Document:

gthx-ex101_200.htm

Exhibit 10.1

 

EMPLOYMENT AGREEMENT

This EMPLOYMENT AGREEMENT (the “Agreement”), is made and entered into effective as of August 1, 2017 (the “Effective Date”), by and between G1 Therapeutics, Inc., a Delaware corporation (the “Company”), and Terry Murdock (“Employee”).

1.EMPLOYMENT; DUTIES. The Company agrees to employ Employee as its Senior Vice President of Development Operations, and Employee agrees to accept such employment upon the terms and conditions hereinafter set forth. Employee will perform such services for the Company as are customarily associated with such position and as may otherwise be assigned to the Employee from time to time by the Company’s Chief Executive Officer or his designee. Employee will devote Employee’s full business time and attention to the business and affairs of the Company, and will perform Employee’s duties diligently and to the best of Employee’s ability, in compliance with the Company’s policies and procedures and the laws and regulations that apply to the Company’s business. 

2.TERM; TERMINATION. Employee’s employment under this Agreement will commence as of the Effective Date and will continue until terminated by either party. Employee’s employment with the Company is at-will, and either party can terminate the employment relationship and/or this Agreement at any time, for any or no cause or reason, and with or without prior notice, subject to the applicable terms of Section 4. Upon termination of Employee’s employment by either party for any reason, Employee will resign Employee’s position(s), if any, as an officer or director of the Company, as a member of the Company’s Board of Directors (the “Board”) and any Board committees, as well as any other positions Employee may hold with or for the benefit of the Company and/or its affiliates.

3.COMPENSATION. As compensation for the services to be rendered by Employee under this Agreement, the Company will provide the following compensation and benefits during Employee’s employment hereunder.

(a)BASE SALARY. The Company will pay Employee a base salary (the

“Base Salary”) at an annual rate of Three Hundred and Forty-Two Thousand Dollars ($342,000), payable in equal installments in accordance with the Company’s customary payroll practices as in effect from time to time. The Base Salary may be reviewed from time to time by the Company and may be increased in the sole discretion of the Company. The Base Salary may also be decreased in connection with any Company-wide decrease in executive compensation.

(b)ANNUAL BONUS. Employee will be eligible to receive an annual calendar year bonus based upon Employee’s and the Company’s achievement of certain individual and Company goals that will be set for Employee by the Board or its designee (the “Annual Bonus”). The amount of the target Annual Bonus will be equal to thirty-five percent (35%) of Employee’s then-current Base Salary as of the date of the payment; provided that the actual amount of the Annual Bonus may be greater or less than such target amount. The Board or its designee will have the sole discretion to set the applicable individual and Company goals, to determine whether the goals have been met, and to determine the amount of the Annual Bonus. 

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The Annual Bonus for any given year will be paid between January 1 and January 31 in the year immediately following the year in which the Annual Bonus, if any, is earned. Employee must be employed by the Company on December 31 of the bonus year in order to receive the Annual Bonus for that year.

(c)STOCK OPTIONS. Subject to approval by the Board, effective on August 1, 2017, Employee will be granted stock options to purchase 100,000 shares of the Company’s common stock (the “Options”) at a per share exercise price equal to the Fair Market Value (as defined in the 2017 Equity Incentive Plan) of the Company’s common stock on the date of grant.  The Options will be, to the maximum extent permissible, treated as “incentive stock options” within the meaning of Section 422 of the Internal Revenue Code and the rules and regulations thereunder. The Options will be granted pursuant to and subject to the terms and conditions of the Company’s 2017 Equity Incentive Plan and will be further subject to the terms of a stock option agreement as approved by the Board setting forth the exercise price, vesting conditions and other restrictions. One fourth (1/4th) of the total number of such Options will vest on the first anniversary of the date hereof, and one forty-eighth (1/48th) of the total number of Options will vest each month over the following thirty-six (36) months thereafter, so long as Employee remains employed by the Company through each such vesting date. Fifty percent (50%) of any unvested Options will vest immediately prior to, and subject to, the consummation of a Change in Control (as defined below) and, subject to Employee’s execution of the release of claims described in Section 4(b), any remaining unvested Options will immediately vest if Employee’s employment is terminated by the Company without Cause (as defined below) or Employee resigns with Good Reason (as defined below) within ninety (90) days following a Change in Control. A “Change in Control” means (i) the Company’s merger or consolidation with or into another entity such that the stockholders of the Company prior to such transaction do not or are not expected to own a majority of the voting stock of the surviving entity, (ii) the sale or other disposition of all or substantially all of the assets of the Company, or (iii) the sale or other disposition of greater than fifty percent (50%) of the then-outstanding voting stock of the Company by the holders thereof to one or more persons or entities who are not then stockholders of the Company.

(d)VACATION. Employee will be eligible for paid vacation time off in accordance with, and subject to, the Company’s policies and procedures in effect from time to time.

(e)BENEFITS. Employee will (subject to applicable eligibility requirements) receive such other benefits as are provided from time to time to other similarly-situated employees of the Company pursuant to the Company’s policies and procedures as they may be instituted from time to time. All such benefits are subject to the provisions of their respective plan documents in accordance with their terms. Employee acknowledges and agrees that the Company has the unilateral right to amend, modify or terminate its employee benefit plans or policies to the maximum extent allowed by law.

(f)EXPENSE REIMBURSEMENT. The Company will reimburse Employee for all reasonable business expenses incurred by Employee in connection with the performance of Employee’s duties hereunder, subject to Employee’s compliance with the Company’s reimbursement policies in effect from time to time. All reimbursements provided under this Agreement will be made or provided in accordance with the requirements of Section 409A of the 

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Internal Revenue Code and the rules and regulations thereunder including, where applicable, the requirement that (i) any reimbursement is for expenses incurred during Employee’s lifetime (or during a shorter period of time specified in this Agreement); (ii) the amount of expenses eligible for reimbursement during a calendar year may not affect the expenses eligible for reimbursement in any other calendar year; (iii) the reimbursement of an eligible expense shall be made no later than the last day of the calendar year following the year in which the expense is incurred; and (iv) the right to reimbursement or in kind benefits is not subject to liquidation or exchange for another benefit.

