SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 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): November 1, 2001
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VERTEX INTERACTIVE, INC.
(Exact name of registrant as specified in its charter)
New Jersey 0-15066 22-2050350
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(State or Other Jurisdiction (Commission File Number) (I.R.S. Identification No.)
of Incorporation)
22 Audrey Place
Fairfield, New Jersey 07004
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (973) 777-3500
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N/A
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(Former name or former address, if changed since last report)
Item 5. Other Events.
On November 1, 2001 MidMark Capital II, L.P. ("MidMark II"), purchased
a convertible promissory note in the amount of $3 million (the "new Note").
Simultaneously, Vertex extended and renegotiated the terms of an outstanding
convertible promissory note in the amount of $5.5 million (the "extended note")
to MidMark Capital L.P. and certain related entities and individuals. Prior to
purchase of the new Note, MidMark Capital L.P., an investment vehicle of MidMark
Capital ("MidMark Capital") owned 5 million Vertex common shares and currently
holds two seats on the Vertex Board of Directors.
The new Note matures on November 1, 2002 and carries an annual interest
rate of 10% to be accrued and added to the principal amount of new Note. The new
Note is secured by certain tangible and intangible assets of Vertex, subject to
agreed upon subordination terms. The new Note is convertible at the discretion
of MidMark II at any time following Vertex shareholder approval at the next
meeting of Vertex shareholders, into 3,000 shares of Series C 10% Cumulative
Convertible Preferred Stock of Vertex. The Series C preferred shares are
convertible into 3,570,000 shares of Vertex common stock.
MidMark Capital and certain related entities and individuals have
entered into Stockholder Voting Agreements pursuant to which they will vote
their Vertex common shares in favor of the issuance of the shares of Vertex's
capital stock upon conversion of the new Note and the extended note.
In the event of shareholder rejection or of payment by Vertex prior to
the receipt of shareholder approval, Vertex shall pay as "additional rejection
interest" an amount equal to the aggregate interest on the principal amounts
outstanding under the new Note which would have accrued at an annual rate of 4%.
The extended note, which expired by its terms on October 17, 2001,
matures on the earlier of March 31, 2002, or the date on which Vertex
shareholders reject the right to convert the extended note to Vertex Series B
preferred shares. Upon Vertex shareholder approval of conversion, the extended
note converts at a renegotiated price, depending upon the occurrence of
specified events in connection with Vertex's efforts to secure additional
capital financing. Under the terms of the extended note MidMark's conversion
price has been reduced to no higher than $1.31 per share. In addition, subject
to the closing of certain specified financing Vertex is presently pursuing,
MidMark would be entitled to a conversion price below $1.31.
Assuming the requisite shareholder approval is obtained and all of
Vertex's outstanding convertible preferred securities are converted to common
equity, MidMark and related entities and individuals, would own approximately
36% of fully diluted Vertex common equity.
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(c) Exhibits
None.
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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.
VERTEX INTERACTIVE, INC
/s/ Mark A. Flint
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Name: Mark A. Flint
Title: Chief Financial Officer
DATED: November 16, 2001
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