Attached files
file | filename |
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8-K - MusclePharm Corp | v205224_8k.htm |
EX-10.1 - MusclePharm Corp | v205224_ex10-1.htm |
CONVERTIBLE
PROMISSORY NOTE
$1,650,000
PLUS INTEREST DUE & PAYABLE
DOCUMENT
A-12012010
THIS NOTE
AND THE SHARES ISSUABLE UPON CONVERSION OF THIS NOTE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THIS NOTE AND THE SHARES ISSUABLE
UPON CONVERSION OF THIS NOTE MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT OR APPLICABLE
EXEMPTION OR SAFE HARBOR PROVISION.
FOR VALUE
RECEIVED, on the Effective Date, as defined below on the signature page, MusclePharm Corp. as Obligor
(“Borrower,” or “Obligor”), hereby promises to pay to the Lender (“Lender” or “
Holder”), as defined below on the signature page, the Principal Sum, as defined
below, along with the Interest Rate, as defined below, according to the terms
herein.
The
“Lender” shall be:
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JMJ
Financial / Its Principal, or Its Assignees.
|
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The
“Principal Sum” shall be:
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$1,650,000
(one million six hundred fifty thousand US Dollars) Subject to the
following: accrued, unpaid interest shall be added to the Principal
Sum.
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The
“Consideration” shall be:
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$1,400,000
(one million four hundred thousand US dollars) in the form of cash payment
by wire or check as set forth in the attached Funding Schedule and
corresponding Registration Rights Agreement.
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The
“Interest Rate” shall be:
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8%
one-time interest charge on the Principal Sum. No
interest or principal payments are required until the Maturity Date, but
both principal and interest may be included in conversion prior to
maturity date.
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The
“Conversion Price” shall be the following price:
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As
applied to the Conversion Formula set forth in 2.2, 70% (seventy percent)
of the lowest trade price in the 30 trading days previous to the
conversion; as applies to MusclePharm Corp. voting common
stock.
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The
“Maturity Date” is the date upon which the Principal Sum of this Note, as
well as any unpaid interest shall be due and payable, and that date shall
be:
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December
1, 2013
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Registration
Rights shall be:
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Registration
of the common shares underlying this note is mandatory, as set forth in
the corresponding Registration Rights Agreement.
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The
“Prepayment Terms” shall be:
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Prepayment
is not permitted.
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ARTICLE
1 PAYMENT-RELATED PROVISIONS
1.1
Interest Rate. Subject to the Holder’s right to convert, interest payable on
this Note will accrue interest at the Interest Rate and shall be applied to the
Principal Sum.
1.2
Payable on Demand. This Note is payable on demand in an amount not to
exceed the cash amount paid in as set forth in the attached Funding
Schedule.
ARTICLE
2 CONVERSION RIGHTS
The Holder will have the right to
convert the Principal Sum and accrued interest under this Note into Shares of
the Borrower’s Common Stock as set forth below.
2.1 Conversion Rights and Cashless
Exercise. Subject to the terms set forth in Section 2.7, the Holder will have
the right at its election from and after the Effective Date, and then at any
time, to convert all or part of the outstanding and unpaid Principal Sum and
accrued interest into shares of fully paid and nonassessable shares of common
stock of MusclePharm Corp. (as such stock exists on the date of issuance of this
Note, or any shares of capital stock of MusclePharm Corp. into which such stock
is hereafter changed or reclassified, the “Common Stock”) as per the Conversion
Formula set forth in Section 2.2. Any such conversion shall be cashless, and
shall not require further payment from Holder. Unless otherwise
agreed in writing by both the Borrower and the Holder, at no time will the
Holder convert any amount of the Note into common stock that would result in the
Holder owning more than 4.99% of the common stock outstanding of MusclePharm
Corp. Shares from any such conversion will be delivered to
Holder by 2:30pm EST within 2 (two) business days of conversion notice delivery
(see 3.1) by “DWAC/FAST” electronic transfer (see “Share Delivery”
attachment).
2.2.
Conversion Formula. The number of shares issued through conversion is the
conversion amount divided by the conversion price.
#
Shares =
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Conversion Amount
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Conversion
Price
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2.3. This
section 2.3 intentionally left blank.
2.4. This
section 2.4 intentionally left blank.
2.5
Reservation of Shares. As of the issuance date of this Note and for the
remaining period during which the conversion right exists, the Borrower will
reserve from its authorized and unissued Common Stock a sufficient number of
shares to provide for the issuance of Common Stock upon the full conversion of
this Note. The Borrower represents that upon issuance, such shares will be duly
and validly issued, fully paid and non-assessable. The Borrower agrees that its
issuance of this Note constitutes full authority to its officers, agents and
transfer agents who are charged with the duty of executing and issuing stock
certificates to execute and issue the necessary certificates for shares of
Common Stock upon the conversion of this Note.
2.6.
Delivery of Conversion Shares. Shares from any such conversion will
be delivered to Holder by 2:30pm EST within 2 (two) business days of conversion
notice delivery (see 3.1) by “DWAC/FAST” electronic transfer (see “Share
Delivery” attachment). If those shares are not delivered in
accordance with this timeframe stated in this Section 2.6, at any time for any
reason prior to offering those shares for sale in a private transaction or in
the public market through its broker, Holder may rescind that particular
conversion to have the conversion amount returned to the note balance with the
conversion shares returned to the Borrower. The Company will
make its best efforts to deliver shares to Holder same day / next
day.
2.7. This
section 2.7 intentionally left blank.
ARTICLE
3 MISCELLANEOUS
3.1. Notices. Any notice required or
permitted hereunder must be in writing and either personally served, sent by
facsimile or email transmission, or sent by overnight
courier. Notices will be deemed effectively delivered at the time of
transmission if by facsimile or email, and if by overnight courier the business
day after such notice is deposited with the courier service for
delivery.
