FIRST AMENDMENT TO SUBORDINATION AGREEMENT
Exhibit
99.2
FIRST AMENDMENT TO SUBORDINATION AGREEMENT
This
First Amendment to Subordination Agreement (this
“Amendment”) is
made as of November 3, 2017, by and between (a) CROSSROADS
FINANCIAL GROUP, LLC, a North Carolina limited liability company
(the “Lender”)
and (b) Xxxx Xxxxxxx, an individual (the “Creditor”).
Recitals
A.
MusclePharm Corporation, a
Nevada corporation (the “Musclepharm” and together with
Canada Musclepharm Enterprises Corp, individually and collectively,
the “Borrower”)
previously issued to the Creditor (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
“Existing Notes”);
B. Musclepharm
and Creditor have agreed to amend and restate the Existing Notes
pursuant to that certain Amended and Restated Convertible Secured
Promissory Note, dated on or about the date hereof, by Musclepharm
in favor of Creditor in an original principal amount of $18,000,000
(the “Restructured
Note”);
C. The
indebtedness evidenced by the Restructured Note is secured by a
lien on substantially all of the assets and property of the
Borrower pursuant to that certain Third Amended and Restated
Security Agreement of even date herewith between the Creditor and
the Borrower (the “Security
Agreement”);
D. The
Borrower is party to that certain Loan and Security Agreement,
dated as of September 30, 2017, by and among the Borrower and the
Lender (the “Crossroads
Agreement”), pursuant to which the Borrower may from
time to time receive advances up to a maximum amount of $3,000,000
aggregate principal amount, which advances are secured by
substantially all of the assets and property of the
Borrower;
E. The
Creditor and the Lender have previously entered into a
Subordination Agreement dated as of September 30, 2017 (as amended,
the “Subordination
Agreement”) in respect of the Borrower’s
obligations under and pursuant to the Existing Notes and the
Crossroads Agreement.
F. Borrower
and Creditor have requested that Lender consent to the execution of
the Restructured Note and Restructured Security Agreement in
accordance with the terms and conditions hereof.
NOW,
THEREFORE, THE PARTIES AGREE AS FOLLOWS:
A.
Modification to Subordination
Agreement. The Subordination Agreement shall be amended by
deleting the following text, appearing in the preamble
thereof:
“The
undersigned, Xxxx Xxxxxxx with an address at [Redacted] (hereinafter referred to as
the “Creditor”),
represents that MusclePharm Corporation and/or Canada MusclePharm
Enterprises Corp. (hereinafter collectively referred to as the
“Borrower”), is
indebted to the Creditor as follows:
1
Outstanding
principal amount of indebtedness: $17,000,000 as of September 30,
2017.
Said
indebtedness is evidenced by Notes dated December 7, 2015 and
November 8, 2016.”
and
inserting in lieu thereof the following:
“The
undersigned, Xxxx Xxxxxxx (hereinafter referred to as the
“Creditor”),
represents that MusclePharm Corporation and/or Canada MusclePharm
Enterprises Corp. (hereinafter collectively referred to as the
“Borrower”)), is
indebted to the Creditor pursuant to that certain Amended and
Restated Convertible Secured Promissory Note with an
“Amendment Date” of November 8, 2017, issued by the
Borrower to the Creditor in an original principal amount of
$18,000,000 (subject to adjustment as set forth in such promissory
note).”
B.
Consent and Ratification of
Creditor. In order to induce
the Lender to enter into this Amendment, the Creditor
hereby:
1.
ratifies,
confirms and reaffirms, all and singular, the terms and conditions
of the Subordination Agreement, as amended hereby;
2.
acknowledges,
confirms and agrees that the Subordination Agreement, as amended by
this Amendment, shall remain in full force and effect and shall in
no way be limited by the execution of the Restructured Note, the
incurrence by Borrower to Creditor of indebtedness thereunder, the
execution of the Security Agreement or the liens reaffirmed and/or
granted by Borrower to Creditor thereunder, or the execution of any
documents, instruments and/or agreements executed and/or delivered
in connection therewith; and
3.
acknowledges,
confirms and agrees that all indebtedness evidenced by the
Restructured Note, all liens securing such indebtedness and all
liens reaffirmed and/or granted by Borrower pursuant to the
Security Agreement are, and shall remain, subject to the terms and
conditions of the Subordination Agreement.
C.
Consent of
Lender. In consideration of the
agreements set forth in the Subordination Agreement (as amended by
this Amendment), the Lender hereby consents, including under
Sections 11.1, 11.5 and 11.8 of the Crossroads Agreement, to (1)
the execution and delivery of the Restructured Note and Security
Agreement substantially in the forms annexed as Exhibit A and
Exhibit B hereto, (2) the indebtedness incurred by Borrower
pursuant to the Restructured Note and (3) the liens reaffirmed
and/or granted by Borrower pursuant to the Security Agreement;
provided that such indebtedness (including repayment thereof) and
such liens shall be subject to the terms and conditions of the
Subordination Agreement (as amended by this Amendment). Without
limiting the foregoing, Lender hereby waives any “Event of
Default” arising under the Crossroads Agreement solely as a
result of the execution and delivery of the Restructured Note or
Security Agreement, the incurrence by Borrower of indebtedness
thereunder or the liens reaffirmed and/or granted by Borrower
thereunder; provided that such indebtedness (including repayment
thereof) and such liens shall be subject to the terms and
conditions of the Subordination Agreement (as amended by this
Amendment).
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D.
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 Amendment and
carry out the provisions hereof.
E.
Governing Law;
Counterparts; Etc. The
provisions of Sections 13 through 18 of the Subordination Agreement
apply to this Amendment as if set forth herein, mutatis
mutandis.
[signature page
follows]
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IN
WITNESS WHEREOF, the undersigned have executed this Amendment as of
the date first above written.
CROSSROADS FINANCIAL GROUP,
LLC, as
Lender
By: /s/ Xxx
Haskin_________________________
Name: Xxx
Haskin________________________
Title: CEO______________________________
XXXX XXXXXXX, as Creditor
/s/ Xxxx
Drexler____________________________
Acknowledged and agreed:
MUSCLEPHARM CORPORATION, as Borrower
By: /s/ Xxxxx
Casutto________________________
Name: Xxxxx Xxxxxxx
________________________
Title: Executive Vice
President, Sales & Operations
CANADA MUSCLEPHARM ENTERPRISES CORP, as
Borrower
By: /s/ Xxxxx
Casutto________________________
Name: Xxxxx Xxxxxxx
________________________
Title: Executive Vice
President, Sales & Operations
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EXHIBIT
A
Restructured
Note
[See
Attached]
5
EXHIBIT
B
Security
Agreement
[See
Attached]
6
