| | Amended and Restated Loan Agreement
On April 29, 2025, IDC Technologies, Inc. ("IDC"), Lyneer Investments, LLC ("Lyneer Investments"), Lyneer Holdings, Inc. ("Lyneer Holdings") and Lyneer Staffing Solutions, LLC ("Lyneer Staffing", and together with IDC, Lyneer Investments and Lyneer Holdings, the "Borrowers") entered into that certain Amended and Restated Loan Agreement (the "Loan Agreement") with certain financial institutions party thereto as lenders ("Lenders") and SPP Credit Advisors LLC ("SPP") in its capacity as agent for the Lenders (in such capacity, the "Agent"). The Loan Agreement amended and restated that certain Loan Agreement dated as of August 31, 2021 (the "Existing Loan Agreement") and, among other things, amended the terms of the Existing Loan Agreement to accommodate a new credit facility with North Mill Capital LLC (d/b/a SLR Business Credit) and Lyneer Staffing as borrower.
The aggregate amount of Loans (as defined in the Loan Agreement) made on the date of the Existing Loan Agreement was $30,000,000. As of April 28, 2025, the aggregate outstanding principal amount of the Loans is $37,897,672.06, the aggregate amount of accrued and unpaid interest on the Loans is $2,546,232.40, the Exit Fee (as defined in the Loan Agreement) is $5,119,500, and the costs and expenses payable by the Borrowers to the Agent and the Lenders are $1,500,000.
The Loans bear interest on the outstanding principal amount at a rate per annum equal to 5.00%. The Borrowers shall pay in arrears in cash to the Lenders interest accrued on the outstanding principal amount of the Loans on the first day of each calendar month. The maturity date is March 31, 2027. The Borrowers are also required to pay the Agent an administration fee of $25,000 annually beginning on April 29, 2025, and on each anniversary thereafter.
The Loan Agreement requires that the Borrowers prepay the Loans in full (subject to the Intercreditor Agreements (as defined in the Loan Agreement)) upon the occurrence of the following events: (a) a Change of Control (as defined in the Loan Agreement), sale or other disposition of a majority of the outstanding capital stock of Atlantic International Corp. ("Atlantic") or a merger of Atlantic with another person, or an acceleration of the Loans pursuant to Section 9.02 of the Loan Agreement, (b) a Disposition (as defined in the Loan Agreement) with respect to any property of any Loan Party (as defined in the Loan Agreement) or any of its Subsidiaries, (c) upon the Disposition or issuance of the Equity Interests (as defined in the Loan Agreement) of any Loan Party, (d) upon the incurrence or issuance by Atlantic or any of its Subsidiaries or any Loan Party or any of its Subsidiaries of any Indebtedness (as defined in the Loan Agreement), (e) upon receipt of any cash by any Loan Party or its Subsidiaries not in the ordinary course of business, and (f) upon the occurrence of a Disposition of the Specified Real Property (as defined in the Loan Agreement).
The proceeds of the Loans are to be used for general corporate purposes of the Borrowers.
The Loan Agreement is secured by all assets of the Borrowers, providing the Agent with a first-priority security interest in the Equity Interests owned and pledged by the Borrowers, including the Equity Interests of Atlantic owned by IDC.
The Loan Agreement provides the Agent the right to designate an observer to the board of directors or equivalent governing body of each of IDC and Lyneer Investments, which boards or equivalent governing bodies shall meet at least two times per year. The Agent-appointed observer is entitled to receive notice of and copies of all materials provided to directors in connection with, and is entitled to attend, all meetings of the board of directors or equivalent governing body of each of IDC and Lyneer Investments.
Pledge and Security Agreement
On August 31, 2021, IDC Technologies, Inc. ("IDC"), Lyneer Investments, LLC ("Lyneer Investments"), Lyneer Holdings, Inc. ("Lyneer Holdings"), Lyneer Staffing Solutions, LLC ("Lyneer Staffing", and collectively with IDC, Lyneer Investments and Lyneer Holdings, the "Grantors"), and SPP Credit Advisors as the agent (in such capacity, the "Agent") entered into that certain Pledge and Security Agreement (the "Security Agreement").
The Security Agreement grants the Agent a continuing security interest in all assets of the Grantors now owned or hereafter acquired, including the shares of Equity Interests owned or at any time and from time to time acquired by a Grantor. The Security Agreement provides that upon the occurrence and during the continuance of an Event of Default, the Agent is granted all rights of each Grantor to exercise the voting and other consensual rights which it would otherwise be entitled to exercise, and to receive the dividends, distributions, interest and other payments that it would otherwise be authorized to receive and retain.
Purchase Agreement (Atlantic Shares)
On April 28, 2025, SPP Credit Advisors LLC, in its capacity as administrative agent for certain lenders and as secured party (in such capacity, the "Secured Party"), and SPP Credit Advisors LLC, in its capacity as transferee (in such capacity, the "Transferee") entered into that certain Purchase Agreement (the "Atlantic Shares Purchase Agreement") with respect to the shares of Atlantic International Corp. ("Atlantic") owned by IDC Technologies, Inc. ("IDC").
