Exhibit 10.44

 

Execution Version

 

pledge AGREEMENT

 

THIS PLEDGE AGREEMENT (this “Agreement”) is made as of January 22, 2015, by and
between TWINLAB HOLDINGS, INC., a Michigan corporation (“Pledgor”), and PENTA
MEZZANINE SBIC FUND I, L.P., a Delaware limited partnership (together with its
successors and assigns,“Purchaser”).

 

RECITALS

 

A.           The term “Companies”, as used herein, shall mean collectively all
of the following entities: TWINLAB CONSOLIDATED HOLDINGS, INC., a Nevada
corporation, TWINLAB CONSOLIDATION CORPORATION, a Delaware corporation, TWINLAB
HOLDINGS, INC., a Michigan corporation, ISI BRANDS INC., a Michigan corporation,
and TWINLAB CORPORATION, a Delaware corporation, TCC CM SUBCO I, INC., a
Delaware corporation, TCC CM SUBCO II, INC., a Delaware corporation, and such
other borrowers that may become “Companies” under the Note Purchase Agreement
(as defined herein); the term “Company”, as used herein, shall mean individually
each entity that is one of the Companies; and the term “Issuer” as used herein
shall mean, collectively, each of Twinlab Corporation, a Delaware corporation,
and ISI Brands Inc., a Michigan corporation.

 

B.           Pursuant to that certain Note and Warrant Purchase Agreement, dated
as of November 13, 2014, among Companies and Purchaser (as the same may be
amended, supplemented, modified, increased, renewed or restated from time to
time, the “Note Purchase Agreement”), Purchaser has agreed to purchase from
Companies up to $10,000,000 of secured promissory notes. Companies have and/or
will have executed and delivered one or more such promissory notes evidencing
the indebtedness incurred by Companies under the Note Purchase Agreement (as the
same may be amended, modified, increased, renewed or restated from time to time,
and together with all renewal notes issued in respect thereof, collectively the
“Notes”). The terms and provisions of the Note Purchase Agreement and Notes are
hereby incorporated by reference in this Agreement.

 

C.           The terms and provisions of the Note Purchase Agreement and Notes
are hereby incorporated by reference in this Agreement. This Agreement, the
Notes, the Note Purchase Agreement and all of the other documents evidencing,
securing and/or governing or executed in connection with the Notes, as the same
may be amended, modified, increased, renewed or restated from time to time, are
herein referred to collectively as the “Financing Documents”.

 

D.           The term “Obligations” as used herein, shall have the meaning given
to such term in the Note Purchase Agreement.

 

E.           In connection with Purchaser entering into the Note Purchase
Agreement and agreeing to make the credit accommodations under the Note Purchase
Agreement and as security for all of the Obligations, Purchaser is requiring
that Pledgor shall have executed and delivered this Agreement.

 

F.           Pledgor is a shareholder of Issuer and, as such, will continue to
derive substantial benefit by reason of Purchaser purchasing the Notes.

 

AGREEMENT

 

NOW, THEREFORE, to induce Purchaser to enter into the Note Purchase Agreement
and to purchase the Notes, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Pledgor and Purchaser
hereby incorporate hereby by this reference the foregoing Recitals and hereby
covenant and agree as follows:

 

 

 

 

1.           Grant of Assignment and Security Interest. Pledgor hereby pledges,
assigns and grants to Purchaser, as security for the Obligations a security
interest in the following property of Pledgor (collectively, the “Collateral”),
whether now existing or hereafter created or arising:

 

(a)          all of the stock, shares, and other equity ownership interests in
Issuer now or hereafter held by Pledgor (collectively, the “Ownership
Interests”) and all of Pledgor’s rights to participate in the management of
Issuer, all rights, privileges, authority and powers of Pledgor as owner or
holder of its Ownership Interests in Issuer, all rights, privileges, authority
and powers relating to the economic interests of Pledgor as owner or holder or
its Ownership Interests in Issuer, including, without limitation, all investment
property and general intangibles related thereto, all options and warrants of
Pledgor for the purchase of any Ownership Interest in Issuer, all documents and
certificates representing or evidencing the Pledgor’s Ownership Interests in
Issuer, all whether existing or hereafter arising, and whether arising under any
agreement or any bylaws, certificate of formation, articles of incorporation or
other governing documents of Issuer (as the same may be amended, modified or
restated from time to time) or otherwise, or at law or in equity and all books
and records of Pledgor pertaining to any of the foregoing and all options,
warrants, distributions, investment property, cash, instruments and other rights
and options from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of such interests, and Pledgor shall
promptly from time to time at the written request of the Purchaser deliver to
Purchaser a certificate duly executed by Pledgor describing such percentage
interests, options or warrants and certifying that the same have been duly
pledged hereunder;

 

(b)          all rights to receive cash distributions, profits, losses and
capital distributions (including, but not limited to, distributions in kind and
liquidating dividends and distributions) and any other rights and property
interests related to the Ownership Interests;

 

(c)          all other securities, instruments or property (including cash) paid
or distributed in respect of or in exchange for the Ownership Interests, whether
or not as part of or by way of spin-off, merger, consolidation, dissolution,
reclassification, combination or exchange of stock (or other Ownership
Interests), asset sales, or similar rearrangement or reorganization or
otherwise; and

 

(d)          all proceeds (both cash and non-cash) of the foregoing, whether now
or hereafter arising with respect to the foregoing.

