UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 21, 2018 (November 19, 2018)
FUSE MEDICAL, INC.
(Exact name of Registrant as specified in its charter)
Delaware | 000-10093 | 59-1224913 | ||
(State or other jurisdiction of incorporation or organization) |
(Commission File Number) |
(I.R.S. Employer Identification No.) |
1565 North Central Expressway Suite 220 Richardson, Texas |
75080 | |
(Address of principal executive offices) | (Zip Code) |
Registrants Telephone Number, including area code: (469) 862-3030
(Former name, former address and former fiscal year, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2.):
☐ |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
☐ |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
☐ |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
☐ |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 1.01 |
Entry into a Material Definitive Agreement |
On November 19, 2018, Fuse Medical, Inc., a Delaware corporation (the Company ), the Companys wholly-owned subsidiary, CPM Medical Consultants, LLC (together with the Company, the Borrowers ), and Zions Bancorporation, N.A. dba Amegy Bank (the Lender ) executed that certain Limited Waiver and Second Amendment (the Second Amendment ), to the Amended and Restated Business Loan Agreement among the Borrowers and the Lender on December 31, 2017 (as amended from time to time, the Loan Agreement ), in the form attached hereto as Exhibit 10.1 , as reported in Item 2.03 of the Companys Current Report on Form 8-K filed with the Securities and Exchange Commission (the SEC ) on January 11, 2018.
The Second Amendment was preceded by the Limited Waiver and First Amendment to the Loan Agreement among the Borrowers and the Lender, dated September 21, 2018 (the First Amendment ), in which the Lender waived certain events of Borrower that qualified as events of default under the Loan Agreement (the Events of Default ).
Pursuant to the Second Amendment, the Lender waived certain Events of Default of the Borrowers under the Loan Agreement and amended certain material terms of the Loan Agreement by:
(i) |
adding the concept of a dilution reserve in an amount of not less than $600,000, relating to all receivables in the definition of Borrowing Base (as defined in the Loan Agreement); |
(ii) |
reducing the aggregate limit of the loans offered pursuant to the Loan Agreement (the Loans ) to $4,000,000.00; |
(iii) |
extending the Termination Date (as defined in the Loan Agreement) from November 2, 2018, to November 4, 2019; |
(iv) |
increasing the rate at which the Loans bear interest to the LIBOR Index Rate plus four percent (4.00%) per annum; |
(v) |
amending the financial covenants of Borrowers to state that Borrowers will not permit: (a) the Fixed Charge Coverage Ratio (as defined in the Loan Agreement) of any calendar quarter end from and after the quarter ending June 30, 2019 to be less than 1.25 to 1.00; and (b) EBITDA to be less than $700,000 for the fiscal quarter ending December 31, 2018, and $100,000 for the fiscal quarter ending March 31, 2019; and |
(vi) |
modifying the Event of Default related to consecutive quarterly losses to be applicable from and after the quarter ending June 30, 2019. |
The foregoing descriptions of the First Amendment and Second Amendment do not purport to be complete and are qualified in their entirety by reference to the full text of the First Amendment and Second Amendment, which are filed herewith as Exhibit 10.2 and Exhibit 10.3 , respectively, and incorporated herein by reference.
Item 2.03 |
Creation of a Direct Financial Obligation or an Obligation Under an Off-Balance Sheet Arrangement of a Registrant |
The information set forth under Item 1.01 is incorporated herein by reference.
Item 7.01 |
Regulation FD Disclosure. |
On November 20, 2018, the Company issued a press release, attached hereto as Exhibit 99.1 , announcing that Deloitte LLP named the Company to the 2018 Technology Fast 500 TM Ranking , which recognizes the fastest growing technology companies in North America.
Item 9.01. |
Financial Statements and Exhibits. |
(d) |
Exhibits |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
FUSE MEDICAL, INC. | ||
By: |
/s/ William E. McLaughlin, III |
|
William E. McLaughlin, III, Senior Vice President Chief Financial Officer and Director (Principal Financial Officer) |
Date: November 21, 2018
Exhibit 10.2
Execution Version
LIMITED WAIVER AND FIRST AMENDMENT TO AMENDED
AND RESTATED BUSINESS LOAN AGREEMENT
This LIMITED WAIVER AND FIRST AMENDMENT TO AMENDED AND RESTATED BUSINESS LOAN AGREEMENT (this Amendment ), dated as of September 21, 2018 ( First Amendment Effective Date ), is made and entered into by and among ZB, N.A. (d/b/a Amegy Bank) (together with its successors and assigns, Lender ), Fuse Medical, Inc. ( Fuse ) and CPM Medical Consultants, LLC ( CPM , together with Fuse, collectively, the Borrowers and each a Borrower ).
RECITALS
A. Lender and Borrowers are parties to that certain Amended and Restated Business Loan Agreement dated as of December 31, 2017 (as amended, amended and restated, supplemented or otherwise modified from time to time, the Loan Agreement ).
