UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_____________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported): May 22, 2020
STRATA SKIN SCIENCES, INC.
(Exact Name of Registrant Specified in Charter)
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Delaware
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000-51481
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13-3986004
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(State or Other
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(Commission File
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(I.R.S. Employer
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Jurisdiction of
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Number)
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Identification No.)
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Incorporation)
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5 Walnut Grove Drive, Suite 140, Horsham, Pennsylvania
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19044
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(Address of Principal Executive Offices)
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(Zip Code)
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Registrant's telephone number, including area code: 215-619-3200
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
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□
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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□
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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□ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
□ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
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Title of each class
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Trading
Symbol(s) |
Name of each exchange on which registered
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Common Stock, $0.001 par value per share
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SSKN
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The NASDAQ Stock Market LLC
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934
(§240.12b-2 of this chapter).
Emerging growth company □
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to
Section 13(a) of the Exchange Act. □
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Item 1.01.
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Entry Into A Material Definitive Agreement.
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On May 22, 2020, STRATA Skin Sciences, Inc. (the “Company”) executed the standard loan documents required for securing a loan (the “EIDL Loan”) from the United States Small Business Administration (the “SBA”) under its
Economic Injury Disaster Loan (“EIDL”) assistance program in light of the impact of the COVID-19 pandemic on the Company’s business. The principal amount of the EIDL Loan is up to $500,000, with proceeds to be used for working capital purposes. As of
the date of this Current Report on Form 8-K, the Company has not requested any disbursements under the EIDL Loan, and the EIDL Loan requires all requests for disbursements be made by September 26, 2020 (six months after the date of the EIDL Loan),
unless the SBA, in its sole discretion, extends the disbursement period. If the Company does not request disbursements by such date, the EIDL Loan commitment will terminate and the Company will lose the ability to draw the funds. Interest accrues at
the rate of 3.75% per annum and will accrue only on funds actually advanced from the date of each advance. Installment payments, including principal and interest, are due monthly beginning March 26, 2021 (twelve months from the date of the promissory
note) in the amount of $2,437. The balance of principal and interest is payable thirty years from the date of the promissory note.
The Company has executed the EIDL Loan documents, which include the SBA Secured Disaster Loan Note, dated March 26, 2020 (the “EIDL Loan Note”), the Loan Authorization and Agreement, dated March 26, 2020 (the “EIDL
Loan LA&A”), between the SBA and the Company, and the Security Agreement, dated March 26, 2020 (the “EIDL Loan Security Agreement”), between the SBA and the Company, and returned those executed documents to the SBA within the two month deadline
from March 26, 2020 in order to avoid forfeiting the EIDL Loan. Notwithstanding the provisions stated in the loan documents requiring a personal guarantee, the Company did not provide a personal guarantee.
The Company may or may not draw any of the available funds under the EIDL Loan if it cannot secure certain changes or clarifications to the loan terms and conditions.
The EIDL Loan is secured by a security interest on all of the Company’s assets. The terms of the security interest are set forth in the EIDL Loan Security Agreement.
The foregoing description of the EIDL Loan is qualified in its entirety by reference to the terms of the EIDL Loan LA&A, which is attached hereto as Exhibit 10.1, the EIDL Loan Note, which is attached hereto as
Exhibit 10.2, and the EIDL Loan Security Agreement, which is attached hereto as Exhibit 10.3, and each of which is incorporated by reference.
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Item 2.03.
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Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
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The information about the EIDL Loan disclosed in Item 1.01 above is incorporated by reference into this Item 2.03.
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Item 5.02.
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Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
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On May 22, 2020, Strata Skin Sciences, Inc. (the “Company”) accepted the resignation of David N. Gill from his position as a Board member and Chairman of the Board's Audit Committee. Mr. Gill resigned for personal
reasons in order to focus attention on other matters. This resignation is not a result of any disagreement or dispute related to Strata’s operations, accounting policies, or practices. On the same date Ms. LuAnn Via, a
member of the Company's Board since 2012 and a member of the Audit Committee since February 2017, agreed to serve as Chairperson of the Audit Committee. In addition to her long-standing service as a member of the Board, Ms. Via had previously served
as Chairperson of the Board.
Additionally, Samuel Navarro, a member of the Board since 2014, became a member of the Audit Committee. Mr. Navarro has previous experience having served on the Audit Committee through the end of the third quarter of
the 2016 fiscal year.
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Item 7.01.
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Regulation FD Disclosure.
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While the Company has executed the SBA’s standard EIDL Loan documents described in Item 1.01 above in order to avoid forfeiting the EIDL Loan commitment, the Company
is seeking modifications regarding, among other things, the security interest of the SBA to permit third-party financing senior, in terms of security, to the SBA. The Company cannot guarantee that it will be successful in modifying the EIDL Loan
documents to eliminate unacceptable provisions, or, if it is unsuccessful, the Company will still request disbursements for some or all of the amounts available under the EIDL Loan.
