TURNING POINT BRANDS, INC. (Exact Name of Registrant As Specified in Its Charter)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2016

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from______to ______

Commission file number: 001-37763 TURNING POINT BRANDS, INC. (Exact name of registrant as specified in its charter)

Delaware 20-0709285 (State or other jurisdiction of Incorporation or organization) (I.R.S. Employer Identification No.)

5201 Interchange Way, Louisville, KY 40229 (Address of principal executive offices) (Zip Code)

(502) 778-4421 (Registrant’s telephone number, including area code)

Former name, former address and former fiscal year, if changed since last report: not applicable

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☐ No ☑

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer ☑ (Do not check if a smaller reporting company) Smaller reporting company ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

At June 14, 2016 , there were 16,927,737 shares outstanding of the registrant’s voting common stock, par value $0.01 per share and 938,857 shares outstanding of the registrant’s non-voting common stock, par value $0.01 per share.

TURNING POINT BRANDS, INC. TABLE OF CONTENTS

Page No. PART I FINANCIAL INFORMATION

ITEM 1 Financial Statements (Unaudited) 3

Consolidated Balance Sheet as of March 31, 2016 and December 31, 2015 3

Consolidated Statements of Income for the three months ended March 31, 2016 and 2015 4

Consolidated Statements of Comprehensive Income for the three months ended March 31, 2016 and 2015 5

Consolidated Statements of Cash Flows for the three months ended March 31, 2016 and 2015 6

Notes of Consolidated Financial Statements 7

ITEM 2 Management’s Discussion and Analysis of Financial Condition and Results of Operations 28

ITEM 3 Quantitative and Qualitative Disclosures about Market Risk 40

ITEM 4 Controls and Procedures 40

PART II OTHER INFORMATION

ITEM 1 Legal Proceedings 41

ITEM 1A Risk Factors 41

ITEM 2 Unregistered Sales of Equity Securities and Use of Proceeds 41

ITEM 3 Defaults Upon Senior Securities 41

ITEM 4 Mine Safety Disclosures 41

ITEM 5 Other Information 41

ITEM 6 Exhibits 41

Signature Signature 42

Index to Exhibits 43

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PART I FINANCIAL INFORMATION

Item 1. Financial Statements

Turning Point Brands, Inc. Consolidated Balance Sheets (dollars in thousands except share data) (unaudited)

March 31, December 31, ASSETS 2016 2015 Current assets: Cash $ 2,940 $ 4,835 Accounts receivable, net of allowances of $137 in 2016 and 2015 2,649 3,940 Inventories 47,976 44,339 Other current assets 9,383 10,838 Total current assets 62,948 63,952 Property, plant and equipment, net 5,764 5,603 Deferred financing costs, net 191 208 Goodwill 128,697 128,697 Other intangible assets, net 8,553 8,553 Master Settlement Agreement - escrow deposits 31,856 31,842 Other assets 3,530 3,608 Total assets $ 241,539 $ 242,463

LIABILITIES AND STOCKHOLDERS' DEFICIT Current liabilities: Accounts payable $ 4,895 $ 4,087 Accrued expenses 9,743 11,053 Accrued interest expense 866 4,329 First lien term loan 1,650 1,650 Revolving credit facility 1,018 18 Total current liabilities 18,172 21,137 Notes payable and long-term debt 290,480 290,772 Deferred income taxes 7,054 7,013 Postretirement benefits 4,638 4,666 Pension benefits 428 487 Total liabilities 320,772 324,075

Commitments and contingencies

Stockholders' deficit: Preferred stock; $0.01 par value; authorized shares 40,000,000; issued and outstanding shares -0- Common stock, voting, $0.01 par value; authorized shares, 190,000,000; issued shares, 2016 and 2015 7,312,642; outstanding shares, 2016 and 2015 6,259,480, shares held in treasury, 2016 and 2015 1,053,162 63 63 Common stock, nonvoting, $0.01 par value; authorized shares, 10,000,000; issued and outstanding shares, 2016 and 2015 938,857 9 9 Additional paid-in capital 12,650 12,628 Accumulated other comprehensive loss (3,389) (3,512) Accumulated deficit (88,566) (90,800) Total stockholders' deficit (79,233) (81,612) Total liabilities and stockholders' deficit $ 241,539 $ 242,463

The accompanying notes are an integral part of the consolidated financial statements.

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Turning Point Brands, Inc. Consolidated Statements of Income (dollars in thousands except share data) (unaudited)

Three Months Ended March 31, March 31, 2016 2015 Net sales $ 49,866 $ 51,086 Cost of sales 25,219 26,431 Gross profit 24,647 24,655 Selling, general and administrative expenses 13,738 12,671 Operating income 10,909 11,984 Interest expense and financing costs 8,462 8,482 Income before income taxes 2,447 3,502 Income tax expense 213 75 Net income $ 2,234 $ 3,427

Basic earnings per common share: Net income $ 0.31 $ 0.48 Diluted earnings per common share: Net income $ 0.27 $ 0.41 Weighted average common shares outstanding: Basic - inclusive of voting and non-voting shares 7,198,337 7,197,523 Diluted - inclusive of voting and non-voting shares 8,354,659 8,353,843

The accompanying notes are an integral part of the consolidated financial statements.

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Turning Point Brands, Inc. Consolidated Statements of Comprehensive Income (dollars in thousands except share data) (unaudited)

Three Months Ended March 31, March 31, 2016 2015 Net income $ 2,234 $ 3,427

Other comprehensive income, net of tax - Pension and postretirement Amortization of unrealized losses recorded in cost of sales 6 6 Amortization of unrealized losses recorded in selling, general and administrative expenses 117 126 123 132 Comprehensive income $ 2,357 $ 3,559

The accompanying notes are an integral part of the consolidated financial statements

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Turning Point Brands, Inc. Consolidated Statements of Cash Flows (dollars in thousands) (unaudited)

Three Months Ended March 31, March 31, 2016 2015 Cash flows from operating activities: Net income $ 2,234 $ 3,427 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation expense 293 251 Amortization of deferred financing costs 362 362 Amortization of original issue discount 259 261 Interest incurred but not paid on PIK toggle notes 2,254 1,945 Deferred income taxes 41 (35) Stock compensation expense 12 46 Member unit compensation expense 10 29 Changes in operating assets and liabilities: Accounts receivable 1,291 (1,931) Inventories (3,637) (1,742) Other current assets 1,455 1,749 Other assets 416 (12) Accounts payable 724 1,159 Accrued pension liabilities 64 42 Accrued postretirement liabilities (28) (31) Accrued expenses and other (4,773) 1,322 Net cash provided by operating activities 977 6,842

Cash flows from investing activities: Capital expenditures (454) (327) Net cash used in investing activities (454) (327)

Cash flows from financing activities: Proceeds from revolving credit facility 1,000 93 Prepaid equity issuance costs (268) - Payment of first lien term loan (3,150) (412) Proceeds from issuance of stock - 1 Net cash used in financing activities (2,418) (318)

Net increase (decrease) in cash (1,895) 6,197 Cash, beginning of period 4,835 8,467 Cash, end of period $ 2,940 $ 14,664

Supplemental schedule of noncash financing activities: Accrued expenses incurred for prepaid equity costs $ 84 $ -

The accompanying notes are an integral part of the consolidated financial statements.

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Turning Point Brands, Inc. Notes to Consolidated Financial Statements (dollars in thousands, except where designated and per share data)

Note 1. Basis of Presentation:

Turning Point Brands, Inc. (formerly known as North Atlantic Holding Company, Inc.), (the “Company”) is a holding company which owns NATC Holding Company, Inc. (“NATC Holding”) and its subsidiaries and Turning Point Brands, LLC (“TPLLC”) and its subsidiary, Intrepid Brands, LLC (“Intrepid”). Except where the context otherwise requires, references to the Company include the Company, NATC Holding and its subsidiary, North Atlantic Trading Company, Inc. (“NATC”) and its subsidiaries, National Tobacco Company, L.P. (“NTC” ), North Atlantic Operating Company, Inc. (“NAOC”), North Atlantic Cigarette Company, Inc. (“NACC”), National Tobacco Finance Corporation (“NTFC”), Fred Stoker & Sons, Inc., RBJ Sales, Inc. and Stoker, Inc. (collectively, “Stoker”) and TPLLC and Intrepid.

The accompanying interim condensed consolidated financial statements have been prepared in accordance with our accounting practices described in our audited consolidated financial statements as of and for the year ended December 31, 2015, and are unaudited. In the opinion of management, the unaudited interim condensed consolidated financial statements included herein contain all adjustments necessary to present fairly our financial position, results of operations and cash flows for the periods indicated. Such adjustments, other than nonrecurring adjustments that have been separately disclosed, are of a normal, recurring nature. The operating results for interim periods are not necessarily indicative of results to be expected for a full year of future interim periods. The unaudited interim condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and accompanying notes as of and for the year ended December 31, 2015. The accompanying interim condensed consolidated financial statements are presented in accordance with the rules and regulations of the Securities and Exchange Commission and, accordingly, do not include all the disclosures required by generally accepted accounting principles in the United States (“U.S. GAAP”) with respect to annual financial statements.

Note 2. Summary of Significant Accounting Policies:

Consolidation: The consolidated financial statements include the accounts of the Company and its subsidiaries, all of which are wholly-owned. All significant intercompany transactions have been eliminated.

Revenue Recognition: The Company recognizes revenues and the related costs upon delivery to the customer, at which time there is a transfer of title and risk of loss to the customer in accordance with the Financial Accounting Standards Board Accounting Standards Codification © (“ASC”) 605-10-S99 . The Company classifies customer rebates as sales deductions in accordance with the requirements of ASC 605-50-25.

Shipping Costs: The Company records shipping costs incurred as a component of selling, general and administrative expenses. Shipping costs incurred were approximately $1.5 million and $1.8 million for the three months ended March 31, 2016 and 2015, respectively.

Master Settlement Agreement Escrow Account: Pursuant to the Master Settlement Agreement (the “MSA”) entered into in November 1998 by most states (represented by their attorneys general acting through the National Association of Attorneys General) and subsequent states’ statutes, a “cigarette manufacturer” (which is defined to include a manufacturer of make-your-own (“MYO”) cigarette tobacco) has the option of either becoming a signatory to the MSA or opening, funding, and maintaining an escrow account to have funds available for certain potential tobacco-related liabilities, with sub-accounts on behalf of each settling state. The Company has chosen to open and fund an escrow account as its method of compliance. It is the Company’s policy to record amounts on deposit in the escrow account for prior years as a non-current asset. Each year’s annual obligation is required to be deposited in the escrow account by April 15 of the following year. In addition to the annual deposit, many states have elected to require quarterly deposits for the previous quarter’s sales. As of March 31, 2016 and December 31, 2015, NATC had on deposit approximately $31.9 million and $31.8 million, respectively.

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The following shows the amount of deposits by sales year for the MSA escrow account:

Deposits At Sales March 31, December 31, Year 2016 2015

1999 $ 211 $ 211 2000 1,017 1,017 2001 1,673 1,673 2002 2,271 2,271 2003 4,249 4,249 2004 3,715 3,715 2005 4,552 4,552 2006 3,847 3,847 2007 4,167 4,167 2008 3,364 3,364 2009 1,626 1,626 2010 406 406 2011 193 193 2012 198 198 2013 173 173 2014 142 142 2015 52 38

Total $ 31,856 $ 31,842

Recent Accounting Pronouncements Adopted:

The Company adopted ASU 2015-03, Interest – Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Cost in 2016 . This ASU requires that debt issuance costs related to a recognized debt liability be presented as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. Based on the requirements of this ASU, the Company has retrospectively applied ASU 2015-03 to the December 31, 2015 Consolidated Balance Sheet, which has resulted in $6.3 million being reclassified to direct deduction of the carrying amount of the debt.

The Company adopted ASU 2015-17, Income Taxes ( Topic 740): Balance sheet classification of deferred taxes in 2016. This ASU requires that deferred tax liabilities and assets be classified as noncurrent in a classified balance sheet. The Company has retrospectively applied ASU 2015-17 to the December 31, 2015 Consolidated Balance Sheet, which has resulted in $0.4 million of deferred tax liabilities being reclassified to a noncurrent deferred tax liability.

Subsequent Events:

The Company’s management has evaluated events and transactions that occurred from April 1, 2016 through June 14, 2016, the date these unaudited condensed consolidated financial statements were issued, for subsequent events requiring recognition or disclosure in the financial statements. See Note 16. Subsequent Events for a description of these events.

Note 3. Fair Value of Financial Instruments:

The following disclosure of the estimated fair value of financial instruments is made in accordance with the requirements of ASC 825, Financial Instruments. The estimated fair value amounts have been determined by the Company using the methods and assumptions described below. However, considerable judgment is required to interpret market data to develop estimates of fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts the Company could realize in a current market exchange. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts.

Cash and Cash Equivalents: Cash and cash equivalents are by definition short-term and the carrying amount is a reasonable estimate of fair value.

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Accounts Receivable: The fair value of accounts receivable approximates their carrying value.

Revolving Credit Facility: The fair value of the revolving credit facility approximates its carrying value.

Long-Term Debt: The fair value of the Company’s long-term debt is estimated based on the quoted market prices for the same or similar issues or on the current rates offered to the Company for debt of the same remaining maturities. As of March 31, 2016, the fair value of the PIK Toggle Notes approximates their face amounts of $62.3 million. As of March 31, 2016, the fair value of the 7% Senior Notes approximates their face amounts of $12.6 million. At December 31, 2015, the fair value of the PIK Toggle Notes approximates their face amounts of $60.1 million. At December 31, 2015, the fair value of the 7% Senior Notes approximates their face amounts of $12.6 million.

As of March 31, 2016, the fair value of the First Lien Term Loan and the Second Lien Term Loan approximate their face amounts of $148.6 million and $80.0 million, respectively. At December 31, 2015, the fair value of the First Lien Term Loan and the Second Lien Term Loan approximate their face amounts of $151.7 million and $80.0 million, respectively.

Foreign Exchange: The fair value of the foreign exchange forward contracts was based upon the quoted market price that resulted in an insignificant asset at March 31, 2016. As of March 31, 2016, the Company had two outstanding foreign exchange forward contracts for the purchase of 1.1 million Euros. The fair value of the foreign exchange forward contracts was based upon the quoted market price that resulted in an insignificant asset as of December 31, 2015. As of December 31, 2015, the Company had seven outstanding foreign exchange forward contracts for the purchase of 5.1 million Euros.

Note 4. Inventories:

Inventories are stated at the lower of cost or market. Cost is determined on the last-in, first-out (“LIFO”) method for approximately 56% of the inventories. Leaf tobacco is presented in current assets in accordance with standard industry practice, notwithstanding the fact that such tobaccos are carried longer than one year for the purpose of curing.

The components of inventories are as follows:

March 31, December 31, 2016 2015 Raw materials and work in process $ 1,932 $ 1,940 Leaf tobacco 23,547 20,839 Finished goods - smokeless products 4,763 3,615 Finished goods - smoking products 12,498 14,077 Finished goods - electronic / vaporizer products 7,436 5,939 Other 1,417 1,237 51,593 47,647 LIFO reserve (3,617) (3,308) $ 47,976 $ 44,339

The Company recorded an inventory valuation allowance of $0.3 million as of March 31, 2016 and December 31, 2015.

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Note 5. Property, Plant and Equipment:

Property, plant and equipment at March 31, 2016 and December 31, 2015 consists of:

March 31, December 31, 2016 2015 Leasehold improvements $ 2,196 $ 2,196 Machinery and equipment 9,425 8,997 Furniture and fixtures 3,147 3,121 14,768 14,314 Accumulated depreciation (9,004) (8,711) $ 5,764 $ 5,603

Note 6. Accrued Expenses:

Accrued expenses at March 31, 2016 and December 31, 2015 consist of:

March 31, December 31, 2016 2015 Accrued payroll and related items $ 4,053 $ 3,659 Customer returns and allowances 1,533 2,015 Other 4,157 5,379 $ 9,743 $ 11,053

Note 7. Notes Payable and Long-Term Debt:

Notes payable and long-term debt consists of the following in order of preference:

March 31, December 31, 2016 2015 First Lien Term Loan $ 147,475 $ 150,555 Second Lien Term Loan 78,943 78,882 PIK Toggle Notes 61,195 58,882 7% Senior Notes 10,429 10,360 298,042 298,679 Less deferred finance charges (5,912) (6,257) Less current maturities (1,650) (1,650) Total Notes Payable and Long-Term Debt $ 290,480 $ 290,772

Long-term Debt

On January 13, 2014, NATC entered into (i) a $170 million First Lien Term Loan Credit Agreement among NATC, the Company, NATC Holding, a wholly owned subsidiary of the Company to which the Company transferred its ownership of all outstanding capital stock of NATC, and Wells Fargo Bank, National Association, as administrative agent (the “First Lien Credit Agreement”), (ii) a $80 million Second Lien Term Loan Credit Agreement among NATC, the Company, NATC Holding and Wells Fargo Bank, National Association, as administrative agent (the “Second Lien Credit Agreement”), and (iii) a $40 million ABL Credit Agreement among NATC, NATC Holding and Wells Fargo Bank, National Association, as ABL Agent (the “ABL Credit Agreement”).

First Lien Credit Agreement

All of NATC’s subsidiaries, as well as the Company and NATC Holding, are guarantors under the First Lien Credit Agreement. The First Lien Credit Agreement is secured by a first priority lien on substantially all of the assets of the borrowers and the guarantors (other than TPLLC) thereunder, including a pledge of the capital stock of NATC and its subsidiaries held by NATC Holding, NATC or any guarantor (other than TPLLC), other than certain excluded assets (the “Collateral”). The loans designated as LIBOR rate loans bear interest at LIBOR Rate then in effect (but not less than 1.25%) plus 6.50% and the loans designated as base rate loans bear interest at the (i) highest of (A) the Prime Rate, (B) the Federal Funds Rate plus 0.50%, (C) LIBOR for an interest period of one month plus 1.00% and (D) 2.25% per year plus (ii) 5.50%. The weighted average interest rate at March 31, 2016 was 7.78%. The First Lien Credit Agreement matures in January 2020.