B. Events of Default have occurred and are continuing, or are anticipated to occur, under the Loan Agreement.
C. Borrowers have requested that Lender waive such Events of Default, and amend the Loan Agreement.
D. Lender is willing to waive such Events of Default, and amend the Loan Agreement on the terms and subject to the conditions set forth below.
NOW, THEREFORE, in consideration of the premises herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:
ARTICLE I
Definitions
Section 1.1 Definitions . Capitalized terms used in this Amendment, to the extent not otherwise defined herein, shall have the same definitions assigned to such terms in the Loan Agreement, as amended hereby.
ARTICLE II
Limited Waiver
Section 2.1 Limited Waiver . Events of Default have occurred and currently exist, or are anticipated to occur, under the Loan Agreement as a result of the following: (i) a breach of the Minimum Fixed Charge Coverage Ratio set forth in Section 9.1(a) of the Loan Agreement for the period ended on March 31, 2018, (ii) a breach of the Minimum Fixed Charge Coverage Ratio set forth in Section 9.1(a) of the Loan Agreement for the period ended on June 30, 2018, (iii) a breach of the Minimum Fixed Charge Coverage Ratio set forth in Section 9.1(a) of the Loan Agreement for the period ending on September 30, 2018, (iv) a breach of the Senior Debt to EBITDA Ratio set forth in Section 9.1(b) of the Loan Agreement for the period ended on June 30, 2018, (v) a breach of the Senior Debt to EBITDA Ratio set forth in Section 9.1(b) of the Loan Agreement for the period ending on September 30, 2018, and (vi) incurring consecutive quarterly losses in violation of Section 10.1(q) (collectively, the Specified Defaults ). Borrowers represent and warrant that the Specified Defaults are the only Defaults or Events of Default that exist, or are anticipated to occur, under the Loan Agreement and the other Loan Documents as of the First Amendment Effective Date. Subject to the satisfaction of the conditions precedent set forth
in Section 4.1 hereof, Lender hereby waives the Specified Defaults. In no event shall such waiver be deemed to constitute a waiver of (a) any Default or Event of Default other than the Specified Defaults or (b) Borrowers obligation to comply with all of the terms and conditions of the Loan Agreement and the other Loan Documents from and after the First Amendment Effective Date. Notwithstanding any prior, temporary mutual disregard of the terms of any contracts between the parties, Borrowers hereby agree that they shall be required strictly to comply with all of the terms of the Loan Documents on and after the First Amendment Effective Date.
ARTICLE III
Amendments to the Loan Agreement
In reliance upon the representations and warranties of the Lender and Borrowers set forth in the Loan Documents and in this Amendment, the Loan Agreement is hereby amended, effective as of the First Amendment Effective Date, as follows:
Section 3.1 Amendment to Section 10.1 . Section 10.1 of the Loan Agreement is hereby amended by deleting the . at the end of subsection (q) and replacing it with ; in lieu thereof, and adding a new subsection 10.1(r), immediately following such subsection 10.1(q), to read in its entirety as set forth below:
(r) Borrowers fail to achieve quarterly net income of $700,000 or more for the fiscal quarter ending on September 30, 2018.
ARTICLE IV
Conditions Precedent
Section 4.1 Conditions Precedent . The effectiveness of this Amendment is subject to the satisfaction of the following conditions precedent, unless specifically waived in writing by Lender, upon which this Amendment shall be effective as of the First Amendment Effective Date:
(a) Lender shall have received a counterpart of this Amendment duly executed by Borrowers and the Consent and Reaffirmation duly executed by Guarantors;
(b) the representations and warranties contained herein and in all other Loan Documents shall be true and correct as of the First Amendment Effective Date as if made on the First Amendment Effective Date; and
(c) no Default or Event of Default shall have occurred and be continuing other than the Specified Defaults.
ARTICLE V
Ratifications, Representations, Warranties, Acknowledgments and Covenants
Section 5.1 Ratifications by Borrowers . The terms and provisions set forth in this Amendment shall modify and supersede all inconsistent terms and provisions set forth in the Loan Agreement and, except as expressly modified and superseded by this Amendment, the terms and provisions of the Loan Agreement are ratified and confirmed and shall continue in full force and effect. The Loan Agreement as amended by this Amendment shall continue to be legal, valid, binding and enforceable in accordance with its terms.
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Section 5.2 Renewal and Extension of Security Interests and Liens . Each Borrower hereby (a) renews and affirms the Liens created and granted in the Loan Documents, and (b) agrees that this Amendment shall in no manner affect or impair the Liens securing the Obligations, and that such Liens shall not in any manner be waived, the purposes of this Amendment being to modify the Loan Agreement as herein provided, and to carry forward all Liens securing the same, which are acknowledged by such Borrower to be valid and subsisting.
