UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported):
May 28, 2014
|
Fuse Medical, Inc.
|
|
(Exact name of registrant as specified in its charter)
|
|
|
|
Golf Rounds.com, Inc.
|
|
(Former name of registrant)
|
|
Delaware
|
|
000-10093
|
|
22-3664872
|
|
(State or other jurisdiction of incorporation)
|
|
(I.R.S. Employer Identification No.)
|
|
(Commission File Number)
|
|
4770 Bryant Irvin Court, Suite 300, Fort Worth, TX
|
|
76107
|
|
(Address of Principal Executive Offices)
|
|
(Zip Code)
|
Registrant’s telephone number, including area code:
(817) 439-7025
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:
|
o
|
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
|
|
o
|
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
|
|
o
|
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
|
|
o
|
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
|
Explanatory Note to Form 8-K/A
This amendment is being filed to amend the Current Report on Form 8-K originally filed with the Securities and Exchange Commission on May 29, 2014 and then amended on May 30, 2014 and August 6, 2014. This amendment is being filed in response to the comments made by the Securities and Exchange Commission in its letter dated August 15, 2014.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Current Report contains forward-looking statements, including, without limitation, in the sections captioned “Business,” “Risk Factors,” and “Management’s Discussion and Analysis of Financial Condition and Result of Operations,” and elsewhere. Any and all statements contained in this Current Report that are not statements of historical fact may be deemed forward-looking statements. Terms such as “may,” “might,” “would,” “should,” “could,” “project,” “estimate,” “pro-forma,” “predict,” “potential,” “strategy,” “anticipate,” “attempt,” “develop,” “plan,” “help,” “believe,” “continue,” “intend,” “expect,” “future,” and terms of similar import (including the negative of any of the foregoing) may be intended to identify forward-looking statements. However, not all forward-looking statements may contain one or more of these identifying terms. Forward-looking statements in this Current Report may include, without limitation, statements regarding (i) the plans and objectives of management for future operations, (ii) a projection of income (including income/loss), earnings (including earnings/loss) per share, capital expenditures, dividends, capital structure or other financial items, (iii) our future financial performance, including any such statement contained in a discussion and analysis of financial condition by management or in the results of operations included pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”), (iv) our beliefs regarding potential clinical and other health benefits of our medical products, and (v) the assumptions underlying or relating to any statement described in points (i), (ii), (iii) or (iv) above.
The forward-looking statements are not meant to predict or guarantee actual results, performance, events or circumstances and may not be realized because they are based upon our current projections, plans, objectives, beliefs, expectations, estimates and assumptions and are subject to a number of risks and uncertainties and other influences, many of which we have no control over. Actual results and the timing of certain events and circumstances may differ materially from those described by the forward-looking statements as a result of these risks and uncertainties. Factors that may influence or contribute to the inaccuracy of the forward-looking statements or cause actual results to differ materially from expected or desired results may include, without limitation, our inability to obtain adequate financing, the significant length of time and resources associated with the development of our products and related insufficient cash flows and resulting illiquidity, our inability to expand our business, significant government regulation of our business and the healthcare industry, the results of clinical studies or trials, lack of product diversification, volatility in the price of our raw materials, existing or increased competition, results of arbitration and litigation, stock volatility and illiquidity, and our failure to implement our business plans or strategies. A description of some of the risks and uncertainties that could cause our actual results to differ materially from those described by the forward-looking statements in this Current Report appears in the section captioned “Risk Factors” and elsewhere in this Current Report.
Readers are cautioned not to place undue reliance on forward-looking statements because of the risks and uncertainties related to them and to the risk factors. We disclaim any obligation to update the forward-looking statements contained in this Current Report to reflect any new information or future events or circumstances or otherwise.
Readers should read this Current Report in conjunction with the discussion under the caption “Risk Factors,” our financial statements and the related notes thereto in this Current Report, and other documents which we may file from time to time with the SEC.
EXPLANATORY NOTE
On May 28, 2014, Golf Rounds.com, Inc., a Delaware corporation (“Golf Rounds”), consummated a “reverse merger” transaction with Fuse Medical, LLC, a Delaware limited liability company (“Fuse”). Details of the transaction are provided in Item 1.01 of this Current Report.
As a result of the “reverse merger” transaction, Golf Rounds agreed to continue the business operations of Fuse and change its name to Fuse Medical, Inc., a Delaware corporation (the “Company”). Prior to the transaction, Golf Rounds was a “shell company” (as such term is defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended, the “Exchange Act”) and did not conduct any business.
In accordance with “reverse merger” accounting treatment, the Company's historical financial statements prior to the transaction will be replaced with the historical financial statements of Fuse prior to the transaction in all future filings with the SEC.
We are a “smaller reporting company” as that term is defined in Rule 12b-2 promulgated under the Exchange Act. Accordingly, this Current Report will reflect the reporting requirements of smaller reporting companies as set forth in Regulation S-K.
This Current Report includes the following items on Form 8-K:
|
Item 1.01
|
Entry into a Material Definitive Agreement.
|
|
Item 2.01
|
Completion of Acquisition or Disposition of Assets.
|
|
Item 3.02
|
Unregistered Sales of Equity Securities.
|
|
Item 3.03
|
Material Modification of Rights of Security Holders.
|
|
Item 5.01
|
Changes in Control of Registrant.
|
|
Item 5.02
|
Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
|
|
Item 5.03
|
Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.
|
|
Item 5.06
|
Change in Shell Company Status.
|
|
Item 5.07
|
Submission of Matters to a Vote of Security Holders.
|
|
Item 9.01
|
Financial Statements and Exhibits.
|
Unless the context otherwise requires or where otherwise indicated, “we,” “our,” “us,” “our company,” ”the company” and similar expressions used in this Current Report refer to the Company and its consolidated subsidiaries, collectively, after giving effect to the transaction described in Item 1.01 of this Current Report.
Item 1.01 Entry into a Material Definitive Agreement.
Agreement and Plan of Merger
On December 18, 2013, Golf Rounds entered into an Agreement and Plan of Merger with Fuse, Project Fuse LLC, a wholly owned subsidiary of the Company (“Merger Sub”), and D. Alan Meeker, solely in his capacity as the representative of the Fuse members (the “Representative”), which agreement was amended on March 3, 2014 and April 11, 2014 solely to extend the termination date set forth therein (as so amended, and as further amended or supplemented from time to time, the “Merger Agreement”). Pursuant to the Merger Agreement, Merger Sub merged with and into Fuse, with Fuse surviving as a wholly owned subsidiary of the Golf Rounds (the “Merger”). The Merger was effective as of May 28, 2014, upon the filing of a certificate of merger with the Secretary of State of the State of Delaware.
At the effective time of the Merger (the “Effective Time”), the legal existence of Merger Sub ceased and each membership interest unit of Merger Sub issued and outstanding immediately prior to the Effective Time was converted into and became one validly issued, fully paid and non-assessable membership interest unit of Fuse, so that after the Effective Time, Golf Rounds became the holder of all of the issued and outstanding membership interest units of Fuse.
Effective as of 12:01 a.m. on May 28, 2014, prior to the consummation of the Merger, Golf Rounds amended its certificate of incorporation to (i) change the name of Golf Rounds from “GolfRounds.com, Inc.” to “Fuse Medical, Inc.”, (ii) increase Golf Rounds' authorized capital stock from 12,000,000 shares of common stock to 500,000,000 shares of common stock and from zero shares of preferred stock to 20,000,000 shares of preferred stock, and to expressly authorize the board of directors of Golf Rounds to issue shares of the preferred stock, in one or more series, and to fix for each such series the voting powers, designations, preferences, or other special rights and the qualifications, limitations or restrictions, and (iii) effect a 14.62 to 1 reverse stock split (the “Reverse Stock Split”) whereby every 14.62 issued and outstanding shares of our common stock automatically converted into one share of common stock, subject to the treatment of fractional share interests as described herein. Unless the context otherwise requires, whenever we refer to shares of common stock of the Company in this Current Report, such shares are discussed on a post-Reverse Stock Split basis.
All of the units reflecting membership interests in Fuse that were issued and outstanding immediately prior to the effective time of the Merger were cancelled and converted into the right to receive 3,600,000 shares of the Company's common stock (on a post-Reverse Stock Split basis), representing 90% of the Company’s issued and outstanding common stock after giving effect to the Merger (the “Merger Consideration”). The Merger Consideration was allocated among the 50 members of Fuse , all of which were accredited investors (the basis of this determination is set forth in the paragraph below), immediately prior to the effective time of the Merger (the “Holders”) in accordance with Fuse’s limited liability company operating agreement. Accordingly, the Merger represents a change in control. As of the date of this Current Report, there are 4,001,280 shares of the Company’s common stock outstanding and no shares of the Company’s preferred stock outstanding.
The shares of common stock of Golf Rounds issued in the Merger to the Holders were not registered under the Securities Act of 1933, as amended (the “Securities Act”), or the securities laws of any state, and were in each case offered, sold and issued in reliance upon the exemption from registration provided by Section 4(2) of the Securities Act, as a transaction by an issuer not involving a public offering, and Rule 506 of Regulation D promulgated thereunder, and the exemption from state securities law registration requirements provided by Section 18(b)(4)(D) of the Securities Act. Golf Rounds relied on such exemptions based in part on written representations made by the Holders, including representations with respect to each member’s status as an accredited investor and investment intent with respect to the acquired securities. The shares of common stock issued in the Merger to the Holders may not be offered or sold absent registration or an applicable exemption from the registration requirements of the Securities Act, and each of the certificates or instruments evidencing such shares bears a legend to that effect. In connection with the Merger, the Company agreed, upon written demand of Holders, to file a registration statement on Form S-1 with the United States Securities and Exchange Commission (“SEC”) covering the resale of all or part of the shares of our common stock issued to the Holders as Merger Consideration. See “Registration Rights Agreement” below.
Our name change to “Fuse Medical, Inc.” became effective for trading purposes on May 30, 2014. We intend to request a trading symbol change to correspond with our name change at the appropriate time and in accordance with FINRA policies. Accordingly, our trading symbol will remain TEEE until such time as we move to another market or otherwise can effect a trading symbol change through FINRA.
In accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 805, “Business Combinations”, Fuse is considered the accounting acquirer and Golf Rounds is considered the accounting acquiree in the Merger. The Company will account for the transaction as a reverse business combination, because the Holders received the greater portion of the voting rights in the combined entity and Fuse’s senior management represents a majority of the senior management of the combined entity. Consequently, the assets and liabilities and the historical operations that will be reflected in our consolidated financial statements will be those of Fuse and will be recorded at the historical cost basis of Fuse.
The Company intends to carry on Fuse’s business as its principal line of business. The Company has relocated its executive offices to those of Fuse at 4770 Bryant Irvin Court, Suite 300, Fort Worth, Texas, 76107. The Company’s new telephone number is (817) 439-7025, and its corporate website is fusemedical.com. The information on, or accessible through, the Company’s website does not constitute part of, and is not incorporated by reference into, this Current Report.
A copy of the Merger Agreement is filed as Exhibit 2.1 hereto .
Registration Rights Agreement
On May 28, 2014, in connection with the Merger, we entered into a registration rights agreement (the “Registration Rights Agreement”) with the Holders. Under the Registration Rights Agreement, during the period commencing on the closing of the Merger and ending on the date the Company is first eligible to register the shares on Form S-3 under the Securities Act, the Holders may demand that the Company effect a registration on Form S-1 under the Securities Act of the shares of the Company’s common stock issued to them as Merger Consideration, subject to certain limitations, including that the Holders may make no more than one such demand in any 12-month period. After the closing of the Merger and the date the Company is first eligible to register the shares on Form S-3 under the Securities Act, the Holders also may demand an unlimited number of registrations on Form S-3, except that the Holders may make only one demand for a shelf registration. The Holders will also have certain “piggyback” registration rights with respect to registration statements filed by the Company with respect to its equity securities, other than registration statements filed in connection with an employee benefit plan, an exchange or offer of securities solely to the Company’s existing stockholders, an offering of convertible debt or a dividend reinvestment plan.
A copy of the Registration Rights Agreement is filed as Exhibit 10.1 hereto.
Lock-Up Agreement
On May 28, 2014, in connection with the Merger, we entered into Lock-Up Agreements with each Holder that, subject to certain limited exceptions, prohibits the Holder from selling or otherwise disposing of the shares of common stock received as Merger Consideration for a period of 365 days after the closing. After the expiration of 365 days, the Holders further may not sell or otherwise dispose of the shares, except that (i) from the 366th day until the 456th day after the closing, with respect to one-quarter of such shares, (ii) from the 457th day until the 546th day after the closing, with respect to an additional one-quarter of such shares, (iii) from the 547th day until the 638th day after the closing, with respect to an additional one-quarter of such shares, and (iv) from the 639th day until the 730th day after the closing, with respect to an additional one-quarter of such shares. After the 730th day, all of the restrictions will cease.
A copy of the Lock-Up Agreement is filed as Exhibit 10.2 to the Form 8-K filed on May 29, 2014.
The disclosures set forth in Items 2.01, 3.02, 5.01, 5.02 and 5.06 of this Current Report are incorporated herein by reference.
Item 2.01 Completion of Acquisition or Disposition of Assets.
On May 28, 2014, we completed the Merger described in Item 1.01 of this Current Report. The disclosures set forth in Item 1.01 are incorporated herein by reference.
BUSINESS
Immediately following the Merger, the business of Fuse became our business. Fuse was formed to market, distribute and sell internal fixation, durable bone materials, biologics, tissue, surgical and other related surgical products for use in a variety of surgical procedures.
Historical Company Information
Golf Rounds was incorporated in 1968 as a Florida corporation.
Until the fourth quarter of fiscal 1992, Golf Rounds was engaged in the wholesale distribution of aluminum alloys, steel and other specialty metals under the name American Metals Service, Inc. This entity liquidated its assets and ceased operations in the fourth quarter of fiscal year 1992. Golf Rounds did not conduct any business operations from such time until May 1999.
In May 1999, Golf Rounds acquired the assets of PKG Design, Inc., the developer of two sports-related Internet websites: golfrounds.com and skiingusa.com. In July 1999, Golf Rounds redomesticated through the merger of Golf Rounds into a wholly owned Delaware subsidiary, with the Delaware subsidiary surviving. Also, in July 1999, in connection with the acquisition of these websites, Golf Rounds formally changed its name to Golf Rounds.com, Inc. In August 2001, Golf Rounds ceased operations of the golfrounds.com and skiingusa.com websites.
On May 28, 2014, as a result of the Merger, Golf Rounds acquired Fuse. Fuse was formed in Delaware on July 18, 2012. Subsequent to the formation of Fuse, two physician partnerships were formed to operate separate businesses focusing on the distribution of medical devices. Fuse Medical V, LP, was formed on November 15, 2012 and is owned 59% by Fuse, 1% by Fuse Management V, LLC (the General Partner) and 40% by individual physicians. The second partnership, Fuse Medical VI, LP was formed on January 31, 2013. Fuse Medical VI, LP was owned 59% by Fuse, 1% by Fuse Management VI, LLC (the General Partner) and 40% by individual physicians. Fuse Medical V, LP and Fuse Medical VI, LP are limited partnerships. Prior to the Merger, the General Partners in Fuse Medical V, LP and Fuse Medical VI, LP agreed to surrender their interests and the individual physicians that owned limited partnership interests in Fuse Medical V, LP and Fuse Medical VI, LP agreed to exchange their interest to corresponding interests in Fuse, each becoming one of the Holders. Accordingly, the above companies have been combined for financial statement purposes as each of the companies are under common control, operate as a single business entity, and became wholly-owned subsidiaries of Fuse immediately prior to the Merger. Collectively, the entities are referred to as “Fuse.”
The Company intends to carry on Fuse’s business as its principal line of business.
The foregoing description of the agreement documenting the surrender of the general partner interests is filed as Exhibit 10.8 and the agreements documenting the exchange of partnership interests for membership interests are filed as Exhibits 4.1 and 4.2.
The disclosures set forth in Items 2.01, 3.02, 5.01, 5.02 and 5.06 of this Current Report are incorporated herein by reference.
Overview
The Company’s business is to market, distribute and sell internal fixation, durable bone materials, biologics, tissue, surgical and other related surgical products for use in a variety of surgical procedures in various types of facilities (ambulatory surgical centers, hospitals and physician offices and other medical facilities) where surgeons and doctors treat patients and operate. The Company markets, distributes and sells a variety of existing FDA-approved and/or state licensed products and services manufactured or produced by other organizations where the Company is considered a distributor and/or a stocking distributor. Currently, these products consist of plates and screws for recurring bone fractures, allografts for bone chips and tendons, and amniotics . The amniotic products are derived from the inner layer of the human amniotic tissue and then processed by the manufacturer which results in an FDA-approved allograft. Amniotics has historically made up over half of the Company's revenues. The Company utilizes its physician relationships, corporate partners, facility relationships and partnerships as well as its knowledge of the healthcare industry, to further its business objectives. All sales are made in compliance with both the Stark Law and the federal anti-kickback statute, as further discussed below. In doing so, the Company’s overall goal is to add value to the healthcare industry by bringing down the overall cost of internal fixation, biologics, bone materials, tissues, surgical implants and other products in the industry.
Product Distribution Channels and Customer Base
The Company utilizes multiple distribution models including representative networks and independent contractors. The Company's customers are physicians, orthopedic surgeons, hospitals, surgical facilities and physician practices. The Company distributes the products on behalf of manufacturers and, in some cases, receives a commission related to sales numbers. In most cases, the Company purchases product directly from manufactures and resells the products from existing inventory. The Company’s distribution model also utilizes its physician investment partners as part of the network. Beginning with the inclusion of Dr. Pratt and Dr. Dei on the Company management team and others of similar reputations who are investors in the Company, the Company is building a large nationwide network of specialists in select clinical specialties, many of whom are leaders in their field, that the Company hopes will clinically utilize the Company’s product lines through appropriate channels in a manner consistent with professional standards of practice. These network specialists include heads of teaching hospitals, universities and clinical resident and fellowship programs at some of the most respected institutes in the nation. In addition, please see item 3.02 Unregistered Sales of Equity Securities.
For products sold on a commission basis, the Company receives payment from the manufacturer or distributor. For products sold from the Company’s inventory, the Company receives payment directly from its customers. Currently, the Company has a limited number of customers that it sells products to. In the fiscal year ended August 31, 2013, The Company had a concentration of sales in a limited number of hospital and surgical facilities. Amniotics has historically made up the largest portion of the Company's business. The Company recognizes that the diversification and growth of its customer base is instrumental to its long-term strategic and financial success. The Company has a diverse line of products and services and intends to grow both the number of customers and product sales through its product distribution channel strategy.
Our principal supplier is Texas AmBioMed, LLC ("AmBioMed"). Fuse entered into a Distributor Agreement with AmBioMed on August 2, 2012, pursuant to which Fuse acts as a non-exclusive global distributor of the following allograft products: AmnioFix® Spine Products, AmnioFix® Nerve Wrap, EpiFix® for wound care, AmBioChoice and AmbioChoice Plus. The term of the agreement was for an initial one year term and renews on each August 2nd anniversary date for successive one-year terms unless it is terminated in writing by either party. Fuse is required to purchase at least 10 units of AmBioMed product during each six month term of the agreement, which results in a minimum commitment of
$2,640
every six months. The Company plans to file the Agreement as an exhibit to its next periodic report and plans to seek confidential treatment of certain terms in the Agreement at such time.
On August 20, 2012, Fuse entered into a Commission Agreement with Gulf Coast Surgical Solutions, LLC in which Fuse receives a 25% commission of all of its sales of ETEX Bone Graft products, subject to certain adjustments set forth in the agreement. The Commission Agreement expires at midnight on August 10, 2015, unless terminated by either party with 60 days prior written notice. A copy of the Commission Agreement is filed as Exhibit 10.21.
On July 17, 2014, the Company entered into an Independent Representative Agreement with Vilex, Inc. (“Vilex”) pursuant to which the Company was appointed as a representative of Vilex to promote and sell Vilex’s products in the United States. The Vilex products include certain plates, screws, and related equipment. Under the terms of the agreement with Vilex, the Company is a non-exclusive representative of Vilex, except for certain specified customers. The term of the agreement with Vilex is five years, and will automatically renew for additional one-year periods at the expiration of the original term unless terminated as provided therein. The Company will be paid a commission based on its net sales. A copy of the agreement with Vilex is filed as Exhibits 10.1 to the Form 10-Q filed on August 19, 2014.
Competition
For most of the products the Company offers there are a number of integrated competitors, several of which are publically traded where they not only manufacture and produce their own products but also have established distribution and sales networks and participate in large group purchasing organizations within the medical industry. Most of these competitors have linked physicians to their entities by engaging select physician and surgical specialties through consulting agreements, clinical trials remuneration and other compensation models. As mature companies, they also have extensive legacy systems and expensive administrative and sales commission cost structures. In addition, there are numerous independent medical distributorships primarily focused on limited geographic markets and products located across the United States.
Intellectual Property
At this time the Company holds no intellectual property, patents or trademarks.
Regulatory Issues
There are both federal and state regulations that may impact the Company’s ability to fully implement its strategic plan.
FDA Regulations
The manufacturers and suppliers of the products we market are subject to extensive regulation by the U.S. Food and Drug Administrations ("FDA"), other federal governmental agencies and by state authorities. These regulations govern the approval, clearance or license to commercialize medical devices, biological products and human cellular and tissue products; including compliance with the standards and requirements related to the design, testing, manufacture, labeling, promotion and sales of the products, stringent record keeping requirements, tracking of devices, reporting of potential product defects and adverse events, conduct of corrections and recalls, and other matters. As a distributor and marketer of such FDA-regulated products, we are subject to independent requirements to register and list certain products, may be required to obtain state licensure or certifications and may be subject to inspections, in addition to complying with derivative requirements applicable to the manufacturers of the products we market. Failure to comply with applicable requirements could result in a wide variety of enforcement actions ranging from warning letters to more severe sanctions such as: fines and civil penalties, operating restrictions, injunctions and criminal prosecutions.
Affordable Care Act
Pursuant to the Physician Payment Sunshine Act (“Sunshine Act”) enacted as part of the Affordable Care Act, we are required to report annually to the Centers for Medicare & Medicaid Services (“CMS”) beginning in 2014 certain payments and other transfers of value furnished to physicians and teaching hospitals, as well as certain ownership or investments held by physicians or their family members. These annual reports will be publicly available. Failure to report timely, accurately, and completely may subject us to civil monetary penalties. Some states have laws similar to the federal Sunshine Act.
Fraud, Abuse and False Claims
We are directly and indirectly subject to certain federal and state laws governing relationships with healthcare providers and pertaining to healthcare fraud and abuse.
The federal Anti-Kickback Statute (the “AKS”) is a criminal statute that prohibits the payment or receipt of remuneration, in cash or otherwise, in return for referrals of federal healthcare beneficiaries. The Center for Medicare and Medicaid Services has promulgated certain safe harbors that offer protection from liability for arrangements that fall within very specific parameters. The Company intends to utilize the “physician investment interest safe harbor” in the AKS as a business model. To reach the “public company exception” (as defined below) to the AKS, the Company must possess undepreciated net tangible assets related to the furnishing of healthcare items and services of more than $50,000,000 in the previous fiscal year or 12-month period.
The Stark Law prohibits physicians or their immediate family members from referring to entities that provide designated health services (“DHS”) to federal program beneficiaries if the physician or an immediate family member has a financial relationship (either via a compensation arrangement or ownership interest) directly or indirectly in that entity. Similar to safe harbors for the AKS, the Stark Law regulations created a series of exceptions to provide protection for certain types of business arrangements that fall within their parameters.
Many states have laws similar to the federal law.
In order to meet its objectives in compliance with the Stark Law, the Company will rely on the exception for publicly traded securities (the “Public Company Exception”). This exception effectively permits physicians to own investment securities that may be purchased on terms generally available to the public and which are securities (i) in a corporation that had, at the end of the corporation’s most recent fiscal year, or on average during the previous three fiscal years, stockholder equity exceeding $75,000,000 and (ii) listed on the New York Stock Exchange, the American Stock Exchange, or any regional exchange in which quotations are published on a daily basis, or foreign securities listed on a recognized foreign, national, or regional exchange in which quotations are published on a daily basis, or traded under an automated interdealer quotation system operated by the National Association of Securities Dealers.
The Company will not accept federal reimbursement for its products until the Public Company Exception under the Stark Law is available to it. In addition there are various state statutes which may limit the Company's ability to fully implement our business model until such time as the Company achieves Public Company Exception status. It is the intent of the Company to not sell any product to an insured that would be reimbursed under any government payer system including, but not limited to, Medicare, Tricare or other national or state government beneficiary program.
Employees
Currently, the Company has 10 full-time employees and 4 independent contractors.
Properties
Our only facilities are our 1,572 sq. ft. leased principal executive offices, located at 4770 Bryant Irvin Court, Suite 300, Fort Worth, Texas 76107. We believe that our present business property is adequate and suitable to meet our needs until we consummate a business combination. The terms of the lease are governed by a lease agreement dated December 23, 2013 between JAR Financial, LLC, and BC Legacy Management, LLC. Fuse entered into an Assignment of Lease on February 15, 2014 with JAR Financial, LLC, which was consented to by BC Legacy Management, LLC, in which Fuse agreed to be bound by the terms of the December 23, 2013 lease agreement. The lease expires on January 31, 2016, subject to Fuse's rights to renew as set forth therein. The base rent is $19.00 per sq. ft. and is subject to certain adjustments as provided in the lease.
A copy of the Assignment of Lease is filed as Exhibit 10.7 hereto.
Legal Proceedings
On January 27, 2014, M. Richard Cutler and Cutler Law Group, P.C. (the “Plaintiffs”) filed a complaint in the District Court of Harris County, Texas, 2014-03355, against Fuse, Alan Meeker, Rusty Shelton, Jonathan Brown, Robert H. Donehew and Golf Rounds (the “Defendants”).
On April 21, 2014, the complaint was dismissed for “want of prosecution.” The Plaintiffs had 30 days from April 21, 2014 to file a motion to reinstate the case and no timely action was taken by the Plaintiffs. However, the Plaintiffs did file a motion to reinstate on May 22, 2014 and it was granted. The Defendants argued a Motion to Dismiss before the court on July 25, 2014 and, on July 28, 2014, the court granted the motion and dismissed the Plaintiffs (i) breach of fiduciary duty claim against all Defendants, (ii) suit on sworn account claim against all Defendants except Fuse, and (iii) quantum meruit claim against all Defendants except Fuse. The Defendants were also awarded attorneys' fees in the amount of $4,343.00.
The Defendants believe the lawsuit to be completely without merit and are continuing to vigorously defend against the remaining claims.
Richard Cutler is the sole principal of Plaintiff, Cutler Law Group, which provided legal representation to its client, Craig Longhurst (“Cutler’s Client”), that was interested in engaging in a transaction with Fuse and Golf Rounds (“Cutler’s Failed Transaction”).
The Plaintiffs had alleged that Cutler's Failed Transaction
failed to materialize notwithstanding the efforts of Mr. Cutler and his law firm to document the transaction.
The Plaintiffs further had alleged that
the Defendants continued to pursue a similar transaction without Cutler’s Client or the Plaintiffs. The Plaintiffs
had claimed
that the Defendants
were
responsible for damages in the amount of (i) $46,465 plus interest because Plaintiffs were not paid their legal fees by Cutler’s Client nor receive equity in Golf Rounds that Plaintiffs hoped would be issued from Cutler’s Failed Transaction; (ii) $46,465 plus interest due to
Defendants
being unjustly enriched from Plaintiffs’ legal services to Cutler’s Client; (iii) $1,186,000 plus interest, being the alleged value of shares that Plaintiffs claimed to be entitled from Cutler’s Failed Transaction, which amount should allegedly be tripled as exemplary damages as a result of intentional fraud and/or negligent representations that some or all of the Defendants allegedly committed and that such conduct allegedly constitutes conspiracy to commit fraud; (iv) $1,186,000, allegedly arising from a breach of a Non-Competition and Non-Disclosure Agreement to which Plaintiffs were not a party; (v) $1,000,000 for breach of fiduciary duty by the Defendants because they would have been directors and officer of the surviving corporation in Cutler’s Failed Transaction had it not failed and Defendants’ moving on to another transaction without Plaintiffs; and (vi) Plaintiffs’ attorneys fees and costs for
having brought the action.
RISK FACTORS
Our business and an investment in our securities are subject to a variety of risks. The following risk factors describe some of the most significant events, facts or circumstances that could have a material adverse effect upon our business, financial condition, results of operations, ability to implement our business plan and the market price for our securities. Many of these events are outside of our control. If any of these risks actually occur, our business, financial condition or results of operations may be materially adversely affected. In such case, the trading price of our common stock could decline and investors in our common stock could lose all or part of their investment.
We are not currently profitable and we will need to raise additional funds in the future; however, additional funds may not be available on acceptable terms, or at all.
We have substantial operating expenses associated with the sales and marketing of the products we sell. The sales and marketing expenses are anticipated to be funded from operating cash flow. There can be no assurance that we will have sufficient access to liquidity or cash flow to meet our operating expenses and other obligations. If we do not increase our revenue or reduce our expenses, we will need to raise additional capital, which would result in dilution to our stockholders, or seek additional loans. The incurrence of indebtedness would result in increased debt service obligations and could require us to agree to operating and financial covenants that would restrict our operations. Financing may not be available in amounts or on terms acceptable to us, if at all. Any failure by us to raise additional funds on terms favorable to us, or at all, could result in our inability to pay our expenses as they come due, limit our ability to expand our business operations, and harm our overall business prospects.
We may not be able to raise capital or, if we can, it may not be on favorable terms. We may seek to raise additional capital through public or private equity financings, partnerships, joint ventures, dispositions of assets, debt financings or restructurings, bank borrowings or other sources. To obtain additional funding, we may need to enter into arrangements that require us to relinquish rights to certain technologies, products and/or potential markets. If adequate funds are not otherwise available, we would be forced to curtail operations significantly, including reducing our sales and marketing expenses which could negatively impact product sales and we could even be forced to cease operations, liquidate our assets and possibly even seek bankruptcy protection.
Pricing pressure and cost containment measures
could have a negative impact on our future operating results.
Pricing pressure has increased in our industry due to continued consolidation among healthcare providers, trends toward managed care, the shift towards government becoming the primary payer of healthcare expenses, and government laws and regulations relating to reimbursement and pricing generally. Pricing pressure, reductions in reimbursement levels or coverage or other cost containment measures could unfavorably affect our future operating results and financial condition.
Product pricing (and, therefore, profitability) is subject to regulatory control.
The pricing and profitability of the products we sell may become subject to control by third-party payors. The continuing efforts of governmental and other third-party payors to contain or reduce the cost of healthcare through various means may adversely affect our ability to successfully commercialize our products. In most foreign markets, the pricing and/or profitability of certain diagnostics and prescription pharmaceuticals are subject to governmental control. In the United States, we expect that there will continue to be federal and state proposals to implement similar governmental control though it is unclear which proposals will ultimately become law, if any. Changes in prices, including any mandated pricing, could impact our revenue and financial performance.
Future regulatory action remains uncertain.
We operate in a highly regulated environment, and any legal or regulatory action could be time-consuming and costly. If we, or the manufacturers or distributors that supply us products fail to comply with all applicable laws, standards and regulations, action by the FDA or other regulatory agencies could result in significant restrictions, including restrictions on the marketing or use of the products we sell or the withdrawal of the products we sell from the market. Any such restrictions or withdrawals could materially affect our business and operations.
Many competitive products exist and more will be developed, and we may not be able to successfully compete because we are smaller and have fewer financial resources.
Our business is in a very competitive and evolving field. Rapid new developments in this field have occurred over the past few years, and are expected to continue to occur. Other companies already have competing products available or may develop products to compete with ours. Many of these products have short regulatory timeframes and our competitors, many with more substantial development resources, may be able to develop competing products that are equal to or better than the ones we market. This may make the products we market obsolete or undesirable by comparison and reduce our revenue.
Our success will depend on our ability to engage and retain qualified technical personnel who are difficult to attract.
Our success will depend on our ability to attract and retain qualified technical personnel to assist in research and development, testing, product implementation, low-scale production and technical support. The demand for such personnel is high and the supply of qualified technical personnel is limited. A significant increase in the wages paid by competing employers could result in a reduction of our technical work force and increases in the wage rates that we must pay or both. If either of these events were to occur, our cost structure could increase and our growth potential could be impaired.
Loss of key members of our management who we need to succeed could adversely affect our business.
We are highly dependent on the services of key members of our management team, and the loss of any of their services could have an adverse effect on our future operations. We do not currently maintain key-man life insurance policies insuring the life of any member of our management team.
Our Chief Executive Officer and President allocates part of his time to other companies.
Mr. Meeker, the Chief Executive Officer and President of our company, is also in management positions with other companies. Mr. Meeker allocates his time between the affairs of the Company and the affairs of these other companies. This situation presents the potential for a conflict of interest for Mr. Meeker in determining the respective percentages of his time to be devoted to the affairs of the Company and the affairs of others. In addition, if the affairs of these other companies require him to devote more substantial amounts of his time to the affairs of the other companies in the future, it could limit his ability to devote sufficient time to our affairs and could have a negative impact on our business.
We will be required to invest in facilities and equipment on a continuing basis, which will put pressure on us to finance these investments.
We have invested, and intend to continue to invest, in facilities and state-of-the-art equipment in order to increase, expand or update our capabilities and facilities. Changes in technology or sales growth beyond currently established production capabilities, which we anticipate, will require further investment. However, there can be no assurance that we will generate sufficient funds from operations to maintain our existing facilities and equipment or to finance any required capital investments or that other sources of funding will be available. Additionally, there can be no guarantee that any future expansion will not negatively affect earnings.
Future revenue will depend on our ability to increase sales.
We currently sell our products through direct sales by our contract employees and indirectly through distributor relationships. We incurred increased sales and marketing expenses in building and expanding our direct sales force, and there can be no assurance that we will generate increased sales as a result of this effort.
There may be fluctuations in our operating results, which will impact our stock price.
Significant annual and quarterly fluctuations in our results of operations may be caused by, among other factors, our volume of revenues, the timing of new product or service announcements, releases by us and our competitors in the marketplace of new products or services, seasonality and general economic conditions. There can be no assurance that the level of revenues achieved by us in any particular fiscal period will not be significantly lower than in other comparable fiscal periods. Our expense levels are based, in part, on our expectations as to future revenues. As a result, if future revenues are below expectations, net income or loss may be disproportionately affected by a reduction in revenues, as any corresponding reduction in expenses may not be proportionate to the reduction in revenues.
Our revenues will depend upon prompt and adequate reimbursement from private insurers and national health systems.
Political, economic and regulatory influences are subjecting the healthcare industry in the United States to fundamental change. The ability of hospitals to pay fees for allograft bone tissue products depends in part on the extent to which reimbursement for the costs of such materials and related treatments will continue to be available from private health coverage insurers and other organizations. We may have difficulty gaining market acceptance for the products we sell if third-party payors do not provide adequate coverage and reimbursement to hospitals. Major third-party payors of hospital services and hospital outpatient services, such as private healthcare insurers, annually revise their payment methodologies, which can result in stricter standards for reimbursement of hospital charges for certain medical procedures or the elimination of reimbursement. Further, private healthcare insurer cutbacks could create downward price pressure on our products.
Our operating results will be harmed if we are unable to effectively manage and sustain our future growth.
We might not be able to manage our future growth efficiently or profitably. Our business is unproven on a large scale and actual revenue and operating margins, or revenue and margin growth, may be less than expected. If we are unable to scale our production capabilities efficiently, we may fail to achieve expected operating margins, which would have a material and adverse effect on our operating results. Growth may also stress our ability to adequately manage our operations, quality of products, safety and regulatory compliance. In order to grow, we may be required to obtain additional financing, which may increase our indebtedness or result in dilution to our stockholders. Further, there can be no assurance that we would be able to obtain any additional financing.
Future business combinations or acquisitions may be difficult to integrate and cause our attention to be diverted.
We may pursue various business combinations with other companies or strategic acquisitions of complementary businesses, product lines or technologies. There can be no assurance that such acquisitions will be available at all, or on terms acceptable to us. These transactions may require additional financing which may increase our indebtedness or outstanding shares, resulting in dilution to stockholders. The inability to obtain such future financing may inhibit our growth and operating results. Integration of acquisitions or additional products can be time consuming, difficult and expensive and may significantly impact operating results. Furthermore, the integration of any acquisition may divert management’s time and resources from our core business. We may sell some or all of our product lines to other companies or may agree to combine with another company. Selling some of our product lines may inhibit our ability to generate positive operating results going forward.
We may be subject to future product liability litigation that could be expensive and our insurance coverage may not be adequate in a catastrophic situation.
Although we are not currently subject to any product liability proceedings, and we have no reserves for product liability disbursements, we may incur material liabilities relating to product liability claims in the future, including product liability claims arising out of the usage of our products. We currently carry product liability insurance, however, our insurance coverage and any reserves we may maintain in the future for product related liabilities may not be adequate and our business could suffer material adverse consequences.
The manufacturers and suppliers of the products we market are subject to continuing regulatory compliance by the FDA which is costly and could result in delays in the commercialization of the products we market.
The manufacturers and suppliers of the products we market are subject to regulation by the FDA . These regulations govern manufacturing of cellular and tissue products as well as the introduction of new medical devices, the observance of certain standards with respect to the design, manufacture, testing, labeling, promotion and sales of the devices, the maintenance of certain records, the ability to track devices, the reporting of potential product defects, the import and export of devices and other matters. Further, the manufacturers that create the products we market are facing an increasing amount of scrutiny and compliance costs as more states are implementing regulations governing medical devices, pharmaceuticals and/or biologics and these regulations could affect many of the products we market, which could impact our sales revenue.
As a distributor we are subject to certain registration and listing requirements by the FDA and similar state authorities.
As a distributor and marketer of such FDA-regulated products, we are subject to independent requirements to register and list certain products, may be required to obtain state licensure or certifications and may be subject to inspections, in addition to complying with derivative requirements applicable to the manufacturers of the products we market. Failure to comply with applicable requirements could result in a wide variety of enforcement actions ranging from warning letters to more severe sanctions such as: fines and civil penalties operating restrictions, injunctions and criminal prosecutions all of which could adversely impact our business.
Future revenue will depend on our ability to develop new sales channels and there can be no assurance that these efforts will result in significant revenues.
We are heavily dependent on developing sales channels for the products we sell, but there can be no assurance that these channels can be developed or that we will continue to be successful in selling our products. We currently sell the products through representative networks, independent contractors and employed representatives. We are engaging in a major initiative to build and further expand our direct sales force. This effort will have significant costs that will be incurred prior to the generation of revenue sufficient to cover these costs. The costs incurred for these efforts may impact our operating results and there can be no assurance of their effectiveness. Many of our competitors have well-developed sales channels and it may be difficult for us to break through these competitors to take market share. If we are unable to develop these sales channels, we may not be able to grow revenue or maintain our current level of revenue generation.
Because we became public through a reverse merger, we may not be able to attract the attention of major brokerage firms or certain investors.
There are coverage risks associated with our becoming public through a reverse merger, including, among other things, security analysts of major brokerage firms may not provide coverage of us since there is no incentive to brokerage firms to recommend the purchase of our common stock. In addition, we may not attract the attention of major brokerage firms and certain investors due to our low stock price. We cannot assure you that brokerage firms would want to conduct any public offerings on our behalf in the future.
The market price of our common stock is extremely volatile, which may affect our ability to raise capital in the future and may subject the value of your investment to sudden decreases.
The market price for securities of biotechnology companies, including ours, historically has been highly volatile, and the market from time to time has experienced significant price and volume fluctuations that are unrelated to the operating performance of such companies. Fluctuations in the trading price or liquidity of our common stock may harm the value of your investment in our common stock.
Factors that may have a significant impact on the market price and marketability of our securities include:
|
●
|
announcements of technological innovations or new commercial products by our collaborative partners or our present or potential competitors;
|
|
●
|
our issuance of debt, equity or other securities, which we need to pursue to generate additional funds to cover our operating expenses;
|
|
●
|
our quarterly operating results;
|
|
●
|
developments or disputes concerning patent or other proprietary rights;
|
|
●
|
developments in our relationships with employees, suppliers or collaborative partners;
|
|
●
|
acquisitions or divestitures;
|
|
●
|
litigation and government proceedings;
|
|
●
|
adverse legislation, including changes in governmental regulation;
|
|
●
|
third-party reimbursement policies;
|
|
●
|
changes in securities analysts’ recommendations;
|
|
●
|
changes in health care policies and practices;
|
|
●
|
economic and other external factors; and
|
|
●
|
general market conditions.
|
In the past, following periods of volatility in the market price of a company’s securities, securities class action litigation has often been instituted. These lawsuits often seek unspecified damages, and as with any litigation proceeding, one cannot predict with certainty the eventual outcome of pending litigation. Furthermore, we may have to incur substantial expenses in connection with any such lawsuits and our management’s attention and resources could be diverted from operating our business as we respond to any such litigation. We maintain insurance to cover these risks for us and our directors and officers, but our insurance is subject to high deductibles to reduce premium expense, and there is no guarantee that the insurance will cover any specific claim that we currently face or may face in the future, or that it will be adequate to cover all potential liabilities and damages.
Shares of common stock are equity securities and are subordinate to any indebtedness.
Shares of our common stock are common equity interests. This means that our common stock will rank junior to any outstanding shares of our preferred stock that we may issue in the future or to our current credit agreement and any future indebtedness we may incur and to all creditor claims and other non-equity claims against us and our assets available to satisfy claims on us, including claims in a bankruptcy or similar proceeding.
Additionally, unlike indebtedness, where principal and interest customarily are payable on specified due dates, in the case of our common stock, (i) dividends are payable only when and if declared by our board of directors or a duly authorized committee of our board of directors, and (ii) as a corporation, we are restricted to making dividend payments and redemption payments out of legally available assets. We have never paid a dividend on our common stock and have no current intention to pay dividends in the future. Furthermore, our common stock places no restrictions on our business or operations or on our ability to incur indebtedness or engage in any transactions, subject only to the voting rights available to shareholders generally.
Our stockholders may experience significant dilution if future equity offerings are used to fund operations or acquire complementary businesses.
If our future operations or acquisitions are financed through the issuance of equity securities, our stockholders could experience significant dilution. In addition, securities issued in connection with future financing activities or potential acquisitions may have rights and preferences senior to the rights and preferences of our common stock.
We do not anticipate paying dividends in the foreseeable future; you should not buy our stock if you expect dividends.
We currently intend to retain our future earnings to support operations and to finance expansion and, therefore, we do not anticipate paying any cash dividends on our common stock in the foreseeable future.
Our current management can exert significant influence over us and make decisions that are not in the best interests of all stockholders.
Our executive officers and directors beneficially own as a group approximately 80.8% of our outstanding shares of common stock. As a result, these stockholders will be able to assert significant influence over all matters requiring stockholder approval, including the election and removal of directors and any change in control. In particular, this concentration of ownership of our outstanding shares of common stock could have the effect of delaying or preventing a change in control, or otherwise discouraging or preventing a potential acquirer from attempting to obtain control. This, in turn, could have a negative effect on the market price of our common stock. It could also prevent our stockholders from realizing a premium over the market prices for their shares of common stock. Moreover, the interests of the owners of this concentration of ownership may not always coincide with our interests or the interests of other stockholders and, accordingly, could cause us to enter into transactions or agreements that we would not otherwise consider.
Our common stock is considered “penny stock” and may be difficult to sell.
The SEC has adopted Rule 3a51-1, which establishes the definition of a “penny stock” for the purposes relevant to us, as any equity security that has a market price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to certain exceptions. The market price of our common stock is less than $5.00 per share and therefore may be designated as a “penny stock” according to SEC rules. For any transaction involving a penny stock, unless exempt, Rule 15g-9 requires:
|
·
|
that a broker or dealer approve a person's account for transactions in penny stocks; and
|
|
·
|
that the broker or dealer receives from the investor a written agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased.
|
In order to approve a person's account for transactions in penny stocks, the broker or dealer must:
|
·
|
obtain financial information and investment experience objectives of the person; and
|
|
·
|
make a reasonable determination that the transactions in penny stocks are suitable for that person and the person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks.
|
The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prescribed by the SEC relating to the penny stock market, which, in highlight form:
|
·
|
sets forth the basis on which the broker or dealer made the suitability determination; and
|
|
·
|
that the broker or dealer received a signed, written agreement from the investor prior to the transaction.
|
Disclosure also has to be made about the risks of investing in penny stocks in both public offerings and in secondary trading and about the commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and the rights and remedies available to an investor in cases of fraud in penny stock transactions. Finally, monthly statements have to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks.
Generally, brokers may be less willing to execute transactions in securities subject to the “penny stock” rules. This may make it more difficult for investors to dispose of our Common Stock and cause a decline in the market value of our stock. In addition, since the Common Stock is currently traded on the OTC Bulletin Board, investors may find it difficult to obtain accurate quotations of the Common Stock and may experience a lack of buyers to purchase such stock or a lack of market makers to support the stock price.
We could issue “blank check” preferred stock without stockholder approval with the effect of diluting then current stockholder interests and impairing their voting rights, and provisions in our charter documents and under Delaware law could discourage a takeover that stockholders may consider favorable.
Our certificate of incorporation provides for the authorization to issue up to 20,000,000 shares of “blank check” preferred stock with designations, rights and preferences as may be determined from time to time by our board of directors. Our board of directors is empowered, without stockholder approval, to issue one or more series of preferred stock with dividend, liquidation, conversion, voting or other rights which could dilute the interest of, or impair the voting power of, our common stockholders. The issuance of a series of preferred stock could be used as a method of discouraging, delaying or preventing a change in control. For example, it would be possible for our board of directors to issue preferred stock with voting or other rights or preferences that could impede the success of any attempt to change control of our company. In addition, we have a staggered board of directors and advanced notice is required prior to stockholder proposals, which might further delay a change of control.
If we are deemed to be subject to the Investment Company Act of 1940, as amended, we may be required to institute burdensome compliance requirements and be subject to restrictions relating to our activities.
The regulatory scope of the Investment Company Act of 1940, as amended (the “Investment Company Act”), which was enacted principally for the purpose of regulating vehicles for pooled investments in securities, extends generally to companies engaged primarily in the business of investing, reinvesting, owning, holding or trading in securities. The Investment Company Act may, however, also be deemed to be applicable to a company that does not intend to be characterized as an investment company but that, nevertheless, engages in activities that may be deemed to be within the definitional scope of certain provisions of the Investment Company Act. While we do not believe that our principal activities will subject us to regulation under the Investment Company Act, we cannot assure you that we will not be deemed to be an investment company. If we are deemed to be an investment company, we may become subject to certain restrictions relating to our activities, including restrictions on:
|
·
|
the nature of our investments; and
|
|
·
|
the issuance of securities,
|
and have imposed upon us certain requirements, including:
|
·
|
registration as an investment company;
|
|
·
|
adoption of a specific form of corporate structure; and
|
|
·
|
compliance with certain burdensome reporting, recordkeeping, voting, proxy and disclosure requirements and other rules and regulations.
|
If we are characterized as an investment company, we would be required to comply with these additional regulatory burdens, which would require additional expense.
U.S. and state governmental regulation could restrict our ability to sell the products.
The federal Anti-Kickback Statute (or “AKS”) is a criminal statute that prohibits the payment or receipt of remuneration, in cash or otherwise, in return for referrals of federal healthcare beneficiaries. The Center for Medicare and Medicaid Services has promulgated certain safe harbors that offer protection from liability for arrangements that fall within very specific parameters. To reach the Public Company Exception to the AKS, we must first possess undepreciated net tangible assets related to the furnishing of healthcare items and services of more than $50,000,000 in the previous fiscal year or 12-month period. The Stark Law prohibits physicians or their immediate family members from referring to entities that provide designated health services (or “DHS”) to federal program beneficiaries if the physician or an immediate family member has a financial relationship (either via a compensation arrangement or ownership interest) directly or indirectly in that entity. Similar to safe harbors for the AKS, the Stark Law regulations created a series of exceptions to provide protection for certain types of business arrangements that fall within their parameters.
In order to meet our objectives in compliance with the Stark Law, we will rely on the Public Company Exception. This exception effectively permits physicians to own investment securities that may be purchased on terms generally available to the public and which are securities (i) in a corporation that had, at the end of the corporation’s most recent fiscal year, or on average during the previous three fiscal years, stockholder equity exceeding $75,000,000 and (ii) listed on the New York Stock Exchange, the American Stock Exchange, or any regional exchange in which quotations are published on a daily basis, or foreign securities listed on a recognized foreign, national, or regional exchange in which quotations are published on a daily basis, or traded under an automated interdealer quotation system operated by the National Association of Securities Dealers.
Many states also include laws similar to AKS or the Stark Law to which we may be subject. If it is determined that our business arrangements fail to comply with the AKS , the Stark Law or similar state laws , we could face significant civil and/or criminal penalties.
Pursuant to the Physician Payment Sunshine Act (“Sunshine Act”) enacted as part of the Affordable Care Act, we are required to report annually to the Centers for Medicare & Medicaid Services (“CMS”) beginning in 2014 certain payments and other transfers of value furnished to physicians and teaching hospitals, as well as certain ownership or investments held by physicians or their family members. These annual reports will be publicly available. Failure to report timely, accurately, and completely may subject us to civil monetary penalties. Some states have laws similar to the federal Sunshine Act.
The scope and enforcement of all of these laws is uncertain and subject to rapid change, especially in light of the lack of applicable precedent and regulations. There can be no assurance that federal or state regulatory or enforcement authorities will not investigate or challenge our current or future activities under these laws. Any investigation or challenge could have a material adverse effect on our business, financial condition and results of operations. Any state or federal regulatory or enforcement review of us, regardless of the outcome, would be costly and time consuming. Additionally, we cannot predict the impact of any changes in these laws, whether these changes are retroactive or will have effect on a going-forward basis only.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
As a result of the Merger and the change in business and operations of the Company, a discussion of the past financial results of the Company, formally known as Golf Rounds.com, is not pertinent, and, under generally accepted accounting principles in the United States the historical financial results of Fuse, the acquirer for accounting purposes, prior to the Merger are considered the historical financial results of the Company.
The following discussion highlights Fuse’s results of operations and the principal factors that have affected its consolidated financial condition as well as its liquidity and capital resources for the periods described, and provides information that management believes is relevant for an assessment and understanding of the Company’s consolidated financial condition and results of operations presented herein. The following discussion and analysis are based on Fuse’s audited and unaudited financial statements contained in this Current Report, which have been prepared in accordance with generally accepted accounting principles in the United States. You should read the discussion and analysis together with such financial statements and the related notes thereto.
Overview
The medical distribution industry is in a mature life-cycle phase. For most of the products we offer there are a number of integrated competitors, several of which are publically traded where they not only manufacture and produce their own products, but also have established distribution and sales networks and participate in large group purchasing organizations within the medical industry. Most of these competitors have linked physicians to their entities by engaging select physician and surgical specialties through consulting agreements, clinical trials remuneration and other compensation models. As mature companies, they also have extensive legacy systems and expensive administrative and sales commission cost structures. In addition, there are numerous independent medical distributorships primarily focused on limited geographic markets and products located across the United States.
Few competitive companies, however, are structured to allow for physician and key stakeholder equity, profit participation and operational input in their companies. As a growth company, we currently compete through the following means:
|
·
|
Partnering with both established and new manufacturers and suppliers who are seeking to have access to a national distribution network for their products.
|
|
·
|
Engagement of physician investment in the Company through private market placements, acquisition of physician-owned companies and other partnership models.
|
|
·
|
Participation of physicians, both investor and non-investor, through our physician leadership structure, which includes the Chief Medical Officer, product and service line directors as well as national, regional, divisional and sectional medical directors.
|
|
·
|
Utilization and maintenance of a flat administrative organizational structure, thereby reducing our overhead cost structure.
|
|
·
|
Installation of a customer relationship management system for managing the Company's interactions with current and future customers, which allows the Company to better organize, automate, and synchronize sales, marketing, customer service, and technical support.
|
|
·
|
Implementation of a minimum sales representative model.
|
|
·
|
Shadow pricing of competitor products that provide cost savings to our end consumers.
|
|
·
|
Engagement of our physician investors to assist in introducing our cost-saving products in healthcare facilities within their service area.
|
Concentration of Sales
During the fiscal year ended August 31, 2013, the Company had a concentration of sales to a limited number of hospital and surgical facilities. Sales to the top three client facilities totaled $658,116 or 62.1% of total sales.
Concentration of Suppliers
During the fiscal year ended August 31, 2013, the Company had a concentration of suppliers with a limited number of manufacturers and supply distributors whom the Company purchased its products. Purchases from the top two suppliers totaled $395,505 or 99.4% of the total goods purchased. This concentration of purchases was due to the expansion of the Company’s product service lines through execution of new manufacturer vendor agreements and the subsequent marketing and placement of those products in new client facilities. Our distributor agreements with these manufacturers and supply distributors are both exclusive and non-exclusive and allow for the Company to market and distribute nationally. These same manufacturers and distributors have the option to provide their own direct sales and distributor networks that may compete with the Company and its products.
Strategy
Our strategy is to continue to expand our end customer, physician, manufacturer and supplier partnership base, both in the regions we currently serve and in new regions across North America that are conducive to our business model. We believe our current employee base is sufficient to meet this challenge. The principal elements of our business strategy are to:
Integrate and Increase Profits
We intend to continue integrating and implementing best practices across all aspects of our operating facilities and product service lines, including financial, staffing, technology, products and packaging, distribution network and compliance.
Our customers and partners require high levels of regulatory compliance, which we intend to accomplish through employee training, facility policies and procedures coupled with ongoing analysis of operating performance. We intend to implement new accounting, invoicing, and logistics management and information technology systems. We believe all of these measures will increase the quality of service we can provide to our customers, increase the visibility of the Company, and maximize profitability.
Expand Services and Supply Volume
We intend to expand our product and services supply volume as well as our number of facility clients by growing our relationships with product manufacturers and suppliers. We plan to increase the volume we sell and distribute in the following ways: continued development of our sales and account management representative network structure to drive physician and facility relationships; growth of our partnership model with other healthcare manufacturers and providers who bring incremental service lines, strategic value and synergy; attraction of new services and customers by demonstrating product quality, customer service and cost value propositions; and attraction of new sales and service revenue in territories we feel may be underserved and provide ease of market penetration. We plan to increase the volume we collect from our end user by implementing specific sales programs and increasing personnel dedicated to sales generation.
In January 2014, we executed a distributorship agreement with a national orthopedic internal fixation manufacturer. This national semi-exclusive agreement allows for direct product sales to acute care hospitals under both consignment and stock-and-bill arrangements. In addition, the agreement allows for the Company’s profit participation for ambulatory surgical centers and physician offices business that we are responsible for developing in conjunction with another national medical supply and distribution company.
Improve our Corporate Office
The Company has completed improvements to its leased corporate offices and has relocated its executive and senior management team members. We feel this will provide for greater integration of our planning, operating and reporting systems.
Pursue Selective Strategic Relationships or Acquisitions
In the United States, the Company will continue to explore additional mergers and acquisitions and seek strategic alliances on a national basis with other companies that are developing, producing or distributing healthcare products and services. We plan to focus on partnerships and acquisitions that not only add revenue, cash flow and profitability to our financial position, but those that provide short and long-term growth potential and support the strategic goals and objectives of the Company.
Explore International Markets
Internationally, we are exploring strategic partnerships and business models to penetrate the healthcare sectors for the products and services the Company provides.
As a long-term objective, the Company will continue to explore the expansion of our operations and products into international markets. We have developed several relationships in markets where we believe the products, services and systems will be able to support an underserved market for western-based healthcare including the Middle East and Asia. We believe that moving into international markets will further establish the Company as a leader in our industry sector and will add incremental net income to the organization.
Critical Accounting Policies
The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America requires estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses and related disclosures of contingent assets and liabilities in the financial statements and accompanying notes. The SEC has defined a company’s critical accounting policies as the ones that are most important to the portrayal of the company’s financial condition and results of operations, and which require the company to make its most difficult and subjective judgments, often as a result of the need to make estimates of matters that are inherently uncertain. We believe that our estimates and assumptions are reasonable under the circumstances; however, actual results may vary from these estimates and assumptions. We have identified in Note 2 - “Significant Accounting Policies” to the Company’s financial statements, which are an exhibit hereto, certain critical accounting policies that affect the more significant judgments and estimates used in the preparation of the financial statements.
Three Months Ended February 28, 2014 Compared to Three Months Ended February 28, 2013
Net Revenues
For the three months ended February 28, 2014, net revenues were $229,786, compared to $405,057 for the three months ended February 28, 2013, a decrease of $175,271, or 43.3%. Our pricing for amniotics was high when we initially began selling them. Subsequently, the reimbursable amounts received by our customers from insurance companies were found to be much lower than we anticipated. During April 2013 through June 2013, we reduced significantly our retail pricing in order for our prices to align better with reimbursable amounts from insurance companies received by our customers. On an aggregate basis, the selling prices of our products decreased by approximately 39.6% during the current period. The decrease in selling prices had no effect on outstanding accounts receivable for sales made prior to April 2013. Selling prices were changed prospectively and no bad debt occurred as a result of the decreased selling prices. As a result, even though the number of units sold decreased only slightly during the current period compared to the prior period, the decrease in contract pricing extended to our customers primarily accounted for the decrease in net revenues.
Cost of Revenues
For the three months ended February 28, 2014, our cost of revenues was $67,450, compared to $71,765 for the three months ended February 28, 2013, representing a decrease of $4,315 or 6.0%. During the period from April to June 2013, the costs of our inventory items did not materially change. Accordingly, the 6.0% decrease in costs of revenues represented approximately the same decrease in the number of units sold. The decrease in cost of revenues was due to a decrease in the number of units sold. Our cost of revenues, on a per unit basis, did not increase significantly during the three months ended February 28, 2014. Cost of revenues includes costs to purchase goods, transportation, storage, sales representatives and account management.
Gross Profit
For the three months ended February 28, 2014, we generated a gross profit of $162,336, compared to $333,292 for the three months ended February 28, 2013, a decrease of $170,956, or 51.3%. The decrease in gross profit was primarily due to the decrease in net revenues, which resulted primarily from a reduction in contracted prices in client facilities.
Operating Expenses
General, Administrative and Other
For the three months ended February 28, 2014, general, administrative and other operating expenses increased to $249,349 from $84,381 for the three months ended February 28, 2013, representing an increase of $164,968, or 196%. General, administrative and other operating expenses consist primarily of salaries and wages, travel expenses, legal and professional fees as well as other general and administrative expenses. This increase is attributable to Fuse’s expansion strategy and related costs to fund operations.
Interest Expense
For the three months ended February 28, 2014, interest expense increased to $5,360 from $189 for the three months ended February 28, 2013, representing an increase of $5,171, or 2,736%. Interest expense increased due to the issuance of an aggregate of $749,137 of promissory notes payable during the current period. Interest expense also includes interest on the Company’s line of credit.
Net Income (Loss)
For the three months ended February 28, 2014, the Company generated a net loss of ($91,736), or ($917) per 1.0% membership interest, compared to net income of $248,722, or $2,487 per 1.0% membership interest for the three months ended February 28, 2013. The change from net income to net loss is primarily due to the decrease in net revenues and the increase in general, administrative and other operating expenses.
Six Months Ended February 28, 2014 Compared to Six Months Ended February 28, 2013
Net Revenues
For the six months ended February 28, 2014, net revenues were $387,652, compared to $662,345 for the six months ended February 28, 2013, a decrease of $274,693, or 41.5%. Our pricing for amniotics was high when we initially began selling them. Subsequently, the reimbursable amounts received by our customers from insurance companies were found to be much lower than we anticipated. During April 2013 through June 2013, we reduced significantly our retail pricing in order for our prices to align better with reimbursable amounts from insurance companies received by our customers. As a result, even though the number of units sold increased during the current period compared to the prior period, the increased number of units sold was more than offset by the significant decrease in contract pricing extended to our customers. On an aggregate basis, the selling prices of our products decreased by approximately 48.5% during the current period. The decrease in selling prices had no effect on outstanding accounts receivable for sales made prior to April 2013. Selling prices were changed prospectively and no bad debt occurred as a result of the decreased selling prices. The decrease in contract pricing extended to our customers primarily accounted for the decrease in net revenues.
Cost of Revenues
For the six months ended February 28, 2014, our cost of revenues was $122,457, compared to $107,845 for the six months ended February 28, 2013, representing an increase of $14,612 or 13.5%. During the period from April to June 2013, the costs of our inventory items did not materially change. Accordingly, the 13.5% increase in costs of revenues represented approximately the same increase in the number of units sold. The increase in cost of revenues was due to an increase in the number of units sold. Our cost of revenues, on a per unit basis, did not increase significantly during the six months ended February 28, 2014. Cost of revenues includes costs to purchase goods, transportation, storage, sales representatives and account management.
Gross Profit
For the six months ended February 28, 2014, we generated a gross profit of $265,195, compared to $554,500 for the six months ended February 28, 2013, a decrease of $289,305, or 52.2%. The decrease in gross profit was primarily due to the decrease in net revenues, which resulted primarily from a reduction in contracted prices in client facilities.
Operating Expenses
General, Administrative and Other
For the six months ended February 28, 2014, general, administrative and other operating expenses increased to $426,623 from $185,830 for the six months ended February 28, 2013, representing an increase of $240,793, or 130%. General, administrative and other operating expenses consist primarily of salaries and wages, legal and professional fees, and travel as well as other general and administrative expenses. This increase is attributable to our expansion strategy and related costs to fund operations.
Interest Expense
For the six months ended February 28, 2014, interest expense increased to $5,724 from $280 for the six months ended February 28, 2013, representing an increase of $5,444, or 1,944%. Interest expense increased due to the issuance of an aggregate of $749,137 of promissory notes payable during the current period. Interest expense also includes interest on the Company’s line of credit.
Net Income (Loss)
For the six months ended February 28, 2014, the Company generated a net loss of ($166,321), or ($1,663) per 1.0% membership interest, compared to net income of $368,390, or $3,684 per 1.0% membership interest for the six months ended February 28, 2013. The change from net income to net loss is primarily due to the decrease in net revenues and the increase in general, administrative and other operating expenses.
Liquidity and Capital Resources
As of February 28, 2014, we had $1,068,079 in current assets, consisting of $524,891 of cash and cash equivalents, $114,753 of accounts receivable, $ 284,683 of inventories, $ 95,000 of notes receivables, $3,320 of prepaid expenses and other receivables and $45,432 of other receivables – related parties. We had total current liabilities of $331,941 consisting of $201,419 of accounts payable , $25,431 of accounts payable – related parties , $5,091 of accrued expenses $100,000 for a line of credit . Accordingly, we had working capital of $736,138.
The Company maintains a $100,000 line of credit with Trinity Bank bearing interest of 2.25% per year, based on a 360 -day year . The line of credit requires minimum monthly payments of interest only. The line of credit is secured by a money market account owned by Dr. and Mrs. Christopher Pratt that is also maintained at Trinity Bank. Dr. Pratt is the Chief Medical Officer and a director of the Company . The balance due on the line of credit is $100,000 and it is fully utilized. On October 10, 2013, due to non-payment of the outstanding principal balance, we were in default on the line of credit; however, on November 27, 2013, an extension of the line of credit was obtained through October 10, 2014, curing any previous default
. The line of credit is due upon demand of the lender or, if no demand is made, October 10, 2014.
During the six months ended February 28, 2014, Fuse raised $5,100 through member contributions. See Item 3.02 of this Form 8-K/A for a list of all member contributions, including those raised during the six months ended February 28, 2014.
During the six months ended February 28, 2014, Fuse made cash distributions of $83,000 to the minority interest owners of Fuse Medical V, LP and Fuse Medical VI, LP. Pursuant to the partnership agreements of Fuse Medical V, LP and Fuse Medical VI, LP, available cash flow distributions were to be paid within 30 days of month-end. Prior to the Merger, and effective on and as of the business day immediately prior to the effective time of the Merger, the general partners in Fuse Medical V, LP and Fuse Medical VI, LP agreed to surrender their interests and the individual physicians that owned the remaining limited partnership interests in Fuse Medical V, LP and Fuse Medical VI, LP agreed to exchange their interests for corresponding interests in Fuse Medical, LLC, each becoming one of the Holders. Accordingly, as of May 28, 2014, the distributions to the minority interest owners of Fuse Medical V, LP and Fuse Medical VI, LP ceased. We do not anticipate declaring any dividends prior to regaining profitability. The payment of dividends will be contingent upon our revenues and earnings, if any, our capital requirements and our general financial condition. The payment of any dividends will be within the discretion of our board of directors. We presently intend to retain all earnings, if any, for use in our business operations and, accordingly, we do not anticipate declaring any dividends in the foreseeable future.
We intend to increase our revenues by expanding our client base as well as growing the number of manufacturers and suppliers from which we obtain products. We plan to increase the number of facility clients and physicians offering our products by utilizing our existing sales and account management representative network structure to drive physician and facility relationships. During the six months ended February 28, 2014, approximately 72% of our revenues were derived from sales in Texas and the remainder was derived from three other states. Our physician network is comprised of physicians located in 19 states and we intend to utilize this network to market the products we sell in order to increase our sales in other states. Our plans to increase the number of product lines available for sale will result in entering into agreements with manufacturers or suppliers and some of those agreements may require the purchase of inventory while other agreements may involve consigned inventory or a commission structure not requiring the purchase of inventory. In sum, our expansion strategy will likely require an increase in our working capital in order to fund increased inventories and accounts receivable as well as operating costs including salaries and case coverage costs, legal fees, information technology platforms, and travel and marketing expenses, offset by any increases in our accounts payable to the product manufacturers and suppliers. The working capital needed for this expansion shall be derived from an increase in our net borrowings.
Historically, our primary source of liquidity is cash receipts from the sale of medical supplies and products and the issuances of debt and equity securities. During the six months ended February 28, 2014, the primary uses of cash were salaries and wages, legal and professional fees and travel. Since December 31, 2013, we raised gross proceeds of $1,512,014 (of which $784,238 was from related parties) through the issuance of two-year promissory notes payable. The notes are unsecured, bear interest at 7.0% and require 18 monthly payments of interest only commencing at the beginning of month seven. Our outstanding notes payable have maturity dates commencing December 2015. As of August 25, 2014, the Company had borrowed all $100,000 available under its line of credit and had approximately $632,000 in available cash. The Company may consider future financing or equity transactions for operations, if needed, to meet cash flow deficits during the next 12 months and to accelerate the growth of the business. If we are unable to raise capital, given our current available cash along with anticipated revenues, we believe that we may not be able to remain operational or we may have to scale back our operations including our growth initiatives which would limit our ability to grow our business. See “Risk Factors." Depending on our cash position, we may spend up to $300,000 in capital expenditures over the next 12 months. These capital expenditures will be allocated across growth initiatives including expansion of amniotics relationships. Depending on the results of management’s efforts to realize efficiencies in technology development and utilize our physician network, our capital expenditures may be less than anticipated. Our cash balances are kept liquid in order to support our growing infrastructure needs. The majority of our cash is concentrated in a large financial institution.
The Company believes it currently has sufficient capital or access to capital to sustain its current operations for the next 12 months. The Company has financed its operations from on-going operations, a line of credit and borrowings discussed below.
The Company has secured capital through multiple borrowings. In addition, on May 28, 2014, we acquired $17,250 of notes payable due to PharmHouse Pharmacy. As of August 25, 2014, the aggregate notes payable are $727,776 to World Health Industries, $466,933 to Cooks Bridge, LLC, $317,305 to Jar Financing, LLC, and $17,250 to PharmHouse Pharmacy. The maturity dates and amounts of each individual notes payable are as follows:
Outstanding Notes Payable
|
Note
|
Maturity Date
|
|
Amount
|
|
|
|
|
|
|
|
|
|
PharmHouse Pharmacy
|
07/29/2015
|
|
$
|
6,000
|
|
|
PharmHouse Pharmacy
|
08/28/2015
|
|
|
11,250
|
|
|
Jar Financing, LLC
|
12/30/2015
|
|
|
60,000
|
|
|
World Health Industries
|
01/14/2016
|
|
|
131,024
|
|
|
Cooks Bridge, LLC
|
01/15/2016
|
|
|
131,024
|
|
|
Cooks Bridge, LLC
|
01/31/2016
|
|
|
116,777
|
|
|
|
|
|
|
|
|
|
World Health Industries
|
02/05/2016
|
|
|
116,777
|
|
|
Jar Financing, LLC
|
02/09/2016
|
|
|
193,535
|
|
|
Cooks Bridge, LLC
|
03/04/2016
|
|
|
87,670
|
|
|
Jar Financing, LLC
|
03/04/2016
|
|
|
63,770
|
|
|
Cooks Bridge, LLC
|
05/08/2016
|
|
|
75,000
|
|
|
World Health Industries
|
05/23/2016
|
|
|
479,975
|
|
|
Cooks Bridge, LLC
|
06/16/2016
|
|
|
56,462
|
|
|
Total notes payable as of August 25, 2014
|
|
|
$
|
1,529,264
|
|
On May 28, 2014, as part of the Merger, the Company assumed an aggregate of $17,250 of promissory notes payable to PharmHouse Pharmacy. The notes are unsecured, bear interest at 3.25% and require quarterly payments of interest only. The notes include a provision that in the event of default the interest rate would increase to the default interest rate of 18%. The first six months of interest is deferred until maturity. The outstanding principal balance along with all accrued and unpaid interest is due at maturity.
The remaining promissory notes payable are for a term of twenty-four (24) months , are unsecured, bear interest at 7.0% and require 18 monthly payments of interest only commencing at the beginning of month seven. The first six months of interest is deferred until maturity . The notes include a provision that in the event of default the interest rate would increase to the default interest rate of 18% . The outstanding principal balance along with all accrued and unpaid interest is due at maturity.
In addition, the Company expects Cooks Bridge , LLC and World Health Industries to assist in the funding of its working capital and growth needs in the future.
Capital Expenditures
For the six months ended February 28, 2014, we had no material capital expenditures. We have no material commitments for capital expenditures as of February 28, 2014.
Commitments and Contractual Obligations
As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide this information.
Off-balance Sheet Arrangements
The Company has no off-balance sheet arrangements.
Twelve Months Ended August 31, 2013 Compared to the Period From July 18, 2012 (Inception of Fuse) to August 31, 2012
Net Revenues
For the twelve months ended August 31, 2013, net revenues were $1,059,339, compared to $35,092 for the period from July 18, 2012 (inception) to August 31, 2012, an increase of $1,024,247, or 2,919%. The increase in net revenues was primarily due to the difference in the length of the periods being compared, combined with an increase in the rate of sales of biologic products to new clients. The Company, working with its physician partners, was successful in executing new product vendor agreements for suture anchors, internal fixation, biologics and then placing those products in a number of new hospitals and ambulatory surgery centers.
Cost of Revenues
For the twelve months ended August 31, 2013, the Company’s cost of revenues was $203,532, compared to $5,660 for the period from July 18, 2012 (inception) to August 31, 2012, representing an increase of $197,872 or 3,496%. The increase in cost of revenues was due to the increase in sales for the reasons described above under “
—Net Revenues
.” Cost of revenues includes costs to purchase goods, transportation, storage, sales representatives and account management.
Operating Expenses
General, Administrative and Other
For the twelve months ended August 31, 2013, general, administrative and other operating expenses increased to $419,752 from $12,744 for the period from July 18, 2012 (inception) to August 31, 2012, representing an increase of $407,008, or 3,194%. General, administrative and other operating expenses consist of consulting fees, salaries and wages, legal and professional fees and other general and administrative expenses. This increase is attributable to the difference in the length of the periods being compared, combined with the Company’s expansion strategy and related costs to fund operations, and primarily included salaries, legal fees, and travel expenses.
We intend to expand our product and services supply volume as well as our number of facility clients by growing our relationships with product manufacturers and suppliers and development of our sales and account management representative network structure to drive physician and facility relationships. This expansion will result in an increase in our working capital needs to fund the purchase of inventory, the cost of labor and other operating costs. This growth will require not only an increase in our net borrowings, but also will result in an increase in our accounts payable to the manufacturers as well as a corresponding increase in sales and associated accounts receivable from clients. The use of funds as part of our expansion strategy will primarily consist of increased inventory, salaries and case coverage costs, legal fees, information technology platforms, and travel and marketing expenses.
For the twelve months ended August 31, 2013, we generated an operating income of $436,055, compared to $16,688 for the period from July 18, 2012 (inception) to August 31, 2012, an increase of $419,367, or 2,513%. The increase in gross profit was primarily due to the increase in sales for the reasons described above under “
—Net Revenues
.”
Interest Expense
For the twelve months ended August 31, 2013, interest expense increased to $669 from $0 for the period from July 18, 2012 (inception) to August 31, 2012, representing an increase of $669. Interest expense consists of interest on Fuse’s line of credit.
Net Income
For the twelve months ended August 31, 2013, the Company generated net income of $435,386, or $4,354 per 1.0% membership interest, compared to net income of $16,688, or $167 per 1.0% membership interest, for the period from July 18, 2012 (inception) to August 31, 2012. The increase in net income is due to the increase in sales for the reasons described above under “
—Net Revenues
.”
Liquidity and Capital Resources
As of August 31, 2013, we had $557,770 in current assets, consisting of $233,081 of cash, $94,676 of accounts receivable, $ 203,413 of inventories and $ 26,600 of prepaid expenses and other receivables. We had total current liabilities of $ 288,538, consisting of $173,162 of accounts payable , $15,376 of accounts payable – related parties and $100,000 for a line of credit. Accordingly, as of August 31, 2013, we had working capital of $269,232.
The Company maintains a $100,000 line of credit with Trinity Bank bearing interest of 2.25% per year, based on a 360-day year. The line of credit requires minimum monthly payments of interest only. The line of credit is secured by a money market account owned by Dr. and Mrs. Christopher Pratt that is also maintained at Trinity Bank. Dr. Pratt is the Chief Medical Officer and a director of the Company. The balance due on the line of credit is $100,000 and it is fully utilized. On October 10, 2013, due to non-payment of the outstanding principal balance, we were in default on the line of credit; however, on November 27, 2013, an extension of the line of credit was obtained through October 10, 2014, curing any previous default. The line of credit is due upon demand of the lender or, if no demand is made, October 10, 2014.
During the year ended August 31, 2013, Fuse raised $8,250 (net of $3,350 of redemptions) through member contributions and $100,000 through our bank line of credit. See Item 3.02 of this Form 8-K/A for a list of all member contributions, including those raised during the year ended August 31, 2013.
During the year ended August 31, 2013, Fuse made cash distributions of $196,309 to the minority interest owners of Fuse Medical V, LP and Fuse Medical VI, LP. Pursuant to the partnership agreements of Fuse Medical V, LP and Fuse Medical VI, LP, available cash flow distributions were to be paid within 30 days of month-end. Prior to the Merger, and effective on and as of the business day immediately prior to the effective time of the Merger, the general partners in Fuse Medical V, LP and Fuse Medical VI, LP agreed to surrender their interests and the individual physicians that owned the remaining limited partnership interests in Fuse Medical V, LP and Fuse Medical VI, LP agreed to exchange their interests for corresponding interests in Fuse Medical, LLC, each becoming one of the Holders. Accordingly, as of May 28, 2014, the distributions to the minority interest owners of Fuse Medical V, LP and Fuse Medical VI, LP ceased. We do not anticipate declaring any dividends prior to regaining profitability. The payment of dividends will be contingent upon our revenues and earnings, if any, our capital requirements and our general financial condition. The payment of any dividends will be within the discretion of our board of directors. We presently intend to retain all earnings, if any, for use in our business operations and, accordingly, we do not anticipate declaring any dividends in the foreseeable future.
We intend to increase our revenues by expanding our client base as well as growing the number of manufacturers and suppliers from which we obtain products. We plan to increase the number of facility clients and physicians offering our products by utilizing our existing sales and account management representative network structure to drive physician and facility relationships. During the year ended August 31, 2013, approximately 67% of our revenues were derived from sales in Texas. Our physician network is comprised of physicians located in 19 states and we intend to utilize this network to market the products we sell in order to increase our sales in other states. Our plans to increase the number of product lines available for sale will result in entering into agreements with manufacturers or suppliers and some of those agreements may require the purchase of inventory while other agreements may involve consigned inventory or a commission structure not requiring the purchase of inventory. In sum, our expansion strategy will likely require an increase in our working capital in order to fund increased inventories and accounts receivable as well as operating costs including salaries and case coverage costs, legal fees, information technology platforms, and travel and marketing expenses, offset by any increases in our accounts payable to the product manufacturers and suppliers. The working capital needed for this expansion shall be derived from an increase in our net borrowings.
Historically, our primary source of liquidity is cash receipts from the sale of medical supplies and products and the issuances of debt and equity securities. During the year ended August 31, 2013, the primary uses of cash were salaries and wages, travel expenses and legal and professional fees. Since December 31, 2013, we raised gross proceeds of $1,512,014 (of which $784,238 was from related parties) through the issuance of two-year promissory notes payable. The notes are unsecured, bear interest at 7.0% and require 18 monthly payments of interest only commencing at the beginning of month seven. Our outstanding notes payable have maturity dates commencing December 2015. As of August 25, 2014, the Company had borrowed all $100,000 available under its line of credit and had approximately $ 632,000 in available cash. The Company may consider future financing or equity transactions for operations, if needed , to meet cash flow deficits during the next 12 months and to accelerate the growth of the business. If we are unable to raise capital , given our current available cash along with anticipated revenues, we believe that we may not be able to remain operational or we may have to scale back our operations including our growth initiatives which would limit our ability to grow our business. See “ Risk Factors." Depending on our cash position, we may spend up to $300,000 in capital expenditures over the next 12 months. These capital expenditures will be allocated across growth initiatives including expansion of amniotics relationships. Depending on the results of management’s efforts to realize efficiencies in technology development and utilize our physician network, our capital expenditures may be less than anticipated. Our cash balances are kept liquid in order to support our growing infrastructure needs. The majority of our cash is concentrated in a large financial institution .
The Company believes it currently has sufficient capital or access to capital to sustain its current operations for the next 12 months. The Company has financed its operations from on-going operations, a line of credit and borrowings discussed below.
The Company has secured capital through multiple borrowings. In addition, on May 28, 2014, we acquired $17,250 of notes payable due to PharmHouse Pharmacy. As of August 25, 2014, the aggregate notes payable are $727,776 to World Health Industries, $466,933 to Cooks Bridge, LLC, $317,305 to Jar Financing, LLC, and $17,250 to PharmHouse Pharmacy. The maturity dates and amounts of each individual notes payable are as follows:
|
Outstanding Notes Payable
|
|
Note
|
Maturity Date
|
|
Amount
|
|
|
|
|
|
|
|
|
|
PharmHouse Pharmacy
|
07/29/2015
|
|
$
|
6,000
|
|
|
PharmHouse Pharmacy
|
08/28/2015
|
|
|
11,250
|
|
|
Jar Financing, LLC
|
12/30/2015
|
|
|
60,000
|
|
|
World Health Industries
|
01/14/2016
|
|
|
131,024
|
|
|
Cooks Bridge, LLC
|
01/15/2016
|
|
|
131,024
|
|
|
Cooks Bridge, LLC
|
01/31/2016
|
|
|
116,777
|
|
|
World Health Industries
|
02/05/2016
|
|
|
116,777
|
|
|
Jar Financing, LLC
|
02/09/2016
|
|
|
193,535
|
|
|
Cooks Bridge, LLC
|
03/04/2016
|
|
|
87,670
|
|
|
Jar Financing, LLC
|
03/04/2016
|
|
|
63,770
|
|
|
Cooks Bridge, LLC
|
05/08/2016
|
|
|
75,000
|
|
|
World Health Industries
|
05/23/2016
|
|
|
479,975
|
|
|
Cooks Bridge, LLC
|
06/16/2016
|
|
|
56,462
|
|
|
Total notes payable as of August 25, 2014
|
|
$
|
1,529,264
|
|
On May 28, 2014, as part of the Merger, the Company assumed an aggregate of $17,250 of promissory notes payable to PharmHouse Pharmacy. The notes are unsecured, bear interest at 3.25% and require quarterly payments of interest only. The notes include a provision that in the event of default the interest rate would increase to the default interest rate of 18%. The first six months of interest is deferred until maturity. The outstanding principal balance along with all accrued and unpaid interest is due at maturity.
The remaining promissory notes payable are for a term of twenty-four (24) months, are unsecured, bear interest at 7.0% and require 18 monthly payments of interest only commencing at the beginning of month seven. The first six months of interest is deferred until maturity. The notes include a provision that in the event of default the interest rate would increase to the default interest rate of 18%. The outstanding principal balance along with all accrued and unpaid interest is due at maturity.
In addition, the Company expects Cooks Bridge, LLC and World Health Industries to assist in the funding of its working capital and growth needs in the future.
Private Financings
For the twelve months ended August 31, 2013, we had no private financings.
Capital Expenditures
For the twelve months ended August 31, 2013, we had material capital expenditures of $1,763, consisting of equipment purchases. We had no material commitments for capital expenditures as of August, 31, 2013.
Commitments and Contractual Obligations
As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide this information.
Off-balance Sheet Arrangements
The Company has no off-balance sheet arrangements.
EXECUTIVE OFFICERS AND DIRECTORS
Executive Officers and Directors
The following table sets forth information regarding the Company’s executive officers and directors immediately after the Merger. Except with respect to the Merger Agreement, there is no agreement or understanding between the Company and each current or proposed director or executive officer pursuant to which he was selected as an officer or director.
|
Name
|
|
Age
|
|
Position
|
|
D. Alan Meeker
|
|
49
|
|
Chairman of the Board, Chief Executive Officer, President and Director
|
|
Jonathan Brown*
|
|
33
|
|
Vice President of New Products and Director
|
|
David Hexter
|
|
46
|
|
Interim Chief Financial Officer
|
|
Chris Pratt
|
|
43
|
|
Chief Medical Officer and Director
|
|
Rusty Shelton
|
|
61
|
|
Chief Development Officer and Director
|
|
Randall Dei
|
|
56
|
|
Medical Director of Podiatry and Director
|
|
Robert H. Donehew
|
|
62
|
|
Director
|
* Mr. Brown resigned as President and Chief Operating Officer on July 30, 2014 and was appointed to the position of Vice President of New Products. Effective July 30, 2014, Mr. Meeker now serves as the Chairman of the Board, Chief Executive Officer and President. Mr. Meeker will not receive any additional compensation.
D. Alan Meeker
, 49, co-founded Fuse in 2012 and has served as its Chief Executive Officer since October 2012. In July 2014, Mr. Meeker also assumed the position of President. Mr. Meeker now serves as the Chief Executive Officer and President of the Company and Chairman of its board. Mr. Meeker’s appointment to our board was provided for in the Merger Agreement. Mr. Meeker has also served as the Chief Executive Officer of the Conglomerate and Crestview Group of Companies since 2000. The Conglomerate and Crestview Group of Companies are engaged in the business of healthcare, genetics, oil & gas exploration and production, airfreight and logistics, land and land rights acquisition, agriculture, and syndicated television production. Prior to founding the Conglomerate and Crestview Group of Companies and beginning in 1995, Mr. Meeker was a private developer and consultant for multinational companies specializing in sophisticated contract negotiation and representation in the hospitality, oil & gas, finance and real estate fields in established and emerging nations. Prior to 1995, Mr. Meeker served as trust manager of the EHM Trust, a private family office. While at the EHM Trust between 1990 and 1995, Mr. Meeker specialized in asset management, financing structure, commercial development, and acquisition & divestiture in the oil & gas and real estate fields. Mr. Meeker attended Texas Christian University.
Mr. Meeker has over a decade’s worth of experience serving as a chief executive officer and will bring over 20 years of financial, managerial, and general business experience to our board.
Jonathan G. Brown
, 33, co-founded Fuse in 2012. Mr. Brown is a member of the Company's Board and has served as the Vice President of New Products of the Company since July 2014. Prior to this position and after the Merger, Mr. Brown served as the Company's Chief Operating Officer and President from June 2012 until July 2014. Mr. Brown’s appointment to our board was provided for in the Merger Agreement. Mr. Brown has been involved in healthcare and medical related business activities for the past seven years. From 2010 to the present, Mr. Brown has served as the chief investment strategist and business development director for a mid-west real estate investment group, where he specialized in raising capital, asset acquisition and asset allocation. Mr. Brown was the global procurement manager for Eli Lilly from 2005 to 2010, a Fortune 200 Company that specialized in pharmaceutical, biologic and biotech development, manufacturing and distribution. Mr. Brown led the company’s global procurement initiatives related to all transportation, logistics, distribution, warehousing and contract services. Mr. Brown also was integral in managing a portfolio of multi-national business operations focused on supplier relationship management and strategic negotiations. Mr. Brown attended Bowling Green State University and graduated in 2004 with a degree in Business Administration specializing in Marketing and Sales, Operations and Procurement Management.
With his significant and diverse business, operations and finance experience in the healthcare and medical industry, Mr. Brown brings to our board strong communication skills, the abilities to understand and assist in the advancement of strategic vision, engage strong business partnerships and integrate a robust corporate structure and culture, as well as work with multiple stakeholders in a positive and constructive manner.
David Hexter,
46, was named the interim Chief Financial Officer of Fuse in May 2014 and will serve as the interim Chief Financial Officer of the Company. Mr. Hexter has also served as the principal of David A. Hexter, CPA, P.A. since December 2005 and Mr. Hexter served as an audit manager for Weinberg & Company, P.A. from 2000 to 2005. Mr. Hexter received his undergraduate degree in Accounting from Arizona State University in 1990 and a master's degree in Accounting from Florida Atlantic University in 1998.
Dr. Chris Pratt
, 43, co-founded Fuse in 2012 and has served as its Chief Medical Officer since 2012. Dr. Pratt now serves as the Chief Medical Officer of the Company and as a member of its board. Dr. Pratt’s appointment to our board was provided for in the Merger Agreement. He was integral in development of Physicians Surgical Center in 2004, served on the board, and negotiated the transition to a Baylor USPI entity in January 2010. Dr. Pratt has served as the Chairman of the Board for the Baylor USPI surgery center in Fort Worth since 2010, and facilitated the merger with Orthopedic Surgery Pavilion. He also co-founded and developed Granbury Surgical Center in 2007, and facilitated the transition to a Baylor USPI entity in 2009.
Dr. Pratt has served as an adjunct faculty member for the University of North Texas health science Center in both family practice and pain medicine since 2008. He also served as a faculty member for UT Southwestern training the pain fellows through the Physical Medicine and Rehabilitation Division Pain Fellowship at John Peter Smith Hospital from 2007 to 2012. Since 2008, Dr. Pratt has been a member of Texas Health Care, a multi-specialty physician group based in Fort Worth, Texas. Dr. Pratt works closely with the orthopedic surgeons, spine surgeons and neurosurgeons in the Fort Worth area providing interventional spine and pain management services. Dr. Pratt received his undergraduate degree in Biology from Hendrix College in 1993 prior to earning his medical degree from the Texas College of Osteopathic Medicine University of North Texas Health Science Center in 1997.
Dr. Pratt brings to our board significant experience in the medical field, both clinical and administrative. He offers a background of strong leadership, with the highest ethical standards. His continued involvement as an active practitioner provides great value to the board in this ever-changing healthcare environment.
Rusty Shelton
, 61, co-founded Fuse in 2012 and has been its Chief Development Officer since 2012. Mr. Shelton now serves as the Chief Development Officer of the Company and as a member of its board. Mr. Shelton’s appointment to our board was provided for in the Merger Agreement. Mr. Shelton is responsible for strategic planning, compliance, product line and corporate client development for the Company. Hospital development, executive management, finance, strategic planning and new business development are the hallmark of Mr. Shelton’s career. His leadership in developing focused community and surgical hospitals, ambulatory surgery centers and aligning physician networks based around a regional integrated delivery system makes him a progressive leader in the physician owned hospital movement. He possesses a unique understanding of operations and market forces stemming from his background in hospitals, health system executive management, finance and medical group development, as well as strategic product development in consumer markets.
Prior to joining Fuse, from October 2010 to February 2012, Mr. Shelton was Chief Investment Officer for University General Health Systems, in Houston, Texas. Where he led a management team that successfully turned around and developed a 72 bed acute care hospital into a regional health network which resulted in the management deciding to take the company public in March 2011. Mr. Shelton was responsible for strategic planning, new services and physician development as well as establishment of a regional network of hospital outpatient departments through acquisitions and departmental management service agreements.
From September 2009 to October 2010, Mr. Shelton was Chief Investment Officer for Prexus Health Systems, a national physician owned entity of physician ventured surgical hospitals, ambulatory surgery and ancillary service centers including six acute hospitals, four surgical centers and supportive ancillary service centers. Previously, from September 1999 to September 2009, Mr. Shelton was co-founder and President/CEO of ReSurge Hospitals, Inc., a national surgical specialty and focused community hospital development and management company. Mr. Shelton was President and Chief Executive Officer of Western Medical Inc. from 1995 to 1999, where he handled all phases for the acquisition of a physician owned ambulatory surgery center and development of a new physician owned surgical hospital and integrated physician network in northern Utah. From 1987 to 1995, Mr. Shelton served as Director of Physician Services for Sutter Health Systems, handling physician development across Northern California. Previously, Mr. Shelton was Executive Director for Redbud Community Hospital, Hospital Finance Director for Seattle General Hospital and Finance Director of Missoula General Hospital. Mr. Shelton has a Bachelor of Science in Business Administration with a concentration in Accounting from California Polytechnic State University San Luis Obispo.
Mr. Shelton was selected as a member of our board due to his vast strategic, legal, financial and operational experience interacting with senior executives of hospitals, integrated delivery systems and physician group structures. Mr. Shelton possesses the unique ability to understand the positioning of the combined company and its vertical services within the public company arena.
Dr. Randall L. Dei
, 56, served as the Medical Director of Podiatry for Fuse. Dr. Dei now serves as the Medical Director of Podiatry for the Company and as a member of its board. Dr. Dei’s appointment to our board was provided for in the Merger Agreement. Dr. Dei has also served as the president and managing partner of his private group practice, the Foot and Ankle Health Center since 1994. The Foot and Ankle Health Center is a regional podiatric group practice employing four physicians specializing in reconstructive foot and ankle surgery. He is board certified by the American Board of Podiatric Surgery in Foot and Ankle Surgery, a member of the American College of Foot and Ankle Surgeons and a member of the American Podiatric Medical Association. Dr. Dei has served the podiatric community throughout his entire career, building relationships across all sectors of podiatric professional organizations and related industries. He is the immediate past President of the American Board of Podiatric Surgery (“ABPS”) and has served on its Board of Directors since September 2007. He has served on many ABPS committees including: Oral Examinations, Oral Field Testing, Computer Based Patient Simulation, Credentials, Credentialing Guidelines, Residency Training, Communications, Surgical Practice Analysis, Maintenance of Certificate and as their representative to the Joint Residency Review Committee of the Council on Podiatric Medical Education. Dr. Dei serves on the Professional Relations Committee for the American College of Foot and Ankle Surgeons. Dr. Dei has also served on committees for the Wisconsin State Podiatric Medical Association.
Dr. Dei has been involved with podiatric education throughout his career. He has served as the Program Director of the Podiatric Medicine and Surgery Program, with the added certificate in reconstructive rear foot/ankle surgery, at Columbia St Mary’s Hospital in Milwaukee, Wisconsin since 2009. He is also an adjunct clinical professor and the Director of Clerkship training for multiple podiatric medical schools for many years. Dr. Dei also serves as the President of Podiatric Residency Resource, which is the logging resource program portal and data bank for all podiatric residency programs and post graduate practice logging software and has done so since 2011 and has been on its Board of Directors since 2009. Dr. Dei graduated from the University Wisconsin-Parkside in 1979 with a degree in Life Science and then earned his Doctor of Podiatric Medicine at WMS College of Podiatric Medicine in 1983 and received his medical and surgical training at St. Anthony’s Hospital in Milwaukee, Wisconsin.
With significant experience in the medical field, Dr. Dei brings to our board significant experience as a practitioner and leading educator in the healthcare industry.
Robert H. Donehew
, 62, has served as member of our board since February 2000, as President and Treasurer of the Company since November 2000 and as the Secretary of the Company since December 2005. Mr. Donehew also served as Vice President and Treasurer of the Company from February 2000 until October 2000. Effective upon completion of the Merger, Mr. Donehew resigned as President, Treasurer and Secretary of the Company, but remains as a member of the board. Mr. Donehew’s appointment to our board was provided for in the Merger Agreement.
Since May 2008, Mr. Donehew has been the Chief Financial Officer and a member of the Board of Directors of EndogenX, Inc., a specialty pharmaceutical company. Since July 1996, Mr. Donehew has been the Chief Executive Officer of Donehew Capital, LLC, the general partner of Donehew Fund Limited Partnership, a private investment partnership specializing in the securities market. Since 1983, he has also served as Chief Financial Officer of R.D. Garwood, Inc. and Dogwood Publishing Company, Inc. From 1976 through 1983, Mr. Donehew had his own tax and financial planning practice. Mr. Donehew graduated from Georgia State University in Atlanta, Georgia in 1974 with a BBA in Accounting.
Mr. Donehew has over 35 years of financial, managerial, and general business experience. Mr. Donehew’s significant experience is extremely valuable to the board.
Family Relationships
There are no family relationships among the Company’s existing or incoming directors or officers.
Board and Director Independence
The Company utilizes the definition of “independent” set forth in the listing standards of The NASDAQ Stock Market, LLC (“Nasdaq”). Currently, the Company believes that none of its directors would be considered independent.
As discussed below, the Company currently does not have a standing audit committee, compensation committee or nominating committee or any other standing committees.
During the fiscal year ended August 31, 2013, the board of directors held no meetings and acted by written consent four times. The board does not have a formal policy of attendance of directors at the annual meeting. The Company did not have an annual meeting of stockholders in 2013.
Corporate Governance
The entire board of directors serves as the audit committee. The board does not have an “audit committee financial expert,” as such term is defined under the securities laws. The board does not believe it is necessary to have a financial expert, given the early stage of the Company’s commercial operations and limited financial resources and activities. The Company believes that none of its directors would be considered “independent,” applying the Nasdaq listing standards for independence for members of an audit committee. No report of the audit committee is required in this information statement.
The Company is not required to have and does not have a compensation committee. The Company does not believe it is necessary for the board of directors to appoint a compensation committee because the volume of compensation matters that will come before the board for consideration permits the entire board to give sufficient time and attention to such matters to be involved in all decision making. Fuse has not paid any compensation to its executive officers or directors in the last two fiscal years. The entire board participates in consideration of executive officer and director compensation. The Company expects that the board will make all decisions regarding executive officer compensation. The board will consider the recommendations of the Chief Executive Officer when determining compensation for the other executive officers. The Chief Executive Officer will have no role in determining his own compensation. The Company has not paid any fee to or otherwise engaged any compensation consultants.
The Company also is not required to have and does not have a nominating committee. Given the limited scope of the Company’s operations, the board believes appointing a nominating committee would be premature and of little assistance until the Company’s business operations are at a more advanced level.
The Company does not have a written policy or formal procedural requirements for stockholders to submit recommendations for director nominations. However, the board will consider recommendations from stockholders. Stockholders should communicate nominee suggestions directly to the board and accompany the recommendation with biographical details and a statement of support for the nominee. The suggested nominee must also provide a statement of consent to being considered for nomination.
The entire board of directors decides on nominees. The board reviews any written information provided with respect to the candidates and interviews the candidates. Although there are no formal criteria for nominees, the board believes that persons should be actively engaged in business endeavors, have a financial background, be familiar with acquisition strategies and money management and be able to promote a diversity of views based on the person’s education, experience and professional employment. Based on the information gathered, the board then makes a decision on whether to recommend the candidates as nominees for director. The committee does not distinguish among nominees recommended by stockholders and other persons. The Company does not pay any fee to or otherwise engage any third party or parties to identify or evaluate or assist in identifying or evaluating potential nominees. Though the committee does not have specific guidelines on diversity, it is one of many criteria considered by the board when evaluating candidates.
Board Leadership Structure and Role in Risk Oversight
Mr. Meeker is the Chairman of the Board and the Chief Executive Officer. The board does not believe that the Company’s size or the complexity of operations warrants a separation of the Chairman of the Board and Chief Executive Officer functions. Furthermore, the board believes that combining the roles of Chief Executive Officer and Chairman of the Board promotes leadership and direction for the board and for executive management, as well as allowing for a single, clear focus for the chain of command. The board does not have a lead independent director.
The board of director’s primary function is one of oversight. The board as a whole has responsibility for risk oversight and reviews management’s risk assessment and risk management policies and procedures.
EXECUTIVE AND DIRECTOR COMPENSATION
Executive Officer and Director Compensation of the Company
Summary Compensation Table
The table below summarizes the compensation earned for services rendered to the Company f/k/a Golf Rounds and Fuse in all capacities, for the fiscal years indicated, by its Chief Executive Officer and two most highly-compensated officers other than the Chief Executive Officer.
|
Name and Principal Position
|
|
Year
|
|
Salary
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
D. Alan Meeker(1)
|
|
2013
|
|
|
-
|
|
|
|
-
|
|
|
Chief Executive Officer and President
|
|
2012
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rusty Shelton(1)
|
|
2013
|
|
|
-
|
|
|
|
-
|
|
|
Chief Development Officer
|
|
2012
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert H. Donehew
|
|
2013
|
|
$
|
22,500.00
|
|
|
$
|
22,500.00
|
|
|
Former President, Secretary, and Treasurer
(2)(3)
|
|
2012
|
|
$
|
30,000.00
|
|
|
$
|
30,000.00
|
|
_____________
|
(1)
|
Neither Mr. Meeker nor Mr. Shelton received any compensation in connection with their service to Fuse Medical, LLC, our wholly-owned subsidiary through which we now operate our business.
|
|
(2)
|
Effective June 1, 2013, due to the financial status of the Company, Mr. Donehew continued to perform his duties as President, Secretary and Treasurer at no charge to the Company.
|
|
(3)
|
Mr. Donehew resigned from his position as our President, Secretary, and Treasurer, effective May 28, 2014.
|
Outstand
ing Equity Awards
The following table sets forth the outstanding equity awards for the named executive officer as of August 31, 2013, the end of the Company’s last completed fiscal year end. The outstanding equity awards are presented on a post-Reverse Stock Split basis.
|
Name
|
|
Number of securities underlying unexercised options (#) exercisable
|
|
|
Option Exercise Price
|
|
Option
Expiration Date
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert H. Donehew(1)
|
|
|
6,498
|
|
|
$
|
9.94
|
|
07/28/2014
|
|
|
|
|
684
|
|
|
$
|
8.77
|
|
08/25/2015
|
|
|
|
|
4,104
|
|
|
$
|
8.77
|
|
07/16/2016
|
|
|
|
|
2,052
|
|
|
$
|
12.13
|
|
07/22/2017
|
|
|
|
|
1,368
|
|
|
$
|
11.11
|
|
08/06/2018
|
____________
|
(1)
|
The options were granted on the following dates:
|
|
Options
|
|
Grant Date
|
|
Expiration Date
|
|
|
|
|
|
|
|
6,498
|
|
07/29/2004
|
|
07/28/2014
|
|
684
|
|
08/26/2005
|
|
08/25/2015
|
|
4,104
|
|
07/17/2006
|
|
07/16/2016
|
|
2,052
|
|
07/23/2007
|
|
07/22/2017
|
|
1,368
|
|
08/07/2008
|
|
08/06/2018
|
On July 10, 2010, we issued to Mr. Donehew ten-year options to purchase 8,208 shares at an exercise price of $4.82 per share (the fair market value on the date of grant) that vested immediately to compensate him for additional services rendered to the Company during fiscal years 2009 and 2010. On September 27, 2010, the 8,208 stock options were exercised and the Company received $39,600.
Compensation Arrangements for Directors
The Company has not established a compensation plan for its directors. Mr. Donehew did not receive any separate cash or other compensation for his services as a director for the year ended August 31, 2013, the Company’s last completed fiscal year. The former executive officers and managers of Fuse have not received any cash or other compensation for the fiscal years ended August 31, 2013 and 2012.
Employment Agreements
On July 1, 2014, the Company entered into a General Counsel Agreement with Ross Eichberg, P.C. The Agreement is for a term of five (5) years and thereafter, it renews for successive one year terms unless terminated. In the event the agreement is terminated without cause (as defined in the agreement), the Company shall pay, after the parties' execution of a release, non-disparagement, non-competition and confidentiality agreement, a lump sum equal to the remainder of the initial five (5) year term or any one (1) year extension in effect. The Company shall pay a base salary of $300,000 per year and a signing bonus of $61,000. The General Counsel will also be eligible for a performance bonus each year to be determined by the Board. The General Counsel will also be reimbursed for weekly travel to Fort Worth from Maryland for two (2) years, not to exceed $2,500 per month. The General Counsel will receive benefit coverage and be eligible to participate in various equity participation that may become available to the management team in the future.
A copy of the General Counsel Agreement is filed as Exhibit 10.5 hereto.
Consultant and Independent Contractor Agreements
On May 1, 2014, the Company entered into a Medical Director Agreement with Dr. Randall L. Dei. The Agreement provides that Dr. Dei is an independent contractor providing various medical consulting services and it is for successive one year terms unless terminated. The Company shall pay Dr. Dei $16,667.67 per month. The agreement provides that, during the term and for a period of two (2) years thereafter, Dr. Dei will not provide similar consulting services to a business competing with the Company. A copy of the Medical Director Agreement is filed as Exhibit 10.4 hereto.
On May 1, 2014, the Company entered into a Medical Director Agreement with Dr. Stephen Corey. The Agreement provides that Dr. Corey is an independent contractor providing various medical consulting services and it is for successive one year terms unless terminated. The Company shall pay Dr. Corey $9,000 per month. The agreement provides that, during the term and for a period of two (2) years thereafter, Dr. Corey will not provide similar consulting services to a business competing with the Company. A copy of the Medical Director Agreement is filed as Exhibit 10.3 hereto.