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The First Lien Credit Agreement contains customary representations and warranties, events of default, affirmative covenants and negative covenants, which impose restrictions on, among other things, the ability of NATC and its subsidiaries to make investments, pay dividends, sell assets, and incur debt and additional liens. In addition, the First Lien Credit Agreement requires NATC to maintain a total leverage ratio as follows:

Period Maximum Ratio Closing Date through March 31, 2015 6.50 to 1.00 April 1, 2015 through September 30, 2016 6.25 to 1.00 October 1, 2016 through September 30, 2017 6.00 to 1.00 October 1, 2017 through September 30, 2018 5.75 to 1.00 October 1, 2018 and thereafter 5.50 to 1.00

NATC is required to make prepayments under the First Lien Credit Agreement upon the occurrence of certain events, including sales of certain assets, casualty events and the incurrence of additional indebtedness, subject to certain exceptions and reinvestment rights. NATC made a prepayment of approximately $2.7 million during the first quarter of 2016.

Second Lien Credit Agreement

The Second Lien Credit Agreement has the benefit of a second priority security interest in the Collateral and is guaranteed by the same entities as the First Lien Credit Agreement. The Second Lien Credit Agreement, contains substantially similar representations and warranties, events of default and covenants as the First Lien Credit Agreement; provided, however, that the total leverage ratio required to be maintained by NATC under the Second Lien Credit Agreement is as follows:

Period Maximum Ratio Closing Date through March 31, 2015 6.75 to 1.00 April 1, 2015 through September 30, 2016 6.50 to 1.00 October 1, 2016 through September 30, 2017 6.25 to 1.00 October 1, 2017 through September 30, 2018 6.00 to 1.00 October 1, 2018 and thereafter 5.75 to 1.00

Under the Second Lien Credit Agreement the loans designated as LIBOR rate loans bear interest at a rate of at LIBOR Rate then in effect (but not less than 1.25%) plus 10.25% and the loans designated as base rate loans bear interest at (i) highest of (A) the Prime Rate, (B) the Federal Funds Rate plus 0.50%, (C) LIBOR for an interest period of one month plus 1.00% and (D) 2.25% per year plus (ii) 9.25%. The weighted average interest rate at March 31, 2016 was 11.5%. The Second Lien Credit Agreement matures in July 2020. In connection with the Company’s initial public offering (“IPO) in May 2016, the Company prepaid $20 million of the borrowings under the Second Lien Credit Agreement. See Note 16. Subsequent Events.

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ABL Credit Agreement

The ABL Credit Agreement provides for aggregate commitments of up to $40 million, subject to a borrowing base, which is calculated as the sum of (i) 85% of eligible accounts receivable, plus (ii) the lesser of (A) the product of 70% multiplied by the value of eligible inventory and (B) the product of 85% multiplied by the net recovery percentage identified in the most recent inventory appraisal multiplied by the value of eligible inventory, plus (iii) the lesser of (A) the product of 75% multiplied by the value of eligible inventory and (B) the product of 85% multiplied by the net recovery percentage identified in the most recent inventory appraisal multiplied by the value of the eligible finished goods inventory, minus (iv) the aggregate amount of reserves established by the administrative agent.

The interest rates per annum applicable to loans under the ABL Credit Agreement are, at the option of NATC, equal to the applicable Base Rate or LIBOR Rate plus the applicable Interest Margin, as defined below:

Applicable Margin for Applicable Margin for Average Excess LIBOR Rate Loans Pricing Level Base Rate Loans (the Availability (the “LIBOR Rate “Base Rate Margin”) Margin”) I > $30,000,000 1.25% 2.25% II < $30,000,000 but > $15,000,000 1.50% 2.50% III < $15,000,000 1.75% 2.75%

The ABL Credit Agreement matures in January 2019 and the balance outstanding at March 31, 2016 was $1.0 million. The weighted average interest rate at March 31, 2016 was 5.00%.

PIK Toggle Notes

On January 13, 2014, the Company issued PIK Toggle Notes (“PIK Toggle Notes”) to Standard General Master Fund, L.P. (“Standard General”) with a principal amount of $45 million and warrants to purchase 42,424 of the Company’s common stock at $.01 per share, as adjusted for stock splits and other events specified in the agreement. After adjustment for the stock split effected in connection with our IPO of 10.43174381 to 1, the warrants have been adjusted to provide for the purchase of 442,558 of the Company’s common stock. Due to the issuance of the warrants, the PIK Toggle Notes had an original issue discount of $1.7 million and were initially valued at $43.3 million. The PIK Toggle Notes mature and the warrants expire on January 13, 2021.

The PIK Toggle Notes accrued interest based on the LIBOR Rate then in effect (but not less than 1.25%) plus 13.75%. Interest is payable on the last day of each quarter and upon maturity. The Company had the flexibility to pay interest in kind through an increase in the principal amount at the same interest rate as the PIK Toggle Notes. The Company chose to increase the PIK Toggle Notes for all interest for the first three months of 2016 and the face amount of the PIK Toggle Notes was $62.3 million at March 31, 2016.

The PIK Toggle Notes contains covenants which limit the ability of the Company to enter into transactions with affiliates and make dividends or other distributions or repurchase capital stock. The PIK Toggle Notes are unsecured and do not limit the Company’s ability to incur additional debt or liens.

In connection with the IPO, in May of 2016 the Company repurchased all of the outstanding PIK Toggle Notes in exchange for a combination of cash and shares of our common stock. See Note 16. Subsequent Events.

7% Senior Notes

In January of 2014, the Company issued 7% Senior Notes to various stockholders with a principal amount of $11 million and warrants to purchase 11,000,000 units of membership interests in Intrepid, which represented 40% of the Intrepid Common Units outstanding on a fully diluted basis, at a purchase price of $1.00 per unit. Due to the issuance of the Intrepid warrants, the 7% Senior Notes had an original issue discount of $2.8 million and was initially valued at $8.2 million. The 7% Senior Notes mature and the warrants expire on December 31, 2023.

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The 7% Senior Notes accrued interest at a fixed rate of 7% per annum. Interest is payable on the last business day of June and December in each year and provided that the Company was permitted to elect to pay all or a portion of the interest in kind. The Company made such election for all of 2014 and 2015. The face amount of the 7% Senior Notes was $12.6 million at March 31, 2016.

The 7% Senior Notes are the general unsecured obligations of the Company and will rank equally with the Company’s other unsecured and unsubordinated debt from time to time outstanding. Redemptions of the 7% Senior Notes may be made by the Company at any time without penalty or premium.

In connection with the IPO, in May of 2016 we repurchased all of the outstanding 7% Senior Notes in exchange for shares of our common stock. See Note 16. Subsequent Events.

Restricted / Non-Restricted Condensed Consolidating Financial Statements

The payment of principal and interest on the First Lien Term Loan, Second Lien Term Loan and ABL are guaranteed by or obligations of NATC and its subsidiaries (“Issuer/Restricted”). TPLLC and its subsidiary (“Non-Restricted”) are not guarantors of the First Lien Term Loan, Second Lien Term Loan and ABL. The separate financial statements of the Issuer/Restricted are not included herein because the Issuer/Restricted are the Company’s wholly-owned consolidated subsidiaries and are jointly, severally, fully and unconditionally liable for the obligations represented by the First Lien Term Loan, Second Lien Term Loan and ABL. The Company believes that the consolidating financial information for the Issuer/Restricted and the Non-Restricted provide information that is more meaningful in understanding the financial position of the Issuer/Restricted than separate financial statements of the Issuer/Restricted.

The following consolidating financial information presents consolidating financial data for the Issuer/Restricted, Non-Restricted and an elimination column for adjustments to arrive at the information for the Company on a consolidated basis as of March 31, 2016 and December 31, 2015 and for the three months ended March 31, 2016 and 2015. The principal elimination entries set forth below eliminate investments in subsidiaries and intercompany balances and transactions.

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Turning Point Brands, Inc. Consolidating Balance Sheet March 31, 2016 (in thousands)

Issuer/ Restricted Non-Restricted Eliminations Consolidated

ASSETS Current assets: Cash $ 953 $ 1,987 $ - $ 2,940 Accounts receivable 2,649 - - 2,649 Inventories 40,252 7,724 - 47,976 Other current assets 6,025 3,358 - 9,383 Total current assets 49,879 13,069 - 62,948

Property, plant and equipment, net 5,639 125 - 5,764 Deferred financing costs, net 191 - - 191 Goodwill 128,697 - - 128,697 Investment in subsidiaries 35,159 - (35,159) - Other intangible assets, net 8,553 - - 8,553 Master Settlement Agreement - escrow deposits 31,856 - - 31,856 Other assets 3,100 430 - 3,530 Total assets $ 263,074 $ 13,624 $ (35,159) $ 241,539

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) Current liabilities: Accounts payable $ 4,831 $ 64 $ - $ 4,895 Accrued expenses 8,802 941 - 9,743 Accrued interest expense 866 - - 866 First lien term loan 1,650 - - 1,650 Revolving credit facility 1,018 - - 1,018 Total current liabilities 17,167 1,005 - 18,172

Notes payable and long-term debt 290,480 - - 290,480 Deferred Income Taxes 7,054 - - 7,054 Postretirement benefits 4,638 - - 4,638 Pension benefits 428 - - 428 Total Liabilities 319,767 1,005 - 320,772

Stockholders' equity (deficit): Common stock, voting 63 - - 63 Common stock, non-voting 9 - - 9 Additional paid-in capital 76,423 11,222 (74,995) 12,650 Advance to TPB 757 (757) - - Accumulated other comprehensive loss (3,389) - - (3,389) Retained earnings (accumulated deficit) (130,556) 2,154 39,836 (88,566) Total stockholders' equity (deficit) (56,693) 12,619 (35,159) (79,233) Total liabilities and stockholders' equity (deficit) $ 263,074 $ 13,624 $ (35,159) $ 241,539

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Turning Point Brands, Inc. Consolidating Statement of Income for the three months ended March 31, 2016 (in thousands)

Issuer/ Restricted Non-Restricted Consolidated Net sales $ 46,224 $ 3,642 $ 49,866 Cost of sales 22,706 2,513 25,219 Gross profit 23,518 1,129 24,647 Selling, general and administrative expenses 12,725 1,013 13,738 Operating income 10,793 116 10,909 Interest expense and financing costs 8,469 (7) 8,462 Income before income taxes 2,324 123 2,447 Income tax expense 213 - 213 Net income $ 2,111 $ 123 $ 2,234

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Turning Point Brands, Inc. Consolidating Statement of Cash Flows for the three months ended March 31, 2016 (in thousands)

Issuer/ Restricted Non-Restricted Consolidated Cash flows from operating activities: Net income $ 2,111 $ 123 $ 2,234 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation expense 293 - 293 Amortization of deferred financing costs 362 - 362 Amortization of original issue discount 259 - 259 Interest incurred but not paid on PIK toggle notes 2,254 - 2,254 Deferred income taxes 41 - 41 Stock compensation expense 12 - 12 Member unit compensation expense - 10 10 Changes in operating assets and liabilities: Accounts receivable 1,179 112 1,291 Inventories (2,187) (1,450) (3,637) Other current assets (435) 1,890 1,455 Other assets 416 - 416 Accounts payable 709 15 724 Accrued pension liabilities 64 - 64 Accrued postretirement liabilities (28) - (28) Accrued expenses and other (4,617) (156) (4,773) Net cash provided by operating activities 433 544 977

Cash flows from investing activities: Capital expenditures (329) (125) (454) Net cash used in investing activities (329) (125) (454)

Cash flows from financing activities: Proceeds from revolving credit facility, net 1,000 - 1,000 Prepaid equity issuance costs (268) - (268) Payments for first lien term loan (3,150) - (3,150) Net cash used in financing activities (2,418) - (2,418)

Net increase (decrease) in cash (2,314) 419 (1,895) Cash, beginning of period 3,267 1,568 4,835 Cash, end of period $ 953 $ 1,987 $ 2,940

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Turning Point Brands, Inc. Consolidating Balance Sheet December 31, 2015 (in thousands)

Issuer/ Restricted Non-Restricted Eliminations Consolidated

ASSETS Current assets: Cash $ 3,267 $ 1,568 $ - $ 4,835 Accounts receivable 3,828 112 - 3,940 Inventories 38,065 6,274 - 44,339 Other current assets 5,590 5,248 - 10,838 Total current assets 50,750 13,202 - 63,952

Property, plant and equipment, net 5,603 - - 5,603 Deferred financing costs, net 208 - - 208 Goodwill 128,697 - - 128,697 Investment in subsidiaries 31,489 - (31,489) - Other intangible assets, net 8,553 - - 8,553 Master Settlement Agreement - escrow deposits 31,842 - - 31,842 Other assets 3,178 430 - 3,608 Total assets $ 260,320 $ 13,632 $ (31,489) $ 242,463

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) Current liabilities: Accounts payable $ 4,038 $ 49 $ - $ 4,087 Accrued expenses 9,956 1,097 - 11,053 Accrued interest expense 4,329 - - 4,329 First lien term loan 1,650 - - 1,650 Revolving credit facility 18 - - 18 Total current liabilities 19,991 1,146 - 21,137

Notes payable and long-term debt 290,772 - - 290,772 Deferred Income Taxes 7,013 - - 7,013 Postretirement benefits 4,666 - - 4,666 Pension benefits 487 - - 487 Total Liabilities 322,929 1,146 - 324,075

Stockholders' equity (deficit): Common stock, voting 63 - - 63 Common stock, non-voting 9 - - 9 Additional paid-in capital 76,410 11,213 (74,995) 12,628 Advance to TPB 793 (793) - - Accumulated other comprehensive loss (3,512) - - (3,512) Retained earnings (accumulated deficit) (136,372) 2,066 43,506 (90,800) Total stockholders' equity (deficit) (62,609) 12,486 (31,489) (81,612) Total liabilities and stockholders' equity (deficit) $ 260,320 $ 13,632 $ (31,489) $ 242,463

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Turning Point Brands, Inc. Consolidating Statement of Income for the three months ended March 31, 2015 (in thousands)

Issuer/ Restricted Non-Restricted Consolidated Net sales $ 45,603 $ 5,483 $ 51,086 Cost of sales 22,999 3,432 26,431 Gross profit 22,604 2,051 24,655 Selling, general and administrative expenses 11,396 1,275 12,671 Operating income 11,208 776 11,984 Interest expense and financing costs 8,450 32 8,482 Income before income taxes 2,758 744 3,502 Income tax expense 75 - 75 Net income $ 2,683 $ 744 $ 3,427

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Turning Point Brands, Inc. Consolidating Statement of Cash Flows for the three months ended March 31, 2015 (in thousands)

Issuer/ Restricted Non-Restricted Consolidated Cash flows from operating activities: Net income $ 2,683 $ 744 $ 3,427 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation expense 251 - 251 Amortization of deferred financing costs 362 - 362 Amortization of original issue discount 261 - 261 Interest incurred but not paid on PIK toggle notes 1,945 - 1,945 Deferred income taxes (35) - (35) Stock compensation expense 46 - 46 Member unit compensation expense - 29 29 Changes in operating assets and liabilities: Accounts receivable (972) (959) (1,931) Inventories (721) (1,021) (1,742) Other current assets (836) 2,585 1,749 Other assets (12) - (12) Accounts payable 2,153 (994) 1,159 Accrued pension liabilities 42 - 42 Accrued postretirement liabilities (31) - (31) Accrued expenses and other 2,088 (766) 1,322 Net cash provided by operating activities 7,224 (382) 6,842

Cash flows from investing activities: Capital expenditures (327) - (327) Issuance of note receivable (800) 800 - Net cash provided by (used in) investing activities (1,127) 800 (327)

Cash flows from financing activities: Proceeds from (payments of) revolving credit facility, net 93 - 93 Prepaid equity issuance costs - - - Payments for first lien term loan (412) - (412) Issuance of stock 1 - 1 Net cash used in financing activities (318) - (318)

Net increase in cash 5,779 418 6,197 Cash, beginning of period 8,014 453 8,467 Cash, end of period $ 13,793 $ 871 $ 14,664

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Note 8. Income Taxes:

The Company has determined, that at March 31, 2016, its ability to realize future benefits of certain net deferred tax assets does not meet the “more likely than not” criteria in ASC 740, Income Taxes; therefore, a valuation allowance has been recorded. The Company’s income tax expense for the three months ended March 31, 2016 does not bear the normal relationship to income before income taxes because of net operating loss carryforwards that were utilized and were partially offset by certain minimum state income taxes. The Company’s income tax expense for the three months ended March 31, 2015 does not bear the normal relationship to income before income taxes because of net operating loss carryforwards which were utilized.

The Company follows the provisions of ASC 740-10-25, which prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely- than-not to be sustained upon examination by taxing authorities. The amount recognized is measured as the largest amount of benefit that is greater than 50 percent likely of being realized upon ultimate settlement. The Company has determined that they did not have any uncertain tax positions requiring recognition under the provisions of ASC 740-10-25. The Company’s policy is to recognize interest and penalties accrued on uncertain tax positions, if any, as part of interest expense. The Company files income tax returns in the U.S. federal jurisdiction and various state jurisdictions. In general, the Company is no longer subject to U.S. federal and state tax examinations for years prior to 2012.

Note 9. Pension and Postretirement Benefit Plans:

The components of Net Periodic Benefit Cost for the three months ended March 31, 2016 and 2015 are as follows:

Pension Benefits Postretirement Benefits For the three months ended March 31 2016 2015 2016 2015

Service cost $ 26 $ 31 $ - $ - Interest cost 175 174 52 52 Expected return on plan assets (259) (295) - - Amortization of gains and losses 123 132 - - Net periodic benefit cost $ 65 $ 42 $ 52 $ 52

NATC has a defined benefit pension plan covering its employees. Benefits for the hourly employees are based on a stated benefit per year of service, reduced by amounts earned in a previous plan. Benefits for salaried employees are based on years of service and the employees’ final compensation. This defined benefit plan is frozen.

NATC sponsored a defined benefit postretirement plan that covered hourly employees. This plan provides medical and dental benefits. This plan is contributory, with retiree contributions adjusted annually.