Section 5.3 Representations and Warranties . Each Borrower represents and warrants to Lender that (a) the execution, delivery and performance of this Amendment and any and all Loan Documents executed and/or delivered in connection herewith have been authorized by all requisite entity action on the part of such Borrower and will not violate the organizational documents of such Borrower or any agreement to which such Borrower is a party, (b) the representations and warranties contained in the Loan Agreement and in each of the other Loan Documents are true and correct on and as of the First Amendment Effective Date as though made on the First Amendment Effective Date, (c) no Default or Event of Default under the Loan Agreement has occurred and is continuing other than the Specified Defaults, and (d) such Borrower is in full compliance with all covenants and agreements contained in the Loan Agreement, as amended hereby.
ARTICLE VI
Miscellaneous
Section 6.1 Survival of Representations and Warranties . All representations and warranties made in the Loan Agreement or any other Loan Document, including without limitation, any Loan Document furnished in connection with this Amendment, shall survive the execution and delivery of this Amendment and the other Loan Documents, and no investigation by Lender or any closing shall affect such representations and warranties or the right of Lender to rely thereon.
Section 6.2 Reference to Loan Agreement . Each of the Loan Documents and any and all other agreements, documents or instruments now or hereafter executed and delivered pursuant to the terms hereof or pursuant to the terms of the Loan Agreement as amended hereby, are hereby amended so that any reference in such Loan Documents to the Loan Agreement shall mean a reference to the Loan Agreement as amended hereby.
Section 6.3 Expenses of Lender . Borrowers agree to pay on demand all reasonable costs and expenses incurred by Lender directly in connection with the preparation, negotiation and execution of this Amendment and the other Loan Documents executed pursuant hereto and any and all amendments, modifications, and supplements thereto, including, without limitation, the costs and fees of Lenders legal counsel, and all costs and expenses incurred by Lender in connection with the enforcement or preservation of any rights under the Loan Agreement, as amended hereby, or any other Loan Document, including, without limitation, the reasonable costs and fees of Lenders legal counsel.
Section 6.4 Severability . Any provision of this Amendment held by a court of competent jurisdiction to be invalid or unenforceable shall not impair or invalidate the remainder of this Amendment and the effect thereof shall be confined to the provision so held to be invalid or unenforceable.
Section 6.5 APPLICABLE LAW . THIS AMENDMENT SHALL BE DEEMED TO HAVE BEEN MADE AND TO BE PERFORMABLE IN AND SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS NOT INCLUDING CONFLICTS OF LAW RULES.
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Section 6.6 WAIVER OF JURY TRIAL . TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE PARTIES HERETO EACH HEREBY WAIVES THE RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT, COUNTERCLAIM, OR PROCEEDING ARISING OUT OF OR RELATED TO THIS AMENDMENT.
Section 6.7 RELEASE OF CLAIMS . TO INDUCE LENDER TO ENTER INTO THIS AMENDMENT, EACH BORROWER, AND BY GUARANTORS SIGNATURES TO THE CONSENT AND REAFFIRMATION, EACH GUARANTOR VOLUNTARILY, KNOWINGLY AND UNCONDITIONALLY RELEASES, ACQUITS, AND FOREVER DISCHARGES LENDER AND ITS OFFICERS, DIRECTORS, AGENTS, EMPLOYEES, SUCCESSORS, AND ASSIGNS (COLLECTIVELY, THE RELEASED PARTIES ), FROM ANY AND ALL LIABILITIES, CLAIMS, DEMANDS, DAMAGES, EXPENSES, ACTIONS, OR CAUSES OF ACTION OF ANY KIND OR NATURE (IF THERE BE ANY), WHETHER ABSOLUTE OR CONTINGENT, DISPUTED OR UNDISPUTED, AT LAW OR IN EQUITY, OR KNOWN OR UNKNOWN, THAT SUCH BORROWER NOW HAS OR EVER HAD AGAINST ANY OF THE RELEASED PARTIES ARISING UNDER OR IN CONNECTION WITH ANY OF THE LOAN DOCUMENTS OR OTHERWISE, INCLUDING, WITHOUT LIMITATION, ANY SUCH LIABILITIES, CLAIMS, DEMANDS, DAMAGES, EXPENSES, ACTIONS, OR CAUSES OF ACTION ARISING OUT OF OR RELATING TO A CLAIM OF BREACH OF CONTRACT, FRAUD, LENDER LIABILITY OR MISCONDUCT, BREACH OF FIDUCIARY DUTY, USURY, UNFAIR BARGAINING POSITION, UNCONSCIONABILITY, VIOLATION OF LAW, NEGLIGENCE, ERROR OR OMISSION IN ACCOUNTING OR CALCULATIONS, MISAPPROPRIATION OF FUNDS, TORTIOUS CONDUCT OR RECKLESS OR WILLFUL MISCONDUCT. EACH BORROWER AND EACH GUARANTOR REPRESENTS AND WARRANTS TO LENDER THAT IT HAS NOT TRANSFERRED OR ASSIGNED TO ANY PERSON ANY CLAIM THAT IT HAS EVER HAD OR CLAIMED TO HAVE AGAINST ANY RELEASED PARTY.