 

2.           Application of Proceeds. Pledgor hereby authorizes and directs the
Issuer, following written notice to do so by Purchaser after the occurrence of
an Event of Default (as hereinafter defined) under this Agreement, to make
direct payment to Purchaser of any amounts due or to become due to Pledgor with
respect to the Collateral. Any moneys received by Purchaser shall be applied to
the Obligations in such order and manner of application as Purchaser may from
time to time determine in its sole discretion.

 

3.           Rights of Pledgor in the Collateral. Until any Event of Default
occurs under this Agreement, Pledgor shall be entitled to exercise all voting
rights and to receive all dividends and other distributions that may be paid on
any Collateral and that are not otherwise prohibited by the Financing Documents.
Any cash dividend or distribution payable in respect of the Collateral that is,
in whole or in part, a return of capital or that is made in violation of this
Agreement or the Financing Documents shall be received by Pledgor in trust for
Purchaser, shall be paid immediately to Purchaser and shall be retained by
Purchaser as part of the Collateral. Upon the occurrence and during the
continuation of an Event of Default, Pledgor shall, at the written direction of
Purchaser, promptly, and in any case within one (1) business day, send a written
notice to Issuer instructing Issuer, and shall cause Issuer, to remit all cash
and other distributions payable with respect to the Ownership Interests (until
such time as Purchaser notifies Pledgor that such Event of Default has ceased to
exist) directly to Purchaser. Nothing contained in this paragraph shall be
deemed to permit the payment of any sum or the making of any distribution which
is prohibited by any of the Financing Documents, if any.

 

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4.           Representations and Warranties of Pledgor. Pledgor hereby warrants
to Purchaser as follows:

 

(a)          Schedule I and Schedule II are true, correct and complete in all
respects;

 

(b)          All of the pledged Ownership Interests of Pledgor (the “Pledged
Interests”) are in certificated form, and are registered in the name of Pledgor;

 

(c)          The Pledged Interests constitute at least the percentage of all the
issued and outstanding Ownership Interests of Issuer as set forth on Schedule I;

 

(d)          The Pledged Interests listed on Schedule I are the only Ownership
Interests of Issuer in which Pledgor has any rights;

 

(e)          All certificates evidencing the Pledged Interests of Pledgor have
been delivered to Purchaser;

 

(f)          Pledgor has good and marketable title to the Collateral. Pledgor is
the sole owner of all of the Collateral, free and clear of all security
interests, pledges, voting trusts, agreements, liens, claims and encumbrances
whatsoever, other than the security interests, assignments and liens granted
under this Agreement and other than Permitted Encumbrances (as defined in the
Note Purchase Agreement);

 

(g)          Pledgor has not heretofore transferred, pledged, assigned or
otherwise encumbered any of its rights in or to the Collateral, other than
pursuant to Permitted Encumbrances (as defined in the Note Purchase Agreement);

 

(h)          Other than a requirement of consent of other members contained in
the operating agreements governing the Ownership Interests (which such consent
has been obtained), Pledgor is not prohibited under any agreement with any other
person or entity, or under any judgment or decree, from the execution and
delivery of this Agreement or the performance or discharge of the obligations,
duties, covenants, agreements, and liabilities contained in this Agreement;

 

(i)          No action has been brought or threatened that might prohibit or
interfere with the execution and delivery of this Agreement or the performance
or discharge of the obligations, duties, covenants, agreements, and liabilities
contained in this Agreement;

 

(j)          Pledgor has full power and authority to execute and deliver this
Agreement, and the execution and delivery of this Agreement do not conflict with
any agreement to which Pledgor is a party or any law, order, ordinance, rule, or
regulation to which Pledgor is subject or by which it is bound and do not
constitute a default under any agreement or instrument binding upon Pledgor; and

 

(k)          This Agreement has been properly executed and delivered and
constitutes the valid and legally binding obligation of Pledgor and is fully
enforceable against Pledgor in accordance with its terms, except as the
enforceability hereof may be limited by bankruptcy, insolvency or other similar
laws relating to the enforcement of creditors’ rights generally and by general
equitable principles.

 

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5.           Covenants of Pledgor. Pledgor hereby covenants and agrees as
follows:

 

(a)          To do or cause to be done all things necessary to preserve and to
keep in full force and effect its interests in the Collateral, and to defend, at
its sole expense, the title to the Collateral and any part of the Collateral;

 

(b)          To cooperate fully with Purchaser’s efforts to preserve the
Collateral and to take such actions to preserve the Collateral as Purchaser may
in good faith direct;

 

(c)          To cause Issuer to maintain proper books of record and account in
which full, true and correct entries are made of all dealings and transactions
in relation to the Collateral;

 

(d)          To deliver and deposit with the Purchaser immediately upon the
execution and delivery of this Agreement in pledge, all of such Pledgor’s
certificates, instruments or other documents comprising or evidencing the
Ownership Interests or other Collateral, and to execute and deliver to Purchaser
one or more transfer powers, substantially in the form of Schedule III attached
hereto or otherwise in form and content satisfactory to Purchaser, pursuant to
which Pledgor assigns, in blank, all Ownership Interests and other Collateral
(the “Transfer Powers”), which such Transfer Powers shall be held by Purchaser
as part of the Collateral.