On June 1, 2014, the Company entered into an Interim CFO Agreement with David Hexter as a representative of David A. Hexter, CPA, P.A. The Agreement provides that the relationship among the parties is that of an independent contractor providing various CPA services and it is for an initial 3 month term and thereafter, the term shall automatically be deemed renewed for up to three (3) sequential one month terms until terminated or the award of employment to Mr. Hexter. The Company shall pay Mr. Hexter at a rate of $150 per hour during the initial term and shall pay Mr. Hexter a monthly retainer of $15,000. During the initial term, any hours in excess of 300 (the “Excess Hours”) shall be paid in cash at the rate of $150 per hour or, at the Company's election, in fully vested stock in the Company (at $200 per hour based on the average closing price during the 5 days prior to the end of the initial term). Compensation for the Excess Hours during the initial term shall not exceed $15,000. The Company shall pay Mr. Hexter at a rate of $150 per hour during any one month renewal term and shall pay Mr. Hexter a monthly retainer of $15,000. During each renewal term, any hours in excess of 100 shall be paid in cash at the rate of $150 per hour or, at the Company's election, in fully vested stock in the Company (at $200 per hour based on the average closing price during the 5 days prior to the end of the renewal term). A copy of the Interim CFO Agreement is filed as Exhibit 10.6 hereto.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, on a post-Reverse Stock Split basis, the number of shares of common stock beneficially owned by (i) those persons or groups known to beneficially own more than 5% of the Company’s common stock, (ii) each current director and executive officer of the Company, and (iii) all the current executive officers and directors as a group. The information is set forth as of the time immediately after the Merger.
Pursuant to Rule 13d-3 under the Exchange Act, a beneficial owner of securities is a person who directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise has, or shares, voting power and/or investment power with respect to the securities, and any person who has the right to acquire beneficial ownership of the security within 60 days through any means, including the exercise of any option, warrant or right or the conversion of a security. Any shares that are not outstanding that a person has the right to acquire are deemed to be outstanding for the purpose of calculating the percentage of beneficial ownership of such person, but are not deemed to be outstanding for the purpose of calculating the percentage of beneficial ownership of any other person.
Except as otherwise indicated in the table below, the business address of each individual or entity is c/o Fuse Medical, LLC, 4770 Bryant Irvin Court, Suite 300, Fort Worth, Texas, 76107.
|
Name and Address of Beneficial Owner
|
|
Amount and Nature of Beneficial Ownership(1)
|
|
|
Percent of Class
|
|
|
Directors and Executive Officers
|
|
|
|
|
|
|
|
Robert H. Donehew
|
|
|
117,745
|
(7)
|
|
|
2.9
|
%
|
|
D. Alan Meeker
|
|
|
540,000
|
(2)
|
|
|
13.5
|
%
|
|
Jonathan Brown
|
|
|
1,206,000
|
(3)
|
|
|
30.1
|
%
|
|
Chris Pratt
|
|
|
648,000
|
(4)
|
|
|
16.2
|
%
|
|
Rusty Shelton
|
|
|
540,000
|
(5)
|
|
|
13.5
|
%
|
|
Randall Dei
|
|
|
180,000
|
(6)
|
|
|
4.5
|
%
|
|
David Hexter
|
|
|
10,461
|
|
|
|
0.3
|
%
|
|
All directors and executive officers as a group (7 people)
|
|
|
3,242,206
|
(7)
|
|
|
80.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Five Percent Stockholders
|
|
|
|
|
|
|
|
|
|
None
|
|
|
|
|
|
|
|
|
_____________
|
(1)
|
The percentage of shares beneficially owned as of the time immediately after the Merger and is based on 4,001,280 shares of common stock outstanding as of such date. Except as otherwise indicated below, the stockholders listed above possess sole voting and investment power with respect to their shares.
|
|
(2)
|
Mr. Meeker is the beneficial owner of these shares, which were issued to Axis Global, LLC. Mr. Meeker is the sole member of Axis Global, LLC.
|
|
(3)
|
Mr. Brown is the beneficial owner of these shares, which were issued to Twelve Global, LLC. Mr. Brown is the sole member of Twelve Global, LLC.
|
|
(4)
|
Dr. Pratt is the beneficial owner of these shares, which were issued to CCEP Holdings, LLC. Dr. Pratt is the sole member of CCEP Holdings, LLC.
|
|
(5)
|
Mr. Shelton is the beneficial owner of these shares, which were issued to ReSurge Hospitals, Inc. Mr. Shelton is the sole stockholder of ReSurge Hospitals, Inc.
|
|
(6)
|
Dr. Dei is the beneficial owner of these shares, which were issued to TJAL Holdings, LLC. Dr. Dei is the sole member of TJAL Holdings, LLC.
|
|
(7)
|
Includes, on a post-Reverse Stock Split basis, 14,706 shares of common stock issuable upon exercise of exercisable options.
|
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Commencing January 1, 2013 through January 31, 2014, Fuse occupied office space on a month-to-month basis for its corporate headquarters for $500 a month from Crestview Farm, an entity controlled by the Company’s Chief Executive Officer (“CEO”). The Company’s CEO serves as the Manager of Crestview Farm. Rent expense for these facilities was $4,000 and $0 for the year ended August 31, 2013 and for the period from July 18, 2012 (Inception) to August 31, 2012, respectively. Rent expense for these facilities was $3,000 and $1,000 for the six months ended February 28, 2014 and 2013, respectively.
During the six months ended February 28, 2014, the Company had aggregate outstanding receivables of $ 45,431.58 to Blue Farm, LP (in the amount of $770.25), Green Farm, LP (in the amount of $909.37) and Farms Operating, LLC (in the amount of $43,751.96). The following related parties each have indirect ownership interests in the entities: Jonathan Brown, a Vice President of the Company (who has an approximate interest of $7,407.60 in the transaction), Rusty Shelton, the Chief Development Officer of the Company (who has an approximate interest of $7,407.60 in the transaction), Chris Pratt, Chief Medical Officer and Director of the Company (who has an approximate interest of $59.25 in the transaction), Randall Dei, Medical Director of Podiatry and Director of the Company (who has an approximate interest of $53.69 in the transaction) and Robert H. Donehew, Director of the Company (who has an approximate interest of $10.76 in the transaction). Further, Crestview Farm Aiken LLC, which has ownership interests in the aforementioned entities, is managed by D. Alan Meeker, the Chief Executive Officer and President of the Company. The advances are unsecured, non-interest bearing and are due on demand. The balance due from the three entities was $ 45,431.58 as of February 28, 2014.
The Company has secured capital through multiple borrowings. As of August 25, 2014, the aggregate amounts payable are $317,305 to JAR Financing, LLC, and $466,933 to Cooks Bridge, LLC. The dates and amounts of each individual borrowing are as follows:
|
Note
|
Maturity
Date
|
|
Amount
|
|
|
|
|
|
|
|
|
|
JAR Financing, LLC
|
12/31/2015
|
|
$
|
60,000
|
|
|
Cooks Bridge, LLC
|
01/15/2016
|
|
$
|
131,024
|
|
|
Cooks Bridge, LLC
|
01/31/2016
|
|
$
|
116,777
|
|
|
JAR Financing, LLC
|
02/09/2016
|
|
$
|
193,535
|
|
|
JAR Financing, LLC
|
03/04/2016
|
|
$
|
63,770
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cooks Bridge, LLC
|
03/04/2016
|
|
$
|
87,670
|
|
|
Cooks Bridge, LLC
|
05/08/2016
|
|
$
|
75,000
|
|
|
Cooks Bridge, LLC
|
06/16/2016
|
|
$
|
56,462
|
|
|
Total notes payable as of August 25, 2014
|
|
|
$
|
784,238
|
|
The term of each borrowing is for twenty-four (24) months from the date of each note. The notes are unsecured, bear interest at 7.0% and require 18 monthly payments of interest only commencing at the beginning of month seven. The first six months of interest is deferred until maturity. The outstanding principal balance along with all accrued and unpaid interest is due at maturity.
Copies of the foregoing notes are filed as Exhibits 10.9 – 10.20 hereto.
In addition, the Company expects Cooks Bridge , LLC to assist in the funding of its working capital and growth needs in the future.
In addition to the financings described above, as of February 28, 2014, $25,431 was owed to JAR Financing, LLC for reimbursement expenses that the Company agreed to pay JAR Financing, LLC in connection with the Company's business development efforts. JAR Financing, LLC has three equal one-third interest members, Crestview Farm Aiken LLC, Twelve Global LLC and ReSurge Hospitals Inc. Crestview Farm Aiken LLC is managed by D. Alan Meeker, the Chief Executive Officer and President of the Company, Twelve Global LLC is wholly-owned by Jonathan Brown, a Vice President of the Company, and ReSurge Hospitals Inc. is wholly-owned by Rusty Shelton, the Chief Development Officer of the Company. Mr. Brown and Mr. Shelton each had an approximate interest of $8,477 in the transaction. As of February 28, 2014, $ 342,736 was the largest aggregate amount of principal outstanding owed to JAR Financing, LLC (consisting of the $25,431 plus the aggregate amount of $317,305 in financing described in the table above). No interest on the $25,431 was charged and this amount was paid in full by Fuse on April 16, 2014. The $25,431 is included in accounts payable – related parties on the accompanying condensed combined balance sheet.
Management and Ownership of Cooks Bridge, LLC
Cooks Bridge, LLC is managed by Jonathan Brown, Vice President of the Company, and Rusty Shelton, the Chief Development Officer of the Company.
Twelve Global, LLC, a member of Cooks Bridge, LLC, owns 30.1% of the Company and Jonathan Brown, a Vice President of the Company, is sole member of Twelve Global, LLC.
Resurge Hospitals, Inc., a member of Cooks Bridge, LLC, owns 13.5% of the Company. Rusty Shelton, the Chief Development Officer of the Company, is the sole stockholder of Resurge Hospitals, Inc.
CCEP Holdings LLC, a member of Cooks Bridge, LLC, owns 16.2% of the Company. Dr. Chris Pratt, the Chief Medical Director of the Company, is the sole member of CCEP Holdings LLC.
TJAL Holdings, LLC, a member of Cooks Bridge, LLC, owns 4.5% of the Company. Dr. Randall Dei is the sole member of TJAL Holdings, LLC and is the Medical Director of Podiatry of the Company.
Coastal IP, LLC, a member of Cooks Bridge, LLC, owns 4.5% of the Company. Dr. Erik Nilssen is the sole member of Coastal IP, LLC and is a Medical Director of the Company.
Lion Share LLC, a member of Cooks Bridge, LLC, owns 1.8% of the Company. Dr. Steve Corey is the sole member of Lion Share LLC and is a Medical Director of the Company.
Robert Donehew, the former Chief Executive Officer of the Company, is the sole member of Trebor Opportunities LLC. Trebor Opportunities LLC is a member of Cooks Bridge, LLC. Mr. Donehew owns 2.9% of the Company.
Management and Ownership of JAR Financing, LLC
JAR Financing, LLC is managed by Alan Meeker, the Chief Executive Officer and President of the Company, Jonathan Brown, a Vice President of the Company, and Rusty Shelton, the Chief Development Officer of the Company. Mr. Meeker is the sole member of Axis Global, LLC, which owns 13.5% of the Company. Mr. Meeker does not own any membership interest in JAR Financing, LLC. Mr. Meeker is the manager of Crestview Farm Aiken, LLC, which owns a membership interest in JAR Financing, LLC. Mr. Meeker does not own a membership interest in JAR Financing, LLC.
Twelve Global, LLC is a member of JAR Financing, LLC and owns 30.1% of the Company. Jonathan Brown, a Vice President of the Company, is the sole member of Twelve Global, LLC.
Resurge Hospitals, Inc., a member of JAR Financing, LLC, owns 13.5% of the Company. Rusty Shelton, the Chief Development Officer of the Company, is the sole stockholder of Resurge Hospitals, Inc.
Arrangements with Executive Officers and Directors
The disclosures set forth in Item 2.01 of this Current Report under the section “Consultant and Independent Contractor Agreements” regarding Dr. Randall L. Dei and David Hexter are incorporated herein by reference.
DESCRIPTION OF CAPITAL STOCK
Common Stock
Our certificate of incorporation authorizes the issuance of up to 500,000,000 shares of common stock. The holders of our common stock are entitled to one vote per share. Our certificate of incorporation does not provide for cumulative voting. The holders of our common stock are entitled to receive ratably such dividends, if any, as may be declared by our board of directors out of legally available funds. However, the current policy of our board of directors is to retain earnings, if any, for our operation and expansion. Upon our liquidation, dissolution or winding-up, the holders of our common stock are entitled to share ratably in all of our assets which are legally available for distribution, after payment of or provision for all liabilities and the preferences of any then outstanding shares of preferred stock. The holders of our common stock have no preemptive, subscription, redemption or conversion rights. All issued and outstanding shares of our common stock are fully-paid and non-assessable.
Preferred Stock
Our certificate of incorporation authorizes the issuance of up to 20,000,000 shares of “blank check” preferred stock with designations, rights and preferences as may be determined from time to time by our board of directors. We have not designated or issued any shares of our preferred stock to date.
Registration Rights
The disclosures set forth in Item 1.01 of this Current Report under the heading “Registration Rights Agreement” are incorporated herein by reference.
Lock-up Agreements
The disclosures set forth in Item 1.01 of this Current Report under the heading “Lock-Up Agreement” are incorporated herein by reference.
MARKET PRICE OF OUR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Trading Information
Our common stock will trade in the over-the-counter market and will be quoted on the Over the Counter Bulletin Board (“OTCBB”) under the trading symbol TEEE until such time as we have received a new symbol. The trading market for our common stock has been extremely limited and sporadic.
Below is a table indicating the range of high and low bid information for the common stock as reported by the OTCBB for the periods listed. Bid prices represent prices between broker-dealers and do not include retail mark-ups and mark-downs or any commission to broker-dealers. In addition, these prices do not necessarily reflect actual transactions.
|
|
|
High
|
|
|
Low
|
|
|
Fiscal 2014
|
|
|
|
|
|
|
|
First Quarter
|
|
$
|
2.92
|
|
|
$
|
0.51
|
|
|
Second Quarter
|
|
|
1.56
|
|
|
|
0.44
|
|
|
Third Quarter
|
|
|
1.75
|
|
|
|
0.87
|
|
|
Fourth Quarter*
|
|
|
3.20
|
|
|
|
1.00
|
|
|
Fiscal 2013
|
|
|
|
|
|
|
|
|
|
First Quarter
|
|
$
|
1.32
|
|
|
$
|
0.44
|
|
|
Second Quarter
|
|
|
1.46
|
|
|
|
0.44
|
|
|
Third Quarter
|
|
|
1.45
|
|
|
|
0.72
|
|
|
Fourth Quarter
|
|
|
2.19
|
|
|
|
0.66
|
|
|
Fiscal 2012
|
|
|
|
|
|
|
|
|
|
First Quarter
|
|
$
|
1.17
|
|
|
$
|
0.44
|
|
|
Second Quarter
|
|
|
1.54
|
|
|
|
0.37
|
|
|
Third Quarter
|
|
|
1.39
|
|
|
|
0.88
|
|
|
Fourth Quarter
|
|
|
1.75
|
|
|
|
0.35
|
|
____________
|
*
|
Through August 25, 2014.
|
Transfer Agent
Our current transfer agent and registrar for our common stock is American Stock Transfer & Trust Company, LLC.
Holders of Record
As of August 25, 2014, there were 1,892 holders of record of the Company’s common stock.
Dividends
We have not paid any dividends on our common stock and we do not intend to pay any dividends on our common stock in the foreseeable future.
Indemnification of Directors and Officers
Our certificate of incorporation and by-laws contains certain provisions permitted under the Delaware General Corporation Law relating to the liability of directors. The provisions eliminate a director’s liability for monetary damages for a breach of fiduciary duty, except in certain circumstances where such liability may not be eliminated under applicable law. Further, the Company’s certificate of incorporation and by-laws contain provisions to indemnify the Company’s directors and officers to the fullest extent permitted by the Delaware General Corporation Law.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling us pursuant to the foregoing provisions, or otherwise, we have been advised that in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable.
Item 3.02 Unregistered Sales of Equity Securities.
The disclosures set forth in Item 1.01 of this Current Report under the heading “Agreement and Plan of Merger” and in Item 2.01 of this Current Report for the description of the Merger and issuance of the Merger Consideration, which is incorporated herein by reference.
Prior to the Merger, the individual physicians that owned partnership interests in Fuse Medical V, LP and Fuse Medical VI, LP agreed to exchange their interests, effective on the day immediately prior to the effective date of the Merger, to corresponding interests in Fuse, each becoming one of the Holders. Accordingly, in the Amended and Restated Agreement dated November 27, 2013 by and among Fuse, KAW Holdings, LLC (“KAW”), Dr. Richard Adams, Dr. Scott King, and Dr. David Wanner, KAW was granted a 3.1388% membership interest in Fuse in exchange for KAW’s interest in Fuse Medical V, LP. In the Amended and Restated Agreement dated November 27, 2013 by and among Fuse and Eva Lou Holding, LLC (“ELH”), ELH was granted a 0.1732% membership interest in Fuse in exchange for ELH’s interest in Fuse Medical VI, LP. KAW and ELH were accredited investors and the transactions were carried out pursuant to Section 4(2) of the Securities Act and Rule 506 of Regulation D of the Securities Act and, accordingly, were exempt from registration.
The foregoing description of the agreements documenting the exchange of partnership interests for membership interests are filed as Exhibits 4.1 and 4.2 hereto.
The following is a list of member contributions made in consideration for equity interests in Fuse.
On July 18, 2012, Twelve Global, LLC was issued, as of the purchase date, a 50.0% membership interest in Fuse in exchange for $3,350.00. Fuse issued the membership interest pursuant to the registration exemptions of the Securities Act afforded under Section 4(2) thereunder. Fuse relied upon representations from the investor that they were “accredited investors” within the meaning of Rule 501(a) under the Securities Act as a basis for the exemptions.
On July 18, 2012, MJB International, LLC was issued, as of the purchase date, a 50.0% membership interest in Fuse in exchange for $3,350.00. Fuse issued the membership interest pursuant to the registration exemptions of the Securities Act afforded under Section 4(2) thereunder. Fuse relied upon representations from the investor that they were “accredited investors” within the meaning of Rule 501(a) under the Securities Act as a basis for the exemptions.
On August 26, 2012, CCEP Holdings, LLC was issued, as of the purchase date, an 18.0% membership interest in Fuse in exchange for $1,800.00. Fuse issued the membership interest pursuant to the registration exemptions of the Securities Act afforded under Section 4(2) thereunder. Fuse relied upon representations from the investor that they were “accredited investors” within the meaning of Rule 501(a) under the Securities Act as a basis for the exemptions.
On August 27, 2012, Axis Global, LLC was issued, as of the purchase date, a 15.0% membership interest in Fuse in exchange for $1,500.00. Fuse issued the membership interest pursuant to the registration exemptions of the Securities Act afforded under Section 4(2) thereunder. Fuse relied upon representations from the investor that they were “accredited investors” within the meaning of Rule 501(a) under the Securities Act as a basis for the exemptions.
On November 27, 2012, ReSurge Hospitals, Inc. was issued, as of the purchase date, a 15.0% membership interest in Fuse in exchange for $1,500.00. Fuse issued the membership interest pursuant to the registration exemptions of the Securities Act afforded under Section 4(2) thereunder. Fuse relied upon representations from the investor that they were “accredited investors” within the meaning of Rule 501(a) under the Securities Act as a basis for the exemptions.
On January 4, 2013, Coastal IP, LLC was issued, as of the purchase date, a 5.0% membership interest in Fuse in exchange for $100.00. Coastal IP, LLC was an accredited investor and Fuse issued the membership interest pursuant to the registration exemptions of the Securities Act afforded under Section 4(2) thereunder. Fuse relied upon representations from the investor that they were “accredited investors” within the meaning of Rule 501(a) under the Securities Act as a basis for the exemptions.
On February 7, 2013, TJAL Holdings, LLC was issued, as of the purchase date, a 5.0% membership interest in Fuse in exchange for $100.00. Fuse issued the membership interest pursuant to the registration exemptions of the Securities Act afforded under Section 4(2) thereunder. Fuse relied upon representations from the investor that they were “accredited investors” within the meaning of Rule 501(a) under the Securities Act as a basis for the exemptions.
On April 24, 2013, Lion Share, LLC was issued, as of the purchase date, a 2.0% membership interest in Fuse in exchange for $100.00. Fuse issued the membership interest pursuant to the registration exemptions of the Securities Act afforded under Section 4(2) thereunder. Fuse relied upon representations from the investor that they were “accredited investors” within the meaning of Rule 501(a) under the Securities Act as a basis for the exemptions.
On August 9, 2013, KT Medical Management, LLC was issued, as of the purchase date, a 0.25% membership interest in Fuse in exchange for $100.00 and 38 hours of general consulting services. Fuse issued the membership interest pursuant to the registration exemptions of the Securities Act afforded under Section 4(2) thereunder. Fuse relied upon representations from the investor that they were “accredited investors” within the meaning of Rule 501(a) under the Securities Act as a basis for the exemptions.
On August 16, 2013, McMurry Ankle & Foot Care, Inc. was issued, as of the purchase date, a 0.25% membership interest in Fuse in exchange for $100.00 and 38 hours of general consulting services. Fuse issued the membership interest pursuant to the registration exemptions of the Securities Act afforded under Section 4(2) thereunder. Fuse relied upon representations from the investor that they were “accredited investors” within the meaning of Rule 501(a) under the Securities Act as a basis for the exemptions.
On August 20, 2013, Chris Lotufo was issued, as of the purchase date, a 0.25% membership interest in Fuse in exchange for $100.00 and 38 hours of general consulting services. Fuse issued the membership interest pursuant to the registration exemptions of the Securities Act afforded under Section 4(2) thereunder. Fuse relied upon representations from the investor that they were “accredited investors” within the meaning of Rule 501(a) under the Securities Act as a basis for the exemptions.
On August 21, 2013, Jeff DeSantis was issued, as of the purchase date, a 0.25% membership interest in Fuse in exchange for $100.00 and 38 hours of general consulting services. Fuse issued the membership interest pursuant to the registration exemptions of the Securities Act afforded under Section 4(2) thereunder. Fuse relied upon representations from the investor that they were “accredited investors” within the meaning of Rule 501(a) under the Securities Act as a basis for the exemptions.
On September 12, 2013, James Clancy was issued, as of the purchase date, a 0.25% membership interest in Fuse in exchange for $100.00 and 38 hours of general consulting services. Fuse issued the membership interest pursuant to the registration exemptions of the Securities Act afforded under Section 4(2) thereunder. Fuse relied upon representations from the investor that they were “accredited investors” within the meaning of Rule 501(a) under the Securities Act as a basis for the exemptions.
On September 12, 2013, Sorex Enterprises, LLC was issued, as of the purchase date, a 0.025% membership interest in Fuse in exchange for $100.00 and 5 hours of general consulting services. Fuse issued the membership interest pursuant to the registration exemptions of the Securities Act afforded under Section 4(2) thereunder. Fuse relied upon representations from the investor that they were “accredited investors” within the meaning of Rule 501(a) under the Securities Act as a basis for the exemptions.
On September 13, 2013, Paul Stone was issued, as of the purchase date, a 0.025% membership interest in Fuse in exchange for $100.00 and 5 hours of general consulting services. Fuse issued the membership interest pursuant to the registration exemptions of the Securities Act afforded under Section 4(2) thereunder. Fuse relied upon representations from the investor that they were “accredited investors” within the meaning of Rule 501(a) under the Securities Act as a basis for the exemptions.
On September 13, 2013, Rams World, LLC was issued, as of the purchase date, a 0.025% membership interest in Fuse in exchange for $100.00 and 5 hours of general consulting services. Fuse issued the membership interest pursuant to the registration exemptions of the Securities Act afforded under Section 4(2) thereunder. Fuse relied upon representations from the investor that they were “accredited investors” within the meaning of Rule 501(a) under the Securities Act as a basis for the exemptions.
On September 13, 2013, Michael Downey was issued, as of the purchase date, a 0.025% membership interest in Fuse in exchange for $100.00 and 5 hours of general consulting services. Fuse issued the membership interest pursuant to the registration exemptions of the Securities Act afforded under Section 4(2) thereunder. Fuse relied upon representations from the investor that they were “accredited investors” within the meaning of Rule 501(a) under the Securities Act as a basis for the exemptions.
On September 16, 2013, Byron Hutchinson was issued, as of the purchase date, a 0.25% membership interest in Fuse in exchange for $100.00 and 38 hours of general consulting services. Fuse issued the membership interest pursuant to the registration exemptions of the Securities Act afforded under Section 4(2) thereunder. Fuse relied upon representations from the investor that they were “accredited investors” within the meaning of Rule 501(a) under the Securities Act as a basis for the exemptions.
On September 19, 2013, Tyconic Enterprises, LLC was issued, as of the purchase date, a 0.001% membership interest in Fuse in exchange for $100.00 and 3 hours of general consulting services. Fuse issued the membership interest pursuant to the registration exemptions of the Securities Act afforded under Section 4(2) thereunder. Fuse relied upon representations from the investor that they were “accredited investors” within the meaning of Rule 501(a) under the Securities Act as a basis for the exemptions.
On September 19, 2013, David Wanner was issued, as of the purchase date, a 0.001% membership interest in Fuse in exchange for $100.00 and 3 hours of general consulting services. Fuse issued the membership interest pursuant to the registration exemptions of the Securities Act afforded under Section 4(2) thereunder. Fuse relied upon representations from the investor that they were “accredited investors” within the meaning of Rule 501(a) under the Securities Act as a basis for the exemptions.
On October 3, 2013, Steven Spinner was issued, as of the purchase date, a 0.25% membership interest in Fuse in exchange for $100.00 and 38 hours of general consulting services. Fuse issued the membership interest pursuant to the registration exemptions of the Securities Act afforded under Section 4(2) thereunder. Fuse relied upon representations from the investor that they were “accredited investors” within the meaning of Rule 501(a) under the Securities Act as a basis for the exemptions.
On October 3, 2013, Richard Adams was issued, as of the purchase date, a 0.025% membership interest in Fuse in exchange for $100.00 and 5 hours of general consulting services. Fuse issued the membership interest pursuant to the registration exemptions of the Securities Act afforded under Section 4(2) thereunder. Fuse relied upon representations from the investor that they were “accredited investors” within the meaning of Rule 501(a) under the Securities Act as a basis for the exemptions.
On October 3, 2013, Craig Camasta was issued, as of the purchase date, a 0.025% membership interest in Fuse in exchange for $100.00 and 5 hours of general consulting services. Fuse issued the membership interest pursuant to the registration exemptions of the Securities Act afforded under Section 4(2) thereunder. Fuse relied upon representations from the investor that they were “accredited investors” within the meaning of Rule 501(a) under the Securities Act as a basis for the exemptions.
On October 3, 2013, John Krebsbach was issued, as of the purchase date, a 0.001% membership interest in Fuse in exchange for $100.00 and 3 hours of general consulting services. Fuse issued the membership interest pursuant to the registration exemptions of the Securities Act afforded under Section 4(2) thereunder. Fuse relied upon representations from the investor that they were “accredited investors” within the meaning of Rule 501(a) under the Securities Act as a basis for the exemptions.
On October 3, 2013, Adam Perler was issued, as of the purchase date, a 0.025% membership interest in Fuse in exchange for $100.00 and 5 hours of general consulting services. Fuse issued the membership interest pursuant to the registration exemptions of the Securities Act afforded under Section 4(2) thereunder. Fuse relied upon representations from the investor that they were “accredited investors” within the meaning of Rule 501(a) under the Securities Act as a basis for the exemptions.
On October 3, 2013, Joseph Menn was issued, as of the purchase date, a 0.025% membership interest in Fuse in exchange for $100.00 and 5 hours of general consulting services. Fuse issued the membership interest pursuant to the registration exemptions of the Securities Act afforded under Section 4(2) thereunder. Fuse relied upon representations from the investor that they were “accredited investors” within the meaning of Rule 501(a) under the Securities Act as a basis for the exemptions.
On October 3, 2013, Complete Wound Solutions, PLLC was issued, as of the purchase date, a 0.025% membership interest in Fuse in exchange for $100.00 and 5 hours of general consulting services. Fuse issued the membership interest pursuant to the registration exemptions of the Securities Act afforded under Section 4(2) thereunder. Fuse relied upon representations from the investor that they were “accredited investors” within the meaning of Rule 501(a) under the Securities Act as a basis for the exemptions.
On October 4, 2013, Scott King was issued, as of the purchase date, a 0.001% membership interest in Fuse in exchange for $100.00 and 3 hours of general consulting services. Fuse issued the membership interest pursuant to the registration exemptions of the Securities Act afforded under Section 4(2) thereunder. Fuse relied upon representations from the investor that they were “accredited investors” within the meaning of Rule 501(a) under the Securities Act as a basis for the exemptions.
On October 7, 2013, Infinity Surgical Specialist, LLC was issued, as of the purchase date, a 0.025% membership interest in Fuse in exchange for $100.00 and 5 hours of general consulting services. Fuse issued the membership interest pursuant to the registration exemptions of the Securities Act afforded under Section 4(2) thereunder. Fuse relied upon representations from the investor that they were “accredited investors” within the meaning of Rule 501(a) under the Securities Act as a basis for the exemptions.
On October 7, 2013, Brett Sachs was issued, as of the purchase date, a 0.025% membership interest in Fuse in exchange for $100.00 and 5 hours of general consulting services. Fuse issued the membership interest pursuant to the registration exemptions of the Securities Act afforded under Section 4(2) thereunder. Fuse relied upon representations from the investor that they were “accredited investors” within the meaning of Rule 501(a) under the Securities Act as a basis for the exemptions.
On October 7, 2013, Richard Derner was issued, as of the purchase date, a 0.025% membership interest in Fuse in exchange for $100.00 and 5 hours of general consulting services. Fuse issued the membership interest pursuant to the registration exemptions of the Securities Act afforded under Section 4(2) thereunder. Fuse relied upon representations from the investor that they were “accredited investors” within the meaning of Rule 501(a) under the Securities Act as a basis for the exemptions.
On October 9, 2013, Stephen Geller was issued, as of the purchase date, a 0.001% membership interest in Fuse in exchange for $100.00 and 3 hours of general consulting services. Fuse issued the membership interest pursuant to the registration exemptions of the Securities Act afforded under Section 4(2) thereunder. Fuse relied upon representations from the investor that they were “accredited investors” within the meaning of Rule 501(a) under the Securities Act as a basis for the exemptions.
On October 14, 2013, Ira Kraus was issued, as of the purchase date, a 0.025% membership interest in Fuse in exchange for $100.00 and 5 hours of general consulting services. Fuse issued the membership interest pursuant to the registration exemptions of the Securities Act afforded under Section 4(2) thereunder. Fuse relied upon representations from the investor that they were “accredited investors” within the meaning of Rule 501(a) under the Securities Act as a basis for the exemptions.
On October 15, 2013, Nickleophia, LLC was issued, as of the purchase date, a 0.25% membership interest in Fuse in exchange for $100.00 and 38 hours of general consulting services. Fuse issued the membership interest pursuant to the registration exemptions of the Securities Act afforded under Section 4(2) thereunder. Fuse relied upon representations from the investor that they were “accredited investors” within the meaning of Rule 501(a) under the Securities Act as a basis for the exemptions.
On October 15, 2013, Mario Ponticello was issued, as of the purchase date, a 0.025% membership interest in Fuse in exchange for $100.00 and 5 hours of general consulting services. Fuse issued the membership interest pursuant to the registration exemptions of the Securities Act afforded under Section 4(2) thereunder. Fuse relied upon representations from the investor that they were “accredited investors” within the meaning of Rule 501(a) under the Securities Act as a basis for the exemptions.
On October 15, 2013, Scott Malay was issued, as of the purchase date, a 0.025% membership interest in Fuse in exchange for $100.00 and 5 hours of general consulting services. Fuse issued the membership interest pursuant to the registration exemptions of the Securities Act afforded under Section 4(2) thereunder. Fuse relied upon representations from the investor that they were “accredited investors” within the meaning of Rule 501(a) under the Securities Act as a basis for the exemptions.
On October 15, 2013, Infinity Surgical Specialist, LLC was issued, as of the purchase date, a 0.001% membership interest in Fuse in exchange for $100.00 and 3 hours of general consulting services. Fuse issued the membership interest pursuant to the registration exemptions of the Securities Act afforded under Section 4(2) thereunder. Fuse relied upon representations from the investor that they were “accredited investors” within the meaning of Rule 501(a) under the Securities Act as a basis for the exemptions.
On October 15, 2013, Chad Michael Nunamaker was issued, as of the purchase date, a 0.001% membership interest in Fuse in exchange for $100.00 and 3 hours of general consulting services. Fuse issued the membership interest pursuant to the registration exemptions of the Securities Act afforded under Section 4(2) thereunder. Fuse relied upon representations from the investor that they were “accredited investors” within the meaning of Rule 501(a) under the Securities Act as a basis for the exemptions.
On October 15, 2013, Andrew Rader was issued, as of the purchase date, a 0.001% membership interest in Fuse in exchange for $100.00 and 3 hours of general consulting services. Fuse issued the membership interest pursuant to the registration exemptions of the Securities Act afforded under Section 4(2) thereunder. Fuse relied upon representations from the investor that they were “accredited investors” within the meaning of Rule 501(a) under the Securities Act as a basis for the exemptions.
On October 18, 2013, K. Paul Flanigan was issued, as of the purchase date, a 0.25% membership interest in Fuse in exchange for $100.00 and 38 hours of general consulting services. Fuse issued the membership interest pursuant to the registration exemptions of the Securities Act afforded under Section 4(2) thereunder. Fuse relied upon representations from the investor that they were “accredited investors” within the meaning of Rule 501(a) under the Securities Act as a basis for the exemptions.
On October 19, 2013, Timothy Harlan was issued, as of the purchase date, a 0.001% membership interest in Fuse in exchange for $100.00 and 3 hours of general consulting services. Fuse issued the membership interest pursuant to the registration exemptions of the Securities Act afforded under Section 4(2) thereunder. Fuse relied upon representations from the investor that they were “accredited investors” within the meaning of Rule 501(a) under the Securities Act as a basis for the exemptions.
On October 28, 2013, Steven Waldman was issued, as of the purchase date, a 0.001% membership interest in Fuse in exchange for $100.00 and 3 hours of general consulting services. Fuse issued the membership interest pursuant to the registration exemptions of the Securities Act afforded under Section 4(2) thereunder. Fuse relied upon representations from the investor that they were “accredited investors” within the meaning of Rule 501(a) under the Securities Act as a basis for the exemptions.
On October 28, 2013, Christopher Milkie was issued, as of the purchase date, a 0.001% membership interest in Fuse in exchange for $100.00 and 3 hours of general consulting services. Fuse issued the membership interest pursuant to the registration exemptions of the Securities Act afforded under Section 4(2) thereunder. Fuse relied upon representations from the investor that they were “accredited investors” within the meaning of Rule 501(a) under the Securities Act as a basis for the exemptions.
On October 31, 2013, Steven Pesenko was issued, as of the purchase date, a 0.025% membership interest in Fuse in exchange for $100.00 and 5 hours of general consulting services. Fuse issued the membership interest pursuant to the registration exemptions of the Securities Act afforded under Section 4(2) thereunder. Fuse relied upon representations from the investor that they were “accredited investors” within the meaning of Rule 501(a) under the Securities Act as a basis for the exemptions.
On November 1, 2013, William Dabdoub was issued, as of the purchase date, a 0.25% membership interest in Fuse in exchange for $100.00 and 38 hours of general consulting services. Fuse issued the membership interest pursuant to the registration exemptions of the Securities Act afforded under Section 4(2) thereunder. Fuse relied upon representations from the investor that they were “accredited investors” within the meaning of Rule 501(a) under the Securities Act as a basis for the exemptions.
On November 4, 2013, Pegasus Holding, LLC was issued, as of the purchase date, a 0.25% membership interest in Fuse in exchange for $100.00 and 38 hours of general consulting services. Fuse issued the membership interest pursuant to the registration exemptions of the Securities Act afforded under Section 4(2) thereunder. Fuse relied upon representations from the investor that they were “accredited investors” within the meaning of Rule 501(a) under the Securities Act as a basis for the exemptions.
On November 5, 2013, Pasquale Cancelliere was issued, as of the purchase date, a 0.001% membership interest in Fuse in exchange for $100.00 and 3 hours of general consulting services. Fuse issued the membership interest pursuant to the registration exemptions of the Securities Act afforded under Section 4(2) thereunder. Fuse relied upon representations from the investor that they were “accredited investors” within the meaning of Rule 501(a) under the Securities Act as a basis for the exemptions.
On November 5, 2013, Robert Schulte was issued, as of the purchase date, a 0.001% membership interest in Fuse in exchange for $100.00 and 3 hours of general consulting services. Fuse issued the membership interest pursuant to the registration exemptions of the Securities Act afforded under Section 4(2) thereunder. Fuse relied upon representations from the investor that they were “accredited investors” within the meaning of Rule 501(a) under the Securities Act as a basis for the exemptions.
On November 8, 2013, Frank Tursi was issued, as of the purchase date, a 0.025% membership interest in Fuse in exchange for $100.00 and 5 hours of general consulting services. Fuse issued the membership interest pursuant to the registration exemptions of the Securities Act afforded under Section 4(2) thereunder. Fuse relied upon representations from the investor that they were “accredited investors” within the meaning of Rule 501(a) under the Securities Act as a basis for the exemptions.
Item 3.03 Material Modification of Rights of Security Holders.
The disclosures made above in Items 1.01 and 2.01 of this Current Report are incorporated herein by reference in their entirety.
Item 5.01 Changes in Control of Registrant.
The disclosures made in Items 1.01 and 2.01 of this Current Report are incorporated herein by reference.
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
Mr. Brown resigned as President and Chief Operating Officer on July 30, 2014 and was appointed to the position of Vice President of New Products. Effective July 30, 2014, Mr. Meeker now serves as the Chairman of the Board, Chief Executive Officer and President. Mr. Meeker will not receive any additional compensation.
The disclosures made above in Items 1.01 and 2.01 of this Current Report are incorporated herein by reference in their entirety.
Item 5.03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.
Prior to the closing of the Merger, Golf Rounds amended its Certificate of Incorporation for the purpose of, (i) changing its name from “Golf Rounds.com, Inc.” to “Fuse Medical, Inc.”, (ii) increasing Golf Rounds' authorized capital stock from 12,000,000 shares of common stock to 500,000,000 shares of common stock and from zero shares of preferred stock to 20,000,000 shares of preferred stock, and expressly authorizing the board of directors of Golf Rounds to issue shares of the preferred stock, in one or more series, and to fix for each such series the voting powers, designations, preferences, or other special rights and the qualifications, limitations or restrictions; and (iii) effecting the Reverse Stock Split. Golf Rounds’ board of directors approved the amendment to the Certificate of Incorporation on May 28, 2014, and as described under Item 5.07 of this Current Report, stockholders holding a majority of the then outstanding shares of Golf Rounds’ common stock approved the amendment to the Certificate of Incorporation on December 18, 2013. The Certificate of Amendment to Certificate of Incorporation became effective on May 28, 2014 and is filed as Exhibit 3.1 to the Form 8-K filed on May 29, 2014.
Item 5.06 Change in Shell Company Status.
Prior to the Merger, we were a “shell company” (as such term is defined in Rule 12b-2 under the Exchange Act). As a result of the Merger described in Items 1.01 and 2.01 above, which are hereby incorporated by reference into this Item 5.06, we have ceased to be a shell company.
Item 5.07 Submission of Matters to a Vote of Security Holders.
On December 18, 2013, as previously described in the Current Report on Form 8-K filed by Golf Rounds on December 20, 2013, Golf Rounds obtained the written consent in lieu of a meeting of stockholders from the holders of a majority of the Company ’ s outstanding common stock approving, effective immediately prior to the consummation of the Merger, to amend Golf Rounds ’ certificate of incorporation in order to do each of the following:
|
·
|
to change the name of Golf Rounds from “Golf Rounds.com, Inc.” to “Fuse Medical, Inc.”;
|
|
·
|
to increase Golf Rounds’ authorized capital stock from 12,000,000 shares, with all such shares authorized as common stock, par value $0.01 per share, to 520,000,000 shares, with 500,000,000 of such shares authorized as common stock, par value $0.01 per share, and 20,000,000 of such shares authorized as “blank check” preferred stock, par value $0.01 per share, with the board of directors of Golf Rounds expressly authorized to issue shares of such preferred stock, in one or more series, and to fix for each such series the voting powers, designations, preferences, or other special rights thereof and the qualifications, limitations or restrictions thereon; and
|
|
·
|
to effect the Reverse Stock Split, whereby each 14.62 shares of the common stock issued and outstanding or held in the treasury (if any) immediately prior to Merger were automatically reclassified and combined, without further action, into one validly issued, fully paid and non-assessable share of common stock, subject to the treatment of fractional share interests as described therein.
|
Golf Rounds’ Certificate of Amendment to Certificate of Incorporation is filed as Exhibit 3.1 to the Form 8-K filed on May 29, 2014.
Item 9.01 Financial Statements and Exhibits.
(a) Financial statements of business acquired.
In accordance with Item 9.01(a), Fuse’s audited combined financial statements for the year ended August 31, 2013 and for the period from July 18, 2012 (inception) through August 31, 2012, and Fuse’s unaudited condensed combined financial statements for the three and six months ended February 28, 2014 and 2013 are included in this Current Report beginning on Page F-1.
(b) Pro forma financial information.
In accordance with Item 9.01(b), the following unaudited pro forma financial information with respect to the Merger with Fuse reported in Item 2.01 of this Current Report is furnished as Exhibit 99.3.
|
·
|
Unaudited Pro Forma Combined Balance Sheet as of February 28, 2014
|
|
·
|
Unaudited Pro Forma Combined Statement of Operations for the year ended August 31, 2013
|
|
·
|
Unaudited Pro Forma Combined Statement of Operations for the six months ended February 28, 2014
|
|
|
|
|
·
|
Notes to the Unaudited Pro Forma Combined Financial Statements
|
(c) Exhibits.
In reviewing the agreements included or incorporated by reference as exhibits to this Current Report, please remember that they are included to provide you with information regarding their terms and are not intended to provide any other factual or disclosure information about the Company or the other parties to the agreements. The agreements may contain representations and warranties by each of the parties to the applicable agreement. These representations and warranties have been made solely for the benefit of the parties to the applicable agreement and:
|
●
|
should not in all instances be treated as categorical statements of fact, but rather as a way of allocating the risk to one of the parties if those statements prove to be inaccurate;
|
|
●
|
have been qualified by disclosures that were made to the other party in connection with the negotiation of the applicable agreement, which disclosures are not necessarily reflected in the agreement;
|
|
●
|
may apply standards of materiality in a way that is different from what may be viewed as material to you or other investors; and
|
|
●
|
were made only as of the date of the applicable agreement or such other date or dates as may be specified in the agreement and are subject to more recent developments.
|
Accordingly, these representations and warranties may not describe the actual state of affairs as of the date they were made or at any other time. Additional information about the Company may be found elsewhere in this Current Report and the Company’s other public filings, which are available without charge through the SEC’s website at http://www.sec.gov.
|
Exhibit No.
|
|
Description
|
|
|
|
|
|
2.1
|
|
Agreement and Plan of Merger, dated as of December 18, 2013, by and among Golf Rounds.com, Inc. (now known as Fuse Medical, Inc.) (the “Company”), Project Fuse LLC, Fuse Medical, LLC and D. Alan Meeker, solely in his capacity as the representative of the Fuse members
|
|
3.1 *
|
|
Certificate of Amendment to Certificate of Incorporation of the Company, filed with the Secretary of State of the State of Delaware on May 28, 2014
|
|
3.2 *
|
|
Bylaws
|
|
3.3 *
|
|
Certificate of Merger, as filed with the Secretary of State of the State of Delaware on May 28, 2014
|
|
4.1
|
|
Amended and Restated Agreement dated November 27, 2013 by and among Fuse Medical, LLC, KAW Holdings, LLC, Dr. Richard Adams, Dr. Scott King, and Dr. David Wanner.
|
|
4.2
|
|
Amended and Restated Agreement dated November 27, 2013 by and among Fuse Medical, LLC and Eva Lou Holding, LLC.
|
|
10.1
|
|
Form of Registration Rights Agreement, dated as of May 28, 2014, by and between the Company and certain stockholders of the Company
|
|
10.2 *
|
|
Form of Lock-Up Agreement, dated as of May 28, 2014, by and between the Company and certain stockholders of the Company
|
|
10.3
|
|
Medical Director Agreement dated May 1, 2014, by and between Fuse Medical, LLC and Dr. Stephen Corey
|
|
10.4
|
|
Medical Director Agreement dated May 1, 2014, by and between Fuse Medical, LLC and Dr. Randall L. Dei
|
|
10.5
|
|
General Counsel Agreement dated July 1, 2014, by and between the Company and Ross Eichberg, P.C.
|
|
10.6
|
|
Interim CFO Services Agreement dated June 1, 2014 by and between the Company and David Hexter
|
|
10.7
|
|
Assignment of Lease dated February 15, 2014 by and between JAR Financial, LLC and Fuse Medical, LLC
|
|
10.8
|
|
Agreement dated November 27, 2013, by and among Fuse Medical, LLC, Fuse Management V, LLC, and Fuse Management VI, LLC.
|
|
10.9
|
|
Promissory Note dated December 31, 2013 payable to JAR Financing, LLC from Fuse Medical, LLC in the amount of $60,000
|
|
10.10
|
|
Promissory Note dated March 4, 2014 payable to JAR Financing, LLC from Fuse Medical, LLC in the amount of $63,769.63
|
|
10.11
|
|
Promissory Note dated February 10, 2014 payable to JAR Financing, LLC from Fuse Medical, LLC in the amount of $193,535.47
|
|
10.12
|
|
Promissory Note dated March 4, 2014 payable to Cooks Bridge, LLC from Fuse Medical, LLC in the amount of $87,670.49
|
|
10.13
|
|
Promissory Note dated January 15, 2014 payable to Cooks Bridge, LLC from Fuse Medical, LLC in the amount of $131,023.65
|
|
10.14
|
|
Promissory Note dated June 16, 2014 payable to Cooks Bridge, LLC from Fuse Medical, LLC in the amount of $56,461.88
|
|
10.15
|
|
Promissory Note dated February 1, 2014 payable to Cooks Bridge, LLC from Fuse Medical, LLC in the amount of $116,777.25
|
|
10.16
|
|
Promissory Note dated May 8, 2014 payable to Cooks Bridge, LLC from Fuse Medical, LLC in the amount of $75,000
|
|
10.17
|
|
Promissory Note dated February 6, 2014 payable to World Health Industries, Inc. and WHIG, LLC from Fuse Medical, LLC in the amount of $116,777.24
|
|
10.18
|
|
Promissory Note dated May 23, 2014 payable to World Health Industries, Inc. and WHIG, LLC from Fuse Medical, LLC in the amount of $479,975.58
|
|
10.19
|
|
Promissory Note dated January 14, 2014 payable to World Health Industries, Inc. and WHIG, LLC from Fuse Medical, LLC in the amount of $131,023.66
|
|
10.20
|
|
Promissory Note dated October 10, 2013 payable to Trinity Bank, N.A. from Fuse Medical, LLC in an amount up to $100,000
|
|
10.21
|
|
Commission Agreement dated August 19, 2012 by and between Gulf Coast Surgical Solutions, LLC and Fuse Medical, LLC
|
|
21.1 *
|
|
List of Subsidiaries
|
|
99.1
|
|
Condensed Combined Financial Statements (Unaudited) for the period ended February 28, 2014
|
|
99.2 *
|
|
Combined Financial Statements for the year ended August 31, 2013
|
|
99.3
|
|
Unaudited pro forma combined financial information regarding Golf Rounds.com, Inc. and Fuse Medical, LLC
|
___________
* Incorporated by reference from the Company's Current Report on Form 8-K filed on May 29, 2014.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
|
|
FUSE MEDICAL, INC.
|
|
|
|
(Registrant)
|
|
|
|
|
|
|
Date: August 29, 2014
|
By:
|
/s/ D. Alan Meeker
|
|
|
|
|
D. Alan Meeker
|
|
|
|
|
Chief Executive Officer and President
|
|
EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER, dated a
s
of December 18, 2013 (this “
Agreement
”), is by and among Fuse Medical LLC, a Delaware limited liability company (“
Fuse
”), Golf Rounds.com, Inc
.,
a Delaware corporation
(“
TEEE
”)
, Project Fuse LLC, a Delaware limited liability company (“
Merger Sub
”), and D. Alan Meeker, solely in his capacity as the representative of the Fuse members (the “
Representative
”). Fuse, TEEE, Merger Sub and the Representative are collectively referred to herein as the “
Parties
.” Unless otherwise specified, all capitalized terms used in this Agreement shall have the meanings set forth in
Exhibit A
.
WHEREAS, the Board of Directors of TEEE, TEEE as the sole member of Merger Sub, and the Board of Managers of Fuse, deem it advisable that Merger Sub merge with and into Fuse with Fuse continuing as the Surviving Company and, accordingly, have each approved the execution of this Agreement and the transactions contemplated hereby, upon the terms and subject to the conditions set forth herein; and
WHEREAS, Fuse, TEEE, and Merger Sub desire to make certain representations, warranties, covenants and agreements in connection with transactions contemplated hereby.
NOW, THEREFORE, the Parties hereto make the following promises, covenants, representations, warranties and agreements:
1.
DESCRIPTION OF THE TRANSACTION.
(a)
Merger
of Merger Sub into Fuse
. Upon the terms and subject to the conditions set forth in this Agreement, at the Effective Time, Merger Sub shall be merged with and into Fuse (the “
Merger
”), and the separate existence of Merger Sub shall cease. Fuse will continue as the surviving company in the Merger (the “
Surviving Company
”).
(b)
Effect of the Merger
. The Merger shall have the effects set forth in this Agreement and in the applicable provisions of Delaware law.
(c)
Closing; Effective Time
. Unless this Agreement is validly terminated as provided in Section 17, and subject to the satisfaction or waiver of the conditions provided in Sections 7 and 8 (other than those conditions that by their nature are able to be satisfied only at Closing), the closing of the Merger (the “
Closing
”) shall take place at the offices of Fuse, 4770 Bryant Irvin Court, Suite 400, Fort Worth, Texas 76107, on a date not later than the fifth Business Day following satisfaction or waiver of the conditions set forth in Sections 7 and 8 (other than those conditions that by their nature are able to be satisfied only at Closing), unless another date, time or place is mutually agreed to in writing by TEEE, Fuse, and Merger Sub (the “
Closing Date
”). Closing signatures may be transmitted by facsimile or by emailed PDF file. At the Closing, the Merger will be consummated by the filing with the Delaware Secretary of State the Certificate of Merger, in such form as required by, and signed and attested in accordance with, the relevant provisions of Delaware law (the time of the filing of such instrument being the “
Effective Time
”).
(d)
Certificate of Formation and Limited Liability Company Agreement; Board of Managers
(i)
At the Effective Time, the Certificate of Formation of Fuse shall be amended to read as the Certificate of Formation of Merger Sub immediately prior to the Effective Time, and shall thereafter (as so amended) be the Certificate of Formation of the Surviving Company, until duly amended in accordance with Delaware law. At the Effective Time, the Limited Liability Company agreement of Fuse shall be amended to read as the Limited Liability Company Agreement of Merger Sub immediately prior to the Effective Time, and shall thereafter (as so amended) be the Limited Liability Company Agreement of the Surviving Company, until duly amended in accordance with Delaware law.
(ii)
The Board of Managers of Merger Sub immediately prior to the Effective Time shall be the Board of Managers of the Surviving Company at the Effective Time.
(e)
Merger Consideration.
(i)
Each membership interest unit of Merger Sub issued and outstanding immediately prior to the Effective Time shall be converted into and become one (1) validly issued, fully paid and non-assessable membership interest unit of the Surviving Company, so that after the Effective Time, TEEE shall be the holder of all of the issued and outstanding membership interest units of the Surviving Company.
(ii)
Each membership interest unit of Fuse issued and outstanding immediately prior to the Effective Time (each, an “
Outstanding Unit
” and collectively, the “
Outstanding Units
”) shall be converted into the right of the holders of such Outstanding Units (each, a “
Holder
”, and collectively, the “
Holders
”) to receive their Ownership Interest Share of the Merger Consideration. Fuse has delivered to TEEE a
Schedule 1(e)(ii)
, and shall deliver to TEEE not less than two (2) Business Days prior to the Closing, an updated
Schedule 1(e)(ii)
, which shall set forth the Holders, their Ownership Interest Shares and their portion of the Merger Consideration, less the Escrowed Shares, payable to each of them as of the date hereof and as of the Closing Date, respectively. For purposes of this Agreement, (A) the “
Ownership Interest Share
” of each Holder means the amount, expressed as a percentage, each Holder is entitled to receive of the Merger Consideration pursuant to the Fuse Limited Liability Company Agreement in effect prior to the Effective Time; and (B) “
Merger Consideration
” means an aggregate of 3,600,000 shares of TEEE common stock (on a post-Reverse Stock Split basis), representing 90% of the issued and outstanding common stock of TEEE after giving effect to the Merger (on a post-Reverse Stock Split basis).
(iii)
All Outstanding Units (which are to be converted into the right to receive the Merger Consideration pursuant this Agreement) shall no longer be outstanding, shall automatically be cancelled and shall cease to exist as of the Effective Time, and each Holder shall only have the right to receive the Merger Consideration into which the Outstanding Units have been converted pursuant to
Section 1(e)(ii)
.
(f)
Closing of Books.
At the Effective Time, the register of Fuse shall be closed and no transfer of any Outstanding Units shall thereafter be made. From and after the Effective Time, the Holders of the Outstanding Units immediately prior to the Effective Time shall cease to have any rights with respect to such Outstanding Units, except as otherwise provided in this Agreement or by applicable law.
(g)
Withholding Rights; Stock Splits, Stock Dividends and Similar Transactions.
(i)
TEEE shall be entitled to deduct and withhold from the Merger Consideration otherwise payable to the Holders pursuant to this Agreement such amounts as it is required to deduct and withhold under applicable law. All such amounts shall be agreed to by Fuse.
(ii)
In the event of any stock split, reverse stock split, stock dividend (including any dividend or distribution of securities convertible into capital stock), reorganization, reclassification, combination, recapitalization or other like change with respect to TEEE occurring after the date hereof and prior to the Effective Time (other than the Reverse Stock Split), except where specifically indicated to the contrary, all references in this Agreement to specified numbers of shares of any class or series affected thereby, and all calculations provided for that are based upon numbers of shares of any class or series affected thereby, shall be equitably adjusted to the extent necessary to provide the Parties the same economic effect as contemplated by this Agreement prior to such stock split, reverse stock split, stock dividend, reorganization, reclassification, combination, recapitalization or other like change. Without limiting the generality of the foregoing, the Merger Consideration will be adjusted if necessary to take into account the 14C Amendments.
(h)
Escrow
. On the Closing Date, the Representative, TEEE and American Stock Transfer & Trust Company (the “
Escrow Agent
”) shall enter into an escrow agreement in the form of Exhibit B attached hereto (the “
Escrow Agreement
”). The Escrow Agreement will be for a term of six months, and will provide that promptly following the Closing Date, and in any event within three (3) Business Days of the Closing Date, 180,000 shares (on a post-Reverse Stock Split basis) of the Merger Consideration (the “
Escrowed Shares
”) shall be deposited in escrow shall be held in escrow pursuant to the terms of this Agreement and the Escrow Agreement. All fees due to the Escrow Agent shall be borne by TEEE.
(i)
Further Action
. If, at any time after the Effective Time, any further action is determined by TEEE to be necessary or desirable to carry out the purposes of this Agreement or to vest the Surviving Company or TEEE with full right, title and possession of and to all rights and property of Merger Sub and Fuse, the officers and directors of the Surviving Company and TEEE shall be fully authorized to take such action.
(j)
Information Statement
. Fuse has provided prior to the date hereof all financial and other information relating to Fuse that TEEE has reasonably requested (including the Fuse Financial Statements and the Pro Formas) for preparation of an information statement on Schedule 14C relating to the approval and adoption of the 14C Amendments and the transactions contemplated hereby (as amended or supplemented, the “
Information Statement
”
). As promptly as practicable following the date hereof, TEEE and Fuse shall prepare and file with the SEC the Information Statement. TEEE shall use its commercially reasonable efforts to ensure that the Information Statement does not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements contained therein, in light of the circumstances under which they were made, not misleading, other than with respect to statements made based on information supplied or to be supplied in writing by Fuse specifically for inclusion therein. Fuse shall use its commercially reasonable efforts to ensure that none of the information it has supplied and will supply in writing specifically for inclusion in the Information Statement contains any untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary in order to make the statements contained therein, in light of the circumstances under which they were made, not misleading. The Parties shall cooperate with each other in connection with the preparation of the foregoing documents and the SEC’s review of such documents. TEEE and Fuse shall promptly respond to any SEC comments on the Information Statement. TEEE and Fuse shall use their commercially reasonable efforts to have the Information Statement cleared by the SEC as promptly as practicable for mailing to the holders of Common Stock as promptly as practicable. TEEE and Fuse shall also take any and all actions required to satisfy the requirements of the Securities Act and the Exchange Act.
(k)
Tax Consequences
. It is intended by the Parties hereto that the Merger shall constitute a reorganization within the meaning of Section 368 of the Internal Revenue Code. The Parties hereto adopt this Agreement as a “plan of reorganization” within the meaning of Sections 1.368-2(g) and 1.368-3(a) of the United States Income Tax Regulations.
(l)
Member and Board of Manager Matters
. Prior to execution of this Agreement, the Board of Managers and the Members of Fuse have approved this Agreement and the Merger by at least a majority vote. At Closing, as a condition to receiving the Merger Consideration, each Holder shall submit a letter of transmittal in which such Holder (i) agrees to be bound by all of the terms and conditions of the Agreement applicable to the Holders, including the indemnification and other obligations set forth in Sections 14(b), 16 and 18; and (ii) represents and warrants to TEEE and Merger Sub that such Holder’s Outstanding Units are free from (A) claims, liens or other encumbrances by any other person and (B) any restrictions on transfer.
2.
DELIVERIES BY TEEE AND MERGER SUB
.
At the Closing, TEEE and Merger Sub, as the case may be, shall deliver the following in accordance with the applicable provisions of this Agreement:
(a)
the stock certificates in the names of each Holder representing its Ownership Interest Share of the Merger Consideration pursuant to Section 1(e)(ii), less the Escrowed Shares, to the Representative for the benefit of the Holders;
(b)
the stock certificates in the names of each Holder representing its Ownership Interest Share of the Escrowed Shares, to the Escrow Agent;
(c)
a counterpart of the Escrow Agreement, executed by TEEE, to the Representative and the Escrow Agent;
(d)
a certificate of TEEE and Merger Sub duly executed by an officer of each of them, certifying in his or her capacity as an officer and not in his or her capacity as an individual, the satisfaction of the conditions set forth in Section 7, to the Representative;
(e)
resolutions authorizing the appointment of Donehew and the other members described in Section 6 to the TEEE Board of Directors effective on the Closing Date;
(f)
a counterpart to the Registration Rights Agreement, in the form attached hereto as Exhibit C (the “
Registration Rights Agreement
”);
(g)
a counterpart to the Lock Up Agreement, in the form attached hereto as Exhibit D (the “
Lock Up Agreement
”);
(h)
resignations of all of the members of the Board of Directors of TEE except Donehew;
(i)
the Donehew Waiver;
(j)
a copy of the resolutions (i) adopted by the Board of Directors of TEEE approving this Agreement and the Merger, (ii) adopted by the Board of Directors and members of Merger Sub approving this Agreement and the Merger, and (iii) adopted by written consent of the stockholders of TEEE approving the 14C Amendments (the “
TEEE Stockholder Approval
”); and
(k)
such other documents and instruments as Fuse or the Representative may reasonably request.
3.
DELIVERIES BY FUSE.
At the Closing, Fuse shall deliver the following in accordance with the applicable provisions of this Agreement:
(a)
a counterpart of the Escrow Agreement, executed by the Representative, to TEEE and the Escrow Agent;
(b)
a counterpart to the Registration Rights Agreement, executed by each of the Holders, to TEEE.
(c)
a counterpart to the Lock Up Agreement, executed by each of the Holders, to TEEE;
(d)
a certificate of Fuse duly executed by an officer, certifying in his or her capacity as an officer and not in his or her capacity as an individual, the satisfaction of the conditions set forth in Section 8, to TEEE and Merger Sub; and
(e)
such other documents and instruments as TEEE or Merger Sub may reasonably request.
4.
CERTIFICATE OF MERGER.
At the Closing, Fuse and TEEE shall execute and deliver the Certificate of Merger
required under Delaware Law and TEEE shall cause such duly executed Certificate of Merger to be properly filed with the Delaware Secretary of State.
5.
PROCEDURES FOR ISSUANCES TO HOLDERS.
(a)
Transfer Agent.
Prior to the Effective Time, TEEE and Fuse will instruct TEEE’s transfer agent to prepare stock certificates in the names of each Holder reflecting such Holder’s Ownership Interest Share of the Merger Consideration, less the Escrowed Shares, and such Holder’s Ownership Interest Share of the Escrowed Shares, so that, upon submission of the letter of transmittal described in
Section 1(l)
, such stock certificates may be delivered to the Representative, on behalf of the Holders, and to the Escrow Agent, as the case may be, at the Closing. The fees due to the transfer agent shall be paid by TEEE.
6.
APPOINTMENT TO TEEE BOARD.
At the Closing, the TEEE Board of Directors shall be reconstituted and shall consist of Donehew, Alan Meeker, Rusty Shelton, Chris Pratt, Jonathan Brown, and Randall Dei. TEEE shall take such actions as are necessary to fix the size of the board and cause such appointments to the board as may be necessary.
7.
FUSE CONDITIONS TO CLOSING.
Fuse’s obligation to close the Merger is subject to the following conditions:
(a)
other than as set forth on
Schedule 7(a)
hereto and other than any loans made by Fuse and its affiliates to TEEE, any amount of outstanding indebtedness due to any other third party by TEEE, including any amounts that may be due as a result of this transaction, shall have been paid by TEEE to such third party, so that only the amounts set forth on
Schedule 7(a)
are outstanding;
(b)
the representations and warranties of TEEE and Merger Sub as set forth in
Section 12
shall remain accurate, (i) if qualified as to materiality, in all respects, and (ii) if not qualified as to materiality, in all material respects, as of the Closing Date, and no material adverse change in the business, operations, financial condition or prospects of TEEE shall have occurred prior to the Closing Date;
(c)
TEEE and Merger Sub shall have performed and complied with, in all material respects, all covenants and agreements required by this Agreement to be performed or complied with by it at or prior to the Closing;
(d)
TEEE shall have filed all documents relating to the Merger necessary to be filed with local, state and federal authorities, including without limitation all Current Reports on Form 8-K that are required to be filed with the Securities and Exchange Commission (the “
Commission
”);
(e)
at least twenty (20) days shall have elapsed since the Information Statement was sent or given to the stockholders of TEEE in accordance with Rule 14c-2(c) promulgated under the Exchange Act and, following the expiration of such twenty (20) day period, the 14C Amendments shall have been filed by TEEE with the Delaware Secretary of State and the Commission;
(f)
TEEE shall have delivered letters of resignation of TEEE’s current officers and directors (except Donehew) to be effective at the Closing Date;
(g)
TEEE shall retain its good standing in Delaware and in such other jurisdictions where it is required to be so qualified and as a publicly-traded company quoted on the OTCQB under the symbol “TEEE”;
(h)
the Merger shall qualify, based on the sole determination of Fuse or its tax advisors, as a tax free reorganization under Section 368 of the Internal Revenue Code;
(i)
there shall be no action, suit, claim, order, injunction or proceeding of any nature pending, or overtly threatened, against Fuse or TEEE, their respective properties or any of their respective officers, directors, or subsidiaries (i) by any person arising out of, or in any way connected with, the Merger or that could give rise to material damages, or (ii) by any Governmental Body arising out of, or in any way connected with, the Merger or that could give rise to material damages; and
(j)
all documents, instruments, certificates or other items required to be delivered by TEEE or Merger Sub pursuant to
Section 2
shall have been delivered.
8.
CONDITIONS TO CLOSING FOR TEEE AND MERGER SUB.
The obligations of TEEE and Merger Sub to close the transaction contemplated by this Agreement are subject to the following conditions:
(a)
the representations and warranties of Fuse as set forth in Section 11 shall remain accurate (i) if qualified as to materiality, in all respects, and (ii) if not qualified as to materiality, in all material respects, as of the Closing Date, and no material adverse change in the business, operations, financial condition or prospects of Fuse shall have occurred prior to the Closing Date;
(b)
Fuse shall have performed and complied with, in all material respects, all covenants and agreements required by this Agreement to be performed or complied with by it at or prior to the Closing;
(c)
at least twenty (20) days shall have elapsed since the Information Statement was sent or given to the stockholders of TEEE in accordance with Rule 14c-2(c) promulgated under the Exchange Act and, following the expiration of such twenty (20) day period, the 14C Amendments shall have been filed by TEEE with the Delaware Secretary of State and the Commission;
(d)
Fuse shall retain its good standing as a limited liability company in Delaware and in such other jurisdictions where it is required to be so qualified;
(e)
all documents, instruments, certificates or other items required to be delivered by Fuse pursuant to Section 3 shall have been delivered;
(f)
there shall be no action, suit, claim, order, injunction or proceeding of any nature pending, or overtly threatened, against Fuse or TEEE, their respective properties or any of their respective officers, directors, or subsidiaries (i) by any person arising out of, or in any way connected with, the Merger or that could give rise to material damages, or (ii) by any Governmental Body arising out of, or in any way connected with, the Merger or that could give rise to material damages; and
(g)
upon request of TEEE, Fuse and the Representative, on behalf of the Holders, shall have provided TEEE with copies of accredited investor questionnaires or letters of transmittal (if such accredited investor information is included therein) and, based upon such information, TEEE shall have reasonably concluded in good faith that the issuance of the Merger Consideration can be completed in compliance with Rule 506 of Regulation D promulgated by the SEC under the Securities Act.
9.
AT AND SUBSEQUENT TO THE CLOSING.
(a)
Promptly following the Closing, but in no event later than four (4) business days following the Closing, TEEE and Surviving Company will file the Current Report on Form 8-K with respect to the consummation of the Merger as required by applicable law.
(b)
From and after the Closing Date, TEEE shall not take, nor cause the Surviving Company or any affiliate of TEEE to take, any actions that would cause the Merger not to be a tax-free reorganization under Section 368 of the Internal Revenue Code.
10.
[RESERVED].
11.
REPRESENTATIONS OF FUSE.
Fuse represents and warrants to TEEE as of the date of this Agreement and as of the Effective Time as follows:
(a)
Ownership of Outstanding Units
. Immediately prior to the Effective Time, the Outstanding Units will be free from claims, liens or other encumbrances and from any restrictions on transfer and will reflect 100% of the ownership equity of Fuse.
(b)
Organization of Fuse; Authorization
. Fuse is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Delaware with full power and authority to execute and deliver this Agreement, to perform its obligations hereunder and to own, lease and operate its assets and properties and to carry on its business as it is now being conducted. Fuse is qualified to transact business in the State of Delaware and Texas. The execution, delivery and performance of this Agreement and the transactions contemplated hereby have been duly authorized by all action necessary to be taken by Fuse, including by the Board of Managers and the members of Fuse, and this Agreement constitutes a valid and binding obligation of Fuse, enforceable against it in accordance with its terms. Executed copies of the foregoing consents of the Board of Managers and members of Fuse have been provided to TEEE and Merger Sub.
(c)
Capitalization
. The Holders listed on
Schedule 1(e)(ii)
are as of the date hereof, and the Holders listed on the updated
Schedule 1(e)(ii)
delivered prior to the Closing in accordance with Section 1(e)(ii) will be at the Effective Time, the beneficial and record owners of the Outstanding Units and such interests are and will constitute 100% of the outstanding equity of Fuse. All of the Outstanding Units are and will be validly issued, fully paid and non-assessable. There is no other class or series of securities authorized by the Limited Liability Company Agreement of Fuse or by the Certificate of Formation of Fuse. As of the Closing Date there will not be outstanding any warrants, options or other agreements on the part of Fuse obligating Fuse to issue any additional securities of any kind. No debt of Fuse is convertible into equity of Fuse.
(d)
No Conflict as to Fuse
. Neither the execution and delivery of this Agreement nor the consummation of Merger will (i) violate any provision of the Certificate of Formation or Limited Liability Company Agreement of Fuse, or (ii) except as set forth on
Schedule 11(d)
, violate, or be in conflict with, or constitute a default (or an event which, with notice or lapse of time or both, would constitute a default) under, or result in the termination of, or accelerate the performance required by, or excuse performance by any person of any of its obligations under, or cause the acceleration of the maturity of any debt or obligation pursuant to, or result in the creation or imposition of any encumbrance upon any property or assets of Fuse under, any material agreement or commitment to which Fuse is a party or by which its property or assets is bound, or to which any of the property or assets of Fuse is subject, or (iii) violate any statute or law or any judgment, decree, order, regulation or rule of any court, governmental agency or governmental body (collectively “
Governmental Body
”) applicable to Fuse, except, with respect to clauses (ii) and (iii), in the case of violations, conflicts, defaults, terminations, accelerations or encumbrances which are not likely to have a material adverse effect on the business or financial condition of Fuse as a whole.
(e)
Consents and Approvals of Governmental Authorities
. No consent, approval or authorization of, or declaration, filing or registration with, any Governmental Body is required to be made or obtained by Fuse in connection with the execution, delivery and performance of this Agreement by Fuse or the consummation of the Merger, other than the filing of a Certificate of Merger with the Delaware Secretary of State.
(f)
Other Consents
. Except as set forth on
Schedule 11(d)
, no consent of any person is required to be obtained by Fuse to the execution, delivery and performance of this Agreement or the consummation of the Merger, including, but not limited to, consents from parties to leases or other agreements or commitments, except for (i) such consents, including the consent of the Board of Managers and members of Fuse, that have already been obtained and (ii) any consent which the failure to obtain would not be likely to have a material adverse effect on the business and financial condition of Fuse as a whole.
(g)
Litigation
. There is no action, suit, inquiry, proceeding or investigation by or before any Governmental Body pending or to the knowledge of Fuse threatened in writing against or involving Fuse or which questions or challenges the validity of this Agreement. Fuse is not subject to any judgment, order or decree that is reasonably likely to have a material adverse effect on the business or financial condition of Fuse as a whole.
(h)
Absence of Certain Changes
. Since September 1, 2013, except (i) for any borrowing, lending, or financing transaction between Fuse and an affiliate, made under commercially reasonable terms up to $500,000 in the aggregate, with the proceeds of such transaction(s) to be used for operating capital and expenses related to this Agreement and the related transactions contemplated hereby, (ii) for any transactions set forth on
Schedule 11(h)
, and (iii) as described in the Fuse Financial Statements delivered prior to the date hereof or as otherwise disclosed in writing to TEEE prior to the date hereof, Fuse has not:
(i)
suffered the damage or destruction of any of its properties or assets (whether or not covered by insurance) which is materially adverse to the business or financial condition, or made any disposition of any of its material properties or assets other than in the ordinary course of business;
(ii)
made any change or amendment in its Certificate of Formation or Limited Liability Company Agreement or other governing instruments;
(iii)
issued or sold any securities or acquired, directly or indirectly, by redemption or otherwise, any securities, reclassified, split-up or otherwise changed any of its securities, or granted or entered into any options, warrants, calls or commitments of any kind with respect thereto;
(iv)
organized any subsidiary or acquired any securities of any entity or any equity or ownership interest in any business;
(v)
borrowed any funds or incurred, or assumed or become subject to, whether directly or by way of guarantee or otherwise, any obligation or liability with respect to any such indebtedness for borrowed money;
(vi)
paid, discharged or satisfied any material claim, liability or obligation (absolute, accrued, contingent or otherwise), other than in the ordinary course of business;
(vii)
prepaid any material obligation having a maturity of more than ninety (90) days from the date such obligation was issued or incurred;
(viii)
cancelled any material debts or waived any material claims or rights, except in the ordinary course of business;
(ix)
disposed of or permitted to lapse any rights to the use of any material patent or registered trademark or copyright or other intellectual property owned or used by it;
(x)
sold, transferred or otherwise disposed of any material assets, including without limitation technology and intangible assets;
(xi)
granted any general increase in the compensation of officers or employees (including any such increase pursuant to any employee benefit plan);
(xii)
declared, set aside or paid any dividend on, or otherwise distributed (whether in cash, stock or property) in respect of, any of Fuse’s equity, or purchased, redeemed or otherwise acquired any of Fuse’s equity or any other securities of the Company or any options, warrants, calls or rights to acquire any such equity or other securities;
(xiii)
incurred any liability other than trade debt in the ordinary course of business; or
(xiv)
entered into any agreement with respect to any of the foregoing.
(i)
Compliance with Law
. The operations of Fuse have been conducted in accordance with all applicable laws and regulations of all Governmental Bodies having jurisdiction over Fuse, except for violations thereof which are not likely to have a material adverse effect on the business or financial condition of Fuse as a whole. Fuse has not received any notification of any asserted present or past failure by it to comply with any such applicable laws or regulations. Fuse has all material licenses, permits, orders or approvals from the Governmental Bodies required for the conduct of its business, and is not in material violation of any such licenses, permits, orders and approvals. All such licenses, permits, orders and approvals are in full force and effect, and no suspension or cancellation of any thereof has been threatened in writing to the knowledge of Fuse.
(j)
Title to Properties
. Fuse owns all the material properties and assets that it purports to own (real, personal and mixed, tangible and intangible), including, without limitation, all the properties and assets reflected in the Fuse Financial Statements. All properties and assets, including without limitation technology and intangible assets, are free and clear of all material encumbrances and are not, in the case of real property, subject to any material rights of way, building use restrictions, exceptions, variances, reservations or limitations of any nature whatsoever except, with respect to all such properties and assets, (i) mortgages or security interests shown on the Fuse Financial Statements as securing specified liabilities or obligations, with respect to which no default (or event which, with notice or lapse of time or both, would constitute a default) exists, (ii) mortgages or security interests incurred in connection with the purchase of property or assets after the date of such financial statements (such mortgages and security interests being limited to the property or assets so acquired), with respect to which no default (or event which, with notice or lapse of time or both, would constitute a default) exists, (iii) as to real property, (A) imperfections of title, if any, none of which materially detracts from the value or impairs the use of the property subject thereto, or impairs the operations of Fuse as a whole and (B) zoning laws that do not impair the present or anticipated use of the property subject thereto, and (iv) liens for current taxes not yet due. The properties and assets of Fuse include all rights, properties and other assets necessary to permit Fuse to conduct business in all material respects in the same manner as it is conducted on the date of this Agreement.
(k)
Brokers’ and Finders’ Fees
. Fuse has not incurred, nor will it incur, directly or indirectly, any liability for brokerage or finders’ fees or agents’ commissions or any similar charges in connection with this Agreement or the Merger except any such liability that will be discharged by Fuse at the Closing.
(l)
Financial Statements
. The Fuse Financial Statements (i) have been prepared from, and are in accordance with, the books and records of Fuse and the subsidiaries; (ii) fairly present in all material respects the consolidated results of operations, cash flows, change in stockholders’ equity and consolidated financial position of Fuse and its subsidiaries for the respective fiscal periods or as of the respective dates therein set forth (subject in the case of their unaudited statements to recurring year-end audit adjustments normal in nature and amount); (iii) comply in all material respects with applicable accounting requirements and with the published rules and regulations of the Commission with respect thereto; and (iv) have been prepared in accordance with GAAP consistently applied during the periods involved, except in each case, as indicated in such statements or in the notes thereto. The books and records of Fuse and its subsidiaries have been, and are being, maintained in all material respects in accordance with GAAP and any other applicable legal and accounting principles. The Pro Formas have been prepared in good faith and derived from the Fuse Financial Statements and the financial statements of TEEE and its subsidiaries included (or incorporated by reference) in the documents filed by TEEE with the Commission. At the Closing, Fuse will have no material liabilities other than trade debt in the ordinary course of business and as set forth in the Fuse Financial Statements as provided to TEEE prior to the date of this Agreement. Copies of the Fuse Financial Statements and the Pro Formas have been provided to TEEE.
12.
REPRESENTATIONS OF TEEE AND MERGER SUB.
TEEE and Merger Sub represent and warrant to Fuse as of the date of this Agreement and as of the Effective Time as follows:
(a)
Organization; Authorization.
TEEE and Merger Sub are each duly organized, validly existing and in good standing under the laws of Delaware with full power and authority to execute and deliver this Agreement, to perform their obligations hereunder and to own, lease and operate its assets and properties and to carry on its business as it is now being conducted. The execution, delivery and performance of this Agreement have been duly authorized by all necessary action of TEEE and Merger Sub, including the Board of Directors of TEEE, the sole member of Merger Sub and the TEEE Stockholder Approval, and this Agreement constitutes a valid and binding obligation of TEEE and Merger Sub, enforceable against them in accordance with its terms. TEEE has no subsidiaries except for DPE Acquisition Corp., which is currently inactive, and Merger Sub. Executed copies of the foregoing consents of the Board of Directors of TEEE, the sole member of Merger Sub and the TEEE Stockholder Approval have been provided to TEEE and Merger Sub.
(b)
Capitalization
. The authorized capital stock of TEEE consists of 12,000,000 shares of common stock, par value $0.01 per share, and no shares of preferred stock, authorized. As of the date of this Agreement, TEEE has 5,848,185 shares of common stock issued and outstanding and no shares of preferred stock issued and outstanding. As of the Closing Date giving effect to the reverse stock split contemplated hereby, TEEE shall have 400,000 shares of common stock outstanding immediately prior to the issuances for and on behalf of Fuse as contemplated hereby. As of the Closing Date, all of the issued and outstanding shares of common stock of TEEE are validly issued, fully paid and non-assessable and except as set forth on
Schedule 12(b)
there is not and as of the Closing Date, there will not be outstanding any warrants, options or other agreements on the part of TEEE obligating any of TEEE to issue any additional shares of common or preferred stock or any of its securities of any kind, except for such shares or securities called for in this Agreement. The Common Stock of TEEE is presently quoted on the OTC Markets OTCQB market under the symbol “TEEE”. TEEE is current in all of its required filings with the Commission. The Merger Consideration is duly authorized by TEEE, and upon issuance as provided in this Agreement will be fully-paid and non-assessable in the hands of the Holders and represent collectively 90% of the issued and outstanding capital stock of TEEE.
(c)
No Conflict as to TEEE and Subsidiaries
. Neither the execution and delivery of this Agreement nor the consummation of the Merger will (i) violate any provision of the Certificate of Incorporation or Bylaws of TEEE or the Certificate of Formation and Limited Liability Company Agreement of Merger Sub, or (ii) violate, or be in conflict with, or constitute a default (or an event which, with notice or lapse of time or both, would constitute a default) under, or result in the termination of, or accelerate the performance required by, or excuse performance by any person of any of its obligations under, or cause the acceleration of the maturity of any debt or obligation pursuant to, or result in the creation or imposition of any encumbrance upon any property or assets of any of TEEE or any of its subsidiaries under, any material agreement or commitment to which any of TEEE or any of its subsidiaries is a party or by which any of their respective property or assets is bound, or to which any of the property or assets of any of TEEE or any of its subsidiaries is subject, or (iii) violate any statute or law or any judgment, decree, order, regulation or rule of any court or other Governmental Body applicable to TEEE or any of its subsidiaries, except, with respect to clauses (ii) and (iii), in the case of violations, conflicts, defaults, terminations, accelerations or encumbrances which are not likely to have a material adverse effect on the business or financial condition of TEEE and its subsidiaries, taken as a whole.
(d)
Consents and Approvals of Governmental Authorities
. No consent, approval or authorization of, or declaration, filing or registration with, any Governmental Body is required to be made or obtained by TEEE in connection with the execution, delivery and performance of this Agreement by TEEE or the Merger, other than (i) the filing of the Information Statement (including the information required pursuant to Rule 14f-1 under the Exchange Act) with the Commission, (ii) the filing of a certificate of amendment to TEEE’s Certificate of Incorporation with the Delaware Secretary of State for the 14C Amendments, (iii) the filing of the Certificate of Merger with the Delaware Secretary of State and (iv) the filing of Current Reports on Form 8-K with the Commission disclosing the execution of this Agreement and the consummation of the transactions contemplated hereby.
(e)
Other Consents
. No consent of any person is required to be obtained by TEEE to the execution, delivery and performance of this Agreement or the consummation of the transactions contemplated by this Agreement, including, but not limited to, consents from parties to leases or other agreements or commitments, except for (i) such consents, including the consent of the Board of Directors of TEEE, the consent of the sole member of Merger Sub and the TEEE Stockholder Approval, that have already been obtained and (ii) any consent which the failure to obtain would not be likely to have a material adverse effect on the business and financial condition of TEEE.
(f)
Litigation
. There is no action, suit, inquiry, proceeding or investigation by or before any Governmental Body pending or to the knowledge of TEEE threatened in writing against or involving TEEE or Merger Sub or which questions or challenges the validity of this Agreement. Neither TEEE nor Merger Sub is subject to any judgment, order or decree that is likely to have a material adverse effect on the business or financial condition of TEEE or Merger Sub as a whole.
(g)
Absence of Certain Changes
. Since September 1, 2013, TEEE has not:
(i)
suffered the damage or destruction of any of its properties or assets (whether or not covered by insurance) which is materially adverse to the business or financial condition, or made any disposition of any of its material properties or assets other than in the ordinary course of business;
(ii)
made any change or amendment in its Certificate of Incorporation or Bylaws, or other governing instruments;
(iii)
other than as set forth in the public reports available on EDGAR, issued or sold any equity securities or other securities, acquired, directly or indirectly, by redemption or otherwise, any such equity securities, reclassified, split-up or otherwise changed any such equity security, or granted or entered into any options, warrants, calls or commitments of any kind with respect thereto;
(iv)
organized any new subsidiary or acquired any equity securities of any person or any equity or ownership interest in any business;
(v)
borrowed any funds or incurred, or assumed or become subject to, whether directly or by way of guarantee or otherwise, any obligation or liability with respect to any such indebtedness for borrowed money, except for the notes listed on
Schedule 12(g)
and any loans made by Fuse and its affiliates to TEEE, which shall be payable upon the consummation of the transactions contemplated by this Agreement or one year after the termination of this Agreement and shall be subject to such other terms and conditions upon which Fuse and TEEE shall agree (the “
Fuse Loans
”);
(vi)
paid, discharged or satisfied any material claim, liability or obligation (absolute, accrued, contingent or otherwise), other than in the ordinary course of business;
(vii)
prepaid any material obligation having a maturity of more than ninety (90) days from the date such obligation was issued or incurred;
(viii)
cancelled any material debts or waived any material claims or rights, except in the ordinary course of business;
(ix)
disposed of or permitted to lapse any rights to the use of any material patent or registered trademark or copyright or other intellectual property owned or used by it;
(x)
sold, transferred or otherwise disposed of any material assets, including without limitation technology and intangible assets; or
(xi)
granted any general increase in the compensation of officers or employees (including any such increase pursuant to any employee benefit plan);
(xii)
declared, set aside or paid any dividend on, or otherwise distributed (whether in cash, stock or property) in respect of, any of TEEE’s stock, or purchased, redeemed or otherwise acquired any of TEEE’s capital stock or any other securities of TEEE or any options, warrants, calls or rights to acquire any such shares or other securities;
(xiii)
incurred any liability other than trade debt in the ordinary course of business; or
(xiv)
entered into any agreement with respect to any of the foregoing.
(h)
Commission Filings
. Since September 1, 2012, TEEE has filed all documents that are required to be filed by it with the Commission pursuant to the reporting requirements of the Exchange Act. TEEE has made available to Fuse an accurate and complete copy of each communication mailed by TEEE to its stockholders since the time of filing of the Form 10-K for the year ending August 31, 2012. No such document or communication filed by TEEE, at the time filed or communicated (or, if amended prior to the date of this Agreement, as of the date of such amendment), contained any untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary in order to make the statements made therein, in light of the circumstances in which they are made, not misleading. As of their respective dates, all documents filed by TEEE with the Commission complied as to form in all material respects with the published rules and regulations of the Commission with respect thereto. To the knowledge of TEEE, none of the documents it filed with the Commission is the subject of any ongoing review or investigation by the Commission or any other governmental entity and there are no unresolved Commission comments with respect to any of such documents.
(i)
Financial Statements
. The financial statements of TEEE and its subsidiaries included (or incorporated by reference) in the documents filed by TEEE with the Commission (including the related notes, where applicable) (i) have been prepared from, and are in accordance with, the books and records of TEEE and the subsidiaries; (ii) fairly present in all material respects the consolidated results of operations, cash flows, change in stockholders’ equity and consolidated financial position of TEEE and its subsidiaries for the respective fiscal periods or as of the respective dates therein set forth (subject in the case of their unaudited statements to recurring year-end audit adjustments normal in nature and amount); (iii) complied, as of their respective dates of filing with the Commission, in all material respects with applicable accounting requirements and with the published rules and regulations of the Commission with respect thereto; and (iv) have been prepared in accordance with GAAP consistently applied during the periods involved, except in each case, as indicated in such statements or in the notes thereto. The books and records of TEEE and its subsidiaries have been, and are being, maintained in all material respects in accordance with GAAP and any other applicable legal and accounting principles. At the Closing, TEEE will have no liabilities other than those described in
Schedule 7(a)
and as set forth in the Reports on Form 10-Q and 10-K filed by TEEE with the Commission after September 1, 2012 and prior to the date of this Agreement.
(j)
Compliance with Law
. The operations of TEEE have been conducted in accordance with all applicable laws and regulations of all Governmental Bodies having jurisdiction over TEEE, except for violations thereof which are not likely to have a material adverse effect on the business or financial condition of TEEE as a whole. TEEE has not received any notification of any asserted present or past failure by it to comply with any such applicable laws or regulations. TEEE has all material licenses, permits, orders or approvals from the Governmental Bodies required for the conduct of its business, and is not in material violation of any such licenses, permits, orders and approvals. All such licenses, permits, orders and approvals are in full force and effect, and no suspension or cancellation of any thereof has been threatened in writing to the knowledge of TEEE.
(k)
Title to Properties
. TEEE owns all the material properties and assets that it purports to own (real, personal and mixed, tangible and intangible), including, without limitation, all the properties and assets reflected in its Annual Report on Form 10-K for the year ended August 31, 2012 (the “
10-K
”). All properties and assets, including without limitation technology and intangible assets, are free and clear of all material encumbrances and are not, in the case of real property, subject to any material rights of way, building use restrictions, exceptions, variances, reservations or limitations of any nature whatsoever except, with respect to all such properties and assets, (i) mortgages or security interests shown in the 10-K as securing specified liabilities or obligations, with respect to which no default (or event which, with notice or lapse of time or both, would constitute a default) exists, (ii) mortgages or security interests incurred in connection with the purchase of property or assets after the date of such financial statements (such mortgages and security interests being limited to the property or assets so acquired), with respect to which no default (or event which, with notice or lapse of time or both, would constitute a default) exists, (iii) as to real property, (A) imperfections of title, if any, none of which materially detracts from the value or impairs the use of the property subject thereto, or impairs the operations of TEEE as a whole and (B) zoning laws that do not impair the present or anticipated use of the property subject thereto, and (iv) liens for current taxes not yet due. The properties and assets of TEEE include all rights, properties and other assets necessary to permit TEEE to conduct business in all material respects in the same manner as it is conducted on the date of this Agreement.
(l)
Operations; Capitalization of Merger Sub
. Merger Sub was formed solely for the purpose of engaging in the transactions contemplated hereby, has engaged in no other business activities, has no employees and has conducted its operations only as contemplated hereby. The authorized units of Merger Sub consists of one (1) membership unit, which is owned by TEEE and is validly issued, fully paid and nonassessable.
(m)
Brokers and Finder's Fees
. TEEE has not, nor will it incur, directly or indirectly, any liability for brokerage or finders’ fees or agents’ commissions or any similar charges in connection with this Agreement or the transactions contemplated hereby.
13.
CHARTER PROTECTIONS; DIRECTORS’ AND OFFICERS’ LIABILITY INSURANCE.
(a)
All rights to indemnification for acts or omissions occurring through the Closing Date now existing in favor of the current directors and officers of TEEE as provided in the Certificate of Incorporation and Bylaws of TEEE as of the date hereof or in any indemnification agreements shall survive the Merger and shall continue in full force and effect in accordance with their terms.
(b)
For a period of three (3) years after the Closing Date, TEEE shall cause to be maintained in effect the current policies of directors' and officers' liability insurance it maintains (or policies of at least the same coverage and amounts containing terms and conditions which are no less advantageous) with respect to claims arising from facts and events that occurred prior to the Closing Date.
(c)
If either of TEEE or Surviving Company or any of their successors or assigns (i) consolidates with or merges into any other person and shall not be the continuing or surviving entity of such consolidation or merger, or (ii) transfers or conveys all or substantially all of its properties and assets to any person, then, in each such case, to the extent necessary, proper provision shall be made so that such successors and assigns assume the obligations set forth in this
Section 13
.
(d)
The provisions of this
Section 13
are intended to be for the benefit of, and shall be enforceable by, each director or officer of TEEE on the Closing Date and may not be changed without the consent of Donehew, as representative of the same.
14.
CERTAIN WAIVERS.
(a)
As additional consideration for the Merger, Donehew shall deliver to Fuse a general release and waiver (“
Donehew Waiver
”) by which he releases and forever discharges, effective as of the Closing Date, TEEE and its directors, officers, shareholders, employees and agents, from any and all rights, claims, demands, judgments, obligations, liabilities and damages, whether accrued or un-accrued, asserted or un-asserted, and whether known or unknown arising out of or resulting from his (i) status as a holder of an equity interest in TEEE; or (ii) employment, service, consulting or other similar agreement entered into with TEEE prior to Closing to the extent that the basis for claims under any such agreement that survives the Closing arise prior to the Closing, provided, however, the foregoing shall not release any obligations owing to him set forth in this Agreement or any other documents executed in connection with the Merger.
(b)
As additional consideration for the Merger, each of the members of Fuse shall deliver to TEEE a general release and waiver (“
Fuse Members Waivers
”) by which he, she or it releases and forever discharges, effective as of the Closing Date, Fuse and its managers, officers, members, employees and agents, from any and all rights, claims, demands, judgments, obligations, liabilities and damages, whether accrued or un-accrued, asserted or un-asserted, and whether known or unknown arising out of or resulting from his, her or its (i) status as a holder of an equity interest in Fuse; or (ii) employment, service, consulting or other similar agreement entered into with Fuse prior to Closing to the extent that the basis for claims under any such agreement that survives the Closing arise prior to the Closing, provided, however, the foregoing shall not release any obligations owing to him, her or it set forth in this Agreement or any other documents executed in connection with the Merger. Such release shall be contained in the Letter of Transmittal.
15.
NO SECURITIES TRANSACTIONS.
Neither Fuse or TEEE, or any of either of their stockholders, members, managers, officers, employees or their affiliates, directly or indirectly, shall engage in any transactions involving the securities of TEEE prior to the time of the making of a public announcement of the transactions contemplated by this Agreement. Fuse shall use its commercially reasonable efforts to require each of its officers, managers, members, employees, agents and representatives to comply with the foregoing requirement.
16.
INDEMNIFICATION.
(a)
The Holders (the “
Holder Indemnitees
”
) shall be indemnified, defended and held harmless by TEEE from and against all Losses asserted against, resulting to, imposed upon, or incurred by any Holder Indemnitee by reason of, arising out of or resulting from:
(i)
the inaccuracy or breach of any representation or warranty of TEEE or Merger Sub contained in or made pursuant to this Agreement; or
(ii)
the non-fulfillment or breach of any covenant or agreement of TEEE or Merger Sub contained in this Agreement.
(b)
TEEE and its officers, directors and affiliates (the “
TEEE Indemnitees
”) shall be indemnified, defended and held harmless by the Holders, from and against all Losses asserted against, resulting to, imposed upon, or incurred by any TEEE Indemnitee by reason of, arising out of or resulting from:
(i)
the inaccuracy or breach of any representation or warranty of Fuse contained in or made pursuant to this Agreement; or
(ii)
the non-fulfillment or breach of any covenant or agreement of Fuse contained in this Agreement.
(c)
As used in this
Section 16
, the term “
Losses
” shall mean all losses, liabilities, damages, judgments, awards, orders, penalties, settlements, costs and expenses (including, without limitation, interest, penalties, court costs and reasonable legal fees and expenses), including those arising from any demands, claims, suits, actions, costs of investigation, notices of violation or noncompliance, causes of action, proceedings and assessments, but shall exclude consequential damages, lost profits and punitive damages.
(d)
Except with respect to the representations and warranties of Fuse contained in Sections 11(a), 11(b) and 11(c), and the representations and warranties of TEEE and Merger Sub contained in Sections 12(a) and 12(b) and the representations and warranties of the Holders contained in the letter of transmittal submitted pursuant to
Section 1(l)
(the “
Surviving Representations
”), which shall survive the Closing without limitation as to time, the representations and warranties in this Agreement by Fuse and the Holders and by TEEE shall survive the Closing for a period of six (6) months, which is the escrow period. The covenants and agreement in this Agreement by Fuse and TEEE shall survive the Closing in accordance with their terms.
(e)
Any claim made by a Party hereunder prior to the expiration of the escrow period shall be preserved despite the subsequent expiration of the escrow period, and any claim set forth in a notice of claim sent prior to the expiration of the escrow period shall survive until final resolution thereof. Except as set forth in the immediately preceding sentence, no claim for indemnification under this Section 16 shall be brought after the end of the six (6) month escrow period in the Escrow Agreement.
(f)
Notwithstanding any other provisions in this Agreement, no amount shall be payable by TEEE under Section 16(a) or by the Holders under Section 16(b) unless and until the aggregate amount of all indemnifiable Losses owed thereunder exceeds $120,000 (the “
Deductible
”), in which event the amount payable shall include all amounts in excess of the Deductible and all future amounts that become payable under
Section 16(a)
or
Section 16(b),
as the case may be, from time to time thereafter, subject to the further provisions of this Section 16.
(g)
Notwithstanding any other provisions in this Agreement, except with respect to the Surviving Representations, the aggregate liability of the Holders for Losses pursuant to
Section 16(b)
shall not in any event exceed the Escrowed Shares, and no TEEE Indemnitee under
Section 16(b)
shall have a claim other than for the Escrowed Shares (and any proceeds of the shares or distributions with respect to the Escrowed Shares).
(h)
The Parties, on behalf of themselves and all other indemnitees in this Section 16, hereby acknowledge and agree that, from and after the Closing, the sole remedy with respect to any and all claims for money damages arising out of or relating to this Agreement shall be pursuant and subject to the requirements of the indemnification provisions set forth in this Section 16. Notwithstanding any of the foregoing, nothing contained in this Section 16 shall in any way impair, modify or otherwise limit a Party's right to bring any claim, demand or suit against any other Party based upon such other Party’s actual fraud or intentional or willful misrepresentation or omission, it being understood that a mere breach of a representation and warranty, without intentional or willful misrepresentation or omission, does not constitute fraud.
(i)
The Representative shall act on behalf of the Holders and the Holder Indemnitees for all purposes under this
Section 16,
including the initiation and settlement of any claims for indemnification hereunder. The parties acknowledge that the Representative’s obligations under this
Section 16
are solely as a representative of the Holders and the Holder Indemnitees in the manner set forth herein and in the Escrow Agreement, and that the Representative shall have no personal responsibility for any expenses incurred by the Representative in such capacity and that all payments to TEEE as a result of such indemnification obligations shall be made solely from, and only to the extent of, the Escrowed Shares. Out-of-pocket expenses of the Representative for attorneys’ fees and other costs shall be borne by the Holders in accordance with
Section 18(d)
. The Escrow Agent, pursuant to the Escrow Agreement after the Closing, may apply all or a portion of the Escrowed Shares to satisfy any claim for indemnification pursuant to this
Section 16
. The Escrow Agent will hold the remaining portion of the Escrowed Shares until final resolution of all claims for indemnification or disputes relating thereto.
17.
TERMINATION
(a)
This Agreement may be terminated at any time upon the mutual agreement of the Parties.
(b)
This Agreement may be terminated by either Fuse or TEEE if the Closing has not occurred by February 15, 2014; provided, however, the Parties agree that such date shall automatically be extended to March 15, 2014 if the Commissions elects to review the Information Statement. The right to terminate this Agreement under this
Section 17(b)
shall not be available to any party whose action or failure to act has been a principal cause of or resulted in the failure of the Merger to occur on or before such date and such action or failure to act constitutes a breach of this Agreement.
(c)
Subject to
Section 17(d)
, this Agreement may be terminated on written notice by either TEEE and Merger Sub, on the one hand, and Fuse, on the other hand, if such terminating Party is not then in breach of this Agreement, in the event of a breach by the other Party of its material obligations under this Agreement which remains uncured after notice and opportunity to cure as provided in
Section 17(d).
(d)
If noncompliance, nonperformance or breach by a Party hereto occurs or exists and can be cured or eliminated, the Party wishing to terminate this Agreement in accordance with
Section 17(c)
shall not terminate unless and until (i) it has given the other Party written notice that the noncompliance, nonperformance or breach has occurred, specifying the nature thereof and the action required to cure, and (ii) such noncompliance, nonperformance or breach shall not have been cured or eliminated, or the Party giving the notice shall not have otherwise been held harmless from the consequences of the noncompliance, nonperformance or breach to its satisfaction, within thirty (30) days of the receipt of such notice.
(e)
Upon termination of this Agreement, this Agreement shall become null and void and there shall be no liability on the part of any Party hereto, or their respective managers, members, directors, stockholders, officers, employees, agents or affiliates;
provided
,
however
, that nothing herein shall relieve any Party from any liability for any breach by such Party of this Agreement, and all rights and remedies of the nonbreaching Party shall be preserved.
Sections 19
through
27
of this Agreement shall survive any such termination.
18.
AUTHORIZATION OF THE REPRESENTATIVE.
(a)
As a condition to receiving Merger Consideration, each Holder shall irrevocably constitute and appoint the Representative. The Representative hereby agrees to accept such appointment as the true and lawful agent and attorney-in-fact of such Holder with full power of substitution to act in the name, place and stead of such Holder with respect to the performance on behalf of any such Holder under the terms and provisions hereof, and to do or refrain from doing all such further acts and things, and to execute all such documents, as the Representative shall deem necessary or appropriate in connection with any transaction contemplated hereunder, including the power to:
(i)
act for any such Holder with respect to its Ownership Interest Share;
(ii)
accept any notices and communications pursuant to Section 19 on behalf of the Holders, such that a notice or communication shall be deemed duly given to the Holders upon delivery to or receipt by the Representative, in accordance with Section 19;
(iii)
act for any such Holder, if applicable, with respect to all indemnification matters referred to herein, including the right to compromise or settle any such claim on behalf of any such Holder;
(iv)
amend or waive any provision hereof in any manner;
(v)
employ, obtain and rely upon the advice of legal counsel, accountants and other professional advisors as the Representative, in its sole discretion, deems necessary or advisable in the performance of the duties of the Representative;
(vi)
do or refrain from doing any further act or deed on behalf of any such Holder that the Representative deems necessary or appropriate, in the sole discretion of the Representative, relating to the subject matter hereof as fully and completely as any such Holder could do if personally present and acting and as though any reference to such Holder herein was a reference to the Representative;
(vii)
execute, on behalf of such Holder, any agreement or other document necessary or appropriate in connection with the transactions contemplated by this Agreement; and
(viii)
make any representation or warranty on behalf of such Holder necessary or appropriate in connection with the transactions contemplated by this Agreement.
(b)
The Representative shall promptly provide written notice to each Holder of any action taken on behalf of the Holders by the Representative pursuant to the authority delegated to the Representative under this
Section 18
.
(c)
The appointment of the Representative shall be deemed coupled with an interest and shall be irrevocable, and any other person or entity may conclusively and absolutely rely, without inquiry, upon any action of the Representative as the act of each Holder in all matters referred to herein.
(d)
Neither the Representative nor its agents shall be liable to any Holder or any other person or entity for any error of judgment, or any action taken, suffered or omitted to be taken, under this Agreement, except in the case of the Representative’s fraud or willful misconduct. The Holders, severally and not jointly, shall indemnify, reimburse, defend and hold harmless the Representative from and against any and all Losses incurred in connection with, arising out of, resulting from or incident to the acceptance, performance or administration of the Representative’s duties under this Agreement, except in the case of fraud or willful misconduct in the performance of such duties. The Representative may consult with legal counsel, independent public accountants and other experts selected by it, and will not be liable for any action taken or omitted to be taken in good faith by the Representative in accordance with the advice of such counsel, accountants or experts. As to any matters not expressly provided for in this Agreement, the Representative will not be required to exercise any discretion or take any action. All costs and expenses of the Representative in connection with the fulfillment of its obligations under this Agreement shall be borne by the Holders, pro rata based on their Ownership Interest Shares.
(e)
The death or incapacity, or dissolution or other termination of existence, of any Holder does not terminate the authority and agency of the Representative (or successor thereto). The provisions of this
Section 18
are binding upon the executors, heirs, legal representatives and successors of each Holder, and any references in this Agreement to a Holder or the Holders means and includes successors to the Holders’ rights hereunder, whether pursuant to testamentary disposition, the laws of descent and distribution or otherwise.
19.
NOTICES.
Any notice which any of the Parties may desire to serve upon any of the other Parties shall be in writing and shall be conclusively deemed to have been received by the Party at its address, if hand delivered or if mailed, postage prepaid, United States mail, registered, return receipt requested, to the following addresses, or if sent by electronic mail or facsimile to the following electronic mail address or facsimile numbers:
|
|
If to Fuse:
|
Fuse Medical LLC
4770 Bryant Irvin Court, Suite 400
Fort Worth, TX 76107
Attention: D. Alan Meeker, Manager
Telephone: (817) 439-7025
Facsimile: (817) 887-1730
E-mail: alan@fusemedical.com
Facsimile: (602) 798-5403
E-mail:
mcconnellk@ballardspahr.com
|
|
|
If to TEEE or Merger Sub:
|
Golf Rounds.com, Inc.
