Exhibit 10.171

 

THIS INSTRUMENT IS SUBJECT TO THE TERMS OF A SUBORDINATION AGREEMENT (GREAT
HARBOR SECURED DEBT) DATED AS OF AUGUST 30, 2017 IN FAVOR OF MIDCAP FUNDING X
TRUST, A DELAWARE STATUTORY TRUST, AS ADMINISTRATIVE AGENT, WHICH SUBORDINATION
AGREEMENT (GREAT HARBOR SECURED DEBT) (AS AMENDED IN ACCORDANCE WITH ITS TERMS)
IS INCORPORATED HEREIN BY REFERENCE

 

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.

 

SECURED PROMISSORY NOTE

 

$3,000,000.00 

August 30, 2017

      

FOR VALUE RECEIVED, the undersigned, TWINLAB CONSOLIDATED HOLDINGS, INC., a
Nevada corporation ("TCHI"), TWINLAB CONSOLIDATION CORPORATION, a Delaware
corporation, TWINLAB HOLDINGS, INC., a Michigan corporation, ISI BRANDS INC., a
Michigan corporation, TWINLAB CORPORATION, a Delaware corporation, NUTRASCIENCE
LABS, INC., a Delaware corporation, NUTRASCIENCE LABS IP CORPORATION, a Delaware
corporation, ORGANIC HOLDINGS LLC, a Delaware limited liability company, RESERVE
LIFE ORGANICS, LLC, a Delaware limited liability company, RESVITALE, LLC, a
Delaware limited liability company, RE-BODY, LLC, a Delaware limited liability
company, INNOVITAMIN ORGANICS, LLC, a Delaware limited liability company,
ORGANICS MANAGEMENT LLC, a Delaware limited liability company, COCOAWELL, LLC, a
Delaware limited liability company, FEMBODY, LLC, a Delaware limited liability
company, RESERVE LIFE NUTRITION, L.L.C., a Delaware limited liability company,
INNOVITA SPECIALTY DISTRIBUTION LLC, a Delaware limited liability company, and
JOIE ESSANCE, LLC, a Delaware limited liability company (collectively as
"Maker"), promises to pay to GREAT HARBOR CAPITAL, LLC, a Delaware limited
liability company ("Holder"), the principal sum of THREE MILLION DOLLARS AND NO
CENTS ($3,000,000.00), together with interest on the unpaid principal balance of
this Secured 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 August 29, 2020 (the "Maturity Date")
or, if such day is not a Business Day, then the next succeeding Business Day.
Capitalized terms used herein and not otherwise defined are set forth in Section
3.12 hereof.

 

 

 
 

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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 on the 1st day of each month, with the first interest payment due
January 1, 2018.

 

b.     The principal amount of this Note together with all accrued and unpaid
interest thereon shall be due and payable on the Maturity Date.

 

1.02     Prepayment.

 

a.     The principal amount of 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,
Exhibit A shall be updated by Holder to reflect such payment. 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     Conversion of Note to Equity. If and upon terms and conditions approved
by the Disinterested Members (as defined below) of TCHI's Board of Directors and
execution of definitive documents mutually agreed upon by the parties, Holder
shall have the right the convert the then outstanding principal and accrued
interest due to Holder under this Note into the common stock, par value $0.001
per share, of Twinlab Consolidated Holdings, Inc.; provided, however, that upon
such a conversion the Warrant (as defined below) shall be cancelled. For
purposes of this provision, and solely with respect to the approval of the terms
and conditions of conversion pursuant to this Section 1.04, the "Disinterested
Members" of TCHI’s Board of Directors shall mean those directors other than
David Van Andel, Mark Bugge, and any director appointed by Holder pursuant to
that certain Voting Agreement in favor of Holder, dated October 2, 2015.