 

(e)          To deliver immediately to Purchaser any certificates that may be
issued following the date of this Agreement representing the Ownership Interests
or other Collateral, and to execute and deliver to Purchaser one or more
Transfer Powers, which such Transfer Powers shall be held by Purchaser as part
of the Collateral;

 

(f)          To execute and deliver to Purchaser such financing statements as
Purchaser may request with respect to the Ownership Interests, and to take such
other steps as Purchaser may from time to time reasonably request to perfect
Purchaser’s security interest in the Ownership Interests under applicable law;

 

(g)          Not to sell, discount, allow credits or allowances, assign, extend
the time for payment on, convey, lease, assign, transfer or otherwise dispose of
the Collateral or any part of the Collateral, except for Permitted Encumbrances
(as defined in the Note Purchase Agreement);

 

(h)          After an Event of Default under the Financing Documents (including
but not limited to this Agreement), not to receive any dividend or distribution
or other benefit with respect to Issuer, and not to vote, consent, waive or
ratify any action taken, that would in any such case violate or be inconsistent
with any of the terms and provisions of this Agreement, or any of the Financing
Documents or that would materially impair the position or interest of Purchaser
in the Collateral or dilute the Ownership Interests pledged to Purchaser under
this Agreement;

 

(i)          Not to sell or otherwise dispose of, or create, incur, assume or
suffer to exist any lien upon any of the Collateral, other than liens in favor
of Purchaser, except for other Permitted Encumbrances (as defined in the Note
Purchase Agreement);

 

(j)          That Pledgor will, upon obtaining ownership of any other Ownership
Interests otherwise required to be pledged to Purchaser, pursuant to any of the
Financing Documents, which Ownership Interests are not already Pledged
Interests, within ten (10) Business Days deliver to Purchaser a Pledge
Amendment, duly executed by Pledgor, in substantially the form of Schedule IV
hereto (a “Pledge Amendment”) in respect of any such additional Ownership
Interests pursuant to which Pledgor shall pledge to Purchaser all of such
additional Ownership Interests. Prior to the delivery thereof to Purchaser, all
such additional Ownership Interests shall be held by Pledgor separate and apart
from its other property and in express trust for Purchaser;

 

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(k)          That Pledgor consents to the admission of Purchaser (and its
assigns or designee) as a member, partner or stockholder of Issuer upon
Purchaser’s acquisition of any of the Ownership Interests; and

 

6.           Rights of Purchaser. Purchaser may from time to time and at its
option (a) require Pledgor to, and Pledgor shall, periodically deliver to
Purchaser records and schedules, which show the status of the Collateral and
such other matters which affect the Collateral; (b) verify the Collateral and
inspect the books and records of Issuer and make copies of or extracts from the
books and records; and (c) notify any prospective buyers or transferees of the
Collateral of Purchaser’s interest in the Collateral. Pledgor agrees that
Purhcaser may at any time take such steps as Purchaser deems reasonably
necessary to protect Purchaser’s interest in and to preserve the Collateral.
Pledgor hereby consents and agrees that Purchaser may at any time or from time
to time pursuant to the Note Purchase Agreement (a) extend or change the time of
payment and/or the manner, place or terms of payment of any and all Obligations,
(b) supplement, amend, restate, supersede, or replace the Note Purchase
Agreement or any other Financing Documents, (c) renew, extend, modify, increase
or decrease loans and extensions of credit under the Note Purchase Agreement,
(d) modify the terms and conditions under which loans and extensions of credit
may be made under the Note Purchase Agreement, (e) settle, compromise or grant
releases for any Obligations and/or any person or persons liable for payment of
any Obligations, (f) exchange, release, surrender, sell, subordinate or
compromise any collateral of any party now or hereafter securing any of the
Obligations and (g) apply any and all payments received from any source by
Purchaser at any time against the Obligations in any order as Purchaser may
determine pursuant to the terms of the Note Purchase Agreement; all of the
foregoing in such manner and upon such terms as Purchaser may determine and
without notice to or further consent from Pledgor and without impairing or
modifying the terms and conditions of this Agreement which shall remain in full
force and effect.

 

This Agreement shall remain in full force and effect and shall not be limited,
impaired or otherwise affected in any way by reason of (i) any delay in making
demand on Pledgor for or delay in enforcing or failure to enforce, performance
or payment of any Obligations, (ii) any failure, neglect or omission on
Purchaser’s part to perfect any lien upon, protect, exercise rights against, or
realize on, any property of Pledgor or any other party securing the Obligations,
(iii) any failure to obtain, retain or preserve, or the lack of prior
enforcement of, any rights against any person or persons or in any property,
(iv) the invalidity or unenforceability of any Obligations or rights in any
Collateral under the Note Purchase Agreement, (v) the existence or nonexistence
of any defenses which may be available to Pledgor with respect to the
Obligations, or (vi) the commencement of any bankruptcy, reorganization;
liquidation, dissolution or receivership proceeding or case filed by or against
Pledgor or any Company.

 

7.           Events of Default. The occurrence of any “Event of Default,” as
defined in the Note Purchase Agreement, shall constitute an event of default (an
“Event of Default”) under this Agreement.