(g)WITHHOLDINGS. The Company will withhold from any amounts payable under this Agreement, such federal, state and local taxes, as the Company reasonably determines are required to be withheld pursuant to applicable law.

(h)RELOCATION.  To assist with relocation to North Carolina, the Company will reimburse Employee for reasonable expenses incurred in relocating Employee and Employee’s family from Employee’s existing residence to a new residence in the Raleigh/Durham area, up to a maximum of One Hundred Thousand Dollars ($100,000) (the “Relocation Assistance Payment”).  The Relocation Assistance Payment will be distributed to Employee as follows: (i) Forty Thousand Dollars ($40,000) will be paid in a lump sum in the first payroll following the Effective Date as a relocation allowance, which may be used to defray miscellaneous costs associated with the purchase of a residence in the Raleigh/Durham area; (ii) Twenty-Five Thousand Dollars ($25,000) will be held in reserve for the transport, by an approved carrier, of Employee’s normal household goods and other items deemed qualifying deductible expenses under the Internal Revenue Code and corresponding guidelines in effect as of the Effective Date; and (iii) Thirty-Five Thousand Dollars ($35,000) will be paid in equal monthly installments of Four Thousand Three Hundred Seventy-Five Dollars ($4,375) for no more than eight (8) months following the Effective Date or until Employee moves into permanent housing in the Raleigh/Durham area, whichever occurs first, to use toward commuting and temporary housing expenses incurred by Employee. Within thirty (30) days after incurring any covered expense, Employee will provide such documentation as may be reasonably requested by the Company to substantiate expenses to be reimbursed.  In exchange for the Company covering relocation expenses, should Employee leave the Company for any reason other than death, disability or termination without Cause within twelve (12) months of the Effective Date, Employee will be responsible for repayment of the full Relocation Assistance Payment to the Company.  Should Employee leave the Company between twelve (12) and twenty-four (24) months following the Effective Date, fifty percent (50%) repayment of the Relocation Assistance Payment is required.  All repayments are due in full within thirty (30) days of the Employee’s separation from the Company.

4.EFFECT OF TERMINATION.

(a)GENERALLY. When Employee’s employment with the Company is terminated for any reason, Employee, or Employee’s estate, as the case may be, will be entitled to receive the compensation and benefits earned through the effective date of termination, along with reimbursement for any approved business expenses that Employee has timely submitted for reimbursement in accordance with the Company’s expense reimbursement policy or practice.

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(b)SEPARATION BENEFITS UPON CERTAIN TERMINATIONS. If the Company terminates Employee’s employment without Cause (as defined below), or if Employee resigns Employee’s employment for Good Reason (as defined below), then conditioned upon Employee executing a Release (as defined below) following such termination, Employee will be entitled to receive an amount equal to payment of Employee’s then-current Base Salary for a period of six (6) months (the “Separation Benefits”). The Separation Benefits are conditioned upon Employee executing a release of claims in a form satisfactory to the Company (the “Release”) within the time specified therein, which Release is not revoked within any time period allowed for revocation under applicable law. The Separation Benefits will be payable to Employee over time in accordance with the Company’s payroll practices and procedures beginning on the sixtieth (60th) day following the termination of Employee’s employment with the Company, provided that the Company, in its sole discretion, may begin the payments earlier. For avoidance of doubt, the termination of Employee’s employment as a result of Employee’s death or disability (meaning the inability of Employee, due to the condition of Employee’s physical, mental or emotional health, effectively to perform the essential functions of Employee’s job with or without reasonable accommodation for a continuous period of more than 90 days or for 90 days in any period of 180 consecutive days, as determined by the Board in its sole discretion in consultation with a physician retained by the Company) will not constitute a termination without Cause triggering the rights described in this Section 4(b).

(c)CAUSE. For purposes of this Agreement, “Cause” means: (i) Employee’s fraud, embezzlement or misappropriation with respect to the Company; (ii) Employee’s material breach of fiduciary duties to the Company; (iii) Employee’s willful or negligent misconduct; (iv) Employee’s material breach of this Agreement; (v) Employee’s willful failure or refusal to perform Employee’s material duties under this Agreement or failure to follow any specific lawful instructions of the Company; (vi) Employee’s conviction or plea of nolo contendere in respect of a felony or of a misdemeanor involving moral turpitude; (vii) Employee’s alcohol or substance abuse which has a material adverse effect on Employee’s ability to perform Employee’s duties under this Agreement; or (viii) Employee’s engagement in a form of discrimination or harassment prohibited by law (including, without limitation, discrimination or harassment based on race, color, religion, sex, national origin, age or disability). In the event that the Company concludes that Employee has engaged in acts constituting in Cause as defined in clause (iii), (iv), (v), or (vii) above, prior to terminating this Agreement for Cause the Company will provide Employee with at least fifteen (15) days’ advance written notice of the specific circumstances constituting such Cause, and an opportunity to correct such circumstances.

(d)GOOD REASON. In order for Employee to resign for Good Reason, Employee must provide written notice to the Company of the existence of the Good Reason condition within thirty (30) days of the initial existence of such Good Reason condition. Upon receipt of such notice, the Company will have thirty (30) days during which it may remedy the Good Reason condition and not be required to provide for the benefits described in Section 4(b) above as a result of such proposed resignation if successfully remedied. If the Good Reason condition is not remedied within such thirty (30) day period, Employee may resign based on the Good Reason condition specified in the notice effective no later than thirty (30) days following the expiration of the thirty (30) day cure period. For purposes of this Agreement, “Good Reason” means the occurrence of any of the following events without Employee’s consent: (i) a material 

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reduction of Employee’s Base Salary not generally applicable to other executive-level employees of the Company, (ii) a material diminution of the Employee’s authority, duties, or responsibilities, (iii) a relocation of Employee’s primary workplace to a location that is more than fifty (50) miles from the location of Employee’s primary workplace as of the date hereof, or (iv) the Company’s material breach of this Agreement.