The information set forth under this Item 7.01 is being furnished and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise
subject to the liabilities of such section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference
in any such filing.
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Item 9.01.
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Financial Statements and Exhibits.
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(d)
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Exhibits:
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10.1
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10.2
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10.3
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SIGNATURE
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.
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STRATA SKIN SCIENCES, INC.
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By:
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/s/ Matthew C. Hill
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Matthew C. Hill
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Chief Financial Officer
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Date May 26, 2020
-3 -
EXHIBIT 10.1
Application # 2000067140/EIDL 4316357010
U.S. Small Business Administration
Secured Economic Injury Disaster Loan
LOAN AUTHORIZATION AND AGREEMENT
Date: March 26, 2020
On the above date, this Administration (SBA) authorized (under Section 7(b) of the Small Business Act, as amended) a Loan (Loan Number EIDL 43163 5 70 10 )
to STRATA SKIN SCIENCES. INC. (Borrower) of 5 WALNUT GROVE DR SUITE 140, HORSHAM , PA 19044 in the amount of Five Hundred Thousand and 00/100 Dollars
($500,000.00) upon the following conditions:
PAYMENT
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Installment payments, including principal and interest, of Two Thousand Four Hundred Thirty-Seven And 00/100 ($2,437.00) Dollars Monthly, will begin Twelve(l2)
months from the date of the promissory Note. The balance of principal and interest will be payable Thirty (30) years from the date of the promissory Note.
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INTEREST
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Interest will accrue at the rate of 3.750% per annum and will accrue only on funds actually advanced from the date(s) of each advance.
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PAYMENT TERMS
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Each payment will be applied first to interest accrued to the date of receipt of each payment, and the balance, if any, will be applied to principal.
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Each payment will be made when due even if at that time the full amount of the Loan has not yet been advanced or the authorized amount of the Loan has been reduced.
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COLLATERAL
Borrower and/or Guarantor will provide the following collateral:
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Borrower hereby grants to Lender, the secured party hereunder, a continuing security interest in and to any and all Collateral as described herein to secure payment and performance of all debts,
liabilities and obligations of Borrower to Lender hereunder without limitation, including but not limited to all interest, other fees and expenses (all hereinafter called Obligations). The Collateral includes the following property
that Borrower now owns or shall acquire or create immediately upon the acquisition or creation thereof: all tangible and intangible personal property, including, but not limited to: (a) inventory, (b) equipment, (c) instruments, including
promissory notes (d) chattel paper, including tangible chattel paper and electronic chattel paper, (e) documents, (f) letter of credit rights, (g) accounts, including health-care insurance receivables and credit card receivables, (h)
deposit accounts, (i) commercial tort claims, (j) general intangibles, including payment intangibles and software and (k) as-extracted collateral as such terms may from time to time be defined in the Uniform Commercial Code. The security
interest Borrower grants includes all accessions, attachments, accessories, parts, supplies and replacements for the Collateral, all products. proceeds and collections thereof and all records and data relating thereto.
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REQUIREMENTS RELATIVE TO COLLATERAL
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•
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Borrower will submit to SBA evidence of SBA's recorded lien position and of payment of appropriate fees prior to the disbursement of Loan funds in excess of $25,000.00.
Such evidence will be in a form satisfactory to SBA Counsel and will be at Borrower's expense.
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Borrower will not sell or transfer any collateral (except normal inventory turnover in the ordinary course of business) described in the "Collateral" paragraph hereof without the prior written consent of SBA.
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SBA Form 1391 (5·00)
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Page 1
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Ref 5030
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Application # 2000067140/EIDL 4316357010
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Borrower will neither seek nor accept future advances under any superior liens on the collateral securing this Loan without the prior written consent of SBA.
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USE OF LOAN PROCEEDS
Borrower will use the proceeds of this Loan solely to alleviate economic injury caused by disaster occurring in the month of January, 2020.
Borrower will apply all Loan proceeds in the following approximate amounts to the specific uses below:
Economic Injury:
Working Capital …………………………………………………………………………………….$ 500,000.00
REQUIREMENTS FOR USE OF LOAN PROCEEDS AND RECEIPTS
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Borrower will obtain and itemize receipts (paid receipts, paid invoices or cancelled checks) and contracts for all Loan funds spent and retain these receipts for 3 years from the date of the final disbursement.
Prior to each subsequent disbursement (if any) and whenever requested by SBA, Borrower will submit to SBA such itemization together with copies of the receipts.
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Borrower will not use any proceeds of this Loan to pay wages or any other compensation for repair work performed by Borrower or members of Borrower's immediate family, or to pay overhead or profit for repairs
performed by, or materials acquired from, a business in which Borrower owns a 50% or greater interest.