Section 6.8 Successors and Assigns . This Amendment is binding upon and shall inure to the benefit of the parties hereto and their respective successors, assigns, heirs, executors, and legal representatives, except that none of the parties hereto other than Lender may assign or transfer any of its rights or obligations hereunder without the prior written consent of Lender.
Section 6.9 Counterparts . This Amendment may be executed in one or more counterparts, each of which when so executed shall be deemed to be an original, but all of which when taken together shall constitute one and the same instrument. Any signature delivered by a party by facsimile or other electronic transmission shall be deemed to be an original signature hereto.
Section 6.10 Effect of Waiver . No consent or waiver, express or implied, by Lender to or for any breach of or deviation from any covenant, condition or duty by any Borrower, shall be deemed a consent to or waiver of any other breach of the same or any other covenant, condition or duty.
Section 6.11 Headings . The headings, captions, and arrangements used in this Amendment are for convenience only and shall not affect the interpretation of this Amendment.
Section 6.12 Conflicting Provision . If any provision of the Loan Agreement as amended hereby conflicts with any provision of any other Loan Document, the provision in the Loan Agreement shall control.
Section 6.13 ENTIRE AGREEMENT . THIS AMENDMENT, THE LOAN AGREEMENT AND ALL OTHER LOAN DOCUMENTS EXECUTED AND DELIVERED IN CONNECTION WITH AND PURSUANT TO THIS AMENDMENT AND THE LOAN AGREEMENT REPRESENT THE
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FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
[Signature Page Follows]
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered as of the date first written above.
BORROWER: | ||
FUSE MEDICAL, INC. | ||
By: |
/s/ Christopher C. Reeg |
|
Name: | Christopher C. Reeg | |
Title: | Chief Executive Officer | |
BORROWER: | ||
CPM MEDICAL CONSULTANTS, LLC | ||
By: |
/s/ Christopher C. Reeg |
|
Name: | Christopher C. Reeg | |
Title: | Chief Executive Officer | |
LENDER: | ||
ZB, N.A. (D/B/A AMEGY BANK) | ||
By: |
/s/ Olga Santiago |
|
Name: | Olga Santiago | |
Title: | Vice President |
[Signature Page to Limited Waiver and First Amendment to Amended and Restated Business Loan Agreement]
GUARANTORS: | ||
NC 143 FAMILY HOLDINGS LP | ||
By: | NC 143 Family Holdings GP LLC, | |
General Partner of NC 143 Family | ||
Holdings LP | ||
By: | NC 143 Family Trust, Dated October 1, | |
2014, as last amended, Manager of | ||
NC 143 Family Holdings GP LLC | ||
By: |
/s/ Mark W. Brooks |
|
Name: | Mark W. Brooks | |
Title: | Trustee of NC 143 Family Trust | |
By: |
/s/ Penelope A. Brooks |
|
Name: | Penelope A. Brooks | |
Title: | Trustee of NC 143 Family Trust | |
MARK W. BROOKS | ||
By: |
/s/ Mark W. Brooks |
[Signature Page to Limited Waiver and First Amendment to Amended and Restated Business Loan Agreement]
CONSENT AND REAFFIRMATION
Each of the undersigned guarantors acknowledges that ZB, N.A. (d/b/a Amegy Bank) ( Lender ) has no obligation to provide it with notice of, or to obtain its consent to, the terms of the foregoing Limited Waiver and First Amendment to the Amended and Restated Business Loan Agreement (the Amendment ). Nevertheless, each of the undersigned consents to the Amendment and other Loan Documents effected thereby, agrees to be bound thereby (including, without limitation, Section 6.7 thereof), and confirms and agrees that, notwithstanding the effectiveness of the Amendment, each Loan Document to which the undersigned is a party is, and the obligations thereunder to which it is a party are, and shall continue to be, in full force and effect and are hereby ratified and confirmed in all respects, in each case as amended by the Amendment.
GUARANTORS: | ||
NC 143 FAMILY HOLDINGS LP | ||
By: | NC 143 Family Holdings GP LLC, | |
General Partner of NC 143 Family | ||
Holdings LP | ||
By: | NC 143 Family Trust, Dated October 1, | |
2014, as last amended, Manager of | ||
NC 143 Family Holdings GP LLC | ||
By: |
/s/ Mark W. Brooks |
|
Name: | Mark W. Brooks | |
Title: | Trustee of NC 143 Family Trust | |
By: |
/s/ Penelope A. Brooks |
|
Name: | Penelope A. Brooks | |
Title: | Trustee of NC 143 Family Trust | |
MARK W. BROOKS | ||
By: |
/s/ Mark W. Brooks |
[Signature Page to Limited Waiver and First Amendment to Amended and Restated Business Loan Agreement]
Exhibit 10.3
Execution Version
LIMITED WAIVER AND SECOND AMENDMENT TO AMENDED
AND RESTATED BUSINESS LOAN AGREEMENT
This LIMITED WAIVER AND SECOND AMENDMENT TO AMENDED AND RESTATED BUSINESS LOAN AGREEMENT (this Amendment ), dated as November 19, 2018 ( Second Amendment Effective Date ), is made and entered into by and among Zions Bancorporation, N.A. dba Amegy Bank (together with its successors and assigns, Lender ), Fuse Medical, Inc. ( Fuse ) and CPM Medical Consultants, LLC ( CPM , together with Fuse, collectively, the Borrowers and each a Borrower ).
