8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 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): April 3, 2019 (March 29, 2019)

HERITAGE GLOBAL INC.

(Exact name of registrant as specified in its charter)

Florida	0-17973	59-2291344
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

12625 High Bluff Drive, Suite 305, San Diego, California	92130
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (858) 847-0656

Not Applicable

(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 (see General Instruction A.2. below):

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (l7 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 1.01 Entry into a Material Definitive Agreement.

On March 29, 2019, Heritage Global Inc. (the “Company”) entered into the Change in Terms Agreement and the First Amendment to Business Loan Agreement (collectively, the “Amendments”), which amend the Company’s secured promissory note and business loan agreement, respectively, with First Choice Bank (the “Credit Facility”). The Amendments, among other things, (i) increase the principal amount of the revolving line of credit to $3.0 million, (ii) extend the maturity date of the Credit Facility to April 5, 2020, and (iii) raise the floor interest rate under the Credit Facility from 5.25% to 5.50%. Pursuant to the Amendments, the Company will pay interest on the Credit Facility in regular monthly payments beginning on May 5, 2019, rather than on November 5, 2018.

The Amendments retain 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. Pursuant to the Amendments, the Company has also covenanted to reflect positive net income of no less than $250,000 on a quarterly basis, with the adding back of all non-cash expenses and the deducting of all non-cash income.

This summary is qualified in its entirety by reference to the full text of the Amendments, which are attached hereto as Exhibit 10.1 and 10.2, and incorporated by reference herein.

Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

The disclosure in Item 1.01 of this Current Report on Form 8-K regarding the Credit Facility is incorporated by reference into this Item 2.03.

Item 9.01 Financial Statements and Exhibits

(d) Exhibits

No.	Description
10.1	Change in Terms Agreement by and between Heritage Global Inc. and First Choice Bank, effective as of March 29, 2019
10.2	First Amendment to Business Loan Agreement by and between Heritage Global Inc. and First Choice Bank, effective as of March 29, 2019

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.

Date: April 3, 2019	HERITAGE GLOBAL INC.
	(Registrant)
	By:	/s/ Scott A. West
		Scott A. West
		Chief Financial Officer
		(principal financial officer)

EX-10.1

Exhibit 10.1

CHANGE IN TERMS AGREEMENT

PrincipalLoan DateMaturityLoan NoCall / CollAccountOfficerInitials

$3,000,000.0003-29-201904-05-2020213334A00 JAK

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: Heritage Global Inc. 12625 High Bluff Drive, Suite 305 San Diego, CA 92130 Lender: First Choice Bank Main Office 17785 Center Court Drive, Suite 750 Cerritos, CA 90703

Principal Amount:  $3,000,000.00 Date of Agreement:  March 29, 2019

DESCRIPTION OF EXISTING INDEBTEDNESS.

A loan evidenced by that certain Promissory Note dated September 27, 2018, including, without limitation, all change(s) and/or modification(s) thereafter, in the Principal Amount of One Million Five Hundred Thousand and 00/100 Dollars ($1,500,000.00), made and executed by Borrower to the order of Lender.

DESCRIPTION OF COLLATERAL.  The Note is secured by the following Collateral as described in the security instrument(s) listed herein:

A)  a Commercial Security Agreement dated September 27, 2018 made and executed between Heritage Global Inc. and Lender on collateral described as:  inventory, chattel paper, accounts, equipment and general intangibles.

B)  a Commercial Security Agreement dated September 27, 2018 made and executed between Heritage Global Partners, Inc. and Lender on collateral described as:  inventory, chattel paper, accounts, equipment and general intangibles.

C)  a Commercial Security Agreement dated September 27, 2018 made and executed between HERITAGE GLOBAL LLC and Lender on collateral described as:  inventory, chattel paper, accounts, equipment and general intangibles.

D)  a Commercial Security Agreement dated September 27, 2018 made and executed between National Loan Exchange, Inc. and Lender on collateral described as:  inventory, chattel paper, accounts, equipment and general intangibles.

E)  a Commercial Security Agreement dated September 27, 2018 made and executed between Equity Partners HG LLC and Lender on collateral described as:  inventory, chattel paper, accounts, equipment and general intangibles.

DESCRIPTION OF CHANGE IN TERMS.  Effective as of the date of this Agreement:

(1) The Principal Amount of the Promissory Note is hereby INCREASED from One Million Five Hundred Thousand and 00/100 Dollars ($1,500,000.00) to Three Million and 00/100 Dollars ($3,000,000.00).

