right to acquire an aggregate 403,509 shares of Common Stock at a price of $0.01 per share at any time prior to the close of business on June 30, 2020. In addition to adjustments on terms and conditions customary for a transaction of this nature in the event of (i) reorganization, recapitalization, stock split-up, combination of shares, mergers, consolidations and (ii) sale of all or substantially all of the Company’s assets or property, the number of shares of Common Stock issuable pursuant to the JL Warrant shall be adjusted as follows: In the event that 50% of the Fair Market Value (as defined in the JL Warrant) of the Common Stock (i) in a private placement by the Company completed prior to December 18, 2018 (but excluding certain specified placements), (ii) as of December 31, 2018, or (iii) on the date of any partial or whole exercise of the JL Warrant prior to December 31, 2018, is less than $0.385 per share, then in each case the existing Current Holder’s Equity Interest (as defined in the JL Warrant) applicable to the JL Warrant at such time (or in the case of a partial exercise, then with respect to the number of shares so exercised) shall increase (but not decrease) to a new Current Holder’s Equity Interest pursuant to the following formula: New Holder’s Equity Interest = [(2 x Existing Current Holder’s Equity Interest) x ($0.385 ÷ 50% of FMV)] – Existing Current Holder’s Equity Interest.

 

The Company granted JL certain registration rights, commencing October 1, 2015, for the shares of Common Stock issuable upon exercise of the JL Warrant.

 

The foregoing descriptions of the (i) JL SPA and (ii) JL Warrant are qualified in their entirety by reference to the full text of such documents, which documents are exhibits to this Report. The foregoing description of the JL Note is qualified in its entirety by reference to the full text of such document, which document was filed as an exhibit to and/or described in the Company’s Current Reports on Form 8-K listed in the following paragraph.

 

4
 

As previously reported in the Company’s (i) Current Report on Form 8-K filed with the SEC on January 28, 2015, (ii) Current Report on Form 8-K filed with the SEC on February 9, 2015, and (iii) Current Report on Form 8-K filed with the SEC on May 6, 2015, the Twinlab Companies entered into a Note and Warrant Purchase Agreement, dated as of January 22, 2015, as amended by the First Amendment to Note and Warrant Purchase Agreement and Consent dated as of February 4, 2015 and as further amended by the Second Amendment to Note and Warrant Purchase Agreement and Consent dated as of April 30, 2015 (as so amended, the “JL NWPA”), with JL.

 

On June 30, 2015, the Twinlab Companies and JL entered into a Third Amendment to Note and Warrant Agreement, Limited Consent and Limited Waiver (the “Third JL Amendment”). Pursuant to the Third JL Amendment, (i) JL provided a limited consent to the conversion of interest payments under the JL Note into Common Stock and the JL Warrant pursuant to the JL SPA; (ii) JL provided a limited consent to the First Essex Lease and the Second Essex Lease, which consent included JL’s agreement to release its liens on the equipment subject to such leases, (iii) JL provided a limited waiver of the Company’s failure to comply with the Minimum Adjusted EBITDA (as defined in the JL NWPA) covenant of the JL NWPA as of March 31, 2015 and (iv) the JL NWPA was amended to reflect the same changes to the Minimum Adjusted EBITDA covenants as were agreed upon in the MidCap Fourth Amendment and also to incorporate into its definitions and applicable covenants the First Essex Lease, the Second Essex Lease and the Amended Note.

 

The foregoing description of the Third JL Amendment is qualified in its entirety by reference to the full text of such document, which document is an exhibit to this Report.

 

Nutricap First Promissory Note

 

As previously reported in the Company’s Current Report on Form 8-K filed with the SEC on February 9, 2015, when NSL completed the acquisition of certain assets of Nutricap and certain of its affiliates, NSL delivered, in partial payment of the purchase price associated therewith, that certain Unsecured Promissory Note, dated February 6, 2015, in the amount of $2,500,000 payable to Nutricap (the “First Promissory Note”), which also provided for a late payment fee of $250,000 if not paid on or before the sixty (60) day maturity date thereof. The First Promissory Note remained unpaid at the original maturity date, and on June 30, 2015, NSL entered into an Amended and Restated Promissory Note (the “Amended Note”) with Nutricap in the original principal amount of $2,750,000 (representing the original principal amount of the First Promissory Note plus the late fee), with a maturity date of January 1, 2016. Until maturity, the Amended Note requires monthly payments of principal (based on a 36 month amortization schedule) and interest (at a rate of eight and a half percent (8.5%) per year), collectively totaling monthly payments of $86,810.73.

 

As a condition to the extension provided in the Amended Note, Nutricap required that payment under the Amended Note be guaranteed by NSL’s parent, TCC, and also, jointly and severally, by Essex Capital Corporation, a California corporation (“Essex”), and its owner Ralph Iannelli (“Iannelli”). Accordingly, on June 30, 2015, TCC entered into a Payment Guaranty with Nutricap (the “TCC Guaranty”), and Essex and Ralph Iannelli, jointly and severally, entered into a Payment Guaranty with Nutricap (the “Essex Guaranty”), with both the TCC Guaranty and the Essex Guaranty guaranteeing payment in full to Nutricap of all amounts as and when due by NSL under the Amended Note, including payment in full of all amounts due and owning upon maturity, as well as any costs of enforcement incurred by Nutricap in connection therewith.

 

The foregoing descriptions of the (i) Amended Note and (ii) TCC Guaranty are qualified in their entirety by reference to the full text of such documents, which documents are exhibits to this Report. The foregoing description of the First Promissory Note is qualified in its entirety by reference to the full text of such document, which document was filed as an exhibit to the Company’s Current Report on Form 8-K filed with the SEC on February 9, 2015.

 

5
 

Item 2.01 Completion of Acquisition or Disposition of Assets.

 

On June 30, 2015, Twinlab entered into a Bill of Sale with Essex (the “Bill of Sale”) pursuant to which Twinlab sold certain machinery and equipment associated with Twinlab’s manufacturing operations in American Fork, Utah to Essex for an aggregate purchase price of $2,900,000.00 in exchange for (i) Essex’s agreement to enter into the Essex Guaranty described in Item 1.01 above, and (ii) Essex’s agreement, in addition to simply providing the Essex Guaranty, to in fact make all payments to Nutricap as and when due under the Amended Note, including payment in full of all amounts due and owing at maturity thereof.

 

On the same date, Twinlab leased the same machinery and equipment back from Essex, pursuant to two 36-month commercial lease agreements requiring monthly lease payments by Twinlab of $89,381.72 (the “First Essex Lease”) and $4,875.37 (the “Second Essex Lease”), respectively. The aggregate amount to be paid by Twinlab under the First Essex Lease and the Second Essex Lease is approximately $3,393,255.00. Both the First Essex Lease and the Second Essex Lease give Twinlab the option to extend the lease, return the equipment, or buy the equipment for 15% of the original purchase price at the end of the initial term. In the event that Essex fails to make payments to Nutricap as and when due under the Amended Note, and following any applicable notice and cure period, either NSL or TCC is thereafter required to and does make payment to Nutricap under the Amended Note, a dollar-for-dollar offset will be provided to Twinlab under the First Essex Lease first, and then, if applicable, under the Second Essex Lease.

 

As additional consideration for Essex providing the Essex Guaranty to Nutricap and agreeing under the Bill of Sale to make all payments to Nutricap as and when due under the Amended Note, Essex was issued a warrant exercisable for an aggregate of 1,428,571 shares of Common Stock, at a per share purchase price of $0.77, at any time prior to the close of business on June 30, 2020 (the “Essex Warrant”). The number of shares issuable upon exercise of the Essex Warrant is subject to adjustment on terms and conditions customary for a transaction of this nature in the event of (i) reorganization, recapitalization, stock split-up, combination of shares, mergers, consolidations and (ii) sale of all or substantially all of the Company’s assets or property.

 

The foregoing descriptions of the (i) Bill of Sale, (ii) First Essex Lease, (iii) Second Essex Lease and (iv) Essex Warrant are qualified in their entirety by reference to the full text of such documents, which documents are exhibits to this Report.

 

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

 

(a)                 The information set forth in Items 1.01 and 2.01 is hereby incorporated by reference in answer to Item 2.03(a).

 

Item 3.02 Unregistered Sales of Equity Securities.

 

The information set forth in Items 1.01 and 2.01, respectively, regarding the (i) Penta SPA, (ii) JL SPA and (iii) Essex Warrant is hereby incorporated by reference in answer to Item 3.02.

 

The Company issued the above-referenced (i) shares of Common Stock and (ii) Warrants, as the case may be, to (a) Penta and Essex in reliance upon the exemption from registration under Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”), for private offerings not involving a public distribution and (b) to JL in reliance on Rule 506 of Regulation D under the Securities Act. The Company believes that the issuance and sale of the shares of (i) Common Stock and (ii) Warrants, as the case may be, were exempt from the registration and prospectus delivery requirements of the Securities Act by virtue of Section 4(a)(2) of the Securities Act or Rule 506 of Regulation D under the Securities Act. The shares or Warrants, as the case may be, were issued directly by the Company and did not involve a public offering or general solicitation. Each purchaser was afforded an opportunity for effective access to the files and records of the Company that contained the relevant information needed to make its investment decision, including the Company’s financial statements and periodic reports under the Securities Exchange Act of 1934, as amended. The Company reasonably believed that each purchaser, immediately prior to the issuance of the above-referenced shares, had such knowledge and experience in the Company’s financial and business matters that it was capable of evaluating the merits and risks of its investment. Each purchaser had the opportunity to speak with the Company’s management on several occasions prior to its investment decision. There were no commissions paid on the issuance of the above-referenced shares or Warrants, as the case may be.

 

6
 

  

Item 9.01 Financial Statements and Exhibits.
   
(d)                  Exhibits.

 

Exhibit 10.66 Amendment No. 4 to Credit and Security Agreement and Limited Waiver, dated as of June 30, 2015, by and among Twinlab Consolidated Holdings, Inc., Twinlab Consolidation Corporation, Twinlab Holdings, Inc., ISI Brands Inc., Twinlab Corporation, NutraScience Labs, Inc., NutraScience Labs IP Corporation and MidCap Funding X Trust.
Exhibit 10.67 Amendment No. 5 to Credit and Security Agreement and Limited Waiver, dated as of June 30, 2015, by and among Twinlab Consolidated Holdings, Inc., Twinlab Consolidation Corporation, Twinlab Holdings, Inc., ISI Brands Inc., Twinlab Corporation, NutraScience Labs, Inc., NutraScience Labs IP Corporation and MidCap Funding X Trust.
Exhibit 10.68 Stock Purchase Agreement, dated as of June 30, 2015, by and between Twinlab Consolidated Holdings, Inc. and Penta Mezzanine SBIC Fund I, L.P.
Exhibit 10.69 Warrant, dated June 30, 2015, by and between Twinlab Consolidated Holdings, Inc. and Penta Mezzanine SBIC Fund I, L.P.
Exhibit 10.70 Fourth Amendment to Note and Warrant Purchase Agreement, Limited Consent and Limited Waiver, dated as of June 30, 2015, by and between Twinlab Consolidated Holdings, Inc., Twinlab Consolidation Corporation, Twinlab Holdings, Inc., ISI Brands Inc., Twinlab Corporation, NutraScience Labs, Inc., NutraScience Labs IP Corporation and Penta Mezzanine SBIC Fund I, L.P.
Exhibit 10.71 Stock Purchase Agreement, dated as of June 30, 2015, by and between Twinlab Consolidated Holdings, Inc. and JL-BBNC Mezz Utah, LLC.
Exhibit 10.72 Warrant, dated June 30, 2015, by and between Twinlab Consolidated Holdings, Inc. and JL-BBNC Mezz Utah, LLC.
Exhibit 10.73 Third Amendment to Note and Warrant Purchase Agreement, Limited Consent and Limited Waiver, dated as of June 30, 2015, by and between Twinlab Consolidated Holdings, Inc., Twinlab Consolidation Corporation, Twinlab Holdings, Inc., ISI Brands Inc., Twinlab Corporation, NutraScience Labs, Inc., NutraScience Labs IP Corporation and JL-BBNC Mezz Utah LLC.
Exhibit 10.74 Amended and Restated Unsecured Promissory Note, dated June 30, 2015, payable by NutraScience Labs, Inc. to Nutricap Labs, LLC.
Exhibit 10.75 Payment Guaranty, made as of June 30, 2015, by Twinlab Consolidation Corporation to and for the benefit of Nutricap Labs, LLC.
Exhibit 10.76 Bill of Sale, dated June 30, 2015, by Twinlab Corporation to Essex Capital Corporation.
Exhibit 10.77 Commercial Lease Agreement, dated June 30, 2015, by and between Essex Capital Corporation and Twinlab Corporation.
Exhibit 10.78 Commercial Lease Agreement, dated June 30, 2015, by and between Essex Capital Corporation and Twinlab Corporation.
Exhibit 10.79 Warrant, dated June 30, 2015, by and between Twinlab Consolidated Holdings, Inc. and Essex Capital Corporation.

 

 

 

7
 

 

 

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: July 7, 2015 TWINLAB CONSOLIDATED HOLDINGS, INC.
   
     
  By: /s/ Thomas A. Tolworthy
    Thomas A. Tolworthy
    President and Chief Executive Officer

 

 

8
 

 

EXHIBIT INDEX

 

 

Exhibit No. Description
Exhibit 10.66 Amendment No. 4 to Credit and Security Agreement and Limited Waiver, dated as of June 30, 2015, by and among Twinlab Consolidated Holdings, Inc., Twinlab Consolidation Corporation, Twinlab Holdings, Inc., ISI Brands Inc., Twinlab Corporation, NutraScience Labs, Inc., NutraScience Labs IP Corporation and MidCap Funding X Trust.
Exhibit 10.67 Amendment No. 5 to Credit and Security Agreement and Limited Waiver, dated as of June 30, 2015, by and among Twinlab Consolidated Holdings, Inc., Twinlab Consolidation Corporation, Twinlab Holdings, Inc., ISI Brands Inc., Twinlab Corporation, NutraScience Labs, Inc., NutraScience Labs IP Corporation and MidCap Funding X Trust.
Exhibit 10.68 Stock Purchase Agreement, dated as of June 30, 2015, by and between Twinlab Consolidated Holdings, Inc. and Penta Mezzanine SBIC Fund I, L.P.
Exhibit 10.69 Warrant, dated June 30, 2015, by and between Twinlab Consolidated Holdings, Inc. and Penta Mezzanine SBIC Fund I, L.P.
Exhibit 10.70 Fourth Amendment to Note and Warrant Purchase Agreement, Limited Consent and Limited Waiver, dated as of June 30, 2015, by and between Twinlab Consolidated Holdings, Inc., Twinlab Consolidation Corporation, Twinlab Holdings, Inc., ISI Brands Inc., Twinlab Corporation, NutraScience Labs, Inc., NutraScience Labs IP Corporation and Penta Mezzanine SBIC Fund I, L.P.
Exhibit 10.71 Stock Purchase Agreement, dated as of June 30, 2015, by and between Twinlab Consolidated Holdings, Inc. and JL-BBNC Mezz Utah, LLC.
Exhibit 10.72 Warrant, dated June 30, 2015, by and between Twinlab Consolidated Holdings, Inc. and JL-BBNC Mezz Utah, LLC.
Exhibit 10.73 Third Amendment to Note and Warrant Purchase Agreement, Limited Consent and Limited Waiver, dated as of June 30, 2015, by and between Twinlab Consolidated Holdings, Inc., Twinlab Consolidation Corporation, Twinlab Holdings, Inc., ISI Brands Inc., Twinlab Corporation, NutraScience Labs, Inc., NutraScience Labs IP Corporation and JL-BBNC Mezz Utah LLC.
Exhibit 10.74 Amended and Restated Unsecured Promissory Note, dated June 30, 2015, payable by NutraScience Labs, Inc. to Nutricap Labs, LLC.
Exhibit 10.75 Payment Guaranty, made as of June 30, 2015, by Twinlab Consolidation Corporation to and for the benefit of Nutricap Labs, LLC.
Exhibit 10.76 Bill of Sale, dated June 30, 2015, by Twinlab Corporation to Essex Capital Corporation.
Exhibit 10.77 Commercial Lease Agreement, dated June 30, 2015, by and between Essex Capital Corporation and Twinlab Corporation.
Exhibit 10.78 Commercial Lease Agreement, dated June 30, 2015, by and between Essex Capital Corporation and Twinlab Corporation.
Exhibit 10.79 Warrant, dated June 30, 2015, by and between Twinlab Consolidated Holdings, Inc. and Essex Capital Corporation.

 

  

9

Exhibit 10.66

 

AMENDMENT NO. 4 TO CREDIT AND SECURITY AGREEMENT

AND LIMITED WAIVER

 

THIS AMENDMENT NO. 4 TO CREDIT AND SECURITY AGREEMENT AND LIMITED WAIVER (this “ Amendment ”) is made as of this 30 th day of June, 2015, by and among TWINLAB CONSOLIDATED HOLDINGS, INC. , a Nevada corporation (“ TCHI ”), TWINLAB CONSOLIDATION CORPORATION , a Delaware corporation (“ TCC ”), TWINLAB HOLDINGS, INC. , a Michigan corporation, ISI BRANDS INC. , a Michigan corporation, TWINLAB CORPORATION , a Delaware corporation, NUTRASCIENCE LABS, INC. , a Delaware corporation (formerly known as TCC CM Subco I, Inc.), and NUTRASCIENCE LABS IP CORPORATION , a Delaware corporation (formerly known as TCC CM Subco II, Inc.) (each of the foregoing Persons being referred to herein individually as a “ Borrower ”, and collectively as “ Borrowers ”), and MIDCAP FUNDING X TRUST, a Delaware statutory trust, as successor-by-assignment from MidCap Financial Trust (as Agent for Lenders, “ Agent ”, and individually, as a Lender), and the other financial institutions or other entities from time to time parties to the Credit Agreement referenced below, each as a Lender.

 

RECITALS

 

A.            Pursuant to that certain Credit and Security Agreement dated as of January 22, 2015 by and among Borrowers, Agent and Lenders (as amended by that certain Amendment No. 1 to Credit and Security Agreement and Limited Consent dated as of February 4, 2015, by that certain Amendment No. 2 to Credit and Security Agreement dated as of April 7, 2015, by that certain Amendment No. 3 and Limited Consent to Credit and Security Agreement dated as of April 30, 2015, as further amended hereby and as it may be further amended, modified and restated from time to time, the “ Credit Agreement ”), Agent and Lenders agreed to make available to Borrowers a secured revolving credit facility in a principal amount of up to $15,000,000 from time to time (as amended, modified, supplemented, extended and restated from time to time, collectively, the “ Loans ”). Capitalized terms used but not otherwise defined in this Amendment shall have the meanings set forth in the Credit Agreement.

 

B.            Borrowers have failed to satisfy Section 6.2 (Minimum Adjusted EBITDA) of the Credit Agreement because Borrowers’ Adjusted EBITDA was less than $ -2,500,000 with respect to the measurement period from January 1, 2015 to March 31, 2015, and such failure constitutes an Event of Default under the Credit Agreement (the “ Existing Event of Default ”). Borrowers have requested that Agent and the Lenders waive the Existing Event of Default, and Agent and Lenders have agreed to do so, in accordance with the terms and subject to the conditions set forth herein.

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the foregoing, the terms and conditions set forth in this Amendment, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Agent, Lenders and Borrowers hereby agree as follows:

 

1.           Recitals. This Amendment shall constitute a Financing Document and the Recitals set forth above shall be construed as part of this Amendment as if set forth fully in the body of this Amendment.

 

 
 

 

2.           Acknowledgement of Existing Event of Default. Prior to the effectiveness of this Amendment, the existence of the Existing Event of Default (a) relieved Agent and Lenders from any obligation to provide any financial accommodations under the Credit Agreement or other Financing Documents, and (b) permitted Agent and Lenders to, among other things, (i) accelerate all or any portion of the Obligations, (ii) commence any legal or other action to collect any or all of the Obligations from Borrowers and/or any Collateral, (iii) foreclose or otherwise realize on any or all of the Collateral, and/or appropriate, set-off and apply to the payment of any or all of the Obligations, any or all of the Collateral, and/or (iv) take any other enforcement action or otherwise exercise any or all rights and remedies provided for by any or all of the Credit Agreement, the other Financing Documents or applicable law.

 

3.           Limited Waiver. Each of the Borrowers hereby acknowledges and agrees that the Existing Event of Default continues to exist as of the date hereof. At the request of and as an accommodation to Borrowers and subject to the terms and conditions set forth herein, Agent and Lenders hereby waive the Existing Event of Default. The limited waiver set forth in this Section 3 is effective solely for the purposes set forth herein and shall be limited precisely as written and shall not be deemed to (a) except as expressly provided herein, be a consent to any amendment, waiver or modification of any term or condition of the Credit Agreement or of any other Financing Document; (b) prejudice any right that Agent or the Lenders have or may have in the future under or in connection with the Credit Agreement or any other Financing Document, including, without limitation, the rights of the Agent under Section 2.1(b)(i) of the Credit Agreement; (c) waive any other Event of Default that may exist as of the date hereof; (d) waive compliance with Section 6.2 of the Credit Agreement for any period other than with respect to the measurement period from January 1, 2015 to March 31, 2015; or (e) establish a custom or course of dealing among any of the Credit Parties, on the one hand, or Agent or any Lender, on the other hand.

 

4.            Amendment to Credit Agreement.

 

(a)         Section 1.1 of the Credit Agreement is hereby amended to add the defined term “Fourth Amendment Closing Date” in its alphabetical order:

 

“Fourth Amendment Closing Date” means June 30, 2015.

 

(b)         The Credit Agreement is hereby amended to add new Section 3.25 as follows:

 

Fourth Amendment Closing Date Capitalization. The authorized equity securities of each of the Credit Parties as of the Fourth Amendment Closing Date are as set forth on Schedule 3.4(B). All issued and outstanding equity securities of each of the Credit Parties are duly authorized and validly issued, fully paid, nonassessable, free and clear of all Liens other than those in favor of Agent and/or Lenders and Permitted Liens that are the subject of a Subordination Agreement, and such equity securities were issued in compliance with all applicable Laws. The identity of the holders of the equity securities of each of the Credit Parties and the percentage of their fully-diluted ownership of the equity securities of each of the Credit Parties as of the Fourth Amendment Closing Date is set forth on Schedule 3.4(B). No shares of the capital stock or other equity securities of any Credit Party, other than those described above, are issued and outstanding as of the Fourth Amendment Closing Date. Except as set forth on Schedule 3.4(B), as of the Fourth Amendment Closing Date there are no preemptive or other outstanding rights, options, warrants, conversion rights or similar agreements or understandings for the purchase or acquisition from any Credit Party of any equity securities of any such entity.

 

 
 

  

(c)          Section 6.2 of the Credit Agreement is hereby amended and restated in its entirety as follows:

 

Minimum Adjusted EBITDA . Commencing with the month ending July 31, 2015 and until such time as all Obligations are paid, satisfied and discharged in full, the Borrowers shall not, as of the end of any measurement period set forth below, permit the Adjusted EBITDA for such measurement period to be less than the amount set forth in the table below opposite such measurement period.

 

Measurement Period   Minimum Adjusted EBITDA  
July 1, 2015 to July 31, 2015   $ -700,000  
August 1, 2015 to August 31, 2015   $ -700,000  

 

(d)        The Schedules of the Credit Agreement are hereby amended to add new Schedule 3.4(B) in the form of Schedule 3.4(B) attached to and made a part of this Amendment.

 

5.           Confirmation of Representations and Warranties; Reaffirmation of Security Interest. Each Borrower hereby (a) confirms that all of the representations and warranties set forth in the Credit Agreement are, after giving effect to this Amendment and the transactions contemplated hereby, true and correct with respect to such Borrower as of the date hereof to the same extent as though made on and as of such date, except (i) to the extent such representations and warranties specifically relate to an earlier date and (ii) without limiting any rights or remedies of Agent and Lenders under any other section in the Credit Agreement, with respect to the respresentation and warranty in Section 3.8 the Agent acknowledges that Borrowers has not repaid the Nutricap Seller First Note at its stated maturity, and (b) covenants to perform its respective obligations under the Credit Agreement. Each Borrower confirms and agrees that all security interests and Liens granted to Agent continue in full force and effect, and all Collateral remains free and clear of any Liens, other than those granted to Agent and Permitted Liens. Nothing herein is intended to impair or limit the validity, priority or extent of Agent’s security interests in and Liens on the Collateral.

 

5.           Enforceability. This Amendment constitutes the legal, valid and binding obligation of each Borrower, and is enforceable against each of the Borrowers in accordance with its terms, except as the enforceability thereof may be limited by bankruptcy, insolvency or other similar laws relating to the enforcement of creditors’ rights generally and by general equitable principles.

 

 
 

  

6.            Costs and Fees . In consideration of Agent’s agreement to enter into this Amendment, Borrower shall pay to Agent a modification fee equal to One Hundred Thousand and No/100 Dollars ($100,000.00), of which (i) Fifty Thousand and No/100 Dollars ($50,000) shall be due and payable on the date hereof and (ii) Fifty Thousand and No/100 Dollars ($50,000) shall be due and payable with the next invoice provided to Borrower by Agent following the date hereof for the month ended July 31, 2015 to be capitalized to the Revolving Loans on August 1, 2015. Furthermore, Borrowers shall be responsible for the payment of all reasonable costs and fees of Agent’s counsel incurred in connection with the preparation of this Amendment and any related documents. If Agent or any Lender uses in-house counsel for any of these purposes, Borrowers further agree that the Obligations include reasonable charges for such work commensurate with the fees that would otherwise be charged by outside legal counsel selected by Agent or such Lender for the work performed. Borrowers hereby authorize Agent to deduct all of such fees set forth in this Section 6 from the proceeds of one or more Revolving Loans made under the Credit Agreement.

 

7 .             Conditions to Effectiveness. This Amendment shall become effective as of the date on which each of the following conditions has been satisfied (the “ Effective Date ”):

 

(a)          Borrowers shall have delivered to Agent this Amendment, duly executed by an authorized officer of each Borrower;

 

(b)          [Reserved.];

 

(c)          all representations and warranties of Borrowers contained herein shall be true and correct in all material respects as of the Effective Date (and such parties’ delivery of their respective signatures hereto shall be deemed to be its certification thereof);

 

(d)          [Reserved.];

 

(e)          Agent shall have received from Borrowers the $50,000 of fees owing pursuant to Section 6(i) of this Amendment and Agent’s reasonable out-of-pocket legal fees and expenses;

 

(f)          Agent shall have received (i) a fully executed waiver to the Subordinated Loan Agreement (as that term is defined in the Subordination Agreement (Penta)) in the form attached hereto as Exhibit A, (ii) a fully executed copy of the Share Purchase Agreement, dated as of the date hereof, between Penta Mezzanine SBIC Fund I, L.P. and Parent in the form attached hereto as Exhibit B and (iii) the fully executed Warrant No. W-4 in the form attached hereto as Exhibit C.

 

(g)          Agent shall have received (i) a fully executed waiver to the Subordinated Loan Agreement (as that term is defined in the Subordination Agreement (Subordination Agreement (JL-BBNC) in the form attached hereto as Exhibit D, (ii) a fully executed copy of the Share Purchase Agreement, dated as of the date hereof, between JL-BBNC Mezz Utah, LLC and Parent in the form attached hereto as Exhibit E and (iii) a fully executed copy of the Warrant, dated as of the date hereof, issued by Parent to Subordinated Lender in the form attached hereto as Exhibit F.

 

 
 

 

(h)          The Agent shall have received (i) evidence satisfactory to the Agent that the David L. Van Andel Trust, under Trust Agreement dated November 30, 1993 (the “ David L. Van Andel Trust ”) has invested at least $2,500,000 in cash in the Equity Interests of Parent, (ii) a fully executed copy of the Share Purchase Agreement, dated as of the date hereof, among Parent and David L. Van Andel Trust in the form attached hereto as Exhibit G, (iii) evidence that David L. Van Andel Trust surrendered to Parent that certain Warrant No. 1, dated as of September 5, 2014, issued by TCC to David L. Van Andel and assumed by Parent on September 16, 2014, and such warrant has been cancelled and (iv) fully executed copies of the Warrants, dated as of the date hereof, issued by Parent to David L. Van Andel Trust in the forms attached hereto as Exhibit H.

 

(i)          The Agent shall have received (i) a fully executed copy of the Share Purchase Agreement, dated as of the date hereof, among Parent and Little Harbor, LLC in the form attached hereto as Exhibit I and (ii) a fully executed copy of the Warrant, dated as of the date hereof, issued by Parent to Little Harbor, LLC, in the form attached hereto as Exhibit J.

 

8.           Release. Each Borrower, voluntarily, knowingly, unconditionally and irrevocably, with specific and express intent, for and on behalf of itself and all of its respective parents, subsidiaries, affiliates, members, managers, predecessors, successors, and assigns, and each of their respective current and former directors, officers, shareholders, agents, and employees (collectively, “ Releasing Parties ”), does hereby fully and completely release, acquit and forever discharge each Indemnitee of and from any and all actions, causes of action, suits, debts, disputes, damages, claims, obligations, liabilities, costs, expenses and demands of any kind whatsoever, at law or in equity, whether matured or unmatured, liquidated or unliquidated, vested or contingent, choate or inchoate, known or unknown that the Releasing Parties (or any of them) has against the Indemnitees (or any of them) that directly or indirectly arise out of, are based upon or are in any manner connected with any Prior Related Event. “ Prior Related Event ” means any transaction, event, circumstance, action, failure to act, occurrence of any type or sort, whether known or unknown, which occurred, existed, was taken, was permitted or begun in accordance with, pursuant to or by virtue of (a) any of the terms of this Amendment or any other Financing Document, (b) any actions, transactions, matters or circumstances related hereto or thereto, (c) the conduct of the relationship between any Indemnitee and any Borrower, or (d) any other actions or inactions by any Indemnitee, all on or prior to the Effective Date. Each Borrower acknowledges that the foregoing release is a material inducement to Agent’s and Lender’s decision to enter into this Amendment and to agree to the modifications contemplated hereunder.

 

9.           No Waiver or Novation. The execution, delivery and effectiveness of this Amendment shall not, except as expressly provided in this Amendment, operate as a waiver of any right, power or remedy of Agent, nor constitute a waiver of any provision of the Credit Agreement, the Financing Documents or any other documents, instruments and agreements executed or delivered in connection with any of the foregoing. Nothing herein is intended or shall be construed, except as expressly provided in this Amendment, as a waiver of any existing Defaults or Events of Default under the Credit Agreement or other Financing Documents or any of Agent’s rights and remedies in respect of such Defaults or Events of Default. This Amendment (together with any other document executed in connection herewith) is not intended to be, nor shall it be construed as, a novation of the Credit Agreement.

 

 
 

 

10.         Affirmation. Except as specifically amended and waived pursuant to the terms hereof, the Credit Agreement and all other Financing Documents (and all covenants, terms, conditions and agreements therein) shall remain in full force and effect, and are hereby ratified and confirmed in all respects by Borrowers. Each Borrower covenants and agrees to comply with all of the terms, covenants and conditions of the Credit Agreement (as amended hereby) and the Financing Documents, notwithstanding any prior course of conduct, waivers, releases or other actions or inactions on Agent’s or any Lender’s part which might otherwise constitute or be construed as a waiver of or amendment to such terms, covenants and conditions.

 

11.          Miscellaneous.

 

(a)           Reference to the Effect on the Credit Agreement. Upon the effectiveness of this Amendment, each reference in the Credit Agreement to “this Agreement,” “hereunder,” “hereof,” “herein,” or words of similar import shall mean and be a reference to the Credit Agreement, as amended by this Amendment. Except as specifically amended and waived above, the Credit Agreement, and all other Financing Documents (and all covenants, terms, conditions and agreements therein), shall remain in full force and effect, and are hereby ratified and confirmed in all respects by Borrowers.

 

(b)           Incorporation of Credit Agreement Provisions. The provisions contained in Section 11.6 (Indemnification), Section 12.8 (Governing Law; Submission to Jurisdiction) and Section 12.9 (Waiver of Jury Trial) of the Credit Agreement are incorporated herein by reference to the same extent as if reproduced herein in their entirety.

 

(c)           Headings. Section headings in this Amendment are included for convenience of reference only and shall not constitute a part of this Amendment for any other purpose.

 

(d)           Counterparts. This Amendment may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. Signatures by facsimile or by electronic mail delivery of an electronic version (e.g., .pdf or .tif file) of an executed signature page shall be treated as delivery of an original and shall bind the parties hereto. This Amendment constitutes the entire agreement and understanding among the parties hereto and supersede any and all prior agreements and understandings, oral or written, relating to the subject matter hereof.

  

[SIGNATURES APPEAR ON FOLLOWING PAGES]

 

 
 

 

( Signature Page to Amendment No. 4 to Credit and Security Agreement and Limited Waiver )  

 

IN WITNESS WHEREOF , intending to be legally bound, and intending that this document constitute an agreement executed under seal, the undersigned have executed this Amendment under seal as of the day and year first hereinabove set forth.

 

AGENT: MIDCAP FUNDING X TRUST, a Delaware statutory trust, as successor-by-assignment from MidCap Financial Trust
     
  By: Apollo Capital Management, L.P.,
    its investment manager
     
  By: Apollo Capital Management GP, LLC,
    its general partner
     
  By: /s/ Michael Levin                                         (SEAL)
  Name:   Michael Levin
  Title: Authorized Signatory
     
LENDER: MIDCAP FUNDING X TRUST, a Delaware statutory trust, as successor-by-assignment from MidCap Financial Trust
     
  By: Apollo Capital Management, L.P.,
    its investment manager
     
  By: Apollo Capital Management GP, LLC,
    its general partner
     
  By: /s/ Michael Levin                                         (SEAL)
  Name:   Michael Levin
  Title: Authorized Signatory

 

 
 

 

( Signature Page to Amendment No. 4 to Credit and Security Agreement and Limited Waiver )

 

BORROWERS:   TWINLAB CONSOLIDATION CORPORATION
     
    By: /s/ Thomas A. Tolworthy                          (Seal)
    Name: Thomas A. Tolworthy
    Title:   Chief Executive Officer and President
     
TWINLAB CONSOLIDATED HOLDINGS, INC.   TWINLAB HOLDINGS, INC.
     
By: /s/ Thomas A. Tolworthy                          (Seal)   By: /s/ Thomas A. Tolworthy                          (Seal)
Name:  Thomas A. Tolworthy   Name:  Thomas A. Tolworthy
Title:  Chief Executive Officer and President   Title:  Chief Executive Officer and President
     
TWINLAB CORPORATION   ISI BRANDS INC.
     
By: /s/ Thomas A. Tolworthy                          (Seal)   By: /s/ Thomas A. Tolworthy                          (Seal)
Name:  Thomas A. Tolworthy   Name:  Thomas A. Tolworthy
Title:  Chief Executive Officer and President   Title:  Chief Executive Officer and President
     
NUTRASCIENCE LABS, INC.   NUTRASCIENCE LABS IP CORPORATION
     
By: /s/ Thomas A. Tolworthy                          (Seal)   By: /s/ Thomas A. Tolworthy                          (Seal)
Name:  Thomas A. Tolworthy   Name:  Thomas A. Tolworthy
Title:  Chief Executive Officer and President   Title:  Chief Executive Officer and President
     
 
 

 

SCHEDULE 3.4(B)

 

[Attached Fourth Amendment Closing Date Capitalization Table]

 

 

Exhibit 10.67

 

 

AMENDMENT NO. 5 TO CREDIT AND SECURITY AGREEMENT

AND LIMITED CONSENT

 

THIS AMENDMENT NO. 5 TO CREDIT AND SECURITY AGREEMENT AND LIMITED CONSENT (this “ Amendment ”) is made as of this 30 th day of June, 2015, by and among TWINLAB CONSOLIDATED HOLDINGS, INC. , a Nevada corporation (“ TCHI ”), TWINLAB CONSOLIDATION CORPORATION , a Delaware corporation (“ TCC ”), TWINLAB HOLDINGS, INC. , a Michigan corporation, ISI BRANDS INC. , a Michigan corporation, TWINLAB CORPORATION , a Delaware corporation (“ Twinlab Corporation ”), NUTRASCIENCE LABS, INC. , a Delaware corporation (formerly known as TCC CM Subco I, Inc.), and NUTRASCIENCE LABS IP CORPORATION , a Delaware corporation (formerly known as TCC CM Subco II, Inc.) (each of the foregoing Persons being referred to herein individually as a “ Borrower ”, and collectively as “ Borrowers ”), and MIDCAP FUNDING X TRUST, a Delaware statutory trust, as successor-by-assignment from MidCap Financial Trust (as Agent for Lenders, “ Agent ”, and individually, as a Lender), and the other financial institutions or other entities from time to time parties to the Credit Agreement referenced below, each as a Lender.

 

RECITALS

 

A.            Pursuant to that certain Credit and Security Agreement dated as of January 22, 2015 by and among Borrowers, Agent and Lenders (as amended by that certain Amendment No. 1 to Credit and Security Agreement and Limited Consent dated as of February 4, 2015, by that certain Amendment No. 2 to Credit and Security Agreement dated as of April 7, 2015, by that certain Amendment No. 3 to Credit and Security Agreement and Limited Consent dated as of April 30, 2015, by that certain Amendment No. 4 to Credit and Security Agreement and Limited Consent dated as of June 30, 2015, as further amended hereby and as it may be further amended, modified and restated from time to time, the “ Credit Agreement ”), Agent and Lenders agreed to make available to Borrowers a secured revolving credit facility in a principal amount of up to $15,000,000 from time to time (as amended, modified, supplemented, extended and restated from time to time, collectively, the “ Loans ”). Capitalized terms used but not otherwise defined in this Amendment shall have the meanings set forth in the Credit Agreement.

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the foregoing, the terms and conditions set forth in this Amendment, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Agent, Lenders and Borrowers hereby agree as follows:

 

1.           Recitals. This Amendment shall constitute a Financing Document and the Recitals set forth above shall be construed as part of this Amendment as if set forth fully in the body of this Amendment.

 

 
 

 

2.           Limited Consent for new Essex Lease. At the request of and as an accommodation to Borrowers and subject to the strict compliance with the terms, conditions and requirements set forth herein (including, without limitation, satisfaction of each of the conditions set forth in Section 7 below), Agent and Lenders hereby consent to (i) a sale/leaseback and refinancing transaction with Essex Capital Corporation in the principal rental amount of $2,750,000 consisting of the sale/leaseback of existing Twinlab Corporation equipment described on Exhibit A (the “ First 2015 Essex Lease ”) and (ii) a sale/leaseback and refinancing transaction with Essex Capital Corporation in the principal rental amount of $150,000 consisting of the sale/leaseback of existing Twinlab Corporation equipment described on Exhibit B (the “ Second 2015 Essex Lease ” and together, collectively, the “ 2015 Essex Leases ”). Consent for the 2015 Essex Leases includes consent for Twinlab Corporation to sell the equipment described on Exhibit A and Exhibit B to Essex Capital Corporation, and Agent shall execute such lien releases and file such financing amendments to evidence lien releases of the equipment described on Exhibit A and Exhibit B as reasonably requested by Twinlab Corporation or Essex Capital Corporation. The limited consent set forth in this Section 2 is effective solely for the purposes set forth herein and shall be limited precisely as written and shall not be deemed to (a) except as expressly provided herein, be a consent to any amendment, waiver or modification of any term or condition of the Credit Agreement or of any other Financing Document; (b) prejudice any right that Agent or the Lenders have or may have in the future under or in connection with the Credit Agreement or any other Financing Document; (c) waive any Event of Default that exists as of the date hereof; or (d) establish a custom or course of dealing among any of the Credit Parties, on the one hand, or Agent or any Lender, on the other hand.