RECITALS
A. Lender and Borrowers are parties to that certain Amended and Restated Business Loan Agreement dated as of December 31, 2017 (as amended by the Limited Wavier and First Amendment, dated as of September 21, 2018, and as may be further amended and restated, supplemented or otherwise modified from time to time, the Loan Agreement ).
B. Borrowers have requested that Lender amend the Loan Agreement to extend the maturity date of the Loans, to reduce the amount of the Revolving Facility Limit and to amend certain financial covenants, among other matters.
C. Lender is willing to amend the Loan Agreement on the terms and subject to the conditions set forth below.
NOW, THEREFORE, in consideration of the premises herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:
ARTICLE I
Definitions
Section 1.1 Definitions . Capitalized terms used in this Amendment, to the extent not otherwise defined herein, shall have the same definitions assigned to such terms in the Loan Agreement, as amended hereby.
ARTICLE II
Limited Waiver
Section 2.1 Limited Waiver . An Event of Default has occurred and currently exists under the Loan Agreement as a result of Borrowers failure to achieve quarterly net income of at least $700,000 or more for the fiscal quarter ended September 31, 2018 as required by Section 10.1(q) (the Specified Default ). Borrowers represent and warrant that the Specified Default is the only Default or Event of Default that exists, or is anticipated to occur, under the Loan Agreement and the other Loan Documents as of the Second Amendment Effective Date. Subject to the satisfaction of the conditions precedent set forth in Section 4.1 hereof, Lender hereby waives the Specified Default. In no event shall such waiver be deemed to constitute a waiver of (a) any Default or Event of Default other than the Specified Default or (b) Borrowers obligation to comply with all of the terms and conditions of the Loan Agreement and the other Loan Documents from and after the Second Amendment Effective Date. Notwithstanding any prior, temporary mutual disregard of the terms of any contracts between the parties, Borrowers hereby agree that they shall be required strictly to comply with all of the terms of the Loan Documents on and after the Second Amendment Effective Date.
ARTICLE III
Amendments to the Loan Agreement
In reliance upon the representations and warranties of the Lender and Borrowers set forth in the Loan Documents and in this Amendment, the Loan Agreement is hereby amended, effective as of the Second Amendment Effective Date, as follows:
Section 3.1 Definitions .
(a) The following definitions in Section 1.1 of the Loan Agreement are hereby amended and restated in their entirety as follows:
Borrowing Base means, as of any date of determination, an amount equal to the sum of:
(a) Eighty percent (80%) advance rate multiplied by Net Amount of Eligible Accounts; plus
(b) Fifty percent (50%) advance rate multiplied by Net Amount of Eligible Inventory (provided that Eligible Inventory shall not constitute more than fifty percent (50%) of the Borrowing Base); minus
(c) Without limiting Lenders discretion to implement other reserves or to increase the amount of the dilution reserve, a dilution reserve in an amount of not less than $600,000 established by Lender in its sole and absolute discretion from time to relating to all receivables not specifically attributed to any one account or class of accounts; minus
(d) the sum of all other Reserves
Revolving Facility Limit means $4,000,000.
Termination Date means the earliest to occur of (a) November 4, 2019 and (b) the date on which Lenders commitment to make Loans is terminated pursuant to Section 10.2 .
(b) Section 3.1(a) of the Loan Agreement is hereby amended and restated to read in its entirety as follows:
(a) Rate . Subject to the provisions of Section 3.1(b) , the Loans shall bear interest at the LIBOR Index Rate plus four percent (4.00%) per annum. All interest due hereunder shall be payable monthly in arrears on the first day of each calendar month and on the Termination Date.
(c) Section 8.1(e) of the Loan Agreement is hereby amended and restated to read in its entirety as follows:
(e) Guarantor Tax Returns . As soon as available, but in no event later than thirty (30) days after the applicable filing date for the tax reporting period ended, each Guarantors Federal and other governmental tax returns; provided, however, the applicable due date for Mr. Brooks tax returns related to the year ended December 31, 2016 shall be no later than June 30, 2019.
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(d) Section 9.1 of the Loan Agreement is hereby amended and restated to read in its entirety as follows:
Section 9.1 Financial Covenants . Borrowers shall maintain and keep in full force and effect each of the financial covenants set forth below:
(a) Minimum Fixed Charge Coverage Ratio . Borrowers shall not permit the Fixed Charge Coverage Ratio as of any calendar quarter end from and after the quarter ending June 30, 2019 to be less than 1.25 to 1.00.