NATC expects to contribute approximately $0.3 million to its postretirement plan in 2016 for the payment of benefits. Plan contributions and benefits have amounted to $80 and $83 for the three months ended March 31, 2016 and 2015, respectively. NATC expects to make no contributions to the pension plan in the year ending December 31, 2016.

Note 10. Share Incentive Plans:

On February 8, 2006, the Board of Directors of the Company adopted the North Atlantic Holding Company, Inc. 2006 Equity Incentive Plan (the “2006 Plan”) and approved a form of Restricted Stock Award Agreement (the “Form Award Agreement”) pursuant to which awards under the 2006 Plan may be granted to employees. The Form Award Agreement requires, as a condition of the award, that any and all stock options (vested or otherwise) previously granted to these individuals will be immediately cancelled as of the date of the award. On March 15, 2006, the Board of Directors of the Company approved a form of Restricted Stock Award Agreement pursuant to which awards under the 2006 Plan may be granted to non-employee directors (the “Director Form Award Agreement”). The 2006 Plan provides for the granting of nonqualified stock options and restricted stock awards. Pursuant to the 2006 Plan, 2,654,910 shares of common stock of the Company are reserved for issuance as awards to employees, consultants and directors as compensation for past or future services or the attainment of certain performance goals. On August 7, 2014, the Board of Directors of the Company amended the 2006 Plan. The 2006 Plan shares were increased to a maximum of 3,651,110 shares that may be issued pursuant to awards under the 2006 Plan. In addition, the term of the 2006 Plan was extended an additional 10 years. The 2006 Plan was initially scheduled to terminate on August 6, 2026. Upon the adoption of the Company’s 2015 Equity Incentive Plan in connection with the IPO (see Note 16. Subsequent Events) the Company determined that no additional grants would be made under the 2006 Plan, however all awards issued under the plan that have not been previously terminated or forfeited remain outstanding and continue unaffected. The Board of Directors of the Company may provide that awards under the 2006 Plan shall become vested in installments over a period of time or may specify that the attainment of certain performance measures will determine the degree of vesting, or a combination of both, as set forth in the applicable award agreements. Upon the occurrence of a change in control, the grantee shall be entitled to such consideration in respect of the outstanding shares subject to the 2006 Plan on the same terms and conditions as that provided to all other stockholders of the Company. As of March 31, 2016, 1,069,129 shares of restricted stock and 1,061,097 options have been granted to employees of NATC and 41,727 shares of restricted stock and 607,229 options have been granted to current and former non-employee directors of the Company under the 2006 Plan.

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The total number of shares available for grant under the 2006 Plan is 871,928. Stock option activity is summarized below:

Weighted Weighted Average Average Incentive Exercise Grant Date Shares Price Fair Value Outstanding, December 31, 2014 1,692,051 $ 2.17 $ 1.19

Granted - Exercised (1,043) 1.06 0.54 Expired - Forfeited (23,337) 1.06 0.54

Outstanding, December 31, 2015 1,667,671 2.19 1.20

Granted - Exercised - Expired - Forfeited (388) 3.83 2.17

Outstanding, March 31, 2016 1,667,283 $ 2.19 $ 1.21

The total intrinsic value of options exercised and vested during the three months ended March 31, 2016 and 2015 was $0 and $7, respectively.

At March 31, 2016, the outstanding stock options’ exercise price for 986,356 options is $1.06 per share all of which are exercisable. The outstanding stock options’ exercise price for 680,927 options is $3.83 per share of which 628,984 options are exercisable. The weighted average of the remaining lives of the outstanding stock options is approximately 1.6 years for the options with the $1.06 exercise price, and 6.5 years for the options with the $3.83 exercise price. NATC estimates that the expected life of all stock options is ten years from the date of grant. For the $1.06 per share options, the weighted average fair value of options was determined using the Black-Scholes model assuming a ten-year life from grant date; a current share price and exercise price of $1.06; risk free interest rate of 4.366%; a volatility of 30%; and no assumed dividend yield. Based on these assumptions, the fair value of these options is approximately $0.54 per share option granted. For the $3.83 per share options, the weighted average fair value of options was determined using the Black-Scholes model assuming a ten-year life from grant date; a current share price and exercise price of $3.83; risk-free interest rate of 3.57%; a volatility of 40%; and no assumed dividend yield. Based on these assumptions, the fair value of these options is approximately $2.17 per share option granted.

The Company has recorded compensation expense related to the options based on the provisions of ASC 718 under which the fixed portion of such expense is determined as the fair value of the options on the date of grant and amortized over the vesting period. The Company recorded compensation expense of approximately $12 and $46 in the consolidated statements of income for the three months ended March 31, 2016 and 2015, respectively.

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Note 11. Unit Incentive Plans and Warrants for Intrepid Brands, LLC:

Effective August 7, 2014, the Company adopted the Intrepid Brands, LLC 2014 Option Plan (“2014 Plan”) for units of ownership in Intrepid. The purpose of the 2014 Plan is to promote the success and enhance the value of the Company by linking the personal interests of the service providers (including employees, consultants and managers) to those of Company equity holders and by providing such individuals with an incentive for outstanding performance to generate superior returns to Company equity holders. The 2014 Plan is further intended to provide flexibility to the Company in its ability to motivate, attract, and retain the services of employees, consultants and managers whose judgment, interest, and special effort the successful conduct of the Company's operation is largely dependent.

The Administration Committee shall determine the treatment to be afforded to a participant in the event of termination of employment for any reason including death, disability, or retirement. The 2014 Plan contains provisions for equitable adjustment of benefits in the event of a merger, consolidation, reorganization, recapitalization, stock dividend, stock split, reverse stock split, split up, spin-off, combination of shares, exchange of shares, dividend in kind or other like change in capital structure or distribution (other than normal cash dividends) to stockholders of the Company.

Pursuant to the 2014 Plan, the maximum number of Common Units of Intrepid that may be issued pursuant to an exercise of Options awarded under the 2014 Plan is 1,375,000 Common Units, reduced by one such Unit for every Incentive Unit (if any) that the Company issues in accordance with the terms of its LLC Agreement. The 2014 Plan shall terminate automatically on the day preceding the tenth anniversary of its adoption unless earlier terminated pursuant to Section 11 (b) of the plan. The 2014 Plan is scheduled to terminate on August 6, 2024. As of March 31, 2016, 1,322,852 unit options have been granted to employees of NTC.

The total number of units available for grant under the 2014 Plan is 52,148. Unit option activity is summarized below:

Weighted Weighted Average Average Unit Exercise Grant Date Options Price Fair Value Outstanding, December 31, 2014 1,358,889 $ 1.00 $ 0.25

Granted - Exercised - Expired - Forfeited (32,047) 1.00 0.25

Outstanding, December 31, 2015 1,326,842 1.00 0.25

Granted - Exercised - Expired - Forfeited (3,990) 1.00 0.25

Outstanding, March 31, 2016 1,322,852 $ 1.00 $ 0.25

At March 31, 2016, under the 2014 Plan, the outstanding unit options’ exercise price for 1,322,852 options is $1.00 per option of which 997,648 are exercisable. The weighted average of the remaining lives of the outstanding unit options is approximately 18.3 years. The weighted average fair value of options was determined using the Black-Scholes model assuming a 20-year life from grant date; a current unit price and exercise price of $1.00; risk-free interest rate of 2.65% and a volatility of 20% and no assumed dividend yield. Based on these assumptions, the fair value of the options is approximately $0.25 per unit option granted. The Company recorded approximately $10 in the statements of income for the three months ended March 31, 2016. The Company recorded approximately $29 in the statements of income for the three months ended March 31, 2015.

In connection with the IPO, in May of 2016 all options outstanding under the 2014 Plan were repurchased for aggregate cash consideration of $683 which included $22 of payroll taxes. See Note 16. Subsequent Events.

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In January of 2014, the Company issued warrants to purchase 11,000,000 units of membership interests in Intrepid (the “Intrepid Warrants”) concurrent with the 7% Senior Notes (see Note 7). This represented 40% of the Intrepid Common Units outstanding on a fully diluted basis, at a purchase price of $1.00 per unit. The warrants were exercisable beginning January 21, 2014 and they expire on December 31, 2023.

In connection with the IPO, in May of 2016 all outstanding Intrepid Warrants were repurchased for aggregate cash consideration of approximately $5.5 million. See Note 16. Subsequent Events.

Note 12. Contingencies:

The Company is involved in various claims and actions that arise in the normal course of business. While the outcome of these legal proceedings cannot be predicted with certainty, it is the opinion of management that the resolution of the proceedings should not have a material adverse effect on the financial position, results of operations or cash flows of the Company.

Note 13. Earnings Per Share:

The following is a reconciliation of the numerators and denominators of the basic and diluted EPS computations of net income:

Three Months Ended March 31, March 31, 2016 2015 Per Per Income Shares Share Income Shares Share Net income $ 2,234 $ 3,427

Basic EPS: Weighted average 7,198,337 $ 0.31 7,197,523 $ 0.48

Diluted EPS: Effect of Dilutive securities: Stock options and warrants 1,156,322 1,156,320 8,354,659 $ 0.27 8,353,843 $ 0.41

For the three months ended March 31, 2016, weighted average options to purchase 680,927 shares of common stock were outstanding but were not included in the computation of diluted earnings per share because the options were anti-dilutive. For the three months ended March 31, 2015, weighted average options to purchase 715,618 shares of common stock were outstanding but were not included in the computation of diluted earnings per share because they were anti-dilutive. Due to the IPO in May 2016, the Company’s weighted average shares and basic and diluted earnings per share are expected to change significantly for the remainder of 2016. See Note 16. Subsequent Events, for a description of the IPO and shares issued in connection herewith.

Note 14. Parent-Only Financial Information:

The Company is a holding company with independent operations including cash and its investments in its subsidiaries.

All of NATC’s subsidiaries are wholly-owned and guarantee the First Lien Term Loan and the Second Lien Term Loan of NATC on a full, unconditional, and joint and several basis. Within the First Lien Term Loan and the Second Lien Term Loan there are no significant restrictions on the ability of NATC to obtain funds from its subsidiaries by dividend or loan, but NATC is subject to significant restrictions on its ability to pay dividends or make other payments to the Company. NATC and its subsidiaries are generally unable to pay dividends and make other restricted payments to the Company, except in limited circumstances, including (i) to pay certain costs in the ordinary course of business, (ii) to redeem, retire or otherwise acquire certain of our outstanding equity interest and (iii) to pay certain tax obligations. As a result of such restrictions on the Company’s subsidiaries’ ability to make distributions to the Company, $227,915 of its consolidated total assets are currently restricted assets of its consolidated subsidiaries, which may not be transferred to the Company in the form of loans, advances or cash dividends without the consent of a third party. The Company has disclosed the amount of restricted total assets rather than restricted net assets due to the negative net assets of the Company and its restricted subsidiaries.

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TPLLC and Intrepid are wholly-owned by the Company. TPLLC and its subsidiary are not guarantors of the First Lien Term Loan and Second Lien Term Loan.

Note 15. Segment Information:

In accordance with ASC 280, Segment Reporting, the Company has three reportable segments, (1) the Smokeless Products; (2) the Smoking Products; and (3) the NewGen Products. The Smokeless Products segment: (a) manufactures and markets moist snuff; and (b) contracts for and markets chewing tobacco products. The Smoking Products segment: (a) imports and markets cigarette papers, tubes and related products; (b) processes, packages and markets MYO cigarette tobaccos; (c) imports and markets finished cigars and MYO cigar tobaccos and cigar wraps; and (d) processes, packages and markets pipe tobaccos. The NewGen Products segment markets e-cigarettes, e-liquids, vaporizers and other related products. The Company’s products are distributed primarily through wholesale distributors in the United States. The Other segment includes the assets of the Company not assigned to the three reportable segments and Elimination includes the elimination of intercompany accounts between segments.

The accounting policies of these segments are the same as those of the Company. Segment data includes a charge allocating corporate costs to the three reportable segments based on their respective Net sales. The Company evaluates the performance of its segments and allocates resources to them based on Operating income.

The table below presents financial information about reported segments for the three months ended March 31, 2016 and 2015:

March 31, March 31, 2016 2015

Net Sales Smokeless Products $ 18,339 $ 17,516 Smoking Products 27,885 28,087 NewGen Products 3,642 5,483 $ 49,866 $ 51,086

Operating Income Smokeless Products $ 3,559 $ 4,523 Smoking Products 7,540 6,985 NewGen Products 116 776 Other (1) (156) (130) $ 11,059 $ 12,154 Less Eliminations (2) (150) (170) $ 10,909 $ 11,984

Interest expense and financing costs (8,462) (8,482)

Income before income taxes $ 2,447 $ 3,502

Assets Smokeless Products $ 77,010 $ 88,045 Smoking Products 525,233 495,211 NewGen Products 13,624 15,647 Other (1) 32,422 32,455 648,289 631,358 Less Eliminations (2) (406,750) (380,598) $ 241,539 $ 250,760

(1) “Other” includes our assets that are not assigned to our three reportable segments, such as intercompany transfers and investments in subsidiaries. All goodwill has been allocated to our reportable segments.

(2) “Elimination” includes the elimination of intercompany accounts between segments and investments in subsidiaries.

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Net Sales - Domestic and Foreign (in thousands)

The table below presents financial information about our domestic and foreign net sales for the three months ended March 31, 2016 and 2015:

Three Months Ended March 31, March 31, 2016 2015 Domestic $ 46,974 $ 48,773 Foreign 2,892 2,313 Net Sales $ 49,866 $ 51,086

Note 16. Subsequent Events

In April of 2016, the Company increased the total authorized shares of preferred and voting and non-voting common stock and effected a 10.43174381 for 1 stock split of the voting and nonvoting common stock. As a result of the stock split, all previously reported share amounts, including options and warrants in the accompanying financial statements and related notes have been retrospectively restated to reflect the stock split.

In May of 2016, the Company sold 6,210,000 shares of voting common stock in its IPO(including shares sold pursuant to the underwriters’ option to purchase 810,000 shares to cover over-allotments) at a price of $10.00 per share. The gross proceeds totaled $62,100. The IPO proceeds were used as follows: 1) $3,884 for the payment of expenses in connection with the Initial Public Offering; 2) $3,250 to purchase and retire Intrepid Warrants (See Note 11); 3) $34,000 to redeem and retire PIK Toggle Notes (See Note 7); 4) $20,200 to redeem and retire $20,000 face amount of Second Lien Term Notes and pay $200 as a 1% prepayment penalty (See Note 7); 5) $683 to purchase and retire all outstanding options to buy Intrepid Common Units which include $22 of payroll taxes (See Note 11); and 6) increased cash of $83.

In addition, in connection with the IPO the Company also: 1) exchanged 1,289,819 shares of voting common stock to repurchase all of the outstanding 7% Senior Notes (See Note 7); 2) exchanged 3,168,438 shares of voting common stock to redeem all of the remaining outstanding PIK Toggle Notes not repurchased for cash as described above (See Note 7); and 3) paid $2,250 to retire all the remaining Intrepid Warrants (for a total expenditure of $5,500 to retire all the Intrepid Warrants).

As a result of the transactions summarized above, the Company has fully repurchased and retired the PIK Toggle Notes and 7% Senior Notes (See Note 7) and fully repurchased and retired all outstanding Intrepid Warrants and options to buy Intrepid Common Units.

The Company has the following voting and non-voting shares of common stock outstanding after the transactions summarized above:

Voting shares outstanding before transactions 6,259,480 Shares issued by the Initial Public Offering 6,210,000 Shares issued for 7% Senior Notes 1,289,819 Shares issued for PIK Toggle Notes 3,168,438 Voting shares outstanding after transactions 16,927,737

Non-Voting shares outstanding before and after transactions 938,857

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Cautionary Note Regarding Forward-Looking Statements

This document includes and other information we make public from time to time may include “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements about our estimates, expectations, projections, beliefs, intentions or strategies for the future, and the assumptions underlying such statements. We use the words “anticipates,” “believes,” “estimates,” “expects,” “intends,” “forecasts,” “may,” “will,” “should,” and similar expressions to identify our forward-looking statements. Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from historical experience or our present expectations. Factors that could cause these differences include, but are not limited to, the factors set forth in “Risk Factors” included in our Prospectus dated May 10, 2016, as well as:

• declining sales of tobacco products, and expected continuing decline of sales, in the tobacco industry overall;

• our dependence on a small number of third-party suppliers and producers;

• the possibility that we will be unable to identify or contract with new suppliers or producers in the event of a supply or product disruption;

• the possibility that our licenses to use certain brands or trademarks will be terminated, challenged or restricted;

• failure to maintain consumer brand recognition and loyalty of our customers;

• substantial and increasing U.S. regulation;

• regulation of our products by the FDA;

• uncertainty related to the regulation and taxation of our NewGen products;

• possible significant increases in federal, state and local municipal tobacco-related taxes;

• possible significant increases in tobacco-related taxes;

• possible taxation of our NewGen products;

• possible increasing international control and regulation;

• our reliance on relationships with several large retailers and national chains for distribution of our products;

• intense competition and our ability to compete effectively;

• significant potential product liability litigation;

• the scientific community’s lack of information regarding the long-term health effects of electronic cigarettes, vaporizer and e-liquid use;

• failure to maintain and contribute significant cash amounts to an escrow account as part of a settlement agreement between us and certain U.S. states;

• our substantial amount of indebtedness;

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• the terms of our credit facilities may restrict our current and future operations;

• competition from illicit sources;

• our reliance on information technology;

• security and privacy breaches;

• contamination of our tobacco supply or products;

• infringement on our intellectual property;

• third-party claims that we infringe on their intellectual property;

• concentration of business with large customers;

• failure to manage our growth;

• fluctuations in our month-to-month results;

• exchange rate fluctuations;

• adverse U.S. and global economic conditions;

• failure to comply with certain regulations; and

• departure of key management personnel or our inability to attract and retain talent.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

You should read the following discussion of the historical financial condition and results of operations in conjunction with our interim condensed consolidated financial statements and accompanying notes, which are included elsewhere in this Quarterly Report on Form 10-Q and with our annual consolidated financial statements and accompanying notes, which are included in our prospectus dated May 10, 2016, filed with the SEC in accordance with Rule 424(b) of the Securities Act on May 12, 2016 (the “Prospectus”) and with the Risk Factors included in the Prospectus. In addition, this discussion includes forward-looking statements that are subject to risks and uncertainties that may result in actual results differing from statements we make. See “Cautionary Note Regarding Forward-Looking Statements.” Factors that could cause actual results to differ include those risks and uncertainties that are discussed in “Risk Factors” in our Prospectus.