 

3.           Amendment to Credit Agreement.

 

(a)          The defined terms “Essex Lease”, “Nutricap Seller First Note” “Permitted Contingent Obligations” in Section 1.1 of the Credit Agreement are hereby amended and restated in their entirety as follows:

 

Essex Lease” means collectively, (i) that certain Commercial Lease Agreement, dated as of November 13, 2013, between Twinlab Corporation and Essex Capital Corporation, (ii) that certain Commercial Lease Agreement, dated as of August 21, 2014 (which Commercial Lease Agreement refreshes and supersedes a Commercial Lease Agreement dated March 19, 2013), between Twinlab Corporation and Essex Capital Corporation, and (iii) new sale/leaseback and refinancing agreements, referenced above as the 2015 Essex Leases, to be entered into between Twinlab Corporation and Essex Capital Corporation, in the form previously provided to and approved by the Agent and for which Essex Capital Corporation has agreed to be subject to an Agreement Regarding Equipment and Lease in form and substance satisfactory to the Agent in its sole discretion; the rental installments of all such lease agreements identified in subclauses (i) through (iii) together is not to exceed an aggregate principal rental amount of $5,800,000.

 

“Nutricap Seller First Note” means the Amended and Restated Unsecured Promissory Note dated June 30, 2015 in the form previously approved by the Agent in the principal amount of $2,750,000 issued by Subco I to Nutricap Labs, LLC, a New York limited liability company, in connection with the Target 2 Acquisition, the principal and interest repayment of which shall have a maturity of January 1, 2016 and bear interest at 8.5% per annum, an executed copy of which has been provided to the Agent.

 

 
 

 

“Permitted Contingent Obligations” means (a) Contingent Obligations arising in respect of the Debt under the Financing Documents; (b) Contingent Obligations resulting from endorsements for collection or deposit in the Ordinary Course of Business; (c) Contingent Obligations outstanding on the date of this Agreement and set forth on Schedule 5.1 (but not including any refinancings, extensions, increases or amendments to the indebtedness underlying such Contingent Obligations other than extensions of the maturity thereof without any other change in terms); (d) Contingent Obligations incurred in the Ordinary Course of Business with respect to surety and appeal bonds, performance bonds and other similar obligations not to exceed $250,000 in the aggregate at any time outstanding; (e) Contingent Obligations arising under indemnity agreements with title insurers to cause such title insurers to issue to Agent mortgagee title insurance policies; (f) Contingent Obligations arising with respect to customary indemnification obligations in favor of purchasers in connection with dispositions of personal property assets permitted under Section 5.6; (g) that certain Payment Guaranty by TCC of the Nutricap Seller First Note and (h) other Contingent Obligations not permitted by clauses (a) through (g) above, not to exceed $250,000 in the aggregate at any time outstanding.

 

(b)          The defined term “Distribution” in Section 1.1 of the Credit Agreement is hereby amended by restating subclause (e) in its entirety as follows:

 

(e) except for payments under the Essex Lease permitted by the applicable Agreement Regarding Equipment and Lease relating thereto, repayments of or debt service on loans or other indebtedness held by any Person holding an equity interest in a Borrower or a Subsidiary of a Borrower, an Affiliate of a Borrower or an Affiliate of any Subsidiary of a Borrower unless permitted under and made pursuant to a Subordination Agreement applicable to such loans or other indebtedness.

 

4.           Confirmation of Representations and Warranties; Reaffirmation of Security Interest. Each Borrower hereby (a) confirms that all of the representations and warranties set forth in the Credit Agreement are true and correct with respect to such Borrower as of the date hereof, and (b) covenants to perform its respective obligations under the Credit Agreement. Each Borrower confirms and agrees that all security interests and Liens granted to Agent continue in full force and effect, and all Collateral remains free and clear of any Liens, other than those granted to Agent and Permitted Liens. Nothing herein is intended to impair or limit the validity, priority or extent of Agent’s security interests in and Liens on the Collateral.

 

 
 

 

5.            Enforceability. This Amendment constitutes the legal, valid and binding obligation of each Borrower, and is enforceable against each Borrowers in accordance with its terms, except as the enforceability thereof may be limited by bankruptcy, insolvency or other similar laws relating to the enforcement of creditors’ rights generally and by general equitable principles.

 

6.             Costs and Fees . Borrowers shall be responsible for the payment of all reasonable costs and fees of Agent’s counsel incurred in connection with the preparation of this Amendment and any related documents. If Agent or any Lender uses in-house counsel for any of these purposes, Borrowers further agree that the Obligations include reasonable charges for such work commensurate with the fees that would otherwise be charged by outside legal counsel selected by Agent or such Lender for the work performed. Borrowers hereby authorize Agent to deduct all of such fees set forth in this Section 6 from the proceeds of one or more Revolving Loans made under the Credit Agreement.

 

7.            Conditions to Effectiveness. This Amendment shall become effective as of the date on which each of the following conditions has been satisfied (the “ Effective Date ”):

 

(a)          Borrowers shall have delivered to Agent this Amendment, duly executed by an authorized officer of each Borrower;

 

(b)          Agent shall have received from Borrowers executed copies of all documents and agreements relating to the 2015 Essex Leases and the Nutricap Seller First Note, including, but not limited to, the Payment Guaranty of Essex Capital Corporation and Ralph T. Iannelli of the Nutricap Seller First Note and each Bill of Sale with respect to the 2015 Essex Leases, duly executed by an authorized officer of each of the parties thereto;

 

(c)          all representations and warranties of Borrowers contained herein shall be true and correct in all material respects as of the Effective Date (and such parties’ delivery of their respective signatures hereto shall be deemed to be its certification thereof);

 

(d)          [Reserved.];

 

(e)          Agent shall have received from Borrowers of all of the fees owing pursuant to this Amendment and Agent’s reasonable out-of-pocket legal fees and expenses;

 

(f)          Borrowers shall have delivered to Agent a fully executed copy of the Amendment No. 1 to Standstill Agreement, duly executed by an authorized officer of each of the parties thereto, including but not limited to NUTRICAP LABS, LLC, as junior lender, and such amendment shall be satisfactory in form and substance to Agent; and

 

(g)          Borrowers shall have delivered to Agent a fully executed Agreement Regarding Equipment and Lease with respect to the 2015 Essex Leases, and such agreement shall be satisfactory in form and substance to Agent.

 

 
 

 

8.           Release. Each Borrower, voluntarily, knowingly, unconditionally and irrevocably, with specific and express intent, for and on behalf of itself and all of its respective parents, subsidiaries, affiliates, members, managers, predecessors, successors, and assigns, and each of their respective current and former directors, officers, shareholders, agents, and employees (collectively, “ Releasing Parties ”), does hereby fully and completely release, acquit and forever discharge each Indemnitee of and from any and all actions, causes of action, suits, debts, disputes, damages, claims, obligations, liabilities, costs, expenses and demands of any kind whatsoever, at law or in equity, whether matured or unmatured, liquidated or unliquidated, vested or contingent, choate or inchoate, known or unknown that the Releasing Parties (or any of them) has against the Indemnitees (or any of them) that directly or indirectly arise out of, are based upon or are in any manner connected with any Prior Related Event. “ Prior Related Event ” means any transaction, event, circumstance, action, failure to act, occurrence of any type or sort, whether known or unknown, which occurred, existed, was taken, was permitted or begun in accordance with, pursuant to or by virtue of (a) any of the terms of this Amendment or any other Financing Document, (b) any actions, transactions, matters or circumstances related hereto or thereto, (c) the conduct of the relationship between any Indemnitee and any Borrower, or (d) any other actions or inactions by any Indemnitee, all on or prior to the Effective Date. Each Borrower acknowledges that the foregoing release is a material inducement to Agent’s and Lender’s decision to enter into this Amendment and to agree to the modifications contemplated hereunder.

 

9.           No Waiver or Novation. The execution, delivery and effectiveness of this Amendment shall not, except as expressly provided in this Amendment, operate as a waiver of any right, power or remedy of Agent, nor constitute a waiver of any provision of the Credit Agreement, the Financing Documents or any other documents, instruments and agreements executed or delivered in connection with any of the foregoing. Nothing herein is intended or shall be construed as a waiver of any existing Defaults or Events of Default under the Credit Agreement or other Financing Documents or any of Agent’s rights and remedies in respect of such Defaults or Events of Default. This Amendment (together with any other document executed in connection herewith) is not intended to be, nor shall it be construed as, a novation of the Credit Agreement.

 

10.         Affirmation. Except as specifically amended pursuant to the terms hereof, the Credit Agreement and all other Financing Documents (and all covenants, terms, conditions and agreements therein) shall remain in full force and effect, and are hereby ratified and confirmed in all respects by Borrowers. Each Borrower covenants and agrees to comply with all of the terms, covenants and conditions of the Credit Agreement (as amended hereby) and the Financing Documents, notwithstanding any prior course of conduct, waivers, releases or other actions or inactions on Agent’s or any Lender’s part which might otherwise constitute or be construed as a waiver of or amendment to such terms, covenants and conditions.

 

11.           Miscellaneous.

 

(a)           Reference to the Effect on the Credit Agreement. Upon the effectiveness of this Amendment, each reference in the Credit Agreement to “this Agreement,” “hereunder,” “hereof,” “herein,” or words of similar import shall mean and be a reference to the Credit Agreement, as amended by this Amendment. Except as specifically amended above, the Credit Agreement, and all other Financing Documents (and all covenants, terms, conditions and agreements therein), shall remain in full force and effect, and are hereby ratified and confirmed in all respects by Borrowers.

 

 
 

 

(b)           Incorporation of Credit Agreement Provisions. The provisions contained in Section 11.6 (Indemnification), Section 12.8 (Governing Law; Submission to Jurisdiction) and Section 12.9 (Waiver of Jury Trial) of the Credit Agreement are incorporated herein by reference to the same extent as if reproduced herein in their entirety.

 

(c)           Headings. Section headings in this Amendment are included for convenience of reference only and shall not constitute a part of this Amendment for any other purpose.

 

(d)           Counterparts. This Amendment may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. Signatures by facsimile or by electronic mail delivery of an electronic version (e.g., .pdf or .tif file) of an executed signature page shall be treated as delivery of an original and shall bind the parties hereto. This Amendment constitutes the entire agreement and understanding among the parties hereto and supersede any and all prior agreements and understandings, oral or written, relating to the subject matter hereof.

  

[SIGNATURES APPEAR ON FOLLOWING PAGES]

 

 
 

 

( Signature Page to Amendment No. 5 to Credit and Security Agreement and Limited Consent )

 

IN WITNESS WHEREOF , intending to be legally bound, and intending that this document constitute an agreement executed under seal, the undersigned have executed this Amendment under seal as of the day and year first hereinabove set forth.

 

AGENT: MIDCAP FUNDING X TRUST, a Delaware statutory trust, as successor-by-assignment from MidCap Financial Trust
     
  By: Apollo Capital Management, L.P.,
    its investment manager
     
  By: Apollo Capital Management GP, LLC,
  its general partner
     
  By: /s/ Michael Levin                                         (SEAL)
  Name:   Michael Levin
  Title: Authorized Signatory
     
LENDER: MIDCAP FUNDING X TRUST, a Delaware statutory trust, as successor-by-assignment from MidCap Financial Trust
     
  By: Apollo Capital Management, L.P.,
    its investment manager
     
  By: Apollo Capital Management GP, LLC,
  its general partner
     
  By: /s/ Michael Levin                                         (SEAL)
  Name:   Michael Levin
  Title: Authorized Signatory

 

 
 

 

( Signature Page to Amendment No. 5 to Credit and Security Agreement and Limited Consent )

 

BORROWERS:   TWINLAB CONSOLIDATION CORPORATION
     
    By: /s/ Thomas A. Tolworthy                          (Seal)
    Name: Thomas A. Tolworthy
    Title:   Chief Executive Officer and President
     
     
TWINLAB CONSOLIDATED HOLDINGS, INC.   TWINLAB HOLDINGS, INC.
     
By: /s/ Thomas A. Tolworthy                          (Seal)   By: /s/ Thomas A. Tolworthy                          (Seal)
Name:  Thomas A. Tolworthy   Name:  Thomas A. Tolworthy
Title:  Chief Executive Officer and President   Title:  Chief Executive Officer and President
     
TWINLAB CORPORATION   ISI BRANDS INC.
     
By: /s/ Thomas A. Tolworthy                          (Seal)   By: /s/ Thomas A. Tolworthy                          (Seal)
Name:  Thomas A. Tolworthy   Name:  Thomas A. Tolworthy
Title:  Chief Executive Officer and President   Title:  Chief Executive Officer and President
     
NUTRASCIENCE LABS, INC.   NUTRASCIENCE LABS IP CORPORATION
     
By: /s/ Thomas A. Tolworthy                          (Seal)   By: /s/ Thomas A. Tolworthy                          (Seal)
Name:  Thomas A. Tolworthy   Name:  Thomas A. Tolworthy
Title:  Chief Executive Officer and President   Title:  Chief Executive Officer and President
     
 
 

 

EXHIBIT A

 

 

Exhibit 10.68

 

EXECUTION VERSION

 

STOCK PURCHASE AGREEMENT

 

THIS STOCK PURCHASE AGREEMENT (this " Agreement "), dated as of June 30, 2015, is entered into between Twinlab Consolidated Holdings, Inc., a Nevada corporation with its principal place of business at 632 Broadway, Suite 201, New York, New York 10012 (" Company "), and Penta Mezzanine SBIC Fund I, L.P., a Delaware limited partnership, with offices at 20 N. Orange Avenue, Suite 1550, Orlando, FL 32801 (" Purchaser ").

 

RECITALS

 

A.           Company and Purchaser are executing and delivering this Agreement in reliance upon the exemption from securities registration afforded by Section 4(a)(2) of the Securities Act of 1933, as amended (the “ Securities Act ”), and Rule 506 of Regulation D (“ Regulation D ”) as promulgated by the United States Securities and Exchange Commission (the “ Commission ”) under the Securities Act.

 

B.           Purchaser wishes to purchase, and Company wishes to sell, upon the terms and conditions stated in this Agreement, an aggregate of 807,018 shares of common stock, par value $0.001 per share (the “ Common Stock ”), of Company, at a purchase price of $0.76 per share (the 807,018 shares of Common Stock to be purchased by Purchaser hereunder are referred to herein as the “ Shares ”).

 

C.           Contemporaneously with the execution and delivery of this Agreement, the parties hereto are executing and delivering a Warrant Agreement, substantially in the form attached hereto as Exhibit A (the “ Warrant Agreement ”), pursuant to which, among other things, Company is granting Purchaser the right to purchase an additional 807,018 shares of Common Stock at a price of $0.01 per share.

 

NOW, THEREFORE, in consideration of the mutual covenants and agreements hereinafter set forth and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

 

1.            Purchase and Sale . Subject to the terms and conditions set forth herein, at the Closing (as defined in Section 2 ), Company shall issue and sell to Purchaser, and Purchaser shall purchase from Company, the Shares. The aggregate purchase price for the Shares shall be $613,333.00 (the " Purchase Price "), to be provided by Purchaser in the form of Purchaser’s agreements set forth in Section 3 hereof.

 

 
 

 

2.            Closing . Subject to the terms and conditions contained in this Agreement, the purchase and sale of the Shares contemplated hereby shall take place at a closing (the " Closing ") to be held at 10:00 a.m. on June 30, 2015 (the " Closing Date ") at the offices of Wilk Auslander LLP, 1515 Broadway, 43 rd Floor, New York, New York 10036, or at such other place or on such other date as Purchaser and Company may mutually agree upon in writing. At the Closing, Company shall deliver to Purchaser a stock certificate or certificates evidencing the Shares, and Purchaser shall have delivered to Company the Purchase Price in the form of Purchaser’s irrevocable agreement provided in Section 3 below to accept the Shares issued by the Company pursuant hereto in lieu of $613,333.00 worth of periodic interest payments otherwise due Purchaser under that certain Initial Note, dated November 13, 2014, as amended, and that certain Deferred Draw Note, dated February 6, 2015, each by and between the Purchaser on the one hand and the Company and its subsidiaries on the other hand (the Initial Note and the Deferred Draw Note collectively, the “ Notes ”).

 

3.            Agreement to Accept Shares in Lieu of Payments under the Notes . Purchaser hereby irrevocably agrees to accept the Shares issued to Purchaser by Company pursuant to this Agreement in lieu and in complete satisfaction of the obligation of the Borrower (as defined in the Notes) to make six (6) months of interest payments to Purchaser in an aggregate amount equal to the Purchase Price, and representing the aggregate amount of interest payable on the Notes for the period beginning on May 1, 2015 and ending on October 31, 2015. Except for Purchaser’s agreement, on the terms set forth herein, to accept the Shares issued pursuant to this Agreement in lieu of cash interest payments otherwise due Purchaser under the Notes in an aggregate amount equal to the Purchase Price, nothing herein is intended to modify in any way the Notes, which shall remain in full force and effect.

 

4.            Closing Deliveries .

 

(a)           On or prior to the Closing, Company shall issue, deliver or cause to be delivered to Purchaser the following:

 

(i)          this Agreement, duly executed by Company;

 

(ii)         certificates representing the Shares; and

 

(iii)        the Warrant Agreement, duly executed by Company.

 

(b)           On or prior to the Closing, Purchaser shall deliver or cause to be delivered to Company the following:

 

(i)          this Agreement, duly executed by Purchaser.

 

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5.            Closing Conditions .

 

(a)          The obligation of Company to issue and sell the Shares to Purchaser hereunder is subject to the satisfaction of the following conditions as of the Closing:

 

(i)          the representations and warranties of Purchaser in Section 7 hereof shall be true and correct on and as of the Closing Date with the same effect as though made at and as of such date;

 

(ii)         Purchaser shall have performed and complied in all material respects with all agreements and conditions required by this Agreement to be performed or complied with by it prior to or on the Closing Date; and

 

(iii)        Purchaser shall have obtained any and all consents, permits, approvals, registrations and waivers necessary or appropriate for consummation of the transactions contemplated herein.

 

(b)          The obligation of Purchaser to purchase the Shares from Company is subject to the satisfaction of the following conditions as of the Closing:

 

(i)          the representations and warranties of Company in Section 6 shall be true and correct on and as of the Closing Date with the same effect as though made at and as of such date;

 

(ii)         Company shall have performed and complied in all material respects with all agreements and conditions required by this Agreement to be performed or complied with by it prior to or on the Closing Date; and

 

(iii)        Company shall have obtained any and all consents, permits, approvals, registrations and waivers necessary or appropriate for consummation of the transactions contemplated herein.

 

6.            Representations and Warranties of Company . Company hereby represents and warrants to Purchaser as follows:

 

(a)          Company is an entity duly incorporated, validly existing and in good standing under the laws of the State of Nevada, with the requisite corporate power and authority to own or lease and use its properties and assets and to carry on its business as currently conducted. Company is not in violation of any of the provisions of its articles of incorporation or bylaws. Company is duly qualified to conduct business and is in good standing as a foreign corporation or other entity in each jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary, except where the failure to be so qualified or in good standing, as the case may be, would not have a Material Adverse Effect. “ Material Adverse Effect ” means a material adverse effect on the results of operations, assets, business or financial condition of Company, except that any of the following, either alone or in combination, shall not be deemed a Material Adverse Effect: (i) effects caused by changes or circumstances affecting general market conditions in the U.S. economy or which are generally applicable to the industry in which Company operates provided that such effects are not borne disproportionately by Company, (ii) effects resulting from or relating to the announcement or disclosure of the sale of the Shares or other transactions contemplated by this Agreement, or (iii) effects caused by any event, occurrence or condition resulting from or relating to the taking of any action in accordance with this Agreement.

 

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(b)          Company has the requisite corporate power and authority to enter into and to consummate the transactions contemplated by this Agreement and otherwise to carry out its obligations hereunder. The execution and delivery of this Agreement by the Company and the consummation by it of the transactions contemplated hereby (including, but not limited to, the sale and delivery of the Shares) have been duly authorized by all necessary corporate action on the part of Company, and no further corporate action is required by Company, its Board of Directors or its stockholders in connection therewith other than in connection with the Required Approvals (as hereinafter defined). This Agreement has been duly executed by the Company and is the legal, valid and binding obligation of the Company enforceable against Company in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally the enforcement of, creditors’ rights and remedies or by other equitable principles of general application or insofar as indemnification and contribution provisions may be limited by applicable law.

 

(c)          The execution, delivery and performance by Company of this Agreement and the consummation by Company of the transactions contemplated hereby (including, without limitation, the issuance of the Shares) do not and will not (i) conflict with or violate any provisions of Company’s articles of incorporation or bylaws or otherwise result in a violation of the organizational documents of Company, (ii) conflict with, or constitute a default (or an event that with notice or lapse of time or both would become a default) under, result in the creation of any Encumbrance upon any of the properties or assets of Company or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any Material Contract (as hereinafter defined) or (iii) subject to the Required Approvals, result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which Company is subject (including federal and state securities laws and regulations and the rules and regulations, assuming the correctness of the representations and warranties made by Purchaser herein, of any self regulatory organization to which Company or its securities are subject), or by which any property or asset of Company is bound or affected), except in the case of clause (ii) and clause (iii) such as would not individually have a Material Adverse Effect. “ Material Contract means any contract of Company that has been filed as an exhibit to the SEC Reports pursuant to Item 601(b)(4) or Item 601(b)(10) of Regulation S-K (including, for purposes hereof, any contracts that are required to be filed as an exhibit to a Form 10). “ Encumbrance ” means any mortgage, deed of trust, pledge, hypothecation, assignment, security interest, lien (whether statutory or otherwise), charge, claim, encumbrance or preference, priority or other security agreement or preferential arrangement held or asserted in respect of any asset or property of any kind or nature whatsoever, including any conditional sale or other title retention agreement, any lease having substantially the same economic effect as any of the foregoing, and the filing of, or agreement to give, any financing statement under the UCC or comparable law of any jurisdiction.

 

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(d)          Company is not required to obtain any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other person or entity in connection with the execution, delivery and performance by Company of the transactions contemplated by this Agreement, the Warrant Agreement and any agreement executed in connection herewith or therewith (including the issuance of the Shares), other than (i) the filing with the Commission of one or more registration statements, (ii) filings required by applicable state securities laws, (iii) the filing of a Notice of Sale of Securities on Form D with the Commission under Regulation D of the Securities Act, (iv) filing of a report on Form 8-K disclosing the Company’s entry into this Agreement and (v) those that have been made or obtained prior to the date of this Agreement (collectively, the “ Required Approvals ”).

 

(e)          The Shares have been duly authorized and, when issued and paid for in accordance with the terms of this Agreement, will be duly and validly issued, fully paid and nonassessable and free and clear of all Encumbrances suffered or permitted by Company, other than restrictions on transfer provided for in this Agreement or imposed by applicable securities laws, and shall not be subject to preemptive or similar rights. Assuming the accuracy of the representations and warranties of Purchaser in this Agreement, the Shares will be issued in compliance with all applicable federal and state securities laws.

 

(f)          There are no actions, suits, claims, investigations or other legal proceedings pending or, to the Company’s Knowledge, threatened against or by Company that challenge or seek to prevent, enjoin or otherwise delay the transactions contemplated by this Agreement. “ Company’s Knowledge ” means with respect to any statement made to the knowledge of Company, that the statement is based upon the actual knowledge of the officers of Company who, as of the date hereof, have responsibility for the matter or matters that are the subject of the statement.

 

(g)          Company has filed all reports, schedules, forms, statements and other documents required to be filed by it under the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”), including pursuant to Section 13(a) or 15(d) thereof, for twelve (12) months preceding and including the date hereof (or such shorter period as Company was required by law or regulation to file such material) (the foregoing materials, including the exhibits thereto and documents incorporated by reference therein, being collectively referred to herein as the “ SEC Reports ”), on a timely basis or has received a valid extension of such time of filing and has filed any such SEC Reports prior to the expiration of any such extension.

 

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(h)          The financial statements of Company included in the SEC Reports comply in all material respects with applicable accounting requirements and the rules and regulations of the Commission with respect thereto as in effect at the time of filing. Such financial statements have been prepared in accordance with U.S. Generally Accepted Accounting Principles (“ GAAP ”) applied on a consistent basis during the periods involved, except as may be otherwise specified in such financial statements or the notes thereto and except that unaudited financial statements may not contain all footnotes required by GAAP, and fairly present in all material respects the financial position of Company and its consolidated subsidiaries taken as a whole as of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the case of unaudited statements, to normal, year-end audit adjustments.

 

(i)          Assuming the accuracy of Purchaser’s representations and warranties set forth in Section 7 of this Agreement (without giving effect to any materiality qualifiers therein), no registration under the Securities Act is required for the offer and sale of the Shares by Company to Purchaser under this Agreement.

 

(j)          No broker, finder or investment banker is entitled to any brokerage, finder's or other fee or commission in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf of Company.

 

7.            Representation and Warranties of Purchaser .

 

(a)          Purchaser is a limited partnership duly organized, validly existing and in good standing under the laws of the State of Delaware.

 

(b)          Purchaser has all requisite power and authority to enter into this Agreement, to carry out its obligations hereunder and to consummate the transactions contemplated hereby. The execution and delivery by Purchaser of this Agreement, the performance by Purchaser of its obligations hereunder and the consummation by Purchaser of the transactions contemplated hereby have been duly authorized by all requisite limited partnership action on the part of Purchaser. This Agreement has been duly executed and delivered by Purchaser and (assuming due authorization, execution and delivery by Company) this Agreement constitutes a legal, valid and binding obligation of Purchaser enforceable against Purchaser in accordance with its terms.

 

(c)          Purchaser is acquiring the Shares solely for its own account for investment purposes and not with a view to, or for offer or sale in connection with, any distribution thereof. Purchaser acknowledges that the Shares are not registered under the Securities Act, or any state securities laws, and that the Shares may not be transferred or sold except pursuant to the registration provisions of the Securities Act or pursuant to an applicable exemption therefrom and subject to state securities laws and regulations, as applicable.

 

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(d)          No governmental, administrative or other third party consents or approvals are required by or with respect to Purchaser in connection with the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby.

 

(e)          There are no actions, suits, claims, investigations or other legal proceedings pending or, to the knowledge of Purchaser, threatened against or by Purchaser that challenge or seek to prevent, enjoin or otherwise delay the transactions contemplated by this Agreement.

 

(f)          Purchaser understands that the Shares are “restricted securities” and have not been registered under the Securities Act or any applicable state securities law and is acquiring the Shares as principal for its own account and not with a view to, or for distributing or reselling such Shares or any part thereof in violation of the Securities Act or any applicable state securities laws, provided, however , that by making the representations herein, Purchaser does not agree to hold any of the Shares for any minimum period of time and reserves the right, subject to the provisions of this Agreement, at all times to sell or otherwise dispose of all or any part of such Shares pursuant to an effective registration statement under the Securities Act or under an exemption from such registration and in compliance with applicable federal and state securities laws. Purchaser is acquiring the Shares hereunder in the ordinary course of its business. Purchaser does not presently have any agreement, plan or understanding, directly or indirectly, with any Person to distribute or effect any distribution of any of the Shares (or any Shares which are derivatives thereof) to or through any person or entity; Purchaser is not a registered broker-dealer under Section 15 of the Exchange Act or an entity engaged in a business that would require it to be so registered as a broker-dealer.

 

(g)          At the time Purchaser was offered the Shares, it was, and at the date hereof it is, an “accredited investor” as defined in Rule 501(a) under the Securities Act. Purchaser has previously delivered an Accredited Investor Questionnaire to Company indicating that Purchaser is an “accredited investor.” As of the date of this Agreement, circumstances have not changed such that Purchaser would not be an “accredited investor.”

 

(h)          Purchaser, either alone or together with its representatives, has such knowledge, sophistication and experience in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment in the Shares, and has so evaluated the merits and risks of such investment. Purchaser is able to bear the economic risk of an investment in the Shares and, at the present time, is able to afford a complete loss of such investment.

 

7
 

 

(i)          Purchaser acknowledges that it has been afforded (i) the opportunity to ask such questions as it has deemed necessary of, and to receive answers from, representatives of Company concerning the terms and conditions of the offering of the Shares and the merits and risks of investing in the Shares; (ii) access to information about Company and its respective financial condition, results of operations, business, properties, management and prospects sufficient to enable it to evaluate its investment; and (iii) the opportunity to obtain such additional information that Company possesses or can acquire without unreasonable effort or expense that is necessary to make an informed investment decision with respect to the investment. Neither such inquiries nor any other investigation conducted by or on behalf of Purchaser or its representatives or counsel shall modify, amend or affect Purchaser’s right to rely on the truth, accuracy and completeness of Company’s representations and warranties contained in this Agreement. Purchaser has sought such accounting, legal and tax advice as it has considered necessary to make an informed decision with respect to its acquisition of the Shares.

 

(j)          Purchaser understands that the Shares are being offered and sold to it in reliance on specific exemptions from the registration requirements of United States federal and state securities laws and that Company is relying in part upon the truth and accuracy of, and Purchaser’s compliance with, the representations, warranties, agreements, acknowledgements and understandings of Purchaser set forth herein in order to determine the availability of such exemptions and the eligibility of Purchaser to acquire the Shares.

 

(k)          Purchaser understands that no United States federal or state agency or any other government or governmental agency has passed on or made any recommendation or endorsement of the Shares or the fairness or suitability of the investment in the Shares nor have such authorities passed upon or endorsed the merits of the offering of the Shares.

 

(l)          No broker, finder or investment banker is entitled to any brokerage, finder's or other fee or commission in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf of Purchaser.

 

8.            Transfer Restrictions .

 

(a)           Notwithstanding any other provision of this Agreement, Purchaser covenants that the Shares may be disposed of only pursuant to an effective registration statement under, and in compliance with the requirements of, the Securities Act, or pursuant to an available exemption from, or in a transaction not subject to, the registration requirements of the Securities Act, and in compliance with any applicable state and federal securities laws. In connection with any transfer of the Shares other than (i) pursuant to an effective registration statement, (ii) to Company, (iii) to an affiliate of Purchaser, (iv) pursuant to Rule 144 under the Securities Act (“ Rule 144 ”) ( provided that Purchaser provides Company with reasonable assurances (in the form of seller and broker representation letters if required) that the securities may be sold pursuant to such rule) or Rule 144A, (v) pursuant to Rule 144 without the requirement that Company be in compliance with the current public information requirements of Rule 144 and without other restriction following the applicable holding period or (vi) in connection with a bona fide pledge, Company may require the transferor thereof to provide to Company an opinion of counsel selected by the transferor and reasonably acceptable to Company, the form and substance of which opinion shall be reasonably satisfactory to Company, to the effect that such transfer does not require registration of such transferred Shares under the Securities Act. As a condition of transfer, any such transferee shall agree in writing to be bound by the terms of this Agreement and shall have the rights of Purchaser under this Agreement.

 

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(b)          Certificates evidencing the Shares shall bear any legend as required by the “Blue Sky” laws of any state and a restrictive legend in substantially the following form until such time as they are not required under Section 8(c) (and a stock transfer order may be placed against transfer of the certificates for the Shares):

 

THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ SECURITIES ACT ”), OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OR (B) AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL REASONABLY SATISFACTORY TO COMPANY.

 

In addition, if Purchaser is an affiliate of Company, certificates evidencing the Shares issued to Purchaser shall bear a customary “affiliates” legend.

 

(c)          Subject to Company’s right to request an opinion of counsel as set forth in Section 8(a), the legend set forth in Section 8(b) above shall be removable and Company shall issue or cause to be issued a certificate without such legend or any other legend (except for any “affiliates” legend as set forth in Section 8(b)) to the holder of the applicable Shares upon which it is stamped if (i) such Shares are registered for resale under the Securities Act (provided that, if Purchaser is selling pursuant to the effective registration statement registering the Shares for resale, Purchaser agrees to only sell such Shares during such time that such registration statement is effective and not withdrawn or suspended, and only as permitted by such registration statement), (ii) such Shares are sold or transferred in compliance with Rule 144 (if the transferor is not an affiliate of Company), including without limitation in compliance with the current public information requirements of Rule 144 if applicable to Company at the time of such sale or transfer, and the holder and its broker have delivered customary documents reasonably requested by Company’s transfer agent and/or Company counsel in connection with such sale or transfer, or (iii) such Shares are eligible for sale under Rule 144 without the requirement that Company be in compliance with the current public information requirements of Rule 144 and without other restriction and Company counsel has provided written confirmation of such eligibility to the transfer agent. Any fees (with respect to the transfer agent, Company counsel or otherwise) associated with the removal of such legend shall be borne by Company. At such time as a legend is no longer required for certain Shares, Company will no later than three (3) business days following the delivery by Purchaser to Company or the transfer agent (with concurrent notice and delivery of copies to Company) of a legended certificate representing such Shares (endorsed or with stock powers attached, signatures guaranteed, and otherwise in form necessary to affect the reissuance and/or transfer, and together with such other customary documents as the transfer agent and/or Company counsel shall reasonably request), deliver or cause to be delivered to the transferee of Purchaser or Purchaser, as applicable, a certificate representing such Shares that is free from all restrictive and other legends. Company may not make any notation on its records or give instructions to the transfer agent that enlarge the restrictions on transfer set forth in this Section 8(c).

 

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(d)          Purchaser hereunder acknowledges its primary responsibilities under the Securities Act and accordingly will not sell or otherwise transfer the Shares or any interest therein without complying with the requirements of the Securities Act. Purchaser acknowledges that the delivery of the Shares and any removal of any legends from certificates representing the Shares as set forth in this Section 8 is predicated on Company’s reliance upon Purchaser’s acknowledgement in this Section 8(d).

 

9.            Survival . All representations and warranties contained herein shall survive the execution and delivery of this Agreement and the Closing hereunder.

 

10.          Indemnification . Company shall indemnify Purchaser and hold Purchaser harmless against and in respect of any and all losses, liabilities, damages, obligations, claims, Encumbrances, costs and expenses (including, without limitation, reasonable attorneys' fees) incurred by Purchaser resulting from any breach of any representation, warranty, covenant or agreement made by Company herein or in any instrument or document delivered to Purchaser pursuant hereto.

 

11.          Further Assurances . Following the Closing, each of the parties hereto shall execute and deliver such additional documents, instruments, conveyances and assurances, and take such further actions as may be reasonably required to carry out the provisions hereof and give effect to the transactions contemplated by this Agreement.

 

12.          Termination . This Agreement may be terminated at any time prior to the Closing (a) by the mutual written consent of Purchaser and Company or (b) by either Purchaser or Company if (i) a breach of any provision of this Agreement has been committed by the other party and such breach has not been cured within 10 days following receipt by the breaching party of written notice of such breach, or (ii) the Closing does not occur by July 1, 2015. Upon termination, all further obligations of the parties under this Agreement shall terminate without liability of any party to the other parties to this Agreement, except that no such termination shall relieve any party from liability for any fraud or willful breach of this Agreement.

 

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13.          Expenses . The Company agrees to pay all reasonable expenses, including legal fees and disbursements, incurred by Purchaser in connection with this Agreement, the Warrant Agreement and the transactions contemplated hereby and thereby.

 

14.          Notices . All notices, requests, consents, claims, demands, waivers and other communications hereunder (each, a " Notice ") shall be in writing and addressed to the parties at the addresses set forth on the first page of this Agreement (or to such other address that may be designated by the receiving party from time to time in accordance with this section). All Notices shall be delivered by personal delivery, nationally recognized overnight courier (with all fees pre-paid), facsimile or e-mail of a PDF document (with confirmation of transmission) or certified or registered mail (in each case, return receipt requested, postage prepaid). Except as otherwise provided in this Agreement, a Notice is effective only (a) upon receipt by the receiving party, and (b) if the party giving the Notice has complied with the requirements of this Section.

 

15.          Entire Agreement . This Agreement 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, agreements, representations and warranties, both written and oral, with respect to such subject matter.

 

16.          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. No party may assign any of its rights or obligations hereunder without the prior written consent of the other parties hereto, which consent shall not be unreasonably withheld or delayed.

 

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

 

18.          Amendment and Modification; Waiver . This Agreement may only be amended, modified or supplemented by an agreement in writing signed by each party hereto. No waiver by any party of any of the provisions hereof shall be effective unless explicitly set forth in writing and signed by the party so waiving. Except as otherwise set forth in this Agreement, no failure to exercise, or delay in exercising, any rights, 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.

 

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19.          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.

 

20.          Governing Law; Submission to Jurisdiction . This Agreement shall be governed by and construed in accordance with the internal laws of the State of New York without giving effect to any choice or conflict of law provision or rule (whether of the State of New York 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.

 

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 Agreement on the date first written above.

 

  TWINLAB CONSOLIDATED HOLDINGS, INC.
   
  By: /s/ Thomas A. Tolworthy
  Name: Thomas A. Tolworthy
  Title: Chief Executive Officer and President
       
  PENTA MEZZANINE SBIC FUND I, L.P.,
  a Delaware limited partnership
   
  By: Penta Mezzanine SBIC Fund I GP, LLC,
    its General Partner
   
    By:    /s/ Seth D. Ellis
    Name:  Seth D. Ellis
    Title:    Manager

 

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Exhibit 10.69

 

 

EXECUTION VERSION

 

THIS WARRANT AND THE EQUITY INTERESTS THAT MAY BE PURCHASED HEREUNDER HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE SECURITIES LAWS OF ANY STATE, AND MAY NOT BE SOLD OR TRANSFERRED, OR OFFERED FOR SALE OR TRANSFER, EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION THEREUNDER OR PURSUANT TO AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS THEREOF.

 

TWINLAB CONSOLIDATED HOLDINGS, INC.

 

No. W-4 June 30, 2015

 

Warrant

 

This Warrant (the “ Warrant ”) certifies that, for value received, PENTA MEZZANINE SBIC FUND I, LP, a Delaware limited partnership , and its permitted transferees, successors and assigns (the “ Holder ”), is entitled to purchase from TWINLAB CONSOLIDATED HOLDINGS, INC., a Nevada corporation (the “ Company ”), 807,018 shares of common stock of the Company (subject to any adjustments pursuant to Section 3.3 ) issuable upon the full exercise of this Warrant at the purchase price of $0.01 per share (the “ Exercise Price ”), at any time prior to 5:00 P.M. Eastern Time on June 30, 2020 (the “ Expiration Date ”).

 

ARTICLE I

DEFINITIONS

 

SECTION 1.1 Definitions . Capitalized terms used but not defined herein shall have the meaning given to them in the Purchase Agreement. As used in this Warrant, the following terms shall have the following meanings:

 

Adjusted EBITDA ” shall mean EBITDA plus any expenses relating to Acquisitions (as defined in the Purchase Agreement) following the Effective Date (as defined in the Purchase Agreement) of the Purchase Agreement, plus severance payments and other costs relating to permanent headcount reductions, all as determined by GAAP.

 

Applicable Law ” means all provisions of laws, statutes, ordinances, rules, regulations, permits, certificates or orders of any Governmental Authority applicable to the Person in question or any of its assets or property, and all judgments, injunctions, orders and decrees of all courts and arbitrators in proceedings or actions in which the Person in question is a party or by which any of its assets or properties are bound.

 

Assignment Form ” shall mean the assignment form attached as Annex 2 hereto.

 

Business Day ” shall have the meaning set forth in the Purchase Agreement.

 

Change in Control ” shall have the meaning set forth in the Purchase Agreement.

 

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Current Holder’s Equity Interest ” means 807,018 shares of common stock of the Company issuable upon the full exercise of this Warrant, minus any Equity Interest previously issued pursuant to the exercise of this Warrant and subject to any adjustment pursuant to Section 3.3 .

 

Company ” shall have the meaning set forth in the Preamble.

 

Delivery Date ” shall have the meaning given to such term in Section 3.2 .

 

EBITDA ” shall have the meaning set forth in the Purchase Agreement.

