RESTRUCTURING AGREEMENT
Exhibit
10.3
This
Restructuring Agreement (the “Agreement”) is made as of November
3, 2017, by and between Xxxx
Xxxxxxx, an individual (“Xxxxxxx”) and MusclePharm Corporation, a Nevada
corporation (the “Company”).
Recitals
WHEREAS, the
Company previously issued to Xxxxxxx (i) a convertible secured
promissory note dated as of December 7, 2015, and amended as of
January 14, 2017, in the original principal amount of $6,000,000
(the “First Convertible
Note”), (ii) a convertible secured promissory note
dated as of November 8, 2016, in the original principal amount of
$11,000,000 (the “Second
Convertible Note”), and (iii) a secured demand
promissory note dated as of July 27, 2017, in the original
principal amount of $1,000,000 (the “Demand Note”; together with the
First Convertible Note and the Second Convertible Note, the
“Prior Notes”);
WHEREAS, the First
Convertible Note and the Second Convertible Note each currently
mature on November 8, 2017, while the Demand Note is due and
payable at any time on demand of Xxxxxxx;
WHEREAS, the Prior
Notes are currently secured by a lien on and security interest in
all of the assets and properties of the Company, as described in
the Second Amended and Restated Security Agreement dated as of July
27, 2017, by and between the Company and Xxxxxxx (the
“Prior Security
Agreement”); and
WHEREAS, the
Company and Xxxxxxx have agreed (1) to amend and restate the Prior
Notes to, among other things, extend the maturity date of such
instruments and make certain other amendments as set forth in the
Restructured Note (as defined below), and (2) to amend and restate
the Prior Security Agreement to reaffirm Xxxxxxx’x continuing
lien on substantially all of the assets and property of the Company
and make certain other amendments as set forth in the Security
Agreement (as defined below) (collectively, the “Restructuring”).
NOW, THEREFORE, THE PARTIES SEVERALLY AGREE AS
FOLLOWS:
1. Amendment
and Restatement of Prior Notes and Prior Security
Agreement.
(i) Effective as of the
Restatement Effective Date (as defined below), the Prior Notes
(including each schedule thereto, if any) are hereby amended and
restated to be in the form attached as Exhibit A hereto (the Prior
Notes, as so amended and restated, being referred to as the
“Restructured
Note”).
(ii) Effective
as of the Restatement Effective Date (as defined below), the Prior
Security Agreement (including each schedule thereto, if any) is
hereby amended and restated to be in the form attached as
Exhibit B hereto
(the Prior Security Agreement, as so amended and restated, being
referred to as the “Security
Agreement”).
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2. Effectiveness of Amendment and
Restatement. The amendment and restatement
of the Prior Notes as set forth in Section 1(i) hereof shall become
effective on the first date (the “Restatement Effective Date”) on
which the following conditions precedent shall have been
satisfied:
(i) Restructuring Documents. Xxxxxxx shall
have received the following, in each case duly executed and
delivered by the Company and dated as of the date
hereof:
(a)
the Restructured
Note;
(b)
the Security
Agreement; and
(c)
such other
documents as Xxxxxxx may reasonably request.
(ii) Payoff
of Accrued Interest on Prior Notes. The Company shall have
made a payment to Xxxxxxx in the amount set forth as
“Interest” in Section 3(i) below (the
“Interest Payoff
Amount”), subject to a per diem adjustment as set forth in
Section 3(ii) below, which amount shall constitute payment and
satisfaction in full of the accrued and unpaid interest on the
Prior Notes. Such payment shall be made by a federal funds wire
transfer to the account described on Exhibit C hereto.
(iii) Crossroads
Consent. Xxxxxxx
shall have received, on or prior to the Restatement Effective Date,
the consent of Crossroads Financial Group, LLC, a North Carolina
limited liability company (“Crossroads”), in a form reasonably
satisfactory to Xxxxxxx, consenting to the Restructuring and
agreeing to waive any potential “Event of Default” as
defined in and pursuant to the Company’s existing debt
facility with Crossroads.
3. Amounts Outstanding under Prior Notes
at Closing; Release.
(i) The Company
acknowledges and agrees that, as of the date hereof, the principal
and interest outstanding under the Prior Notes are as
follows:
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Principal
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$18,000,000.00
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Interest (through
November 8, 2017)
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$40,588.42
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(ii) The
foregoing amounts do not include interest accruing on the Prior
Notes on or following the date hereof. If Xxxxxxx does not receive
the Interest Payoff Amount on the date hereof, the Interest Payoff
Amount shall be increased by a per
diem amount of $5,078.62 for each day after November 8, 2017
through and including the date of actual repayment.
(iii) The
Company confirms, acknowledges, and agrees that all of the
principal, interest, fees, expenses and other amounts outstanding
under the Prior Notes, including those set forth above
(collectively, the “Obligations”), are valid and
outstanding, and the Company does not have any rights of offset,
recoupment, netting, or deduction, or any defenses, claims or
counterclaims with respect to, and agrees not to dispute,
challenge, or contest, any of the Obligations, and each party
hereby indemnifies, holds harmless, and forever releases the other
party and his/its respective controlled affiliates and each of
his/its respective past and present agents, representatives,
attorneys and fiduciaries (the “Released Parties”) from any and
all claims and causes of action of any kind or nature that the
releasing party now has or may hereafter have against any Released
Party that relate to the Prior Notes based on facts, known or
unknown, existing on or before the date hereof or that are related
to or arise in connection with the Restructuring or this Agreement
(except for any rights or obligations provided for in this
Agreement, the Restructured Note or the Security
Agreement).