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Borrower will not use, directly or indirectly, any portion of the proceeds of this Loan to relocate without the prior written permission of SBA. The law prohibits the use of any portion of the proceeds of this
Loan for voluntary relocation from the business area in which the disaster occurred. To request SBA's prior written permission to relocate, Borrower will present to SBA the reasons therefore and a description or address of the relocation
site. Determinations of (1) whether a relocation is voluntary or otherwise, and (2) whether any site other than the disaster-affected location is within the business area in which the disaster occurred, will be made solely by SBA.
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Borrower will, to the extent feasible, purchase only American-made equipment and products with the proceeds of this Loan.
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Borrower will make any request for a loan increase for additional disaster-related damages as soon as possible after the need for a loan increase is discovered. The SBA will not consider a request for a loan
increase received more than two (2) years from the date of loan approval unless, in the sole discretion of the SBA, there are extraordinary and
unforeseeable circumstances beyond the control of the borrower.
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DEADLINE FOR RETURN OF LOAN CLOSING DOCUMENTS
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Borrower will sign and return the loan closing documents to SBA within 2 months of the date of this Loan Authorization and Agreement. By notifying the Borrower in
writing, SBA may cancel this Loan if the Borrower fails to meet this requirement. The Borrower may submit and the SBA may, in its sole discretion, accept documents after 2 months of the date of this Loan Authorization and Agreement.
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COMPENSATION FROM OTHER SOURCES
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Eligibility for this disaster Loan is limited to disaster losses that are not compensated by other sources. Other sources include but are not limited to: (1) proceeds of policies of insurance or other
indemnifications, (2) grants or other reimbursement (including loans) from government agencies or private organizations, (3) claims for civil liability against other individuals, organizations or governmental entities, and (4) salvage
(including any sale or re-use) of items of damaged property.
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SBA Form 1391 (5·00)
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Page 2
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Ref 5030
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Application # 2000067140/EIDL 4316357010
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Borrower will promptly notify SBA of the existence and status or any claim or application for such other compensation, and of the receipt of any such compensation, and Borrower will promptly submit the proceeds
of same (not exceeding the outstanding balance of this Loan) to SBA.
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Borrower hereby assigns to SBA the proceeds of any such compensation from other sources and authorizes the payor of same to deliver said proceeds to SBA at such time and place as SBA shall designate.
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SBA will in its sole discretion determine whether any such compensation from other sources is a duplication of benefits. SBA will use the proceeds of any such duplication to reduce the outstanding balance of
this Loan, and Borrower agrees that such proceeds will not be applied in lieu of scheduled payments.
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DUTY TO MAINTAIN HAZARD INSURANCE
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Within 12 months from the date of this Loan Authorization and Agreement the Borrower will provide proof of an active and in effect hazard insurance policy including fire, lightning, and extended coverage on all
items used to secure this loan to at least 80% of the insurable value. Borrower will not cancel such coverage and will maintain such coverage throughout the entire term of this Loan. BORROWER MAY NOT BE
ELIGIBLE FOR EITHER ANY FUTURE DISASTER ASSISTANCE OR SBA FINANCIAL ASSISTANCE IF THIS INSURANCE IS NOT MAINTAINED AS STIPULATED HEREIN THROUGHOUT THE ENTIRE TERM OF THIS LOAN. Please submit proof of insurance to: U.S. Small
Business Administration, Office of Disaster Assistance, 14925 Kingsport Rd, Fort Worth , TX. 76155
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BOOKS AND RECORDS
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Borrower will maintain current and proper books of account in a manner satisfactory to SBA for the most recent 5 years until 3 years after the date of maturity, including extensions, or the date this Loan is
paid in full, whichever occurs first. Such books will include Borrower's financial and operating statements, insurance policies, tax returns and related filings, records of earnings distributed and dividends paid and records of compensation
to officers, directors, holders of 10% or more of Borrower's capital stock, members, partners and proprietors.
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Borrower authorizes SBA to make or cause to be made, at Borrower's expense and in such a manner and at such times as SBA may require: (1) inspections and audits of any books, records and paper in the custody or
control of Borrower or others relating to Borrower's financial or business conditions, including the making of copies thereof and extracts therefrom, and (2) inspections and appraisals of any of Borrower's assets.
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Borrower will furnish to SBA, not later than 3 months following the expiration of Borrower's fiscal year and in such form as SBA may require, Borrower's financial
statements.
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Upon written request of SBA, Borrower will accompany such statements with an 'Accountant's Review Report' prepared by an independent public accountant at Borrower's
expense.