(e)APPLICATION OF INTERNAL REVENUE CODE SECTION 409A. Notwithstanding anything to the contrary set forth herein, any payments and benefits provided under this Section 4 that constitute “deferred compensation” within the meaning of Section 409A of the Internal Revenue Code and the regulations and other guidance thereunder and any state law of similar effect (collectively “Section 409A”) will not commence in connection with Employee’s termination of employment unless and until Employee has also incurred a “separation from service” (as such term is defined in Treasury Regulation Section 1.409A-1(h) (a “Separation From Service”), unless the Company reasonably determines that such amounts may be provided to Employee without causing Employee to incur an additional tax under Section 409A. The parties intend that each installment of the Separation Benefits payments provided for in this Agreement is a separate “payment” for purposes of Treasury Regulation Section 1.409A-2(b)(2)(i). For the avoidance of doubt, the parties intend that payments of the Separation Benefits set forth in this Agreement satisfy, to the greatest extent possible, the exemptions from the application of Section 409A provided under Treasury Regulation Sections 1.409A-1(b)(4), 1.409A-1(b)(5) and 1.409A-1(b)(9). However, if the Company determines that the Separation Benefits constitute “deferred compensation” under Section 409A and Employee is, on the termination of service, a “specified employee” of the Company or any successor entity thereto, as such term is defined in Section 409A, then, solely to the extent necessary to avoid the incurrence of the adverse personal tax consequences under Section 409A, the timing of the Separation Benefits payments will be delayed until the earlier to occur of: (i) the date that is six months and one day after Employee’s Separation From Service, or (ii) the date of Employee’s death (such applicable date, the “Specified Employee Initial Payment Date”), the Company (or the successor entity thereto, as applicable) will (A) pay to Employee a lump sum amount equal to the sum of the Separation Benefits payments that Employee would otherwise have received through the Specified Employee Initial Payment Date if the commencement of the payment of the Separation Benefits had not been so delayed pursuant to this Section and (B) commence paying the balance of the Separation Benefits in accordance with the applicable payment schedules set forth in this Agreement.

(f)NO FURTHER OBLIGATIONS. Except as expressly provided above or as otherwise required by law, the Company will have no obligations to Employee in the event of the termination of this Agreement for any reason.

5.EMPLOYEE REPRESENTATIONS. Employee represents and warrants that Employee is not obligated or restricted under any agreement (including any non-competition or confidentiality agreement), judgment, decree, order or other restraint of any kind that could impair Employee’s ability to perform the duties and obligations required of Employee hereunder. Employee further agrees that Employee will not divulge to the Company any confidential information and/or trade secrets belonging to others, including Employee’s former employers, nor will the Company seek to elicit from Employee such information. Consistent with the 

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foregoing, Employee will not provide to the Company, and the Company will not request, any documents or copies of documents containing such information.

6.NOTICES. Any notice required to be given hereunder will be sufficient if in writing and hand delivered or sent by mail, return receipt requested, postage prepaid, in the case of Employee, to Employee’s address shown on the Company’s records, and in the case of the Company, to 79 T.W. Alexander Drive, 4401 Research Commons, Suite 105, Research Triangle Park, NC 27709, or to such other addresses as either party shall specify to the other.

7.AMENDMENT; WAIVER. No amendment of any provision of this Agreement will be valid unless the amendment is in writing and signed by the Company and Employee. No waiver of any provision of this Agreement will be valid unless the waiver is in writing and signed by the waiving party. The failure of a party at any time to require performance of any provision of this Agreement will not affect such party’s rights at a later time to enforce such provision. No waiver by a party of any breach of this Agreement will be deemed to extend to any other breach hereunder or affect in any way any rights arising by virtue of any other breach.

8.GOVERNING LAW; VENUE. This Agreement will be governed by and construed in accordance with the laws of the State of North Carolina, without regard to that body of law known as choice of law. The parties agree that any litigation arising out of or related to this Agreement or Employee’s employment by the Company will be brought exclusively in any state or federal court in Durham County, North Carolina. Each party (i) consents to the personal jurisdiction of said courts, (ii) waives any venue or inconvenient forum defense to any proceeding maintained in such courts, and (iii) agrees not to bring any proceeding arising out of or relating to this Agreement or Employee’s employment by the Company in any other court.

9.BENEFIT. This Agreement will be binding upon and will inure to the benefit of each of the parties hereto, and to their respective heirs, representatives, successors and permitted assigns. Employee may not assign any of Employee’s rights or delegate any of Employee’s duties under this Agreement.

10.ENTIRE AGREEMENT; OTHER AGREEMENTS. This Agreement contains the entire agreement and understanding by and between the Company and Employee with respect to the subject matter hereof, and any representations, promises, agreements or understandings, written or oral, not herein contained will be of no force or effect; provided, however, that Employee is also subject to the terms and conditions of (i) that certain Employee Non-Competition and Non-Solicitation Agreement, dated August 1, 2017, by and between Employee and the Company, and (ii) that certain Employee Confidentiality and Inventions Agreement, dated August 1, 2017, by and between Employee and the Company, each of which remains in full force and effect. 

11.CAPTIONS; RULE OF CONSTRUCTION. The captions in this Agreement are for convenience only and in no way define, bind or describe the scope or intent of this Agreement. The terms and provisions of this Agreement will not be construed against the drafter or drafters hereof. All parties hereto agree that the language of this Agreement will be construed as a whole according to its fair meaning and not strictly for or against any of the parties hereto.

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12.COUNTERPARTS. This Agreement may be executed in one or more counterparts, each of which will be deemed an original but all of which together will constitute one and the same agreement. Facsimile or PDF reproductions of original signatures will be deemed binding for the purpose of the execution of this Agreement.

