Item
1.01 Entry into a Material Definitive Agreement.
As
previously disclosed by MusclePharm Corporation (the
“Company”) on a Current Report on Form 8-K filed with the U.S. Securities and Exchange Commission on October 19, 2021, the
Company entered into a Securities Purchase Agreement (the “October SPA”) with certain
institutional investors (the “October Investors”) pursuant to which the Company sold an aggregate of $8,197,674.42 in principal
amount (the “October Principal Amount”) of 14% original issue discount senior secured notes (the “October Notes”),
resulting in gross proceeds to the Company of $7,050,000, exclusive of placement agent commission and fees and other offering
expenses, and warrants (the “October Warrants”) to purchase up to 17,355,700 shares
of the Company’s common stock at an exercise price of $0.78, subject to adjustment (the “October Offering”).
As of June 3,
2022, the Company entered into an Amended and Restated Securities Purchase Agreement (the “Amended and Restated Securities
Purchase Agreement”) with certain accredited and institutional investors, including certain of the October Investors (collectively,
the “Subsequent Investors” and together with the October Investors, the “Investors”), which amends and restates
the October SPA to, among other things, allow for the issuance of additional senior secured notes and warrants.
Pursuant to the Amended
and Restated Securities Purchase Agreement, the Company agreed to sell $3,081,875 in principal
amount of 20% Original Issue Discount Senior Secured Notes (the “June Notes”
and together with the October Notes, the “Notes”), resulting in gross proceeds
to the Company of $2,465,500, exclusive of placement agent commission and fees and other offering expenses,
and warrants (the “June Warrants” and together with the October Warrants, the “Warrants”) to
purchase up to 22,013,393 shares (the “Warrant Shares”) of the Company’s common stock (the “June Offering”).
The closing of the June Offering is expected to occur on or about June 10, 2022, subject to the satisfaction of customary closing conditions.
Subject to certain exceptions,
the June Notes will accrue no interest, will mature six months after issuance and will be secured by the same collateral that secured
the October Notes. The June Warrants will be exercisable for five years from the date of issuance at an exercise price of $0.231
per share, subject to adjustment. If at any time following the six-month anniversary of the date of issuance of the June Warrants, a
registration statement covering the resale of the Warrant Shares is not effective, the holders may exercise the June Warrants by means
of a cashless exercise. The Company is prohibited from effecting an exercise of the June Warrants to the extent that, as a result
of such exercise, the holder together with the holder’s affiliates, would beneficially own more than 4.99% of the number of shares
of the Company’s common stock outstanding immediately after giving effect to the issuance of the Warrant Shares upon exercise of
the June Warrant.
The June Warrants and the
Warrant Shares will not be registered under the Securities Act of 1933, as amended (the “Securities Act”), or the securities
laws of any state, and are being offered and will be sold in reliance on the exemption from registration under the Securities Act, afforded
by Section 4(a)(2) and Rule 506 of Regulation D promulgated thereunder.
Pursuant to the Amended and
Restated Securities Purchase Agreement, until such time as no Investor holds any of the Warrants, the Company is prohibited from effecting
or entering into an agreement to effect any issuance by the Company or any of its subsidiaries of common stock or common stock equivalents
(or a combination thereof) involving a Variable Rate Transaction (as defined in the Amended and Restated Securities Purchase Agreement).
In connection with the June
Offering, the Company agreed to:
| · | increase
the original issue discount of the October Notes from 14% to 28% such that the October Principal
Amount was increased to $9,759,135.00; |
| | | |
| · | amend
the maturity date of the October Notes such that the October Notes expire six months from
the closing date of the June Offering; |
| | | |
| · | amend
(i) the convertible secured promissory note issued to Ryan Drexler, the Company’s Chief
Executive Officer and Chairman of the Company’s Board of Directors, on November 29,
2020 (as amended on August 13, 2021) in the principal amount of $2,871,967 (the “Drexler
November Note”) and (ii) the convertible secured promissory note issued to Ryan Drexler
on August 13, 2021 in the principal amount of $2,457,549 (the “Drexler August Note”
and together with the Drexler November Note, the “Drexler Notes”) to extend the
maturity date of the Drexler Notes to such date that is three years from the closing date
of the June Offering; |
| | | |
| · | enter
into an amendment to Ryan Drexler’s Amended and Restated Employment Agreement pursuant
to which Mr. Drexler’s annual cash compensation, including base salary and bonus, will
be decreased to $250,000 while any Notes remain outstanding; and |
| | | |
| · | appoint
Sabina Rizvi, the Company’s President and Chief Financial Officer, as a member of the
board of directors of the Company. |
The foregoing description of the Amended
and Restated Securities Purchase Agreement, the June Warrants, the June Notes and the Waiver and Amendments is not complete
and is qualified in its entirety by reference to the full text of the forms of the Amended and Restated Securities Purchase Agreement,
the June Warrants, June Notes and the Waiver and Amendments, copies of which are filed as Exhibit 10.1, 10.2, 10.3 and
10.4, respectively, to this Current Report on Form 8-K and are incorporated by reference herein.