 

8.           Rights of Purchaser Following Event of Default. Upon the occurrence
of an Event of Default under this Agreement (and in addition to all of its other
rights, powers and remedies under this Agreement and the Note Purchase
Agreement), Purchaser may, at its option, without notice to Pledgor or any other
party, do any one or more of the following:

 

(a)          Declare any unpaid balance of the Obligations to be immediately due
and payable (the occurrence or nonoccurrence of an Event of Default shall in no
manner impair the ability of Purchaser to demand payment of any portion of the
Obligations that is payable upon demand);

 

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(b)          Proceed to perform or discharge any and all of Pledgor’s
obligations, duties, responsibilities, or liabilities and exercise any and all
of its rights in connection with the Collateral for such period of time as
Purchaser may deem appropriate, with or without the bringing of any legal action
in or the appointment of any receiver by any court;

 

(c)          Do all other acts which Purchaser may deem necessary or proper to
protect Purchaser’s security interest in the Collateral and carry out the terms
of this Agreement;

 

(d)          Exercise all voting and management rights of Pledgor as to Issuer
or otherwise pertaining to the Collateral, and Pledgor, forthwith upon the
request of Purchaser, shall use its best efforts to secure, and cooperate with
the efforts of Purchaser to secure (if not already secured by Purchaser), all
the benefits of such voting and management rights.

 

(e)          Sell the Collateral in any manner permitted by the UCC (as defined
in the Note Purchase Agreement); and upon any such sale of the Collateral,
Purchaser may (i) bid for and purchase the Collateral and apply the expenses of
such sale (including, without limitation, attorneys’ fees) as a credit against
the purchase price, or (ii) apply the proceeds of any sale or sales to other
persons or entities, in whatever order Purchaser in its sole discretion may
decide, to the expenses of such sale (including, without limitation, attorneys’
fees), to the Obligations, and the remainder, if any, shall be paid to Pledgor
or to such other person or entity legally entitled to payment of such remainder;
and

 

(f)          Proceed by suit or suits in law or in equity or by any other
appropriate proceeding or remedy to enforce the performance of any term,
covenant, condition, or agreement contained in this Agreement, and institution
of such a suit or suits shall not abrogate the rights of Purchaser to pursue any
other remedies granted in this Agreement or to pursue any other remedy available
to Purchaser either at law or in equity.

 

Purchaser shall have all of the rights and remedies of a secured party under the
UCC and other applicable laws. All costs and expenses, including reasonable
attorneys’ fees and expenses, incurred or paid by Purchaser in exercising or
protecting any interest, right, power or remedy conferred by this Agreement,
shall bear interest at a per annum rate of interest equal to the then highest
rate of interest charged on any of the Obligations from the date of payment
until repaid in full and shall, along with the interest thereon, constitute and
become a part of the Obligations secured by this Agreement.

 

Pledgor hereby constitutes Purchaser as the attorney-in-fact of Pledgor after
the occurrence and during the continuance an Event of Default under the
Financing Documents (including but not limited to this Agreement) to take such
actions and execute such documents as Purchaser may deem appropriate in the
exercise of the rights and powers granted to Purchaser in this Agreement,
including, but not limited to, filling-in blanks in the Transfer Power to cause
a transfer of the Ownership Interests and other Collateral pursuant to a sale of
the Collateral. The power of attorney granted hereby shall be irrevocable and
coupled with an interest and shall terminate only upon the payment in full of
the Obligations. Pledgor shall indemnify and hold Purchaser harmless for all
losses, costs, damages, fees, and expenses suffered or incurred in connection
with the exercise of this power of attorney and shall release Purchaser from any
and all liability arising in connection with the exercise of this power of
attorney (other than any such losses, costs, etc. to the extent solely caused by
the Purchaser’s gross negligence or willful misconduct).

 

9.           Performance by Purchaser. If Pledgor shall fail to perform, observe
or comply with any of the conditions, terms, or covenants contained in this
Agreement or any of the other Financing Documents, Purchaser, without notice to
or demand upon Pledgor and without waiving or releasing any of the Obligations
or any Event of Default, may (but shall be under no obligation to) at any time
thereafter perform such conditions, terms or covenants for the account and at
the expense of Pledgor, and may enter upon the premises of Pledgor for that
purpose and take all such action on the premises as Purchaser may consider
necessary or appropriate for such purpose. All sums paid or advanced by
Purchaser in connection with the foregoing and all costs and expenses
(including, without limitation, reasonable attorneys’ fees and expenses)
incurred in connection with the foregoing, together with interest thereon at a
per annum rate of interest equal to the then highest rate of interest charged on
the principal of any of the Obligations, from the date of payment until repaid
in full, shall be paid by Pledgor to Purchaser on demand and shall constitute
and become a part of the Obligations secured by this Agreement.

 

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10.         Indemnification. Purchaser shall not in any way be responsible for
the performance or discharge of, and Purchaser does not hereby undertake to
perform or discharge of, any obligation, duty, responsibility, or liability of
Pledgor in connection with the Collateral or otherwise. Pledgor hereby agrees to
indemnify Purchaser and hold Purchaser harmless from and against all losses,
liabilities, damages, claims, or demands suffered or incurred by reason of this
Agreement or by reason of any alleged responsibilities or undertakings on the
part of Purchaser to perform or discharge any obligations, duties,
responsibilities, or liabilities of Pledgor in connection with the Collateral or
otherwise; provided, however, that the foregoing indemnity and agreement to hold
harmless shall not apply to losses, liabilities, damages, claims, or demands
suffered or incurred by reason of Purchaser’s own gross negligence or willful
misconduct. Purchaser shall have no duty to collect any amounts due or to become
due in connection with the Collateral or enforce or preserve Pledgor’s rights
under this Agreement.

