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 30th 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]