 

Equity Interest ” shall have the meaning set forth in the Purchase Agreement.

 

Exchange Act ” shall mean the Securities Exchange Act of 1934, as amended from time to time, and any successor statute.

 

Exchange Form ” shall mean the exchange form attached as Annex 3 hereto.

 

Executive Officer ” shall mean, with respect to the Company, its Chief Executive Officer, President, Chief Financial Officer or Chief Operating Officer.

 

Exercise Form ” shall mean the exercise form attached as Annex 1 hereto.

 

Exercise Price ” shall have the meaning set forth in the Preamble.

 

Expiration Date ” shall have the meaning set forth in the Preamble.

 

Fair Market Value ” shall, except in the event of a private placement by the Company of its common stock, mean (i) the trading volume weighted average closing price of the common stock of Company for the twenty (20) trading days immediately preceding the applicable date in question, as quoted on (a) a domestic securities exchange, (b) NASDAQ Stock Market or (c) a domestic over-the-counter market, which trades are reported by Pink OTC Markets Inc. or any similar successor organization or any other over-the-counter market in the United States, as the case may be; or (ii) in the event that the common stock of the Company is not trading on a market such that a value can be derived under subsection (i) of this definition as of the applicable date in question, a valuation per share of the common stock of the Company as determined in accordance with Generally Accepted Valuation Principles by an independent third-party valuation firm mutually agreed upon by the parties (and if the parties cannot mutually agree on a valuation firm, one of the “big four” accounting firms chosen by the Holder). In the event of a private placement by the Company of its common stock, “Fair Market Value” shall mean the average price per share of common stock in such private placement, including any warrants, options or other agreements providing the right to purchase shares of the Company’s common stock.

 

Fiscal Year ” shall have the meaning set forth in the Purchase Agreement.

 

Fully-Diluted Basis ” shall have the meaning set forth in the Purchase Agreement.

 

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Governmental Authority ” shall have the meaning set forth in the Purchase Agreement.

 

Holder ” shall have the meaning set forth in the Preamble.

 

Holder's Equity Interest ” shall have the meaning given to such term in Section 3.3 .

 

Indebtedness ” shall have the meaning set forth in the Purchase Agreement.

 

NASDAQ ” shall mean the NASDAQ Stock Market.

 

Organizational Documents ” shall mean, with respect to any Person, each instrument or other document that (a) defines the existence of such Person, including its articles or certificate of incorporation, formation or organization, as filed or recorded with an applicable Governmental Authority or (ii) governs the internal affairs of such Person, including its by-laws or its operating, partnership or limited liability company agreement, in each case as amended, supplemented or restated.

 

Person ” shall have the meaning set forth in the Purchase Agreement.

 

Purchase Agreement ” shall have the meaning set forth in the Preamble.

 

Qualified Assignment ” shall mean any of the following: (a) an assignment to a transferee acquiring at least 25% of the Equity Interests subject to the Warrant (subject to adjustment for stock splits, stock dividends, recapitalizations and similar events); or (b) an assignment to an Affiliate of the Holder.

 

Rights Agreement ” shall have the meaning given to such term in Section 4.1 .

 

Securities Act ” shall mean the Securities Act of 1933, as amended from time to time, and any successor statute.

 

Taxes ” means all taxes, charges, fees, levies or other assessments, however denominated and whether imposed by a taxing authority within or without the United States, including all net income, gross income, gross receipts, sales, use, ad valorem, goods and services, capital, transfer, franchise, profits, license, withholding, payroll, employment, employer health, excise, estimated, severance, stamp, occupation, property or other taxes, custom duties, fees, assessments or charges of any kind whatsoever, together with any interest and any penalties, additions to tax or additional amounts imposed by any taxing authority whether arising before, on or after the date hereof.

 

Warrant ” or “ Warrants ” shall mean this Warrant.

 

Warrant Register ” shall have the meaning given to such term in Section 2.1.

 

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SECTION 1.2 Interpretation . Unless the context of this Warrant clearly requires otherwise, the masculine, feminine or neuter gender and the singular or plural number shall be deemed to include the others whenever the context so requires. Accounting terms used but not otherwise defined herein have the meanings given to them under GAAP. The terms “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation.” The words “hereof,” “herein,” “hereunder,” and similar terms in this Warrant refer to this Warrant as a whole and not to any particular provision of this Warrant. References to “Articles”, “Sections,” “Subsections,” “Exhibits,” “Preamble,” “Annexes,” and “Schedules” are to articles, sections, subsections, exhibits, preamble, annexes and schedules, respectively, of this Warrant, unless otherwise specifically provided. References to “days” and “months” refer to calendar days and calendar months unless otherwise expressly designated (i.e., business days or particular 30-day periods). The captions contained herein are for convenience only and shall not control or affect the meaning or construction of any provision of this Agreement. The term “dollars” or “$” means United States Dollars.

 

ARTICLE II

FORM; EXCHANGE FOR WARRANTS; TRANSFER; TAXES

 

SECTION 2.1 Warrant Register . Each Warrant issued, exchanged or transferred pursuant to the Purchase Agreement shall be registered in a warrant register (the “ Warrant Register ”). The Warrant Register shall set forth the number of each Warrant, the name and address of the holder thereof, and the Current Holder’s Equity Interest for which the Warrant is then exercisable. The Warrant Register will be maintained by the Company and will be available for inspection by the Holder at the principal office of the Company or such other location as the Company may designate to the Holder in the manner set forth in Section 5.1 hereof. The Company shall be entitled to treat the Holder as the owner in fact thereof for all purposes and shall not be bound to recognize any equitable or other claim to or interest in such Warrant on the part of any other Person.

 

SECTION 2.2 Exchange of Warrants for Warrants .

 

(a)          The Holder may exchange this Warrant for another Warrant or Warrants of like kind and tenor representing in the aggregate the right to purchase the same Current Holder’s Equity Interest which could be purchased pursuant to the Warrant being so exchanged. In order to effect an exchange permitted by this Section 2.2 , the Holder shall deliver to the Company such Warrant accompanied by an Exchange Form in the form attached hereto as Annex 3 signed by the Holder thereof specifying the number and denominations of Warrants to be issued in such exchange and the names in which such Warrants are to be issued. Within ten (10) Business Days of receipt of such a request, the Company shall issue, register and deliver to the Holder thereof each Warrant to be issued in such exchange.

 

(b)          Upon receipt of evidence reasonably satisfactory to the Company (an affidavit of the Holder, including indemnification reasonably acceptable to the Company) of the ownership and the loss, theft, destruction or mutilation of any Warrant or, in the case of any such mutilation, upon surrender of such Warrant, the Company shall (at its expense) execute and deliver in lieu of such Warrant a new Warrant of like kind and tenor representing the same rights represented by and dated the date of such lost, stolen, destroyed or mutilated Warrant. Any such new Warrant shall constitute an original contractual obligation of the Company, whether or not the allegedly lost, stolen, mutilated or destroyed Warrant shall be at any time enforceable by any Person.

 

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(c)          The Company shall pay all Taxes (other than any applicable income or similar Taxes payable by a Holder of a Warrant) attributable to an exchange of a Warrant pursuant to this Section 2.2 ; provided, however , that the Company shall not be required to pay any Tax which may be payable in respect of any transfer involved in the issuance of any Warrant in a name other than that of the Holder of the Warrant being exchanged.

 

SECTION 2.3 Transfer of Warrant .

 

(a)          Subject to Section 2.3(c) hereof and the Purchase Agreement, each Warrant and the rights thereunder may be transferred by the Holder thereof by delivering to the Company such Warrant accompanied by a properly completed Assignment Form in the form of Annex 2 . Within ten (10) Business Days of receipt of such Assignment Form the Company shall issue, register and deliver to the new Holder, subject to Section 2.3(c ) hereof a new Warrant or Warrants of like kind and tenor representing in the aggregate the right to purchase the same Current Holder’s Equity Interest which could be purchased pursuant to the Warrant being transferred. In all cases of transfer by an attorney, the original power of attorney, duly approved, or a copy thereof, duly certified, shall be deposited and remain with the Company. In case of a transfer by executors, administrators, guardians or other legal representatives, duly authenticated evidence of their authority shall be produced and may be required to be deposited and remain with the Company in its discretion.

 

(b)          Each Warrant issued in accordance with this Section 2.3 shall bear the restrictive legend set forth on the face of this Warrant, unless the Holder or transferee thereof supplies to the Company an opinion of counsel, reasonably satisfactory to the Company, that the restrictions described in such legend are no longer applicable to such Warrant.

 

(c)          The transfer of Warrants and any Equity Interest purchased thereunder shall be permitted, so long as such transfer is pursuant to a transaction that complies with, or is exempt from, the provisions of the Securities Act, and the Company may require an opinion of counsel in form and substance reasonably satisfactory to it to such effect prior to effecting any transfer of Warrants or any Equity Interest purchased thereunder.

 

ARTICLE III

EXERCISE OF WARRANT; EXCHANGE FOR EQUITY INTEREST

 

SECTION 3.1 Exercise of Warrants . On any Business Day prior to the Expiration Date, the Holder may exercise this Warrant, in whole or in part, by delivering to the Company this Warrant accompanied by a properly completed Exercise Form in the form of Annex 1 and a check in an aggregate amount equal to the applicable Exercise Price.

 

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SECTION 3.2 Issuance of Equity Interest .

 

(a)          The Company represents and warrants that the authorized Equity Interest of the Company consists solely of (i) 5,000,000,000 shares of common stock, par value $0.001 per share, of which only 228,447,370 common shares have been issued and 219,952,969 common shares remain outstanding as of the date hereof and (ii) 500,000,000 shares of preferred stock, of which no preferred shares have been issued as of the date hereof. The shares of common stock of the Company issued and outstanding as of the date hereof are duly authorized, validly issued, fully paid and non-assessable. The delivery to the Holder of certificates representing the Equity Interest that the Holder purchases pursuant to the exercise of this Warrant shall grant to the Holder good and valid title to the Equity Interest represented by such certificate, free and clear of any and all liens, pledges, security interests, charges or encumbrances of any kind or nature or any option, warrant or trust having the practical effect of any of the foregoing.

 

(b)          Immediately upon the exercise of this Warrant in accordance with Section 3.1 , the Company (the “ Delivery Date ”) shall issue the Equity Interest that the Holder has purchased pursuant to such exercise, deliver to the Holder the certificates representing such Equity Interest and reflect the issuance of such Equity Interest, which Equity Interest shall be duly authorized, validly issued, outstanding, fully paid and non-assessable, in the Company’s shareholder records (maintained by the Company or its duly appointed transfer agent), whereupon the Holder shall be deemed for all purposes, effective as of the Delivery Date, to be a holder of record and beneficial owner of the Equity Interest that it has purchased pursuant to such exercise.

 

(c)          If a Holder shall exercise this Warrant for less than all of the Equity Interest which could be purchased or received hereunder, the Company shall issue to the Holder, within five (5) Business Days of the Delivery Date, a new Warrant of like kind and tenor to this Warrant evidencing the right to purchase the remaining Equity Interest represented by the Warrant. This Warrant shall be cancelled upon surrender thereof pursuant to Section 3.1 .

 

(d)          The Company shall pay all Taxes (other than any applicable income or similar Taxes payable by a Holder of a Warrant) attributable to the initial issuance of any Equity Interest upon the exercise or exchange of this Warrant or any successor Warrant; provided , however , that the Company shall not be required to pay any Tax which may be payable in respect of any transfer involved in the issuance of a successor to this Warrant in a name other than that of the Holder of the Warrant being exercised or exchanged.

 

(e)          Except as set forth in any document that is un-redacted and publicly filed with the U.S. Securities and Exchange Commission, neither the Company 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 3.3 Adjustment of Holder’s Equity Interest . The Equity Interest issuable upon exercise of this Warrant (such Equity Interest is referred to herein as the “ Holder's Equity Interest ”) shall be subject to adjustment from time to time in accordance with this Section 3.3 .

 

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SECTION 3.3.1 Issuance of Additional Equity Interest; Capital Reorganization or Capital Reclassifications . If, at any time after the date hereof, the Equity Interests of the Company shall be changed into or exchanged for a different number or kind of shares of stock or other securities of the Company or of another corporation, whether through reorganization, recapitalization, stock split-up, combination of shares, merger or consolidation (including, without limitation, any subdivision or combination of Equity Interest), then in each case the Company shall cause effective provision to be made so that this Warrant shall, effective as of the effective date of such event retroactive to the record date, if any, of such event, be exercisable or exchangeable for the kind and number of equity securities, cash or other property to which a holder of the Equity Interest deliverable upon exercise or exchange of this Warrant would have been entitled upon such event and any such provision shall include adjustments in respect of such securities or other property that shall be equivalent to the adjustments provided for in this Warrant with respect to such Warrant.

 

SECTION 3.3.2 Consolidations and Mergers; Dissolution .

 

(a)          If, at any time after the date hereof, the Company shall consolidate with, merge with or into, or sell all or substantially all of its assets or property to, another Person, then the Company shall cause effective provision to be made so that each Warrant shall, effective as of the effective date of such event retroactive to the record date, if any, of such event, be exercisable or exchangeable for the kind and number of shares of stock, membership or other equity interests, other securities, cash or other property to which a holder of the Equity Interest deliverable upon exercise or exchange of such Warrant would have been entitled upon such event. 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 Holder at the Holder’s address set forth in Section 5.1. 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.

 

(b)          In case a voluntary or involuntary dissolution, liquidation, or winding up of the Company (other than in connection with a consolidation or merger covered by subsection (a) above) is at any time proposed, the Company shall give at least 30 days’ prior written notice to the Holder. 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 Holder 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 to be made to the Holder 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.

 

SECTION 3.3.3 Adjustments to the Current Holder’s Equity Interest . Subject to the terms of this Section 3.3.3 , the Current Holder’s Equity Interest (and the Warrant) shall be subject to increase (but not decrease) as follows:

 

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(a)          In the event that (i) prior to December 18, 2018 the Company completes a private placement of its common stock and 50% of the Fair Market Value of the Company’s common stock in such private placement is less than $0.385 per share, or (ii) 50% of the Fair Market Value of the Company’s common stock as of December 31, 2018 is less than $0.385 per share, then in each case the existing Current Holder’s Equity Interest applicable to the Warrant at such time shall increase (but not decrease) to a new Current Holder’s Equity Interest pursuant to the following formula:

 

New Current Holder’s Equity Interest = [(2 x Existing Current Holder’s Equity Interest) x ($0.385 ÷ 50% of FMV)] – Existing Current Holder’s Equity Interest.

 

(b)          In the event that Holder exercises the Warrant in whole or in part prior to December 31, 2018 and Fair Market Value of the Company’s common stock on the date of such exercise is less than $0.385 per share, then the Current Holder’s Equity Interest with respect solely to those shares being exercised shall increase (but not decrease) pursuant to the same formula set forth in Section 3.3.3(a) above, such that the formula would apply only to the shares being exercised, as follows:

 

New Current Holder’s Equity Interest for Exercised Shares = [(2 x Existing Current Holder’s Equity Interest in the Exercised Shares ) x ($0.385 ÷ 50% of FMV as of the Exercise Date )] – Existing Current Holder’s Equity Interest in the Exercised Shares

 

(c)          Solely for the purposes of illustration, examples of the calculations described in this Section 3.3.3 are set forth on Schedule 3.3.3 attached hereto .

 

(d)          The foregoing notwithstanding, the adjustment to Current Holder’s Equity Interest provided for in this Section 3.3.3 shall not apply to any private placement completed by the Company on or prior to September 30, 2015 with (i) David L. Van Andel; (ii) David L. Van Andel Trust, under Trust Agreement dated November 30, 1993; (iii) the Holder; (iv) JL-BBNC Mezz Utah, LLC; (v) JL Properties, Inc.; or (vi) MidCap Funding X Trust, or any of the parent companies, subsidiaries, or affiliates of any of the foregoing persons or entities.

 

SECTION 3.3.4  Notice; Calculations; Etc . Whenever the Equity Interest issuable hereunder shall be adjusted as provided in this Section 3.3 , the Company shall provide to the Holder a statement, signed by an Executive Officer, describing in detail the facts requiring such adjustment and setting forth a calculation of the Equity Interest applicable to each Warrant after giving effect to such adjustment. All calculations under this Section 3.3 shall be made to the nearest one hundredth of a cent or to the nearest one-tenth of a unit, as the case may be.

 

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ARTICLE IV

 

CERTAIN OTHER RIGHTS

 

SECTION 4.1 Registration Rights.

 

(a)          At any time at which this Warrant or the Equity Interest underlying the same remains outstanding, upon the request of the Holder, the Company will enter into a registration rights agreement with Holder (the “ Rights Agreement ”). Such Rights Agreement shall provide that beginning October 1, 2015, if the Company is eligible for the use of a registration statement on Form S-3, then the Holder shall have the right to request an initial registration and thereafter on a quarterly basis after such initial registration shall have been declared effective by the U.S. Securities and Exchange Commission, registration of its Equity Interests on Form S-3 or any similar short-form registration (each, a " Demand Registration "). The Rights Agreement will provide that each request for a Demand Registration shall specify the approximate number of Equity Interests requested to be registered and that the Company shall cause a registration statement on Form S-3 (or any successor form) to be filed within twenty (20) 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. The Rights Agreement will provide that 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 determines in its reasonable good faith judgment that such Demand Registration would (i) materially interfere with a significant acquisition, corporate reorganization 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. The Rights Agreement shall contain such other terms and conditions applicable to the Holder no less favorable to the Holder than registration rights made available to any other holder of any Equity Interest or other equity security of the Company.

 

(b)          The rights to cause the Company to register Equity Interests pursuant hereto may be assigned (but only with all related obligations) by the Holder in a Qualified Assignment; provided, that, (i) the Company is, upon or within a reasonable time after such transfer, furnished with written notice of the name and address of such transferee and the securities with respect to which such registration rights are being assigned, (ii) such transferee or assignee agrees in writing to be bound by and subject to the terms and conditions of this Warrant, (iii) such assignment shall be effective only if immediately following such transfer the further disposition of such securities by transferee or assignee is restricted under the Securities Act, and (iv) such assignment shall be effective only if immediately following such transfer such Equity Interests continue to be Equity Interests of the Company.

 

ARTICLE V

MISCELLANEOUS

 

SECTION 5.1 Notices . Unless otherwise specifically provided herein, any notice or other communication herein required or permitted to be given shall be in writing and shall be made by electronic mail, personal service, facsimile or reputable courier service:

 

(a) If to the Company, to:

 

TWINLAB CONSOLIDATED HOLDINGS, INC.

600 East Quality Drive

American Fork, UT 84003

Attention: Mark Jaggi, Chief Financial Officer

Facsimile: (801) 763-0789

e-mail: MJaggi@twinlab.com

 

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and

 

TWINLAB CONSOLIDATED HOLDINGS, INC.

632 Broadway, Suite 201

New York, NY 10012

Attention: Richard Neuwirth, Chief Legal Officer

Facsimile: (212) 260-1853

e-mail: RNeuwirth@twinlab.com

 

with a copy to:

 

VARNUM LLP

Bridgewater Place, P.O. Box 352

Grand Rapids, MI 49501

Attention: Mary Kay Shaver

Facsimile: (616) 336-7000

e-mail: mkshaver@varnumlaw.com

 

and

 

WILK AUSLANDER LLP

1515 Broadway, 43 rd Floor

New York, NY 10036

Attention: Joel I. Frank

Facsimile: (212) 752-6380

e-mail: jfrank@wilkauslander.com

 

(b) If to the Holder, to:

 

PENTA MEZZANINE SBIC FUND I, L.P.

20 N. Orange Ave, Suite 1550

Orlando, FL 32801

Attention: Seth Ellis, Principal

Facsimile: (407) 641-9286

e-mail: sellis@floridamezz.com

 

with a copy to:

 

KATTEN MUCHIN ROSENMAN LLP

575 Madison Avenue

New York, New York 10022

Attention: Angela Batterson, Esq.

e-mail: angela.batterson@kattenlaw.com

 

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Unless otherwise specifically provided herein, any notice or other communication shall be deemed to have been given when delivered in person or by courier service, upon receipt of electronic mail or upon receipt of facsimile.

 

SECTION 5.2 No Voting Rights: Limitations of Liability . This Warrant shall not entitle the holder thereof to any voting rights or, except as otherwise provided or referenced herein, other rights of an equity owner of the Company. No provision hereof, in the absence of affirmative action by the Holder to purchase its Equity Interest, and no enumeration herein of the rights or privileges of the Holder shall give rise to any liability of the Holder for the Exercise Price of the Equity Interest acquirable by exercise hereunder or as a stockholder of the Company.

 

SECTION 5.3 Amendments and Waivers . Any provision of this Warrant may be amended or waived, but only pursuant to a written agreement signed by the Company and the Holder; provided , however , that, notwithstanding the foregoing, this Warrant will automatically be amended, without any further action required by the Company and the Holder under this Section 5.3 , in the event the Current Holder’s Equity Interest is adjusted pursuant to Section 3.3.3 .

 

SECTION 5.4 Severability . If any provision of this Agreement shall be held to be invalid or unenforceable, such invalidity or unenforceability shall attach only to such provision and shall not in any way affect or render invalid or unenforceable any other provision of this Agreement, and such provision shall be deemed to be restated to reflect the parties' original intentions as nearly as possible in accordance with Applicable Law(s).

 

SECTION 5.5 Specific Performance . The Holder shall have the right to specific performance by the Company of the provisions of this Warrant, in addition to any other remedies it may have at law or in equity. The Company hereby irrevocably waives, to the extent that it may do so under Applicable Law, any defense based on the adequacy of a remedy at law which may be asserted as a bar to the remedy of specific performance in any action brought against the Company for specific performance of this Warrant by the Holder.

 

SECTION 5.6 Binding Effect . This Warrant shall be binding upon and inure to the benefit of the Company, the Holder and their respective successors and assigns.

 

SECTION 5.7 Counterparts . This Warrant may be executed in several counterparts, and/or by the execution of counterpart signature pages that may be attached to one or more counterparts of this Warrant, and all so executed shall constitute one agreement binding on all of the parties hereto, notwithstanding that all of the parties hereto are not signatory to the original or the same counterpart. In addition, any counterpart signature page may be executed by any party wherever such party is located, and may be delivered by telephone facsimile or by electronic mail in PDF format, and any such transmitted signature pages may be attached to one or more counterparts of this Warrant, and such faxed or sent by electronic mail signature(s) shall have the same force and effect, and be as binding, as if original signatures had been executed and delivered in person.

 

SECTION 5.8 Entire Agreement . This Warrant, together with the other documents and instruments entered into by the parties thereto in connection therewith, constitute the entire understanding among the parties hereto with respect to the subject matter hereof and supersedes any prior agreements, written or oral, with respect thereto.

 

11
 

 

SECTION 5.9 Governing law . THIS WARRANT SHALL BE GOVERNED BY AND CONSTRUED UNDER THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAWS RULES AND PRINCIPLES. THE PARTIES HEREBY EXPRESSLY AND IRREVOCABLY SUBMIT TO THE JURISDICTION OF THE STATE AND FEDERAL COURTS LOCATED IN NEW YORK COUNTY, NEW YORK FOR THE PURPOSE OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS WARRANT, AND IRREVOCABLY AGREE TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH SUCH LITIGATION. THE PARTIES HEREBY EXPRESSLY AND IRREVOCABLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH THEY MAY HAVE OR HEREAFTER MAY HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. TO THE EXTENT THAT ANY PARTY HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, THE PARTY HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS WARRANT.

 

SECTION 5.10 Expenses . The Company will promptly (and in any event within thirty (30) days of receiving any statement or invoice therefor) pay all reasonable fees, expenses and costs relating hereto, including, but not limited to, (i) the cost of reproducing this Warrant, (ii) the fees and disbursements of counsel to the Holder in preparing this Warrant, (iii) all transfer, stamp, documentary or other similar Taxes, assessments or charges levied by any governmental or revenue authority in respect hereof or any other document referred to herein, (iv) fees and expenses (including, without limitation, reasonable attorneys' fees) incurred in respect of the enforcement by the Holder of the rights granted to the Holder under this Warrant, and (v) the expenses relating to the consideration, negotiation, preparation or execution of any amendments, waivers or consents requested by the Company pursuant to the provisions hereof, whether or not any such amendments, waivers or consents are executed.

 

SECTION 5.11 Attorneys' Fees . In any action or proceeding brought by a party to enforce any provision of this Warrant, the prevailing party shall be entitled to recover the reasonable costs and expenses incurred by it or him in connection therewith (including reasonable attorneys’ and paralegals’ fees and costs incurred before and at any trial or arbitration and at all appellate levels), as well as all other relief granted or awarded in such action or other proceeding.

 

SECTION 5.12 Filings . The Company shall, at its own expense, promptly execute and deliver, or cause to be executed and delivered, to the Holder all applications, certificates, instruments and all other documents and papers that the Holder may reasonably request in connection with the obtaining of any consent, approval, qualification, or authorization of any Federal, provincial, state or local government (or any agency or commission thereof) necessary or appropriate in connection with, or for the effective exercise of, the Warrant (and/or any successor Warrant(s) hereto).

 

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SECTION 5.13 Other Transactions . Nothing contained herein shall preclude the Holder from engaging in any transaction, in addition to those contemplated by this Warrant with the Company or any of its Affiliates in which the Company or such Affiliate is not restricted hereby from engaging with any other Person.

 

SECTION 5.14 Waiver of Jury Trial . THE HOLDER AND THE COMPANY HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS WARRANT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF THE HOLDER OR THE COMPANY. THE COMPANY ACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED FULL AND SUFFICIENT CONSIDERATION FOR THIS PROVISION AND THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE HOLDER ENTERING INTO THIS WARRANT.

 

SECTION 5.15 Headings . Section titles and captions contained in this Warrant are inserted only as a matter of convenience and for reference. The titles and captions in no way define, limit, extend or describe the scope of this Warrant or the intent of any provision hereof.

 

SECTION 5.16 No Third-Party Beneficiaries . This Warrant is for the sole benefit of the Company and the Holder and their respective successors and, in the case of the Holder, 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.

 

[Remainder of page intentionally left blank; signatures on following page]

 

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IN WITNESS WHEREOF, the undersigned has caused this Warrant to be duly executed and delivered by an authorized officer, all as of the date and year first above written.

 

  TWINLAB CONSOLIDATED HOLDINGS, INC.,
a Nevada corporation
     
  By: /s/ Thomas A. Tolworthy
  Name:  Thomas A. Tolworthy
  Title:    Chief Executive Officer and President

 

[SIGNATURE PAGE TO WARRANT]

 

14
 

 

ACKNOWLEDGED AND AGREED:
 
PENTA MEZZANINE SBIC FUND I, L.P.,
a Delaware limited partnership
     
By: Penta Mezzanine SBIC Fund I GP, LLC,
  its General Partner
     
  By: /s/ Seth D. Ellis
  Name:  Seth D. Ellis
  Title:    Manager

 

[SIGNATURE PAGE TO WARRANT]

 

15
 

 

ANNEX 1

 

ELECTION TO EXERCISE FORM

 

(To Be Executed By the Holder of This Warrant

 

In Order to Exercise This Warrant)

 

The undersigned hereby irrevocably elects to exercise the right covered by this Warrant to purchase ____________________ of the Equity Interest of TWINLAB CONSOLIDATED HOLDINGS, INC. , a Nevada corporation, according to the conditions hereof and herewith makes payment in full of the Exercise Price with respect to such Equity Interest.

 

   
  Signature
   
   
   
   
  Address

 

Dated: ____________________

 

16
 

 

ANNEX 2

 

ASSIGNMENT FORM

 

(To Be Executed By the Holder of This Warrant

 

In Order to Assign This Warrant)

 

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto _____________________________ this Warrant and all rights evidenced thereby and does irrevocably constitute and appoint ___________________, attorney, to transfer the said Warrant on the books of TWINLAB CONSOLIDATED HOLDINGS, INC. , a Nevada corporation.

 

   
  Signature
   
   
   
   
  Address

 

Dated: ____________________

 

17
 

 

ANNEX 3

 

EXCHANGE FORM

 

(To Be Executed By the Holder of This Warrant

 

In Order to Exchange and Assign This Warrant)

 

The undersigned hereby irrevocably elects to exchange this Warrant to purchase ________________, of the Equity Interest of TWINLAB CONSOLIDATED HOLDINGS, INC. , a Nevada corporation, for ___________ Warrants to purchase the Equity Interest of TWINLAB CONSOLIDATED HOLDINGS, INC. , a Nevada corporation, set forth below to the Persons named and hereby sells, assigns and transfers unto such Persons that portion of this Warrant represented by such new Warrants and all rights evidenced thereby and does irrevocably constitute and appoint ____________________, attorney, to exchange and transfer this Warrant as aforesaid on the books of TWINLAB CONSOLIDATED HOLDINGS, INC. , a Nevada corporation.

 

Equity Interest     Assignee
       
       
       
       
       
       
      Signature
       
     
     
    Address

 

FOR USE BY THE COMPANY ONLY:

 

This Warrant No. __ cancelled (or transferred or exchanged) this ________ day of _____________, ____________ of the Equity Interest of TWINLAB CONSOLIDATED HOLDINGS, INC. , a Nevada corporation, issued therefor in the name of ____ ___________ Warrant No. ___ for ________, of the Equity Interest of TWINLAB CONSOLIDATED HOLDINGS, INC. , a Nevada corporation, in the name of _________________________.

 

Dated: ____________________

 

 
 

 

Schedule 3.3.3

 

Calculations for Adjustment of Current Holder’s Equity Interest

 

In the event that (i) prior to December 18, 2018 the Company completes a private placement of its common stock and 50% of the Fair Market Value of the Company’s common stock in such private placement is less than $0.385 per share, (ii) 50% of the Fair Market Value of the Company’s common stock as of December 31, 2018 is less than $0.385 per share, or (iii) Holder exercises the Warrant in whole or in part prior to December 31, 2018 and Fair Market Value of the Company’s common stock on the date of such exercise is less than $0.385 per share, then in each case, the existing Current Holder’s Equity Interest will increase (but not decrease) consistent with the following examples:

 

Section 3.3.3(a) - Example Where Warrant Has Remained Unexercised as of December 31, 2018

 

Solely for illustration purposes:

 

Assumptions :

· Original Investment: $760,000
· Price per share: $0.76
· Total Shares: 1,000,000
· FMV of Company’s common stock: $.50/share
· No exercises of Warrant through December 31, 2018

 

New Current Holder’s Equity Interest:

= [(2 x 1,000,000) x (0.385 ÷ 0.25)] – 1,000,000

= [2,000,000 x 1.54] – 1,000,000

= 3,080,000 – 1,000,000

= 2,080,000 (an increase of 1,080,000 over existing CHEI)

 

At a $0.01/share exercise price, to fully-exercise the New Current Holder’s Equity Interest would cost $20,800. Together with the original investment of $760,000, the Holder’s total investment would equal $780,800 for 3,080,000 shares, or $0.25/share.

 

Section 3.3.3(b) - Example Assuming Warrant is Partially Exercised Prior to December 31, 2018 .

 

Same assumptions as above, but assume 750,000 of the 1,000,000 shares are exercised in a partial exercise.

 

New Current Holder’s Equity Interest for the portion of the Warrant the Holder is exercising:

= [(2 x 750,000) x (0.385 ÷ 0.25)] – 750,000

= [1,500,000 x 1.54] – 750,000

= 2,310,000 – 750,000

= 1,560,000 (an increase of 756,000 over existing CHEI)

 

2
 

 

At a $0.01/share exercise price, to fully exercise the New Current Holder’s Equity Interest for the portion of the Warrant the Holder is then exercising would cost $15,600. Together with the original investment of $570,000 for the corresponding number of original investment shares (i.e., 750,000 shares at $0.76/share), the Holder’s total investment related to the portion of the Warrant so exercised would equal $585,600 for 2,310,000 shares, or $0.25/share. The Holder would retain the right to exercise the remaining 250,000 shares.

 

3

Exhibit 10.70

 

 

FOURTH AMENDMENT TO NOTE AND WARRANT PURCHASE AGREEMENT, LIMITED CONSENT AND LIMITED WAIVER

 

This FOURTH AMENDMENT TO NOTE AND WARRANT AGREEMENT, LIMITED CONSENT AND LIMITED WAIVER (this “ Amendment ”), dated as of June 30, 2015, is made by and between TWINLAB CONSOLIDATED HOLDINGS, INC., a Nevada corporation (“ Parent ”), TWINLAB CONSOLIDATION CORPORATION, a Delaware corporation (“ TCC ”), TWINLAB HOLDINGS, INC., a Michigan corporation (“ Twinlab Holdings ”), ISI BRANDS INC., a Michigan corporation (“ ISI Brands ”), and TWINLAB CORPORATION, a Delaware corporation (“ Twinlab Corporation ”), NUTRASCIENCE LABS, INC., a Delaware corporation, NUTRASCIENCE LABS IP CORPORATION., a Delaware corporation (each of the foregoing Persons being referred to herein individually as a “ Company ” and collectively as the “ Companies ”), and PENTA MEZZANINE SBIC FUND I, L.P., a Delaware limited partnership (the “ Purchaser ”).

 

WHEREAS, the Companies and the Purchaser are parties to a Note and Warrant Purchase Agreement dated as of November 13, 2014, as amended by that certain First Amendment to Note and Warrant Purchase Agreement, Consent and Joinder dated as of January 22, 2015, that certain Second Amendment to Note and Warrant Purchase Agreement and Consent dated as of February 4, 2015 and that certain Third Amendment to Note and Warrant Purchase Agreement and Consent dated as of April 30, 2015 (as the same may be further amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “ Note Purchase Agreement ”); and

 

WHEREAS, the Companies have requested that the Purchaser convert the aggregate amount of interest payable on the Notes for the period beginning on May 1, 2015 and ending on October 31, 2015 (it being understood and agreed that the aggregate amount of interest payable for such period is $613,333) into Equity Interests in Parent at the price of $0.76 per share of common stock pursuant to that certain Share Purchase Agreement, dated as of the date hereof, among Purchaser and Parent (the “ Share Purchase Agreement ”) (the “ Interest Conversion ”);

 

WHEREAS, (a) the Companies have requested that the Purchaser (i) consent to the Interest Conversion and (ii) waive certain defaults and provisions of the Note Purchase Agreement, and (b) the Purchaser has agreed to do so subject to the terms and conditions set forth herein.

 

NOW, THEREFORE, in consideration of the promises and the mutual agreements contained in this Amendment, and subject to the terms and conditions set forth herein, each party hereto hereby agrees as follows:

 

1.           Capitalized Terms . Capitalized terms used but not defined herein shall have the meanings set forth in the Note Purchase Agreement.

 

2.           Limited Consent for the Interest Conversion . At the request of and as an accommodation to the Companies and subject to the strict compliance with the terms, conditions and requirements set forth herein (including, without limitation, satisfaction of each of the conditions set forth in Section 8 below), the Purchaser hereby consents to the Interest Conversion. The limited consent set forth in this Section 2 is effective solely for the purposes set forth herein and shall be limited precisely as written and shall not be deemed to (a) except as expressly provided herein, be a consent to any amendment, waiver or modification of any term or condition of the Note Purchase Agreement or of any other Transaction Document; (b) prejudice any right that the Purchaser have or may have in the future under or in connection with the Note Purchase Agreement or any other Transaction Document; (c) waive any Event of Default that exists as of the date hereof; or (d) establish a custom or course of dealing among any of the Companies, on the one hand, or the Purchaser on the other hand.

 

1
 

  

3.           Limited Consent for new Essex Lease . At the request of and as an accommodation to the Companies and subject to the strict compliance with the terms, conditions and requirements set forth herein (including, without limitation, satisfaction of each of the conditions set forth in Section 8 below), the Purchaser hereby consents to (i) a sale/leaseback and refinancing transaction with Essex Capital Corporation in the principal rental amount of $2,750,000 consisting of the sale/leaseback of existing Twinlab Corporation equipment described on Exhibit K (the “ First 2015 Essex Lease ”) and (ii) a sale/leaseback and refinancing transaction with Essex Capital Corporation in the principal rental amount of $150,000 consisting of the sale/leaseback of existing Twinlab Corporation equipment described on Exhibit L (the “ Second 2015 Essex Lease ” and together, collectively, the “ 2015 Essex Leases ”). Consent for the 2015 Essex Leases includes consent for Twinlab Corporation to sell the equipment described on Exhibit K and Exhibit L to Essex Capital Corporation, and the Purchaser shall execute such lien releases and file such financing amendments to evidence lien releases of the equipment described on Exhibit K and Exhibit L as reasonably requested by Twinlab Corporation or Essex Capital Corporation. The limited consent set forth in this Section 3 is effective solely for the purposes set forth herein and shall be limited precisely as written and shall not be deemed to (a) except as expressly provided herein, be a consent to any amendment, waiver or modification of any term or condition of the Note Purchase Agreement or of any other Transaction Document; (b) prejudice any right that the Purchaser has or may have in the future under or in connection with the Note Purchase Agreement or any other Transaction Document; (c) waive any Event of Default that exists as of the date hereof; or (d) establish a custom or course of dealing among any of the Companies, on the one hand, or the Purchaser on the other hand.

 

4.           Limited Waiver to Note Purchase Agreement . At the request of and as an accommodation to the Companies and subject to the strict compliance with the terms, conditions and requirements set forth herein (including, without limitation, satisfaction of each of the conditions set forth in Section 8 below), the Purchaser hereby agrees to waive (i) the Event of Default under Section 11.1(c) of the Note Purchase Agreement due to the Companies’ failure to comply with the financial covenants set forth in Section 5.12 of the Note Purchase Agreement for the measurement period ending March 31, 2015 (the “ Specified Event of Default ”) and (ii) the Companies’ compliance with the financial covenants set forth in Section 5.12 of the Note Purchase Agreement for the measurement period ending June 30, 2015. The limited waiver set forth in this Section 4 is effective solely for the purposes set forth herein and shall be limited precisely as written and shall not be deemed to (a) except as expressly provided herein, be a consent to any amendment, waiver or modification of any term or condition of the Note Purchase Agreement or of any other Transaction Document; (b) prejudice any right that the Purchaser have or may have in the future under or in connection with the Note Purchase Agreement or any other Transaction Document; (c) waive any Event of Default (other than the Specified Event of Default) that exists as of the date hereof; or (d) establish a custom or course of dealing among any of the Companies, on the one hand, or the Purchaser on the other hand.

 

5.           Amendments to Note Purchase Agreement . Subject to the satisfaction of the conditions precedent set forth herein and in reliance on the representations, warranties and covenants of the Companies set forth herein and in the Note Purchase Agreement, each party hereto hereby agrees that the Note Purchase Agreement be and hereby is, amended as follows:

 

5.1.           Amendment and Restatement of Existing Defined Terms . Section 1 of the Note Purchase Agreement is hereby amended by amending and restating each of the following defined terms as follows:

 

2
 

 

Essex Debt ” means Indebtedness pursuant to (i) that certain Commercial Lease Agreement, dated as of November 13, 2013, between Twinlab Corporation and Essex Capital Corporation, (ii) that certain Commercial Lease Agreement, dated as of August 21, 2014 (which Commercial Lease Agreement refreshes and supersedes a Commercial Lease Agreement dated March 19, 2013), between Twinlab Corporation and Essex Capital Corporation, and (iii) a new sale/leaseback and refinancing agreement to be entered into between Twinlab Consolidation Corporation and Essex Capital Corporation, in the form previously provided to and approved by the Agent and for which Essex Capital Corporation has agreed to be subject to an Agreement Regarding Equipment and Lease in form and substance satisfactory to the Purchaser in its sole discretion; the rental installments of all such lease agreements identified in subclauses (i) through (iii) together is not to exceed an aggregate principal rental amount of $5,800,000.