111 Village Parkway, Building #2
Marietta, GA 30067
Attention: Robert H. Donehew, President
Telephone: (770) 952-3386
Facsimile: (770) 984-2720
E-mail: rdonehew@aol.com
With a copy to:
Attention: David Alan Miller and Brian L Ross
Telephone: (212) 818-8880
Facsimile: (212) 818-8881
E-mail:
dmiller@graubard.com
|
|
|
If to Representative:
|
D. Alan Meeker
4770 Bryant Irvin Court, Suite 400
Telephone: (817) 307-2525
Facsimile: (817) 887-1269
E-mail: alan@cviewgroup.com
Facsimile: (602) 798-5403
E-mail: mcconnellk@ballardspahr.com
|
20.
SUCCESSORS
.
This Agreement may not be assigned by any Party without the prior written consent of all other Parties. This Agreement shall be binding upon and inure to the benefit of the permitted successors and assigns of the Parties.
21.
CHOICE OF LAW; VENUE.
This Agreement shall be construed and enforced in accordance with the laws of the State of Delaware, and the Parties hereby submit to the exclusive jurisdiction of the state and federal courts located in Tarrant County, Texas in respect of all disputes arising hereunder. Each of the Parties agrees that all claims in respect of any dispute may be heard and determined only in such courts, and agrees not to bring any action or proceeding arising out of, or relating to, this Agreement in any other court. Each of the Parties waives any defense of inconvenient forum to the maintenance of any action or proceeding so brought. Each Party agrees that a final judgment in any action so brought shall be conclusive and may be enforced by suit on the judgment or in any other manner provided by applicable law. EACH OF THE PARTIES HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT.
22.
COUNTERPARTS.
This Agreement may be signed in one or more counterparts, all of which taken together shall constitute one entire agreement.
23.
CONFIDENTIAL INFORMATION.
The Parties hereby acknowledge and agree that all information disclosed to each other, whether written or oral, relating to the disclosing Party’s business activities, including its customer names and addresses, operating plans, existing services, new or envisioned products or services and the development thereof, scientific, engineering, or technical information, marketing and product promotional material, including brochures, product literature and plan sheets, customer reports, information relating to order processing, pricing, costs and quotations, and any and all information relating to relationships with customers, is considered confidential information, and is proprietary to, and is considered the invaluable trade secret of such Party (collectively “
Confidential Information
”). Such confidentiality obligations will not apply to (i) information which was known to the one Party or its agents prior to receipt from the other Party; (ii) information which is or becomes generally known through no fault of a Party; (iii) information acquired by a Party or their respective agents from a third party who was not bound to an obligation of confidentiality; (iv) disclosure required by law, regulation or stock exchange rule; or (v) disclosure consented to by the other Party. Any disclosure of any Confidential Information by any Party, its employees, or representatives shall cause immediate, substantial, and irreparable harm and loss to the disclosing Party. Each Party understands that the others desire to keep such Confidential Information in the strictest confidence, and that such Party’s agreement to do so is a continuing condition of the receipt and possession of Confidential Information, and a material provision of this Agreement, and a condition that shall survive the termination of this Agreement. Consequently, each Party shall use Confidential Information for the sole purpose of performing its obligations as provided herein.
24.
ENTIRE AGREEMENT.
This Agreement and Exhibits and Schedules hereto and the documents and instruments delivered pursuant hereto set forth the entire agreement and understanding of the Parties hereto with respect to the transactions contemplated hereby, and supersede all prior agreements, arrangements and understandings related to the subject matter hereof. No understanding, promise, inducement, statement of intention, representation, warranty, covenant or condition, written or oral, express or implied, whether by statute or otherwise, has been made by any Party hereto which is not embodied in this Agreement or the written statements, certificates, or other documents delivered pursuant hereto or in connection with the transactions contemplated hereby, and no Party hereto shall be bound by or liable for any alleged understanding, promise, inducement, statement, representation, warranty, covenant or condition not so set forth.
25.
COSTS AND EXPENSES.
Subject to the Fuse Loans, each Party will bear the expenses of its own attorneys, brokers, investment bankers, agents, and finders employed by such Party; provided, however, that Fuse will pay up to $15,000 to Graubard Miller for its representation in connection with the negotiation of this Agreement and the preparation, filing and mailing of the Information Statement. The Parties agree that such cap shall not apply to any other work Graubard Miller may be asked to perform in connection with its representation of TEEE, including without limitation any work in connection with the preparation and filing of a Current Report on Form 8-K disclosing the consummation of the transactions contemplated by this Agreement or any work performed after the Closing; provided, however, that all such work must be pre approved by Fuse in writing.
26.
ATTORNEY’S FEES
.
Should any action be commenced between or among the Parties to this Agreement concerning the matters set forth in this Agreement or the right and duties of any of them in relation thereto, the prevailing Party in such action shall be entitled, in addition to such other relief as may be granted, to recover from the other Party or Parties its reasonable attorney’s fees and other expenses.
27.
RULES OF CONSTRUCTION
. The headings of Sections are provided for convenience only and do not affect the construction or interpretation of this Agreement. Any reference in this Agreement to a “Section,” “Schedule” or “Exhibit” refers to the corresponding section, schedule or exhibit of or to this Agreement, unless the context indicates otherwise. Any reference to a statute refers to the statute, any amendments or successor legislation, and all regulations promulgated under or implementing the statute, as in effect at the relevant time. Any reference to a contract as of a given date means the contract as amended, supplemented and modified from time to time through such date. All pronouns and any variations thereof shall be construed to refer to such gender and number as the identity of the person or persons may require. The terms “include” and “including” indicate examples of a foregoing general statement and not a limitation on that general statement. Words such as “hereof,” “herein,” “hereunder,” and “hereinafter,” refer to this Agreement as a whole, unless the context otherwise requires. Each Party acknowledges that such Party, either directly or through such Party’s representatives, has participated in the drafting of this Agreement, and any applicable rule of construction that ambiguities are to be resolved against the drafting Party should not be applied in connection with the construction or interpretation of this Agreement.
[Signature page follows]
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the date first above written.
|
Fuse:
|
Fuse Medical, LLC,
a Delaware limited liability company
|
|
|
|
|
|
|
|
|
By:
|
/s/ D. Alan Meeker
|
|
|
|
|
D. Alan Meeker
|
|
|
|
|
Manager
|
|
|
|
|
|
|
|
|
|
|
|
|
TEEE:
|
Golf Rounds.com, Inc.,
a Delaware corporation
|
|
|
|
|
|
|
|
|
By:
|
/s/ Robert H. Donehew
|
|
|
|
|
Robert H. Donehew
|
|
|
|
|
President
|
|
|
|
|
|
|
|
|
|
|
|
|
Merger Sub:
|
Project Fuse LLC,
a Delaware limited liability company
|
|
|
|
|
|
|
|
|
By:
|
/s/ Robert H. Donehew
|
|
|
|
|
Robert H. Donehew
|
|
|
|
|
Manager
|
|
|
|
|
|
|
|
|
|
|
|
|
Representative:
|
By:
|
/s/ D. Alan Meeker
|
|
|
|
|
D. Alan Meeker
|
|
EXHIBIT A
DEFINED TERMS
The following terms have the respective meanings given to them below or in the Sections of this Agreement set forth below:
“
10-K
” is defined in
Section 12(k)
.
“
14C Amendments
” means the amendments to the TEEE Certificate of Incorporation that have been duly approved by the TEEE Stockholder Approval and will be set forth in the Information Statement, which amendments shall effect (i) the Reverse Stock Split, (ii) an increase in authorized capital stock from 12,000,000 shares of common stock to 500,000,000 shares of common stock and from 0 shares of preferred stock to 20,000,000 shares of preferred stock, and (iii) a name change of TEEE to “Fuse Medical, Inc.”
“
Agreement
” is defined in the preamble.
“
Business Day
” means any day other than a Saturday, Sunday or legal holiday as recognized in the State of Delaware.
“
Closing
” is defined in
Section 1(c)
.
“
Closing Date
” is defined in
Section 1(c)
.
“
Confidential Information
” is defined in
Section 23
.
“
Commission
” is defined in
Section 7(d)
.
“
Deductible
” is defined in
Section 16(e)
.
“
Donehew
” means Robert Donehew.
“
Donehew Waiver
” is defined in
Section 14(a)
.
“
Effective Time
” is defined in
Section 1(c)
.
“
Escrow Agent
” is defined in
Section 1(h)
.
“
Escrow Agreement
” is defined in
Section 1(h)
.
“
Escrowed Shares
” is defined in
Section 1(h)
.
“
Fuse
” is defined in the preamble.
“
Fuse Financial Statements
” means audited financial statements of Fuse for the fiscal years ended August 31, 2012, and August 31, 2013 and any interim or other financial statements required for inclusion in the Information Statement or Current Report on Form 8-K to be filed in connection with this Agreement (including the balance sheet, statement of operations, statement of cash flows, statement of member equity and all related notes).
“
Fuse Loans
” is defined in
Section 12(g)
.
“
Fuse Members Waivers
” is defined in
Section 14(b)
.
“
Governmental Body
” is defined in
Section 11(d)
.
“
Holders
” is defined in
Section 1(e)(ii)
.
“
Holder Indemnitees
” is defined in
Section 16(a)
.
“
Information Statement
” is defined in
Section 1(j)
.
“
Losses
” is defined in
Section 16(c)
.
“
Lock Up Agreement
” is defined in
Section 2(g)
.
“
Merger
” is defined in
Section 1(a)
.
“
Merger Consideration
” is defined in
Section 1(e)(ii)(B)
.
“
Merger Sub
” is defined in the preamble.
“
Outstanding Unit
” is defined in
Section 1(e)(ii)
.
“
Outstanding Units
” is defined in
Section 1(e)(ii)
.
“
Ownership Interest Share
” is defined in
Section 1(e)(ii)(A)
.
“
Parties
” is defined in the preamble.
“
Pro Formas
” means pro forma financial statements reflecting the transactions contemplated by this Agreement (including a pro forma balance sheet and statement of operations and all related notes thereto) for the fiscal year ended August 31, 2013 and any interim or other pro forma financial statements as are required for inclusion in the Information Statement or Current Report on Form 8-K to be filed in connection with this Agreement.
“
Registration Rights Agreement
” is defined in
Section 2(f)
.
“
Representative
” is defined in the preamble.
“
Reverse Stock Split
” means the 14.62 to 1 reverse stock split of the TEEE common stock approved by the TEEE Stockholder Approval.
“
Surviving Company
” is defined in
Section 1(a)
.
“
Surviving Representations
” is defined in
Section 16(d)
.
“
TEEE
” is defined in the preamble.
“
TEEE Indemnitees
” is identified in
Section 16(b)
.
“
TEEE Stockholder Approval
” is identified in
Section 2(j)
.
EXHIBIT B
ESCROW AGREEMENT
This ESCROW AGREEMENT, dated as of _______, 2014 (together with schedules hereto, this “
Agreement
”), is by and among D. ALAN MEEKER (“
Meeker
”), with an address of 4770 Bryant Irvin Court, Suite 400, Fort Worth, Texas 76107, acting as the representative of the former holders (each, a “
Holder
”) of all of the membership interests of Fuse Medical LLC (“
Fuse
”); FUSE MEDICAL, INC. (formerly known as Golf Rounds.com, Inc.), a Delaware corporation, with principal offices located at _______ (“
Parent
” or “
Indemnitee
”); and AMERICAN STOCK TRANSFER & TRUST COMPANY, LLC,
a New York limited liability trust company, with principal offices located at 6201 15th Avenue, Brooklyn, New York, 11219 (“
Escrow Agent
”).
Parent, Project Fuse LLC (“
Merger Sub
”), Fuse and Meeker, solely in his capacity as representative of the Holders, are the parties to an Agreement and Plan of Merger dated as of December 18, 2013 (the “
Merger Agreement
”) pursuant to which Fuse has merged into Merger Sub, with Fuse being the surviving entity of such merger and remaining a wholly-owned subsidiary of Parent (the “
Merger
”). Pursuant to the Merger Agreement and the letters of transmittal (the “
Letters of Transmittal
”) delivered by the Holders in connection with the exchange of their membership interests for shares of common stock of Parent, par value $0.01 per share (“
Parent Common Stock
”), in the Merger, Parent is to be indemnified in certain respects. References herein to the Merger Agreement include, for the purposes of the indemnification obligations contained in the Letters of Transmittal, the Letters of Transmittal. The parties desire to establish an escrow fund as collateral security for the indemnification obligations under the Merger Agreement. The Indemnitor Representative (as defined below) has been designated pursuant to the Merger Agreement to represent all of the Holders and each Permitted Transferee (as hereinafter defined) of the Holders (the Holders and all such Permitted Transferees are hereinafter referred to collectively as the “
Owners
”), and to act on their behalf for purposes of this Agreement. The Indemnitee Representative (as defined below) is designated hereby to represent Parent, and to act on its behalf for purposes of this Agreement.
NOW THEREFORE,
for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, for themselves, their successors and assigns, hereby agree as follows:
|
1.
|
Definitions
. The following terms shall have the meanings indicated or referred to below, inclusive of their singular and plural forms, except where the context requires otherwise. Unless the context requires otherwise, all references to “years,” “months,” or “days” shall mean “calendar years,” “calendar months,” and “calendar days.” References in this Agreement to “including” shall mean “including, without limitation,” whether or not so specified. Any term not defined below which is initially capitalized in this Agreement shall have the meaning ascribed to it in this Agreement.
|
“
Affiliate
” means, with respect to any person, (a) a person which directly or indirectly through one or more intermediaries controls, is controlled by or is under common control with such person, (b) any person of which such person is the beneficial owner of a twenty-five percent (25%) or greater interest, or (c) any person which acquires all or substantially all of the assets of such person. A person is deemed to control another person if such person, directly or indirectly, has the power to direct the management, operations or business of such person. The term “beneficial owner” is to be determined in accordance with Rule 13d-3 of the Securities Exchange Act of 1934, as amended.
“
Business Day
” shall mean any day other than a Saturday, a Sunday, or a day on which banking institutions in the State of New York are authorized or obligated by law or executive order to close.
“
Holder Representative
” or “
Indemnitor Representative
” shall mean D. Alan Meeker or any other person designated in a writing signed by the Owners (as hereinafter defined) and delivered to Escrow Agent and Parent Representative in accordance with the notice provisions of this Agreement, to act as the Holders’ representative under this Agreement. D. Alan Meeker has been designated, pursuant to the Merger Agreement and the letters of transmittal delivered by the Holders in connection with the closing of the transactions contemplated by the Merger Agreement, to represent the Holders, and to act on their behalf for purposes of this Agreement.
“
Joint Written Direction
” shall mean a Joint Notice (as defined below) or any other direction executed by the Representatives to take or refrain from taking an action pursuant to this Agreement.
“
Parent Representative
” or “
Indemnitee Representative
” shall mean Robert H. Donehew or any other person (other than any person who is a Holder or present or former affiliate of a Holder) designated in a writing signed by the then-existing Parent Representative and delivered to Escrow Agent and Holder Representative in accordance with the notice provisions of this Agreement, to act as Parent’s representative under this Agreement. This provision shall not be amended without the consent of the then-existing Parent Representative.
“
Representatives
” shall mean the Indemnitor Representative and the Indemnitee Representative.
|
2.
|
Escrow Fund; Appointment; Stockholder Rights
.
|
|
(a)
|
Concurrently with the execution hereof, Parent's transfer agent is delivering to the Escrow Agent, to be held in escrow pursuant to the terms of this Agreement, stock certificates in the amounts set forth in
Schedule B
hereto issued in the names of each Holder representing a portion of the shares of common stock of Parent, par value $0.01 per share (“
Parent Common Stock
”), issued to the Holders in the Merger, together with two (2) assignments (separate from certificate) executed in blank by such Stockholder, with medallion signature guaranties. The shares of Parent Common Stock represented by the stock certificates so delivered by the Holders to the Escrow Agent are herein referred to in the aggregate as the “
Escrow Fund
.” The Escrow Agent shall maintain a separate account for each Holder and, subsequent to any transfer permitted pursuant to Paragraph 2(d) hereof, each Owner’s, portion of the Escrow Fund.
|
|
(b)
|
The Escrow Agent hereby agrees to act as escrow agent and to hold, safeguard and disburse the Escrow Fund pursuant to the terms and conditions hereof. It shall treat the Escrow Fund as a trust fund in accordance with the terms of this Agreement and not as the property of Parent. The Escrow Agent’s duties hereunder shall terminate upon its distribution of the entire Escrow Fund in accordance with this Agreement.
|
|
(c)
|
Except as herein provided, the Owners shall retain all of their rights as stockholders of Parent with respect to shares of Parent Common Stock constituting the Escrow Fund during the period the Escrow Fund is held by the Escrow Agent (the “
Escrow Period
”), including, without limitation, the right to vote their shares of Parent Common Stock included in the Escrow Fund.
|
|
(d)
|
During the Escrow Period, all dividends payable in cash with respect to the shares of Parent Common Stock included in the Escrow Fund shall be paid to the Owners, but all dividends payable in stock or other non-cash property (“
Non-Cash Dividends
”) shall be delivered to the Escrow Agent to hold in accordance with the terms hereof. As used herein, the term “
Escrow Fund
” shall be deemed to include the Non-Cash Dividends distributed thereon, if any.
|
|
(e)
|
During the Escrow Period, no sale, transfer or other disposition may be made of any or all of the shares of Parent Common Stock in the Escrow Fund except (i) to a “Permitted Transferee” (as hereinafter defined), (ii) by virtue of the laws of descent and distribution upon death of any Owner, or (iii) pursuant to a qualified domestic relations order; provided, however, that such permissive transfers may be implemented only upon the respective transferee’s written agreement to be bound by the terms and conditions of this Agreement and to the appointment of the Indemnitor Representative to represent such Permitted Transferee and to act on such Permitted Transferee’s behalf for the purposes of this Agreement. As used in this Agreement, the term “
Permitted Transferee
” shall include: (x) members of a Holder’s “Immediate Family” (as hereinafter defined); (y) an entity in which (A) a Holder and/or members of a Holder’s Immediate Family beneficially own 100% of such entity’s voting and non-voting equity securities, or (B) a Holder and/or a member of such Holder’s Immediate Family is a general partner and in which such Holder and/or members of such Holder’s Immediate Family beneficially own 100% of all capital accounts of such entity; and (z) a revocable trust established by a Holder during his lifetime for the benefit of such Holder or for the exclusive benefit of all or any of such Holder’s Immediate Family. As used in this Agreement, the term “
Immediate Family
” means, with respect to any Holder, a spouse, Parent, lineal descendants, the spouse of any lineal descendant, and brothers and sisters (or a trust, all of whose current beneficiaries are members of an Immediate Family of the Holder). In connection with and as a condition to each permitted transfer, the Permitted Transferee shall deliver to the Escrow Agent an assignment separate from certificate executed by the transferring Holder, with medallion signature guaranty, or where applicable, an order of a court of competent jurisdiction, evidencing the transfer of shares to the Permitted Transferee, together with two (2) assignments (separate from certificate) executed in blank by the Permitted Transferee, with medallion signature guaranties, with respect to the shares transferred to the Permitted Transferee. Upon receipt of such documents, the Escrow Agent shall deliver to Parent’s transfer agent the original stock certificate out of which the assigned shares are to be transferred, together with the executed assignment separate from certificate executed by the transferring Holder, or a copy of the applicable court order, and shall request that Parent issue new certificates representing (m) the number of shares, if any, that continue to be owned by the transferring Holder, and (n) the number of shares owned by the Permitted Transferee as the result of such transfer. Parent, the transferring Holder and the Permitted Transferee shall cooperate in all respects with the Escrow Agent in documenting each such transfer and in effectuating the result intended to be accomplished thereby. During the Escrow Period, no Owner shall pledge or grant a security interest in such Owner’s shares of Parent Common Stock included in the Escrow Fund or grant a security interest in such Owner’s rights under this Agreement.
|
|
(a)
|
Parent, acting through the Parent Representative, may make a claim for indemnification pursuant to Section 16 of the Merger Agreement (“
Indemnification Claim
”) against the Escrow Fund by giving notice (a “
Notice
”) to the Holder Representative (with a copy to the Escrow Agent) specifying (i) the covenant, representation, warranty, or agreement contained in the Merger Agreement which it asserts has been breached or otherwise entitles Parent to indemnification, (ii) in reasonable detail, the nature and dollar amount of any Indemnification Claim, and (iii) whether the Indemnification Claim results from a claim by a person other than the parties to the Merger Agreement (“
Third Party Claim
”) against Parent or Fuse. The Parent Representative also shall deliver to the Escrow Agent (with a copy to the Holder Representative), concurrently with its delivery to the Escrow Agent of the Notice, a certification as to the date on which the Notice was delivered to the Holder Representative.
|
|
(b)
|
If the Indemnitor Representative shall give a notice to the Indemnitee Representative (with a copy to the Escrow Agent) (a “
Counter Notice
”), within 30 days following the date of receipt (as specified in the Committee’s certification) by the Indemnitor Representative of a copy of the Notice, disputing whether the Indemnification Claim is indemnifiable under the Merger Agreement, the Indemnitee Representative and the Indemnitor Representative shall attempt to resolve such dispute by voluntary settlement as provided in
Section 3(c)
below. If no Counter Notice with respect to an Indemnification Claim is received by the Escrow Agent from the Indemnitor Representative within such 30-day period, the Indemnification Claim shall be deemed to be an Established Claim (as hereinafter defined) for purposes of this Agreement.
|
|
(c)
|
If the Indemnitor Representative delivers a Counter Notice to the Escrow Agent, the Indemnitee Representative and the Indemnitor Representative shall, during the period of 60 days following the delivery of such Counter Notice or such greater period of time as the parties may agree to in writing (with a copy to the Escrow Agent), attempt to resolve the dispute with respect to which the Counter Notice was given. If the Indemnitee Representative and the Indemnitor Representative shall reach a settlement with respect to any such dispute, they shall jointly deliver written notice of such settlement to the Escrow Agent specifying the terms thereof. If the Indemnitee Representative and the Indemnitor Representative shall be unable to reach a settlement with respect to a dispute, such dispute shall be resolved by arbitration pursuant to
Section 3(d)
below.
|
|
(d)
|
If the Indemnitee Representative and the Indemnitor Representative cannot resolve a dispute prior to expiration of the 60-day period referred to in paragraph 3(d) above (or such longer period as the parties may have agreed to in writing), then such dispute shall be submitted (and either party may submit such dispute) for arbitration in accordance with
Section 14
.
|
|
(e)
|
As used in this Agreement, “
Established Claim
” means (i) Indemnification Claim deemed established pursuant to the last sentence of
Section 3(b)
above, (ii) Indemnification Claim resolved in favor of Indemnitee by settlement pursuant to
Section 3(d)
above, resulting in a dollar award to Indemnitee, (iii) Indemnification Claim established by the decision of an arbitrator pursuant to
Section 3(d)
above, resulting in a dollar award to Indemnitee, (iv) Third Party Claim that has been sustained by a final determination (after exhaustion of any appeals) of a court of competent jurisdiction, or (v) Third Party Claim that the Indemnitee Representative and the Indemnitor Representative have jointly notified the Escrow Agent has been settled in accordance with the provisions of the Merger Agreement.
|
|
(i)
|
Promptly after an Indemnification Claim becomes an Established Claim, the Indemnitee Representative and the Indemnitor Representative shall jointly deliver a notice to the Escrow Agent (a “
Joint Notice
”) directing the Escrow Agent to pay to Indemnitee, and the Escrow Agent promptly shall pay to Indemnitee, an amount equal to the aggregate dollar amount of the Established Claim (or, if at such time there remains in the Escrow Fund less than the full amount so payable, the full amount remaining in the Escrow Fund). Notwithstanding anything to the contrary, pursuant to Section 16(f) of the Merger Agreement, no amounts shall be payable on any Established Claim until such time as the amount of such Established Claim, aggregated with all other Established Claims, exceeds $120,000 (the “Deductible”). Once the aggregate value of all Established Claims exceeds the Deductible, the amount payable for the Established Claims will be all amounts in excess of the Deductible.
|
|
(ii)
|
Payment of an Established Claim shall be made, after taking into account the Deductible, from the Escrow Shares pro rata from the account maintained on behalf of each Owner. For purposes of each payment, such shares shall be valued at the “
Fair Market Value
” (as defined below). However, in no event shall the Escrow Agent be required to calculate Fair Market Value or make a determination of the number of shares to be delivered to Indemnitee in satisfaction of any Established Claim; rather, such calculation shall be included in and made part of the Joint Notice. The Escrow Agent shall transfer to Indemnitee out of the Escrow Fund that number of shares of Parent Common Stock necessary to satisfy each Established Claim, after taking into account the Deductible, as set out in the Joint Notice. Any dispute between the Indemnitee Representative and the Indemnitor Representative concerning the calculation of Fair Market Value, or the number of shares necessary to satisfy the Deductible or any Established Claim, or any other dispute regarding a Joint Notice, shall be resolved between the Indemnitee Representative and the Indemnitor Representative in accordance with the procedures specified in
Section 3(d)
above, and shall not involve the Escrow Agent. Each transfer of shares in satisfaction of an Established Claim shall be made by the Escrow Agent delivering to Parent stock certificates held in each Owner’s account evidencing not less than such Owner’s pro rata portion of the aggregate number of shares specified in the Joint Notice, together with assignments separate from certificate executed in blank by such Owner and completed by the Escrow Agent in accordance with instructions included in the Joint Notice. Upon receipt of the stock certificates and assignments, Parent shall deliver to the Escrow Agent new certificates representing the number of shares owned by each Owner after such payment. The parties hereto (other than the Escrow Agent) agree that the foregoing right to make payments of Established Claims in shares of Parent Common Stock may be made notwithstanding any other agreements restricting or limiting the ability of any Owner to sell any shares of Parent stock or otherwise. The Parent Representative and the Holder Representative shall be required to exercise utmost good faith in all matters relating to the preparation and delivery of each Joint Notice. As used herein, “
Fair Market Value
” means the average reported closing price for the Parent Common Stock for the ten trading days ending on the last trading day prior to the day the Established Claim is paid.
|
|
4.
|
Release of Escrow Fund
.
|
|
(a)
|
On the first Business Day after the date that is six (6) months from the closing of the Merger (the “
Termination Date
”), the Escrow Agent shall distribute and deliver to each Owner certificates representing shares of Parent Common Stock equal to the original number of shares placed in such Owner’s account, less that number of shares in such Owner’s account equal to the sum of (i) the number of shares applied in satisfaction of Indemnification Claims made prior to that date and (ii) the number of shares in the Pending Claims Reserve allocated to such Owner’s account, as provided in the following sentence. If, at such time, there are any Indemnification Claims with respect to which Notices have been received but which have not been resolved pursuant to
Section 3
hereof or in respect of which the Escrow Agent has not been notified of, and received a copy of, a final determination (after exhaustion of any appeals) by a court of competent jurisdiction, as the case may be (in either case, “
Pending Claims
”), and which, if resolved or finally determined in favor of Parent, would result in a payment to Parent in excess of the Deductible, the Escrow Agent shall retain in the Pending Claims Reserve that number of shares of Parent Common Stock having a Fair Market Value equal to the dollar amount for which indemnification is sought in such Indemnification Claim in excess of the Deductible to the extent all Established Claims have not exceeded, in the aggregate, the Deductible, allocated pro rata from the account maintained on behalf of each Owner. The Parent Representative and the Holder Representative shall certify to the Escrow Agent the Fair Market Value to be used in calculating the Pending Claims Reserve, and the number of shares of Parent Common Stock to be retained therefor. Thereafter, if any Pending Claim becomes an Established Claim, the Parent Representative and the Holder Representative shall deliver to the Escrow Agent a Joint Notice directing the Escrow Agent to deliver to Parent the number of shares in the Pending Claims Reserve in respect thereof determined in accordance with paragraph 3(f) above and to deliver to each Owner the remaining shares in the Pending Claims Reserve allocated to such Pending Claim, all as specified in a Joint Notice. If any Pending Claim is resolved against Parent, the Parent Representative and the Holder Representative shall deliver to the Escrow Agent a Joint Notice directing the Escrow Agent to pay to each Owner its pro rata portion of the number of shares allocated to such Pending Claim in the Pending Claims Reserve.
|
|
(b)
|
As used herein, the “
Pending Claims Reserve
” shall mean, at the time any such determination is made, that number of shares of Parent Common Stock in the Escrow Fund having a Fair Market Value equal to the sum of the aggregate dollar amounts claimed to be due with respect to all Pending Claims in excess of the Deductible if such Deductible has not yet been reached (as shown in the Notices of such Claims).
|
|
5.
|
Cooperation
. The Escrow Agent, the Parent Representative and the Holders Representative shall cooperate in all respects with one another in the calculation of any amounts determined to be payable to Parent and the Owners in accordance with this Agreement and in implementing the procedures necessary to effect such payments.
|
|
6.
|
Suspension of Performance; Disbursement into Court
. If, at any time, (i) after compliance with
Section 3
, there shall exist any dispute between or among Parent, the Holders and/or either of the Representatives with respect to the holding or disposition of all or any portion of the Escrow Funds or any other obligations of Escrow Agent hereunder, (ii) Escrow Agent is unable to determine, to Escrow Agent’s sole satisfaction, the proper disposition of all or any portion of the Escrow Funds or Escrow Agent’s proper actions with respect to its obligations hereunder, or (iii) the Representatives have not, within thirty (30) days of the furnishing by Escrow Agent of a notice of resignation pursuant to
Section 8
hereof, appointed a successor escrow agent to act hereunder (which such successor escrow agent has accepted such appointment), then Escrow Agent may, in its sole discretion, take either or both of the following actions:
|
|
(a)
|
suspend the performance of any of its obligations (including any disbursement obligations) under this Agreement until such dispute or uncertainty shall be resolved to the sole satisfaction of Escrow Agent or until a successor escrow agent shall have been appointed (as the case may be).
|
|
(b)
|
petition (by means of an interpleader action or any other appropriate method) any court of competent jurisdiction in any venue convenient to Escrow Agent, for instructions with respect to such dispute or uncertainty, and to the extent required or permitted by law, pay into such court, for holding and disposition in accordance with the instructions of such court, all Escrow Funds, after deduction and payment to Escrow Agent of all fees, costs and expenses (including court costs and expenses and attorneys’ fees) or any other amount payable to, incurred by, or expected to be incurred by Escrow Agent in connection with the performance of its duties and the exercise of its rights hereunder.
|
Escrow Agent shall have no liability to Parent, the Holders, or either of the Representatives, or to their respective shareholders, partners, or members, officers or directors, employees, Affiliates or any other person with respect to any such suspension of performance or disbursement into court (including any disbursement obligations hereunder), specifically including any liability or claimed liability that may arise, or be alleged to have arisen, out of or as a result of any delay in the disbursement of Escrow Funds or any delay in or with respect to any other action required or requested of Escrow Agent.
|
7.
|
[Intentionally omitted]
|
|
8.
|
Resignation of Escrow Agent
. Escrow Agent may resign and be discharged from the performance of its duties hereunder at any time by giving ten (10) days’ prior written notice to Parent, the Holders and the Representatives specifying the date when such resignation shall take effect. Upon any such notice of resignation, the Representatives shall jointly issue to Escrow Agent a Joint Written Direction authorizing redelivery of the Escrow Funds to a bank or trust company that has been retained as successor to Escrow Agent hereunder prior to the effective date of such resignation. The retiring Escrow Agent shall transmit all records pertaining to the Escrow Funds and shall pay all Escrow Funds to the successor escrow agent, after making copies of such records as the retiring Escrow Agent deems advisable and after deduction and payment to the retiring Escrow Agent of all fees, costs and expenses (including court costs and expenses and attorneys' fees) or any other amount payable to, incurred by, or expected to be incurred by the retiring Escrow Agent in connection with the performance of its duties and the exercise of its rights hereunder.
|
After any retiring Escrow Agent’s resignation, the provisions of this Agreement shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Escrow Agent under this Agreement. Any corporation or other entity into which Escrow Agent may be merged or converted or with which it may be merged or consolidated, or any other entity to which all or a majority of all of Escrow Agent’s escrow business may be transferred by sale of assets or otherwise, shall be Escrow Agent under this Agreement without further act or consent of any party hereto.
|
9.
|
Liability of Escrow Agent
. Escrow Agent undertakes to perform only the ministerial duties as are expressly set forth herein and no other duties and obligations (fiduciary or otherwise) shall be implied. Escrow Agent shall have no duty to enforce any obligation of any other person to make any payment or delivery, or to direct or cause any payment or delivery to be made, or to enforce any obligation of any other person to perform any other act. Escrow Agent shall have no liability under and no duty to inquire as to the provisions of any agreement (even though such agreement may be referenced in this Agreement) other than this Agreement. In the event of any conflict between the terms and provisions of this Agreement and any other agreement, as to Escrow Agent, the terms and conditions of this Agreement shall control subject to
Section 31
hereof. Escrow Agent is not a party to the Merger Agreement, is not bound by any of its terms, and has not undertaken in any way to effectuate, implement or comply with the Merger Agreement. Escrow Agent shall not be liable to Parent or the Holders or to anyone else for any action taken or omitted by it in good faith except to the extent that a court of competent jurisdiction determines that Escrow Agent’s gross negligence or willful misconduct was the primary cause of any loss to Parent or the Holders. Escrow Agent’s sole responsibility shall be for the safekeeping and disbursement of the Escrow Funds in accordance with the terms of this Agreement and the Merger Agreement. Escrow Agent shall have no implied duties or obligations and shall not be charged with knowledge or notice of any fact or circumstance not specifically set forth herein. Escrow Agent shall have no duty to solicit any payment which may be due to be paid in Escrow Funds or to confirm or verify the accuracy or correctness of any amounts deposited in accordance with this Agreement. Escrow Agent may rely conclusively, and shall be protected in acting, upon any notice, instruction (including a Joint Written Direction (such as a wire transfer instruction)), request, order, judgment, certification, opinion or advice of counsel (including counsel chosen by Escrow Agent), statement, demand or other instrument or document, not only as to its due execution, validity (including the authority of the person signing or presenting the same) and effectiveness, but also as to the truth and accuracy of any information contained therein, which Escrow Agent shall believe to be genuine and to have been signed or presented by the person or parties purporting to sign the same. In no event shall Escrow Agent be liable for incidental, indirect, special, consequential or punitive damages of any kind whatsoever (including lost profits), even if Escrow Agent has been advised of the likelihood of such loss or damage and regardless of the form of action. The officers, directors, members, partners, trustees, employees, agents, attorneys or other representatives and Affiliates of Escrow Agent owe no duty or obligation to any party hereunder and shall have no liability to any person by reason of any error of judgment, for any act done or not done, for any mistake of fact or law, or otherwise.
|
Escrow Agent shall not be obligated to take any legal or other action or commence any proceeding in connection with the Escrow Funds, any account in which Escrow Funds are deposited, this Agreement or the Merger Agreement, or to appear in, prosecute or defend any such legal action or proceeding (whether or not it shall have been furnished with acceptable indemnification and advancement). Escrow Agent may consult legal counsel selected by it in the event of any dispute or question as to the construction of any of the provisions hereof or of any other agreement or of its duties hereunder, or relating to any dispute or question involving any party hereto, and shall incur no liability and shall be fully indemnified from any liability whatsoever in acting in accordance with the opinion or instruction of such counsel. Parent and the Holders, jointly and severally, shall promptly pay, upon demand, the reasonable fees, costs and expenses of any such counsel. Escrow Agent shall have no responsibility with respect to the use or application of any Escrow Funds paid by Escrow Agent pursuant to the provisions hereof.
Escrow Agent is authorized, in its sole discretion, to comply with orders issued or process entered by any court with respect to the Escrow Funds, without determination by Escrow Agent of such court’s jurisdiction in the matter. If any portion of the Escrow Funds is at any time attached, garnished or levied upon under any court order, or in case the payment, assignment, transfer, conveyance or delivery of any such property shall be stayed or enjoined by any court order, or in case any order, judgment or decree shall be made or entered by any court affecting such property or any part thereof, then and in any such event, Escrow Agent is authorized, in its sole discretion, to rely upon and comply with any such order, writ, judgment or decree which it is advised by legal counsel selected by it is binding upon it without the need for appeal or other action; and if Escrow Agent complies with any such order, writ, judgment or decree, it shall not be liable to any of the parties hereto or to any other person or entity by reason of such compliance even though such order, writ, judgment or decree may be subsequently reversed, modified, annulled, set aside or vacated.
|
10.
|
Indemnification of Escrow Agent
. From and at all times after the date of this Agreement, Parent and the Holders, jointly and severally, shall, to the fullest extent permitted by law, defend, indemnify and hold harmless Escrow Agent and each director, officer, member, partner, trustee, employee, attorney, agent and Affiliate of Escrow Agent (collectively, the “Indemnified Parties”) against any and all actions, claims (whether or not valid), losses, damages, liabilities, costs, penalties, settlements, judgments and expenses of any kind or nature whatsoever (including costs and expenses and reasonable attorneys’ fees) incurred by or asserted against any of the Indemnified Parties from and after the date hereof, whether direct, indirect or consequential, as a result of, in connection with, or arising from or in any way relating to any claim, demand, suit, action or proceeding (including any inquiry or investigation) by any person, including Parent, the Holders and/or the Representatives, whether threatened or initiated, asserting a claim for any legal or equitable remedy against any person (whether it is an Indemnified Party or not) under any statute or regulation, including any federal or state securities laws, or under any common law or equitable cause or otherwise, arising from or in connection with the negotiation, preparation, execution, performance or failure of performance of this Agreement or any transactions contemplated herein or relating hereto (including tax reporting or withholding or the enforcement of any rights or remedies under or in connection with this Agreement), whether or not any such Indemnified Party is a party to any such action, proceeding, suit or the target of any such inquiry or investigation (without derogation of any other indemnity afforded to Escrow Agent);
provided, however
, that no Indemnified Party shall have the right to be indemnified hereunder for any liability finally determined by a court of competent jurisdiction, subject to no further appeal, to have resulted solely from the gross negligence or willful misconduct of such Indemnified Party. Each Indemnified Party shall, in its sole discretion, have the right to select and employ separate counsel with respect to any action or claim brought or asserted against it, and the reasonable fees of such counsel (and such counsel’s costs and expenses) shall be paid, upon demand, by Parent and the Holders jointly and severally.
|
The parties hereto agree that neither the payment by Parent or the Holders of any claim by Escrow Agent for indemnification hereunder nor the disbursement of any amounts to Escrow Agent from the Escrow Funds in respect of a claim by Escrow Agent for indemnification shall impair, limit, modify, or affect, as between Parent and the Holders the respective rights and obligations of Parent, on the one hand, and the Holders, on the other hand, under the Merger Agreement.
|
11.
|
Fees, Costs and Expenses of Escrow Agent
. Parent shall compensate Escrow Agent for its services hereunder in accordance with
Schedule A
attached hereto and, in addition, shall reimburse Escrow Agent for all of its reasonable out-of-pocket costs and expenses, including attorneys’ fees, travel expenses, telephone and facsimile transmission costs, postage (including express mail and overnight delivery charges), copying charges and the like. The additional provisions and information set forth on
Schedule A
hereto are hereby incorporated by this reference, and form a part of this Agreement. All of the compensation shall be payable by Parent and all of the reimbursement obligations set forth in this
Section 11
shall be payable by Parent and the Holders, jointly and severally, upon execution of this Agreement and, in the future, upon demand by Escrow Agent. Escrow Agent is expressly authorized and directed, but shall not be obligated, to, and may, charge against and disburse to itself from the Escrow Funds (including taking such steps as selling any investment held as part of the Escrow Funds), from time to time, the amount of any compensation and reimbursement of any costs, fees and expenses set forth on
Schedule A
hereto which are due and payable hereunder, including any amount to which Escrow Agent or any other Indemnified Party is entitled to seek indemnification pursuant to
Section 10
hereof, or any other amount owing to Escrow Agent hereunder. Escrow Agent shall notify the Representatives of any disbursement from the Escrow Funds to itself or any other Indemnified Party in respect of any compensation or reimbursement hereunder and shall furnish to the Representatives copies of all related invoices and other statements. Parent, the Holders and the Representatives hereby grant to Escrow Agent and the other Indemnified Parties a security interest in and lien upon the Escrow Funds (i) for the payment of any fees, costs, expenses and other amounts due to Escrow Agent or any other Indemnified Party hereunder and (ii) to secure any and all obligations of Parent and the Holders in this Agreement with the right to offset any amount due any of them under this Agreement against the Escrow Funds. If for any reason funds in the Escrow Funds are insufficient to cover such amount, Parent shall pay, upon demand, such amounts to Escrow Agent or any other Indemnified Party upon receipt of copies of related invoices and other statements.
|
|
12.
|
Representations and Warranties
. Parent and the Holder Representative, solely on behalf of the Holders and solely with respect to
Sections 12(e)
,
(f)
and
(g)
(as the last relates to
Sections 12(e)
and
(f)
), covenants and makes the following representations and warranties to Escrow Agent:
|
|
(a)
|
It is duly organized, validly existing, and in good standing under the laws of the state of its incorporation or organization, and has full power and authority to execute and deliver this Agreement and to perform its obligations hereunder.
|
|
(b)
|
It possesses such valid and current licenses, certificates, authorizations or permits issued by the appropriate state, federal or foreign regulatory agencies or bodies necessary to conduct its respective businesses, and it has not received any notice of proceedings relating to the revocation or modification of, or non-compliance with, any such license, certificate, authorization or permit.
|
|
(c)
|
This Agreement has been duly approved by all necessary action, including any necessary shareholder or membership approval, has been executed by its duly authorized officers, and constitutes its valid and binding agreement enforceable in accordance with its terms.
|
|
(d)
|
The execution, delivery, and performance of this Agreement is in accordance with the Merger Agreement and will not violate, conflict with, or cause a default under its articles of incorporation, bylaws, management agreement or other organizational document, as applicable, any applicable law, rule or regulation, any court order or administrative ruling or decree to which it is a party or any of its property is subject, or any agreement, contract, indenture, or other binding arrangement, including the Merger Agreement, to which it is a party or any of its property is subject.
|
|
(e)
|
The applicable persons designated on
Schedule A
hereto have been duly appointed to act as its representatives hereunder and have full power and authority to execute and deliver any Joint Written Direction, to amend, modify or waive any provision of this Agreement and to take any and all other actions as the Representatives under this Agreement, all without further consent or direction from, or notice to, it or any other party.
|
|
(f)
|
No party other than the parties hereto has, or shall have, any lien, claim or security interest in the Escrow Funds or any part thereof. No financing statement under the Uniform Commercial Code is on file in any jurisdiction claiming a security interest in or describing (whether specifically or generally) the Escrow Funds or any part thereof.
|
|
(g)
|
All of its representations and warranties contained herein are true and complete as of the date hereof and will be true and complete at the time of any disbursement of Escrow Funds.
|
|
13.
|
Patriot Act Disclosure; Taxpayer Certification and Reporting
.
|
|
(a)
|
Patriot Act Disclosure
. Parent and the Holder Representative, solely on behalf of the Holders, acknowledge that a portion of the identifying information set forth on
Schedule A
hereto is being requested by Escrow Agent in connection with the USA Patriot Act, Pub.L.107-56 (the “Act”), and Parent and the Holder Representative, solely on behalf of the Holders, agree to provide any additional information requested by Escrow Agent in connection with the Act or any similar law, rule, regulation, order, or other governmental act to which Escrow Agent is subject, in a timely manner and consent to Escrow Agent obtaining from third parties any such identifying information. Parent and the Holder Representative, solely on behalf of the Holders, each represent that all identifying information set forth on
Schedule A
hereto, including its Taxpayer Identification Number assigned by the Internal Revenue Service or any other taxing authority, is true and complete on the date hereof and will be true and complete at the time of any disbursement of Escrow Funds. For a non-individual person such as a charity, a trust, or other legal entity, Escrow Agent may require documentation to verify formation and existence as a legal entity. Escrow Agent may also require financial statements, licenses, identification and authorization documentation from any individual claiming authority to represent the entity or other relevant documentation.
|
|
(b)
|
Certification and Tax Reporting
. Parent and Holders have provided Escrow Agent with their respective fully executed Internal Revenue Service (“IRS”) Form W-8, or W-9 and/or other required documentation. Parent and the Holder Representative, solely on behalf of the Holders, acknowledge that solely for tax purposes, Escrow Agent does not have any interest in the Escrow Funds or the escrow account. All income earned under this Agreement shall be allocated to Holders and reported, as and to the extent required by law, by Escrow Agent to the IRS, or any other taxing authority, on IRS Form 1099 or 1042S (or other appropriate form) as income earned from the Escrow Funds by Holders whether or not said income has been distributed during such year. Holders shall timely file all tax returns and pay all taxes due with respect to any income earned or losses generated with respect to the Escrow Funds. Escrow Agent shall not have any liability for the payment of taxes with respect to the Escrow Funds, and Parent and the Holders shall indemnify and hold Escrow Agent harmless from and against all such taxes. Escrow Agent shall withhold any taxes it deems appropriate in the absence of proper tax documentation or as required by law, and shall remit such taxes to the appropriate authorities. Parent and the Holder Representative, solely on the behalf of the Holders, hereby represent and warrant to Escrow Agent that (i) there is no sale or transfer of a United States Real Property Interest as defined under Section 897(c) of the Internal Revenue Code of 1986, as amended, in the underlying transaction giving rise to this Agreement and (ii) such underlying transaction does not constitute an installment sale requiring any tax reporting or withholding of imputed interest or original issue discount to the IRS or other taxing authority.
|
|
14.
|
Dispute Resolution
. All disputes arising under this Agreement between the Parent Representative and the Holder Representative, including a dispute arising from a party’s failure or refusal to sign a Joint Notice, shall be submitted to arbitration to the American Arbitration Association in Tarrant County, Texas. The Parent Representative and the Holder Representative each hereby consents to the exclusive jurisdiction of the federal and state courts sitting in Tarrant County, Texas, with respect to any claim or controversy arising out of this Agreement. Service of process in any action or proceeding brought against the Parent Representative and the Holder Representative in respect of any such claim or controversy may be made upon it by registered mail, postage prepaid, return receipt requested, at the address specified in
Section 16
.
|
|
15.
|
Consent to Jurisdiction and Venue
. Subject to
Section 14
, in the event that any party hereto commences a lawsuit or other proceeding relating to or arising from this Agreement, the parties hereto agree that the federal court in Tarrant County, Texas, shall have the sole and exclusive jurisdiction over any such proceeding. If such court lacks federal subject matter jurisdiction, the parties hereto agree that the state courts in the State of Texas within Tarrant County shall have sole and exclusive jurisdiction. Any final judgment shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Any of these courts shall be proper venue for any such lawsuit or judicial proceeding and the parties hereto waive any objection to such venue and irrevocably and unconditionally waive and agree not to plead or claim in any such court that any such suit or proceeding in any such court has been brought in an inconvenient forum.
|
The parties hereto consent to and agree to submit to the jurisdiction of any of the courts specified herein and agree to accept service of process to vest personal jurisdiction over them in any of these courts.
Each party hereto irrevocably and unconditionally waives any right to a trial by jury and agrees that any of them may file a copy of this section of this Agreement with any court as written evidence of the knowing, voluntary and bargained-for agreement among the parties hereto irrevocably to waive the right to trial by jury in any litigation related to or arising under this Agreement.
|
16.
|
Notice
. All notices, instructions (pursuant to a Joint Written Direction or otherwise), approvals, consents, requests, and other communications hereunder shall be in writing and shall be deemed to have been given (a) when such writing is delivered by hand or overnight delivery service, or (b) upon telephone call-back in accordance with
Section 16
below, after being sent by e-mail with PDF attachment from the designated e-mail account(s) of the sending person(s) as designated on
Schedule A
hereto to the designated e-mail account(s) of the receiving person(s) as designated on
Schedule A
hereto or (c) three (3) Business Days after being mailed by first class mail (postage prepaid), in each case to the address set forth on
Schedule A
hereto or to such other address as each party hereto may designate for itself by like notice.
|
|
17.
|
Security Procedures
. If notices, instructions (pursuant to a Joint Written Direction or otherwise), approvals, consents, requests, and other communications, are received by Escrow Agent by e-mail at its e-mail account(s) as designated on
Schedule A
hereto, Escrow Agent is authorized, but not required, to seek prompt confirmation of such communications by telephone call-back to the sending person or persons’ telephone number(s) as designated on
Schedule A
hereto, and Escrow Agent may rely upon the confirmation of anyone purporting to be the person or persons so designated in that call-back. Any e-mail by PDF attachment executed by more than one person shall be sent by each signatory. The persons and their telephone numbers authorized to receive call-backs as designated in
Schedule A
hereto may be changed only in a writing actually received and acknowledged by Escrow Agent and delivered in accordance with
Section 16
above and, if applicable, this
Section 17
. If Escrow Agent is unable to contact any such designated person, Escrow Agent is hereby authorized (but not required) both to receive written instructions from and seek confirmation of such instructions by telephone call-back to any one or more of Parent’s executive officers (each, an “Executive Officer”), as the case may be, who shall include individuals holding titles of ___________ or more senior thereto, as Escrow Agent may select. Such Executive Officer(s) shall deliver to Escrow Agent a fully executed incumbency certificate upon Escrow Agent’s request, and Escrow Agent may rely upon the confirmation of anyone purporting to be any such Executive Officer(s). The parties to this Agreement acknowledge and agree that the security procedures set forth above are commercially reasonable.
|
Escrow Agent in any funds transfer may rely solely upon any account numbers or similar identifying numbers provided by the parties hereto to identify (i) a beneficiary, (ii) a beneficiary's bank, or (iii) an intermediary bank. Escrow Agent may apply any of the Escrow Funds for any payment order it executes using any such identifying number, even where its use may result in a person other than a beneficiary being paid, or the transfer of funds to a bank other than a beneficiary's bank or an intermediary bank designated.
|
18.
|
Amendment or Waiver
. This Agreement may be changed, waived, discharged or terminated only by a writing signed by the parties hereto. No delay or omission by any party hereto in exercising any right with respect hereto shall operate as a waiver. A waiver on any one occasion shall not be construed as a bar to, or waiver of, any right or remedy on any future occasion.
|
|
19.
|
Severability
. To the extent any provision of this Agreement is prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement.
|
|
20.
|
Governing Law
. This Agreement shall be construed and interpreted in accordance with the internal laws of the State of Delaware without giving effect to the conflict of laws principles thereof.
|
|
21.
|
Entire Agreement
. This Agreement constitutes the entire agreement between the parties hereto relating to the holding, investment and disbursement of Escrow Funds and sets forth in their entirety the obligations and duties of Escrow Agent with respect to the Escrow Funds.
|
|
22.
|
Binding Effect
. All of the terms of this Agreement, as amended from time to time, shall be binding upon, inure to the benefit of and be enforceable by the respective successors and assigns of Parent, the Holders and Escrow Agent.
|
|
23.
|
Execution in Counterparts
. This Agreement and any Joint Written Direction may be executed in two or more counterparts, which when so executed shall constitute one and the same agreement or direction. Subject to
Section 16
and
Section 17
hereof, this Agreement and any Joint Written Direction may be executed and delivered by e-mailing a PDF version of a signed signature page, which shall have the same force and effect as the delivery of an originally executed signature page.
|
|
24.
|
Termination of Escrow Agent.
Upon the first to occur of (i) the termination of the Escrow Period (and the occurrence of the related distribution(s)), (ii) the disbursement of all amounts in the Escrow Funds pursuant to one or more Joint Written Directions, into court pursuant to
Section 6
hereof,
in accordance with applicable state escheatment and unclaimed property laws
or otherwise (iii) the resignation of Escrow Agent or (iv) mutual agreement of Holder Representative and Parent Representative, Escrow Agent shall be released from its obligations hereunder and Escrow Agent shall have no further obligation or liability whatsoever with respect to this Agreement or the Escrow Funds. The obligations of Parent and the Holders continue to exist notwithstanding the termination or discharge of Escrow Agent’s obligations or liabilities hereunder until the obligations of Parent and the Holders have been fully performed.
|
|
25.
|
Dealings
. Escrow Agent and any stockholder, director, officer or employee of Escrow Agent may buy, sell, and deal in any of the securities of Parent and become pecuniarily interested in any transaction in which Parent, Fuse or the Holders may be interested, and contract and lend money to Parent, Fuse or the Holders and otherwise act as fully and freely as though it were not Escrow Agent under this Agreement. Nothing herein shall preclude Escrow Agent from acting in any other capacity for Parent, Fuse or for any other entity or for the Holders.
|
|
26.
|
Currency
. The currency applicable to any amount payable or receivable under this Agreement is United States dollars.
|
|
27.
|
Late Payment
. If any amount due to Escrow Agent under this Agreement is not paid within 30 days (subject to any longer time period prescribed herein) after notice to Parent or the Holders, as applicable (other than any amount that is subject to good faith dispute), Parent or the Holders, as applicable, shall pay interest thereon (from the due date to the payment date) at a per annum rate equal to ten (10) percent.
|
|
28.
|
Force Majeure
. Notwithstanding anything to the contrary hereunder, Escrow Agent shall not be liable for any delay, failure to perform, or other act or non-act resulting from acts beyond its reasonable control, including acts of God, terrorism, shortage of supply, labor difficulties (including strikes), war, civil unrest, fire, floods, electrical outages, equipment or transmission failures, internet interruption, vendor failures (including information technology providers), and other similar causes.
|
|
29.
|
No Third Party Beneficiaries
. This Agreement and all of its terms and conditions are for the sole and exclusive benefit of the parties hereto and their respective permitted successors and assigns. Nothing expressed or referred to in this Agreement will be construed to give any person or entity other than the parties to this Agreement any legal or equitable rights, remedy, or claim under or with respect to this Agreement or any term or condition of this Agreement.
|
|
30.
|
No Strict Construction
. The parties hereto have participated jointly in the negotiation and draft of this Agreement. In the event any ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if it were drafted jointly by the parties hereto, and no presumption or burden of proof shall arise favoring or disfavoring any party hereto by virtue of authorship of any provision of this Agreement.
|
|
(a)
|
In the event of any conflict between the provisions of
Schedule A
hereto and the remainder of this Agreement, this Agreement shall be construed in a manner prescribed by Escrow Agent acting in good faith.
|
|
(b)
|
Nothing contained in this Agreement shall amend, replace or supersede any agreement between Parent and Escrow Agent to act as Parent’s transfer agent, which agreement shall remain of full force and effect.
|
|
(c)
|
In the event of any conflict between the provisions of the Merger Agreement and this Agreement, the provisions in the Merger Agreement shall control.
|
|
32.
|
Headings
. The headings in this Agreement are for convenience purposes and shall be ignored for purposes of enforcing this Agreement, do not constitute a part of this Agreement, and may not be used by any party hereto to characterize, interpret, limit or affect otherwise any provision of this Agreement.
|
[signature page follows]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date first above written.
|
|
D. ALAN MEEKER
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FUSE MEDICAL, INC.
|
|
|
|
|
|
|
|
|
By:
|
|
|
|
|
|
Name:
|
|
|
|
|
Title:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AMERICAN STOCK TRANSFER & TRUST COMPANY, LLC,
as Escrow Agent
|
|
|
|
|
|
|
|
|
By:
|
|
|
|
|
|
Name:
|
|
|
|
|
Title:
|
|
SCHEDULE A
Escrow Funds amount: Number of Shares: ____________________
|
Acceptance Fee:
|
$ ______________________________
|
|
Annual Escrow Fee (including first year):
|
$ ______________________________
|
|
Out-of-Pocket Expenses:
|
$ ______________________________
|
|
[Transactional Costs]:
|
$ ______________________________
|
|
[Other Fees/Attorney, etc.]:
|
$ ______________________________
|
|
TOTAL
|
$ ______________________________
|
The Acceptance Fee and the Annual Escrow Fee for each year of the term of this Agreement are payable upon execution of this Agreement. In the event the escrow is not funded, the Acceptance Fee and all related expenses, including attorneys’ fees, costs and expenses remain due and payable, and if paid, will not be refunded. Annual fees cover a full year in advance, or any part thereof, and thus are not pro-rated in the year of termination.
The fees quoted in this schedule apply to services ordinarily rendered in the administration of an escrow account and are subject to reasonable adjustment based on final review of documents, or when Escrow Agent is called upon to undertake unusual or extraordinary duties or responsibilities, or as changes in law, procedures, or the cost of doing business demand. Services in addition to and not contemplated in this Agreement, including document amendments and revisions, non-standard cash and/or investment transactions, calculations, notices and reports, and legal fees, will be billed as expenses.
Unless otherwise indicated, the above fees relate to the establishment of one escrow account. Additional sub-accounts governed by this Agreement may incur an additional charge. Transaction costs include charges for wire transfers, checks, internal transfers and securities transactions.
The fees quoted in this schedule are subject to reasonable adjustment by Escrow Agent in accordance with its customary practices and if it is called upon to undertake further unusual or extraordinary duties or responsibilities, or as changes in law, procedures, or the cost of doing business demand.
|
3.
|
Taxpayer Identification Numbers
.
|
Parent: __________________
|
4.
|
[Intentionally omitted.]
|
|
5.
|
Investment Instructions
.
|
Citibank Insured Money Market Account
|
6.
|
Representatives
. The following person is hereby designated and appointed as Holder Representative under this Agreement:
|
|
|
|
|
|
|
Name
|
|
Specimen signature
|
|
Address
Mailing Address, if different
Social Security number
|
|
|
|
|
|
The following person is hereby designated and appointed as Parent Representative under this Agreement:
|
|
|
|
|
|
|
Name
|
|
Specimen signature
|
|
Address
Mailing Address, if different
Social Security number
|
|
|
|
If to Parent at:
[ADDRESS]
[Phone]
If to Parent Representative at:
[ADDRESS]
[Phone]
If to Holders at:
[ADDRESS]
[Phone]
If to Holder Representative at:
[ADDRESS]
[Phone]
If to Escrow Agent at:
American Stock Transfer & Trust Company, LLC
6201 15th Avenue
Brooklyn, New York 11219
Attn: Corporate Actions
Tel: (718) 921.8200
with copy to:
American Stock Transfer & Trust Company, LLC
6201 15th Avenue
Brooklyn, New York 11219
Attn: General Counsel
Tel: (718) 921.8200
|
8.
|
Designated Email Accounts and Telephone Call-Back Numbers
(for persons designated to send and receive notices by e-mail).
|
|
|
Parent:
|
Name
|
Email Address
|
Phone
|
|
|
Parent Representative:
|
Name
|
Email Address
|
Phone
|
[Parent Representative to insert]
|
|
Holder Representative:
|
Name
|
Email Address
|
Phone
|
[Holder Representative to insert]
|
|
Escrow Agent:
|
Name
|
Email Address
|
Phone
|
[Escrow Agent to insert]
EXHIBIT C
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the “
Agreement
”), dated as of ________, 2013, is by and among Fuse Medical, Inc., a Delaware corporation (the “
Company
”), and the investors set forth on
Schedule 1
attached hereto, who are receiving shares of the Company’s common stock, par value $0.001 per share, pursuant to that certain Agreement and Plan of Merger, dated December 18, 2013, by and among the Company, Project Fuse LLC, a Delaware limited liability company (“
PF
”), Fuse Medical LLC, a Delaware limited liability company (“
Target
”), and D. Alan Meeker, as Stockholder Representative, pursuant to which PF was merged with and into Target and Target became a wholly-owned subsidiary of the Company (the “
Merger
”).
The parties hereby agree as follows:
1.
Certain Definitions
.
As used in this Agreement, the following terms shall have the following meanings:
“
Affiliate
” means, with respect to any person, any other person which directly or indirectly controls, is controlled by, or is under common control with, such person.
“
Allowed Delay
” shall have the meaning set forth in Section 2(e)(ii) of this Agreement.
“
Business Day
” means a day, other than a Saturday or Sunday, on which banks in New York City are open for the general transaction of business.
“
Common Stock
” means shares of the Company’s common stock, par value $0.001, and any securities into which such shares may hereinafter be reclassified.
“
Company Registration
” means a registration statement to be filed by the Company with respect to any of its equity securities for its own account (other than a registration statement on Form S-4 or S-8 (or any successor or substantially similar form).
“
Form S-1
” means a Form S-1 Registration Statement under the 1933 Act, or any successor or substantially similar form.
“
Form S-3
” means a Form S-3 Registration Statement under the 1933 Act, or any successor or substantially similar form.
“
Investors
” means collectively the investors set forth on Schedule 1 attached hereto or a permitted transferee of any such Investor who is a subsequent holder of any Registrable Securities. The Investors are individually referred to herein as an “
Investor.
”
“
Other Holder Piggyback Rights
” means the rights of any holder of Company securities having contractual piggy-back registration rights entitled to participate in a registration, other than the Investors.
“
Prospectus
” means the prospectus included in any Registration Statement, as amended or supplemented by any prospectus supplement, with respect to the terms of the offering of any portion of the Registrable Securities covered by such Registration Statement and by all other amendments and supplements to the prospectus, including post-effective amendments and all material incorporated by reference or deemed to be incorporated by reference in such prospectus which is permitted to be so incorporated by reference in accordance with the rules and regulations of the SEC.
“
Register
,” “
registered
” and “
registration
” refer to a registration made by preparing and filing a Registration Statement or similar document in compliance with the 1933 Act (as defined below), and the declaration or ordering of effectiveness of such Registration Statement or document.
“
Registrable Securities
” or “
Registrable Security
” means (i) the shares of Common Stock issued to the Investors in connection with the Merger, and (ii) any securities issued or issuable with respect to such securities by way of a stock dividend or stock split or in connection with a combination of shares, recapitalization, merger, consolidation or other reorganization with respect to any of the securities referenced in clause (i);
provided
that securities shall cease to be a Registrable Securities when: (a) a Registration Statement with respect to the sale of such securities shall have become effective under the 1933 Act and such securities shall have been sold, transferred, disposed of or exchanged in accordance with such Registration Statement; (b) such securities shall have been otherwise transferred, and new certificates for them not bearing a legend restricting further transfer shall have been delivered by the Company; (c) such securities shall have ceased to be outstanding; or (d) the Registrable Securities are salable within a three month period under Rule 144 without regard to any volume limitations under Rule 144.
“
Registration
” shall mean any Demand Registration or Piggy-Back Registration.
“
Registration Statement
” means any registration statement of the Company filed under the 1933 Act that covers the resale of any of the Registrable Securities pursuant to the provisions of this Agreement, amendments and supplements to such Registration Statement, including post-effective amendments, and all exhibits to and all material incorporated by reference or deemed to be incorporated by reference in such Registration Statement.
“
Required Investors
” mean the Investors who, together, hold a majority of the Registrable Securities.
“
SEC
” means the U.S. Securities and Exchange Commission.
“
Underwriter
” means a securities dealer, investment banker, or purchaser’s agent who purchases any Registrable Securities as principal in an underwritten offering and not as part of such securities dealer’s market-making activities.
“
1933 Act
” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
“
1934 Act
” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
2.
Registration
.
(a)
Form S-1 Demand Registration
.
(i) During the Demand Term (as defined below), Required Investors may, by written notice to the Company, request that the Company effect a registration on Form S-1 (a “
Demand Registration
”) under the 1933 Act covering all or part of the Registrable Securities held by such Required Investors (the date of such notice, the “
Demand Date
”), and the Company shall promptly notify all other Investors in writing of the receipt of such notice. Each such Investor may elect (by written notice sent to the Company within ten (10) Business Days from the date of such Investor’s receipt of such notice from the Company) to have all or part of such Investor’s Registrable Securities included in such Demand Registration pursuant to this Section 2(a), and such Investor shall specify in such notice the number of Registrable Securities that such Investor elects to include in such Demand Registration. The Company shall, as expeditiously as possible, but in any event no later than sixty (60) days after the Demand Date, file with the SEC a Registration Statement (a “
Demand Registration Statement
”) relating to all shares of Registrable Securities which the Company has been so requested to register by such Investors (“
Participating Investors
”) for sale. As used herein, “
Demand Term
” shall mean the period commencing on _______, 2014 and ending on such date as the Company is first eligible to register the Registrable Securities on Form S-3. If the Company loses its eligibility to register the Registrable Securities on Form S-3 while Registrable Securities are still held by the Investors, the Demand Term shall be automatically extended until the Company again becomes eligible to register the Registrable Securities on Form S-3.
(ii) Notwithstanding anything to the contrary contained herein, the Company shall not be required to prepare and file (A) more than one (1) Demand Registration Statement in any twelve-month period, (B) any Demand Registration Statement within one hundred twenty (120) days following the date of effectiveness of any other Registration Statement; or (C) during the period commencing with the date thirty (30) days prior to the Company’s good faith estimate of the date of filing of, and ending on a date ninety (90) days after the effective date of, a Company Registration;
provided
that the Company is actively employing in good faith all reasonable efforts to cause such registration statement to become effective; and
provided
further
that, if the Company abandons such Company Registration, the Company shall promptly notify any Investor that was unable to effect a registration under this Section 2(a) as a result of this clause (C).
(iii) If a majority-in-interest of the Participating Investors so elect and such holders so advise the Company as part of their written demand for a Demand Registration, the offering of such Registrable Securities pursuant to such Demand Registration shall be in the form of an underwritten offering. In such event, the right of any Investor to include its Registrable Securities in such registration shall be conditioned upon such Investor’s participation in such underwriting and the inclusion of such holder’s Registrable Securities in the underwriting to the extent provided herein. All Participating Investors proposing to distribute their securities through such underwriting shall enter into an underwriting agreement in customary form with the Underwriter or Underwriters selected for such underwriting by a majority-in-interest of the Participating Investors initiating the Demand Registration.
(iv) If the managing Underwriter or Underwriters for a Demand Registration that is to be an underwritten offering advise the Company and the Participating Investors in writing that the dollar amount or number of shares of Registrable Securities which the Participating Investors desire to sell, taken together with all other shares of Common Stock or other securities, if any, as to which registration has been requested pursuant to Other Holder Piggyback Rights, exceeds the maximum dollar amount or maximum number of shares that can be sold in such offering without adversely affecting the proposed offering price, the timing, the distribution method, or the probability of success of such offering (such maximum dollar amount or maximum number of shares, as applicable, the “
Maximum Number of Shares
”), then the Company shall include in such registration: (i) first, the Registrable Securities as to which Demand Registration has been requested by the Participating Investors (pro rata in accordance with the number of shares of Registrable Securities then held by such Participating Investors) that can be sold without exceeding the Maximum Number of Shares; (ii) second, to the extent that the Maximum Number of Shares has not been reached under the foregoing clause (i) , the shares of Common Stock for the account of other persons that the Company is obligated to register under Other Holder Piggyback Rights pursuant to written contractual arrangements with such persons and that can be sold without exceeding the Maximum Number of Shares; and (ii) third, to the extent that the Maximum Number of Shares have not been reached under the foregoing clauses (i) and (ii), the shares of Common Stock that the Company and other shareholders desire to sell that can be sold without exceeding the Maximum Number of Shares.
(b)
Form S-3 and Shelf Demand Registration
.
(i) After both (A) __________, 2014 and (B) the Company has qualified for the use of Form S-3 under the 1933 Act for sales of Registrable Securities by selling stockholders, and prior to the date on which the Registrable Securities all cease to be Registrable Securities, in addition to the rights contained in Section 2(a), the Investors shall have the right to request an unlimited number of registrations on Form S-3. Such requests shall be in writing and shall state the number of shares of Registrable Securities to be disposed of and the intended methods of disposition of such shares by such Investors, including whether such offering is requested to be an underwritten offering. Upon such request, the Company shall, subject to Section 2(e)(ii) hereof, use its commercially reasonable efforts to effect the registration under the 1933 Act of the Registrable Securities which the Company has been so requested to register by such Investors;
provided
,
however
, that the Company shall not be obligated to effect a registration pursuant to this Section 2(b): (1) more than once in any twelve-month period; (2) unless the Registrable Securities requested to be included therein have an anticipated offering price to the public of at least $1.00 per share; (3) during the period commencing with the date thirty (30) days prior to the Company’s good faith estimate of the date of filing of, and ending on a date ninety (90) days after the effective date of, a Company Registration;
provided
that the Company is actively employing in good faith all reasonable efforts to cause such registration statement to become effective; and
provided
further
that, if the Company abandons such Company Registration, the Company shall promptly notify any Investor who was unable to effect a registration under this Section 2(b) as a result of this clause (3); or (4) within one hundred eighty (180) days following the last date on a Registration Statement filed in respect of a registration hereunder, if any, was effective. Any registration under this Section 2(b) shall be underwritten at the request of Investors holding a majority of the Registrable Securities held by all Investors participating in such registration.
(ii) If a request complying with the requirements of Section 2(b)(i) hereof is delivered to the Company, the notice provisions set forth in Section 2(a)(i) and the provisions of Sections 2(a)(iii) and 2(a)(iv) shall apply to such registration;
provided
that if such request is for an offering other than an underwritten offering, the portions of those Sections applying to an underwritten offering shall not apply.
(iii) The Investors shall have the right to request that one (1) registration made pursuant to Section 2(b) constitute an offering of Registrable Securities under the Securities Act in a manner that permits sales on a continuous or delayed basis pursuant to Rule 415 (the “
Shelf Registration
”). The Company shall, subject to Section 2(e)(ii) hereof, use its commercially reasonable efforts to cause the Registration Statement relating to the Shelf Registration to become effective as promptly as practicable and maintain the effectiveness of such Registration Statement for a period ending on the earliest of (A) two (2) years following the date on which such Registration Statement first becomes effective (but one (1) year if the Company is not continuously able to use Form S-3 during such period unless the Company is not permitted by applicable law to maintain the effectiveness for one (1) year, and then for such shorter period as is permitted), and (B) the date on which all Registrable Securities covered by such Registration Statement have been sold and the distribution contemplated thereby has been completed or have become freely tradable pursuant to Rule 144 without regard to volume limitations. Any “takedown” under the Shelf Registration shall be underwritten at the request of Investors holding a majority of the Registrable Securities held by all Investors participating in such “takedown.” Any request for such a “takedown” that is intended to be an underwritten offering shall be made pursuant to Section 2(b)(ii) such that the provisions relating to effecting a Registration Statement thereunder apply to effecting the takedown under the Shelf Registration. Any sales made on a delayed or continuous basis under the Shelf Registration that do not constitute an underwritten offering shall not be required to comply with the underwriting provisions of Section 2(b)(ii).
(c)
Piggy-Back Registration
.
(i) If at any time after the date hereof and prior to the date on which all Registrable Securities cease to be Registrable Securities, the Company proposes to file a Registration Statement under the 1933 Act with respect to an offering of equity securities, or securities or other obligations exercisable or exchangeable for, or convertible into, equity securities, by the Company for its own account or for stockholders of the Company for their account (or by the Company and by stockholders of the Company), other than a Registration Statement (A) filed in connection with any employee stock option or other benefit plan, (B) for an exchange offer or offering of securities solely to the Company’s existing stockholders, (C) for an offering of debt that is convertible into equity securities of the Company, or (D) for a dividend reinvestment plan, then the Company shall (1) give written notice of such proposed filing to the Investors as soon as practicable but in no event less than ten (10) days before the anticipated filing date, which notice shall describe the amount and type of securities to be included in such offering, the intended method(s) of distribution, and the name of the proposed managing Underwriter or Underwriters, if any, of the offering, and (2) offer to the Investors in such notice the opportunity to register the sale of such number of shares of Registrable Securities as such holders may request in writing within five (5) days following receipt of such notice (a “
Piggy-Back Registration
”).
(ii) The Company shall cause such Registrable Securities to be included in such Piggy-Back Registration and shall use commercially reasonable efforts to cause the managing Underwriter or Underwriters of a proposed underwritten offering to permit the Registrable Securities requested to be included in a Piggy-Back Registration to be included on the same terms and conditions as any similar securities of the Company and to permit the sale or other disposition of such Registrable Securities in accordance with the intended method(s) of distribution thereof. All holders of Registrable Securities proposing to distribute their securities through a Piggy-Back Registration that involves an Underwriter or Underwriters shall enter into an underwriting agreement in customary form with the Underwriter or Underwriters selected for such Piggy-Back Registration.
(iii) If the managing Underwriter or Underwriters for a Piggy-Back Registration that is to be an underwritten offering advises the Company and the holders of Registrable Securities in writing that the dollar amount or number of shares of Common Stock which the Company desires to sell, taken together with shares of Common Stock, if any, as to which registration has been demanded pursuant to written contractual arrangements with persons other than the Investors, the Registrable Securities as to which registration has been requested under this Section 2(c), and the shares of Common Stock, if any, as to which registration has been requested pursuant to Other Holder Piggyback Rights, exceeds the Maximum Number of Shares, then the Company shall include in any such registration:
(A) If the registration is undertaken for the Company’s account: (1) first, the shares of Common Stock or other securities that the Company desires to sell that can be sold without exceeding the Maximum Number of Shares; (2) second, to the extent that the Maximum Number of Shares has not been reached under the foregoing clause (1), Registrable Securities as to which registration has been requested under this Section 2(c) that can be sold without exceeding the Maximum Number of Shares; and (3) third, to the extent that the Maximum Number of Shares has not been reached under the foregoing clauses (1) and (2), the shares of Common Stock as to which registration has been requested pursuant to Other Holder Piggyback Rights that can be sold without exceeding the Maximum Number of Shares.
(B) If the registration is a “demand” registration undertaken at the demand of persons other than the Investors pursuant to written contractual arrangements with such persons, (1) first, the shares of Common Stock for the account of the demanding persons that can be sold without exceeding the Maximum Number of Shares; (2) second, to the extent that the Maximum Number of Shares has not been reached under the foregoing clause (1), the shares of Common Stock or other securities that the Company desires to sell that can be sold without exceeding the Maximum Number of Shares; (3) third, to the extent that the Maximum Number of Shares has not been reached under the foregoing clauses (1) and (2), Registrable Securities as to which registration has been requested under this Section 2(c) that can be sold without exceeding the Maximum Number of Shares, (4) fourth, to the extent that the Maximum Number of Shares has not been reached under the foregoing clauses (1), (2), and (3), the shares of Common Stock, if any, as to which registration has been requested pursuant to Other Holder Piggyback Rights that can be sold without exceeding the Maximum Number of Shares.
(d)
Expenses
. The Company will pay all expenses associated with each Registration, including filing and printing fees, the Company’s counsel and accounting fees and expenses, costs associated with clearing the Registrable Securities for sale under applicable state securities laws, listing fees, blue sky fees, and the expenses of any special audits incident to or required by any such Registration, but excluding stock transfer taxes, discounts, commissions or fees of underwriters, selling brokers, dealer managers or similar securities industry professionals with respect to the Registrable Securities being sold.
(e)
Effectiveness
.
(i) The Company shall use commercially reasonable efforts to have a Demand Registration Statement declared effective within one hundred and twenty (120) days after the Demand Date. The Company shall notify the Investors by facsimile or e-mail as promptly as practicable, or by issuing a press release, within twenty-four (24) hours, after any Registration Statement is declared effective and as soon as reasonably practicable shall make available to the Investor, upon written request, copies of any related Prospectus to be used in connection with the sale or other disposition of the Registrable Securities covered thereby.
(ii) Notwithstanding anything to contrary, the Company may delay, suspend the use of, or withdraw any Registration Statement or qualification of Registrable Securities if the Company in good faith determines that any such Registration Statement, or the use thereof, would materially and adversely affect any material corporate event or would otherwise require disclosure of nonpublic information which the Company determines, in its reasonable judgment, is not in the best interests of the Company at such time (an “
Allowed Delay
”);
provided
that the Company shall promptly (A) notify the Investors in writing of the existence of (but in no event, without the prior written consent of the Investors, shall the Company disclose to the Investors any of the facts or circumstances regarding) the event giving rise to an Allowed Delay;
provided
,
however
, that the Company shall not be required to disclose material nonpublic information to the Investors unless an Investor has executed the nondisclosure agreement contemplated pursuant to Section 4(b); (B) advise the Investors in writing to cease all sales under the Registration Statement until the end of the Allowed Delay; and (C) use commercially reasonable best efforts to terminate an Allowed Delay as promptly as practicable.
(f)
SEC Reductions
. In the event the Company is required by the SEC to reduce the number of Registrable Securities being registered for resale on any Registration Statement filed with the SEC pursuant to Section 2(a), 2(b) or 2(c) hereof, then unless otherwise required by the SEC or agreed to by the Participating Investors, the number of Registrable Securities included in such Registration shall be allocated among all the Participating Investors on a pro rata basis based on the number of Registrable Securities held by each Participating Investor. The Company shall notify the Investors in the event of any such reduction.
3.
Company Obligations
. The Company will use commercially reasonable efforts to effect the registration of the Registrable Securities in accordance with the terms hereof, and pursuant hereto the Company will, as expeditiously as possible:
(a) use commercially reasonable efforts to cause such Registration Statement to become and remain effective until the earlier of (i) one hundred and eighty (180) days following the effective date of such Registration Statement; (ii) such time as all of the Registrable Securities covered by the Registration Statement have been sold; or (iii) the date on which all of the Registrable Securities may be sold pursuant to Rule 144 under the 1933 Act without regard to volume restrictions, except that for any Shelf Registration, the required effectiveness periods set forth in Section 2(b)(iii) above shall be required (the “
Effectiveness Period
”);
(b) prepare and file with the SEC such amendments, prospectus supplements or post-effective amendments to the Registration Statement and the Prospectus as may be necessary to keep the Registration Statement effective for the period specified in Section 3(a) and to comply with the provisions of the 1933 Act and the 1934 Act with respect to the distribution of all of the Registrable Securities covered thereby;
(c) make available to the Investors and their legal counsel upon written request (i) promptly after the same is prepared and publicly distributed, filed with the SEC, or received by the Company, one copy of any Registration Statement and any amendment thereto, each preliminary prospectus and Prospectus and each amendment or supplement thereto, and each letter written by or on behalf of the Company to the SEC or the staff of the SEC, and each item of correspondence from the SEC or the staff of the SEC, in each case relating to such Registration Statement (other than any portion thereof which contains information for which the Company has sought confidential treatment), and (ii) such number of copies of a Prospectus, including a preliminary prospectus, and all amendments and supplements thereto and such other documents as the Investors may reasonably request in order to facilitate the disposition of the Registrable Securities owned by such Investors that are covered by the related Registration Statement. Notwithstanding the foregoing, the Company shall not be required to provide any Investor or Investors’ representative with material non-public information unless such Investor has entered into a non-disclosure agreement with the Company;
(d) use commercially reasonable efforts to (i) prevent the issuance of any stop order or other suspension of effectiveness, and (ii) if such order is issued, obtain the withdrawal of any such order at the earliest possible moment;
(e) use commercially reasonable efforts to cause all Common Stock covered by a Registration Statement to be listed on each securities exchange, interdealer quotation system or other market on which similar securities issued by the Company are then listed or quoted (if applicable);
(f) promptly notify the Investors upon the occurrence of any of the following events in respect of the Registration Statement or the Prospectus forming a part thereof: (i) the issuance by the SEC or any other federal or state governmental authority of any stop order suspending the effectiveness of the Registration Statement or the initiation of any proceedings for that purpose; (ii) receipt of any notification with respect to the suspension of the qualification or exemption from qualification of any of the Registrable Securities for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose; or (iii) the effectiveness of the Registration Statement within twenty four (24) hours of such Registration Statement being declared effective;
(g) immediately notify the Investors, at any time when a Prospectus relating to Registrable Securities is required to be delivered under the 1933 Act, upon discovery that, or upon the happening of any event or the passage of time as a result of which, the Prospectus included in a Registration Statement, as then in effect, includes an untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing, and promptly prepare and furnish to such holder a reasonable number of copies of a supplement to or an amendment of such Prospectus or the Registration Statement as may be necessary so that, as thereafter delivered to the purchasers of such Registrable Securities, such Prospectus shall not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing;
(h) otherwise use commercially reasonable efforts to comply with all applicable rules and regulations of the SEC under the 1933 Act and the 1934 Act, take such other actions as may be reasonably necessary to facilitate the registration of the Registrable Securities hereunder;
(i) cooperate with the Investors to facilitate the timely preparation and delivery of certificates representing Registrable Securities to be sold pursuant to a Registration Statement, and to enable such Registrable Securities to be in such denominations and registered in such names as the Investors may request; and
(j) prior to any public offering of Registrable Securities, register or qualify (unless an exemption from such registration of qualification is available) the Registrable Securities for offer and sale under the securities or ”blue sky” laws of such jurisdictions within the United States, keep each such registration or qualification (or exemption therefrom) effective during the Effectiveness Period and do any and all other acts or things necessary or advisable to enable the disposition in such jurisdictions of the Registrable Securities covered by a Registration Statement;
provided
,
however
, that the Company shall not be required to qualify generally to transact business in any jurisdiction where it is not then so qualified or to take any action that would subject it to general service of process in any such jurisdiction where it is not then so subject or subject the Company to any material tax in any such jurisdiction where it is not then so subject.
4.
Due Diligence Review; Information
.
(a) The Company shall make available, during normal business hours, upon reasonable request and within a reasonable time, for inspection and review by the Investors and by advisors to and representatives of the Investors (who may or may not be affiliated with the Investors and who are reasonably acceptable to the Company), all financial and other records, all filings with the SEC, and all other documents respecting the Company, its assets, its properties or its business (including without limitation minute books, corporate records, financial statements, contracts, permits, licenses, approvals, technical or engineering reports, and any valuations which the Company has obtained) as may be reasonably necessary for the purpose of such review, and cause the Company’s officers, directors and employees, within a reasonable time period, to supply all such information reasonably requested by the Investors or any such advisor or representative in connection with such Registration Statement (including, without limitation, in response to all questions and other inquiries reasonably made or submitted by any of them) to the extent not publicly available on EDGAR or the Company’s website, prior to and from time to time after the filing and effectiveness of the Registration Statement until the end of the Effectiveness Period, for the sole purpose of enabling the Investor and such advisors and representatives to conduct initial and ongoing due diligence with respect to the Company and the accuracy of such Registration Statement.
(b) Any Investor (and its advisors and representatives) requesting Company information pursuant to Section 4(a) shall complete a non-disclosure agreement with the Company and an acknowledgement that such investigation may reveal material non-public information. Nothing herein shall obligate the Company to provide to the Investor, or any advisors or representatives or underwriters, any material nonpublic information. Additionally, the Company is not required to provide any information the Company deems commercially sensitive or proprietary.
5.
Obligations of the Investors
.
(a) Each Investor shall furnish in writing to the Company such information regarding itself, the Registrable Securities held by it and the intended method of disposition of the Registrable Securities held by it, as shall be reasonably required to effect the registration of such Registrable Securities and shall execute such documents in connection with such registration as the Company may reasonably request within five (5) Business Days of such request. Additionally, each Investor agrees to respond to any comments from the SEC or any other government regulator regarding such Investor as soon as possible and in any event within five (5) Business Days of such request. The Company shall not be required to include the Registrable Securities of an Investor in a Registration Statement and shall not be required to pay any damages to any Investor who fails to furnish to the Company such information within the prescribed time periods.
(b) The Investors, by their acceptance of the Registrable Securities, agree to cooperate with the Company as reasonably requested by the Company in connection with the preparation and filing of any Registration Statement hereunder, unless any such Investor has notified the Company in writing of its election to exclude all of its Registrable Securities from such Registration Statement.
(c) Each Investor agrees that, upon receipt of any notice (which may be oral as long as written notice is provided by the next Business Day) from the Company of the commencement of an Allowed Delay pursuant to Section 2(e)(ii), the Investor will immediately discontinue disposition of Registrable Securities pursuant to the Registration Statement covering such Registrable Securities, until otherwise notified in writing by the Company or until the Investor’s receipt of the copies of the supplemented or amended Prospectus filed with the SEC and until any related post-effective amendment is declared effective. In addition, if so directed by the Company, the Investor shall deliver to the Company (at the expense of the Company) or destroy (and deliver to the Company a certificate of destruction) all copies in the Investor’s possession of the Prospectus covering the Registrable Securities current at the time of receipt of such notice.
(d) Each Investor covenants and agrees that it will comply with the prospectus delivery requirements of the 1933 Act as applicable to it in connection with sales of Registrable Securities pursuant to the Registration Statement.
6.
Indemnification
.
(a)
Indemnification by the Company
. The Company will indemnify and hold harmless each Investor, and each of its officers, directors, members, employees and agents, successors and assigns, and each other person, if any, who controls such Investor within the meaning of the 1933 Act, against any losses, claims, damages, liabilities and expense (including reasonable attorneys’ fees), joint or several, to which they may become subject under the 1933 Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon: (i) any untrue statement or alleged untrue statement of any material fact contained in any Registration Statement, any preliminary prospectus or final prospectus contained therein, or any amendment or supplement thereof; (ii) any application or other document or communication (collectively, an “application”) executed by, or on behalf of, the Company or based upon written information furnished by, or on behalf of, the Company filed in any jurisdiction in order to register or qualify any of the Registrable Securities under the securities or “blue sky” laws thereof or filed with any securities exchange; (iii) the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading; (iv) any violation by the Company or its agents of any rule or regulation promulgated under the 1933 Act applicable to the Company or its agents and relating to action or inaction required of the Company in connection with such registration; or (v) any failure to register or qualify the Registrable Securities included in any such Registration Statement in any state where the Company or its agents has affirmatively undertaken or agreed in writing that the Company will undertake such registration or qualification on the Investor’s behalf;
provided
,
however
, that the Company will not be liable in any such case if and to the extent that (A) any such loss, claim, damage, liability or expense either arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission so made in conformity with information furnished by the Investor for use in such Registration Statement or Prospectus, or (B) such information relates to the Investor or the Investor’s proposed method of distribution of Registrable Securities and was reviewed and approved by the Investor for use in the Registration Statement, such Prospectus or such form of Prospectus or in any amendment or supplement thereto, or (C) in the case of an occurrence of an Allowed Delay or of an event of the type specified in Section 3(g), the use by the Investor of an outdated or defective Prospectus after the Company has notified the Investor in writing that the Prospectus is outdated or defective and prior to the receipt by the Investor of an amended or supplemented Prospectus, but only if and to the extent that following the receipt of such amended or supplemented Prospectus the misstatement or omission giving rise to such liability would have been corrected.
(b)
Indemnification by the Investor
. Each Investor agrees, severally but not jointly, to indemnify and hold harmless, to the fullest extent permitted by law, the Company, its directors, officers, employees, shareholders and each person who controls the Company (within the meaning of the 1933 Act) against any losses, claims, damages, liabilities and expenses (including reasonable attorneys’ fees) resulting from any untrue statement of a material fact or any omission of a material fact required to be stated in the Registration Statement or Prospectus or preliminary prospectus or amendment or supplement thereto or necessary to make the statements therein not misleading, to the extent that such untrue statement or omission is contained in any information furnished by the Investor to the Company for inclusion in such Registration Statement or Prospectus or amendment or supplement thereto, or to the extent that such information relates to such Investor’s proposed method of distribution of Registrable Securities and was reviewed and approved by the Investor for use in the Registration Statement, such Prospectus or such form of Prospectus or in any amendment or supplement thereto, or in the case of an occurrence of an Allowed Delay or an event of the type specified in Section 3(g), the use by the Investor of an outdated or defective Prospectus after the Company has notified the Investor in writing that the Prospectus is outdated or defective and prior to the receipt by the Investor of an amended or supplemented Prospectus, but only if and to the extent that following the receipt of the amended or supplemented Prospectus the misstatement or omission giving rise to such liability would have been corrected. In no event shall the liability of the Investor be greater in amount than the dollar amount of the proceeds (net of any damages the Investor has otherwise been required to pay by reason of such untrue statement or omission by the Company) received by the Investor upon the sale of the Registrable Securities included in the Registration Statement giving rise to such indemnification obligation.
(c)
Conduct of Indemnification Proceedings
. Any person entitled to indemnification hereunder shall (i) give prompt notice to the indemnifying party of any claim with respect to which it seeks indemnification; and (ii) permit such indemnifying party to assume the defense of such claim with counsel reasonably satisfactory to the indemnified party;
provided
that any person entitled to indemnification hereunder shall have the right to employ separate counsel and to participate in the defense of such claim, but the fees and expenses of such counsel shall be at the expense of such person unless (A) the indemnifying party has agreed to pay such fees or expenses; or (B) the indemnifying party shall have failed to assume the defense of such claim and employ counsel reasonably satisfactory to such person; or (C) in the reasonable judgment of any such person, based upon written advice of its counsel, a conflict of interest exists between such person and the indemnifying party with respect to such claims (in which case, if the person notifies the indemnifying party in writing that such person elects to employ separate counsel at the expense of the indemnifying party, the indemnifying party shall not have the right to assume the defense of such claim on behalf of such person); or (D) the indemnified party shall have reasonably concluded, with the advice of counsel, that there may be one or more legal defenses available to it or them or to other indemnified parties which are different from, or in addition to, those available to the indemnifying party; and
provided
further
, that the failure of any indemnified party to give notice as provided herein shall not relieve the indemnifying party of its obligations hereunder, except to the extent that such failure to give notice shall materially adversely affect the indemnifying party in the defense of any such claim or litigation. It is understood that the indemnifying party shall not, in connection with any proceeding in the same jurisdiction, be liable for fees or expenses of more than one separate firm of attorneys at any time for all such indemnified parties. No indemnifying party will, except with the consent of the indemnified party, consent to entry of any judgment or enter into any settlement that does not include as an unconditional term thereof the giving by the claimant or plaintiff to such indemnified party of a release from all liability in respect of such claim or litigation. The Company agrees promptly to notify the Investors of the commencement of any litigation or proceedings against the Company or any of its officers or directors in connection with the sale of any Registrable Securities or any preliminary prospectus, prospectus, registration statement, or amendment or supplement thereto, or any application relating to any sale of any Registrable Securities.
(d)
Contribution
. If for any reason the indemnification provided for in the preceding paragraphs (a) and (b) is unavailable to an indemnified party or insufficient to hold it harmless, other than as expressly specified therein, then the indemnifying party shall contribute to the amount paid or payable by the indemnified party as a result of such loss, claim, damage or liability in such proportion as is appropriate to reflect the relative fault of the indemnified party and the indemnifying party, as well as any other relevant equitable considerations. The relative fault, in the case of an untrue statement, alleged untrue statement, omission, or alleged omission, shall be determined by, among other things, whether such statement, alleged statement, omission, or alleged omission relates to information supplied by the Company or by the Investor, and the parties’ relative intent, knowledge, access to information, and opportunity to correct or prevent such statement, alleged statement, omission, or alleged omission. The parties agree that it would be unjust and inequitable if the respective obligations of the Company and each Investor for contribution were determined by pro rata or per capita allocation of the aggregate losses, liabilities, claims, damages, and expenses or by any other method of allocation that does not reflect the equitable considerations referred to in this clause (d). No person guilty of fraudulent misrepresentation within the meaning of Section 11(f) of the 1933 Act shall be entitled to contribution from any person not guilty of such fraudulent misrepresentation. In no event shall the contribution obligation of a holder of Registrable Securities be greater in amount than the dollar amount of the proceeds (net of all expenses paid by such holder in connection with any claim relating to this Section 6 and the amount of any damages such holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission) received by it upon the sale of the Registrable Securities giving rise to such contribution obligation. Anything in this Section 6(d) to the contrary notwithstanding, no party shall be liable for contribution with respect to the settlement of any claim or action effected without its written consent. This Section 6(d) is not intended to supersede any right to contribution under the 1933 Act, the 1934 Act, or otherwise.
7.
Miscellaneous
.
(a)
Amendments and Waivers
. This Agreement may be amended only by an instrument in writing signed by the Company and the Required Investors,
provided
that no amendment to this Agreement that is materially and disproportionately adverse to any Investor shall be made without such Investor’s written consent. The Company may take any action herein prohibited, or omit to perform any act herein required to be performed by it, only if the Company shall have obtained the written waiver or consent to such amendment, action or omission to act, of the Required Investors,
provided
that no such action or omission that is adverse to any Investor shall occur without such Investor’s written consent. Matters approved as provided in this Section 7(a) shall be binding on all Investors.
(b)
Notices
. All notices that are required or permitted hereunder shall be in writing and shall be sufficient if personally delivered or sent by registered or certified mail or Federal Express or other nationally recognized overnight delivery service. Any notices shall be deemed given upon the earlier of the date when received, or the third Business Day after the date when sent by registered or certified mail, or the Business Day after the date when sent by overnight delivery service, to the address set forth below, unless such address is changed by notice in the manner described in this Section 7(b):
|
If to Company:
Fuse Medical Inc.
________________________
________________________
Attention: ________________
|
|
|
|
If to the Investors:
To their addresses set forth on
Schedule 1
|
(c)
Assignments and Transfers by Investors
. The provisions of this Agreement shall be binding upon and inure to the benefit of the Investors and their successors and permitted assigns. An Investor may transfer or assign, in whole or from time to time in part, to one or more persons who are “accredited investors” as defined in Rule 501(a) of Regulation D under the 1933 Act and who agree in writing to be bound by the terms and conditions of this Agreement (which writing shall be furnished to the Company), its rights hereunder in connection with the transfer of Registrable Securities by such Investor to such person,
provided
that the Investor complies with all laws applicable thereto and provides written notice of assignment to the Company promptly after such assignment is effected. From and after such proper assignment, such assignee shall be deemed an Investor hereunder.
(d)
Assignments and Transfers by the Company
. This Agreement may not be assigned by the Company (whether by operation of law or otherwise) without the prior written consent of the Required Investors,
provided
,
however
, that the Company may assign its rights and delegate its duties hereunder to any surviving or successor corporation in connection with a merger or consolidation of the Company with another corporation, or a sale, transfer or other disposition of all or substantially all of the Company’s assets to another corporation, without the prior written consent of the Required Investors, after notice duly given by the Company to the Investors.
(e)
Benefits of the Agreement
. The terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective permitted successors and assigns of the parties. Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and assigns any rights, remedies, obligations, or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement.
(f)
Counterparts; Facsimiles
. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. This Agreement may also be executed via facsimile, which shall be deemed an original.
(g)
Titles and Subtitles
. The titles and subtitles used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement.
(h)
Severability
. Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, but shall be interpreted as if it were written so as to be enforceable to the maximum extent permitted by applicable law, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. To the extent permitted by applicable law, the parties hereby waive any provision of law which renders any provisions hereof prohibited or unenforceable in any respect.
(i)
Further Assurances
. The parties shall execute and deliver all such further instruments and documents and take all such other actions as may reasonably be required to carry out the transactions contemplated hereby and to evidence the fulfillment of the agreements herein contained.
(j)
Entire Agreement
. This Agreement is intended by the parties as a final expression of their agreement and intended to be a complete and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter contained herein. This Agreement supersedes all prior agreements and understandings between the parties with respect to its subject matter.
(k)
Governing Law; Consent to Jurisdiction; Waiver of Jury Trial
. This Agreement shall be governed by, and construed in accordance with, the internal laws of the State of Delaware without regard to the choice of law principles thereof. Each of the parties hereto irrevocably submits to the exclusive jurisdiction of the courts of the State of Texas and the United States District Courts for Texas, in each case in the County of _______, for the purpose of any suit, action, proceeding or judgment relating to or arising out of this Agreement and the transactions contemplated hereby. Service of process in connection with any such suit, action or proceeding may be served on each party hereto anywhere in the world by the same methods as are specified for the giving of notices under this Agreement. Each of the parties hereto irrevocably consents to the jurisdiction of any such court in any such suit, action or proceeding and to the laying of venue in such court. Each party hereto irrevocably waives any objection to the laying of venue of any such suit, action or proceeding brought in such courts and irrevocably waives any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum. EACH OF THE PARTIES HERETO WAIVES ANY RIGHT TO REQUEST A TRIAL BY JURY IN ANY LITIGATION WITH RESPECT TO THIS AGREEMENT AND REPRESENTS THAT COUNSEL HAS BEEN CONSULTED SPECIFICALLY AS TO THIS WAIVER.
[The remainder of this page is intentionally blank.]
IN WITNESS WHEREOF, the parties have executed this Registration Rights Agreement or caused their duly authorized officers to execute this Registration Rights Agreement as of the date first above written.
|
|
Fuse Medical Inc.
|
|
|
|
|
|
|
|
|
By:
|
|
|
|
|
|
Name: ________________________
|
|
|
|
|
Title: _________________________
|
|
|
|
|
|
|
|
|
_______________________________________________
Name of Investor: ________________________________
|
Schedule 1
Investors
|
Investor Name
|
Investor Mailing Address
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EXHIBIT D
LOCK UP AGREEMENT
__________, 2013
Fuse Medical Inc.
_________________
_________________
Attention: _____________
Re:
Lock-up Agreement
Ladies and Gentlemen:
Fuse Medical LLC, a Delaware limited liability company (the “
Company
”), is a party to an Agreement and Plan of Merger dated December 18, 2013 (the “
Merger Agreement
”), by and among Fuse Medical Inc., a Delaware corporation (“
Acquirer
”), Project Fuse LLC, a Delaware limited liability company and a wholly-owned subsidiary of Acquirer (“
Merger Sub
”), and D. Alan Meeker, solely in its capacity as the Representative, pursuant to which Merger Sub will merge with and into the Company (the “
Merger
”), with the Company to survive the Merger and become a wholly-owned subsidiary of Acquirer. In connection with the Merger, Acquirer will issue to the undersigned unit holder of Company (“
Holder
”) and all other Company unit holders Acquirer common stock in a private placement effected in reliance on the exemption from the registration requirements of the Securities Act of 1933, as amended (the “
Securities Act
”), provided by Section 4(2) of the Securities Act and/or Regulation D promulgated thereunder, and exemptions from the qualification requirements of applicable state law. Unless otherwise defined herein, all capitalized terms used herein shall have the respective meanings given to such terms in the Merger Agreement.
In order to induce Acquirer and Merger Sub to enter into the Merger Agreement, Holder hereby agrees with Acquirer as follows.
The undersigned will not engage in any of the following dispositive actions with respect to the shares of Common Stock of Acquirer issued in the Merger (the “
Shares
”)
for the periods and in the amounts set forth in the next following paragraph: (1) offer, pledge, announce the intention to sell, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, or otherwise transfer or dispose of, directly or indirectly, the Shares or (2) enter into any swap or other agreement that transfers, in whole or in part, any of the economic consequences of ownership of the Shares, whether any such transaction described in clause (1) or (2) above is to be settled by delivery of the Shares, in cash or otherwise (“
Dispositive Actions
”). The restrictions set forth in this paragraph shall not apply to (1) any transfers made by the undersigned (a) as a bona fide gift to any member of the immediate family (as defined below) of the undersigned or to a trust the beneficiaries of which are exclusively the undersigned or members of the undersigned’s immediate family, (b) by will or intestate succession upon the death of the undersigned or (c) as a bona fide gift to a charity or educational institution, (2) if the undersigned is a corporation, partnership, limited liability company, or other business entity, (a) transfers to another corporation, partnership, limited liability company, trust or other business entity that is a direct or indirect affiliate (as defined below) of the undersigned, or (b) distribution of the Shares to stockholders, limited partners, limited liability company members, or other similar equity holders of the undersigned, or (3) if the undersigned is a trust, the distribution by the trust of the Shares to its beneficiaries;
provided
,
however
, that it shall be a condition to any such transfer that the transferee executes and delivers to Acquirer, not later than one (1) business day prior to such transfer, a written agreement, in substantially the form of this Agreement (it being understood that any references to “immediate family” in the agreement executed by such transferee shall expressly refer only to the immediate family of the undersigned and not to the immediate family of the transferee) and otherwise satisfactory in form and substance to the Acquirer. For purposes of this paragraph, “immediate family” shall mean a spouse, domestic partner, child, grandchild or other lineal descendant (including by adoption), father, mother, brother or sister of the undersigned, and “affiliate” shall have the meaning as defined in Rule 405 promulgated under the Securities Act.
In the period from the Closing of the Merger until that date which is 365 days from such Closing, the undersigned will not engage in any Dispositive Action with respect to the Shares received by the undersigned as Net Merger Consideration. In the period that begins as follows:
|
1.
|
On the 366th day from the Closing until that date which is 456 days from the Closing, Holder will not engage in any Dispositive Action except with respect to that number of Shares as equals one-quarter of the number of Shares received by the undersigned as Net Merger Consideration.
|
|
2.
|
On the 457th day from the Closing until that date which is 546 days from the Closing, Holder will not engage in any Dispositive Action except with respect to that number of Shares as equals an additional one-quarter of the number of Shares received by the undersigned as Net Merger Consideration.
|
|
3.
|
On the 547th day from the Closing until that date which is 638 days from the Closing, Holder will not engage in any Dispositive Action except with respect to that number of Shares as equals an additional one-quarter of the number of Shares received by the undersigned as Net Merger Consideration.
|
|
4.
|
On the 639th day from the Closing until that date which is 730 days from the Closing, Holder will not engage in any Dispositive Action except with respect to that number of Shares as equals an additional one-quarter of the number of Shares received by the undersigned as Net Merger Consideration.
|
|
5.
|
After the date that is 730 days from the Closing, the restrictions set forth herein shall cease.
|
The undersigned acknowledges that the Shares issued to the undersigned in the Merger are characterized as “restricted securities” under the Securities Act inasmuch as they are being acquired from Acquirer in a transaction not involving a public offering and that, consequently, such Shares may be resold only pursuant to an effective registration statement under the Securities Act, or pursuant to an exemption from registration under the Securities Act.
Neither party hereto may assign any of its rights or obligations hereunder without the prior written consent of the other party hereto. This letter will be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns. This letter may be executed in any number of counterparts, each of which will be an original as regards any party whose signature appears thereon and all of which together will constitute one and the same instrument.
The parties hereto agree that irreparable damage would occur in the event that any of the provisions of this letter were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the parties shall be entitled to seek an injunction or injunctions to prevent breaches of this letter and to enforce specifically the terms and provisions hereof in any court of the United States or any state having jurisdiction.
Any term or provision of this letter may be amended, and the observance of any term of this letter may be waived (either generally or in a particular instance and either retroactively or prospectively), only by a writing signed by the party to be bound thereby.
[Signature Page Follows.]
|
|
Very truly yours,
|
|
|
|
|
|
|
|
|
|
|
|
Signature
|
|
|
|
|
|
|
|
|
|
|
|
Name (Please Type or Print)
|
|
|
|
|
|
|
|
|
|
|
|
Name and Title if signing on behalf an entity
|
|
|
|
|
|
|
|
|
|
|
|
Address
|
|
|
|
|
|
|
|
|
|
|
|
City, State and Zip Code
|
|
Company Membership Units beneficially owned on the date hereof: ___________
Agreed to and Accepted:
Fuse Medical Inc.