The following discussion relates to the interim unaudited financial statements of the Company included elsewhere in this Quarterly Report on Form 10-Q. In this discussion, unless the context requires otherwise, references to “our Company” “we,” “our,” or “us” refer to Turning Point Brands, Inc. and our consolidated subsidiaries. References to “TPB” refer to Turning Point Brands, Inc. without any of its subsidiaries. We were incorporated in 2004 under the name North Atlantic Holding Company, Inc. On November 4, 2015, we changed our name to Turning Point Brands, Inc. Many of the amounts and percentages in this discussion have been rounded for convenience of presentation.

Overview

We are a leading independent provider of Other Tobacco Products (“OTP”) in the U.S. We sell a wide range of products across the OTP spectrum, including moist snuff, loose leaf chewing tobacco, premium cigarette papers, make-your-own (“MYO”) cigar wraps and cigar smoking tobacco, cigars, liquid vapor products and tobacco vaporizer products. We do not sell cigarettes. We estimate that the OTP industry generated approximately $10.0 billion in manufacturer revenue in 2014. In contrast to manufactured cigarettes, which have been experiencing declining sales for decades based on data published by the Alcohol and Tobacco Tax and Trade Bureau (“TTB”), the OTP industry is demonstrating increased consumer appeal. For instance, according to Management Science Incorporated (“MSAi”), OTP consumer units shipped to retail increased by approximately 2% from 2013 to 2014 and approximately 3% from 2014 to 2015.

Our portfolio of brands includes some of the most widely recognized names in the OTP industry, such as Zig-Zag ® , Beech-Nut ® , Stoker’s ® , Trophy ® , Havana Blossom ® , Durango ® , Our Pride ® and Red Cap ™.

We generate revenues from the sale of our products primarily to wholesale distributors who in turn resell them to retail operations, as well as from the sale of our products directly to retail operations. Our net sales, which include federal excise taxes, consist of gross sales, net of cash discounts, returns, and selling and marketing allowances.

Our principal operating expenses include the cost of raw materials used to manufacture the limited number of our products which we manufacture; the cost of finished products, which are purchased goods; federal excise taxes; restructuring and impairment expenses; legal expenses and compensation expenses, including benefits and costs of salaried personnel. Our other principal expenses include interest expense and amortization of deferred financing costs and other expenses.

Recent Developments

On May 10, 2016, we priced the initial public offering (the “IPO”) of our voting common stock. In the IPO, we sold 6,210,000 shares of our voting common stock (including 810,000 shares pursuant to the underwriters option to purchase additional shares to cover over-allotments (the “Over-allotment Option”)) at a price per share of $10.00. The IPO closed on May 13, 2016 and the sale of shares pursuant to the exercise of the Over-Allotment Option closed on May 19, 2016.

The Company raised a total of approximately $62.1 million in gross proceeds from the IPO, or $58.2 million in net proceeds after deducting underwriting commissions and other associated costs. We used the proceeds from the IPO together with cash on hand to pay fees and expenses related to the IPO, repurchase outstanding warrants and options issued by our subsidiary, Intrepid Brands LLC (“Intrepid”), repay approximately $34 million of our floating rate PIK Toggle Notes due 2021 (the “PIK Toggle Notes”) and to repay approximately $20 million of the borrowings outstanding under our second lien credit facility.

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In connection with the IPO, we exchanged (i) all of the PIK Toggle Notes that were not repaid in cash with a portion of the proceeds from the IPO for 3,168,438 shares of Common Stock and (ii) all of our outstanding 7% Senior Notes for 1,289,819 shares of our common stock.

As noted above, in connection with the IPO and related transactions we were able to significantly reduce our leverage. The following table provides outstanding balances under our debt facilities and instruments as of March 31, 2016 and also provides the outstanding balances under these facilities and instruments after giving effect to the IPO and related transactions:

Debt Exchanged Debt Repaid Adjusted for

Actual for Equity with Cash IPO & Conversion

Bank Debt $ 229.6 $ - $ (20.0) $ 209.6 PIK Toggle Notes 62.3 (28.3) (34.0) - 7% Senior Notes 12.6 (12.6) - - Total Debt $ 304.5 $ (40.9) $ (54.0) $ 209.6

Segment Information

We operate in three segments: (i) smokeless products, (ii) smoking products and (iii) NewGen products. In our smokeless products segment we (i) manufacture and market moist snuff and (ii) contract for and market loose leaf chewing tobacco products. In our smoking products segment, we (i) market and distribute cigarette papers and related products, as well as package, market and distribute MYO cigarette smoking tobaccos and related products and (ii) market and distribute MYO cigar wraps, MYO loose cigar smoking tobacco, and cigars, and package, market and distribute traditional pipe tobaccos. In our NewGen products segment, we market and distribute liquid vapor products, tobacco vaporizer products, certain other related products, such as e-liquids and shishafruits, shisha gels and other products without tobacco and/or nicotine.

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The table below presents financial information for reported segments for the three months ended March 31, 2016 and 2015:

March 31, March 31, 2016 2015

Net Sales Smokeless Products $ 18,339 $ 17,516 Smoking Products 27,885 28,087 NewGen Products 3,642 5,483 $ 49,866 $ 51,086

Operating Income Smokeless Products $ 3,559 $ 4,523 Smoking Products 7,540 6,985 NewGen Products 116 776 Other (1) (156) (130) $ 11,059 $ 12,154 Less Eliminations (2) (150) (170) $ 10,909 $ 11,984

Interest expense and financing costs (8,462) (8,482)

Income before income taxes $ 2,447 $ 3,502

(2) “Elimination” includes the elimination of intercompany accounts between segments and investments in subsidiaries.

Key Factors Affecting Our Results of Operations

We consider the following factors to be the key factors affecting our results of operations:

• Our ability to further penetrate markets with our existing products;

• Our ability to introduce new products and product lines that complement our core business;

• Decreasing interest in tobacco products among consumers;

• Price sensitivity in our end-markets;

• Marketing and promotional initiatives, which cause variability in our month-to-month results;

• General economic conditions, including consumer access to disposable income;

• Cost and increasing regulation of promotional and advertising activities;

• Cost of complying with regulation, including newly passed “deeming regulations”;

• Counterfeit and other illegal products in our end-markets; and

• Currency fluctuations.

Critical Accounting Policies and Uses of Estimates

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There have been no material changes to our critical accounting policies and estimates from the information provided in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Prospectus, dated May 10, 2016 related to the IPO.

Recent Accounting Pronouncements Adopted:

The Company adopted ASU 2015-03, Interest – Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Cost in 2016 . This ASU requires that debt issuance costs related to a recognized debt liability be presented as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. Based on the requirements of this ASU, the Company has retrospectively applied ASU 2015-03 to the December 31, 2015 Consolidated Balance Sheet which has resulted in $6.3 million being reclassified to direct deduction of the carrying amount of the debt.

The Company adopted ASU 2015-17, Income Taxes ( Topic 740): Balance sheet classification of deferred taxes in 2016. This ASU requires that deferred tax liabilities and assets be classified as noncurrent in a classified balance sheet. The Company has retrospectively applied ASU 2015-17 to the December 31, 2015 Consolidated Balance Sheet which has resulted in $0.4 million of deferred tax liabilities being reclassified to a noncurrent deferred tax liability.

Results of Operations

Summary

The table and discussion set forth below relates to our consolidated results of operations for the three months ended March 31, 2016 and 2015:

Components of our Results of Operations

Set forth below is a brief description of the composition of the key line items of our consolidated income statement:

Net Sales . Net sales includes gross sales from the direct sales of our products to wholesalers and retailers less discounts, returns and selling and marketing allowances.

Cost of Sales . Cost of sales includes our manufacturing costs or the cost of purchases for resale (“CPR”). Each product category within a segment has a different cost of goods sold.

Selling, General and Administrative Expenses . Selling, general and administrative expenses include research and development costs, shipping costs, compensation expenses, depreciation expenses, professional and board fees and all other expenses necessary for our operations.

Interest Expense and Financing Costs . Interest expense and financing costs includes interest charged on our outstanding debt.

Income Tax Expense . Income tax expense includes federal and state income taxes on our net income (loss).

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Comparison of Three Months Ended March 31, 2016 to the Three Months Ended March 31, 2015

Net Sales . Company net sales for the three months ended March 31, 2016 were $49.9 million, a decrease of $1.2 million or 2.4% from the corresponding period of the prior year. This decrease was caused by decreases in the Smoking Products and NewGen segments, partially offset by an increase in net sales in the Smokeless Products segment.

Net sales for the Smokeless Products segment for the current period increased $0.8 million or 4.7% to $18.3 million from the corresponding period of the prior year. For the 2016 first quarter, Smokeless case volume increased slightly, while the average of all our individual smokeless list prices per case increased slightly when compared to 2015.

Net sales for the Smoking Products segment decreased $0.2 million or 0.7% to $27.9 million compared to the corresponding period of the prior year. For the quarter, Smoking Product case volume decreased slightly, while the average of all our individual smoking list prices per case increased compared to the 2015 quarter.

Net sales of the NewGen Products segment decreased $1.8 million or 33.6% to $3.6 million in comparison to the corresponding period of the prior year. NewGen case volume for the 2016 quarter decreased, while the average of all our individual NewGen Products list prices per case increased slightly when compared to the 2015 quarter. Industry sales into traditional retail declined sharply as consumer migration to the vape shops and accessory shops continued.

Cost of Sales . For the three months ended March 31, 2016, cost of sales decreased to $25.2 million from $26.4 million for the three months ended March 31, 2015, a decrease of $1.2 million, or 4.6%, principally due to a decrease in cost of sales in the Smoking Products segment and NewGen products segment, partially offset by increases in cost of sales in the Smokeless Products segments.

For the three months ended March 31, 2016, cost of sales in the Smokeless Products segment increased to $9.1 million from $8.6 million for the three months ended March 31, 2015, an increase of $0.5 million, or 6.0%, principally due to an incremental increase in net sales of products with a higher manufacturing cost.

For the three months ended March 31, 2016, cost of sales in the Smoking Products segment decreased to $13.6 million from $14.4 million for the three months ended March 31, 2015, a decrease of $0.8 million, or 5.6%, principally due to an incremental decrease in net sales of which there was a decrease in sales volume of cigarillos and MYO tobacco products, which have higher manufacturing costs than other products in the segment.

For the three months ended March 31, 2016, cost of sales in the NewGen products segment decreased to $2.5 million from $3.4 million for the three months ended March 31, 2015, a decrease of $0.9 million, or 26.8%, principally due to a reduction in sales volume of vaporizers and e-cigarettes.

Gross Profit . Gross profit for the three months ended March 31, 2016 totaled $24.6 million, which was flat in comparison to the corresponding period of the prior year. Gross margin improved from 48.3% in the corresponding period of the prior year to 49.4% in the three months ended March 31, 2016.

Gross profit of the Smokeless Products segment increased 3.4% or $0.3 million to $9.2 million compared to the corresponding period of the prior year. Gross margin for this segment decreased to 50.2% of net sales for the current period from 50.8% in the corresponding period of the prior year due primarily to the mix / shift from chewing tobacco to moist snuff tobacco products.

Gross profit of the Smoking Products segment gross profit increased $0.6 million or 4.4% to $14.3 million when compared to the corresponding period of the prior year. Gross margin of the Smoking Products segment increased to 51.3% of net sales for the current period in comparison to 48.8% for the corresponding period in 2015, principally as the result of favorable mix / shifts within the segment. Promotional activity in the Cigarillo non-tipped HTL (homogenized tobacco leaf) market remained elevated with greater than 90% of all volumes sold carrying some type of price-off incentive.

Gross profit in the NewGen segment decreased $0.9 million or 45.0% to $1.1 million when compared to the corresponding period of the prior year. Gross margin of the NewGen segment decreased to 31.0% of net sales for the current period in comparison to 37.4% for the corresponding period of the prior year. The decrease in gross margin was primarily due to a mix shift within the segment to lower margin products.

Selling, General, and Administrative Expenses . Selling, general, and administrative expenses for the three months ended March 31, 2016 were $13.7 million compared to $12.7 million for the corresponding period of the prior year. The 8.4% increase for the three months ended March 31, 2016 was primarily the result of an increase in compensation associated with the salesforce expansion, incremental moist snuff tobacco merchandising and promotion, and legal expenses related to strategic initiatives and the IPO.

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Interest Expense and Financing Costs . Interest expense and financing costs for each of the three months ended March 31, 2016 and 2015 was $8.5 million.

Income Tax Expense. The Company’s income tax expense for the three months ended March 31, 2016 does not bear the normal relationship to income before income taxes because of net operating loss carryforwards which were utilized and were partially offset by certain minimum state income taxes. The Company’s income tax expense for the three months ended March 31, 2015 does not bear the normal relationship to income before income taxes because of the use of income tax loss carryforwards.

Net Income . Due to the factors described above, net income for the three months ended March 31, 2016 and 2015 was $2.2 million and $3.4 million, respectively.

EBITDA and Adjusted EBITDA:

To supplement our financial information presented in accordance with generally accepted accounting principles in the United States, or U.S. GAAP, we use non- U.S. GAAP financial measures, including EBITDA and Adjusted EBITDA. We believe Adjusted EBITDA provides useful information to management and investors regarding certain financial and business trends relating to our financial condition and results of operations. Adjusted EBITDA is used by management to compare our performance to that of prior periods for trend analyses and planning purposes and is presented to our board of directors. We believe that EBITDA and Adjusted EBITDA are appropriate measures of operating performance because they eliminate the impact of expenses that do not relate to business performance.

In addition, our credit agreements contain financial covenants that use Adjusted EBITDA calculations.

We define “EBITDA” as net income before depreciation and amortization, interest expense and provision for income taxes. We define “Adjusted EBITDA” as net income before depreciation and amortization, interest expense, provision for income taxes, loss on extinguishment of debt, other non-cash items and other items that we do not consider ordinary course in our evaluation of ongoing operating performance.

Non-U.S. GAAP measures should not be considered a substitute for, or superior to, financial measures calculated in accordance with U.S. GAAP. Adjusted EBITDA excludes significant expenses that are required by U.S. GAAP to be recorded in our financial statements and is subject to inherent limitations. In addition, other companies in our industry may calculate this non-U.S. GAAP measure differently than we do or may not calculate it at all, limiting its usefulness as a comparative measure. The table below provides a reconciliation between net income and Adjusted EBITDA.

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Three Months Ended March 31, March 31, 2016 2015 Net income $ 2,234 $ 3,427 Add: Interest expense 8,462 8,482 Depreciation expense 293 251 Income tax expense 213 75 EBITDA $ 11,202 $ 12,235 Components of Adjusted EBITDA LIFO adjustment (a) 309 431 Pension/postretirement expense (b) 117 94 Non-cash stock option and incentives expense 22 75 Foreign exchange hedging (c) (21) 240 Warehouse reconfiguation (d) - 375 Strategic initiatives (e) 432 363 Launch costs (f) 392 91 Adjusted EBITDA $ 12,453 $ 13,904

(a) Represents non-cash expense related to an inventory valuation allowance for last-in, first-out ("LIFO") reporting. (b) Represents our Pension/Postretirement expense. (c) Represents non-cash gain and loss stemming from our foreign exchange hedging activities. (d) Represents the one-time relocation of finished product for improved logistical services. (e) Represents the fees incurred for the study of strategic initatives. (f) Represents product launch costs of our new product lines.

Liquidity and Capital Reserves

Our principal uses for cash are working capital, debt service and capital expenditures. We believe that our cash flows from operations and borrowing availability under our ABL are adequate to satisfy our operating cash requirements for the foreseeable future.

We had working capital of $44.8 million at March 31, 2016 compared to working capital of $42.8 million at December 31, 2015. This increase is primarily the result of a decrease in accrued interest.

March 31, December 31, 2016 2015 Current Assets $ 62,948 $ 63,952 Current Liabilities 18,172 21,137

Working Capital $ 44,776 $ 42,815

Cash Flows From Operating Activities

The following table sets out the principal components of our cash flows from operating activities for the three months ended March 31, 2016 and 2015:

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Three Months Ended March 31, March 31, 2016 2015 Cash flows from operating activities: Net income $ 2,234 $ 3,427 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation expense 293 251 Amortization of deferred financing costs 362 362 Amortization of original issue discount 259 261 Interest incurred but not paid on PIK toggle note 2,254 1,945 Deferred income taxes 41 (35) Stock compensation expense 12 46 Member unit compensation expense 10 29 Changes in operating assets and liabilities: Accounts receivable 1,291 (1,931) Inventories (3,637) (1,742) Other current assets 1,455 1,749 Other assets 416 (12) Accounts payable 724 1,159 Accrued pension liabilities 64 42 Accrued postretirement liabilities (28) (31) Accrued expenses and other (4,773) 1,322 Net cash provided by operating activities $ 977 $ 6,842

For the three months ended March 31, 2016, net cash provided by operating activities decreased to $1.0 million from $6.8 million for the three months ended March 31, 2015, a decrease of $5.9 million, or 85.7%, principally due to increases in inventory and decreases in accrued expenses.

Cash Flows from Investing Activities

The following table sets out the principal components of our cash flows from investing activities for the three months ended March 31, 2016 and 2015:

Three Months Ended March 31, March 31, 2016 2015 Cash flows from investing activities: Capital expenditures $ (454) $ (327) Net cash used in investing activities $ (454) $ (327)

For the three months ended March 31, 2016, net cash used in investing activities increased to $0.5 million from $0.3 million for the three months ended March 31, 2015, an increase of $0.1 million.