 

Nutricap Seller First Note ” means the Amended and Restated Unsecured Promissory Note dated June 30, 2015 in the form previously approved by the Purchaser in the principal amount of $2,750,000 issued by Subco I to Nutricap Labs, LLC, a New York limited liability company, in connection with the Target 2 Acquisition, the principal and interest repayment of which shall have a maturity of January 1, 2016 and bear interest at 8.5% per annum, an executed copy of which has been provided to the Purchaser.

 

5.2.           Amendment to Section 5.12(a) . Section 5.12(a) of the Note Purchase Agreement is hereby amended and restated in its entirety as follows:

 

“(a)           Minimum Adjusted EBITDA . Commencing with the month ending July 31, 2015 and until such time as all Obligations are paid, satisfied and discharged in full, the Borrowers shall not, as of the end of any measurement period set forth below, permit the Adjusted EBITDA for such measurement period to be less than the amount set forth in the table below opposite such measurement period.

 

Measurement Period

  Minimum Adjusted EBITDA  
July 1, 2015 to July 31, 2015   $ -700,000  
August 1, 2015 to August 31, 2015   $ -700,000”  

 

6.           Representations and Warranties; No Default . Each Company hereby represents and warrants that:

 

6.1.       The execution, delivery and performance by such Company of this Amendment (a) are within such Company’s corporate or similar powers and, at the time of execution hereof and have been duly authorized by all necessary corporate and similar action; (b) does not and will not result, in any breach or default under any other document, instrument or agreement to which a Company or any of its Subsidiaries is a party or to which a Company or any of its Subsidiaries, the Premises, the Collateral or any of the property of a Company or any of its Subsidiaries is subject or bound, except for such breaches or defaults which, individually or in the aggregate, have not had, and would not reasonably be expected to result in, a Material Adverse Effect and (c) will not violate any applicable law, statute, regulation, rule, ordinance, code, rule or order.

 

6.2.       This Amendment has been duly executed and delivered for the benefit of or on behalf of each Company and constitutes a legal, valid and binding obligation of each Company, enforceable against such Company in accordance with its terms except (a) as the same may be limited by bankruptcy, insolvency, reorganization moratorium or similar laws now or hereafter in effect relating to creditors rights generally and (b) that the remedy of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and to the discretion of the court before which any proceeding therefor may be brought.

 

3
 

  

6.3.          Both before and after giving effect to this Amendment on the date hereof (a) except as set forth on Schedule A attached hereto, the representations and warranties of the Companies contained in Section 4.1 of the Note Purchase Agreement and the other Transaction Documents are true, correct and complete on and as of the date hereof as if made on such date (and to the extent any representations and warranties shall relate to the Effective Date or another earlier date, such representation and warranties shall be deemed to be amended to relate to the date hereof), and (b) except as set forth on Schedule B attached hereto, no Default or Event of Default (other than the Specified Event of Default) has occurred and is continuing.

 

7.           Ratification and Confirmation . The Companies hereby ratify and confirm all of the terms and provisions of the Note Purchase Agreement and the other Transaction Documents and agree that all of such terms and provisions, as amended hereby, remain in full force and effect, except as, and to the extent expressly set forth herein.

 

8.             Condition to Effectiveness . The effectiveness of this Amendment shall be subject to the satisfaction of the following conditions precedent:

 

8.1.        The Purchaser shall have received (i) a fully executed copy of this Amendment, (ii) a fully executed copy of the Share Purchase Agreement in the form attached hereto as Exhibit A and (iii) the fully executed Warrant No. W-4 in the form attached hereto as Exhibit B .

 

8.2.        The Purchaser shall have received (i) fully executed amendments to the documents evidencing the Permitted Senior Debt in the form attached hereto as Exhibit C and (ii) evidence reasonably satisfactory to the Purchaser that there will be no reduction in the facility size or the availability formula under the Permitted Senior Debt.

 

8.3.        The Purchaser shall have received (i) a fully executed amendment to the Subordinated Loan Agreement in the form attached hereto as Exhibit D , (ii) a fully executed copy of the Share Purchase Agreement, dated as of the date hereof, among Parent and Subordinated Lender in the form attached hereto as Exhibit E and (iii) a fully executed copy of the Warrant, dated as of the date hereof, issued by Parent to Subordinated Lender in the form attached hereto as Exhibit F .

 

8.4.        The Purchaser shall have received (i) evidence reasonably satisfactory to the Purchaser that the David L. Van Andel Trust, under Trust Agreement dated November 30, 1993 (the “ David L. Van Andel Trust ”) has invested at least $2,500,000 in cash in the Equity Interests of Parent, (ii) a fully executed copy of the Share Purchase Agreement, dated as of the date hereof, among Parent and David L. Van Andel Trust in the form attached hereto as Exhibit G , (iii) evidence that David L. Van Andel Trust surrendered to Parent that certain Warrant No. 1, dated as of September 5, 2014, issued by TCC to David L. Van Andel and assumed by Parent on September 16, 2014, and such warrant has been cancelled and (iv) fully executed copies of the Warrants, dated as of the date hereof, issued by Parent to David L. Van Andel Trust in the forms attached hereto as Exhibit H .

 

8.5.        The Purchaser shall have received (i) a fully executed copy of the Share Purchase Agreement, dated as of the date hereof, among Parent and Little Harbor, LLC in the form attached hereto as Exhibit I and (ii) a fully executed copy of the Warrant, dated as of the date hereof, issued by Parent to Little Harbor, LLC, in the form attached hereto as Exhibit J .

 

4
 

  

8.6.        The Purchaser shall have received from the Companies executed copies of all documents and agreements relating to the 2015 Essex Leases and the Nutricap Seller First Note, including, but not limited to, the Payment Guaranty of Essex Capital Corporation and Ralph T. Iannelli of the Nutricap Seller First Note and each Bill of Sale with respect to the 2015 Essex Leases, duly executed by an authorized officer of each of the parties thereto.

 

8.7.        The Companies shall have delivered to the Purchaser a fully executed copy of the Amendment No. 1 to Standstill Agreement, duly executed by an authorized officer of each of the parties thereto, including but not limited to NUTRICAP LABS, LLC, as junior lender, and such amendment shall be satisfactory in form and substance to the Purchaser.

 

8.8.        The Companies shall have delivered to the Purchaser a fully executed Agreement Regarding Equipment and Lease with respect to the 2015 Essex Leases, and such agreement shall be satisfactory in form and substance to the Purchaser.

 

8.9.        All representations and warranties of the Companies contained herein shall be true and correct in all material respects as of the date hereof (and such parties’ delivery of their respective signatures hereto shall be deemed to be its certification thereof).

 

8.10.      The Purchaser shall have received all fees and other amounts due and payable to the Purchaser and its counsel in connection with this Amendment, and to the extent invoiced, reimbursement or payment of all out-of-pocket expenses required to be reimbursed or paid by the Companies under the Note Purchase Agreement.

 

9.           Use of Proceeds . The Companies hereby agree that the proceeds of the Interest Conversion and the other transactions contemplated by this Amendment shall be used solely to purchase new raw materials for use in the production of the Companies’ higher margin products.

 

10.          Miscellaneous .

 

10.1.     Except as otherwise expressly set forth herein, nothing herein shall be deemed to constitute an amendment, modification or waiver of any of the provisions of the Note Purchase Agreement, the Security Agreement or the other Transaction Documents, all of which remain in full force and effect as of the date hereof and are hereby ratified and confirmed. Each Company hereby acknowledges and agrees that nothing contained herein shall be deemed to entitle any Company to consent to, or a waiver, amendment or modification of, any of the terms, conditions, obligations, covenants or agreements contained in the Transaction Documents in similar or different circumstances. This Amendment (together with any other document executed in connection herewith) is not intended to be, nor shall it be construed as, a novation of the Note Purchase Agreement.

 

10.2.     This Amendment may be executed in any number of counterparts, each of which, when executed and delivered, shall be an original, but all counterparts shall together constitute one instrument. Delivery of an executed counterpart of a signature page of this Amendment by facsimile or electronic mail shall be equally effective as delivery of a manually executed counterpart of this Amendment.

 

10.3.     This Amendment shall be governed by the laws of the State of New York without giving effect to any conflict of law principles and shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.

 

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10.4.          The Companies agree to pay all reasonable expenses, including legal fees and disbursements, incurred by Purchaser in connection with this Amendment and the transactions contemplated hereby.

 

10.5.          This Amendment shall be deemed a Transaction Document for all purposes of the Note Purchase Agreement and the other Transaction Documents. On and after the date hereof, each reference in the Note Purchase Agreement and the other Transaction Documents to the Note Purchase Agreement, shall mean and be a reference to the Note Purchase Agreement, as modified by this Amendment.

 

10.6.           Each Company, voluntarily, knowingly, unconditionally and irrevocably, with specific and express intent, for and on behalf of itself and all of its respective parents, subsidiaries, affiliates, members, managers, predecessors, successors, and assigns, and each of their respective current and former directors, officers, shareholders, agents, and employees (collectively, “ Releasing Parties ”), does hereby fully and completely release, acquit and forever discharge each Indemnified Party of and from any and all actions, causes of action, suits, debts, disputes, damages, claims, obligations, liabilities, costs, expenses and demands of any kind whatsoever, at law or in equity, whether matured or unmatured, liquidated or unliquidated, vested or contingent, choate or inchoate, known or unknown that the Releasing Parties (or any of them) has against the Indemnified Parties (or any of them) that directly or indirectly arise out of, are based upon or are in any manner connected with any Prior Related Event. “ Prior Related Event ” means any transaction, event, circumstance, action, failure to act, occurrence of any type or sort, whether known or unknown, which occurred, existed, was taken, was permitted or begun in accordance with, pursuant to or by virtue of (a) any of the terms of this Amendment or any other Transaction Document, (b) any actions, transactions, matters or circumstances related hereto or thereto, (c) the conduct of the relationship between the Purchaser and any Company, or (d) any other actions or inactions by the Purchaser, all on or prior to the date hereof. Each Company acknowledges that the foregoing release is a material inducement to the Purchaser’s decision to enter into this Amendment and to agree to the modifications contemplated hereunder.

 

[Signature Pages Follow.]

 

6
 

 

IN WITNESS WHEREOF, the parties hereto have executed this Amendment which shall be deemed to be a sealed instrument as of the date first above written.

  

  COMPANIES
   
  TWINLAB CONSOLIDATED HOLDINGS, INC.
     
  By: /s/ Thomas A. Tolworthy
  Name: Thomas A. Tolworthy
  Title: Chief Executive Officer and President
     
  TWINLAB HOLDINGS, INC.
     
  By: /s/ Thomas A. Tolworthy
  Name: Thomas A. Tolworthy
  Title: Chief Executive Officer and President
     
  TWINLAB CONSOLIDATION CORPORATION
     
  By:   /s/ Thomas A. Tolworthy
  Name: Thomas A. Tolworthy
  Title: Chief Executive Officer and President
     
  TWINLAB CORPORATION
     
  By:   /s/ Thomas A. Tolworthy
  Name: Thomas A. Tolworthy
  Title: Chief Executive Officer and President
     
  ISI BRANDS, INC.
     
  By:   /s/ Thomas A. Tolworthy
  Name: Thomas A. Tolworthy
  Title: Chief Executive Officer and President

 

[Signature Page – Fourth Amendment to Note and Warrant Purchase Agreement, Limited Consent and Limited Waiver]

 

 
 

  

  NUTRASCIENCE LABS, INC.
     
  By: /s/ Thomas A. Tolworthy
  Name: Thomas A. Tolworthy
  Title: Chief Executive Officer and President
     
  NUTRASCIENCE LABS IP CORPORATION
     
  By: /s/ Thomas A. Tolworthy
  Name: Thomas A. Tolworthy
  Title: Chief Executive Officer and President

 

[Signature Page – Fourth Amendment to Note and Warrant Purchase Agreement, Limited Consent and Limited Waiver]

  

 
 

 

  PURCHASER :
   
  PENTA MEZZANINE SBIC FUND I, L.P.
   
  By: Penta Mezzanine SBIC Fund I GP, LLC, its General Partner
     
  By: /s/ Rebecca R. Irish
  Name: Rebecca R. Irish
  Title: Authorized Member

 

 

Exhibit 10.71

 

 

STOCK PURCHASE AGREEMENT

 

THIS STOCK PURCHASE AGREEMENT (this " Agreement "), dated as of June 30, 2015, is entered into between Twinlab Consolidated Holdings, Inc., a Nevada corporation with its principal place of business at 632 Broadway, Suite 201, New York, New York 10012 (" Company "), and JL-BBNC Mezz Utah, LLC, an Alaska limited liability company, with offices at 701 West 8 th Street, Suite 1200, Anchorage, AK 99501 (" Purchaser ").

 

RECITALS

 

A.           Company and Purchaser are executing and delivering this Agreement in reliance upon the exemption from securities registration afforded by Section 4(a)(2) of the Securities Act of 1933, as amended (the “ Securities Act ”), and Rule 506 of Regulation D (“ Regulation D ”) as promulgated by the United States Securities and Exchange Commission (the “ Commission ”) under the Securities Act.

 

B.           Purchaser wishes to purchase, and Company wishes to sell, upon the terms and conditions stated in this Agreement, an aggregate of 403,509 shares of common stock, par value $0.001 per share (the “ Common Stock ”), of Company, at a purchase price of $0.76 per share (the 403,509 shares of Common Stock to be purchased by Purchaser hereunder are referred to herein as the “ Shares ”).

 

C.           Contemporaneously with the execution and delivery of this Agreement, the parties hereto are executing and delivering a Warrant Agreement, substantially in the form attached hereto as Exhibit A (the “ Warrant Agreement ”), pursuant to which, among other things, Company is granting Purchaser the right to purchase an additional 403,509 shares of Common Stock at a price of $0.01 per share.

 

NOW, THEREFORE, in consideration of the mutual covenants and agreements hereinafter set forth and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

 

1.           Purchase and Sale . Subject to the terms and conditions set forth herein, at the Closing (as defined in Section 2 ), Company shall issue and sell to Purchaser, and Purchaser shall purchase from Company, the Shares. The aggregate purchase price for the Shares shall be $306,667.00 (the " Purchase Price "), to be provided by Purchaser in the form of Purchaser’s agreements set forth in Section 3 hereof.

 

 
 

 

2.            Closing . Subject to the terms and conditions contained in this Agreement, the purchase and sale of the Shares contemplated hereby shall take place at a closing (the " Closing ") to be held at 10:00 a.m. on June 30, 2015 (the " Closing Date ") at the offices of Wilk Auslander LLP, 1515 Broadway, 43 rd Floor, New York, New York 10036, or at such other place or on such other date as Purchaser and Company may mutually agree upon in writing. At the Closing, Company shall deliver to Purchaser a stock certificate or certificates evidencing the Shares, and Purchaser shall have delivered to Company the Purchase Price in the form of Purchaser’s irrevocable agreement provided in Section 3 below to accept the Shares issued by the Company pursuant hereto in lieu of $306,667.00 worth of periodic interest payments otherwise due Purchaser under that certain Note, dated January 22, 2015, by and between the Purchaser on the one hand and the Company and its subsidiaries on the other hand (the “ Note ”).

 

3.            Agreement to Accept Shares in Lieu of Payments under the Note . Purchaser hereby irrevocably agrees to accept the Shares issued to Purchaser by Company pursuant to this Agreement in lieu and in complete satisfaction of the obligation of the Borrower (as defined in the Note) to make six (6) months of interest payments to Purchaser in an aggregate amount equal to the Purchase Price, and representing the aggregate amount of interest payable on the Note for the period beginning on May 1, 2015 and ending on October 31, 2015. Except for Purchaser’s agreement, on the terms set forth herein, to accept the Shares issued pursuant to this Agreement in lieu of cash interest payments otherwise due Purchaser under the Note in an aggregate amount equal to the Purchase Price, nothing herein is intended to modify in any way the Note, which shall remain in full force and effect.

 

4. Closing Deliveries .

 

(a)           On or prior to the Closing, Company shall issue, deliver or cause to be delivered to Purchaser the following:

 

(i)          this Agreement, duly executed by Company;

 

(ii)         certificates representing the Shares; and

 

(iii)        the Warrant Agreement, duly executed by Company.

 

(b)           On or prior to the Closing, Purchaser shall deliver or cause to be delivered to Company the following:

 

(i)          this Agreement, duly executed by Purchaser.

 

5. Closing Conditions .

 

(a)          The obligation of Company to issue and sell the Shares to Purchaser hereunder is subject to the satisfaction of the following conditions as of the Closing:

 

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(i)          the representations and warranties of Purchaser in Section 7 hereof shall be true and correct on and as of the Closing Date with the same effect as though made at and as of such date;

 

(ii)         Purchaser shall have performed and complied in all material respects with all agreements and conditions required by this Agreement to be performed or complied with by it prior to or on the Closing Date; and

 

(iii)        Purchaser shall have obtained any and all consents, permits, approvals, registrations and waivers necessary or appropriate for consummation of the transactions contemplated herein.

 

(b)          The obligation of Purchaser to purchase the Shares from Company is subject to the satisfaction of the following conditions as of the Closing:

 

(i)          the representations and warranties of Company in Section 6 shall be true and correct on and as of the Closing Date with the same effect as though made at and as of such date;

 

(ii)         Company shall have performed and complied in all material respects with all agreements and conditions required by this Agreement to be performed or complied with by it prior to or on the Closing Date; and

 

(iii)        Company shall have obtained any and all consents, permits, approvals, registrations and waivers necessary or appropriate for consummation of the transactions contemplated herein.

 

6.            Representations and Warranties of Company . Company hereby represents and warrants to Purchaser as follows:

 

(a)          Company is an entity duly incorporated, validly existing and in good standing under the laws of the State of Nevada, with the requisite corporate power and authority to own or lease and use its properties and assets and to carry on its business as currently conducted. Company is not in violation of any of the provisions of its articles of incorporation or bylaws. Company is duly qualified to conduct business and is in good standing as a foreign corporation or other entity in each jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary, except where the failure to be so qualified or in good standing, as the case may be, would not have a Material Adverse Effect. “ Material Adverse Effect ” means a material adverse effect on the results of operations, assets, business or financial condition of Company, except that any of the following, either alone or in combination, shall not be deemed a Material Adverse Effect: (i) effects caused by changes or circumstances affecting general market conditions in the U.S. economy or which are generally applicable to the industry in which Company operates provided that such effects are not borne disproportionately by Company, (ii) effects resulting from or relating to the announcement or disclosure of the sale of the Shares or other transactions contemplated by this Agreement, or (iii) effects caused by any event, occurrence or condition resulting from or relating to the taking of any action in accordance with this Agreement.

 

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(b)          Company has the requisite corporate power and authority to enter into and to consummate the transactions contemplated by this Agreement and otherwise to carry out its obligations hereunder. The execution and delivery of this Agreement by the Company and the consummation by it of the transactions contemplated hereby (including, but not limited to, the sale and delivery of the Shares) have been duly authorized by all necessary corporate action on the part of Company, and no further corporate action is required by Company, its Board of Directors or its stockholders in connection therewith other than in connection with the Required Approvals (as hereinafter defined). This Agreement has been duly executed by the Company and is the legal, valid and binding obligation of the Company enforceable against Company in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally the enforcement of, creditors’ rights and remedies or by other equitable principles of general application or insofar as indemnification and contribution provisions may be limited by applicable law.

 

(c)          The execution, delivery and performance by Company of this Agreement and the consummation by Company of the transactions contemplated hereby (including, without limitation, the issuance of the Shares) do not and will not (i) conflict with or violate any provisions of Company’s articles of incorporation or bylaws or otherwise result in a violation of the organizational documents of Company, (ii) conflict with, or constitute a default (or an event that with notice or lapse of time or both would become a default) under, result in the creation of any Encumbrance upon any of the properties or assets of Company or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any Material Contract (as hereinafter defined) or (iii) subject to the Required Approvals, result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which Company is subject (including federal and state securities laws and regulations and the rules and regulations, assuming the correctness of the representations and warranties made by Purchaser herein, of any self regulatory organization to which Company or its securities are subject), or by which any property or asset of Company is bound or affected), except in the case of clause (ii) and clause (iii) such as would not individually have a Material Adverse Effect. “ Material Contract means any contract of Company that has been filed as an exhibit to the SEC Reports pursuant to Item 601(b)(4) or Item 601(b)(10) of Regulation S-K (including, for purposes hereof, any contracts that are required to be filed as an exhibit to a Form 10). “ Encumbrance ” means any mortgage, deed of trust, pledge, hypothecation, assignment, security interest, lien (whether statutory or otherwise), charge, claim, encumbrance or preference, priority or other security agreement or preferential arrangement held or asserted in respect of any asset or property of any kind or nature whatsoever, including any conditional sale or other title retention agreement, any lease having substantially the same economic effect as any of the foregoing, and the filing of, or agreement to give, any financing statement under the UCC or comparable law of any jurisdiction.

 

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(d)          Company is not required to obtain any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other person or entity in connection with the execution, delivery and performance by Company of the transactions contemplated by this Agreement, the Warrant Agreement and any agreement executed in connection herewith or therewith (including the issuance of the Shares), other than (i) the filing with the Commission of one or more registration statements, (ii) filings required by applicable state securities laws, (iii) the filing of a Notice of Sale of Securities on Form D with the Commission under Regulation D of the Securities Act, (iv) filing of a report on Form 8-K disclosing the Company’s entry into this Agreement and (v) those that have been made or obtained prior to the date of this Agreement (collectively, the “ Required Approvals ”).

 

(e)          The Shares have been duly authorized and, when issued and paid for in accordance with the terms of this Agreement, will be duly and validly issued, fully paid and nonassessable and free and clear of all Encumbrances suffered or permitted by Company, other than restrictions on transfer provided for in this Agreement or imposed by applicable securities laws, and shall not be subject to preemptive or similar rights. Assuming the accuracy of the representations and warranties of Purchaser in this Agreement, the Shares will be issued in compliance with all applicable federal and state securities laws.

 

(f)          There are no actions, suits, claims, investigations or other legal proceedings pending or, to the Company’s Knowledge, threatened against or by Company that challenge or seek to prevent, enjoin or otherwise delay the transactions contemplated by this Agreement. “ Company’s Knowledge ” means with respect to any statement made to the knowledge of Company, that the statement is based upon the actual knowledge of the officers of Company who, as of the date hereof, have responsibility for the matter or matters that are the subject of the statement.

 

(g)          Company has filed all reports, schedules, forms, statements and other documents required to be filed by it under the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”), including pursuant to Section 13(a) or 15(d) thereof, for twelve (12) months preceding and including the date hereof (or such shorter period as Company was required by law or regulation to file such material) (the foregoing materials, including the exhibits thereto and documents incorporated by reference therein, being collectively referred to herein as the “ SEC Reports ”), on a timely basis or has received a valid extension of such time of filing and has filed any such SEC Reports prior to the expiration of any such extension.

 

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(h)          The financial statements of Company included in the SEC Reports comply in all material respects with applicable accounting requirements and the rules and regulations of the Commission with respect thereto as in effect at the time of filing. Such financial statements have been prepared in accordance with U.S. Generally Accepted Accounting Principles (“ GAAP ”) applied on a consistent basis during the periods involved, except as may be otherwise specified in such financial statements or the notes thereto and except that unaudited financial statements may not contain all footnotes required by GAAP, and fairly present in all material respects the financial position of Company and its consolidated subsidiaries taken as a whole as of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the case of unaudited statements, to normal, year-end audit adjustments.

 

(i)          Assuming the accuracy of Purchaser’s representations and warranties set forth in Section 7 of this Agreement (without giving effect to any materiality qualifiers therein), no registration under the Securities Act is required for the offer and sale of the Shares by Company to Purchaser under this Agreement.

 

(j)          No broker, finder or investment banker is entitled to any brokerage, finder's or other fee or commission in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf of Company.

 

7. Representation and Warranties of Purchaser .

 

(a)          Purchaser is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Alaska.

 

(b)          Purchaser has all requisite power and authority to enter into this Agreement, to carry out its obligations hereunder and to consummate the transactions contemplated hereby. The execution and delivery by Purchaser of this Agreement, the performance by Purchaser of its obligations hereunder and the consummation by Purchaser of the transactions contemplated hereby have been duly authorized by all requisite limited liability company action on the part of Purchaser. This Agreement has been duly executed and delivered by Purchaser and (assuming due authorization, execution and delivery by Company) this Agreement constitutes a legal, valid and binding obligation of Purchaser enforceable against Purchaser in accordance with its terms.

 

(c)          Purchaser is acquiring the Shares solely for its own account for investment purposes and not with a view to, or for offer or sale in connection with, any distribution thereof. Purchaser acknowledges that the Shares are not registered under the Securities Act, or any state securities laws, and that the Shares may not be transferred or sold except pursuant to the registration provisions of the Securities Act or pursuant to an applicable exemption therefrom and subject to state securities laws and regulations, as applicable.

 

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(d)          No governmental, administrative or other third party consents or approvals are required by or with respect to Purchaser in connection with the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby.

 

(e)          There are no actions, suits, claims, investigations or other legal proceedings pending or, to the knowledge of Purchaser, threatened against or by Purchaser that challenge or seek to prevent, enjoin or otherwise delay the transactions contemplated by this Agreement.

 

(f)          Purchaser understands that the Shares are “restricted securities” and have not been registered under the Securities Act or any applicable state securities law and is acquiring the Shares as principal for its own account and not with a view to, or for distributing or reselling such Shares or any part thereof in violation of the Securities Act or any applicable state securities laws, provided, however , that by making the representations herein, Purchaser does not agree to hold any of the Shares for any minimum period of time and reserves the right, subject to the provisions of this Agreement, at all times to sell or otherwise dispose of all or any part of such Shares pursuant to an effective registration statement under the Securities Act or under an exemption from such registration and in compliance with applicable federal and state securities laws. Purchaser is acquiring the Shares hereunder in the ordinary course of its business. Purchaser does not presently have any agreement, plan or understanding, directly or indirectly, with any Person to distribute or effect any distribution of any of the Shares (or any Shares which are derivatives thereof) to or through any person or entity; Purchaser is not a registered broker-dealer under Section 15 of the Exchange Act or an entity engaged in a business that would require it to be so registered as a broker-dealer.

 

(g)          At the time Purchaser was offered the Shares, it was, and at the date hereof it is, an “accredited investor” as defined in Rule 501(a) under the Securities Act. Purchaser has previously delivered an Accredited Investor Questionnaire to Company indicating that Purchaser is an “accredited investor.” As of the date of this Agreement, circumstances have not changed such that Purchaser would not be an “accredited investor.”

 

(h)          Purchaser, either alone or together with its representatives, has such knowledge, sophistication and experience in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment in the Shares, and has so evaluated the merits and risks of such investment. Purchaser is able to bear the economic risk of an investment in the Shares and, at the present time, is able to afford a complete loss of such investment.

 

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(i)          Purchaser acknowledges that it has been afforded (i) the opportunity to ask such questions as it has deemed necessary of, and to receive answers from, representatives of Company concerning the terms and conditions of the offering of the Shares and the merits and risks of investing in the Shares; (ii) access to information about Company and its respective financial condition, results of operations, business, properties, management and prospects sufficient to enable it to evaluate its investment; and (iii) the opportunity to obtain such additional information that Company possesses or can acquire without unreasonable effort or expense that is necessary to make an informed investment decision with respect to the investment. Neither such inquiries nor any other investigation conducted by or on behalf of Purchaser or its representatives or counsel shall modify, amend or affect Purchaser’s right to rely on the truth, accuracy and completeness of Company’s representations and warranties contained in this Agreement. Purchaser has sought such accounting, legal and tax advice as it has considered necessary to make an informed decision with respect to its acquisition of the Shares.

 

(j)          Purchaser understands that the Shares are being offered and sold to it in reliance on specific exemptions from the registration requirements of United States federal and state securities laws and that Company is relying in part upon the truth and accuracy of, and Purchaser’s compliance with, the representations, warranties, agreements, acknowledgements and understandings of Purchaser set forth herein in order to determine the availability of such exemptions and the eligibility of Purchaser to acquire the Shares.

 

(k)          Purchaser understands that no United States federal or state agency or any other government or governmental agency has passed on or made any recommendation or endorsement of the Shares or the fairness or suitability of the investment in the Shares nor have such authorities passed upon or endorsed the merits of the offering of the Shares.

 

(l)          No broker, finder or investment banker is entitled to any brokerage, finder's or other fee or commission in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf of Purchaser.

 

8. Transfer Restrictions .

 

(a)           Notwithstanding any other provision of this Agreement, Purchaser covenants that the Shares may be disposed of only pursuant to an effective registration statement under, and in compliance with the requirements of, the Securities Act, or pursuant to an available exemption from, or in a transaction not subject to, the registration requirements of the Securities Act, and in compliance with any applicable state and federal securities laws. In connection with any transfer of the Shares other than (i) pursuant to an effective registration statement, (ii) to Company, (iii) to an affiliate of Purchaser, (iv) pursuant to Rule 144 under the Securities Act (“ Rule 144 ”) ( provided that Purchaser provides Company with reasonable assurances (in the form of seller and broker representation letters if required) that the securities may be sold pursuant to such rule) or Rule 144A, (v) pursuant to Rule 144 without the requirement that Company be in compliance with the current public information requirements of Rule 144 and without other restriction following the applicable holding period or (vi) in connection with a bona fide pledge, Company may require the transferor thereof to provide to Company an opinion of counsel selected by the transferor and reasonably acceptable to Company, the form and substance of which opinion shall be reasonably satisfactory to Company, to the effect that such transfer does not require registration of such transferred Shares under the Securities Act. As a condition of transfer, any such transferee shall agree in writing to be bound by the terms of this Agreement and shall have the rights of Purchaser under this Agreement.

 

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(b)          Certificates evidencing the Shares shall bear any legend as required by the “Blue Sky” laws of any state and a restrictive legend in substantially the following form until such time as they are not required under Section 8(c) (and a stock transfer order may be placed against transfer of the certificates for the Shares):

 

THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ SECURITIES ACT ”), OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OR (B) AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL REASONABLY SATISFACTORY TO COMPANY.

 

In addition, if Purchaser is an affiliate of Company, certificates evidencing the Shares issued to Purchaser shall bear a customary “affiliates” legend.

 

(c)          Subject to Company’s right to request an opinion of counsel as set forth in Section 8(a), the legend set forth in Section 8(b) above shall be removable and Company shall issue or cause to be issued a certificate without such legend or any other legend (except for any “affiliates” legend as set forth in Section 8(b)) to the holder of the applicable Shares upon which it is stamped if (i) such Shares are registered for resale under the Securities Act (provided that, if Purchaser is selling pursuant to the effective registration statement registering the Shares for resale, Purchaser agrees to only sell such Shares during such time that such registration statement is effective and not withdrawn or suspended, and only as permitted by such registration statement), (ii) such Shares are sold or transferred in compliance with Rule 144 (if the transferor is not an affiliate of Company), including without limitation in compliance with the current public information requirements of Rule 144 if applicable to Company at the time of such sale or transfer, and the holder and its broker have delivered customary documents reasonably requested by Company’s transfer agent and/or Company counsel in connection with such sale or transfer, or (iii) such Shares are eligible for sale under Rule 144 without the requirement that Company be in compliance with the current public information requirements of Rule 144 and without other restriction and Company counsel has provided written confirmation of such eligibility to the transfer agent. Any fees (with respect to the transfer agent, Company counsel or otherwise) associated with the removal of such legend shall be borne by Company. At such time as a legend is no longer required for certain Shares, Company will no later than three (3) business days following the delivery by Purchaser to Company or the transfer agent (with concurrent notice and delivery of copies to Company) of a legended certificate representing such Shares (endorsed or with stock powers attached, signatures guaranteed, and otherwise in form necessary to affect the reissuance and/or transfer, and together with such other customary documents as the transfer agent and/or Company counsel shall reasonably request), deliver or cause to be delivered to the transferee of Purchaser or Purchaser, as applicable, a certificate representing such Shares that is free from all restrictive and other legends. Company may not make any notation on its records or give instructions to the transfer agent that enlarge the restrictions on transfer set forth in this Section 8(c).

 

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(d)          Purchaser hereunder acknowledges its primary responsibilities under the Securities Act and accordingly will not sell or otherwise transfer the Shares or any interest therein without complying with the requirements of the Securities Act. Purchaser acknowledges that the delivery of the Shares and any removal of any legends from certificates representing the Shares as set forth in this Section 8 is predicated on Company’s reliance upon Purchaser’s acknowledgement in this Section 8(d).

 

9.           Survival . All representations and warranties contained herein shall survive the execution and delivery of this Agreement and the Closing hereunder.

 

10.          Indemnification . Company shall indemnify Purchaser and hold Purchaser harmless against and in respect of any and all losses, liabilities, damages, obligations, claims, Encumbrances, costs and expenses (including, without limitation, reasonable attorneys' fees) incurred by Purchaser resulting from any breach of any representation, warranty, covenant or agreement made by Company herein or in any instrument or document delivered to Purchaser pursuant hereto.

 

11.          Further Assurances . Following the Closing, each of the parties hereto shall execute and deliver such additional documents, instruments, conveyances and assurances, and take such further actions as may be reasonably required to carry out the provisions hereof and give effect to the transactions contemplated by this Agreement.

 

12.          Termination . This Agreement may be terminated at any time prior to the Closing (a) by the mutual written consent of Purchaser and Company or (b) by either Purchaser or Company if (i) a breach of any provision of this Agreement has been committed by the other party and such breach has not been cured within 10 days following receipt by the breaching party of written notice of such breach, or (ii) the Closing does not occur by July 1, 2015. Upon termination, all further obligations of the parties under this Agreement shall terminate without liability of any party to the other parties to this Agreement, except that no such termination shall relieve any party from liability for any fraud or willful breach of this Agreement.

 

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13.          Expenses . The Company agrees to pay all reasonable expenses, including legal fees and disbursements, incurred by Purchaser in connection with this Agreement, the Warrant Agreement and the transactions contemplated hereby and thereby.

 

14.          Notices . All notices, requests, consents, claims, demands, waivers and other communications hereunder (each, a " Notice ") shall be in writing and addressed to the parties at the addresses set forth on the first page of this Agreement (or to such other address that may be designated by the receiving party from time to time in accordance with this section). All Notices shall be delivered by personal delivery, nationally recognized overnight courier (with all fees pre-paid), facsimile or e-mail of a PDF document (with confirmation of transmission) or certified or registered mail (in each case, return receipt requested, postage prepaid). Except as otherwise provided in this Agreement, a Notice is effective only (a) upon receipt by the receiving party, and (b) if the party giving the Notice has complied with the requirements of this Section.

 

15.          Entire Agreement . This Agreement 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, agreements, representations and warranties, both written and oral, with respect to such subject matter.

 

16.          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. No party may assign any of its rights or obligations hereunder without the prior written consent of the other parties hereto, which consent shall not be unreasonably withheld or delayed.

 

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

 

18.          Amendment and Modification; Waiver . This Agreement may only be amended, modified or supplemented by an agreement in writing signed by each party hereto. No waiver by any party of any of the provisions hereof shall be effective unless explicitly set forth in writing and signed by the party so waiving. Except as otherwise set forth in this Agreement, no failure to exercise, or delay in exercising, any rights, 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.

 

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19.          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.

 

20.          Governing Law; Submission to Jurisdiction . This Agreement shall be governed by and construed in accordance with the internal laws of the State of New York without giving effect to any choice or conflict of law provision or rule (whether of the State of New York 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.

 

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 Agreement on the date first written above.

 

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

 

 

  JL-BBNC MEZZ UTAH, LLC,
  An Alaska limited liability company
     
  By: /s/ Jonathan B. Rubini  
  Name:   Jonathan B. Rubini
  Title:     Managing Member

 

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Exhibit 10.72

 

THIS WARRANT AND THE EQUITY INTERESTS THAT MAY BE PURCHASED HEREUNDER HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE SECURITIES LAWS OF ANY STATE, AND MAY NOT BE SOLD OR TRANSFERRED, OR OFFERED FOR SALE OR TRANSFER, EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION THEREUNDER OR PURSUANT TO AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS THEREOF.

 

TWINLAB CONSOLIDATED HOLDINGS, INC.

 

No. 2015-25 June 30, 2015

 

Warrant

 

This Warrant (the “ Warrant ”) certifies that, for value received, JL-BBNC MEZZ UTAH, LLC, an Alaska limited liability company , and its permitted transferees, successors and assigns (the “ Holder ”), is entitled to purchase from TWINLAB CONSOLIDATED HOLDINGS, INC., a Nevada corporation (the “ Company ”), 403,509 shares of common stock of the Company (subject to any adjustments pursuant to Section 3.3 ) issuable upon the full exercise of this Warrant at the purchase price of $0.01 per share (the “ Exercise Price ”), at any time prior to 5:00 P.M. Eastern Time on June 30, 2020 (the “ Expiration Date ”).

 

ARTICLE I

DEFINITIONS

 

SECTION 1.1 Definitions . As used in this Warrant, the following terms shall have the following meanings:

 

Adjusted EBITDA ” shall mean EBITDA plus any expenses relating to Acquisitions (as defined in the Purchase Agreement) following the Effective Date (as defined in the Purchase Agreement) of the Purchase Agreement, plus severance payments and other costs relating to permanent headcount reductions, all as determined by GAAP.

 

Applicable Law ” means all provisions of laws, statutes, ordinances, rules, regulations, permits, certificates or orders of any Governmental Authority applicable to the Person in question or any of its assets or property, and all judgments, injunctions, orders and decrees of all courts and arbitrators in proceedings or actions in which the Person in question is a party or by which any of its assets or properties are bound.

 

Assignment Form ” shall mean the assignment form attached as Annex 2 hereto.

 

Business Day ” shall have the meaning set forth in the Purchase Agreement.

 

Change in Control ” shall have the meaning set forth in the Purchase Agreement.

 

Current Holder’s Equity Interest ” means 403,509 shares of common stock of the Company issuable upon the full exercise of this Warrant, minus any Equity Interest previously issued pursuant to the exercise of this Warrant and subject to any adjustment pursuant to Section 3.3 .

 

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Company ” shall have the meaning set forth in the Preamble.

 

Delivery Date ” shall have the meaning given to such term in Section 3.2 .

 

EBITDA ” shall have the meaning set forth in the Purchase Agreement.

 

Equity Interest ” shall have the meaning set forth in the Purchase Agreement.

 

Exchange Act ” shall mean the Securities Exchange Act of 1934, as amended from time to time, and any successor statute.

 

Exchange Form ” shall mean the exchange form attached as Annex 3 hereto.

 

Executive Officer ” shall mean, with respect to the Company, its Chief Executive Officer, President, Chief Financial Officer or Chief Operating Officer.

 

Exercise Form ” shall mean the exercise form attached as Annex 1 hereto.

 

Exercise Price ” shall have the meaning set forth in the Preamble.

 

Expiration Date ” shall have the meaning set forth in the Preamble.

 

Fair Market Value ” shall, except in the event of a private placement by the Company of its common stock, mean (i) the trading volume weighted average closing price of the common stock of Company for the twenty (20) trading days immediately preceding the applicable date in question, as quoted on (a) a domestic securities exchange, (b) NASDAQ Stock Market or (c) a domestic over-the-counter market, which trades are reported by Pink OTC Markets Inc. or any similar successor organization or any other over-the-counter market in the United States, as the case may be; or (ii) in the event that the common stock of the Company is not trading on a market such that a value can be derived under subsection (i) of this definition as of the applicable date in question, a valuation per share of the common stock of the Company as determined in accordance with Generally Accepted Valuation Principles by an independent third-party valuation firm mutually agreed upon by the parties (and if the parties cannot mutually agree on a valuation firm, one of the “big four” accounting firms chosen by the Holder). In the event of a private placement by the Company of its common stock, “Fair Market Value” shall mean the average price per share of common stock in such private placement, including any warrants, options or other agreements providing the right to purchase shares of the Company’s common stock.