By: ___________________________
Name: _________________________
Title: __________________________
[Signature Page to Lock-Up Agreement]
FIRST AMENDMENT
TO
AGREEMENT AND PLAN OF MERGER
This FIRST AMENDMENT TO THE AGREEMENT AND PLAN OF MERGER, dated as of March 3, 2014 (the “
Amendment
”), is entered into by and among Fuse Medical LLC, a Delaware limited liability company (“
Fuse
”), Golf Rounds.com, Inc., a Delaware corporation (“
TEEE
”), Project Fuse LLC, a Delaware limited liability company (“
Merger Sub
”), and D. Alan Meeker, solely in his capacity as the representative of the Fuse members (the “
Representative
”). Fuse, TEEE, Merger Sub and the Representative are collectively referred to herein as the “
Parties
.” Capitalized terms used but not defined herein shall have the meanings set forth that certain Agreement and Plan of Merger dated December 18, 2013 (the "
Merger Agreement
").
A G R E E M E N T S
1.
Amendment
. Section 17(b) of the Merger Agreement is hereby amended and restated entirely as set forth below:
(b) This Agreement may be terminated by either Fuse or TEEE if the Closing has not occurred by April 14, 2014. The right to terminate this Agreement under this Section 17(b) shall not be available to any party whose action or failure to act has been a principal cause of or resulted in the failure of the Merger to occur on or before such date and such action or failure to act constitutes a breach of this Agreement.
2.
General
. In the event of any conflict or inconsistency between the provisions of the Merger Agreement and the provisions of this Amendment, the Parties agree that the provisions of this Amendment shall govern. Except to the extent expressly amended hereby, all terms and conditions of the Merger Agreement and related documents shall remain in full force and effect.
[Signature page follows]
IN WITNESS WHEREOF, the Parties hereto have executed this Amendment as of the date first above written.
|
Fuse:
|
Fuse Medical, LLC,
a Delaware limited liability company
|
|
|
|
|
|
|
|
|
By:
|
/s/ D. Alan Meeker
|
|
|
|
|
D. Alan Meeker
|
|
|
|
|
Manager
|
|
|
|
|
|
|
|
TEEE:
|
Golf Rounds.com, Inc.,
a Delaware corporation
|
|
|
|
|
|
|
|
|
By:
|
/s/ Robert H. Donehew
|
|
|
|
|
Robert H. Donehew
President
|
|
|
|
|
|
|
|
Merger Sub:
|
Project Fuse LLC,
a Delaware limited liability company
|
|
|
|
|
|
|
|
|
By:
|
/s/ Robert H. Donehew
|
|
|
|
|
Robert H. Donehew
Manager
|
|
|
|
|
|
|
|
Representative:
|
By:
|
/s/ D. Alan Meeker
|
|
|
|
|
D. Alan Meeker
|
|
SECOND AMENDMENT
TO
AGREEMENT AND PLAN OF MERGER
This SECOND AMENDMENT TO THE AGREEMENT AND PLAN OF MERGER, dated as of April 11, 2014 (the “
Amendment
”), is entered into by and among Fuse Medical LLC, a Delaware limited liability company (“
Fuse
”), Golf Rounds.com, Inc., a Delaware corporation (“
TEEE
”), Project Fuse LLC, a Delaware limited liability company (“
Merger Sub
”), and D. Alan Meeker, solely in his capacity as the representative of the Fuse members (the “
Representative
”). Fuse, TEEE, Merger Sub and the Representative are collectively referred to herein as the “
Parties
.” Capitalized terms used but not defined herein shall have the meanings set forth that certain Agreement and Plan of Merger dated December 18, 2013 (the "
Merger Agreement
").
A G R E E M E N T S
1.
Amendment
. Section 17(b) of the Merger Agreement is hereby amended and restated entirely as set forth below:
(b) This Agreement may be terminated by either Fuse or TEEE if the Closing has not occurred by May 31, 2014. The right to terminate this Agreement under this Section 17(b) shall not be available to any party whose action or failure to act has been a principal cause of or resulted in the failure of the Merger to occur on or before such date and such action or failure to act constitutes a breach of this Agreement.
2.
General
. In the event of any conflict or inconsistency between the provisions of the Merger Agreement and the provisions of this Amendment, the Parties agree that the provisions of this Amendment shall govern. Except to the extent expressly amended hereby, all terms and conditions of the Merger Agreement and related documents shall remain in full force and effect.
[Signature page follows]
IN WITNESS WHEREOF, the Parties hereto have executed this Amendment as of the date first above written.
|
Fuse:
|
Fuse Medical, LLC,
|
|
|
|
a Delaware limited liability company
|
|
|
|
|
|
|
|
|
By:
|
/s/ D. Alan Meeker
|
|
|
|
|
D. Alan Meeker
|
|
|
|
|
Manager
|
|
|
|
|
|
|
|
|
|
|
|
|
TEEE:
|
Golf Rounds.com, Inc.,
|
|
|
|
a Delaware corporation
|
|
|
|
|
|
|
|
|
By:
|
/s/ Robert H. Donehew
|
|
|
|
|
Robert H. Donehew
|
|
|
|
|
President
|
|
|
|
|
|
|
|
|
|
|
|
|
Merger Sub:
|
Project Fuse LLC,
|
|
|
|
a Delaware limited liability company
|
|
|
|
|
|
|
|
|
By:
|
/s/ Robert H. Donehew
|
|
|
|
|
Robert H. Donehew
|
|
|
|
|
Manager
|
|
|
|
|
|
|
|
|
|
|
|
|
Representative:
|
By:
|
/s/ D. Alan Meeker
|
|
|
|
|
D. Alan Meeker
|
|
***The Disclosure Schedules have been omitted pursuant to Item 601(b)(2) of Regulation S-K. A copy of any omitted schedule will be furnished supplementally to the Securities and Exchange Commission upon request.
Disclosure Schedules
Schedule 1(e)(ii)
- Merger Consideration
Schedule 7(a)
– Remaining Liabilities
Schedule 7(a)
– Remaining Liabilities
Schedule 11(d)
– Conflicts/Consents
Schedule 11(h)
– Certain Changes
Schedule 12(b)
– Options Outstanding
Schedule 12(g)
– TEEE Notes Payable
EXHIBIT 4.1
AMENDED AND RESTATED AGREEMENT
This Amended and Restated Agreement (the “
Agreement
”‘) is entered into as of this 27th day of November, 2013, by and among Fuse Medical, LLC, a Delaware limited liability company (“
Fuse LLC
”), and KAW Holdings, LLC (“
Holder
”), Dr. Richard Adams, an individual (“
Adams
”), Dr. Scott King, an individual (“
King
”), Dr. David Wanner (“
Wanner
”), an individual. This Agreement amends, restates and replaces in its entirety the Conversion Agreement dated October 3, 2013, by and among Fuse LLC, Holder and Golf Rounds.com, Inc., a Delaware corporation (“
TEEE
”), Amendment 1 to the KAW Holdings LLC Share Allocation Agreement dated October 3, 2013 by and among Holder, Adams, King, and Wanner, and any other agreement between or among the parties governing similar subject matter.
Recitals
:
A.
Holder is a limited partner of Fuse Medical V, LP (“
LP
”) and holds a partnership interest in the LP (the “
Interest
”).
B.
Fuse LLC is negotiating an Agreement and Plan of Merger (the “
Merger
Agreement
”) with TEEE, pursuant to which a newly-formed subsidiary of TEEE will merge with and into Fuse LLC (the “
Merger
”) with Fuse LLC surviving the Merger as a wholly-owned subsidiary of TEEE. In connection with the Merger, the members of Fuse LLC will receive shares of Common Stock of TEEE representing in the aggregate 90% of the issued and outstanding common stock of TEEE after giving effect to the Merger (the “
Merger Consideration
”). The Merger Agreement in substantially final form has been provided to Holder.
C.
Holder and Fuse LLC desire that Holder exchange the Interest for a membership interest in Fuse LLC, effective on and as of the business day immediately prior to the effective time of the Merger (such date, the “
Effective Date
”). In connection with the Merger, Holder, as a member of Fuse LLC, will be entitled to receive its pro rata share of the Merger Consideration.
D.
The exchange contemplated by this Agreement is subject to and conditioned upon (1) the execution and delivery of agreements substantially identical to this Agreement by Fuse LLC with the limited partners of Fuse Medical VI, LP, and (2) the Merger.
NOW, THEREFORE in consideration of the mutual terms and covenants set forth herein, the parties agree as follows:
Agreements
:
1.
Contribution of the LP Interest; Consents
A.
Exchange
. By execution of this Agreement, Holder hereby irrevocably assigns its Interest in the LP to Fuse LLC in exchange for a 3.1388% membership interest in Fuse LLC (the “
Exchange Interest
”), which assignment shall be effective as of the Effective Date. By this transaction, Holder is surrendering to Fuse LLC any and all interest in the Interest. Fuse LLC shall take all necessary action to document Holder’s Exchange Interest in its books and records.
B.
Consent to Exchange
Interest
. Adams, King and Wanner hereby acknowledge and agree to the calculation of Holder’s Exchange Interest set forth in
Section l(A)
of this Agreement.
C.
Consent to Merger and Allocable Share of Merger Consideration
. Holder hereby consents to the Merger and approves the Merger Agreement and the transactions contemplated thereby, and acknowledges and agrees that as a result of the exchange, Holder shall be entitled to 3.1388% of the Merger Consideration in connection with the Merger. Holder shall be required to execute and deliver to TEEE the letter of transmittal described in the Merger Agreement in order to obtain Holder’s portion of the Merger Consideration.
2.
Representations and Warranties of Fuse LLC
. Fuse LLC hereby represents and warrants to Holder as follows:
A.
Organization and Standing
. Fuse LLC is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Delaware and has full power and authority to conduct its business as presently conducted and as proposed to be conducted by it, and to enter into and perform this Agreement, to issue the Exchange Interest hereunder and to carry out the transactions contemplated by this Agreement.
B.
Authorization; Validity
. The execution and delivery by Fuse LLC of this Agreement and the performance by Fuse LLC of its obligations hereunder have been duly authorized by all necessary action, and this Agreement has been duly executed and delivered by Fuse LLC. This Agreement constitutes the valid and binding obligation of Fuse LLC enforceable against Fuse LLC in accordance with its terms. The execution and performance of this Agreement by Fuse LLC will not conflict with or result in any breach of any of the terms, conditions or provisions of, or constitute a default under, its Certificate of Formation, limited liability company agreement, or any agreement to which Fuse LLC is a party or by which it is bound.
C.
Issuance of Exchange Interest
. The issuance and delivery of the Exchange Interest in accordance with this Agreement has been duly authorized by all necessary action on the part of Fuse LLC, and the Exchange Interest, when so issued and delivered in accordance with the provisions of this Agreement, will be validly issued, fully paid and non-assessable.
3.
Representations and Warranties of Holder
. Holder hereby represents and warrants to Fuse LLC as follows:
A.
Title
. Holder has good and marketable title to the Interest, free and clear of any liens or other encumbrance. Holder has not previously transferred, sold or assigned the Interest, or any portion thereof, or any interest therein, to any other person or entity, nor has Holder granted any person or entity any preferential right to purchase the Interest or to vote the Interest.
B.
Validity
. This Agreement has been duly executed and delivered by Holder and constitutes a legal, valid and binding obligation of Holder, enforceable against Holder in accordance with its terms.
C.
Accredited Investor Status
. Holder is an accredited investor within the meaning of Regulation D under the Securities Act of 1933, as amended, by reason of (check all that apply):
|
|
x
|
My individual net worth, or my joint net worth with my spouse, exceeds $1,000,000. NOTE: In computing the amount of net worth, exclude both the value of your primary residence and the amount of indebtedness that is secured by your primary residence from the computation. However, if the amount of such indebtedness exceeds the value of your primary residence, include the excess (and only the excess) indebtedness amount in the computation of net worth, but still do not include the value of your primary residence in the computation.
|
|
|
x
|
I personally have had an individual income in excess of $200,000 in each of the two (2) most recent years and I reasonably expect an income in excess of $200,000 in the current year.
|
|
|
x
|
My joint income with my spouse is in excess of $300,000 in each of the two (2) most recent years and I reasonably expect a joint income in excess of $300,000 in the current year.
|
|
|
____
|
I am a corporation, partnership, trust or other entity in which all of the equity owners meets one of the three tests set forth above.
|
|
|
____
|
I am a corporation, partnership, trust or other entity with total assets in excess of $5,000,000, not formed for the purpose of investing in Fuse LLC and/or TEEE.
|
D.
Other Securities Laws Matters
. Holder has been given an opportunity to ask questions and receive answers from the management of Fuse LLC and to obtain additional information from Fuse LLC concerning Fuse LLC and the Merger, and all such answers and information have been received to Holder’s satisfaction. Holder has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of an investment in Fuse LLC and the Merger Consideration and to protect its interests in connection therewith. Holder understands that the Merger Consideration Holder receives in the Merger will be subject to a lock-up agreement and cannot be sold except in compliance therewith and compliance with applicable federal and state securities laws.
4.
Release and Waiver
. Effective as of the Effective Date, Holder, on behalf of itself and its members, managers, affiliates, heirs, executors, successors and assigns (the “
Releasing Parties
”), hereby releases and forever discharges Fuse LLC and its managers, officers, members, employees, agents, successors and assigns (the “
Released Parties
”), from and against any and all rights, claims, demands, judgments, obligations, liabilities and damages, whether accrued or unaccrued, asserted or unasserted, and whether known or unknown, arising out of or resulting from the Releasing Parties’ (A) status as a holder of an equity interest in the LP and Fuse LLC; or (B) employment, service, consulting or other similar agreement entered into with the LP and/or Fuse LLC prior to the closing of the Merger to the extent that the basis for claims under any such agreement that survive the closing of the Merger arise prior to such closing,
provided
,
however
, the foregoing shall not release any obligations owing to the Releasing Parties under this Agreement or under the Merger Agreement or any other documents executed in connection with the Merger. Each of the Releasing Parties acknowledges and agrees that this general release applies to all claims that such party may have against any of the Released Parties, including, but not limited to, causes of action, injuries, damages, claims for costs or losses to any person or property, real or personal, whether those injuries, damages, or losses are known or unknown, foreseen or unforeseen, or patent or latent. The Releasing Parties agree not to file any complaints, causes of action, or grievances with any governmental, state or county entity against any of the Released Parties regarding any of the matters subject of the release.
5.
Miscellaneous
.
A.
TEEE as Third Party Beneficiary
. The Parties acknowledge and agree that this Agreement will be provided by Fuse LLC to TEEE and that TEEE will rely hereon in entering into the Merger Agreement and issuing the Merger Consideration at the closing of the Merger to the members of Fuse LLC, including Holder. TEEE is an intended third party beneficiary of this Agreement.
B.
No Guarantee of Merger
. Nothing in this Agreement shall require Fuse LLC or TEEE to consummate the Merger, it being understood that the exchange described herein shall not become effective, and shall automatically be terminated, if the Merger is not consummated for any reason.
C.
Confidentiality
. Holder, Adams, King and Wanner acknowledge that the Merger Agreement and the Merger constitute material transactions that have not yet been publicly disclosed by TEEE. Accordingly, they agree to keep this Agreement confidential until such time as the Merger is publicly announced by TEEE, and further agree that they will not purchase any shares of TEEE common stock in advance of the Merger or recommend to any other person or entity that such person or entity purchase or sell such shares.
D.
Entire Agreement
. This Agreement (including the documents referred to herein) constitutes the entire agreement among the parties, and supersedes any prior understandings, agreements, or representations by or among the parties, written or oral, to the extent they related in any way to the subject matter hereof, including the agreements referred to in the introductory paragraph hereof.
E.
Counterparts
. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which together will constitute one and the same instrument.
F.
Governing
Law
. This Agreement shall be construed and enforced in accordance with the laws of the State of Delaware, and the parties hereby submit to the exclusive jurisdiction of the state and federal courts located in Tarrant County, Texas in respect of all disputes arising hereunder. Each of the parties agrees that all claims in respect of any dispute may be heard and determined only in such courts, and agrees not to bring any action or proceeding arising out of, or relating to, this Agreement in any other court. Each of the parties waives any defense of inconvenient forum to the maintenance of any action or proceeding so brought.
G.
Amendments
and Waivers
. No amendment of any provision of this Agreement shall be valid unless the same shall be in writing and signed by the parties. No waiver by any party of any default, misrepresentation, or breach of warranty or covenant hereunder, whether intentional or not, shall be deemed to extend to any prior or subsequent default, misrepresentation, or breach of warranty or covenant hereunder or affect in any way any rights arising by virtue of any prior or subsequent such occurrence.
H.
Severability
. Any term or provision of this Agreement that is invalid or unenforceable in any situation in any jurisdiction shall not affect the validity or enforceability of the remaining terms and provisions hereof or the validity or enforceability of the offending term or provision in any other situation or in any other jurisdiction.
[
signature page follows
]
IN WITNESS WHEREOF, the parties hereto executed the foregoing Amended and Restated Agreement effective as of the date set forth above.
|
|
FUSE MEDICAL, LLC
|
|
|
|
|
|
|
|
|
By:
|
/s/ Jonathan Brown
|
|
|
|
Name:
|
Jonathan Brown
|
|
|
|
Title:
|
Manager
|
|
|
|
|
|
|
|
|
KAW Holdings, LLC
|
|
|
|
|
|
|
|
|
By:
|
/s/ Dr. Richard Adams
|
|
|
|
Name:
|
Dr. Richard Adams
|
|
|
|
Title:
|
Owner/ Manager
|
|
|
|
|
|
|
|
|
|
|
|
|
|
/s/ Dr. Richard Adams
|
|
|
|
Dr. Richard Adams
|
|
|
|
|
|
|
|
|
|
|
|
|
|
/s/
Dr. Scott King
|
|
|
|
Dr. Scott King
|
|
|
|
|
|
|
|
|
|
|
|
|
|
/s/
Dr.
David Wanner
|
|
|
|
Dr.
David Wanner
|
|
5
EXHIBIT 4.2
AMENDED AND RESTATED AGREEMENT
This Amended and Restated Agreement (the “
Agreement
”) is entered into as of this 27th day of November, 2013, by and among Fuse Medical, LLC, a Delaware limited liability company (“
Fuse LLC
”), and Eva Lou Holding LLC (“
Holder
”
). This Agreement amends, restates and replaces in its entirety the Conversion Agreement dated July 30, 2013, by and among Fuse LLC, Holder and Golf Rounds.com, Inc., a Delaware corporation (“
TEEE
”), and any other agreement between or among the parties governing similar subject matter.
Recitals
:
A.
Holder is a limited partner of Fuse Medical VI, LP (“
LP
”) and holds a partnership interest in the LP (the “
Interest
”).
B.
Fuse LLC is negotiating an Agreement and Plan of Merger (the “
Merger Agreement
”) with TEEE, pursuant to which a newly-formed subsidiary of TEEE will merge with and into Fuse LLC (the “
Merger
”) with Fuse LLC surviving the Merger as a wholly-owned subsidiary of TEEE. In connection with the Merger, the members of Fuse LLC will receive shares of Common Stock of TEEE representing in the aggregate 90% of the issued and outstanding common stock of TEEE after giving effect to the Merger (the “
Merger Consideration
”). The Merger Agreement in substantially final form has been provided to Holder.
C.
Holder and Fuse LLC desire that Holder exchange the Interest for a membership interest in Fuse LLC, effective on and as of the business day immediately prior to the effective time of the Merger (such date, the “
Effective Date
”). In connection with the Merger, Holder, as a member of Fuse LLC, will be entitled to receive its pro rata share of the Merger Consideration.
D.
The exchange contemplated by this Agreement is subject to and conditioned upon (1) the execution and delivery of agreements substantially identical to this Agreement by Fuse LLC with the limited partners of Fuse Medical V, LP, and (2) the Merger.
NOW, THEREFORE in consideration of the mutual terms and covenants set forth herein, the parties agree as follows:
Agreements
:
1.
Contribution of the LP Interest; Consents
.
A.
Exchange
. By execution of this Agreement, Holder hereby irrevocably assigns its Interest in the LP to Fuse LLC in exchange for a .1732% membership interest in Fuse LLC (the “
Exchange Interest
”), which assignment shall be effective as of the Effective Date. By this transaction, Holder is surrendering to Fuse LLC any and all interest in the Interest. Fuse LLC shall take all necessary action to document Holder’s Exchange Interest in its books and records.
B.
Consent to Merger and Allocable Share of Merger Consideration
. Holder hereby consents to the Merger and approves the Merger Agreement and the transactions contemplated thereby, and acknowledges and agrees that as a result of the exchange, Holder shall be entitled to .1732% of the Merger Consideration in connection with the Merger. Holder shall be required to execute and deliver to TEEE the letter of transmittal described in the Merger Agreement in order to obtain Holder’s portion of the Merger Consideration.
2.
Representations and Warranties of Fuse LLC
. Fuse LLC hereby represents and warrants to Holder as follows:
A.
Organization and Standing
. Fuse LLC is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Delaware and has full power and authority to conduct its business as presently conducted and as proposed to be conducted by it, and to enter into and perform this Agreement, to issue the Exchange Interest hereunder and to carry out the transactions contemplated by this Agreement.
B.
Authorization; Validity
. The execution and delivery by Fuse LLC of this Agreement and the performance by Fuse LLC of its obligations hereunder have been duly authorized by all necessary action, and this Agreement has been duly executed and delivered by Fuse LLC. This Agreement constitutes the valid and binding obligation of Fuse LLC enforceable against Fuse LLC in accordance with its terms. The execution and performance of this Agreement by Fuse LLC will not conflict with or result in any breach of any of the terms, conditions or provisions of, or constitute a default under, its Certificate of Formation, limited liability company agreement, or any agreement to which Fuse LLC is a party or by which it is bound.
C.
Issuance of Exchange Interest
. The issuance and delivery of the Exchange Interest in accordance with this Agreement has been duly authorized by all necessary action on the part of Fuse LLC, and the Exchange Interest, when so issued and delivered in accordance with the provisions of this Agreement, will be validly issued, fully paid and non-assessable.
3.
Representations and Warranties of Holder
. Holder hereby represents and warrants to Fuse LLC as follows:
A.
Title
. Holder has good and marketable title to the Interest, free and clear of any liens or other encumbrance. Holder has not previously transferred, sold or assigned the Interest, or any portion thereof, or any interest therein, to any other person or entity, nor has Holder granted any person or entity any preferential right to purchase the Interest or to vote the Interest.
B.
Validity
. This Agreement has been duly executed and delivered by Holder and constitutes a legal, valid and binding obligation of Holder, enforceable against Holder in accordance with its terms.
C.
Accredited
Investor Status
. Holder is an accredited investor within the meaning of Regulation D under the Securities Act of 1933, as amended, by reason of (check all that apply):
|
|
x
|
My individual net worth, or my joint net worth with my spouse, exceeds $1,000,000. NOTE: In computing the amount of net worth, exclude both the value of your primary residence and the amount of indebtedness that is secured by your primary residence from the computation. However, if the amount of such indebtedness exceeds the value of your primary residence, include the excess (and only the excess) indebtedness amount in the computation of net worth, but still do not include the value of your primary residence in the computation.
|
|
|
x
|
I personally have had an individual income in excess of $200,000 in each of the two (2) most recent years and I reasonably expect an income in excess of $200,000 in the current year.
|
|
|
___
|
My joint income with my spouse is in excess of $300,000 in each of the two (2) most recent years and I reasonably expect a joint income in excess of $300,000 in the current year.
|
|
|
x
|
I am a corporation, partnership, trust or other entity in which all of the equity owners meets one of the three tests set forth above.
|
|
|
___
|
I am a corporation, partnership, trust or other entity with total assets in excess of $5,000,000, not formed for the purpose of investing in Fuse LLC and/or TEEE.
|
D.
Other
Securities Laws Matters
. Holder has been given an opportunity to ask questions and receive answers from the management of Fuse LLC and to obtain additional information from Fuse LLC concerning Fuse LLC and the Merger, and all such answers and information have been received to Holder’s satisfaction. Holder has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of an investment in Fuse LLC and the Merger Consideration and to protect its interests in connection therewith. Holder understands that the Merger Consideration Holder receives in the Merger will be subject to a lock-up agreement and cannot be sold except in compliance therewith and compliance with applicable federal and state securities laws.
4.
Release and Waiver
. Effective as of the Effective Date, Holder, on behalf of itself and its members, managers, affiliates, heirs, executors, successors and assigns (the “
Releasing Parties
”), hereby releases and forever discharges Fuse LLC and its managers, officers, members, employees, agents, successors and assigns (the “
Released Parties
”), from and against any and all rights, claims, demands, judgments, obligations, liabilities and damages, whether accrued or unaccrued, asserted or unasserted, and whether known or unknown, arising out of or resulting from the Releasing Parties’ (A) status as a holder of an equity interest in the LP and Fuse LLC; or (B) employment, service, consulting or other similar agreement entered into with the LP and/or Fuse LLC prior to the closing of the Merger to the extent that the basis for claims under any such agreement that survive the closing of the Merger arise prior to such closing,
provided
,
however
, the foregoing shall not release any obligations owing to the Releasing Parties under this Agreement or under the Merger Agreement or any other documents executed in connection with the Merger. Each of the Releasing Parties acknowledges and agrees that this general release applies to all claims that such party may have against any of the Released Parties, including, but not limited to, causes of action, injuries, damages, claims for costs or losses to any person or property, real or personal, whether those injuries, damages, or losses are known or unknown, foreseen or unforeseen, or patent or latent. The Releasing Parties agree not to file any complaints, causes of action, or grievances with any governmental, state or county entity against any of the Released Parties regarding any of the matters subject of the release.
5.
Miscellaneous
.
A.
TEEE
as Third Party Beneficiary
. The Parties acknowledge and agree that this Agreement will be provided by Fuse LLC to TEEE and that TEEE will rely hereon in entering into the Merger Agreement and issuing the Merger Consideration at the closing of the Merger to the members of Fuse LLC, including Holder. TEEE is an intended third party beneficiary of this Agreement.
B.
No
Guarantee of Merger
. Nothing in this Agreement shall require Fuse LLC or TEEE to consummate the Merger, it being understood that the exchange described herein shall not become effective, and shall automatically be terminated, if the Merger is not consummated for any reason.
C.
Confidentiality
. Holder acknowledges that the Merger Agreement and the Merger constitute material transactions that have not yet been publicly disclosed by TEEE. Accordingly, Holder agrees to keep this Agreement confidential until such time as the Merger is publicly announced by TEEE, and further agree that it will not purchase any shares of TEEE common stock in advance of the Merger or recommend to any other person or entity that such person or entity purchase or sell such shares.
D.
Entire
Agreement
. This Agreement (including the documents referred to herein) constitutes the entire agreement among the parties, and supersedes any prior understandings, agreements, or representations by or among the parties, written or oral, to the extent they related in any way to the subject matter hereof, including the agreement referred to in the introductory paragraph hereof.
E.
Counterparts
. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which together will constitute one and the same instrument.
F.
Governing
Law
. This Agreement shall be construed and enforced in accordance with the laws of the State of Delaware, and the parties hereby submit to the exclusive jurisdiction of the state and federal courts located in Tarrant County, Texas in respect of all disputes arising hereunder. Each of the parties agrees that all claims in respect of any dispute may be heard and determined only in such courts, and agrees not to bring any action or proceeding arising out of, or relating to, this Agreement in any other court. Each of the parties waives any defense of inconvenient forum to the maintenance of any action or proceeding so brought.
G.
Amendments
and Waivers
. No amendment of any provision of this Agreement shall be valid unless the same shall be in writing and signed by the parties. No waiver by any party of any default, misrepresentation, or breach of warranty or covenant hereunder, whether intentional or not, shall be deemed to extend to any prior or subsequent default, misrepresentation, or breach of warranty or covenant hereunder or affect in any way any rights arising by virtue of any prior or subsequent such occurrence.
H.
Severability
. Any term or provision of this Agreement that is invalid or unenforceable in any situation in any jurisdiction shall not affect the validity or enforceability of the remaining terms and provisions hereof or the validity or enforceability of the offending term or provision in any other situation or in any other jurisdiction.
[signature page follows]
IN WITNESS WHEREOF, the parties hereto executed the foregoing Amended and Restated Agreement effective as of the date set forth above.
|
|
FUSE MEDICAL, LLC
|
|
|
|
|
|
|
|
|
By:
|
/s/ Jonathan Brown
|
|
|
|
Name:
|
Jonathan Brown
|
|
|
|
Title:
|
Manager
|
|
|
|
Eva Lou Holding LLC
|
|
|
|
|
|
|
|
|
By:
|
/s/ John P. Krebsbach
|
|
|
|
Name:
|
John P. Krebsbach
|
|
|
|
Title:
|
Holder
|
|
5
EXHIBIT 10.1
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the “
Agreement
”), dated as of May 28, 2014, is by and among Fuse Medical, Inc., a Delaware corporation (the “
Company
”), and the investors set forth on
Schedule 1
attached hereto, who are receiving shares of the Company’s common stock, par value $0.001 per share, pursuant to that certain Agreement and Plan of Merger, dated December 18, 2013, by and among the Company, Project Fuse LLC, a Delaware limited liability company (“
PF
”), Fuse Medical LLC, a Delaware limited liability company (“
Target
”), and D. Alan Meeker, as Stockholder Representative, pursuant to which PF was merged with and into Target and Target became a wholly-owned subsidiary of the Company (the “
Merger
”).
The parties hereby agree as follows:
1.
Certain Definitions
.
As used in this Agreement, the following terms shall have the following meanings:
“
Affiliate
” means, with respect to any person, any other person which directly or indirectly controls, is controlled by, or is under common control with, such person.
“
Allowed Delay
” shall have the meaning set forth in Section 2(e)(ii) of this Agreement.
“
Business Day
” means a day, other than a Saturday or Sunday, on which banks in New York City are open for the general transaction of business.
“
Common Stock
” means shares of the Company’s common stock, par value $0.001, and any securities into which such shares may hereinafter be reclassified.
“
Company Registration
” means a registration statement to be filed by the Company with respect to any of its equity securities for its own account (other than a registration statement on Form S-4 or S-8 (or any successor or substantially similar form).
“
Form S-1
” means a Form S-1 Registration Statement under the 1933 Act, or any successor or substantially similar form.
“
Form S-3
” means a Form S-3 Registration Statement under the 1933 Act, or any successor or substantially similar form.
“
Investors
” means collectively the investors set forth on Schedule 1 attached hereto or a permitted transferee of any such Investor who is a subsequent holder of any Registrable Securities. The Investors are individually referred to herein as an “
Investor.
”
“
Other Holder Piggyback Rights
” means the rights of any holder of Company securities having contractual piggy-back registration rights entitled to participate in a registration, other than the Investors.
“
Prospectus
” means the prospectus included in any Registration Statement, as amended or supplemented by any prospectus supplement, with respect to the terms of the offering of any portion of the Registrable Securities covered by such Registration Statement and by all other amendments and supplements to the prospectus, including post-effective amendments and all material incorporated by reference or deemed to be incorporated by reference in such prospectus which is permitted to be so incorporated by reference in accordance with the rules and regulations of the SEC.
“
Register
,” “
registered
” and “
registration
” refer to a registration made by preparing and filing a Registration Statement or similar document in compliance with the 1933 Act (as defined below), and the declaration or ordering of effectiveness of such Registration Statement or document.
“
Registrable Securities
” or “
Registrable Security
” means (i) the shares of Common Stock issued to the Investors in connection with the Merger, and (ii) any securities issued or issuable with respect to such securities by way of a stock dividend or stock split or in connection with a combination of shares, recapitalization, merger, consolidation or other reorganization with respect to any of the securities referenced in clause (i);
provided
that securities shall cease to be a Registrable Securities when: (a) a Registration Statement with respect to the sale of such securities shall have become effective under the 1933 Act and such securities shall have been sold, transferred, disposed of or exchanged in accordance with such Registration Statement; (b) such securities shall have been otherwise transferred, and new certificates for them not bearing a legend restricting further transfer shall have been delivered by the Company; (c) such securities shall have ceased to be outstanding; or (d) the Registrable Securities are salable within a three month period under Rule 144 without regard to any volume limitations under Rule 144.
“
Registration
” shall mean any Demand Registration or Piggy-Back Registration.
“
Registration Statement
” means any registration statement of the Company filed under the 1933 Act that covers the resale of any of the Registrable Securities pursuant to the provisions of this Agreement, amendments and supplements to such Registration Statement, including post-effective amendments, and all exhibits to and all material incorporated by reference or deemed to be incorporated by reference in such Registration Statement.
“
Required Investors
” mean the Investors who, together, hold a majority of the Registrable Securities.
“
SEC
” means the U.S. Securities and Exchange Commission.
“
Underwriter
” means a securities dealer, investment banker, or purchaser’s agent who purchases any Registrable Securities as principal in an underwritten offering and not as part of such securities dealer’s market-making activities.
“
1933 Act
” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
“
1934 Act
” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
2.
Registration
.
(a)
Form S-1 Demand Registration
.
(i) During the Demand Term (as defined below), Required Investors may, by written notice to the Company, request that the Company effect a registration on Form S-1 (a “
Demand Registration
”) under the 1933 Act covering all or part of the Registrable Securities held by such Required Investors (the date of such notice, the “
Demand Date
”), and the Company shall promptly notify all other Investors in writing of the receipt of such notice. Each such Investor may elect (by written notice sent to the Company within ten (10) Business Days from the date of such Investor’s receipt of such notice from the Company) to have all or part of such Investor’s Registrable Securities included in such Demand Registration pursuant to this Section 2(a), and such Investor shall specify in such notice the number of Registrable Securities that such Investor elects to include in such Demand Registration. The Company shall, as expeditiously as possible, but in any event no later than sixty (60) days after the Demand Date, file with the SEC a Registration Statement (a “
Demand Registration Statement
”) relating to all shares of Registrable Securities which the Company has been so requested to register by such Investors (“
Participating Investors
”) for sale. As used herein, “
Demand Term
” shall mean the period commencing on May 28, 2014 and ending on such date as the Company is first eligible to register the Registrable Securities on Form S-3. If the Company loses its eligibility to register the Registrable Securities on Form S-3 while Registrable Securities are still held by the Investors, the Demand Term shall be automatically extended until the Company again becomes eligible to register the Registrable Securities on Form S-3.
(ii) Notwithstanding anything to the contrary contained herein, the Company shall not be required to prepare and file (A) more than one (1) Demand Registration Statement in any twelve-month period, (B) any Demand Registration Statement within one hundred twenty (120) days following the date of effectiveness of any other Registration Statement; or (C) during the period commencing with the date thirty (30) days prior to the Company’s good faith estimate of the date of filing of, and ending on a date ninety (90) days after the effective date of, a Company Registration;
provided
that the Company is actively employing in good faith all reasonable efforts to cause such registration statement to become effective; and
provided
further
that, if the Company abandons such Company Registration, the Company shall promptly notify any Investor that was unable to effect a registration under this Section 2(a) as a result of this clause (C).
(iii) If a majority-in-interest of the Participating Investors so elect and such holders so advise the Company as part of their written demand for a Demand Registration, the offering of such Registrable Securities pursuant to such Demand Registration shall be in the form of an underwritten offering. In such event, the right of any Investor to include its Registrable Securities in such registration shall be conditioned upon such Investor’s participation in such underwriting and the inclusion of such holder’s Registrable Securities in the underwriting to the extent provided herein. All Participating Investors proposing to distribute their securities through such underwriting shall enter into an underwriting agreement in customary form with the Underwriter or Underwriters selected for such underwriting by a majority-in-interest of the Participating Investors initiating the Demand Registration.
(iv) If the managing Underwriter or Underwriters for a Demand Registration that is to be an underwritten offering advise the Company and the Participating Investors in writing that the dollar amount or number of shares of Registrable Securities which the Participating Investors desire to sell, taken together with all other shares of Common Stock or other securities, if any, as to which registration has been requested pursuant to Other Holder Piggyback Rights, exceeds the maximum dollar amount or maximum number of shares that can be sold in such offering without adversely affecting the proposed offering price, the timing, the distribution method, or the probability of success of such offering (such maximum dollar amount or maximum number of shares, as applicable, the “
Maximum Number of Shares
”), then the Company shall include in such registration: (i) first, the Registrable Securities as to which Demand Registration has been requested by the Participating Investors (pro rata in accordance with the number of shares of Registrable Securities then held by such Participating Investors) that can be sold without exceeding the Maximum Number of Shares; (ii) second, to the extent that the Maximum Number of Shares has not been reached under the foregoing clause (i) , the shares of Common Stock for the account of other persons that the Company is obligated to register under Other Holder Piggyback Rights pursuant to written contractual arrangements with such persons and that can be sold without exceeding the Maximum Number of Shares; and (ii) third, to the extent that the Maximum Number of Shares have not been reached under the foregoing clauses (i) and (ii), the shares of Common Stock that the Company and other shareholders desire to sell that can be sold without exceeding the Maximum Number of Shares.
(b)
Form S-3 and Shelf Demand Registration
.
(i) After both (A) May 28, 2014 and (B) the Company has qualified for the use of Form S-3 under the 1933 Act for sales of Registrable Securities by selling stockholders, and prior to the date on which the Registrable Securities all cease to be Registrable Securities, in addition to the rights contained in Section 2(a), the Investors shall have the right to request an unlimited number of registrations on Form S-3. Such requests shall be in writing and shall state the number of shares of Registrable Securities to be disposed of and the intended methods of disposition of such shares by such Investors, including whether such offering is requested to be an underwritten offering. Upon such request, the Company shall, subject to Section 2(e)(ii) hereof, use its commercially reasonable efforts to effect the registration under the 1933 Act of the Registrable Securities which the Company has been so requested to register by such Investors;
provided
,
however
, that the Company shall not be obligated to effect a registration pursuant to this Section 2(b): (1) more than once in any twelve-month period; (2) unless the Registrable Securities requested to be included therein have an anticipated offering price to the public of at least $1.00 per share; (3) during the period commencing with the date thirty (30) days prior to the Company’s good faith estimate of the date of filing of, and ending on a date ninety (90) days after the effective date of, a Company Registration;
provided
that the Company is actively employing in good faith all reasonable efforts to cause such registration statement to become effective; and
provided
further
that, if the Company abandons such Company Registration, the Company shall promptly notify any Investor who was unable to effect a registration under this Section 2(b) as a result of this clause (3); or (4) within one hundred eighty (180) days following the last date on a Registration Statement filed in respect of a registration hereunder, if any, was effective. Any registration under this Section 2(b) shall be underwritten at the request of Investors holding a majority of the Registrable Securities held by all Investors participating in such registration.
(ii) If a request complying with the requirements of Section 2(b)(i) hereof is delivered to the Company, the notice provisions set forth in Section 2(a)(i) and the provisions of Sections 2(a)(iii) and 2(a)(iv) shall apply to such registration;
provided
that if such request is for an offering other than an underwritten offering, the portions of those Sections applying to an underwritten offering shall not apply.
(iii) The Investors shall have the right to request that one (1) registration made pursuant to Section 2(b) constitute an offering of Registrable Securities under the Securities Act in a manner that permits sales on a continuous or delayed basis pursuant to Rule 415 (the “
Shelf Registration
”). The Company shall, subject to Section 2(e)(ii) hereof, use its commercially reasonable efforts to cause the Registration Statement relating to the Shelf Registration to become effective as promptly as practicable and maintain the effectiveness of such Registration Statement for a period ending on the earliest of (A) two (2) years following the date on which such Registration Statement first becomes effective (but one (1) year if the Company is not continuously able to use Form S-3 during such period unless the Company is not permitted by applicable law to maintain the effectiveness for one (1) year, and then for such shorter period as is permitted), and (B) the date on which all Registrable Securities covered by such Registration Statement have been sold and the distribution contemplated thereby has been completed or have become freely tradable pursuant to Rule 144 without regard to volume limitations. Any “takedown” under the Shelf Registration shall be underwritten at the request of Investors holding a majority of the Registrable Securities held by all Investors participating in such “takedown.” Any request for such a “takedown” that is intended to be an underwritten offering shall be made pursuant to Section 2(b)(ii) such that the provisions relating to effecting a Registration Statement thereunder apply to effecting the takedown under the Shelf Registration. Any sales made on a delayed or continuous basis under the Shelf Registration that do not constitute an underwritten offering shall not be required to comply with the underwriting provisions of Section 2(b)(ii).
(c)
Piggy-Back Registration
.
(i) If at any time after the date hereof and prior to the date on which all Registrable Securities cease to be Registrable Securities, the Company proposes to file a Registration Statement under the 1933 Act with respect to an offering of equity securities, or securities or other obligations exercisable or exchangeable for, or convertible into, equity securities, by the Company for its own account or for stockholders of the Company for their account (or by the Company and by stockholders of the Company), other than a Registration Statement (A) filed in connection with any employee stock option or other benefit plan, (B) for an exchange offer or offering of securities solely to the Company’s existing stockholders, (C) for an offering of debt that is convertible into equity securities of the Company, or (D) for a dividend reinvestment plan, then the Company shall (1) give written notice of such proposed filing to the Investors as soon as practicable but in no event less than ten (10) days before the anticipated filing date, which notice shall describe the amount and type of securities to be included in such offering, the intended method(s) of distribution, and the name of the proposed managing Underwriter or Underwriters, if any, of the offering, and (2) offer to the Investors in such notice the opportunity to register the sale of such number of shares of Registrable Securities as such holders may request in writing within five (5) days following receipt of such notice (a “
Piggy-Back Registration
”).
(ii) The Company shall cause such Registrable Securities to be included in such Piggy-Back Registration and shall use commercially reasonable efforts to cause the managing Underwriter or Underwriters of a proposed underwritten offering to permit the Registrable Securities requested to be included in a Piggy-Back Registration to be included on the same terms and conditions as any similar securities of the Company and to permit the sale or other disposition of such Registrable Securities in accordance with the intended method(s) of distribution thereof. All holders of Registrable Securities proposing to distribute their securities through a Piggy-Back Registration that involves an Underwriter or Underwriters shall enter into an underwriting agreement in customary form with the Underwriter or Underwriters selected for such Piggy-Back Registration.
(iii) If the managing Underwriter or Underwriters for a Piggy-Back Registration that is to be an underwritten offering advises the Company and the holders of Registrable Securities in writing that the dollar amount or number of shares of Common Stock which the Company desires to sell, taken together with shares of Common Stock, if any, as to which registration has been demanded pursuant to written contractual arrangements with persons other than the Investors, the Registrable Securities as to which registration has been requested under this Section 2(c), and the shares of Common Stock, if any, as to which registration has been requested pursuant to Other Holder Piggyback Rights, exceeds the Maximum Number of Shares, then the Company shall include in any such registration:
(A) If the registration is undertaken for the Company’s account: (1) first, the shares of Common Stock or other securities that the Company desires to sell that can be sold without exceeding the Maximum Number of Shares; (2) second, to the extent that the Maximum Number of Shares has not been reached under the foregoing clause (1), Registrable Securities as to which registration has been requested under this Section 2(c) that can be sold without exceeding the Maximum Number of Shares; and (3) third, to the extent that the Maximum Number of Shares has not been reached under the foregoing clauses (1) and (2), the shares of Common Stock as to which registration has been requested pursuant to Other Holder Piggyback Rights that can be sold without exceeding the Maximum Number of Shares.
(B) If the registration is a “demand” registration undertaken at the demand of persons other than the Investors pursuant to written contractual arrangements with such persons, (1) first, the shares of Common Stock for the account of the demanding persons that can be sold without exceeding the Maximum Number of Shares; (2) second, to the extent that the Maximum Number of Shares has not been reached under the foregoing clause (1), the shares of Common Stock or other securities that the Company desires to sell that can be sold without exceeding the Maximum Number of Shares; (3) third, to the extent that the Maximum Number of Shares has not been reached under the foregoing clauses (1) and (2), Registrable Securities as to which registration has been requested under this Section 2(c) that can be sold without exceeding the Maximum Number of Shares, (4) fourth, to the extent that the Maximum Number of Shares has not been reached under the foregoing clauses (1), (2), and (3), the shares of Common Stock, if any, as to which registration has been requested pursuant to Other Holder Piggyback Rights that can be sold without exceeding the Maximum Number of Shares.
(d)
Expenses
. The Company will pay all expenses associated with each Registration, including filing and printing fees, the Company’s counsel and accounting fees and expenses, costs associated with clearing the Registrable Securities for sale under applicable state securities laws, listing fees, blue sky fees, and the expenses of any special audits incident to or required by any such Registration, but excluding stock transfer taxes, discounts, commissions or fees of underwriters, selling brokers, dealer managers or similar securities industry professionals with respect to the Registrable Securities being sold.
(e)
Effectiveness
.
(i) The Company shall use commercially reasonable efforts to have a Demand Registration Statement declared effective within one hundred and twenty (120) days after the Demand Date. The Company shall notify the Investors by facsimile or e-mail as promptly as practicable, or by issuing a press release, within twenty-four (24) hours, after any Registration Statement is declared effective and as soon as reasonably practicable shall make available to the Investor, upon written request, copies of any related Prospectus to be used in connection with the sale or other disposition of the Registrable Securities covered thereby.
(ii) Notwithstanding anything to contrary, the Company may delay, suspend the use of, or withdraw any Registration Statement or qualification of Registrable Securities if the Company in good faith determines that any such Registration Statement, or the use thereof, would materially and adversely affect any material corporate event or would otherwise require disclosure of nonpublic information which the Company determines, in its reasonable judgment, is not in the best interests of the Company at such time (an “
Allowed Delay
”);
provided
that the Company shall promptly (A) notify the Investors in writing of the existence of (but in no event, without the prior written consent of the Investors, shall the Company disclose to the Investors any of the facts or circumstances regarding) the event giving rise to an Allowed Delay;
provided
,
however
, that the Company shall not be required to disclose material nonpublic information to the Investors unless an Investor has executed the nondisclosure agreement contemplated pursuant to Section 4(b); (B) advise the Investors in writing to cease all sales under the Registration Statement until the end of the Allowed Delay; and (C) use commercially reasonable best efforts to terminate an Allowed Delay as promptly as practicable.
(f)
SEC Reductions
. In the event the Company is required by the SEC to reduce the number of Registrable Securities being registered for resale on any Registration Statement filed with the SEC pursuant to Section 2(a), 2(b) or 2(c) hereof, then unless otherwise required by the SEC or agreed to by the Participating Investors, the number of Registrable Securities included in such Registration shall be allocated among all the Participating Investors on a pro rata basis based on the number of Registrable Securities held by each Participating Investor. The Company shall notify the Investors in the event of any such reduction.
3.
Company Obligations
. The Company will use commercially reasonable efforts to effect the registration of the Registrable Securities in accordance with the terms hereof, and pursuant hereto the Company will, as expeditiously as possible:
(a) use commercially reasonable efforts to cause such Registration Statement to become and remain effective until the earlier of (i) one hundred and eighty (180) days following the effective date of such Registration Statement; (ii) such time as all of the Registrable Securities covered by the Registration Statement have been sold; or (iii) the date on which all of the Registrable Securities may be sold pursuant to Rule 144 under the 1933 Act without regard to volume restrictions, except that for any Shelf Registration, the required effectiveness periods set forth in Section 2(b)(iii) above shall be required (the “
Effectiveness Period
”);
(b) prepare and file with the SEC such amendments, prospectus supplements or post-effective amendments to the Registration Statement and the Prospectus as may be necessary to keep the Registration Statement effective for the period specified in Section 3(a) and to comply with the provisions of the 1933 Act and the 1934 Act with respect to the distribution of all of the Registrable Securities covered thereby;
(c) make available to the Investors and their legal counsel upon written request (i) promptly after the same is prepared and publicly distributed, filed with the SEC, or received by the Company, one copy of any Registration Statement and any amendment thereto, each preliminary prospectus and Prospectus and each amendment or supplement thereto, and each letter written by or on behalf of the Company to the SEC or the staff of the SEC, and each item of correspondence from the SEC or the staff of the SEC, in each case relating to such Registration Statement (other than any portion thereof which contains information for which the Company has sought confidential treatment), and (ii) such number of copies of a Prospectus, including a preliminary prospectus, and all amendments and supplements thereto and such other documents as the Investors may reasonably request in order to facilitate the disposition of the Registrable Securities owned by such Investors that are covered by the related Registration Statement. Notwithstanding the foregoing, the Company shall not be required to provide any Investor or Investors’ representative with material non-public information unless such Investor has entered into a non-disclosure agreement with the Company;
(d) use commercially reasonable efforts to (i) prevent the issuance of any stop order or other suspension of effectiveness, and (ii) if such order is issued, obtain the withdrawal of any such order at the earliest possible moment;
(e) use commercially reasonable efforts to cause all Common Stock covered by a Registration Statement to be listed on each securities exchange, interdealer quotation system or other market on which similar securities issued by the Company are then listed or quoted (if applicable);
(f) promptly notify the Investors upon the occurrence of any of the following events in respect of the Registration Statement or the Prospectus forming a part thereof: (i) the issuance by the SEC or any other federal or state governmental authority of any stop order suspending the effectiveness of the Registration Statement or the initiation of any proceedings for that purpose; (ii) receipt of any notification with respect to the suspension of the qualification or exemption from qualification of any of the Registrable Securities for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose; or (iii) the effectiveness of the Registration Statement within twenty four (24) hours of such Registration Statement being declared effective;
(g) immediately notify the Investors, at any time when a Prospectus relating to Registrable Securities is required to be delivered under the 1933 Act, upon discovery that, or upon the happening of any event or the passage of time as a result of which, the Prospectus included in a Registration Statement, as then in effect, includes an untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing, and promptly prepare and furnish to such holder a reasonable number of copies of a supplement to or an amendment of such Prospectus or the Registration Statement as may be necessary so that, as thereafter delivered to the purchasers of such Registrable Securities, such Prospectus shall not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing;
(h) otherwise use commercially reasonable efforts to comply with all applicable rules and regulations of the SEC under the 1933 Act and the 1934 Act, take such other actions as may be reasonably necessary to facilitate the registration of the Registrable Securities hereunder;
(i) cooperate with the Investors to facilitate the timely preparation and delivery of certificates representing Registrable Securities to be sold pursuant to a Registration Statement, and to enable such Registrable Securities to be in such denominations and registered in such names as the Investors may request; and
(j) prior to any public offering of Registrable Securities, register or qualify (unless an exemption from such registration of qualification is available) the Registrable Securities for offer and sale under the securities or ”blue sky” laws of such jurisdictions within the United States, keep each such registration or qualification (or exemption therefrom) effective during the Effectiveness Period and do any and all other acts or things necessary or advisable to enable the disposition in such jurisdictions of the Registrable Securities covered by a Registration Statement;
provided
,
however
, that the Company shall not be required to qualify generally to transact business in any jurisdiction where it is not then so qualified or to take any action that would subject it to general service of process in any such jurisdiction where it is not then so subject or subject the Company to any material tax in any such jurisdiction where it is not then so subject.
4.
Due Diligence Review; Information
.
(a) The Company shall make available, during normal business hours, upon reasonable request and within a reasonable time, for inspection and review by the Investors and by advisors to and representatives of the Investors (who may or may not be affiliated with the Investors and who are reasonably acceptable to the Company), all financial and other records, all filings with the SEC, and all other documents respecting the Company, its assets, its properties or its business (including without limitation minute books, corporate records, financial statements, contracts, permits, licenses, approvals, technical or engineering reports, and any valuations which the Company has obtained) as may be reasonably necessary for the purpose of such review, and cause the Company’s officers, directors and employees, within a reasonable time period, to supply all such information reasonably requested by the Investors or any such advisor or representative in connection with such Registration Statement (including, without limitation, in response to all questions and other inquiries reasonably made or submitted by any of them) to the extent not publicly available on EDGAR or the Company’s website, prior to and from time to time after the filing and effectiveness of the Registration Statement until the end of the Effectiveness Period, for the sole purpose of enabling the Investor and such advisors and representatives to conduct initial and ongoing due diligence with respect to the Company and the accuracy of such Registration Statement.
(b) Any Investor (and its advisors and representatives) requesting Company information pursuant to Section 4(a) shall complete a non-disclosure agreement with the Company and an acknowledgement that such investigation may reveal material non-public information. Nothing herein shall obligate the Company to provide to the Investor, or any advisors or representatives or underwriters, any material nonpublic information. Additionally, the Company is not required to provide any information the Company deems commercially sensitive or proprietary.
5.
Obligations of the Investors
.
(a) Each Investor shall furnish in writing to the Company such information regarding itself, the Registrable Securities held by it and the intended method of disposition of the Registrable Securities held by it, as shall be reasonably required to effect the registration of such Registrable Securities and shall execute such documents in connection with such registration as the Company may reasonably request within five (5) Business Days of such request. Additionally, each Investor agrees to respond to any comments from the SEC or any other government regulator regarding such Investor as soon as possible and in any event within five (5) Business Days of such request. The Company shall not be required to include the Registrable Securities of an Investor in a Registration Statement and shall not be required to pay any damages to any Investor who fails to furnish to the Company such information within the prescribed time periods.
(b) The Investors, by their acceptance of the Registrable Securities, agree to cooperate with the Company as reasonably requested by the Company in connection with the preparation and filing of any Registration Statement hereunder, unless any such Investor has notified the Company in writing of its election to exclude all of its Registrable Securities from such Registration Statement.
(c) Each Investor agrees that, upon receipt of any notice (which may be oral as long as written notice is provided by the next Business Day) from the Company of the commencement of an Allowed Delay pursuant to Section 2(e)(ii), the Investor will immediately discontinue disposition of Registrable Securities pursuant to the Registration Statement covering such Registrable Securities, until otherwise notified in writing by the Company or until the Investor’s receipt of the copies of the supplemented or amended Prospectus filed with the SEC and until any related post-effective amendment is declared effective. In addition, if so directed by the Company, the Investor shall deliver to the Company (at the expense of the Company) or destroy (and deliver to the Company a certificate of destruction) all copies in the Investor’s possession of the Prospectus covering the Registrable Securities current at the time of receipt of such notice.
(d) Each Investor covenants and agrees that it will comply with the prospectus delivery requirements of the 1933 Act as applicable to it in connection with sales of Registrable Securities pursuant to the Registration Statement.
6.
Indemnification
.
(a)
Indemnification by the Company
. The Company will indemnify and hold harmless each Investor, and each of its officers, directors, members, employees and agents, successors and assigns, and each other person, if any, who controls such Investor within the meaning of the 1933 Act, against any losses, claims, damages, liabilities and expense (including reasonable attorneys’ fees), joint or several, to which they may become subject under the 1933 Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon: (i) any untrue statement or alleged untrue statement of any material fact contained in any Registration Statement, any preliminary prospectus or final prospectus contained therein, or any amendment or supplement thereof; (ii) any application or other document or communication (collectively, an “application”) executed by, or on behalf of, the Company or based upon written information furnished by, or on behalf of, the Company filed in any jurisdiction in order to register or qualify any of the Registrable Securities under the securities or “blue sky” laws thereof or filed with any securities exchange; (iii) the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading; (iv) any violation by the Company or its agents of any rule or regulation promulgated under the 1933 Act applicable to the Company or its agents and relating to action or inaction required of the Company in connection with such registration; or (v) any failure to register or qualify the Registrable Securities included in any such Registration Statement in any state where the Company or its agents has affirmatively undertaken or agreed in writing that the Company will undertake such registration or qualification on the Investor’s behalf;
provided
,
however
, that the Company will not be liable in any such case if and to the extent that (A) any such loss, claim, damage, liability or expense either arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission so made in conformity with information furnished by the Investor for use in such Registration Statement or Prospectus, or (B) such information relates to the Investor or the Investor’s proposed method of distribution of Registrable Securities and was reviewed and approved by the Investor for use in the Registration Statement, such Prospectus or such form of Prospectus or in any amendment or supplement thereto, or (C) in the case of an occurrence of an Allowed Delay or of an event of the type specified in Section 3(g), the use by the Investor of an outdated or defective Prospectus after the Company has notified the Investor in writing that the Prospectus is outdated or defective and prior to the receipt by the Investor of an amended or supplemented Prospectus, but only if and to the extent that following the receipt of such amended or supplemented Prospectus the misstatement or omission giving rise to such liability would have been corrected.
(b)
Indemnification by the Investor
. Each Investor agrees, severally but not jointly, to indemnify and hold harmless, to the fullest extent permitted by law, the Company, its directors, officers, employees, shareholders and each person who controls the Company (within the meaning of the 1933 Act) against any losses, claims, damages, liabilities and expenses (including reasonable attorneys’ fees) resulting from any untrue statement of a material fact or any omission of a material fact required to be stated in the Registration Statement or Prospectus or preliminary prospectus or amendment or supplement thereto or necessary to make the statements therein not misleading, to the extent that such untrue statement or omission is contained in any information furnished by the Investor to the Company for inclusion in such Registration Statement or Prospectus or amendment or supplement thereto, or to the extent that such information relates to such Investor’s proposed method of distribution of Registrable Securities and was reviewed and approved by the Investor for use in the Registration Statement, such Prospectus or such form of Prospectus or in any amendment or supplement thereto, or in the case of an occurrence of an Allowed Delay or an event of the type specified in Section 3(g), the use by the Investor of an outdated or defective Prospectus after the Company has notified the Investor in writing that the Prospectus is outdated or defective and prior to the receipt by the Investor of an amended or supplemented Prospectus, but only if and to the extent that following the receipt of the amended or supplemented Prospectus the misstatement or omission giving rise to such liability would have been corrected. In no event shall the liability of the Investor be greater in amount than the dollar amount of the proceeds (net of any damages the Investor has otherwise been required to pay by reason of such untrue statement or omission by the Company) received by the Investor upon the sale of the Registrable Securities included in the Registration Statement giving rise to such indemnification obligation.
(c)
Conduct of Indemnification Proceedings
. Any person entitled to indemnification hereunder shall (i) give prompt notice to the indemnifying party of any claim with respect to which it seeks indemnification; and (ii) permit such indemnifying party to assume the defense of such claim with counsel reasonably satisfactory to the indemnified party;
provided
that any person entitled to indemnification hereunder shall have the right to employ separate counsel and to participate in the defense of such claim, but the fees and expenses of such counsel shall be at the expense of such person unless (A) the indemnifying party has agreed to pay such fees or expenses; or (B) the indemnifying party shall have failed to assume the defense of such claim and employ counsel reasonably satisfactory to such person; or (C) in the reasonable judgment of any such person, based upon written advice of its counsel, a conflict of interest exists between such person and the indemnifying party with respect to such claims (in which case, if the person notifies the indemnifying party in writing that such person elects to employ separate counsel at the expense of the indemnifying party, the indemnifying party shall not have the right to assume the defense of such claim on behalf of such person); or (D) the indemnified party shall have reasonably concluded, with the advice of counsel, that there may be one or more legal defenses available to it or them or to other indemnified parties which are different from, or in addition to, those available to the indemnifying party; and
provided
further
, that the failure of any indemnified party to give notice as provided herein shall not relieve the indemnifying party of its obligations hereunder, except to the extent that such failure to give notice shall materially adversely affect the indemnifying party in the defense of any such claim or litigation. It is understood that the indemnifying party shall not, in connection with any proceeding in the same jurisdiction, be liable for fees or expenses of more than one separate firm of attorneys at any time for all such indemnified parties. No indemnifying party will, except with the consent of the indemnified party, consent to entry of any judgment or enter into any settlement that does not include as an unconditional term thereof the giving by the claimant or plaintiff to such indemnified party of a release from all liability in respect of such claim or litigation. The Company agrees promptly to notify the Investors of the commencement of any litigation or proceedings against the Company or any of its officers or directors in connection with the sale of any Registrable Securities or any preliminary prospectus, prospectus, registration statement, or amendment or supplement thereto, or any application relating to any sale of any Registrable Securities.
(d)
Contribution
. If for any reason the indemnification provided for in the preceding paragraphs (a) and (b) is unavailable to an indemnified party or insufficient to hold it harmless, other than as expressly specified therein, then the indemnifying party shall contribute to the amount paid or payable by the indemnified party as a result of such loss, claim, damage or liability in such proportion as is appropriate to reflect the relative fault of the indemnified party and the indemnifying party, as well as any other relevant equitable considerations. The relative fault, in the case of an untrue statement, alleged untrue statement, omission, or alleged omission, shall be determined by, among other things, whether such statement, alleged statement, omission, or alleged omission relates to information supplied by the Company or by the Investor, and the parties’ relative intent, knowledge, access to information, and opportunity to correct or prevent such statement, alleged statement, omission, or alleged omission. The parties agree that it would be unjust and inequitable if the respective obligations of the Company and each Investor for contribution were determined by pro rata or per capita allocation of the aggregate losses, liabilities, claims, damages, and expenses or by any other method of allocation that does not reflect the equitable considerations referred to in this clause (d). No person guilty of fraudulent misrepresentation within the meaning of Section 11(f) of the 1933 Act shall be entitled to contribution from any person not guilty of such fraudulent misrepresentation. In no event shall the contribution obligation of a holder of Registrable Securities be greater in amount than the dollar amount of the proceeds (net of all expenses paid by such holder in connection with any claim relating to this Section 6 and the amount of any damages such holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission) received by it upon the sale of the Registrable Securities giving rise to such contribution obligation. Anything in this Section 6(d) to the contrary notwithstanding, no party shall be liable for contribution with respect to the settlement of any claim or action effected without its written consent. This Section 6(d) is not intended to supersede any right to contribution under the 1933 Act, the 1934 Act, or otherwise.
7.
Miscellaneous
.
(a)
Amendments and Waivers
. This Agreement may be amended only by an instrument in writing signed by the Company and the Required Investors,
provided
that no amendment to this Agreement that is materially and disproportionately adverse to any Investor shall be made without such Investor’s written consent. The Company may take any action herein prohibited, or omit to perform any act herein required to be performed by it, only if the Company shall have obtained the written waiver or consent to such amendment, action or omission to act, of the Required Investors,
provided
that no such action or omission that is adverse to any Investor shall occur without such Investor’s written consent. Matters approved as provided in this Section 7(a) shall be binding on all Investors.
(b)
Notices
. All notices that are required or permitted hereunder shall be in writing and shall be sufficient if personally delivered or sent by registered or certified mail or Federal Express or other nationally recognized overnight delivery service. Any notices shall be deemed given upon the earlier of the date when received, or the third Business Day after the date when sent by registered or certified mail, or the Business Day after the date when sent by overnight delivery service, to the address set forth below, unless such address is changed by notice in the manner described in this Section 7(b):
|
If to Company:
Fuse Medical Inc.
4770 Bryant Irvin Court, Suite 300
Fort Worth, Texas 76107
Attention: D. Alan Meeker
|
|
|
|
If to the Investors:
To their addresses set forth on
Schedule 1
|
(c)
Assignments and Transfers by Investors
. The provisions of this Agreement shall be binding upon and inure to the benefit of the Investors and their successors and permitted assigns. An Investor may transfer or assign, in whole or from time to time in part, to one or more persons who are “accredited investors” as defined in Rule 501(a) of Regulation D under the 1933 Act and who agree in writing to be bound by the terms and conditions of this Agreement (which writing shall be furnished to the Company), its rights hereunder in connection with the transfer of Registrable Securities by such Investor to such person,
provided
that the Investor complies with all laws applicable thereto and provides written notice of assignment to the Company promptly after such assignment is effected. From and after such proper assignment, such assignee shall be deemed an Investor hereunder.
(d)
Assignments and Transfers by the Company
. This Agreement may not be assigned by the Company (whether by operation of law or otherwise) without the prior written consent of the Required Investors,
provided
,
however
, that the Company may assign its rights and delegate its duties hereunder to any surviving or successor corporation in connection with a merger or consolidation of the Company with another corporation, or a sale, transfer or other disposition of all or substantially all of the Company’s assets to another corporation, without the prior written consent of the Required Investors, after notice duly given by the Company to the Investors.
(e)
Benefits of the Agreement
. The terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective permitted successors and assigns of the parties. Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and assigns any rights, remedies, obligations, or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement.
(f)
Counterparts; Facsimiles
. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. This Agreement may also be executed via facsimile, which shall be deemed an original.
(g)
Titles and Subtitles
. The titles and subtitles used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement.
(h)
Severability
. Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, but shall be interpreted as if it were written so as to be enforceable to the maximum extent permitted by applicable law, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. To the extent permitted by applicable law, the parties hereby waive any provision of law which renders any provisions hereof prohibited or unenforceable in any respect.
(i)
Further Assurances
. The parties shall execute and deliver all such further instruments and documents and take all such other actions as may reasonably be required to carry out the transactions contemplated hereby and to evidence the fulfillment of the agreements herein contained.
(j)
Entire Agreement
. This Agreement is intended by the parties as a final expression of their agreement and intended to be a complete and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter contained herein. This Agreement supersedes all prior agreements and understandings between the parties with respect to its subject matter.
(k)
Governing Law; Consent to Jurisdiction; Waiver of Jury Trial
. This Agreement shall be governed by, and construed in accordance with, the internal laws of the State of Delaware without regard to the choice of law principles thereof. Each of the parties hereto irrevocably submits to the exclusive jurisdiction of the courts of the State of Texas and the United States District Courts for Texas, in each case in the County of Tarrant, for the purpose of any suit, action, proceeding or judgment relating to or arising out of this Agreement and the transactions contemplated hereby. Service of process in connection with any such suit, action or proceeding may be served on each party hereto anywhere in the world by the same methods as are specified for the giving of notices under this Agreement. Each of the parties hereto irrevocably consents to the jurisdiction of any such court in any such suit, action or proceeding and to the laying of venue in such court. Each party hereto irrevocably waives any objection to the laying of venue of any such suit, action or proceeding brought in such courts and irrevocably waives any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum. EACH OF THE PARTIES HERETO WAIVES ANY RIGHT TO REQUEST A TRIAL BY JURY IN ANY LITIGATION WITH RESPECT TO THIS AGREEMENT AND REPRESENTS THAT COUNSEL HAS BEEN CONSULTED SPECIFICALLY AS TO THIS WAIVER.
[The remainder of this page is intentionally blank.]
IN WITNESS WHEREOF, the parties have executed this Registration Rights Agreement or caused their duly authorized officers to execute this Registration Rights Agreement as of the date first above written.
|
|
Fuse Medical Inc.
|
|
|
|
|
|
|
|
|
By:
|
|
|
|
|
|
|
|
|
|
Name:
|
|
|
|
|
|
|
|
|
|
Title:
|
|
|
|
|
|
|
|
|
|
|
|
|
Name of Investor: Twelve Global LLC
|
|
|
|
|
|
|
|
|
By:
|
|
|
|
|
|
|
|
|
|
Title:
|
|
|
|
|
|
|
|
|
|
|
|
|
Name of Investor: ReSurge Hospitals, Inc.
|
|
|
|
|
|
|
|
|
By:
|
|
|
|
|
|
|
|
|
|
Title:
|
|
|
|
|
|
|
|
|
|
|
|
|
Name of Investor: CCEP Holdings LLC
|
|
|
|
|
|
|
|
|
By:
|
|
|
|
|
|
|
|
|
|
Title:
|
|
|
|
|
|
|
|
|
|
|
|
|
Name of Investor: TJAL Holdings, LLC
|
|
|
|
|
|
|
|
|
By:
|
|
|
|
|
|
|
|
|
|
Title:
|
|
|
|
|
|
|
|
|
|
|
|
|
Name of Investor: Coastal IP LLC
|
|
|
|
|
|
|
|
|
By:
|
|
|
|
|
|
|
|
|
|
Title:
|
|
|
|
|
|
|
|
|
|
|
|
|
Name of Investor: KAW Holdings, LLC
|
|
|
|
|
|
|
|
|
By:
|
|
|
|
|
|
|
|
|
|
Title:
|
|
|
|
|
|
|
|
|
|
|
|
|
Name of Investor: Lion Share LLC
|
|
|
|
|
|
|
|
|
By:
|
|
|
|
|
|
|
|
|
|
Title:
|
|
|
|
|
|
|
|
|
|
|
|
|
Name of Investor: James Clancy
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name of Investor: Paul Flanigan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name of Investor: Nickleophia, LLC
|
|
|
|
|
|
|
|
|
By:
|
|
|
|
|
|
|
|
|
|
Title:
|
|
|
|
|
|
|
|
|
|
|
|
|
Name of Investor: William Dabdoub
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name of Investor: Pensco Trust Co.
|
|
|
|
|
|
|
|
|
By:
|
|
|
|
|
|
|
|
|
|
Title:
|
|
|
|
|
|
|
|
|
|
|
|
|
Name of Investor: Chris Lotufo
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name of Investor: Pegasus Holding, LLC
|
|
|
|
|
|
|
|
|
By:
|
|
|
|
|
|
|
|
|
|
Title:
|
|
|
|
|
|
|
|
|
|
|
|
|
Name of Investor: McMurray Ankle and Foot Care, Inc.
|
|
|
|
|
|
|
|
|
By:
|
|
|
|
|
|
|
|
|
|
Title:
|
|
|
|
|
|
|
|
|
|
|
|
|
Name of Investor: Byron Hutchinson
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name of Investor: KT Medical Management LLC
|
|
|
|
|
|
|
|
|
By:
|
|
|
|
|
|
|
|
|
|
Title:
|
|
|
|
|
|
|
|
|
|
|
|
|
Name of Investor: Steven Spinner
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name of Investor: Eva Lou, LLC
|
|
|
|
|
|
|
|
|
By:
|
|
|
|
|
|
|
|
|
|
Title:
|
|
|
|
|
|
|
|
|
|
|
|
|
Name of Investor: Richard Adams
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name of Investor: Sorex Enterprises, LLC
|
|
|
|
|
|
|
|
|
By:
|
|
|
|
|
|
|
|
|
|
Title:
|
|
|
|
|
|
|
|
|
|
|
|
|
Name of Investor: Michelle Butterworth
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name of Investor: Rich Derner
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name of Investor: Michael Downey
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name of Investor: Kelly Grimes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name of Investor: Scot Malay
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name of Investor: Adam Perler
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name of Investor: Mario Ponticello
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name of Investor: Paul Stone
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name of Investor: Craig Camasta
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name of Investor: Ira Kraus
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name of Investor: Joseph Menn
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name of Investor: Steven Pesenko
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name of Investor: Frank Tursi
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name of Investor: Infinity Surgical Specialist, LLC
|
|
|
|
|
|
|
|
|
By:
|
|
|
|
|
|
|
|
|
|
Title:
|
|
|
|
|
|
|
|
|
|
|
|
|
Name of Investor: Brett Sachs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name of Investor: Pasquale Cancelliere
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name of Investor: Stephen Geller
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name of Investor: Timothy Harlan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name of Investor: Scott King
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name of Investor: John Krebsbach
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name of Investor: Christopher Milkie
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name of Investor: Chad Michael Nunamaker
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name of Investor: Andrew Rader
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name of Investor: Robert Schulte
|
|
|
|
|
|
|
Page intentionally left blank
|
|
|
|
|
|
|
|
|
|
Name of Investor: Paul Shromoff
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name of Investor: Steven Waldman
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name of Investor: David Wanner
|
|
|
|
|
|
|
Schedule
1
Investors
|
Investor Name
|
|
Investor Mailing Address
|
|
Twelve Global, LLC
|
|
748 Creekside Dr., Roosford, OH 43460
|
|
|
|
|
|
Axis Global, LLC
|
|
4770 Bryant Irvin Ct., #400, Fort Worth, TX 76107
|
|
|
|
|
|
ReSurge Hospitals, Inc.
|
|
1026 E. Canyon Rd., Hyde Park, UT 84318
|
|
|
|
|
|
CCEP Holdings, LLC
|
|
6350 Elm Crest Ct., Fort Worth, TX 76132
|
|
|
|
|
|
TJAL Holdings, LLC
|
|
7565 S. Cambridge Dr., Franklin, WI 53132
|
|
|
|
|
|
Coastal IP, LLC
|
|
38 Highpoint Dr., Gulf Breeze, FL 32561
|
|
|
|
|
|
KAW Holdings, LLC
|
|
5610 Equestrian Ct., Granbury, TX 76049
|
|
|
|
|
|
Lion Share, LLC
|
|
402 Nelson Blvd., Ste 300, Kingstree, SC 29556
|
|
|
|
|
|
James Clancy
|
|
8765 Wendy Way Lane South, West Palm Beach, FL 33411
|
|
|
|
|
|
K. Paul Flanigan
|
|
10 Carriage Lane, Yarmouth, ME 04096
|
|
|
|
|
|
Nickleophia, LLC
|
|
528 East Lancaster Ave., Radnor, PA 19087
|
|
|
|
|
|
William Dabdoub
|
|
100 Ayshire Ct., Slidell, LA 70461
|
|
|
|
|
|
Jeffrey DeSantis
|
|
2611 Circle Dr., Newport Beach, CA 92663
|
|
|
|
|
|
Chris Lotufo
|
|
906 SE 201
st
Ct., Camas, WA 98607
|
|
|
|
|
|
Pegasus Holding, LLC
|
|
14407 N. 67
th
St., Scottsdale, AZ 85254
|
|
|
|
|
|
McMurray Ankle & Foot
Care, Inc.
|
|
220 Springdale Rd., Venetia, PA 15367
|
|
Byron Hutchinson
|
|
229 S 173
rd
PL, Seattle, WA 98148
|
|
|
|
|
|
KT Medical Management,
LLC
|
|
19984 East Crooked Pine Circle, Parker, CO 80134
|
|
|
|
|
|
Steven Spinner
|
|
201 N. University Dr., Plantation, FL 33324
|
|
|
|
|
|
Eva Lou Holding, LLC
|
|
526 W. Appletree Rd., Glendale, WI 53217
|
|
|
|
|
|
Richard Adams
|
|
5610 Equestrian Ct., Granbury, TX 76049
|
|
|
|
|
|
Sorex Enterprises, LLC
|
|
1748 Somerset Circle, Charleston, SC 29407
|
|
|
|
|
|
Rams World, LLC
|
|
402 Nelson Blvd., Ste 300, Kingstree, SC 29556
|
|
|
|
|
|
Richard Derner
|
|
6455 Lake Meadow Drive, Burke, VA 22015
|
|
|
|
|
|
Michael Downey
|
|
165 Pheasant Fields Lane, Moorestown, NJ 08057
|
|
|
|
|
|
Complete Wound Solutions, PLLC
|
|
3437 W 7
th
Street, #210, Fort Worth, TX 76107
|
|
|
|
|
|
Scot Malay
|
|
2314 Waverly Street, Philadelphia, PA 19146
|
|
|
|
|
|
Adam Perler
|
|
1385 Knightsgate Dr., Carmel, IN 46032
|
|
|
|
|
|
Mario Ponticello
|
|
5655 N. Bethmaur Ln, Glendale, WI 53209
|
|
|
|
|
|
Paul Stone
|
|
250 Lead King Drive, Castle Rock, CO 80108
|
|
|
|
|
|
Craig Camasta
|
|
3816 Berrybride Way, Marietta, GA 30067
|
|
|
|
|
|
Ira Kraus
|
|
20 Dogwood Trail, Ringgold, GA 30736
|
|
|
|
|
|
Joseph Menn
|
|
315 14
th
Avenue North, Surfside Beach, SC 29575
|
|
|
|
|
|
Steven Pesenko
|
|
25 E. Washington, #701, Chicago, IL 60602
|
|
|
|
|
|
Frank Tursi
|
|
117 White Horse Rd., Voorhees, NJ 08043
|
|
Infinity Surgical Specialist, LLC
|
|
4628 New Broad St., Orlando, FL 32814
|
|
|
|
|
|
Brett Sachs
|
|
3301 S Birch St., Denver, CO 80222
|
|
|
|
|
|
Pasquale Cancelliere
|
|
645 Beachfront Dr., Evansville, IN 47715
|
|
|
|
|
|
Stephen Geller
|
|
4901 N. 44
th
Street, #102, Phoenix AZ 85018
|
|
|
|
|
|
Timothy Harlan
|
|
21880 N. 79
th
Way, Scottsdale, AZ 85255
|
|
|
|
|
|
Scott King
|
|
10585 Rutledge Rd., Ottumwa, IA 52501
|
|
|
|
|
|
John Krebsbach
|
|
526 W. Appletree Rd., Glendale, WI 53217
|
|
|
|
|
|
Christopher Milkie
|
|
5699 N. Centerparkway, #417, Glendale, WI 53217
|
|
|
|
|
|
Chad Michael Nunamaker
|
|
798 W. Sunset Dr., Huntingburg, IN 47452
|
|
|
|
|
|
Andrew Rader
|
|
7445 S. 75 W, Ferdinand, IN 47532
|
|
|
|
|
|
Robert Schulte
|
|
2701 McKeag Dr., Fort Collins, CO 80526
|
|
|
|
|
|
Tyconic Enterprises, LLC
|
|
111 Keighley Dr., Goose Creek, SC 29445
|
|
|
|
|
|
Steven Waldman
|
|
9251 N. Waverly Dr., Bayside, WI 53217
|
|
|
|
|
|
David Wanner
|
|
1005 E Pennsylvania Ave., Ste 202, Ottumwa, IA 52501
|
EXHIBIT 10.3
MEDICAL DIRECTOR AGREEMENT
This Medical Director Agreement (“Agreement”) entered into and made effective as of this 1
st
day of May, 2014 (the “Effective Date”), between Fuse Medical, LLC, with offices at 4770 Bryant Irvin Court, Suite 300, Fort Worth, Texas 76107 (“Company”) and Dr. Stephen Corey (hereinafter referred to as “Medical Director”) with an address of 402 Nelson Blvd Suite 300, Kingstree, SC 29556 (each, a “Party” and collectively the “Parties”).
RECITALS
WHEREAS, Company desires to obtain the services of Medical Director as described in the body of this Agreement and the attached
Exhibit “A”
(“Services”); and
WHEREAS, Medical Director is in the business of providing such Services, and desires to provide them to Company; and
WHEREAS, Medical Director has unique knowledge, contacts, skills and abilities that he intends to provide to Company in this representation;
NOW, THEREFORE, in consideration of the terms, conditions and mutual promises contained herein, the Parties mutually agree as follows:
AGREEMENT
1.
Scope of Work
.
a.
Medical Director shall provide the Services according to the schedule and scope of work as set forth in Exhibit “A”, which is attached hereto and made a part of this Agreement by reference.
b.
Medical Director agrees to furnish all labor, supervision, and services needed to complete his obligations under this Agreement. Medical Director shall report and pay all taxes applicable to the Services that are furnished under this Agreement.
c.
Medical Director’s title shall be “Chief Medical Officer of Fuse Medical, LLC”.
2.
Term
. This Agreement shall commence on the Effective Date, and shall remain in effect for successive one year terms, until terminated by the occurrence of one or more of the following:
a.
Either Party provides written notice to the other Party not less than thirty (30) days prior to the end of the then current term, that such Party desires to terminate this Agreement at the end of the then current term; otherwise, this Agreement shall continue for another one year term; or
b.
Upon the bankruptcy of either Party, assignment for the benefit of creditors of either Party’s assets, or the appointment of a receiver for either Party’s assets; or
c.
Either Party provides written notice of termination to the other Party upon the other Party’s material or repeated default in the performance of its or his obligations under this Agreement and failure to cure such default within thirty (30) days of receipt of the notice from the non-breaching Party specifying the default and the intention to terminate; or
d.
Upon Company’s written notice to Medical Director that the Agreement is being terminated because of Cause. “Cause” means:
(i)
an intentional tort (excluding any tort relating to a motor vehicle) by Medical Director which causes substantial loss, damage or injury to the property or reputation of the Company or its subsidiaries;
(ii)
any serious crime or intentional, material act of fraud or dishonesty by Medical Director against the Company;
(iii)
the commission of a felony that results in other than immaterial harm to the Company’s business or to the reputation of the Company or Medical Director;
(iv)
habitual neglect of Medical Director’s reasonable duties as outlined in Exhibit “A” (for a reason other than illness or incapacity) which is not cured within thirty (30) days after written notice thereof by the Company’s Board of Directors (the “Board”) to the Medical Director;
(v)
the disregard of written, material policies of the Company or its subsidiaries which causes other than immaterial loss, damage or injury to the property or reputation of the Company or its subsidiaries which is not cured within thirty (30) days after written notice thereof by the Board from Company to the Medical Director; or
(vi)
any material breach of the Medical Director’s ongoing obligation not to disclose confidential information and not to assign intellectual property developed during the term of this Agreement which, if capable of being cured, is not cured within thirty (30) days after written notice thereof by the Board to the Medical Director.
3.
Termination During the First Twelve Months
. In the event this Agreement is terminated for any reason during its initial twelve (12) month term, the Parties shall not enter into any agreement with each other for the provision of Services as described hereunder during the remainder of such initial twelve (12) month period unless the financial terms are the same as those contained herein.
4.
Compensation
. Company shall pay Medical Director the sum of $9,000.00 per month in arrears during the term hereof. The Parties acknowledge that the compensation set forth within the foregoing sentence resulted from arms-length negotiations and was determined without regard to the volume or value of referrals by Medical Director, if any, to the Company. This Agreement is not conditioned upon Medical Director’s making any referrals to the Company.
5.
Confidentiality
. The Parties agree to keep confidential all confidential information of the other Party that is generated or obtained in connection with or as a result of performing services under this Agreement, until the end of one (1) year following termination or expiration of the terms of this Agreement. Notwithstanding the foregoing, the Parties shall be permitted to disclose confidential information to the extent that such disclosure required by any valid subpoena, order or judicial process of a court or governmental agency, provided that, to the extent permitted by law, the other Party is notified prior to any such disclosure and is afforded the reasonable opportunity to obtain a protective order or other form of protection. The Medical Director shall not, without the prior written consent of the Company, use the Company’s name in any advertising or promotional literature or publish any articles that (a) relate to the Company, this Agreement, or the Services provided by Medical Director, or (b) otherwise refer to the retention of Medical Director to render Services hereunder.
6.
Relationship of Parties
.
a.
Although Medical Director holds a title with the Company, it is understood and agreed that Medical Director is an independent contractor with respect to the performance of each and every part of this Agreement. Medical Director is solely responsible for the supervision, direction and control of his employees (if any), and shall be solely responsible for all labor and expenses in connection therewith. It is understood between the Parties that this is a contract for personal services, and that Medical Director may not substitute any other individual or assign this Agreement to perform the Services, without the express written consent of the Company.
b.
The Parties recognize that this Agreement does not create any actual or apparent agency, partnership, franchise, or relationship of employer and employee between the Parties. The Medical Director is not authorized to enter into or commit the Company to any agreements, and the Medical Director shall not represent himself as the agent or legal representative of the Company. The Medical Director shall work in conjunction with the Company’s Podiatric Medical Officer and report to the Company’s Podiatric Medical Officer.
c.
Further, the Medical Director shall not be entitled to participate in any of the Company’s benefits, including without limitation any health or retirement plans. The Medical Director shall not be entitled to any remuneration, benefits, or expenses other than as specifically provided for in this Agreement.
d.
The Company shall not be liable for taxes, Worker’s Compensation, unemployment insurance, employers’ liability, employer’s FICA, social security, withholding tax, or other taxes or withholding for or on behalf of the Medical Director or any other person consulted or employed by the Medical Director in performing Services under this Agreement. All such costs shall be Medical Director’s responsibility.
7.
Proprietary Rights
.
a.
The Medical Director acknowledges that he has no right to or interest in its work or product resulting from the Services he performs hereunder, or any of the documents, reports or other materials created by the Medical Director in connection with such Services, nor any right to or interest in any copyright therein. The Medical Director acknowledges that the Services and the products thereof (hereinafter referred to as the “Materials”) have been specially commissioned or ordered by the Company as “works made-for-hire” as that term is used in the Copyright Law of the United States, and that the Company is therefore to be deemed the author of and is the owner of all copyrights in and to such Materials. Notwithstanding the foregoing or anything to the contrary in this Agreement, Company shall have no intellectual property rights to any such device, drug, treatment, therapy, document, report or other material (“Outside Material”) created by Medical Director or under development: (i) prior to the Effective Date (but Medical Director hereby represents that no such Outside Material presently exists or is presently pending); or (ii) on or after the Effective Date as a result of activities conducted outside of the scope of Services provided by Medical Director under this Agreement, provided, however, that any intellectual property created by Medical Director relating to any business line of the Company or its affiliates shall be conclusively deemed to be “works made-for-hire”. Medical Director may retain any and all fees and/or compensation collected by him and/or in his name that is received in connection with any Outside Material and/or the research and development that is conducted outside of the scope of his engagement by Company under this Agreement.
b.
In the event that such Materials, or any portion thereof, are for any reason deemed not to have been works made-for-hire, the Medical Director hereby assigns to the Company any and all right, title, and interest Medical Director may have in and to such Materials, including all copyrights, all publishing rights, and all rights to use, reproduce, and otherwise exploit the Materials in any and all formats or media and all channels, whether now known or hereafter created. The Medical Director agrees to execute such instruments as the Company may from time to time deem necessary or desirable to evidence, establish, maintain, and protect the Company’s ownership of such Materials, and all other rights, title, and interest therein.
c.
Notwithstanding the foregoing, the Company acknowledges that the Medical Director’s ability to carry out the Services is heavily dependent upon the Medical Director’s past experience in the industry and in providing similar services to others and both Parties expect Medical Director to continue such work in the future. Subject to the confidentiality provisions herein, generic information communicated to the Company in the course of his engagement by the Company either orally, in the form of presentations, or in documents that report such general industry knowledge is not subject to the terms of section 7(a) and (b) above.
8.
Standards of Performance
. The Medical Director represents and warrants that:
a.
Medical Director shall provide the Services in accordance with, and shall not violate, applicable laws, rules or regulations, and standards prevailing in the industry and the Medical Director shall obtain all permits or permissions required to comply with such laws, rules or regulations;
b.
The Materials developed by Medical Director shall be original, clear, and presentable in accordance with generally applicable standards in the industry;
c.
The Materials developed by Medical Director will not contain libelous, injurious, or unlawful material and will not violate or in any way infringe upon the personal or proprietary rights of third Parties, including property, contractual, employment, trade secrets, proprietary information, and non-disclosure rights, or any trademark, copyright, or patent, nor will they contain any format, instruction, or information that is inaccurate or injurious to any person, computer system, or machine;
d.
The Medical Director shall provide the Services in accordance with the specifications established by the Company.
9.
Insurance
. The Parties acknowledge that the Company presently does not maintain Directors and Officers liability insurance, but is presently investigating such coverages for itself and its affiliates (but no assurance is provided as to the whether such coverage will actually be obtained). The Company is in the process of merging into another company, Golf National, Inc., which presently maintains such coverage. The Company will make a copy of such insurance policy available to Medical Director for his review upon request.
10.
Mutual Indemnification
. Each Party shall indemnify and hold the other Party (and its members, directors, employees, agents and representatives) harmless from any and all claims, liabilities, damages, taxes, fines, repayment obligations, or expenses, including court costs and reasonable attorneys’ fees (collectively, “Claims”) arising from any act or omission by the indemnifying Party or its employees or agents (excepting the indemnified Party), or from the indemnifying Party’s material breach of this Agreement. Without limiting the generality of the foregoing, each Party expressly agrees to indemnify and hold the other Party (and its members, directors, employees, agents and representatives) harmless from any and all Claims arising from or relating to: (a) any goods and/or services provided by or on behalf of the indemnifying Party; (b) any other work engaged in by the indemnifying Party outside of this Agreement; and/or (c) the indemnifying Party’s compliance with federal and state laws (including but not limited to Medicare and Medicaid requirements) relating to the indemnifying Party’s submission or assignment of claims to government payors or third-party payors. Notwithstanding the foregoing, indemnity obligations under this Section shall only apply to any costs or expenses incurred by the indemnified Parties which are not covered or coverable by applicable liability insurance. In the event the indemnity provisions of this Section are interpreted to reduce any insurance coverage to which any Party would otherwise be entitled in the absence of such provisions, they shall be deemed inoperative and not a part of this Agreement. This Section shall survive the termination of this Agreement for the period of the applicable statute of limitations.
11.
Representations and Warranties Concerning Company
. Company hereby represents and warrants to Medical Director that, to the actual knowledge of its Chief Executive Officer (“Knowledge”), no complaint, action, suit, arbitration, proceeding, hearing, charge, demand, claim or investigation has been filed or commenced with respect to the Company or, to such Knowledge, is threatened. A civil action styled
Cutler v. Fuse Medical LLC, et. al.
has been commenced naming the Company as a defendant, and such litigation has been dismissed without prejudice for failure to prosecute.
12.
Change or Clarification to Law
. In the event of a change in the Stark Law or the federal Anti-kickback Statute or similar law, regulation or interpretation thereof which materially affects any aspect of the arrangement between Medical Director and the Company, including, without limitation, the compensation payable to Medical Director, either Party may propose a new basis for the arrangement by written notice to the other Party. In the event such legislation, regulation and interpretation makes the arrangement herein illegal or defeats the fundamental purposes and respective benefits of this Agreement and a new arrangement cannot be agreed to within sixty (60) days of a proposal, either Party may terminate this Agreement by written notice to the other Party given within twenty (20) days following the end of the sixty (60) day period.
13.
No Violation of Law
. Each Party represents and warrants to the other Party it shall not knowingly violate any federal, state, or local laws or regulations by entering into this Agreement or performing its obligations hereunder.
14.
Governing Law
. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, without application of its conflict of laws principles. Venue for any dispute shall be in Tarrant County, Texas.
15.
Amendment
. No amendment or modification of this Agreement shall be effective unless set forth in writing and signed by both Parties.
16.
Entire Agreement
. This Agreement sets forth the full and complete understanding of the Parties, and supersedes all prior agreements, whether made orally or in writing.
17.
Execution
. This Agreement may be executed by facsimile in multiple counterparts, each of which shall together constitute one and the same instrument.
18.
Assignment
. The Company may freely assign this Agreement, in whole or in part. The Medical Director may not, without the written consent of the Company, assign, subcontract, or delegate its obligations under this Agreement, except that the Medical Director may transfer the right only to receive any amounts which may be payable to it for performance under this Agreement, and then only after receipt by the Company of written notice of such assignment or transfer.
19.
Severability
. In the event that any clause or provision of this Agreement is found by a court of competent jurisdiction to be unenforceable, then such clause shall be deemed severed from this Agreement and the balance of the clause or provision shall be given full force and effect. In the event that any portion of the covenant in the following Section is found by a court of competent jurisdiction to be excessively broad in terms of geographic coverage, duration or scope or otherwise, then such provision shall be deemed modified to conform to the broadest interpretation consistent with applicable law in order to protect the Company from economic harm caused by the Medical Director following such Medical Director receiving education, experience, contacts and compensation from the Company pursuant to the terms of this Agreement.
20.
Covenant
.
a.
Medical Director hereby expressly covenants and agrees that during the term hereof and for a period of two (2) years following the date on which this Agreement terminates, whether such termination is upon expiration or termination of this Agreement, he will not, directly or indirectly, in any capacity whatsoever, provide any consulting services similar to those described in
Exhibit A
or any part for any thereof with any company or entity competitive with the Company. For the avoidance of doubt, any entity will be deemed “competitive” with the Company if such entity, wherever situated (i) distributes or sells goods or services with respect to which the Company from time to time designates as a current or prospective business line, or (ii) provides marketing or consulting services for entities described in clause 20(a)(i) above. The Parties acknowledge that this Agreement does not pertain to Medical Director’s performance of patient services at all and that Medical Director is free to provide care and treatment to any patient at any location during or after the term of this Agreement. Consequently, it is the intent of the Parties that Texas Business Commerce Code Section 15.50(b) shall not apply to this Agreement.
b.
For the avoidance of doubt, the business lines covered by clause 20(a)(i) above are the following: internal fixations, retail pharmacies, nutritional supplements, pain creams, wound care, and such other business lines as may be entered by the Company or its affiliates from time to time. Notwithstanding the foregoing, nothing herein shall restrict Medical Director from providing any services with respect to any persons or entities which had engaged him in a business transaction prior to the date hereof and which had not become clients, investors, partners, or customers of the Company or its affiliates.
c.
In the event that Medical Director breaches the covenant contained in this Paragraph 20, Medical Director agrees to pay to the Company, at the Company’s election, either (i) as liquidated damages and not as a penalty, a sum equal to three times the aggregate amount of compensation paid by the Company to Medical Director pursuant to Paragraphs 3 during the term and any renewal hereof, together with all expenses, including reasonable attorneys’ fees, incurred by the Company in enforcing its rights under this Paragraph 20, and (ii) the compensatory damages actually incurred by the Company arising from the breach. In addition, the Parties agree that monetary damages are not an adequate remedy and are not easily ascertained so that the Company may seek equitable relief including an injunction to specifically enforce this covenant.
21.
Review by Counsel
. Medical Director confirms that he has had full and fair opportunity to review this Agreement with his legal counsel and discuss the terms hereof with such counsel and the Company.
22.
Employment Agreement
. The Parties acknowledge that they may consider entering into an employment agreement at some time in the future. No assurances of such employment arrangement are made by either Party as of the date hereof.
IN WITNESS WHEREOF, the Parties have executed this Agreement effective as of the date and year first written above.
|
|
FUSE MEDICAL, LLC
|
|
|
|
|
|
|
|
|
By:
|
/s/ Alan Meeker
|
|
|
|
|
Alan Meeker, Manager
|
|
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
/s/ Stephen Corey
|
|
|
|
|
Stephen Corey, DPM
|
|
EXHIBIT A: SERVICES
|
1.
|
Foot and Ankle DPM > Implantable Medical Director
|
|
a.
|
Act as the Foot and Ankle DPM Implantable Medical Director
|
|
i.
|
Develop Fuse Medical Strategic Foot & Ankle vertical product line
|
|
1.
|
Review need and usefulness of products
|
|
2.
|
Develop Plan for obtaining product needs
|
|
3.
|
Develop priority List of Doctors as initial users
|
|
4.
|
Develop Secondary and beyond priority list of implementation
|
|
5.
|
Review usage, feedback and outcomes of products
|
|
6.
|
Constant brainstorming and research to be on cutting edge
|
|
7.
|
Work in conjunction with “think tank group”
|
|
ii.
|
Strategic Foot & Ankle vertical product lines will include but not limited to:
|
|
1.
|
Internal Fixation Hardware – plates and screws
|
|
3.
|
Bone Substitute Material
|
|
4.
|
Hammertoe, Hemi Implants
|
|
6.
|
Tendon Repair Products and Systems
|
|
7.
|
Inter-postal Products and Systems
|
|
10.
|
Others per Fuse strategic plan
|
|
iii.
|
Develop Fuse Medical vertical product service line implementation strategy for facility integration
|
|
1.
|
Work closely with the Podiatry Medical Director and all National Directors and Regional Directors to identify product verticals and create implementation strategies.
|
|
2.
|
Work collaboratively with Fuse administration and Directors to identify and prioritize medical facilities and physician leaders for product implementation.
|
|
3.
|
Strategic development of Fuse Medical LLC downstream Physicians for facility implementation.
|
|
iv.
|
Establish National Implantable Team (4 leaders)
|
i. Dr. Byron Hutchinson (or other)
i. TBD
i. Dr. JT Marcoux (or other)
i. TBD
|
v.
|
Director of Foot and Ankle related Fuse Product Verticals along all of the surgically implantable lines
|
|
1.
|
Planning for implantation of Foot & Ankle product lines
|
|
2.
|
Physician Panel development and oversight
|
|
3.
|
Physician identification by region/system
|
|
4.
|
Utilize products under clinical review and implement a product review committee
|
|
5.
|
Develop data base system to incorporate Physician demographics and utilization
|
|
6.
|
Physician interaction oversight for shelving process
|
|
7.
|
Develop product review program
|
|
8.
|
Oversight of product review
|
|
9.
|
Interloper between Physician and Fuse’s product line managers
|
|
b.
|
Work with Foot and Ankle Space MD counterpart(s) in development of parallel initiatives
|
|
2.
|
Foot and Ankle DPM > National Director (ND) Development
|
|
a.
|
Develop strategic planning and organizational documents for directorships and leaders
|
|
b.
|
Work with the DPM-RD to develop recruitment and vetting efforts for physician partners
|
|
c.
|
Report to Fuse organizational leaders regarding responsibilities, performance and on-going physician directors and leaders development
|
|
3.
|
Provider Network Development
|
Lead in the development of both primary market service areas (e.g. close personal contacts) and secondary market service areas (e.g. attenuated contacts, trade show contacts) for the following medical specialties and geographic locations to market Fuse Medical Product lines (verticals) defined, but not limited to, below:
|
a.
|
Primary market provider network
|
|
b.
|
Podiatry and foot/ankle
|
|
d.
|
Bone Substitute Material (BSM)
|
|
g.
|
Primary care physicians
|
|
h.
|
Corporate management entities
|
|
i.
|
Other identified medical specialties
|
Secondary market provider network: working with existing medical providers to establish contacts to assist PEPS in the development of a local provider network targeting, but not limited to identified specialties (e.g. podiatry, foot and ankle, orthopedics, and pain).
|
4.
|
Direct physician leadership for selection and implementation of Information Technology (IT) Platform
|
|
a.
|
Assist in implementation and training of end-user physicians and account managers
|
|
b.
|
Assist in the development of reporting systems
|
|
5.
|
Direct Physician support (or assisting Directors)
|
|
b.
|
Physician training/conclaves
|
|
e.
|
Physician/Staff/Patient satisfaction
|
|
6.
|
Direct Physician Product Utilization Programs
|
|
a.
|
Utilization review as above
|
|
b.
|
Physicians for Ethical Patient Solutions (PEPS) or equivalent organization evaluation and compliance monthly and quarterly review
|
|
a.
|
Identify and fully vet key physician leaders for product line development
|
|
b.
|
Assist the product line physician leaders with:
|
|
i.
|
Identifying and vetting their specific product panels
|
|
ii.
|
Agenda development for panel and subcommittee meetings
|
|
iii.
|
Action planning and oversight
|
|
iv.
|
Coordination with Fuse staff
|
|
v.
|
Product identification, resourcing, review, selection, usage implementation, tracking, utilization, quality assurance and outcome analysis
|
|
vi.
|
Reporting to Fuse organizational leaders
|
|
a.
|
Time Commitment to Fuse on the following days weekly:
|
|
i.
|
Friday morning (7am – 11am CST)
|
|
ii.
|
Every Saturday and Sunday (6 hour block each day)
|
|
iii.
|
Monday morning (7am – 11pm CST)
|
|
iv.
|
Monday thru Thursday Evenings (7pm – 10pm CST) as needed
|
|
v.
|
Weekly report call every Sunday evening with presentation of report activity document and plan for future activities with COO, CMO, PMD
|
|
9.
|
Implantable MD > Action Plan by Quarter Q2 – 2014
|
(subsequent quarterly action plans to be developed by CMO, PMD and COO)
|
|
1.
|
Work with Fuse Medical Board to Finalize disassociation of Flower contractual arrangements
|
|
|
a.
|
Develop and lead formal communication plan to physicians
|
|
|
b.
|
Support follow-up questions and visionary direction of next steps
|
|
|
2.
|
Work with Podiatry Medical Director and COO to develop Vilex proposal for Administration approval
|
|
|
1.
|
For DPM’s that are already underutilizing users = value of new uptick in business to Vilex by Fuse connections
|
|
|
2.
|
Farmers and PEA list of non-users as potential users = value to Fuse
|
|
|
3.
|
Non-Fuse/Framers as NEW users = value to Fuse
|
|
|
4.
|
Areas where they do not have reps/Distributors?
|
|
|
ii.
|
New business based upon system and local shelving approval
|
|
|
1.
|
Get list of all Systems that Vilex is approved and have Courtney search all system’s webpages for whom is on staff. Are they on our Farmers/PEA?
|
|
|
a.
|
If so, develop plan for RD’s to contact users and implement
|
|
|
b.
|
If not associated with Fuse/Farms > get local entre thru RD’s
|
|
|
2.
|
Get a list of all facilities that Vilex is already approved (> same as 1. above)
|
|
|
b.
|
Based upon above > Find out where their lowest hanging fruit intersects with our Fuse/Framers
|
|
|
i.
|
Develop survey for Fuse/Farmers downstream
|
|
|
ii.
|
Survey ALL of downstream as to current utilization of Vilex
|
|
|
iii.
|
Develop low hangin’ target list ASAP
|
|
|
iv.
|
Develop relationship with Vilex distributors and coordinate with our Fuse/Farm downstream
|
|
|
v.
|
Develop tracking for usage process
|
|
|
3.
|
Build Implantable Team > ongoing by vendor/product Line
|
|
|
a.
|
Develop individual action plans from each
|
|
|
b.
|
Set up ongoing conference calls via Courtney
|
|
|
4.
|
Develop RD and their downstream program
|
|
|
5.
|
Consideration of NEW product lines
|
|
|
6.
|
Consideration with downstream of NEW product development
|
|
|
7.
|
Work with Podiatric Medical Director to develop PEPs/DPM strategy
|
|
|
8.
|
Add downstream items from Podiatric Medical Director Appendix A
|
EXHIBTI 10.4
MEDICAL DIRECTOR AGREEMENT
This Medical Director Agreement (“Agreement”) entered into and made effective as of this 1
st
day of May, 2014 (the “Effective Date”), between Fuse Medical, LLC, with offices at 4770 Bryant Irvin Court, Suite 300, Fort Worth, Texas 76107 (“Company”) and Dr. Randall L. Dei herein after referred to as (“Medical Director”) with an address of 7565 S. Cambridge Drive, Franklin, Wisconsin 53132 (each, a “Party” and collectively the “Parties”).
RECITALS
WHEREAS, Company desires to obtain the services of Medical Director as described in the body of this Agreement and the attached
Exhibit “A”
(“Services”); and
WHEREAS, Medical Director is in the business of providing such Services, and desires to provide them to Company; and
WHEREAS, Medical Director has unique knowledge, contacts, skills and abilities that he intends to provide to Company in this representation;
NOW, THEREFORE, in consideration of the terms, conditions and mutual promises contained herein, the Parties mutually agree as follows:
AGREEMENT
1.
Scope of Work
.
a.
Medical Director shall provide the Services according to the schedule and scope of work as set forth in
Exhibit “A”
, which is attached hereto and made a part of this Agreement by reference.
b.