 

 

 
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ARTICLE II
DEFAULTS

 

2.01     Events of Default. Each of the following shall constitute an "Event 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.     the occurrence of an event of default under any of the Loan Documents and
the continuation of such failure for a period of fifteen (15) Business Days
following notice thereof;

 

d.     the occurrence of (x)(i) a default or an event of default with respect to
any indebtedness of Maker for borrowed money that accrues interest, including,
but not limited to Midcap Funding X Trust, JL Properties, Inc., JL-US, the
Holder, Golisano Holdings, Little Harbor and (ii) such indebtedness is
accelerated by the creditor or (y) for the non-payment of indebtedness of Maker
for borrowed money at its scheduled final maturity (including any extension or
refinancings thereof); or

 

e.     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

 

f.     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.

 

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(d) or 2.01(e) 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.

 

 

 
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Concurrently herewith, TCHI has issued into escrow the Warrant to purchase
shares of TCHI’s common stock in the name of Holder which will only be released
from escrow and deemed issued at that time and otherwise become exercisable if
Maker fails to pay Holder the entire unamortized principal amount of this Note
and any accrued and unpaid interest thereon as of the Maturity Date or such
earlier date as is required pursuant to an Acceleration Notice issued by Holder
in accordance with the terms hereof. The issuance of the Warrant is intended to
compensate Holder in the event that Maker fails to make payment in full of this
Note as and when due. Maker and Holder have mutually agreed that, considering
all of the circumstances existing on the date hereof, the right of Holder to
exercise the Warrant, and the attendant consequences of doing so, represent fair
and reasonable compensation for a portion of the damages that Holder would
suffer as a result of the existence of the conditions giving rise to such right.
The granting of such right is not intended as a forfeiture or penalty but,
rather, is intended to constitute partial liquidated damages to Holder. The
issuance of the Warrant is not, nor shall it be deemed to be, made in lieu of or
to otherwise reduce or limit in any way Maker’s payment obligations under this
Note or be deemed or construed as a limitation on any other rights or remedies
that Holder may have hereunder, at law or in equity, or otherwise.

 

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.

 

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     Arm's Length Agreement. This Agreement has been negotiated and prepared
at the mutual request, direction and construction of Holder and Maker, at arm's
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 Monroe County, 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:

 

a.     If to Maker, to:

 

Twinlab Consolidated Holdings, Inc.

4800 T-Rex Avenue
Suite 305
Boca Raton, Florida 33431
Attention: Alan S. Gever, Chief Financial Officer

e-mail: agever@twinlab.com

 

 

 
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b.     If to Holder, to:

 

Great Harbor Capital, LLC

3133 Orchard Vista Drive SE

Grand Rapids, MI 49546

Attention: Mark J. Bugge, Secretary

Facsimile: (616) 808-2721

e-mail: Mark.Bugge@vaegr.com

 

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 Maker without the express prior written consent of Holder. Any
attempted assignment of this Note by Maker in violation of this restriction
shall be void.

 

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.

 

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
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     Security. The indebtedness evidenced by this Note and any extensions,
renewals or modifications of such indebtedness is secured by any and all
mortgages, security agreements, guaranties and other security documents now or
hereafter in effect as security for this Note (collectively, the "Loan
Documents").

 

Definitions. The following terms have the following meanings:

 

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

 

"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.

 

 

 
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"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.

 

"Disinterested Members" shall have the meaning set forth in Section 1.04.

 

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

 

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

 

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

 

"Interest Rate" shall have the meaning set forth in Section 1.02(a).

 

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

 

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

 

"MidCap Subordination" shall have the meaning set forth in the Preamble.

 

"Transfer" has the meaning set forth in Section 3.07.

 

"Warrant" has the meaning set forth in Section 2.01 and shall be in the form
attached as Exhibit B to the Note.

 

 

 

[SIGNATURE PAGES FOLLOW]

 

 

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

 

 

MAKER:

TWINLAB CONSOLIDATION

CORPORATION

 

 

By:_______________________________(Seal)

Name: Naomi Whittel

Title: Chief Executive Officer

   

TWINLAB CONSOLIDATED

HOLDINGS, INC.