(b) Minimum EBITDA . Borrowers shall not permit EBITDA to be less than (i) $700,000 for the fiscal quarter ending December 31, 2018 and (ii) $100,000 for the fiscal quarter ending March 31, 2019.
(e) Section 10.1(q) of the Loan Agreement is hereby amended and restated to read in its entirety as follows:
(q) from and after the quarter ending June 30, 2019 incur any consecutive quarterly losses.
ARTICLE IV
Conditions Precedent
Section 4.1 Conditions Precedent . The effectiveness of this Amendment is subject to the satisfaction of the following conditions precedent, unless specifically waived in writing by Lender, upon which this Amendment shall be effective as of the Second Amendment Effective Date:
(a) Lender shall have received a counterpart of this Amendment duly executed by Borrowers and the Consent and Reaffirmation duly executed by Guarantors;
(b) the representations and warranties contained herein and in all other Loan Documents shall be true and correct as of the Second Amendment Effective Date as if made on the Second Amendment Effective Date;
(c) no Default or Event of Default shall have occurred and be continuing; and
(d) Borrowers shall have paid all reasonable costs and expenses incurred by Lender in connection with the preparation, negotiation and execution of this Amendment and the other Loan Documents executed pursuant hereto, including, without limitation, the costs and fees of Lenders legal counsel and such counsels outstanding invoices related to the preparation of the Loan Documents and amendments thereto.
ARTICLE V
Ratifications, Representations, Warranties, Acknowledgments and Covenants
Section 5.1 Ratifications by Borrowers . The terms and provisions set forth in this Amendment shall modify and supersede all inconsistent terms and provisions set forth in the Loan Agreement and, except as expressly modified and superseded by this Amendment, the terms and provisions of the Loan Agreement are ratified and confirmed and shall continue in full force and effect. The Loan Agreement as amended by this Amendment shall continue to be legal, valid, binding and enforceable in accordance with its terms.
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Section 5.2 Renewal and Extension of Security Interests and Liens . Each Borrower hereby (a) renews and affirms the Liens created and granted in the Loan Documents, and (b) agrees that this Amendment shall in no manner affect or impair the Liens securing the Obligations, and that such Liens shall not in any manner be waived, the purposes of this Amendment being to modify the Loan Agreement as herein provided, and to carry forward all Liens securing the same, which are acknowledged by such Borrower to be valid and subsisting.
Section 5.3 Representations and Warranties . Each Borrower represents and warrants to Lender that (a) the execution, delivery and performance of this Amendment and any and all Loan Documents executed and/or delivered in connection herewith have been authorized by all requisite entity action on the part of such Borrower and will not violate the organizational documents of such Borrower or any agreement to which such Borrower is a party, (b) the representations and warranties contained in the Loan Agreement and in each of the other Loan Documents are true and correct on and as of the Second Amendment Effective Date as though made on the Second Amendment Effective Date, (c) no Default or Event of Default under the Loan Agreement has occurred and is continuing, and (d) such Borrower is in full compliance with all covenants and agreements contained in the Loan Agreement, as amended hereby.
ARTICLE VI
Miscellaneous
Section 6.1 Survival of Representations and Warranties . All representations and warranties made in the Loan Agreement or any other Loan Document, including without limitation, any Loan Document furnished in connection with this Amendment, shall survive the execution and delivery of this Amendment and the other Loan Documents, and no investigation by Lender or any closing shall affect such representations and warranties or the right of Lender to rely thereon.
Section 6.2 Reference to Loan Agreement . Each of the Loan Documents and any and all other agreements, documents or instruments now or hereafter executed and delivered pursuant to the terms hereof or pursuant to the terms of the Loan Agreement as amended hereby, are hereby amended so that any reference in such Loan Documents to the Loan Agreement shall mean a reference to the Loan Agreement as amended hereby.
Section 6.3 Expenses of Lender . Borrowers agree to pay on demand all reasonable costs and expenses incurred by Lender directly in connection with any and all amendments, modifications, and supplements to this Amendment and the other Loan Documents executed pursuant hereto, including, without limitation, the costs and fees of Lenders legal counsel, and all costs and expenses incurred by Lender in connection with the enforcement or preservation of any rights under the Loan Agreement, as amended hereby, or any other Loan Document, including, without limitation, the reasonable costs and fees of Lenders legal counsel.
Section 6.4 Severability . Any provision of this Amendment held by a court of competent jurisdiction to be invalid or unenforceable shall not impair or invalidate the remainder of this Amendment and the effect thereof shall be confined to the provision so held to be invalid or unenforceable.
Section 6.5 APPLICABLE LAW . THIS AMENDMENT SHALL BE DEEMED TO HAVE BEEN MADE AND TO BE PERFORMABLE IN AND SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS NOT INCLUDING CONFLICTS OF LAW RULES.