Cash Flows from Financing Activities

The following table sets out the principal components of our cash flows used in financing activities for the three months ended March 31, 2016 and 2015:

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Three Months Ended March 31, March 31, 2016 2015 Cash flows from financing activities: Proceeds from revolving credit facility borrowings $ 1,000 $ 93 Prepaid equity issuance costs (268) - Payment of first lien term loan (3,150) (412) Proceeds from issuance of stock - 1 Net cash used in financing activities $ (2,418) $ (318)

For the three months ended March 31, 2016, net cash used in financing activities was $2.4 million compared with net cash used in financing activities of $0.3 million for the three months ended March 31, 2015, an increase of $2.1 million, principally due to payments on the first lien term loan during 2016, partially offset by proceeds from the revolving credit facility in 2016.

Long-Term Debt

The Company’s long-term indebtedness currently consists of our ABL, First Lien Credit Agreement and Second Lien Credit Facility. In connection with the IPO we repurchased and retired all of our PIK Toggle Notes and 7% Senior Notes for a combination of cash and shares of our common stock. See “—Recent Developments.” As of March 31, 2016, we were in compliance with the financial and restrictive covenants in our existing debt instruments. The following table provides outstanding balances under our debt instruments as of March 31, 2016 and December 31, 2015.

March 31, December 31, 2016 2015 ABL $ 1,018 $ 18 First Lien Term Loan 147,475 150,555 Second Lien Term Loan 78,943 78,882 PIK Toggle Notes 61,195 58,882 7% Senior Notes 10,429 10,360 299,060 298,697 Less deferred financing charges (5,912) (6,257) Less current maturities (1,650) (1,650) $ 291,498 $ 290,790

ABL Credit Agreement

The ABL Credit Agreement provides for aggregate commitments of up to $40 million, subject to a borrowing base, equal to the sum of (i) 85% of eligible accounts receivable, plus (ii) the lesser of (A) the product of 70% multiplied by the value of eligible inventory and (B) the product of 85% multiplied by the net recovery percentage identified in the most recent inventory appraisal multiplied by the value of eligible inventory, plus (iii) the lesser of (A) the product of 75% multiplied by the value of eligible inventory and (B) the product of 85% multiplied by the net recovery percentage identified in the most recent inventory appraisal multiplied by the value of the eligible finished goods inventory, minus (iv) the aggregate amount of reserves established by the administrative agent.

The interest rates per annum applicable to loans under the ABL Credit Agreement are, at the option of North Atlantic Trading Company, Inc. (“NATC”), the borrower under the facility, equal to the applicable Base Rate or LIBOR Rate plus the applicable Interest Margin, as defined below in the ABL Credit Agreement.

The ABL Credit Agreement matures in January 2019 and the balance outstanding at March 31, 2016 was $1.0 million. The weighted average interest rate on March 31, 2016 is 5.0%. As of March 31, 2016, we have the ability to borrow an additional $22.9 million.

The Company is subject to financial covenants under the ABL Credit Agreement and is required to maintain a consolidated fixed charge coverage ratio of at least 1.10 to 1.00 for each applicable period. The Company is subject to similar negative and affirmative covenants, and events of default as the first lien and second lien term loans described below. As of March 31, 2016, we were in compliance with all such covenants.

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First Lien Term Loan

On January 13, 2014, we entered into the First Lien Credit Agreement with Wells Fargo Securities, LLC and Jefferies Finance LLC, as Joint Lead Arrangers and Joint Bookrunners, and Wells Fargo Bank, National Association as Administrative Agent for a $170.0 million first lien term loan, which matures on January 13, 2020. NATC is the borrower and the first lien term loan is guaranteed by the Company and the Guarantors under the ABL.

The borrowings under the First Lien Credit Agreement are secured by a first priority lien on substantially all of the assets of the borrower and the guarantors of this facility (other than TPLLC), including a pledge of the capital stock of NATC and its subsidiaries held by Holdings, NATC or any Guarantor (other than Holdings), other than certain excluded assets. The aggregate outstanding amounts under the first lien term loan are paid in consecutive quarterly installments on the last business day of each March, June, September and December.

The loans designated as LIBOR rate loans bear interest at the LIBOR Rate then in effect (but not less than 1.25%) plus 6.50% and the loans designated as base rate loans bear interest at the (i) highest of (A) the Prime Rate, (B) the Federal Funds Rate plus 0.50%, (C) LIBOR for an interest period of one month plus 1.00% and (D) 2.25% per year plus (ii) 5.50%. We are required to make mandatory prepayments in certain circumstances including in connection with certain debt issuances by NATC or any of its subsidiaries or in connection with certain asset dispositions. We are permitted to voluntarily prepay the obligations at any time and from time to time without any penalty or premium. The First Lien Credit Agreement requires principal payments of $1.650 million in each of the years of 2015, 2016, 2017 and 2018, respectively, and $1.238 million in 2019. As of March 31, 2016, the weighted average interest rate on the first lien term loan was 7.78%.

The first lien term loan contains certain financial covenants that require NATC to maintain a consolidated fixed charge coverage ratio of not be less than 1.25 to 1.00 at the end of any fiscal quarter, and a consolidated total leverage ratio ranging from 6.25 to 1.00 from April 1, 2015 through September 30, 2016, decreasing to a ratio of 5.50 to 1.00 from October 1, 2018 to maturity.

The First Lien Credit Agreement contains negative covenants that, among other things, limit the incurrence of additional indebtedness, the distribution of dividends, transactions with affiliates, asset sales, acquisitions, mergers, prepayments of other indebtedness, the incurrence of liens and encumbrances, capital expenditures, restricted payments, and other matters customarily restricted in such agreements. The First Lien Credit Agreement also contains customary affirmative covenants including, among others, the provision of financial statements, maintenance of property, licenses and insurance. The First Lien Credit Agreement also contains an affirmative covenant requiring us to maintain in effect the Bolloré distribution and license agreements. The First Lien Credit Agreement also contains customary events of default, including payment defaults, breach of representations and warranties, covenant defaults, cross-acceleration, cross-defaults to certain other indebtedness, bankruptcy and insolvency, the occurrence of a change of control and judgment defaults. As of March 31, 2016, we were in compliance with all such covenants. If any events of default occur and are not cured within applicable grace periods or waived, the outstanding loans may be accelerated and the lenders’ commitments may be terminated. The occurrence of the bankruptcy and insolvency event of default will result in the automatic termination of commitments and acceleration of outstanding amounts under the First Lien Credit Agreement.

Second Lien Term Loan

On January 13, 2014, we entered into the Second Lien Credit Facility, with NATC as borrower, between the same parties as the First Lien Credit Agreement for an $80.0 million second lien term loan, which matures on July 13, 2020. The Second Lien Credit Facility is guaranteed by the same guarantors as the first lien term loan and is secured by a second priority lien over the same collateral.

In connection with the IPO, we prepaid $20 million of the borrowings outstanding under the facility in May 2016. See “—Recent Developments.”

Under the Second Lien Credit Facility, the loans designated as LIBOR rate loans bear interest at the LIBOR Rate then in effect (but not less than 1.25%) plus 10.25% and the loans designated as base rate loans bear interest at (i) the highest of (A) the Prime Rate, (B) the Federal Funds Rate plus 0.50%, (C) LIBOR for an interest period of one month plus 1.00% and (D) 2.25% per year plus (ii) 9.25%. There is no maximum interest rate other than that permitted by applicable law. We are required to make mandatory prepayments in certain circumstances including in connection with certain debt issuances by NATC or any of its subsidiaries or in connection with certain asset dispositions. We are permitted to voluntarily prepay the obligations without any penalty or premium at any time after the third anniversary of the closing date. For the first three years following the closing date, we must pay a prepayment premium, beginning at 3.0% of the amount being prepaid, refinanced or assigned, which reduces to 2.0% following the first anniversary and to 1.0% following the second anniversary. As of March 31, 2016, the weighted average interest rate was 11.5%.

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We are subject to substantially similar negative and affirmative covenants, and events of default as under the First Lien Credit Agreement. With respect to the financial covenants, we have the same fixed charge coverage ratio requirements, however, NATC is required to maintain a consolidated total leverage ratio under the Second Lien Credit Facility ranging from 6.50 to 1.00 from April 1, 2015 through September 30, 2016, reducing to a maximum ratio of 5.75 to 1.00 from October 1, 2018 to maturity. As of March 31, 2016, we were in compliance with all such covenants.

PIK Toggle Notes and Standard General Warrants

On January 13, 2014, TPB issued the PIK Toggle Notes to Standard General in an aggregate principal amount of $45.0 million and issued the warrants, which were valued at $1.7 million, to purchase 42,424 of our common stock at $.01 per share, in connection therewith. After adjustment for the stock split effected prior to the IPO, the warrants provide for the purchase of 442,558 shares of the Company’s common stock. The PIK Toggle Notes had an original issue discount of $1.7 million and were initially valued at $43.3 million.

The PIK Toggle Notes accrued interest based on the LIBOR Rate then in effect (but not less than 1.25%) plus 13.75%, reset quarterly. We chose to pay interest in kind for all interest payments for the three months ended March 31, 2016 and the years ended December 31, 2015 and 2014. The outstanding principal amount of the PIK Toggle Notes at March 31, 2016 was $61.2 million.

In connection with the IPO, in May of 2016 we repurchased all of the outstanding PIK Toggle Notes in exchange for a combination of cash and shares of our common stock. See “—Recent Developments.”

As of March 31, 2016, 442,558 Standard General Warrants remained issued and outstanding.

7% Senior Notes

In January of 2014, TPB conducted a rights offering to certain of our stockholders that qualified as “accredited investors” under the Securities Act, pursuant to which TPB issued our 7% Senior Notes to various stockholders, including Standard General and members of management, for a principal amount of $11.0 million and issued the noteholders Intrepid Warrants to purchase 11,000,000 units of membership interests in Intrepid Brands. The Intrepid Warrants represented 40% of the Intrepid Brands common units outstanding on a fully diluted basis, and are exercisable at a purchase price of $1.00 per unit. As a result of the Intrepid Warrants, the 7% Senior Notes had an original issue discount of $2.8 million and were initially valued at $8.2 million.

Interest was payable on the 7% Senior Notes on the last business day of June and December in each year, provided that we may elect to exercise an option. We elected to pay interest in kind (“PIK Interest”) on the 7% Senior Notes for all interest in 2015 and 2014. The outstanding principal amount of the 7% Senior Notes was $12.6 million as of March 31, 2016. We may redeem the 7% Senior Notes at any time without penalty or premium. As of March 31, 2016, we were in compliance with all of the covenants under the 7% Senior Notes.

In connection with the IPO, in May of 2016 we repurchased all of the outstanding 7% Senior Notes in exchange for shares of our common stock and all outstanding Intrepid Warrants for cash. See “—Recent Developments.”

Credit Line with Standard General

The Company has entered into an agreement with Standard General for a $50.0 million line of credit that we may use to finance acquisitions that are approved by Standard General L.P. in its sole discretion. The line of credit will terminate and all borrowings under the line will mature on May 13, 2021. Borrowings under the line of credit will bear interest at a floating rate equal to LIBOR plus a margin of 6.5% with a LIBOR floor of 1.0%. TPB will be the borrower under the facility and none of its present subsidiaries will guarantee the facility.

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Off-balance Sheet Arrangements

As of March 31, 2016, NATC had two outstanding foreign exchange forward contracts for the purchase of 1.1 million Euros.

During the year ended December 31, 2015, we executed various forward contracts for the purchase of 11.5 million Euros with maturity dates from May 13, 2015 to July 11, 2016. On December 31, 2015, we had foreign currency contracts to purchase a total amount of 5.1 million Euros.

The effect of a hypothetical 10% change in Euro and US exchange rates applicable to our business would not have had a material impact on our consolidated financial statements.

Contractual Obligations

As of March 31, 2016, there had been no material changes outside the ordinary course to our contractual obligations from December 31, 2015 as reported in our Prospectus dated May 10, 2016 and filed with the SEC.

Inflation

The Company believes that any effect of inflation at current levels will be minimal. Historically, we have been able to increase prices at a rate equal to or greater than that of inflation and believe that we will continue to be able to do so for the foreseeable future. In addition, we have been able to maintain a relatively stable variable cost structure for our products due, in part, to our successful procurement and reformulation activities with regard to our tobacco products and, in part, to our existing contractual agreement for the purchase of our premium cigarette papers.

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Item 3. Quantitative and Qualitative Disclosures about Market Risk

Foreign Currency Sensitivity

There have been no material changes in our exposure to market risk during the three months ended March 31, 2016. Please refer to our “Quantitative and Qualitative Disclosures about Market Risk” included in our Prospectus dated May 10, 2016 related to the IPO.

Item 4. Controls and Procedures

We have carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act of 1934, as amended (the “Act”)) as of March 31, 2016. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Act is: (i) recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms; and (ii) accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosures.

There have been no changes in the Company’s internal control over financial reporting during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II OTHER INFORMATION

Item 1. Legal Proceedings

The Company is involved in various claims and actions that arise in the normal course of business. While the outcome of these legal proceedings cannot be predicted with certainty, it is the opinion of management that the resolution of the proceedings should not have a material adverse effect on our financial position, results of operations or cash flows of the Company.

Item 1A. Risk Factors

In addition to the other information set forth in this report, you should carefully consider the factors discussed in “Risk Factors” contained in our Prospectus dated May 10, 2016 related to the IPO. There have been no material changes to the Risk Factors set forth in the Prospectus.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

On May 10, 2016, our Registration Statement on Form S-1 (File No. 333-207816) for our IPO was declared effective by the SEC, pursuant to which we registered and sold an aggregate of 6,210,000 shares of common stock (including 810,000 shares sold pursuant to the underwriters' Over-Allotment Option) at a price of $10.00 per share. The IPO commenced on May 11, 2016 and did not terminate before all of the securities registered in the Registration Statement were sold. The IPO closed on May 13, 2016 and the Over-Allotment Option was closed on May 19, 2016. Cowen and Company, LLC and FBR Capital Markets & Co. acted as Joint Book-Running Managers and underwriters in the IPO.

We raised a total of approximately $62.1 million in gross proceeds from the IPO, or $58.2 million in net proceeds after deducting underwriting commissions and other associated costs. We used the proceeds from the IPO together with cash on hand to pay fees and expenses related to the IPO of approximately $3.9 million, repurchase Intrepid Brands, LLC warrants and options for approximately $6.2 million, repay approximately $34 million of our floating rate PIK Toggle Notes due 2021 and to repay approximately $20 million of the borrowings outstanding under our Second Lien Credit Agreement.

Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

Item 6. Exhibits

See the Exhibit Index immediately following the signature page of this Quarterly Report on Form 10-Q.

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Signature

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

TURNING POINT BRANDS, INC. By: /s/ Lawrence S. Wexler Name: Lawrence S. Wexler Title: Chief Executive Officer

/s/ Mark A. Stegeman Name: Mark A. Stegeman Title: Chief Financial and Accounting Officer

Dated: June 15, 2016

42 Table of Contents

Exhibit No. Description

3.1 * Second Amended and Restated Certificate of Incorporation.

3.2 Amended and Restated By-laws (incorporated by reference to Exhibit 3.3 of the Registrant’s Registration Statement on Form S-1 (File No. 333- 207816) filed on November 24, 2015).

10.1 * Exchange and Sale Agreement between North Atlantic Holding Company, Inc. and Standard General for PIK Notes.

10.2 * Exchange Agreement between Turning Point Brands, Inc. and Standard General for 7% Senior Notes.

10.3 Exchange Agreement between North Atlantic Holding Company, Inc. and certain holders of the 7% Senior Notes dated November 4, 2015 (incorporated by reference to Exhibit 10.39 of the Registrant’s Registration Statement on Form S-1 (File No. 333-207816) filed on November 24, 2015).

10.4 * Intrepid Brands LLC Warrant Repurchase Agreement, dated May 10, 2016.

31.1 * Certification of Chief Executive Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a)m as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2 * Certification of Chief Financial Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1 * Certifications of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

* Filed herewith.

43 Exhibit 3.1

SECOND AMENDED AND RESTATED

CERTIFICATE OF INCORPORATION

TURNING POINT BRANDS, INC.

May 12, 2016

Turning Point Brands, Inc. (the “ Corporation ”), a corporation organized and existing under the General Corporation Law of the State of Delaware, as amended (the “ DGCL ”), does hereby certify as follows:

The name of the Corporation is Turning Point Brands, Inc. The original certificate of incorporation of the Corporation was filed under the name North Atlantic Holding Company, Inc. with the office of the Secretary of State of the State of Delaware on January 28, 2004, amended on August 18, 2008, further amended and restated on September 24, 2015 and further amended on November 4, 2015 and on April 28, 2016.

This Second Amended and Restated Certificate of Incorporation, as amended (the “ Certificate of Incorporation ”), was duly adopted by the Board of Directors of the Corporation (the “ Board of Directors ”) and by the stockholders of the Corporation in accordance with Sections 242 and 245 of the DGCL.

This Certificate of Incorporation restates and integrates and further amends the certificate of incorporation of the Corporation, as heretofore amended or supplemented.

The Certificate of Incorporation is hereby amended and restated to read in its entirety as follows:

FIRST: The name of the corporation is Turning Point Brands, Inc.

SECOND: The address of the registered office of the Corporation in the State of Delaware is 1209 Orange Street, City of Wilmington, County of New Castle, State of Delaware, postal 19801. The name of the registered agent of the Corporation at that address is The Corporation Trust Company.

THIRD: The purpose of the Corporation is to engage in any lawful act or activity for which a corporation may be organized under the DGCL.

FOURTH: The Corporation is authorized to issue three classes of stock designated, respectively, as voting common stock (“ Voting Common Stock ”), non-voting common stock (“ Non-Voting Common Stock ” and, together with the Voting Common Stock, the “ Common Stock ”) and preferred stock (“ Preferred Stock ”). The total number of shares of capital stock that the Corporation is authorized to issue is two hundred forty million (240,000,000). The total number of shares of Voting Common Stock that the Corporation is authorized to issue is one hundred ninety million (190,000,000), with a par value of $0.01 per share, the total number of shares of Non-Voting Common Stock that the Corporation is authorized to issue is ten million (10,000,000), with a par value of $0.01 per share, and the total number of shares of Preferred Stock that the Corporation is authorized to issue is forty million (40,000,000), with a par value of $0.01 per share.