3.2. Amendment Provision. The term
“Note” and all reference thereto, as used throughout this instrument, means this
instrument as originally executed, or if later amended or supplemented, then as
so amended or supplemented.
3.3. Assignability. This Note will be
binding upon the Borrower and its successors and permitted assigns, and will
inure to the benefit of the Holder and its successors and permitted assigns, and
may be assigned by the Holder.
3.4.
Governing Law. This Note will be governed by, and construed and enforced in
accordance, with the laws of the State of Florida, without regard to the
conflict of laws principles thereof. Any action brought by either
party against the other concerning the transactions contemplated by this
Agreement shall be brought only in the state courts of Florida or in the federal
courts located in Miami-Dade County, in the State of Florida. Both
parties and the individuals signing this Agreement agree to submit to the
jurisdiction of such courts.
3.5. Maximum Payments. Nothing
contained herein may be deemed to establish or require the payment of a rate of
interest or other charges in excess of the maximum permitted by applicable law.
In the event that the rate of interest required to be paid or other charges
hereunder exceed the maximum permitted by such law, any payments in excess of
such maximum will be credited against amounts owed by the Borrower to the Holder
and thus refunded to the Borrower.
3.6.
Attorney Fees. In the event any attorney is employed by either party to this
Note with regard to any legal or equitable action, arbitration or other
proceeding brought by such party for the enforcement of this Note or because of
an alleged dispute, breach, default or misrepresentation in connection with any
of the provisions of this Note, the prevailing party in such proceeding will be
entitled to recover from the other party reasonable attorneys’ fees and other
costs and expenses incurred, in addition to any other relief to which the
prevailing party may be entitled.
3.7. No
Public Announcement. Except as required by securities law, no public
announcement may be made regarding this Note, payments, or conversions without
written permission by both Borrower and Holder.
3.8.
Opinion of Counsel. In the event that an opinion of counsel is needed for any
matter related to this Note, Holder has the right to have any such opinion
provided by its counsel. Holder also has the right to have any such
opinion provided by Borrower’s counsel.
3.9.
Director’s Resolution. Once effective, Borrower will execute and
deliver to Holder a copy of a Board of Director’s resolution resolving that this
note is validly issued, paid, and effective.
BORROWER[S]:
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Brad
Pyatt
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CEO
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MusclePharm
Corp.
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LENDER/HOLDER:
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JMJ
Financial / Its
Principal
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FUNDING
SCHEDULE
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§
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$200,000
paid to borrower within 5 business days of execution and closing of this
agreement.
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§
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$200,000
paid to Borrower within 10 business days of notice of effective
registration statement, and that registration statement must be effective
no later than 120 days from the execution of this
agreement.
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§
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$250,000
paid to Borrower within 45 business days of notice of effective
registration statement, and that registration statement must be effective
no later than 120 days from the execution of this
agreement.
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§
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$250,000
paid to Borrower within 90 business days of notice of effective
registration statement, and that registration statement must be effective
no later than 120 days from the execution of this
agreement.
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§
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$250,000
paid to Borrower within 135 business days of notice of effective
registration statement, and that registration statement must be effective
no later than 125 days from the execution of this
agreement.
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§
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$250,000
paid to Borrower within 180 business days of notice of effective
registration statement, and that registration statement must be effective
no later than 125 days from the execution of this
agreement.
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Conditions to Funding Each
Payment:
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§
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At
the time of each payment interval, the share price of Borrower’s common
stock must be equal to or greater than $0.20 per
share.
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§
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At
the time of each payment interval, the total dollar trading volume of
Borrower’s common stock for the previous 23 trading days must be equal to
or greater than $800,000 (eight hundred thousand). The total
dollar volume will be calculated by removing the three highest dollar
volume days and summing the dollar volume for the remaining 20 trading
days.
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§
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At
the time of each payment interval, there shall not exist an event of
default as described within any of the agreements between Borrower and
Holder.
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SAMPLE
NOTICE OF
CONVERSION
(To be
executed by the Holder in order to convert the Note)
The
undersigned hereby elects to convert a portion of the Note issued by MusclePharm
Corp. into Shares of Common Stock of MusclePharm Corp. according to the
conditions set forth in such Note, as of the date written below.
Date of
Conversion:_______________________________________________________
Conversion
Amount:_______________________________________________________
Conversion
Price:________________________________________________________
Shares To
Be Delivered:___________________________________________________
Signature:_____________________________________________________________
Print
Name:____________________________________________________________
Address:_____________________________________________________________
____________________________________________________________________
____________________________________________________________________
Shares from any such conversion will
be delivered to Holder by 2:30pm EST within 2 (two) business days of conversion
notice by “DWAC/FAST” electronic transfer in accordance with Section 2.6.
SHARE
DELIVERY ATTACHMENT
EXAMPLE
2.6.
Delivery of Conversion Shares. Shares from any such conversion will
be delivered to Holder by 2:30pm EST within 2 (two) business days of conversion
notice delivery (see 3.1) by “DWAC/FAST” electronic transfer (see “Share
Delivery” attachment). If those shares are not delivered in
accordance with this timeframe stated in this Section 2.6, at any time for any
reason prior to offering those shares for sale in a private transaction or in
the public market through its broker, Holder may rescind that particular
conversion to have the conversion amount returned to the note balance with the
conversion shares returned to the Borrower. The Company will
make its best efforts to deliver shares to Holder same day / next
day.
Example:
Holder
delivers conversion notice to Borrower at 5:15pm eastern time on Monday January
1st.
Borrower’s
transfer agent must deliver shares to Holder’s broker via “DWAC/FAST” electronic
transfer by no later than 2:30pm eastern time on Wednesday January
3rd.