 

Fiscal Year ” shall have the meaning set forth in the Purchase Agreement.

 

Fully-Diluted Basis ” shall have the meaning set forth in the Purchase Agreement.

 

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Governmental Authority ” shall have the meaning set forth in the Purchase Agreement.

 

Holder ” shall have the meaning set forth in the Preamble.

 

Holder's Equity Interest ” shall have the meaning given to such term in Section 3.3 .

 

Indebtedness ” shall have the meaning set forth in the Purchase Agreement.

 

NASDAQ ” shall mean the NASDAQ Stock Market.

 

Organizational Documents ” shall mean, with respect to any Person, each instrument or other document that (a) defines the existence of such Person, including its articles or certificate of incorporation, formation or organization, as filed or recorded with an applicable Governmental Authority or (ii) governs the internal affairs of such Person, including its by-laws or its operating, partnership or limited liability company agreement, in each case as amended, supplemented or restated.

 

Person ” shall have the meaning set forth in the Purchase Agreement.

 

Purchase Agreement ” shall have the meaning set forth in the Preamble.

 

Qualified Assignment ” shall mean any of the following: (a) an assignment to a transferee acquiring at least 25% of the Equity Interests subject to the Warrant (subject to adjustment for stock splits, stock dividends, recapitalizations and similar events); or (b) an assignment to an Affiliate of the Holder.

 

Rights Agreement ” shall have the meaning given to such term in Section 4.1 .

 

Securities Act ” shall mean the Securities Act of 1933, as amended from time to time, and any successor statute.

 

Taxes ” means all taxes, charges, fees, levies or other assessments, however denominated and whether imposed by a taxing authority within or without the United States, including all net income, gross income, gross receipts, sales, use, ad valorem, goods and services, capital, transfer, franchise, profits, license, withholding, payroll, employment, employer health, excise, estimated, severance, stamp, occupation, property or other taxes, custom duties, fees, assessments or charges of any kind whatsoever, together with any interest and any penalties, additions to tax or additional amounts imposed by any taxing authority whether arising before, on or after the date hereof.

 

Warrant ” or “ Warrants ” shall mean this Warrant.

 

Warrant Register ” shall have the meaning given to such term in Section 2.1.

 

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SECTION 1.2 Interpretation . Unless the context of this Warrant clearly requires otherwise, the masculine, feminine or neuter gender and the singular or plural number shall be deemed to include the others whenever the context so requires. Accounting terms used but not otherwise defined herein have the meanings given to them under GAAP. The terms “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation.” The words “hereof,” “herein,” “hereunder,” and similar terms in this Warrant refer to this Warrant as a whole and not to any particular provision of this Warrant. References to “Articles”, “Sections,” “Subsections,” “Exhibits,” “Preamble,” “Annexes,” and “Schedules” are to articles, sections, subsections, exhibits, preamble, annexes and schedules, respectively, of this Warrant, unless otherwise specifically provided. References to “days” and “months” refer to calendar days and calendar months unless otherwise expressly designated (i.e., business days or particular 30-day periods). The captions contained herein are for convenience only and shall not control or affect the meaning or construction of any provision of this Agreement. The term “dollars” or “$” means United States Dollars.

 

ARTICLE II

FORM; EXCHANGE FOR WARRANTS; TRANSFER; TAXES

 

SECTION 2.1 Warrant Register . Each Warrant issued, exchanged or transferred shall be registered in a warrant register (the “ Warrant Register ”). The Warrant Register shall set forth the number of each Warrant, the name and address of the holder thereof, and the Current Holder’s Equity Interest for which the Warrant is then exercisable. The Warrant Register will be maintained by the Company and will be available for inspection by the Holder at the principal office of the Company or such other location as the Company may designate to the Holder in the manner set forth in Section 5.1 hereof. The Company shall be entitled to treat the Holder as the owner in fact thereof for all purposes and shall not be bound to recognize any equitable or other claim to or interest in such Warrant on the part of any other Person.

 

SECTION 2.2 Exchange of Warrants for Warrants .

 

(a)          The Holder may exchange this Warrant for another Warrant or Warrants of like kind and tenor representing in the aggregate the right to purchase the same Current Holder’s Equity Interest which could be purchased pursuant to the Warrant being so exchanged. In order to effect an exchange permitted by this Section 2.2 , the Holder shall deliver to the Company such Warrant accompanied by an Exchange Form in the form attached hereto as Annex 3 signed by the Holder thereof specifying the number and denominations of Warrants to be issued in such exchange and the names in which such Warrants are to be issued. Within ten (10) Business Days of receipt of such a request, the Company shall issue, register and deliver to the Holder thereof each Warrant to be issued in such exchange.

 

(b)          Upon receipt of evidence reasonably satisfactory to the Company (an affidavit of the Holder, including indemnification reasonably acceptable to the Company) of the ownership and the loss, theft, destruction or mutilation of any Warrant or, in the case of any such mutilation, upon surrender of such Warrant, the Company shall (at its expense) execute and deliver in lieu of such Warrant a new Warrant of like kind and tenor representing the same rights represented by and dated the date of such lost, stolen, destroyed or mutilated Warrant. Any such new Warrant shall constitute an original contractual obligation of the Company, whether or not the allegedly lost, stolen, mutilated or destroyed Warrant shall be at any time enforceable by any Person.

 

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(c)          The Company shall pay all Taxes (other than any applicable income or similar Taxes payable by a Holder of a Warrant) attributable to an exchange of a Warrant pursuant to this Section 2.2 ; provided, however , that the Company shall not be required to pay any Tax which may be payable in respect of any transfer involved in the issuance of any Warrant in a name other than that of the Holder of the Warrant being exchanged.

 

SECTION 2.3 Transfer of Warrant .

 

(a)          Subject to Section 2.3(c) hereof and the Purchase Agreement, each Warrant and the rights thereunder may be transferred by the Holder thereof by delivering to the Company such Warrant accompanied by a properly completed Assignment Form in the form of Annex 2 . Within ten (10) Business Days of receipt of such Assignment Form the Company shall issue, register and deliver to the new Holder, subject to Section 2.3(c ) hereof a new Warrant or Warrants of like kind and tenor representing in the aggregate the right to purchase the same Current Holder’s Equity Interest which could be purchased pursuant to the Warrant being transferred. In all cases of transfer by an attorney, the original power of attorney, duly approved, or a copy thereof, duly certified, shall be deposited and remain with the Company. In case of a transfer by executors, administrators, guardians or other legal representatives, duly authenticated evidence of their authority shall be produced and may be required to be deposited and remain with the Company in its discretion.

 

(b)          Each Warrant issued in accordance with this Section 2.3 shall bear the restrictive legend set forth on the face of this Warrant, unless the Holder or transferee thereof supplies to the Company an opinion of counsel, reasonably satisfactory to the Company, that the restrictions described in such legend are no longer applicable to such Warrant.

 

(c)          The transfer of Warrants and any Equity Interest purchased thereunder shall be permitted, so long as such transfer is pursuant to a transaction that complies with, or is exempt from, the provisions of the Securities Act, and the Company may require an opinion of counsel in form and substance reasonably satisfactory to it to such effect prior to effecting any transfer of Warrants or any Equity Interest purchased thereunder.

 

ARTICLE III

EXERCISE OF WARRANT; EXCHANGE FOR EQUITY INTEREST

 

SECTION 3.1 Exercise of Warrants . On any Business Day prior to the Expiration Date, the Holder may exercise this Warrant, in whole or in part, by delivering to the Company this Warrant accompanied by a properly completed Exercise Form in the form of Annex 1 and a check in an aggregate amount equal to the applicable Exercise Price.

 

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SECTION 3.2 Issuance of Equity Interest .

 

(a)          The Company represents and warrants that the authorized Equity Interest of the Company consists solely of (i) 5,000,000,000 shares of common stock, par value $0.001 per share, of which only 220,657,895 common shares have been issued and 219,952,969 common shares remain outstanding as of the date hereof (taking into account shares pending to be surrendered by Tom Tolworthy pursuant to a Surrender Agreement) and (ii) 500,000,000 shares of preferred stock, of which no preferred shares have been issued as of the date hereof. The shares of common stock of the Company issued and outstanding as of the date hereof are duly authorized, validly issued, fully paid and non-assessable. The delivery to the Holder of certificates representing the Equity Interest that the Holder purchases pursuant to the exercise of this Warrant shall grant to the Holder good and valid title to the Equity Interest represented by such certificate, free and clear of any and all liens, pledges, security interests, charges or encumbrances of any kind or nature or any option, warrant or trust having the practical effect of any of the foregoing.

 

(b)          Immediately upon the exercise of this Warrant in accordance with Section 3.1 , the Company (the “ Delivery Date ”) shall issue the Equity Interest that the Holder has purchased pursuant to such exercise, deliver to the Holder the certificates representing such Equity Interest and reflect the issuance of such Equity Interest, which Equity Interest shall be duly authorized, validly issued, outstanding, fully paid and non-assessable, in the Company’s shareholder records (maintained by the Company or its duly appointed transfer agent), whereupon the Holder shall be deemed for all purposes, effective as of the Delivery Date, to be a holder of record and beneficial owner of the Equity Interest that it has purchased pursuant to such exercise.

 

(c)          If a Holder shall exercise this Warrant for less than all of the Equity Interest which could be purchased or received hereunder, the Company shall issue to the Holder, within five (5) Business Days of the Delivery Date, a new Warrant of like kind and tenor to this Warrant evidencing the right to purchase the remaining Equity Interest represented by the Warrant. This Warrant shall be cancelled upon surrender thereof pursuant to Section 3.1 .

 

(d)          The Company shall pay all Taxes (other than any applicable income or similar Taxes payable by a Holder of a Warrant) attributable to the initial issuance of any Equity Interest upon the exercise or exchange of this Warrant or any successor Warrant; provided , however , that the Company shall not be required to pay any Tax which may be payable in respect of any transfer involved in the issuance of a successor to this Warrant in a name other than that of the Holder of the Warrant being exercised or exchanged.

 

(e)          Except as set forth in any document that is un-redacted and publicly filed with the U.S. Securities and Exchange Commission, neither the Company 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 3.3 Adjustment of Holder’s Equity Interest . The Equity Interest issuable upon exercise of this Warrant (such Equity Interest is referred to herein as the “ Holder's Equity Interest ”) shall be subject to adjustment from time to time in accordance with this Section 3.3 .

 

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SECTION 3.3.1      Issuance of Additional Equity Interest; Capital Reorganization or Capital Reclassifications . If, at any time after the date hereof, the Equity Interests of the Company shall be changed into or exchanged for a different number or kind of shares of stock or other securities of the Company or of another corporation, whether through reorganization, recapitalization, stock split-up, combination of shares, merger or consolidation (including, without limitation, any subdivision or combination of Equity Interest), then in each case the Company shall cause effective provision to be made so that this Warrant shall, effective as of the effective date of such event retroactive to the record date, if any, of such event, be exercisable or exchangeable for the kind and number of equity securities, cash or other property to which a holder of the Equity Interest deliverable upon exercise or exchange of this Warrant would have been entitled upon such event and any such provision shall include adjustments in respect of such securities or other property that shall be equivalent to the adjustments provided for in this Warrant with respect to such Warrant.

 

SECTION 3.3.2            Consolidations and Mergers; Dissolution .

 

(a)          If, at any time after the date hereof, the Company shall consolidate with, merge with or into, or sell all or substantially all of its assets or property to, another Person, then the Company shall cause effective provision to be made so that each Warrant shall, effective as of the effective date of such event retroactive to the record date, if any, of such event, be exercisable or exchangeable for the kind and number of shares of stock, membership or other equity interests, other securities, cash or other property to which a holder of the Equity Interest deliverable upon exercise or exchange of such Warrant would have been entitled upon such event. 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 Holder at the Holder’s address set forth in Section 5.1. 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.

 

(b)          In case a voluntary or involuntary dissolution, liquidation, or winding up of the Company (other than in connection with a consolidation or merger covered by subsection (a) above) is at any time proposed, the Company shall give at least 30 days’ prior written notice to the Holder. 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 Holder 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 to be made to the Holder 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.

 

SECTION 3.3.3            Adjustments to the Current Holder’s Equity Interest . Subject to the terms of this Section 3.3.3 , the Current Holder’s Equity Interest (and the Warrant) shall be subject to increase (but not decrease) as follows:

 

(a)          In the event that (i) prior to December 18, 2018 the Company completes a private placement of its common stock and 50% of the Fair Market Value of the Company’s common stock in such private placement is less than $0.385 per share, or (ii) 50% of the Fair Market Value of the Company’s common stock as of December 31, 2018 is less than $0.385 per share, then in each case the existing Current Holder’s Equity Interest applicable to the Warrant at such time shall increase (but not decrease) to a new Current Holder’s Equity Interest pursuant to the following formula:

 

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New Current Holder’s Equity Interest = [(2 x Existing Current Holder’s Equity Interest) x ($0.385 ÷ 50% of FMV)] – Existing Current Holder’s Equity Interest.

 

(b)          In the event that Holder exercises the Warrant in whole or in part prior to December 31, 2018 and Fair Market Value of the Company’s common stock on the date of such exercise is less than $0.385 per share, then the Current Holder’s Equity Interest with respect solely to those shares being exercised shall increase (but not decrease) pursuant to the same formula set forth in Section 3.3.3(a) above, such that the formula would apply only to the shares being exercised, as follows:

 

New Current Holder’s Equity Interest for Exercised Shares = [(2 x Existing Current Holder’s Equity Interest in the Exercised Shares ) x ($0.385 ÷ 50% of FMV as of the Exercise Date )] – Existing Current Holder’s Equity Interest in the Exercised Shares

 

(c)          Solely for the purposes of illustration, examples of the calculations described in this Section 3.3.3 are set forth on Schedule 3.3.3 attached hereto .

 

(d)          The foregoing notwithstanding, the adjustment to Current Holder’s Equity Interest provided for in this Section 3.3.3 shall not apply to any private placement completed by the Company on or prior to September 30, 2015 with (i) David L. Van Andel; (ii) David L. Van Andel Trust, under Trust Agreement dated November 30, 1993; (iii) the Holder; (iv) Penta Mezzanine SBIC Fund I, L.P.; (v) JL Properties, Inc.; or (vi) MidCap Funding X Trust, or any of the parent companies, subsidiaries, or affiliates of any of the foregoing persons or entities.

 

SECTION 3.3.4         Notice; Calculations; Etc . Whenever the Equity Interest issuable hereunder shall be adjusted as provided in this Section 3.3 , the Company shall provide to the Holder a statement, signed by an Executive Officer, describing in detail the facts requiring such adjustment and setting forth a calculation of the Equity Interest applicable to each Warrant after giving effect to such adjustment. All calculations under this Section 3.3 shall be made to the nearest one hundredth of a cent or to the nearest one-tenth of a unit, as the case may be.

 

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ARTICLE IV

CERTAIN OTHER RIGHTS

 

SECTION 4.1 Registration Rights.

 

(a)          At any time at which this Warrant or the Equity Interest underlying the same remains outstanding, upon the request of the Holder, the Company will enter into a registration rights agreement with Holder (the “ Rights Agreement ”). Such Rights Agreement shall provide that beginning October 1, 2015, if the Company is eligible for the use of a registration statement on Form S-3, then the Holder shall have the right to request an initial registration and thereafter on a quarterly basis after such initial registration shall have been declared effective by the U.S. Securities and Exchange Commission, registration of its Equity Interests on Form S-3 or any similar short-form registration (each, a " Demand Registration "). The Rights Agreement will provide that each request for a Demand Registration shall specify the approximate number of Equity Interests requested to be registered and that the Company shall cause a registration statement on Form S-3 (or any successor form) to be filed within twenty (20) 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. The Rights Agreement will provide that 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 determines in its reasonable good faith judgment that such Demand Registration would (i) materially interfere with a significant acquisition, corporate reorganization 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. The Rights Agreement shall contain such other terms and conditions applicable to the Holder no less favorable to the Holder than registration rights made available to any other holder of any Equity Interest or other equity security of the Company.

 

(b)          The rights to cause the Company to register Equity Interests pursuant hereto may be assigned (but only with all related obligations) by the Holder in a Qualified Assignment; provided, that, (i) the Company is, upon or within a reasonable time after such transfer, furnished with written notice of the name and address of such transferee and the securities with respect to which such registration rights are being assigned, (ii) such transferee or assignee agrees in writing to be bound by and subject to the terms and conditions of this Warrant, (iii) such assignment shall be effective only if immediately following such transfer the further disposition of such securities by transferee or assignee is restricted under the Securities Act, and (iv) such assignment shall be effective only if immediately following such transfer such Equity Interests continue to be Equity Interests of the Company.

 

ARTICLE V

MISCELLANEOUS

 

SECTION 5.1 Notices . Unless otherwise specifically provided herein, any notice or other communication herein required or permitted to be given shall be in writing and shall be made by electronic mail, personal service, facsimile or reputable courier service:

 

(a) If to the Company, to:

 

TWINLAB CONSOLIDATED HOLDINGS, INC.

600 East Quality Drive

American Fork, UT 84003

Attention: Mark Jaggi, Chief Financial Officer

Facsimile: (801) 763-0789

e-mail: MJaggi@twinlab.com

 

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and

 

TWINLAB CONSOLIDATED HOLDINGS, INC.

632 Broadway, Suite 201

New York, NY 10012
Attention: Richard Neuwirth, Chief Legal Officer

Facsimile: (212) 260-1853

e-mail: RNeuwirth@twinlab.com

 

with a copy to:

 

VARNUM LLP

Bridgewater Place, P.O. Box 352

Grand Rapids, MI 49501

Attention: Mary Kay Shaver

Facsimile: (616) 336-7000

e-mail: mkshaver@varnumlaw.com

 

and

 

WILK AUSLANDER LLP

1515 Broadway, 43 rd Floor

New York, NY 10036

Attention: Joel I. Frank

Facsimile: (212) 752-6380

e-mail: jfrank@wilkauslander.com

 

(b) If to the Holder, to:

 

JL-BBNC Mezz Utah, LLC

701 West 8 th Street, Suite 1200

Anchorage, AK 99501

Attention: Joshua D. Hodes

Facsimile: (907) 276-8433

e-mail: joshh@lbblawyers.com

 

with a copy to:

 

JL-BBNC Mezz Utah, LLC

701 West 8 th Street, Suite 1200

Anchorage, AK 99501

Attention: Joshua D. Hodes

Facsimile: (907) 276-8433

e-mail: joshh@lbblawyers.com

 

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Unless otherwise specifically provided herein, any notice or other communication shall be deemed to have been given when delivered in person or by courier service, upon receipt of electronic mail or upon receipt of facsimile.

 

SECTION 5.2 No Voting Rights: Limitations of Liability . This Warrant shall not entitle the holder thereof to any voting rights or, except as otherwise provided or referenced herein, other rights of an equity owner of the Company. No provision hereof, in the absence of affirmative action by the Holder to purchase its Equity Interest, and no enumeration herein of the rights or privileges of the Holder shall give rise to any liability of the Holder for the Exercise Price of the Equity Interest acquirable by exercise hereunder or as a stockholder of the Company.

 

SECTION 5.3 Amendments and Waivers . Any provision of this Warrant may be amended or waived, but only pursuant to a written agreement signed by the Company and the Holder; provided , however , that, notwithstanding the foregoing, this Warrant will automatically be amended, without any further action required by the Company and the Holder under this Section 5.3 , in the event the Current Holder’s Equity Interest is adjusted pursuant to Section 3.3.3 .

 

SECTION 5.4 Severability . If any provision of this Agreement shall be held to be invalid or unenforceable, such invalidity or unenforceability shall attach only to such provision and shall not in any way affect or render invalid or unenforceable any other provision of this Agreement, and such provision shall be deemed to be restated to reflect the parties' original intentions as nearly as possible in accordance with Applicable Law(s).

 

SECTION 5.5 Specific Performance . The Holder shall have the right to specific performance by the Company of the provisions of this Warrant, in addition to any other remedies it may have at law or in equity. The Company hereby irrevocably waives, to the extent that it may do so under Applicable Law, any defense based on the adequacy of a remedy at law which may be asserted as a bar to the remedy of specific performance in any action brought against the Company for specific performance of this Warrant by the Holder.

 

SECTION 5.6 Binding Effect . This Warrant shall be binding upon and inure to the benefit of the Company, the Holder and their respective successors and assigns.

 

SECTION 5.7 Counterparts . This Warrant may be executed in several counterparts, and/or by the execution of counterpart signature pages that may be attached to one or more counterparts of this Warrant, and all so executed shall constitute one agreement binding on all of the parties hereto, notwithstanding that all of the parties hereto are not signatory to the original or the same counterpart. In addition, any counterpart signature page may be executed by any party wherever such party is located, and may be delivered by telephone facsimile or by electronic mail in PDF format, and any such transmitted signature pages may be attached to one or more counterparts of this Warrant, and such faxed or sent by electronic mail signature(s) shall have the same force and effect, and be as binding, as if original signatures had been executed and delivered in person.

 

SECTION 5.8 Entire Agreement . This Warrant, together with the other documents and instruments entered into by the parties thereto in connection therewith, constitute the entire understanding among the parties hereto with respect to the subject matter hereof and supersedes any prior agreements, written or oral, with respect thereto.

 

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SECTION 5.9 Governing law . THIS WARRANT SHALL BE GOVERNED BY AND CONSTRUED UNDER THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAWS RULES AND PRINCIPLES. THE PARTIES HEREBY EXPRESSLY AND IRREVOCABLY SUBMIT TO THE JURISDICTION OF THE STATE AND FEDERAL COURTS LOCATED IN NEW YORK COUNTY, NEW YORK FOR THE PURPOSE OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS WARRANT, AND IRREVOCABLY AGREE TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH SUCH LITIGATION. THE PARTIES HEREBY EXPRESSLY AND IRREVOCABLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH THEY MAY HAVE OR HEREAFTER MAY HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. TO THE EXTENT THAT ANY PARTY HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, THE PARTY HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS WARRANT.

 

SECTION 5.10 Expenses . The Company will promptly (and in any event within thirty (30) days of receiving any statement or invoice therefor) pay all reasonable fees, expenses and costs relating hereto, including, but not limited to, (i) the cost of reproducing this Warrant, (ii) the fees and disbursements of counsel to the Holder in preparing this Warrant, (iii) all transfer, stamp, documentary or other similar Taxes, assessments or charges levied by any governmental or revenue authority in respect hereof or any other document referred to herein, (iv) fees and expenses (including, without limitation, reasonable attorneys' fees) incurred in respect of the enforcement by the Holder of the rights granted to the Holder under this Warrant, and (v) the expenses relating to the consideration, negotiation, preparation or execution of any amendments, waivers or consents requested by the Company pursuant to the provisions hereof, whether or not any such amendments, waivers or consents are executed.

 

SECTION 5.11 Attorneys' Fees . In any action or proceeding brought by a party to enforce any provision of this Warrant, the prevailing party shall be entitled to recover the reasonable costs and expenses incurred by it or him in connection therewith (including reasonable attorneys’ and paralegals’ fees and costs incurred before and at any trial or arbitration and at all appellate levels), as well as all other relief granted or awarded in such action or other proceeding.

 

SECTION 5.12 Filings . The Company shall, at its own expense, promptly execute and deliver, or cause to be executed and delivered, to the Holder all applications, certificates, instruments and all other documents and papers that the Holder may reasonably request in connection with the obtaining of any consent, approval, qualification, or authorization of any Federal, provincial, state or local government (or any agency or commission thereof) necessary or appropriate in connection with, or for the effective exercise of, the Warrant (and/or any successor Warrant(s) hereto).

 

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SECTION 5.13 Other Transactions . Nothing contained herein shall preclude the Holder from engaging in any transaction, in addition to those contemplated by this Warrant with the Company or any of its Affiliates in which the Company or such Affiliate is not restricted hereby from engaging with any other Person.

 

SECTION 5.14 Waiver of Jury Trial . THE HOLDER AND THE COMPANY HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS WARRANT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF THE HOLDER OR THE COMPANY. THE COMPANY ACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED FULL AND SUFFICIENT CONSIDERATION FOR THIS PROVISION AND THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE HOLDER ENTERING INTO THIS WARRANT.

 

SECTION 5.15 Headings . Section titles and captions contained in this Warrant are inserted only as a matter of convenience and for reference. The titles and captions in no way define, limit, extend or describe the scope of this Warrant or the intent of any provision hereof.

 

SECTION 5.16 No Third-Party Beneficiaries . This Warrant is for the sole benefit of the Company and the Holder and their respective successors and, in the case of the Holder, 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.

 

[Remainder of page intentionally left blank; signatures on following page]

 

13
 

 

IN WITNESS WHEREOF, the undersigned has caused this Warrant to be duly executed and delivered by an authorized officer, all as of the date and year first above written.

 

  TWINLAB CONSOLIDATED HOLDINGS, INC.,
a Nevada corporation
     
  By: /s/ Thomas A. Tolworthy
  Name:    Thomas A. Tolworthy
  Title: Chief Executive Officer and President

 

Signature Page To Warrant 2015-25

 

14
 

 

ACKNOWLEDGED AND AGREED:  
   
JL-BBNC MEZZ UTAH, LLC  
an Alaska limited liability company  
     
By: /s/ Jonathan B. Rubini  
Name:   Jonathan B. Rubini  
Title:     Managing Member  

 

[SIGNATURE PAGE TO WARRANT]

 

15
 

 

ANNEX 1

 

ELECTION TO EXERCISE FORM

 

(To Be Executed By the Holder of This Warrant

 

In Order to Exercise This Warrant)

 

The undersigned hereby irrevocably elects to exercise the right covered by this Warrant to purchase ____________________ of the Equity Interest of TWINLAB CONSOLIDATED HOLDINGS, INC. , a Nevada corporation, according to the conditions hereof and herewith makes payment in full of the Exercise Price with respect to such Equity Interest.

 

     
  Signature  
     
     
     
     
  Address  

 

Dated:     

 

16
 

  

ANNEX 2

 

ASSIGNMENT FORM

 

(To Be Executed By the Holder of This Warrant

 

In Order to Assign This Warrant)

 

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto _____________________________ this Warrant and all rights evidenced thereby and does irrevocably constitute and appoint ___________________, attorney, to transfer the said Warrant on the books of TWINLAB CONSOLIDATED HOLDINGS, INC. , a Nevada corporation.

 

     
  Signature  
     
     
     
     
  Address  

 

Dated:    

 

17
 

  

ANNEX 3

 

EXCHANGE FORM

 

(To Be Executed By the Holder of This Warrant

 

In Order to Exchange and Assign This Warrant)

 

The undersigned hereby irrevocably elects to exchange this Warrant to purchase ________________, of the Equity Interest of TWINLAB CONSOLIDATED HOLDINGS, INC. , a Nevada corporation, for ___________ Warrants to purchase the Equity Interest of TWINLAB CONSOLIDATED HOLDINGS, INC. , a Nevada corporation, set forth below to the Persons named and hereby sells, assigns and transfers unto such Persons that portion of this Warrant represented by such new Warrants and all rights evidenced thereby and does irrevocably constitute and appoint ____________________, attorney, to exchange and transfer this Warrant as aforesaid on the books of TWINLAB CONSOLIDATED HOLDINGS, INC. , a Nevada corporation.

 

Equity Interest     Assignee  
         
         
         
         
         
         
      Signature  
         
         
         
    Address  
   

 

FOR USE BY THE COMPANY ONLY:

 

This Warrant No. __ cancelled (or transferred or exchanged) this ________ day of _____________, ____________ of the Equity Interest of TWINLAB CONSOLIDATED HOLDINGS, INC. , a Nevada corporation, issued therefor in the name of ____ ___________ Warrant No. ___ for ________, of the Equity Interest of TWINLAB CONSOLIDATED HOLDINGS, INC. , a Nevada corporation, in the name of _________________________.

 

Dated:    

 

 
 

   

Schedule 3.3.3

 

Calculations for Adjustment of Current Holder’s Equity Interest

 

In the event that (i) prior to December 18, 2018 the Company completes a private placement of its common stock and 50% of the Fair Market Value of the Company’s common stock in such private placement is less than $0.385 per share, (ii) 50% of the Fair Market Value of the Company’s common stock as of December 31, 2018 is less than $0.385 per share, or (iii) Holder exercises the Warrant in whole or in part prior to December 31, 2018 and Fair Market Value of the Company’s common stock on the date of such exercise is less than $0.385 per share, then in each case, the existing Current Holder’s Equity Interest will increase (but not decrease) consistent with the following examples:

 

Section 3.3.3(a) - Example Where Warrant Has Remained Unexercised as of December 31, 2018

 

Solely for illustration purposes:

 

Assumptions :

· Original Investment: $760,000
· Price per share: $0.76
· Total Shares: 1,000,000
· FMV of Company’s common stock: $.50/share
· No exercises of Warrant through December 31, 2018

 

New Current Holder’s Equity Interest:

= [(2 x 1,000,000) x (0.385 ÷ 0.25)] – 1,000,000

= [2,000,000 x 1.54] – 1,000,000

= 3,080,000 – 1,000,000

= 2,080,000 (an increase of 1,080,000 over existing CHEI)

 

At a $0.01/share exercise price, to fully-exercise the New Current Holder’s Equity Interest would cost $20,800. Together with the original investment of $760,000, the Holder’s total investment would equal $780,800 for 3,080,000 shares, or $0.25/share.

 

Section 3.3.3(b) - Example Assuming Warrant is Partially Exercised Prior to December 31, 2018 .

 

Same assumptions as above, but assume 750,000 of the 1,000,000 shares are exercised in a partial exercise.

 

New Current Holder’s Equity Interest for the portion of the Warrant the Holder is exercising:

= [(2 x 750,000) x (0.385 ÷ 0.25)] – 750,000

= [1,500,000 x 1.54] – 750,000

= 2,310,000 – 750,000

= 1,560,000 (an increase of 756,000 over existing CHEI)

  

2
 

 

At a $0.01/share exercise price, to fully exercise the New Current Holder’s Equity Interest for the portion of the Warrant the Holder is then exercising would cost $15,600. Together with the original investment of $570,000 for the corresponding number of original investment shares (i.e., 750,000 shares at $0.76/share), the Holder’s total investment related to the portion of the Warrant so exercised would equal $585,600 for 2,310,000 shares, or $0.25/share. The Holder would retain the right to exercise the remaining 250,000 shares.

 

3

Exhibit 10.73

THIRD AMENDMENT TO NOTE AND WARRANT PURCHASE AGREEMENT, LIMITED CONSENT AND LIMITED WAIVER

 

This THIRD AMENDMENT TO NOTE AND WARRANT AGREEMENT, LIMITED CONSENT AND LIMITED WAIVER (this “ Amendment ”), dated as of June 30, 2015, is made by and between TWINLAB CONSOLIDATED HOLDINGS, INC., a Nevada corporation (“ Parent ”), TWINLAB CONSOLIDATION CORPORATION, a Delaware corporation (“ TCC ”), TWINLAB HOLDINGS, INC., a Michigan corporation (“ Twinlab Holdings ”), ISI BRANDS INC., a Michigan corporation (“ ISI Brands ”), and TWINLAB CORPORATION, a Delaware corporation (“ Twinlab Corporation ”), NUTRASCIENCE LABS, INC., a Delaware corporation, NUTRASCIENCE LABS IP CORPORATION., a Delaware corporation (each of the foregoing Persons being referred to herein individually as a “ Company ” and collectively as the “ Companies ”), and JL-BBNC MEZZ UTAH, LLC, a Alaska limited liability (the “ Purchaser ”).

 

WHEREAS, the Companies and the Purchaser are parties to a Note and Warrant Purchase Agreement dated as of January 22, 2015, as amended by that certain First Amendment to Note and Warrant Purchase Agreement and Consent dated as of February 4, 2015, that certain Second Amendment to Note and Warrant Purchase Agreement and Consent dated as of April 30, 2015 (as the same may be further amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “ Note Purchase Agreement ”); and

 

WHEREAS, the Companies have requested that the Purchaser convert the aggregate amount of interest payable on the Notes for the period beginning on May 1, 2015 and ending on October 31, 2015 (it being understood and agreed that the aggregate amount of interest payable for such period is $306,667) into Equity Interests in Parent at the price of $0.76 per share of common stock pursuant to that certain Stock Purchase Agreement, dated as of the date hereof, among Purchaser and Parent (the “ Share Purchase Agreement ”) (the “ Interest Conversion ”);

 

WHEREAS, (a) the Companies have requested that the Purchaser (i) consent to the Interest Conversion and (ii) waive certain defaults and provisions of the Note Purchase Agreement, and (b) the Purchaser has agreed to do so subject to the terms and conditions set forth herein.

 

NOW, THEREFORE, in consideration of the promises and the mutual agreements contained in this Amendment, and subject to the terms and conditions set forth herein, each party hereto hereby agrees as follows:

 

1.           Capitalized Terms . Capitalized terms used but not defined herein shall have the meanings set forth in the Note Purchase Agreement.

 

2.           Limited Consent for the Interest Conversion . At the request of and as an accommodation to the Companies and subject to the strict compliance with the terms, conditions and requirements set forth herein (including, without limitation, satisfaction of each of the conditions set forth in Section 8 below), the Purchaser hereby consents to the Interest Conversion. The limited consent set forth in this Section 2 is effective solely for the purposes set forth herein and shall be limited precisely as written and shall not be deemed to (a) except as expressly provided herein, be a consent to any amendment, waiver or modification of any term or condition of the Note Purchase Agreement or of any other Transaction Document; (b) prejudice any right that the Purchaser have or may have in the future under or in connection with the Note Purchase Agreement or any other Transaction Document; (c) waive any Event of Default that exists as of the date hereof; or (d) establish a custom or course of dealing among any of the Companies, on the one hand, or the Purchaser on the other hand.

 

1
 

  

3.           Limited Consent for new Essex Lease . At the request of and as an accommodation to the Companies and subject to the strict compliance with the terms, conditions and requirements set forth herein (including, without limitation, satisfaction of each of the conditions set forth in Section 8 below), the Purchaser hereby consents to (i) a sale/leaseback and refinancing transaction with Essex Capital Corporation in the principal rental amount of $2,750,000 consisting of the sale/leaseback of existing Twinlab Corporation equipment described on Exhibit K (the “ First 2015 Essex Lease ”) and (ii) a sale/leaseback and refinancing transaction with Essex Capital Corporation in the principal rental amount of $150,000 consisting of the sale/leaseback of existing Twinlab Corporation equipment described on Exhibit L (the “ Second 2015 Essex Lease ” and together, collectively, the “ 2015 Essex Leases ”). Consent for the 2015 Essex Leases includes consent for Twinlab Corporation to sell the equipment described on Exhibit K and Exhibit L to Essex Capital Corporation, and the Purchaser shall execute such lien releases and file such financing amendments to evidence lien releases of the equipment described on Exhibit K and Exhibit L as reasonably requested by Twinlab Corporation or Essex Capital Corporation. The limited consent set forth in this Section 3 is effective solely for the purposes set forth herein and shall be limited precisely as written and shall not be deemed to (a) except as expressly provided herein, be a consent to any amendment, waiver or modification of any term or condition of the Note Purchase Agreement or of any other Transaction Document; (b) prejudice any right that the Purchaser has or may have in the future under or in connection with the Note Purchase Agreement or any other Transaction Document; (c) waive any Event of Default that exists as of the date hereof; or (d) establish a custom or course of dealing among any of the Companies, on the one hand, or the Purchaser on the other hand.

 

4.           Limited Waiver to Note Purchase Agreement . At the request of and as an accommodation to the Companies and subject to the strict compliance with the terms, conditions and requirements set forth herein (including, without limitation, satisfaction of each of the conditions set forth in Section 8 below), the Purchaser hereby agrees to waive (i) the Event of Default under Section 11.1(c) of the Note Purchase Agreement due to the Companies’ failure to comply with the financial covenants set forth in Section 5.12 of the Note Purchase Agreement for the measurement period ending March 31, 2015 (the “ Specified Event of Default ”) and (ii) the Companies’ compliance with the financial covenants set forth in Section 5.12 of the Note Purchase Agreement for the measurement period ending June 30, 2015. The limited waiver set forth in this Section 4 is effective solely for the purposes set forth herein and shall be limited precisely as written and shall not be deemed to (a) except as expressly provided herein, be a consent to any amendment, waiver or modification of any term or condition of the Note Purchase Agreement or of any other Transaction Document; (b) prejudice any right that the Purchaser have or may have in the future under or in connection with the Note Purchase Agreement or any other Transaction Document; (c) waive any Event of Default (other than the Specified Event of Default) that exists as of the date hereof; or (d) establish a custom or course of dealing among any of the Companies, on the one hand, or the Purchaser on the other hand.

 

5.           Amendments to Note Purchase Agreement . Subject to the satisfaction of the conditions precedent set forth herein and in reliance on the representations, warranties and covenants of the Companies set forth herein and in the Note Purchase Agreement, each party hereto hereby agrees that the Note Purchase Agreement be and hereby is, amended as follows:

 

5.1.           Amendment and Restatement of Existing Defined Terms . Section 1 of the Note Purchase Agreement is hereby amended by amending and restating each of the following defined terms as follows:

 

2
 

 

Essex Debt ” means Indebtedness pursuant to (i) that certain Commercial Lease Agreement, dated as of November 13, 2013, between Twinlab Corporation and Essex Capital Corporation, (ii) that certain Commercial Lease Agreement, dated as of August 21, 2014 (which Commercial Lease Agreement refreshes and supersedes a Commercial Lease Agreement dated March 19, 2013), between Twinlab Corporation and Essex Capital Corporation, and (iii) a new sale/leaseback and refinancing agreement to be entered into between Twinlab Consolidation Corporation and Essex Capital Corporation, in the form previously provided to and approved by the Purchaser and for which Essex Capital Corporation has agreed to be subject to an Agreement Regarding Equipment and Lease in form and substance satisfactory to the Purchaser in its sole discretion; the rental installments of all such lease agreements identified in subclauses (i) through (iii) together is not to exceed an aggregate principal rental amount of $5,800,000.

 

Nutricap Seller First Note ” means the Amended and Restated Unsecured Promissory Note dated June 30, 2015 in the form previously approved by the Purchaser in the principal amount of $2,750,000 issued by Subco I to Nutricap Labs, LLC, a New York limited liability company, in connection with the Target 2 Acquisition, the principal and interest repayment of which shall have a maturity of January 1, 2016 and bear interest at 8.5% per annum, an executed copy of which has been provided to the Purchaser.

 

5.2.           Amendment to Section 5.12(a) . Section 5.12(a) of the Note Purchase Agreement is hereby amended and restated in its entirety as follows:

 

“(a)           Minimum Adjusted EBITDA . Commencing with the month ending July 31, 2015 and until such time as all Obligations are paid, satisfied and discharged in full, the Borrowers shall not, as of the end of any measurement period set forth below, permit the Adjusted EBITDA for such measurement period to be less than the amount set forth in the table below opposite such measurement period.

 

Measurement Period

  Minimum Adjusted EBITDA  
July 1, 2015 to July 31, 2015   $ -700,000  
August 1, 2015 to August 31, 2015   $ -700,000  

 

6.           Representations and Warranties; No Default . Each Company hereby represents and warrants that:

 

6.1.          The execution, delivery and performance by such Company of this Amendment (a) are within such Company’s corporate or similar powers and, at the time of execution hereof and have been duly authorized by all necessary corporate and similar action; (b) does not and will not result, in any breach or default under any other document, instrument or agreement to which a Company or any of its Subsidiaries is a party or to which a Company or any of its Subsidiaries, the Premises, the Collateral or any of the property of a Company or any of its Subsidiaries is subject or bound, except for such breaches or defaults which, individually or in the aggregate, have not had, and would not reasonably be expected to result in, a Material Adverse Effect and (c) will not violate any applicable law, statute, regulation, rule, ordinance, code, rule or order.