13.SEVERABILITY. Each provision of this Agreement is severable from every other provision of this Agreement. Any provision of this Agreement that is determined by any court of competent jurisdiction to be invalid or unenforceable will not affect the validity or enforceability of any other provision. Any provision of this Agreement held invalid or unenforceable only in part or degree will remain in full force and effect to the extent not held invalid or unenforceable.

14.SURVIVAL. The terms of Sections 4 through 14 will survive the termination or expiration of this Agreement for any reason.

[Signature Page Follows.]

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IN WITNESS WHEREOF, the parties have executed this Agreement effective as of the Effective Date.

 

G1 THERAPEUTICS, INC.

 

By:         /s/ Mark A. Velleca, M.D., Ph.D.

                 Mark A. Velleca, M.D., Ph.D.
                      Chief Executive Officer

 

EMPLOYEE:

 

By:                     /s/ Terry L. Murdock                   

                            Terry L. Murdock

 

 

 

 

 

 
 
8Blueprint

 

 Exhibit
10.1

 

THIS NOTE AND THE SECURITIES ISSUABLE UPON THE CONVERSION HEREOF
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AND HAVE
BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN
CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH SALE OR
DISTRIBUTION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION
STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL IN A FORM
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED
UNDER THE SECURITIES ACT OF 1933.

 

NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, THIS NOTE, THE
REPAYMENT OF ALL INDEBTEDNESS EVIDENCED HEREBY AND THE EXERCISE OF
ANY RIGHT OR REMEDY HEREUNDER BY THE HOLDER HEREOF ARE SUBJECT TO
THE TERMS AND CONDITIONS SET FORTH IN THAT CERTAIN SUBORDINATION
AGREEMENT, DATED ON OR ABOUT SEPTEMBER 30, 2017, BY AND BETWEEN
CROSSROADS FINANCIAL GROUP, LLC AND THE INITIAL HOLDER HEREOF. IN
THE EVENT OF ANY CONFLICT BETWEEN THE TERMS OF SUCH SUBORDINATION
AGREEMENT AND THIS NOTE, THE TERMS OF THE SUBORDINATION AGREEMENT
SHALL GOVERN AND CONTROL.

 

Amended and Restated Convertible Secured Promissory
Note

 

$18,000,000  November 8, 2017 (the “Amendment
Date”)

CPN-3  Denver, Colorado

 

WHEREAS,
MusclePharm
Corporation, a
Nevada corporation (the “Company”), previously issued to
Ryan Drexler or his assigns
(the “Holder”)
(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 the Holder;

 

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 the Holder (the
“Prior Security
Agreement”);

 

WHEREAS, pursuant
to that certain Restructuring Agreement, dated as of the date
hereof, by and between the Company and the Holder (the
“Restructuring
Agreement”), the Company and the Holder have agreed 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 herein (the “Restructuring”); and

 

 

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WHEREAS, after
considering the other available strategic alternatives and funding
sources available to the Company, the Board of Directors of the
Company (the “Board”), on the recommendation of
a special committee thereof, has determined that the Restructuring
is necessary and advisable to ensure the Company’s ability to
operate as a going concern and thereby protect the interests of the
Company and its stockholders;

 

NOW,
THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Company and the
Holder hereby amend and restate the terms of, and supersede in
their entirety, the Prior Notes as follows:

 

For
value received, the Company promises to pay to the Holder the
principal sum of Eighteen Million
Dollars ($18,000,000), plus interest on the outstanding
principal amount at the rate of twelve percent (12%) per annum, in
each case in accordance with the terms and subject to adjustment as
set forth in this amended and restated note (this
“Note”).

 

This
Note is secured by a lien on and security interest in all of the
assets and properties of the Company, as described in the Third
Amended and Restated Security Agreement of even date herewith by
and between the Company and the Holder (the “Security Agreement”).

 

This
Note is subject to the following terms and conditions:

 

1. Maturity.

 

(a) Repayment. Unless earlier converted or
repaid (as applicable) as provided in Sections 1(d), 2
or 3, all outstanding principal (including any PIK Interest)
and any accrued but unpaid interest under this Note (whether or not
that interest has been capitalized) plus the Event of Default
Redemption Premium, as applicable (collectively, the
“Conversion
Amount”), shall be due and payable on December 31,
2019 (as such date may be accelerated solely in accordance with the
terms hereof, the “Maturity
Date”).

 

(b) Interest.

 

(i) Interest on this
Note shall commence on the Amendment Date and shall continue and
accrue daily at the applicable rate on the outstanding principal
amount until paid in full or converted in accordance with this
Note.

 

(ii) Interest
shall be computed on the basis of a year of 365 days for the actual
number of days elapsed.

 

(iii) Accrued
and unpaid interest shall be paid by the Company to the Holder in
cash on the last day of each calendar quarter (each such date, an
“Interest Payment
Date”), provided that, at
the irrevocable election of the Company (as determined by the
independent directors of the Board) made in writing by notice to
the Holder at least two (2) business days prior to any Interest
Payment Date, and so long as no Event of Default has occurred and
is then continuing, the Company may elect to pay the PIK Amount of
such interest either (at the sole option of the independent
directors of the Board) (i) in kind by increasing the principal
amount of this Note by such PIK Amount, or (ii) in shares of the
Company’s Common Stock, $0.001 par value per share
(“Common
Stock”), at the closing price per share on the last
business day of such calendar quarter immediately preceding such
Interest Payment Date, rounded down to the nearest whole share on
such Interest Payment Date. The “PIK Amount” shall, in respect of
any Interest Payment Date, be an amount equal to one-sixth of the
interest otherwise payable on such Interest Payment Date. Any
interest paid in kind by adding such interest then due to the
unpaid principal amount shall be referred to as “PIK Interest.”

 

 

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(iv) Any
interest not paid when due in cash (including any PIK Interest)
shall be capitalized and added to the principal amount of this Note
and shall bear interest, compounded annually, along with all other
unpaid principal, capitalized interest and other capitalized
obligations hereunder.

 

(c) Events of Default.