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Borrower authorizes all Federal, State and municipal authorities to furnish reports of examination, records and other information relating to the conditions and affairs of Borrower and any desired information
from such reports, returns, files, and records of such authorities upon request of SBA.
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LIMIT ON DISTRIBUTION OF ASSETS
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Borrower will not, without the prior written consent of SBA, make any distribution of Borrower's assets, or give any preferential treatment, make any advance, directly or indirectly, by way of loan, gift,
bonus, or otherwise, to any owner or partner or any of its employees, or to any company directly or indirectly controlling or affiliated with or controlled by Borrower, or any other company.
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EQUAL OPPORTUNITY REQUIREMENT
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If Borrower has or intends to have employees, Borrower will post SBA Form 722, Equal Opportunity Poster, in Borrower's place of business where it will be clearly visible to employees, applicants for employment,
and the general public.
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SBA Form 1391 (5·00)
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Page 3
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Ref 5030
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Application # 2000067140/EIDL 4316357010
RESQLUTION OF BOARD OF DIRECTORS
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Prior to disbursement of any Loan funds, Borrower will submit a Board of Directors' Resolution on SBA Form 160 for:
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STRATA SKIN SCIENCES, INC.
DISCLOSURE OF LOBBYING ACTIVITIES
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Prior to disbursement of any Loan funds, Borrower will complete the Certification Regarding Lobbying and the Disclosure of Lobbying Activities (if appropriate), and submit the required document(s) to SBA.
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BORROWER'S CERTIFICATIONS
Borrower certifies that:
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Borrower will not use lead-based paint on any interior surface of any residential structure, and those exterior surfaces of residential structures such as stairs, porches, windows, and doors, which are readily
accessible to children under 7 years of age. If lead-based paint is improperly used, the Borrower will be required to remove the paint and repaint the affected area at the Borrower's expense.
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There has been no substantial adverse change in Borrower's financial condition (and organization, in case of a business borrower) since the date of the application for this Loan. (Adverse changes include, but
are not limited to: judgment liens, tax liens, mechanic's liens, bankruptcy, financial reverses, arrest or conviction of felony, etc.)
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No fees have been paid, directly or indirectly, to any representative (attorney, accountant, etc.) for services provided or to be provided in connection with applying for or closing this Loan, other than those
reported on SBA Form 5 Business Disaster Loan Application'; or SBA Form 1 59, 'Compensation Agreement'. All fees not approved by SBA are prohibited.
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All representations in the Borrower's Loan application (including all supplementary submissions) are true, correct and complete and are offered to induce SBA to make this Loan.
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No claim or application for any other compensation for disaster losses has been submitted to or requested of any source, and no such other compensation has been received, other than that which Borrower has
fully disclosed to SBA.
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Neither the Borrower nor, if the Borrower is a business, any principal who owns at least 50% of the Borrower, is delinquent more than 60 days under the terms of any: (a) administrative order; (b) court order;
or (c) repayment agreement that requires payment of child support.
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Borrower certifies that no fees have been paid, directly or indirectly, to any representative (attorney, accountant, etc.) for services provided or to be provided in connection with applying for or closing this
Loan, other than those reported on the Loan Application. All fees not approved by SBA are prohibited. If an Applicant chooses to employ an Agent, the compensation an Agent charges to and that is paid by the Applicant must bear a necessary and
reasonable relationship to the services actually performed and must be comparable to those charged by other Agents in the geographical area. Compensation cannot be contingent on loan approval. In addition, compensation must not include any
expenses which are deemed by SBA to be unreasonable for services actually performed or expenses actually incurred. Compensation must not include charges prohibited in 13 CFR 103 or SOP 50-30, Appendix I. If
the compensation exceeds $500 for a disaster home loan or $2,500 for a disaster business loan, Borrower must fill out the Compensation Agreement Form 159D which will be provided for Borrower upon request or can be found on the SBA
website.
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The Borrower(s) are the owner(s) of and hold legal title to certain real estate property fully described in Section 2 -Collateral. Said premises are in my/our possession, and my/our title thereto has never
been disputed or questioned as to any part thereof. Said premises are free of all mortgages, taxes, assessments, liens, encumbrances, and claims,
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SBA Form 1391 (5·00)
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Page 4
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Ref 5030
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Application # 2000067140/EIDL 4316357010
or interest of any other party, except as listed in Section 2 of this document. There are no actions pending affecting said real property.
CIVIL AND CRIMINAL PENALTIES
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Whoever wrongfully misapplies the proceeds of an SBA disaster loan shall be civilly liable to the Administrator in an amount equal to one-and-one half times the original principal amount of the loan under 15
U.S.C. 636(b). In addition, any false statement or misrepresentation to SBA may result in criminal, civil or administrative sanctions including, but not limited to: 1) fines, imprisonment or both, under 15 U.S.C. 645, 18 U.S.C. 1001, 18
U.S.C. 1014, 18 U.S.C. 1040, 18 U.S.C. 3571, and any other applicable laws; 2) treble damages and civil penalties under the False Claims Act, 31 U.S.C. 3729;3) double damages and civil penalties under the Program Fraud Civil Remedies Act, 31
U.S.C. 3802; and 4) suspension and/or debarment from all Federal procurement and non-procurement transactions. Statutory fines may increase if amended by the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015.