(2)  The date on which all outstanding principal is due and payable (together with any accrued but unpaid interest thereon) ("Maturity Date"), in the Promissory Note and all Related Documents, is hereby EXTENDED from October 5, 2019 to April 5, 2020.

(3)  The Floor Interest Rate used to calculate the unpaid principal balance is hereby CHANGED from 5.25% to 5.50%.

(4)  The paragraphs entitled PAYMENT and VARIABLE INTEREST RATE in the Promissory Note are hereby REPLACED with the paragraphs noted below:

PAYMENT.  Borrower will pay this loan in one payment of all outstanding principal plus all accrued unpaid interest on April 5, 2020.  In addition, Borrower will pay regular monthly payments of all accrued unpaid interest due as of each payment date, beginning May 5, 2019, 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 first to any accrued unpaid interest; then to principal; then to any late charges; and then to any escrow or reserve account payments as required under any mortgage, deed of trust, or other security instrument or security agreement securing this Note.

VARIABLE INTEREST RATE.  The interest rate on this loan is subject to change from time to time based on changes in an independent index which is the Prime Rate as published daily in The Wall Street Journal (the "Index").  The Index is not necessarily the lowest rate charged by Lender on its loans.  If the Index becomes unavailable during the term of this loan, Lender may designate a substitute index after notifying Borrower.  Lender will tell Borrower the current Index rate upon Borrower's request.  The interest rate change will not occur more often than each day.  Borrower understands that Lender may make loans based on other rates as well.  The Index currently is 5.500% per annum.  Interest on the unpaid principal balance of this loan will be calculated as described in the "INTEREST CALCULATION METHOD" paragraph using a rate equal to the Index, adjusted if necessary for any minimum and maximum rate limitations described below, resulting in an initial rate of 5.500%.  NOTICE:  Under no circumstances will the interest rate on this loan be less than 5.500% per annum or more than the maximum rate allowed by applicable law.

(5)  FIRST AMENDMENT TO BUSINESS LOAN AGREEMENT of the even date herewith is executed concurrently with this Change In terms Agreement.

All other terms and conditions remain the same.

CONTINUING VALIDITY.  Except as expressly changed by this Agreement, the terms of the original obligation or obligations, including all agreements evidenced or securing the obligation(s), remain unchanged and in full force and effect.  Consent by Lender to this Agreement does not waive Lender's right to strict performance of the obligation(s) as changed, nor obligate Lender to make any future change in terms.  Nothing in this Agreement will constitute a satisfaction of the obligation(s).  It is the intention of Lender to retain as liable parties all makers and endorsers of the original obligation(s), including accommodation parties, unless a party is expressly released by Lender in writing.  Any maker or endorser, including accommodation makers, will not be released by virtue of this Agreement.  If any person who signed the original obligation does not sign this Agreement below, then all persons signing below acknowledge that this Agreement is given conditionally, based on the representation to Lender that the non-signing party consents to the changes and provisions of this Agreement or otherwise will not be released by it.  This waiver applies not only to any initial extension, modification or

1

Exhibit 10.1

CHANGE IN TERMS AGREEMENT

release, but also to all such subsequent actions.

PRIOR TO SIGNING THIS AGREEMENT, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS AGREEMENT.  BORROWER AGREES TO THE TERMS OF THE AGREEMENT.

BORROWER:

HERITAGE GLOBAL INC.

    By: ____/s/ Ross Dove_____________________________     Ross Dove, Chief Executive Officer of    Heritage Global Inc.     By: _____/s/ Kirk Dove ____________________________      Kirk Dove, President of Heritage Global Inc.

    By: ____/s/ James Sklar____________________________     James Sklar, Secretary of Heritage Global Inc.     By: _____/s/ Scott West____________________________      Scott West, Chief Financial Officer of     Heritage Global Inc.