 

(i) Notwithstanding
Section 1(a) above, at the option and upon the declaration of the
Holder and upon written notice to the Company, the entire
Conversion Amount shall become due and payable upon an Event of
Default. The occurrence of the following shall constitute an
“Event of
Default”:

 

(1) the
Company fails to pay any and all unpaid principal, accrued and
unpaid interest and all other amounts owing under the Note and the
Security Agreement when due and payable pursuant to the terms of
the Note, provided, however,
that an Event of Default shall not be deemed to have occurred on
account of a failure to pay due solely to an administrative or
operational error of any depositary institution that is crediting
by ACH or wiring such payment if the Company had the funds to make
the payment when due and payment is received by the Holder within
two (2) business days following the Company’s knowledge of
such failure to pay;

 

(2) the
Company or any of its subsidiaries files any petition or action for
relief under any bankruptcy, reorganization, insolvency or
moratorium law or any other law for the relief of, or relating to,
debtors, now or hereafter in effect, or makes any general
assignment for the benefit of creditors;

 

(3) an
involuntary petition is filed against the Company or any of its
subsidiaries (unless such petition is dismissed or discharged
within forty-five (45) days) under any bankruptcy statute or
similar law now or hereafter in effect, or a custodian, receiver,
trustee, assignee for the benefit of creditors (or other similar
official) is appointed to take possession, custody or control of
any property of the Company; or

 

(4) the
Company breaches any other material term of this Note or the
Security Agreement (unless, in the case of any curable material
breach, such material breach is cured within thirty (30) days of
the earlier of the date on which (x) the Holder has given notice of
such breach to the Company and (y) the Company has actual knowledge
of such breach);

 

 

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(5) the
Company amends or modifies the terms of any existing indebtedness
in a manner that increases the principal amount thereof or the
interest rate applicable thereto, accelerates the maturity of the
obligations thereunder or otherwise adversely affects the Holder;
provided,
that, the foregoing shall not constitute an Event of Default
if undertaken, caused, approved or voted in favor of by the Holder
in his capacity as an employee, officer or director of the
Company;

 

(6) a
final judgment or judgments for the payment of money aggregating in
excess of $100,000 that are not covered by insurance or an
indemnity from a creditworthy party are rendered against the
Company and/or any of its subsidiaries and which judgments are not,
within thirty (30) days after the entry thereof, bonded, discharged
or stayed pending appeal, or are not discharged within thirty (30)
days after the expiration of such stay;

 

(7) the
Company fails to pay, when due, giving effect to any applicable
grace period, any payment with respect to any funded indebtedness
in excess of $100,000 due to any third party (other than, with
respect to unsecured funded indebtedness only, payments contested
by the Company in good faith by proper proceedings and with respect
to which adequate reserves have been set aside for the payment
thereof in accordance with U.S. generally accepted accounting
principles) or is otherwise in breach or violation of any agreement
for monies owed or owing in an amount in excess of $100,000, other
than unsecured trade obligations in the ordinary course of
business, which breach or violation permits the other party thereto
to declare a default or otherwise accelerate amounts due
thereunder; provided, that, the
foregoing shall not constitute an Event of Default if undertaken,
caused, approved or voted in favor of by the Holder in his capacity
as an employee, officer or director of the Company; or

 

(8) there
exists any circumstances or events that would, with or without the
passage of time or the giving of notice, result in a default or
event of default under any agreement binding the Company or any
subsidiary, which default or event of default would or is likely to
have a material adverse effect on the business, assets, operations
or financial condition of the Company and its subsidiaries, taken
as a whole; provided, that, the
foregoing shall not constitute an Event of Default if such
circumstances or events are undertaken, caused, approved or voted
in favor of by the Holder in his capacity as an employee, officer
or director of the Company;

 

provided, however,
that all obligations under this Note, including without limitation
all principal (including any PIK Interest) and all accrued and
unpaid interest, shall be accelerated, and shall be immediately and
automatically due and payable (together with the Event of Default
Redemption Premium, as applicable) without any notice to the
Company or other action, upon the occurrence of any Event of
Default described in clause (2) or (3) of this Section
1(c)(i).

 

(ii) Notwithstanding
anything to the contrary contained in this Note, at the option of
the Holder, at any time after the occurrence and during the
continuance of an Event of Default described in clause (1) of
Section 1(c)(i), the unpaid principal of this Note from time to
time outstanding (including any PIK Interest) and all past due
installments of interest shall, to the extent permitted by
applicable law, bear interest at the Default Rate. For purposes of
this Section 1(c)(ii), “Default Rate” shall mean the rate
per annum that is two (2%) greater than the rate that is otherwise
applicable to the obligations under this Note, but in no event
greater than the Maximum Rate (as defined below). Application of
the Default Rate shall not constitute a waiver of the Event of
Default arising from the overdue installment, and shall not prevent
the Holder from exercising any other rights or remedies available
to the Holder with respect to such Event of Default.

 

 

4

 

 

(d) Conversion. The Holder may at any time,
and from time to time, in the sole discretion of the Holder, upon
written notice to the Company, elect to convert all or a portion of
the Conversion Amount into shares of the Common Stock, at a price
per share equal to one dollar and eleven cents ($1.11), rounded
down to the nearest whole share.