 

6.2.          This Amendment has been duly executed and delivered for the benefit of or on behalf of each Company and constitutes a legal, valid and binding obligation of each Company, enforceable against such Company in accordance with its terms except (a) as the same may be limited by bankruptcy, insolvency, reorganization moratorium or similar laws now or hereafter in effect relating to creditors rights generally and (b) that the remedy of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and to the discretion of the court before which any proceeding therefor may be brought.

 

3
 

  

6.3.          Both before and after giving effect to this Amendment on the date hereof (a) except as set forth on Schedule A attached hereto, the representations and warranties of the Companies contained in Section 4.1 of the Note Purchase Agreement and the other Transaction Documents are true, correct and complete on and as of the date hereof as if made on such date (and to the extent any representations and warranties shall relate to the Effective Date or another earlier date, such representation and warranties shall be deemed to be amended to relate to the date hereof), and (b) except as set forth on Schedule B attached hereto, no Default or Event of Default (other than the Specified Event of Default) has occurred and is continuing.

 

7.            Ratification and Confirmation . The Companies hereby ratify and confirm all of the terms and provisions of the Note Purchase Agreement and the other Transaction Documents and agree that all of such terms and provisions, as amended hereby, remain in full force and effect, except as, and to the extent expressly set forth herein.

 

8.           Condition to Effectiveness . The effectiveness of this Amendment shall be subject to the satisfaction of the following conditions precedent:

 

8.1.        The Purchaser shall have received (i) a fully executed copy of this Amendment, (ii) a fully executed copy of the Share Purchase Agreement in the form attached hereto as Exhibit A and (iii) the fully executed Warrant No. W-4 in the form attached hereto as Exhibit B .

 

8.2.        The Purchaser shall have received (i) fully executed amendments to the documents evidencing the Permitted Senior Debt in the form attached hereto as Exhibit C and (ii) evidence reasonably satisfactory to the Purchaser that there will be no reduction in the facility size or the availability formula under the Permitted Senior Debt.

 

8.3.        The Purchaser shall have received (i) a fully executed amendment to the Subordinated Loan Agreement in the form attached hereto as Exhibit D , (ii) a fully executed copy of the Share Purchase Agreement, dated as of the date hereof, among Parent and Subordinated Lender in the form attached hereto as Exhibit E and (iii) a fully executed copy of the Warrant, dated as of the date hereof, issued by Parent to Subordinated Lender in the form attached hereto as Exhibit F .

 

8.4.        The Purchaser shall have received (i) evidence reasonably satisfactory to the Purchaser that the David L. Van Andel Trust, under Trust Agreement dated November 30, 1993 (the “ David L. Van Andel Trust ”) has invested at least $2,500,000 in cash in the Equity Interests of Parent, (ii) a fully executed copy of the Share Purchase Agreement, dated as of the date hereof, among Parent and David L. Van Andel Trust in the form attached hereto as Exhibit G , (iii) evidence that David L. Van Andel Trust surrendered to Parent that certain Warrant No. 1, dated as of September 5, 2014, issued by TCC to David L. Van Andel and assumed by Parent on September 16, 2014, and such warrant has been cancelled and (iv) fully executed copies of the Warrants, dated as of the date hereof, issued by Parent to David L. Van Andel Trust in the forms attached hereto as Exhibit H .

 

8.5.        The Purchaser shall have received (i) a fully executed copy of the Share Purchase Agreement, dated as of the date hereof, among Parent and Little Harbor, LLC in the form attached hereto as Exhibit I and (ii) a fully executed copy of the Warrant, dated as of the date hereof, issued by Parent to Little Harbor, LLC, in the form attached hereto as Exhibit J .

 

4
 

  

8.6.          The Purchaser shall have received from the Companies executed copies of all documents and agreements relating to the 2015 Essex Leases and the Nutricap Seller First Note, including, but not limited to, the Payment Guaranty of Essex Capital Corporation and Ralph T. Iannelli of the Nutricap Seller First Note and each Bill of Sale with respect to the 2015 Essex Leases, duly executed by an authorized officer of each of the parties thereto.

 

8.7.          The Companies shall have delivered to the Purchaser a fully executed copy of the Amendment No. 1 to Standstill Agreement, duly executed by an authorized officer of each of the parties thereto, including but not limited to NUTRICAP LABS, LLC, as junior lender, and such amendment shall be satisfactory in form and substance to the Purchaser.

 

8.8.          The Companies shall have delivered to the Purchaser a fully executed Agreement Regarding Equipment and Lease with respect to the 2015 Essex Leases, and such agreement shall be satisfactory in form and substance to the Purchaser.

 

8.9.          All representations and warranties of the Companies contained herein shall be true and correct in all material respects as of the date hereof (and such parties’ delivery of their respective signatures hereto shall be deemed to be its certification thereof).

 

8.10.         The Purchaser shall have received all fees and other amounts due and payable to the Purchaser and its counsel in connection with this Amendment, and to the extent invoiced, reimbursement or payment of all out-of-pocket expenses required to be reimbursed or paid by the Companies under the Note Purchase Agreement.

 

9.               Use of Proceeds . The Companies hereby agree that the proceeds of the Interest Conversion and the other transactions contemplated by this Amendment shall be used solely to purchase new raw materials for use in the production of the Companies’ higher margin products.

 

10.               Miscellaneous .

 

10.1.          Except as otherwise expressly set forth herein, nothing herein shall be deemed to constitute an amendment, modification or waiver of any of the provisions of the Note Purchase Agreement, the Security Agreement or the other Transaction Documents, all of which remain in full force and effect as of the date hereof and are hereby ratified and confirmed. Each Company hereby acknowledges and agrees that nothing contained herein shall be deemed to entitle any Company to consent to, or a waiver, amendment or modification of, any of the terms, conditions, obligations, covenants or agreements contained in the Transaction Documents in similar or different circumstances. This Amendment (together with any other document executed in connection herewith) is not intended to be, nor shall it be construed as, a novation of the Note Purchase Agreement.

 

10.2.          This Amendment may be executed in any number of counterparts, each of which, when executed and delivered, shall be an original, but all counterparts shall together constitute one instrument. Delivery of an executed counterpart of a signature page of this Amendment by facsimile or electronic mail shall be equally effective as delivery of a manually executed counterpart of this Amendment.

 

10.3.          This Amendment shall be governed by the laws of the State of New York without giving effect to any conflict of law principles and shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.

 

5
 

  

10.4.          The Companies agree to pay all reasonable expenses, including legal fees and disbursements, incurred by Purchaser in connection with this Amendment and the transactions contemplated hereby.

 

10.5.          This Amendment shall be deemed a Transaction Document for all purposes of the Note Purchase Agreement and the other Transaction Documents. On and after the date hereof, each reference in the Note Purchase Agreement and the other Transaction Documents to the Note Purchase Agreement, shall mean and be a reference to the Note Purchase Agreement, as modified by this Amendment.

 

10.6.           Each Company, voluntarily, knowingly, unconditionally and irrevocably, with specific and express intent, for and on behalf of itself and all of its respective parents, subsidiaries, affiliates, members, managers, predecessors, successors, and assigns, and each of their respective current and former directors, officers, shareholders, agents, and employees (collectively, “ Releasing Parties ”), does hereby fully and completely release, acquit and forever discharge each Indemnified Party of and from any and all actions, causes of action, suits, debts, disputes, damages, claims, obligations, liabilities, costs, expenses and demands of any kind whatsoever, at law or in equity, whether matured or unmatured, liquidated or unliquidated, vested or contingent, choate or inchoate, known or unknown that the Releasing Parties (or any of them) has against the Indemnified Parties (or any of them) that directly or indirectly arise out of, are based upon or are in any manner connected with any Prior Related Event. “ Prior Related Event ” means any transaction, event, circumstance, action, failure to act, occurrence of any type or sort, whether known or unknown, which occurred, existed, was taken, was permitted or begun in accordance with, pursuant to or by virtue of (a) any of the terms of this Amendment or any other Transaction Document, (b) any actions, transactions, matters or circumstances related hereto or thereto, (c) the conduct of the relationship between the Purchaser and any Company, or (d) any other actions or inactions by the Purchaser, all on or prior to the date hereof. Each Company acknowledges that the foregoing release is a material inducement to the Purchaser’s decision to enter into this Amendment and to agree to the modifications contemplated hereunder.

 

[Signature Pages Follow.]

 

6
 

 

IN WITNESS WHEREOF, the parties hereto have executed this Amendment which shall be deemed to be a sealed instrument as of the date first above written.

 

 

  COMPANIES
   
  TWINLAB CONSOLIDATED HOLDINGS, INC.
   
  By: /s/ Thomas A. Tolworthy
  Name: Thomas A. Tolworthy
  Title: Chief Executive Officer and President
     
  TWINLAB HOLDINGS, INC.
     
  By:   /s/ Thomas A. Tolworthy
  Name: Thomas A. Tolworthy
  Title: Chief Executive Officer and President
     
  TWINLAB CONSOLIDATION CORPORATION
     
  By:   /s/ Thomas A. Tolworthy
  Name: Thomas A. Tolworthy
  Title: Chief Executive Officer and President
     
  TWINLAB CORPORATION
     
  By:   /s/ Thomas A. Tolworthy
  Name: Thomas A. Tolworthy
  Title: Chief Executive Officer and President
     
  ISI BRANDS, INC.
     
  By:   /s/ Thomas A. Tolworthy
  Name: Thomas A. Tolworthy
  Title: Chief Executive Officer and President

 

[Signature Page – Third Amendment to Note and Warrant Purchase Agreement, Limited Consent and Limited Waiver]

 

 
 

  

  NUTRASCIENCE LABS, INC.
     
  By: /s/ Thomas A. Tolworthy
  Name: Thomas A. Tolworthy
  Title: Chief Executive Officer and President
     
  NUTRASCIENCE LABS IP CORPORATION
     
  By:   /s/ Thomas A. Tolworthy
  Name: Thomas A. Tolworthy
  Title: Chief Executive Officer and President

 

[Signature Page – Third Amendment to Note and Warrant Purchase Agreement, Limited Consent and Limited Waiver]

 

 
 

 

  PURCHASER :
   
  JL-BBNC MEZZ UTAH, LLC
     
  By: /s/ Jonathan B. Rubini
  Name: Jonathan B. Rubini
  Title: Managing Member

 

 

Exhibit 10.74

 

EXECUTION VERSION

 

THIS INSTRUMENT IS SUBJECT TO THE TERMS OF A STANDSTILL AGREEMENT DATED AS OF FEBRUARY 4, 2015 AMONG HOLDER, MAKER AND MIDCAP FUNDING X TRUST, A DELAWARE STATUTORY TRUST, ADMINISTRATIVE AGENT, WHICH STANDSTILL AGREEMENT (AS AMENDED IN ACCORDANCE WITH ITS TERMS) IS INCORPORATED HEREIN BY REFERENCE (the “ MidCap Standstill ”).

 

THIS INSTRUMENT IS SUBJECT TO THE TERMS OF A STANDSTILL AGREEMENT DATED AS OF FEBRUARY 4, 2015 AMONG HOLDER, MAKER AND PENTA MEZZANINE SBIC FUND I, L.P., A DELAWARE LIMITED PARTNERSHIP, WHICH STANDSTILL AGREEMENT (AS AMENDED IN ACCORDANCE WITH ITS TERMS) IS INCORPORATED HEREIN BY REFERENCE (the “ Penta Standstill ”).

 

THIS INSTRUMENT IS SUBJECT TO THE TERMS OF A STANDSTILL AGREEMENT DATED AS OF FEBRUARY 4, 2015 AMONG HOLDER, MAKER AND JL-BBNC MEZZ UTAH, LLC, AN ALASKA LIMITED LIABILITY COMPANY, WHICH STANDSTILL AGREEMENT (AS AMENDED IN ACCORDANCE WITH ITS TERMS) IS INCORPORATED HEREIN BY REFERENCE (the “ JL Standstill ”).

 

THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY APPLICABLE STATE SECURITIES LAWS. THIS NOTE HAS BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO DISTRIBUTION OR RESALE, AND MAY NOT BE SOLD, MORTGAGED, PLEDGED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION UNDER THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS, OR AN EXEMPTION THEREFROM.

 

AMENDED AND RESTATED

UNSECURED PROMISSORY NOTE

 

$2,750,000 June 30, 2015

 

FOR VALUE RECEIVED, the undersigned, NUTRASCIENCE LABS, INC. F/K/A TCC CM SUBCO I, INC., a Delaware corporation (“ Maker ”), promises to pay to NUTRICAP LABS, LLC, a New York limited liability company (“ Holder ”), the principal sum of TWO MILLION SEVEN HUNDRED FIFTY THOUSAND DOLLARS ($2,750,000.00), together with interest on the unpaid principal balance of this Unsecured Promissory Note (this “ Note ”) from time to time outstanding until paid in full, in lawful money of the United States of America. This Note shall mature and be due and payable by Maker on January 1, 2016 (the “ Maturity Date ”) or, if such day is not a Business Day, then the next succeeding Business Day.

 

This Note is an amendment and restatement, but not a novation of, the “First Promissory Note” referenced in that certain Asset Purchase Agreement (as amended, restated, modified or supplemented from time to time, the “ Purchase Agreement ”), dated February 4, 2015 and effective as of the Option Exercise Date (as defined in the Purchase Agreement), among Maker, Holder, Vitacap Labs, LLC, a New York limited liability company, Canyon Marketing V, LLC, a Delaware limited liability company, Canyon Marketing II, INC., a New York corporation, and Canyon Marketing III, LLC, a Delaware limited liability company. Holder is receiving this Note to amend and restate on the terms set forth herein the First Promissory Note received by Holder pursuant to the Purchase Agreement. Holder expressly agrees that as an amendment and restatement, but not a novation, of the First Promissory Note, this Note remains subject to the terms of each of the MidCap Standstill, the Penta Standstill, and the JL Standstill.

 

 
 

  

ARTICLE I
TERMS AND CONDITIONS

 

1.01        Payment of Principal and Accrued Interest .

 

a.           Interest shall accrue on the outstanding principal amount of this Note at eight and one-half percent (8.5%) per annum (the “ Interest Rate ”). Interest shall be computed hereunder based on a 360-day year. Interest shall be payable monthly at such times and in such amounts as set forth in Schedule A hereto.

 

b.           The principal amount of this Note shall, until the Maturity Date, be payable in monthly installments on the basis of a thirty-six (36) month amortization schedule, with principal amortization payments payable at such times and in such amounts as set forth in Schedule A hereto. The unamortized principal amount of this Note (the “ Amount Due ”) shall be payable on the Maturity Date in accordance with Section 6.17 of the Purchase Agreement. Upon the occurrence of any Event of Default (as defined below), the Amount Due shall be payable in a single payment on demand.

 

1.02        Prepayment .

 

a.           The principal indebtedness evidenced by this Note may be prepaid, in whole or in part, at any time and from time to time, together with accrued and unpaid interest to the date of such prepayment on the amount so prepaid, without premium or penalty. Any partial prepayment of principal made after the Maturity Date shall be applied as follows: first, to the payment of accrued interest; and second, to the payment of principal.

 

b.           Upon any partial prepayment, at the request of either Maker or Holder, this Note shall be surrendered to Maker in exchange for a substitute note, which shall set forth the revised principal amount. In the event that this Note is prepaid in its entirety, this Note shall be surrendered to Maker for cancellation as a condition to any such prepayment.

 

1.03        Payments Only on Business Days . Payments hereunder shall be made only on a Business Day. Any payment hereunder which, but for this Section 1.03 , would be payable on a day which is not a Business Day, shall instead be due and payable on the next succeeding Business Day.

 

1.04        Guarantors . The right of Holder to receive payments of principal and interest pursuant to the terms of this Note have been guaranteed jointly and severally by Essex Capital Corporation, a California Corporation (“ Essex ”), Ralph T. Iannelli, an individual and resident of California (“ Iannelli ”), and Twinlab Consolidation Corporation (“ TCC ) , a Delaware corporation and parent company of NutraScience Labs, Inc. (each of the foregoing persons or entities, a “ Guarantor ”), pursuant to (a) a Guaranty Agreement of equal date herewith by and between Holder on the one hand and Essex Capital Corporation and Ralph T. Iannelli, jointly and severally, on the other hand (the “ Essex Guaranty ”), and (b) a Guaranty Agreement of equal date herewith by and between Holder and Twinlab Consolidation Corporation (the “ TCC Guaranty ”). Holder expressly agrees that any payments under Schedule A hereto made to Holder by any Guarantor or made by any Guarantor pursuant to the Essex Guaranty and/or the TCC Guaranty, shall for the purposes of this Note be deemed payments by Maker in satisfaction of the corresponding portion of Maker’s obligations hereunder.

 

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1.05        Order of Demand and Enforcement . Upon an Event of Default hereunder, Holder agrees to first seek payment pursuant to the Essex Guaranty before seeking payment from the Maker or pursuant to the TCC Guaranty. Accordingly, until the tenth (10 th ) day after which Holder has made demand for payment to both Essex and Iannelli pursuant to and in accordance with the terms of the Essex Guaranty, and unless any amounts due and owing Holder pursuant to this Note remain unpaid as of such date, Holder agrees that it shall not demand or take any action to seek payment pursuant to the TCC Guaranty.

 

ARTICLE II
DEFAULTS

 

2.01        Events of Default . The following shall constitute “ Events of Default ” under this Note:

 

a.           failure by Maker to make any interest payment required under this Note when the same shall become due and payable (whether at maturity, by acceleration or otherwise) and the continuation of such failure for a period of fifteen (15) Business Days following notice thereof; or

 

b.           failure by Maker to make any payments of principal required under this Note when the same shall become due and payable (whether at maturity, by acceleration or otherwise) and the continuation of such failure for a period of fifteen (15) Business Days following notice thereof; or

 

c.           Maker, pursuant to or within the meaning of any Bankruptcy Law (i) commences a voluntary case or proceeding; (ii) consents to the entry of an order for relief against it in an involuntary case or proceeding; (iii) consents to the appointment of a custodian of it or for all or any substantial portion of its property or assets; or (iv) makes a general assignment for the benefit of its creditors; or

 

d.           an involuntary case or proceeding is commenced against Maker under any Bankruptcy Law and is not dismissed, bonded or discharged within sixty (60) days thereafter, or a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that (i) is for relief against Maker in an involuntary case or proceeding; (ii) appoints a custodian of Maker or for all or substantially all of its properties; or (iii) orders the liquidation of Maker; and in each case the order or decree remains unstayed and in effect for sixty (60) days.

 

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If an Event of Default occurs, the Interest Rate shall equal fifteen percent (15%) per annum from and after the date of such Event of Default until the date upon which this Note is repaid in full. If an Event of Default occurs, Holder may, at its option, declare, by notice in writing to Maker (the “ Acceleration Notice ”), the entire principal amount of this Note (and any accrued and unpaid interest thereon) to be immediately due and payable and upon any such declaration such principal and interest shall become and be forthwith due and payable without any further notice, presentment, protest, or demand of any kind, all of which are hereby expressly waived by Maker. If an Event of Default specified in Sections 2.01(c) or 2.01(d) hereof occurs, the principal amount of this Note (and any accrued and unpaid interest thereon) shall become due and payable immediately without any declaration or other act on the part of Holder. If any Event of Default shall have occurred, Holder may proceed to protect and enforce its rights either by suit in equity or by action at law, or both, whether for specific performance of any provision of this Note or in aid of the exercise of any power granted to Holder under this Note.

 

ARTICLE III
MISCELLANEOUS

 

3.01        No Waiver: Amendment . Maker hereby waives presentment, demand for payment, notice of dishonor, notice of protest and all other notices or demands in connection with the delivery, acceptance, performance or default of this Note. No delay by Holder in exercising any power or right hereunder shall operate as a waiver of any power or right, nor shall any single or partial exercise of any power or right preclude other or further exercise thereof, or the exercise of any other power or right hereunder or otherwise; and no waiver whatsoever or modification of the terms hereof, including but not limited to an extension of the time for the payment of this Note or any installment due hereunder, shall be valid unless set forth in writing by Holder. This Note may not be changed orally, but only by an agreement in writing signed by the party against whom enforcement of any waiver, change, modification or discharge is sought. No modifications or amendments made by agreement with any person now or hereafter liable for the payment of this Note shall operate to release, discharge, modify, change or affect the liability of Maker under this Note, either in whole or in part unless Holder agrees otherwise in writing. This Note may not be amended without the prior written consent of each Guarantor.

 

3.02        Limit of Validity . The provisions of this Note are hereby expressly limited so that in no contingency or event whatsoever, whether by reason of demand or acceleration of the maturity of this Note or otherwise, shall the amount paid, or agreed to be paid to Holder for the use, forbearance or retention of money under this Note (“ Interest ”) exceed the maximum amount permissible under applicable law. If, from any circumstance whatsoever, performance or fulfillment of any provision hereof or of any agreement between Maker and Holder shall, at the time performance or fulfillment of such provision shall be due, exceed the limit for Interest prescribed by law or otherwise transcend the limit of validity prescribed by applicable law, then ipso facto the obligation to be performed or fulfilled shall be reduced to such limit and if, from any circumstance whatsoever, Holder shall ever receive anything of value deemed Interest by applicable law in excess of the maximum lawful amount, an amount equal to any excessive Interest shall be applied to the reduction of the principal amount owing under this Note (whether or not then due) or at the option of Holder be paid over to Maker, and not to the payment of Interest. All Interest (including any amounts or payments deemed to be Interest) paid or agreed to be paid to Holder shall, to the extent permitted by applicable law, be amortized, prorated, allocated and spread throughout the full period until payment in full of the principal amount of this Note so that the Interest thereof for such full period will not exceed the maximum amount permitted by applicable law.

 

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3.03        Arms Length Agreement . This Agreement has been negotiated and prepared at the mutual request, direction and construction of Holder and Maker, at arms length, with the advice and participation of counsel, and will be interpreted in accordance with its terms without favor to any party.

 

3.04        Governing Law . This Note shall be interpreted, construed and enforced according to the substantive laws of the State of New York, without giving effect to principles of conflicts of law.

 

3.05        Judicial Proceedings . All judicial proceedings brought against Maker arising out of or relating to this Note may be brought 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 by execution and delivery of this Note, Maker accepts for itself and in connection with its properties, generally and unconditionally, the nonexclusive jurisdiction of the aforesaid courts and waives any defense of forum non conveniens and irrevocably agrees to be bound by any judgment rendered thereby in connection with this Note. Maker hereby agrees that service of all process in any such proceeding in any such court may be made by registered or certified mail, return receipt requested, to Maker at its address set forth in Section 3.06 , such service being hereby acknowledged by Maker to be sufficient for personal jurisdiction in any action against Maker in any such court and to be otherwise effective and binding service in every respect. Nothing herein shall affect the right to serve process in any other manner permitted by law or shall limit the right of Holder to bring proceedings against Maker in the courts of any other jurisdiction.

 

3.06        Notices . Any notices or other communications required or permitted hereunder shall be in writing, and shall be sufficiently given if made by hand delivery, electronic mail or registered or certified mail, postage prepaid, return receipt requested, in accordance with the Purchase Agreement.

 

3.07        Assignment and Transfer; Covenant . Neither this Note nor any interest herein shall be assigned, transferred, pledged or otherwise disposed of, through liquidation or otherwise (any of the foregoing, a “ Transfer ”), in whole or in part, by Holder. Neither this Note nor any interest herein or obligation hereunder shall be Transferred, in whole or in part, by Maker without the express prior written consent of Holder.

 

3.08        Replacement of Notes . Upon receipt by Maker of evidence satisfactory to it of the loss, theft, destruction or mutilation of this Note, and (in case of loss, theft or destruction) of an indemnity reasonably satisfactory to it, and upon surrender and cancellation of this Note, if mutilated, Maker will deliver a new Note, or like tenor in lieu of this Note, payable to Holder, in the same principal amount as the unpaid principal amount of this Note and bearing interest at the same Interest Rate as this Note. Any Note delivered in accordance with the provisions of this Section 3.08 shall be dated as of the date of this Note.

 

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3.09        Successors and Assigns . The respective rights and obligations of Maker and Holder shall be binding upon and inure to the benefit of their respective heirs, executors, administrators, successors and permitted assigns.

 

3.10        Collection Costs . If any amount due under this Note is not paid at the earlier of (i) the due date hereunder or (ii) at acceleration of maturity as herein provided and is placed in the hands of an attorney for collection, or if it is collected through bankruptcy, probate or other court after maturity or the acceleration thereof, Maker shall pay all reasonable attorneys’ fees and collection costs of Holder incurred with respect to the collection of amounts due under this Note promptly on the demand of Holder.

 

3.11        Definitions . The following terms have the following meanings:

 

Acceleration Notice ” shall have the meaning set forth in Section 2.01 .

 

Amount Due ” shall have the meaning set forth in Section 1.01(b) .

 

Bankruptcy Law ” means Title 11, United States Code, or any similar federal, state or foreign law for the relief of debtors or any arrangement, reorganization, assignment for the benefit of creditors or any other marshalling of the assets and liabilities of Maker.

 

Business Day ” means each day other than Saturdays, Sundays and days when commercial banks are authorized or required by law to be closed for business in New York, New York.

 

Essex ” shall have the meaning set forth in Section 1.04 .

 

Essex Guaranty ” shall have the meaning set forth in Section 1.04 .

 

Events of Default ” shall have the meaning set forth in Section 2.01 .

 

Guarantor ” shall have the meaning set forth in Section 1.04 .

 

Holder ” shall have the meaning set forth in the Preamble .

 

Iannelli ” shall have the meaning set forth in Section 1.04 .

 

Interest ” shall have the meaning set forth in Section 3.02 .

 

Interest Rate ” shall have the meaning set forth in Section 1.01(a) .

 

JL Standstill ” shall have the meaning set forth in the Preamble .

 

Maker ” shall have the meaning set forth in the Preamble .

 

Maturity Date ” shall have the meaning set forth in the Preamble .

 

MidCap Standstill ” shall have the meaning set forth in the Preamble .

 

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Obligations ” means all principal, interest, premium, penalties, fees, indemnities, damages and other liabilities and obligations payable under the documentation governing, or with respect to, indebtedness for borrowed money (including all interest after the commencement of any bankruptcy, insolvency, receivership or similar proceeding at the rate provided in the governing documentation, whether or not such interest is an allowed claim in such proceeding).

 

Penta Standstill ” shall have the meaning set forth in the Preamble .

 

Purchase Agreement ” shall have the meaning set forth in the Preamble .

 

TCC ” shall have the meaning set forth in Section 1.04 .

 

TCC Guaranty ” shall have the meaning set forth in Section 1.04 .

 

Transfer ” has the meaning set forth in Section 3.07 .

 

[SIGNATURE PAGE FOLLOWS]

 

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IN WITNESS WHEREOF, Maker has executed this Note as of the date first above written.

 

  NUTRASCIENCE LABS, INC. F/K/A
  TCC CM SUBCO I, INC.
   
  By:    /s/ Thomas A. Tolworthy
    Name: Thomas A. Tolworthy
    Title:  CEO

 

[ First Unsecured Promissory Note ]

 

 
 

   

ACKNOWLEDGED & AGREED

 

NUTRICAP LABS, LLC

 

/s/ Jonathan Greenhut  
By: Jonathan Greenhut  
Title: CEO  

 

[ First Unsecured Promissory Note ]

 

 
 

  

SCHEDULE A

 

Monthly Principal Amortization and Interest Payment Schedule

 

Original Principal Amount: $2,750,000

 

Annual Interest Rate 8.50%

 

Based on 36 Month Amortization Schedule

 

Monthly Total Payment: 86,810.73

 

First Payment 7/01/15

 

Payment
No.
  Due
Date
  Total
Payment
    Interest     Principal
Amortization
    Principal
Balance
 
1   07/01/15     86,810.73       19,479.17       67,331.56       2,682,668.44  
2   08/01/15     86,810.73       19,002.23       67,808.50       2,614,859.94  
3   09/01/15     86,810.73       18,521.92       68,288.81       2,546,571.14  
4   10/01/15     86,810.73       18,038.21       68,772.52       2,477,798.62  
5   11/01/15     86,810.73       17,551.07       69,259.66       2,408,538.96  
6   12/01/15     86,810.73       17,060.48       69,750.25       2,338,788.72  
7   1/1/15     86,810.73       16,566.42       70,244.31       2,268,544.41  

   

[ First Unsecured Promissory Note ]

 

 

Exhibit 10.75

 

EXECUTION VERSION

 

PAYMENT GUARANTY

 

THIS PAYMENT GUARANTY (this “ Guaranty ”) made as of June 30, 2015, by TWINLAB CONSOLIDATION CORPORATION (“ Guarantor ”), to and for the benefit of NUTRICAP LABS, LLC , a New York limited liability company, its successors and assigns (“ Nutricap” or Lender ”).

 

RECITALS

 

A.           Pursuant to that certain Amended and Restated Unsecured Promissory Note of even date herewith (the “ Restated Note ”) among NutraScience Labs, Inc. , a Delaware corporation, (the “ Borrower ”), and Lender, Lender has made a loan and other credit accommodations to Borrower in the original principal amount of $2,750,000. Capitalized terms used and not otherwise defined herein shall have the meanings given to them in the Restated Note.

 

B.           Lender’s willingness to enter into the Restated Note is based in part on the execution and delivery of this Guaranty by Guarantor.

 

C.           Guarantor will derive material financial benefit from the Borrower based in part on Borrower’s ability to enter into the Restated Note with Lender.

 

D.           Lender has relied on the statements and agreements contained herein in agreeing to make the Restated Note. The execution and delivery of this Guaranty by Guarantor is a condition precedent to the making of the Restated Note by Lender.

 

AGREEMENT

 

NOW, THEREFORE, intending to be legally bound, Guarantor, in consideration of the matters described in the foregoing Recitals, which Recitals are incorporated herein and made a part hereof, and for other good and valuable consideration the receipt and sufficiency of which are acknowledged, hereby covenants and agrees for the benefit of Lender and its successors, indorsees, transferees, participants and assigns as follows:

 

1.             Guaranty . Guarantor absolutely, unconditionally and irrevocably guarantees:

 

(a)          the full and prompt payment of the principal of and interest on the Restated Note when due (after the expiration of all applicable cure and grace periods contained in the Restated Note), whether in respect of scheduled monthly payments, at stated maturity, upon acceleration or otherwise, and at all times thereafter, and the full and prompt payment of all sums, including all costs and expenses, which may become due and owing upon an Event of Default under the Restated Note (including, without limitation, any interest that may accrue on any judgment against Guarantor in respect of any of the guaranteed obligations hereunder at the lesser of the default rate of interest (as set forth in the Restated Note) and the maximum interest rate permitted by applicable law); and

 

(b)          the full and prompt payment of any Enforcement Costs (as defined in Section 7 hereof).

 

All amounts due, debts, liabilities and payment obligations described in subsections (a), (b) and (c) of this Section 1 shall be hereinafter collectively referred to as the “ Obligations .”

 

 
 

 

All payments under this Guaranty must be made in lawful money of the United States of America and in current funds. Any amount received by Lender from any collateral or security for the Restated Note may be applied by it towards any sums due under or in respect of the Restated Note, in such order of application as is provided for under the applicable Restated Note.

 

2.           Payment of Amounts Owed . Upon the occurrence of any Event of Default by Borrower under the Restated Note, after the expiration of any applicable cure or grace period associated therewith (including, without limitation, the fifteen (15) Business Day periods set forth in Sections 2.01(a) and 2.01(b) of the Restated Note), Guarantor agrees, on demand by Lender, to pay the Obligations, regardless of any defense, right of set-off or recoupment or claims which Borrower or Guarantor may have against Lender. All of the remedies set forth herein and/or provided for in the Restated Note or at law or equity shall be equally available to Lender, and the choice by Lender of one such alternative over another shall not be subject to question or challenge by Guarantor or any other person, nor shall any such choice be asserted as a defense, setoff, recoupment or failure to mitigate damages in any action, proceeding, or counteraction by Lender to recover or seeking any other remedy under this Guaranty, nor shall such choice preclude Lender from subsequently electing to exercise a different remedy. The parties have agreed to the alternative remedies provided herein in part because they recognize that the choice of remedies in the event of a default hereunder will necessarily be and should properly be a matter of good faith business judgment. It is the intention of the parties that such good faith choice by Lender be given conclusive effect regardless of such subsequent developments.

 

3.           Certain Waivers by Guarantor . To the fullest extent permitted by law, Guarantor does hereby (a) waive notice of acceptance of this Guaranty by Lender and any and all notices and demands of every kind which may be required to be given by any statute, rule or law; (b) agree to refrain from asserting, until after repayment in full of the Restated Note, any defense, right of set-off, right of recoupment or other claim which Guarantor may have against Borrower; (c) waive any defense, right of set-off, right of recoupment or other claim which Guarantor or Borrower may have against Lender or the holder of the Restated Note; (d) waive any and all rights Guarantor may have under any anti-deficiency statute or other similar protections; (e) waive all rights at law or in equity to seek subrogation, contribution, indemnification or any other form of reimbursement or repayment from Borrower or any other person or entity now or hereafter primarily or secondarily liable for any of the Obligations until the Obligations has been paid in full; (f) waive presentment for payment, demand for payment, notice of nonpayment or dishonor, protest and notice of protest, diligence in collection and any and all formalities which otherwise might be legally required to charge Guarantor with liability; (g) waive the benefit of all appraisement, valuation, marshalling, forbearance, stay, extension, redemption, homestead, exemption and moratorium laws now or hereafter in effect; (h) waive any defense based on the incapacity, lack of authority, death or disability of any other person or entity or the failure of Lender to file or enforce a claim against the estate of any other person or entity in any administrative, bankruptcy or other proceeding; (i) waive any defense based on an election of remedies by Lender, whether or not such election may affect in any way the recourse, subrogation or other rights of Guarantor against the Borrower, any other guarantor or any other person in connection with the Obligations; (j) waive any defense based on the failure of the Lender to (i) provide notice to Guarantor of a sale or other disposition (including any collateral sale pursuant to the Uniform Commercial Code) of any of the security for any of the Obligations, or (ii) conduct such a sale or disposition in a commercially reasonable manner; (k) waive any defense based on the negligence of Lender in administering the Restated Note (including, without limitation, the failure to perfect any security interest in any collateral for the Restated Note), or taking or failing to take any action in connection therewith, or based on the federal Equal Credit Opportunity Act and applicable regulations or the Equal Credit Opportunity Acts and applicable regulations of any state, provided, however , that such waiver shall not apply to the gross negligence or willful misconduct of the Lender, as determined by the final, non-appealable decision of a court having proper jurisdiction; (l) waive the defense of expiration of any statute of limitations affecting the liability of Guarantor hereunder or the enforcement hereof; (m) waive any right to file any Claim (as defined below) as part of, and any right to request consolidation of any action or proceeding relating to a Claim with, any action or proceeding filed or maintained by Lender to collect any Obligations of Guarantor to Lender hereunder or to exercise any rights or remedies available to Lender under the Restated Note, at law, in equity or otherwise; (n) agree that Lender shall not have any obligation to obtain, perfect or retain a security interest in any property to secure any of the Obligations or this Guaranty, or to protect or insure any such property; (o) waive any obligation Lender may have to disclose to Guarantor any facts the Lender now or hereafter may know or have reasonably available to it regarding the Borrower or Borrower’s financial condition, whether or not the Lender has a reasonable opportunity to communicate such facts or has reason to believe that any such facts are unknown to Guarantor or materially increase the risk to Guarantor beyond the risk Guarantor intends to assume hereunder; (p) agree that Lender shall not be liable in any way for any decrease in the value or marketability of any property securing any of the Obligations which may result from any action or omission of the Lender in enforcing any part of this Guaranty or any portion of the Restated Note; (q) waive any defense based on the consideration for this Guaranty; (r) waive any defense based on any invalidity, irregularity or unenforceability, in whole or in part, of the Restated Note; (s) waive any defense based on any change in the composition of Borrower, including, without limitation, the voluntary or involuntary withdrawal or removal of Guarantor from any current or future position of ownership, management or control of Borrower; and (t) waive any defense based on any representations and warranties made by Guarantor herein or by Borrower in the Restated Note. Lender shall not have any obligation to disclose or discuss with Guarantor its assessment of the financial condition of Borrower. Guarantor acknowledges that no representations of any kind whatsoever have been made by Lender to induce Guarantor to execute and deliver this Guaranty. No modification or waiver of any of the provisions of this Guaranty shall be binding upon Lender except as expressly set forth in a writing duly signed and delivered by Lender. For purposes of this section, the term “ Claim ” shall mean any claim, action or cause of action, defense, counterclaim, set-off or right of recoupment of any kind or nature against the Lender, its officers, directors, employees, agents, members, actuaries, accountants, trustees or attorneys, or any affiliate of the Lender in connection with the making, closing, administration, collection or enforcement by the Lender of the indebtedness evidenced by the Restated Note or this Guaranty.

 

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4.           Guarantor’s Obligations Not Affected by Modifications of Restated Note . Guarantor further agrees that Guarantor’s liability as guarantor shall not be impaired or affected by any renewals or extensions which may be made from time to time, with or without the knowledge or consent of Guarantor of the time for payment of interest or principal under the Note or by any forbearance or delay in collecting interest or principal under the Restated Note, or by any waiver by Lender under the Restated Note, or by Lender’s failure or election not to pursue any other remedies it may have against Borrower or Guarantor, or by the acceptance by Lender of any additional security or any increase, substitution or change therein, or by the release by Lender of any security or any withdrawal thereof or decrease therein, or by the application of payments received from any source to the payment of any obligation other than the Obligations even though Lender might lawfully have elected to apply such payments to any part or all of the Obligations, it being the intent hereof that, subject to Lender’s compliance with the terms of this Guaranty and the Restated Note, Guarantor shall remain liable for the payment of the Obligations, until the Obligations have been paid in full in cash lawful money of the United States of America, notwithstanding any act or thing which might otherwise operate as a legal or equitable discharge of a surety. NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED HEREIN, THE RESTATED NOTE MAY NOT BE AMENDED WITHOUT THE GUARANTOR’S PRIOR WRITTEN CONSENT.

 

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5.           Nature of Guaranty . This is an absolute, present and continuing guaranty of payment and not merely of collection. Guarantor agrees that this Guaranty may be enforced by Lender without the necessity at any time of resorting to or exhausting any other security or collateral given in connection herewith or with the Restated Note through foreclosure or sale proceedings, as the case may be, under the Restated Note or otherwise, or resorting to any other guaranties, and Guarantor hereby waives any right to require Lender to join Borrower or any other guarantor in any action brought hereunder or to commence any action against or obtain any judgment against Borrower or any other guarantor or to pursue any other remedy or enforce any other right. Guarantor further agrees that nothing contained herein or otherwise shall prevent Lender from pursuing concurrently or successively all rights and remedies available to it at law and/or in equity or under the Restated Note, and the exercise of any of its rights or the completion of any of its remedies that do not result in full payment of the Obligations and complete satisfaction of Borrower’s obligations under the Restated Note shall not constitute a discharge of Guarantor’s obligations hereunder, it being the purpose and intent of Guarantor that the obligations of Guarantor hereunder shall be absolute, independent and unconditional under any and all circumstances whatsoever. None of Guarantor’s obligations under this Guaranty or any remedy for the enforcement thereof shall be impaired, modified, changed or released in any manner whatsoever by any impairment, modification, change, release or limitation of the liability of Borrower under the Restated Note or by reason of the bankruptcy of Borrower or any other guarantor or by reason of any creditor or bankruptcy proceeding instituted by or against Borrower. This Guaranty shall continue to be effective or be reinstated (as the case may be) if at any time payment of all or any part of any sum payable pursuant to the Restated Note is rescinded or otherwise required to be returned by Lender upon the insolvency, bankruptcy, dissolution, liquidation, or reorganization of Borrower or any other guarantor, or upon or as a result of the appointment of a receiver, intervenor, custodian or conservator of or trustee or similar officer for, Borrower or any other guarantor or any substantial part of any of the property of the foregoing, or otherwise, all as though such payment to Lender had not been made, regardless of whether Lender contested the order requiring the return of such payment. In the event of an action against the Borrower or any other guarantor and of a deficiency, Guarantor hereby promises and agrees forthwith to pay the amount of such deficiency notwithstanding the fact that recovery of said deficiency against Borrower or any other guarantor would not be allowed by applicable law; however, the foregoing shall not be deemed to require that Lender institute any action or otherwise resort to or exhaust any other collateral or security prior to or concurrently with enforcing this Guaranty.