 

11.         Termination. Upon payment in full of the Obligations, and
termination of any further obligation of Purchaser to extend any credit to
Companies under the Financing Documents, this Agreement shall terminate and
Purchaser shall promptly execute appropriate documents to evidence such
termination.

 

12.         Release. Without prejudice to any of Purchaser’s rights under this
Agreement, Purchaser may take or release other security for the payment or
performance of the Obligations, may release any party primarily or secondarily
liable for the Obligations, and may apply any other security held by Purchaser
to the satisfaction of the Obligations.

 

13.         Pledgor’s Liability Absolute. The liability of Pledgor under this
Agreement shall be direct and immediate and not conditional or contingent upon
the pursuit of any remedies against Pledgor or any other person, nor against
other securities or liens available to Purchaser or Purchaser’s respective
successors, assigns, or agents. Pledgor waives any right to require that resort
be had to any security or to any balance of any deposit account or credit on the
books of Purchaser in favor of any other person.

 

14.         Preservation of Collateral. Purchaser shall be deemed to have
exercised reasonable care in the custody and preservation of the Collateral and
in preserving rights under this Agreement if Purchaser takes action for those
purposes as Pledgor may reasonably request in writing, provided, however, that
failure to comply with any such request shall not, in and of itself, be deemed a
failure to exercise reasonable care, and no failure by Purchaser to preserve or
protect any rights with respect to the Collateral or to do any act with respect
to the preservation of the Collateral not so requested by Pledgor shall be
deemed a failure to exercise reasonable care in the custody or preservation of
the Collateral.

 

15.         Private Sale. Pledgor recognizes that Purchaser may be unable to
effect a public sale of the Collateral by reason of certain provisions contained
in the federal Securities Act of 1933, as amended, and applicable state
securities laws and, under the circumstances then existing, may reasonably
resort to a private sale to a restricted group of purchasers who will be obliged
to agree, among other things, to acquire the Collateral for their own account
for investment and not with a view to the distribution or resale of the
Collateral. Pledgor agrees that a private sale so made may be at a price and on
other terms less favorable to the seller than if the Collateral were sold at
public sale and that Purchaser has no obligation to delay sale of the Collateral
for the period of time necessary to permit Pledgor, even if Pledgor would agree
to register or qualify the Collateral for public sale under the Securities Act
of 1933, as amended, and applicable state securities laws. Pledgor agrees that a
private sale made under the foregoing circumstances and otherwise in a
commercially reasonable manner shall be deemed to have been made in a
commercially reasonable manner under the UCC.

 

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16.         General.

 

(a)          Final Agreement and Amendments. This Agreement, together with the
other Financing Documents, constitutes the final and entire agreement and
understanding of the parties and any term, condition, covenant or agreement not
contained herein or therein is not a part of the agreement and understanding of
the parties. Neither this Agreement, nor any term, condition, covenant or
agreement hereof may be changed, waived, discharged or terminated except by an
instrument in writing signed by the party against whom enforcement of the
change, waiver, discharge or termination is sought.

 

(b)          Waiver. No party hereto shall be deemed to have waived the exercise
of any right which it holds hereunder unless such waiver is made expressly and
in writing (and, without limiting the generality of the foregoing, no delay or
omission by any party hereto in exercising any such right shall be deemed a
waiver of its future exercise). No such waiver made in any instance involving
the exercise of any such right shall be deemed a waiver as to any other such
instance, or any other such right. No single or partial exercise of any power or
right shall preclude other or further exercise of the power or right or the
exercise of any other power or right. No course of dealing between the parties
hereto shall be construed as an amendment to this Agreement or a waiver of any
provision of this Agreement. No notice to or demand on Pledgor in any case shall
thereby entitle Pledgor to any other or further notice or demand in the same,
similar or other circumstances.

 

(c)          Headings. The headings of the Sections, subsections, paragraphs and
subparagraphs hereof are provided herein for and only for convenience of
reference, and shall not be considered in construing their contents.

 

(d)          Construction. As used herein, all references made (i) in the
neuter, masculine or feminine gender shall be deemed to have been made in all
such genders, (ii) in the singular or plural number shall be deemed to have been
made, respectively, in the plural or singular number as well, and (iii) to any
Section, subsection, paragraph or subparagraph shall, unless therein expressly
indicated to the contrary, be deemed to have been made to such Section,
subsection, paragraph or subparagraph of this Agreement. The Recitals are
incorporated herein as a substantive part of this Agreement and the parties
hereto acknowledge that such Recitals are true and correct.

 

(e)          Binding Effect. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective heirs, personal
representatives, successors and assigns hereunder. In the event of any
assignment or transfer by Purchaser of any of the Pledgor’s obligations under
the Financing Documents or the collateral therefor, Purchaser thereafter shall
be fully discharged from any responsibility with respect to such collateral so
assigned or transferred, but Purchaser shall retain all rights and powers given
by this Agreement with respect to any of the Pledgor’s obligations under the
Financing Documents or collateral not so assigned or transferred. Pledgor shall
have no right to assign or delegate its rights or obligations hereunder.