 

(e) Change of Control. The Company shall not
enter into any agreement that would effect, and shall not effect,
any Change of Control (as defined below) unless the Company has
provided the Holder with at least fifteen (15) days’ advance
written notice of such Change of Control, including the anticipated
consideration to be received by the holders of the Company’s
Common Stock, and has otherwise provided the Holder with a
meaningful opportunity to exercise its conversion rights hereunder
prior to the consummation of such Change of Control; provided,
that, the Holder shall maintain the confidentiality of any
information provided to it pursuant to this paragraph. The term
“Change of
Control” means (i) a sale of all or substantially all
of the Company’s assets other than to an Excluded Entity (as
defined below), (ii) a merger, consolidation or other capital
reorganization or business combination transaction of the Company
with or into another corporation, limited liability company or
other entity other than an Excluded Entity, in each case pursuant
to which the stockholders of the Company immediately prior to such
merger, consolidation or other capital reorganization or business
combination transaction own less than fifty percent (50%) of the
voting interests in the surviving or resulting entity, or (iii) the
consummation of a transaction, or series of related transactions,
in which any “person” (as such term is used in Sections
13(d) and 14(d) of the Securities Exchange Act of 1934, as amended
(the “Exchange
Act”)) becomes the “beneficial owner” (as
defined in Rule 13d-3 of the Exchange Act), directly or indirectly,
of all of the Company’s then outstanding voting capital
stock. Notwithstanding the foregoing, a transaction shall not
constitute a Change of Control if its purpose is to (A) change the
jurisdiction of the Company’s incorporation or (B) create a
holding company that will be owned in substantially the same
proportions by the persons who hold the Company’s voting
capital stock immediately before such transaction. An
“Excluded
Entity” means a corporation or other entity of which
the holders of voting capital stock of the Company outstanding
immediately prior to such transaction directly or indirectly
beneficially own voting capital stock representing at least a
majority of the votes entitled to be cast by all of such
corporation’s or other entity’s voting securities
outstanding immediately after such transaction.

 

2. Mechanics
and Effect of Conversion.

 

(a) Effectiveness of Conversion. Upon
conversion of this Note, the Company will be forever released from
all of its obligations and liabilities under this Note with respect
to that portion of the Conversion Amount being converted, including
without limitation the obligation to repay such portion of the
principal amount and accrued and unpaid interest. Principal and
accrued and unpaid interest on this Note will be converted
proportionally unless otherwise specified by the Holder. Upon
conversion of this Note, the Company shall take all such actions as
are necessary in order to ensure that the Common Stock issuable
with respect to such conversion shall be validly issued, fully paid
and nonassessable.

 

 

5

 

 

(b) Issuance of Certificates. Upon
conversion of this Note, the Holder shall surrender this Note, duly
endorsed, at the principal offices of the Company or any transfer
agent of the Company. At its expense, the Company shall, as soon as
practicable thereafter, issue and deliver to such Holder, at such
principal office, a certificate or certificates for the number of
shares of Common Stock to which such Holder is entitled upon such
conversion, together with any other securities and property to
which the Holder is entitled upon such conversion under the terms
of this Note, including a check payable to the Holder for any cash
amounts payable as described herein. Upon any partial conversion of
this Note, a new Note containing the same date and provisions of
this Note shall, at the request of the Holder, be issued by the
Company to the Holder for the principal balance of this Note and
interest which shall not have been converted or paid.

 

(c) Fractional Shares. No fractional shares
of the Company’s Common Stock will be issued upon conversion
of this Note. If any fractional share of Common Stock would, except
for the provisions hereof, be deliverable upon conversion of this
Note, the Company, in lieu of delivering such fractional share,
shall pay an amount in cash equal to the value of such fractional
share, as determined by the per share conversion price used to
effect such conversion.

 

3. Payment; Prepayment. All payments shall
be made in lawful money of the United States of America at such
place as the Holder hereof may from time to time designate in
writing to the Company. Payment shall be credited first to any fees
and expenses due and payable hereunder, then to accrued and unpaid
interest, and then the remainder shall be applied to principal. The
Company may prepay this Note in whole or in part at any time
following at least fifteen (15) and no more than sixty (60)
days’ advance written notice to the Holder, provided that the
Holder shall retain all rights of conversion until the date of
repayment, notwithstanding the pendency of any prepayment notice,
and provided
further that upon the occurrence and during the continuance
of an Event of Default, any such prepayment shall be subject to the
Event of Default Redemption Premium.

 

4. Adjustment Provisions. If after the
Amendment Date the Company shall make or issue, or shall fix a
record date for the determination of eligible holders of its
capital stock entitled to receive, a dividend or other distribution
payable with respect to the Common Stock that is payable in
securities of the Company, assets (including cash), or rights or
warrants to purchase shares of Common Stock or securities
convertible into shares of Common Stock (each, a
“Dividend
Event”), and such dividend or other distribution is
actually made, then, and in each such case, the Holder, upon
conversion of all or a portion of the Conversion Amount into shares
of Common Stock at any time after such Dividend Event, shall
receive, in addition to the Common Stock issuable upon such
conversion of the Note, the securities or other assets, rights or
warrants that would have been issuable to the Holder had the
Holder, immediately prior to such Dividend Event, converted such
Conversion Amount into Common Stock.

 

 

6

 

 

5. Event of Default Redemption Premium.
Notwithstanding anything to the contrary contained in this Note,
upon the occurrence and during the continuance of any Event of
Default, any conversion, redemption, payment, or prepayment of this
Note under any circumstances (including whether voluntary or
involuntary, whether prior to or following any acceleration, and
whether or not during or in connection with any bankruptcy or
similar proceeding) shall be in an amount equal to the sum of (i)
the product of (a) the sum of all outstanding principal (including
any PIK Interest) and all accrued interest and (b) one hundred and
five percent (105%) and (ii) all fees and expenses and all other
amounts owing in connection with this Note and the Security
Agreement; provided, that, any
amount provided for in clause (ii) shall, in connection with any
conversion, be paid in cash. The difference between the product
calculated under clause (i) of the prior sentence and the sum
described in clause (i)(a) of such sentence shall be referred to as
the “Event of Default
Redemption Premium.”

 

6. Covenants.

 

(a) Restrictions on Additional Indebtedness and
Liens and Subordination. The Company may not incur or suffer
to exist any Indebtedness (as defined below) other than Permitted
Indebtedness (as defined below) or any Lien (as defined below)
other than Permitted Liens (as defined below).

 

(i) “Indebtedness” shall mean any and
all indebtedness for borrowed money; all obligations in respect of
any deferred purchase price; all obligations in respect of capital
leases; all reimbursement obligations in respect of letters of
credit, surety bonds and similar instruments; all obligations
evidenced by notes, bonds, loan agreements, debentures and similar
instruments; and all guarantee obligations and contingent
obligations in respect of any of the foregoing.

