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05/24/23 11:13 AM

#80836 RE: SLC-JD #80835

“In mid-October 2017, Amerop provided its proposal to the Special Committee, offering to purchase $18 million of MusclePharm stock on condition that MusclePharm replace senior management, including Drexler. ” Musclepharm Corp. v. White Winston Select Asset Fund Series Fund MP-18, LLC, SUCV20190663BLS2, (Mass. Super. Sep. 20, 2019)

I stand corrected - thank you SLC-JD. Almost six years since then of grief, litigation, animosity - turning down this proposal was clearly not the best for MSLP shareholders. These are the kinds of business decisions that can haunt you.

For those following the court docket - Drexler has been opposing the revised auction, claiming it's rushed when no urgency is required. Also explicitly stated is Drexler's desire to insert the coveted Ch.11 Trustee.The viewpoint is likely that by including a Trustee, Drexler will hold some sort of seat at the table as a party that needs to be negotiated with.

Meanwhile, Empery is leaning on their executed Subordination/Intercreditor agreement to object to any insertion of a Trustee, and to reaffirm the status of the agreement with a Motion to Enforce. In short, Empery's stance remains unchanged - when they made the loans to MSLP that Drexler signed for, he also signed this agreement which handcuffs his ability to act without authorization from the lendor (aka Empery and related-parties).

As quoted in the filing linked directly above; "The Subordination/Intercreditor Agreement was a bargained for agreement for which Empery gave, and Drexler received, valuable consideration. Empery expressly bargained to not be in the situation where Drexler placed Debtor in Chapter 11 and then directly and indirectly acted to block or disrupt an Empery supported Sale and Plan, thereby threating Empery’s ability to collect its debt, so Drexler could enhance his personal bargaining position. Drexler knowingly compromised his rights and cannot now seek to undo that compromise, and deprive Empery of its economic and practical rights under the Subordination/Intercreditor Agreement."

To Drexler's credit, he does point out a potential conflict-of-interest when director Nicholas Rubin was inserted onto MSLP's Board. His past dealings and connections with Garman from the namesake GTG law firm should have been disclosed. Making investments and providing services for each other's companies or interests (as they did with Force-10 and LAWCLERK) - to this layperson - should be disclosed as potential conflicts for consideration. Better to disclose and have the possibility of conflict evaluated than to hope nobody notices. Drexler noticed and he's raising objections. But then stepping back - is this about maximizing the value of the estate for the benefit of MSLP shareholders, or is it about Drexler attempting to maximize his own personal benefit?

What happened to fiduciary duties to maximize shareholder value? I revert to the question raised in my last post - millions of dollars from retail and household investors have evaporated due to the decisions made by senior management at this Company. Retail investors held the bag and at best can have insight into the carcass of the MSLP entity and watch it be picked over, and have a loss carry-forward for their taxes.

Or they could make a bid at the auction in July. Ya never know..