 

(f)          Severability. If any term, provision, covenant or condition of this
Agreement or the application of such term, provision, covenant or condition to
any party or circumstance shall be found by a court of competent jurisdiction to
be, to any extent, invalid or unenforceable, the remainder of this Agreement and
the application of such term, provision, covenant, or condition to parties or
circumstances other than those as to which it is held invalid or unenforceable,
shall not be affected thereby, and each term, provision, covenant or condition
shall be valid and enforced to the fullest extent permitted by law.

 

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(g)          Notices. All notices required or permitted hereunder shall be given
and shall become effective as provided in Section 12.3 of the Note Purchase
Agreement. All notices to Pledgor shall be addressed in accordance with the
information provided on the signature page hereto.

 

(h)          Remedies Cumulative. Each right, power and remedy of Purchaser as
provided for in this Agreement, or in any of the other Financing Documents or
now or hereafter existing by law, shall be cumulative and concurrent and shall
be in addition to every other right, power or remedy provided for in this
Agreement, or in any of the other Financing Documents now or hereafter existing
by law, and the exercise or beginning of the exercise by Purchaser of any one or
more of such rights, powers or remedies shall not preclude the later exercise by
Purchaser of any other rights, powers or remedies.

 

(i)          Time of the Essence; Survival; Joint and Several Liability. Time is
of the essence of this Agreement and each and every term, covenant and condition
contained herein. All covenants, agreements, representations and warranties made
in this Agreement or in any of the other Financing Documents shall continue in
full force and effect so long as any of the obligations of any party under the
Financing Documents (other than Purchaser) remain outstanding. Each person or
entity constituting Pledgor shall be jointly and severally liable for all of the
obligations of Pledgor under this Agreement.

 

(j)          Further Assurances. Pledgor hereby agrees that at any time and from
time to time, at the expense of Pledgor, Pledgor will promptly execute and
deliver all further instruments and documents, and take all further action, that
may be necessary or that Purchaser may reasonably request, in order to perfect
and protect any security interest granted or purported to be granted hereby, or
to enable Purchaser or any of its agents to exercise and enforce its rights and
remedies under this Agreement with respect to any portion of such collateral.

 

(k)          Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be considered to be an original, but all of
which shall constitute one in the same instrument. As used in this Agreement,
the term “this Agreement” shall include all attachments, exhibits, schedules,
riders and addenda.

 

(l)          Costs. Pledgor shall be responsible for the payment of any and all
reasonable fees, costs and expenses which Purchaser may incur by reason of this
Agreement, including, but not limited to, the following: (i) any taxes of any
kind related to any property or interests assigned or pledged hereunder;
(ii) expenses incurred in filing public notices relating to any property or
interests assigned or pledged hereunder; and (iii) any and all costs, expenses
and fees (including, without limitation, reasonable attorneys’ fees and expenses
and court costs and fees), whether or not litigation is commenced, incurred by
Purchaser in protecting, insuring, maintaining, preserving, attaching,
perfecting, enforcing, collecting or foreclosing upon any lien, security
interest, right or privilege granted to Purchaser or any obligation of Pledgor
under this Agreement, whether through judicial proceedings or otherwise, or in
defending or prosecuting any actions or proceedings arising out of or related to
this Agreement or any property or interests assigned or pledged hereunder.

 

(m)         No Defenses. Pledgor’s obligations under this Agreement shall not be
subject to any set-off, counterclaim or defense to payment that Pledgor now has
or may have in the future.

 

9

 

 

(n)          Cooperation in Discovery and Litigation. In any litigation, trial,
arbitration or other dispute resolution proceeding relating to this Agreement,
all directors, officers, employees and agents of Pledgor or of its affiliates
shall be deemed to be employees or managing agents of Pledgor for purposes of
all applicable law or court rules regarding the production of witnesses by
notice for testimony (whether in a deposition, at trial or otherwise). Pledgor
agrees that Purchaser’s counsel in any such dispute resolution proceeding may
examine any of these individuals as if under cross-examination and that any
discovery deposition of any of them may be used in that proceeding as if it were
an evidence deposition. Pledgor in any event will use all commercially
reasonable efforts to produce in any such dispute resolution proceeding, at the
time and in the manner requested by Purchaser, all persons and entities,
documents (whether in tangible, electronic or other form) or other things under
its control and relating to the dispute in any jurisdiction that recognizes that
(or any similar) distinction.

 