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(iv) The
Company confirms, acknowledges, and agrees that Xxxxxxx has a
valid, duly perfected, first priority and fully enforceable
security interest in and lien on all of the Collateral (as defined
in the Security Agreement), as and to the extent provided for in
the Security Agreement, and that the Company agrees not to dispute,
challenge, or contest, the enforceability, validity, attachment,
perfection or first priority (as and to the extent provided for in
the Security Agreement) of the lien and security interest securing
the Obligations, and each party hereby indemnifies, holds harmless,
and forever releases the Released Parties from any and all claims
and causes of action of any kind or nature, known or unknown, that
such releasing party or any other party now has or may hereafter
have against any Released Party that relate to the Prior Security
Agreement based on facts, known or unknown, existing on or before
the date hereof or lien and security interest securing the
Obligations.
4. Attorney Costs. The Company
shall pay all reasonable, out-of-pocket fees, charges and
disbursements of counsel to Xxxxxxx in connection with the
Restructuring (directly to such counsel if requested by Xxxxxxx) in
an amount not to exceed $100,000.
5. Further Assurances. The parties
hereto shall do all such things and provide all such reasonable
assurances as may be required to consummate the transactions
contemplated hereby, and the parties hereto shall provide such
further documents or instruments required by the other parties as
may be reasonably necessary or desirable to effect the purpose of
this Agreement and carry out the provisions hereof.
6. Effect of Amendment and
Restatement. Except as expressly set forth herein (including
the exhibits hereto), this Agreement shall not by implication or
otherwise limit, impair, constitute a waiver of, or otherwise
affect the rights and remedies of either party under the Prior
Notes or the Prior Security Agreement. Neither this Agreement nor
the effectiveness of the Restructured Note or the Security
Agreement shall extinguish the obligations for the payment of money
outstanding under the Prior Notes or discharge or release any
security interest in respect thereof.
7. Amendment and Waiver. No
provision of this Agreement may be amended or waived except by an
instrument in writing executed by the party against whom such
amendment or waiver is to be effective.
8. Counterparts. This Agreement
may be executed in any number of counterparts, each of which shall
be deemed an original, and all of which together shall constitute a
single instrument and shall become effective when one or more
counterparts have been signed by each of the parties and delivered
to the other parties. Delivery of an executed counterpart of a
signature page to this Agreement by facsimile, email in
“portable document format” (“.pdf”) form or
by other electronic means intended to preserve the original graphic
and pictorial appearance of a document will have the same effect as
physical delivery of the paper document bearing the original
signature.
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9. Entire Agreement. This
Agreement, together with the Restructured Note and Security
Agreement, constitutes the entire agreement and supersedes all
prior agreements and understandings, both written and oral, among
the parties with respect to the subject matter hereof.
10. Severability. If any term,
provision, covenant or restriction of this Agreement is held by a
court of competent jurisdiction or other authority to be invalid,
void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions of this Agreement shall remain in full
force and effect and shall in no way be affected, impaired or
invalidated.
11. Governing Law; Jurisdiction;
Venue.
(i) This Agreement
shall be governed by and construed in accordance with the laws of
the State of New York (without giving effect to any conflict of
laws principles that would require application of the laws of
another jurisdiction other than Section 5-1401 of the General
Obligations Law of the State of New York).
(ii) Each
party irrevocably submits to the jurisdiction of the courts of the
State of New York and of the United States sitting in the State of
New York, and of the courts of its/his own corporate or individual
domicile with respect to actions or proceedings brought against
it/him as a defendant, for purposes of all proceedings. Each party
irrevocably waives, to the fullest extent permitted by law, any
objection which it/he may now or hereafter have to the laying of
venue of any proceeding and any claim that any proceeding has been
brought in an inconvenient forum. Any process or summons for
purposes of any proceeding may be served on a party by mailing a
copy thereof by registered mail, or a form of mail substantially
equivalent thereto, addressed to it at its address as provided for
notices under the Restructured Note.
12. Waiver of Jury
Trial. Each party hereby
irrevocably waives any and all right to trial by jury in any
proceeding.
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of page intentionally blank]
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IN
WITNESS WHEREOF, the undersigned have duly executed this Agreement
as of the date first set forth above.
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Xxxx Xxxxxxx, an individual |
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/s/ Xxxx
Xxxxxxx
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MusclePharm
Corporation, a Nevada corporation
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By:
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/s/
Xxxxx
Xxxxxxx
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Name:
Xxxxx
Xxxxxxx
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Title:
Executive Vice
President, Sales & Operations
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Exhibit A
Restructured
Note
6
Exhibit B
Security
Agreement
7
Exhibit C
Wire
Instructions
8