 

6.           Assignment of Note and Guaranty . NEITHER THE RESTATED NOTE NOR THIS GUARANTY MAY BE ASSIGNED WITHOUT GUARANTOR’S PRIOR WRITTEN CONSENT.

 

7.           Enforcement Costs . If: (a) this Guaranty is placed in the hands of an attorney for collection or is collected through any legal proceeding; (b) an attorney is retained to represent Lender in any bankruptcy, reorganization, receivership, or other proceedings affecting creditors’ rights and involving a claim under this Guaranty; (c) an attorney is retained to provide advice or other representation with respect to this Guaranty; or (d) an attorney is retained to represent Lender in any proceedings whatsoever in connection with this Guaranty and Lender prevails in any such proceedings, then Guarantor shall pay to Lender upon demand all attorney’s fees, costs and expenses incurred in connection therewith (all of which are referred to herein as “ Enforcement Costs ”), in addition to all other amounts due hereunder, regardless of whether all or a portion of such Enforcement Costs are incurred in a single proceeding brought to enforce this Guaranty as well as the Restated Note.

 

8.           Severability . The parties hereto intend and believe that each provision in this Guaranty comports with all applicable local, state and federal laws and judicial decisions. However, if any provision or provisions, or if any portion of any provision or provisions, in this Guaranty is found by a court of law to be in violation of any applicable local, state or federal ordinance, statute, law, administrative or judicial decision, or public policy, and if such court should declare such portion, provision or provisions of this Guaranty to be illegal, invalid, unlawful, void or unenforceable as written, then it is the intent of all parties hereto that such portion, provision or provisions shall be given force to the fullest possible extent that they are legal, valid and enforceable, that the remainder of this Guaranty shall be construed as if such illegal, invalid, unlawful, void or unenforceable portion, provision or provisions were not contained therein, and that the rights, obligations and interest of Lender under the remainder of this Guaranty shall continue in full force and effect.

 

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9.           CONSENT TO JURISDICTION . TO THE GREATEST EXTENT PERMITTED BY LAW, GUARANTOR HEREBY WAIVES ANY AND ALL RIGHTS TO REQUIRE MARSHALLING OF ASSETS BY LENDER. WITH RESPECT TO ANY SUIT, ACTION OR PROCEEDINGS RELATING TO THIS GUARANTY (EACH, A “PROCEEDING”), LENDER (BY THEIR ACCEPTANCE HEREOF) AND GUARANTOR IRREVOCABLY (A) SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS HAVING JURISDICTION IN NEW YORK COUNTY, NEW YORK, AND (B) WAIVE ANY OBJECTION WHICH IT MAY HAVE AT ANY TIME TO THE LAYING OF VENUE OF ANY PROCEEDING BROUGHT IN ANY SUCH COURT, WAIVE ANY CLAIM THAT ANY PROCEEDING HAS BEEN BROUGHT IN AN INCONVENIENT FORUM AND FURTHER WAIVE THE RIGHT TO OBJECT, WITH RESPECT TO SUCH PROCEEDING, THAT SUCH COURT DOES NOT HAVE JURISDICTION OVER SUCH PARTY. LENDER AND EACH GUARANTOR FURTHER AGREE AND CONSENT THAT, IN ADDITION TO ANY METHODS OF SERVICE OF PROCESS PROVIDED FOR UNDER APPLICABLE LAW, ALL SERVICE OF PROCESS IN ANY PROCEEDING IN ANY STATE OR UNITED STATES COURT SITTING IN NEW YORK COUNTY, NEW YORK MAY BE MADE BY CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED, DIRECTED TO THE APPLICABLE PARTY AT THE ADDRESS INDICATED BELOW, AND SERVICE SO MADE SHALL BE COMPLETE UPON RECEIPT; EXCEPT THAT IF SUCH PARTY SHALL REFUSE TO ACCEPT DELIVERY, SERVICE SHALL BE DEEMED COMPLETE FIVE (5) DAYS AFTER THE SAME SHALL HAVE BEEN SO MAILED.

 

10.          Claims in Bankruptcy . In the event (i) Borrower or any other guarantor shall (A) file voluntarily or be filed against involuntarily for protection under the U.S. Bankruptcy Code or any other present or future federal or state act or law relating to bankruptcy, insolvency, or other relief for debtors, (B) have sought or consented to or acquiesced in the appointment of any trustee, receiver, conservator, or liquidator, or (C) be the subject of any order, judgment, or decree entered by any court of competent jurisdiction approving a petition filed against such party for any reorganization, arrangement, composition, readjustment, liquidation, dissolution, or similar relief under any present or future federal or state act or law relating to bankruptcy, insolvency, or relief for debtors, and (ii) the automatic stay imposed by the applicable provisions of the U.S. Bankruptcy Code, as amended, or under any other applicable law, against the exercise of the rights and remedies otherwise available to creditors of the Borrower or such other guarantor is deemed by the court having jurisdiction to apply to Guarantor so that Guarantor is not permitted to pay Lender the Obligations and/or Lender may not immediately enforce the terms of this Guaranty or exercise such other rights and remedies against Guarantor as would otherwise be provided by law, Lender shall immediately be entitled, and Guarantor hereby consents, to relief from such stay, and Guarantor hereby authorizes and directs Lender to present this Guaranty to the applicable court to evidence this agreement and consent.

 

11.          Application of Proceeds . Any amounts received by Lender from any source on account of the Restated Note may be utilized by Lender for the payment of the Obligations under the terms of the Restated Note.

 

12.           Events of Default .

 

(a)          It is expressly agreed that time is of the essence of this Guaranty and every covenant and provision hereof, and that any of the following shall be an “ Event of Default ” under this Guaranty:

 

(i)          any Insolvency Event (as defined below) with respect to Guarantor; and

 

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(ii)         the failure by Guarantor and/or Borrower to make any payment when due hereunder or under the Restated Note (beyond any applicable notice and/or grace period, if any, including the fifteen (15) Business Day periods set forth in Sections 2.01(a) and 2.01(b) of the Restated Note), or any other material default under any other obligation of or covenant by Guarantor under this Guaranty (beyond any applicable notice and/or grace period, if any).

 

(b)          Upon the occurrence of any Event of Default under this Guaranty, there shall be deemed to have occurred a default and an Event of Default under the Restated Note, regardless of whether or not any portion of the Obligations may then be due and payable.

 

(c)          The term “ Insolvency Event ” shall mean any of the following: (i) Guarantor makes an assignment for the benefit of creditors, offers a composition or extension to creditors, or makes or sends notice of an intended bulk sale of any business or assets now or hereafter conducted or owned by Guarantor; (ii) Guarantor files a petition in bankruptcy; (iii) Guarantor is adjudicated insolvent or bankrupt, or petitions or applies to any tribunal for any receiver of or any trustee for itself or any substantial part of its property; (iv) Guarantor commences any proceeding relating to itself under any reorganization, arrangement, readjustment or debt, dissolution or liquidation law or statute of any jurisdiction, whether now or hereafter in effect; (v) any such proceeding is commenced against Guarantor and such proceeding remains undismissed for a period of sixty (60) days; or (vi) Guarantor by any act indicates its consent to, approval of, or acquiescence in, any such proceeding or the appointment of any receiver of or any trustee for Guarantor or any substantial part of its property, or suffers any such receivership or trusteeship to continue undischarged for a period of sixty (60) days.

 

(d)          All grace periods under the Restated Note and/or this Guaranty shall run concurrently such that once any grace period has expired without the curing of the default in question, Lender shall be entitled to exercise any and all of the rights and remedies granted under the Restated Note and this Guaranty without the necessity of issuing any further notice or the granting of any further grace periods.

 

13.          WAIVER OF TRIAL BY JURY . GUARANTOR AND LENDER (BY THEIR ACCEPTANCE HEREOF) EACH KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY CLAIM, CONTROVERSY, DISPUTE, ACTION OR PROCEEDING ARISING OUT OF OR RELATED TO THIS GUARANTY AND THE RESTATED NOTE (INCLUDING WITHOUT LIMITATION ANY ACTIONS OR PROCEEDINGS FOR ENFORCEMENT OF THE RESTATED NOTE) AND AGREE THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY. GUARANTOR AND LENDER ACKNOWLEDGE THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH OF THEM HAS RELIED ON THIS WAIVER IN ENTERING INTO THIS GUARANTY AND THAT EACH OF THEM WILL CONTINUE TO RELY ON THIS WAIVER IN THEIR RELATED FUTURE DEALINGS. GUARANTOR AND LENDER EACH WARRANT AND REPRESENT THAT EACH HAS HAD THE OPPORTUNITY OF REVIEWING THIS JURY WAIVER WITH LEGAL COUNSEL, AND THAT EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS.

 

14.          Notices . All notices required or permitted hereunder shall be given in writing and shall become effective on the first business day after sent by national overnight carrier to the notice address provided below.

 

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All notices to Guarantor shall be addressed as follows: Twinlab Consolidation Corporation
  632 Broadway, Suite 201
  New York, NY 10012
  Attention: Richard H. Neuwirth, CLO
 
All notices to Lender shall be addressed as follows: Nutricap Labs, LLC
  70 Carolyn Boulevard
  Farmingdale, NY 11735
  Attention: Jonathan Greenhut
   

15.          Representations and Warranties . To induce Lender to make the Restated Note, Guarantor makes the following representations and warranties to Lender set forth in this Section 15, and Guarantor acknowledges that but for the truth and accuracy of the matters covered by the following representations and warranties, Lenders would not have agreed to make the Restated Note:

 

(a)          Twinlab Consolidation Corporation is duly formed, validly existing, and in good standing in its state of organization and has qualified to do business and is in good standing in any state in which it is necessary in the conduct of its business;

 

(b)          Guarantor maintains an office at the address set forth for such party in Section 14;

 

(c)          the execution, delivery, and performance by Guarantor of this Guaranty does not and will not contravene or conflict with (i) any Laws, order, rule, regulation, writ, injunction or decree now in effect of any Government Authority, or court having jurisdiction over Guarantor, (ii) any contractual restriction binding on or affecting Guarantor or Guarantor’s property or assets which may adversely affect Guarantor’s ability to fulfill its obligations under this Guaranty, (iii) the instruments creating any trust holding title to any assets included in Guarantor’s financial statements, or (iv) the organizational or other documents of Guarantor;

 

(d)          this Guaranty creates legal, valid, and binding obligations of Guarantor enforceable in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, moratorium, insolvency, reorganization, fraudulent conveyance or other laws affecting the enforcement of creditors’ rights generally or by general equitable principles; and

 

(e)           all statements set forth in the Recitals are true and correct.

 

16.          Covenants of the Guarantor

 

(a)          If Guarantor shall become insolvent or seek protection under insolvency laws or proceedings, or any application shall be made to have Guarantor declared bankrupt or insolvent, or a receiver or trustee shall be appointed for Guarantor or for all or a substantial part of the property of Guarantor, or Guarantor shall make an assignment for the benefit of creditors, notice of such occurrence or event shall be promptly furnished to the Lender by Guarantor.

 

(b)          Twinlab Consolidation Corporation shall maintain its corporate existence.

 

17.          Successors and Assigns . This Guaranty shall be binding upon the successors and assigns of Guarantor. If more than one party executes this Guaranty, the liability of all such parties shall be joint and several.

 

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18.          CHOICE OF LAW; CONSTRUCTION . THIS GUARANTY AND THE RESTATED NOTE WERE NEGOTIATED IN THE STATE OF NEW YORK, AND DELIVERED BY GUARANTOR, AS APPLICABLE, AND ACCEPTED BY LENDER IN THE STATE OF NEW YORK, WHICH STATE THE PARTIES AGREE HAS A SUBSTANTIAL RELATIONSHIP TO THE PARTIES AND THE UNDERLYING TRANSACTIONS EMBODIED HEREBY. IN ALL RESPECTS, INCLUDING, WITHOUT LIMITATION, MATTERS OF CONSTRUCTION OF THE IMPROVEMENTS AND PERFORMANCE OF THIS GUARANTY AND THE OBLIGATIONS ARISING HEREUNDER, THIS GUARANTY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED IN SUCH STATE AND ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA. The titles of the paragraphs of this GUARANTY are for convenience of reference only and are not to be considered in construing this GUARANTY .

 

19.          Counterparts . This Guaranty may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same instrument. A signed copy of this Guaranty delivered by facsimile, email or other means of electronic transmission shall be deemed to have the same legal effect as delivery of an original signed copy of this Guaranty and shall bind any party whose signature was so delivered hereto.

 

[SIGNATURES APPEAR ON FOLLOWING PAGE(S)]

 

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IN WITNESS WHEREOF, Guarantor has delivered this Guaranty in the State of New York as of the date first written above.

 

  GUARANTOR :
   
  TWINLAB CONSOLIDATION
CORPORATION
  a Delaware Corporation
     
  By: /s/ Thomas A. Tolworthy
  Name: Thomas A. Tolworthy
  Title: CEO

 

State of New York )
  )SS:
County of New York )

 

On this, the 30 th day of June, 2015, before me a notary public, the undersigned officer, personally appeared Thomas A. Tolworthy, known to me (or satisfactorily proven) to be the person whose name is subscribed to the within instrument, and acknowledged that he executed the same for the purposes therein contained.

 

In witness hereof, I hereunto set my hand and official seal.

  

  /s/ Karen M. Walker
  Notary Public

 

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Exhibit 10.76

 

BILL OF SALE

 

Twinlab Corporation (“Twinlab”) is a wholly-owned subsidiary of Twinlab Consolidation Corporation (“TCC”) and a sister company of NutraScience Labs, Inc. (“NSL”), also a wholly-owned subsidiary of TCC. In connection with an acquisition of assets on February 6, 2015, NSL is an obligor on that certain Amended & Restated Unsecured Promissory Note of even date herewith to Nutricap Labs, LLC (“Nutricap”) in the principal amount of $2,750,000 and with a stated maturity date of January 1, 2016 (the “Note”).

 

IN CONSIDERATION of the sale pursuant hereto by Twinlab to Essex Capital Corporation (“Essex”) of the machinery and equipment listed on Exhibit A hereto as well as Twinlab’s agreement to lease that machinery and equipment from Essex pursuant to and on the terms set forth in one or more Commercial Lease Agreements between Twinlab and Essex of equal date herewith (the “Leases”), Essex hereby irrevocably agrees (i) to enter into a guaranty agreement with Nutricap, in substantially the form attached hereto as Exhibit B, and (ii) to make on behalf of NSL all payments as and when due to Nutricap under the Note, including both the monthly payments set forth in Schedule A to the Note as well as payment in full of all accrued interest and unamortized principal due and owing to Nutricap as of the January 1, 2016 maturity date.

 

IN CONSIDERATION of Essex’s agreements as set forth above, which for the purposes hereof the parties hereto agree shall be valued as a purchase price of $2,900,000 (equal to the original principal amount of the Leases), constituting good and valuable consideration the receipt and sufficiency of which are hereby acknowledged, Twinlab as seller, and with an address at 600 East Quality Drive, American Fork, UT 84003, does hereby sell, transfer, and convey to Essex as buyer, with an address at 1486 East Valley Road, Santa Barbara, CA 93108, all right, title and interest in and to the equipment and other assets listed in Exhibit A hereto, which is incorporated herein by reference (the “Equipment”), and all appurtenant rights relating thereto.

 

Twinlab represents and warrants to Essex that: (i) Twinlab is the sole and lawful owner of the Equipment; (ii) Twinlab is hereby transferring to Essex good and marketable title to all of the Equipment, free and clear of any claim, charge, encumbrance, covenant, security interest, lien, option, pledge, rights of others, or restriction, whether imposed by agreement, understanding, law, equity or otherwise (each, an “Encumbrance”); (iii) all of such Equipment is in good operating condition, normal wear and tear excepted; (iv) all of the Equipment is located at Twinlab’s facility at 600 East Quality Drive, American Fork, UT 84003; (v) the sale of the Equipment and the execution, delivery and performance of this Bill of Sale and any related agreements by Twinlab has been duly and validly authorized by all necessary corporate action on the part of Twinlab; (vi) neither the sale of the Equipment nor the execution, delivery and performance of this Bill of Sale or any related agreements by Twinlab will violate, or constitute a breach or default (whether upon lapse of time and/or the occurrence of any act or event or otherwise) under, the charter documents of Twinlab or any contract, document or instrument by which it is bound, or result in the imposition of any Encumbrance against any of the Equipment, or violate any statute or other law, rule, regulation, or interpretation of any governmental entity; (vii) neither the sale of the Equipment nor the execution, delivery and performance of this Bill of Sale or any related agreements by Twinlab requires the approval or consent of any governmental entity or any other third party, other than those consents previously received in writing and provided by Twinlab to Essex; (viii) neither the sale of the Equipment nor the execution, delivery and performance of this Bill of Sale or any related agreements by Twinlab requires any filing or registration with any governmental entity, except for any filings with the Securities and Exchange Commission (“SEC”) by Twinlab’s ultimate parent company, Twinlab Consolidated Holdings, Inc. (“TCH”), a publicly traded company, that TCH determines in its sole discretion is required to be filed pursuant to applicable SEC regulation; (ix) there is no action, complaint or other legal proceeding pending, or, to the best knowledge of Twinlab, threatened, that might reasonably be expected to have an adverse effect on the Equipment or on Twinlab’s ability to transfer the Equipment, or on any aspect of the transactions contemplated by this Bill of Sale; (x) Twinlab and its affiliated entities are financially solvent and will not be rendered insolvent by the transactions contemplated by this Bill of Sale or any related agreements; (xi) all financial statements of Twinlab and its affiliated entities provided to Essex present fairly the financial condition and results of operations of such entities for the periods covered in all material respects; and (xii) since the most recent date of the financial statements provided to Essex, there has not been, occurred or arisen any change in or event affecting Twinlab, its business, or the Equipment that has had or may reasonably be expected to have a material adverse effect on Twinlab, its business, or the Equipment.

 

 
 

 

Twinlab agrees to indemnify, defend and hold harmless Essex and its directors, officers, employees, affiliates, agents and assigns from and against any and all actions, costs, damages, disbursements, expenses, liabilities, losses, deficiencies, diminution in value, obligations, penalties or settlements of any kind or nature, whether foreseeable or unforeseeable, including but not limited to, interest, legal, accounting and other professional fees and expenses that may be imposed on or otherwise incurred or suffered by any of such persons or entities, directly or indirectly, as a result of, or based upon or arising from any inaccuracy in or breach of any of the representations or warranties made by Twinlab in this Bill of Sale.

 

EXCEPT AS SET FORTH IN THIS BILL OF SALE, TWINLAB MAKES NO WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED, REGARDING THE EQUIPMENT. WITHOUT LIMITING, THE GENERALITY OF THE FOREGOING, TWINLAB DISCLAIMS ANY IMPLIED OR EXPRESSED WARRANTY OF MERCHANTIBILITY, FITNESS FOR PURPOSE, QUALITY, CAPACITY, DESIGN, CONDITION, MATERIAL OR WORKMANSHIP, OR AS TO PATENT INFRINGMENT OR THE LIKE. THE SALE OF THE EQUIPMENT SHALL BE ON AN “AS IS, WHERE IS” BASIS “WITH ALL FAULTS”. IN NO EVENT SHALL SELLER BE LIABLE TO BUYER FOR ANY INCIDENTIAL OR CONSEQUENTIAL DAMAGES.

 

Twinlab hereby covenants that, from time to time after the delivery of this instrument, at the request of Essex and without further consideration, Twinlab will do, execute and deliver all and every such further acts, deeds, conveyances, assignments and assurances as reasonably may be required more effectively to convey, transfer to and vest in Essex, any of the Equipment.

 

This instrument is executed by, and shall be binding upon, Twinlab, its successors and assigns, effective immediately upon its delivery to Essex. This instrument shall be governed by and construed in accordance with the laws of the State of California applicable to contracts made and performed in such State, excluding any laws that direct the application of another jurisdiction’s laws.

 

(signatures on following page)

 

 
 

 

Dated this 30 th day of June 2015.

 

TWINLAB:   ESSEX:
TWINLAB CORPORATION   ESSEX CAPITAL CORPORATION
         
BY: /s/ Tom Tolworthy   BY: /s/ Ralph T. Iannelli
NAME: TOM TOLWORTHY   NAME:  RALPH T. IANNELLI
TITLE:   PRESIDENT & CEO   TITLE:   PRESIDENT AND CEO

 

 

Exhibit 10.77

 

COMMERCIAL LEASE AGREEMENT

 

LESSOR: LESSEE:
ESSEX CAPITAL CORPORATION TWINLAB CORPORATION
1486 EAST VALLEY ROAD 600 E. QUALITY DRIVE
SANTA BARBARA, CA 93108 AMERICAN FORK, UT 84003

 

EQUIPMENT LOCATION : (If other than Address of Lessee set forth above)     same as above       (“ Equipment Location ”)

 

EQUIPMENT DESCRIPTION : As described on Addendum I attached hereto and made a part hereof (“ Leased Equipment ”).

 

LEASE DATE : June 30, 2015 (“ Lease Date ”)

 

        MONTHLY            
LEASE TERM:       RENTAL:     FEES:      
36 Months   Amount:   $ 89,381.72     Documentation Fee:   $ 300.00  
    Tax:   $     Filing Fee:   $ 75.00  
    Total           Other:   $  
    Rentals =   $     (Less amounts received)   $  
                         
SECURITY DEPOSIT:   $       TOTAL FEES   $  

 

FIRST PAYMENT DUE : June 30, 2015

 

 

 THIS LEASE IS A NON-CANCELABLE LEASE 

 

 

1. AGREEMENT TO LEASE . Lessor agrees to lease to Lessee, and Lessee agrees to lease from Lessor, subject to the terms of this lease agreement (“ Lease Agreement ” or “ Lease ”) and any schedules or addenda attached hereto, the Leased Equipment identified above or in the attached schedules or addenda. Lessor may insert in this Lease Agreement the serial numbers, and other identification data, of the Leased Equipment when determined by Lessor. The Leased Equipment shall be installed at, and shall not be removed from the Equipment Location identified above without Lessor’s written consent. Equipment required to be registered under applicable state vehicle laws shall not be removed from the state of registration without the Lessor’s written consent. The lease term shall commence upon the Lease Date and shall continue for the thirty-six (36) month term referenced above (the “ Initial Term ”, and if extended pursuant to the terms and conditions herein, the “ Term ”). This Lease Agreement shall have no effect prior to the execution of this Lease Agreement by both parties. This Lease Agreement is not subject to cancellation for any reason.

 

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2. STATUS OF PARTIES, WARRANTIES AND DEFENSES . This is a finance lease (California Uniform Commercial Code Section 10103 (a)(7)). Lessee has selected the Leased Equipment from the supplier of the Leased Equipment (the “ Supplier ”). Lessor has not manufactured or supplied the Leased Equipment but is acquiring the same or the right to possession and use of the same solely in connection with this Lease Agreement, and at the request of Lessee. Lessee acknowledges that Lessee has received copies of all contracts evidencing the purchase of the Leased Equipment and the rights with respect thereto.

 

Lessee’s sole remedy in the event of a claimed breach of warranty or other defect in or failure of the Leased Equipment shall be in accordance with the Supplier’s warranty. Lessee covenants not to assert any claim against Lessor on account of any alleged defect or failure of the Leased Equipment and Lessee may not withhold or fail to pay any installments due to Lessor hereunder.

 

LESSOR LEASES THE LEASED EQUIPMENT “AS IS,” AND BEING NEITHER THE MANUFACTURER OF THE LEASED EQUIPMENT NOR THE AGENT OF EITHER THE MANUFACTURER OR SELLER, LESSOR DISCLAIMS ANY REPRESENTATION OR WARRANTY OF ANY KIND, EXPRESS OR IMPLIED, WITH RESPECT TO THE CONDITION OR PERFORMANCE OF THE LEASED EQUIPMENT, ITS MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR WITH RESPECT TO PATENT INFRINGEMENTS OR THE LIKE. LESSOR SHALL HAVE NO LIABILITY TO LESSEE OR ANY OTHER PERSON FOR ANY CLAIM, LOSS OR DAMAGE OF ANY KIND OR NATURE WHATSOEVER, NOR SHALL THERE BE ANY ABATEMENT OF RENTAL FOR ANY REASON INCLUDING CLAIMS ARISING OUT OF OR IN CONNECTION WITH (i) THE DEFICIENCY OR INADEQUACY OF THE LEASED EQUIPMENT FOR ANY PURPOSE, WHETHER OR NOT KNOWN OR DISCLOSED TO LESSOR, (ii) ANY DEFICIENCY OR DEFECT IN THE LEASED EQUIPMENT, (iii) THE USE OR PERFORMANCE OF THE LEASED EQUIPMENT, OR (iv) ANY LOSS OF BUSINESS OR OTHER CONSEQUENTIAL LOSS OR DAMAGE, WHETHER OR NOT RESULTING FROM ANY OF THE FOREGOING.

 

3. PAYMENT . Lessee promises and agrees to pay all rental installments on the date designated by Lessor and to pay such other charges as are herein provided. Payments of rental installments for each month during the Term shall be payable at the office of Lessor, or to such other person and/or at such other place as Lessor may from time to time designate in writing. Lessor may apply remittances received to unpaid rental installments and/or charges on a due date basis, remittance received being applied to the oldest unpaid rental installment or charge.

 

The Lease is a net lease, it being the intention of the parties that all costs, expenses and liabilities associated with the Leased Equipment or its lease shall be borne by Lessee. Lessee’s agreement to pay all obligations under the Lease, including but not limited to the rental installments, is absolute and unconditional and such agreement is for the benefit of Lessor and its assignees. Lessee’s obligations shall not be subject to any abatement, deferment, reduction, setoff, defense, counterclaim or recoupment for any reason whatsoever.

 

In addition to the fees and payments specified above, Lessee shall also deliver to Lessor concurrently with the execution hereof a Warrant to Purchase Common Stock of Lessee’s indirect parent company, Twinlab Consolidated Holdings, Inc. (“TLCC”), in the form attached hereto as Addendum II.

 

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4. FINANCIAL AND EQUIPMENT CONDITION . Lessor may inspect the Leased Equipment at any time during business hours upon reasonable notice, and Lessee agrees to keep the Leased Equipment in good condition and repair (ordinary wear and tear excepted) at Lessee’s expense and house the same in suitable shelter, and not to sell or otherwise dispose of the Leased Equipment or any accessories attached hereto. Lessee shall cause the Leased Equipment to be maintained and serviced in accordance with the recommendations of the Supplier and otherwise in accordance with sound and customary industry practices.

 

Lessor may rely upon TLCC’s and Lessee’s financial statements and other documents filed with the Securities and Exchange Commission. Upon Lessor’s reasonably request, Lessee will furnish Lessor with additional financial information of TLCC and Lessee, subject to Lessor’s agreement not to disclose such financial information or trade in the stock of TLCC prior to the time such financial information becomes publicly available.

 

5. OWNERSHIP. The parties agree that this Lease Agreement creates a lease of personal property, rather than a security interest, within the meaning of California Uniform Commercial Code Section 1203, and that the Initial Term is less than the remaining economic life of the Leased Equipment. No title or right in the Leased Equipment shall pass to Lessee except the rights herein expressly granted. Plates or other markings may be affixed to or placed on the Leased Equipment by Lessor or at Lessor’s reasonable request, by Lessee at Lessee’s expense, indicating the Lessor is the owner thereof, and Lessee will not remove the same. Upon the termination of the Initial Term, except as provided in paragraph 6 below, Lessee will immediately crate, insure, and ship the Leased Equipment and operating manuals to whatever destination Lessor shall direct, all at Lessee’s expense, in as good condition as received less normal wear and tear, said destination to be confirmed by Lessee prior to shipment. Lessee agrees to pay Lessor monthly rent at the rate specified for the Term for any month or part thereof from the end of the Term until the Leased Equipment is shipped by Lessee. Said Leased Equipment shall always remain and be deemed personal property even though attached to realty. Lessee shall maintain each unit of Leased Equipment so that it may be removed from the building in which it is placed without material damage to the building. All replacements, accessories, or capital improvements made to or placed in or upon said Leased Equipment shall become component parts thereof and title thereto shall immediately vest in Lessor and shall be included under the terms hereof. Lessee agrees that Lessor is authorized, at its option, to file financing statements or amendments thereto without the signature of Lessee with respect to any or all of the Leased Equipment and, if a signature is required by law, then Lessee appoints Lessor as Lessee’s attorney-in-fact for the purpose of executing any such financing statements and further agrees to pay the Lessor a reasonable documentation fee to cover the expense of making such filing(s). Lessee further agrees to itself execute such documents and take such action, as Lessor may reasonably request to protect Lessor and Lessor’s lenders and carve out the interest from any owner or encumbrancer of the real property on which the Leased Equipment shall be installed or located, waiving any claim of interest in the Leased Equipment and consenting to its removal upon the expiration or sooner termination of this Lease Agreement.

 

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If Lessee rents the Equipment Location specified above, Lessee shall obtain a signed waiver from Lessee’s landlord (and, if applicable, from such landlord’s mortgagee) in favor of Lessor substantially in the form attached hereto as Addendum III.

 

If Lessee has one or more secured lenders, Lessee will, upon the request of Lessor, provide Lessor with a release of collateral relating to the Leased Equipment executed by each such secured lender and file appropriate UCC financing statement amendments to delete the Leased Equipment from the financing statements filed by each such secured lender.

 

6. EXPIRATION OF LEASE; PURCHASE OPTION. At the expiration of the Initial Term, Lessee shall provide at least sixty (60) days prior written notice to Lessor of Lessee’s intent to either (a) purchase the Leased Equipment pursuant to the purchase option set forth herein, (b) extend the Lease Agreement for a specified period of time, which shall not be less than one year, at a monthly rental rate determined by the Lessor (in its sole discretion) to be the fair market value rental rate for the Leased Equipment at such time; or (c) return the Leased Equipment to the Lessor pursuant to Paragraph 5 above. In the event that notice is not given at least sixty (60) days prior to the expiration of the Initial Term or any renewal or extension then in effect, then this Lease Agreement shall continue as a hold-over on a month-to month basis, and Lessee shall continue to pay the monthly rent then required hereunder, until Lessee thereafter meets the sixty (60) day prior written notice requirement. Nothing herein shall be deemed or construed as a waiver of Lessor’s rights and remedies upon the expiration or termination of the Initial Term.

 

Provided that Lessee has complied in all material respects with all the terms and conditions of this Lease Agreement, no default is continuing hereunder, and has paid in full all amounts due under this Lease Agreement, including all lease payments and applicable taxes, then Lessee shall have the option to purchase the Leased Equipment upon the expiration of the Initial Term or upon the expiration of any renewal or extension as provided herein. Upon the proper exercise of this purchase option, including timely notice under this Paragraph 6, Lessee may purchase all of the Leased Equipment for an amount equal to fifteen percent (15%) of the Leased Equipment’s $2,750,000 initial purchase price by Lessor from Lessee pursuant to that certain Bill of Sale of equal date herewith, plus any applicable taxes, provided that Lessor receives payment in full on or before the last day of the applicable term. Upon any such exercise of this purchase option and payment in full, title to the Leased Equipment shall be transferred to Lessee free and clear of all liens, security interests and other encumbrances created by Lessor and this Lease Agreement shall then terminate.

 

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7. ASSIGNMENT . Lessor may assign this Lease Agreement, and any such assignee(s) may further assign this Lease Agreement, without notice to or consent of the Lessee. Any such assignee shall succeed to all rights of the Lessor hereunder, and such assignee’s rights shall be free from all defenses, set-offs or counter-claims of any kind which Lessee may be entitled to assert against Lessor other than for Lessee’s right to use and possession of the Leased Equipment. Lessee hereby waives the right to assert any such defense, set-off or counter-claim against any such assignees, it being understood that such assignees shall assume the obligations of the Lessor named herein. By the foregoing waiver, Lessee does not waive the right to any defense, set-off, or counterclaim in may have against Lessor in the event Lessor assigns this Lease pursuant to this provision.

 

LESSEE SHALL NOT ASSIGN, MORTGAGE OR HYPOTHECATE THIS LEASE OR ANY INTEREST HEREIN, WITHOUT THE PRIOR WRITTEN CONSENT OF LESSOR AND ANY SUCH TRANSFER OR ASSIGNMENT WITHOUT SUCH CONSENT WILL BE VOID. TITLE TO THE LEASED EQUIPMENT SUBJECT TO THIS LEASE IS RETAINED BY THE LESSOR AND LESSEE COVENANTS THAT IT WILL NOT PLEDGE OR ENCUMBER THE EQUIPMENT IN ANY MATTER WHATSOEVER, NOR PERMIT ANY LIENS, CHARGES, OR ENCUMBRANCES TO ATTACH THERETO.

 

The provisions of this Lease Agreement apply to and bind the heirs, executors, administration, successors and permitted assigns of the respective parties hereto.

 

8. INSURANCE . Lessee assumes the entire risk of loss or damages to the Leased Equipment, whether or not covered by insurance, and no such loss shall relieve Lessee of its obligations hereunder. Lessee agrees to keep the Leased Equipment insured and to provide proof of insurance to Lessor in the Leased Equipment; to protect all interests of Lessor, at Lessee’s expense, against all risks of loss or damage from any cause whatsoever for not less than the unpaid balance of the lease rentals due hereunder or eighty percent (80%) of the then current value of said Leased Equipment, whichever is higher, and to purchase insurance in the amounts set forth in the attached Lessor’s Insurance Requirements. During the Term of this Lease Agreement, Lessor and Lessor’s lenders shall be named as an additional insured in all such insurance policies providing and as a loss payee as its interests may arise in the policies insuring the Leased Equipment. Each policy shall expressly provide that said insurance as to Lessor and its assigns shall not be invalidated by any acts, omissions or neglect of Lessee and cannot be canceled without thirty (30) days prior written notice to Lessor. As to each policy, Lessee shall furnish Lessor a Certificate of Insurance and copy of policy from the insurer reflecting the coverage required by this paragraph on or before the Lease Date. The proceeds of such insurance whether resulting from loss or damage or return of premium or otherwise, shall be applied toward the replacement or repair of the Leased Equipment or the payment of Lessee’s attorney-in-fact to make claim for, receive payment of and execute or endorse all documents, checks or drafts for loss or damage or return premium under any insurance policy issued the Leased Equipment. If Lessee fails to maintain the insurance required by this paragraph, Lessor may, but it is not obligated to, obtain insurance in such forms and amounts as it deems reasonable to protect its interests and Lessee agrees to reimburse Lessor for all such costs together with interest at the rate provided herein upon demand.

 

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9. INDEMNITY . Lessee shall, at its sole cost and expense, indemnify, hold harmless and defend Lessor and its agents, employees, officers and directors from and against any and all claims, actions, suits, proceedings, costs, expenses, damages and liabilities, including attorney’s fees, arising out of, connected with, resulting from or relating to the Leased Equipment or the condition, delivery, leasing, location, maintenance, manufacture, operation, ownership, possession, purchase, repair, repossession, return, sale, selection, service or use thereof, including without limitation (a) claims involving latent or other defects (whether or not discoverable by Lessee or Lessor), (b) claims for trademark patent or copyright infringement, and (c) claims for injury or death to persons or damage to property or loss of business or anticipatory profits, whether resulting from acts or omissions, including negligence, of Lessee or Lessor or otherwise. Lessee shall give Lessor prompt written notice of any claims or liability covered by this paragraph. The indemnities under this paragraph shall survive the satisfaction of all other obligations of Lessee herein and the termination of this Lease Agreement.

 

10. TAXES AND FEES . Lessee agrees to use, operate and maintain the Leased Equipment in accordance with all laws in all material respects; to pay all licensing and registration fees for the Leased Equipment; to keep the same free of levies, liens and encumbrances; to show the Leased Equipment as “leased equipment” on Lessee’s personal property tax returns; to pay all personal property taxes assessed against equipment, which sum Lessee shall remit to the taxing authority; to pay all other federal, state and local taxes, assessments, fees and penalties which may be levied or assessed on or in respect to the Leased Equipment or its use or any interest therein, or rental payments thereon including but not limited to all sales and use taxes, however designated, levied or assessed upon the Lessee and Lessor or either of them or said equipment, or upon the sale, ownership, use or operation thereof (other than those measured by Lessor’s net income). Lessor may pay such taxes and other amounts and may file such returns on behalf of Lessee if Lessee fails to do so as provided herein. Lessee agrees to reimburse Lessor for reasonable costs incurred in collecting any charges, taxes, assessments or fees for which Lessee is liable hereunder.

 

11. ADVANCES . All advances made and costs reasonably incurred by Lessor to preserve the Leased Equipment or to discharge and pay any taxes, assessments, fees, penalties, liens or encumbrances thereon or to insure the Leased Equipment shall be added to the unpaid balance of rentals due hereunder and shall be repayable by Lessee to Lessor immediately together with interest thereon at the rate of one and six tenths (1.6%) percent per month (or, if lower, the highest rate then allowed by law) until paid.

 

12. DEFAULT . Lessee shall be in default hereunder upon the occurrence of any of the following events (each a “ Default ”): (a) failure of Lessee to pay any rental payment or other amount required hereunder when due; (b) failure of Lessee to perform any other obligation hereunder or observe any other term or provision hereunder; (c) any representation or warranty made to Lessor by Lessee or by any Guarantor proves to have been false in any material respect when made; (d) levy, seizure or attachment or other involuntary transfer of the Leased Equipment; (e) a filing by or against Lessee under the provisions of any federal or state bankruptcy or insolvency law or Lessee otherwise becomes subject to the provisions of such law, or assignment for benefit of creditors or bulk transfer of assets by, or cessation of business, termination of existence, death or dissolution of, Lessee or any Guarantor; or (f) the receipt by Lessor of a written notice from the landlord of the Equipment Location that (i) Lessee has vacated or abandoned the Equipment Location, or (ii) any default by Lessee under its real property lease with such landlord has occurred and such landlord intends to retake possession of the Equipment Location. As used herein, the term “ Guarantor ” shall include any guarantor of this Lease Agreement and any owner of any property given as security for Lessee’s obligations hereunder.

 

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13. REMEDIES . If a Default hereunder is continuing, Lessor may exercise any one or more of the following remedies without demand or notice to Lessee and without terminating or otherwise affecting Lessee’s obligations hereunder; (i) accelerate the obligation of Lessee hereunder and, in such event, shall be entitled to recover the sum of (a) delinquent lease payments with interest thereon at the legal rate, (b) the lease payments that will become due in the future discounted to present value as of the date of entry of judgment at a rate equal to 80% of the New York Prime Rate as published from time to time in the Wall Street Journal as of that date, and (c) the anticipated residual value of the Leased Equipment; (ii) require Lessee to assemble the Leased Equipment and make it available to Lessor at a place designated by Lessor, in its sole discretion; (iii) take and hold possession of the Leased Equipment from any premise where the same may be located without liability to Lessee for any damage caused thereby; (iv) sell or lease the Leased Equipment or any part thereof at public or private sale for cash, on credit or otherwise with or without representations or warranties, and upon such commercially reasonable terms as shall be acceptable to Lessor; (v) use and occupy the Equipment Location for the purpose of taking, holding, reconditioning, displaying, selling or leasing the Leased Equipment, without cost to Lessor or liability to Lessee; and (vi) demand, sue for and recover from Lessee all sums due hereunder. Lessee shall be entitled to credit for net proceeds received by Lessor upon sale or reletting of the Leased Equipment, if any, discounted to present value. Lessee shall also be liable for all costs incurred by Lessor in retaking, protecting, and disposing of the Leased Equipment, including reasonable legal fees and costs.