LENDER:

FIRST CHOICE BANK

By: ____/s/ Julie Kloiber____________________________

     Authorized Signer

_________________________________________________________________________________________________________________________

LaserPro, Ver. 19.1.10.016  Copr. Finastra USA Corporation 1997, 2019.   All Rights Reserved.   - CA  F:\CFI\LPL\D20C.FC  TR-1614  PR-53 (M)

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EX-10.2

Exhibit 10.2

FIRST AMENDMENT TO BUSINESS LOAN AGREEMENT

PrincipalLoan DateMaturityLoan NoCall / CollAccountOfficerInitials

$3,000,000.0003-29-201904-05-2020213334A00 JAK

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: Heritage Global Inc. 12625 High Bluff Drive, Suite 305 San Diego, CA 92130 Lender: First Choice Bank Main Office 17785 Center Court Drive, Suite 750 Cerritos, CA 90703

_______________________________________________________________________________________________________________________

This FIRST AMENDMENT TO BUSINESS LOAN AGREEMENT (the “Amendment”),dated as of March 29, 2019, is entered into by and between Heritage Global Inc. (“Borrower”) and First Choice Bank (“Lender”).

RECITALS:

A. Borrower and Lender are parties to a Business Loan Agreement dated as of September 27, 2018 (the “Agreement”).

B. Borrower and Lender have agreed to amend certain terms and conditions of the Agreement in certain respects.

C. Borrower and Lender are contemporaneously with this Agreement entering into a Change in Terms Agreement, which may also amend certain terms of the Agreement.

AGREEMENT:

Borrower and Lender agree as follows:

1. Each of the terms defined in the Agreement, unless otherwise defined herein, shall have the same meaning when used herein.

2. The section entitled Financial Statements (Quarterly) in the AFFIRMATIVE COVENANTS section of the Agreement is hereby AMENDED in full to read as follows:

Financial Statements (Quarterly).  As soon as available, but in no event later than thirty (30) days after the applicable filing date for each quarter, Borrower shall provide Lender with Borrower’s U.S. Securities and Exchange Commission (“SEC”) Form 10-Q.

3. The section entitled Positive Net Income in the Additional Requirements of the AFFIRMATIVE COVENANTS section of the Agreement is hereby AMENDED in full to read as follows:

Positive Net Income.  Borrower to reflect positive net income of no less than Two Hundred Fifty Thousand and 00/100 Dollars ($250,000.00), on a quarterly (3-months) basis. For the purpose of the calculation, all non-cash expenses shall be added back to net income and all non-cash income shall be deducted from net income.

4. Item number 1 listed in the section entitled OTHER TERMS AND CONDITIONS of the AFFIRMATIVE COVENANTS section of the Agreement is hereby AMENDED in full to read as follows:

1)  Proceeds from the sale of capital asset acquisitions where funds were drawn on the line of credit will be used first to pay down the line of credit. For each advance on the line of credit, Borrower to provide supporting documentation indicating the purpose of the advance.

5. FACSIMILE AND COUNTERPART.  This Agreement may be executed in two or more counterparts, which, taken together, shall constitute the whole of the agreement as between the parties.  Each executed counterpart may be delivered in the form of a photocopy, facsimile, or scanned document, each of which shall have the same legal force and effect as delivery of an original.

6. Except as specifically amended above, the Agreement shall remain in full force and effect and is hereby ratified and confirmed.  This Amendment and the Agreement shall be read together, as one document.

7. Borrower represents and warrants as follows:

Each of the representations and warranties contained in the Agreement, as amended hereby, is hereby reaffirmed as of the date hereof;

The execution, delivery and performance of this Amendment and any note required hereunder are within the Borrower’s powers, have been duly authorized by all necessary action, have received all necessary governmental approvals, if any, and do not contravene any law or any contractual restriction binding on Borrower; and

No event has occurred and is continuing or would result from this Amendment that constitutes an Event of Default under the Agreement, or would constitute an Event of Default but for the requirement that notice be given or time elapse or both.

WITNESS the due execution hereof as of the date first above written.

BORROWER:

HERITAGE GLOBAL INC.

  By: _____/s/ Ross Dove____________________________ Ross Dove, Chief Executive Officer of Heritage Global Inc.   By: _____/s/ Kirk Dove_____________________________      Kirk Dove, President of Heritage Global Inc.

  By: _____/s/ James Sklar___________________________     James Sklar, Secretary of Heritage Global Inc.   By: _____/s/ Scott West_____________________________      Scott West, Chief Financial Officer of Heritage Global Inc.

1

Exhibit 10.2

FIRST AMENDMENT TO BUSINESS LOAN AGREEMENT

LENDER:

FIRST CHOICE BANK

By: ______/s/ Julie Kloiber__________________________

     Authorized Signer

LaserPro, Ver. 19.1.10.016  Copr. Finastra USA Corporation 1997, 2019.   All Rights Reserved.   - CA  F:\CFI\LPL\G60.FC  TR-1614  PR-53 (M)

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