Item 1.01 Entry into a Material Definitive Agreement.
PNC Bank Loan Agreement
On September 21, 2022, Periship Global LLC ("PeriShip"), a wholly owned
subsidiary of VerifyMe, Inc. (the "Company"), entered into a Loan Agreement (the
"Loan Agreement") with PNC Bank, National Association (the "Bank") with the
Company as guarantor, effective as of September 15, 2022. The Loan Agreement
provides for a $2 million term loan facility as evidenced by a secured Term Note
(the "Term Note") and a $1 million revolving credit facility, or such lesser
amount as may be advanced to or for the benefit of PeriShip, as evidence by a
secured Revolving Line of Credit Note (the "Line of Credit Note"), each issued
in favor of the Bank.
The Term Note matures on September 15, 2026, with payments payable in equal
payments of principal and interest and with all outstanding principal and
accrued interest due and payable on the maturity date. The Term Note bears
interest per annum at a rate equal to the sum of Daily SOFR (as defined in the
Term Note) plus 310 basis points, or 3.10%, and provides a mechanism to adjust
the interest rate in the event Daily SOFR cannot be determined. PeriShip may
prepay the Term Note without penalty or premium.
The Line of Credit Note expires on September 15, 2023, with monthly interest
payments starting on October 15, 2022 and payable on the same day of each month
thereafter. All outstanding principal and accrued but unpaid interest is due and
payable on the expiration date. The Line of Credit Note bears interest at a per
annum rate equal to the sum of Daily SOFR (as defined in the Line of Credit
Note) plus 285 basis points, or 2.85%, and provides a mechanism to adjust the
interest rate in the event Daily SOFR cannot be determined. PeriShip may prepay
the Line of Credit Note without penalty or premium.
Under the Term Note and Line of Credit Note PeriShip is required to maintain its
primary depository accounts with the Bank and has granted it a contractual
possessory security interest in and a contractual right of setoff against all of
its right, title and interest in and to its deposits, moneys, securities and
other property deposited with or in the possession of the Bank. If PeriShip
fails to establish or maintain its primary deposit accounts with the Bank, then
the Bank may, with 30 days' notice to PeriShip, increase the interest rate of
both the Term Note and Line of Credit Note by up to 100 basis points, or 1.00%.
Additionally, should the Bank be unable to automatically deduct payments
required under the Line of Credit Note or Term Note due to an act or omission of
PeriShip or the Company then the Bank may, with 30 days' notice to PeriShip,
increase the interest rate of both the Term Note and Line of Credit Note by 25
basis points, or 0.25%.
The Loan Agreement includes a number of affirmative and restrictive covenants
applicable to PeriShip, including, among others, a financial covenant to
maintain a fixed charge coverage ratio of at least 1.10 to 1.00 at the end of
each fiscal year, affirmative covenants regarding delivery of financial
statements, payment of taxes, and establishing primary depository accounts with
the Bank, and restrictive covenants regarding dispositions of property,
acquisitions, incurrence of additional indebtedness or liens, investments and
transactions with affiliates. PeriShip is also restricted from paying dividends
or making other distributions or payments on its capital stock if an event of
default (as defined in the Loan Agreement) has occurred or would occur upon such
declaration of dividend.
Upon the occurrence of certain events, including PeriShip's failure to satisfy
its payment obligations under the Loan Agreement, failure to adhere to the
financial covenants, the breach of certain of its other covenants under the Loan
Agreement, cross defaults to other indebtedness or material agreements, judgment
defaults and defaults related to failure to maintain governmental approvals, the
Bank will have the right, among other remedies, to declare all principal and
interest due under the Term Note and Line of Credit Note immediately due and
payable, and to exercise secured party remedies.
Also on September 21, 2022, the Company entered into a Guaranty and Suretyship
Agreement (the "Guaranty") with the Bank, effective September 15, 2022, whereby
it unconditionally guaranteed, as a primary obligor, the prompt payment and
performance of PeriShip's obligations under the Loan Agreement, Term Note, and
Line of Credit Note.
Also on September 21, 2022, both the Company and PeriShip entered into Security
Agreements with the Bank, effective September 15, 2022, whereby each of the
Company and PeriShip granted the Bank a continuing lien and security interest in
all the assets of the Company, respectively, to secure the Company's and
PeriShip's obligations under the Loan Agreement, Term Note, Line of Credit, and
Guaranty, as applicable.
The foregoing is only a summary of the material terms of the Loan Agreement, the
Term Note, the Line of Credit Note, the Guaranty, and the Security Agreements
does not purport to be complete and are qualified in their by reference to the
full text of each document, copies of which are included as exhibits to this
Current Report on Form 8-K and are incorporated herein by reference.
Amendment to PeriShip Promissory Note and Stock Consideration
As previously reported, in connection with the Company's acquisition of
PeriShip, LLC (including any successor thereto, the "Seller"), PeriShip Global
issued a promissory note payable to the Seller in the amount of $2,000,000 (the
"Seller Note") with a fixed interest rate of 6% per annum on the unpaid
principal balance, to be paid in three installments on the sixth, fifteenth, and
. . .
Item 1.02 Termination of a Material Definitive Agreement.
To the extent required by Item 1.02 of Form 8-K, the disclosure in Item 1.01 of
this Current Report on Form 8-K is incorporated herein by reference.
Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant.
To the extent required by Item 2.03 of Form 8-K, the disclosure in Item 1.01 of
this Current Report on Form 8-K is incorporated herein by reference.
Item 7.01. Regulation FD Disclosure.
On September 27, 2022, the Company issued a press release announcing the entry
into the Loan Agreement, Term Note and Line of Credit Note, the payoff of the
Seller Note, and the Stock Redemption. A copy of this press release is furnished
herewith as Exhibit 99.1 to this Current Report on Form 8-K.
Item 9.01 Financial Statement and Exhibits.
(d) Exhibits.
Exhibit No. Description
10.1 Loan Agreement between PeriShip Global LLC and PNC Bank, National
Association, effective September 15, 2022
10.2* Term Note between PeriShip Global LLC and PNC Bank, National
Association, effective September 15, 2022
10.3 Revolving Line of Credit Note between PeriShip Global LLC and PNC
Bank, National Association, effective September 15, 2022
10.4 Guaranty and Suretyship Agreement between VerifyMe, Inc., and PNC
Bank, National Association, effective September 15, 2022
10.5 Security Agreement between PeriShip Global LLC and PNC Bank,
National Association, effective September 15, 2022
10.6 Security Agreement between VerifyMe, Inc. and PNC Bank, National
Association, effective September 15, 2022
99.1 VerifyMe, Inc. Press Release dated September 27, 2022
104 Cover Page Interactive Data File (embedded within the Inline XBRL
document)
* The schedule to this agreement has been omitted pursuant to Item 601(a)(5) of
Regulation S-K. A copy of any omitted schedule will be furnished to the SEC upon
request.
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