(o)          CHOICE OF LAW; CONSENT TO JURISDICTION. THIS AGREEMENT SHALL BE
GOVERNED BY THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAWS. WITH RESPECT TO ANY SUIT, ACTION OR PROCEEDINGS RELATING TO
THIS AGREEMENT (EACH, A “PROCEEDING”), PLEDGOR HEREBY (A) SUBMITS TO THE
JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED WITHIN NEW YORK AND
IRREVOCABLY AGREES THAT, SUBJECT TO PURCHASER’S ELECTION, ALL ACTIONS OR
PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE OTHER FINANCING
DOCUMENTS SHALL BE LITIGATED IN SUCH COURTS AND (B) WAIVES ANY OBJECTION WHICH
IT MAY HAVE AT ANY TIME TO THE LAYING OF VENUE OF ANY PROCEEDING BROUGHT IN ANY
SUCH COURT, WAIVES ANY CLAIM THAT ANY PROCEEDING HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM AND FURTHER WAIVES THE RIGHT TO OBJECT, WITH RESPECT TO SUCH
PROCEEDING, THAT SUCH COURT DOES NOT HAVE JURISDICTION OVER SUCH PARTY. NOTHING
IN THIS AGREEMENT SHALL PRECLUDE PURCHASER FROM BRINGING A PROCEEDING IN ANY
OTHER JURISDICTION NOR WILL THE BRINGING OF A PROCEEDING IN ANY ONE OR MORE
JURISDICTIONS PRECLUDE THE BRINGING OF A PROCEEDING IN ANY OTHER JURISDICTION.
PLEDGOR HEREBY WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS AND FURTHER AGREES
AND CONSENTS THAT, IN ADDITION TO ANY METHODS OF SERVICE OF PROCESS PROVIDED FOR
UNDER APPLICABLE LAW, ALL SERVICE OR PROCESS IN ANY PROCEEDING IN ANY NEW YORK
STATE OR UNITED STATES COURT SITTING IN THE STATE OF NEW YORK MAY BE MADE BY
CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED, DIRECTED TO PLEDGOR AT
THE ADDRESS INDICATED HEREIN, AND SERVICE SO MADE SHALL BE COMPLETE UPON
RECEIPT; EXCEPT THAT IF PLEDGOR SHALL REFUSE TO ACCEPT DELIVERY, SERVICE SHALL
BE DEEMED COMPLETE FIVE (5) DAYS AFTER THE SAME SHALL HAVE BEEN SO MAILED.

 

17.         WAIVER OF JURY TRIAL. PLEDGOR HEREBY (A) COVENANTS AND AGREES NOT TO
ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY A JURY, AND (B) WAIVES
ANY RIGHT TO TRIAL BY JURY FULLY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR
HEREAFTER EXIST. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS SEPARATELY GIVEN,
KNOWINGLY AND VOLUNTARILY, BY PLEDGOR, AND THIS WAIVER IS INTENDED TO ENCOMPASS
INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A JURY TRIAL
WOULD OTHERWISE ACCRUE. PURCHASER IS HEREBY AUTHORIZED AND REQUESTED TO SUBMIT
THIS AGREEMENT TO ANY COURT HAVING JURISDICTION OVER THE SUBJECT MATTER AND THE
PARTIES HERETO, SO AS TO SERVE AS CONCLUSIVE EVIDENCE OF PLEDGOR’S WAIVER OF THE
RIGHT TO JURY TRIAL. FURTHER, PLEDGOR HEREBY CERTIFIES THAT NO REPRESENTATIVE OR
AGENT OF PURCHASER (INCLUDING THEIR RESPECTIVE COUNSEL) HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, TO PLEDGOR THAT PURCHASER WILL NOT SEEK TO ENFORCE THIS
WAIVER OF RIGHT TO JURY TRIAL PROVISION.

 

10

 

  

18.         Notwithstanding anything in this Agreement to the contrary, so long
as the Subordination Agreement dated January 22, 2015 (as hereafter amended,
modified or restated, the “Subordination Agreement”) by and between MidCap
Financial Trust (“MidCap”) and Purchaser remains in effect, Pledgor and Issuer
shall be deemed to have complied fully with any and all obligations imposed
under this Agreement for the delivery of physical possession of, or the making
of payments or remittance of funds to, Purchaser with respect to any Collateral,
any proceeds thereof or payments thereunder, any certificates, stock powers,
instruments or other documents evidencing the Collateral or necessary for the
perfection of a security interest therein, or any other tangible or intangible
personal property (any of the foregoing deliveries, payments or remittances
referred to as a “Delivery,” and collectively as “Deliveries”), to the extent
that any such Delivery shall have been made to MidCap in its capacity as “Senior
Lender” (as defined in the Subordination Agreement). The Deliveries subject to
the provisions of this Section include (without limitation) the deliveries and
remittances required pursuant to Section 2, Section 3, Section 5(d) and Section
5(e) of this Agreement; provided, however that the term “Deliveries” shall not
be deemed to include the delivery of financing statements as described in
Section 5(f) or the delivery of Pledge Amendments as described in Section 5(j).

 

[Signature Pages Follow]

 

11

 

  

IN WITNESS WHEREOF, intending to be legally bound, and intending that this
agreement constitute an agreement executed under seal, each of the parties have
caused this Agreement to be executed under seal the day and year first above
mentioned.

 

PLEDGOR:

TWINLAB HOLDINGS, INC.

