EXHIBIT 10.1
DEBTOR-IN-POSSESSION
REVOLVING CREDIT AND SECURITY AGREEMENT
DATED AS OF DECEMBER 15, 1998
This Debtor-In-Possession Revolving Credit and Security Agreement ("DIP
LOAN AGREEMENT") between NEXAR TECHNOLOGIES, INC., a Delaware Corporation,
having its principal place of business at ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇
("Nexar", "BORROWER" OR "DEBTOR") a debtor-in-possession in Case No.
____________, pending in the United States Bankruptcy Court for the Western
District of Massachusetts ("CASE"), and ATEC GROUP, INC. ("ATEC") a Delaware
Corporation having its principal office at ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇.
RECITALS
FIRST: On December 16, 1998, Debtor filed its voluntary petition (the
"Petition Date") with the Bankruptcy Court commencing the Case.
Pursuant to Sections 1107 and 1108 of the Bankruptcy Code, Debtor
as debtor-in-possession has remained in possession and control of
its assets.
SECOND: Debtor has requested that Atec provide Debtor with a post-petition
secured financing.
THIRD: Atec is prepared to extend certain financial accommodations to
Borrower, subject to the terms and conditions set forth herein,
and based upon the court's ability to grant to Atec a first
priority lien on all assets of Borrower.
NOW, THEREFORE, and in consideration of the mutual promises, covenants
and agreements contained herein and for other good and valuable consideration
the receipt and sufficiency of which are hereby acknowledged, the Borrower and
Atec agree as follows:
1. DEFINED TERMS
1.1. DEFINED TERMS. In addition to terms defined elsewhere in this
DIP Loan Agreement, when used herein, the following terms shall have the
following meanings:
"ACCOUNT" means account if any, as defined in Section 9-106 of the
Uniform Commercial Code as currently enacted in the State of Massachusetts (and
includes Receivables defined herein).
"ADVANCE" means a disbursement by Atec to Borrower under the Credit.
"AFFILIATE" means, as to any Person, any other Person which, directly or
indirectly, is in control of, is controlled by, or is under common control with
such Person. For purposes of this definition, a Person (a "Controlled Person")
shall be deemed to be "controlled by" another Person
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(a "Controlling Person") if the Controlling Person possesses, directly or
indirectly, power to direct or cause the direction of the management and
policies of the Controlled Person whether by contract or otherwise.
"AGGREGATE OUTSTANDING" means at any time the aggregate outstanding
principal balance of all Advances under the Revolving Loan.
"AUTHORIZED PERSON" means any of the following (i) ▇▇▇▇▇▇ ▇. ▇▇▇▇▇:
"BANKRUPTCY CODE" shall mean The Bankruptcy Reform Act of 1978, as
heretofore and hereinafter amended, and as codified in II U.S.C. Section 101 ET
SEQ.
"BORROWING BASE" shall mean, the greater of $750,000.00 or , an amount
equal to eighty (80%) percent of the face amount of all Receivables which are
Eligible Receivables of Nexar. In connection with the computation of the
Borrowing Base, Atec shall be entitled to adjust the amount and other
information contained therein to the extent that it believes in its sole
discretion that such adjustment is appropriate to reflect the then current
amount of Eligible Receivables or changes in business practices of the Borrower
and require that the Borrower maintain such additional reserves or adjustments
(for purposes of computing the Borrowing Base) in respect of Eligible
Receivables and make such other adjustments to the Borrowing Base parameters as
Atec shall reasonably require in its sole discretion.
"BUSINESS DAY" means any day other than Saturday, Sunday or other day on
which banks in both New York and Massachusetts are authorized or required to
close.
"CARVE OUT" has the meaning ascribed to such term in SECTION 3.7 hereof.
"COLLATERAL" has the meaning ascribed to such term in SECTION 3.1 hereof.
"COLLATERAL ACCOUNT" has the meaning set forth in SECTION 3.2 hereof.
"CREDIT" means the facility established under this DIP Loan Agreement
pursuant to which Advances are to be made.
"DEFAULT" means an event which, with the giving of notice, or the passage
of time, would constitute an Event of Default.
