On March 8, 2024, KORU Medical Systems, Inc. entered into a loan and security agreement, by and between the Company and HSBC Ventures USA Inc., as lender providing for a revolving credit facility in an aggregate principal amount not to exceed $5,000,000 and a term loan facility in an aggregate principal amount not to exceed $5,000,000. The Company has not drawn on the Credit Facility, and there is no obligation for the Company to do so at any time.   Borrowings under the Credit Facility are secured by a first-priority lien on substantially all of the assets of the Company, subject to customary exceptions.

The Revolver matures on December 31, 2025 and the Term Loan matures on December 1, 2028.   Borrowings under the Revolver will bear interest at the greater of Prime or 6.50%, payable in arrears on a monthly basis and at maturity. Borrowings under the Term Loan will bear interest at the greater of Prime minus 0.50% or 6.50% and will be interest-only through December 31, 2025, followed by 24 equal monthly payments of principal plus interest.

  The Company will pay a final payment fee of 3.25% of the amount advanced under the Term Loan upon termination or maturity. The Company will pay a commitment fee of 0.25% of the total Revolver upon closing of the Credit Facility and an unused line fee of 0.20% per annum based on the daily unused amount of commitments under the Revolver, payable quarterly in arrears. The Company may use the proceeds of borrowings under the Credit Facility to pay transaction fees and expenses, provide for its working capital needs and for other general corporate purposes.

  At the Company?s option, the Company may at any time prepay the outstanding principal balance of the Term Loan in whole but not in part, with a prepayment fee of 2% of the advanced amount if prepaid in the first year of the Term Loan, 1% if prepaid in the second year of the Term Loan and 0% thereafter (which prepayment fee will be waived if the Term Loan is refinanced by the lender).   The Loan and Security Agreement contains customary affirmative covenants for transactions of this type, including, among others, the provision of financial and other information to the lender, notice to the lender upon the occurrence of certain material events, preservation of existence, maintenance of properties and insurance, compliance with laws, including environmental laws, the provision of additional guarantees, and an affiliate transactions covenant, subject to customary exceptions. The Loan and Security Agreement contains customary negative covenants, including, among others, restrictions on the ability to merge and consolidate with other companies, incur indebtedness, grant liens or security interests on assets, make investments, acquisitions, loans, or advances, pay dividends, and sell or otherwise transfer assets, all as subject to customary exceptions.

  The Loan and Security Agreement contains a financial maintenance covenant that requires the Company to maintain a minimum Adjusted Quick Ratio (defined as the ratio of the Company?s (i) unrestricted and unencumbered cash and cash equivalents maintained with the lender and its affiliates, plus eligible accounts receivable, to (ii) current liabilities) of not less than 1.50 to 1.00 tested on the last day of each month. The Loan and Security Agreement also provides for a number of customary events of default, including, among others: payment defaults to the lenders; voluntary and involuntary bankruptcy proceedings; covenant defaults; material inaccuracies of representations and warranties; certain change of control events; material money judgments; and other customary events of default. The occurrence of an event of default could result in the acceleration of obligations and the termination of lending commitments under the Loan and Security Agreement.

  As a condition to the closing of the Term Loan, the Company issued to HSBC Ventures USA Inc. a Stock Purchase Warrant to purchase up to 76,104 shares of the Company?s common stock, par value $0.01 per share, at an exercise price of $2.12 per share. The warrant is exercisable for a period of ten years from issuance and vests as follows: 50% upon issuance and 50% upon any advance pursuant to the Term Loan.