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RESULT OF VIOLATION OF THIS LOAN AUTHORIZATION AND AGREEMENT
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If Borrower violates any of the terms or conditions or this Loan Authorization and Agreement, the Loan will be in default and SBA may declare all or any part of the indebtedness immediately due and payable.
SBA's failure to exercise its rights under this paragraph will not constitute a waiver.
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A default (or any violation of any of the terms and conditions) of any SBA Loan(s) to Borrower and/or its affiliates will be considered a default of all such Loan(s).
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DISBURSEMENT OF THE LOAN
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Disbursements will be made by and at the discretion of SBA Counsel, in accordance with this Loan Authorization and Agreement and the general requirements of SBA.
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Disbursements may be made in increments as needed.
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Other conditions may be imposed by SBA pursuant to general requirements of SBA.
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Disbursement may be withheld if, in SBA's sole discretion, there has been an adverse change in Borrower's financial condition or in any other material fact represented in the Loan application, or if Borrower
fails to meet any of the terms or conditions of this Loan Authorization and Agreement.
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NO DISBURSEMENT WILL BE MADE LATER THAN 6 MONTHS FROM THE DATE OF THIS LOAN AUTHORIZATION AND AGREEMENT UNLESS SBA, IN ITS SOLE DISCRETION, EXTENDS THIS DISBURSEMENT PERIOD.
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PARTIES AFFECTED
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This Loan Authorization and Agreement will be binding upon Borrower and Borrower's successors and assigns and will inure to the benefit of SBA and its successors and assigns.
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SBA Form 1391 (5·00)
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Page 5
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Ref 5030
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Application # 2000067140/EIDL 4316357010
DATE
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This Loan Authorization and Agreement is approved and issued on March 26, 2020.
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Administrator
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Jovita Carranza
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/s/ James E. Rivera
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James E. Rivera
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Associate Administrator
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U.S. Small Business Administration
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The undersigned agree(s) to be bound by the terms and conditions herein during the term of this Loan, and further agree(s) that no provision stated herein
will be waived without prior written consent of SBA.
Corporate Execution:
STRATA SKIN SCIENCES , INC.
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BY:
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/s/ Dolev Rafaeli
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Date:
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5/15/20
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DOLEV RAFAELI, PRESIDENT
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BY:
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/s/ Jay Sturm
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Date:
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5/15/20
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JAY STURM, SECRETARY
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Note: Corporate Borrowers must execute Loan Authorization and Agreement in corporate name, by a duly authorized officer, and a seal should be affixed
and duly attested, if applicable. Partnership Borrowers must execute in firm name, together with signature of a general partner. Limited Liability entities must execute in the entity name by the signature of the authorized managing person.
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SBA Form 1391 (5·00)
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Page 6
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Ref 5030
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EXHIBIT 10.2
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U.S. Small Business Administration
NOTE
(SECURED DISASTER LOANS)
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Date: March 26, 2020
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Loan Amount: $500,000.00
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Annual Interest Rate: 3.750%
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Application # 2000067240 Loan# EIDL 4316357010
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1.
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PROMISE TO PAY: In return for a loan. Borrower promises to pay to the order of SBA the
amount of Five Hundred Thousand Dollars ($500,000.00) interest on the unpaid principal balance, and all other amounts required by this Note.
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2.
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DEFINITIONS: A) "Collateral" means any property taken as security for payment of this Note or any guarantee of this Note. B) "Guarantor" means each person or
entity that signs a guarantee of payment of this Note. C) "Loan Documents" means the documents related to this loan signed by Borrower, any Guarantor, or anyone who pledges collateral.
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3.
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PAYMENT TERMS: Borrower must make all payments at the place SBA designates. Borrower may prepay this Note in part or in full at any time, without notice or penalty.
Borrower must pay principal and interest payments of Two Thousand Four Hundred Thirty-Seven And 00/100 ($2,437.00) every month beginning Twelve (12) months from the date of the Note. SBA will apply each installment payment first to pay interest accrued to the day SBA receives the payment and will then apply any remaining balance to
reduce principal. All remaining principal and accrued interest is due and payable Thirty (30) years from the date of the Note.
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4.