"DIP LOAN AGREEMENT" means this Revolving Credit and Security Agreement,
as it may be amended, modified or supplemented from time to time.
"DOLLARS" means lawful money of the United States of America.
"ELIGIBLE RECEIVABLES" means Receivables arising in the ordinary
course of Borrower's business from the sale of goods or rendition of
services, which Atec shall deem eligible based on such considerations as Atec
may from time to time deem appropriate. Without limiting the foregoing, a
Receivable shall not be deemed to be an Eligible Receivable if (i) the
account debtor has failed to pay the Receivable within a period of ninety
(90) days after invoice date, to the extent of any amount remaining unpaid
after such period; (ii) the account debtor has failed to pay
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more than 25% of all outstanding Receivables owed by it to Borrower within
sixty (60) days after invoice date; (iii) the account debtor is an Affiliate
of Borrower; (iv) the goods relating thereto are placed on consignment,
guaranteed sale, "▇▇▇▇ and hold," "COD" or other terms pursuant to which
payment by the account debtor may be conditional; (v) the account debtor is
not located in the United States, unless the Receivable is supported by a
letter of credit or other form of guaranty or security, in each case in form
and substance satisfactory to Atec; (vi) the account debtor is the United
States or any department, agency or instrumentality thereof or any State,
city or municipality of the United States; (vii) Borrower is or may become
liable to the account debtor for goods sold or services rendered by the
account debtor to Borrower; (viii) the account debtor's total obligations to
Borrower exceed 15% of all Eligible Receivables, to the extent of such
excess; (ix) the account debtor disputes liability or makes any claim with
respect thereto (up to the amount of such liability or claim), or is subject
to any insolvency or Bankruptcy proceeding, or becomes insolvent, ; (x) the
amount thereof consists of late charges or finance charges; (xi) the amount
thereof consists of a credit balance more than ninety (90) days past due;
(xii) the face amount thereof exceeds $10,000.00, unless accompanied by
evidence of shipment of the goods relating thereto satisfactory to Atec;
(xiii) the invoice constitutes a progress billing on a project not yet
completed, except that the final billing at such time as the matter has been
completed and delivered to the customer may be deemed an Eligible Receivable;
or (xiv) the amount thereof is not yet represented by an invoice or ▇▇▇▇
issued in the name of the applicable account debtor.
"ENVIRONMENTAL LAWS" means any and all federal, state, local or municipal
laws, rules, orders, regulations, statutes, ordinances, codes, decrees or
requirements of any governmental entity regulating, relating to or imposing
liability or standards of conduct concerning any Hazardous Substance or other
hazardous, toxic or dangerous waste, substance or constituent, or other
substance, whether solid, liquid or gas, as now or at any time hereafter in
effect.
"ENVIRONMENTAL LIEN" means a Lien in favor of any Governmental Authority
for (i) any liability under federal, state or local environmental laws or
regulations, or (ii) damages arising from or costs incurred by such Governmental
Authority in response to a release or threatened release of a Hazardous
Substance or other substance into the environment.
"EQUIPMENT" means all of Borrower's present and hereafter acquired
machinery, molds, machine tools, motors, furniture, equipment, furnishings,
fixtures, trade fixtures, motor vehicles, tools, parts dyes, jugs, goods and
other tangible personal property (other than Inventory) of every kind and
description used in Borrower's operations or owned by Borrower and any interest
in any of the foregoing, and all attachments, accessories, accessions,
replacements, substitutions, additions or improvements to any of the foregoing,
wherever located.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations promulgated and rulings issued
thereunder.
"EVENT OF DEFAULT" has the meaning ascribed to such term in SECTION 7.1.
"FINAL FINANCING ORDER" shall mean the Final Order of the Bankruptcy
Court referred to in Section 3.7, 4.1(1), 4.2(c), 5.4, 6.17, 7.1(g) hereof.
"GAAP" means generally accepted accounting principals applied on a basis
consistent with those used in preparing the financial statements of Borrower
previously provided to Atec by
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Borrower.