Medical Director agrees to furnish all labor, supervision, and services needed to complete his obligations under this Agreement. Medical Director shall report and pay all taxes applicable to the Services that are furnished under this Agreement.
c.
Medical Director’s title shall be “Pediatric Medical Director of Fuse Medical, LLC”.
2.
Term
. This Agreement shall commence on the Effective Date, and shall remain in effect for successive one year terms, until terminated by the occurrence of one or more of the following:
a.
Either Party provides written notice to the other Party not less than thirty (30) days prior to the end of the then current term, that such Party desires to terminate this Agreement at the end of the then current term; otherwise, this Agreement shall continue for another one year term; or
b.
Upon the bankruptcy of either Party, assignment for the benefit of creditors of either Party’s assets, or the appointment of a receiver for either Party’s assets; or
c.
Either Party provides written notice of termination to the other Party upon the other Party’s material or repeated default in the performance of its or his obligations under this Agreement and failure to cure such default within thirty (30) days of receipt of the notice from the non-breaching Party specifying the default and the intention to terminate; or
d.
Upon Company’s written notice to Medical Director that the Agreement is being terminated because of Cause. “Cause” means:
(i)
an intentional tort (excluding any tort relating to a motor vehicle) by Medical Director which causes substantial loss, damage or injury to the property or reputation of the Company or its subsidiaries;
(ii)
any serious crime or intentional, material act of fraud or dishonesty by Medical Director against the Company;
(iii)
the commission of a felony that results in other than immaterial harm to the Company’s business or to the reputation of the Company or Medical Director;
(iv)
habitual neglect of Medical Director’s reasonable duties as outlined in
Exhibit “A”
(for a reason other than illness or incapacity) which is not cured within thirty (30) days after written notice thereof by the Company’s Board of Directors (the “Board”) to the Medical Director;
(v)
the disregard of written, material policies of the Company or its subsidiaries which causes other than immaterial loss, damage or injury to the property or reputation of the Company or its subsidiaries which is not cured within thirty (30) days after written notice thereof by the Board from Company to the Medical Director; or
(vi)
any material breach of the Medical Director’s ongoing obligation not to disclose confidential information and not to assign intellectual property developed during the term of this Agreement which, if capable of being cured, is not cured within thirty (30) days after written notice thereof by the Board to the Medical Director.
3.
Termination During the First Twelve Months
. In the event this Agreement is terminated for any reason during its initial twelve (12) month term, the Parties shall not enter into any agreement with each other for the provision of Services as described hereunder during the remainder of such initial twelve (12) month period unless the financial terms are the same as those contained herein.
4.
Compensation
. Company shall pay Medical Director the sum of $16,667.67 per month in arrears during the term hereof. The Parties acknowledge that the compensation set forth within the foregoing sentence resulted from arms-length negotiations and was determined without regard to the volume or value of referrals by Medical Director, if any, to the Company. This Agreement is not conditioned upon Medical Director’s making any referrals to the Company.
5.
Confidentiality
. The Parties agree to keep confidential all confidential information of the other Party that is generated or obtained in connection with or as a result of performing services under this Agreement, until the end of one (1) year following termination or expiration of the terms of this Agreement. Notwithstanding the foregoing, the Parties shall be permitted to disclose confidential information to the extent that such disclosure required by any valid subpoena, order or judicial process of a court or governmental agency, provided that, to the extent permitted by law, the other Party is notified prior to any such disclosure and is afforded the reasonable opportunity to obtain a protective order or other form of protection. The Medical Director shall not, without the prior written consent of the Company, use the Company’s name in any advertising or promotional literature or publish any articles that (a) relate to the Company, this Agreement, or the Services provided by Medical Director, or (b) otherwise refer to the retention of Medical Director to render Services hereunder.
6.
Relationship of Parties
.
a.
Although Medical Director holds a title with the Company, it is understood and agreed that Medical Director is an independent contractor with respect to the performance of each and every part of this Agreement. Medical Director is solely responsible for the supervision, direction and control of his employees (if any), and shall be solely responsible for all labor and expenses in connection therewith. It is understood between the Parties that this is a contract for personal services, and that Medical Director may not substitute any other individual or assign this Agreement to perform the Services, without the express written consent of the Company.
b.
The Parties recognize that this Agreement does not create any actual or apparent agency, partnership, franchise, or relationship of employer and employee between the Parties. The Medical Director is not authorized to enter into or commit the Company to any agreements, and the Medical Director shall not represent himself as the agent or legal representative of the Company. The Medical Director shall report to and work in conjunction with the Company’s Chief Medical Officer.
c.
Further, the Medical Director shall not be entitled to participate in any of the Company’s benefits, including without limitation any health or retirement plans. The Medical Director shall not be entitled to any remuneration, benefits, or expenses other than as specifically provided for in this Agreement.
d.
The Company shall not be liable for taxes, Worker’s Compensation, unemployment insurance, employers’ liability, employer’s FICA, social security, withholding tax, or other taxes or withholding for or on behalf of the Medical Director or any other person consulted or employed by the Medical Director in performing Services under this Agreement. All such costs shall be Medical Director’s responsibility.
7.
Proprietary Rights.
a.
The Medical Director acknowledges that he has no right to or interest in its work or product resulting from the Services he performs hereunder, or any of the documents, reports or other materials created by the Medical Director in connection with such Services, nor any right to or interest in any copyright therein. The Medical Director acknowledges that the Services and the products thereof (hereinafter referred to as the “Materials”) have been specially commissioned or ordered by the Company as “works made-for-hire” as that term is used in the Copyright Law of the United States, and that the Company is therefore to be deemed the author of and is the owner of all copyrights in and to such Materials. Notwithstanding the foregoing or anything to the contrary in this Agreement, Company shall have no intellectual property rights to any such device, drug, treatment, therapy, document, report or other material (“Outside Material”) created by Medical Director or under development: (i) prior to the Effective Date (but Medical Director hereby represents that no such Outside Material presently exists or is presently pending); or (ii) on or after the Effective Date as a result of activities conducted outside of the scope of Services provided by Medical Director under this Agreement, provided, however, that any intellectual property created by Medical Director relating to any business line of the Company or its affiliates shall be conclusively deemed to be “works made-for-hire”. Medical Director may retain any and all fees and/or compensation collected by him and/or in his name that is received in connection with any Outside Material and/or the research and development that is conducted outside of the scope of his engagement by Company under this Agreement.
b.
In the event that such Materials, or any portion thereof, are for any reason deemed not to have been works made-for-hire, the Medical Director hereby assigns to the Company any and all right, title, and interest Medical Director may have in and to such Materials, including all copyrights, all publishing rights, and all rights to use, reproduce, and otherwise exploit the Materials in any and all formats or media and all channels, whether now known of hereafter created. The Medical Director agrees to execute such instruments as the Company may from time to time deem necessary or desirable to evidence, establish, maintain, and protect the Company’s ownership of such Materials, and all other rights, title, and interest therein.
c.
Notwithstanding the foregoing, the Company acknowledges that the Medical Director’s ability to carry out the Services is heavily dependent upon the Medical Director’s past experience in the industry and in providing similar services to others and both Parties expect Medical Director to continue such work in the future. Subject to the confidentiality provisions herein, generic information communicated to the Company in the course of his engagement by the Company either orally, in the form of presentations, or in documents that report such general industry knowledge is not subject to the terms of section 7(a) and (b) above.
8.
Standards of Performance
. The Medical Director represents and warrants that:
a.
Medical Director shall provide the Services in accordance with, and shall not violate, applicable laws, rules or regulations, and standards prevailing in the industry and the Medical Director shall obtain all permits or permissions required to comply with such laws, rules or regulations;
b.
The Materials developed by Medical Director shall be original, clear, and presentable in accordance with generally applicable standards in the industry;
c.
The Materials developed by Medical Director will not contain libelous, injurious, or unlawful material and will not violate or in any way infringe upon the personal or proprietary rights of third Parties, including property, contractual, employment, trade secrets, proprietary information and non-disclosure rights, or any trademark, copyright, or patent, nor will they contain any format, instruction, or information that is inaccurate or injurious to any person, computer system, or machine;
d.
The Medical Director shall provide the Services in accordance with the specifications established by the Company.
9.
Insurance
. The Parties acknowledge that the Company presently does not maintain Directors and Officers liability insurance, but is presently investigating such coverages for itself and its affiliates (but no assurance is provided as to the whether such coverage will actually be obtained). The Company is in the process of merging into another company, Golf National, Inc., which presently maintains such coverage. The Company will make a copy of such insurance policy available to Medical Director for his review upon request.
10.
Mutual Indemnification
. Each Party shall indemnify and hold the other Party (and its members, directors, employees, agents and representatives) harmless from any and all claims, liabilities, damages, taxes, fines, repayment obligations, or expenses, including court costs and reasonable attorneys’ fees (collectively, “Claims”), arising from any act or omission by the indemnifying Party or its employees or agents (excepting the indemnified Party), or from the indemnifying Party’s material breach of this Agreement. Without limiting the generality of the foregoing, each Party expressly agrees to indemnify and hold the other Party (and its members, directors, employees, agents and representatives) harmless from any and all Claims arising from or relating to: (a) any goods and/or services provided by or on behalf of the indemnifying Party; (b) any other work engaged in by the indemnifying Party outside of this Agreement; and/or (c) the indemnifying Party’s compliance with federal and state laws (including but not limited to Medicare and Medicaid requirements) relating to the indemnifying Party’s submission or assignment of claims to government payors or third-party payors. Notwithstanding the foregoing, indemnity obligations under this Section shall only apply to any costs or expenses incurred by the indemnified Parties which are not covered or coverable by applicable liability insurance. In the event the indemnity provisions of this Section are interpreted to reduce any insurance coverage to which any Party would otherwise be entitled in the absence of such provisions, they shall be deemed inoperative and not a part of this Agreement. This Section shall survive the termination of this Agreement for the period of the applicable statute of limitations.
11.
Representations and Warranties Concerning Company
. Company hereby represents and warrants to Medical Director that, to the actual knowledge of its Chief Executive Officer (“Knowledge”), no complaint, action, suit, arbitration, proceeding, hearing, charge, demand, claim or investigation has been filed or commenced with respect to the Company or, to such Knowledge, is threatened. A civil action styled
Cutler v. Fuse Medical LLC, et. al,
has been commenced naming the Company as a defendant, and such litigation has been dismissed without prejudice for failure to prosecute.
12.
Change or Clarification to Law
. In the event of a change in the Stark Law or the federal Anti-kickback Statute or similar law, regulation or interpretation thereof which materially affects any aspect of the arrangement between Medical Director and the Company, including, without limitation, the compensation payable to Medical Director, either Party may propose a new basis for the arrangement by written notice to the other Party. In the event such legislation, regulation and interpretation makes the arrangement herein illegal or defeats the fundamental purposes and respective benefits of this Agreement and a new arrangement cannot be agreed to within sixty (60) days of a proposal, either Party may terminate this Agreement by written notice to the other Party given within twenty (20) days following the end of the sixty (60) day period.
13.
No Violation of Law
. Each Party represents and warrants to the other Party it shall not knowingly violate any federal, state, or local laws or regulations by entering into this Agreement or performing its obligations hereunder.
14.
Governing Law
. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, without application of its conflict of laws principles. Venue for any dispute shall be in Tarrant County, Texas.
15.
Amendment
. No amendment or modification of this Agreement shall be effective unless set forth in writing and signed by both Parties.
16.
Entire Agreement
. This Agreement sets forth the full and complete understanding of the Parties, and supersedes all prior agreements, whether made orally or in writing.
17.
Execution
. This Agreement may be executed by facsimile in multiple counterparts, each of which shall together constitute one and the same instrument.
18.
Assignment
. The Company may freely assign this Agreement, in whole or in part. The Medical Director may not, without the written consent of the Company, assign, subcontract, or delegate its obligations under this Agreement, except that the Medical Director may transfer the right only to receive any amounts which may be payable to it for performance under this Agreement, and then only after receipt by the Company of written notice of such assignment or transfer.
19.
Severability
. In the event that any clause or provision of this Agreement is found by a court of competent jurisdiction to be unenforceable, then such clause shall be deemed severed from this Agreement and the balance of the clause or provision shall be given full force and effect. In the event that any portion of the covenant in the following Section is found by a court of competent jurisdiction to be excessively broad in terms of geographic coverage, duration or scope or otherwise, then such provision shall be deemed modified to conform to the broadest interpretation consistent with applicable law in order to protect the Company from economic harm caused by the Medical Director following such Medical Director receiving education, experience, contacts and compensation from the Company pursuant to the terms of this Agreement.
20.
Covenant
.
a.
Medical Director hereby expressly covenants and agrees that during the term hereof and for a period of two (2) years following the date on which this Agreement terminates, whether such termination is upon expiration or termination of this Agreement, he will not, directly or indirectly, in any capacity whatsoever, provide any consulting services similar to those described in
Exhibit A
or any part for any thereof with any company or entity competitive with the Company. For the avoidance of doubt, any entity will be deemed “competitive” with the Company if such entity, wherever situated (i) distributes or sells goods or services with respect to which the Company from time to time designates as a current or prospective business line, or (ii) provides marketing or consulting services for entities described in clause 20(a)(i) above. The Parties acknowledge that this Agreement does not pertain to Medical Director’s performance of patient services at all and that Medical Director is free to provide care and treatment to any patient at any location during or after the term of this Agreement. Consequently, it is the intent of the Parties that Texas Business Commerce Code Section 15.50(b) shall not apply to this Agreement.
b.
For the avoidance of doubt, the business lines covered by clause 20(a)(i) above are the following: internal fixations, retail pharmacies, nutritional supplements, pain creams, wound care, and such other business lines as may be entered by the Company or its affiliates from time to time. Notwithstanding the foregoing, nothing herein shall restrict Medical Director from providing any services with respect to any persons or entities which had engaged him in a business transaction prior to the date hereof and which had not become clients, investors, partners, or customers of the Company or its affiliates.
c.
In the event that Medical Director breaches the covenant contained in this Paragraph 20, Medical Director agrees to pay to the Company, at the Company’s election, either (i) as liquidated damages and not as a penalty, a sum equal to three times the aggregate amount of compensation paid by the Company to Medical Director pursuant to Paragraphs 3 during the term and any renewal hereof, together with all expenses, including reasonable attorneys’ fees, incurred by the Company in enforcing its rights under this Paragraph 20, and (ii) the compensatory damages actually incurred by the Company arising from the breach. In addition, the Parties agree that monetary damages are not an adequate remedy and are not easily ascertained so that the Company may seek equitable relief including an injunction to specifically enforce this covenant.
21.
Review by Counsel
. Medical Director confirms that he has had full and fair opportunity to review this Agreement with his legal counsel and discuss the terms hereof with such counsel and the Company.
22.
Employment Agreement
. The Parties acknowledge that they may consider entering into an employment agreement at some time in the future. No assurances of such employment arrangement are made by either Party as of the date hereof.
IN WITNESS WHEREOF, the Parties have executed this Agreement effective as of the date and year first written above.
|
|
FUSE MEDICAL, LLC
|
|
|
|
|
|
|
|
|
By:
|
/s/ Alan Meeker
|
|
|
|
|
Alan Meeker, Manager
|
|
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
/s/ Randall L. Dei
|
|
|
|
|
Randall L. Dei, DPM
|
|
EXHIBIT A: SERVICES
|
a.
|
Act as the Foot and Ankle space DPM Medical Director
|
|
i.
|
Strategic business development
|
|
ii.
|
Communication point person to the Fuse and affiliated entities physician leadership structures.
|
|
iii.
|
Director of Foot and Ankle related Fuse Verticals
|
1.
Planning for implantation of Foot & Ankle product lines
2.
Physician Panel development and oversight
3.
Physician interaction oversight for shelving process
4.
Oversight of product review
5.
Liaison between Physician and Fuse’s product line managers
|
b.
|
Work with Foot and Ankle Space and physician counterpart(s) in development of parallel initiatives
|
|
2.
|
Foot and Ankle DPM > National Director (ND)
|
|
a.
|
Provide leadership and direction to the National Director of Podiatry of the Company
|
|
b.
|
Develop strategic planning and organizational documents for directorships and leaders
|
|
c.
|
Work with the DPM-ND to develop recruitment and vetting efforts for physician partners
|
|
d.
|
Report to Fuse organizational leaders regarding responsibilities, performance and on-going physician directors and leaders development
|
|
3.
|
Provider Network Development
|
Lead and assist in the development of both primary market service areas (
e.g.
, close personal contacts) and secondary market service areas (
e.g.
, attenuated contacts, trade show contacts) for the following medical specialties and geographic locations to market compound Company’s products:
|
a.
|
Primary market provider network
|
|
b.
|
Podiatry and foot/ankle
|
|
c.
|
Pain management/orthopedic
|
|
d.
|
Primary care physicians
|
|
e.
|
Wound care providers and corporate management entities
|
|
f.
|
Other identified medical specialties
|
Secondary market provider network: working with existing medical provider, establish contacts to assist the Company in the development of a local provider network targeting, but not limited to identified specialties (
e.g.
, podiatry, foot and ankle, orthopedics, and pain).
|
4.
|
Direct Physician Support (or assisting Directors)
|
|
b.
|
Physician training/conclaves
|
|
e.
|
Physician/Staff/Patient satisfaction
|
|
f.
|
Assist Physicians for Ethical Patient Solutions (PEPS) in the implementation of their representative network within the Company’s Clients.
|
|
g.
|
Assist in and oversee the implementation and training programs of physicians, physician office staff and clients in the proper utilization of the Company’s information technology platforms.
|
|
5.
|
Non-Physician Partner Product Utilization, Outcome Tracking and Education
|
|
a.
|
Utilization review as described above
|
|
b.
|
In conjunction with Company’s Chief Medical Officer, oversee the development and implementation of podiatry service sector clinical tracking programs and indicators to demonstrate the effectiveness of Company’s products.
|
|
c.
|
Assist in the development and implementation of product education, clinical applications, efficacy and clinical treatment protocols for Company’s podiatry products.
|
|
d.
|
Establish a library of clinical white papers and other research documents that will be available to Company’s clients for Company’s podiatry products.
|
|
e.
|
Implement a product improvement process for podiatry service products.
|
|
6.
|
Vertical Service Line Development
|
|
a.
|
Identify and fully vet key physician leaders for product line development
|
|
b.
|
Assist the product line physician leaders with:
|
|
i.
|
Identifying and vetting their specific product panels
|
|
ii.
|
Agenda development for panel and subcommittee meetings
|
|
iii.
|
Action planning and oversight
|
|
iv.
|
Coordination with Fuse staff
|
|
v.
|
Implementation, tracking, utilization, quality assurance and outcome analysis
|
|
vi.
|
Reporting to Fuse organization leaders
|
|
a.
|
Be available every Thursday afternoon, all day Fridays and Saturdays and partial day Sundays as needed.
|
|
b.
|
Be available evenings (7PM-10PM CST) Monday thru Wednesday as needed.
|
|
c.
|
Provide weekly reports as to activities due each Sunday PM and action planning for future activities.
|
|
d.
|
Physician Product Utilization, Outcome Tracking & Education
|
|
·
|
Utilization review as described above
|
|
·
|
In conjunction with the Company’s Chief Medical Officer oversee the development and implementation of Podiatry service sector clinical _________________________ Company’s products.
|
|
·
|
Assist in the development and implementation of product education, clinical applications, efficacy and clinical treatment protocols for the Company’s podiatry products.
|
|
·
|
Establish a library of clinical white papers and other research documents that will be available to the Company’s clients for the Company’s podiatry products.
|
|
·
|
Implement a product improvement process for podiatry service products.
|
|
e.
|
Vertical Service Line Development
|
|
·
|
Identify and fully vet key physician leaders for product line development
|
|
·
|
Assist the product line physician leaders with:
|
|
·
|
Identifying and vetting their specific product panels
|
|
·
|
Agenda development for panel and subcommittee meetings
|
|
·
|
Action planning and oversight
|
|
·
|
Coordination with Fuse staff
|
|
·
|
Product identification, resourcing, review, selection, usage implementation, tracking, utilization, quality assurance and outcome analysis
|
|
·
|
Reporting to Fuse organizational leaders
|
|
·
|
Be available every Thursday afternoon, all day Friday and Saturday and a partial day Sunday as needed.
|
|
·
|
To be available evenings (7PM-10PM CST) Monday thru Wednesday as needed.
|
|
·
|
Weekly report as to activities due each Sunday PM and action planning for future activities.
|
EXHIBIT 10.5
EXECUTION COPY
GENERAL COUNSEL AGREEMENT
This General Counsel Agreement (“Agreement”) entered into and made effective as of this 1st day of July, 2014 (the “Effective Date”), between Fuse Medical, Inc., with offices at 4770 Bryant Irvin Court, Suite 300, Fort Worth, Texas 76107 (“Company”) and Ross Eichberg, P.C. (hereinafter referred to as “General Counsel”) with an address of 358 Queen Anne Road, Stevensville, Maryland 21666 (each, a “Party” and collectively the “Parties”).
RECITALS
WHEREAS, Company desires to obtain the services of General Counsel as described in the body of this Agreement and the attached
Exhibit “A”
(“Services”); and
WHEREAS, General Counsel is in the business of providing such Services, and desires to provide them to Company; and
WHEREAS, General Counsel has unique knowledge, contacts, skills and abilities that it intends to provide to Company in this representation.
NOW, THEREFORE, in consideration of the terms, conditions and mutual promises contained herein, the Parties mutually agree as follows:
AGREEMENT
1.
Scope of Work
.
(a)
General Counsel shall provide the Services according to the schedule and scope of work as set forth in
Exhibit “A”
, which is attached hereto and made a part of this Agreement by reference.
(b)
General Counsel agrees to furnish all labor, supervision, and services needed to complete its obligations under this Agreement. General Counsel shall report and pay all taxes applicable to services that are furnished under this Agreement.
(c)
General Counsel’s title shall be “General Counsel of Fuse Medical, Inc.”.
(d)
General Counsel shall report to the Chief Executive Officer of the Company.
2.
Term
. This Agreement shall commence on the Effective Date (which may be advanced or delayed by mutual consent), and shall remain in effect for an initial five (5) year term and thereafter successive one year terms, until terminated by the occurrence of one or more of the following:
(a)
Either Party provides written notice to the other Party not less than thirty (30) days prior to the end of the then current term, that such Party desires to terminate this Agreement at the end of the then current term; otherwise, this Agreement shall continue for another one year term; or
(b)
Upon the bankruptcy of General Counsel, assignment for the benefit of creditors of General Counsel’s assets, or the appointment of a receiver for General Counsel’s assets; or
(c)
Upon Company’s written notice to General Counsel that the Agreement is being terminated because of Cause. “Cause” means:
(i)
an intentional tort (excluding any tort relating to a motor vehicle) by General Counsel which causes substantial loss, damage or injury to the property or reputation of the Company or its subsidiaries;
(ii)
any serious crime or intentional, material act of fraud or dishonesty by General Counsel against the Company;
(iii)
the commission of a felony that results in other than immaterial harm to the Company’s business or to the reputation of the Company or General Counsel;
(iv)
habitual neglect of Executive’s reasonable duties (for a reason other than illness or incapacity) which is not cured within thirty (30) days after written notice thereof by the Board to the General Counsel;
(v)
the disregard of written, material policies of the Company or its subsidiaries which causes other than immaterial loss, damage or injury to the property or reputation of the Company or its subsidiaries which is not cured within thirty (30) days after written notice thereof by the Board to the Executive; or
(vi)
any material breach of the General Counsel’s ongoing obligation not to disclose confidential information and not to assign intellectual property developed during employment which, if capable of being cured, is not cured within thirty (30) days after written notice thereof by the Board to the General Counsel.
(d)
Upon the Company’s ninety (90) days’ written notice to General Counsel that the Agreement is being terminated Without Cause. In the event that the Company terminates this Agreement Without Cause, the Company shall provide General Counsel a lump sum equal to the base compensation for the remainder of the initial five (5)-year term or any one (1) year extension term, as applicable, that would have remained but for such termination Without Cause upon General Counsel’s execution and non-revocation of a general and specific release containing such terms and conditions as are necessary in the Company’s sole discretion and in a form acceptable to the Company, and non-disparagement, non-competition and confidentiality agreements consistent with the terms of this Agreement. Company shall prepare and deliver to General Counsel execution drafts of such agreements prior to, or simultaneously with, the termination Without Cause. The Company acknowledges that General Counsel would not have entered into this Agreement without the severance provisions set forth within this Paragraph 2(d) and Company desires to extend such provisions to General Counsel to induce General Counsel to leave the private practice of law with his current law firm. In return, General Counsel has agreed to be bound by the covenant not-to-compete for the full two (2) years described within Paragraph 16(a) of this Agreement following termination Without Cause.
3.
Compensation/Expenses/Equity Interests
.
(a)
Company shall pay General Counsel (a) base compensation equal to the sum of $300,000 per year in 24 equal biweekly installments of Twelve Thousand Five Hundred Dollars ($12,500) in arrears during the term and any renewal terms hereof; (b) bonus compensation in such amount as the Board of Directors of Fuse may determine based upon General Counsel’s performance and the financial condition of the Company; and (c) a signing bonus payable on the Effective Date equal to $61,000.
(b)
Company shall either include General Counsel and his family in its group health insurance policy or reimburse General Counsel for the cost of obtaining separate coverage, and shall include General Counsel in its Directors and Officers liability insurance policy (including an E&O endorsement) which Company warrants will be effective on or prior to the Effective Date.
(c)
Company shall provide housing for General Counsel in Fort Worth and a reasonable allowance to cover weekly coach air travel between Fort Worth and Maryland for a period of two years. Such housing and travel allowance shall not exceed $2,500 per month. Company shall reimburse General Counsel for reasonable and customary business expenses incurred in connection with the business of the Company.
(d)
General Counsel shall also have an equity participation in other future projects of the Company or its affiliates consistent with such opportunities made available to other members of the Company’s Executive Team. General Counsel will also be eligible to participate in the Company’s stock incentive plan when that is organized to the same extent as other members of the Executive Team.
4.
Confidentiality
. The Parties agree to keep confidential all confidential information that is generated or obtained in connection with or as a result of performing services under this Agreement, until the end of two (2) years following termination or completion of the terms of this Agreement. Notwithstanding the foregoing, the obligation to protect confidentiality shall not limit either Party’s right or obligation to record leases, memorandums of leases, make such other public record filings as are necessary to fully secure the benefits of this Agreement, or disclose information as required by law or by any government authority. The General Counsel shall not, without the prior written consent of the Company, use the Company’s name in any advertising or promotional literature or publish any articles relating to the Company, this Agreement, or the Services and shall not otherwise refer to the retention of General Counsel to render consulting services hereunder.
5.
Relationship of Parties
.
(a)
Although General Counsel holds a title with the Company, it is understood and agreed that General Counsel is an independent contractor with respect to the performance of each and every part of this Agreement. General Counsel is solely responsible for the supervision, direction and control of General Counsel’s employees (if any), and shall be solely responsible for all labor and expenses in connection therewith. It is understood between the Parties that this is a contract for personal services, and that General Counsel may not substitute any other individual or assign this Agreement to perform the Services, without the express written consent of the Company. Company retains outside counsel for compliance and other specialized legal needs and such legal work is outside the scope of General Counsel’s services.
(b)
The parties to this Agreement recognize that this Agreement does not create any actual or apparent agency, partnership, franchise, or relationship of employer and employee between the parties. The General Counsel is not authorized to enter into or commit the Company to any agreements, and the General Counsel shall not represent itself as the agent or legal representative of the Company except as set forth on business cards and other documentation provided by the Company.
(c)
General Contractor represents that General Contractor maintains an independently established business and, if required by federal law, has obtained a federal tax identification number. General Contractor further acknowledges and warrants that while performing all services or work under this Agreement, General Contractor will be operating on behalf of an independently owned business which has fully complied with all legal requirements including but not limited to obtaining a federal tax identification number, registration with the applicable department(s) of labor, and maintenance of any required employer-sponsored benefit programs such as unemployment, worker’s compensation, medical, or disability insurance.
(d)
Further, the General Counsel shall not be entitled to participate in any of the Company’s benefits, including without limitation any health or retirement plans except with the consent of the Company. The General Counsel shall not be entitled to any remuneration, benefits, or expenses other than as specifically provided for in this Agreement.
(e)
The Company shall not be liable for taxes, Worker’s Compensation, unemployment insurance, employers’ liability, employer’s FICA, social security, withholding tax, or other taxes or withholding for or on behalf of the General Counsel or any other person consulted or employed by the General Counsel in performing Services under this Agreement. All such costs shall be General Counsel’s responsibility.
6.
Proprietary Rights
.
(a)
The General Counsel acknowledges that it has no right to or interest in its work or product resulting from the Services performed hereunder, or any of the documents, reports or other materials created by the General Counsel in connection with such Services, nor any right to or interest in any copyright therein. The General Counsel acknowledges that the Services and the products thereof (hereinafter referred to as the “Materials”) have been specially commissioned or ordered by the Company as “works made-for-hire’’ as that term is used in the Copyright Law of the United States, and that the Company is therefore to be deemed the author of and is the owner of all copyrights in and to such Materials.
(b)
In the event that such Materials, or any portion thereof, are for any reason deemed not to have been works made-for-hire, the General Counsel hereby assigns to the Company any and all right, title, and interest General Counsel may have in and to such Materials, including all copyrights, all publishing rights, and all rights to use, reproduce, and otherwise exploit the Materials in any and all formats or media and all channels, whether now known of hereafter created. The General Counsel agrees to execute such instruments as the Company may from time to time deem necessary or desirable to evidence, establish, maintain, and protect the Company’s ownership of such Materials, and all other rights, title, and interest therein.
(c)
Notwithstanding the foregoing, the Company acknowledges that the General Counsel’s ability to carry out the work required is heavily dependent upon the General Counsel’s past experience in the health care and pharmacy industries and in providing similar services to others and they expect to continue such work in the future. Subject to the confidentiality provisions herein, generic information communicated to the Company in the course of this project either orally, in the form of presentations, or in documents that report such general industry knowledge is not subject to the terms of section 6(a) and (b) above.
7.
Warranty of Performance
. The General Counsel represents and warrants that:
(a)
The Services shall be performed in accordance with, and shall not violate, applicable laws, rules or regulations, and standards prevailing in the industry and the General Counsel shall obtain and maintain all permits or permissions required to comply with such laws, rules or regulations. Notwithstanding the foregoing, the Company waives any claims against the General Counsel relating to practicing law outside of the jurisdictions of the District of Columbia and Maryland where the principal of General Counsel is licensed to practice law.
(b)
The Materials shall be original, clear, and presentable in accordance with generally applicable standards in the industry;
(c)
The Materials will not contain libelous, injurious, or unlawful material and will not violate or in any way infringe upon the personal or proprietary rights of third parties, including property, contractual, employment, trade secrets, proprietary information, and non-disclosure rights, or any trademark, copyright, or patent, nor will they contain any format, instruction, or information that is inaccurate or injurious to any person, computer system, or machine;
(d)
The General Counsel has full power and authority to enter into and perform its obligations under this Agreement; and
(e)
The General Counsel will perform the Services in accordance with the specifications established by the Company.
8.
Indemnification
. Company shall defend, indemnify and hold the General Counsel harmless from any and all claims, liabilities, damages, taxes, fines, repayment obligations, or expenses, including court costs and reasonable attorneys’ fees (collectively, “Claims”), arising from any act or omission by the Company or its affiliates or their respective officers, partners, shareholders, directors, officers, employees or agents, or from the Company’s material breach of this Agreement. Without limiting the generality of the foregoing, the Company expressly agrees to indemnify and hold the General Counsel harmless from any and all Claims arising from or relating to: (a) any goods and/or services provided by or on behalf of the Company or its affiliates; (b) any other work engaged in by the Company or its affiliates outside of this Agreement; and/or (c) the Company’s and its affiliates’ compliance with federal and state laws (including but not limited to Medicare and Medicaid requirements, the Stark law, and the federal anti-kickback statute, false claims acts, and state versions of such statutes). Any adjudicated claims by the Company against General Counsel shall be funded solely by proceeds, if any, from the D&E and E&O policies that the Company may elect to procure for that purpose. This Section shall survive the termination of this Agreement for the period of the applicable statute of limitations or the tail provisions under such D&E and E&O policies whichever first occurs.
9.
Governing Law
. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, without application of its conflict of laws principles. Venue for any dispute shall be in Tarrant County, Texas.
10.
Conflict of Interests
. General Counsel may continue General Counsel’s outside law practice provided it does not materially detract from the performance of General Counsel’s duties hereunder. The Company hereby waives the appearance of any conflict of interest relating to General Counsel’s representation of any of General Counsel’s outside clients or any investments in any of their ventures. General Counsel’s clients include, among others, various principals and affiliates in the Crestview Group family of companies (including D. Alan Meeker who is an officer of the Company), the Mallick Group of Fort Worth, Texas and its affiliates, Frank Bonilla of Fort Worth, Texas and his affiliates, Acacia Health Pte Ltd., a Singapore company, and its affiliates, and World Health Industries, Inc. and its affiliates and various Texas Limited Partnerships whose function is to own compound pharmacies all of which are affiliated with The Crestview Group. In the event of an actual conflict of interest between the Company and such clients that cannot be amicably resolved, General Counsel shall recuse himself from representing either party in the transaction giving rise to the conflict but such recusal shall not prejudice General Counsel’s interests in this Agreement or ability to represent the Company or other client in unrelated matters. General Counsel may have other business interests and may participate in other investments or activities in addition to those relating to the Company and its affiliates. The Company and its affiliates shall not have any right, by virtue of this Agreement or otherwise, to share or participate in any other of General Counsel’s (or its affiliates) business interests, investments or activities or the income or proceeds derived therefrom. General Counsel shall have no liability to Company or its affiliates by reason of participating in any such other business, investment or activity.
11.
Amendment
. No amendment or modification of this Agreement shall be effective unless set forth in writing and signed by both Parties.
12.
Entire Agreement
. This Agreement sets forth the full and complete understanding of the Parties, and supersedes all prior agreements, whether made orally or in writing.
13.
Execution
. This Agreement may be executed by facsimile in multiple counterparts, each of which shall together constitute one and the same instrument.
14.
Assignment
. The Company may freely assign this Agreement, in whole or in part. The General Counsel may not, without the written consent of the Company, assign, subcontract, or delegate its obligations under this Agreement, except that the General Counsel may transfer the right only to receive any amounts which may be payable to it for performance under this Agreement, and then only after receipt by the Company of written notice of such assignment or transfer.
15.
Severability
. In the event that any clause or provision of this Agreement is found by a court of competent jurisdiction to be unenforceable, then such clause shall be deemed severed from this Agreement and the balance of the clause or provision shall be given full force and effect. In the event that any portion of the covenant in the following Section is found by a court of competent jurisdiction to be excessively broad in terms of geographic coverage, duration or scope or otherwise, then such provision shall be deemed modified to conform to the broadest interpretation consistent with applicable law in order to protect the Company from economic harm caused by General Counsel.
16.
Covenant
.
(a)
General Counsel hereby expressly covenants and agrees that for a period of two (2) years following the date on which this Agreement terminates, whether such termination is upon expiration or termination of this Agreement, General Counsel will not serve as general counsel or otherwise provide legal advice for any transaction competitive with the Company unless such termination arose as a result of the default of the Company hereunder. For the avoidance of doubt, a transaction will be deemed “competitive” with the Company if the transaction provides any similar services offered by the Company to a client other than those persons or entities referenced in Section 10 above and/or such similar services (i) shall be performed in the United States and (ii) involves the distribution, provision of or sale of goods or services described in Section 16(b) below.
(b)
For the avoidance of doubt, the business lines covered by clause 16(a) above shall be limited to the following: internal fixation products, bone substitute materials, compounding pharmacies, nutritional supplements, biological tissues, wound care or any other similar product service lines offered by the Company during the term of the Agreement. Notwithstanding the foregoing, nothing herein shall restrict General Counsel from providing legal services for any non-competitive services with respect to any persons or entities which had engaged him in a business transaction prior to the date hereof.
(c)
General Counsel agrees that, except as may be required under compulsion of law or as part of General Counsel’s duties under this Agreement, General Counsel shall make no representations or statements, either direct or indirect (in the form of oral or written statements), to anyone (including but not limited to prospective clients, employers, existing or prospective customers or employees of the Company, or to any consultant, agent or representative of any customer of the Company, or to any representative or agent of the media) that disparages the Company, the Company’s past, present, or future performance, personnel, directors, executives, shareholders, operational conditions, services or organizational capabilities. The term “disparage” shall mean any statement which, directly or indirectly, creates a negative impression about the subject matter of the statement.
In the event that General Counsel breaches the covenant contained in this Paragraph 16, General Counsel agrees to pay to the Company at the Company’s election, either (i) as liquidated damages and not as a penalty, a sum equal to two times the aggregate amount of compensation paid by the Company to General Counsel pursuant to Paragraphs 3 during the term and any renewal hereof, together with all expenses, including reasonable attorneys’ fees, incurred by the Company in enforcing its rights under this Paragraph 16, and (ii) the compensatory damages actually incurred by the Company arising from the breach. In addition, the parties agree that monetary damages are not an adequate remedy and are not easily ascertained so that the Company may seek equitable relief including an injunction to specifically enforce this covenant.
17.
Review by Counsel
. General Counsel and Company each confirms that General Counsel or the Company have had full and fair opportunity to review this Agreement with their respective legal counsel and discuss the terms hereof with such counsel.
[SIGNATURES ON FOLLOWING PAGE]
IN WITNESS WHEREOF, the Parties have executed this Agreement effective as of the date and year first written above.
|
|
FUSE MEDICAL, INC.
|
|
|
|
|
|
|
|
|
By:
|
/s/ Alan Meeker
|
|
|
|
|
Alan Meeker, CEO
|
|
|
|
ROSS EICHBERG, PC
|
|
|
|
|
|
|
|
|
By:
|
/s/ Ross Eichberg
|
|
|
|
|
Ross Eichberg, Manager
|
|
EXHIBIT A:
SERVICES
General charge of the ongoing legal affairs of the Company and its affiliated organizations.
Monitoring and liaison with outside transactional, litigation, compliance and regulatory legal counsel, and establishing budgets and other performance criteria with outside counsel.
Contract structuring, drafting and negotiation regarding the M&A, transactional and operational activities of the Company.
Coordinate with other executives within the Company to help those executives make legal, compliance and regulatory decisions consistent with legal requirements.
The duties of General Counsel shall be established by the Board of Directors from time to time and carried out and implemented under the direction of the Board of Directors.
Assistance in the drafting and preparation of any required public company documents required to be filed by the Company.
9
EXHIBIT 10.6
INTERIM CFO SERVICES AGREEMENT
This Interim CFO Services Agreement (“Agreement”) entered into and made effective as of June 1, 2014 (the “Effective Date”), between FUSE MEDICAL, INC., a Delaware limited liability company, with offices at 4770 Bryant Irvin Court, Suite 300, Fort Worth, Texas 76107 (the “Company”), and DAVID HEXTER (“Hexter”), as a representative of DAVID A. HEXTER, CPA, P.A. (the “Firm”) with an address of 4650 Siena Circle, Wellington, Florida 33414 (each is a “Party” and collectively the “Parties”).
RECITALS
WHEREAS, Company desires to obtain the services of Hexter as described in the body of this Agreement and the attached
Exhibit “A”
(“Services”); and
WHEREAS, Hexter is a licensed certified public accountant and in the business of providing such Services, and desires to provide them to the Company; and
WHEREAS, Hexter has knowledge, contacts, skills and abilities that he intends to provide to the Company in this representation;
NOW, THEREFORE, in consideration of the terms, conditions and mutual promises contained herein, the Parties mutually agree as follows:
AGREEMENT
|
a.
|
Hexter shall provide the Services according to the schedule and scope of work as set forth in
Exhibit “A”
, which is attached hereto and made a part of this Agreement by reference.
|
|
b.
|
Hexter agrees to furnish all labor, supervision, and services needed to complete his obligations under this Agreement. Hexter shall report and pay all taxes applicable to services that are furnished under this Agreement.
|
|
2.
|
Term
. This Agreement shall commence on the Effective Date, and shall remain in effect for an initial three month term. At the end of the three month term, the term shall automatically be deemed renewed for up to three (3) sequential one month terms until terminated by either party or the award of an employment agreement for Hexter serving as the Chief Financial Officer of the Company. This Agreement may be terminated by the Company or by the Firm for any reason by providing 30 days’ prior written notice to the other party. In the event of such termination, Hexter shall continue to provide services during the 30-day period and the Compensation provided for under Section 3 shall continue to be paid until the end of the 30-day period.
|
|
a.
|
The Company shall pay to Hexter compensation for services rendered hereunder at the rate of $150 per hour during the term of this Agreement. The parties presently anticipate that the first two months of the Term shall require 120 hours per month and the third month of the Term shall require 100 hours of Hexter’s time. Hexter shall maintain his billing records throughout the Term. The parties will discuss whether such estimate of hours is reasonably accurate at the end of 30 days. Upon execution of this Agreement, the Company shall pay an initial monthly retainer of $15,000, and on or about the thirtieth and sixtieth day of the Term an additional $15,000 monthly retainer shall be paid. The parties will “true up” the compensation actually paid and the hours actually billed at the end of the initial term (see 3(c) below).
|
|
b.
|
Travel time between Fort Worth, Texas and Wellington, Florida will be charged at the rate of four (4) hours each way, and Hexter is expected to work on Company business on the plane.
|
|
c.
|
At the end of the initial term, any hours billed in excess of 300 hours (the “Excess Hours”) shall be paid to Hexter in the form of: (i) cash (at $150 per hour) or, at the Company’s election (ii) fully-vested stock in the Company (“Stock”) (at $200 per hour based on the average closing price during the five days prior to the end of the term). During the initial term, cash compensation for the Excess Hours shall not exceed $15,000.
|
|
d.
|
During any renewal period, the Company shall pay a monthly retainer of $15,000. At the end of each renewal period, any hours billed in excess of 100 hours per month (the “Excess Hours”) shall be paid to Hexter in the form of: (i) cash (at $150 per hour) or, at the Company’s election (ii) fully-vested stock in the Company (“Stock”) (at $200 per hour based on the average closing price during the five days prior to the end of the term). During each renewal period, cash compensation for the Excess Hours shall not exceed $5,000 per month.
|
|
4.
|
Representations and Warranties by Hexter
. Hexter hereby represents and warrants to Company that the following statements are true as of the date hereof:
|
|
a.
|
Hexter is experienced and knowledgeable in business and financial matters in general and is capable of evaluating the merits and risks of entering into this Agreement.
|
|
b.
|
Hexter recognizes that the Company is recently organized and involves a high degree of risk and is of a speculative nature.
|
|
c.
|
Hexter understands that neither this Agreement nor the ownership interests in the Company have been registered under the Securities Act of 1933 or any state securities laws in reliance upon exemptions therefrom, that the Company’s ownership interests may not be transferred unless it is registered under the Securities Act of 1933 and applicable state securities laws or unless an exemption from registration is available, and that no state or federal governmental authority has made any finding or determination relating to the fairness of the Company’s Stock and that no state or federal government authority has or will recommend or endorse the Stock.
|
|
d.
|
Hexter understands that the transferability of the Stock is restricted and that investors therein cannot expect to be readily able to transfer the Stock in case of emergency and that it may have to continue to bear the risk of holding the Stock for an indefinite period.
|
|
e.
|
Hexter has not been convicted of any felony or received any disciplinary action from any state licensing board during the prior ten years.
|
|
5.
|
Confidentiality
. The Parties agree to keep confidential all confidential information that is generated or obtained in connection with or as a result of performing services under this Agreement, until the end of one (l) year following termination or completion of the terms of this Agreement. Notwithstanding the foregoing, the obligation to protect confidentiality shall not limit either Party’s right or obligation to disclose information as required by law or by any government authority. Hexter shall not, without the prior written consent of the Company, use the Company’s name in any advertising or promotional literature or publish any articles relating to the Company, this Agreement, or the Services and shall not otherwise refer to the retention of Hexter to render services hereunder.
|
|
6.
|
Relationship of Parties
.
|
|
a.
|
It is understood and agreed that Hexter is an independent contractor with respect to the performance of each and every part of this Agreement. Hexter is solely responsible for the supervision, direction and control of his assistants (if any), and shall be solely responsible for all labor and expenses in connection therewith other than: (i) lodging in Fort Worth, Texas, (ii) coach airfare between Fort Worth, Texas and Wellington, Florida and (iii) ground transportation related to travel to and within Fort Worth, Texas. It is understood between the Parties that this is a contract for personal services, and that Hexter may not substitute any other individual or assign this Agreement to perform the Services, without the express written consent of the Company.
|
|
b.
|
The parties to this Agreement recognize that this Agreement does not create any actual or apparent agency, partnership, franchise, or relationship of employer and employee between the parties.
|
|
c.
|
Further, Hexter shall not be entitled to participate in any of the Company’s benefits, including without limitation any health or retirement plans. Hexter shall not be entitled to any remuneration, benefits, or expenses other than as specifically provided for in this Agreement.
|
|
d.
|
The Company shall not be liable for taxes, Worker’s Compensation unemployment insurance, employers’ liability, employer’s FlCA, social security, withholding tax, or other taxes or withholding for or on behalf of Hexter or any other person consulted or employed by Hexter in performing Services under this Agreement. All such costs shall be Hexter’s responsibility.
|
|
7.
|
Assignment
. The Company may freely assign this Agreement, in whole or in part. Hexter may not, without the written consent of the Company, assign, subcontract, or delegate its obligations under this Agreement, except that Hexter may transfer the right only to receive any amounts which may be payable to it for performance under this Agreement, and then only after receipt by the Company of written notice of such assignment or transfer.
|
|
a.
|
Hexter acknowledges that he has no right to or interest in his work or product resulting from the Services performed hereunder, or any of the documents, reports or other materials created by Hexter in connection with such Services, nor any right to or interest in any copyright therein. Hexter acknowledges that the Services and any products thereof (hereinafter referred to as the “Materials”) have been specially commissioned or ordered by the Company as “works made-for-hire” as that term is used in the Copyright Law of the United States, and that the Company is therefore to be deemed the author of and is the owner of all copyrights in and to such Materials.
|
|
b.
|
In the event that such Materials, or any portion thereof, are for any reason deemed not to have been works made-for-hire, Hexter hereby assigns to the Company any and all right, title, and interest Hexter may have in and to such Materials, including all copyrights, all publishing rights, and all rights to use, reproduce, and otherwise exploit the Materials in any and all formats or media and all channels, whether now known of hereafter created. Hexter agrees to execute such instruments as the Company may from time to time deem necessary or desirable to evidence, establish, maintain, and protect the Company’s ownership of such Materials, and all other rights, title, and interest therein.
|
|
c.
|
Notwithstanding the foregoing, the Company acknowledges that Hexter’s ability to carry out the work required is heavily dependent upon Hexter’s past experience in the industry and in providing similar services to others and they expect to continue such work in the future. Subject to the confidentiality provisions herein, generic information communicated to the Company in the course of this project either orally, in the form of presentations, or in documents that report such general industry knowledge is not subject to the terms of Sections 11(a) and (b) above.
|
|
9.
|
Warranty of Performance
. Hexter represents and warrants that:
|
|
a.
|
The Services shall be performed in accordance with, and shall not violate, applicable laws, rules or regulations, and standards prevailing in the industry and Hexter shall obtain all permits or permissions required to comply with such laws, rules or regulations;
|
|
b.
|
The Materials shall be original, clear, and presentable in accordance with generally applicable standards in the industry;
|
|
c.
|
The Materials will not contain libelous, injurious, or unlawful material and will not violate or in any way infringe upon the personal or proprietary rights of third parties, including property, contractual, employment, trade secrets, proprietary information, and non-disclosure rights, or any trademark, copyright, or patent, nor will they contain any format, instruction, or information that is inaccurate or injurious to any person, computer system, or machine;
|
|
d.
|
Hexter has full power and authority to enter into and perform his obligations under this Agreement; and
|
|
e.
|
Hexter will perform the Services in accordance with the specifications established by the Company.
|
|
10.
|
Indemnification
. Hexter agrees to indemnify and hold harmless the Company, its managers, its officers, directors, agents and employees, and the Company’s affiliates and their partners, managers, directors, agents and employees from and against all expenses, claims, demands, costs, causes of action, damages and expenditures (including reasonable attorney’s fees) arising out of Hexter’s gross negligence or willful misconduct in the performance of the Services for the Company. Company will indemnify and hold harmless Hexter from and against all expenses, claims, demands, cost, causes of action, damages and expenditures (including reasonable attorney’s fees) arising out of the Company’s acts or omissions. The Company shall obtain and maintain a D&O insurance policy which covers Hexter.
|
|
11.
|
Governing Law
. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware without application of its conflict of laws principles. Venue for any dispute shall be in Tarrant County, Texas.
|
|
12.
|
Amendment
. No amendment or modification of this Agreement shall be effective unless set forth in writing and signed by both Parties.
|
|
13.
|
Entire Agreement
. This Agreement sets forth the full and complete understanding of the Parties, and supersedes all prior agreements, whether made orally or in writing.
|
|
14.
|
Execution
. This Agreement may be executed by facsimile in multiple counterparts, each of which shall together constitute one and the same instrument.
|
|
15.
|
Severability
. In the event that any clause or provision of this Agreement is found by a court of competent jurisdiction to be unenforceable, then such clause shall be deemed severed from this Agreement and the balance of the clause or provision shall be given full force and effect. In the event that any portion of the covenant in the following Section is found by a court of competent jurisdiction to be excessively broad in terms of geographic coverage, duration or scope or otherwise, then such provision shall be deemed modified to conform to the broadest interpretation consistent with applicable law in order to protect the Company from economic harm caused Hexter.
|
|
16.
|
Review by Counsel
. Hexter confirms that he has had full and fair opportunity to review this Agreement with his legal counsel and discuss the terms hereof with such counsel and the Company.
|
|
17.
|
Employment Agreement
. The parties acknowledge that they may consider entering into an employment agreement for a full-time CFO position upon the conclusion of the term hereof. No assurances of such employment arrangement are made by either party as of the date hereof, given the pending merger transaction and other business variables. However, the parties agree to continuously update each other on the business conditions necessary to execute a CFO employment agreement.
|
|
18.
|
Attorney’s Fees
. In the event that there is any controversy or claim arising out of or relating to this Agreement, or to the interpretation, breach or enforcement thereof, and any action or proceeding is commenced to enforce the provisions of this Agreement, the prevailing party shall be entitled to a reasonable attorney’s fee, costs and expenses.
|
IN WITNESS WHEREOF, the Parties have executed this Agreement effective as of the Effective Date.
|
|
FUSE MEDICAL, INC.
|
|
|
|
|
|
|
|
|
By:
|
/s/ Alan Meeker
|
|
|
|
|
Alan Meeker, CEO
|
|
|
|
DAVID A. HEXTER, CPA, P.A.
|
|
|
|
For the Firm
|
|
|
|
|
|
|
|
By:
|
/s/ David Hexter
|
|
|
|
|
David Hexter
|
|
EXHIBIT A:
SERVICES
Accounting services relating to:
|
(i)
|
the Company’s merger with Golf Rounds.com, Inc. and preparation of financial statements of the Company relating to said merger and being the Company’s liaison with the auditors working on the transaction,
|
|
(ii)
|
financial portions of the SEC filings that shall be required in connection with the merger,
|
|
(iii)
|
the Company’s year end financial reporting requirements,
|
|
(iv)
|
due diligence regarding potential mergers and acquisitions, and
|
|
(v)
|
supervision of all financial aspects of the Company and future subsidiaries.
|
Hexter shall work from the Company’s office as agreed between the parties.
7
EXHIBIT 10.7
ASSIGNMENT OF LEASE
THIS AGREEMENT is made between
JAR Financial, LLC
a Delaware limited liability company (“Assignor”), and
Fuse Medical, LLC
, a Delaware limited liability company (“Assignee”).
Recitals
1.
A lease was executed on December 23, 2013, between BC Legacy Management, LLC, as Landlord, and the Assignor as Tenant, under which the following described property was leased to the Assignor as Tenant for a term of two (2) years, beginning on February 1, 2014, and ending on January 31, 2016 (the “Lease”), subject to the exercise of an option to extend the term and further subject to earlier termination as provided in the lease:
4770 Bryant Irvin Ct., Suite 300
2.
The Assignor now wishes to assign the Lease to the Assignee, and the Assignee wishes to accept the assignment.
Assignment
In consideration of the exercise of rights contained in the Lease, receipt of which is acknowledged by this agreement and the agreement of the Assignee set forth below, the Assignor assigns to the Assignee and the Assignee’s heirs, assigns, executors, and administrators all right, title, and interest in and to the Lease, a copy of which is attached to this document as Exhibit A. The Assignee accepts the assignment and agrees to fulfill all the terms and covenants required by the Assignor as the Tenant under the Lease, including making all payments due to or payable on behalf of the Landlord when due and payable.
Binding on Successors
This agreement binds and inures to the benefit of the parties, their heirs, executors, administrators, successors in interest, and assigns.
Dated: February 15, 2014
|
ASSIGNOR:
|
JAR Financial, LLC
|
|
|
|
|
|
|
|
|
By:
|
/s/ D. Alan Meeker
|
|
|
|
|
D. Alan Meeker, Manager
|
|
|
|
|
|
|
ASSIGNEE:
|
Fuse Medical, LLC
|
|
|
|
|
|
|
|
|
By:
|
/s/ D. Alan Meeker
|
|
|
|
|
D. Alan Meeker, Manager
|
|
CONSENT OF LANDLORD
The Landlord in the Lease, defined in the above assignment, consents to assigning the Lease to
Fuse Medical, LLC
, and releases the Assignor from any further liability or obligation under the Lease.
Dated: February 5, 2014
|
LANDLORD:
|
BC Legacy Management, LLC
|
|
|
|
|
|
|
|
|
By:
|
/s/ Edmond L. Bradshaw
|
|
|
|
|
Edmond L. Bradshaw, Member
|
|
|
STATE OF TEXAS
|
§
|
|
|
|
§
|
KNOW ALL PERSONS BY THESE PRESENTS:
|
|
COUNTY OF TARRANT
|
§
|
|
THIS LEASE AGREEMENT (“Lease”) is made and entered into effective as of the 23rd day of December, 2013, by and between BC Legacy Management, LLC, a Texas limited liability company (“Landlord”) and JAR Financial, LLC, a Delaware limited liability company (“Tenant”).
WITNESSETH
ARTICLE 1
Lease
Section 1.01
Leased
Premises
. Landlord, in consideration of the mutual covenants, agreements, conditions, and rent herein set forth, hereby does lease exclusively unto Tenant, and Tenant hereby does lease from Landlord, a portion of the office complex (the “Building”) located at 4770 Bryant Irvin Court, Fort Worth, Tarrant County, Texas 76107, commonly known as suite 300 and containing approximately 1572 Gross Rentable Square Feet as shown with greater particularity on
Exhibit “A”
attached hereto (the “Premises”).
ARTICLE 2
Term
Section 2.01
Term
. This Lease shall commence on the 1
st
day of January, 2014 or upon the first business day following Substantial Completion of Landlord’s Work, as defined hereinbelow, whichever date is later (“Commencement Date”) and will expire twenty-four (24) months thereafter (the “Term”).
Section 2.02
Renewal Term
. Provided Tenant is not in default at the time of its election, the Tenant shall have the right to renew the Term of this Lease for one (1) additional period of three (3) years (the “Renewal Term”) by providing written notice on or before six (6) months prior to expiration of the initial Term of its election to extend the Term. The Base Rent for the Renewal Term (the “Renewal Rate”) shall be market rent for comparable space and a comparable location in Fort Worth, Texas as agreed upon between Landlord and Tenant; provided, however, in no event shall the Renewal Rate be less than the Base Rent for the final year of the initial Term. Within twenty (20) days after receiving Tenant’s notice of intent to renew, Landlord shall advise Tenant in writing of the proposed Renewal Rate to be applicable during the Renewal Term immediately following the expiration of the current Term. Within fifteen (15) days after Tenant receives notice from Landlord of the proposed Renewal Rate for the Renewal Term, Tenant shall notify Landlord that (i) Tenant desires to exercise the renewal option at the Renewal Rate specified by Landlord; (ii) Tenant does not desire to exercise the renewal option; or (iii) if Landlord bases the proposed Renewal Rate on its opinion of the market base rental rate, that Tenant objects to the Renewal Rate. If Tenant objects to the proposed market value Renewal Rate, Landlord and Tenant agree to negotiate in good faith to reach an agreement as to a mutually acceptable Renewal Rate. If no agreement is reached within twenty (20) days of Tenant’s objection, the Lease will terminate at the end of the Term. The terms and provisions of this Lease shall remain in effect until such final termination.
ARTICLE 3
Rent
Section 3.01
Base Rent
. As monthly rental for the Premises, Tenant shall pay to Landlord $19.00 per Gross Rentable Square Foot (“Base Rent”) during the first year of the Lease, in accordance with
Exhibit “B”
attached hereto. Base Rent is the monthly rental for the Premises together with a charge for a Common Area Factor. Base Rent shall be due and payable in advance on the first day of each month; provided that if this Lease commences or expires on a day other than the first or last day of a month, the monthly payment for such month shall be prorated on the basis of a thirty (30) day month. The Gross Rentable Square Feet for the Premises and the Rental Rate for each year of the Lease is set forth on
Exhibit “B”
attached hereto.
Section 3.02
Additional Rent
. The Base Rent payable hereunder shall be adjusted from time to time in accordance with the following provisions:
1.
Tenant’s Base Rent is based, in part, upon a Base Year (herein so called) of operating costs equal to the actual operating expenses for the Building for calendar year
2014
. It is understood and agreed by Tenant that Landlord has not made any representation that the Base Year operating costs will equal or approximate the actual operating expenses for the Building for any calendar year. Tenant shall, during the Lease Term, pay as an adjustment to Base Rent hereunder an amount equal to Tenant’s Pro Rata Share of the excess (“Excess”), if any, from time to time of actual Building Costs per year for the Building and Property (also referred to as the “Complex”) over the Base Year. Landlord shall deliver to Tenant on or before May 1, 2015 a statement setting forth the actual Building Costs for the Base Year.
2.
As soon as is practical following the end of each calendar year, but in no event later than May 1, during Tenant’s occupancy Landlord shall furnish to Tenant a statement of Landlord’s actual Building Costs for the previous calendar year. Tenant shall pay to Landlord, within 30 days of receipt of Landlord’s statement, Tenant’s Pro Rata Share of the Excess with respect to the prior year (“Additional Rent”) whether or not the Lease has terminated prior to receipt by Tenant of a statement.
3.
If actual Building Costs for the previous year are less than those established in the Base Year, Tenant shall receive a credit toward Additional Rent for the next year. If a credit is due at the end of the Term, Landlord shall pay such sums to Tenant within thirty (30) days after the end of the Term.
4.
“Building Costs” shall mean all direct and indirect costs and expenses incurred in each calendar year in connection with operating, maintaining, repairing, managing and owning the Building and the Property, including, but not limited to the following:
(a)
Fees for management services for the Building and Property, but only if provided by an independent management company not affiliated with Landlord and only to the extent that the costs of such services do not exceed competitive costs for comparable services in comparable buildings of the class, type, size, age and location of the Building in the market area;
(b)
All rental and/or purchase costs of materials, supplies, hand tools and equipment used in the operation, repair, replacement and maintenance and the control of access to the Building and the Property;
(c)
All amounts charged to Landlord by contractors and/or suppliers for services, materials, equipment and supplies furnished in connection with the operation, repair, maintenance, replacement of and control of access to any part of the Building, the parking areas, and the sidewalks adjoining the Building, if any, or the Property generally, and the heating, air conditioning, ventilating, plumbing, electrical and other systems of the Building;
(d)
All premiums paid by Landlord for fire and extended coverage insurance (including Landlord’s personal property used in connection with the Building, but not personal property used by Landlord in its capacity as a tenant of the Building), liability and extended coverage insurance and other insurance customarily carried from time to time by lessors of comparable office buildings or required to be carried by Landlord;
(e)
Charges for all utilities for the Building (both exterior and interior) including but not limited to water, sewer and electricity, but excluding those charges for which tenants are individually responsible or paid directly by Tenant;
(f)
All real estate taxes and assessments on the Property, the Building or the Premises, and taxes and assessments levied in substitution or supplementation in whole or in part of such taxes (and if the amount of Taxes payable for any calendar year, including the amount of Taxes included in the Base Year, is changed by final determination of legal proceedings, settlement, or otherwise, such changed amount shall be the Taxes for such year) (AND TENANT AGREES THAT, AS BETWEEN LANDLORD AND TENANT, LANDLORD HAS THE SOLE AND ABSOLUTE RIGHT TO CONTEST TAXES LEVIED AGAINST THE PREMISES AND THE PROJECT. TENANT AGREES THAT IT WILL NOT PROTEST OR APPEAL ANY APPRAISAL OR RE-APPRAISAL OF THE PREMISES OR ALL OR ANY PORTION OF THE PROJECT BEFORE ANY GOVERNMENTAL AUTHORITY AND TENANT HEREBY WAIVES ANY RIGHT TO RECEIVE NOTICES OF RE-APPRAISAL, WHICH WAIVER INCLUDES, WITHOUT LIMITATION, ANY RIGHTS WHICH MAY OTHERWISE EXIST UNDER SECTIONS 41.413 AND 42.015 OF THE TEXAS TAX CODE, AS THE SAME MAY BE MODIFIED OR AMENDED FROM TIME TO TIME);
(g)
Costs of ad valorem tax consultants;
(h)
All landscape expenses and costs of repairing, resurfacing and striping of the parking areas of the Property;
(i)
Cost of all maintenance service agreements for equipment, alarm service, window cleaning, window blind cleaning, janitorial services, pest control, landscaping, and parking equipment;
(j)
Cost of all other repairs, replacements and general maintenance of the Property and Building neither specified above nor directly billed to tenants (excluding such repairs and general maintenance paid by insurance proceeds or by Tenant or other third parties);
(k)
Legal expenses incurred with respect to the Building or Property which relate directly to the operation of the Complex and which benefit all of the tenants of the Complex generally, such as legal proceedings to abate offensive activities or uses or to reduce property taxes, but excluding legal expenses related to the collection of Rent or to the sale, leasing or financing of the Complex;
(l)
Expenses incurred in order to comply with any federal, state or municipal law, code or ordinance, or regulation which was not promulgated, or which was promulgated but not in effect or applicable to the Complex, as of the Effective Date of this Lease;
(m)
Operating Costs of the Exterior Common Areas. “Exterior Common Areas” shall mean those areas of the Property which are not located within the Building and its immediate proximity and which are provided and maintained for the common use and benefit of Landlord and tenants of the Building generally and the employees, invitees and licensees of Landlord and such tenants, including, without limitation, sidewalks and landscapes;
5.
“Building Costs” will not include any expenses or costs for the following items:
(a)
Electricity costs for the Premises paid directly by the Tenant;
(b)
Except as provided in
Paragraph 4
above, costs that, under generally accepted accounting principles, are required to be classified as capital expenditures (including, without limitation, HVAC replacement);
(c)
Except as provided in
Paragraph 4
above, depreciation or amortization of the Building or its contents or components;
(d)
Expenses for the preparation of space (including tenant finish out costs) or other similar type work that Landlord performs for any tenant or prospective tenant of the Building;
(e)
Expenses incurred in leasing or obtaining new tenants or retaining existing tenants, such as marketing costs and leasing commissions;
(f)
Except as provided in
Paragraph 4
above, legal expenses;
(g)
Interest, amortization or other costs associated with any mortgage;
(h)
Any payments (such as salaries or fees) to Landlord’s executive personnel or employees;
(i)
Except as provided in
Paragraph 4
above, taxes on Landlord’s business (such as income, excess profits, franchise, capital stock, estate, inheritance);
(j)
Costs to correct construction defects;
(k)
Expenses paid directly by a tenant for any reason (including, without limitation, excessive utility use or increase in insurance due to that tenant’s activities);
(l)
Any repair or other work necessitated by condemnation, fire, or other casualty for which full reimbursement is received by Landlord;
(m)
Costs exceeding those reasonably obtainable through “arm’s length” negotiations with third parties;
(n)
Services or benefits or both provided to some tenants but not to Tenant; and
(o)
Any costs, fines, and the like due to Landlord’s violation of any governmental rule or authority.
Section 3.03
Payment
. All payments by Tenant of Rent, including any other payments due hereunder, if any, required to be made to Landlord shall be in the lawful money of the United States of America and shall be made to Landlord at the address for Landlord set forth in this Lease.
Section 3.04
Security Deposit
. Tenant has deposited with Landlord the sum of $2,489.00 as a security for the performance of every provision of this lease to be performed by Tenant. If Tenant defaults with respect to any provision of this Lease, including but not limited to the provisions relating to the payment of Rent, after ten (10) days written notice to Tenant of its intent to do so, Landlord may use, apply, or retain all or any part of this security deposit for the payment of any Rent or any other sum in default or for the payment of any other amount which Landlord may spend or become obligated to spend due to Tenant’s default. If any portion of this deposit is so used or applied, Tenant shall within five (5) days after demand therefor, deposit cash with Landlord in an amount sufficient to restore the security deposit to its original amount. Landlord shall keep this security deposit separate from its general funds and shall not pay interest to Tenant. If Tenant performs each of its obligations under this Lease throughout the Term, Landlord shall return the security deposit or any balance thereof to Tenant (or, at Landlord’s option, to the last transferee of Tenant’s interest under this Lease) within thirty (30) days after the expiration of the Term, subject to Tenant’s vacation of the Premises and Landlord’s inspection of the Premises. If the Building is sold, Landlord shall transfer the security deposit to the new owner, and upon the new owner’s acknowledgment of receipt of same, Landlord shall thereafter have no liability for the security deposit.
ARTICLE 4
Utilities
Section 4.01
Utilities
. Tenant shall pay directly to the supplier thereof: all charges for Utilities supplied for or to the Premises. As used herein, the Term “Utilities” means all charges made by providers of electricity service furnished to or for the benefit of the Premises. Such Utilities shall be separately metered. Any additional services for telephone, cable television, satellite or internet service shall be at Tenant’s sole cost and expense and shall be separately billed directly to Tenant. Landlord shall pay all Utilities for the Common Area.
ARTICLE 5
Indemnity and Insurance
Section 5.01
INDEMNITY
.
TENANT AGREES TO INDEMNIFY AND HOLD HARMLESS LANDLORD AND ITS AFFILIATED COMPANIES AND THEIR AGENTS, SERVANTS, DIRECTORS, OFFICERS, MEMBERS, PARTNERS, SHAREHOLDERS, AND EMPLOYEES (AS USED IN SECTIONS 5.01 AND 5.02 HEREINAFTER, LANDLORD AND ITS AFFILIATED COMPANIES AND THEIR AGENTS, SERVANTS, DIRECTORS, OFFICERS, SHAREHOLDERS, AND EMPLOYEES ARE COLLECTIVELY CALLED “INDEMNITEE”) FROM AND AGAINST ANY AND ALL LIABILITIES, LOSSES, DAMAGES, LIENS, CLAIMS, SUITS, CAUSES OF ACTION, COSTS (INCLUDING COURT COSTS, REASONABLE ATTORNEY’ S FEES AND COSTS OF INVESTIGATION), AND ACTIONS OF ANY KIND ARISING OUT OF, CAUSED BY, RESULTING FROM OR ALLEGED TO ARISE BY REASON OF INJURY TO OR DEATH OF ANY PERSON OR DAMAGE TO OR LOSS OF PROPERTY OCCURRING ON, IN, OR ABOUT THE PREMISES, OR BY REASON OF ANY OTHER CLAIM WHATSOEVER OF ANY PERSON OR PARTY OCCASIONED OR ALLEGED TO BE OCCASIONED IN WHOLE OR IN PART BY ANY ACT OR OMISSION ON THE PART OF TENANT OR ANY INVITEE, LICENSEE, EMPLOYEE, DIRECTOR, OFFICER, SERVANT, CONTRACTOR, SUBCONTRACTOR OR SUBTENANT OF TENANT (THE FOREGOING ARE COLLECTIVELY CALLED A “TENANT PARTY”), OR BY ANY BREACH, VIOLATION, OR NONPERFORMANCE OF ANY COVENANT OF TENANT UNDER THIS LEASE. IF ANY ACTION OR PROCEEDING SHALL BE BROUGHT BY OR AGAINST ANY INDEMNITEE IN CONNECTION WITH ANY SUCH LIABILITY OR CLAIM, TENANT, ON NOTICE FROM LANDLORD, SHALL DEFEND SUCH ACTION OR PROCEEDING, AT TENANT’S EXPENSE, BY OR THROUGH ATTORNEYS REASONABLY SATISFACTORY TO LANDLORD. THE PROVISIONS OF THIS SECTION SHALL APPLY TO ALL ACTIVITIES OF TENANT WITH RESPECT TO THE PREMISES, WHETHER OCCURRING BEFORE OR AFTER THE COMMENCEMENT DATE OF THE TERM AND BEFORE THE EXPIRATION OR TERMINATION OF THIS LEASE, THOUGH TENANT’S INDEMNITY OBLIGATION FOR EVENTS OCCURRING BEFORE TERMINATION OF THE LEASE SHALL SURVIVE TERMINATION OF THE LEASE.
TENANT AGREES TO INDEMNIFY AND HOLD HARMLESS THE INDEMNITEES FROM AND AGAINST ANY AND ALL LIABILITIES, LOSSES, DAMAGES, LIENS, CLAIMS, SUITS, CAUSES OF ACTION, COSTS (INCLUDING COURT COSTS, REASONABLE ATTORNEY’S FEES AND COSTS OF INVESTIGATION), AND ACTIONS OF ANY KIND ARISING OUT OF, CAUSED BY, RESULTING FROM OR ALLEGED TO ARISE BY REASON OF INJURY TO OR DEATH OF ANY PERSON OR DAMAGE TO OR LOSS OF PROPERTY OCCURRING ON, IN, OR ABOUT THE COMMON AREAS OF THE BUILDING TO THE EXTENT SUCH LIABILITY DAMAGES, LIENS, CLAIMS, SUITS, CAUSES OF ACTION, COSTS, INJURIES, OR DEATHS ARE CAUSED BY OR ALLEGED TO BE CAUSED BY A CONDITION CREATED BY A TENANT PARTY OR ARISE FROM, ARE CAUSED BY OR ARE ALLEGED TO ARISE FROM OR TO BE CAUSED BY THE NEGLIGENCE OR WILLFUL MISCONDUCT OF TENANT OR ANY TENANT PARTY. IF ANY ACTION OR PROCEEDING SHALL BE BROUGHT BY OR AGAINST ANY INDEMNITEE IN CONNECTION WITH ANY SUCH LIABILITY OR CLAIM, TENANT, ON NOTICE FROM LANDLORD, SHALL DEFEND SUCH ACTION OR PROCEEDING, AT TENANT’S EXPENSE, BY OR THROUGH ATTORNEYS REASONABLY SATISFACTORY TO LANDLORD. THE PROVISIONS OF THIS SECTION SHALL APPLY TO ALL ACTIVITIES OF TENANT WITH RESPECT TO THE PREMISES AND THE COMMON AREAS, WHETHER OCCURRING BEFORE OR AFTER THE COMMENCEMENT DATE OF THE TERM AND BEFORE THE EXPIRATION OR TERMINATION OF THIS LEASE, THOUGH TENANT’S INDEMNITY OBLIGATION FOR EVENTS OCCURING BEFORE TERMINATION OF THE LEASE SHALL SURVIVE TERMINATION OF THE LEASE.
TENANT’S OBLIGATIONS UNDER THIS SECTION SHALL NOT BE LIMITED TO THE LIMITS OR COVERAGE OF INSURANCE MAINTAINED OR REQUIRED TO BE MAINTAINED BY TENANT UNDER THIS LEASE.
Section 5.02
WAIVER OF LIABILITY
.
NO INDEMNITEE SHALL BE LIABLE IN ANY MANNER TO TENANT OR ANY OTHER PARTY FOR ANY INJURY TO OR DEATH OF PERSONS UNLESS CAUSED BY THE WILLFUL MISCONDUCT OR GROSS NEGLIGENCE OF AN INDEMNITEE. IN NO EVENT SHALL ANY INDEMNITEE BE LIABLE IN ANY MANNER TO TENANT OR ANY OTHER PARTY AS THE RESULT OF THE ACTS OR OMISSIONS OF TENANT, ITS AGENTS, EMPLOYEES, CONTRACTORS, OR ANY OTHER PARTY OR ANY OTHER TENANT ON THE PREMISES. ALL PERSONAL PROPERTY UPON THE PREMISES SHALL BE AT THE RISK OF TENANT, AND LANDLORD SHALL NOT BE LIABLE FOR ANY LOSS OF OR DAMAGE TO PROPERTY (OF WHATEVER NATURE) OF TENANT, ITS EMPLOYEES, AGENTS, CUSTOMERS, INVITEES, OR TO OTHERS, REGARDLESS OF WHETHER SUCH PROPERTY IS ENTRUSTED TO EMPLOYEES OF THE PREMISES, OR SUCH LOSS OR DAMAGE IS OCCASIONED BY CASUALTY, THEFT, FAILURE OF LANDLORD TO MAINTAIN THE STRUCTURAL PORTIONS OF THE PREMISES, OR ANY OTHER CAUSE OF WHATSOEVER NATURE, IT BEING THE RESPONSIBILITY OF TENANT TO SECURE AND MAINTAIN NECESSARY INSURANCE COVERAGE FOR SUCH PROPERTY.
Section 5.03
Waiver of Subrogation
. Tenant and Landlord each hereby waive and relinquish any right or claim against the other party or their respective principals, partners, members, managers, employees, or agents for damage to the property of either at or on the Premises by way of subrogation or assignment. To the extent that these damages are covered by insurance proceeds, each party agrees to have its insurance policies endorsed to waive the carrier’s right of recovery under subrogation and a certificate of insurance shall be available upon request verifying such waiver. Whether or not any such policy is so endorsed, all rights of subrogation are hereby waived.
Section 5.04
Insurance
.
(a)
Tenant shall obtain, at Tenant’s sole expense, to be in effect at all times during the Term, the following insurance coverage with limits not less than those set forth below with insurers licensed to do business in Texas:
|
Insurance
|
|
Minimum Limits
|
|
A.
|
Commercial General
Liability, Bodily Injury
and Property Damage equivalent
|
|
$1,000,000 per occurrence
$2,000,000 aggregate
|
This policy shall be endorsed to include Landlord as an additional insured, state that the insurance is primary over any other insurance carried by Landlord, and shall include the following coverages.
|
|
2)
|
Independent Contractors;
|
|
|
3)
|
Broad Form Contractual in support of the Indemnity Section of this Lease;
|
|
|
4)
|
Personal Injury Liability
|
|
B.
|
Umbrella Excess Liability Insurance
Bodily Injury/Property Damage
|
|
$2,000,000 Aggregate
|
This Umbrella Excess Liability Insurance policy shall be written on an excess basis above coverages as described in A above.
(b)
Landlord shall acquire and maintain, at its expense, insurance coverage with limits equal to or greater than the following with insurers licensed to do business in the State of Texas:
|
Insurance
|
|
Minimum Limits
|
|
A.
|
Commercial General
Liability, Bodily Injury occurrence and Property Damage equivalent
|
|
$1,000,000 per occurrence
$2,000,000 aggregate
|
This policy shall state that the insurance is primary and shall include the following coverages.
|
|
2)
|
Independent Contractors;
|
|
|
3)
|
Broad Form Contractual in support of the Indemnity Section of this Lease.
|
Each policy shall include a waiver of subrogation in favor of the other party. Each party shall provide the other with certificates of insurance which specify the additional insured status mentioned above as well as the waiver(s) of subrogation, and include a statement that each will be notified in writing by the insurance company thirty (30) days prior to cancellation, material change or renewal of insurance.
ARTICLE 6
Condition, Use, Compliance with Laws, Maintenance, Services,
Alterations and Improvements
Section 6.01
Condition
. Other than as set forth in this Article 6 and
Exhibit “D,”
upon Substantial Completion of Landlord’s Work and Tenant’s inspection and Acceptance thereof, Tenant shall be deemed to have accepted the Premises, with the exception of latent defects not discoverable through reasonable inspection, AS IS, WHERE IS, AND WITHOUT ANY WARRANTIES OF WHATEVER NATURE, EXPRESS OR IMPLIED, IT BEING THE INTENTION OF THE LANDLORD AND TENANT EXPRESSLY TO NEGATE AND EXCLUDE ALL WARRANTIES EXPRESS OR IMPLIED, IN FACT OR BY LAW, OR INCLUDING WITHOUT LIMITATION, THE IMPLIED WARRANTY OF SUITABILITY, AND THE WARRANTIES OF MERCHANTABILITY AND FITNESS FOR ANY PARTICULAR PURPOSE, CONTAINED IN OR CREATED BY ANY APPLICABLE LAW OF THE STATE OF TEXAS. However, nothing contained herein shall relieve Landlord of its construction and maintenance obligations under this Lease, including
Exhibit “D.”
Section 6.02
Use
. Tenant may occupy the Premises for general office purposes only, and such use and occupancy shall be in compliance with all applicable laws and the Rules and Regulations attached hereto as
Exhibit “C,”
as reasonably amended from time to time by Landlord.
Section 6.03
Compliance with Laws
. Tenant shall conduct its operations at the Premises in accordance with all applicable laws, including but not limited to environmental laws, rules, and regulations whether federal, state, or municipal in nature (collectively, the “Laws”). In the event of any breach by Tenant of any Laws; Tenant shall take whatever action is necessary to remedy the violation of the Laws and shall indemnify and hold Landlord harmless from and against any and all losses, costs, damages and liabilities arising from or alleged to arise from Tenant’s violation of the Laws, including reasonable attorney’s fees incurred by Landlord.
Section 6.04
Maintenance and Repairs
. Except as hereinafter provided, Landlord shall not be required to furnish any services or facilities of whatever nature or to make any repairs or alterations of whatever nature in or to the Premises. After Substantial Completion and Acceptance of Landlord’s Work, Tenant shall assume full and sole responsibility for the condition, operation, repair, replacement, maintenance, and management of the Premises and any construction thereon; provided, however, Landlord shall maintain the roof and structural portions of the Premises, including the foundation, exterior walls, plumbing, and electrical systems not installed by Tenant. Landlord shall be responsible for the cost of maintaining the HVAC equipment for the Premises. Landlord shall repair or replace the HVAC equipment as needed.
Section 6.05
Services provided by Landlord
.
(a)
Landlord shall furnish Tenant, at Landlord’s expense, subject to Tenant’s obligations to pay Utility charges as provided by Section 4.01 and Tenant’s obligations under Section 3.02, the following services during the Term hereof:
(1)
Air conditioning and heating in season, at such time as Landlord normally furnishes these services to other tenants in the Building and at such temperatures and in such amounts as are considered by Landlord to be standard, but service to the common areas of the Building outside normal business hours and on Saturdays, Sundays and holidays shall be furnished only upon Tenant’s reasonable advance request, who shall bear the standard charges of Landlord therefor, which shall never be less than the cost thereto, but not exceed the actual cost thereof.
(2)
Hot and cold water at those points of supply provided for general use.
(3)
Standard building janitor service in and about the Building and the Leased Premises, two (2) days per week, and periodic window washing; however Tenant shall pay the additional costs attributable to the cleaning of improvements within the Premises other than Building standard improvements.
(4)
Proper Building standard facilities to furnish sufficient electrical power for standard office use to Tenant’s electrical panel in the Premises.
2.
Except as set forth below, no interruption, moratorium or malfunction of any services or failure of any machinery or equipment to operate for any cause whatsoever shall constitute an eviction or disturbance of Tenant’s use and possession of the Premises or Building or a breach by Landlord of any of its obligations hereunder or render Landlord liable for damages or entitle Tenant to be relieved from any of its obligations hereunder (including the obligation to pay Base Rent) or grant Tenant any right of setoff or recoupment. In the event of any such interruption, however, Landlord shall use reasonable diligence during normal business hours to restore such service in any circumstances in which such restoration is within reasonable control of Landlord and the interruption was not caused by Tenant’s fault. If due to breakdown of equipment or services not the fault of Tenant the Premises become unusable for persons of ordinary sensibilities (
e.g
., failure of HVAC during summer months) for a period in excess of five (5) business days, rent and other charges will be equitably adjusted or abated for the period of any such interruption,
Section 6.06
Alterations and Improvements
.
1.
Tenant shall make no alterations or improvements to the Premises without Landlord’s prior written consent, not to be unreasonably withheld, conditioned, or delayed. Prior to commencement of the Lease, Landlord will provide Landlord’s building standard finish out in accordance with the parameters outlined in
Exhibit “D”
attached hereto (“Landlord’s Work”). Landlord shall proceed with due diligence to complete both Landlord’s Work and Tenant’s Work (collectively the “Work”) in compliance with
Exhibit “D”
attached hereto, or as otherwise agreed, and tender the Premises to Tenant. The Premises shall be “substantially complete” when all of the Work on the Premises shall have been fully performed, with only such omissions or deviations as are inadvertent and unintentional, and are remediable without impairing the intended use of the Premises. The Premises shall be deemed to be ready for occupancy when Landlord certifies in writing to Tenant that Landlord has substantially completed the Work and Landlord has in fact substantially completed the Work to such point that Tenant may immediately occupy the premises and commence its intended business operations (“Substantial Completion”). Tenant shall promptly inspect the Work and accept same if in compliance with the terms hereof (“Acceptance”), which shall not be unreasonably withheld, conditioned or delayed. All construction work done by Landlord shall be performed in a good and workmanlike manner, in compliance with all governmental requirements, and in accordance with the description of the Work in
Exhibit “D.”
If approved in writing by Tenant, any costs for tenant finish-out in excess of the Landlord’s building standard shall be borne by Tenant. If deemed reasonably necessary, specific construction details will be memorialized in a letter agreement between Landlord and Tenant prior to commencement of construction, which will form part of
Exhibit “D”
to this Lease.
2.
At the end or other Termination of this Lease, Tenant shall deliver up the Premises with all improvements located thereon (except as otherwise herein provided) in as good repair and condition as when delivered to or constructed by Tenant, reasonable wear and tear excepted. Tenant may remove its equipment and fixtures installed by it but must repair any damage occasioned by such removal if requested by Landlord.
Section 6.07
Signs
. Tenant may not erect signs on the Premises without Landlord’s prior written approval, which may be withheld in Landlord’s sole discretion. Landlord shall provide a Building standard sign to identify Tenant’s Premises at a location designated by Landlord in the same size and style as provided for tenants occupying similar space.
Section 6.08
Security System
. Landlord has installed a security system that monitors exterior doors and motion detectors for interior common areas. The cost of monitoring, maintaining, replacing, expanding or enhancing the system shall be paid by Landlord and included in the Building Cost.
Landlord will not provide security equipment or monitoring services for the Leased Premises. Tenant, at Tenant’s sole cost and expense, may install a security system within the Leased Premises. No additional security equipment or systems may be installed by Tenant without Landlord’s prior written approval both as to the equipment and the subcontractor providing installation services, such approval to be given or withheld in Landlord’s reasonable discretion. In the event Landlord gives approval for installation of additional security equipment by Tenant, Landlord assumes no responsibility or liability for its operation, maintenance, monitoring or malfunction. Tenant agrees to be responsible for the damages caused to the Leased Premises or the Building upon removal of such security equipment. Tenant shall provide Landlord with necessary access codes, passwords and operating instructions of any security equipment installed by Tenant and shall notify Landlord within twenty-four (24) hours of any change in this information. This information shall be deemed confidential information of Tenant and shall not be disclosed by Landlord to anyone without prior approval of Tenant.
Landlord will provide Tenant with appropriate codes and operating instructions to access the Common Areas of the Building. This information shall be deemed confidential information of Landlord and shall not be disclosed by Tenant to anyone without prior approval of Landlord. Tenant shall designate one (I) person to receive the access code on behalf of Tenant.
The security system provided by Landlord is intended as a deterrent, only, to criminal activity and nothing more. Landlord expressly disclaims all responsibility for the proper operation or malfunction of any security equipment and Landlord shall not be held liable by Tenant and its agents, servants, directors, officers, members, partners, shareholders, employees and invitees for claims of loss or injury to property or person due to the failure of said equipment or its failure to prevent a loss, damage, or injury even if caused by the express or sole negligence of Landlord in connection with the security system.
ARTICLE 7
Damage or Destruction
Section 7.01
Damage or Destruction
. If at any time during the Term the Premises shall be damaged or destroyed by fire or other casualty, and such damage or destruction cannot be repaired within ninety (90) days following the date of the damage or destruction, then Landlord or Tenant shall have the election to terminate this Lease. If the Lease is not terminated, Landlord shall repair and reconstruct the Premises to substantially the same condition in which it existed immediately prior to such damage or destruction, except that Landlord shall not be required to repair or reconstruct any personal property, furniture, trade fixtures, office equipment which are located in the Premises and removable by Tenant under the provisions of this Lease.
In any of the aforesaid circumstances, Base Rent shall abate proportionately during the period and to the extent that the Premises are unfit for use by Tenant in the ordinary conduct of its business, provided, however, that if the damage is caused by the negligence or willful misconduct of Tenant or Tenants’ agents, invitees, licensees, employees or contractors there shall be no abatement of Base Rent.
ARTICLE 8
Assignment and Subletting
Section 8.01
Assignment and Subletting
. Tenant shall not assign this Lease or sublease the Premises or any part thereof without the prior express written consent of Landlord, which consent may be withheld in Landlord’s sole discretion. Notwithstanding the forgoing restriction however, Tenant shall have the one time right, during the initial term of the lease, to assign the lease to Fuse Medical, Inc., a ________ corporation (“Fuse”), without the necessity of obtaining prior approval. In the event of an assignment to Fuse, Tenant shall provide Landlord with at least fourteen (14) days prior notice and provide Landlord with a copy of the assignment instrument.
ARTICLE 9
Default Provisions
Section 9.01
Default
.
1.
Each of the following shall be deemed an “Act of Default” by Tenant and a material breach of this Lease.
(a)
If any installment of Rent or any other sum owed by the Tenant under this Lease has not been paid when due, and such failure continues for five (5) business days after written notice to Tenant specifying the failure, provided, however, Tenant shall not be entitled to more than two (2) such notices in a calendar year.
(b)
Whenever Tenant shall do, or permit to be done, whether by action or inaction, anything contrary to any covenant or agreement on the part of the Tenant herein contemplated or shall fail in the keeping or performance of any of the covenants, agreements, terms, or provisions contained in this Lease which on the part or behalf of Tenant are to be kept or performed (other than those referred to in the foregoing subsection (1)(a) of this Section 9.01) and Tenant shall fail to remedy the same within twenty (20) days after Landlord shall have given to Tenant notice specifying the same, unless such default cannot be cured in twenty (20) days, in which event Tenant shall have a commercially reasonable time within which to cure such default.
2.
Upon occurrence of an Act of Default hereunder, Landlord, at any time thereafter, and without waiving any other rights hereunder or available to Landlord at law or in equity, shall have the option, in its sole discretion, to do any one or more or all of the following.
(a)
Continue this Lease in full force and effect and collect, by legal proceedings or otherwise, each installment of Base Rent and any other charges payable to Landlord hereunder at any time after the same becomes due, and to enforce, by legal proceedings or otherwise, every term and provision of this Lease; or
(b)
Terminate the Lease by written notice to Tenant.
In the event Landlord elects to terminate the Lease by reason of an Act of Default, Landlord may instead hold Tenant liable for all Rent and other indebtedness accrued to the date of such termination, plus such Rent and other indebtedness as would otherwise have been required to be paid by Tenant to Landlord during the period following termination of the Term measured from the date of such termination by Landlord until the date of expiration stated herein (had Landlord not elected to terminate the Lease on account of such Act of Default) diminished by any net sums thereafter received by Landlord through re-letting the Premises during said period (after deducting expenses incurred by Landlord as provided herein). Actions to collect amounts due by Tenant provided for in this paragraph may be brought from time to time by Landlord during the aforesaid period, on one or more occasions, without the necessity of Landlord’s waiting until expiration of such period; and in no event shall Tenant be entitled to any excess of Rent (or Rent plus other sums) obtained by re-letting over and above the Rent provided for in this Lease.
3.
In the event that Landlord elects to repossess the Premises without terminating the Lease, then Tenant shall be liable for and shall pay to Landlord at Fort Worth, Tarrant County, Texas, all rent and other indebtedness accrued to the date of such repossession, plus Rent required to be paid by Tenant to Landlord during the remainder of the Term until the date of expiration of the Term, diminished by any net sums thereafter received by Landlord through re-letting the Premises during said period (after deducting expenses incurred by Landlord). In no event shall Tenant be entitled to any Rent herein reserved. Actions to collect amounts due by Tenant as provided in this paragraph may be brought from time to time, on one or more occasions, without the necessity of Landlord’s waiting until expiration of the Term.
4.
Tenant agrees that Landlord shall use reasonable efforts to mitigate its damages in the event of Tenant’s default, but Landlord shall have no obligation to exercise any preferential treatment with respect to the Premises if other space is available in the Building or at other property owned by Landlord.
Section 9.02
Surrender of Premises
. Upon any termination or expiration of this Lease, Tenant shall peaceably quit and surrender the Premises to Landlord in the same condition as received, reasonable wear and tear excepted, and Landlord may without further notice enter upon, re-enter, possess and repossess itself thereof, by force, summary proceedings, ejectment, or otherwise, and Landlord may dispose and remove Tenant from the Premises.
ARTICLE 10
Encumbrances
Section 10.01
Encumbrances, Nondisturbance, Attornment
. Tenant’s rights shall be subordinate to the lien of any mortgage or deed of trust in force or later placed against the Building and to all advances made upon the security thereof. However, the mortgagee or beneficiary named in the mortgage or deed of trust shall agree that Tenant’s peaceable possession of the Leased Premises shall not be disturbed if Tenant is not in default of this Lease. Tenant agrees to execute a mutually acceptable agreement evidencing the provisions hereof if requested to do so by Landlord.
ARTICLE 11
Miscellaneous
Section 11.01
Performance of Tenant’s Obligations
. Should Tenant fail to perform any of its obligations hereunder, Landlord shall have, in addition to the other rights of Landlord hereunder, and without waiving any default by Tenant, the right, but not the obligation, to perform or attempt to perform such obligations. Tenant shall reimburse any payments made by Landlord upon demand, together with interest thereon at the rate of ten percent (10%) per annum.
Section 11.02
Survival
. The obligations of Tenant arising, accruing, or occurring under this Lease, to the extent based upon events occurring upon or prior to the expiration or termination of this Lease shall survive the expiration or termination of this Lease.
Section 11.03
Notice
. Any notice, communication, request, reply, or advise, or duplicate thereof (hereinafter severally and collectively called “Notice”), in this Lease provided or permitted to be given, made, or accepted by either party to or from the other party must be in writing. Notice given by depositing the same in the United States mail postage pre-paid, registered or certified, and addressed to the party to be notified, with return receipt requested, shall be effective two (2) days after deposit in the U.S. Mail. Notice given in any other manner shall be effective only if and when received by the party to be notified. For the purposes of notice the address of the parties shall, until changed as hereinafter provided, be as follows:
|
|
If to Landlord:
|
BC Legacy Management, LLC
|
|
|
4770 Bryant Irvin Court, Suite 100
|
|
|
If to Tenant:
|
JAR Financial, LLC
|
|
|
4770 Bryant Irvin Court, Suite 300
|
|
|
With copy to:
|
Lee F. Christie
|
|
|
Pope, Hardwicke, Christie, Schell Kelly & Ray, L.L.P.
|
|
|
306 W. 7th St., Suite 901
|
|
|
Fort Worth, Texas 76102-4995
|
The parties hereunto and their respective successors and assigns shall have the right from time to time and at any time to change their respective addresses and each shall have the right to specify as its address any other address within the State of Texas upon at least fifteen (15) days written notice to the other party, with specific reference to this Lease.
Section 11.04
Non-Waiver
. No waiver or waivers by either party of any breach, default, liability, or performance by the other party shall be deemed or construed a waiver of any other Term, condition, or liability or the breach of default thereof. Acceptance by Landlord of Rent payable under this Lease shall not constitute a waiver of any breach or default under this Lease. Failure on the part of either party to complain of any action or inaction on the part of the other party or to declare the other in default, no matter how long such failure may continue, shall not be deemed to be a waiver by such party or any of its rights hereunder.
Section 11.05
Landlord’s Right to Inspect
. With reasonable advance notice Landlord or its agent shall have access to the Premises at any and all reasonable times for the purposes of inspecting the Premises.
Section 11.06
Holding Over
. Should Tenant hold the Premises after termination of this Lease, by lapse of time or otherwise, such holding over shall be construed as a tenancy from month to month only, and Tenant shall pay in advance, as Rent, for each month of such holding, two hundred percent (200%) of the Rent payable for the last month of the Lease Term and otherwise subject to all conditions, provisions, and obligations of this Lease.
Section 11.07
Severability
. If any clause or provision of this Lease is or shall become illegal, invalid, or unenforceable because of present or future laws or any rule or regulation of any governmental body or entity, effective during the Term, the intention of the parties hereto is that the remaining parts of this Lease shall not be affected thereby.
Section 11.08
Force Majeure
. Landlord shall not be required to perform any term, condition or covenant in this Lease so long as such performance is delayed or prevented by “Force Majeure,” which shall mean Acts of God, strikes, lockouts, material or labor restrictions by any governmental authority, civil riot, floods, and any other cause not reasonably within the control of Landlord, and which by the exercise of due diligence Landlord is unable, wholly or in part, to prevent or overcome.
Section 11.09
Successors
. The terms, conditions and covenants contained in this Lease, shall apply to, inure to the benefit of, and be binding upon the parties hereto and their respective successors in interest and legal representatives except as otherwise herein expressly provided.
Section 11.10
Heading and Construction
. The headings which have been used throughout this Lease have been inserted for convenience of reference only and do not constitute matters to be construed in interpreting this Lease.
Section 11.11
Terminology
. Wherever required by the context, any gender shall include any other gender, the singular shall include the plural, and the plural shall include the singular.
Section 11.12
Attorneys’ Fees
. Any signatory to this Lease who is the prevailing party in any legal proceeding against any other signatory brought under or with relations to this Lease or transaction shall be additionally entitled to recover court costs and reasonable attorneys’ fees from the non-prevailing party.
Section 11.13
Time of the Essence
. In all instances where a party is required hereunder to pay any sum or do any act at a particular indicated time or within an indicated period, it is understood that time is of the essence.
Section 11.14
Law
. This Lease shall be construed under and in accordance with the laws of the State of Texas, and venue of any proceeding related hereto shall be in the State District, Justice of the Peace or County courts of Tarrant County, Texas.
Section 11.15
Agent
. Landlord and Tenant may be represented by an agent or broker. Any commission due shall be made pursuant to a separate written agreement. Each party agrees to fully comply with any commission agreement to which they are bound and shall indemnify the other against the claims of any agent or broker that makes a claim of entitlement to a commission from the indemnifying party.
Section 11.16
Leases to Competitors of Tenant
. [Intentionally deleted.]
Section 11.17
Entire Agreement
. This Lease contains the entire agreement of the parties hereto with respect to the Lease of the Premises. This Lease may not be modified or amended orally or in any manner other than by an agreement in writing, signed by Landlord and Tenant.
Section 11.18
Landlord Representation
. Except for paragraph 2.01 (“Term”), Section 2.03 (“Right of First Refusal”), Section 3.02 (1) (“Additional Rent”), Section 8.01 (“Assignment”), Exhibit B, Exhibit D and the identification of the leased Premises and Parties, the terms and conditions of this Lease are identical to the lease signed by Conglomerate Gas II, LP for Suite 400, dated October 1, 2006 (“Suite 400Lease”). In the event that the terms of the leases should conflict, other than those mentioned in the preceding sentence, the terms of the Suite 400 Lease will control.
IN WITNESS WHEREOF, this Lease is hereby executed effective as of the date set forth above.
|
LANDLORD.
|
BC Legacy Management, LLC,
a Texas limited liability company
|
|
|
|
|
|
|
|
|
By:
|
/s/ Edmond L. Bradshaw
|
|
|
|
Name:
|
Edmond L. Bradshaw
|
|
|
|
Title:
|
Member
|
|
|
|
|
|
|
|
|
|
|
|
TENANT.
|
JAR Financial, LLC,
a Delaware limited liability company,
|
|
|
|
|
|
|
|
|
By:
|
/s/ D. Alan Meeker
|
|
|
|
Name:
|
D. Alan Meeker
|
|
|
|
Title:
|
Manager
|
|
EXHIBIT “A”
|
|
|
|
|
|
EB
|
|
AM
|
|
|
|
Initial
|
|
Initial
|
|
Gross Rentable Square Feet = Useable Square Feet X 1.2
As used in this Lease
:
Gross Rentable Square Feet = 1310 X 1.2
Gross Rentable Square Feet = 1572
Total Gross Rentable Square Feet for Building = 7,708
Tenant’s Pro Rata Share = 20.4 % (1572/7708= 0.20394)
|
Rental Rate
:
|
Year 1
|
$ 19.00
|
|
|
Year 2
|
$ 19.00
|
EXHIBIT “C”
RULES AND REGULATIONS
|
1.
|
Landlord agrees to furnish Tenant two (2) keys without charge. Additional keys will be furnished at a nominal charge. Tenant shall not change or re-key any lock on any door within the Premises without first obtaining the written permission of Landlord. In the event such permission is granted, Tenant shall deliver to Landlord two (2) sets of any new keys as a result of the change.
|
|
2.
|
Tenant will refer all contractors, contractor’s representatives and installation technicians rendering any service on or to the Premises for Tenant, to Landlord for Landlord’s approval before performance of any contractual service. This provision shall apply to all work performed on or about the premises, including installation of telephones, telegraph equipment, electrical devices and attachments and installations of any nature affecting floors, walls, woodwork, trim, windows, ceilings and equipment or any other physical portion of the Premises or project.
|
|
3.
|
Tenant shall not at any time occupy any part of the Premises as sleeping or lodging quarters.
|
|
4.
|
Tenant shall not place, install or operate on the Premises or in any part of the Building or project, any engine, stove or machinery, or conduct mechanical operations or cook thereon or therein, or place or use in or about the Premises or project any explosives, gasoline, kerosene, oil, acids, caustics, or any flammable, explosive or hazardous material without written consent of Landlord.
|
|
5.
|
Landlord will not be responsible for lost or stolen personal property, equipment, money or jewelry from the Premises or the project regardless of whether such loss occurs when the area is locked against entry or not.
|
|
6.
|
No dogs, cats, fowl, or other animals shall be brought into or kept in or about the Premises or project.
|
|
7.
|
None of the parking, plaza, recreation or lawn area, entries, passages, doors, elevators, hallways or stairways shall be blocked or obstructed, or any rubbish, litter, trash or material of any nature placed, emptied or thrown into these areas or such areas be used by Tenant’s agents, employees or invitees at any time for purposes inconsistent with their designation by Landlord. All garbage and refuse shall be kept in the kind of container specified by Landlord, and shall be placed outside of the Premises prepared for collection in the manner and at the times and places specified by Landlord.
|
|
8.
|
The water closets and other water fixtures shall not be used for any purpose other than those for which they were constructed, and any damage resulting to them from misuse, or by the defacing or injury of any part of the Premises or project shall be borne by the person who shall occasioned it. No person shall waste water by interfering with the faucets or otherwise.
|
|
9.
|
No person shall disturb occupants of the Building or project by the use of any radios, record players, tape recorders, musical instruments, the making of unseemly noises, or any unreasonable use.
|
|
10.
|
Nothing shall be thrown out of the windows of the Building or down the stairways or other passages.
|
|
11.
|
Tenant and its employees, agents and invitees shall park their vehicles only in those parking areas designated by Landlord. Tenant shall furnish Landlord with state automobile license numbers of Tenant’s vehicles and its employees’ vehicles within five days after taking possession of the Premises and shall notify Landlord of any changes within five days after such change occurs. Tenant shall not leave any vehicle in a state of disrepair (including without limitation, flat tires, out of date inspection stickers or license plates) on the Premises or any part of the property or project. If Tenant or its employees, agents or invitees park their vehicles in areas other than the designated parking areas or leave any vehicle in a state of disrepair, Landlord, after giving written notice to Tenant of such violation, shall have the right to remove such vehicles at Tenant’s expense.
|
|
12.
|
Movement in or out of the Building or project of furniture, office supplies, equipment, merchandise or any material, which requires use of stairways, driveways or alleys, shall be restricted to hours designated by Landlord. All such movement shall be carried out in the manner agreed between Tenant and Landlord by prearrangement before performance. Such prearrangement will include determination by Landlord of time, method, and routing of movement and limitations imposed by safety or other concerns which may prohibit any article, equipment or any other item from being brought into the Building or project. Tenant assumes, and shall indemnify Landlord against, all risks and claims of damage to persons and properties arising in connection with any said movement.
|
|
13.
|
Tenant shall use the pest extermination contractor as Landlord may direct and at such intervals as Landlord may require. The cost of such service will be a part of the general maintenance of the Building and assessed in conjunction with the Building Costs. It shall be Tenant’s responsibility to notify Landlord about any medical condition related to Tenant or Tenant’s employees which may result in an adverse reaction by the individual to pest control products.
|
|
14.
|
It is Landlord’s desire to maintain the project with the highest standard of dignity and good condition consistent with comfort and convenience for Tenants. Any action or condition not meeting this high standard should be reported directly to Landlord. Your cooperation will be mutually beneficial and sincerely appreciated. Landlord reserves the right to make such other and further reasonable rules and regulations as in its judgment may from time to time be necessary, for the safety, care and cleanliness of the Premises, and for the preservation of good order therein.
|
|
15.
|
Tenant agrees to not store any personal property of Tenant outside of Premises.
|
|
16.
|
All interior portions of the Building are designated
NON SMOKING AREAS
. Smoking will only be permitted along the rear, or West, side of the Building and in the enclosed patio on the south side of the Building (for tenants and guests of Suites 100 and 200 only). All debris and waste from the use of tobacco products shall be deposited in appropriate containers and shall not be allowed to collect on the ground or create litter of any sort.
|
|
17.
|
The Common Areas of the Building are for use by all Tenants. No Tenant may attempt to use a Common Area for its exclusive use without Landlord’s prior written approval, which may be withheld in Landlord’s sole discretion. For purposes of this paragraph, the term “Common Areas” shall include only the following areas on the ground floor of the Building: the interior hallways, break room, restrooms, exterior sidewalks outside of the fenced patios and all parking areas. The fenced patio on the North side of the Building is intended for the mutual use of Tenants occupying suites 300 and 400 only. The fenced patio on the South side of the Building is intended for the mutual use of Tenants occupying suites 100 and 200 only. The Tenants occupying these respective suites shall cooperate with one another in the common use of the patios. Failure to cooperate with a Tenant in the use of a patio may result in the loss of use, in the sole discretion of Landlord, without adjustment to rent. Tenants shall not hold any type of party, meeting, function or other type of gathering which requires use of the Common Areas without Landlord’s prior written approval. Such requests shall be made to Landlord in writing no less than 3 business days in advance of the requested event.
|
|
18.
|
The common area break room is available to all Tenants and their employees on a non exclusive basis. Tenants may store their own personal property in the break room such as plates, glasses, cups, silverware and food items with due consideration for the rights of the other Tenants. Landlord shall not be responsible for loss or damage to Tenant’s personal property left in the break room. Tenants shall not make use of the personal property of other Tenants without express permission. Each Tenant shall be responsible for leaving the break room in a clean and orderly fashion, on a daily basis, as a result of their use of the area.
|
EXHIBIT “D”
WORK LETTER
Except as expressly provided below, and elsewhere in the Lease, Landlord shall deliver the Premises to Tenant in AS-IS, WHERE-IS condition and Landlord shall have no obligation to construct leasehold improvements to the Premises. Notwithstanding the foregoing, Landlord shall deliver the Premises to Tenant upon Substantial Completion of the Landlord’s Work and Tenant’s Work (collectively the “Work”) in a clean condition and free of all furniture and equipment.
