Item 5. Other Information
Item 5. Other Information.
New Credit Facility
On May 11, 2021, the Company entered into a promissory note, business loan agreement, commercial security agreement and pledge agreement (the “ New Credit Facility ”) with C3bank, National Association for a $10.0 million revolving line of credit. The New Credit Facility matures on May 11, 2023 and replaces the Credit Facility. The Company is permitted to use the proceeds of the loan solely for its business operations.
The New Credit Facility accrues at a variable interest rate, which is based on the rate of interest last quoted by The Wall Street Journal as the “prime rate,” plus a margin of 1.70% (such rate not to be less than 4.950% per annum). The Company will pay interest on the New Credit Facility in regular monthly payments, beginning on June 11, 2021. The New Credit Facility also provides for a minimum fee, which is offset by interest payments. The Company may prepay the New Credit Facility without penalty and may convert up to $5.0 million of revolving debt into term debt.
The Company is the borrower under the New Credit Facility. The New Credit Facility is secured by a security interest in certain of the Company’s and its certain subsidiaries’ current and future tangible and intangible assets, inventory, chattel paper, accounts, equipment and general intangibles and a pledge of the equity of the direct and indirect subsidiaries of the Company.
The availability of additional draws under the New Credit Facility is conditioned, among other things, on the compliance with certain customary representations and warranties, including default, insolvency or bankruptcy, material adverse change in financial condition and any guarantor’s attempt to revise its guarantee. The agreement governing the New Credit Facility also contains customary affirmative covenants regarding, among other things, the maintenance of records, maintenance of certain insurance coverage, compliance with governmental requirements and maintenance of several financial covenants.
The New Credit Facility contains certain customary financial covenants and negative covenants that, among other things, include restrictions on the Company’s ability to create, incur or assume indebtedness for borrowed money, including capital leases or to sell, transfer, mortgage, assign, pledge, lease, grant a security interest in, or encumber any of the Company’s assets.
On May 11, 2021, the Company terminated the Credit Facility as a result of entry into the New Credit Facility. A description of the material terms and conditions of the Credit Facility are included in the “ Liquidity and Capital Resources—Liquidity ” section of Part I, Item 2 contained in this Quarterly Report on Form 10-Q.
This summary is qualified in its entirety by reference to the full text of the promissory note, business loan agreement, and commercial security agreement, which are attached hereto as Exhibit 10.2, 10.3, and 10.4, respectively, and incorporated by reference herein.
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Item 6. Exhibits.
(a) Exhibits
Exhibit No.
Identification of Exhibit
3.1
Amended and Restated Articles of Incorporation (restated for filing purposes only) (filed as Exhibit 3.1 to the Company’s Annual Report on Form 10-K filed on March 9, 2020 (File No. 000-17973), and incorporated herein by reference).
3.2
Restated Bylaws, as amended (filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on September 30, 2020 (File No. 001-39471), and incorporated herein by reference).
4.1
Warrant Agreement by and between Heritage Global Inc. and Napier Park Industrial Asset Acquisition, LP, effective as of March 19, 2019 (filed as Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on March 25, 2019 (File No. 000-17973), and incorporated herein by reference).
10.1
Separation Agreement, dated March 30, 2021, by and between Heritage Global Inc. and Scott West
10.2
Business Loan Agreement, dated May 11, 2021, by and between Heritage Global Inc. and C3bank, National Association
10.3
Promissory Note, dated May 11, 2021, by and between Heritage Global Inc. and C3bank, National Association
10.4
Commercial Security Agreement, dated May 11, 2014, by and between Heritage Global Inc. and C3bank, National Association
10.5
Pledge and Security Agreement, dated May 11, 2021, by and between Heritage Global Inc. and C3bank, National Association
10.6
Side Letter, dated May 5, 2021, by and between Heritage Global Inc. and C3bank, National Association
31.1
Certification of Principal Executive Officer pursuant to Rule 13a-14(a) and 15d-14(a) as adopted under Section 302 of the Sarbanes-Oxley Act of 2002
31.2
Certification of Principal Financial Officer pursuant to Rule 13a-14(a) and 15d-14(a) as adopted under Section 302 of the Sarbanes-Oxley Act of 2002
32.1
Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2
Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS
XBRL Instance Document
101.SCH
XBRL Taxonomy Extension Schema Document
101.CAL
XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF
XBRL Taxonomy Extension Definition Linkbase Document
101.LAB
XBRL Taxonomy Extension Labels Linkbase Document
101.PRE
XBRL Taxonomy Extension Presentation Linkbase Document
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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 thereunder duly authorized.
Heritage Global Inc.
Date: May 13, 2021
By:
/s/ Ross Dove
Ross Dove
Chief Executive Officer
(Principal Executive Officer)
By:
/s/ Brian J. Cobb
Brian J. Cobb
Vice President of Finance and Controller
(Principal Financial Officer)
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