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DEFAULT: Borrower is in default under this Note if Borrower does not make a payment when due under this Note, or if Borrower:
A) Fails to comply with any provision of this Note. the Loan Authorization and Agreement, or other Loan Documents: B) Defaults on any other SBA loan; C) Sells or otherwise transfers, or does not preserve or account to SBA’s satisfaction for, any of the Collateral or its proceed: D) Does not disclose, or
anyone acting on their behalf docs not disclose, any material fact to SBA: E) Makes, or anyone acting on their behalf makes, a materially false or misleading representation to SBA: F) Defaults on any loan or agreement with another creditor, if SBA believes the default may materially affect Borrower's ability to pay this Note: G) Fails to
pay any taxes when due: H) Becomes the subject of a proceeding under any bankruptcy or insolvency law: I) Has a receiver or liquidator appointed for any
part of their business or property: J) Makes an assignment for the benefit of creditors: K) Has any adverse change in financial condition or business
operation that SBA believes may materially affect Borrower’s ability to pay this Note: L) Dies: M) Reorganizes, merges, consolidates, or otherwise
changes ownership or business structure without SBA's prior written consent; or, N) Becomes the subject of a civil or criminal action that SBA believes may materially affect Borrower's ability to
pay this Note.
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5.
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SBA'S RIGHTS IF THERE IS A DEFAULT: Without notice or demand and without giving up any of its rights, SBA may: A) Require
immediate payment of all amounts owing under this Note: B) Have recourse to collect all amounts owing from any Borrower or Guarantor; C) File suit and
obtain judgment: D) Take possession of any Collateral: or E) Sell, lease, or otherwise dispose of, any Collateral at public or private sale, with or
without advertisement.
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6.
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SBA'S GENERAL POWERS: Without notice and without Borrower's consent. SBA may: A) Bid on or buy the Collateral at its sale
or the sale of another lien holder, at any price it chooses: B) Collect amounts due under this Note, enforce the terms of this Note or any other Loan Document, and preserve or dispose of the
Collateral. Among other things, the expenses may include payments for property taxes, prior liens, insurance, appraisals, environmental remediation costs, and reasonable attorney’s fees and costs. If SBA incurs such expenses, it may demand
immediate reimbursement from Borrower or add the expenses to the principal balance: C) Release anyone obligated to pay this Note; D) Compromise, release,
renew, extend or substitute any of the Collateral: and E) Take any action necessary to protect the Collateral or collect amounts owing on this Note.
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7.
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FEDERAL LAW APPLIES: When SBA is the holder, this Note will be interpreted and enforced under federal law, including SBA regulations. SBA may use state or local
procedures for filing papers, recording documents, giving notice, foreclosing liens, and other purposes. By using such procedures, SBA does not waive any federal immunity from state or local control, penalty, tax, or liability. As to this
Note, Borrower may not claim or assert against SBA any local or state law to deny any obligation, defeat any claim of SBA, or preempt federal law.
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8.
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GENERAL PROVISIONS: A) All individuals and entities signing this Note are jointly and severally liable. B) Borrower
waives all suretyship defenses. C) Borrower must sign all documents required at any time to comply with the Loan Documents and to enable SBA to acquire, perfect, or maintain SBA’s liens on
Collateral. D) SBA may exercise any of its rights separately or together, as many times and in any order it chooses. SBA may delay or forgo enforcing any of its rights without giving up any of
them. E) Borrower may not use an oral statement of SBA to contradict or alter the written terms of this Note. F) If any part of this Note is
unenforceable, all other parts remain in effect. G) To the extent allowed by law, Borrower waives all demands and notices in connection with this Note, including presentment, demand, protest, and
notice of dishonor. Borrower also waives any defenses based upon any claim that SBA did not obtain any guarantee:
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2000067240/EIDL 4316357010
did not obtain, perfect, or maintain a lien upon Collateral; impaired Collateral: or did not obtain the fair market value of Collateral at a sale. H) SBA
may sell or otherwise transfer this Note.
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9.
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MISUSE OF LOAN FUNDS: Anyone who wrongfully misapplies any proceeds of the loan will be civilly liable to SBA for one and one-half times the proceeds
disbursed, in addition to other remedies allowed by law.
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10.
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BORROWER'S NAME(S) AND SIGNATURE(S): By signing below, each individual or entity acknowledges and accepts personal obligation and full liability under
the Noted as Borrower.
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Corporate Seal
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Corporate Execution:
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STRATA SKIN SCIENCES, INC.
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BY:
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/s/ Dolev Rafaeli
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DOLEV RAFAELI, PRESIDENT
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BY:
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/s/ Jay Sturm
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JAY STURM, SECRTARY
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EXHIBIT 10.3
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U.S. Small Business Administration
SECURITY AGREEMENT
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'
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SBA Loan #
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EIDL4316357010
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Debtor
(Exact full legal name of individual(s), corporation, LLC, partnership, or other organization
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STRATA SKIN SCIENCES, INC.