LANDLORD’S WORK
Landlord, at Landlord’s sole cost and expense, agrees to perform the following work to the Leased Premises before delivering possession thereof to Tenant:
|
1.
|
Landlord shall provide the construction of 2 additional offices and expand the closet area to Suite 300 as shown on the floor plan attached hereto as Exhibit D-1.
|
|
2.
|
Standard building finish out shall consist of:
|
a. Sheetrock partition walls with tape, bed, paint and spray-on texture;
b.
Acoustical drop-in ceiling identical to common areas of the Building;
c.
Stained wood doors, door frames, window trim and sills and base mold;
d.
Door hardware to match Building;
e.
Fluorescent lighting to match common areas;
f. Standard electrical package including switches, plugs, wiring and fuse panel;
g.
HVAC connection, ducting, thermostat, registers and returns as appropriate to accommodate space;
h.
Existing Commercial grade carpet and pad;
i.
Stained 2 in. wood blinds on all windows to match Building;
j.
Two (2) glass break detectors;
|
3.
|
Notwithstanding paragraph 2 above, Landlord shall provide finish-out of wall, ceiling tiles and molding to match existing materials.
|
|
4.
|
Landlord’s total cost and expense for the Work shall not exceed $14,000 (“Tenant Improvement Cap”). Any amounts in excess of the Tenant Improvement Cap shall be borne by Tenant.
|
EXHIBIT “D-1”
EXHIBIT 10.8
AGREEMENT
This Agreement (the “
Agreement
”) is entered into as of this 27th day of November, 2013, by and among Fuse Medical, LLC, a Delaware limited liability company (“
Fuse LLC
”), and Fuse Management V, LLC (“
Fuse V
”) and Fuse Management VI, LLC (“
Fuse VI
” and, together with Fuse V, the “
Fuse GPs
”).
Recitals
:
A. Fuse V is the general partner of Fuse Medical V, LP (“
V LP
”) and holds a 1% partnership interest in V LP (the “
V GP Interest
”). Fuse VI is the general partner of Fuse Medical VI, LP (“
VI LP
”) and holds a 1% partnership interest in VI LP (the “
VI GP Interest
”).
B. Fuse LLC is negotiating an Agreement and Plan of Merger (the “
Merger
Agreement
”) with TEEE, pursuant to which a newly-formed subsidiary of TEEE will merge with and into Fuse LLC (the “
Merger
”) with Fuse LLC surviving the Merger as a wholly-owned subsidiary of TEEE. In connection with the Merger, the members of Fuse LLC will receive shares of Common Stock of TEEE representing in the aggregate 90% of the issued and outstanding common stock of TEEE after giving effect to the Merger (the “
Merger
Consideration
”). The Merger Agreement in substantially final form has been provided to the Fuse GPs.
C. The Fuse GPs and Fuse LLC desire that the Fuse GPs surrender their respective V GP Interest and VI GP Interest in V LP and VI LP for no additional consideration effective on and as of the business day immediately prior to the effective time of the Merger, and immediately after the limited partners of V LP and VI LP have exchanged their respective interests for equity in Fuse LLC (such date and time, the “
Effective Date
”). The purpose of the surrender is to cause V LP and VI LP, which are currently affiliates of Fuse LLC, to cease to exist as separate entities by virtue of the contribution and/or surrender of all partnership interests therein to Fuse LLC to facilitate the Merger. The members and managers of the Fuse GPs have significant equity in Fuse LLC and a vested interest in the Merger.
D. The surrender contemplated by this Agreement is subject to and conditioned upon the Merger.
NOW, THEREFORE in consideration of the mutual terms and covenants set forth herein, the parties agree as follows:
Agreements
:
1.
Surrender of Interest; Consents
.
A.
Surrender
. By execution of this Agreement, the Fuse GPs hereby irrevocably surrender the V GP Interest and the VI GP Interest in V LP and VI LP, respectively, to Fuse LLC, effective as of the Effective Date. By this transaction, the Fuse GPs are surrendering to Fuse LLC any and all interest in the V GP Interest and the VI GP Interest.
B.
Consent to Merger
. If and to the extent their consents are necessary or required, the Fuse GPs hereby consent to the Merger and approve the Merger Agreement and the transactions contemplated thereby.
2.
Representations and Warranties of Fuse LLC
. Fuse LLC hereby represents and warrants to the Fuse GPs that this Agreement has been duly executed and delivered by Fuse LLC and constitutes the valid and binding obligation of Fuse LLC enforceable against Fuse LLC in accordance with its terms.
3.
Representations and Warranties of Fuse GPs
. The Fuse GPs hereby represent and warrant to Fuse LLC that this Agreement has been duly executed and delivered by each of them and constitutes a legal, valid and binding obligation of each of them, enforceable against each of them in accordance with its terms.
4.
Release and Waiver
. Effective as of the Effective Date, each of the Fuse GPs, on behalf of itself and its members, managers, affiliates, heirs, executors, successors and assigns (the “
Releasing Parties
”), hereby releases and forever discharges Fuse LLC and its managers, officers, members, employees, agents, successors and assigns (the “
Released Parties
”), from and against any and all rights, claims, demands, judgments, obligations, liabilities and damages, whether accrued or unaccrued, asserted or unasserted, and whether known or unknown, arising out of or resulting from the Releasing Parties’ status as a holder of an equity interest in the V LP and VI LP,
provided
,
however
, the foregoing shall not release any obligations owing to the Releasing Parties under this Agreement. Each of the Releasing Parties acknowledges and agrees that this general release applies to all claims that such party may have against any of the Released Parties, including, but not limited to, causes of action, injuries, damages, claims for costs or losses to any person or property, real or personal, whether those injuries, damages, or losses are known or unknown, foreseen or unforeseen, or patent or latent. The Releasing Parties agree not to file any complaints, causes of action, or grievances with any governmental, state or county entity against any of the Released Parties regarding any of the matters subject of the release.
5.
Miscellaneous
.
A.
TEEE as Third Party Beneficiary
. The Parties acknowledge and agree that this Agreement will be provided by Fuse LLC to TEEE and that TEEE will rely hereon in entering into the Merger Agreement and issuing the Merger Consideration at the closing of the Merger to the members of Fuse LLC. TEEE is an intended third party beneficiary of this Agreement.
B.
No Guarantee of Merger
. Nothing in this Agreement shall require Fuse LLC or TEEE to consummate the Merger, it being understood that the surrender described herein shall not become effective, and shall automatically be terminated, if the Merger is not consummated for any reason.
C.
Confidentiality
. The Fuse GPs acknowledge that the Merger Agreement and the Merger constitute material transactions that have not yet been publicly disclosed by TEEE. Accordingly, they agree to keep this Agreement confidential until such time as the Merger is publicly announced by TEEE, and further agree that they will not purchase any shares of TEEE common stock in advance of the Merger or recommend to any other person or entity that such person or entity purchase or sell such shares.
D.
Entire Agreement
. This Agreement (including the documents referred to herein) constitutes the entire agreement among the parties, and supersedes any prior understandings, agreements, or representations by or among the parties, written or oral, to the extent they related in any way to the subject matter hereof.
E.
Counterparts
. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which together will constitute one and the same instrument.
F.
Governing Law
. This Agreement shall be construed and enforced in accordance with the laws of the State of Delaware, and the parties hereby submit to the exclusive jurisdiction of the state and federal courts located in Tarrant County, Texas in respect of all disputes arising hereunder. Each of the parties agrees that all claims in respect of any dispute may be heard and determined only in such courts, and agrees not to bring any action or proceeding arising out of, or relating to, this Agreement in any other court. Each of the parties waives any defense of inconvenient forum to the maintenance of any action or proceeding so brought.
G.
Amendments and Waivers
. No amendment of any provision of this Agreement shall be valid unless the same shall be in writing and signed by the parties. No waiver by any party of any default, misrepresentation, or breach of warranty or covenant hereunder, whether intentional or not, shall be deemed to extend to any prior or subsequent default, misrepresentation, or breach of warranty or covenant hereunder or affect in any way any rights arising by virtue of any prior or subsequent such occurrence.
H.
Severability
. Any term or provision of this Agreement that is invalid or unenforceable in any situation in any jurisdiction shall not affect the validity or enforceability of the remaining terms and provisions hereof or the validity or enforceability of the offending term or provision in any other situation or in any other jurisdiction.
[signature page follows]
IN WITNESS WHEREOF, the parties hereto executed the foregoing Amended and Restated Agreement effective as of the date set forth above.
|
|
FUSE MEDICAL, LLC.
|
|
|
|
|
|
|
|
|
By:
|
/s/ Jonathan Brown
|
|
|
|
Name:
|
Jonathan Brown
|
|
|
|
Title:
|
Manager
|
|
|
|
|
|
|
|
|
FUSE MANAGEMENT VLLC
|
|
|
|
|
|
|
|
|
By:
|
/s/ Jonathan Brown
|
|
|
|
Name:
|
Jonathan Brown
|
|
|
|
Title:
|
Manager
|
|
|
|
|
|
|
|
|
FUSE MANAGEMENT VILLC
|
|
|
|
|
|
|
|
|
By:
|
/s/ Jonathan Brown
|
|
|
|
Name:
|
Jonathan Brown
|
|
|
|
Title:
|
Manager
|
|
4
EXHIBIT 10.9
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY APPLICABLE STATE SECURITIES LAWS. THE NOTE MAY NOT BE SOLD OR OTHERWISE TRANSFERRED UNLESS (i) A REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND SUCH APPLICABLE STATE SECURITIES LAWS SHALL HAVE BECOME EFFECTIVE WITH REGARD THERETO OR (ii) IN THE OPINION OF COUNSEL IN FORM AND SUBSTANCE REASONABLY ACCEPTABLE TO THE COMPANY, REGISTRATION UNDER THE SECURITIES ACT AND SUCH APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED IN CONNECTION WITH A PROPOSED SALE OR TRANSFER.
FUSE MEDICAL, LLC.
PROMISSORY NOTE
|
$60,000.00
|
December 31, 2013
|
FOR VALUE RECEIVED, FUSE MEDICAL, LLC
, a Delaware limited liability company (the “Company”), hereby promises to pay to the order of JAR, LLC (“Lender”), at the office of Lender located at 4770 Bryant Irvin Court, Suite 400, Fort Worth, Texas 76107 the principal amount of sixty thousand dollars and no cents ($60,000.00), together with interest on the principal balance from time to time outstanding under this note (“Note”) from (and including) the date hereof until (but not including) the date of payment, at a per annum rate equal to the “Stated Interest Rate” specified below or, to the extent applicable, the “Default Interest Rate” specified below, in accordance with the following terms and conditions:
1.
Contracted For Rate of Interest
. The contracted for rate of interest of the indebtedness evidenced hereby shall consist of the following:
(a)
Stated Interest Rate
. The “Stated Interest Rate” shall equal 7.00% per annum applied to the principal balance from time to time outstanding hereunder.
(b)
Default Interest Rate
. The “Default Interest Rate” shall equal 18.00% per annum applied to the principal balance outstanding hereunder. The principal balance outstanding hereunder shall bear interest at the Default Interest Rate from the date of the occurrence of an Event of Default (as hereinafter defined) hereunder until the earlier of (i) the date on which the principal balance outstanding hereunder, together with all accrued interest and other amounts payable hereunder, are paid in full; or (ii) the date on which such Event of Default is timely cured in a manner satisfactory to Lender (A) if the Company is specifically granted a right to cure such Event of Default, or (B) if no such right to cure is specifically granted, then as and to the extent that Lender, in its sole and absolute discretion, permits such Event of Default to be cured.
2.
Payments
. This Note shall be payable as follows:
(a)
Twenty four (24) monthly payments of interest only on the principal balance then-outstanding, due and payable on the 1st day of each month, beginning on July 1, 2014, not to exceed six (6) months from the date hereof (the “Effective Date”); and
(b)
The outstanding principal amount of this Note, together with all accrued but unpaid interest due hereunder, shall be due and payable on December 30, 2015, not to exceed five (5) years from the Effective Date (the “Maturity Date”). Payment of the principal and of interest on this Note is to be made at the offices of Lender or such other place as Lender shall designate in writing to the Company.
3.
Application of Payments
. Payments received by Lender with respect to the indebtedness evidenced hereby shall be applied in such order and manner as Lender in its sole and absolute discretion may elect. Unless otherwise elected by Lender, all such payments shall first be applied to accrued and unpaid interest at the Stated Interest Rate and, to the extent applicable, the Default Interest Rate, next to the principal balance then outstanding hereunder, and the remainder to Additional Sums (as hereinafter defined) or other costs or added charges provided for in this Note.
4.
Prepayments
. Payments of principal hereof may be made at any time, or from time to time, in whole or in part, without penalty, provided that all previously matured interest and other charges accrued to the date of prepayment are also paid in full. Notwithstanding any prepayment of principal hereof, (a) there will be no change in the Maturity Date or amount of payments due hereunder unless Lender, in its sole and absolute discretion, agrees in writing to such change; and (b) the Company’s obligations hereunder shall continue in effect, and this Note shall remain outstanding, unless and until the principal balance outstanding hereunder, together with all accrued interest and other amounts payable hereunder are paid in full and thereafter, and upon the Company’s request, Lender delivers to the Company the original executed copy of this Note, marked “cancelled.”
5.
Events of Default; Acceleration
. The occurrence of any one or more of the following events shall constitute an “Event of Default” hereunder, and upon such Event of Default, the entire principal balance outstanding hereunder, together with all accrued interest and other amounts payable hereunder, at the election of Lender, shall become immediately due and payable, without any notice to the Company, and without presentment, demand, protest or any other notice of any kind, all of which are hereby expressly waived by the Company:
(a)
Nonpayment of principal, interest or other amounts when the same shall become due and payable hereunder, and the Company does not cure such failure to pay within five calendar days after the date such payment is due;
(b)
The failure of the Company to comply with any other provision of this Note and the Company does not cure such non-compliance within ten calendar days after Lender delivers written notice to the Company specifying such failure to comply;
(c)
The dissolution, winding-up or termination of the existence of the Company or any other person or entity that is or may become liable hereunder, or the sale or disposition of substantially all of the assets of the Company’s business or the business of any other person or entity that is or may become liable hereunder, or the merger, consolidation, or reorganization of the Company with or into another entity in a transaction in which the holders of the Company’s outstanding voting securities prior to such to transaction do not hold a majority of the voting securities of the entity that survives such transaction;
(d)
The calling of a meeting of the creditors of the Company or any other person or entity who is or may become liable hereunder;
(e)
The making by the Company or any other person or entity who is or may become liable hereunder of an assignment for the benefit of its creditors; or
(f)
The appointment of (or application for appointment of) a receiver of the Company or any other person or entity who is or may become liable hereunder; or the voluntary filing by the Company, or any other person or entity who is or may become liable hereunder, of a petition or application for relief under federal bankruptcy law or any similar state or federal law; or the involuntary filing against the Company, or any other person or entity who is or may become liable hereunder, of a petition or application for relief under federal bankruptcy law or any similar state or federal law that is not stayed or dismissed within 90 days of filing; or the issuance of any writ of garnishment, execution or attachment for service with respect to the Company or any person or entity who is or may become liable hereunder or any property of the Company or property of any person or entity who is or may become liable hereunder.
6.
Additional Sums
. The Company agrees to pay an effective contracted for rate of interest equal to the rate of interest resulting from all interest payable as provided in this Note, plus the additional rate of interest resulting from the “Additional Sums,” as defined in the next sentence. All fees, charges, goods, things in action or any other sums or things of value, other than the interest resulting from the Stated Interest Rate and the Default Interest Rate, as applicable, paid or payable by the Company (collectively, the “Additional Sums”), whether pursuant to this Note or any other document or instrument in any way pertaining to this transaction, or otherwise with respect to this transaction, that, under the laws of the State of Texas, may be deemed to be interest with respect to this transaction, for the purpose of any laws of the State of Texas that may limit the maximum amount of interest to be charged with respect to this transaction, shall be payable by the Company as, and shall be deemed to be, additional interest, and for such purposes only, the agreed upon and “contracted for rate of interest” of this transaction shall be deemed to be increased by the rate of interest resulting from the Additional Sums. The Company understands and believes that this transaction complies with the usury laws of the State of Texas; however, if any interest or other charges in connection with this transaction are ever determined to exceed the maximum amount permitted by law, then the Company agrees that (a) the amount of interest or charges payable pursuant to this transaction shall be reduced to the maximum amount permitted by law; and (b) any excess amount previously collected from the Company in connection with this transaction that exceeded the maximum amount permitted by law shall be credited against the principal balance then outstanding hereunder, if the outstanding principal balance hereunder has been paid in full, the excess amount paid will be refunded to the Company.
7.
Waivers
. Except as set forth in this Note, to the extent permitted by applicable law, the Company, and each person who is or may become liable hereunder, severally waives and agrees not to assert (a) demand, diligence, grace, presentment for payment, protest, or notice of nonpayment, nonperformance, extension, dishonor, maturity, protest, acceleration, and default; and (b) recourse to guaranty or suretyship defenses (including, without limitation, the right to require the Lender to bring an action on this Note). No failure to accelerate the debt evidenced hereby by reason of default hereunder, acceptance of a past-due installment, or other indulgence granted from time to time shall be construed as a novation of this Note or as a waiver of such right of acceleration or of the right of Lender thereafter to insist upon strict compliance with the terms of this Note or to prevent the exercise of such right of acceleration or any other right granted hereunder or by applicable law. Lender may extend the time for payment of or renew this Note, or release any party from liability hereunder, and any such extension, renewal, release or other indulgence shall not alter or diminish the liability of the Company or any other person or entity who is or may become liable on this Note except to the extent expressly set forth in a writing evidencing or constituting such extension, renewal, release or other indulgence. No delay or failure of Lender in exercising any right hereunder shall affect such right, nor shall any single or partial exercise of any right preclude further exercise thereof.
8.
Subordination
. The indebtedness evidenced by this Note, including the principal hereof and interest hereon, is expressly subordinate and subject in right of payment to the prior payment in full of all “Senior Indebtedness,” whether now outstanding or hereafter incurred. The term “Senior Indebtedness” shall mean the principal of and premium, if any, and interest on (a) indebtedness (other than this Note) of the Company for money borrowed from or guaranteed to individuals or other persons, firms or corporations that engage in lending money, including, but without limitation, banks, trust companies, insurance companies and other financing institutions and charitable trusts, pension trusts and other investing organizations, evidenced by notes or similar obligations; (b) indebtedness of the Company evidenced by notes or debentures (other than this Note) issued under the provisions of an indenture or similar instrument between the Company and a bank or trust company; and (c) indebtedness incurred, assumed or guaranteed by the Company in connection with the acquisition by it or a subsidiary of any property or asset intended to be leased or sold to others in the ordinary course of the business of the Company or such subsidiary; unless, in each case, by the terms of the instrument creating or evidencing the indebtedness it is expressly provided that such indebtedness is not superior in right of payment to this Note.
9.
Securities Laws; Accredited Investor
.
(a)
Status Under Securities Laws
. Lender acknowledges and agrees as follows:
(i)
Restricted Securities
. This Note is a “restricted security” within the meaning of Rule 144 under the Securities Act of 1933 (the “1933 Act”). Lender acknowledges and agrees that it is acquiring this Note without a view to the public distribution or resale in violation of applicable federal or state securities laws.
(ii)
No Registration
. This Note has not been registered under the 1933 Act or the securities laws of any other jurisdiction and must be held indefinitely without any transfer, sale or other disposition unless it is subsequently registered under the 1933 Act and the securities laws of any other applicable jurisdiction or, in the opinion of counsel to the Company, registration is not required under such acts or laws as the result of an available exemption. The Company is under no obligation to register this Note under the 1933 Act or the securities laws of any other jurisdiction or to take any action that would make available any exemption from such registration.
(iii)
Restriction on Other Securities
. Except upon certain limited circumstances, the restrictions on the transfer of this Note will also apply to any and all shares of capital stock or other securities issued or otherwise acquired with respect thereto including, without limitation, shares and securities issued or acquired as a result of any stock dividend, stock split or exchange or any distribution of shares or securities pursuant to any corporate reorganization, reclassification or similar event.
(iv)
Refusal to Transfer
. The Company may refuse to effect a transfer, sale or other disposition of this Note by the Lender or its successors or assigns otherwise than as contemplated hereby.
(b)
Accredited Investor
. The Lender is an accredited investor within the meaning of Regulation D promulgated under the 1933 Act.
10.
Miscellaneous
.
(a)
Severability
. If any provision hereof is invalid or unenforceable, the other provisions hereof shall remain in full force and effect and shall be construed so as to effectuate the other provisions hereof.
(b)
Amendment
. This Note may not be changed, modified or terminated, nor may any provision of this Note be waived except by an agreement in writing signed by the party to be charged.
(c)
Binding Nature of Agreement; Assignment
. The provisions of this Note shall be binding upon the Lender and the Company, and shall inure to the benefit of and bind the respective successors and assigns of the Lender and the Company. Neither the Company nor the Lender may assign or transfer this Note or assign or delegate any of its respective rights or obligations hereunder without the prior written consent of the other party in each instance.
(d)
Collection Costs and Expenses
. The Company agrees to pay all costs of collection, including, without limitation, attorneys’ fees, whether or not suit is filed, and all costs of suit and preparation for suit (whether at trial or appellate level), in the event any payment of principal, interest, or other amount is not paid when due, or if at any time the Lender should incur any attorneys’ fees in any proceeding under any federal bankruptcy law (or any similar state or federal law) in connection with the obligations evidenced hereby. In the event of any court proceeding, court costs and attorneys’ fees shall be set by the court and not by the jury and shall be included in any judgment obtained by the Lender.
(e)
Time of Essence
. Time is of the essence of this Note and each and every provision hereof.
(f)
Controlling Law
. This Note and all questions relating to its validity, interpretation, performance, and enforcement shall be governed by and construed in accordance with the laws of the State of Texas, notwithstanding any Texas or other conflict-of-law provisions to the contrary.
(g)
Notices
. All notices, requests, demands and other communications required or permitted under this Agreement shall be in writing and shall be deemed to have been duly given, made, and received (i) when delivered against receipt; (ii) upon receipt of a facsimile transmission; (iii) one day following the day of deposit thereof, with delivery charges prepaid, with a national overnight delivery service; or (iv) three business days following the day of deposit thereof, with the United States Postal Service, by regular first class, certified or registered mail, return receipt requested, postage prepaid, in each case addressed as set forth below:
(i)
If to the Company:
Fuse Medical LLC.
4770 Bryant Irvin Court, Suite 300
Fort Worth, TX 76107
Attention: Jonathan Brown, Manager
Telephone: (817) 439-7025
Facsimile: (817) 887-1730
E-mail:
jbrown@
fusemedical
.com
(ii)
If to Lender:
JAR, LLC
4770 Bryant Irvin Court, Suite 400
Fort Worth, Texas 76107
Attention: Alan Meeker, Manager
Phone: 817-348-0010 x 101
Fax: 817-887-1269
E-mail:
aIan@
cviewgroup
.com
Either party may alter the address to which communications or copies are to be sent by giving notice of such change of address in conformity with the provisions of this paragraph for the giving of notice.
(h)
Section Headings
. The section headings in this Note are for convenience only; they form no part of this Note and shall not affect its interpretation.
(i)
Number of Days
. In computing the number of days for purposes of this Note, all days shall be counted, including Saturdays, Sundays and holidays; provided, however, that if the final day of any time period falls on a Saturday, Sunday or holiday, then the final day shall be deemed to be the next day which is not a Saturday, Sunday or holiday.
(j)
Loss or Destruction of Note
. Upon receipt by the Company of evidence satisfactory to it of the loss, theft, destruction or mutilation of this Note, or in the case of loss, theft or destruction of an indemnity satisfactory to it, and in the case of mutilation, upon surrender and cancellation of this Note, the Company shall execute and deliver a new Note on like tenor and date.
(k)
Construction
. The language of this Note shall be construed as a whole according to its fair meaning. The word “include(s)” means “include(s), without limitation,” and the word “including” means “including, but not limited to.” No inference in favor of, or against, the Company or Lender shall be drawn from the fact that one party has drafted any portion hereof.
IN WITNESS WHEREOF
, the Company has caused this Note to be duly executed as of the date first set forth above.
|
|
FUSE MEDICAL, LLC.
|
|
|
|
|
|
|
|
|
By:
|
/s/ Jonathan Brown
|
|
|
|
|
Printed Name:
Jonathan Brown
|
|
|
|
|
Its: Manager
|
|
8
EXHIBIT 10.10
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY APPLICABLE STATE SECURITIES LAWS. THE NOTE MAY NOT BE SOLD OR OTHERWISE TRANSFERRED UNLESS (i) A REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND SUCH APPLICABLE STATE SECURITIES LAWS SHALL HAVE BECOME EFFECTIVE WITH REGARD THERETO OR (ii) IN THE OPINION OF COUNSEL IN FORM AND SUBSTANCE REASONABLY ACCEPTABLE TO THE COMPANY, REGISTRATION UNDER THE SECURITIES ACT AND SUCH APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED IN CONNECTION WITH A PROPOSED SALE OR TRANSFER.
FUSE MEDICAL, LLC.
PROMISSORY NOTE
FOR VALUE RECEIVED, FUSE MEDICAL, LLC
, a Delaware limited liability company (the “Company”), hereby promises to pay to the order of JAR Financing, LLC (“Lender”), at the office of Lender located at 4770 Bryant Irvin Court, Suite 400, Fort Worth, Texas 76107 the principal amount of sixty-three thousand seven hundred sixty-nine dollars and sixty-three cents ($63,769.63), together with interest on the principal balance from time to time outstanding under this note (“Note”) from (and including) the date hereof until (but not including) the date of payment, at a per annum rate equal to the “Stated Interest Rate” specified below or, to the extent applicable, the “Default Interest Rate” specified below, in accordance with the following terms and conditions:
1.
Contracted For Rate of Interest
. The contracted for rate of interest of the indebtedness evidenced hereby shall consist of the following:
(a)
Stated Interest Rate
. The “Stated Interest Rate” shall equal 7.00% per annum applied to the principal balance from time to time outstanding hereunder.
(b)
Default Interest Rate
. The “Default Interest Rate” shall equal 18.00% per annum applied to the principal balance outstanding hereunder. The principal balance outstanding hereunder shall bear interest at the Default Interest Rate from the date of the occurrence of an Event of Default (as hereinafter defined) hereunder until the earlier of (i) the date on which the principal balance outstanding hereunder, together with all accrued interest and other amounts payable hereunder, are paid in full; or (ii) the date on which such Event of Default is timely cured in a manner satisfactory to Lender (A) if the Company is specifically granted a right to cure such Event of Default, or (B) if no such right to cure is specifically granted, then as and to the extent that Lender, in its sole and absolute discretion, permits such Event of Default to be cured.
2.
Payments
. This Note shall be payable as follows:
(a)
This Note shallbe payable as follows: Eighteen (18) monthly payments of interest only on the principal balance then-outstanding, due and payable on the 1st day of each month, beginning on September 4,2014, six (6) months from the date hereof (the “Effective Date”). The interest accruing in the first six (6) months shall be tolled and payable at Maturity Date; and
(b)
The outstanding principal amount of this Note, together with all accrued but unpaid interest due hereunder, shall be due and payable on March 4, 2016, unless mutually extended by the parties in writing, not to exceed five (5) years from the Effective Date (the “Maturity Date”). Payment of the principal and of interest on this Note is to be made at the offices of Lender or such other place as Lender shall designate in writing to the Company.
3.
Application of Payments
. Payments received by Lender with respect to the indebtedness evidenced hereby shall be applied in such order and manner as Lender in its sole and absolute discretion may elect. Unless otherwise elected by Lender, all such payments shall first be applied to accrued and unpaid interest at the Stated Interest Rate and, to the extent applicable, the Default Interest Rate, next to the principal balance then outstanding hereunder, and the remainder to Additional Sums (as hereinafter defined) or other costs or added charges provided for in this Note.
4.
Prepayments
. Payments of principal hereof may be made at any time, or from time to time, in whole or in part, without penalty, provided that all previously matured interest and other charges accrued to the date of prepayment are also paid in full. Notwithstanding any prepayment of principal hereof, (a) there will be no change in the Maturity Date or amount of payments due hereunder unless Lender, in its sole and absolute discretion, agrees in writing to such change; and (b) the Company’s obligations hereunder shall continue in effect, and this Note shall remain outstanding, unless and until the principal balance outstanding hereunder, together with all accrued interest and other amounts payable hereunder are paid in full and thereafter, and upon the Company’s request, Lender delivers to the Company the original executed copy ofthis Note, marked “cancelled.”
5.
Events of Default; Acceleration
. The occurrence of any one or more of the following events shall constitute an “Event of Default” hereunder, and upon such Event of Default, the entire principal balance outstanding hereunder, together with all accrued interest and other amounts payable hereunder, at the election of Lender, shall become immediately due and payable, without any notice to the Company, and without presentment, demand, protest or any other notice of any kind, all of which are hereby expressly waived by the Company:
(a)
Nonpayment of principal, interest or other amounts when the same shall become due and payable hereunder, and the Company does not cure such failure to pay within five calendar days after the date such payment is due;
(b)
The failure of the Company to comply with any other provision of this Note and the Company does not cure such non-compliance within ten calendar days after Lender delivers written notice to the Company specifying such failure to comply;
(c)
The dissolution, winding-up or termination of the existence of the Company or any other person or entity that is or may become liable hereunder, or the sale or disposition of substantially all of the assets of the Company’s business or the business of any other person or entity that is or may become liable hereunder, or the merger, consolidation, or reorganization of the Company with or into another entity in a transaction in which the holders of the Company’s outstanding voting securities prior to such to transaction do not hold a majority of the voting securities of the entity that survives such transaction;
(d)
The calling of a meeting of the creditors of the Company or any other person or entity who is or may become liable hereunder;
(e)
The making by the Company or any other person or entity who is or may become liable hereunder of an assignment for the benefit of its creditors; or
(f)
The appointment of (or application for appointment of) a receiver of the Company or any other person or entity who is or may become liable hereunder; or the voluntary filing by the Company, or any other person or entity who is or may become liable hereunder, of a petition or application for relief under federal bankruptcy law or any similar state or federal law; or the involuntary filing against the Company, or any other person or entity who is or may become liable hereunder, of a petition or application for relief under federal bankruptcy law or any similar state or federal law that is not stayed or dismissed within 90 days of filing; or the issuance of any writ of garnishment, execution or attachment for service with respect to the Company or any person or entity who is or may become liable hereunder or any property of the Company or property of any person or entity who is or may become liable hereunder.
6.
Additional Sums
. The Company agrees to pay an effective contracted for rate of interest equal to the rate of interest resulting from all interest payable as provided in this Note, plus the additional rate of interest resulting from the “Additional Sums,” as defined in the next sentence. All fees, charges, goods, things in action or any other sums or things of value, other than the interest resulting from the Stated Interest Rate and the Default Interest Rate, as applicable, paid or payable by the Company (collectively, the “Additional Sums”), whether pursuant to this Note or any other document or instrument in any way pertaining to this transaction, or otherwise with respect to this transaction, that, under the laws of the State of Texas, may be deemed to be interest with respect to this transaction, for the purpose of any laws of the State of Texas that may limit the maximum amount of interest to be charged with respect to this transaction, shall be payable by the Company as, and shall be deemed to be, additional interest, and for such purposes only, the agreed upon and “contracted for rate of interest” of this transaction shall be deemed to be increased by the rate of interest resulting from the Additional Sums. The Company understands and believes that this transaction complies with the usury laws of the State of Texas; however, if any interest or other charges in connection with this transaction are ever determined to exceed the maximum amount permitted by law, then the Company agrees that (a) the amount of interest or charges payable pursuant to this transaction shall be reduced to the maximum amount permitted by law; and (b) any excess amount previously collected from the Company in connection with this transaction that exceeded the maximum amount permitted by law shall be credited against the principal balance then outstanding hereunder, if the outstanding principal balance hereunder has been paid in full, the excess amount paid will be refunded to the Company.
7.
Waivers
. Except as set forth in this Note, to the extent permitted by applicable law, the Company, and each person who is or may become liable hereunder, severally waives and agrees not to assert (a) demand, diligence, grace, presentment for payment, protest, or notice of nonpayment, nonperformance, extension, dishonor, maturity, protest, acceleration, and default; and (b) recourse to guaranty or suretyship defenses (including, without limitation, the right to require the Lender to bring an action on this Note). No failure to accelerate the debt evidenced hereby by reason of default hereunder, acceptance of a past-due installment, or other indulgence granted from time to time shall be construed as a novation of this Note or as a waiver of such right of acceleration or of the right of Lender thereafter to insist upon strict compliance with the terms of this Note or to prevent the exercise of such right of acceleration or any other right granted hereunder or by applicable law. Lender may extend the time for payment of or renew this Note, or release any party from liability hereunder, and any such extension, renewal, release or other indulgence shall not alter or diminish the liability of the Company or any other person or entity who is or may become liable on this Note except to the extent expressly set forth in a writing evidencing or constituting such extension, renewal, release or other indulgence. No delay or failure of Lender in exercising any right hereunder shall affect such right, nor shall any single or partial exercise of any right preclude further exercise thereof.
8.
Subordination
. The indebtedness evidenced by this Note, including the principal hereof and interest hereon, is expressly subordinate and subject in right of payment to the prior payment in full of all “Senior Indebtedness,” whether now outstanding or hereafter incurred. The term “Senior Indebtedness” shall mean the principal of and premium, if any, and interest on (a) indebtedness (other than this Note) of the Company for money borrowed from or guaranteed to individuals or other persons, firms or corporations that engage in lending money, including, but without limitation, banks, trust companies, insurance companies and other financing institutions and charitable trusts, pension trusts and other investing organizations, evidenced by notes or similar obligations; (b) indebtedness of the Company evidenced by notes or debentures (other than this Note) issued under the provisions of an indenture or similar instrument between the Company and a bank or trust company; and (c) indebtedness incurred, assumed or guaranteed by the Company in connection with the acquisition by it or a subsidiary of any property or asset intended to be leased or sold to others in the ordinary course of the business of the Company or such subsidiary; unless, in each case, by the terms of the instrument creating or evidencing the indebtedness it is expressly provided that such indebtedness is not superior in right of payment to this Note.
9.
Securities Laws; Accredited Investor
.
(a)
Status Under Securities Laws
. Lender acknowledges and agrees as follows:
(i)
Restricted Securities
. This Note is a “restricted security” within the meaning of Rule 144 under the Securities Act of 1933 (the “1933 Act”). Lender acknowledges and agrees that it is acquiring this Note without a view to the public distribution or resale in violation of applicable federal or state securities laws.
(ii)
No Registration
. This Note has not been registered under the 1933 Act or the securities laws of any other jurisdiction and must be held indefinitely without any transfer, sale or other disposition unless it is subsequently registered under the 1933 Act and the securities laws of any other applicable jurisdiction or, in the opinion of counsel to the Company, registration is not required under such acts or laws as the result of an available exemption. The Company is under no obligation to register this Note under the 1933 Act or the securities laws of any other jurisdiction or to take any action that would make available any exemption from such registration.
(iii)
Restriction on Other Securities
. Except upon certain limited circumstances, the restrictions on the transfer of this Note will also apply to any and all shares of capital stock or other securities issued or otherwise acquired with respect thereto including, without limitation, shares and securities issued or acquired as a result of any stock dividend, stock split or exchange or any distribution of shares or securities pursuant to any corporate reorganization, reclassification or similar event.
(iv)
Refusal to Transfer
. The Company may refuse to effect a transfer, sale or other disposition of this Note by the Lender or its successors or assigns otherwise than as contemplated hereby.
(b)
Accredited Investor
. The Lender is an accredited investor within the meaning of Regulation D promulgated under the 1933 Act.
10.
Miscellaneous
.
(a)
Severability
. If any provision hereof is invalid or unenforceable, the other provisions hereof shall remain in full force and effect and shall be construed so as to effectuate the other provisions hereof.
(b)
Amendment
. This Note may not be changed, modified or terminated, nor may any provision of this Note be waived except by an agreement in writing signed by the party to be charged.
(c)
Binding Nature of Agreement; Assignment
. The provisions of this Note shall be binding upon the Lender and the Company, and shall inure to the benefit of and bind the respective successors and assigns of the Lender and the Company. Neither the Company nor the Lender may assign or transfer this Note or assign or delegate any of its respective rights or obligations hereunder without the prior written consent of the other party in each instance.
(d)
Collection Costs and Expenses
. The Company agrees to pay all costs of collection, including, without limitation, attorneys’ fees, whether or not suit is filed, and all costs of suit and preparation for suit (whether at trial or appellate level), in the event any payment of principal, interest, or other amount is not paid when due, or if at any time the Lender should incur any attorneys’ fees in any proceeding under any federal bankruptcy law (or any similar state or federal law) in connection with the obligations evidenced hereby. In the event of any court proceeding, court costs and attorneys’ fees shall be set by the court and not by the jury and shall be included in any judgment obtained by the Lender.
(e)
Time of Essence
. Time is of the essence of this Note and each and every provision hereof.
(f)
Controlling Law
. This Note and all questions relating to its validity, interpretation, performance, and enforcement shall be governed by and construed in accordance with the laws of the State of Texas, notwithstanding any Texas or other conflict-of-law provisions to the contrary.
(g)
Notices
. All notices, requests, demands and other communications required or permitted under this Agreement shall be in writing and shall be deemed to have been duly given, made, and received (i) when delivered against receipt; (ii) upon receipt of a facsimile transmission; (iii) one day following the day of deposit thereof, with delivery charges prepaid, with a national overnight delivery service; or (iv) three business days following the day of deposit thereof, with theUnited States Postal Service, by regular first class, certified or registered mail, return receipt requested, postage prepaid, in each case addressed as set forth below:
|
|
(i)
|
If to the Company:
Fuse Medical LLC.
4770 Bryant Irvin Court, Suite 300
Fort Worth, TX 76107
Attention: Jonathan Brown, Manager
Telephone: (817)439-7025
Facsimile: (817) 887-1730
E-mail:
jbrown@fusemedical.com
|
|
|
(ii)
|
If to Lender:
JAR Financing, LLC
4770 Bryant Irvin Court, Suite 400
Fort Worth, Texas 76107
Attention: Alan Meeker, Manager
Phone: 817-348-0010x101
Fax: 817-887-1269
E-mail:
alan@cviewgroup.com
|
Either party may alter the address to which communications or copies are to be sent by giving notice of such change of address in conformity with the provisions of this paragraph for the giving of notice.
(h)
Section Headings
. The section headings in this Note are for convenienceonly; they form no part of this Note and shall not affect its interpretation.
(i)
Number of Days
. In computing the number ofdays for purposes of this Note,all days shall be counted, including Saturdays, Sundays and holidays; provided, however, that if thefinal day of any time period falls on a Saturday, Sunday or holiday, then the final day shall bedeemed to be the next day which is not a Saturday, Sunday or holiday.
(j)
Loss or Destruction of Note
. Upon receipt by the Company of evidence satisfactory to it of the loss, theft, destruction or mutilation of this Note, or in the case of loss, theft or destruction of an indemnity satisfactory to it, and in the case of mutilation, upon surrender and cancellation of this Note, the Company shall execute and deliver a new Note on like tenor and date.
(k)
Construction
. The language of this Note shall be construed as a whole according to its fair meaning. The word “include(s)” means “include(s), without limitation,” and the word “including” means “including, but not limited to.” No inference in favor of, or against, the Company or Lender shall be drawn from the fact that one party has drafted any portion hereof.
IN WITNESS WHEREOF
, the Company has caused this Note to be duly executed as of the date first set forth above.
|
|
FUSE MEDICAL, LLC.
|
|
|
|
|
|
|
|
|
By:
|
/s/ D. Alan Meeker
|
|
|
|
|
Printed Name: D. Alan Meeker
|
|
|
|
|
Its: Manager
|
|
EXHIBIT 10.11
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURJTIES ACT”), OR ANY APPLICABLE STATE SECURITIES LAWS. THE NOTE MAY NOT BE SOLD OR OTHERWISE TRANSFERRED UNLESS (i) A REGISTRATION STATEMENT UNDER THE SECURJTIES ACT AND SUCH APPLICABLE STATE SECURITIES LAWS SHALL HAVE BECOME EFFECTIVE WITH REGARD THERETO OR (ii) IN THE OPINION OF COUNSEL IN FORM AND SUBSTANCE REASONABLY ACCEPTABLE TO THE COMPANY, REGISTRATION UNDER THE SECURJTIES ACT AND SUCH APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED IN CONNECTION WITH A PROPOSED SALE OR TRANSFER.
FUSE MEDICAL, LLC.
PROMISSORY NOTE
|
$193,535.47
|
|
February 10, 2014
|
FOR VALUE RECEIVED, FUSE MEDICAL, LLC
, a Delaware limited liability company (the Company”), hereby promises to pay to the order of JAR, LLC (“Lender’’), at the office of Lender located at 4770 Bryant Irvin Court, Suite 400, Fort Worth, Texas 76107 the principal amount of one hundred ninety one thousand, five hundred thirty five dollars and forty seven cents ($193,535.47), together with interest on the principal balance from time to time outstanding under this note (“Note”) from (and including) the date hereof until (but not including) the date of payment, at a per annum rate equal to the “Stated Interest Rate” specified below or, to the extent applicable, the “Default Interest Rate” specified below, in accordance with the following terms and conditions:
1.
Contracted For Rate of Interest
. The contracted for rate of interest of the indebtedness evidenced hereby shall consist of the following:
(a)
Stated Interest Rate
. The “Stated Interest Rate” shall equal 7.00% per annum applied to the principal balance from time to time outstanding hereunder.
(b)
Default Interest Rate
. The “Default Interest Rate” shall equal 18.00% per annum applied to the principal balance outstanding hereunder. The principal balance outstanding hereunder shall bear interest at the Default Interest Rate from the date of the occurrence of an Event of Default (as hereinafter defined) hereunder until the earlier of (i) the date on which the principal balance outstanding hereunder, together with all accrued interest and other amounts payable hereunder, are paid in full; or (ii) the date on which such Event of Default is timely cured in a manner satisfactory to Lender (A) if the Company is specifically granted a right to cure such Event of Default, or (B) if no such right to cure is specifically granted, then as and to the extent that Lender, in its sole and absolute discretion, permits such Event of Default to be cured.
2.
Payments
. This Note shall be payable as follows:
(a)
Twenty four (24) monthly payments of interest only on the principal balance then-outstanding, due and payable on the 1st day of each month, beginning on August 10, 2014, not to exceed six (6) months from the date hereof (the “Effective Date”); and
(b)
The outstanding principal amount of this Note, together with all accrued but unpaid interest due hereunder, shall be due and payable on February 9, 2016, not to exceed five (5) years from the Effective Date (the “Maturity Date”). Payment of the principal and of interest on this Note is to be made at the offices of Lender or such other place as Lender shall designate in writing to the Company.
3.
Application of Payments
. Payments received by Lender with respect to the indebtedness evidenced hereby shall be applied in such order and manner as Lender in its sole and absolute discretion may elect. Unless otherwise elected by Lender, all such payments shall first be applied to accrued and unpaid interest at the Stated Interest Rate and, to the extent applicable, the Default Interest Rate, next to the principal balance then outstanding hereunder, and the remainder to Additional Sums (as hereinafter defined) or other costs or added charges provided for in this Note.
4.
Prepayments
. Payments of principal hereof may be made at any time, or from time to time, in whole or in part, without penalty, provided that all previously matured interest and other charges accrued to the date of prepayment are also paid in full Notwithstanding any prepayment of principal hereof, (a) there will be no change in the Maturity Date or amount of payments due hereunder unless Lender, in its sole and absolute discretion, agrees in writing to such change; and (b) the Company’s obligations hereunder shall continue in effect, and this Note shall remain outstanding, unless and until the principal balance outstanding hereunder, together with all accrued interest and other amounts payable hereunder are paid in full and thereafter, and upon the Company’s request, Lender delivers to the Company the original executed copy of this Note, marked “cancelled.”
5.
Events of Default; Acceleration
. The occurrence of any one or more of the following events shall constitute an “Event of Default” hereunder, and upon such Event of Default, the entire principal balance outstanding hereunder, together with all accrued interest and other amounts payable hereunder, at the election of Lender, shall become immediately due and payable, without any notice to the Company, and without presentment, demand, protest or any other notice of any kind, all of which are hereby expressly waived by the Company:
(a)
Nonpayment of principal, interest or other amounts when the same shall become due and payable hereunder, and the Company does not cure such failure to pay within five calendar days after the date such payment is due;
(b)
The failure of the Company to comply with any other provision of this Note and the Company does not cure such non-compliance within ten calendar days after Lender delivers written notice to the Company specifying such failure to comply;
(c)
The dissolution, winding-up or termination of the existence of the Company or any other person or entity that is or may become liable hereunder, or the sale or disposition of substantially all of the assets of the Company’s business or the business of any other person or entity that is or may become liable hereunder, or the merger, consolidation, or reorganization of the Company with or into another entity in a transaction in which the holders of the Company’s outstanding voting securities prior to such to transaction do not hold a majority of the voting securities of the entity that survives such transaction;
(d)
The calling of a meeting of the creditors of the Company or any other person or entity who is or may become liable hereunder;
(e)
The making by the Company or any other person or entity who is or may become liable hereunder of an assignment tor the benefit of its creditors; or
(f)
The appointment of (or application for appointment of) a receiver of the Company or any other person or entity who is or may become liable hereunder; or the voluntary filing by the Company, or any other person or entity who is or may become liable hereunder, of a petition or application tor relief under federal bankruptcy law or any similar state or federal law; or the involuntary filing against the Company, or any other person or entity who is or may become liable hereunder, of a petition or application for relief under federal bankruptcy law or any similar state or federal law that is not stayed or dismissed within 90 days of filing; or the issuance of any writ of garnishment, execution or attachment for service with respect to the Company or any person or entity who is or may become liable hereunder or any property of the Company or property of any person or entity who is or may become liable hereunder.
6.
Additional Sums
. The Company agrees to pay an effective contracted for rate of interest equal to the rate of interest resulting from all interest payable as provided in this Note, plus the additional rate of interest resulting from the “Additional Sums,” as defined in the next sentence. All tees, charges, goods, things in action or any other sums or things of value, other than the interest resulting from the Stated Interest Rate and the Default Interest Rate, as applicable, paid or payable by the Company (collectively, the “Additional Sums”), whether pursuant to this Note or any other document or instrument in any way pertaining to this transaction, or otherwise with respect to this transaction, that, under the laws of the State of Texas, may be deemed to be interest with respect to this transaction, for the purpose of any laws of the State of Texas that may limit the maximum amount of interest to be charged with respect to this transaction, shall be payable by the Company as, and shall be deemed to be, additional interest, and for such purposes only, the agreed upon and “contracted for rate of interest” of this transaction shall be deemed to be increased by the rate of interest resulting from the Additional Sums. The Company understands and believes that this transaction complies with the usury laws of the State of Texas; however, if any interest or other charges in connection with this transaction are ever determined to exceed the maximum amount permitted by law, then the Company agrees that (a) the amount of interest or charges payable pursuant to this transaction shall be reduced to the maximum amount permitted by law; and (b) any excess amount previously collected from the Company in connection with this transaction that exceeded the maximum amount permitted by law shall be credited against the principal balance then outstanding hereunder, if the outstanding principal balance hereunder has been paid in full, the excess amount paid will be refunded to the Company.
7.
Waivers
. Except as set forth in this Note, to the extent permitted by applicable law, the Company, and each person who is or may become liable hereunder, severally waives and agrees not to assert (a) demand, diligence, grace, presentment for payment, protest, or notice of nonpayment, nonperformance, extension, dishonor, maturity, protest, acceleration, and default; and (b) recourse to guaranty or suretyship defenses (including, without limitation, the right to require the Lender to bring an action on this Note). No failure to accelerate the debt evidenced hereby by reason of default hereunder, acceptance of a past-due installment, or other indulgence granted from time to time shall be construed as a novation of this Note or as a waiver of such right of acceleration or of the right of Lender thereafter to insist upon strict compliance with the terms of this Note or to prevent the exercise of such right of acceleration or any other right granted hereunder or by applicable law. Lender may extend the time for payment of or renew this Note, or release any party from liability hereunder, and any such extension, renewal, release or other indulgence shall not alter or diminish the liability of the Company or any other person or entity who is or may become liable on this Note except to the extent expressly set forth in a writing evidencing or constituting such extension, renewal, release or other indulgence. No delay or failure of Lender in exercising any right hereunder shall affect such right, nor shall any single or partial exercise of any right preclude further exercise thereof.
8.
Subordination
. The indebtedness evidenced by this Note, including the principal hereof and interest hereon, is expressly subordinate and subject in right of payment to the prior payment in full of all “Senior Indebtedness,” whether now outstanding or hereafter incurred. The term “Senior Indebtedness” shall mean the principal of and premium, if any, and interest on (a) indebtedness (other than this Note) of the Company for money borrowed from or guaranteed to individuals or other persons, firms or corporations that engage in lending money, including, but without limitation, banks, trust companies, insurance companies and other financing institutions and charitable trusts, pension trusts and other investing organizations, evidenced by notes or similar obligations; (b) indebtedness of the Company evidenced by notes or debentures (other than this Note) issued under the provisions of an indenture or similar instrument between the Company and a bank or trust company; and (c) indebtedness incurred, assumed or guaranteed by the Company in connection with the acquisition by it or a subsidiary of any property or asset intended to be leased or sold to others in the ordinary course of the business of the Company or such subsidiary; unless, in each case, by the terms of the instrument creating or evidencing the indebtedness it is expressly provided that such indebtedness is not superior in right of payment to this Note.
9.
Securities Laws; Accredited Investor
.
(a)
Status Under Securities Laws
. Lender acknowledges and agrees as follows:
(i)
Restricted Securities
. This Note is a “restricted security” within the meaning of Rule 144 under the Securities Act of1933 (the “1933 Act”). Lender acknowledges and agrees that it is acquiring this Note without a view to the public distribution or resale in violation of applicable federal or state securities laws.
(ii)
No Registration
. This Note has not been registered under the 1933 Act or the securities laws of any other jurisdiction and must be held indefinitely without any transfer, sale or other disposition unless it is subsequently registered under the 1933 Act and the securities laws of any other applicable jurisdiction or, in the opinion of counsel to the Company, registration is not required under such acts or laws as the result of an available exemption. The Company is under no obligation to register this Note under the 1933 Act or the securities laws of any other jurisdiction or to take any action that would make available any exemption from such registration.
(iii)
Restriction on Other Securities
. Except upon certain limited circumstances, the restrictions on the transfer of this Note will also apply to any and all shares of capital stock or other securities issued or otherwise acquired with respect thereto including, without limitation, shares and securities issued or acquired as a result of any stock dividend, stock split or exchange or any distribution of shares or securities pursuant to any corporate reorganization, reclassification or similar event.
(iv)
Refusal to Transfer
. The Company may refuse to effect a transfer, sale or other disposition of this Note by the Lender or its successors or assigns otherwise than as contemplated hereby.
(b)
Accredited Investor
. The Lender is an accredited investor within the meaning of Regulation D promulgated under the 1933 Act.
10.
Miscellaneous
.
(a)
Severability
. If any provision hereof is invalid or unenforceable, the other provisions hereof shall remain in full force and effect and shall be construed so as to effectuate the other provisions hereof.
(b)
Amendment
. This Note may not be changed, modified or terminated, nor may any provision of this Note be waived except by an agreement in writing signed by the party to be charged.
(c)
Binding Nature of Agreement; Assignment
. The provisions of this Note shall be binding upon the Lender and the Company, and shall inure to the benefit of and bind the respective successors and assigns of the Lender and the Company. Neither the Company nor the Lender may assign or transfer this Note or assign or delegate any of its respective rights or obligations hereunder without the prior written consent of the other party in each instance.
(d)
Collection Costs and Expenses
. The Company agrees to pay all costs of collection, including, without limitation, attorneys’ fees, whether or not suit is filed, and all costs of suit and preparation for suit (whether at trial or appellate level), in the event any payment of principal, interest, or other amount is not paid when due, or if at any time the Lender should incur any attorneys’ fees in any proceeding under any federal bankruptcy law (or any similar state or federal law) in connection with the obligations evidenced hereby. In the event of any court proceeding, court costs and attorneys’ fees shall be set by the court and not by the jury and shall be included in any judgment obtained by the Lender.
(e)
Time of Essence
. Time is of the essence of this Note and each and every provision hereof.
(f)
Controlling Law
. This Note and all questions relating to its validity, interpretation, performance, and enforcement shall be governed by and construed in accordance with the laws of the State of Texas, notwithstanding any Texas or other conflict-of-law provisions to the contrary.
(g)
Notices
. All notices, requests, demands and other communications required or permitted under this Agreement shall be in writing and shall be deemed to have been duly given, made, and received (i) when delivered against receipt; (ii) upon receipt of a facsimile transmission; (iii) one day following the day of deposit thereof, with delivery charges prepaid, with a national overnight delivery service; or (iv) three business days following the day of deposit thereof, with the United States Postal Service, by regular first class, certified or registered mail, return receipt requested, postage prepaid, in each case addressed as set forth below:
|
|
(i)
|
If to the Company:
Fuse Medical LLC.
4770 Bryant Irvin Court, Suite 300
Fort Worth, TX 76107
Attention: Jonathan Brown, Manager
Telephone: (817) 439-7025
Facsimile: (817) 887-1730
E-mail: jbrown@fusemedicalcom
|
|
|
(ii)
|
If to Lender:
JAR, LLC
4770 Bryant Irvin Court, Suite 400
Fort Worth, Texas 76107
Attention: Alan Meeker, Manager
Phone: 817-348-0010 x 101
Fax: 817-887-1269
E-mail: alan@cviewgroup.com
|
Either party may alter the address to which communications or copies are to be sent by giving notice of such change of address in conformity with the provisions of this paragraph for the giving of notice.
(h)
Section Headings
. The section headings in this Note arc for convenience only; they form no part of this Note and shall not affect its interpretation.
(i)
Number of Days
. In computing the number of days for purposes of this Note, all days shall be counted, including Saturdays, Sundays and holidays; provided, however, that if the final day of any time period falls on a Saturday, Sunday or holiday, then the final day shall be deemed to be the next day which is not a Saturday, Sunday or holiday.
(j)
Loss or Destruction of Note
. Upon receipt by the Company of evidence satisfactory to it of the loss, theft, destruction or mutilation of this Note, or in the case of loss, theft or destruction of an indemnity satisfactory to it, and in the case of mutilation, upon surrender and cancellation of this Note, the Company shall execute and deliver a new Note on like tenor and date.
(k)
Construction
. The language of this Note shall be construed as a whole according to its fair meaning. The word “include(s)” means “include(s), without limitation,” and the word “including” means “including, but not limited to.” No inference in favor of, or against, the Company or Lender shall be drawn from the fact that one party has drafted any portion hereof.
IN WITNESS WHEREOF
, the Company has caused this Note to be duly executed as of the date first set forth above.
|
|
FUSE MEDICAL, LLC.
|
|
|
|
|
|
|
|
|
By:
|
/s/
Jonathan Brown
|
|
|
|
|
Printed Name: Jonathan Brown
|
|
|
|
|
Its:
Manager
|
|
EXHIBIT 10.12
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY APPLICABLE STATE SECURITIES LAWS. THE NOTE MAY NOT BE SOLD OR OTHERWISE TRANSFERRED UNLESS (i) A REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND SUCH APPLICABLE STATE SECURITIES LAWS SHALL HAVE BECOME EFFECTIVE WITH REGARD THERETO OR (ii) IN THE OPINION OF COUNSEL IN FORM AND SUBSTANCE REASONABLY ACCEPTABLE TO THE COMPANY, REGISTRATION UNDER THE SECURITIES ACT AND SUCH APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED IN CONNECTION WITH A PROPOSED SALE OR TRANSFER.
FUSE MEDICAL, LLC.
PROMISSORY NOTE
FOR VALUE RECEIVED, FUSE MEDICAL, LLC,
a Delaware limited liability company (the “Company”), hereby promises to pay to the order of Cooks Bridge, LLC (“Lender”), at the office of Lender located at 4770 Bryant Irvin Court, Suite 400, Fort Worth, Texas 76107 the principal amount of eighty-seven thousand six hundred seventy dollars and forty-nine cents ($87,670.49), together with interest on the principal balance from time to time outstanding under this note (“Note”) from (and including) the date hereof until (but not including) the date of payment, at a per annum rate equal to the “Stated Interest Rate” specified below or, to the extent applicable, the “Default Interest Rate” specified below, in accordance with the following terms and conditions:
1.
Contracted For Rate of Interest.
The contracted for rate of interest of the indebtedness evidenced hereby shall consist of the following:
(a)
Stated Interest Rate.
The “Stated Interest Rate” shall equal 7.00% per annum applied to the principal balance from time to time outstanding hereunder.
(b)
Default Interest Rate.
The “Default Interest Rate” shall equal 18.00% per annum applied to the principal balance outstanding hereunder. The principal balance outstanding hereunder shall bear interest at the Default Interest Rate from the date of the occurrence of an Event of Default (as hereinafter defined) hereunder until the earlier of (i) the date on which the principal balance outstanding hereunder, together with all accrued interest and other amounts payable hereunder, are paid in full; or (ii) the date on which such Event of Default is timely cured in a manner satisfactory to Lender (A) if the Company is specifically granted a right to cure such Event of Default, or (B) if no such right to cure is specifically granted, then as and to the extent that Lender, in its sole and absolute discretion, permits such Event of Default to be cured.
2.
Payments.
This Note shall be payable as follows:
(a)
This Note shall be payable as follows: Eighteen (18) monthly payments of interest only on the principal balance then-outstanding, due and payable on the 1st day of each month, beginning on September 4, 2014, six (6) months from the date hereof (the “Effective Date”). The interest accruing in the first six (6) months shall be tolled and payable at Maturity Date; and
(b)
The outstanding principal amount of this Note, together with all accrued but unpaid interest due hereunder, shall be due and payable on March 4, 2016, unless mutually extended by the parties in writing not to exceed five (5) years from the Effective Date (the “Maturity Date”). Payment of the principal and of interest on this Note is to be made at the offices of Lender or such other place as Lender shall designate in writing to the Company.
3.
Application of Payments.
Payments received by Lender with respect to the indebtedness evidenced hereby shall be applied in such order and manner as Lender in its sole and absolute discretion may elect. Unless otherwise elected by Lender, all such payments shall first be applied to accrued and unpaid interest at the Stated Interest Rate and, to the extent applicable, the Default Interest Rate, next to the principal balance then outstanding hereunder, and the remainder to Additional Sums (as hereinafter defined) or other costs or added charges provided for in this Note.
4.
Prepayments.
Payments of principal hereof may be made at any time, or from time to time, in whole or in part, without penalty, provided that all previously matured interest and other charges accrued to the date of prepayment are also paid in full. Notwithstanding any prepayment of principal hereof, (a) there will be no change in the Maturity Date or amount of payments due hereunder unless Lender, in its sole and absolute discretion, agrees in writing to such change; and (b) the Company’s obligations hereunder shall continue in effect, and this Note shall remain outstanding, unless and until the principal balance outstanding hereunder, together with all accrued interest and other amounts payable hereunder are paid in full and thereafter, and upon the Company’s request, Lender delivers to the Company the original executed copy of this Note, marked “cancelled.”
5.
Events of Default; Acceleration.
The occurrence of any one or more of the following events shall constitute an “Event of Default” hereunder, and upon such Event of Default, the entire principal balance outstanding hereunder, together with all accrued interest and other amounts payable hereunder, at the election of Lender, shall become immediately due and payable, without any notice to the Company, and without presentment, demand, protest or any other notice of any kind, all of which are hereby expressly waived by the Company:
(a)
Nonpayment of principal, interest or other amounts when the same shall become due and payable hereunder, and the Company does not cure such failure to pay within five calendar days after the date such payment is due;
(b)
The failure of the Company to comply with any other provision of this Note and the Company does not cure such non-compliance within ten calendar days after Lender delivers written notice to the Company specifying such failure to comply;
(c)
The dissolution, winding-up or termination of the existence of the Company or any other person or entity that is or may become liable hereunder, or the sale or disposition of substantially all of the assets of the Company’s business or the business of any other person or entity that is or may become liable hereunder, or the merger, consolidation, or reorganization of the Company with or into another entity in a transaction in which the holders of the Company’s outstanding voting securities prior to such to transaction do not hold a majority of the voting securities of the entity that survives such transaction;
(d)
The calling of a meeting of the creditors of the Company or any other person or entity who is or may become liable hereunder;
(e)
The making by the Company or any other person or entity who is or may become liable hereunder of an assignment for the benefit of its creditors; or
(f)
The appointment of (or application for appointment of) a receiver of the Company or any other person or entity who is or may become liable hereunder; or the voluntary filing by the Company, or any other person or entity who is or may become liable hereunder, of a petition or application for relief under federal bankruptcy law or any similar state or federal law; or the involuntary filing against the Company, or any other person or entity who is or may become liable hereunder, of a petition or application for relief under federal bankruptcy law or any similar state or federal law that is not stayed or dismissed within 90 days of filing; or the issuance of any writ of garnishment, execution or attachment for service with respect to the Company or any person or entity who is or may become liable hereunder or any property of the Company or property of any person or entity who is or may become liable hereunder.
6.
Additional Sums.
The Company agrees to pay an effective contracted for rate of interest equal to the rate of interest resulting from all interest payable as provided in this Note, plus the additional rate of interest resulting from the “Additional Sums,” as defined in the next sentence. All fees, charges, goods, things in action or any other sums or things of value, other than the interest resulting from the Stated Interest Rate and the Default Interest Rate, as applicable, paid or payable by the Company (collectively, the “Additional Sums”), whether pursuant to this Note or any other document or instrument in any way pertaining to this transaction, or otherwise with respect to this transaction, that, under the laws of the State of Texas, may be deemed to be interest with respect to this transaction, for the purpose of any laws of the State of Texas that may limit the maximum amount of interest to be charged with respect to this transaction, shall be payable by the Company as, and shall be deemed to be, additional interest, and for such purposes only, the agreed upon and “contracted for rate of interest” of this transaction shall be deemed to be increased by the rate of interest resulting from the Additional Sums. The Company understands and believes that this transaction complies with the usury laws of the State of Texas; however, if any interest or other charges in connection with this transaction are ever determined to exceed the maximum amount permitted by law, then the Company agrees that (a) the amount of interest or charges payable pursuant to this transaction shall be reduced to the maximum amount permitted by law; and (b) any excess amount previously collected from the Company in connection with this transaction that exceeded the maximum amount permitted by law shall be credited against the principal balance then outstanding hereunder, if the outstanding principal balance hereunder has been paid in full, the excess amount paid will be refunded to the Company.
7.
Waivers.
Except as set forth in this Note, to the extent permitted by applicable law, the Company, and each person who is or may become liable hereunder, severally waives and agrees not to assert (a) demand, diligence, grace, presentment for payment, protest, or notice of nonpayment, nonperformance, extension, dishonor, maturity, protest, acceleration, and default; and (b) recourse to guaranty or suretyship defenses (including, without limitation, the right to require the Lender to bring an action on this Note). No failure to accelerate the debt evidenced hereby by reason of default hereunder, acceptance of a past-due installment, or other indulgence granted from time to time shall be construed as a novation of this Note or as a waiver of such right of acceleration or of the right of Lender thereafter to insist upon strict compliance with the terms of this Note or to prevent the exercise of such right of acceleration or any other right granted hereunder or by applicable law. Lender may extend the time for payment of or renew this Note, or release any party from liability hereunder, and any such extension, renewal, release or other indulgence shall not alter or diminish the liability of the Company or any other person or entity who is or may become liable on this Note except to the extent expressly set forth in a writing evidencing or constituting such extension, renewal, release or other indulgence. No delay or failure of Lender in exercising any right hereunder shall affect such right, nor shall any single or partial exercise of any right preclude further exercise thereof.
8.
Subordination.
The indebtedness evidenced by this Note, including the principal hereof and interest hereon, is expressly subordinate and subject in right of payment to the prior payment in full of all “Senior Indebtedness,” whether now outstanding or hereafter incurred. The term “Senior Indebtedness” shall mean the principal of and premium, if any, and interest on (a) indebtedness (other than this Note) of the Company for money borrowed from or guaranteed to individuals or other persons, firms or corporations that engage in lending money, including, but without limitation, banks, trust companies, insurance companies and other financing institutions and charitable trusts, pension trusts and other investing organizations, evidenced by notes or similar obligations; (b) indebtedness of the Company evidenced by notes or debentures (other than this Note) issued under the provisions of an indenture or similar instrument between the Company and a bank or trust company; and (c) indebtedness incurred, assumed or guaranteed by the Company in connection with the acquisition by it or a subsidiary of any property or asset intended to be leased or sold to others in the ordinary course of the business of the Company or such subsidiary; unless, in each case, by the terms of the instrument creating or evidencing the indebtedness it is expressly provided that such indebtedness is not superior in right of payment to this Note.
9.
Securities Laws; Accredited Investor.
(a)
Status Under Securities Laws.
Lender acknowledges and agrees as follows:
(i)
Restricted Securities.
This Note is a “restricted security” within the meaning of Rule 144 under the Securities Act of 1933 (the “1933 Act”). Lender acknowledges and agrees that it is acquiring this Note without a view to the public distribution or resale in violation of applicable federal or state securities laws.
(ii)
No Registration.
This Note has not been registered under the 1933 Act or the securities laws of any other jurisdiction and must be held indefinitely without any transfer, sale or other disposition unless it is subsequently registered under the 1933 Act and the securities laws of any other applicable jurisdiction or, in the opinion of counsel to the Company, registration is not required under such acts or laws as the result of an available exemption. The Company is under no obligation to register this Note under the 1933 Act or the securities laws of any other jurisdiction or to take any action that would make available any exemption from such registration.
(iii)
Restriction on Other Securities.
Except upon certain limited circumstances, the restrictions on the transfer of this Note will also apply to any and all shares of capital stock or other securities issued or otherwise acquired with respect thereto including, without limitation, shares and securities issued or acquired as a result of any stock dividend, stock split or exchange or any distribution of shares or securities pursuant to any corporate reorganization, reclassification or similar event.
(iv)
Refusal to Transfer.
The Company may refuse to effect a transfer, sale or other disposition of this Note by the Lender or its successors or assigns otherwise than as contemplated hereby.
(b)
Accredited Investor.
The Lender is an accredited investor within the meaning of Regulation D promulgated under the 1933 Act.
10.
Miscellaneous.
(a)
Severability.
If any provision hereof is invalid or unenforceable, the other provisions hereof shall remain in full force and effect and shall be construed so as to effectuate the other provisions hereof.
(b)
Amendment.
This Note may not be changed, modified or terminated, nor may any provision of this Note be waived except by an agreement in writing signed by the party to be charged.
(c)
Binding Nature of Agreement; Assignment.
The provisions of this Note shall be binding upon the Lender and the Company, and shall inure to the benefit of and bind the respective successors and assigns of the Lender and the Company. Neither the Company nor the Lender may assign or transfer this Note or assign or delegate any of its respective rights or obligations hereunder without the prior written consent of the other party in each instance.
(d)
Collection Costs and Expenses.
The Company agrees to pay all costs of collection, including, without limitation, attorneys’ fees, whether or not suit is filed, and all costs of suit and preparation for suit (whether at trial or appellate level), in the event any payment of principal, interest, or other amount is not paid when due, or if at any time the Lender should incur any attorneys’ fees in any proceeding under any federal bankruptcy law (or any similar state or federal law) in connection with the obligations evidenced hereby. In the event of any court proceeding, court costs and attorneys’ fees shall be set by the court and not by the jury and shall be included in any judgment obtained by the Lender.
(e)
Time of Essence.
Time is of the essence of this Note and each and every provision hereof.
(f)
Controlling Law.
This Note and all questions relating to its validity, interpretation, performance, and enforcement shall be governed by and construed in accordance with the laws of the State of Texas, notwithstanding any Texas or other conflict-of-law provisions to the contrary.
(g)
Notices.
All notices, requests, demands and other communications required or permitted under this Agreement shall be in writing and shall be deemed to have been duly given, made, and received (i) when delivered against receipt; (ii) upon receipt of a facsimile transmission; (iii) one day following the day of deposit thereof, with delivery charges prepaid, with a national overnight delivery service; or (iv) three business days following the day of deposit thereof, with the United States Postal Service, by regular first class, certified or registered mail, return receipt requested, postage prepaid, in each case addressed as set forth below:
|
|
(i)
|
If to the Company:
Fuse Medical, LLC
4770 Bryant Irvin Court, Suite 300
Fort Worth, TX 76107
Telephone: (817) 348-0010 X101
Facsimile: (817) 887-1730
E-mail: jbrown@fusemedical.com
|
|
|
(ii)
|
If to Lender:
Cooks Bridge, LLC
4770 Bryant Irvin Court, Suite 400
Fort Worth, TX 76107
Attention: Jonathan Brown, Chief Operating Officer
Phone: (817) 439-7025 X303
Fax: (817) 887-1730
E-mail: alan@fusemedical.com
|
Either party may alter the address to which communications or copies are to be sent by giving notice of such change of address in conformity with the provisions of this paragraph for the giving of notice.
(h)
Section Headings.
The section headings in this Note are for convenience only; they form no part of this Note and shall not affect its interpretation.
(i)
Number of Days.
In computing the number of days for purposes of this Note, all days shall be counted, including Saturdays, Sundays and holidays; provided, however, that if the final day of any time period falls on a Saturday, Sunday or holiday, then the final day shall be deemed to be the next day which is not a Saturday, Sunday or holiday.
(j)
Loss or Destruction of Note.
Upon receipt by the Company of evidence satisfactory to it of the loss, theft, destruction or mutilation of this Note, or in the case of loss, theft or destruction of an indemnity satisfactory to it, and in the case of mutilation, upon surrender and cancellation of this Note, the Company shall execute and deliver a new Note on like tenor and date.
(k)
Construction.
The language of this Note shall be construed as a whole according to its fair meaning. The word “include(s)” means “include(s), without limitation, “and the word “including” means “including, but not limited to.” No inference in favor of, or against, the Company or Lender shall be drawn from the fact that one party has drafted any portion hereof.
IN WITNESS WHEREOF,
the Company has caused this Note to be duly executed as of the date first set forth above.
|
|
FUSE MEDICAL, LLC.
|
|
|
|
|
|
|
|
|
By:
|
/s/ D. Alan Meeker
|
|
|
|
|
Printed Name: D. Alan Meeker
|
|
|
|
|
Its:
Manager
|
|
EXHIBIT 10.13
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY APPLICABLE STATE SECURITIES LAWS. THE NOTE MAY NOT BE SOLD OR OTHERWISE TRANSFERRED UNLESS (i) A REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND SUCH APPLICABLE STATE SECURITIES LAWS SHALL HAVE BECOME EFFECTIVE WITH REGARD THERETO OR (ii) IN THE OPINION OF COUNSEL IN FORM AND SUBSTANCE REASONABLY ACCEPTABLE TO THE COMPANY, REGISTRATION UNDER THE SECURITIES ACT AND SUCH APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED IN CONNECTION WITH A PROPOSED SALE OR TRANSFER.
FUSE MEDICAL, LLC.
PROMISSORY NOTE
|
$131,023.65
|
|
January 15, 2014
|
FOR VALUE RECEIVED, FUSE MEDICAL, LLC
, a Delaware limited liability company (the “Company”), hereby promises to pay to the order of Cooks Bridge, LLC (“Lender”), at the office of Lender located at 4770 Bryant Irvin Court, Suite 400, Fort Worth, Texas 76107 the principal amount of one hundred thirty one thousand twenty three dollars and sixty five cents ($131,022.65), together with interest on the principal balance from time to time outstanding under this note (“Note”) from (and including) the date hereof until (but not including) the date of payment, at a per annum rate equal to the “Stated Interest Rate” specified below or, to the extent applicable, the “Default Interest Rate” specified below, in accordance with the following terms and conditions:
1.
Contracted For Rate of Interest
. The contracted for rate of interest of the indebtedness evidenced hereby shall consist of the following:
(a)
Stated Interest Rate
. The “Stated Interest Rate” shall equal 7.00% per annum applied to the principal balance from time to time outstanding hereunder.
(b)
Default Interest Rate
. The “Default Interest Rate” shall equal 18.00% per annum applied to the principal balance outstanding hereunder. The principal balance outstanding hereunder shall bear interest at the Default Interest Rate from the date of the occurrence of an Event of Default (as hereinafter defined) hereunder until the earlier of (i) the date on which the principal balance outstanding hereunder, together with all accrued interest and other amounts payable hereunder, are paid in full; or (ii) the date on which such Event of Default is timely cured in a manner satisfactory to Lender (A) if the Company is specifically granted a right to cure such Event of Default, or (B) if no such right to cure is specifically granted, then as and to the extent that Lender, in its sole and absolute discretion, permits such Event of Default to be cured.
2.
Payments
. This Note shall be payable as follows:
(a)
Twenty four (24) monthly payments of interest only on the principal balance then-outstanding, due and payable on the 1
st
day of each month, beginning on August 1, 2014, not to exceed six (6) months from the date hereof (the “Effective Date”); and
(b)
The outstanding principal amount of this Note, together with all accrued but unpaid interest due hereunder, shall he due and payable on January 14, 2016, not to exceed five (5) years from the Effective Date (the “Maturity Date”). Payment of the principal and of interest on this Note is to be made at the offices of Lender or such other place as Lender shall designate in writing to the Company.
3.
Application of Payments
. Payments received by Lender with respect to the indebtedness evidenced hereby shall be applied in such order and manner as Lender in its sole and absolute discretion may elect. Unless otherwise elected by Lender, all such payments shall first be applied to accrued and unpaid interest at the Stated Interest Rate and, to the extent applicable, the Default Interest Rate, next to the principal balance then outstanding hereunder, and the remainder to Additional Sums (as hereinafter defined) or other costs or added charges provided for in this Note.
4.
Prepayments
. Payments of principal hereof may be made at any time, or from time to time, in whole or in part, without penalty, provided that all previously matured interest and other charges accrued to the date of prepayment are also paid in full. Notwithstanding any prepayment of principal hereof, (a) there will be no change in the Maturity Date or amount of payments due hereunder unless Lender, in its sole and absolute discretion, agrees in writing to such change; and (b) the Company’s obligations hereunder shall continue in effect, and this Note shall remain outstanding, unless and until the principal balance outstanding hereunder, together with all accrued interest and other amounts payable hereunder are paid in full and thereafter, and upon the Company’s request, Lender delivers to the Company the original executed copy of this Note, marked “cancelled.”
5.
Events of Default; Acceleration
. The occurrence of any one or more of the following events shall constitute an “Event of Default” hereunder, and upon such Event of Default, the entire principal balance outstanding hereunder, together with all accrued interest and other amounts payable hereunder, at the election of Lender, shall become immediately due and payable, without any notice to the Company, and without presentment, demand, protest or any other notice of any kind, all of which are hereby expressly waived by the Company:
(a)
Nonpayment of principal, interest or other amounts when the same shall become due and payable hereunder, and the Company does not cure such failure to pay within five calendar days after the date such payment is due;
(b)
The failure of the Company to comply with any other provision of this Note and the Company does not cure such non-compliance within ten calendar days after Lender delivers written notice to the Company specifying such failure to comply;
(c)
The dissolution, winding-up or termination of the existence of the Company or any other person or entity that is or may become liable hereunder, or the sale or disposition of substantially all of the assets of the Company’s business or the business of any other person or entity that is or may become liable hereunder, or the merger, consolidation, or reorganization of the Company with or into another entity in a transaction in which the holders of the Company’s outstanding voting securities prior to such to transaction do not hold a majority of the voting securities of the entity that survives such transaction;
(d)
The calling of a meeting of the creditors of the Company or any other person or entity who is or may become liable hereunder;
(e)
The making by the Company or any other person or entity who is or may become liable hereunder of an assignment for the benefit of its creditors; or
(f)
The appointment of (or application for appointment of) a receiver of the Company or any other person or entity who is or may become liable hereunder; or the voluntary filing by the Company, or any other person or entity who is or may become liable hereunder, of a petition or application for relief under federal bankruptcy law or any similar state or federal law; or the involuntary filing against the Company, or any other person or entity who is or may become liable hereunder, of a petition or application for relief under federal bankruptcy law or any similar state or federal law that is not stayed or dismissed within 90 days of filing; or the issuance of any writ of garnishment, execution or attachment for service with respect to the Company or any person or entity who is or may become liable hereunder or any property of the Company or property of any person or entity who is or may become liable hereunder.
6.
Additional Sums
. The Company agrees to pay an effective contracted for rate of interest equal to the rate of interest resulting from all interest payable as provided in this Note, plus the additional rate of interest resulting from the “Additional Sums,” as defined in the next sentence. All fees, charges, goods, things in action or any other sums or things of value, other than the interest resulting from the Stated Interest Rate and the Default Interest Rate, as applicable, paid or payable by the Company (collectively, the “Additional Sums”), whether pursuant to this Note or any other document or instrument in any way pertaining to this transaction, or otherwise with respect to this transaction, that, under the laws of the State of Texas, may be deemed to be interest with respect to this transaction, for the purpose of any laws of the State of Texas that may limit the maximum amount of interest to be charged with respect to this transaction, shall be payable by the Company as, and shall be deemed to be, additional interest, and for such purposes only, the agreed upon and “contracted for rate of interest” of this transaction shall be deemed to be increased by the rate of interest resulting from the Additional Sums. The Company understands and believes that this transaction complies with the usury laws of the State of Texas; however, if any interest or other charges in connection with this transaction are ever determined to exceed the maximum amount permitted by law, then the Company agrees that (a) the amount of interest or charges payable pursuant to this transaction shall be reduced to the maximum amount permitted by law; and (b) any excess amount previously collected from the Company in connection with this transaction that exceeded the maximum amount permitted by law shall be credited against the principal balance then outstanding hereunder, if the outstanding principal balance hereunder has been paid in full, the excess amount paid will be refunded to the Company.
7.
Waivers
. Except as set forth in this Note, to the extent permitted by applicable law, the Company, and each person who is or may become liable hereunder, severally waives and agrees not to assert (a) demand, diligence, grace, presentment for payment, protest, or notice of nonpayment, nonperformance, extension, dishonor, maturity, protest, acceleration, and default; and (b) recourse to guaranty or suretyship defenses (including, without limitation, the right to require the Lender to bring an action on this Note). No failure to accelerate the debt evidenced hereby by reason of default hereunder, acceptance of a past-due installment, or other indulgence granted from time to time shall be construed as a novation of this Note or as a waiver of such right of acceleration or of the right of Lender thereafter to insist upon strict compliance with the terms of this Note or to prevent the exercise of such right of acceleration or any other right granted hereunder or by applicable law. Lender may extend the time for payment of or renew this Note, or release any party from liability hereunder, and any such extension, renewal, release or other indulgence shall not alter or diminish the liability of the Company or any other person or entity who is or may become liable on this Note except to the extent expressly set forth in a writing evidencing or constituting such extension, renewal, release or other indulgence. No delay or failure of Lender in exercising any right hereunder shall affect such right, nor shall any single or partial exercise of any right preclude further exercise thereof.
8.
Subordination
. The indebtedness evidenced by this Note, including the principal hereof and interest hereon, is expressly subordinate and subject in right of payment to the prior payment in full of all “Senior Indebtedness,” whether now outstanding or hereafter incurred. The term “Senior Indebtedness” shall mean the principal of and premium, if any, and interest on (a) indebtedness (other than this Note) of the Company for money borrowed from or guaranteed to individuals or other persons, firms or corporations that engage in lending money, including, but without limitation, banks, trust companies, insurance companies and other financing institutions and charitable trusts, pension trusts and other investing organizations, evidenced by notes or similar obligations; (b) indebtedness of the Company evidenced by notes or debentures (other than this Note) issued under the provisions of an indenture or similar instrument between the Company and a bank or trust company; and (c) indebtedness incurred, assumed or guaranteed by the Company in connection with the acquisition by it or a subsidiary of any property or asset intended to be leased or sold to others in the ordinary course of the business of the Company or such subsidiary; unless, in each case, by the terms of the instrument creating or evidencing the indebtedness it is expressly provided that such indebtedness is not superior in right of payment to this Note.
9.
Securities Laws; Accredited Investor
.
(a)
Status Under Securities Laws
. Lender acknowledges and agrees as follows:
(i)
Restricted Securities
. This Note is a “restricted security” within the meaning of Rule 144 under the Securities Act of 1933 (the “1933 Act”). Lender acknowledges and agrees that it is acquiring this Note without a view to the public distribution or resale in violation of applicable federal or state securities laws.
(ii)
No Registration
. This Note has not been registered under the 1933 Act or the securities laws of any other jurisdiction and must be held indefinitely without any transfer, sale or other disposition unless it is subsequently registered under the 1933 Act and the securities laws of any other applicable jurisdiction or, in the opinion of counsel to the Company, registration is not required under such acts or laws as the result of an available exemption. The Company is under no obligation to register this Note under the 1933 Act or the securities laws of any other jurisdiction or to take any action that would make available any exemption from such registration.
(iii)
Restriction on Other Securities
. Except upon certain limited circumstances, the restrictions on the transfer of this Note will also apply to any and all shares of capital stock or other securities issued or otherwise acquired with respect thereto including, without limitation, shares and securities issued or acquired as a result of any stock dividend, stock split or exchange or any distribution of shares or securities pursuant to any corporate reorganization, reclassification or similar event.
(iv)
Refusal to Transfer
. The Company may refuse to effect a transfer, sale or other disposition of this Note by the Lender or its successors or assigns otherwise than as contemplated hereby.
(b)
Accredited Investor
. The Lender is an accredited investor within the meaning of Regulation D promulgated under the 1933 Act.
10.
Miscellaneous
.
(a)
Severability
. If any provision hereof is invalid or unenforceable, the other provisions hereof shall remain in full force and effect and shall be construed so as to effectuate the other provisions hereof
(b)
Amendment
. This Note may not be changed, modified or terminated, nor may any provision of this Note be waived except by an agreement in writing signed by the party to be charged.
(c)
Binding Nature of Agreement; Assignment
. The provisions of this Note shall be binding upon the Lender and the Company, and shall inure to the benefit of and bind the respective successors and assigns of the Lender and the Company. Neither the Company nor the Lender may assign or transfer this Note or assign or delegate any of its respective rights or obligations hereunder without the prior written consent of the other party in each instance.
(d)
Collection Costs and Expenses
. The Company agrees to pay all costs of collection, including, without limitation, attorneys’ fees, whether or not suit is filed, and all costs of suit and preparation for suit (whether at trial or appellate level), in the event any payment of principal, interest, or other amount is not paid when due, or if at any time the Lender should incur any attorneys’ fees in any proceeding under any federal bankruptcy law (or any similar state or federal law) in connection with the obligations evidenced hereby. In the event of any court proceeding, court costs and attorneys’ fees shall be set by the court and not by the jury and shall be included in any judgment obtained by the Lender.
(e)
Time of Essence
. Time is of the essence of this Note and each and every provision hereof.
(f)
Controlling Law
. This Note and all questions relating to its validity, interpretation, performance, and enforcement shall be governed by and construed in accordance with the laws of the State of Texas, notwithstanding any Texas or other conflict-of-law provisions to the contrary.
(g)
Notices
. All notices, requests, demands and other communications required or permitted under this Agreement shall be in writing and shall be deemed to have been duly given, made, and received (i) when delivered against receipt; (ii) upon receipt of a facsimile transmission; (iii) one day following the day of deposit thereof, with delivery charges prepaid, with a national overnight delivery service; or (iv) three business days following the day of deposit thereof, with the United States Postal Service, by regular first class, certified or registered mail, return receipt requested, postage prepaid, in each case addressed as set forth below:
|
|
(i)
|
If to the Company:
Fuse Medical LLC.
4770 Bryant Irvin Court, Suite 300
Fort Worth, TX 76107
Attention: Jonathan Brown, Manager
Telephone: (817) 439-7025
Facsimile: (817) 887-1730
E-mail: jbrown@fusemedical.com
|
|
|
(ii)
|
If to Lender:
Cooks Bridge, LLC
4770 Bryant Irvin Court, Suite 400
Fort Worth, Texas 76107
Attention: Alan Meeker, Manager
Phone: 817-348-0010 x 101
Fax: 817-887-1269
E-mail: alan@cviewgroup.com
|
Either party may alter the address to which communications or copies are to be sent by giving notice of such change of address in conformity with the provisions of this paragraph for the giving of notice.
(h)
Section Headings
. The section headings in this Note are for convenience only; they form no part of this Note and shall not affect its interpretation.
(i)
Number of Days
. In computing the number of days for purposes of this Note, all days shall be counted, including Saturdays, Sundays and holidays; provided, however, that if the final day of any time period falls on a Saturday, Sunday or holiday, then the final day shall be deemed to be the next day which is not a Saturday, Sunday or holiday.
(j)
Loss or Destruction of Note
. Upon receipt by the Company of evidence satisfactory to it of the loss, then, destruction or mutilation of this Note, or in the case of loss, theft or destruction of an indemnity satisfactory to it, and in the case of mutilation, upon surrender and cancellation of this Note, the Company shall execute and deliver a new Note on like tenor and date.
(k)
Construction
. The language of this Note shall be construed as a whole according to its fair meaning. The word “include(s)” means “includes), without limitation,” and the word “including” means “including, but not limited to.” No inference in favor of, or against, the Company or Lender shall be drawn from the fact that one party has drafted any portion hereof
IN WITNESS WHEREOF
, the Company has caused this Note to be duly executed as of the date first set forth above.
|
|
FUSE MEDICAL, LLC.
|
|
|
|
|
|
|
|
|
By:
|
/s/
Jonathan Brown
|
|
|
|
|
Printed Name: Jonathan Brown
|
|
|
|
|
Its:
Manager
|
|
EXHIBIT 10.14
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY APPLICABLE STATE SECURITIES LAWS. THE NOTE MAY NOT BE SOLD OR OTHERWISE TRANSFERRED UNLESS (i) A REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND SUCH APPLICABLE STATE SECURITIES LAWS SHALL HAVE BECOME EFFECTIVE WITH REGARD THERETO OR (ii) IN THE OPINION OF COUNSEL IN FORM AND SUBSTANCE REASONABLY ACCEPTABLE TO THE COMPANY, REGISTRATION UNDER THE SECURITIES ACT AND SUCH APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED IN CONNECTION WITH A PROPOSED SALE OR TRANSFER.
FUSE MEDICAL, LLC.
PROMISSORY NOTE
FOR VALUE RECEIVED, FUSE MEDICAL, LLC
, a Delaware limited liability company (the “Company”), hereby promises to pay to the order of COOKS BRIDGE, LLC (“Lender”), at the office of Lender located at 4770 Bryant Irvin Court, Suite 400, Fort Worth, Texas 76107 the principal amount of fifty-six thousand four hundred sixty-one dollars and eighty-eight cents ($56,461.88), together with interest on the principal balance from time to time outstanding under this note (“Note”) from (and including) the date hereof until (but not including) the date of payment, at a per annum rate equal to the “Stated Interest Rate” specified below or, to the extent applicable, the “Default Interest Rate” specified below, in accordance with the following terms and conditions:
1.
Contracted For Rate of Interest
. The contracted for rate of interest of the indebtedness evidenced hereby shall consist of the following:
(a)
Stated Interest Rate
. The “Stated Interest Rate” shall equal 7.00% per annum applied to the principal balance from time to time outstanding hereunder.
(b)
Default Interest Rate
. The “Default Interest Rate” shall equal 18.00% per annum applied to the principal balance outstanding hereunder. The principal balance outstanding hereunder shall bear interest at the Default Interest Rate from the date of the occurrence of an Event of Default (as hereinafter defined) hereunder until the earlier of (i) the date on which the principal balance outstanding hereunder, together with all accrued interest and other amounts payable hereunder, are paid in full; or (ii) the date on which such Event of Default is timely cured in a manner satisfactory to Lender (A) if the Company is specifically granted a right to cure such Event of Default, or (B) if no such right to cure is specifically granted, then as and to the extent that Lender, in its sole and absolute discretion, permits such Event of Default to be cured.
2.
Payments
. This Note shall be payable as follows:
(a)
This Note shall be payable as follows: Eighteen (18) monthly payments of interest only on the principal balance then-outstanding, due and payable on the 1st day of each month, beginning on December 16, 2014, six (6) months from the date hereof (the “Effective Date”). The interest accruing in the first six (6) months shall be tolled and payable at Maturity Date; and
(b)
The outstanding principal amount of this Note, together with all accrued but unpaid interest due hereunder, shall be due and payable on June 16, 2016, unless mutually extended by the parties in writing, not to exceed five (5) years from the Effective Date (the “Maturity Date”). Payment of the principal and of interest on this Note is to be made at the offices of Lender or such other place as Lender shall designate in writing to the Company.
3.
Application of Payments
. Payments received by Lender with respect to the indebtedness evidenced hereby shall be applied in such order and manner as Lender in its sole and absolute discretion may elect. Unless otherwise elected by Lender, all such payments shall first be applied to accrued and unpaid interest at the Stated Interest Rate and, to the extent applicable, the Default Interest Rate, next to the principal balance then outstanding hereunder, and the remainder to Additional Sums (as hereinafter defined) or other costs or added charges provided for in this Note.
4.
Prepayments
. Payments of principal hereof may be made at any time, or from time to time, in whole or in part, without penalty, provided that all previously matured interest and other charges accrued to the date of prepayment are also paid in full. Notwithstanding any prepayment of principal hereof, (a) there will be no change in the Maturity Date or amount of payments due hereunder unless Lender, in its sole and absolute discretion, agrees in writing to such change; and (b) the Company’s obligations hereunder shall continue in effect, and this Note shall remain outstanding, unless and until the principal balance outstanding hereunder, together with all accrued interest and other amounts payable hereunder are paid in full and thereafter, and upon the Company’s request, Lender delivers to the Company the original executed copy of this Note, marked “cancelled.”
5.
Events of Default; Acceleration
. The occurrence of any one or more of the following events shall constitute an “Event of Default” hereunder, and upon such Event of Default, the entire principal balance outstanding hereunder, together with all accrued interest and other amounts payable hereunder, at the election of Lender, shall become immediately due and payable, without any notice to the Company, and without presentment, demand, protest or any other notice of any kind, all of which are hereby expressly waived by the Company:
(a)
Nonpayment of principal, interest or other amounts when the same shall become due and payable hereunder, and the Company does not cure such failure to pay within five calendar days after the date such payment is due;
(b)
The failure of the Company to comply with any other provision of this Note and the Company does not cure such non-compliance within ten calendar days after Lender delivers written notice to the Company specifying such failure to comply;
(c)
The dissolution, winding-up or termination of the existence of the Company or any other person or entity that is or may become liable hereunder, or the sale or disposition of substantially all of the assets of the Company’s business or the business of any other person or entity that is or may become liable hereunder, or the merger, consolidation, or reorganization of the Company with or into another entity in a transaction in which the holders of the Company’s outstanding voting securities prior to such to transaction do not hold a majority of the voting securities of the entity that survives such transaction;
(d)
The calling of a meeting of the creditors of the Company or any other person or entity who is or may become liable hereunder;
(e)
The making by the Company or any other person or entity who is or may become liable hereunder of an assignment for the benefit of its creditors; or
(f)
The appointment of (or application for appointment of) a receiver of the Company or any other person or entity who is or may become liable hereunder; or the voluntary filing by the Company, or any other person or entity who is or may become liable hereunder, of a petition or application for relief under federal bankruptcy law or any similar state or federal law; or the involuntary filing against the Company, or any other person or entity who is or may become liable hereunder, of a petition or application for relief under federal bankruptcy law or any similar state or federal law that is not stayed or dismissed within 90 days of filing; or the issuance of any writ of garnishment, execution or attachment for service with respect to the Company or any person or entity who is or may become liable hereunder or any property of the Company or property of any person or entity who is or may become liable hereunder.
6.
Additional Sums
. The Company agrees to pay an effective contracted for rate of interest equal to the rate of interest resulting from all interest payable as provided in this Note, plus the additional rate of interest resulting from the “Additional Sums,” as defined in the next sentence. All fees, charges, goods, things in action or any other sums or things of value, other than the interest resulting from the Stated Interest Rate and the Default Interest Rate, as applicable, paid or payable by the Company (collectively, the “Additional Sums”), whether pursuant to this Note or any other document or instrument in any way pertaining to this transaction, or otherwise with respect to this transaction, that, under the laws of the State of Texas, may be deemed to be interest with respect to this transaction, for the purpose of any laws of the State of Texas that may limit the maximum amount of interest to be charged with respect to this transaction, shall be payable by the Company as, and shall be deemed to be, additional interest, and for such purposes only, the agreed upon and “contracted for rate of interest” of this transaction shall be deemed to be increased by the rate of interest resulting from the Additional Sums. The Company understands and believes that this transaction complies with the usury laws of the State of Texas; however, if any interest or other charges in connection with this transaction are ever determined to exceed the maximum amount permitted by law, then the Company agrees that (a) the amount of interest or charges payable pursuant to this transaction shall be reduced to the maximum amount permitted by law; and (b) any excess amount previously collected from the Company in connection with this transaction that exceeded the maximum amount permitted by law shall be credited against the principal balance then outstanding hereunder, if the outstanding principal balance hereunder has been paid in full, the excess amount paid will be refunded to the Company.
7.
Waivers
. Except as set forth in this Note, to the extent permitted by applicable law, the Company, and each person who is or may become liable hereunder, severally waives and agrees not to assert (a) demand, diligence, grace, presentment for payment, protest, or notice of nonpayment, nonperformance, extension, dishonor, maturity, protest, acceleration, and default; and (b) recourse to guaranty or suretyship defenses (including, without limitation, the right to require the Lender to bring an action on this Note). No failure to accelerate the debt evidenced hereby by reason of default hereunder, acceptance of a past-due installment, or other indulgence granted from time to time shall be construed as a novation of this Note or as a waiver of such right of acceleration or of the right of Lender thereafter to insist upon strict compliance with the terms of this Note or to prevent the exercise of such right of acceleration or any other right granted hereunder or by applicable law. Lender may extend the time for payment of or renew this Note, or release any party from liability hereunder, and any such extension, renewal, release or other indulgence shall not alter or diminish the liability of the Company or any other person or entity who is or may become liable on this Note except to the extent expressly set forth in a writing evidencing or constituting such extension, renewal, release or other indulgence. No delay or failure of Lender in exercising any right hereunder shall affect such right, nor shall any single or partial exercise of any right preclude further exercise thereof.
8.
Subordination
. The indebtedness evidenced by this Note, including the principal hereof and interest hereon, is expressly subordinate and subject in right of payment to the prior payment in full of all “Senior Indebtedness,” whether now outstanding or hereafter incurred. The term “Senior Indebtedness” shall mean the principal of and premium, if any, and interest on (a) indebtedness (other than this Note) of the Company for money borrowed from or guaranteed to individuals or other persons, firms or corporations that engage in lending money, including, but without limitation, banks, trust companies, insurance companies and other financing institutions and charitable trusts, pension trusts and other investing organizations, evidenced by notes or similar obligations; (b) indebtedness of the Company evidenced by notes or debentures (other than this Note) issued under the provisions of an indenture or similar instrument between the Company and a bank or trust company; and (c) indebtedness incurred, assumed or guaranteed by the Company in connection with the acquisition by it or a subsidiary of any property or asset intended to be leased or sold to others in the ordinary course of the business of the Company or such subsidiary; unless, in each case, by the terms of the instrument creating or evidencing the indebtedness it is expressly provided that such indebtedness is not superior in right of payment to this Note.
9.
Securities Laws; Accredited Investor.
(a)
Status Under Securities Laws
. Lender acknowledges and agrees as follows:
(i)
Restricted Securities
. This Note is a “restricted security” within the meaning of Rule 144 under the Securities Act of 1933 (the “1933 Act”). Lender acknowledges and agrees that it is acquiring this Note without a view to the public distribution or resale in violation of applicable federal or state securities laws.
(ii)
No Registration
. This Note has not been registered under the 1933 Act or the securities laws of any other jurisdiction and must be held indefinitely without any transfer, sale or other disposition unless it is subsequently registered under the 1933 Act and the securities laws of any other applicable jurisdiction or, in the opinion of counsel to the Company, registration is not required under such acts or laws as the result of an available exemption. The Company is under no obligation to register this Note under the 1933 Act or the securities laws of any other jurisdiction or to take any action that would make available any exemption from such registration.
(iii)
Restriction on Other Securities
. Except upon certain limited circumstances, the restrictions on the transfer of this Note will also apply to any and all shares of capital stock or other securities issued or otherwise acquired with respect thereto including, without limitation, shares and securities issued or acquired as a result of any stock dividend, stock split or exchange or any distribution of shares or securities pursuant to any corporate reorganization, reclassification or similar event.
(iv)
Refusal to Transfer
. The Company may refuse to effect a transfer, sale or other disposition of this Note by the Lender or its successors or assigns otherwise than as contemplated hereby.
(b)
Accredited Investor
. The Lender is an accredited investor within the meaning of Regulation D promulgated under the 1933 Act.
10.
Miscellaneous
.
(a)
Severability
. If any provision hereof is invalid or unenforceable, the other provisions hereof shall remain in full force and effect and shall be construed so as to effectuate the other provisions hereof.
(b)
Amendment
. This Note may not be changed, modified or terminated, nor may any provision of this Note be waived except by an agreement in writing signed by the party to be charged.
(c)
Binding Nature of Agreement; Assignment
. The provisions of this Note shall be binding upon the Lender and the Company, and shall inure to the benefit of and bind the respective successors and assigns of the Lender and the Company. Neither the Company nor the Lender may assign or transfer this Note or assign or delegate any of its respective rights or obligations hereunder without the prior written consent of the other party in each instance.
(d)
Collection Costs and Expenses
. The Company agrees to pay all costs of collection, including, without limitation, attorneys’ fees, whether or not suit is filed, and all costs of suit and preparation for suit (whether at trial or appellate level), in the event any payment of principal, interest, or other amount is not paid when due, or if at any time the Lender should incur any attorneys’ fees in any proceeding under any federal bankruptcy law (or any similar state or federal law) in connection with the obligations evidenced hereby. In the event of any court proceeding, court costs and attorneys’ fees shall be set by the court and not by the jury and shall be included in any judgment obtained by the Lender.
(e)
Time of Essence
. Time is of the essence of this Note and each and every provision hereof.
(f)
Controlling Law
. This Note and all questions relating to its validity, interpretation, performance, and enforcement shall be governed by and construed in accordance with the laws of the State of Texas, notwithstanding any Texas or other conflict-of-law provisions to the contrary.
(g)
Notices
. All notices, requests, demands and other communications required or permitted under this Agreement shall be in writing and shall be deemed to have been duly given, made, and received (i) when delivered against receipt; (ii) upon receipt of a facsimile transmission; (iii) one day following the day of deposit thereof, with delivery charges prepaid, with a national overnight delivery service; or (iv) three business days following the day of deposit thereof, with the United States Postal Service, by regular first class, certified or registered mail, return receipt requested, postage prepaid, in each case addressed as set forth below:
|
|
(i)
|
If to the Company:
FUSE MEDICAL, LLC
4770 Bryant Irvin Court, Suite 300
Fort Worth, TX 76107
Telephone: (817) 348-0010 X101
Facsimile: (817) 887-1730
E-mail:
alan@fusemedical.com
|
|
|
(ii)
|
If to Lender:
COOKS BRIDGE, LLC
4770 Bryant Irvin Court, Suite 400
Fort Worth, TX 76107
Attention: Jonathan Brown, Chief Operating Officer
Phone: (817) 439-7025 X303
Fax: (817) 887-1730
E-mail:
jbrown@fusemedicaI.com
|
Either party may alter the address to which communications or copies are to be sent by giving notice of such change of address in conformity with the provisions of this paragraph for the giving of notice.
(h)
Section Headings
. The section headings in this Note are for convenience only; they form no part of this Note and shall not affect its interpretation.
(i)
Number of Days
. In computing the number of days for purposes of this Note, all days shall be counted, including Saturdays, Sundays and holidays; provided, however, that if the final day of any time period falls on a Saturday, Sunday or holiday, then the final day shall be deemed to be the next day which is not a Saturday, Sunday or holiday.
(j)
Loss or Destruction of Note
. Upon receipt by the Company of evidence satisfactory to it of the loss, theft, destruction or mutilation of this Note, or in the case of loss, theft or destruction of an indemnity satisfactory to it, and in the case of mutilation, upon surrender and cancellation of this Note, the Company shall execute and deliver a new Note on like tenor and date.