1 FIFTH: The rights, preferences, privileges and restrictions granted or imposed upon the Voting Common Stock and the Non-Voting Common Stock are as follows:

A. Subject to the rights of any holders of any shares of Preferred Stock which may from time to time come into existence and be outstanding, the holders of Voting Common Stock and Non-Voting Common Stock shall be entitled to the payment of dividends when and as declared by the Board of Directors in accordance with applicable law and to receive other distributions from the Corporation. Any dividends declared by the Board of Directors to the holders of the then outstanding Voting Common Stock and Non-Voting Common Stock shall be paid to the holders thereof pro rata in accordance with the number of shares of Voting Common Stock and Non-Voting Common Stock held by each such holder as of the record date of such dividend, as if the two classes of stock constituted a single class.

B. Subject to the rights of any holders of any shares of Preferred Stock which may from time to time come into existence and be outstanding, in the event of any liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, the funds and assets of the Corporation that may be legally distributed to the Corporation’s stockholders shall be distributed among the holders of the then outstanding Voting Common Stock and Non-Voting Common Stock pro rata in accordance with the number of shares of Voting Common Stock and Non-Voting Common Stock held by each such holder, as if the two classes of stock constituted a single class.

C. Each holder of Voting Common Stock shall be entitled to one (1) vote for each share of Voting Common Stock held by such holder. Each holder of Voting Common Stock and Non-Voting Common Stock shall be entitled to notice of any stockholders’ meeting in accordance with the bylaws of the Corporation (as in effect at the time in question) and applicable law on all matters put to a vote of the stockholders of the Corporation. Except as otherwise required by law and paragraph D below, each share of Non-Voting Common Stock shall not entitle the holder thereof to any voting rights, including, but not limited to, any right to approve any increase or decrease (but not below the number of shares then outstanding) in the number of authorized shares of Non-Voting Common Stock irrespective of the provisions of Section 242(b)(2) of the DGCL. The number of authorized shares of Voting Common Stock, Non-Voting Common Stock or Preferred Stock may be increased or decreased (but not below the number of shares thereof then outstanding) by the affirmative vote of the holders of a majority in voting power of the stock of the Corporation entitled to vote thereon irrespective of the provisions of Section 242(b)(2) of the DGCL (or any successor provision thereto), and no vote of the holders of either the Voting Common Stock, Non-Voting Common Stock or the Preferred Stock voting separately as a class shall be required therefor.

D. The holders of Non-Voting Common Stock shall be entitled to vote on matters involving amendments to the terms of the Non-Voting Common Stock that would significantly and adversely affect the rights or preferences of the Non-Voting Common Stock, including, without limitation, with respect to the convertibility thereof, any such amendments to which shall require the affirmative vote of a majority of the outstanding shares of the Non-Voting Common Stock, voting as a separate class.

2 E. Each outstanding share of Non-Voting Common Stock may be converted into one fully paid and nonassessable share of Voting Common Stock upon the determination of the Board of Directors, which may be made in its sole discretion.

(i) The conversion right provided in this paragraph (E) shall be exercised by the delivery of a written notice (the “ Conversion Notice ”) of the election by the Secretary of the Corporation to the holder of shares of Non-Voting Common Stock (the “ Converted Holder ”) to be converted. Subject to prior approval by the Board of Directors, the Conversion Notice shall be countersigned by the Converted Holder, and an officer of the Corporation shall deliver such countersigned Conversion Notice to the office of the transfer agent of the Corporation (the “ Transfer Agent ”) during normal business hours together with (if so required by the Corporation or the Transfer Agent) an instrument of transfer, in form satisfactory to the Corporation and to the Transfer Agent, duly executed by such Converted Holder or his duly authorized attorney, and funds in the amount of any applicable transfer tax (unless provision satisfactory to the Corporation is otherwise made therefor), if required pursuant to subparagraph (iii).

(ii) As promptly as practicable after the delivery of a Conversion Notice to the Transfer Agent and the payment in cash of any amount required by the provisions of subparagraphs (i) and (iii), the Corporation will deliver or cause to be delivered at the office of the Transfer Agent to or upon the written order of the Converted Holder, a confirmation of book-entry transfer of shares representing the number of fully paid and non-assessable shares of Voting Common Stock issuable upon such conversion, issued in such name or names as the Converted Holder may direct by written notice to the Corporation. Such conversion shall be deemed to have been made immediately prior to the close of business on the date of the delivery of the Conversion Notice to the Transfer Agent, and all rights of the Converted Holder shall cease with respect to such shares of Non-Voting Common Stock at such time and the person or persons in whose name or names the shares of Voting Common Stock issued upon conversion shall be treated for all purposes as having become the record holder or holders of such shares of Voting Common Stock at such time; provided, however, that any delivery of a Conversion Notice and payment on any date when the stock transfer books of the Corporation shall be closed shall constitute the person or persons in whose name or names the shares Voting Common Stock are to be issued as the record holder or holders thereof for all purposes immediately prior to the close of business on the next succeeding day on which such stock transfer books are open.

(iii) The issuance of shares of Voting Common Stock upon conversion of shares of Non-Voting Common Stock shall be made without charge for any stamp or other similar tax in respect of such issuance. However, if any such shares to be issued upon conversion are to be issued in a name other than that of the Converted Holder, the person or persons to whom such shares are to be issued shall pay to the Corporation the amount of any tax that may be payable in respect of any transfer involved in such issuance, or shall establish to the satisfaction of the Corporation that such tax has been paid.

3 (iv) When shares of Non-Voting Common Stock have been converted, they shall be cancelled and become authorized but unissued shares of Non-Voting Common Stock.

SIXTH: The Board of Directors is authorized, subject to any limitations prescribed by law, to provide for the issuance of shares of Preferred Stock in series, and by filing a certificate pursuant to the applicable law of the State of Delaware (such certificate being hereinafter referred to as a “ Preferred Stock Designation ”), to establish from time to time the number of shares to be included in each such series, and to fix the designation, powers, preferences, and rights of the shares of each such series and any qualifications, limitations or restrictions thereof. The number of authorized shares of Preferred Stock may be increased or decreased (but not below the number of shares thereof then outstanding) by the affirmative vote of the holders of a majority of the voting power of all of the then-outstanding shares of capital stock of the Corporation entitled to vote thereon, without a vote of the holders of the Preferred Stock, or of any series thereof, unless a vote of any such holders is required pursuant to the terms of any Preferred Stock Designation.

SEVENTH: The following provisions are inserted for the management of the business and the conduct of the affairs of the Corporation, and for further definition, limitation and regulation of the powers of the Corporation and of its directors and stockholders:

A. The business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors. In addition to the powers and authority expressly conferred upon them by statute or by this Certificate of Incorporation or the by‑laws of the Corporation, the directors are hereby empowered to exercise all such powers and do all such acts and things as may be exercised or done by the Corporation, except as otherwise specifically required by law or as otherwise provided in this Certificate of Incorporation.

B. The directors of the Corporation need not be elected by written ballot unless the by‑laws so provide.

C. Subject to the rights of the holders of any series of Preferred Stock, any action required or permitted to be taken by the stockholders of the Corporation must be effected at a duly called annual or special meeting of stockholders of the Corporation and may not be effected by any consent in writing by such stockholders.

D. Special meetings of stockholders of the Corporation may be called only by the Board of Directors acting pursuant to a resolution adopted by a majority of the Whole Board. For purposes of this Certificate of Incorporation, the term “Whole Board” shall mean the total number of authorized directors whether or not there exist any vacancies in previously authorized directorships.

E. An annual meeting of stockholders, for the election of directors to succeed those whose terms expire and for the transaction of such other business as may properly come before the meeting, shall be held at such place, on such date, and at such time as the Board of Directors shall fix.

4 EIGHTH:

A. Subject to the rights of the holders of any series of Preferred Stock to elect additional directors under specified circumstances, the number of directors shall be fixed from time to time exclusively by the Board of Directors pursuant to a resolution adopted by a majority of the Whole Board. The directors, other than those who may be elected by the holders of any series of Preferred Stock under specified circumstances, shall have a term of office to expire at the Corporation’s next annual meeting of stockholders after their election, with each director to hold office until his or her successor shall have been duly elected and qualified.

B. A majority of the Whole Board shall constitute a quorum for all purposes at any meeting of the Board of Directors, and, except as otherwise expressly required by law or by this Certificate of Incorporation, all matters shall be determined by the affirmative vote of a majority of the directors present at any meeting at which a quorum is present.

C. Subject to the rights of the holders of any series of Preferred Stock then outstanding, newly created directorships resulting from any increase in the authorized number of directors or any vacancies in the Board of Directors resulting from death, resignation, disqualification, removal from office or other cause shall, unless otherwise required by law or by resolution of the Board of Directors, be filled only by a majority vote of the directors then in office, though less than a quorum (and not by stockholders), and directors so chosen shall serve for a term expiring at the annual meeting of stockholders at which the term of office of the class to which they have been chosen expires, with each director to hold office until his or her successor shall have been duly elected and qualified. No decrease in the authorized number of directors shall shorten the term of any incumbent director.

D. Advance notice of stockholder nominations for the election of directors and of business to be brought by stockholders before any meeting of the stockholders of the Corporation shall be given in the manner provided in the by‑laws of the Corporation.

E. Subject to the rights of the holders of any series of Preferred Stock then outstanding, any director, or the entire Board of Directors, may be removed from office at any time, but only by the affirmative vote of the holders of at least a majority of the voting power of all of the then-outstanding shares of capital stock of the Corporation then entitled to vote at an election of directors, voting together as a single class.

NINTH: The Board of Directors is expressly empowered to adopt, amend or repeal by‑laws of the Corporation. Any adoption, amendment or repeal of the by‑laws of the Corporation by the Board of Directors shall require the approval of a majority of the Whole Board. The stockholders shall also have power to adopt, amend or repeal the by‑laws of the Corporation; provided, however, that, in addition to any vote of the holders of any class or series of stock of the Corporation required by law or by this Certificate of Incorporation, the affirmative vote of the holders of at least a majority of the voting power of all of the then‑outstanding shares of the capital stock of the Corporation entitled to vote thereon, voting together as a single class, shall be required to adopt, amend or repeal any provision of the by‑laws of the Corporation.

5 TENTH: A director of the Corporation shall not be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (A) for any breach of the director’s duty of loyalty to the Corporation or its stockholders, (B) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (C) under Section 174 of the DGCL, or (D) for any transaction from which the director derived an improper personal benefit. If the DGCL is amended to authorize corporate action further eliminating or limiting the personal liability of directors, then the liability of a director of the Corporation shall be eliminated or limited to the fullest extent permitted by the DGCL, as so amended.

Any repeal or modification of the foregoing paragraph shall not adversely affect any right or protection of a director of the Corporation existing at the time of such repeal or modification.

ELEVENTH: The Corporation reserves the right to amend or repeal any provision contained in this Certificate of Incorporation in the manner prescribed by the laws of the State of Delaware and all rights conferred upon stockholders are granted subject to this reservation; provided, however, that, notwithstanding any other provision of this Certificate of Incorporation or any provision of law that might otherwise permit a lesser vote or no vote, but in addition to any vote of the holders of any class or series of the stock of this corporation required by law or by this Certificate of Incorporation, the affirmative vote of the holders of at least a majority of the voting power of all of the then-outstanding shares of the capital stock of the Corporation entitled to vote thereon, voting together as a single class, shall be required to amend or repeal this Certificate of Incorporation.

TWELFTH: Unless the Corporation consents in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware (the “ Court of Chancery ”) shall be the sole and exclusive forum for any stockholder (including a beneficial owner) to bring (A) any derivative action or proceeding brought on behalf of the Corporation, (B) any action asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee of the Corporation to the Corporation or the Corporation’s stockholders, (C) any action asserting a claim against the Corporation, its directors, officers or employees arising pursuant to any provision of the DGCL or this Certificate of Incorporation or bylaws, or (D) any action asserting a claim against the Corporation, its directors, officers or employees governed by the internal affairs doctrine, except as to each of (A) through (D) above, for any claim as to which the Court of Chancery determines that there is an indispensable party not subject to the jurisdiction of the Court of Chancery (and the indispensable party does not consent to the personal jurisdiction of the Court of Chancery within ten days following such determination), which is vested in the exclusive jurisdiction of a court or forum other than the Court of Chancery, or for which the Court of Chancery does not have subject matter jurisdiction. If any provision or provisions of this Article TWELFTH shall be held to be invalid, illegal or unenforceable as applied to any person or entity or circumstance for any reason whatsoever, then, to the fullest extent permitted by law, the validity, legality and enforceability of such provisions in any other circumstance and of the remaining provisions of this Article TWELFTH (including, without limitation, each portion of any sentence of this Article TWELFTH containing any such provision held to be invalid, illegal or unenforceable that is not itself held to be invalid, illegal or unenforceable) and the application of such provision to other persons or entities and circumstances shall not in any way be affected or impaired thereby.

6 THIRTEENTH: In order to preserve the rights of the Corporation or any “Subsidiary” (as hereinafter defined) to distribute certain products pursuant to the “Distribution Agreements” (as hereinafter defined), “Restricted Investors” (as hereinafter defined) shall not own (whether of record or beneficially) more than the “Permitted Percentage” (as hereinafter defined) of any class of capital stock of the Corporation at any time outstanding, and the provisions contained in this Article THIRTEENTH shall apply to the extent necessary to prevent the loss by the Corporation or any Subsidiary of such rights. The Board of Directors (or any duly constituted committee thereof) is specifically authorized to make all such reasonable determinations as shall be necessary to implement the provisions of this Article THIRTEENTH set forth below.

A. For the purposes of this Article THIRTEENTH, the following terms shall have the following meanings:

1. “ Bolloré ” shall mean Bolloré Technologies, S.A., a corporation organized under the laws of the Republic of France.

2. “ Bolloré Competitor ” shall mean any Entity that directly or indirectly manufactures, sells, markets, distributes or otherwise promotes cigarette paper booklets, filter tubes, injector machines or filter tips in the Territory.

3. “ Distribution Agreements ” shall mean the Amended and Restated Distribution and License Agreements dated as of November 30, 1992 between Bolloré and North Atlantic Operating Corporation, Inc., a Delaware corporation and subsidiary of the Corporation, relating to (i) the United States and (ii) Canada, each as amended by a Restated Amendment dated June 25, 1997 and Amendments dated respectively October 22, 1997, October 7, 1999, October 20, 1999, June 19, 2002, February 28, 2005 and April 20, 2006, and the License and Distribution Agreement, dated March 19, 2013, between Bolloré and North Atlantic Operating Corporation, Inc., in each case as so amended and as may hereafter be amended, modified or superseded, and any other related agreements between or among such parties.

4. “ Entity ” means any individual, partnership, firm, corporation, limited liability company, association, trust, unincorporated organization or other entity.

5. “ Equity Interest ” means the ownership of any class of equity security of an Entity (whether common or preferred and whether voting or non-voting), any security that is convertible into any class of equity security of an Entity (including, but not limited to any warrant, option, convertible note or contract right to acquire any equity security) or any partnership or other equity ownership interest in an Entity.

7 6. “ Fair Market Value ” shall mean the average Market Price of one share of stock for the 30 consecutive trading days next preceding the date of determination. The “Market Price” for a particular day shall mean (i) the last reported sales price, regular way, or, in case no sale takes place on such day, the average of the reported closing bid and asked prices, regular way, in either case as reported on the New York Stock Exchange, Inc. (“NYSE”) composite tape; and (ii) if the Common Stock is not then listed or admitted to unlisted trading privileges on the NYSE, as reported on the consolidated reporting system of the principal national securities exchange (then registered as such pursuant to Section 6 of the Securities Exchange Act of 1934, as amended) on which the Common Stock is then listed or admitted to unlisted trading privileges; and (iii) if the Common Stock is not then listed or admitted to unlisted trading privileges on the NYSE or any national securities exchange, as included for quotation through the National Association of Securities Dealers, Inc. Automated Quotation (“NASDAQ”) National Market System; and (iv) if the Common Stock is not then listed or admitted to unlisted trading privileges on the NYSE or on any national securities exchange, and is not then included for quotation through the NASDAQ National Market System, (x) the average of the closing “bid” and “asked” prices on such day in the over-the-counter market as reported by NASDAQ or, (y) if “bid” and “asked” prices for the Common Stock on such day shall not have been reported on NASDAQ, the average of the “bid” and “asked” prices for such day as furnished by any NYSE member firm regularly making a market in and for the Common Stock. If the Common Stock ceases to be publicly traded, the Fair Market Value thereof shall mean the fair value of one share of Common Stock as determined in good faith by the Board of Directors, which determination shall be conclusive.

7. “ Permitted Percentage ” shall mean 14.9%.

8. “ Redemption Securities ” shall mean interest bearing promissory notes of the Corporation with a maturity of not more than 10 years from the date of issue and bearing interest and having such other payment terms designed to ensure, in the Corporation’s determination, that the discounted present value of such promissory notes at the date of issuance is substantially equivalent to the Redemption Price (as hereinafter defined) as if paid in cash.

9. “ Restricted Investor ” means (i) any Bolloré Competitor, (ii) any Entity that owns more than a 20% Equity Interest in any Bolloré Competitor, or (iii) any person who serves as a director or officer of, or any Entity that has the right to appoint an officer or director of, any Bolloré Competitor or of any Entity that owns more than a 20% Equity Interest in any Bolloré Competitor.

10. “ Subsidiary ” shall mean any Entity 50% or more of whose Equity Interests are owned, directly or indirectly, by the Corporation.

11. “ Territory ” means the United States, the District of Columbia, the territories, possessions and military bases of the United States and the Dominion of Canada.