"GENERAL INTANGIBLES" means all general intangibles of Borrower, whether
now owned or hereafter created or acquired by Borrower, including, without
limitation, all choses in action, causes of action, corporate or other business
records, inventions, designs, drawings, blueprints, trademarks, licenses and
patents, names, trade secrets, goodwill, copyrights, registrations, licenses,
franchises, customer lists, security and other deposits, rights in all
litigation presently or hereafter [pending for any cause or claim (whether in
contract tor or otherwise), and all judgments now or hereafter arising
therefrom, all claims of Borrower against Atec rights to purchase or sell real
or personal property, rights as a licensor or licensee or any kind, royalties,
telephone numbers, proprietary information, purchase orders, and all insurance
policies and claims (including, without limitation, credit, liability, property
and other insurance) tax refunds and claims, computer programs, discs, tapes and
tape files, claims under guaranties, security interests or other security held
by or granted to Borrower to secure payment of any of the Receivables by an
account debtor, all right to indemnification and all other intangible property
of every kind and nature (other than Receivables).
"GOVERNMENTAL AUTHORITY" means any Federal, state, county, municipal or
other governmental department, commission, board bureau, agency or
instrumentality or any court, in each case whether of the United States or
foreign.
"HAZARDOUS SUBSTANCE" means any substance or material that, whether by
its nature or use, is subject to regulation under any Environmental Law.
"INDEBTEDNESS" shall mean, as to the Borrower, all items of indebtedness,
obligation or liability, whether matured or unmatured, liquidated or
unliquidated, direct or contingent, joint or several, including but not limited
to principal, interest, costs, and reasonable attorney fees, other fees and
expenses.
"INVENTORY" means all of Borrower's now owned and hereafter acquired
goods, merchandise or other personal property, wherever located, to be furnished
under any contract of service of held for sale or lease, all raw materials, work
in process, finished goods and materials and supplies of any kind, nature or
description which are or might be used or consumed in Borrower's business or
used in connection with the manufacture, packing, shipping, advertising, selling
or finishing of such goods, merchandise or other personal property, and all
documents of title or other documents representing them.
"INTELLECTUAL PROPERTY" means all of Borrower's right title, and interest
in and to, whether now owned or hereafter acquired: (i) trademarks, trademark
registrations, trade names, trade name registrations, and trademark or trade
name applications, including without limitation, such as are listed on the
Schedule attached hereto and made a part hereof, as the same may be amended from
time to time, and (a) renewals thereof, (b) all income, royalties, damages and
payments now and hereafter due and/or payable with respect thereto, including
without limitation, damages and payments for past or future infringements
thereof, (c) the right to ▇▇▇ for past, present and future infringements
thereto, (d) all rights corresponding thereto throughout the world, and (e) the
goodwill of the business operated by Borrower connected with and symbolized by
any trademarks
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or trade names; (ii) copyrights, copyright registrations and copyright
applications, including without limitation such as are listed on the Schedule
attached hereto and made a part hereof, as the same may be amended from time
to time, and (a) renewals thereof, (b) all income, royalties, damages and
payments now and hereafter due and/or payable with respect thereto, including
without limitations, damages and payments for past or future infringements
thereof, (c) the right to ▇▇▇ for past, present and future infringements
thereof, and (d) all right corresponding thereto without the world; (iii)
license agreements, including without limitation, such as are listed on the
Schedule attached hereto and made a art hereof, and the right to prepare for
sale, sell and advertise for sale any Inventory now or hereafter owned by
Borrower and now or hereafter covered by such licenses; and (iv) patents and
patent applications, registered or pending, including without limitation such
as are listed on the Schedule attached hereto, together with all income,
royalties, shop rights, damages and payments thereto, the right to ▇▇▇ for
infringements thereof, and all right thereto throughout the world and all
reissues, divisions, continuations, renewals, extensions and continuations in
part thereof.
"INTERIM ORDER" shall mean the Interim Order of the Bankruptcy Court
referred to in Section 2.1(a), 3.7, 4.1(h), 4.2(c), 5.4, 6.17, 7.1(g).
"KEY OFFICER" means ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇; or the acting
President, Treasurer or Chief Executive Officer of the Borrower.