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Section 6.6 Waiver of Jury Trial . TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE PARTIES HERETO EACH HEREBY WAIVES THE RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT, COUNTERCLAIM, OR PROCEEDING ARISING OUT OF OR RELATED TO THIS AMENDMENT.
Section 6.7 RELEASE OF CLAIMS . TO INDUCE LENDER TO ENTER INTO THIS AMENDMENT, EACH BORROWER, AND BY GUARANTORS SIGNATURES TO THE CONSENT AND REAFFIRMATION, EACH GUARANTOR VOLUNTARILY, KNOWINGLY AND UNCONDITIONALLY RELEASES, ACQUITS, AND FOREVER DISCHARGES LENDER AND ITS OFFICERS, DIRECTORS, AGENTS, EMPLOYEES, SUCCESSORS, AND ASSIGNS (COLLECTIVELY, THE RELEASED PARTIES ), FROM ANY AND ALL LIABILITIES, CLAIMS, DEMANDS, DAMAGES, EXPENSES, ACTIONS, OR CAUSES OF ACTION OF ANY KIND OR NATURE (IF THERE BE ANY), WHETHER ABSOLUTE OR CONTINGENT, DISPUTED OR UNDISPUTED, AT LAW OR IN EQUITY, OR KNOWN OR UNKNOWN, THAT SUCH BORROWER NOW HAS OR EVER HAD AGAINST ANY OF THE RELEASED PARTIES ARISING UNDER OR IN CONNECTION WITH ANY OF THE LOAN DOCUMENTS OR OTHERWISE, INCLUDING, WITHOUT LIMITATION, ANY SUCH LIABILITIES, CLAIMS, DEMANDS, DAMAGES, EXPENSES, ACTIONS, OR CAUSES OF ACTION ARISING OUT OF OR RELATING TO A CLAIM OF BREACH OF CONTRACT, FRAUD, LENDER LIABILITY OR MISCONDUCT, BREACH OF FIDUCIARY DUTY, USURY, UNFAIR BARGAINING POSITION, UNCONSCIONABILITY, VIOLATION OF LAW, NEGLIGENCE, ERROR OR OMISSION IN ACCOUNTING OR CALCULATIONS, MISAPPROPRIATION OF FUNDS, TORTIOUS CONDUCT OR RECKLESS OR WILLFUL MISCONDUCT. EACH BORROWER AND EACH GUARANTOR REPRESENTS AND WARRANTS TO LENDER THAT IT HAS NOT TRANSFERRED OR ASSIGNED TO ANY PERSON ANY CLAIM THAT IT HAS EVER HAD OR CLAIMED TO HAVE AGAINST ANY RELEASED PARTY.
Section 6.8 Successors and Assigns . This Amendment is binding upon and shall inure to the benefit of the parties hereto and their respective successors, assigns, heirs, executors, and legal representatives, except that none of the parties hereto other than Lender may assign or transfer any of its rights or obligations hereunder without the prior written consent of Lender.
Section 6.9 Counterparts . This Amendment may be executed in one or more counterparts, each of which when so executed shall be deemed to be an original, but all of which when taken together shall constitute one and the same instrument. Any signature delivered by a party by facsimile or other electronic transmission shall be deemed to be an original signature hereto.
Section 6.10 Effect of Waiver . No consent or waiver, express or implied, by Lender to or for any breach of or deviation from any covenant, condition or duty by any Borrower, shall be deemed a consent to or waiver of any other breach of the same or any other covenant, condition or duty.
Section 6.11 Headings . The headings, captions, and arrangements used in this Amendment are for convenience only and shall not affect the interpretation of this Amendment.
Section 6.12 Conflicting Provision . If any provision of the Loan Agreement as amended hereby conflicts with any provision of any other Loan Document, the provision in the Loan Agreement shall control.
Section 6.13 ENTIRE AGREEMENT . THIS AMENDMENT, THE LOAN AGREEMENT AND ALL OTHER LOAN DOCUMENTS EXECUTED AND DELIVERED IN CONNECTION WITH AND PURSUANT TO THIS AMENDMENT AND THE LOAN AGREEMENT REPRESENT THE
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FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
[Signature Page Follows]
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IN WITNESS WHEREOF, the parties hereto have caused this Limited Waiver and Second Amendment to be duly executed and delivered as of the date first written above.