B. Restrictions on Issuance and Transfer . Any purported issuance (including upon the exercise, conversion or exchange of any securities of the Corporation) or transfer of any shares of any class of capital stock of the Corporation that would result in the ownership by any Restricted Investor, in the aggregate, of a percentage of the outstanding shares of such class of capital stock in excess of the Permitted Percentage shall, to the fullest extent permitted by applicable law and for so long as such excess exists, be ineffective as against the Corporation, and neither the Corporation nor its transfer agent shall register such purported transfer or issuance on the stock transfer records of the Corporation, and neither the Corporation nor its transfer agent shall be required to recognize the purported transferee or owner as a stockholder of the Corporation for any purpose whatsoever, except to the extent necessary to effect a further transfer to a person who is not a Restricted Investor and for purposes of effecting any remedy available to the Corporation, in each case consistent with the policy and provisions of this Article THIRTEENTH.

8 C. No Voting Rights; Temporarily Withholding Payments of Dividends and Other Distributions . If on any date (including any record date) ownership by any Restricted Investor (including ownership resulting from the exercise, conversion or exchange of securities of the Corporation), in the aggregate, of the outstanding capital stock of any class of the Corporation exceeds the Permitted Percentage, the Corporation shall determine in the manner prescribed below which shares owned by such Restricted Investor constitute such excess (the “ Excess Shares ”), and the Excess Shares shall (so long as such excess exists) not have any voting rights, and the Corporation may (so long as such excess exists) temporarily withhold the payment of dividends and the sharing in any other distribution (upon liquidation or otherwise) in respect of the Excess Shares; provided, however, that any such dividend or distribution shall be set aside for payment to the owners of the Excess Shares when such shares are no longer owned by a Restricted Investor. The determination of those shares that constitute Excess Shares shall be made solely by reference to the date or dates on which such shares were acquired by a Restricted Investor (which, in the event such shares were acquired upon the exercise, conversion or exchange of securities, shall be deemed to be the date of such exercise, conversion or exchange), starting with the most recent acquisition of shares of capital stock by a Restricted Investor and including, in reverse chronological order of acquisition, all other acquisitions of shares of capital stock by the Restricted Investor from and after the acquisition of those shares of capital stock by the Restricted Investor that first caused the Permitted Percentage to be exceeded, the determination by the Corporation as to those shares that constitute Excess Shares shall be determined by reference to bona fide records maintained by the Corporation’s transfer agent and shall be conclusive and binding on the Restricted Investor in all respects.

D. Redemption of Stock . Excess Shares shall be subject to redemption by the Corporation (by action of the Board of Directors, in its discretion) to the extent necessary to reduce the aggregate number of shares of such capital stock owned by Restricted Investors to the Permitted Percentage. The terms and conditions of such redemption shall be as follows:

1. the per share redemption price to be paid for the Excess Shares (the “ Redemption Price ”) shall be the sum of (i) the Fair Market Value of such shares of capital stock plus (ii) an amount equal to the amount of any dividend or distribution declared in respect of such shares prior to the date on which such shares are called for redemption and which amount has been withheld by the Corporation pursuant to paragraph C of this Article THIRTEENTH;

2. the Redemption Price shall be paid either in cash (by bank or cashier’s check) or by the issuance of Redemption Securities, as determined by the Board of Directors, in its discretion;

9 3. the Excess Shares to be redeemed shall be selected in the same manner as provided in paragraph C of this Article THIRTEENTH and shall not exceed the number necessary to reduce the percentage of shares of capital stock owned by the Restricted Investor, in the aggregate, to the Permitted Percentage; provided that the Corporation may adjust upward to the nearest whole share the number of shares to be redeemed so as not to be required to redeem or issue fractional shares;

4. written notice of the date of redemption (the “ Redemption Date ”) together with a letter of transmittal to accompany certificates evidencing shares of stock which are surrendered for redemption shall be given either by hand delivery or by overnight courier service first class mail, postage prepaid, to each holder of record of the selected shares to be redeemed, at such holder's last known address as the same appears on the stock register of the Corporation (unless such notice is waived in writing by any such holders) (the “ Redemption Notice ”);

5. the Redemption Date (for purposes of determining right, title and interest in and to shares of capital stock being selected for redemption) shall be the later of (A) the date specified as the redemption date in the Redemption Notice given to holders (which date shall not be earlier than the date such notice is given) or (B) the date on which the funds or Redemption Securities necessary to effect the redemption have been irrevocably deposited in trust for the benefit of such holders;

6. each Redemption Notice shall specify (A) the Redemption Date (as determined pursuant to clause (5) of this paragraph D of this Article THIRTEENTH), (B) the number of shares of capital stock to be redeemed from such holder (and the certificate number(s) evidencing such shares), (C) the Redemption Price and the manner of payment thereof, (D) the place where certificates for such shares are to be surrendered for cancellation against the simultaneous payment of the Redemption Price, (E) any instructions as to the endorsement or assignment for transfer of such certificates and the completion of the accompanying letter of transmittal; and (F) the fact that all right, title and interest in respect of the shares so selected for redemption (including, without limitation, voting and dividend rights) shall cease and terminate on the Redemption Date, except for the right to receive the Redemption Price;

7. from and after the Redemption Date, all right, title and interest in respect of the shares selected for redemption (including, without limitation, voting and dividend rights) shall cease and terminate, such shares shall no longer be deemed to be outstanding (and may either be retired or held by the Corporation as treasury stock) and the owners of such shares shall thereafter be entitled only to receive the Redemption Price; and

8. upon surrender of the certificates for any shares so redeemed in accordance with the requirements of the Redemption Notice and accompanying letter of transmittal (and otherwise in proper form for transfer as specified in the Redemption Notice), the owner of such shares shall be entitled to payment of the Redemption Price. In case fewer than all the shares represented by any such certificate are redeemed, a new certificate (or certificates) shall be issued representing the shares not redeemed without cost to the holder thereof.

10 E. Certification Requirements . To the extent necessary to enable the Corporation to determine the percentage of the outstanding capital stock of any class owned by Restricted Investors, the Corporation may require that record or beneficial owners of shares of stock confirm whether or not they are Restricted Investors (by submitting such documentary and other evidence thereof as the Corporation may reasonably require or request) and may, in the discretion of the Board of Directors, temporarily withhold and deposit into escrow dividends payable to, any such record holder and owner until adequate confirmation is received. The Board of Directors is authorized to take all such other ministerial acts and to make such interpretations as it may deem necessary or advisable to effectuate the policy and provisions of this Article THIRTEENTH.

F. Severability . Each provision of this Article THIRTEENTH is intended to be severable from every other provision. If any one or more of the provisions contained in this Article THIRTEENTH is held by a court or similar body of competent jurisdiction to be invalid, illegal or unenforceable, the validity, legality or enforceability of any other provision of this Article THIRTEENTH shall not be affected, and this Article THIRTEENTH shall be construed as if the provisions held to be invalid, illegal or unenforceable had never been contained therein.

FOURTEENTH: The Corporation waives, to the maximum extent permitted by law, the application of the doctrine of corporate opportunity, or any other analogous doctrine, with respect to the Corporation, to Standard General LP, a Delaware limited partnership, or any stockholder of the Corporation that is an “Affiliate” (as hereinafter defined) of Standard General LP (each, a “SG Stockholder”) or any director of the Corporation who is an employee or “Affiliate” (as hereinafter defined) of any SG Stockholder. Subject to Article THIRTEENTH, no SG Stockholder or director of the Corporation who is an employee or Affiliate of any SG Stockholder shall have any obligation to refrain from (A) engaging in the same or similar activities or lines of business as the Corporation or developing or marketing any products or services that compete, directly or indirectly, with those of the Corporation, (B) investing or owning any interest publicly or privately in, or developing a business relationship with, any Entity (as defined in Article THIRTEENTH) engaged in the same or similar activities or lines of business as, or otherwise in competition with, the Corporation or (C) doing business with any client or customer of the Corporation (each of the activities referred to in clauses (A)-(C), a “Specified Activity”), and the Corporation renounces any interest or expectancy in, or in being offered an opportunity to participate in, any Specified Activity that may be presented to or become known to any SG Stockholder or any director of the Corporation who is an employee or Affiliate of any SG Stockholder. As used in this Article FOURTEENTH, (1) the term “Corporation” means the Corporation and/or any of its Subsidiaries (as defined in Article THIRTEENTH) and (2) the term “Affiliate” means, with respect to Standard General LP, any other Entity directly or indirectly controlling or controlled by or under direct or indirect common control with Standard General LP; provided that (a) neither the Corporation nor any of its Subsidiaries will be deemed an Affiliate of any SG Stockholder and (ii) no stockholder of the Corporation will be deemed an Affiliate of Standard General LP, in each case, solely by reason of any investment in the Corporation and, for the purposes of this definition, “control,” when used with respect to any Entity, means the power to direct or cause the direction of the affairs or management of that Entity, whether through the ownership of voting securities, as trustee, personal representative or executor, by contract, credit arrangement or otherwise.

11 FIFTEENTH: The Corporation will not be subject to the provisions of Section 203 of the DGCL.

IN WITNESS WHEREOF, the Corporation has caused this Second Amended and Restated Certificate of Incorporation to be executed on its behalf.

/s/ Lawrence Wexler By: Lawrence Wexler Title: President and Chief Executive Officer

12 Exhibit 10.1

EXCHANGE AGREEMENT

THIS EXCHANGE AGREEMENT (this “ Agreement ”) is made and entered into as of May 20, 2016 by and among Turning Point Brands, Inc., a Delaware corporation (the “ Company ”), and the other signatories to this Agreement as set forth on the signature pages hereto (the “ Noteholders ”).

RECITALS

WHEREAS, the Company has effected an initial public offering (the “ IPO ”) of its voting common stock, par value $0.01 per share (the “ Common Stock ”), pursuant to a registration statement on Form S-1 filed with the U.S. Securities and Exchange Commission (the “ S-1 ”);

WHEREAS, the Company has issued to the Noteholders, pursuant to that certain Note and Warrant Purchase Agreement, dated as of January 13, 2014, by and among the Noteholders and Standard General Master Fund L.P., 7% Senior Notes due December 31, 2023 (the “ Notes ”) in the respective principal amounts set forth opposite their names on Exhibit A hereto;

WHEREAS, each of the Noteholders has agreed to exchange all of such Noteholder’s Note(s) for Shares as provided herein.

NOW, THEREFORE, in consideration of the premises and the representations, warranties, covenants and agreements herein contained and intending to be legally bound hereby, the Company and each Noteholder hereby agree as follows:

ARTICLE I EXCHANGE OF NOTES

Section 1.1 Exchange of Notes for Exchange Shares .

(a) Subject to the terms and conditions set forth in this Agreement, each Noteholder hereby agrees to exchange (the “ Exchange ”) at the Closing (as defined below), all Note(s) held by such Noteholder for the number of shares of Common Stock set forth opposite such Noteholder’s name on Exhibit A (the “ Exchange Shares ”).

(b) Upon the surrender by each Noteholder of such Noteholder’s Note(s) in exchange for the Exchange Shares issuable to the Noteholder in the Exchange, such Note(s) shall be cancelled and the Company’s obligation to pay any amounts on the Note(s) shall be terminated. Each Noteholder waives all rights to receive any future payments of principal of or interest on such Noteholder’s Notes from and after the Closing.

ARTICLE II CLOSING; DELIVERY

Section 2.1 Closing . The closing (the “ Closing ”) of the Exchange shall take place at the offices of Milbank, Tweed, Hadley & McCloy LLP, 28 Liberty Street, New York, New York 10005, on the date of this Agreement (the “ Closing Date ”) substantially simultaneously with the execution and delivery of this Agreement by the Noteholders and TPB.

Section 2.2 Delivery for the Exchange . At the Closing:

(a) Each Noteholder shall surrender such Noteholder’s Note(s) duly endorsed to the Company (and accompanied by appropriate endorsement and transfer documents) for cancellation; and such Note(s) shall be cancelled by the Company; and

(b) The Company shall deliver the Exchange Shares issuable to each Noteholder by book entry deposit to an account established for such purpose.

Section 2.3 Consummation of Closing . All acts, deliveries and confirmations comprising the Closing, regardless of chronological sequence, shall be deemed to occur contemporaneously and simultaneously upon the occurrence of the last act, delivery or confirmation of the Closing and none of such acts, deliveries or confirmations shall be effective unless and until the last of same shall have occurred.

ARTICLE III REPRESENTATIONS AND WARRANTIES

Section 3.1 Representations and Warranties of Each Party . The Company and each Noteholder severally and not jointly, with respect to only itself hereby represents and warrants to the other parties that:

(i) such party has all necessary power and authority to execute and deliver this Agreement and to perform its obligations hereunder and to consummate the transaction contemplated hereby;

(ii) this Agreement has been duly and validly executed and delivered by such party and constitutes a legal, valid and binding obligation of such party enforceable against such party in accordance with its terms;

(iii) the execution, delivery and performance by such party of this Agreement and the consummation by such party of the transactions contemplated hereby do not and will not (A) conflict with or violate any United States or non-United States statute, law, ordinance, regulation, rule, code, executive order, injunction, judgment, decree or other order applicable to such party, (B) other than the prior written consent of the board of directors of the Company to the transactions contemplated hereby, require any consent, approval or authorization of, declaration, filing or registration with, or notice to, any person or entity, (C) result in the creation of any encumbrance on the Notes or (D) conflict with or result in a breach of or constitute a default under any provision of any party’s governing documents; and

(iv) as of the date hereof, no material action, suit or legal, administrative or arbitral proceeding or investigation by or against such party is pending, or to the knowledge of such party threatened in writing, which would affect the legality, validity or enforceability of this Agreement or the consummation of the transactions contemplated hereby.

Section 3.2 Representations and Warranties of the Noteholders . Each Noteholder severally and not jointly, with respect to only itself hereby represents and warrants to the Company that it:

(i) owns beneficially and exclusively of record and has good, valid and marketable title to such Noteholder’s Note(s) free and clear of any security interest, lien, claim, pledge, proxy, option, right of first refusal, agreement, voting restriction, limitation on disposition, charge, adverse claim of ownership or use or other encumbrance of any kind and has the full right, power and authority to take the actions contemplated by this Agreement with respect to such Note(s);

(ii) understands that shares of the Common Stock it will receive in the Exchange have not been registered under the Securities Act of 1933, as amended (the “Securities Act”) and are being or will be issued by the Company in a transaction exempt from the registration requirements of the Securities Act;

(iii) understands that shares of the Common Stock it will receive in the Exchange may not be offered or resold except pursuant to an effective registration statement under the Securities Act or pursuant to an applicable exemption from registration under the Securities Act; and

(iv) understands that it is a Qualified Institutional Buyer as defined in Rule 144A under the Securities Act; it or its representative has had access to the same kind of information concerning the Company that is required by Schedule A of the Securities Act, to the extent that the Company possesses such information; has such knowledge and experience in financial and business matters that it is capable of utilizing the information that is available to it concerning the Company to evaluate the risks of investment in the Company including the risk that it could lose its entire investment in the Company; and consummating the Exchange for its own sole benefit and account for investment and not with a view to, or for resale in connection with, a public offering or distribution thereof in violation of any securities laws.

2 ARTICLE IV MISCELLANEOUS

Section 4.1 Further Actions . Each party shall, at the written request of any other party, at any time and from time to time following the Closing, execute and deliver to such other party all such further instruments and take all such further action as may be reasonably necessary or appropriate in order to confirm or carry out its obligations under this Agreement.

Section 4.2 E ntire Agreement; Assignment . This Agreement constitutes the entire agreement among the parties with respect to the subject matter hereof and supersede all prior agreements and undertakings, both written and oral, among the parties, or any of them, with respect to the subject matter hereof. This Agreement shall not be assigned (whether pursuant to a merger, by operation of law or otherwise) except as permitted herein.

Section 4.3 Severability . If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any rule of law, or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the fullest extent possible.

Section 4.4 Governing Law . This Agreement shall be governed by and construed in accordance with the laws of the State of New York, without giving effect to the State of New York’s conflict of law principles to the extent such principles are not mandatorily applicable by statute and would require or permit the application of the laws of another jurisdiction. Each of the parties hereby irrevocably and unconditionally submits, for such party and its property, to the exclusive jurisdiction of any New York State court or Federal court of the United States sitting in New York City, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims or causes of action (whether in contract, tort or otherwise) in respect of any such action or proceeding may be heard and determined in such New York State court or, to the extent permitted by law, in such Federal court.

Section 4.5 Waiver of Jury Trial . Each of the parties hereto hereby waives to the fullest extent permitted by applicable law any right it may have to a trial by jury with respect to any litigation directly or indirectly arising out of, under or in connection with this Agreement or the transactions contemplated hereby. Each of the parties hereto (a) certifies that no representative, agent or attorney of any other party has represented, expressly or otherwise, that such other party would not, in the event of litigation, seek to enforce that foregoing waiver and (b) acknowledges that it and the other hereto have been induced to enter into this Agreement and the transactions contemplated hereby, as applicable, by, among other things, the mutual waivers and certifications in this Section 4.5 .

Section 4.6 Headings . The descriptive headings contained in this Agreement are included for convenience of reference only and shall not affect in any way the meaning or interpretation of this Agreement.

Section 4.7 Counterparts . This Agreement may be executed and delivered (including by facsimile or portable document format (pdf) transmission) in one or more counterparts, and by the different parties hereto in separate counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement.

Section 4.8 Waiver; Remedies . No delay on the part of any Noteholder or the Company in exercising any right, power or privilege under this Agreement shall operate as a wavier thereof, nor shall any waiver on the part of any Noteholder or the Company of any right, power or privilege under this Agreement operate as a waiver of any other right, power or privilege of such party under this Agreement, nor shall any single or partial exercise of any right, power or privilege under this Agreement preclude any other or further exercise thereof or the exercise of any other right, power or privilege under this Agreement.

Section 4.9 Specific Performance . The parties hereto agree that irreparable damage would occur if any provision of this Agreement were not performed in accordance with the terms hereof and that the parties shall be entitled to an injunction or injunctions to prevent breaches of this agreement or to enforce specifically the performance of the terms and provisions hereof in addition to any other remedy to which they are entitled at law or in equity.

Section 4.10 Amendment . This Agreement may be modified or amended only by written agreement of each of the parties to this Agreement.