 

 

By:____________________________(Seal)

Name: Naomi Whittel

Title: Chief Executive Officer

 

TWINLAB HOLDINGS, INC.

 

 

 

By:_______________________________(Seal)

Name: Naomi Whittel

Title: Chief Executive Officer

TWINLAB CORPORATION

 

 

By:____________________________(Seal)

Name: Naomi Whittel

Title: Chief Executive Officer

 

ISI BRANDS INC.

 

 

By:_______________________________(Seal)

Name: Naomi Whittel

Title: Chief Executive Officer

NUTRASCIENCE LABS, INC.

 

 

By:____________________________(Seal)

Name: Naomi Whittel

Title: Chief Executive Officer

 

NUTRASCIENCE LABS IP CORPORATION

 

 

By:_______________________________(Seal)

Name: Naomi Whittel

Title: Chief Executive Officer

ORGANIC HOLDINGS LLC

 

 

By:_________________________(Seal)

Name: Naomi Whittel

Title: Sole Manager

RESERVE LIFE ORGANICS, LLC

 

By ORGANIC HOLDINGS LLC,

its sole Member

 

By:_________________________(Seal)

Name: Naomi Whittel

Title: Sole Manager

 

 

 

[First Signature Page to Secured Promissory Note – August 2017 – Great Harbor]

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RESVITALE, LLC

 

By ORGANIC HOLDINGS LLC,

its sole Member

 

By:_________________________(Seal)

Name: Naomi Whittel

Title: Sole Manager

 

RE-BODY, LLC

 

By ORGANIC HOLDINGS LLC,

its sole Member

 

By:_________________________(Seal)

Name: Naomi Whittel

Title: Sole Manager

INNOVITAMIN ORGANICS, LLC

 

By ORGANIC HOLDINGS LLC,

its sole Member

 

By:_________________________(Seal)

Name: Naomi Whittel

Title: Sole Manager

 

ORGANICS MANAGEMENT LLC

 

By ORGANIC HOLDINGS LLC,

its sole Member

 

By:_________________________(Seal)

Name: Naomi Whittel

Title: Sole Manager

COCOAWELL, LLC

 

By ORGANIC HOLDINGS LLC,

its sole Member

 

By:_________________________(Seal)

Name: Naomi Whittel

Title: Sole Manager

FEMBODY, LLC

 

By ORGANIC HOLDINGS LLC,

its sole Member

 

By:_________________________(Seal)

Name: Naomi Whittel

Title: Sole Manager

 

RESERVE LIFE NUTRITION, L.L.C.

 

By ORGANIC HOLDINGS LLC,

its sole Member

 

By:_________________________(Seal)

Name: Naomi Whittel

Title: Sole Manager

 

INNOVITA SPECIALTY DISTRIBUTION LLC

 

By ORGANIC HOLDINGS LLC,

its sole Member

 

By:_________________________(Seal)

Name: Naomi Whittel

Title: Sole Manager

  

 

 

[Second Signature Page to Secured Promissory Note – August 2017 – Great Harbor]

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JOIE ESSANCE, LLC

 

By ORGANIC HOLDINGS LLC,

its sole Member

 

By:_________________________(Seal)

Name: Naomi Whittel

Title: Sole Manager

 

 

 

 

#12158918 

 

 

[Third Signature Page to Secured Promissory Note – August 2017 – Great Harbor]

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ACKNOWLEDGED & AGREED

 

GREAT HARBOR CAPITAL, LLC

 

 

 

By:__________________________

Name: Mark J. Bugge

Title: Secretary

 

 

 

#12158918

 

 

 

 

[Fourth Signature Page to Secured Promissory Note – August 2017 – Great Harbor]

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EXHIBIT A

 

SCHEDULE OF PREPAYMENTS

 

 

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EXHIBIT B

 

FORM OF WARRANT