(k)
Construction
. The language of this Note shall be construed as a whole according to its fair meaning. The word “include(s)” means “include(s), without limitation,” and the word “including” means “including, but not limited to.” No inference in favor of, or against, the Company or Lender shall be drawn from the fact that one party has drafted any portion hereof.
IN WITNESS WHEREOF
, the Company has caused this Note to be duly executed as of the date first set forth above.
|
|
FUSE MEDICAL, LLC.
|
|
|
|
|
|
|
|
|
By:
|
/s/ D. Alan Meeker
|
|
|
|
|
Printed Name: D. Alan Meeker
|
|
|
|
|
Its:
Manager
|
|
7
EXHIBIT 10.15
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY APPLICABLE STATE SECURITIES LAWS. THE NOTE MAY NOT BE SOLD OR OTHERWISE TRANSFERRED UNLESS (i) A REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND SUCH APPLICABLE STATE SECURITIES LAWS SHALL RAVE BECOME EFFECTNE WITH REGARD THERETO OR (ii) IN THE OPINION OF COUNSEL IN FORM AND SUBSTANCE REASONABLY ACCEPTABLE TO THE COMPANY, REGISTRATION UNDER THE SECURITIES ACT AND SUCH APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED IN CONNECTION WITH A PROPOSED SALE OR TRANSFER.
FUSE MEDICAL, LLC.
PROMISSORY NOTE
|
$116,777.25
|
|
February 1, 2014
|
FOR VALUE RECEIVED, FUSE MEDICAL, LLC
, a Delaware limited liability company (the “Company”), hereby promises to pay to the order of Cooks Bridge, LLC (“Lender”), at the office of Lender located at 4770 Bryant Irvin Court, Suite 400, Fort Worth, Texas 76107 the principal amount of one hundred sixteen thousand seven hundred seventy seven dollars and twenty five cents ($116,777.25), together with interest on the principal balance from time to time outstanding under this note (“Note”) from (and including) the date hereof until (but not including) the date of payment, at a per annum rate equal to the “Stated Interest Rate” specified below or, to the extent applicable, the “Default Interest Rate” specified below, in accordance with the following terms and conditions:
1.
Contracted For Rate of Interest.
The contracted for rate of interest of the indebtedness evidenced hereby shall consist of the following:
(a)
Stated Interest Rate.
The “Stated Interest Rate” shall equal 7.00% per annum applied to the principal balance from time to time outstanding hereunder.
(b)
Default Interest Rate.
The “Default Interest Rate” shall equal 18.00% per annum applied to the principal balance outstanding hereunder. The principal balance outstanding hereunder shall bear interest at the Default Interest Rate from the date of the occurrence of an Event of Default (as hereinafter defined) hereunder until the earlier of (i) the date on which the principal balance outstanding hereunder, together with all accrued interest and other amounts payable hereunder, are paid in full; or (ii) the date on which such Event of Default is timely cured in a manner satisfactory to Lender (A) if the Company is specifically granted a right to cure such Event of Default, or (B) if no such right to cure is specifically granted, then as and to the extent that Lender, in its sole and absolute discretion, permits such Event of Default to be cured.
2.
Payments.
This Note shall be payable as follows:
(a)
Twenty four (24) monthly payments of interest only on the principal balance then-outstanding, due and payable on the 1st day of each month, beginning on August 1, 2014, not to exceed six (6) months from the date hereof (the “Effective Date”); and
(b)
The outstanding principal amount of this Note, together with all accrued but unpaid interest due hereunder, shall be due and payable on January 31, 2016 , not to exceed five (5) years from the Effective Date (the “Maturity Date”). Payment of the principal and of interest on this Note is to be made at the offices of Lender or such other place as Lender shall designate in writing to the Company.
3.
Application of Payments.
Payments received by Lender with respect to the indebtedness evidenced hereby shall be applied in such order and manner as Lender in its sole and absolute discretion may elect. Unless otherwise elected by Lender, all such payments shall first be applied to accrued and unpaid interest at the Stated Interest Rate and, to the extent applicable, the Default Interest Rate, next to the principal balance then outstanding hereunder, and the remainder to Additional Sums (as hereinafter defined) or other costs or added charges provided for in this Note.
4.
Prepayments.
Payments of principal hereof may be made at any time, or from time to time, in whole or in part, without penalty, provided that all previously matured interest and other charges accrued to the date of prepayment are also paid in full. Notwithstanding any prepayment of principal hereof, (a) there will be no change in the Maturity Date or amount of payments due hereunder unless Lender, in its so]e and absolute discretion, agrees in writing to such change and (b) the Company’s obligations hereunder shall continue in effect, and this Note shall remain outstanding, unless and until the principal balance outstanding hereunder, together with all accrued interest and other amounts payable hereunder are paid in full and thereafter, and upon the Company’s request, Lender delivers to the Company the original executed copy of this Note, marked “cancelled.”
5.
Events of Default; Acceleration.
The occurrence of any one or more of the following events shall constitute an “Event of Default” hereunder, and upon such Event of Default, the entire principal balance outstanding hereunder, together with all accrued interest and other amounts payable hereunder, at the election of Lender, shall become immediately due and payable, without any notice to the Company, and without presentment, demand, protest or any other notice of any kind, all of which are hereby expressly waived by the Company:
(a)
Nonpayment of principal, interest or other amounts when the same shall become due and payable hereunder, and the Company does not cure such failure to pay within five calendar days after the date such payment is due;
(b)
The failure of the Company to comply with any other provision of this Note and the Company does not cure such non-compliance within ten calendar days after Lender delivers written notice to the Company specifying such failure to comply;
(c)
The dissolution, winding-up or termination of the existence of the Company or any other person or entity that is or may become liable hereunder, or the sale or disposition of substantially all of the assets of the Company’s business or the business of any other person or entity that is or may become liable hereunder, or the merger, consolidation, or reorganization of the Company with or into another entity in a transaction in which the holders of the Company’s outstanding voting securities prior to such to transaction do not hold a majority of the voting securities of the entity that survives such transaction:
(d)
The calling of a meeting of the creditors of the Company or any other person or entity who is or may become liable hereunder;
(e)
The making by the Company or any other person or entity who is or may become liable hereunder of an assignment for the benefit of its creditors; or
(f)
The appointment of (or application for appointment of) a receiver of the Company or any other person or entity who is or may become liable hereunder; or the voluntary filing by the Company, or any other person or entity who is or may become liable hereunder, of a petition or application for relief under federal bankruptcy law or any similar state or federal law; or the involuntary filing against the Company, or any other person or entity who is or may become liable hereunder, of a petition or application for relief under federal bankruptcy law or any similar state or federal law that is not stayed or dismissed within 90 days of filing; or the issuance of any writ of garnishment, execution or attachment for service with respect to the Company or any person or entity who is or may become liable hereunder or any property of the Company or property of any person or entity who is or may become liable hereunder.
6.
Additional Sums.
The Company agrees to pay an effective contracted for rate of interest equal to the rate of interest resulting from all interest payable as provided in this Note, plus the additional rate of interest resulting from the “Additional Sums,” as defined in the next sentence. All fees, charges, goods, things in action or any other sums or things of value, other than the interest resulting from the Stated Interest Rate and the Default Interest Rate, as applicable, paid or payable by the Company (collectively, the “Additional Sums”), whether pursuant to this Note or any other document or instrument in any way pertaining to this transaction, or otherwise with respect to this transaction, that, under the Laws of the State of Texas, may be deemed to be interest with respect to this transaction, for the purpose of any laws of the State of Texas that may limit the maximum amount of interest to be charged with respect to this transaction, shall be payable by the Company as, and shall be deemed to be, additional interest, and for such purposes only, the agreed upon and “contracted for rate of interest” of this transaction shall be deemed to be increased by the rate of interest resulting from the Additional Sums. The Company understands and believes that this transaction complies with the usury laws of the State of Texas; however, if any interest or other charges in connection with this transaction are ever determined to exceed the maximum amount permitted by law, then the Company agrees that (a) the amount of interest or charges payable pursuant to this transaction shall be reduced to the maximum amount permitted by law; and (b) any excess amount previously collected from the Company in connection with this transaction that exceeded the maximum amount permitted by law shall be credited against the principal balance then outstanding hereunder, if the outstanding principal balance hereunder has been paid in full, the excess amount paid will be refunded to the Company.
7.
Waivers.
Except as set forth in this Note, to the extent permitted by applicable law, the Company, and each person who is or may become liable hereunder, severally waives and agrees not to assert (a) demand, diligence, grace, presentment for payment, protest, or notice of nonpayment, nonperformance, extension, dishonor, maturity, protest, acceleration, and default and (b) recourse to guaranty or suretyship defenses (including, without limitation, the right to require the Lender to bring an action on this Note). No failure to accelerate the debt evidenced hereby by reason of default hereunder, acceptance of a past-due installment, or other indulgence granted from time to time shall be construed as a novation of this Note or as a waiver of such right of acceleration or of the right of Lender thereafter to insist upon strict compliance with the terms of this Note or to prevent the exercise of such right of acceleration or any other right granted hereunder or by applicable law. Lender may extend the time for payment of or renew this Note, or release any party from liability hereunder, and any such extension, renewal, release or other indulgence shall not alter or diminish the liability of the Company or any other person or entity who is or may become liable on this Note except to the extent expressly set forth in a writing evidencing or constituting such extension, renewal, release or other indulgence. No delay or failure of Lender in exercising any right hereunder shall affect such right, nor shall any single or partial exercise of any right preclude further exercise thereof.
8.
Subordination.
The indebtedness evidenced by this Note, including the principal hereof and interest hereon, is expressly subordinate and subject in right of payment to the prior payment in full of all “Senior Indebtedness,” whether now outstanding or hereafter incurred. The term “Senior Indebtedness” shall mean the principal of and premium, if any, and interest on (a) indebtedness (other than this Note) of the Company for money borrowed from or guaranteed to individuals or other persons, firms or corporations that engage in lending money, including, but without limitation, banks, trust companies insurance companies and other financial institutions and charitable trusts, pension trusts and other investing organizations, evidenced by notes or similar obligations; (b) indebtedness of the Company evidenced by notes or debentures (other than this Note) issued under the provisions of an indenture or similar instrument between the Company and a bank or trust company; and (c) indebtedness incurred, assumed or guaranteed by the Company in connection with the acquisition by it or a subsidiary of any property or asset intended to be leased or sold to others in the ordinary course of the business of the Company or such subsidiary; unless, in each case, by the terms of the instrument creating or evidencing the indebtedness it is expressly provided that such indebtedness is not superior in right of payment to this Note.
9.
Securities Laws; Accredited Investor.
(a)
Status Under Securities Laws.
Lender acknowledges and agrees as follows:
(i)
Restricted Securities.
This Note is a “restricted security” within the meaning of Rule 144 under the Securities Act of 1933 (the “1933 Act”). Lender acknowledges and agrees that it is acquiring this Note without a view to the public distribution or resale in violation of applicable federal or state securities laws.
(ii)
No Registration.
This Note has not been registered under the 1933 Act or the securities laws of any other jurisdiction and must be held indefinitely without any transfer, sale or other disposition unless it is subsequently registered under the 1933 Act and the securities laws of any other applicable jurisdiction or, in the opinion of counsel to the Company, registration is not required under such acts or laws as the result of an available exemption. The Company is under no obligation to register this Note under the 1933 Act or the securities laws of any other jurisdiction or to take any action that would make available any exemption from such registration.
(iii)
Restriction on Other Securities.
Except upon certain limited circumstances, the restrictions on the transfer of this Note will also apply to any and all shares of capital stock or other securities issued or otherwise acquired with respect thereto including, without limitation, shares and securities issued or acquired as a result of any stock dividend, stock split or exchange or any distribution of shares or securities pursuant to any corporate reorganization, reclassification or similar event.
(iv)
Refusal to Transfer.
The Company may refuse to affect a transfer, sale or other disposition of this Note by the Lender or its successors or assigns otherwise than as contemplated hereby.
(b)
Accredited Investor.
The Lender is an accredited investor within the meaning of Regulation D promulgated under the 1933 Act.
10.
Miscellaneous.
(a)
Severability.
If any provision hereof is invalid or unenforceable, the other provisions hereof shall remain in fu11 force and effect and shall be construed so as to effectuate the other provisions hereof.
(b)
Amendment.
This Note may not be changed, modified or terminated, nor may any provision of this Note be waived except by an agreement in writing signed by the party to be charged.
(c)
Binding Nature of Agreement; Assignment.
The provisions of this Note shall be binding upon the Lender and the Company, and shall inure to the benefit of and bind the respective successors and assigns of the Lender and the Company. Neither the Company nor the Lender may assign or transfer this Note or assign or delegate any of its respective rights or obligations hereunder without the prior written consent of the other party in each instance.
(d)
Collection Costs and Expenses.
The Company agrees to pay all costs of collection, including, without limitation, attorneys’ fees, whether or not suit is filed, and all costs of suit and preparation for suit (whether at trial or appellate level), in the event any payment of principal, interest, or other amount is not paid when due, or if at any time the Lender should incur any attorneys’ fees in any proceeding under any federal bankruptcy law (or any similar state or federal law) in connection with the obligations evidenced hereby. In the event of any court proceeding, court costs and attorneys’ fees shall be set by the court and not by the jury and shall be included in any judgment obtained by the Lender.
(e)
Time of Essence.
Time is of the essence of this Note and each and every provision hereof.
(f)
Controlling Law.
This Note and all questions relating to its validity, interpretation, performance, and enforcement shall be governed by and construed in accordance with the laws of the State of Texas, notwithstanding any Texas or other conflict-of-law provisions to the contrary.
(g)
Notices.
All notices, requests, demands and other communications required or permitted under this Agreement shall be in writing and shall be deemed to have been duly given, made, and received (i) when delivered against receipt; (ii) upon receipt of a facsimile transmission; (iii) one day following the day of deposit thereof, with delivery charges prepaid, with a national overnight delivery service; or (iv) three business days following the day of deposit thereof, with the United States Postal Service, by regular first class, certified or registered mail, return receipt requested, postage prepaid, in each case addressed as set forth below:
|
|
(i)
|
If to the Company:
Fuse Medical LLC.
4770 Bryant Irvin Court, Suite 300
Fort Worth, TX 76107
Attention: Jonathan Brown, Manager
Telephone: (8 I 7) 439-7025
Facsimile: (817) 887- 1730
E-mail: jbrown@fusemedical.com
|
|
|
(ii)
|
If to Lender:
Cooks Bridge, LLC
4770 Bryant Irvin Court, Suite 400
Fort Worth, Texas 761 07
Attention: Alan Meeker, Manager
Phone: 817-348-0010 x 101
Fax: 817-887-1269
E-mail: alan@cviewgroup.com
|
Either party may alter the address to which communications or copies are to be sent by giving notice of such change of address in conformity with the provisions of this paragraph for the giving of notice.
(h)
Section Headings.
The section headings in this Note arc for convenience only; they form no part of this Note and shall not affect its interpretation.
(i)
Number of Days.
In computing the number of days for purposes of this Note, all days shall be counted, including Saturdays, Sundays and holidays; provided, however, that if the final day of any time period falls on a Saturday, Sunday or holiday, then the final day shall be deemed to be the next day which is not a Saturday, Sunday or holiday.
(j)
Loss or Destruction of Note.
Upon receipt by the Company of evidence satisfactory to it of the loss, theft, destruction or mutilation of this Note, or in the case of loss, theft or destruction of an indemnity satisfactory to it, and in the case of mutilation, upon surrender and cancellation of this Note, the Company shall execute and deliver a new Note on like tenor and date.
(k)
Construction.
The language of this Note shall be construed as a whole according to its fair meaning. The word “include(s)” means “include(s), without limitation,” and the word “including” means “including. but not limited to.” No inference in favor of, or against, the Company or Lender shall be drawn from the fact that one party has drafted any portion hereof.
IN WITNESS WHEREOF
, the Company has caused this Note to be duly executed as of the date first set forth above.
|
|
FUSE MEDICAL, LLC.
|
|
|
|
|
|
|
|
|
By:
|
/s/
Jonathan Brown
|
|
|
|
|
Printed Name: Jonathan Brown
|
|
|
|
|
Its: Manager
|
|
EXHIBIT 10.16
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY APPLICABLE STATE SECURITIES LAWS. THE NOTE MAY NOT BE SOLD OR OTHERWISE TRANSFERRED UNLESS (i) A REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND SUCH APPLICABLE STATE SECURITIES LAWS SHALL HAVE BECOME EFFECTIVE WITH REGARD THERETO OR (ii) IN THE OPINION OF COUNSEL IN FORM AND SUBSTANCE REASONABLY ACCEPTABLE TO THE COMPANY, REGISTRATION UNDER THE SECURITIES ACT AND SUCH APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED IN CONNECTION WITH A PROPOSED SALE OR TRANSFER.
FUSE MEDICAL, LLC.
PROMISSORY NOTE
FOR VALUE RECEIVED, FUSE MEDICAL, LLC
, a Delaware limited liability company (the “Company”), hereby promises to pay to the order of Cooks Bridge, LLC (“Lender”), at the office of Lender located at 4770 Bryant Irvin Court, Suite 400, Fort Worth, Texas 76107 the principal amount of seventy-five thousand dollars ($75,000.00), together with interest on the principal balance from time to time outstanding under this note (“Note”) from (and including) the date hereof until (but not including) the date of payment, at a per annum rate equal to the “Stated Interest Rate” specified below or, to the extent applicable, the “Default Interest Rate” specified below, in accordance with the following terms and conditions:
1.
Contracted For Rate of Interest
. The contracted for rate of interest of the indebtedness evidenced hereby shall consist of the following:
(a)
Stated Interest Rate
. The “Stated Interest Rate” shall equal 7.00% per annum applied to the principal balance from time to time outstanding hereunder.
(b)
Default Interest Rate
. The “Default Interest Rate” shall equal 18.00% per annum applied to the principal balance outstanding hereunder. The principal balance outstanding hereunder shall bear interest at the Default Interest Rate from the date of the occurrence of an Event of Default (as hereinafter defined) hereunder until the earlier of (i) the date on which the principal balance outstanding hereunder, together with all accrued interest and other amounts payable hereunder, are paid in full; or (ii) the date on which such Event of Default is timely cured in a manner satisfactory to Lender (A) if the Company is specifically granted a right to cure such Event of Default, or (B) if no such right to cure is specifically granted, then as and to the extent that Lender, in its sole and absolute discretion, permits such Event of Default to be cured.
2.
Payments
. This Note shall be payable as follows:
(a)
This Note shall be payable as follows: Eighteen (18) monthly payments of interest only on the principal balance then-outstanding, due and payable on the 1st day of each month, beginning on November 8, 2014, six (6) months from the date hereof (the “Effective Date”). The interest accruing in the first six (6) months shall be tolled and payable at Maturity Date; and
(b)
The outstanding principal amount of this Note, together with all accrued but unpaid interest due hereunder, shall be due and payable on May 8, 2016, unless mutually extended by the parties in writing, not to exceed five (5) years from the Effective Date (the “Maturity Date”). Payment of the principal and of interest on this Note is to be made at the offices of Lender or such other place as Lender shall designate in writing to the Company.
3.
Application of Payments
. Payments received by Lender with respect to the indebtedness evidenced hereby shall be applied in such order and manner as Lender in its sole and absolute discretion may elect. Unless otherwise elected by Lender, all such payments shall first be applied to accrued and unpaid interest at the Stated Interest Rate and, to the extent applicable, the Default Interest Rate, next to the principal balance then outstanding hereunder, and the remainder to Additional Sums (as hereinafter defined) or other costs or added charges provided for in this Note.
4.
Prepayments
. Payments of principal hereof may be made at any time, or from time to time, in whole or in part, without penalty, provided that all previously matured interest and other charges accrued to the date of prepayment are also paid in full. Notwithstanding any prepayment of principal hereof (a) there will be no change in the Maturity Date or amount of payments due hereunder unless Lender, in its sole and absolute discretion, agrees in writing to such change; and (b) the Company’s obligations hereunder shall continue in effect, and this Note shall remain outstanding, unless and until the principal balance outstanding hereunder, together with all accrued interest and other amounts payable hereunder are paid in full and thereafter, and upon the Company’s request, Lender delivers to the Company the original executed copy of this Note, marked “cancelled.”
5.
Events of Default; Acceleration
. The occurrence of any one or more of the following events shall constitute an “Event of Default” hereunder, and upon such Event of Default, the entire principal balance outstanding hereunder, together with all accrued interest and other amounts payable hereunder, at the election of Lender, shall become immediately due and payable, without any notice to the Company, and without presentment, demand, protest or any other notice of any kind, all of which are hereby expressly waived by the Company:
(a)
Nonpayment of principal, interest or other amounts when the same shall become due and payable hereunder, and the Company does not cure such failure to pay within five calendar days after the date such payment is due;
(b)
The failure of the Company to comply with any other provision of this Note and the Company does not cure such non-compliance within ten calendar days after Lender delivers written notice to the Company specifying such failure to comply;
(c)
The dissolution, winding-up or termination of the existence of the Company or any other person or entity that is or may become liable hereunder, or the sale or disposition of substantially all of the assets of the Company’s business or the business of any other person or entity that is or may become liable hereunder, or the merger, consolidation, or reorganization of the Company with or into another entity in a transaction in which the holders of the Company’s outstanding voting securities prior to such to transaction do not hold a majority of the voting securities of the entity that survives such transaction;
(d)
The calling of a meeting of the creditors of the Company or any other person or entity who is or may become liable hereunder;
(e)
The making by the Company or any other person or entity who is or may become liable hereunder of an assignment for the benefit of its creditors; or
(f)
The appointment of (or application for appointment of) a receiver of the Company or any other person or entity who is or may become liable hereunder; or the voluntary filing by the Company, or any other person or entity who is or may become liable hereunder, of a petition or application for relief under federal bankruptcy law or any similar state or federal law; or the involuntary filing against the Company, or any other person or entity who is or may become liable hereunder, of a petition or application for relief under federal bankruptcy law or any similar state or federal law that is not stayed or dismissed within 90 days of filing; or the issuance of any writ of garnishment, execution or attachment for service with respect to the Company or any person or entity who is or may become liable hereunder or any property of the Company or property of any person or entity who is or may become liable hereunder.
6.
Additional Sums
. The Company agrees to pay an effective contracted for rate of interest equal to the rate of interest resulting from all interest payable as provided in this Note, plus the additional rate of interest resulting from the “Additional Sums,” as defined in the next sentence. All fees, charges, goods, things in action or any other sums or things of value, other than the interest resulting from the Stated Interest Rate and the Default Interest Rate, as applicable, paid or payable by the Company (collectively, the “Additional Sums”), whether pursuant to this Note or any other document or instrument in any way pertaining to this transaction, or otherwise with respect to this transaction, that, under the laws of the State of Texas, may be deemed to be interest with respect to this transaction, for the purpose of any laws of the State of Texas that may limit the maximum amount of interest to be charged with respect to this transaction, shall be payable by the Company as, and shall be deemed to be, additional interest, and for such purposes only, the agreed upon and “contracted for rate of interest” of this transaction shall be deemed to be increased by the rate of interest resulting from the Additional Sums. The Company understands and believes that this transaction complies with the usury laws of the State of Texas; however, if any interest or other charges in connection with this transaction are ever determined to exceed the maximum amount permitted by law, then the Company agrees that (a) the amount of interest or charges payable pursuant to this transaction shall be reduced to the maximum amount permitted by law; and (b) any excess amount previously collected from the Company in connection with this transaction that exceeded the maximum amount permitted by law shall be credited against the principal balance then outstanding hereunder, if the outstanding principal balance hereunder has been paid in full, the excess amount paid will be refunded to the Company.
7.
Waivers
. Except as set forth in this Note, to the extent permitted by applicable law, the Company, and each person who is or may become liable hereunder, severally waives and agrees not to assert (a) demand, diligence, grace, presentment for payment, protest, or notice of nonpayment, nonperformance, extension, dishonor, maturity, protest, acceleration, and default; and (b) recourse to guaranty or suretyship defenses (including, without limitation, the right to require the Lender to bring an action on this Note). No failure to accelerate the debt evidenced hereby by reason of default hereunder, acceptance of a past-due installment, or other indulgence granted from time to time shall be construed as a novation of this Note or as a waiver of such right of acceleration or of the right of Lender thereafter to insist upon strict compliance with the terms of this Note or to prevent the exercise of such right of acceleration or any other right granted hereunder or by applicable law. Lender may extend the time for payment of or renew this Note, or release any party from liability hereunder, and any such extension, renewal, release or other indulgence shall not alter or diminish the liability of the Company or any other person or entity who is or may become liable on this Note except to the extent expressly set forth in a writing evidencing or constituting such extension, renewal, release or other indulgence. No delay or failure of Lender in exercising any right hereunder shall affect such right, nor shall any single or partial exercise of any right preclude further exercise thereof.
8.
Subordination
. The indebtedness evidenced by this Note, including the principal hereof and interest hereon, is expressly subordinate and subject in right of payment to the prior payment in full of all “Senior Indebtedness,” whether now outstanding or hereafter incurred. The term “Senior Indebtedness” shall mean the principal of and premium, if any, and interest on (a) indebtedness (other than this Note) of the Company for money borrowed from or guaranteed to individuals or other persons, firms or corporations that engage in lending money, including, but without limitation, banks, trust companies, insurance companies and other financing institutions and charitable trusts, pension trusts and other investing organizations, evidenced by notes or similar obligations; (b) indebtedness of the Company evidenced by notes or debentures (other than this Note) issued under the provisions of an indenture or similar instrument between the Company and a bank or trust company; and (c) indebtedness incurred, assumed or guaranteed by the Company in connection with the acquisition by it or a subsidiary of any property or asset intended to be leased or sold to others in the ordinary course of the business of the Company or such subsidiary; unless, in each case, by the terms of the instrument creating or evidencing the indebtedness it is expressly provided that such indebtedness is not superior in right of payment to this Note.
9.
Securities Laws; Accredited Investor.
(a)
Status Under Securities Laws
. Lender acknowledges and agrees as follows:
(i)
Restricted Securities
. This Note is a “restricted security” within the meaning of Rule 144 under the Securities Act of 1933 (the “1933 Act”). Lender acknowledges and agrees that it is acquiring this Note without a view to the public distribution or resale in violation of applicable federal or state securities laws.
(ii)
No Registration
. This Note has not been registered under the 1933 Act or the securities laws of any other jurisdiction and must be held indefinitely without any transfer, sale or other disposition unless it is subsequently registered under the 1933 Act and the securities laws of any other applicable jurisdiction or, in the opinion of counsel to the Company, registration is not required under such acts or laws as the result of an available exemption. The Company is under no obligation to register this Note under the 1933 Act or the securities laws of any other jurisdiction or to take any action that would make available any exemption from such registration.
(iii)
Restriction on Other Securities
. Except upon certain limited circumstances, the restrictions on the transfer of this Note will also apply to any and all shares of capital stock or other securities issued or otherwise acquired with respect thereto including, without limitation, shares and securities issued or acquired as a result of any stock dividend, stock split or exchange or any distribution of shares or securities pursuant to any corporate reorganization, reclassification or similar event.
(iv)
Refusal to Transfer
. The Company may refuse to effect a transfer, sale or other disposition of this Note by the Lender or its successors or assigns otherwise than as contemplated hereby.
(b)
Accredited Investor
. The Lender is an accredited investor within the meaning of Regulation D promulgated under the 1933 Act.
10.
Miscellaneous
.
(a)
Severability
. If any provision hereof is invalid or unenforceable, the other provisions hereof shall remain in full force and effect and shall be construed so as to effectuate the other provisions hereof.
(b)
Amendment
. This Note may not be changed, modified or terminated, nor may any provision of this Note be waived except by an agreement in writing signed by the party to be charged.
(c)
Binding Nature of Agreement; Assignment
. The provisions of this Note shall be binding upon the Lender and the Company, and shall inure to the benefit of and bind the respective successors and assigns of the Lender and the Company. Neither the Company nor the Lender may assign or transfer this Note or assign or delegate any of its respective rights or obligations hereunder without the prior written consent of the other party in each instance.
(d)
Collection Costs and Expenses
. The Company agrees to pay all costs of collection, including, without limitation, attorneys’ fees, whether or not suit is filed, and all costs of suit and preparation for suit (whether at trial or appellate level), in the event any payment of principal, interest, or other amount is not paid when due, or if at any time the Lender should incur any attorneys’ fees in any proceeding under any federal bankruptcy law (or any similar state or federal law) in connection with the obligations evidenced hereby. In the event of any court proceeding, court costs and attorneys’ fees shall be set by the court and not by the jury and shall be included in any judgment obtained by the Lender.
(e)
Time of Essence
. Time is of the essence of this Note and each and every provision hereof.
(f)
Controlling Law
. This Note and all questions relating to its validity, interpretation, performance, and enforcement shall be governed by and construed in accordance with the laws of the State of Texas, notwithstanding any Texas or other conflict-of-law provisions to the contrary.
(g)
Notices
. All notices, requests, demands and other communications required or permitted under this Agreement shall be in writing and shall be deemed to have been duly given, made, and received (i) when delivered against receipt; (ii) upon receipt of a facsimile transmission; (iii) one day following the day of deposit thereof, with delivery charges prepaid, with a national overnight delivery service; or (iv) three business days following the day of deposit thereof, with the United States Postal Service, by regular first class, certified or registered mail, return receipt requested, postage prepaid, in each case addressed as set forth below:
|
|
(i)
|
If to the Company:
Fuse Medical LLC.
4770 Bryant Irvin Court, Suite 300
Fort Worth, TX 76107
Attention: Jonathan Brown, Manager
Telephone: (817) 439-7025
Facsimile: (817) 887-1730
E-mail:
jbrown@fusemedical.com
|
|
|
(ii)
|
If to Lender:
Cooks Bridge, LLC
4770 Bryant Irvin Court, Suite 400
Fort Worth, Texas 76107
Attention: Alan Meeker, Manager
Phone: 817-348-0010 x 101
Fax: 817-887-1269
E-mail:
alan@cviewgroup.com
|
Either party may alter the address to which communications or copies are to be sent by giving notice of such change of address in conformity with the provisions of this paragraph for the giving of notice.
(h)
Section Headings
. The section headings in this Note are for convenience only; they form no part of this Note and shall not affect its interpretation.
(i)
Number of Days
. In computing the number of days for purposes of this Note, all days shall be counted, including Saturdays, Sundays and holidays; provided, however, that if the final day of any time period falls on a Saturday, Sunday or holiday, then the final day shall be deemed to be the next day which is not a Saturday, Sunday or holiday.
(j)
Loss or Destruction of Note
. Upon receipt by the Company of evidence satisfactory to it of the loss, theft, destruction or mutilation of this Note, or in the case of loss, theft or destruction of an indemnity satisfactory to it, and in the case of mutilation, upon surrender and cancellation of this Note, the Company shall execute and deliver a new Note on like tenor and date.
(k)
Construction
. The language of this Note shall be construed as a whole according to its fair meaning. The word “include(s)” means “include(s), without limitation,” and the word “including” means “including, but not limited to.” No inference in favor of or against, the Company or Lender shall be drawn from the fact that one party has drafted any portion hereof.
IN WITNESS WHEREOF
, the Company has caused this Note to be duly executed as of the date first set forth above.
|
|
FUSE MEDICAL, LLC.
|
|
|
|
|
|
|
|
|
By:
|
/s/ D. Alan Meeker
|
|
|
|
|
Printed Name: D. Alan Meeker
|
|
|
|
|
Its: Manager
|
|
EXHIBIT 10.17
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY APPLICABLE STATE SECURITIES LAWS. THE NOTE MAY NOT BE SOLD OR OTHERWISE TRANSFERRED UNLESS (i) A REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND SUCH APPLICABLE STATE SECURITIES LAWS SHALL HAVE BECOME EFFECTIVE WITH REGARD THERETO OR (ii) IN THE OPINION OF COUNSEL IN FORM AND SUBSTANCE REASONABLY ACCEPTABLE TO THE COMPANY, REGISTRATION UNDER THE SECURITIES ACT AND SUCH APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED IN CONNECTION WITH A PROPOSED SALE OR TRANSFER.
FUSE MEDICAL, LLC.
PROMISSORY NOTE
|
$116,777.24
|
|
February 6, 2014
|
FOR VALUE RECEIVED, FUSE MEDICAL, LLC
, a Delaware limited liability company (the “Company”), hereby promises to pay to the order of WORLD HEALTH INDUSTRIES, INC., a Mississippi corporation and WHIG, LLC, a Mississippi limited liability company (“Lender”), at the office of Lender located at 1485 Livingston Lane, Jackson, Mississippi 39213 the principal amount of one hundred sixteen thousand seven hundred seventy-seven dollars and twenty-four cents ($116,777.24), together with interest on the principal balance from time to time outstanding under this note (“Note”) from (and including) the date hereof until (but not including) the date of payment, at a per annum rate equal to the “Stated Interest Rate” specified below or, to the extent applicable, the “Default Interest Rate” specified below, in accordance with the following terms and conditions:
1.
Contracted For Rate of Interest
. The contracted for rate of interest of the indebtedness evidenced hereby shall consist of the following:
(a)
Stated Interest Rate
. The “Stated Interest Rate” shall equal 7.00% per annum applied to the principal balance from time to time outstanding hereunder.
(b)
Default Interest Rate
. The “Default Interest Rate” shall equal 18.00% per annum applied to the principal balance outstanding hereunder. The principal balance outstanding hereunder shall bear interest at the Default Interest Rate from the date of the occurrence of an Event of Default (as hereinafter defined) hereunder until the earlier of (i) the date on which the principal balance outstanding hereunder, together with all accrued interest and other amounts payable hereunder, are paid in full; or (ii) the date on which such Event of Default is timely cured in a manner satisfactory to Lender (A) if the Company is specifically granted a right to cure such Event of Default, or (B) if no such right to cure is specifically granted, then as and to the extent that Lender, in its sole and absolute discretion, permits such Event of Default to be cured.
2.
Payments
. This Note shall be payable as follows:
(a)
This Note shall be payable as follows: Eighteen (18) monthly payments of interest only on the principal balance then-outstanding, due and payable on the 1st day of each month, beginning on August 6, 2014, six (6) months from the date hereof (the “Effective Date”). The interest accruing in the first six (6) months shall be tolled and payable at Maturity Date; and
(b)
The outstanding principal amount of this Note, together with all accrued but unpaid interest due hereunder, shall be due and payable on February 6, 2016, unless mutually extended by the parties in writing, not to exceed five (5) years from the Effective Date (the “Maturity Date”). Payment of the principal and of interest on this Note is to be made at the offices of Lender or such other place as Lender shall designate in writing to the Company.
3.
Application of Payments
. Payments received by Lender with respect to the indebtedness evidenced hereby shall be applied in such order and manner as Lender in its sole and absolute discretion may elect. Unless otherwise elected by Lender, all such payments shall first be applied to accrued and unpaid interest at the Stated Interest Rate and, to the extent applicable, the Default Interest Rate, next to the principal balance then outstanding hereunder, and the remainder to Additional Sums (as hereinafter defined) or other costs or added charges provided for in this Note.
4.
Prepayments
. Payments of principal hereof may be made at any time, or from time to time, in whole or in part, without penalty, provided that all previously matured interest and other charges accrued to the date of prepayment are also paid in full. Notwithstanding any prepayment of principal hereof, (a) there will be no change in the Maturity Date or amount of payments due hereunder unless Lender, in its sole and absolute discretion, agrees in writing to such change; and (b) the Company’s obligations hereunder shall continue in effect, and this Note shall remain outstanding, unless and until the principal balance outstanding hereunder, together with all accrued interest and other amounts payable hereunder are paid in full and thereafter, and upon the Company’s request, Lender delivers to the Company the original executed copy of this Note, marked “cancelled.”
5.
Events of Default; Acceleration
. The occurrence of any one or more of the following events shall constitute an “Event of Default” hereunder, and upon such Event of Default, the entire principal balance outstanding hereunder, together with all accrued interest and other amounts payable hereunder, at the election of Lender, shall become immediately due and payable, without any notice to the Company, and without presentment, demand, protest or any other notice of any kind, all of which are hereby expressly waived by the Company:
(a)
Nonpayment of principal, interest or other amounts when the same shall become due and payable hereunder, and the Company does not cure such failure to pay within five calendar days after the date such payment is due;
(b)
The failure of the Company to comply with any other provision of this Note and the Company does not cure such non-compliance within ten calendar days after Lender delivers written notice to the Company specifying such failure to comply;
(c)
The dissolution, winding-up or termination of the existence of the Company or any other person or entity that is or may become liable hereunder, or the sale or disposition of substantially all of the assets of the Company’s business or the business of any other person or entity that is or may become liable hereunder, or the merger, consolidation, or reorganization of the Company with or into another entity in a transaction in which the holders of the Company’s outstanding voting securities prior to such to transaction do not hold a majority of the voting securities of the entity that survives such transaction;
(d)
The calling of a meeting of the creditors of the Company or any other person or entity who is or may become liable hereunder;
(e)
The making by the Company or any other person or entity who is or may become liable hereunder of an assignment for the benefit of its creditors; or
(f)
The appointment of (or application for appointment of) a receiver of the Company or any other person or entity who is or may become liable hereunder; or the voluntary filing by the Company, or any other person or entity who is or may become liable hereunder, of a petition or application for relief under federal bankruptcy law or any similar state or federal law; or the involuntary filing against the Company, or any other person or entity who is or may become liable hereunder, of a petition or application for relief under federal bankruptcy law or any similar state or federal law that is not stayed or dismissed within 90 days of filing; or the issuance of any writ of garnishment, execution or attachment for service with respect to the Company or any person or entity who is or may become liable hereunder or any property of the Company or property of any person or entity who is or may become liable hereunder.
6.
Additional Sums
. The Company agrees to pay an effective contracted for rate of interest equal to the rate of interest resulting from all interest payable as provided in this Note, plus the additional rate of interest resulting from the “Additional Sums,” as defined in the next sentence. All fees, charges, goods, things in action or any other sums or things of value, other than the interest resulting from the Stated Interest Rate and the Default Interest Rate, as applicable, paid or payable by the Company (collectively, the “Additional Sums”), whether pursuant to this Note or any other document or instrument in any way pertaining to this transaction, or otherwise with respect to this transaction, that, under the laws of the State of Texas, may be deemed to be interest with respect to this transaction, for the purpose of any laws of the State of Texas that may limit the maximum amount of interest to be charged with respect to this transaction, shall be payable by the Company as, and shall be deemed to be, additional interest, and for such purposes only, the agreed upon and “contracted for rate of interest” of this transaction shall be deemed to be increased by the rate of interest resulting from the Additional Sums. The Company understands and believes that this transaction complies with the usury laws of the State of Texas; however, if any interest or other charges in connection with this transaction are ever determined to exceed the maximum amount permitted by law, then the Company agrees that (a) the amount of interest or charges payable pursuant to this transaction shall be reduced to the maximum amount permitted by law; and (b) any excess amount previously collected from the Company in connection with this transaction that exceeded the maximum amount permitted by law shall be credited against the principal balance then outstanding hereunder, if the outstanding principal balance hereunder has been paid in full, the excess amount paid will be refunded to the Company.
7.
Waivers
. Except as set forth in this Note, to the extent permitted by applicable law, the Company, and each person who is or may become liable hereunder, severally waives and agrees not to assert (a) demand, diligence, grace, presentment for payment, protest, or notice of nonpayment, nonperformance, extension, dishonor, maturity, protest, acceleration, and default; and (b) recourse to guaranty or suretyship defenses (including, without limitation, the right to require the Lender to bring an action on this Note). No failure to accelerate the debt evidenced hereby by reason of default hereunder, acceptance of a past-due installment, or other indulgence granted from time to time shall be construed as a novation of this Note or as a waiver of such right of acceleration or of the right of Lender thereafter to insist upon strict compliance with the terms of this Note or to prevent the exercise of such right of acceleration or any other right granted hereunder or by applicable law. Lender may extend the time for payment of or renew this Note, or release any party from liability hereunder, and any such extension, renewal, release or other indulgence shall not alter or diminish the liability of the Company or any other person or entity who is or may become liable on this Note except to the extent expressly set forth in a writing evidencing or constituting such extension, renewal, release or other indulgence. No delay or failure of Lender in exercising any right hereunder shall affect such right, nor shall any single or partial exercise of any right preclude further exercise thereof.
8.
Subordination
. The indebtedness evidenced by this Note, including the principal hereof and interest hereon, is expressly subordinate and subject in right of payment to the prior payment in full of all “Senior Indebtedness,” whether now outstanding or hereafter incurred. The term “Senior Indebtedness” shall mean the principal of and premium, if any, and interest on (a) indebtedness (other than this Note) of the Company for money borrowed from or guaranteed to individuals or other persons, firms or corporations that engage in lending money, including, but without limitation, banks, trust companies, insurance companies and other financing institutions and charitable trusts, pension trusts and other investing organizations, evidenced by notes or similar obligations; (b) indebtedness of the Company evidenced by notes or debentures (other than this Note) issued under the provisions of an indenture or similar instrument between the Company and a bank or trust company; and (c) indebtedness incurred, assumed or guaranteed by the Company in connection with the acquisition by it or a subsidiary of any property or asset intended to be leased or sold to others in the ordinary course of the business of the Company or such subsidiary; unless, in each case, by the terms of the instrument creating or evidencing the indebtedness it is expressly provided that such indebtedness is not superior in right of payment to this Note.
9.
Securities Laws; Accredited Investor
.
(a)
Status Under Securities Laws
. Lender acknowledges and agrees as follows:
(i)
Restricted Securities
. This Note is a “restricted security” within the meaning of Rule 144 under the Securities Act of 1933 (the “1933 Act”). Lender acknowledges and agrees that it is acquiring this Note without a view to the public distribution or resale in violation of applicable federal or state securities laws.
(ii)
No Registration
. This Note has not been registered under the 1933 Act or the securities laws of any other jurisdiction and must be held indefinitely without any transfer, sale or other disposition unless it is subsequently registered under the 1933 Act and the securities laws of any other applicable jurisdiction or, in the opinion of counsel to the Company, registration is not required under such acts or laws as the result of an available exemption. The Company is under no obligation to register this Note under the 1933 Act or the securities laws of any other jurisdiction or to take any action that would make available any exemption from such registration.
(iii)
Restriction on Other Securities
. Except upon certain limited circumstances, the restrictions on the transfer of this Note will also apply to any and all shares of capital stock or other securities issued or otherwise acquired with respect thereto including, without limitation, shares and securities issued or acquired as a result of any stock dividend, stock split or exchange or any distribution of shares or securities pursuant to any corporate reorganization, reclassification or similar event.
(iv)
Refusal to Transfer
. The Company may refuse to effect a transfer, sale or other disposition of this Note by the Lender or its successors or assigns otherwise than as contemplated hereby.
(b)
Accredited Investor
. The Lender is an accredited investor within the meaning of Regulation D promulgated under the 1933 Act.
10.
Miscellaneous
.
(a)
Severability
. If any provision hereof is invalid or unenforceable, the other provisions hereof shall remain in full force and effect and shall be construed so as to effectuate the other provisions hereof.
(b)
Amendment
. This Note may not be changed, modified or terminated, nor may any provision of this Note be waived except by an agreement in writing signed by the party to be charged.
(c)
Binding Nature of Agreement; Assignment
. The provisions of this Note shall be binding upon the Lender and the Company, and shall inure to the benefit of and bind the respective successors and assigns of the Lender and the Company. Neither the Company nor the Lender may assign or transfer this Note or assign or delegate any of its respective rights or obligations hereunder without the prior written consent of the other party in each instance.
(d)
Collection Costs and Expenses
. The Company agrees to pay all costs of collection, including, without limitation, attorneys’ fees, whether or not suit is filed, and all costs of suit and preparation for suit (whether at trial or appellate level), in the event any payment of principal, interest, or other amount is not paid when due, or if at any time the Lender should incur any attorneys’ fees in any proceeding under any federal bankruptcy law (or any similar state or federal law) in connection with the obligations evidenced hereby. In the event of any court proceeding, court costs and attorneys’ fees shall be set by the court and not by the jury and shall be included in any judgment obtained by the Lender.
(e)
Time of Essence
. Time is of the essence of this Note and each and every provision hereof.
(f)
Controlling Law
. This Note and all questions relating to its validity, interpretation, performance, and enforcement shall be governed by and construed in accordance with the laws of the State of Texas, notwithstanding any Texas or other conflict-of-law provisions to the contrary.
(g)
Notices
. All notices, requests, demands and other communications required or permitted under this Agreement shall be in writing and shall be deemed to have been duly given, made, and received (i) when delivered against receipt; (ii) upon receipt of a facsimile transmission; (iii) one day following the day of deposit thereof, with delivery charges prepaid, with a national overnight delivery service; or (iv) three business days following the day of deposit thereof, with the United States Postal Service, by regular first class, certified or registered mail, return receipt requested, postage prepaid, in each case addressed as set forth below:
|
|
(i)
|
If to the Company:
FUSE MEDICAL, LLC
4770 Bryant Irvin Court, Suite 300
Fort Worth, TX 76107
Attention: Alan Meeker, Chief Executive Officer
Telephone: (817) 348-0010 X101
Facsimile: (817) 887-1730
E-mail:
alan@fusemedical.com
|
|
|
(ii)
|
If to Lender:
WORLD HEALTH INDUSTRIES, INC. and WHIG, LLC
1485 Livingston Lane
Jackson, Mississippi 39213
Attention: Robert Durham, Chief Financial Officer
Phone: (601) 983-1239
Fax: (601) 982-7103
E-mail:
rdurham@worldhealthind.com
|
Either party may alter the address to which communications or copies are to be sent by giving notice of such change of address in conformity with the provisions of this paragraph for the giving of notice.
(h)
Section Headings
. The section headings in this Note are for convenience only; they form no part of this Note and shall not affect its interpretation.
(i)
Number of Days
. In computing the number of days for purposes of this Note, all days shall be counted, including Saturdays, Sundays and holidays; provided, however, that if the final day of any time period falls on a Saturday, Sunday or holiday, then the final day shall be deemed to be the next day which is not a Saturday, Sunday or holiday.
(j)
Loss or Destruction of Note
. Upon receipt by the Company of evidence satisfactory to it of the loss, theft, destruction or mutilation of this Note, or in the case of loss, theft or destruction of an indemnity satisfactory to it, and in the case of mutilation, upon surrender and cancellation of this Note, the Company shall execute and deliver a new Note on like tenor and date.
(k)
Construction
. The language of this Note shall be construed as a whole according to its fair meaning. The word “include(s)” means “include(s), without limitation,” and the word “including” means “including, but not limited to.” No inference in favor of, or against, the Company or Lender shall be drawn from the fact that one party has drafted any portion hereof.
IN WITNESS WHEREOF
, the Company has caused this Note to be duly executed as of the date first set forth above.
|
|
FUSE MEDICAL, LLC.
|
|
|
|
|
|
|
|
|
By:
|
/s/ D. Alan Meeker
|
|
|
|
|
Printed Name: D. Alan Meeker
|
|
|
|
|
Its:
Manager
|
|
EXHIBIT 10.18
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY APPLICABLE STATE SECURITIES LAWS. THE NOTE MAY NOT BE SOLD OR OTHERWISE TRANSFERRED UNLESS (i) A REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND SUCH APPLICABLE STATE SECURITIES LAWS SHALL HAVE BECOME EFFECTIVE WITH REGARD THERETO OR (ii) IN THE OPINION OF COUNSEL IN FORM AND SUBSTANCE REASONABLY ACCEPTABLE TO THE COMPANY, REGISTRATION UNDER THE SECURITIES ACT AND SUCH APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED IN CONNECTION WITH A PROPOSED SALE OR TRANSFER.
FUSE MEDICAL, LLC.
PROMISSORY NOTE
FOR VALUE RECEIVED, FUSE MEDICAL, LLC
, a Delaware limited liability company (the “Company”), hereby promises to pay to the order of WORLD HEALTH INDUSTRIES, INC., a Mississippi corporation and WHIG, LLC, a Mississippi limited liability company (“Lender”), at the office of Lender located at 1485 Livingston Lane, Jackson, Mississippi 39213 the principal amount of four hundred seventy-nine thousand nine hundred seventy-five dollars and fifty-eight cents ($479,975.58), together with interest on the principal balance from time to time outstanding under this note (“Note”) from (and including) the date hereof until (but not including) the date of payment, at a per annum rate equal to the “Stated Interest Rate” specified below or, to the extent applicable, the “Default Interest Rate” specified below, in accordance with the following terms and conditions:
1.
Contracted For Rate of Interest
. The contracted for rate of interest of the indebtedness evidenced hereby shall consist of the following:
(a)
Stated Interest Rate
. The “Stated Interest Rate” shall equal 7.00% per annum applied to the principal balance from time to time outstanding hereunder.
(b)
Default Interest Rate
. The “Default Interest Rate” shall equal 18.00% per annum applied to the principal balance outstanding hereunder. The principal balance outstanding hereunder shall bear interest at the Default Interest Rate from the date of the occurrence of an Event of Default (as hereinafter defined) hereunder until the earlier of (i) the date on which the principal balance outstanding hereunder, together with all accrued interest and other amounts payable hereunder, are paid in full; or (ii) the date on which such Event of Default is timely cured in a manner satisfactory to Lender (A) if the Company is specifically granted a right to cure such Event of Default, or (B) if no such right to cure is specifically granted, then as and to the extent that Lender, in its sole and absolute discretion, permits such Event of Default to be cured.
2.
Payments
. This Note shall be payable as follows:
(a)
This Note shall be payable as follows: Eighteen (18) monthly payments of interest only on the principal balance then-outstanding, due and payable on the 1st day of each month, beginning on November 23, 2014, six (6) months from the date hereof (the “Effective Date”). The interest accruing in the first six (6) months shall be tolled and payable at Maturity Date; and
(b)
The outstanding principal amount of this Note, together with all accrued but unpaid interest due hereunder, shall be due and payable on May 23, 2016, unless mutually extended by the parties in writing, not to exceed five (5) years from the Effective Date (the “Maturity Date”). Payment of the principal and of interest on this Note is to be made at the offices of Lender or such other place as Lender shall designate in writing to the Company.
3.
Application of Payments
. Payments received by Lender with respect to the indebtedness evidenced hereby shall be applied in such order and manner as Lender in its sole and absolute discretion may elect. Unless otherwise elected by Lender, all such payments shall first be applied to accrued and unpaid interest at the Stated Interest Rate and, to the extent applicable, the Default Interest Rate, next to the principal balance then outstanding hereunder, and the remainder to Additional Sums (as hereinafter defined) or other costs or added charges provided for in this Note.
4.
Prepayments
. Payments of principal hereof may be made at any time, or from time to time, in whole or in part, without penalty, provided that all previously matured interest and other charges accrued to the date of prepayment are also paid in full. Notwithstanding any prepayment of principal hereof, (a) there will be no change in the Maturity Date or amount of payments due hereunder unless Lender, in its sole and absolute discretion, agrees in writing to such change; and (b) the Company’s obligations hereunder shall continue in effect, and this Note shall remain outstanding, unless and until the principal balance outstanding hereunder, together with all accrued interest and other amounts payable hereunder are paid in full and thereafter, and upon the Company’s request, Lender delivers to the Company the original executed copy of this Note, marked “cancelled.”
5.
Events of Default; Acceleration
. The occurrence of any one or more of the following events shall constitute an “Event of Default” hereunder, and upon such Event of Default, the entire principal balance outstanding hereunder, together with all accrued interest and other amounts payable hereunder, at the election of Lender, shall become immediately due and payable, without any notice to the Company, and without presentment, demand, protest or any other notice of any kind, all of which are hereby expressly waived by the Company:
(a)
Nonpayment of principal, interest or other amounts when the same shall become due and payable hereunder, and the Company does not cure such failure to pay within five calendar days after the date such payment is due;
(b)
The failure of the Company to comply with any other provision of this Note and the Company does not cure such non-compliance within ten calendar days after Lender delivers written notice to the Company specifying such failure to comply;
(c)
The dissolution, winding-up or termination of the existence of the Company or any other person or entity that is or may become liable hereunder, or the sale or disposition of substantially all of the assets of the Company’s business or the business of any other person or entity that is or may become liable hereunder, or the merger, consolidation, or reorganization of the Company with or into another entity in a transaction in which the holders of the Company’s outstanding voting securities prior to such to transaction do not hold a majority of the voting securities of the entity that survives such transaction;
(d)
The calling of a meeting of the creditors of the Company or any other person or entity who is or may become liable hereunder;
(e)
The making by the Company or any other person or entity who is or may become liable hereunder of an assignment for the benefit of its creditors; or
(f)
The appointment of (or application for appointment of) a receiver of the Company or any other person or entity who is or may become liable hereunder; or the voluntary filing by the Company, or any other person or entity who is or may become liable hereunder, of a petition or application for relief under federal bankruptcy law or any similar state or federal law; or the involuntary filing against the Company, or any other person or entity who is or may become liable hereunder, of a petition or application for relief under federal bankruptcy law or any similar state or federal law that is not stayed or dismissed within 90 days of filing; or the issuance of any writ of garnishment, execution or attachment for service with respect to the Company or any person or entity who is or may become liable hereunder or any property of the Company or property of any person or entity who is or may become liable hereunder.
6.
Additional Sums
. The Company agrees to pay an effective contracted for rate of interest equal to the rate of interest resulting from all interest payable as provided in this Note, plus the additional rate of interest resulting from the “Additional Sums,” as defined in the next sentence. All fees, charges, goods, things in action or any other sums or things of value, other than the interest resulting from the Stated Interest Rate and the Default Interest Rate, as applicable, paid or payable by the Company (collectively, the “Additional Sums”), whether pursuant to this Note or any other document or instrument in any way pertaining to this transaction, or otherwise with respect to this transaction, that, under the laws of the State of Texas, may be deemed to be interest with respect to this transaction, for the purpose of any laws of the State of Texas that may limit the maximum amount of interest to be charged with respect to this transaction, shall be payable by the Company as, and shall be deemed to be, additional interest, and for such purposes only, the agreed upon and “contracted for rate of interest” of this transaction shall be deemed to be increased by the rate of interest resulting from the Additional Sums. The Company understands and believes that this transaction complies with the usury laws of the State of Texas; however, if any interest or other charges in connection with this transaction are ever determined to exceed the maximum amount permitted by law, then the Company agrees that (a) the amount of interest or charges payable pursuant to this transaction shall be reduced to the maximum amount permitted by law; and (b) any excess amount previously collected from the Company in connection with this transaction that exceeded the maximum amount permitted by law shall be credited against the principal balance then outstanding hereunder, if the outstanding principal balance hereunder has been paid in full, the excess amount paid will be refunded to the Company.
7.
Waivers
. Except as set forth in this Note, to the extent permitted by applicable law, the Company, and each person who is or may become liable hereunder, severally waives and agrees not to assert (a) demand, diligence, grace, presentment for payment, protest, or notice of nonpayment, nonperformance, extension, dishonor, maturity, protest, acceleration, and default; and (b) recourse to guaranty or suretyship defenses (including, without limitation, the right to require the Lender to bring an action on this Note). No failure to accelerate the debt evidenced hereby by reason of default hereunder, acceptance of a past-due installment, or other indulgence granted from time to time shall be construed as a novation of this Note or as a waiver of such right of acceleration or of the right of Lender thereafter to insist upon strict compliance with the terms of this Note or to prevent the exercise of such right of acceleration or any other right granted hereunder or by applicable law. Lender may extend the time for payment of or renew this Note, or release any party from liability hereunder, and any such extension, renewal, release or other indulgence shall not alter or diminish the liability of the Company or any other person or entity who is or may become liable on this Note except to the extent expressly set forth in a writing evidencing or constituting such extension, renewal, release or other indulgence. No delay or failure of Lender in exercising any right hereunder shall affect such right, nor shall any single or partial exercise of any right preclude further exercise thereof.
8.
Subordination
. The indebtedness evidenced by this Note, including the principal hereof and interest hereon, is expressly subordinate and subject in right of payment to the prior payment in full of all “Senior Indebtedness,” whether now outstanding or hereafter incurred. The term “Senior Indebtedness” shall mean the principal of and premium, if any, and interest on (a) indebtedness (other than this Note) of the Company for money borrowed from or guaranteed to individuals or other persons, firms or corporations that engage in lending money, including, but without limitation, banks, trust companies, insurance companies and other financing institutions and charitable trusts, pension trusts and other investing organizations, evidenced by notes or similar obligations; (b) indebtedness of the Company evidenced by notes or debentures (other than this Note) issued under the provisions of an indenture or similar instrument between the Company and a bank or trust company; and (c) indebtedness incurred, assumed or guaranteed by the Company in connection with the acquisition by it or a subsidiary of any property or asset intended to be leased or sold to others in the ordinary course of the business of the Company or such subsidiary; unless, in each case, by the terms of the instrument creating or evidencing the indebtedness it is expressly provided that such indebtedness is not superior in right of payment to this Note.
9.
Securities Laws; Accredited Investor
.
(a)
Status Under Securities Laws
. Lender acknowledges and agrees as follows:
(i)
Restricted Securities
. This Note is a “restricted security” within the meaning of Rule 144 under the Securities Act of 1933 (the “1933 Act”). Lender acknowledges and agrees that it is acquiring this Note without a view to the public distribution or resale in violation of applicable federal or state securities laws.
(ii)
No Registration
. This Note has not been registered under the 1933 Act or the securities laws of any other jurisdiction and must be held indefinitely without any transfer, sale or other disposition unless it is subsequently registered under the 1933 Act and the securities laws of any other applicable jurisdiction or, in the opinion of counsel to the Company, registration is not required under such acts or laws as the result of an available exemption. The Company is under no obligation to register this Note under the 1933 Act or the securities laws of any other jurisdiction or to take any action that would make available any exemption from such registration.
(iii)
Restriction on Other Securities
. Except upon certain limited circumstances, the restrictions on the transfer of this Note will also apply to any and all shares of capital stock or other securities issued or otherwise acquired with respect thereto including, without limitation, shares and securities issued or acquired as a result of any stock dividend, stock split or exchange or any distribution of shares or securities pursuant to any corporate reorganization, reclassification or similar event.
(iv)
Refusal to Transfer
. The Company may refuse to effect a transfer, sale or other disposition of this Note by the Lender or its successors or assigns otherwise than as contemplated hereby.
(b)
Accredited Investor
. The Lender is an accredited investor within the meaning of Regulation D promulgated under the 1933 Act.
10.
Miscellaneous
.
(a)
Severability
. If any provision hereof is invalid or unenforceable, the other provisions hereof shall remain in full force and effect and shall be construed so as to effectuate the other provisions hereof.
(b)
Amendment
. This Note may not be changed, modified or terminated, nor may any provision of this Note be waived except by an agreement in writing signed by the party to be charged.
(c)
Binding Nature of Agreement; Assignment
. The provisions of this Note shall be binding upon the Lender and the Company, and shall inure to the benefit of and bind the respective successors and assigns of the Lender and the Company. Neither the Company nor the Lender may assign or transfer this Note or assign or delegate any of its respective rights or obligations hereunder without the prior written consent of the other party in each instance.
(d)
Collection Costs and Expenses
. The Company agrees to pay all costs of collection, including, without limitation, attorneys’ fees, whether or not suit is filed, and all costs of suit and preparation for suit (whether at trial or appellate level), in the event any payment of principal, interest, or other amount is not paid when due, or if at any time the Lender should incur any attorneys’ fees in any proceeding under any federal bankruptcy law (or any similar state or federal law) in connection with the obligations evidenced hereby. In the event of any court proceeding, court costs and attorneys’ fees shall be set by the court and not by the jury and shall be included in any judgment obtained by the Lender.
(e)
Time of Essence
. Time is of the essence of this Note and each and every provision hereof.
(f)
Controlling Law
. This Note and all questions relating to its validity, interpretation, performance, and enforcement shall be governed by and construed in accordance with the laws of the State of Texas, notwithstanding any Texas or other conflict-of-law provisions to the contrary.
(g)
Notices
. All notices, requests, demands and other communications required or permitted under this Agreement shall be in writing and shall be deemed to have been duly given, made, and received (i) when delivered against receipt; (ii) upon receipt of a facsimile transmission; (iii) one day following the day of deposit thereof, with delivery charges prepaid, with a national overnight delivery service; or (iv) three business days following the day of deposit thereof, with the United States Postal Service, by regular first class, certified or registered mail, return receipt requested, postage prepaid, in each case addressed as set forth below:
|
|
(i)
|
If to the Company:
FUSE MEDICAL, LLC
4770 Bryant Irvin Court, Suite 300
Fort Worth, TX 76107
Attention: Alan Meeker, Chief Executive Officer
Telephone: (817) 348-0010 X101
Facsimile: (817) 887-1730
E-mail:
alan@fusemedical.com
|
|
|
(ii)
|
If to Lender:
WORLD HEALTH INDUSTRIES, INC. and WHIG, LLC
1485 Livingston Lane
Jackson, Mississippi 39213
Attention: Robert Durham, Chief Financial Officer
Phone: (601) 983-1239
Fax: (601) 982-7103
E-mail:
rdurham@worldhealthind.com
|
Either party may alter the address to which communications or copies are to be sent by giving notice of such change of address in conformity with the provisions of this paragraph for the giving of notice.
(h)
Section Headings
. The section headings in this Note are for convenience only; they form no part of this Note and shall not affect its interpretation.
(i)
Number of Days
. In computing the number of days for purposes of this Note, all days shall be counted, including Saturdays, Sundays and holidays; provided, however, that if the final day of any time period falls on a Saturday, Sunday or holiday, then the final day shall be deemed to be the next day which is not a Saturday, Sunday or holiday.
(j)
Loss or Destruction of Note
. Upon receipt by the Company of evidence satisfactory to it of the loss, theft, destruction or mutilation of this Note, or in the case of loss, theft or destruction of an indemnity satisfactory to it, and in the case of mutilation, upon surrender and cancellation of this Note, the Company shall execute and deliver a new Note on like tenor and date.
(k)
Construction
. The language of this Note shall be construed as a whole according to its fair meaning. The word “include(s)” means “include(s), without limitation,” and the word “including” means “including, but not limited to.” No inference in favor of, or against, the Company or Lender shall be drawn from the fact that one party has drafted any portion hereof.
IN WITNESS WHEREOF
, the Company has caused this Note to be duly executed as of the date first set forth above.
|
|
FUSE MEDICAL, LLC.
|
|
|
|
|
|
|
|
|
By:
|
/s/ D. Alan Meeker
|
|
|
|
|
Printed Name: D. Alan Meeker
|
|
|
|
|
Its: Manager
|
|
EXHIBIT 10.19
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY APPLICABLE STATE SECURITIES LAWS. THE NOTE MAY NOT BE SOLD OR OTHERWISE TRANSFERRED UNLESS (i) A REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND SUCH APPLICABLE STATE SECURITIES LAWS SHALL RAVE BECOME EFFECTNE WITH REGARD THERETO OR (ii) IN THE OPINION OF COUNSEL IN FORM AND SUBSTANCE REASONABLY ACCEPTABLE TO THE COMPANY, REGISTRATION UNDER THE SECURITIES ACT AND SUCH APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED IN CONNECTION WITH A PROPOSED SALE OR TRANSFER.
FUSE MEDICAL, LLC.
PROMISSORY NOTE
|
$131,023.66
|
|
January 14, 2014
|
FOR VALUE RECEIVED, FUSE MEDICAL, LLC
, a Delaware limited liability company (the “Company”), hereby promises to pay to the order of WORLD HEALTH INDUSTRIES, INC., a Mississippi corporation and WHIG, LLC, a Mississippi limited liability company (“Lender”), at the office of Lender located at 1485 Livingston Lane, Jackson, Mississippi 39213 the principal amount of one hundred thirty-one thousand twenty-three dollars and sixty-six cents ($131,023.66), together with interest on the principal balance from time to time outstanding under this note (“Note”) from (and including) the date hereof until (but not including) the date of payment, at a per annum rate equal to the “Stated Interest Rate” specified below or, to the extent applicable, the “Default Interest Rate” specified below, in accordance with the following terms and conditions:
1.
Contracted For Rate of Interest.
The contracted for rate of interest of the indebtedness evidenced hereby shall consist of the following:
(a)
Stated Interest Rate.
The “Stated Interest Rate” shall equal 7.00% per annum applied to the principal balance from time to time outstanding hereunder.
(b)
Default Interest Rate.
The “Default Interest Rate” shall equal 18.00% per annum applied to the principal balance outstanding hereunder. The principal balance outstanding hereunder shall bear interest at the Default Interest Rate from the date of the occurrence of an Event of Default (as hereinafter defined) hereunder until the earlier of (i) the date on which the principal balance outstanding hereunder, together with all accrued interest and other amounts payable hereunder, are paid in full; or (ii) the date on which such Event of Default is timely cured in a manner satisfactory to Lender (A) if the Company is specifically granted a right to cure such Event of Default, or (B) if no such right to cure is specifically granted, then as and to the extent that Lender, in its sole and absolute discretion, permits such Event of Default to be cured.
2.
Payments.
This Note shall be payable as follows:
(a)
This Note shall be payable as follows: Eighteen (18) monthly payments of interest only on the principal balance then-outstanding, due and payable on the 1st day of each month, beginning on July 14, 2014, six (6) months from the date hereof(the "Effective Date"). The interest accruing in the first six (6) months shall be tolled and payable at Maturity Date; and
(b)
The outstanding principal amount of this Note, together with all accrued but unpaid interest due hereunder, shall be due and payable on January 14, 2016, unless mutually extended by the parties in writing, not to exceed five (5) years from the Effective Date (the “Maturity Date”). Payment of the principal and of interest on this Note is to be made at the offices of Lender or such other place as Lender shall designate in writing to the Company.
3.
Application of Payments.
Payments received by Lender with respect to the indebtedness evidenced hereby shall be applied in such order and manner as Lender in its sole and absolute discretion may elect. Unless otherwise elected by Lender, all such payments shall first be applied to accrued and unpaid interest at the Stated Interest Rate and, to the extent applicable, the Default Interest Rate, next to the principal balance then outstanding hereunder, and the remainder to Additional Sums (as hereinafter defined) or other costs or added charges provided for in this Note.
4.
Prepayments.
Payments of principal hereof may be made at any time, or from time to time, in whole or in part, without penalty, provided that all previously matured interest and other charges accrued to the date of prepayment are also paid in full. Notwithstanding any prepayment of principal hereof, (a) there will be no change in the Maturity Date or amount of payments due hereunder unless Lender, in its so]e and absolute discretion, agrees in writing to such change and (b) the Company’s obligations hereunder shall continue in effect, and this Note shall remain outstanding, unless and until the principal balance outstanding hereunder, together with all accrued interest and other amounts payable hereunder are paid in full and thereafter, and upon the Company’s request, Lender delivers to the Company the original executed copy of this Note, marked “cancelled.”
5.
Events of Default; Acceleration.
The occurrence of any one or more of the following events shall constitute an “Event of Default” hereunder, and upon such Event of Default, the entire principal balance outstanding hereunder, together with all accrued interest and other amounts payable hereunder, at the election of Lender, shall become immediately due and payable, without any notice to the Company, and without presentment, demand, protest or any other notice of any kind, all of which are hereby expressly waived by the Company:
(a)
Nonpayment of principal, interest or other amounts when the same shall become due and payable hereunder, and the Company does not cure such failure to pay within five calendar days after the date such payment is due;
(b)
The failure of the Company to comply with any other provision of this Note and the Company does not cure such non-compliance within ten calendar days after Lender delivers written notice to the Company specifying such failure to comply;
(c)
The dissolution, winding-up or termination of the existence of the Company or any other person or entity that is or may become liable hereunder, or the sale or disposition of substantially all of the assets of the Company’s business or the business of any other person or entity that is or may become liable hereunder, or the merger, consolidation, or reorganization of the Company with or into another entity in a transaction in which the holders of the Company’s outstanding voting securities prior to such to transaction do not hold a majority of the voting securities of the entity that survives such transaction:
(d)
The calling of a meeting of the creditors of the Company or any other person or entity who is or may become liable hereunder;
(e)
The making by the Company or any other person or entity who is or may become liable hereunder of an assignment for the benefit of its creditors; or
(f)
The appointment of (or application for appointment of) a receiver of the Company or any other person or entity who is or may become liable hereunder; or the voluntary filing by the Company, or any other person or entity who is or may become liable hereunder, of a petition or application for relief under federal bankruptcy law or any similar state or federal law; or the involuntary filing against the Company, or any other person or entity who is or may become liable hereunder, of a petition or application for relief under federal bankruptcy law or any similar state or federal law that is not stayed or dismissed within 90 days of filing; or the issuance of any writ of garnishment, execution or attachment for service with respect to the Company or any person or entity who is or may become liable hereunder or any property of the Company or property of any person or entity who is or may become liable hereunder.
6.
Additional Sums.
The Company agrees to pay an effective contracted for rate of interest equal to the rate of interest resulting from all interest payable as provided in this Note, plus the additional rate of interest resulting from the “Additional Sums,” as defined in the next sentence. All fees, charges, goods, things in action or any other sums or things of value, other than the interest resulting from the Stated Interest Rate and the Default Interest Rate, as applicable, paid or payable by the Company (collectively, the “Additional Sums”), whether pursuant to this Note or any other document or instrument in any way pertaining to this transaction, or otherwise with respect to this transaction, that, under the Laws of the State of Texas, may be deemed to be interest with respect to this transaction, for the purpose of any laws of the State of Texas that may limit the maximum amount of interest to be charged with respect to this transaction, shall be payable by the Company as, and shall be deemed to be, additional interest, and for such purposes only, the agreed upon and “contracted for rate of interest” of this transaction shall be deemed to be increased by the rate of interest resulting from the Additional Sums. The Company understands and believes that this transaction complies with the usury laws of the State of Texas; however, if any interest or other charges in connection with this transaction are ever determined to exceed the maximum amount permitted by law, then the Company agrees that (a) the amount of interest or charges payable pursuant to this transaction shall be reduced to the maximum amount permitted by law; and (b) any excess amount previously collected from the Company in connection with this transaction that exceeded the maximum amount permitted by law shall be credited against the principal balance then outstanding hereunder, if the outstanding principal balance hereunder has been paid in full, the excess amount paid will be refunded to the Company.
7.
Waivers.
Except as set forth in this Note, to the extent permitted by applicable law, the Company, and each person who is or may become liable hereunder, severally waives and agrees not to assert (a) demand, diligence, grace, presentment for payment, protest, or notice of nonpayment, nonperformance, extension, dishonor, maturity, protest, acceleration, and default and (b) recourse to guaranty or suretyship defenses (including, without limitation, the right to require the Lender to bring an action on this Note). No failure to accelerate the debt evidenced hereby by reason of default hereunder, acceptance of a past-due installment, or other indulgence granted from time to time shall be construed as a novation of this Note or as a waiver of such right of acceleration or of the right of Lender thereafter to insist upon strict compliance with the terms of this Note or to prevent the exercise of such right of acceleration or any other right granted hereunder or by applicable law. Lender may extend the time for payment of or renew this Note, or release any party from liability hereunder, and any such extension, renewal, release or other indulgence shall not alter or diminish the liability of the Company or any other person or entity who is or may become liable on this Note except to the extent expressly set forth in a writing evidencing or constituting such extension, renewal, release or other indulgence. No delay or failure of Lender in exercising any right hereunder shall affect such right, nor shall any single or partial exercise of any right preclude further exercise thereof.
8.
Subordination.
The indebtedness evidenced by this Note, including the principal hereof and interest hereon, is expressly subordinate and subject in right of payment to the prior payment in full of all “Senior Indebtedness,” whether now outstanding or hereafter incurred. The term “Senior Indebtedness” shall mean the principal of and premium, if any, and interest on (a) indebtedness (other than this Note) of the Company for money borrowed from or guaranteed to individuals or other persons, firms or corporations that engage in lending money, including, but without limitation, banks, trust companies insurance companies and other financial institutions and charitable trusts, pension trusts and other investing organizations, evidenced by notes or similar obligations; (b) indebtedness of the Company evidenced by notes or debentures (other than this Note) issued under the provisions of an indenture or similar instrument between the Company and a bank or trust company; and (c) indebtedness incurred, assumed or guaranteed by the Company in connection with the acquisition by it or a subsidiary of any property or asset intended to be leased or sold to others in the ordinary course of the business of the Company or such subsidiary; unless, in each case, by the terms of the instrument creating or evidencing the indebtedness it is expressly provided that such indebtedness is not superior in right of payment to this Note.
9.
Securities Laws; Accredited Investor.
(a)
Status Under Securities Laws.
Lender acknowledges and agrees as follows:
(i)
Restricted Securities.
This Note is a “restricted security” within the meaning of Rule 144 under the Securities Act of 1933 (the “1933 Act”). Lender acknowledges and agrees that it is acquiring this Note without a view to the public distribution or resale in violation of applicable federal or state securities laws.
(ii)
No Registration.
This Note has not been registered under the 1933 Act or the securities laws of any other jurisdiction and must be held indefinitely without any transfer, sale or other disposition unless it is subsequently registered under the 1933 Act and the securities laws of any other applicable jurisdiction or, in the opinion of counsel to the Company, registration is not required under such acts or laws as the result of an available exemption. The Company is under no obligation to register this Note under the 1933 Act or the securities laws of any other jurisdiction or to take any action that would make available any exemption from such registration.
(iii)
Restriction on Other Securities.
Except upon certain limited circumstances, the restrictions on the transfer of this Note will also apply to any and all shares of capital stock or other securities issued or otherwise acquired with respect thereto including, without limitation, shares and securities issued or acquired as a result of any stock dividend, stock split or exchange or any distribution of shares or securities pursuant to any corporate reorganization, reclassification or similar event.
(iv)
Refusal to Transfer.
The Company may refuse to affect a transfer, sale or other disposition of this Note by the Lender or its successors or assigns otherwise than as contemplated hereby.
(b)
Accredited Investor.
The Lender is an accredited investor within the meaning of Regulation D promulgated under the 1933 Act.
10.
Miscellaneous.
(a)
Severability.
If any provision hereof is invalid or unenforceable, the other provisions hereof shall remain in full force and effect and shall be construed so as to effectuate the other provisions hereof.
(b)
Amendment.
This Note may not be changed, modified or terminated, nor may any provision of this Note be waived except by an agreement in writing signed by the party to be charged.
(c)
Binding Nature of Agreement; Assignment.
The provisions of this Note shall be binding upon the Lender and the Company, and shall inure to the benefit of and bind the respective successors and assigns of the Lender and the Company. Neither the Company nor the Lender may assign or transfer this Note or assign or delegate any of its respective rights or obligations hereunder without the prior written consent of the other party in each instance.
(d)
Collection Costs and Expenses.
The Company agrees to pay all costs of collection, including, without limitation, attorneys’ fees, whether or not suit is filed, and all costs of suit and preparation for suit (whether at trial or appellate level), in the event any payment of principal, interest, or other amount is not paid when due, or if at any time the Lender should incur any attorneys’ fees in any proceeding under any federal bankruptcy law (or any similar state or federal law) in connection with the obligations evidenced hereby. In the event of any court proceeding, court costs and attorneys’ fees shall be set by the court and not by the jury and shall be included in any judgment obtained by the Lender.
(e)
Time of Essence.
Time is of the essence of this Note and each and every provision hereof.
(f)
Controlling Law.
This Note and all questions relating to its validity, interpretation, performance, and enforcement shall be governed by and construed in accordance with the laws of the State of Texas, notwithstanding any Texas or other conflict-of-law provisions to the contrary.
(g)
Notices.
All notices, requests, demands and other communications required or permitted under this Agreement shall be in writing and shall be deemed to have been duly given, made, and received (i) when delivered against receipt; (ii) upon receipt of a facsimile transmission; (iii) one day following the day of deposit thereof, with delivery charges prepaid, with a national overnight delivery service; or (iv) three business days following the day of deposit thereof, with the United States Postal Service, by regular first class, certified or registered mail, return receipt requested, postage prepaid, in each case addressed as set forth below:
|
|
(i)
|
If to the Company:
FUSE MEDICAL, LLC
4770 Bryant Irvin Court, Suite 300
Fort Worth, TX 76107
Attention: Alan Meeker, Chief Executive Officer
Telephone: (817) 348-0010 X101
Facsimile: (817) 887-1730
E-mail: alan@fusemedical.com
|
|
|
(ii)
|
If to Lender:
WORLD HEALTH INDUSTRIES, INC. and WHIG, LLC
1485 Livingston Lane
Jackson, Mississippi 39213
Attention: Robert Durham, Chief Financial Officer
Phone: (601) 983-1239
Fax: (601) 982-7103
E-mail: rdurham@worldhealthind.com
|
Either party may alter the address to which communications or copies are to be sent by giving notice of such change of address in conformity with the provisions of this paragraph for the giving of notice.
(h)
Section Headings.
The section headings in this Note arc for convenience only; they form no part of this Note and shall not affect its interpretation.
(i)
Number of Days.
In computing the number of days for purposes of this Note, all days shall be counted, including Saturdays, Sundays and holidays; provided, however, that if the final day of any time period falls on a Saturday, Sunday or holiday, then the final day shall be deemed to be the next day which is not a Saturday, Sunday or holiday.
(j)
Loss or Destruction of Note.
Upon receipt by the Company of evidence satisfactory to it of the loss, theft, destruction or mutilation of this Note, or in the case of loss, theft or destruction of an indemnity satisfactory to it, and in the case of mutilation, upon surrender and cancellation of this Note, the Company shall execute and deliver a new Note on like tenor and date.
(k)
Construction.
The language of this Note shall be construed as a whole according to its fair meaning. The word “include(s)” means “include(s), without limitation,” and the word “including” means “including. but not limited to.” No inference in favor of, or against, the Company or Lender shall be drawn from the fact that one party has drafted any portion hereof.
IN WITNESS WHEREOF
, the Company has caused this Note to be duly executed as of the date first set forth above.
|
|
FUSE MEDICAL, LLC.
|
|
|
|
|
|
|
|
|
By:
|
/s/ D. Alan Meeker
|
|
|
|
|
Printed Name: D. Alan Meeker
|
|
|
|
|
Its: Manager
|
|
EXHIBIT 10.20
PROMISSORY NOTE
|
Principal
$100,000.00
|
Loan Date
10-10-2013
|
Maturity
10-10-2014
|
Loan No.
2424
|
Call / Coll
210
|
Account
5324
|
Officer
BCW
|
Initials
|
|
References in the boxes above are for Lender’s use only and do not limit the applicability of this document to any particular loan or item. Any item above containing “***” has been omitted due to text length limitations.
|
|
Borrower:
|
Fuse Medical LLC
|
Lender:
|
Trinity Bank, N. A.
|
|
|
PO Box 101782
|
|
3500 West Vickery Blvd
|
|
|
Fort Worth, TX 76185
|
|
Fort Worth, TX 76107
|
|
Principal Amount: $100,000.00
|
Date of Note: October 10, 2013
|
PROMISE TO PAY. Fuse Medical LLC (“Borrower”) promises to pay to Trinity Bank. N.A. (“Lender”), or order, in lawful money of the United States of America, the principle amount of One Hundred Thousand & 00/100 ($100,000.00) or as much as may be outstanding, together with interest on the unpaid outstanding principal balance of each advance, calculated as described in the “INTEREST CALCULATION METHOD” paragraphs using an interest rate of 2.250% per annum based on a year of 360 days. Interest shall be calculated from the date of each advance until repayment of each advance or maturity, whichever occurs first. The interest rate may change under the terms and conditions of the “POST MATURITY RATE” section.
CHOICE OF USURY CEILING AND INTEREST RATE.
The interest rate on this Note has been implemented under the “Weekly Ceiling” as referred to in Sections 303.002 and 303.003 of the Texas Finance Code. However, Lender reserves the right to implement a different interest rate and to renew such rate, provided Lender complies with the requirements of Sections 303.101, 102 and 103 of the Texas Finance Code.
PAYMENT. Borrower will pay this loan in full immediately upon Lender’s demand. If no demand is made, Borrower will pay this loan in one payment of all outstanding principal plus all accrued unpaid interest on October 10, 2014. In addition, Borrower will pay regular monthly payments of all accrued unpaid interest due as of each payment date, beginning November 10, 2013, with all subsequent interest payments to be due on the same day of each month after that. Unless otherwise agreed or required by applicable law, payments will be applied to principal and interest as billed. Borrower will pay Lender at Lender’s address shown above or at such other place as Lender may designate in writing.
MAXIMUM INTEREST RATE.
Under no circumstances
will the interest rate on this Note exceed (except for any higher default rate shown below) the lesser of 18.000% per annum or the maximum rate allowed by applicable law.
INTEREST CALCULATION METHOD. Interest on this Note is computed on a 365/360 basis; that is, by applying the ratio of the interest rate over a year of 360 days, multiplied by the outstanding principal balance, multiplied by the actual number of days the principal balance is outstanding, unless such calculation would result in a usurious rate, in which case interest shall be calculated on a per diem basis of a year of 365 or 366 days, as the case may be. All interest payable under this Note is computed using this method. This calculation method results in a higher effective interest rate than the numeric interest rate stated in this Note.
PROMISSORY NOTE
(Continued)
PREPAYMENT.
Borrower may pay without penalty all or a portion of the amount owed earlier than it is due. Prepayment in full shall consist of payment of the remaining unpaid principal balance together with all accrued and unpaid interest and all other amounts, costs and expenses for which Borrower is responsible under this Note or any other agreement with Lender pertaining to this loan, and in no event will Borrower ever be required to pay any unearned interest. Early payments will not, unless agreed to by Lender in writing, relieve Borrower of Borrower’s obligation to continue to make payments of accrued unpaid interest. Rather, early payments will reduce the principal balance due. Borrower agrees not to send Lender payments marked “
paid in full
”, “without recourse”, or similar language. If Borrower sends such a payment, Lender may accept it without losing any of Lender’s rights under this Note, and Borrower will remain obligated to pay any further amount owed to Lender.
All written communications concerning disputed amounts, including any check or other payment instrument that indicates that the payment constitutes “payment in full” of the amount owed or that is tendered with other conditions or limitations or as full satisfaction of a disputed amount must be mailed or delivered to: Trinity Bank, N.A.; 3500 West Vickery Blvd; Fort Worth, TX 76107.
POST MATURITY RATE.
The Post Maturity Rate on this Note is the lesser of (A) the maximum rate allowed by law or (B) 18.000% per annum based on a year of 360 days. Borrower will pay interest on all sums due after final maturity, whether by acceleration or otherwise, at that rate.
DEFAULT.
Each of the following shall constitute an event of default (“Event of Default”) under this Note:
Payment Default.
Borrower fails to make any payment when due under this Note.
Other Defaults.
Borrower fails to comply with or to perform any other term, obligation, covenant or condition contained in this Note or in any of the related documents or to comply with or to perform any term, obligation, covenant or condition contained in any other agreement between Lender and Borrower.
Default in Favor of Third Parties.
Borrower or any Grantor defaults under any loan, extension of credit, security agreement, purchase or sales agreement, or any other agreement, in favor of any other creditor or person that may materially affect any of Borrower’s property or Borrower’s ability to repay this Note or perform Borrower’s obligations under this Note or any of the related documents.
False Statements.
Any warranty, representation or statement made or furnished to Lender by Borrower or on Borrower’s behalf under this Note or the related documents is false or misleading in any material respect, either now or at the time made or furnished or becomes false or misleading at any time thereafter.
Death or Insolvency.
The dissolution of Borrower (regardless of whether election to continue is made), any member withdraws from Borrower, or any other termination of Borrower’s existence as a going business or the death of any member, the insolvency of Borrower, the appointment of a receiver for any part of Borrower’s property, any assignment for the benefit of creditors, any type of creditor workout, or the commencement of any proceeding under any bankruptcy or insolvency laws by or against Borrower.
Creditor or Forfeiture Proceedings.
Commencement of foreclosure or forfeiture proceedings, whether by judicial proceeding, self-help, repossession or any other method, by any creditor of Borrower or by any governmental agency against any collateral securing the loan. This includes a garnishment of any of Borrower’s accounts, including deposit accounts, with Lender. However, this Event of Default shall not apply if there is a good faith dispute by Borrower as to the validity or reasonableness of the claim which is the basis of the creditor or forfeiture proceeding and if Borrower gives Lender written notice of the creditor or forfeiture proceeding and deposits with Lender monies or a surety bond for the creditor or forfeiture proceeding, in an amount determined by Lender, in its sole discretion, as being an adequate reserve or bond for the dispute.
Events Affecting Guarantor.
Any of the preceding events occurs with respect to any Guarantor of any of the indebtedness or any Guarantor dies or becomes incompetent, or revokes or disputes the validity of, or liability under, any guaranty of the indebtedness evidenced by this Note.
Adverse Change.
A material adverse change occurs in Borrower’s financial condition, or Lender believes the prospect of payment or performance of this Note is impaired.
Insecurity.
Lender in good faith believes itself insecure.
Cure Provisions.
If any default, other than a default in payment is curable, it may be cured if Borrower, after Lender sends written notice to Borrower demanding cure of such default: (1) cures the default within fifteen (15) days; or (2) if the cure requires more than fifteen (15) days, immediately initiates steps which Lender deems in Lender’s sole discretion to be sufficient to cure the default and thereafter continues and completes all reasonable and necessary steps sufficient to produce compliance as soon as reasonably practical.
PROMISSORY NOTE
(Continued)
LENDER’S RIGHTS.
Upon default, Lender may declare the entire indebtedness, including the unpaid principal balance under this Note, all accrued unpaid interest, and all other amounts, costs and expenses for which Borrower is responsible under this Note or any other agreement with Lender pertaining to this loan, immediately due, without notice, and then Borrower will pay that amount.
ATTORNEYS’ FEES; EXPENSES.
Lender may hire an attorney to help collect this Note if Borrower does not pay, and Borrower will pay Lender’s reasonable attorneys’ fees. Borrower also will pay Lender all other amounts Lender actually incurs as court costs, lawful fees for filing, recording, releasing to any public office any instrument securing this Note; the reasonable cost actually expended for repossessing, storing, preparing for sale, and selling any security; and fees for noting a lien on or transferring a certificate of title to any motor vehicle offered as security for this Note. or premiums or identifiable charges received in connection with the sale of authorized insurance.
GOVERNING LAW. This Note will be governed by federal law applicable to Lender and, to the extent not preempted by federal law, the laws of the State of Texas without regard to its conflicts of law provisions. This Note has been accepted by Lender in the State of Texas.
DISHONORED CHECK CHARGE.
Borrower will pay a processing fee of $25.00 if any check given by Borrower to Lender as a payment on this loan is dishonored.
RIGHT OF SETOFF.
To the extent permitted by applicable law, Lender reserves a right of setoff in all Borrower’s accounts with Lender (whether checking, savings, or some other account). This includes all accounts Borrower holds jointly with someone else and all accounts Borrower may open in the future. However, this does not include any IRA or Keogh accounts, or any trust accounts for which setoff would be prohibited by law. Borrower authorizes Lender, to the extent permitted by applicable law, to charge for setoff all sums owing on the indebtedness against any and all such accounts, and, at Lender’s option, to administratively freeze all such accounts to allow Lender to protect Lender’s charge and setoff rights provided in this paragraph.
COLLATERAL.
Borrower acknowledges this Note is secured by the following collateral described in the security instrument listed herein; deposit accounts described in an Assignment of Deposit Account dated October 10, 2013.
LINE OF CREDIT.
This Note evidences a revolving line of credit. Advances under this Note, as well as directions for payment from Borrower’s accounts, may be requested orally or in writing by Borrower or by an authorized person. Lender may, but need not, require that all oral requests be confirmed in writing. Borrower agrees to be liable for all sums either: (A) advanced in accordance with the instructions of an authorized person or (B) credited to any of Borrower’s accounts with Lender. The unpaid principal balance owing on this Note at any time may be evidenced by endorsements on this Note or by Lender’s internal records, including daily computer print-outs. Lender will have no obligation to advance funds under this Note if: (A) Borrower or any guarantor is in default under the terms of this Note or any agreement that Borrower or any guarantor has with Lender, including any agreement made in connection with the signing of this Note; (B) Borrower or any guarantor ceases doing business or is insolvent; (C) any guarantor seeks, claims or otherwise attempts to limit, modify or revoke such guarantor’s guarantee of this Note or any other loan with Lender; (D) Borrower has applied funds provided pursuant to this Note for purposes other than those authorized by Lender; or (E) Lender in good faith believes itself insecure.
This revolving line of credit shall not be subject to Ch. 346 of the Texas Finance Code.
SUCCESSOR INTERESTS.
The terms of this Note shall be binding upon Borrower and upon Borrower’s heirs, personal representatives, successors and assigns, and shall inure to the benefit of Lender and its successors and assigns.
NOTIFY US OF INACCURATE INFORMATION WE REPORT TO CONSUMER REPORTING AGENCIES.
Borrower may notify Lender if Lender reports any inaccurate information about Borrower’s account(s) to a consumer reporting agency. Borrower’s written notice describing the specific inaccuracy(ies) should be sent to Lender at the following address: Trinity Bank, N.A. 3500 W. Vickery Blvd Fort Worth, TX 76107.
PROMISSORY NOTE
(Continued)
GENERAL PROVISIONS.
This Note is payable on demand. The inclusion of specific default provisions or rights of Lender shall not preclude Lender’s right to declare payment of this Note on its demand. NOTICE: Under no circumstances (and notwithstanding any other provisions of this Note) shall the interest charged, collected, or contracted for on this Note exceed the maximum rate permitted by law. The term “maximum rate permitted by law” as used in this Note means the greater of (a) the maximum rate of interest permitted under federal or other law applicable to the indebtedness evidenced by this Note, or (b) the higher, as of the date of this Note, of the “Weekly Ceiling” or the “Quarterly Ceiling” as referred to in Sections 303.002, 303.003 and 303.006 of the Texas Finance Code. If any part of this Note cannot be enforced, this fact will not affect the rest of the Note. Borrower does not agree or intend to pay, and Lender does not agree or intend to contract for, charge, collect, take, reserve or receive (collectively referred to herein as “charge or collect”), any amount in the nature of interest or in the nature of a fee for this loan, which would in any way or event (including demand, prepayment, or acceleration cause Lender to charge or collect more for this loan than the maximum Lender would be permitted to charge or collect by federal law or the law of the State of Texas (as applicable). Any such excess interest or unauthorized fee shall, instead of anything stated to the contrary, be applied first to reduce the principal balance of this loan, and when the principal has been paid in full, be refunded to Borrower. The right to accelerate maturity of sums due under this Note does not include the right to accelerate any interest which has not otherwise accrued on the date of such acceleration, and Lender does not intend to charge or collect any unearned interest in the event of acceleration. All sums paid or agreed to be paid to Lender for the use, forbearance or detention of sums due hereunder shall, to the extent permitted by applicable law, be amortized, prorated, allocated and spread throughout the full term of the loan evidenced by this Note until payment in full so that the rate or amount of interest on account of the loan evidenced hereby does not exceed the applicable usury ceiling. Lender may delay or forgo enforcing any of its rights or remedies under this Note without losing them. Borrower and any other person who signs, guarantees or endorses this Note, to the extent allowed by law, waive presentment, demand for payment, notice of dishonor, notice of intent to accelerate the maturity of this Note, and notice of acceleration of the maturity of this Note. Upon any change in the terms of this Note, and unless otherwise expressly stated in writing, no party who signs this Note, whether as maker, guarantor, accommodation maker or endorser, shall be released from liability. All such parties agree that Lender may renew or extend (repeatedly and for any length of time) this loan or release any party or guarantor or collateral; or impair, fail to realize upon or perfect Lender’s security interest in the collateral without the consent of or notice to anyone. All such parties also agree that Lender may modify this loan without the consent of or notice to anyone other than the party with whom the modification is made. The obligations under this Note are joint and several.
PRIOR TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS NOTE. BORROWER AGREES TO THE TERMS OF THE NOTE.
BORROWER ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THIS PROMISSORY NOTE.
|
|
BORROWER:
FUSE MEDICAL LLC
CCEP HOLDINGS LLC, Manager of Fuse Medical LLC
|
|
|
|
|
|
|
|
|
By:
|
/s/ Christopher C Pratt
|
|
|
|
|
Christopher C Pratt, Manager of CCEP Holdings LLC
|
|
|
|
|
|
|
|
|
TWELVE GLOBAL LLC, Manager of Fuse Medical LLC
|
|
|
|
|
|
|
|
|
By:
|
/s/
Jonathan G. Brown
|
|
|
|
|
Jonathan G. Brown, Manager of Twelve Global LLC
|
|
|
|
|
|
|
|
|
AXIS GLOBAL, LLC, Manager of Fuse Medical LLC
|
|
|
|
|
|
|
|
|
By:
|
/s/
D. Alan Meeker
|
|
|
|
|
D. Alan Meeker, Manager of Axis Global LLC
|
|
|
|
|
|
|
|
|
RESURGE HOSPITALS, INC., Manager of Fuse Medical LLC
|
|
|
|
|
|
|
|
|
By:
|
/s/
Rusty Shelton
|
|
|
|
|
Rusty Shelton, President of ReSurge Hospitals, Inc.
|
|
ASSIGNMENT OF DEPOSIT ACCOUNT
|
Principal
$100,000.00
|
Loan Date
10-10-2013
|
Maturity
10-10-2014
|
Loan No.
2424
|
Call / Coll
210
|
Account
5324
|
Officer
BCW
|
Initials
|
|
References in the boxes above are for Lender’s use only and do not limit the applicability of this document to any particular loan or item. Any item above containing “***” has been omitted due to text length limitations.
|
|
Borrower:
|
Fuse Medical LLC
|
Lender:
|
Trinity Bank, N. A.
|
|
|
PO Box 101782
|
|
3500 West Vickery Blvd
|
|
|
Fort Worth, TX 76185
|
|
Fort Worth, TX 76107
|
|
|
|
|
|
|
Grantor:
|
Christopher C Pratt
Cesily Pratt
6350 Elm Crest Ct
Fort Worth, TX 76132
|
|
|
THIS ASSIGNMENT OF DEPOSIT ACCOUNT dated October 10, 2013, is made and executed among Christopher C Pratt and Cesily Pratt (“Grantor”); Fuse Medical LLC (“Borrower”); and Trinity Bank, N. A. (“Lender”).
ASSIGNMENT.
For valuable consideration, Grantor assigns and grants to Lender a security interest in the Collateral, including without limitation the deposit accounts described below, to secure the Indebtedness and agrees that Lender shall have the rights stated in this Agreement with respect to the Collateral, in addition to all other rights which Lender may have by law.
COLLATERAL DESCRIPTION.
The word “Collateral’ means the following described deposit account (“Account”):
Trinity Bank Money Market Account Number 6003941 in the names of Christopher and Cesily Pratt, with an approximate balance of $100,000.00, including all renewals and extensions thereof.
together with (A) all interest, whether now accrued or hereafter accruing; (B) all additional deposits hereafter made to the Account; (C) any and all proceeds from the Account; and (D) all renewals, replacements and substitutions for any of the foregoing.
BORROWER’S WAIVERS AND RESPONSIBILITIES.
Except as otherwise required under this Agreement or by applicable law, (A) Borrower agrees that Lender need not tell Borrower about any action or inaction Lender takes in connection with this Agreement; (B) Borrower assumes the responsibility for being and keeping informed about the Collateral; and (C) Borrower waives any defenses that may arise because of any action or inaction of Lender, including without limitation any failure of Lender to realize upon the Collateral or any delay by Lender in realizing upon the Collateral; and Borrower agrees to remain liable under the Note no matter what action Lender takes or fails to take under this Agreement.
GRANTOR’S REPRESENTATIONS AND WARRANTIES.
Grantor warrants that: (A) this Agreement is executed at Borrower’s request and not at the request of Lender; (B) Grantor has the full right, power and authority to enter into this Agreement and to pledge the Collateral to Lender; (C) Grantor has established adequate means of obtaining from Borrower on a continuing basis information about Borrower’s financial condition; and (D) Lender has made no representation to Grantor about Borrower or Borrower’s creditworthiness.
ASSIGNMENT OF DEPOSIT ACCOUNT
(Continued)
GRANTOR’S WAIVERS.
Grantor waives all requirements of presentment, protest, demand, and notice of dishonor or non-payment to Borrower or Grantor, or any other party to the Indebtedness or the Collateral. Lender may do any of the following with respect to any obligation of any Borrower, without first obtaining the consent of Grantor: (A) grant any extension of time for any payment, (B) grant any renewal, (C) permit any modification of payment terms or other terms, or (D) exchange or release any Collateral or other security. No such act or failure to act shall affect Lender’s rights against Grantor or the Collateral.
RIGHT OF SETOFF.
To the extent permitted by applicable law, Lender reserves a right of setoff in all Grantor’s accounts with Lender (whether checking, savings, or some other account). This includes all accounts Grantor holds jointly with someone else and all accounts Grantor may open in the future. However, this does not include any IRA or Keogh accounts, or any trust accounts for which setoff would be prohibited by law. Grantor authorizes Lender, to the extent permitted by applicable law, to charge or setoff all sums owing on the Indebtedness against any and all such accounts, and, at Lender’s option, to administratively freeze all such accounts to allow Lender to protect Lender’s charge and setoff rights provided in this paragraph.
GRANTOR’S REPRESENTATIONS AND WARRANTIES WITH RESPECT TO THE COLLATERAL.
With respect to the Collateral, Grantor represents and promises to Lender that:
Ownership.
Grantor is the lawful owner of the Collateral free and clear of all loans, liens, encumbrances, and claims except as disclosed to and accepted by Lender in writing.
Right to Grant Security Interest.
Grantor has the full right, power, and authority to enter into this Agreement and to assign the Collateral to Lender.
No Prior Assignment.
Grantor has not previously granted a security interest in the Collateral to any other creditor.
No Further Transfer.
Grantor shall not sell, assign, encumber, or otherwise dispose of any of Grantor’s rights in the Collateral except as provided in this Agreement.
No Defaults.
There are no defaults relating to the Collateral, and there are no offsets or counterclaims to the same. Grantor will do everything required of Grantor under the terms, conditions, promises, and agreements contained in or relating to the Collateral.
Proceeds.
Any and all replacement or renewal certificates, instruments, or other benefits or proceeds related to the Collateral that are received by Grantor shall be held by Grantor in trust for Lender and immediately shall be delivered by Grantor to Lender to be held as part of the Collateral.
Validity; Binding Effect.
This Agreement is binding upon Grantor and Grantor’s successor and assigns and is legally enforceable in accordance with its terms.
Financing Statements.
Grantor authorizes Lender to file a UCC financing statement, or alternatively, a copy of this Agreement to perfect Lender’s security interest. At Lender’s request, Grantor additionally agrees to sign all other documents that are necessary to perfect, protect, and continue Lender’s security interest in the Property. Grantor will pay all filing fees, title transfer fees, and other fees and costs involved unless prohibited by law or unless Lender is required by law to pay such fees and costs. Grantor irrevocably appoints Lender to execute documents necessary to transfer title if there is a default. Lender may file a copy of this Agreement as a financing statement. Grantor will promptly notify Lender of any change to Grantor’s name or the name of any individual Grantor, any individual who is a partner for a Grantor, and any individual who is a trustee or settler or trustor for a Grantor under this Agreement. Grantor will also promptly notify Lender of any change to the name that appears on the most recently issued, unexpired driver’s license or state-issued identification card, any expiration of the most recently issued driver’s license or state-issued identification card for Grantor or any individual for whom Grantor is required to provide notice regarding name changes.
ASSIGNMENT OF DEPOSIT ACCOUNT
(Continued)
LENDER’S RIGHTS AND OBLIGATIONS WITH RESPECT TO THE COLLATERAL.
While this Agreement is in effect, Lender may retain the rights to possession of the Collateral, together with any and all evidence of the Collateral, such as certificates or passbooks. This Agreement will remain in effect until (a) there no longer is any Indebtedness owing to Lender; (b) all other obligations secured by this Agreement have been fulfilled; and (c) Grantor, in writing, has requested from Lender a release of this Agreement.
LENDER’S EXPENDITURES.
If any action or proceeding is commenced that would materially affect Lender’s interest in the Collateral or if Grantor fails to comply with any provision of this Agreement or any Related Documents, including but not limited to Grantor’s failure to discharge or pay when due any amounts Grantor is required to discharge or pay under this Agreement or any Related Documents, Lender on Grantor’s behalf may (but shall not be obligated to) take any action that Lender deems appropriate, including but not limited to discharging or paying all taxes, liens, security interests, encumbrances and other claims, at any time levied or placed on the Collateral and paying all costs for insuring, maintaining and preserving the Collateral. All such expenditures paid by Lender for such purposes will then bear interest at the Note rate from the date paid by Lender to the date of repayment by Grantor. To the extent permitted by applicable law, all such expenses will become a part of the Indebtedness and, at Lender’s option, will (A) be payable on demand; (B) be added to the balance of the Note and be apportioned among and be payable with any installment payments to become due during either (1) the term of any applicable insurance policy; or (2) the remaining term of the Note; or (C) be treated as a balloon payment which will be due and payable at the Note’s maturity. The Agreement also will secure payment of these amounts. Such right shall be in addition to all other rights and remedies to which Lender may be entitled upon Default.
LIMITATIONS ON OBLIGATIONS OF LENDER.
Lender shall use ordinary reasonable care in the physical preservation and custody of any certificate or passbook for the Collateral but shall have no other obligation to protect the Collateral or its value. In particular, but without limitation, Lender shall have no responsibility (A) for the collection or protection of any income on the Collateral; (B) for the preservation of rights against issuers of the Collateral or against third persons; (C) for ascertaining any maturities, conversions, exchanges, offers, tenders, or similar matters relating to the Collateral; nor (D) for informing the Grantor about any of the above, whether or not Lender has or is deemed to have knowledge of such matters.
DEFAULT.
Each of the following shall constitute an Event of Default under this Agreement:
Payment Default.
Borrower fails to make any payment when due under the Indebtedness:
Other Defaults.
Borrower or Grantor fails to comply with or to perform any other term, obligation, covenant or condition contained in this Agreement or in any of the Related Documents or to comply with or to perform any term, obligation, covenant or condition contained in any other agreement between Lender and Borrower or Grantor.
Default in Favor of Third Parties.