 

By: /s/ Thomas A. Tolworthy                     (SEAL)
Name: Thomas A. Tolworthy
Title: Chief Executive Officer and President

 

 

Pledgor Contact Information:

 

Twinlab Holdings, Inc.
632 Broadway, Suite 201
New York, NY 10012
Attention: Thomas A. Tolworthy, Chief Executive Officer and President

 

[SIGNATURE PAGE TO PENTA/TWINLAB HOLDINGS PLEDGE AGREEMENT]

 

 

 

 

PURCHASER:

PENTA MEZZANINE SBIC FUND I, L.P.,

a Delaware limited partnership

 

By:   Penta Mezzanine SBIC Fund I GP, LLC, its General Partner

 

By: /s/ Richard E. Mount                             (SEAL)

Name: Richard E. Mount

Title: Authorized Member

 

[SIGNATURE PAGE TO PENTA/TWINLAB HOLDINGS PLEDGE AGREEMENT]

 

 

 

 

SCHEDULE I

Pledged Interests

 

Name of Pledgor: Twinlab Holdings, Inc.     Issuer Name: Twinlab Corporation    
Type of Type of Entity of Issuer: Corporation     Jurisdiction of Organization
of Issuer: Delaware     Organizational ID No. of Issuer: DE3698995     Tax ID
No. of Issuer: [  ]     Class of Interests in Issuer: Common Stock     Equity
Interest Certificate No.: 2     Number of Units: 100     Percentage of
Outstanding Equity Interest: 100%

 

 

 

 

Name of Pledgor: Twinlab Holdings, Inc.     Issuer Name: ISI Brands Inc.    
Type of Type of Entity of Issuer: Corporation     Jurisdiction of Organization
of Issuer: Michigan     Organizational ID No. of Issuer: MI23407C     Tax ID No.
of Issuer: [  ]     Class of Interests in Issuer: Common Stock     Equity
Interest Certificate No.: 1     Number of Units: 1000     Percentage of
Outstanding Equity Interest: 100%

 

 

 

 

SCHEDULE II

Pledgor Information

 

Name of Pledgor: Twinlab Holdings, Inc.     Type of Entity of Pledgor:
Corporation     Jurisdiction of Organization of Pledgor: Michigan    
Organizational ID No. of Pledgor: MI03048C     Tax ID No. of Pledgor: [  ]

 

 

 

 

SCHEDULE III

STOCK POWER

 

FOR VALUE RECEIVED, the undersigned, _________________________, a __________
corporation (“Pledgor”), does hereby sell, assign and transfer to
__________________________________* all of its Equity Interests (as hereinafter
defined) represented by Certificate No(s). __________* in _____________________,
a ______________________ corporation (“Issuer”), standing in the name of Pledgor
on the books of said Issuer. Pledgor does hereby irrevocably constitute and
appoint ________________________________*, as attorney, to transfer the Equity
Interest in said Issuer with full power of substitution in the premises. The
term “Equity Interest” means any security, share, unit, partnership interest,
membership interest, ownership interest, equity interest, option, warrant,
participation, “equity security” (as such term is defined in Rule 3(a)11 1 of
the General Rules and Regulations of the Securities Exchange Act of 1934, as
amended, or any similar statute then in effect, promulgated by the Securities
and Exchange Commission and any successor thereto) or analogous interest
(regardless of how designated) of or in a corporation, partnership, limited
partnership, limited liability company, limited liability partnership, business
trust or other entity, of whatever nature, type, series or class, whether voting
or nonvoting, certificated or uncertificated, common or preferred, and all
rights and privileges incident thereto.

  

Dated:______________________________

PLEDGOR:

 

[NAME OF PLEDGOR]

 

By:________________________________(SEAL)

Name:____________________________________

Its: ______________________________________ 

 

*To Remain Blank - Not Completed at Closing

 

[SIGNATURE PAGE TO PENTA/TWINLAB HOLDINGS PLEDGE AGREEMENT]

 

 

 

 

SCHEDULE IV

PLEDGE AMENDMENT

 

This Pledge Amendment, dated ________________, 20___ is delivered pursuant to
Section 5(i) of the Pledge Agreement referred to below. All defined terms herein
shall have the meanings ascribed thereto or incorporated by reference in the
Pledge Agreement. The undersigned hereby certifies that the representations and
warranties in Section 4 of the Pledge Agreement are and continue to be true and
correct, both as to the Collateral pledged prior to this Pledge Amendment and as
to the Collateral pledged pursuant to this Pledge Amendment. The undersigned
further agrees that this Pledge Amendment may be attached to that certain Pledge
Agreement, dated _________ ____, 201__, between undersigned, as Pledgor, and
Penta Mezzanine SBIC Fund I, L.P., as Purchaser (as may be amended, restated,
supplemented or otherwise modified from time to time, the “Pledge Agreement”),
and that the Ownership Interests listed on this Pledge Amendment shall be and
become a part of the Pledged Interests and Pledged Collateral referred to in
said Pledge Agreement and shall secure all Obligations referred to and in
accordance with said Pledge Agreement. Schedule I of the Pledge Agreement shall
be deemed amended to include the Ownership Interests listed on this Pledge
Amendment. The undersigned acknowledge that any Ownership Interests issued by
Issuer owned by Pledgor not included in the Pledged Collateral at the discretion
of Purchaser may not otherwise be pledged by Pledgor to any other Person or
otherwise used as security for any obligations other than the Obligations.

 

 

PLEDGOR:

 

[NAME OF PLEDGOR]

 

By:________________________________(SEAL)

Name:____________________________________

Its: ______________________________________ 

 

[SIGNATURE PAGE TO PENTA/TWINLAB HOLDINGS PLEDGE AGREEMENT]

 

 

 

  

SCHEDULE IV- continued

 

 Name and
Address of Pledgor

  Issuer   Class of
Equity Interest   Certificate
Number(s)   Number of
Shares                                                      

  

    Initial
Principal Amount   Issue Date   Maturity Date   Interest Rate