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Borrower
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STRATA SKIN SCIENCES, INC.
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Secured Party
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The Small Business Administration, an Agency of the U.S. Government
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Date
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March 26, 2020
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Note Amount
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$500,000.00
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1.
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DEFINITIONS.
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Unless otherwise specified, all terms
used in this Agreement will have the meanings ascribed to them under the Official Text of the Uniform Commercial Code, as it may be amended from time to time, (“UCC”). “SBA” means the Small Business
Administration, an Agency of the U.S. Government.
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2.
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GRANT OF SECURITY INTEREST.
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For value received, the Debtor grants to the Secured Party a security interest in the property
described below in paragraph 4 (the “Collateral”).
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3.
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OBLIGATIONS SECURED.
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This Agreement secures the payment and performance or:
(a) all obligations under a Note dated March 26, 2020, made by STRATA SKIN SCIENCES,
INC., made payable to SBA, in the amount of $500,000.00 (“Note”), including all costs
and expenses (including reasonable attorney's fees), incurred by Secured Party in the disbursement, administration and collection of the loan evidenced by the Note: (b) all costs and expenses (including reasonable attorney’s fees), incurred by Secured Party in the protection, maintenance and enforcement of the security interest hereby granted; (c) all obligations of
the Debtor in any other agreement relating to the Note; and (d) any modifications, renewals, refinancings, or extensions of the foregoing obligations.
2000067240/EIDL4316357010
The Note and all other obligations secured hereby are collectively called the·“Obligations”.
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4.
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COLLATERAL DESCRIPTION.
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Borrower/Debtor hereby grants to Lender, the secured party hereunder, a continuing security
interest in and to any and all Collateral as described herein to secure payment and performance of all debts, liabilities and obligations of Borrower to Lender hereunder without limitation, including but not limited to all interest, other fees and
expenses.
The Collateral includes the following property
that Borrower/Debtor now owns or shall acquire or create immediately upon the acquisition or creation thereof: All
tangible and intangible personal property, including, but not limited to: (a) inventory, (b) equipment, (c)
instruments, including promissory notes (d) chattel paper, including tangible chattel paper and electronic chattel paper, (e) documents, (f) letter of credit rights, (g) accounts, including health-care insurance receivables and
credit card receivables, (h) deposit accounts, (i) commercial tort claims, (j) general intangibles, including payment intangibles and software and (k) as-extracted collateral as such terms may from time to time be defined in the Uniform Commercial Code. The security interest includes all accessions, attachments, accessories, parts, supplies and replacements for the Collateral, all products, proceeds and collections thereof and all records and data relating thereto.
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5.
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RESTRICTIONS ON COLLATERAL TRANSFER.
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Debtor will not sell, lease, license or otherwise transfer (including by granting security interests, liens, or other encumbrances in) all or any part of the Collateral
or Debtor’s interest in the Collateral without Secured Party's written or electronically communicated approval, except that Debtor may sell inventory in the ordinary course of business on customary terms. Debtor may collect and use amounts due on
accounts and other rights to payment arising or created in the ordinary course of business, until notified otherwise by Secured Party in writing or by electronic communication.
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6.
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MAINTENANCE AND LOCATION OF COLLATERAL; INSPECTION; INSURANCE.
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Debtor must promptly notify Secured
Party by written or electronic communication of any change in location of the Collateral, specifying the new location. Debtor hereby grants to Secured Party the right to inspect the Collateral at all reasonable times and upon reasonable notice. Debtor must: (a) maintain the Collateral in good condition; (b) pay promptly all taxes, judgments, or charges of any kind levied or assessed thereon; (c) keep current all rent or mortgage payments due, if any, on premises where the Collateral is located: and (d) maintain hazard insurance on the Collateral, with an insurance
company and in an amount approved by Secured Party (but in no event less than the replacement cost of that
Collateral), and including such terms as Secured Party may require including a Lender's Loss Payable Clause in favor of Secured Party. Debtor hereby assigns to Secured Party any proceeds of such policies and all unearned premiums thereon and authorizes and empowers Secured Party to collect such sums and to execute and endorse in Debtor’s
name all proofs of loss, drafts, checks and any other documents necessary for Secured Party to obtain such
payments.
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7.
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CHANGES TO DEBTOR’S LEGAL STRUCTURE, PLACE OF BUSINESS, JURISDICTION OF ORGANIZATION, OR NAME.
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Debtor must notify Secured Party by written or electronic communication not less than 30 days before taking any of the following actions: (a) changing or reorganizing the type of
organization or form under which it does business: (b) moving, changing its place of business or adding a place of business: (c) changing its jurisdiction of
organization: or (d) changing its name. Debtor will pay for the preparation and
filing of all documents Secured Party deems necessary to maintain, perfect and continue the perfection of Secured Party's security interest in the event of any such change.