Borrower, any guarantor or Grantor defaults under any loan, extension of credit, security agreement, purchase or sales agreement, or any other agreement, in favor of any other creditor or person that may materially affect any of Borrower’s, any guarantor’s or Grantor’s property or ability to perform their respective obligations under this Agreement or any of the Related Documents.
False Statements.
Any warranty, representation or statement made or furnished to Lender by Borrower or Grantor or on Borrower’s or Grantor’s behalf under this Agreement or the Related Documents is false or misleading in any material respect, either now or at the time made or furnished or becomes false or misleading at any time thereafter.
Defective Collateralization.
This Agreement or any of the Related Documents ceases to be in full force and effect (including failure of any collateral document to create a valid and perfected security interest or lien) at any time and for any reason.
ASSIGNMENT OF DEPOSIT ACCOUNT
(Continued)
Death or Insolvency.
The death of Borrower or Grantor or the dissolution or termination of Borrower’s or Grantor’s existence as a going business, the insolvency of Borrower or Grantor, the appointment of a receiver for any part of Borrower’s or Grantor’s property, any assignment for the benefit of creditors, any type of creditor workout, or the commencement of any proceeding under any bankruptcy or insolvency laws by or against Borrower or Grantor.
Creditor or Forfeiture Proceedings.
Commencement of foreclosure or forfeiture proceedings, whether by judicial proceeding, self-help, repossession or any other method, by any creditor of Borrower or Grantor or by any governmental agency against any collateral securing the Indebtedness. This includes a garnishment of any of Borrower’s or Grantor’s accounts, including deposit accounts, with Lender. However, this Event of Default shall not apply if there is a good faith dispute by Borrower or Grantor as to the validity or reasonableness of the claim which is the basis of the creditor or forfeiture proceeding and if Borrower or Grantor gives Lender written notice of the creditor or forfeiture proceeding and deposits with Lender monies or a surety bond for the creditor or forfeiture proceeding, in an amount determined by Lender in its sole discretion, as being an adequate reserve or bond for the dispute.
Events Affecting Guarantor.
Any of the preceding events occurs with respect to any Guarantor of any of the Indebtedness or Guarantor dies or becomes incompetent or revokes or disputes the validity of, or liability under, any Guaranty of the Indebtedness.
Adverse Change.
A material adverse change occurs in Borrower’s or Grantor’s financial condition, or Lender believes the prospect of payment or performance of the Indebtedness is impaired.
Insecurity.
Lender in good faith believes itself insecure.
Cure Provisions.
If any default, other than a default in payment is curable, it may be cured if Grantor, after Lender sends written notice to Borrower demanding cure of such default: (1) cures the default within fifteen (15) days; or (2) if the cure requires more than fifteen (15) days, immediately initiates steps which Lender deems in Lender’s sole discretion to be sufficient to cure the default and thereafter continues and completes all reasonable and necessary steps sufficient to produce compliance as soon as reasonably practical.
RIGHTS AND REMEDIES ON DEFAULT.
Upon the occurrence of an Event of Default, or at any time thereafter. Lender may exercise any one or more of the following rights and remedies, in addition to any rights or remedies that may be available at law, in equity, or otherwise:
Accelerate Indebtedness.
Lender may declare all Indebtedness of Borrower to Lender immediately due and payable, without notice of any kind to Borrower or Grantor.
Application of Account Proceeds.
Lender may take directly all funds in the Account and apply them to the indebtedness. If the Account is subject to an early withdrawal penalty, that penalty shall be deducted from the Account before its application to the Indebtedness, whether the Account is with Lender or some other institution. Any excess funds remaining after application of the Account proceeds to the Indebtedness will be paid to Borrower or Grantor as the interests of Borrower or Grantor may appear. Borrower agrees to the extent permitted by law, to pay any deficiency after application of the proceeds of the Account to the Indebtedness. Lender also shall have all the rights of a secured party under the Texas Uniform Commercial Code, even if the Account is not otherwise subject to such Code concerning security interests, and the parties to this Agreement agree that the provisions of the Code giving rights to a secured party shall nonetheless be a part of this Agreement.
Transfer Title.
Lender may effect transfer of title upon sale of all or part of the Collateral. For this purpose, Grantor irrevocably appoints Lender as Grantor’s attorney-in-fact to execute endorsements, assignments and instruments in the name of Grantor and each of them (if more than one) as shall be necessary or reasonable.
Other Rights and Remedies.
Lender shall have and may exercise any or all of the rights and remedies of a secured creditor under the provisions of the Texas Uniform Commercial Code, at law, in equity, or otherwise.
ASSIGNMENT OF DEPOSIT ACCOUNT
(Continued)
Deficiency Judgment.
If permitted by applicable law, Lender may obtain a judgment for any deficiency remaining in the Indebtedness due to Lender after application of all amounts received from the exercise of the rights provided in this section.
Election of Remedies.
Except as may be prohibited by applicable law, all of Lender’s rights and remedies, whether evidenced by this Agreement or by any other writing, shall be cumulative and may be exercised singularly or concurrently. Election by Lender to pursue any remedy shall not exclude pursuit of any other remedy, and an election to make expenditures or to take action to perform an obligation of Grantor under this Agreement, after Grantor’s failure to perform, shall not affect Lender’s right to declare a default and exercise its remedies.
Cumulative Remedies.
All of Lender’s rights and remedies, whether evidenced by this Agreement or by any other writing, shall be cumulative and may be exercised singularly or concurrently. Election by Lender to pursue any remedy shall not exclude pursuit of any other remedy, and an election to make expenditures or to take action to perform an obligation of Grantor under this Agreement, after Grantor’s failure to perform, shall not affect Lender’s right to declare a default and to exercise its remedies.
MISCELLANEOUS PROVISIONS.
The following miscellaneous provisions are a part of this Agreement:
Amendments.
This Agreement, together with any Related Documents, constitutes the entire understanding and agreement of the parties as to the matters set forth in this Agreement. No alteration of or amendment to this Agreement shall be effective unless given in writing and signed by the party or parties sought to be charged or bound by the alteration or amendment.
Attorneys’ Fees; Expenses.
Grantor agrees to pay upon demand all of Lender’s costs and expenses, including Lender’s reasonable attorneys’ fees and Lender’s legal expenses, incurred in connection with the enforcement of this Agreement. Lender may hire or pay someone else to help enforce this Agreement, and Grantor shall pay the costs and expenses of such enforcement. Costs and expenses include Lender’s reasonable attorneys’ fees and legal expenses whether or not there is a lawsuit, including Lender’s reasonable attorneys’ fees and legal expenses for bankruptcy proceedings (including efforts to modify or vacate any automatic stay or injunction), appeals, and any anticipated post-judgment collection services. Grantor also shall pay all court costs and such additional fees as may be directed by the court.
Caption Headings.
Caption headings in this Agreement are for convenience purposes only and are not to be used to interpret or define the provisions of this Agreement.
Governing Law. This Agreement will be governed by federal law applicable to Lender and, to the extent not preempted by federal law, the laws of the State of Texas without regard to its conflicts of law provisions. This Agreement has been accepted by Lender in the State of Texas.
Joint and Several Liability.
All obligations of Borrower and Grantor under this Agreement shall be joint and several, and all references to Grantor shall mean each and every Grantor, and all references to Borrower shall mean each and every Borrower. This means that each Borrower and Grantor signing below is responsible for all obligations in this Agreement.
No Waiver by Lender.
Lender shall not be deemed to have waived any rights under this Agreement unless such waiver is given in writing and signed by Lender. No delay or omission on the part of Lender in exercising any right shall operate as a waiver of such right or any other right. A waiver by Lender of a provision of this Agreement shall not prejudice or constitute a waiver of Lender’s right otherwise to demand strict compliance with that provision or any other provision of this Agreement. No prior waiver by Lender, nor any course of dealing between Lender and Grantor, shall constitute a waiver of any of Lender’s rights or of any of Grantor’s obligations as to any future transactions. Whenever the consent of Lender is required under this Agreement, the granting of such consent by Lender in any instance shall not constitute continuing consent to subsequent instances where such consent is required and in all cases such consent may be granted or withheld in the sole discretion of Lender.
Notices.
Any notice required to be given under this Agreement shall be given in writing, and shall be effective when actually delivered, when actually received by telefacsimile (unless otherwise required by law), when deposited with a nationally recognized overnight courier, or, if mailed, when deposited in the United States mail, as first class, certified or registered mail postage prepaid, directed to the addresses shown near the beginning of this Agreement. Any party may change its address for notices under this Agreement by giving formal written notice to the other parties, specifying that the purpose of the notice is to change the party’s address. For notice purposes, Grantor agrees to keep Lender informed at all times of Grantor’s current address. Unless otherwise provided or required by law, if there is more than one Grantor any notice given by Lender to any Grantor is deemed to be notice given to all Grantors.
ASSIGNMENT OF DEPOSIT ACCOUNT
(Continued)
Power of Attorney.
Grantor hereby appoints Lender as its true and lawful attorney-in-fact, irrevocably, with full power of substitution to do the following: (1) to demand, collect, receive, receipt for, sue and recover all sums of money or other property which may now or hereafter become due, owing or payable from the Collateral; (2) to execute, sign and endorse any and all claims, instruments, receipts, checks, drafts or warrants issued in payment for the Collateral; (3) to settle or compromise any and all claims arising under the Collateral, and in the place and stead of Grantor, to execute and deliver its release and settlement for the claim; and (4) to file any claim or claims or to take any action or institute or take part in any proceedings, either in its own name or in the name of Grantor, or otherwise, which in the discretion of Lender may seem to be necessary or advisable. This power is given as security for the Indebtedness, and the authority hereby conferred is and shall be irrevocable and shall remain in full force and effect until renounced by Lender.
Payment of Interest and Fees.
Notwithstanding any other provision of this Agreement or any provision of any Related Document, Grantor does not agree or intend to pay, and Lender does not agree or intend to charge, collect, take, reserve or receive (collectively referred to herein as “charge or collect”), any amount in the nature of interest or in the nature at a fee for the Indebtedness which would in any way or event (including demand, prepayment, or acceleration) cause Lender to contract for, charge or collect more for the Indebtedness than the maximum Lender would be permitted to charge or collect by any applicable federal or Texas state law. Any such excess interest or unauthorized fee will, instead of anything stated to the contrary, be applied first to reduce the unpaid principal balance at the Indebtedness, and when the principal has been paid in full, be refunded to Grantor.
Severability.
If a court of competent jurisdiction finds any provision of this Agreement to be illegal, invalid, or unenforceable as to any person or circumstance, that finding shall not make the offending provision illegal, invalid, or unenforceable as to any other person or circumstance. If feasible, the offending provision shall be considered modified so that it becomes legal, valid and enforceable. If the offending provision cannot be so modified, it shall be considered deleted from this Agreement. Unless otherwise required by law, the illegality, invalidity, or unenforceability of any provision of this Agreement shall not affect the legality, validity or enforceability of any other provision of this Agreement.
Successors and Assigns.
Subject to any limitations stated in this Agreement on transfer of Grantor’s interest, this Agreement shall be binding upon and inure to the benefit of the parties, their successors and assigns. If ownership of the Collateral becomes vested in a person other than Grantor, Lender, without notice to Grantor, may deal with Grantor’s successors with reference to this Agreement and the Indebtedness by way of forbearance or extension without releasing Grantor from the obligations of this Agreement or liability under the Indebtedness.
Survival of Representations and Warranties.
All representations, warranties, and agreements made by Grantor in this Agreement shall survive the execution and delivery of this Agreement, shall be continuing in nature, and shall remain in full force and effect until such time as Borrower’s Indebtedness shall be paid in full.
Time is of the Essence.
Time is of the essence in the performance of this Agreement.
DEFINITIONS.
The following capitalized words and terms shall have the following meanings when used in this Agreement. Unless specifically stated to the contrary, all references to dollar amounts shall mean amounts in lawful money of the United States of America. Words and terms used in the singular shall include the plural, and the plural shall include the singular, as the context may require. Words and terms not otherwise defined in this Agreement shall have the meanings attributed to such terms in the Uniform Commercial Code:
Account.
The word “Account” means the deposit account described in the “Collateral Description” section.
Agreement.
The word “Agreement” means this Assignment of Deposit Account, as this Assignment of Deposit Account may be amended or modified from time to time, together with all exhibits and schedules attached to this Assignment of Deposit Account from time to time.
Borrower.
The word “Borrower” means Fuse Medical LLC and includes all co-signers and co-makers signing the Note and all their successors and assigns.
ASSIGNMENT OF DEPOSIT ACCOUNT
(Continued)
Collateral.
The word “Collateral” means all of Grantor’s right, title and interest in and to all the Collateral as described in the Collateral Description section of this Agreement.
Default.
The word “Default” means the Default set forth in this Agreement in the section titled “Default”.
Event of Default.
The words “Event of Default” mean any of the events of default set forth in this Agreement in the default section of this Agreement.
Grantor.
The word “Grantor” means Christopher C Pratt and Cesily Pratt.
Guarantor.
The word “Guarantor” means any guarantor, surety, or accommodation party of any or all of the Indebtedness.
Guaranty.
The word “Guaranty” means the guaranty from Guarantor to Lender, including without limitation a guaranty at all or part of the Note.
Indebtedness.
The word “Indebtedness” means the indebtedness evidenced by the Note or Related Documents, including all principal and interest together with all other indebtedness and costs and expenses for which Borrower is responsible under this Agreement or under any of the Related Documents.
Lender.
The word “Lender” means Trinity Bank, N. A., its successors and assigns.
Note.
The word “Note” means the Note dated October 10, 2013 and executed by Fuse Medical LLC in the principal amount of $100,000.00, together with all renewals of, extensions of, modifications of, refinancings of, consolidations of, and substitutions for the note or credit agreement.
Property.
The word “Property” means all of Grantor’s right, title and interest in and to all the Property as described in the “Collateral Description” section of this Agreement.
Related Documents.
The words “Related Documents” mean all promissory notes, credit agreements, loan agreements, environmental agreements, guaranties, security agreements, mortgages, deeds of trust, security deeds, collateral mortgages, and all other instruments, agreements and documents, whether now or hereafter existing, executed in connection with the Indebtedness.
ASSIGNMENT OF DEPOSIT ACCOUNT
(Continued)
BORROWER AND GRANTOR HAVE READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS ASSIGNMENT OF DEPOSIT ACCOUNT AND AGREE TO ITS TERMS. THIS AGREEMENT IS DATED OCTOBER 10, 2013.
GRANTOR:
|
/s/ Christopher C Pratt
|
|
/s/ Cesily Pratt
|
|
|
Christopher C Pratt, Individually
|
|
Cesily Pratt, Individually
|
|
|
|
BORROWER:
FUSE MEDICAL LLC
CCEP HOLDINGS LLC, Manager of Fuse Medical LLC
|
|
|
|
|
|
|
|
|
By:
|
/s/ Christopher C Pratt
|
|
|
|
|
Christopher C Pratt, Manager of CCEP Holdings LLC
|
|
|
|
|
|
|
|
|
TWELVE GLOBAL LLC, Manager of Fuse Medical LLC
|
|
|
|
|
|
|
|
|
By:
|
/s/
Jonathan G. Brown
|
|
|
|
|
Jonathan G. Brown, Manager of Twelve Global LLC
|
|
|
|
|
|
|
|
|
AXIS GLOBAL, LLC, Manager of Fuse Medical LLC
|
|
|
|
|
|
|
|
|
By:
|
/s/
D. Alan Meeker
|
|
|
|
|
D. Alan Meeker, Manager of Axis Global LLC
|
|
|
|
|
|
|
|
|
RESURGE HOSPITALS, INC., Manager of Fuse Medical LLC
|
|
|
|
|
|
|
|
|
By:
|
/s/
Rusty Shelton
|
|
|
|
|
Rusty Shelton, President of ReSurge Hospitals, Inc.
|
|
LIMITED LIABILITY COMPANY RESOLUTION TO BORROW / GRANT COLLATERAL
|
Principal
$100,000.00
|
Loan Date
10-10-2013
|
Maturity
10-10-2014
|
Loan No.
2424
|
Call / Coll
210
|
Account
5324
|
Officer
BCW
|
Initials
|
|
References in the boxes above are for Lender’s use only and do not limit the applicability of this document to any particular loan or item. Any item above containing “***” has been omitted due to text length limitations.
|
|
Company:
|
Fuse Medical LLC
|
Lender:
|
Trinity Bank, N. A.
|
|
|
PO Box 101782
|
|
3500 West Vickery Blvd
|
|
|
Fort Worth, TX 76185
|
|
Fort Worth, TX 76107
|
WE, THE UNDERSIGNED, DO HEREBY CERTIFY THAT:
THE COMPANY’S EXISTENCE
. The complete and correct name of the Company is Fuse Medical LLC (“Company”). The Company is a limited liability company which is, and at all times shall be, duly organized, validly existing, and in good standing under and by virtue of the laws of the State of Delaware. The Company is duly authorized to transact business in the State of Texas and all other states in which the Company is doing business, having obtained all necessary filings, governmental licenses and approvals for each state in which the Company is doing business. Specifically, the Company is, and at all times shall be, duly qualified as a foreign limited liability company in all states in which the failure to so qualify would have a material adverse effect on its business or financial condition. The Company has the full power and authority to own its properties and to transact the business in which it is presently engaged or presently proposes to engage. The Company maintains an office at 4770 Bryant Irvin Ct Ste 400, Fort Worth, TX 76107. Unless the Company has designated otherwise in writing, the principal office is the office at which the Company keeps its books and records. The Company will notify Lender prior to any change in the location of the Company’s state of organization or any change in the Company’s name. The Company shall do all things necessary to preserve and to keep in full force and effect its existence, rights and privileges, and shall comply with all regulations, rules, ordinances, statutes, orders and decrees of any governmental or quasi-governmental authority or court applicable to the Company and the Company’s business activities.
RESOLUTIONS ADOPTED
. At a meeting of the members of the Company, duly called and held on October 29, 2013, at which a quorum was present and voting, or by other duly authorized action in lieu of a meeting, the resolutions set forth in this Resolution were adopted.
MANAGERS
. The following named entities are managers of Fuse Medical LLC:
|
NAMES
|
|
TITLES
|
|
AUTHORIZED
|
|
ACTUAL SIGNATURES
|
|
|
|
|
|
|
|
|
|
CCEP Holdings LLC
|
|
Manager
|
|
Y
|
|
/s/ Christopher C Pratt
|
|
|
|
|
|
|
|
|
|
Twelve Global LLC
|
|
Manager
|
|
Y
|
|
/s/ Jonathan G. Brown
|
|
|
|
|
|
|
|
|
|
Axis Global, LLC
|
|
Manager
|
|
Y
|
|
/s/ D. Alan Meeker
|
|
|
|
|
|
|
|
|
|
ReSurge Hospitals, Inc.
|
|
Manager
|
|
Y
|
|
/s/ Rusty Shelton
|
LIMITED LIABILITY COMPANY RESOLUTION TO BORROW / GRANT COLLATERAL
(Continued)
ACTIONS AUTHORIZED
. Any four (4) of the authorized entities listed above may enter into any agreements of any nature with Lender, and those agreements will bind the Company. Specifically, but without limitation, any four (4) of such authorized entities are authorized, empowered, and directed to do the following for and on behalf of the Company:
Borrow Money
. To borrow, as a cosigner or otherwise, from time to time from Lender, on such terms as may be agreed upon between the Company and Lender, such sum or sums of money as in their judgment should be borrowed, without limitation.
Execute Notes
. To execute and deliver to Lender the promissory note or notes, or other evidence of the Company’s credit accommodations, on Lender’s forms, at such rates of interest and on such terms as may be agreed upon, evidencing the sums of money so borrowed or any of the Company’s indebtedness to Lender, and also to execute and deliver to Lender one or more renewals, extensions, modifications, refinancings, consolidations, or substitutions for one or more of the notes, any portion of the notes, or any other evidence of credit accommodations.
Grant Security
. To mortgage, pledge, transfer, endorse, hypothecate, or otherwise encumber and deliver to Lender any property now or hereafter belonging to the Company or in which the Company now or hereafter may have an interest, including without limitation all of the Company’s real property and all of the Company’s personal property (tangible or intangible), as security for the payment of any loans or credit accommodations so obtained, any promissory notes so executed (including any amendments to or modifications, renewals, and extensions of such promissory notes), or any other or further indebtedness of the Company to Lender at any time owing, however the same may be evidenced. Such property may be mortgaged, pledged, transferred, endorsed, hypothecated or encumbered at the time such loans are obtained or such indebtedness is incurred, or at any other time or times, and may be either in addition to or in lieu of any property theretofore mortgaged, pledged, transferred, endorsed, hypothecated or encumbered.
Execute Security Documents
. To execute and deliver to Lender the forms of mortgage, deed of trust, pledge agreement, hypothecation agreement, and other security agreements and financing statements which Lender may require and which shall evidence the terms and conditions under and pursuant to which such liens and encumbrances, or any of them, are given; and also to execute and deliver to Lender any other written instruments, any chattel paper, or any other collateral, of any kind or nature, which Lender may deem necessary or proper in connection with or pertaining to the giving of the liens and encumbrances. Notwithstanding the foregoing, any one of the above authorized persons may execute, deliver, or record financing statements.
Negotiate Items
. To draw, endorse, and discount with Lender all drafts, trade acceptances, promissory notes, or other evidences of indebtedness payable to or belonging to the Company or in which the Company may have an interest, and either to receive cash for the same or to cause such proceeds to be credited to the Company’s account with Lender, or to cause such other disposition of the proceeds derived therefrom as they may deem advisable.
LIMITED LIABILITY COMPANY RESOLUTION TO BORROW / GRANT COLLATERAL
(Continued)
FurtherActs
. In the case of lines of credit, to designate additional or alternate individuals as being authorized to request advances under such lines, and in all cases, to do and perform such other acts and things, to pay any and all fees and costs, and to execute and deliver such other documents and agreements as the managers may in their discretion deem reasonably necessary or proper in order to carry into effect the provisions of this Resolution.
ASSUMED BUSINESS NAMES
. The Company has filed or recorded all documents or filings required by law relating to all assumed business names used by the Company. Excluding the name of the Company, the following is a complete list of all assumed business names under which the Company does business:
None.
NOTICES TO LENDER
. The Company will promptly notify Lender in writing at Lender’s address shown above (or such other addresses as Lender may designate from time to time) prior to any (A) change in the Company’s name; (B) change in the Company’s assumed business name(s); (C) change in the management or in the Managers of the Company; (D) change in the authorized signer(s); (E) change in the Company’s principal office address; (F) change in the Company’s state of organization; (G) conversion of the Company to a new or different type of business entity; or (H) change in any other aspect of the Company that directly or indirectly relates to any agreements between the Company and Lender. No change in the Company’s name or state of organization will take effect until after Lender has received notice.
CERTIFICATION CONCERNING MANAGERS AND RESOLUTIONS
. The managers named above are duly elected, appointed, or employed by or for the Company, as the case may be, and occupy the positions set opposite their respective names. This Resolution now stands of record on the books of the Company, is in full force and effect, and has not been modified or revoked in any manner whatsoever.
CONTINUING VALIDITY
. Any and all acts authorized pursuant to this Resolution and performed prior to the passage of this Resolution are hereby ratified and approved. This Resolution shall be continuing, shall remain in full force and effect and Lender may rely on it until written notice of its revocation shall have been delivered to Lender and receipt acknowledged by Lender in writing at Lender’s address shown above (or such addresses as Lender may designate from time to time). Any such notice shall not affect any of the Company’s agreements or commitments in effect at the time notice is given.
IN TESTIMONY WHEREOF, we have hereunto set our hand and attest that the signatures set opposite the names listed above are their genuine signatures.
We each have read all of the provisions of this Resolution, and we each personally and on behalf of the Company certify that all statements and representations made in this Resolution are true and correct. This Limited Liability Company Resolution to Borrow / Grant Collateral is dated October 10, 2013.
LIMITED LIABILITY COMPANY RESOLUTION TO BORROW / GRANT COLLATERAL
(Continued)
THIS RESOLUTION IS DELIVERED UNDER SEAL AND IT IS INTENDED THAT THIS RESOLUTION IS AND SHALL CONSTITUTE AND HAVE THE EFFECT OF A SEALED INSTRUMENT ACCORDING TO LAW.
|
|
CERTIFIED TO AND ATTESTED BY:
|
|
|
|
|
|
|
|
CCEP HOLDINGS LLC, Manager of Fuse Medical LLC
|
|
|
|
|
|
|
|
By:
|
/s/ Christopher C Pratt
|
(Seal)
|
|
|
|
Christopher C Pratt, Manager of CCEP Holdings LLC
|
|
|
|
|
|
|
|
|
TWELVE GLOBAL LLC, Manager of Fuse Medical LLC
|
|
|
|
|
|
|
|
|
By:
|
/s/ Jonathan G Brown
|
(Seal)
|
|
|
|
Jonathan G Brown, Manager of Twelve Global LLC
|
|
|
|
|
|
|
|
|
AXIS GLOBAL, LLC, Manager of Fuse Medical LLC
|
|
|
|
|
|
|
|
|
By:
|
/s/ D. Alan Meeker
|
(Seal)
|
|
|
|
D. Alan Meeker, Manager of Axis Global, LLC
|
|
|
|
|
|
|
|
|
RESURGE HOSPITALS, INC., Manager of Fuse Medical LLC
|
|
|
|
|
|
|
|
|
By:
|
/s/ Rusty Shelton
|
(Seal)
|
|
|
|
Rusty Shelton, President of ReSurge Hospitals, Inc.
|
|
NOTE: If the managers signing this Resolution are designated by the foregoing document as one of the managers authorized to act on the Company’s behalf, it is advisable to have this Resolution signed by at least one non-authorized manager of the Company.
RESOLUTION OF LIMITED LIABILITY COMPANY MEMBER
|
Principal
$100,000.00
|
Loan Date
10-10-2013
|
Maturity
10-10-2014
|
Loan No.
2424
|
Call / Coll
210
|
Account
5324
|
Officer
BCW
|
Initials
|
|
References in the boxes above are for Lender’s use only and do not limit the applicability of this document to any particular loan or item. Any item above containing “***” has been omitted due to text length limitations.
|
|
Borrower:
|
Fuse Medical LLC
|
Lender:
|
Trinity Bank, N. A.
|
|
|
PO Box 101782
|
|
3500 West Vickery Blvd
|
|
|
Fort Worth, TX 76185
|
|
Fort Worth, TX 76107
|
|
|
|
|
|
|
Company:
|
Axis Global, LLC
|
|
|
|
|
4770 Bryant Irvin Ct Ste 400
|
|
|
|
|
Fort Worth, TX 76107
|
|
|
I, THE UNDERSIGNED, DO HEREBY CERTIFY THAT:
ORGANIZATION
. The Company is a limited liability company which is, and at all times shall be, duly organized, validly existing, and in good standing under and by virtue of the laws of the State of Nevada. The Company is duly authorized to transact business in all other states in which the Company is doing business, having obtained all necessary filings, governmental licenses and approvals for each state in which the Company is doing business. Specifically, the Company is, and at all times shall be, duly qualified as a foreign limited liability company in all states in which the failure to so qualify would have a material adverse effect on its business or financial condition. The Company has the full power and authority to own its properties and to transact the business in which it is presently engaged or presently proposes to engage. The Company maintains an office at 4770 Bryant Irvin Ct Ste 400, Fort Worth, TX 76107. Unless the Company has designated otherwise in writing, the principal office is the office at which the Company keeps its books and records including its records concerning the Collateral. The Company will notify Lender prior to any change in the location of the Company’s state of organization or any change in the Company’s name. The Company shall do all things necessary to preserve and to keep in full force and effect its existence, rights and privileges, and shall comply with all regulations, rules, ordinances, statutes, orders and decrees of any governmental or quasi-governmental authority or court applicable to the Company and the Company’s business activities.
RELATIONSHIP TO BORROWER AND GRANTOR
. The Company is a Member in
Fuse Medical LLC
.
Fuse Medical LLC
has applied or will be applying to
Trinity Bank, N. A. (“Lender”)
for a loan or loans and other financial accommodations from Lender and has agreed to grant collateral for a loan or loans and other financial accommodations from Lender to
Fuse Medical LLC
, including those which may be described on any exhibit or schedule attached to this Resolution. The Company has considered the value of
Fuse Medical LLC
obtaining the financial accommodations described above and granting the collateral.
AUTHORIZATION TO BE A MEMBER
. The Company is authorized to be and become a Member in the Limited Liability Company named
Fuse Medical LLC
, whose office is at 4770 Bryant Irvin Ct Ste 400, Fort Worth, TX 76107.
RESOLUTIONS ADOPTED
. At a meeting of the members of the Company, duly called and held on
April 25, 2012
, at which a quorum was present and voting or by other duly authorized action in lieu of a meeting, the resolutions set forth in this Resolution were adopted.
RESOLUTION OF LIMITED LIABILITY COMPANY MEMBER
(Continued)
MANAGER
. The following named person is a manager of Axis Global, LLC:
|
NAMES
|
|
TITLES
|
|
AUTHORIZED
|
|
ACTUAL SIGNATURES
|
|
|
|
|
|
|
|
|
|
D. Alan Meeker
|
|
Manager
|
|
Y
|
|
/s/ D. Alan Meeker
|
ACTIONS AUTHORIZED
. The authorized person listed above may enter into any agreements of any nature with Lender, and those agreements will bind the Company. Specifically, but without limitation, the authorized person is authorized, empowered, and directed to do the following for and on behalf of the Company:
Execute Documents
. As Member of Fuse Medical LLC, to execute and deliver to Lender the form of Limited Liability Company Resolution and other loan documents submitted by Lender, confirming the nature and existence of Fuse Medical LLC, including the Company’s participation in Fuse Medical LLC as a Member, and evidencing the terms of the loan from Lender to Fuse Medical LLC.
Authorize Managers
. To authorize other managers or employees of the Company, from time to time, to act in his or her stead or as his or her successors on behalf of the Company as Member in Fuse Medical LLC.
Further Acts
. In the case of lines of credit, to designate additional or alternate individuals as being authorized to request advances under such lines, and in all cases, to do and perform such other acts and things, to pay any and all fees and costs, and to execute and deliver such other documents and agreements as the manager may in his or her discretion deem reasonably necessary or proper in order to carry into effect the provisions of this Resolution.
NOTICES TO LENDER
. The Company will promptly notify Lender in writing at Lender’s address shown above (or such other addresses as Lender may designate from time to time prior to any (A) change in the Company’s name; (B) change in the Company’s assumed business name(s); (C) change in the management or in the Managers of the Company; (D) change in the authorized signer(s); (E) change in the Company’s principal office address; (F) change in the Company’s state of organization; (G) conversion of the Company to a new or different type of business entity; or (H) change in any other aspect of the Company that directly or indirectly relates to any agreements between the Company and Lender. No change in the Company’s name or state of organization will take effect until after Lender has received notice.
PARTICIPATION AUTHORIZED
. The Company’s participation in Fuse Medical LLC as a Member and the execution, delivery, and performance of the documents described herein have been duly authorized by all necessary action by the Company and do not conflict with, result in a violation of, or constitute a default under (A) any provision of its articles of organization, or any agreement or other instrument binding upon the Company or (B) any law, governmental regulation, court decree, or order applicable to the Company.
CERTIFICATION CONCERNING MANAGERS AND RESOLUTIONS
. The manager named above is duly elected, appointed, or employed by or for the Company, as the case may be, and occupies the position set opposite his or her respective name. This Resolution now stands of record on the books of the Company, is in full force and effect, and has not been modified or revoked in any manner whatsoever.
CONTINUING VALIDITY
. Any and all acts authorized pursuant to this Resolution and performed prior to the passage of this Resolution are hereby ratified and approved. This Resolution shall be continuing, shall remain in full force and effect and Lender may rely on it until written notice of its revocation shall have been delivered to Lender and receipt acknowledged by Lender in writing at Lender’s address shown above (or such addresses as Lender may designate from time to time). Any such notice shall not affect any of the Company’s agreements or commitments in effect at the time notice is given.
RESOLUTION OF LIMITED LIABILITY COMPANY MEMBER
(Continued)
IN TESTIMONY WHEREOF, I have hereunto set my hand and attest that the signature set opposite the name listed above is his or her genuine signature.
I have read all the provisions of this Resolution, and I personally and on behalf of the Company certify that all statements and representations made in this Resolution are true and correct. This Resolution of Limited Liability Company Member is dated October 10, 2013.
|
|
CERTIFIED TO AND ATTESTED BY:
|
|
|
|
|
|
|
|
|
By:
|
/s/ D. Alan Meeker
|
|
|
|
|
D. Alan Meeker, Manager of Axis Global, LLC
|
|
RESOLUTION OF CORPORATE LLC MEMBER
|
Principal
$100,000.00
|
Loan Date
10-10-2013
|
Maturity
10-10-2014
|
Loan No.
2424
|
Call / Coll
210
|
Account
5324
|
Officer
BCW
|
Initials
|
|
References in the boxes above are for Lender’s use only and do not limit the applicability of this document to any particular loan or item. Any item above containing “***” has been omitted due to text length limitations.
|
|
Borrower:
|
Fuse Medical LLC
PO Box 101782
Fort Worth, TX 76185
|
Lender:
|
Trinity Bank, N. A.
3500 West Vickery Blvd
Fort Worth, TX 76107
|
|
|
|
|
|
|
Company:
|
ReSurge Hospitals, Inc.
1026 E Canyon Rd
Hyde Park, UT 84318
|
|
|
I, THE UNDERSIGNED, DO HEREBY CERTIFY THAT:
ORGANIZATION.
The Corporation is a corporation for profit which is, and at all times shall be, duly organized, validly existing, and in good standing under and by virtue of the laws of the State of Utah. The Corporation is duly authorized to transact business in all other states in which the Corporation is doing business, having obtained all necessary filings, governmental licenses and approvals for each state in which the Corporation is doing business. Specifically, the Corporation is, and at all times shall be, duly qualified as a foreign corporation in all states in which the failure to so qualify would have a material adverse effect on its business or financial condition. The Corporation has the full power and authority to own its properties and to transact the business in which it is presently engaged or presently proposes to engage. The Corporation maintains an office at 1026 E Canyon Rd, Hyde Park, UT 84318. Unless the Corporation has designated otherwise in writing, the principal office is the office at which the Corporation keeps its books and records including its records concerning the Collateral. The Corporation will notify Lender prior to any change in the location of the Corporation’s state of organization or any change in the Corporation’s name. The Corporation shall do all things necessary to preserve and to keep in full force and effect its existence, rights and privileges, and shall comply with all regulations, rules, ordinances, statutes, orders and decrees of any governmental or quasi-governmental authority or court applicable to the Corporation and the Corporation’s business activities.
RELATIONSHIP TO BORROWER AND GRANTOR
. The Corporation is a Member in
Fuse Medical LLC
.
Fuse Medical LLC
has applied or will be applying to
Trinity Bank, N. A. (“Lender”)
for a loan or loans and other financial accommodations from Lender and has agreed to grant collateral for a loan or loans and other financial accommodations from Lender to
Fuse Medical LLC
, including those which may be described on any exhibit or schedule attached to this Resolution. The Corporation has considered the value of
Fuse Medical LLC
obtaining the financial accommodations described above and granting the collateral.
RESOLUTION OF CORPORATE LLC MEMBER
(Continued)
AUTHORIZATION TO BE A MEMBER
. The Corporation is authorized to be and become a Member in the Limited Liability Company named Fuse Medical LLC, whose office is at 4770 Bryant Irvin Ct Ste 400, Fort Worth, TX 76107.
RESOLUTIONS ADOPTED
. At a meeting of the Directors of the Corporation, or if the Corporation is a close corporation having no Board of Directors then at a meeting of the Corporation’s shareholders, duly called and held on
May 20, 2002
, at which a quorum was present and voting, or by other duly authorized action in lieu of a meeting, the resolutions set forth in this Resolution were adopted.
OFFICER
. The following named person is an officer of ReSurge Hospitals, Inc.:
|
NAMES
|
|
TITLES
|
|
AUTHORIZED
|
|
ACTUAL SIGNATURES
|
|
|
|
|
|
|
|
|
|
Rusty Shelton
|
|
President
|
|
Y
|
|
/s/
Rusty Shelton
|
ACTIONS AUTHORIZED
. The authorized person listed above may enter into any agreements of any nature with Lender, and those agreements will bind the Corporation. Specifically, but without limitation, the authorized person is authorized, empowered, and directed to do the following for and on behalf of the Corporation:
Execute Documents
. As Member of Fuse Medical LLC, to execute and deliver to Lender the form of Limited Liability Company Resolution and other loan documents submitted by Lender, confirming the nature and existence of Fuse Medical LLC, including the Corporation’s participation in Fuse Medical LLC as a Member, and evidencing the terms of the loan from Lender to Fuse Medical LLC.
Authorize Officers
. To authorize other officers or employees of the Corporation, from time to time, to act in his or her stead or as his or her successors on behalf of the Corporation as Member in Fuse Medical LLC.
Further Acts
. In the case of lines of credit, to designate additional or alternate individuals as being authorized to request advances under such lines, and in all cases, to do and perform such other acts and things, to pay any and all fees and costs, and to execute and deliver such other documents and agreements as the officer may in his or her discretion deem reasonably necessary or proper in order to carry into effect the provisions of this Resolution.
NOTICES TO LENDER
. The Corporation will promptly notify Lender in writing at Lender’s address shown above (or such other addresses as Lender may designate from time to time) prior to any (A) change in the Corporation’s name; (B) change in the Corporation’s assumed business name(s); (C) change in the management of the Corporation; (D) change in the authorized signer(s); (E) change in the Corporation’s principal office address; (F) change in the Corporation’s state of organization; (G) conversion of the Corporation to a new or different type of business entity; or (H) change in any other aspect of the Corporation that directly or indirectly relates to any agreements between the Corporation and Lender. No change in the Corporation’s name or state of organization will take effect until after Lender has received notice.
PARTICIPATION AUTHORIZED
. The Corporation’s participation in Fuse Medical LLC as a Member and the execution, delivery, and performance of the documents described herein have been duly authorized by all necessary action by the Corporation and do not conflict with, result in a violation of, or constitute a default under (A) any provision of its articles of incorporation, bylaws, or any agreement or other instrument binding upon the Corporation or (B) any law, governmental regulation, court decree, or order applicable to the Corporation.
RESOLUTION OF CORPORATE LLC MEMBER
(Continued)
CERTIFICATION CONCERNING OFFICERS AND RESOLUTIONS
. The officer named above is duly elected, appointed, or employed by or for the Corporation, as the case may be, and occupies the position set opposite his or her respective name. This Resolution now stands of record on the books of the Corporation, is in full force and effect, and has not been modified or revoked in any manner whatsoever.
NO CORPORATE SEAL
. The Corporation has no corporate seal, and therefore, no seal is affixed to this Resolution.
CONTINUING VALIDITY
. Any and all acts authorized pursuant to this Resolution and performed prior to the passage of this Resolution are hereby ratified and approved. This Resolution shall be continuing, shall remain in full force and effect and Lender may rely on it until written notice of its revocation shall have been delivered to Lender and receipt acknowledged by Lender in writing at Lender’s address shown above (or such addresses as Lender may designate from time to time). Any such notice shall not affect any of the Corporation’s agreements or commitments in effect at the time notice is given.
IN TESTIMONY WHEREOF, I have hereunto set my hand and attest that the signature set opposite the name listed above is his or her genuine signature.
I have read all the provisions of this Resolution, and I personally and on behalf of the Corporation certify that all statements and representations made in this Resolution are true and correct. This Resolution of Corporate LLC Member is dated October 10, 2013.
|
|
CERTIFIED TO AND ATTESTED BY:
|
|
|
|
|
|
|
|
|
By:
|
/s/ Rusty Shelton
|
|
|
|
|
Rusty Shelton, President of ReSurge Hospitals, Inc.
|
|
DISBURSEMENT REQUEST AND AUTHORIZATION
|
Principal
$100,000.00
|
Loan Date
10-10-2013
|
Maturity
10-10-2014
|
Loan No.
2424
|
Call / Coll
210
|
Account
5324
|
Officer
BCW
|
Initials
|
|
References in the boxes above are for Lender’s use only and do not limit the applicability of this document to any particular loan or item. Any item above containing “***” has been omitted due to text length limitations.
|
|
Borrower:
|
Fuse Medical LLC
PO Box 101782
Fort Worth, TX 76185
|
Lender:
|
Trinity Bank, N. A.
3500 West Vickery Blvd
Fort Worth, TX 76101
|
LOAN TYPE
. This is a non-precomputed Fixed Rate (2.250%) Nondisclosable Revolving Line of Credit Loan to a Limited Liability Company for $100,000.00 due on October 10, 2014. This is a secured renewal loan.
PRIMARY PURPOSE OF LOAN
. The primary purpose of this loan is for:
o
Personal, Family or Household Purposes.
o
Personal Investment.
x
Business, Agricultural and All Other.
SPECIFIC PURPOSE
. The specific purpose of this loan is: renewal of working capital line of credit.
DISBURSEMENT INSTRUCTIONS
. Borrower understands that no loan proceeds will be disbursed until all of Lender's conditions for making the loan have been satisfied. Please disburse the loan proceeds of $100,000.00 as follows:
|
Other Disbursements:
|
|
$
|
100,000.00
|
|
|
$100,000.00 Renewal of Loan #2424
|
|
|
|
|
|
|
|
|
|
|
|
Note Principal:
|
|
$
|
100,000.00
|
|
DISBURSEMENT REQUEST AND AUTHORIZATION
(Continued)
FINANCIAL CONDITION. BY SIGNING THIS AUTHORIZATION, BORROWER REPRESENTS AND WARRANTS TO LENDER THAT THE INFORMATION PROVIDED ABOVE IS TRUE AND CORRECT AND THAT THERE HAS BEEN NO MATERIAL ADVERSE CHANGE IN BORROWER'S FINANCIAL CONDITION AS DISCLOSED IN BORROWER'S MOST RECENT FINANCIAL STATEMENT TO LENDER. THIS AUTHORIZATION IS DATED OCTOBER 10, 2013.
|
|
BORROWER:
FUSE MEDICAL, LLC
CCEP HOLDINGS LLC, Manager of Fuse Medical LLC
|
|
|
|
|
|
|
|
|
By:
|
/s/ Christopher C Pratt
|
|
|
|
|
Christopher C Pratt, Manager of CCEP Holdings LLC
|
|
|
|
|
|
|
|
|
TWELVE GLOBAL LLC, Manager of Fuse Medical LLC
|
|
|
|
|
|
|
|
|
By:
|
/s/
Jonathan G. Brown
|
|
|
|
|
Jonathan G. Brown, Manager of Twelve Global LLC
|
|
|
|
|
|
|
|
|
AXIS GLOBAL, LLC, Manager of Fuse Medical LLC
|
|
|
|
|
|
|
|
|
By:
|
/s/
D. Alan Meeker
|
|
|
|
|
D. Alan Meeker, Manager of Axis Global LLC
|
|
|
|
|
|
|
|
|
RESURGE HOSPITALS, INC., Manager of Fuse Medical LLC
|
|
|
|
|
|
|
|
|
By:
|
/s/
Rusty Shelton
|
|
NOTICE OF FINAL AGREEMENT
|
Principal
$100,000.00
|
Loan Date
10-10-2013
|
Maturity
10-10-2014
|
Loan No.
2424
|
Call / Coll
210
|
Account
5324
|
Officer
BCW
|
Initials
|
|
References in the boxes above are for Lender’s use only and do not limit the applicability of this document to any particular loan or item. Any item above containing “***” has been omitted due to text length limitations.
|
|
Borrower:
|
Fuse Medical LLC
|
Lender:
|
Trinity Bank, N. A.
|
|
|
PO Box 101782
|
|
3500 West Vickery Blvd
|
|
|
Fort Worth, TX 76185
|
|
Fort Worth, TX 76107
|
|
THE WRITTEN LOAN AGREEMENT REPRESENTS THE 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.
|
|
|
|
As used in this Notice, the following terms have the following meanings:
|
|
|
|
Loan
. The term “Loan” means the following described loan: a non-precomputed Fixed Rate (2.250%) Nondisclosable Revolving Line of Credit Loan to a Limited Liability Company for $100,000.00 due on October 10, 2014. This is a secured renewal loan.
|
|
|
|
Loan Agreement
. The term “Loan Agreement” means one or more promises, promissory notes, agreements, undertakings, security agreements, deeds of trust or other documents, or commitments, or any combination of those actions or documents, relating to the Loan, including without limitation the following:
|
|
|
|
LOAN DOCUMENTS
|
|
|
|
|
LLC Resolution: Fuse Medical LLC
Resolution of Limited Liability Company LLC Member: Axis Global, LLC
TX Commercial Guaranty: Christopher C Pratt
Disbursement Request and Authorization
Notice of Final Agreement
|
Resolution of Corporate LLC Member: Resurge Hospitals, Inc.
Customer Information Profile: Fuse Medical LLC
Promissory Note
TX Assignment of Deposit Account: Trinity Bank Money Market Account Number 6003941 in the names of Christopher and Cesily Pratt, with an approximate balance of $100,000.00, including all renewals and extensions thereof.; owned by Pratt and Pratt
|
|
|
|
|
Parties
. The term “Parties” means Trinity Bank, N. A. and any and all entities or individuals who are obligated to repay the loan or have pledged property as security for the Loan, including without limitation the following:
|
|
Borrower:
|
Fuse Medical LLC
|
|
|
Grantor(s):
|
Christopher C Pratt and Cesily Pratt
|
|
|
Guarantor 1:
|
Christopher C Pratt
|
|
NOTICE OF FINAL AGREEMENT
(Continued)
The Notice of Final Agreement is given by Trinity Bank, N. A. pursuant to Section 26.02 of the Texas Business and Commerce Code. Each Party who signs below, other than Trinity Bank, N.A. acknowledges, represents, and warrants to Trinity Bank, N.A. that it has received, read and understood this Notice of Final Agreement. This Notice is dated October 10, 2013.
|
|
BORROWER:
CCEP HOLDINGS LLC, Manager of Fuse Medical LLC
|
|
|
|
|
|
|
|
|
By:
|
/s/ Christopher C Pratt
|
|
|
|
|
Christopher C Pratt, Manager of CCEP Holdings LLC
|
|
|
|
|
|
|
|
|
TWELVE GLOBAL LLC, Manager of Fuse Medical LLC
|
|
|
|
|
|
|
|
|
By:
|
/s/
Jonathan G. Brown
|
|
|
|
|
Jonathan G. Brown, Manager of Twelve Global LLC
|
|
|
|
|
|
|
|
|
AXIS GLOBAL, LLC, Manager of Fuse Medical LLC
|
|
|
|
|
|
|
|
|
By:
|
/s/
D. Alan Meeker
|
|
|
|
|
D. Alan Meeker, Manager of Axis Global LLC
|
|
|
|
|
|
|
|
|
RESURGE HOSPITALS, INC., Manager of Fuse Medical LLC
|
|
|
|
|
|
|
|
|
By:
|
/s/
Rusty Shelton
|
|
|
GRANTOR:
|
|
|
|
|
|
|
|
|
|
/s/ Christopher C Pratt
|
|
/s/ Cesily Pratt
|
|
|
Christopher C Pratt, Individually
|
|
Cesily Pratt, Individually
|
|
|
GUARANTOR:
|
|
|
|
|
|
/s/ Christopher C Pratt
|
|
Christopher C Pratt, Individually
|
|
|
LENDER:
TRINITY BANK, N. A.
|
|
|
|
|
|
/s/ Trinity Bank, N.A.
|
|
|
|
|
EXHIBIT 10.21
Commission Agreement
This commission agreement is between Gulf Coast Surgical Solutions, LLC (Company) and Fuse Medical LLC (Agent). In consideration of the mutual agreement and covenants herein contained, the parties hereto agree as follows:
1.
AGENCY:
The Company appoints the agent as its non-exclusive agent for the following purposes: Selling and sales representation of ETEX Bone graft products throughout the United States.
2.
INDEPENDENT CONTRACTORS:
This Agreement shall not render the Agent an employee, or joint venture with the Company for any purpose. The Agent is and will remain an independent contractor in his or her relationship to the Company. The Company shall not be responsible for withholding taxes with respect to the Agent’s compensation hereunder. The Agents shall have no claim against the Company hereunder or otherwise for vacation pay, sick leave, retirement benefits, social security, workers compensation, health or disability benefits, unemployment benefits, or employee benefits of any kind. Agent shall lack authority to bind Company to any agreement or contract until Agent obtains written consent from Gulf Coast Surgical Solutions, LLC.
3.
INSURANCE:
The Agent will carry liability insurance relative to any service that he or she performs for the Company.
4.
COMMISSION:
For the Agent’s services the Company shall pay the Agent a commission percentage of 25% of all of the Agents total sales of ETEX Bone graft products (hereinafter “Commission”). Agents are responsible to pay all Agent’s sale representatives from the commission percentage listed above. The Company will pay the Rep associated with the Agent. If Agent sells ETEX product for less than 40% off 2012 list price, product pricing attached in Exhibit A, then the Agent and the Company will receive less commission from ETEX. This amount is to be determined by ETEX Corporation and will be fully disclosed to the Agent. Company agrees to pay Agent same proportion of what Company receives from ETEX to the above Commission of any less commission’s if Agent sells ETEX product for less than 40% off 2012 list price outlined in Exhibit A.
5.
EXPENSES:
The Company shall not be obligated to reimburse the Agent for any additional expenses incurred in the performance of service pursuant to this Agreement unless agreed in writing by the Company in advance.
6.
TERM:
Unless renewed, this Agreement expires at midnight on August 10, 2015. Notwithstanding the previous sentence, Company or Agent may terminate this Agreement with a sixty (60) day written notice to the other party.
7.
EXCLUSIONS:
Excluded from this Agreement are all existing written agreements in place at the time of the execution of this Agreement with other agents.
8.
MODIFICATION:
This Agreement may not be modified except by amendment reduced to writing and signed by both Company and Agent. No waiver of this Agreement shall be construed as a continuing waiver or consent to any subsequent breach thereof.
9.
ENTIRE AGREEMENT:
This Agreement sets forth the entire agreement and understanding between the parties relating to the subject matter herein and supersedes all prior discussion between the parties. No modification of or amendment to this Agreement, nor any waiver of any rights under this Agreement, will be effective unless in writing signed by the party to be charged. Any subsequent change or changes in the Agent’s duties or commission will not affect the validity or scope of this agreement.
10.
GOVERNING LAWS, COSSENT TO PERSONAL JURISDICTION:
This agreement will be governed by the laws of the State of Florida, without regard for conflict of laws principles.
11.
SEVERABILITY:
If one or more of the provisions in this Agreement are deemed void by law, then the remaining provisions will continue in full force and effect.
12.
ATTORNEY FEES:
In the event that this Agreement becomes subject to litigation between the parties hereto, the parties agree that prevailing party shall be entitled to an award of attorney fees, costs and prevailing statutory interest from the other party.
13.
ADDITIONAL ACKNOWLEDGMENTS:
Both parties acknowledge and agree that: (a) the parties are executing this Agreement voluntarily and without any duress or undue influence; (b) the parties have carefully read this Agreement and have asked any questions needed to understand the terms, consequences, and binding effect of this Agreement and fully understand them; and (c) the parties have sought the advice of an attorney of their respective choice if so desired prior to signing this Agreement.
14.
FURTHER DOCUMENT:
If any other provisions or agreement are necessary to enforce the intent of this document, both parties agree to execute such provisions or agreement upon request.
This Agreement, consisting of all pages, including this page, is entered into this the 19
th
day of August, 2012.
|
COMPANY
|
|
|
|
|
|
/s/ Jamey Holley
|
|
|
Jamey Holley
|
|
|
(Printed Name of Company Representative)
|
|
|
|
|
|
August 20th, 2012
|
|
|
Date
|
|
|
AGENT
|
|
|
|
|
|
/s/ Jonathan Brown
|
|
|
Jonathan Brown
|
|
|
(Printed Name of Company Representative)
|
|
|
|
|
|
August 19th, 2012
|
|
|
Date
|
|
EXHIBIT A
[LOGO PLACEHOLDER]
2012 Pricing
|
Product Description
|
|
Part#
|
|
|
Price
|
|
|
1cc Gamma-bsm kitA
|
|
|
76-6001
|
|
|
|
1,192
|
|
|
2.5cc Gamma-bsm kit
|
|
|
76-6023
|
|
|
|
1,833
|
|
|
5cc Gamma-bsm kit
|
|
|
76-6005
|
|
|
|
2,750
|
|
|
10cc Gamma-bsm kit
|
|
|
76-6010
|
|
|
|
4,033
|
|
|
1cc Beta-bsm kit
|
|
|
76-6024
|
|
|
|
l,192
|
|
|
2.5cc Beta-bsm kit
|
|
|
76-6025
|
|
|
|
1,833
|
|
|
5cc Beta-bsm kit
|
|
|
76-6016
|
|
|
|
2,750
|
|
|
10cc Beta-bsm kit
|
|
|
76-6017
|
|
|
|
4,033
|
|
|
2.5cc Equivabone kit
|
|
|
76-6027
|
|
|
|
1,925
|
|
|
5cc Equivabone kit
|
|
|
76-6021
|
|
|
|
2,933
|
|
|
10cc Equivabone kit
|
|
|
76-6022
|
|
|
|
4,400
|
|
|
2.5cc Carrigen kit
|
|
|
76-6034
|
|
|
|
1,925
|
|
|
5cc Carrigen kit
|
|
|
76-6035
|
|
|
|
2,933
|
|
|
10cc Carrigen kit
|
|
|
76-6036
|
|
|
|
4,400
|
|
4
EXHIBIT 99.1
Fuse Medical, LLC, Fuse Medical V, LP and Fuse Medical VI, LP Index to Combined Financial Statements
|
|
|
Page
|
|
|
Financial Statements:
|
|
|
|
|
|
|
|
|
|
Condensed Combined Balance Sheets as of February 28, 2014 (Unaudited) and August 31, 2013
|
|
|
F-2
|
|
|
|
|
|
|
|
|
Condensed Combined Statements of Operations for the three and six months ended February 28, 2014 and 2013 (Unaudited)
|
|
|
F-3
|
|
|
|
|
|
|
|
|
Condensed Combined Statement of Changes in Owners' Equity for the six months ended February 28, 2014 (Unaudited)
|
|
|
F-4
|
|
|
|
|
|
|
|
|
Condensed Combined Statements of Cash Flows for the six months ended February 28, 2014 and 2013 (Unaudited)
|
|
|
F-5
|
|
|
|
|
|
|
|
|
Notes to Condensed Combined Financial Statements (Unaudited)
|
|
|
F-6
|
|
FUSE MEDICAL, LLC, FUSE MEDICAL V, LP AND FUSE MEDICAL VI, LP
CONDENSED COMBINED BALANCE SHEETS
|
|
|
February 28,
2014
|
|
|
August 31,
2013
|
|
|
|
|
(Unaudited)
|
|
|
|
|
|
Assets
|
|
Current assets:
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
524,891
|
|
|
$
|
233,081
|
|
|
Accounts receivable
|
|
|
114,753
|
|
|
|
94,676
|
|
|
Inventories
|
|
|
284,683
|
|
|
|
203,413
|
|
|
Notes receivable
|
|
|
95,000
|
|
|
|
-
|
|
|
Prepaid expenses and other receivables
|
|
|
3,320
|
|
|
|
26,600
|
|
|
Other receivables - related parties
|
|
|
45,432
|
|
|
|
-
|
|
|
Total current assets
|
|
|
1,068,079
|
|
|
|
557,770
|
|
|
|
|
|
|
|
|
|
|
|
|
Property and equipment, net
|
|
|
37,004
|
|
|
|
1,483
|
|
|
Security deposit
|
|
|
2,489
|
|
|
|
-
|
|
|
Total assets
|
|
$
|
1,107,572
|
|
|
$
|
559,253
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Owners’ Equity
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
201,419
|
|
|
$
|
173,162
|
|
|
Accounts payable - related parties
|
|
|
25,431
|
|
|
|
15,376
|
|
|
Accrued expenses
|
|
|
5,091
|
|
|
|
-
|
|
|
Line of credit
|
|
|
100,000
|
|
|
|
100,000
|
|
|
Total current liabilities
|
|
|
331,941
|
|
|
|
288,538
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes payable
|
|
|
247,801
|
|
|
|
-
|
|
|
Notes payable - related parties
|
|
|
501,336
|
|
|
|
-
|
|
|
Total liabilities
|
|
|
1,081,078
|
|
|
|
288,538
|
|
|
|
|
|
|
|
|
|
|
|
|
Commitments and contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Owners' equity:
|
|
|
|
|
|
|
|
|
|
Members' equity
|
|
|
26,494
|
|
|
|
270,715
|
|
|
Total owners' equity
|
|
|
26,494
|
|
|
|
270,715
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and owners' equity
|
|
$
|
1,107,572
|
|
|
$
|
559,253
|
|
The accompanying notes are an integral part of these condensed combined financial statements.
FUSE MEDICAL, LLC, FUSE MEDICAL V, LP AND FUSE MEDICAL VI, LP
CONDENSED COMBINED STATEMENTS OF OPERATIONS
(Unaudited)
|
|
|
For the Three
|
|
|
For the Three
|
|
|
For the Six
|
|
|
For the Six
|
|
|
|
|
Months Ended
|
|
|
Months Ended
|
|
|
Months Ended
|
|
|
Months Ended
|
|
|
|
|
February 28,
2014
|
|
|
February 28,
2013
|
|
|
February 28,
2014
|
|
|
February 28,
2013
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Product revenues
|
|
$
|
203,186
|
|
|
$
|
405,057
|
|
|
$
|
361,052
|
|
|
$
|
662,345
|
|
|
Consulting revenues
|
|
|
26,600
|
|
|
|
-
|
|
|
|
26,600
|
|
|
|
-
|
|
|
Total revenues
|
|
|
229,786
|
|
|
|
405,057
|
|
|
|
387,652
|
|
|
|
662,345
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenues
|
|
|
67,450
|
|
|
|
71,765
|
|
|
|
122,457
|
|
|
|
107,845
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
162,336
|
|
|
|
333,292
|
|
|
|
265,195
|
|
|
|
554,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General, adminstrative and other
|
|
|
249,349
|
|
|
|
84,381
|
|
|
|
426,623
|
|
|
|
185,830
|
|
|
Total operating expenses
|
|
|
249,349
|
|
|
|
84,381
|
|
|
|
426,623
|
|
|
|
185,830
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss)
|
|
|
(87,013
|
)
|
|
|
248,911
|
|
|
|
(161,428
|
)
|
|
|
368,670
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
|
637
|
|
|
|
-
|
|
|
|
831
|
|
|
|
-
|
|
|
Interest expense
|
|
|
(5,360
|
)
|
|
|
(189
|
)
|
|
|
(5,724
|
)
|
|
|
(280
|
)
|
|
Total other income (expense)
|
|
|
(4,723
|
)
|
|
|
(189
|
)
|
|
|
(4,893
|
)
|
|
|
(280
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
(91,736
|
)
|
|
$
|
248,722
|
|
|
$
|
(166,321
|
)
|
|
$
|
368,390
|
|
The accompanying notes are an integral part of these condensed combined financial statements.
FUSE MEDICAL, LLC, FUSE MEDICAL V, LP AND FUSE MEDICAL VI, LP
CONDENSED COMBINED STATEMENT OF CHANGES IN OWNERS’ EQUITY
FOR THE SIX MONTHS ENDED FEBRUARY 28, 2014
(Unaudited)
|
|
|
Fuse Medical,
LLC
|
|
|
Fuse Medical
V, LP
|
|
|
Fuse Medical
VI, LP
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, August 31, 2013
|
|
$
|
(170,189
|
)
|
|
$
|
415,459
|
|
|
$
|
25,445
|
|
|
$
|
270,715
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash contributions from members
|
|
|
5,100
|
|
|
|
-
|
|
|
|
-
|
|
|
|
5,100
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Member distributions
|
|
|
-
|
|
|
|
(73,000
|
)
|
|
|
(10,000
|
)
|
|
|
(83,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
|
(289,468
|
)
|
|
|
123,897
|
|
|
|
(750
|
)
|
|
|
(166,321
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, February 28, 2014
|
|
$
|
(454,557
|
)
|
|
$
|
466,356
|
|
|
$
|
14,695
|
|
|
$
|
26,494
|
|
The accompanying notes are an integral part of these condensed combined financial statements.
FUSE MEDICAL, LLC, FUSE MEDICAL V, LP AND FUSE MEDICAL VI, LP
CONDENSED COMBINED STATEMENTS OF CASH FLOWS
(Unaudited)
|
|
|
For the Six
|
|
|
For the Six
|
|
|
|
|
Months Ended
|
|
|
Months Ended
|
|
|
|
|
February 28,
2014
|
|
|
February 28,
2013
|
|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
(166,321
|
)
|
|
$
|
368,390
|
|
|
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
1,207
|
|
|
|
28
|
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
(20,077
|
)
|
|
|
(268,602
|
)
|
|
Inventories
|
|
|
(81,270
|
)
|
|
|
(67,025
|
)
|
|
Prepaid expenses and other receivables
|
|
|
23,280
|
|
|
|
-
|
|
|
Security deposit
|
|
|
(2,489
|
)
|
|
|
-
|
|
|
Accounts payable
|
|
|
28,257
|
|
|
|
110,510
|
|
|
Accounts payable - related parties
|
|
|
10,055
|
|
|
|
15,272
|
|
|
Accrued expenses
|
|
|
5,091
|
|
|
|
-
|
|
|
Net cash provided by (used in) operating activities
|
|
|
(202,267
|
)
|
|
|
158,573
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
Purchases of property and equipment
|
|
|
(36,728
|
)
|
|
|
(1,011
|
)
|
|
Advances to related parties
|
|
|
(45,432
|
)
|
|
|
-
|
|
|
Advances under notes receivable
|
|
|
(95,000
|
)
|
|
|
-
|
|
|
Net cash used in investing activities
|
|
|
(177,160
|
)
|
|
|
(1,011
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
Proceeds from line of credit, net
|
|
|
-
|
|
|
|
40,000
|
|
|
Proceeds from issuance of promissory notes
|
|
|
247,801
|
|
|
|
-
|
|
|
Proceeds from issuance of promissory notes to related parties
|
|
|
501,336
|
|
|
|
-
|
|
|
Capital contributions received
|
|
|
5,100
|
|
|
|
11,400
|
|
|
Redemption of member interest
|
|
|
-
|
|
|
|
(3,350
|
)
|
|
Member distributions
|
|
|
(83,000
|
)
|
|
|
(57,909
|
)
|
|
Net cash provided by financing activities
|
|
|
671,237
|
|
|
|
(9,859
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Net increase in cash and cash equivalents
|
|
|
291,810
|
|
|
|
147,703
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents - beginning of period
|
|
|
233,081
|
|
|
|
3,285
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents - end of period
|
|
$
|
524,891
|
|
|
$
|
150,988
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosure of cash flow information:
|
|
|
|
|
|
|
|
|
|
Interest paid
|
|
$
|
1,133
|
|
|
$
|
280
|
|
The accompanying notes are an integral part of these condensed combined financial statements.
FUSE MEDICAL, LLC, FUSE MEDICAL V, LP AND FUSE MEDICAL VI, LP
NOTES TO CONDENSED COMBINED FINANCIAL STATEMENTS
FOR THE THREE AND SIX MONTHS ENDED FEBRUARY 28, 2014 AND 2013
(Unaudited)
Note 1. Nature of Operations
Overview
The combined financial statements include the accounts of: (i) Fuse Medical, LLC, which was formed in Delaware on July 18, 2012, (ii) Fuse Medical V, LP, which was formed in Texas on November 15, 2012, and (iii) Fuse Medical VI, LP, which was formed in Texas on January 31, 2013.
The companies have been combined for financial statement purposes as each of the companies are under common control, operate as a single business entity, and will become wholly-owned subsidiaries of Fuse prior to the Merger.
Collectively, the entities are referred to as “the Company” or “Fuse Medical”. All intercompany transactions have been eliminated in combination.
Fuse Medical is a physician-partnered company and national distributor that provides diversified healthcare products and supplies, including biologics and bone substitute materials, while striving to document cost savings and clinical outcomes to its manufacturers, physicians, health insurers and medical facility partners. Fuse Medical has entered into partnership arrangements with physicians in order to distribute its products.
Merger Agreement
On December 18, 2013, Fuse Medical, LLC entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Golf Rounds.com, Inc. (the “Registrant”), Project Fuse LLC (a wholly owned subsidiary of Golf Rounds.com, Inc.) (“Merger Sub”), and D. Alan Meeker, solely in his capacity as the representative of the members of Fuse Medical, LLC (the “Representative”). Upon consummation of the transactions contemplated by the Merger Agreement, Merger Sub will merge with and into Fuse Medical, LLC, with Fuse Medical, LLC surviving as a wholly owned subsidiary of Golf Rounds.com, Inc. (the “Merger”). The Merger is expected to be completed during the third fiscal quarter of 2014.
All of the units reflecting membership interests in Fuse Medical that are issued and outstanding immediately prior to the effective time of the Merger shall be cancelled and converted into the right to receive 3,600,000 shares of Golf Rounds.com’s common stock (on a post-Reverse Stock Split basis), representing 90% of the Registrant’s issued and outstanding common stock after giving effect to the Merger (the “Merger Consideration”). The Merger Consideration will be allocated among the members of Fuse Medical immediately prior to the effective time of the Merger (the “Holders”) in accordance with Fuse Medical’s limited liability company operating agreement.
The merger will be accounted for as a “reverse merger” and recapitalization since, immediately following the completion of the transaction, Fuse Medical will have effective control of Golf Rounds.com, Inc. through the Holder’s 90% fully diluted stockholder interest in the combined entity. In addition, Fuse Medical will have control of the combined entity through control of a substantial proportion of the Board by designating six of the seven board seats. Additionally, all of Fuse Medical’s senior executive positions will continue on as management of the combined entity after consummation of the Merger. For accounting purposes, Fuse Medical will be deemed to be the accounting acquirer in the transaction and, consequently, the transaction will be treated as a recapitalization of Fuse Medical. Accordingly, Fuse Medical’s assets, liabilities and results of operations will become the historical financial statements of the registrant, and Golf Rounds.com’s assets, liabilities and results of operations will be consolidated with Fuse Medical effective as of the date of the closing of the Merger. No step-up in basis or intangible assets or goodwill will be recorded in this transaction.
FUSE MEDICAL, LLC, FUSE MEDICAL V, LP AND FUSE MEDICAL VI, LP
NOTES TO CONDENSED COMBINED FINANCIAL STATEMENTS
FOR THE THREE AND SIX MONTHS ENDED FEBRUARY 28, 2014 AND 2013
(Unaudited)
Basis of Presentation
The
interim condensed combined financial statements included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). In the opinion of the Company’s management, all adjustments (consisting of normal recurring adjustments and reclassifications and non-recurring adjustments) necessary to present fairly our results of operations and cash flows for the three and six months ended February 28, 2014 and 2013 and our financial position as of February 28, 2014 have been made. The results of operations for such interim periods are not necessarily indicative of the operating results to be expected for the full year.
Certain information and disclosures normally included in the notes to the annual combined financial statements have been condensed or omitted from these interim combined financial statements. Accordingly, these interim condensed combined financial statements should be read in conjunction with the combined financial statements and notes thereto included elsewhere in this Form 8-K for the fiscal year ended August 31, 2013. The August 31, 2013 balance sheet is derived from those audited financial statements.
Note 2. Significant Accounting Policies
Use of Estimates
The preparation of the combined financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts in the combined financial statements. Actual results could differ from those estimates. Significant estimates in the accompanying combined financial statements include the allowance for doubtful accounts and other receivables, valuation of notes receivable, valuation of inventories, and the estimates of depreciable lives
and valuation of property and equipment
.
Fair Value Measurements
Fair value is the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants. The Company classifies assets and liabilities recorded at fair value under the fair value hierarchy based upon the observability of inputs used in valuation techniques. Observable inputs (highest level) reflect market data obtained from independent sources, while unobservable inputs (lowest level) reflect internally developed market assumptions. The fair value measurements are classified under the following hierarchy:
|
●
|
Level 1—Observable inputs that reflect quoted market prices (unadjusted) for identical assets and liabilities in active markets;
|
|
●
|
Level 2—Observable inputs, other than quoted market prices, that are either directly or indirectly observable in the marketplace for identical or similar assets and liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets and liabilities; and
|
|
|
|
|
●
|
Level 3—Unobservable inputs that are supported by little or no market activity that are significant to the fair value of assets or liabilities.
|
FUSE MEDICAL, LLC, FUSE MEDICAL V, LP AND FUSE MEDICAL VI, LP
NOTES TO CONDENSED COMBINED FINANCIAL STATEMENTS
FOR THE THREE AND SIX MONTHS ENDED FEBRUARY 28, 2014 AND 2013
(Unaudited)
The estimated fair value of certain financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and accrued expenses are carried at historical cost basis, which approximates their fair values because of the short-term nature of these instruments.
Property and Equipment
Property and equipment are recorded at cost less accumulated depreciation and amortization. Depreciation and amortization are computed using the straight-line method over the estimated useful lives of the related assets per the following table.
|
Category
|
|
Amortization Period
|
|
|
|
|
|
Computer equipment
|
|
3 years
|
|
Furniture and fixtures
|
|
5 years
|
Upon the retirement or disposition of property and equipment, the related cost and accumulated depreciation and amortization are removed and a gain or loss is recorded in the combined statements of operations. Repairs and maintenance costs are expensed in the period incurred.
Recent Accounting Pronouncements
We have implemented all new accounting standards that are in effect and that may impact our combined financial statements and do not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on our combined financial position or results of operations.
Note 3. Property and Equipment
Property and equipment consisted of the following at February 28, 2014 and August 31, 2013:
|
|
|
February 28,
2014
|
|
|
August 31,
2013
|
|
|
|
|
|
|
|
|
|
|
Computer equipment
|
|
$
|
34,643
|
|
|
$
|
1,763
|
|
|
Furniture and fixtures
|
|
|
3,848
|
|
|
|
-
|
|
|
|
|
|
38,491
|
|
|
|
1,763
|
|
|
Less: accumulated depreciation
|
|
|
(1,487
|
)
|
|
|
(280
|
)
|
|
Property and equipment, net
|
|
$
|
37,004
|
|
|
$
|
1,483
|
|
Depreciation expense for the six months ended February 28, 2014 and 2013 was $1,207 and $28
, respectively. Accumulated depreciation amounted to $1,487 and $280 as of February 28, 2014 and August 31, 2013, respectively.
FUSE MEDICAL, LLC, FUSE MEDICAL V, LP AND FUSE MEDICAL VI, LP
NOTES TO CONDENSED COMBINED FINANCIAL STATEMENTS
FOR THE THREE AND SIX MONTHS ENDED FEBRUARY 28, 2014 AND 2013
(Unaudited)
Note 4. Notes Receivable
On October 18, 2013, the Company advanced $39,000 to Golf Rounds.com, Inc., a publicly-held company, in exchange for a six-month promissory note receivable due April 15, 2014 (See Note 1 – Merger Agreement). On November 4, 2013, the Company advanced an additional $24,000 to Golf Rounds.com, Inc. in exchange for a six-month promissory note receivable due May 5, 2014. On December 26, 2013, the Company advanced an additional $32,000 to Golf Rounds.com, Inc. in exchange for a six-month promissory note receivable due June 26, 2014. The notes are unsecured, bear interest at a rate of 3.0% per annum and require payment of principal and interest at maturity. On April 1, 2014, the notes receivable maturing April 15, 2014 and May 5, 2014 were amended whereby the maturity date was extended to June 26, 2014 (See Note 12).
During the six months ended February 28, 2014, interest income of $831 was recognized on outstanding notes receivable. As of February 28, 2014, accrued interest receivable was $831, which is included in prepaid expenses and other receivables on the accompanying condensed combined balance sheet.
Note 5. Other Receivable – Related Parties
During the six months ended February 28, 2014, the Company advanced an aggregate of $45,432 to three entities that are owned partially by the officers of the Company. The advances are unsecured, non-interest bearing and are due on demand. The balance due to the three entities was $45,432 as of February 28, 2014.
Note 6. Notes Payable
Notes Payable
During the period from January 15, 2014 through February 1, 2014, the Company issued two two-year promissory notes in exchange for aggregate cash proceeds of $247,801 from a non-related party. The notes are unsecured, bear interest at 7.0% and require 18 monthly payments of interest only commencing at the beginning of month seven. The notes include a provision that in the event of default the interest rate would increase to the default interest rate of 18%. The first six months of interest is deferred until maturity. The outstanding principal balance along with all accrued and unpaid interest is due at maturity.
Notes Payable – Related Parties
During the period from December 31, 2013 through February 28, 2014, the Company issued several two-year promissory notes in exchange for aggregate cash proceeds of $501,336. The funds were received from entities controlled by officers of the Company. The officers also owned or partially owned the entities from which the funds were received. The notes are unsecured, bear interest at 7.0% and require 18 monthly payments of interest only commencing at the beginning of month seven. The notes include a provision that in the event of default the interest rate would increase to the default interest rate of 18%. The first six months of interest is deferred until maturity. The outstanding principal balance along with all accrued and unpaid interest is due at maturity.
During the six months ended February 28, 2014, interest expense of $4,591 was recognized on outstanding notes payable. As of February 28, 2014, accrued interest payable was $4,591, which is included in accrued expenses and other receivables on the accompanying condensed combined balance sheet.
FUSE MEDICAL, LLC, FUSE MEDICAL V, LP AND FUSE MEDICAL VI, LP
NOTES TO CONDENSED COMBINED FINANCIAL STATEMENTS
FOR THE THREE AND SIX MONTHS ENDED FEBRUARY 28, 2014 AND 2013
(Unaudited)
Notes payable consisted of the following at February 28, 2014:
|
|
|
February 28,
2014
|
|
|
Note payable - related party originating December 31, 2013; monthly interest payments required commencing in month 7; bearing interest at 7%; maturing at December 30, 2015
|
|
$
|
60,000
|
|
|
|
|
|
|
|
|
Note payable - related party originating January 15, 2014; monthly interest payments required commencing in month 7; bearing interest at 7%; maturing at January 14, 2016
|
|
|
131,024
|
|
|
|
|
|
|
|
|
Note payable - originating January 14, 2014; monthly interest payments required commencing in month 7; bearing interest at 7%; maturing at January 15, 2016
|
|
|
131,024
|
|
|
|
|
|
|
|
|
Note payable - related party originating February 1, 2014; monthly interest payments required commencing in month 7; bearing interest at 7%; maturing at January 31, 2016
|
|
|
116,777
|
|
|
|
|
|
|
|
|
Note payable - originating February 6, 2014; monthly interest payments required commencing in month 7; bearing interest at 7%; maturing at February 5, 2016
|
|
|
116,777
|
|
|
|
|
|
|
|
|
Note payable - related party originating February 10, 2014; monthly interest payments required commencing in month 7; bearing interest at 7%; maturing at February 9, 2016
|
|
|
193,535
|
|
|
Total
|
|
|
749,137
|
|
|
Less: Current maturities
|
|
|
-
|
|
|
Amount due after one year (includes $501,336 to related parties)
|
|
$
|
749,137
|
|
Future maturities of the convertible notes payable are as follows:
|
Year Ending August 31,
|
|
|
|
|
2016
|
|
$
|
749,137
|
|
|
|
|
$
|
749,137
|
|
FUSE MEDICAL, LLC, FUSE MEDICAL V, LP AND FUSE MEDICAL VI, LP
NOTES TO CONDENSED COMBINED FINANCIAL STATEMENTS
FOR THE THREE AND SIX MONTHS ENDED FEBRUARY 28, 2014 AND 2013
(Unaudited)
Note 7. Line of Credit
On October 10, 2012, the Company obtained a line of credit with a bank, up to a maximum credit line of $100,000. The line of credit bears interest equal to 2.25% per year based on a year of 360 days. The line of credit requires minimum monthly payments consisting of interest only commencing November 10, 2012. The line of credit is secured by a money market account having an approximate balance of $105,000 that is: (i) owned by an entity that is a member of the Company and (ii) is maintained at the bank extending the line of credit. The line of credit is due on demand or, if no demand is made, all outstanding principal and accrued interest on the line of credit was due October 10, 2013. The balance due on the line of credit as of February 28, 2014 was $100,000. The unused amount under the line of credit available to the Company at February 28, 2014 was $0. On October 10, 2013, due to non-payment of the outstanding principal balance, the Company was in default on the line of credit.
On November 27, 2013, an extension of the line of credit was obtained thereby curing the default that occurred on October 10, 2013 due to nonpayment. The extension is effective October 10, 2013 and extends the due date of the line of credit to October 10, 2014. The line of credit remains open
.
Note 8. Owners’ Equity
Fuse Medical, LLC
Fuse Medical, LLC was formed with two members, each having a 50.0% ownership interest. During the six months ended February 28, 2014, Fuse Medical, LLC received cash proceeds of $5,100 from member contributions.
Fuse Medical V, LP
Since its formation, Fuse Medical V, LP is owned 59% by Fuse Medical, LLC, 1% by Fuse Management V, LLC (the General Partner) and 40% by a physician’s group. During the six months ended February 28, 2014, member distributions of $73,000 were made.
Fuse Medical VI, LP
Since its formation, Fuse Medical VI, LP is owned 59% by Fuse Medical, LLC, 1% by Fuse Management VI, LLC (the General Partner) and 40% by a physician’s group. During the six months ended February 28, 2014, member distributions of $10,000 were made.
Net profits and losses are allocated to the capital account of each member at the end of each accounting period in proportion to their respective ownership percentages and days of ownership during the period.
FUSE MEDICAL, LLC, FUSE MEDICAL V, LP AND FUSE MEDICAL VI, LP
NOTES TO CONDENSED COMBINED FINANCIAL STATEMENTS
FOR THE THREE AND SIX MONTHS ENDED FEBRUARY 28, 2014 AND 2013
(Unaudited)
Note 9. Commitments and Contingencies
Legal Matters
On January 27, 2014, M. Richard Cutler and Cutler Law Group, P.C. (the “Plaintiffs”) filed a complaint in the District Court of Harris County, Texas, 2014-03355, against Fuse, Alan Meeker, Rusty Shelton, Jonathan Brown, Robert H. Donehew and Golf Rounds.com, Inc. (the “Defendants”). On April 21, 2014, the complaint was dismissed for “want of prosecution.” The Plaintiffs had 30 days from April 21, 2014 to file a motion to reinstate the case and no timely action was taken by the Plaintiffs. However, the Plaintiffs did file a motion to reinstate on May 22, 2014 and it was granted. The Defendants argued a Motion to Dismiss before the court on July 25, 2014 and, on July 28, 2014, the court granted the motion and dismissed the Plaintiffs' (i) breach of fiduciary duty claim against all Defendants, (ii) suit on sworn account claim against all Defendants except Fuse, and (iii) quantum meruit claim against all Defendants except Fuse. The Defendants were also awarded attorneys' fees in the amount of $4,343. The Defendants believe the lawsuit to be completely without merit and are continuing to vigorously defend against the remaining claims.
Richard Cutler is the sole principal of Plaintiff, Cutler Law Group, which provided legal representation to its client, Craig Longhurst (“Cutler’s Client”), that was interested in engaging in a transaction with Fuse and Golf Rounds.com, Inc. (“Cutler’s Failed Transaction”). The Plaintiffs had alleged that Cutler’s Failed Transaction failed to materialize notwithstanding the efforts of Mr. Cutler and his law firm to document the transaction. The Plaintiffs further had alleged that the Defendants continued to pursue a similar transaction without Cutler’s Client or the Plaintiffs. The Plaintiffs had claimed that the Defendants were responsible for damages in the amount of (i) $46,465 plus interest because Plaintiffs were not paid their legal fees by Cutler’s Client nor receive equity in Golf Rounds.com, Inc. that Plaintiffs hoped would be issued from Cutler’s Failed Transaction; (ii) $46,465 plus interest due to Defendants being unjustly enriched from Plaintiffs’ legal services to Cutler’s Client; (iii) $1,186,000 plus interest, being the alleged value of shares that Plaintiffs claimed to be entitled from Cutler’s Failed Transaction, which amount should allegedly be tripled as exemplary damages as a result of intentional fraud and/or negligent representations that some or all of the Defendants allegedly committed and that such conduct allegedly constitutes conspiracy to commit fraud; (iv) $1,186,000, allegedly arising from a breach of a Non-Competition and Non-Disclosure Agreement to which Plaintiffs were not a party; (v) $1,000,000 for breach of fiduciary duty by the Defendants because they would have been directors and officer of the surviving corporation in Cutler’s Failed Transaction had it not failed and Defendants’ moving on to another transaction without Plaintiffs; and (vi) Plaintiffs’ attorneys fees and costs for having brought the action.
Operating Leases
Commencing January 1, 2013 through January 31, 2014, the Company occupied office space on a month-to-month basis for its corporate headquarters for $500 a month from Crestview Farm, an entity controlled by the Company’s Chief Executive Officer (“CEO”). The Company's CEO serves as the Manager of Crestview Farm. Rent expense for these facilities was $3,000 and $1,000 for the six months ended February 28, 2014 and 2013, respectively.
Effective February 1, 2014, the Company entered into a two-year lease agreement for its corporate headquarters in Fort Worth, Texas. The lease agreement requires base rent payments of $2,489 per month plus common area maintenance and expires January 31, 2016.
Note 10. Concentrations
Concentration of Revenues, Accounts Receivable and Supplier
For the three and six months ended February 28, 2014 and 2013, the Company had significant customers with individual percentage of total revenues equaling 10% or greater as follows:
|
|
|
For the Three
|
|
|
For the Three
|
|
|
For the Six
|
|
|
For the Six
|
|
|
|
|
Months Ended
|
|
|
Months Ended
|
|
|
Months Ended
|
|
|
Months Ended
|
|
|
|
|
February 28,
2014
|
|
|
February 28,
2013
|
|
|
February 28,
2014
|
|
|
February 28,
2013
|
|
|
Customer 1
|
|
|
43.3
|
%
|
|
|
24.4
|
%
|
|
|
39.1
|
%
|
|
|
26.4
|
%
|
|
Customer 2
|
|
|
11.6
|
%
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
Customer 3
|
|
|
11.3
|
%
|
|
|
-
|
|
|
|
19.8
|
%
|
|
|
-
|
|
|
Customer 4
|
|
|
-
|
|
|
|
12.2
|
%
|
|
|
10.0
|
%
|
|
|
13.2
|
%
|
|
Customer 5
|
|
|
-
|
|
|
|
33.5
|
%
|
|
|
-
|
|
|
|
31.5
|
%
|
|
Totals
|
|
|
66.2
|
%
|
|
|
70.1
|
%
|
|
|
68.9
|
%
|
|
|
71.1
|
%
|
FUSE MEDICAL, LLC, FUSE MEDICAL V, LP AND FUSE MEDICAL VI, LP
NOTES TO CONDENSED COMBINED FINANCIAL STATEMENTS
FOR THE THREE AND SIX MONTHS ENDED FEBRUARY 28, 2014 AND 2013
(Unaudited)
At February 28, 2014 and August 31, 2013, concentration of accounts receivable with significant customers representing 10% or greater of accounts receivable was as follows:
|
|
|
February 28,
2014
|
|
|
August 31,
2013
|
|
|
Customer 1
|
|
|
55.0
|
%
|
|
|
12.7
|
%
|
|
Customer 2
|
|
|
10.5
|
%
|
|
|
-
|
|
|
Customer 3
|
|
|
-
|
|
|
|
27.5
|
%
|
|
Customer 4
|
|
|
-
|
|
|
|
16.5
|
%
|
|
Customer 5
|
|
|
-
|
|
|
|
12.0
|
%
|
|
Customer 6
|
|
|
-
|
|
|
|
10.9
|
%
|
|
Customer 7
|
|
|
-
|
|
|
|
10.6
|
%
|
|
Totals
|
|
|
65.5
|
%
|
|
|
90.2
|
%
|
For the three and six months ended February 28, 2014 and 2013, the Company had significant suppliers representing 10% or greater of goods purchased as follows:
|
|
|
For the Three
|
|
|
For the Three
|
|
|
For the Six
|
|
|
For the Six
|
|
|
|
|
Months Ended
|
|
|
Months Ended
|
|
|
Months Ended
|
|
|
Months Ended
|
|
|
|
|
February 28,
2014
|
|
|
February 28,
2013
|
|
|
February 28,
2014
|
|
|
February 28,
2013
|
|
|
Supplier 1
|
|
|
18.0
|
%
|
|
|
-
|
|
|
|
17.8
|
%
|
|
|
-
|
|
|
Supplier 2
|
|
|
17.7
|
%
|
|
|
-
|
|
|
|
15.0
|
%
|
|
|
-
|
|
|
Supplier 3
|
|
|
10.2
|
%
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
Supplier 4
|
|
|
-
|
|
|
|
62.9
|
%
|
|
|
10.3
|
%
|
|
|
69.7
|
%
|
|
Totals
|
|
|
45.9
|
%
|
|
|
62.9
|
%
|
|
|
43.1
|
%
|
|
|
69.7
|
%
|
Note 11. Related Party Transactions
Commencing January 1, 2013 through January 31, 2014, the Company occupied office space on a month-to-month basis for its corporate headquarters for $500 a month from Crestview Farm, an entity controlled by the Company’s Chief Executive Officer (“CEO”). The Company's CEO serves as the Manager of Crestview Farm. Rent expense for these facilities was $3,000 and $1,000 for the six months ended February 28, 2014 and 2013, respectively.
During the period from inception through February 28, 2014, the Company’s Chief Operating Officer provided services at no charge to the Company. The financial statements do not include an estimate of the fair value of these services.
As of February 28, 2014, $25,431 is owed to an entity controlled by officers of the Company. This amount is included in accounts payable – related parties on the accompanying condensed combined balance sheet.
FUSE MEDICAL, LLC, FUSE MEDICAL V, LP AND FUSE MEDICAL VI, LP
NOTES TO CONDENSED COMBINED FINANCIAL STATEMENTS
FOR THE THREE AND SIX MONTHS ENDED FEBRUARY 28, 2014 AND 2013
(Unaudited)
Note 12. Subsequent Events
Note Agreements
On April 1, 2014, the notes receivable in the aggregate amount of $63,000 due from Golf Rounds.com, Inc. maturing April 15, 2014 and May 5, 2014 were amended whereby the maturity date was extended to June 26, 2014. On May 2, 2014, the Company advanced an additional $10,000 to Golf Rounds.com, Inc. in exchange for a promissory note receivable due June 26, 2014. The note is unsecured, bears interest at a rate of 3.0% per annum and requires payment of principal and interest at maturity. On May 28, 2014, as a result of the closing of the Merger, the notes payable became part of the consideration to acquire Golf Rounds.com, Inc.
During the period from March 4, 2014 through June 16, 2014, the Company issued several two-year promissory notes in exchange for aggregate cash proceeds of $282,902 from related parties. The funds were received from entities controlled by officers of the Company. The officers also owned or partially owned the entities from which the funds were received. The notes are unsecured, bear interest at 7.0% and require 18 monthly payments of interest only commencing at the beginning of month seven. The first six months of interest is deferred until maturity. The outstanding principal balance along with all accrued and unpaid interest is due at maturity.
On May 23, 2014, the Company issued a two-year promissory note in exchange for cash proceeds of $479,975 from a non-related party. The note is unsecured, bears interest at 7.0% and requires 18 monthly payments of interest only commencing at the beginning of month seven. The first six months of interest is deferred until maturity. The outstanding principal balance along with all accrued and unpaid interest is due at maturity.
Consulting Agreements
On May 1, 2014, the Company entered into a one-year consulting agreement with an individual who is a director of the Company whereby the individual shall be the Company’s Podiatric Medical Director and shall receive compensation of $16,667 per month.
On May 1, 2014, the Company entered into a one-year consulting agreement with an individual whereby the individual shall be a Medical Director and shall receive compensation of $9,000 per month.
On July 1, 2014, the Company entered into a five-year consulting agreement with an individual whereby the individual shall be the Company’s General Counsel and shall receive compensation of $25,000 per month as well as a signing bonus of $61,000.
Other Matters
On May 28, 2014, the Company consummated a merger with Golf Rounds.com, Inc. that resulted in the issuance of 401,280 shares of common stock to the existing stockholders of Golf Rounds.com, Inc. as of that date.
During the period from July 18, 2014 through August 4, 2014, the Company received aggregate cash proceeds of $500 from outstanding subscriptions receivable.
F-14
EXHIBIT 99.3
UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
The following unaudited pro forma combined financial statements give effect to the Merger Agreement between Fuse, the Company, Merger Sub, and the Representative, solely in his capacity as the representative of the Fuse members. Immediately prior to the consummation of the Merger, the Company shall change its name to Fuse Medical, Inc. (“FMI”). In the Merger, Merger Sub shall be merged with and into Fuse, and Fuse, as the surviving corporation, shall become a wholly-owned subsidiary of FMI.
Immediately prior to the closing of the Merger, FMI shall complete a 1-for-14.62 Reverse Stock Split whereby each 14.62 issued and outstanding shares of FMI common stock, par value of $0.01 per share, shall be converted into 1 share of FMI (leaving 400,013 common shares). Upon closing of the Merger, all of the units reflecting membership interests in Fuse that are issued and outstanding immediately prior to the effective time of the Merger shall be cancelled and converted into the right to receive 3,600,000 shares of FMI common stock (on a post-Reverse Stock Split basis), representing 90% of FMI’s issued and outstanding common stock after giving effect to the Merger.
The Merger will be accounted for as a “reverse merger” and recapitalization since, immediately following the completion of the transaction, the Holders will have effective control of FMI through the Holders’ 90% fully diluted stockholder interest in the combined entity. In addition, Fuse will have control of the combined entity through control of a substantial proportion of the Board by designating five of the six board seats. Additionally, all of Fuse’s senior executive positions will continue on as management of the combined entity after consummation of the Merger. For accounting purposes, Fuse will be deemed to be the accounting acquirer in the transaction and, consequently, the transaction will be treated as a recapitalization of FMI. Accordingly, Fuse’s assets, liabilities and results of operations will become the historical financial statements of the registrant, and the Company’s assets, liabilities and results of operations will be consolidated with Fuse effective as of the date of the closing of the Merger. No step-up in basis or intangible assets or goodwill will be recorded in this transaction.
The unaudited pro forma combined balance sheet as of February 28, 2014 and the unaudited combined statements of operations for the year ended August 31, 2013 and for the six months ended February 28, 2014 presented herein gives effect to the Merger as if the transaction had occurred at the beginning of such period and includes certain adjustments that are directly attributable to the transaction, which are expected to have a continuing impact on FMI, and are factually supportable, as summarized in the accompanying notes. In a reverse recapitalization, for purposes of the pro forma combined financial statements, the activities of FMI (the shell company) are presumed to cease as of the date of the Merger. Accordingly, the statements of operations for FMI have been omitted from the pro forma combined statements of operations.
The unaudited pro forma combined financial statements have been prepared for illustrative purposes only and are not necessarily indicative of the consolidated financial position or results of operations in future periods or the results that actually would have been realized had Fuse and FMI been a combined company during the specified periods. The unaudited pro forma combined financial statements, including the notes thereto, are qualified in their entirety by reference to, and should be read in conjunction with, the historical combined financial statements of Fuse included herein and the historical financial statements of the Company included in its Annual Report on Form 10-K for the year ended August 31, 2013 and its Quarterly Report on Form 10-Q for the six months ended February 28, 2014.
FUSE MEDICAL, INC.
PRO FORMA COMBINED BALANCE SHEET
FEBRUARY 28, 2014
(Unaudited)
|
|
|
|
|
|
Fuse
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Medical,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Inc.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F/K/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fuse
|
|
|
Golf
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Medical,
|
|
|
Rounds.com,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LLC
|
|
|
Inc.
|
|
|
Adj
|
|
|
Pro Forma
|
|
|
Pro Forma
|
|
|
|
|
(Historical)
|
|
|
(Historical)
|
|
|
#
|
|
|
Adjustments
|
|
|
Combined
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
524,891
|
|
|
$
|
6,551
|
|
|
|
|
|
$
|
-
|
|
|
$
|
531,442
|
|
|
Accounts receivable
|
|
|
114,753
|
|
|
|
-
|
|
|
|
|
|
|
-
|
|
|
|
114,753
|
|
|
Inventories
|
|
|
284,683
|
|
|
|
-
|
|
|
|
|
|
|
-
|
|
|
|
284,683
|
|
|
Notes receivable
|
|
|
95,000
|
|
|
|
-
|
|
|
A
|
|
|
|
(95,000
|
)
|
|
|
-
|
|
|
Prepaid expenses and other receivables
|
|
|
3,320
|
|
|
|
18,673
|
|
|
A
|
|
|
|
(831
|
)
|
|
|
21,162
|
|
|
Other receivables - related parties
|
|
|
45,432
|
|
|
|
-
|
|
|
|
|
|
|
-
|
|
|
|
45,432
|
|
|
Total current assets
|
|
|
1,068,079
|
|
|
|
25,224
|
|
|
|
|
|
|
(95,831
|
)
|
|
|
997,472
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property and equipment, net
|
|
|
37,004
|
|
|
|
-
|
|
|
|
|
|
|
-
|
|
|
|
37,004
|
|
|
Security deposit
|
|
|
2,489
|
|
|
|
-
|
|
|
|
|
|
|
-
|
|
|
|
2,489
|
|
|
Total assets
|
|
$
|
1,107,572
|
|
|
$
|
25,224
|
|
|
|
|
|
$
|
(95,831
|
)
|
|
$
|
1,036,965
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders’ Equity (Deficit)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
201,419
|
|
|
$
|
18,545
|
|
|
|
|
|
$
|
-
|
|
|
$
|
219,964
|
|
|
Accounts payable - related parties
|
|
|
25,431
|
|
|
|
-
|
|
|
|
|
|
|
-
|
|
|
|
25,431
|
|
|
Accrued expenses
|
|
|
5,091
|
|
|
|
852
|
|
|
A
|
|
|
|
(831
|
)
|
|
|
5,112
|
|
|
Line of credit
|
|
|
100,000
|
|
|
|
-
|
|
|
|
|
|
|
-
|
|
|
|
100,000
|
|
|
Notes payable, current portion
|
|
|
-
|
|
|
|
95,000
|
|
|
A
|
|
|
|
(95,000
|
)
|
|
|
-
|
|
|
Total current liabilities
|
|
|
331,941
|
|
|
|
114,397
|
|
|
|
|
|
|
(95,831
|
)
|
|
|
350,507
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes payable
|
|
|
247,801
|
|
|
|
17,250
|
|
|
|
|
|
|
-
|
|
|
|
265,051
|
|
|
Notes payable - related parties
|
|
|
501,336
|
|
|
|
-
|
|
|
|
|
|
|
-
|
|
|
|
501,336
|
|
|
Total liabilities
|
|
|
1,081,078
|
|
|
|
131,647
|
|
|
|
|
|
|
(95,831
|
)
|
|
|
1,116,894
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders’ equity (deficit):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock
|
|
|
-
|
|
|
|
58,481
|
|
|
B
|
|
|
|
(54,481
|
)
|
|
|
40,000
|
|
|
|
|
|
|
|
|
|
|
|
|
C
|
|
|
|
36,000
|
|
|
|
|
|
|
Additional paid-in capital
|
|
|
-
|
|
|
|
3,270,942
|
|
|
B
|
|
|
|
54,481
|
|
|
|
(13,506
|
)
|
|
|
|
|
|
|
|
|
|
|
|
C
|
|
|
|
(36,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
D
|
|
|
|
(3,435,846
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
E
|
|
|
|
106,423
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F
|
|
|
|
26,494
|
|
|
|
|
|
|
Members' equity (Accumulated deficit)
|
|
|
26,494
|
|
|
|
(3,435,846
|
)
|
|
D
|
|
|
|
3,435,846
|
|
|
|
(106,423
|
)
|
|
|
|
|
|
|
|
|
|
|
|
E
|
|
|
|
(106,423
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F
|
|
|
|
(26,494
|
)
|
|
|
|
|
|
Total stockholders’ equity (deficit)
|
|
|
26,494
|
|
|
|
(106,423
|
)
|
|
|
|
|
|
-
|
|
|
|
(79,929
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders’ equity (deficit)
|
|
$
|
1,107,572
|
|
|
$
|
25,224
|
|
|
|
|
|
$
|
(95,831
|
)
|
|
$
|
1,036,965
|
|
See Notes and Assumptions to Unaudited Pro Forma Combined Financial Statements.
FUSE MEDICAL, INC.
PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED AUGUST 31, 2013
(Unaudited)
|
|
|
Fuse
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Medical,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LLC
|
|
|
Adj
|
|
|
Pro Forma
|
|
|
Pro Forma
|
|
|
|
|
(Historical)
|
|
|
#
|
|
|
Adjustments
|
|
|
Combined
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Product revenues
|
|
$
|
979,539
|
|
|
|
|
|
$
|
-
|
|
|
$
|
979,539
|
|
|
Consulting revenues
|
|
|
79,800
|
|
|
|
|
|
|
-
|
|
|
|
79,800
|
|
|
Total revenues
|
|
|
1,059,339
|
|
|
|
|
|
|
-
|
|
|
|
1,059,339
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenues
|
|
|
203,532
|
|
|
|
|
|
|
-
|
|
|
|
203,532
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
855,807
|
|
|
|
|
|
|
-
|
|
|
|
855,807
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General, adminstrative and other
|
|
|
419,752
|
|
|
|
|
|
|
-
|
|
|
|
419,752
|
|
|
Total operating expenses
|
|
|
419,752
|
|
|
|
|
|
|
-
|
|
|
|
419,752
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss)
|
|
|
436,055
|
|
|
|
|
|
|
-
|
|
|
|
436,055
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
(669
|
)
|
|
|
|
|
|
-
|
|
|
|
(669
|
)
|
|
Total other expense
|
|
|
(669
|
)
|
|
|
|
|
|
-
|
|
|
|
(669
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes
|
|
|
435,386
|
|
|
|
|
|
|
-
|
|
|
|
435,386
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense (benefit)
|
|
|
-
|
|
|
G
|
|
|
|
148,031
|
|
|
|
148,031
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
435,386
|
|
|
|
|
|
$
|
(148,031
|
)
|
|
$
|
287,355
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted (H)
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
0.07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted (H)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,860,248
|
|
See Notes and Assumptions to Unaudited Pro Forma Combined Financial Statements.
FUSE MEDICAL, INC.
PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED FEBRUARY 28, 2014
(Unaudited)
|
|
|
Fuse
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Medical,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LLC
|
|
|
Adj
|
|
|
Pro Forma
|
|
|
Pro Forma
|
|
|
|
|
(Historical)
|
|
|
#
|
|
|
Adjustments
|
|
|
Combined
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Product revenues
|
|
$
|
361,052
|
|
|
|
|
|
$
|
-
|
|
|
$
|
361,052
|
|
|
Consulting revenues
|
|
|
26,600
|
|
|
|
|
|
|
|
|
|
|
26,600
|
|
|
Total revenues
|
|
|
387,652
|
|
|
|
|
|
|
-
|
|
|
|
387,652
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenues
|
|
|
122,457
|
|
|
|
|
|
|
-
|
|
|
|
122,457
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
265,195
|
|
|
|
|
|
|
-
|
|
|
|
265,195
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General, adminstrative and other
|
|
|
426,623
|
|
|
|
|
|
|
-
|
|
|
|
426,623
|
|
|
Total operating expenses
|
|
|
426,623
|
|
|
|
|
|
|
-
|
|
|
|
426,623
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating loss
|
|
|
(161,428
|
)
|
|
|
|
|
|
-
|
|
|
|
(161,428
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
|
831
|
|
|
A
|
|
|
|
(831
|
)
|
|
|
-
|
|
|
Interest expense
|
|
|
(5,724
|
)
|
|
|
|
|
|
|
|
|
|
(5,724
|
)
|
|
Total other expense
|
|
|
(4,893
|
)
|
|
|
|
|
|
(831
|
)
|
|
|
(5,724
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before income taxes
|
|
|
(166,321
|
)
|
|
|
|
|
|
(831
|
)
|
|
|
(167,152
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense (benefit)
|
|
|
-
|
|
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(166,321
|
)
|
|
|
|
|
$
|
(831
|
)
|
|
$
|
(167,152
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted (H)
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(0.04
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted (H)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,001,280
|
|
See Notes and Assumptions to Unaudited Pro Forma Combined Financial Statements.
FUSE MEDICAL, INC.
NOTES AND ASSUMPTIONS TO PRO FORMA COMBINED FINANCIAL STATEMENTS
(Unaudited)
|
(A)
|
To eliminate intercompany promissory notes receivable/payable, accrued interest receivable/payable, and interest income/expense amounts.
|
|
|
|
|
(B)
|
Immediately prior to the closing of the Merger, FMI shall complete a 1-for-14.62 reverse split whereby each 14.62 issued and outstanding shares of FMI common stock, par value of $0.01 per share, shall be converted into 1 share of FMI (leaving 400,013 common shares).
|
|
|
|
|
(C)
|
Upon closing of the Merger, all of the units reflecting membership interests in Fuse that are issued and outstanding immediately prior to the Effective Time of the Merger shall be cancelled and converted into the right to receive 3,600,000 shares of FMI common stock.
|
|
|
|
|
(D)
|
To eliminate the accumulated deficit of FMI (the accounting acquiree).
|
|
|
|
|
(E)
|
To record the net liabilities acquired from FMI (the accounting acquiree).
|
|
|
|
|
(F)
|
To reclassify the undistributed earnings of Fuse to additional paid-in capital upon its transition from a nontaxable entity to a taxable entity as a result of the closing of the Merger.
|
|
|
|
|
(G)
|
To reflect federal income taxes of Fuse as if it was a corporation.
|
|
|
|
|
(H)
|
Pro forma basic and diluted loss per common share is based on the weighted average number of common shares which would have been outstanding during the period if the recapitalization had occurred at September 1, 2012, and reflects the exchange of the units of Fuse for common stock of FMI.
|
The unaudited pro forma combined financial statements do not include any adjustment for non-recurring costs incurred or to be incurred after February 28, 2014 by both FML and FMI to consummate the Reverse Merger, except as noted above. Merger costs include debt assumed from legal acquirer, fees payable for investment banking services, legal fees and accounting fees. Such costs will be expensed as incurred.
5
