AuthID Inc. Enters into an Amended and Restated Facility Agreement with Garchik

On March 21, 2022, authID Inc. entered into a Facility Agreement with Stephen J. Garchik, pursuant to which Garchik agreed to provide to the Company a $10.0 million unsecured standby line of credit facility that could be drawn down in several tranches, subject to certain conditions described in the Facility Agreement (the Original Facility Agreement). Pursuant to the Original Facility Agreement, the Company paid Garchik a facility commitment fee of 100,000 shares of common stock (the Facility Commitment Fee") upon the effective date of the Original Facility Agreement. On March 8, 2023, the Company entered into an Amended and Restated Facility Agreement with G archik, pursuant to which the Company and Garchik amended and restated the Original Facility Agreement in its entirety (the A&R Facility Agreement), to replace the credit facility contemplated by the Original Facility Agreement with (i) an initial credit facility to the Company in an amount of $900,000 (the Initial Funding") and (ii) the parties to use their reasonable best efforts after the Initial Funding to negotiate the terms of a subsequent credit facility in the aggregate amount of $2,700,000 (the Subsequent Funding").

On March 9, 2023, pursuant to the A&R Facility Agreement, the Company entered into a promissory note in favor of Garchik (the Initial Promissory Note), pursuant to which Garchik loaned $900,000 (the Principal Amount") to the Company. At the same time, as a condition to Garchik providing the Principal Amount, certain of the Company's subsidiaries, ID Solutions Inc., FIN Holdings Inc. and Innovation in Motion Inc. (the Guarantors") entered into a guaranty of the Initial Promissory Note with Garchik (the Guaranty). Under the A&R Facility Agreement, Garchik agreed to provide the Initial Funding to the Company upon receipt of a fully executed Initial Promissory Note and an executed Release Agreement relating to the Original Facility Agreement (the “ Release Agreement”).

The Company and Garchik have agreed to use reasonable best efforts to negotiate the terms of the Subsequent Funding by March 15, 2023, and the A&R Facility Agreement will terminate if definitive documentation for the Subsequent Funding is not entered into before July 1, 2023, for any reason other than breach of a party's obligations. While the terms of the Subsequent Funding are subject to due diligence and final documentation, a summary of selected terms of the proposed financing is attached to the A&R Facility Agreement as Exhibit B thereto. The Subsequent Funding would be a $2,700,000 secured note facility with a 12% per annum interest rate, paid in kind, capitalized and added to the balance of the loan on a quarterly basis, calculated on a 360-day year basis, on the outstanding aggregate balance of the Subsequent Facility.

The Subsequent Facility will mature twenty-four (24) months after effectiveness. Garchik will be granted a fully perfected, non-avoidable, first-priority security interest and lien on all assets of the Company. The Subsequent Facility would be the senior obligation of the Company and will rank senior in right to payment of the obligations under the existing Senior Secured Convertible Notes entered into between the Company and certain noteholders on March 21, 2022 (the “ Convertible Notes”) and the liens granted in connection with the Subsequent Facility shall rank pari passu with the liens granted to holders of the Convertible Notes.

Pursuant to this, the Company will use reasonable best efforts to obtain the consent of two-thirds of the holders of Convertible Notes. In satisfaction of a condition precedent to the Initial Funding under the A&R Facility Agreement, Thomas L. Thimot, Phillip L. Kumnick, Philip R. Broenniman, Michael A. Gorriz and Neepa Patel, comprising all directors of the Company's board of directors (the “ Board of Directors”) other than Joseph Trelin, Michael L. Koehneman and Jacqueline L. White (the “ Remaining Directors”), delivered to the Company executed resignation letters in escrow (the “ Board Resignation Letters”) that became effective as of the Initial Funding. Also in satisfaction of a condition precedent to the Initial Funding under the A&R Facility Agreement, on March 9, 2023, the Board of Directors appointed Joseph Trelin to the Company's Compensation and Audit Committees, effective as of the Initial Funding.

The A&R Facility Agreement also provided Garchik with the right to nominate four (4) designees (not counting any Remaining Directors) (the “ New Designees”) to be considered for election to the Board of Directors (the “ Nomination Right”). In satisfaction of a condition precedent to the Initial Funding under the A&R Facility Agreement, as described in greater detail in Item 5.02 of this Current Report, the Board of Directors appointed four (4) New Designees to the Board, effective as of the Initial Funding. The Company also agreed that the Board of Directors would, promptly following the closing of the Initial Funding, evaluate candidates for appointment as replacement of Mr. Thimot as Chief Executive Officer and that, upon the earlier of appointment of a new Chief Executive Officer or April 3, 2023, Mr. Thimot's resignation letter as Chief Executive Officer will be declared effective.