 

14. LATE CHARGE . In the event a rent payment or personal property tax payment is not made when due hereunder, the Lessee promises to pay (1) a late charge to the Lessor or its assigns not later than one month thereafter, in an amount calculated at the rate of five cents per one ($1.00) dollar of each such delayed payment. The late charge and/or the interest payment set forth in this contract shall apply only when permitted by law and, if not permitted by law, the late charges and/or interest payments shall be calculated at the maximum rate permissible by law.

 

15. OMISSION . The omission by the Lessor at any time to enforce any default or right reserved to it, or to require performance of any of the terms, covenants or provisions hereof or the Lessee at any time designated, shall not be a waiver of any such default or right to which the Lessor is entitled, nor shall it in any way affect the right of the Lessor to enforce such provisions thereafter. The Lessor may exercise all remedies simultaneously, pursuant to the terms hereof and such action shall not operate to release the Lessee until the full arrival of the rentals due and to become due and all other sums to be paid hereunder have been paid.

 

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16. AGREEMENT TO PAY NUTRICAP NOTE. In connection with Lessor’s acquisition from Lessee of the Leased Equipment on the date hereof, Lessor irrevocably agreed to make all payments as and when due to Nutricap Labs, LLC (“Nutricap”) by, and on behalf of, Lessor’s sister company NutraScience Labs, Inc. (“NSL”) pursuant to that certain Amended & Restated Unsecured Promissory Note of equal date herewith between NSL and Nutricap (the “Note”). Lessor hereby expressly agrees that if, and only if, (i) Lessor fails to make any payment to Nutricap when due under the Note (after the expiration of any grace period or cure period including, without limitation, the fifteen (15) business day periods set forth in Sections 2.01(a) and 2.01(b) of the Note), and (ii) NSL or its immediate parent company Twinlab Consolidation Corporation (“TCC”), by virtue of TCC’s guaranty of the Note, is required to and does make such payment to Nutricap, then (x) the remaining monthly rental installments hereunder shall be adjusted by reducing the unamortized principal balance under this Lease on a dollar-for-dollar basis by the amount of such payments, and (y) the “initial purchase price” shall be likewise reduced for purposes of the 15% repurchase option under Section 6 of this Lease Agreement. In the event that the amounts paid by NSL or TCC under the Note (upon a failure by Lessor to pay such amounts) exceed the unamortized principal balance remaining hereunder at such time, then Lessor shall be liable to Lessee for the full amount of such excess, such cash payments not to exceed the lesser of (a) the total amount of payments made by Lessee to Lessor pursuant to this Lease, and (b) an amount that when added to the amount of any reduction of unamortized principal pursuant to this provision equals $2,750,000.

 

17. NOTICES. Any notice or other communication to be given hereunder shall be in writing and shall be (as elected by the party giving such notice): (i) personally delivered; (ii) transmitted by postage prepaid registered or certified mail, return receipt requested; (iii) deposited prepaid with a nationally recognized overnight courier service; or (iv) transmitted by electronic mail via the Internet (with a copy of such transmission delivered promptly thereafter by registered or certified mail or courier). Unless otherwise provided herein, all notices shall be deemed to be effective on: (a) if delivered personally or by courier, the date of receipt (or if delivery is refused, the date of such refusal); (b) if by electronic mail, the date transmitted to the appropriate electronic mail address and an appropriate return receipt or telephone confirmation is received; or (c) if transmitted by registered or certified mail, three (3) days after the date of posting. Any notice shall refer to this Agreement, including the specific paragraph under which notice is being given. Notice hereunder shall be directed to a party at the address for such party set forth on this first page of this Lease Agreement or to such other address or to such other person as either party shall have last designated by such notice to the other party hereto.

 

18. GOVERNING LAW, VENUE, and JURY WAIVER . This Agreement shall be governed and interpreted in accordance with the laws of the state of Lessor’s principal office which is the State of California and any suit hereon shall be brought in the county of such office. To the extent permitted by law, the parties waive their right to a jury trial.

 

19. INTEGRATION . It is specifically understood and agreed that all understandings and agreements heretofore made between the parties hereto relative to this Lease are merged in this Lease Agreement (including its addenda and schedules), which contains the entire agreement and understanding of the parties hereto, and neither party relies upon any other statement or representation, except for the credit application and financial statements of Lessee and any Guarantor provided in connection herewith. This Lease Agreement may not be modified or canceled except by an instrument in writing signed by the Lessee and a corporate officer of the Lessor.

 

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20. COUNTERPARTS . This Lease Agreement (and any amendment hereto or any other document delivered pursuant hereto) may be executed in one or more counterparts and, at such time as each party has signed and delivered at least one such counterpart to the other parties hereto, each counterpart shall be deemed an original and, taken together, the counterparts shall constitute one and the same agreement. The transmission of a counterpart signed with an electronic signature and the transmission of a facsimile, including in portable document format (PDF), of any original signed counterpart by electronic mail shall both be treated for all purposes as the delivery of an original signed counterpart.

 

21. LEGAL REPRESENTATION AND CONSTRUCTION . Each party hereto has been represented by legal counsel in connection with the negotiation and drafting of this Lease Agreement and any related documents. The parties acknowledge that each party and its counsel have reviewed and revised this Lease Agreement and related documents, and that the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Agreement or any related documents. As used in this Agreement, the terms “includes” or “including” shall mean “including, without limitation.” Wherever the context may require, any pronouns used in this Agreement shall include the corresponding masculine, feminine or neuter forms, and the singular form of nouns or pronouns shall include the plural and vice versa. Time is of the essence of this Lease Agreement.

 

This Lease is not effective nor accepted until signed by an officer of Lessor, which is the last act necessary for the effectiveness of this Lease.

 

(signatures on following page)

 

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IN WITNESS WHEREOF, each of the parties has caused this Lease Agreement to be executed by its duly authorized officers.

 

LESSEE: TWINLAB CORPORATION

 

By: /s/ Thomas A. Tolworthy   Title: Chief Executive Officer
Date: 6/30/15    
       
By: /s/ Mark Jaggi   Title: Chief Financial Officer
Date: 6/30/15    

 

Witness: ___________________________

 

Accepted by LESSOR: ESSEX CAPITAL CORPORATION

 

By: /s/ Ralph T. Iannelli   Title: President
Date:   6/30/2015      

 

[Signature Page to Commercial Lease Agreement]

 

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LESSEE: TWINLAB CORPORATION  
     
By: /s/ Thomas A. Tolworthy  
Title: Chief Executive Officer  
Date: 6/30/15  
     
By: /s/ Mark Jaggi  
Title: Chief Financial Officer  
Date: 6/30/15  
     
LESSOR:   ESSEX CAPITAL CORPORATION  
     
By: /s/ Ralph T. Iannelli  
Title: President  
Date: 6/30/2015  

 

[Signature Page to Schedule of Leased Equipment]

 

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Exhibit 10.78

 

COMMERCIAL LEASE AGREEMENT

 

LESSOR: LESSEE:
ESSEX CAPITAL CORPORATION TWINLAB CORPORATION
1486 EAST VALLEY ROAD 600 E. QUALITY DRIVE
SANTA BARBARA, CA 93108 AMERICAN FORK, UT 84003

 

EQUIPMENT LOCATION : (If other than Address of Lessee set forth above)   same as above    (“ Equipment Location ”)

 

EQUIPMENT DESCRIPTION : As described on Addendum I attached hereto and made a part hereof (“ Leased Equipment ”).

 

LEASE DATE : June 30, 2015 (“ Lease Date ”)

 

       

MONTHLY

         
LEASE TERM:       RENTAL: FEES:        
36 Months   Amount:   $ 4,875.37     Documentation Fee:   $ 300.00  
    Tax:   $        Filing Fee:   $ 75.00  
    Total           Other:   $    
    Rentals =   $       (Less amounts received)   $    
                         
SECURITY DEPOSIT :   $              TOTAL FEES   $    

 

FIRST PAYMENT DUE : June 30, 2015

 

THIS LEASE IS A NON-CANCELABLE LEASE

 

1.          AGREEMENT TO LEASE . Lessor agrees to lease to Lessee, and Lessee agrees to lease from Lessor, subject to the terms of this lease agreement (“ Lease Agreement ” or “ Lease ”) and any schedules or addenda attached hereto, the Leased Equipment identified above or in the attached schedules or addenda. Lessor may insert in this Lease Agreement the serial numbers, and other identification data, of the Leased Equipment when determined by Lessor. The Leased Equipment shall be installed at, and shall not be removed from the Equipment Location identified above without Lessor’s written consent. Equipment required to be registered under applicable state vehicle laws shall not be removed from the state of registration without the Lessor’s written consent. The lease term shall commence upon the Lease Date and shall continue for the thirty-six (36) month term referenced above (the “ Initial Term ”, and if extended pursuant to the terms and conditions herein, the “ Term ”). This Lease Agreement shall have no effect prior to the execution of this Lease Agreement by both parties. This Lease Agreement is not subject to cancellation for any reason.

 

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2.          STATUS OF PARTIES, WARRANTIES AND DEFENSES . This is a finance lease (California Uniform Commercial Code Section 10103 (a)(7)). Lessee has selected the Leased Equipment from the supplier of the Leased Equipment (the “ Supplier ”). Lessor has not manufactured or supplied the Leased Equipment but is acquiring the same or the right to possession and use of the same solely in connection with this Lease Agreement, and at the request of Lessee. Lessee acknowledges that Lessee has received copies of all contracts evidencing the purchase of the Leased Equipment and the rights with respect thereto.

 

Lessee’s sole remedy in the event of a claimed breach of warranty or other defect in or failure of the Leased Equipment shall be in accordance with the Supplier’s warranty. Lessee covenants not to assert any claim against Lessor on account of any alleged defect or failure of the Leased Equipment and Lessee may not withhold or fail to pay any installments due to Lessor hereunder.

 

LESSOR LEASES THE LEASED EQUIPMENT “AS IS,” AND BEING NEITHER THE MANUFACTURER OF THE LEASED EQUIPMENT NOR THE AGENT OF EITHER THE MANUFACTURER OR SELLER, LESSOR DISCLAIMS ANY REPRESENTATION OR WARRANTY OF ANY KIND, EXPRESS OR IMPLIED, WITH RESPECT TO THE CONDITION OR PERFORMANCE OF THE LEASED EQUIPMENT, ITS MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR WITH RESPECT TO PATENT INFRINGEMENTS OR THE LIKE. LESSOR SHALL HAVE NO LIABILITY TO LESSEE OR ANY OTHER PERSON FOR ANY CLAIM, LOSS OR DAMAGE OF ANY KIND OR NATURE WHATSOEVER, NOR SHALL THERE BE ANY ABATEMENT OF RENTAL FOR ANY REASON INCLUDING CLAIMS ARISING OUT OF OR IN CONNECTION WITH (i) THE DEFICIENCY OR INADEQUACY OF THE LEASED EQUIPMENT FOR ANY PURPOSE, WHETHER OR NOT KNOWN OR DISCLOSED TO LESSOR, (ii) ANY DEFICIENCY OR DEFECT IN THE LEASED EQUIPMENT, (iii) THE USE OR PERFORMANCE OF THE LEASED EQUIPMENT, OR (iv) ANY LOSS OF BUSINESS OR OTHER CONSEQUENTIAL LOSS OR DAMAGE, WHETHER OR NOT RESULTING FROM ANY OF THE FOREGOING.

 

3.          PAYMENT . Lessee promises and agrees to pay all rental installments on the date designated by Lessor and to pay such other charges as are herein provided. Payments of rental installments for each month during the Term shall be payable at the office of Lessor, or to such other person and/or at such other place as Lessor may from time to time designate in writing. Lessor may apply remittances received to unpaid rental installments and/or charges on a due date basis, remittance received being applied to the oldest unpaid rental installment or charge.

 

The Lease is a net lease, it being the intention of the parties that all costs, expenses and liabilities associated with the Leased Equipment or its lease shall be borne by Lessee. Lessee’s agreement to pay all obligations under the Lease, including but not limited to the rental installments, is absolute and unconditional and such agreement is for the benefit of Lessor and its assignees. Lessee’s obligations shall not be subject to any abatement, deferment, reduction, setoff, defense, counterclaim or recoupment for any reason whatsoever.

 

In addition to the fees and payments specified above, Lessee shall also deliver to Lessor concurrently with the execution hereof a Warrant to Purchase Common Stock of Lessee’s indirect parent company, Twinlab Consolidated Holdings, Inc. (“TLCC”), in the form attached hereto as Addendum II.

 

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4.          FINANCIAL AND EQUIPMENT CONDITION . Lessor may inspect the Leased Equipment at any time during business hours upon reasonable notice, and Lessee agrees to keep the Leased Equipment in good condition and repair (ordinary wear and tear excepted) at Lessee’s expense and house the same in suitable shelter, and not to sell or otherwise dispose of the Leased Equipment or any accessories attached hereto. Lessee shall cause the Leased Equipment to be maintained and serviced in accordance with the recommendations of the Supplier and otherwise in accordance with sound and customary industry practices.

 

Lessor may rely upon TLCC’s and Lessee’s financial statements and other documents filed with the Securities and Exchange Commission. Upon Lessor’s reasonably request, Lessee will furnish Lessor with additional financial information of TLCC and Lessee, subject to Lessor’s agreement not to disclose such financial information or trade in the stock of TLCC prior to the time such financial information becomes publicly available.

 

5.          OWNERSHIP. The parties agree that this Lease Agreement creates a lease of personal property, rather than a security interest, within the meaning of California Uniform Commercial Code Section 1203, and that the Initial Term is less than the remaining economic life of the Leased Equipment. No title or right in the Leased Equipment shall pass to Lessee except the rights herein expressly granted. Plates or other markings may be affixed to or placed on the Leased Equipment by Lessor or at Lessor’s reasonable request, by Lessee at Lessee’s expense, indicating the Lessor is the owner thereof, and Lessee will not remove the same. Upon the termination of the Initial Term, except as provided in paragraph 6 below, Lessee will immediately crate, insure, and ship the Leased Equipment and operating manuals to whatever destination Lessor shall direct, all at Lessee’s expense, in as good condition as received less normal wear and tear, said destination to be confirmed by Lessee prior to shipment. Lessee agrees to pay Lessor monthly rent at the rate specified for the Term for any month or part thereof from the end of the Term until the Leased Equipment is shipped by Lessee. Said Leased Equipment shall always remain and be deemed personal property even though attached to realty. Lessee shall maintain each unit of Leased Equipment so that it may be removed from the building in which it is placed without material damage to the building. All replacements, accessories, or capital improvements made to or placed in or upon said Leased Equipment shall become component parts thereof and title thereto shall immediately vest in Lessor and shall be included under the terms hereof. Lessee agrees that Lessor is authorized, at its option, to file financing statements or amendments thereto without the signature of Lessee with respect to any or all of the Leased Equipment and, if a signature is required by law, then Lessee appoints Lessor as Lessee’s attorney-in-fact for the purpose of executing any such financing statements and further agrees to pay the Lessor a reasonable documentation fee to cover the expense of making such filing(s). Lessee further agrees to itself execute such documents and take such action, as Lessor may reasonably request to protect Lessor and Lessor’s lenders and carve out the interest from any owner or encumbrancer of the real property on which the Leased Equipment shall be installed or located, waiving any claim of interest in the Leased Equipment and consenting to its removal upon the expiration or sooner termination of this Lease Agreement.

 

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If Lessee rents the Equipment Location specified above, Lessee shall obtain a signed waiver from Lessee’s landlord (and, if applicable, from such landlord’s mortgagee) in favor of Lessor substantially in the form attached hereto as Addendum III.

 

If Lessee has one or more secured lenders, Lessee will, upon the request of Lessor, provide Lessor with a release of collateral relating to the Leased Equipment executed by each such secured lender and file appropriate UCC financing statement amendments to delete the Leased Equipment from the financing statements filed by each such secured lender.

 

6.          EXPIRATION OF LEASE; PURCHASE OPTION. At the expiration of the Initial Term, Lessee shall provide at least sixty (60) days prior written notice to Lessor of Lessee’s intent to either (a) purchase the Leased Equipment pursuant to the purchase option set forth herein, (b) extend the Lease Agreement for a specified period of time, which shall not be less than one year, at a monthly rental rate determined by the Lessor (in its sole discretion) to be the fair market value rental rate for the Leased Equipment at such time; or (c) return the Leased Equipment to the Lessor pursuant to Paragraph 5 above. In the event that notice is not given at least sixty (60) days prior to the expiration of the Initial Term or any renewal or extension then in effect, then this Lease Agreement shall continue as a hold-over on a month-to month basis, and Lessee shall continue to pay the monthly rent then required hereunder, until Lessee thereafter meets the sixty (60) day prior written notice requirement. Nothing herein shall be deemed or construed as a waiver of Lessor’s rights and remedies upon the expiration or termination of the Initial Term.

 

Provided that Lessee has complied in all material respects with all the terms and conditions of this Lease Agreement, no default is continuing hereunder, and has paid in full all amounts due under this Lease Agreement, including all lease payments and applicable taxes, then Lessee shall have the option to purchase the Leased Equipment upon the expiration of the Initial Term or upon the expiration of any renewal or extension as provided herein. Upon the proper exercise of this purchase option, including timely notice under this Paragraph 6, Lessee may purchase all of the Leased Equipment for an amount equal to fifteen percent (15%) of the Leased Equipment’s $2,750,000 initial purchase price by Lessor from Lessee pursuant to that certain Bill of Sale of equal date herewith, plus any applicable taxes, provided that Lessor receives payment in full on or before the last day of the applicable term. Upon any such exercise of this purchase option and payment in full, title to the Leased Equipment shall be transferred to Lessee free and clear of all liens, security interests and other encumbrances created by Lessor and this Lease Agreement shall then terminate.

 

7.          ASSIGNMENT . Lessor may assign this Lease Agreement, and any such assignee(s) may further assign this Lease Agreement, without notice to or consent of the Lessee. Any such assignee shall succeed to all rights of the Lessor hereunder, and such assignee’s rights shall be free from all defenses, set-offs or counter-claims of any kind which Lessee may be entitled to assert against Lessor other than for Lessee’s right to use and possession of the Leased Equipment. Lessee hereby waives the right to assert any such defense, set-off or counter-claim against any such assignees, it being understood that such assignees shall assume the obligations of the Lessor named herein. By the foregoing waiver, Lessee does not waive the right to any defense, set-off, or counterclaim in may have against Lessor in the event Lessor assigns this Lease pursuant to this provision.

 

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LESSEE SHALL NOT ASSIGN, MORTGAGE OR HYPOTHECATE THIS LEASE OR ANY INTEREST HEREIN, WITHOUT THE PRIOR WRITTEN CONSENT OF LESSOR AND ANY SUCH TRANSFER OR ASSIGNMENT WITHOUT SUCH CONSENT WILL BE VOID. TITLE TO THE LEASED EQUIPMENT SUBJECT TO THIS LEASE IS RETAINED BY THE LESSOR AND LESSEE COVENANTS THAT IT WILL NOT PLEDGE OR ENCUMBER THE EQUIPMENT IN ANY MATTER WHATSOEVER, NOR PERMIT ANY LIENS, CHARGES, OR ENCUMBRANCES TO ATTACH THERETO.

 

The provisions of this Lease Agreement apply to and bind the heirs, executors, administration, successors and permitted assigns of the respective parties hereto.

 

8.          INSURANCE . Lessee assumes the entire risk of loss or damages to the Leased Equipment, whether or not covered by insurance, and no such loss shall relieve Lessee of its obligations hereunder. Lessee agrees to keep the Leased Equipment insured and to provide proof of insurance to Lessor in the Leased Equipment; to protect all interests of Lessor, at Lessee’s expense, against all risks of loss or damage from any cause whatsoever for not less than the unpaid balance of the lease rentals due hereunder or eighty percent (80%) of the then current value of said Leased Equipment, whichever is higher, and to purchase insurance in the amounts set forth in the attached Lessor’s Insurance Requirements. During the Term of this Lease Agreement, Lessor and Lessor’s lenders shall be named as an additional insured in all such insurance policies providing and as a loss payee as its interests may arise in the policies insuring the Leased Equipment. Each policy shall expressly provide that said insurance as to Lessor and its assigns shall not be invalidated by any acts, omissions or neglect of Lessee and cannot be canceled without thirty (30) days prior written notice to Lessor. As to each policy, Lessee shall furnish Lessor a Certificate of Insurance and copy of policy from the insurer reflecting the coverage required by this paragraph on or before the Lease Date. The proceeds of such insurance whether resulting from loss or damage or return of premium or otherwise, shall be applied toward the replacement or repair of the Leased Equipment or the payment of Lessee’s attorney-in-fact to make claim for, receive payment of and execute or endorse all documents, checks or drafts for loss or damage or return premium under any insurance policy issued the Leased Equipment. If Lessee fails to maintain the insurance required by this paragraph, Lessor may, but it is not obligated to, obtain insurance in such forms and amounts as it deems reasonable to protect its interests and Lessee agrees to reimburse Lessor for all such costs together with interest at the rate provided herein upon demand.

 

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9.          INDEMNITY . Lessee shall, at its sole cost and expense, indemnify, hold harmless and defend Lessor and its agents, employees, officers and directors from and against any and all claims, actions, suits, proceedings, costs, expenses, damages and liabilities, including attorney’s fees, arising out of, connected with, resulting from or relating to the Leased Equipment or the condition, delivery, leasing, location, maintenance, manufacture, operation, ownership, possession, purchase, repair, repossession, return, sale, selection, service or use thereof, including without limitation (a) claims involving latent or other defects (whether or not discoverable by Lessee or Lessor), (b) claims for trademark patent or copyright infringement, and (c) claims for injury or death to persons or damage to property or loss of business or anticipatory profits, whether resulting from acts or omissions, including negligence, of Lessee or Lessor or otherwise. Lessee shall give Lessor prompt written notice of any claims or liability covered by this paragraph. The indemnities under this paragraph shall survive the satisfaction of all other obligations of Lessee herein and the termination of this Lease Agreement.

 

10.         TAXES AND FEES . Lessee agrees to use, operate and maintain the Leased Equipment in accordance with all laws in all material respects; to pay all licensing and registration fees for the Leased Equipment; to keep the same free of levies, liens and encumbrances; to show the Leased Equipment as “leased equipment” on Lessee’s personal property tax returns; to pay all personal property taxes assessed against equipment, which sum Lessee shall remit to the taxing authority; to pay all other federal, state and local taxes, assessments, fees and penalties which may be levied or assessed on or in respect to the Leased Equipment or its use or any interest therein, or rental payments thereon including but not limited to all sales and use taxes, however designated, levied or assessed upon the Lessee and Lessor or either of them or said equipment, or upon the sale, ownership, use or operation thereof (other than those measured by Lessor’s net income). Lessor may pay such taxes and other amounts and may file such returns on behalf of Lessee if Lessee fails to do so as provided herein. Lessee agrees to reimburse Lessor for reasonable costs incurred in collecting any charges, taxes, assessments or fees for which Lessee is liable hereunder.

 

11.         ADVANCES . All advances made and costs reasonably incurred by Lessor to preserve the Leased Equipment or to discharge and pay any taxes, assessments, fees, penalties, liens or encumbrances thereon or to insure the Leased Equipment shall be added to the unpaid balance of rentals due hereunder and shall be repayable by Lessee to Lessor immediately together with interest thereon at the rate of one and six tenths (1.6%) percent per month (or, if lower, the highest rate then allowed by law) until paid.

 

12.         DEFAULT . Lessee shall be in default hereunder upon the occurrence of any of the following events (each a “ Default ”): (a) failure of Lessee to pay any rental payment or other amount required hereunder when due; (b) failure of Lessee to perform any other obligation hereunder or observe any other term or provision hereunder; (c) any representation or warranty made to Lessor by Lessee or by any Guarantor proves to have been false in any material respect when made; (d) levy, seizure or attachment or other involuntary transfer of the Leased Equipment; (e) a filing by or against Lessee under the provisions of any federal or state bankruptcy or insolvency law or Lessee otherwise becomes subject to the provisions of such law, or assignment for benefit of creditors or bulk transfer of assets by, or cessation of business, termination of existence, death or dissolution of, Lessee or any Guarantor; or (f) the receipt by Lessor of a written notice from the landlord of the Equipment Location that (i) Lessee has vacated or abandoned the Equipment Location, or (ii) any default by Lessee under its real property lease with such landlord has occurred and such landlord intends to retake possession of the Equipment Location. As used herein, the term “ Guarantor ” shall include any guarantor of this Lease Agreement and any owner of any property given as security for Lessee’s obligations hereunder.

 

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13.         REMEDIES . If a Default hereunder is continuing, Lessor may exercise any one or more of the following remedies without demand or notice to Lessee and without terminating or otherwise affecting Lessee’s obligations hereunder; (i) accelerate the obligation of Lessee hereunder and, in such event, shall be entitled to recover the sum of (a) delinquent lease payments with interest thereon at the legal rate, (b) the lease payments that will become due in the future discounted to present value as of the date of entry of judgment at a rate equal to 80% of the New York Prime Rate as published from time to time in the Wall Street Journal as of that date, and (c) the anticipated residual value of the Leased Equipment; (ii) require Lessee to assemble the Leased Equipment and make it available to Lessor at a place designated by Lessor, in its sole discretion; (iii) take and hold possession of the Leased Equipment from any premise where the same may be located without liability to Lessee for any damage caused thereby; (iv) sell or lease the Leased Equipment or any part thereof at public or private sale for cash, on credit or otherwise with or without representations or warranties, and upon such commercially reasonable terms as shall be acceptable to Lessor; (v) use and occupy the Equipment Location for the purpose of taking, holding, reconditioning, displaying, selling or leasing the Leased Equipment, without cost to Lessor or liability to Lessee; and (vi) demand, sue for and recover from Lessee all sums due hereunder. Lessee shall be entitled to credit for net proceeds received by Lessor upon sale or reletting of the Leased Equipment, if any, discounted to present value. Lessee shall also be liable for all costs incurred by Lessor in retaking, protecting, and disposing of the Leased Equipment, including reasonable legal fees and costs.

 

14.         LATE CHARGE . In the event a rent payment or personal property tax payment is not made when due hereunder, the Lessee promises to pay (1) a late charge to the Lessor or its assigns not later than one month thereafter, in an amount calculated at the rate of five cents per one ($1.00) dollar of each such delayed payment. The late charge and/or the interest payment set forth in this contract shall apply only when permitted by law and, if not permitted by law, the late charges and/or interest payments shall be calculated at the maximum rate permissible by law.

 

15.         OMISSION . The omission by the Lessor at any time to enforce any default or right reserved to it, or to require performance of any of the terms, covenants or provisions hereof or the Lessee at any time designated, shall not be a waiver of any such default or right to which the Lessor is entitled, nor shall it in any way affect the right of the Lessor to enforce such provisions thereafter. The Lessor may exercise all remedies simultaneously, pursuant to the terms hereof and such action shall not operate to release the Lessee until the full arrival of the rentals due and to become due and all other sums to be paid hereunder have been paid.

 

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16.         AGREEMENT TO PAY NUTRICAP NOTE. In connection with Lessor’s acquisition from Lessee of the Leased Equipment on the date hereof, Lessor irrevocably agreed to make all payments as and when due to Nutricap Labs, LLC (“Nutricap”) by, and on behalf of, Lessor’s sister company NutraScience Labs, Inc. (“NSL”) pursuant to that certain Amended & Restated Unsecured Promissory Note of equal date herewith between NSL and Nutricap (the “Note”). Lessor hereby expressly agrees that if, and only if, (i) Lessor fails to make any payment to Nutricap when due under the Note (after the expiration of any grace period or cure period including, without limitation, the fifteen (15) business day periods set forth in Sections 2.01(a) and 2.01(b) of the Note), (ii) NSL or its immediate parent company Twinlab Consolidation Corporation (“TCC”), by virtue of TCC’s guaranty of the Note, is required to and does make such payment to Nutricap, and (iii) if such payments by NSL or TCC exceed the total combined amount of unamortized principal offset and cash reimbursement called for by Section 16 of the Commercial Lease Agreement of equal date herewith between Lessor and Lessee for equipment with an original purchase price of $2,750,000 (the “$2.75MM Lease”), then with respect only to the amount of such excess (x) the remaining monthly rental installments hereunder shall be adjusted by reducing the unamortized principal balance under this Lease on a dollar-for-dollar basis by the amount of such payments, and (y) the “initial purchase price” shall be likewise reduced for purposes of the 15% repurchase option under Section 6 of this Lease Agreement. In the event that the amounts of such excess paid by NSL or TCC under the Note (upon a failure by Lessor to pay such amounts) exceed the unamortized principal balance remaining hereunder at such time, then Lessor shall be liable to Lessee for the full amount of such excess, such cash payments not to exceed the lesser of (a) the total amount of payments made by Lessee to Lessor pursuant to this Lease, and (b) an amount that when added to the amount of any reduction of unamortized principal pursuant to this provision equals $150,000. It is expressly agreed that the remedies available to the Lessee pursuant to Section 16 of the $2.75MM Lease, must be fully-exhausted before Lessee shall be entitled to the remedies provided for in Section 16 hereof.

 

17.         NOTICES. Any notice or other communication to be given hereunder shall be in writing and shall be (as elected by the party giving such notice): (i) personally delivered; (ii) transmitted by postage prepaid registered or certified mail, return receipt requested; (iii) deposited prepaid with a nationally recognized overnight courier service; or (iv) transmitted by electronic mail via the Internet (with a copy of such transmission delivered promptly thereafter by registered or certified mail or courier). Unless otherwise provided herein, all notices shall be deemed to be effective on: (a) if delivered personally or by courier, the date of receipt (or if delivery is refused, the date of such refusal); (b) if by electronic mail, the date transmitted to the appropriate electronic mail address and an appropriate return receipt or telephone confirmation is received; or (c) if transmitted by registered or certified mail, three (3) days after the date of posting. Any notice shall refer to this Agreement, including the specific paragraph under which notice is being given. Notice hereunder shall be directed to a party at the address for such party set forth on this first page of this Lease Agreement or to such other address or to such other person as either party shall have last designated by such notice to the other party hereto.

 

18.         GOVERNING LAW, VENUE, and JURY WAIVER . This Agreement shall be governed and interpreted in accordance with the laws of the state of Lessor’s principal office which is the State of California and any suit hereon shall be brought in the county of such office. To the extent permitted by law, the parties waive their right to a jury trial.

 

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19.         INTEGRATION . It is specifically understood and agreed that all understandings and agreements heretofore made between the parties hereto relative to this Lease are merged in this Lease Agreement (including its addenda and schedules), which contains the entire agreement and understanding of the parties hereto, and neither party relies upon any other statement or representation, except for the credit application and financial statements of Lessee and any Guarantor provided in connection herewith. This Lease Agreement may not be modified or canceled except by an instrument in writing signed by the Lessee and a corporate officer of the Lessor.

 

20.         COUNTERPARTS . This Lease Agreement (and any amendment hereto or any other document delivered pursuant hereto) may be executed in one or more counterparts and, at such time as each party has signed and delivered at least one such counterpart to the other parties hereto, each counterpart shall be deemed an original and, taken together, the counterparts shall constitute one and the same agreement. The transmission of a counterpart signed with an electronic signature and the transmission of a facsimile, including in portable document format (PDF), of any original signed counterpart by electronic mail shall both be treated for all purposes as the delivery of an original signed counterpart.

 

21.         LEGAL REPRESENTATION AND CONSTRUCTION . Each party hereto has been represented by legal counsel in connection with the negotiation and drafting of this Lease Agreement and any related documents. The parties acknowledge that each party and its counsel have reviewed and revised this Lease Agreement and related documents, and that the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Agreement or any related documents. As used in this Agreement, the terms “includes” or “including” shall mean “including, without limitation.” Wherever the context may require, any pronouns used in this Agreement shall include the corresponding masculine, feminine or neuter forms, and the singular form of nouns or pronouns shall include the plural and vice versa. Time is of the essence of this Lease Agreement.

 

This Lease is not effective nor accepted until signed by an officer of Lessor, which is the last act necessary for the effectiveness of this Lease.

 

(signatures on following page)

 

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IN WITNESS WHEREOF, each of the parties has caused this Lease Agreement to be executed by its duly authorized officers.

 

LESSEE: TWINLAB CORPORATION      
         
By: /s/ Thomas A. Tolworthy   Title: Chief Executive Officer  
Date:   6/30/15         
         
By: /s/ Mark Jaggi   Title: Chief Financial Officer  
Date: 6/30/15      

 

Witness:          

 

Accepted by LESSOR:   ESSEX CAPITAL CORPORATION  

 

By: /s/ Ralph T. Iannelli   Title: President
Date:   6/30/15      

 

[Signature Page to Commercial Lease Agreement]

 

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Addendum I

Schedule of Leased Equipment

 

Schedule A attached hereto is incorporated herein by this reference.

 

[Signature Page Follows]

 

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LESSEE: TWINLAB CORPORATION

 

By: /s/ Thomas A. Tolworthy  
Title: Chief Executive Officer    
Date: 6/30/15  
     
By: /s/ Mark Jaggi  
Title: Chief Financial Officer  
Date: 6/30/15  

 

LESSOR:        ESSEX CAPITAL CORPORATION

 

By: /s/ Ralph T. Iannelli  
Title: President  
Date: 6/30/15  

 

[Signature Page to Schedule of Leased Equipment]

 

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Exhibit 10.79

 

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 1,428,571 Shares of Common Stock ($0.001 par value)

 

Warrant Number: 2015-24

 

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 during the period set forth in Paragraph 3 below, in whole or in part, 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: Essex Capital Corporation, a California corporation

 

2. Purchase Price . The purchase price per share shall be $0.77.

 

3. When Exercisable. This Warrant shall be exercisable at any time from and after the date hereof and shall expire at 5:00 p.m., New York Time, June 30, 2020 (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.

 

(A)        The Registered Owner shall notify the Company of the number of shares that it desires to purchase and deliver with such notice (i) cash, immediately available funds or a certified bank check payable to the Company for the purchase price of the shares being purchased or (ii) through a net exercise pursuant to clause (B) below.

 

(B)        Notwithstanding any provisions herein to the contrary, if the fair market value of one share of Common Stock is greater than the purchase price (at the date of calculation as set forth below), in lieu of exercising this Warrant by payment of cash, the Registered Owner may elect to receive shares equal to the value (as determined below) of this Warrant (or the portion thereof being canceled) by surrender of this Warrant at the principal office of the Company together with the properly endorsed notice of exercise in which event the Company shall issue to the Registered Owner a number of shares of Common Stock computed using the following formula:

 

X = Y (A-B)

A

 

 Where X = the number of shares of Common Stock to be issued to the Registered Owner

 

     Y = the number of shares of Common Stock purchasable under this Warrant or, if only a portion of this Warrant is being exercised, that portion of the Warrant being canceled (at the date of such calculation)

 

     A = the fair market value of one share of Common Stock (at the date of such calculation)

 

     B = the purchase price (as adjusted to the date of such calculation)

 

For purposes of clarity, upon an exercise of this Warrant (or a portion thereof) pursuant to this Section 6(B), the number of shares purchasable under the Warrant that is represented by the “Y” designation above, shall be cancelled upon issuance to Registered Owner of Common Stock represented by the “X” designation above.

 

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The fair market value per share shall be determined as follows:

 

(i)             if traded on a securities exchange, the fair market value shall be the product of (x) the average of the closing prices over a five (5) day period ending three (3) days before the day the current fair market value of the securities is being determined and (y) the number of shares of Common Stock issuable pursuant to this Warrant at the time of such exercise;

 

(ii)            if actively traded over-the-counter, the fair market value shall be the product of (x) the average of the closing bid and asked prices quoted on the NASDAQ system (or similar system) over the five (5) day period ending three (3) days before the day the current fair market value of the securities is being determined and (y) the number of shares of Common Stock issuable pursuant to this Warrant at the time of such exercise; or

 

(iii)           if not listed on any securities exchange or quoted in the NASDAQ System or the over-the-counter market, the fair market value shall be determined in good faith by the Company’s Board of Directors.

 

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. IT IS AGREED THAT THE COMPANY WILL NOT REQUIRE OPINIONS OF COUNSEL FOR TRANSACTIONS MADE PURSUANT TO RULE 144, EXCEPT IN UNUSUAL CIRCUMSTANCES."

 

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 .

 

(A)           At any time at which this Warrant remains outstanding, upon the request of the Registered Owner, the Company will enter into a registration rights agreement with Registered Owner (the " Rights Agreement "). Such Rights Agreement shall provide that beginning on the later of January 1, 2016 or the date upon which this Warrant becomes exercisable pursuant to Section 3 hereof, if the Company is eligible for the use of a registration statement on Form S-3, then the Registered Owner shall have the right to request an initial registration and thereafter on a quarterly basis after such initial registration shall have been declared effective by the U.S. Securities and Exchange Commission (the “Commission”), registration of its Common Stock on Form S-3 or any similar short-form registration (each, a " Demand Registration "). The Rights Agreement will provide that each request for a Demand Registration shall specify the approximate number of shares of Common Stock requested to be registered and that the Company shall cause a registration statement on Form S-3 (or any successor form) to be filed within twenty (20) 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. The Rights Agreement will provide that 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 determines in its reasonable good faith judgment that such Demand Registration would (i) materially interfere with a significant acquisition, corporate reorganization 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 Securities Exchange Act of 1934, as amended.

 

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(B)           The rights to cause the Company to register shares of Common Stock pursuant hereto may be assigned (but only with all related obligations) by the Registered Owner in a Qualified Assignment; provided, that, (i) the Company is, upon or within a reasonable time after such transfer, furnished with written notice of the name and address of such transferee and the securities with respect to which such registration rights are being assigned, (ii) such transferee or assignee agrees in writing to be bound by and subject to the terms and conditions of this Warrant, and (iii) such assignment shall be effective only if immediately following such transfer the further disposition of such securities by transferee or assignee is restricted under the Securities Act.

 

19. 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.

 

20. 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.

 

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If to the Registered Owner: Essex Capital Corporation
1486 East Valley Road
 Santa Barbara, CA 93108
E-mail: ralph@essexcapitalcorp.com
Attention: Ralph T. Iannelli
   
with a copy to (which shall not constitute notice to the Registered Owner): Seed Mackall, LLP
1332 Anacapa Street, Suite 200
Santa Barbara, California 93101
E-mail:  THARDING@seedmackall.com
Attention: Tom Harding, Esq.

 

21. 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.

 

22. Entire Agreement . This Warrant together with the Bill of Sale of even date herewith between the parties, 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.

 

23. 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 (i) may not be assigned by the Registered Owner until this Warrant has become exercisable pursuant to Section 3 of this Warrant and (ii) thereafter may only be assigned with the mutual consent of the Registered Owner and the Company in writing.

 

24. 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.

 

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

 

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26. 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.

 

27. 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.

 

28. 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.

 

29. 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.

 

30. 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.

 

31. 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.

 

32. 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.

 

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[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 June, 2015.

 

  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:

 

ESSEX CAPITAL CORPORATION

 

By: /s/ Ralph T. Iannelli  
  Ralph T. Iannelli  
  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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