At the Auction (as defined in the Atlantic Shares Purchase Agreement), in accordance with the terms set forth in the Atlantic Shares Purchase Agreement, the Transferee purchased the shares of Atlantic described on Schedule 1 of the Atlantic Shares Purchase Agreement (the "Purchased Shares") for a credit bid of $1 plus the agreement to apply all cash received thereby from the sale of the Purchased Shares to the Obligations (as defined in the Atlantic Shares Purchase Agreement).
Purchase Agreement (Lyneer Merger Note)
On April 28, 2025, SPP Credit Advisors LLC (the "Transferee") and BMO Bank, N.A., as administrative agent for certain lenders and as secured party (in such capacity, the "Secured Party") entered into that certain Purchase Agreement (the "Merger Note Purchase Agreement") with respect to the Convertible Promissory Note dated June 18, 2024, in the original principal amount of $35,000,000 (the "Lyneer Merger Note") executed by Atlantic International Corp. ("Atlantic") and payable to IDC Technologies, Inc. ("IDC"). IDC pledged the indebtedness under the Lyneer Merger Note and the right to receive all payments thereunder and to exercise all rights and remedies thereunder and all related rights, titles and interests to the Secured Party in connection with that certain ABL Credit Agreement, dated as of August 31, 2021.
At the Auction (as defined in the Merger Note Purchase Agreement), in accordance with the terms set forth in the Merger Note Purchase Agreement, the Transferee purchased the Lyneer Merger Note, free and clear of liens, security interests, claims and interests for a credit bid of $1 plus the agreement to apply all cash received thereby from payments received by Transferee to the SPP Obligations (as defined in the Merger Note Purchase Agreement) in accordance with the SPP Loan Agreement (as defined in the Merger Note Purchase Agreement).
Convertible Promissory Note
On April 28, 2025, Atlantic International Corp. ("Atlantic") executed that certain Amended and Restated Convertible Promissory Note (the "Lyneer Merger Note"), whereby Atlantic promised to pay the original principal amount of $35,000,000 to IDC Technologies, Inc. ("IDC"). The Lyneer Merger Note amended and restated that certain Convertible Promissory Note dated as of June 18, 2024, executed by Atlantic and payable to the order of IDC.
The Lyneer Merger Note was issued by Atlantic to IDC pursuant to the terms of that certain Amended and Restated Agreement and Plan of Reorganization dated as of May 29, 2023, as amended on June 22, 2023, as further amended on June 23, 2023, October 5, 2023, October 17, 2023, November 3, 2023, January 16, 2024, and April 15, 2024, entered into among Atlantic, IDC, Atlantic Acquisition Corp., Atlantic Merger LLC, Lyneer Investments, LLC and SeqLL Merger LLC (the "Merger Agreement"). The Maturity Date under the Lyneer Merger Note is the earlier of (a) March 31, 2027, (b) the completion of debt or equity offerings by Atlantic in which Atlantic received gross proceeds of at least $40,000,000, or (c) any other date on which any principal amount of, or accrued unpaid interest on, the Lyneer Merger Note is declared to be, or becomes, due and payable pursuant to its terms prior to the Maturity Date.
The Lyneer Merger Note may be prepaid in whole or in part without penalty or deduction. The principal amount of the Lyneer Merger Note shall not beer interest, however, following an Event of Default (as defined in the Lyneer Merger Note), the Lyneer Merger Note shall bear simple interest at a rate equal to 7% per annum payable on demand.
At any time following the Note Term (as defined in the Lyneer Merger Note), IDC shall have the right, at IDC's option, to convert all, but not part, of the outstanding Conversion Amount (as defined in the Lyneer Merger Note), into fully paid and non-assessable Common Stock of Atlantic or other securities into which such Common Stock shall thereafter be changed or reclassified at a price per share of Common Stock equal to the lowest daily VWAP during five trading days immediately preceding the date of the conversion notice.
The Lyneer Merger Note contains restrictions on Atlantic's ability to pay, declare or set apart for such payment, any dividend or other distribution on the Common Stock (or other capital securities of Atlantic) other than dividends on Common Stock solely in the form of additional shares of Common Stock unless IDC provides its prior written consent. The Lyneer Merger Note also contains restrictions on Atlantic's rights to change the nature of its business, sell, divest, change the structure of any material assets or any subsidiary other than in the ordinary course of business, accept Merchant-Cash-Advances in which it sells future receivables at a discount, any other factoring transactions or similar transactions, or enter into a borrowing arrangement where Atlantic pays an effective APR greater than 20%. Under the Lyneer Merger Note, Atlantic also may not redeem, repurchase or otherwise acquire in any transaction or series of transactions any Common Stock of Atlantic or any warrants, rights or options to purchase or acquire any such shares without the written consent of IDC.
The Lyneer Merger Note includes specified events of default, including, among others, Atlantic's failure to maintain the listing or quotation of its Common Stock on Nasdaq or any other national securities exchange, and a Change of Control (as defined in the Lyneer Merger Note), which trigger IDC's right to accelerate repayment, exercise its right of setoff, exercise any or all rights, powers and remedies provided for in the Lyneer Merger Note or existing at law or in equity, and to charge the Default Rate (as defined in the Lyneer Merger Note) of interest on the principal amount outstanding. |