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8.
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PERFECTION OF SECURITY INTEREST.
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Debtor consents, without further notice, to Secured
Party's filing or recording of any documents necessary to perfect, continue, amend or terminate its security interest. Upon request of Secured Party, Debtor must sign or otherwise authenticate all documents that Secured Party deems necessary at any
time to allow Secured Party to acquire, perfect, continue or amend its security interest in the
2000067240/EIDL4316357010
Collateral. Debtor will pay the filing and recording costs of any documents relating to Secured Party's security
interest. Debtor ratifies all previous filings and recordings, including financing statements and notations on certificates of title. Debtor will cooperate with Secured Party in obtaining a Control Agreement satisfactory to Secured Party with respect
to any Deposit Accounts or Investment Property, or in otherwise obtaining control or possession of that or any other Collateral.
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9.
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DEFAULT.
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Debtor is in default under this Agreement if: (a) Debtor fails to pay, perform or otherwise
comply with any provision or this Agreement; (b) Debtor makes any materially false representation, warranty or certification in, or in connection with, this Agreement, the Note, or any other agreement related to the Note or this Agreement (c) another
secured party or judgment creditor exercises its rights against the Collateral: or (d) an event defined as a “default” under the Obligations occurs. In the event of default and if Secured Party requests, Debtor must assemble and make available all
Collateral at a place and time designated by Secured Party. Upon default and at any time thereafter, Secured Party may declare all Obligations secured hereby immediately due and payable, and, in its sole discretion, may proceed to enforce payment of
same and exercise any of the rights and remedies available to a secured party by law including those available to it under Article 9 of the UCC that is in effect in the jurisdiction
where Debtor or the Collateral is located. Unless otherwise required under applicable law, Secured Party has no obligation to clean or otherwise prepare the Collateral for sale or other disposition and Debtor waives any right it may have to require
Secured Party to enforce the security interest or payment or performance of the Obligations against any other person.
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10.
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FEDERAL RIGHTS.
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When SBA is the holder of the Note, this Agreement will
be construed and enforced under federal law, including SBA regulations. Secured Party or SBA may use state or
local procedures for filing papers, recording documents, giving notice, enforcing security interests or liens, and for any other purposes. By using such procedures, SBA does not waive any federal immunity from state or local control, penalty, tax or liability. As to this Agreement, Debtor may not claim or assert any local or state law against SBA to deny any obligation,
defeat any claim of SBA, or preempt federal law.
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11.
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GOVERNING LAW.
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Unless SBA is the holder of the Note, in which case federal law will govern, Debtor and Secured
Party agree that this Agreement will be governed by the laws or the jurisdiction where the Debtor is located, including the UCC as in effect in such jurisdiction and without reference to its
conflicts of laws principles.
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12.
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SECURED PARTY RIGHTS.
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All rights conferred in this Agreement on Secured Party are in addition to those granted to it
by law, and all rights are cumulative and may be exercised simultaneously. Failure of Secured Party to enforce any rights or remedies will not constitute an estoppel or waiver of Secured Party's ability to exercise such rights or remedies. Unless
otherwise required under applicable law, Secured Party is not liable for any loss or damage to Collateral in its possession or under its control, nor will such loss or damage reduce or discharge the Obligations that are due, even if Secured Party's actions or inactions caused or in any way contributed to such loss or damage.
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13.
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SEVERABILITY.
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If any provision of this Agreement is unenforceable, all other provisions remain in effect.
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14.
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DEBTOR CERTIFICATIONS.
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Debtor certifies that: (a) its Name (or Names) as stated above is correct: (b) all Collateral
is owned or titled in the Debtor's name and not in the name of any other organization or individual; (c) Debtor
2000067240/EIDL4316357010
has the legal authority to grant the security interest in the Collateral: (d) Debtor's ownership in or title to the:
Collateral is free of all adverse claims, liens, or security interests (unless expressly permitted by Secured Party): (e) none of the Obligations are or will be primarily for personal, family or household purposes: (f) none of the Collateral is or will be used, or has been or will be bought primarily for personal, family or household purposes: (g) Debtor
has read and understands the meaning and effect of all terms of this Agreement.
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15.
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DEBTOR NAME(S) AND SIGNATURE(S).
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By signing or otherwise authenticating below, each
individual and each organization becomes jointly and severally obligated as a Debtor under this Agreement.
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Corporate Execution:
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|||
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STRATA SKIN SCIENCES, INC.
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BY:
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/s/ Dolev Rafaeli
|
|||
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DOLEV RAFAELI, PRESIDENT
|
||||
|
BY:
|
/s/ Jay Sturm
|
|||
|
JAY STURM, SECRTARY
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