Notice of termination of material agreement
Termination of a Material Definitive Agreement and Occurrence of a Triggering Event Accelerating a Direct Financial Obligation
Cleveland, Ohio, September 29, 2020 – Mace Security International, Inc. (OTCQX: MACE) (the “Company”) advises that it received a Notice of Demand for Payment in Full (the “Notice”) from TCF National Bank, successor-by-merger to Chemical Bank (the “Bank”) on September 21, 2020 in connection with the commercial revolving credit facility (the “Loan”) established for the benefit of the Company in accordance with the terms and conditions of the Business Loan Agreement dated July 25, 2017 between the Company and the Bank. The Company has sufficient funds to make the payment by September 30th, if required, as requested by the Bank.
Because the Loan is payable upon demand, the Bank may call the Loan for any reason or for no reason. The Bank’s Notice did not indicate or assert the occurrence of any event of default by the Company under the terms of the Loan. The Company is current with all reporting and principal and interest payment requirements under the Loan.
The Company is currently in discussions with the Bank to obtain an agreement of forbearance with the Bank that would extend for a period of 120 days the date by which repayment of the Loan is required. No assurances can be given that the Company will be successful in obtaining such an extension, in which case the Company will make the required payment to the Bank in accordance with the Notice.
The Loan is evidenced by a Promissory Note dated July 25, 2017 in the original principal amount of $1,500,000.00 issued by the Company in favor of the Bank and payable upon demand. The Note is secured by a Commercial Security Agreement pursuant to which the Company granted the Bank a lien on substantially all its tangible and intangible personal property. As of September 29, 2020, the amount of principal owed under the Note was $600,000, with interest accruing on the unpaid balance at the rate of $31.75 per day.
In the Notice, the Bank notified the Company of the Bank’s election to demand payment of the Note in accordance with its terms, to declare that all amounts due in respect of the Loan shall be due and payable on September 30, 2020 (the “Termination Date”), and to cease any further advances under the Loan. If the amount due under the Note is not paid by the Termination Date, the Bank may, without further notice, pursue its remedies to enforce payment, including reducing the Note to judgment and/or pursuing any collateral securing the Loan.
The Company is working with several banks to secure a replacement revolving credit facility to fund its working capital needs driven by its double-digit growth in the order backlog. Should the Company be unable to secure a replacement for working capital financing in the next six to twelve months, this could have a material adverse effect on the Company’s ability to build inventory and increase its sales.
About Mace Security International, Inc.
Mace Security International Inc. is a globally recognized leader in personal safety products. Based in Cleveland, Ohio, the Company has spent more than 30 years designing and manufacturing consumer and tactical products for personal defense and security under its world-renowned Mace® Brand – the original trusted brand of pepper spray products. The Company’s other leading brands include Tornado® Brand stun guns and pepper spray, and Vigilant® Brand personal alarms. The Company also offers aerosol defense sprays for law enforcement and security professionals worldwide through its Take Down® Brand.
Mace Security International distributes and supports its products and services through mass-market retailers, wholesale distributors, independent dealers, e-commerce channels and through its website, www.Mace.com. For more information, please visit www.mace.com.
Certain statements and information included in this press release constitute “forward-looking statements” within the meaning of the Federal Private Securities Litigation Reform Act of 1995. When used in this press release, the words or phrases “will likely result,” “are expected to,” “will continue,” “is anticipated,” “estimate,” “projected,” “intend to” or similar expressions are intended to identify “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are subject to certain risks, known and unknown, and uncertainties, including but not limited to economic conditions, dependence on management, our ability to compete with competitors, dilution to shareholders, and limited capital resources.