BORROWER: | ||
FUSE MEDICAL, INC. | ||
By: |
/s/ Christopher C. Reeg |
|
Name: | Christopher C. Reeg | |
Title: | Chief Executive Officer | |
BORROWER: | ||
CPM MEDICAL CONSULTANTS, LLC | ||
By: |
/s/ Christopher C. Reeg |
|
Name: | Christopher C. Reeg | |
Title: | Chief Executive Officer | |
LENDER: | ||
ZIONS BANCORPORATION, N.A. dba AMEGY BANK | ||
By: |
/s/ Olga Santiago |
|
Name: | Olga Santiago | |
Title: | Vice President |
(Signature Page to Limited Waiver and Second Amendment)
GUARANTORS: | ||
NC143 FAMILY HOLDINGS LP | ||
By: | NC 143 Family Holdings GP LLC, | |
General Partner of NC 143 Family | ||
Holdings LP | ||
By: | NC 143 Family Trust, Dated October 1, | |
2014, as last amended, Manager of NC | ||
143 Family Holdings GP LLC | ||
By: |
/s/ Mark W. Brooks |
|
Name: | Mark W. Brooks | |
Title: | Trustee of NC 143 Family Trust | |
By: |
/s/ Penelope A. Brooks |
|
Name: | Penelope A. Brooks | |
Title: | Trustee of NC 143 Family Trust | |
MARK W. BROOKS | ||
By: |
/s/ Mark W. Brooks |
(Signature Page to Limited Waiver and Second Amendment)
Exhibit 99.1
For Immediate Release
Contact:
Fuse Medical, Inc.
Attention: Devon Peddie, Investor Relations Analyst
1565 North Central Expressway, Suite 220
Richardson, Texas 75080
Office (469) 862-3030
Facsimile (469) 862-3035
info@Fusemedical.com
Fuse Medical, Inc. Ranked No. 56 Fastest Growing Company in North America on Deloittes 2018 Technology Fast 500 TM
RICHARDSON, TX, November 20, 2018 /Businesswire/ Fuse Medical, Inc., (OTC: FZMD), (Fuse or the Company), a contract manufacturer and national distributor of medical devices, announced that it has been named Number 56 on Deloittes 2018 Technology Fast 500 TM (Technology Fast 500 TM ), an annual ranking of the fastest growing North American companies in the technology, media, telecommunications, life sciences and energy tech sectors.
During the selected period, Fuses revenue grew 2,706% securing the No. 56 spot on the list. Overall, 2018 Technology Fast 500 TM , companies achieved revenue growth ranging from 143% to 77,260% percent, with the medical device sector having median growth at 396% percent.
Christopher C. Reeg, Chief Executive Officer, commented, We are honored to make our debut on the Deloittes Technology Fast 500. It is a privilege to be included with other fast-growing, innovative companies that are rapidly becoming leaders in their market sectors. This recognition further validates Fuses continued commitment to new product development, while adding value to the health care system.
Sandra Shirai, vice chairman, Deloitte LLP, and U.S. technology, media and telecommunications leader, Congratulations to the Deloitte 2018 Technology Fast 500 winners on this impressive achievement. These companies are innovators who have converted their disruptive ideas into products, services and experiences that can captivate new customers and drive remarkable growth.
About Deloittes 2018 Technology Fast 500 TM
Deloittes Technology Fast 500 TM provides a ranking of the fastest growing technology, media, telecommunications, life sciences and energy tech companies both public and private in North America.
For Immediate Release
In order to qualify for Technology Fast 500 TM , a company must meet certain criteria including: (i) be in business for minimum of four years; (ii) headquartered in North America; (iii) at least $50,000 in operating revenue for 2015; (iv) at least $5 million operating revenue for 2018; (v) a growth rate of 75 percentage or greater; and (vi) own proprietary intellectual property or proprietary technology. The winners are selected based on percentage fiscal year revenue growth over a three-year period.
To view more information as well as a full list of winners: Deloitte 2018 Technology Fast 500 Winners .
About Fuse Medical, Inc.
Fuse is a contract manufacturer and national distributor of medical devices, who provides a broad portfolio internal and external fixation products; upper and lower extremity plating and total joint reconstruction; soft tissue fixation and augmentation for sports medicine procedures; full spinal implants for trauma, degenerative disc disease, and deformity indications, (collectively, Orthopedic Implants) and a wide array of osteo-biologics and regenerative tissue which include human allografts, substitute bone materials, tendons, and regenerative tissues and fluids (Biologics). The Companys broad portfolio of Orthopedic Implants and Biologics provide high-quality products to assist surgeons with positive patient outcomes and cost-effective solutions for its customers. For more information about Fuse, please visit: www.fusemedical.com .
Forward Looking Statements
Certain statements in this press release, including those related to an anticipated purchase of all of the outstanding membership units and plans for the consolidated company, constitute forward-looking statements within the meaning of the federal securities laws. Words such as may, might, will, should, believe, expect, anticipate, estimate, continue, predict, forecast, project, plan, intend, or similar expressions or statements regarding intent, belief, or current expectations, are forward-looking statements. While the Company believes these forward-looking statements are reasonable, undue reliance should not be placed on any such forward-looking statements, which are based only on information available to the Company as of the date of this release. These forward-looking statements are based upon current estimates and assumptions and are subject to various risks and uncertainties, including, without limitation, those set forth in the Companys filings with the Securities and Exchange Commission; the failure of the Company to close the transaction; and integration issues with the consolidated company. Thus, actual results could be materially different. The Company expressly disclaims any obligation to update or alter statements whether as a result of new information, future events, or otherwise, except as required by law.
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