 

(ii) “Permitted
Indebtedness” shall mean (a) Indebtedness evidenced by
this Note; (b) Indebtedness in respect of taxes, fees, assessments
or other governmental charges or levies, either not delinquent or
being contested in good faith by appropriate proceedings;
provided, that
Company maintains adequate reserves therefor; (c) Indebtedness
existing as of the date hereof and set forth on the schedule of
Permitted Indebtedness attached hereto, or pursuant to an
instrument set forth on such schedule; (d) Indebtedness to trade
creditors (including suppliers) incurred in the ordinary course of
business, including Indebtedness incurred in the ordinary course of
business with corporate credit cards; (e) extensions, refinancings,
repayment and renewals of the obligations under this Note and under
any Permitted Indebtedness described in clause (d) above,
provided
that the principal amount is not increased or the terms modified to
impose materially more burdensome terms upon the Company, and (f)
Subordinated Indebtedness incurred after the date of this Note and
approved by a majority of the independent directors of the
Board.

 

 

7

 

 

(iii) “Subordinated
Indebtedness” means secured and/or unsecured
Indebtedness expressly subordinated to the obligations of the
Company to the Holder hereunder and under the Security Agreement,
including in payment and lien priority.

 

(iv) “Lien”
shall mean any lien, claim, encumbrance or similar interest in or
on any asset, including without limitation any security interest or
mortgage.

 

(v) “Permitted Lien” shall mean (a)
Liens securing Indebtedness evidenced by this Note; (b) Liens for
taxes, fees, assessments or other governmental charges or levies,
either not delinquent or being contested in good faith by
appropriate proceedings, provided that the
Company maintains adequate reserves therefor; (c) claims of
materialmen, mechanics, carriers, warehousemen, processors or
landlords arising out of operation of law so long as the
obligations secured thereby (i) are not past due or (ii) are being
properly contested and for which the Company has established
adequate reserves; (d) Liens consisting of deposits or pledges made
in the ordinary course of business in connection with
workers’ compensation, unemployment insurance, social
security and similar laws; (e) Liens on equipment (including
capital leases) to secure purchase money Indebtedness existing as
of the date hereof, or any permitted refinancing thereof, so long
as such security interests do not apply to any property of the
Company other than the equipment so acquired, and the Indebtedness
secured thereby does not exceed the cost of such equipment, and
provided
that any extension, renewal or replacement Lien shall be limited to
the property encumbered by the existing Lien and the principal
amount of the Indebtedness being extended, renewed, or refinanced
(as may have been reduced by any payment thereon) does not
increase; (f) Liens on accounts, inventory, machinery, equipment,
instruments, documents, chattel paper, general intangibles and
other assets to secure purchase money Indebtedness under agreements
set forth on the schedule of Permitted Indebtedness attached hereto
and (g) Liens to secure the obligations under agreements set forth
on the schedule of Permitted Liens attached hereto.

 

7. Transfer; Successors and Assigns. The
terms and conditions of this Note shall inure to the benefit of and
be binding upon the respective successors and assigns of the
Company and the Holder. Notwithstanding the foregoing, the Holder
may not assign, pledge or otherwise transfer this Note without the
prior written consent of the Company. Subject to the preceding
sentence, this Note may be transferred only upon surrender of the
original Note for registration of transfer, duly endorsed, or
accompanied by a duly executed written instrument of transfer in
form satisfactory to the Company. Thereupon, a new note for the
same principal amount and interest will be issued to, and
registered in the name of, the transferee. Interest and principal
are payable only to the registered holder of this
Note.

 

8. Governing Law. This Note 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.).

 

9. Jurisdiction. Each of the Company and
the Holder 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 own corporate or individual
domicile with respect to actions or proceedings brought against it
as a defendant, for purposes of all proceedings. Each of the
Company and the Holder irrevocably waives, to the fullest extent
permitted by law, any objection which it 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 the
Company or the Holder, as applicable, 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 this Note.

 

 

8

 

 

10. Waiver of Jury Trial. Each of the Company and the Holder hereby
irrevocably waives any and all right to trial by jury in any
proceeding.

 

11. Notices. Any notice required or
permitted by this Note shall be in writing and shall be deemed
sufficient when delivered personally or by overnight courier or
sent by email or fax (upon customary confirmation of receipt), or
forty-eight (48) hours after being deposited in the U.S. mail as
certified or registered mail with postage prepaid, addressed to the
party to be notified at such party’s address or fax
number as set forth on
the signature page, as subsequently modified by written notice, or
if no address is specified on the signature page, at the most
recent address set forth in the Company’s books and records;
provided, that, any notice to the Company by the Holder also shall
be provided to the independent directors of the Board.

 

12. Amendments and Waivers. Any term of this
Note may be amended only with the written consent of the Company
and the Holder. Any amendment or waiver effected in accordance
herewith shall be binding upon the Company, the Holder and each
transferee of this Note.

 

13. Entire Agreement. This Note, together
with the Security Agreement and the Restructuring Agreement,
constitutes the entire agreement between the Company and the Holder
pertaining to the subject matter hereof, and any and all other
written or oral agreements existing between the Company and the
Holder are expressly canceled.

 

14. Counterparts. This Note may be executed
in any number of counterparts, each of which will be deemed to be
an original and all of which together will constitute a single
agreement.

 

15. Action to Collect on Note. The Company
promises to pay all costs and expenses, including reasonable
attorney’s fees, incurred in connection with the collection
or enforcement of this Note or any obligation hereunder, including
without limitation during or in the context of any bankruptcy,
receivership, trusteeship, reorganization or insolvency proceeding
or other proceeding under any other law for the relief of, or
relating to, debtors, now or hereafter in effect, and all such
amounts shall be payable on demand (or, if the Holder is prevented
by applicable law from making demand, as and when incurred by the
Holder) and, if not paid when due, shall be capitalized and become
part of the principal amount of this Note, and interest shall
accrue thereon as set forth for other principal amounts under this
Note.