Section 4.11 Parties in Interest . This Agreement shall be binding upon and inure solely to the benefit of each party hereto, and nothing in this Agreement, express or implied, is intended to or shall confer upon any other person any right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.

3 Section 4.12 Notice . All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be given (and shall be deemed to have been duly given upon receipt) by delivery in person, by facsimile or email or by registered or certified mail (postage prepaid, return receipt requested, provided that the facsimile or email is promptly confirmed by telephone or email confirmation thereof) to the respective parties at the following addresses (or at such other address for a party as shall be specified in a notice given in accordance with this Section 4.12 ):

if to the Company:

Turning Point Brands, Inc. 5201 Interchange Way Louisville, Kentucky 40229 Attention: James Dobbins, Senior Vice President, General Counsel and Secretary Email: [email protected] with a copy to:

Milbank, Tweed, Hadley & McCloy LLP 28 Liberty Street New York, New York 10005 Attention: David E. Zeltner, Esq. Email: [email protected]

If to any Noteholder, at the address set forth beneath such Noteholder’s signature on the signature pages hereto.

* * *

4 IN WITNESS WHEREOF, the parties hereto, intending to be legally bound, have caused this Agreement to be executed by their respective duly authorized officers, as of the date first above written.

TURNING POINT BRANDS, INC.

By: /s/ Mark Stegeman Name: Mark Stegeman Title: Senior Vice President and Chief Financial Officer

SUMMIT PARTNERS CREDIT FUND, L.P.

By: Summit Partners Credit GP, L.P., its general partner By: Summit Partners Credit GP, LLC, its general partner

By: /s/ James Freeland Name: James Freeland Title: Authorized Signatory Address:Summit Partners Credit Fund, L.P. 222 Berkeley Street, 17 th Floor Boston, MA 02116

SUMMIT PARTNERS CREDIT FUND A-1, L.P.

By: Summit Partners Credit A-1 GP, L.P., its general partner By: Summit Partners Credit A-1 GP, LLC, its general partner

By: /s/ James Freeland Name: James Freeland Title: Authorized Signatory Address:Summit Partners Credit Fund, L.P. 222 Berkeley Street, 17 th Floor Boston, MA 02116

SUMMIT PARTNERS CREDIT OFFSHORE INTERMEDIATE FUND, L.P.

By: Summit Partners Credit GP, L.P., its general partner By: Summit Partners Credit GP, LLC, its general partner

By: /s/ James Freeland Name: James Freeland Title: Authorized Signatory Address:Summit Partners Credit Fund, L.P. 222 Berkeley Street, 17 th Floor Boston, MA 02116

SUMMIT INVESTORS I, LLC

By: Summit Investors Management, LLC, its manager By: Summit Partners L.P., its manager By: Summit Master Company, LLC., its general partner

By: /s/ James Freeland Name: James Freeland Title: Authorized Signatory Address:Summit Partners Credit Fund, L.P. 222 Berkeley Street, 17 th Floor Boston, MA 02116

SUMMIT INVESTORS I (UK), LP

By: Summit Investors Management, LLC, its general partner By: Summit Partners L.P., its manager By: Summit Master Company, LLC., its general partner

By: /s/ James Freeland Name: James Freeland Title: Authorized Signatory Address:Summit Partners Credit Fund, L.P. 222 Berkeley Street, 17 th Floor Boston, MA 02116

[Signature Page to Exchange Agreement for Senior Notes to Equity]

Exhibit A

Notes

Principal Plus Principal Amount Accrued and Number of Noteholder of Note(s) Unpaid Interest Exchange Shares Summit Partners Credit Fund, L.P. $ 909,383.84 $ 1,066,302.45 106,631 Summit Partners Credit Fund A-1, L.P. $ 396,845.53 $ 465,323.16 46,533 Summit Partners Credit Offshore Intermediate Fund, L.P. $ 64,732.22 $ 75,902.08 7,591 Summit Investors I, LLC $ 3,313.11 $ 3,884.80 389 Summit Investors I (UK), LP $ 725.30 $ 850.45 86

Exhibit 10.2

EXCHANGE AGREEMENT

THIS EXCHANGE AGREEMENT (this “ Agreement ”) is made and entered into as of May 20, 2016 by and among Turning Point Brands, Inc., a Delaware corporation (the “ Company ”), Daniel Fitzgerald and Peter Parent (the “ Noteholders ”).

RECITALS

WHEREAS, the Company has issued to the Noteholders, pursuant to that certain Note Purchase Agreement, dated as of January 22, 2014, by and among North Atlantic Holding Company, Inc. and the purchasers thereto, 7% Senior Notes due December 31, 2023 (the “ Notes ”) in the respective principal amounts set forth opposite their names on Exhibit A hereto;

WHEREAS, each of the Noteholders has agreed to exchange all of such Noteholder’s Note(s) for Shares as provided herein.

ARTICLE I EXCHANGE OF NOTES

Section 1.1 Exchange of Notes for Exchange Shares .

ARTICLE II CLOSING DATE; DELIVERY

Section 2.1 Closing . The closing (the “ Closing ”) of the Exchange shall take place at the offices of Milbank, Tweed, Hadley & McCloy LLP, 28 Liberty Street, New York, New York 10005, on the date of this Agreement (the “Closing Date”) substantially simultaneously with the execution and delivery of this Agreement by the Noteholders and TPB.

Section 2.2 Delivery for the Exchange . At the Closing:

(b) The Company shall deliver the Exchange Shares issuable to each Noteholder by book entry deposit to an account established for such purpose.

ARTICLE III REPRESENTATIONS AND WARRANTIES

(i) such party has all necessary power and authority to execute and deliver this Agreement and to perform its obligations hereunder and to consummate the transaction contemplated hereby;

Section 3.2 Representations and Warranties of the Noteholders . Each Noteholder severally and not jointly, with respect to only itself hereby represents and warrants to the Company that it:

(i) owns exclusively, beneficially and of record and has good, valid and marketable title to such Noteholder’s Note(s) free and clear of any security interest, lien, claim, pledge, proxy, option, right of first refusal, agreement, voting restriction, limitation on disposition, charge, adverse claim of ownership or use or other encumbrance of any kind and has the full right, power and authority to take the actions contemplated by this Agreement with respect to such Note(s);

(ii) understands that shares of the Common Stock it will receive in the Exchange have not been registered under the Securities Act of 1933, as amended (the “ Securities Act ”) and are being or will be issued by the Company in a transaction exempt from the registration requirements of the Securities Act;

(iv) understands that it is an “accredited investor” as defined in Rule 501(a) of Regulation D under the Securities Act; it or its representative has had access to the same kind of information concerning the Company that is required by Schedule A of the Securities Act, to the extent that the Company possesses such information; has such knowledge and experience in financial and business matters that it is capable of utilizing the information that is available to it concerning the Company to evaluate the risks of investment in the Company including the risk that it could lose its entire investment in the Company; and consummating the Exchange for its own sole benefit and account for investment and not with a view to, or for resale in connection with, a public offering or distribution thereof.

2 ARTICLE IV MISCELLANEOUS

Section 4.2 Entire Agreement; Assignment . This Agreement constitutes the entire agreement among the parties with respect to the subject matter hereof and supersede all prior agreements and undertakings, both written and oral, among the parties, or any of them, with respect to the subject matter hereof. This Agreement shall not be assigned (whether pursuant to a merger, by operation of law or otherwise) except as permitted herein.

Section 4.10 Amendment . This Agreement may be modified or amended only by written agreement of each of the parties to this Agreement.

if to the Company:

Turning Point Brands, Inc. 5201 Interchange Way Louisville, Kentucky 40229 Attention: James Dobbins, Senior Vice President, General Counsel and Secretary Email: [email protected] with a copy to:

Milbank, Tweed, Hadley & McCloy LLP 28 Liberty Street New York, New York 10005 Attention: David E. Zeltner, Esq. Email: [email protected]

If to any Noteholder, at the address set forth beneath such Noteholder’s signature on the signature pages hereto.

* * *

4 IN WITNESS WHEREOF, the parties hereto, intending to be legally bound, have caused this Agreement to be executed by their respective duly authorized officers, as of the date first above written.

TURNING POINT BRANDS, INC.

By: /s/ Mark Stegeman Name: Mark Stegeman Title: Senior Vice President and Chief Financial Officer

/s/ Daniel Fitzgerald Name: Daniel Fitzgerald Address: Email:

/s/ Peter Parent Name: Peter Parent Address: Email:

[Signature Page to Exchange Agreement for Senior Notes to Equity]

Exhibit A

Notes

Principal Plus Principal Amount Accrued and Number of Noteholder of Note(s) Unpaid Interest Exchange Shares Daniel Fitzgerald $ 13,885.35 $ 16,281.33 1,629 Peter Parent $ 3,589.11 $ 4,208.43 421

Exhibit 10.4

WARRANT PURCHASE AGREEMENT

THIS WARRANT PURCHASE AGREEMENT (this “ Agreement ”) is made as of May 20, 2016, by and between Turning Point Brands, Inc., a Delaware corporation (“ TPB ”), and each holder of Warrants (as defined below) listed on the signature pages hereto (each, a “ Holder ” and collectively, the “ Holders ”).

W I T N E S S E T H:

WHEREAS, the Holders own warrants (the “ Warrants ”) to purchase common units (the “ Common Units ”) of Intrepid Brands, LLC, a Delaware limited liability company and indirect subsidiary of TPB (“ Intrepid ”) pursuant to that certain Note and Warrant Purchase Agreement, dated as of January 13, 2014, by and among the Holders and Standard General Master Fund L.P.; and

WHEREAS, TPB has effected an initial public offering of its common stock (the “ IPO ”) pursuant to a registration statement on Form S-1 filed with the U.S. Securities and Exchange Commission (the “ S-1 ”); and

WHEREAS, TPB wishes to purchase the Warrants from the Holders and the Holders wish to sell the Warrants to TPB, for the consideration and upon the terms and conditions set forth herein (the ” Warrant Purchase ”); and

WHEREAS, in accordance with Section 7.1 of that certain Warrant Agreement, dated as of January 21, 2014, by and among Intrepid and the holders of warrants thereunder (the “ Warrant Agreement ”), the board of managers of Intrepid has granted its prior written approval to the transfer of Warrants contemplated hereby.

NOW THEREFORE, in consideration of the mutual covenants and agreements set forth in this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties intending to be legally bound, do hereby agree as follows:

1. Warrant Purchase . Substantially simultaneously with the Closing (as defined below), each Holder shall irrevocably sell, transfer, convey, assign and deliver to TPB, and TPB shall purchase and accept from such Holder, all of such Holder’s right, title and interest in and to the Warrant set forth opposite such Holder’s name on Schedule 1 for the aggregate cash purchase price set forth opposite such Holder’s name on Schedule 1 (such purchase price being equal to $0.50 per Common Unit subject to such Warrant and the amount payable pursuant to Schedule 1 to any Holder in respect of such Holder’s Warrant is referred to herein as such Holder’s “ Purchase Price ”).

2. Closing . The closing of the Warrant Purchase shall occur substantially simultaneously with the execution and delivery of this Agreement (the “ Closing ”) at the offices of Milbank, Tweed, Hadley & McCloy LLP, 28 Liberty Street, New York, New York 10005. At the Closing, TPB shall pay to each Holder such Holder’s Purchase Price by wire transfer of immediately available funds to the account designated in writing by such Holder to TPB prior to the Closing, and such Holder shall deliver to TPB at the Closing the certificate or certificates representing such Warrants together with an instrument of transfer (substantially in the form attached to the Warrant Agreement) duly endorsed in blank.

3. Representations and Warranties .

3.1 Representations and Warranties of Each Party . Each of TPB, on the one hand, and each of the Holders severally and not jointly, with respect to only itself, on the other hand, hereby represents and warrants to the other party that:

(i) such party has all necessary power and authority to execute and deliver this Agreement and to perform its obligations hereunder and to consummate the transaction contemplated hereby;

(iii) the execution, delivery and performance by such party of this Agreement and the consummation by such party of the transactions contemplated hereby do not and will not (A) conflict with or violate any United States or non-United States statute, law, ordinance, regulation, rule, code, executive order, injunction, judgment, decree or other order applicable to such party, (B) other than the prior written consent of the board of managers of Intrepid to the transactions contemplated hereby, require any consent, approval or authorization of, declaration, filing or registration with, or notice to, any person or entity, (C) result in the creation of any encumbrance on any Warrants or (D) if such party is not a natural person, conflict with or result in a breach of or constitute a default under any provision of such party’s governing documents; and

(iv) as of the date hereof, no material litigation, action or proceeding by or against such party is pending, or to the knowledge of such party threatened in writing, which would affect the legality, validity or enforceability of this Agreement or the consummation of the transactions contemplated hereby.

3.2 Representations and Warranties of each Holder . Each Holder hereby represents and warrants to TPB that it owns beneficially and exclusively of record and has good, valid and marketable title to the Warrant set forth opposite such Holder’s name on Schedule 1 free and clear of any security interest, lien, claim, pledge, proxy, option, right of first refusal, agreement, voting restriction, limitation on disposition, charge, adverse claim of ownership or use or other encumbrance of any kind and has the full right, power and authority to sell, transfer and deliver such Warrant, and such Holder does not own, directly or indirectly, any warrants to purchase common units of Intrepid other than such Warrant.

4. Miscellaneous .

4.1 General Release . In consideration of such Holder’s Purchase Price, each Holder, on behalf of himself or herself and each of his or her successors, executors, representatives, agents, estate, heirs, legatees, devisees, beneficiaries and assigns, hereby forever releases, remises, acquits, satisfies, and discharges TPB (and any successor thereto) and its affiliates, and the respective directors, officers, employees, partners, agents, advisors and representatives thereof, and the respective successors and assigns of the foregoing (each, a “ Releasee ”), from any and all manner of actions, claims, causes of action, suits, debts, dues, sums of money, accounts, reckonings, covenants, contracts, controversies, agreements, promises, damages, judgments, executions, and demands whatsoever, in law or in equity (collectively, “ Claims ”), which the undersigned ever had, now has, or which any successor or assign of the undersigned hereafter can, shall or may have, against any Releasee, for, upon or by reason of any matter, cause or thing whatsoever, known or unknown, directly or indirectly, from the beginning of the world to the Closing, without limitation, Claims arising out of or related to any (i) breach or alleged breach of fiduciary duty and claims in tort, and (ii) the Warrants and the Warrant Agreement; except for (x) the right to receive such Holder’s Purchase Price under this Agreement and (y) any Claims arising out of or relating to any actual fraud of a Releasee.

2 4.2 Further Assurances . TPB and each Holder will take such actions as may be reasonably required or desirable to carry out the provisions of this Agreement.

4.3 Successors and Assigns . This Agreement and the rights evidenced hereby shall be binding upon and shall inure to the benefit of the parties hereto and the successors of TPB and the successors and permitted assigns of each Holder. Such successors and/or permitted assigns of each Holder shall be deemed to be a Holder for all purposes hereunder.

4.4 Governing Law; Jurisdiction; No Trial by Jury . This Agreement shall be governed by and construed in accordance with the laws of the State of New York, without giving effect to the State of New York’s conflict of law principles to the extent such principles are not mandatorily applicable by statute and would require or permit the application of the laws of another jurisdiction. Each of the parties hereby irrevocably and unconditionally submits, for itself and its property, to the exclusive jurisdiction of any New York State court or Federal court of the United States sitting in New York City, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims or causes of action (whether in contract, tort or otherwise) in respect of any such action or proceeding may be heard and determined in such New York State court or, to the extent permitted by law, in such Federal court. EACH PARTY HERETO HEREBY KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVES ANY RIGHTS IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY SUCH ACTION OR PROCEEDING. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (I) NO REPRESENTATIVE, AGENT, OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (II) EACH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (III) EACH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (IV) EACH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 5.4.

4.5 Notices . All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be given (and shall be deemed to have been duly given upon receipt) by delivery in person, by telecopy or e-mail or by registered or certified mail (postage prepaid, return receipt requested) to the respective parties at their addresses as specified on the signature pages of this Agreement.

3 4.6 Amendments and Waivers . Except as otherwise provided herein, this Agreement may only be amended, modified or supplemented by an agreement in writing signed by each party hereto. No waiver by TPB or any Holder of any of the provisions hereof shall be effective unless explicitly set forth in writing and signed by the party so waiving. No waiver by any party shall operate or be construed as a waiver in respect of any failure, breach or default not expressly identified by such written waiver, whether of a similar or different character, and whether occurring before or after that waiver. No failure to exercise, or delay in exercising, any rights, remedy, power or privilege arising from this Agreement shall operate or be construed as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege.

4.7 No Third-Party Beneficiaries . This Agreement is for the sole benefit of TPB and the Holders and their respective successors and, in the case of each Holder, permitted assigns and nothing herein, express or implied, is intended to or shall confer upon any other natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, governmental authority or other entity any legal or equitable right, benefit or remedy of any nature whatsoever, under or by reason of this Agreement.

4.8 Severability . If one or more provisions of this Agreement are held to be unenforceable under applicable law, such provision shall be excluded from this Agreement and the balance of this Agreement shall be interpreted as if such provision were so excluded and shall be enforceable in accordance with its terms so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the fullest extent possible.

4.9 Headings . The headings contained in this Agreement are for purposes of convenience only and shall not affect the meaning or interpretation of this Agreement.

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

4.11 Entire Agreement . This Agreement and the documents referred to herein constitute the entire agreement among the parties with respect to the subject matter hereof and supersede all prior agreements and undertakings, both written and oral, among the parties with respect to the subject matter hereof.

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

TURNING POINT BRANDS, INC.

By: /s/ Mark Stegeman Name: Mark Stegeman Title: Senior Vice President and Chief Financial Officer

Address for notice :

Turning Point Brands, Inc. 5201 Interchange Way Louisville, Kentucky 40229 Attention: James Dobbins Telephone: (502) 778-4421 Email: [email protected]

[Signature Page to Warrant Purchase Agreement]

SUMMIT PARTNERS CREDIT FUND, L.P.

By: Summit Partners Credit GP, L.P., its general partner By: Summit Partners Credit GP, LLC, its general partner