 

 

9

 

 

16. Loss of Note. Upon receipt by the
Company of evidence satisfactory to it of the loss, theft,
destruction or mutilation of this Note or any Note exchanged for
it, and indemnity satisfactory to the Company (in case of loss,
theft or destruction) or surrender and cancellation of such Note
(in the case of mutilation), the Company will make and deliver in
lieu of such Note a new Note of like tenor.

 

17. Interest Rate Limitation.
Notwithstanding anything to the contrary contained herein, the
interest paid or agreed to be paid under this Note shall not exceed
the maximum rate of non-usurious interest permitted by applicable
law (the “Maximum
Rate”). If the Holder shall receive interest in an
amount that exceeds the Maximum Rate, the excess interest shall be
applied to the principal amount remaining owed under this Note or,
if it exceeds such unpaid principal amount, refunded to the
Company. In determining whether the interest contracted for,
charged, or received by the Holder exceeds the Maximum Rate, the
Holder may, to the extent permitted by applicable law, (i)
characterize any payment that is not principal as an expense, fee,
or premium rather than interest, (ii) exclude voluntary prepayments
and the effects thereof, and (iii) amortize, prorate, allocate and
spread in equal or unequal parts the total amount of interest
throughout the contemplated term of this Note.

 

18. Indemnification. The Company shall, to
the fullest extent permitted by law, indemnify (but only to the
extent of and out of Company assets) the Holder against all
reasonable expenses (including reasonable attorneys’ fees),
judgments, fines and amounts paid in settlement actually and
reasonably incurred by the Holder in connection with any claim,
action, suit or proceeding, whether civil, criminal, administrative
or investigative, before or by any court or any administrative or
legislative body or authority, in which the Holder is involved, as
a party or otherwise, or with which the Holder may be threatened,
arising in connection with this Note or the Security Agreement
(each, an “Action”), except to the extent the
same has been finally adjudicated to constitute fraud, gross
negligence or willful misconduct of the Holder or a breach by the
Holder of this Note or the Security Agreement. Promptly after
receipt by the Holder of notice of the commencement or threatened
commencement against it of any third party Action, the Holder will
notify the Company. The Company will be entitled to assume the
defense of the Action unless the Holder shall have reasonably
concluded that a conflict may exist between the Company and the
Holder in conducting the defense of the Action. If the Company
assumes the defense of any Action in accordance with the provisions
of this Section, it will not be liable to the Holder for any legal
or other expenses subsequently separately incurred by the Holder in
connection with the defense of such Action. The Company shall not
be liable for any settlement of a third-party Action effected
without its written consent, which consent may not be unreasonably
withheld.

 

19. Severability. In the event that any
provision of this Note is invalid or unenforceable under any
applicable statute or rule of law, then such provision shall be
deemed inoperative to the extent that it may conflict therewith and
shall be deemed modified to conform with such statute or rule of
law. Any such provision which may prove invalid or unenforceable
under any law shall not affect the validity or enforceability of
any other provision of this Note.

 

 

10

 

 

20.           Reaffirmation;
Amendment and Restatement. The Company has created a lien on
and security interest in all of the assets and properties of the
Company in favor of the Holder to secure its obligations hereunder,
pursuant to the Security Agreement. The Company hereby acknowledges
that it has reviewed the terms and provisions of this Note and
consents to the amendment and restatement of the Prior Notes
effected pursuant to this Note. The Company hereby confirms that
the Security Agreement will continue to secure, to the fullest
extent possible in accordance with the Security Agreement, the
payment and performance of the obligations set forth herein, as
applicable now or hereafter existing, and that this Note does not
constitute a novation of the obligations and liabilities existing
under the Prior Notes or the Prior Security Agreement. The Company
and the Holder hereby agree that, on the Amendment Date, the terms
and provisions of the Prior Notes shall be and hereby are amended
and restated in their entirety by the terms, conditions and
provisions of this Note, and the terms and provisions of the Prior
Notes shall be superseded by this Note.

 

[Remainder of Page
Intentionally Left Blank]

 

 

11

 

IN WITNESS WHEREOF, the undersigned have
duly executed this Amended and Restated Convertible Secured
Promissory Note as of the date indicated herein.

 

	

 

	MusclePharm
Corporation	

 

	

 

	

 

	

 

	

 

	
 

	
By:  

	
/s/ Brian
Casutto

	

 

	

 

	

 

	
Name 
Brian
Casutto

	

 

	

 

	

 

	

Title
Executive Vice President, Sales & Operations

	

 

  

 

Acknowledged and
Agreed:

 

Ryan
Drexler

 

/s/ Ryan Drexler

 

 

12

 

Schedule of Permitted Indebtedness

 

Purchase
and Sale Agreement, dated as of January 11, 2016, between the
Company and Prestige Capital Corporation, as amended or modified
through the date hereof, and as hereafter amended or modified with
the consent of the Holder in his capacity as such or as a director
or officer of the Company, providing for aggregate borrowings up to
a maximum principal amount of $10,000,000.

 

Loan
and Security Agreement, dated as of October 6, 2017, among the
Company, Canada MusclePharm Enterprises Corp. and Crossroads
Financial Group, LLC, as amended or modified through the date
hereof, and as hereafter amended or modified with the consent of
the Holder in his capacity as such or as a director or officer of
the Company, providing for aggregate borrowings up to a maximum
principal amount of $3,000,000.

 

Capital
leases outstanding at June 30, 2017 described in Note 9 to the
Condensed Consolidated Financial Statements contained in the
Company’s 10-Q for the quarter ended June 30,
2017.

 

Schedule of Permitted Liens

 

Loan
and Security Agreement, dated as of October 6, 2017, among the
Company, Canada MusclePharm Enterprises Corp. and Crossroads
Financial Group, LLC, as amended or modified through the date
hereof, and as hereafter amended or modified with the consent of
the Holder in his capacity as such or as a director or officer of
the Company, providing for aggregate borrowings up to a maximum
principal amount of $3,000,000.

 

 

 

 

 

13

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