"LOAN DOCUMENTS" means this DIP Loan Agreement, the Revolving Note
together with all other agreements, documents and instruments executed and
delivered to Atec in connection herewith.
"MAXIMUM CREDIT" shall mean $750,000.00.
"MATURITY DATE" shall mean the earlier of (A) 90 days from the Debtor's
Petition Date; (B) the consummation of a sale of all or substantially all of the
assets or capital stock of Borrower and (C) confirmation of a plan of
reorganization.
"OBLIGATIONS" means all of the liabilities, obligations and indebtedness
of Borrower to Atec of any kind or nature, however created, arising or
evidenced, whether direct or indirect, absolute or contingent, now or hereafter
existing or due or to become due, whether arising in a transaction involving
Atec alone, or in a transaction involving other creditors of Borrower, and
including but not limited to (i) Borrower's obligations under this DIP Loan
Agreement including without limitation Borrower's obligations under the
Revolving Note, (iii) interest, charges, expenses, reasonable attorneys' fees
and other fees and sums chargeable to Borrower by Atec under this DIP Loan
Agreement or the other Loan Documents, including obligations of performance and
including any fees and costs incurred in negotiating, drafting, or enforcing all
amendments, extensions, renewals, refundings or refinancings of any of the
foregoing including post-confirmation financing; (iv) Borrower's obligations to
Atec for work, labor and service, and/or goods sold and delivered to Borrower by
Atec.
"PBGC" means the Pension Benefit Guaranty Corporation, or any successor
agency or entity performing substantially the same functions.
"PERMITTED LIENS" means the liens set forth on the attached SCHEDULE 5.3
hereof.
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"PERSON" means any natural person, corporation, division of a
corporation, firm, association, partnership, joint venture, limited liability
company, association, trust, joint-stock company, unincorporated organization,
government, Governmental Authority or any other entity, whether acting in an
individual, fiduciary or other capacity.
"PREMISES" means all premises where Borrower conducts its business and
any rights of possession, including, without limitation, the premises described
in SCHEDULE 3.5 hereof.
"PROJECTIONS" has the meaning ascribed to such term in SECTION 5.19
hereof.
"RECEIVABLES" means all of Borrower's now owned and hereafter acquired
accounts (whether or not earned by performance), proceeds of any letters of
credit naming Borrower as beneficiary, contract rights, chattel paper,
instruments, documents and all other forms of obligations at any time owing to
Borrower, all guaranties and other security therefor, whether secured or
unsecured, all merchandise returned to or repossessed by Borrower, and all
rights of stoppage in transit and all other rights or remedies of an unpaid
vendor, lienor or secured party.
"SECURITY INTEREST" or "LIEN" means any lien, pledge, mortgage,
encumbrance, charge or security interest of any kind whatsoever, (including
without limitation, the lien or retained security title of a conditional sale or
other title retention agreement or any lease in the nature thereof) whether
arising under a security instrument or as a matter of law, judicial process or
otherwise or an agreement granting any lien, security interest or pledge or
mortgage or encumbering any asset.
"SUPER-PRIORITY CLAIM" means a claim, authorized pursuant to Section
364(c)(1) of the Bankruptcy Code, against Borrower in the Case which is an
administrative expense claim having priority over any and all administrative
expenses of the kind specified in Sections 503(b), 506(c) and 507(b) of the
Bankruptcy Code, subject only to the Carve-Out.
1.2. TERMS GENERALLY. The definitions in SECTION 1.1. shall apply
equally to both the singular and plural forms of the terms defined. All
references in this DIP Loan Agreement to Articles, Section, Exhibits, and
Schedules shall be deemed references to Articles and Sections of and Exhibits
and Schedules to, this DIP Loan Agreement unless the context requires otherwise.
Except as otherwise expressly provided herein, all terms of an accounting or
financial nature shall be construed in accordance with GAAP, as in effect from
time to time; provided however, that for purposes of determining compliance with
any covenant set forth in Article VI, such terms shall be construed in
accordance with GAAP as in effect on the date of this DIP Loan Agreement applied
an a basis consistent with the application used in Borrower's audited financial
statements referred to in SECTION 5.6. All terms contained in this DIP Loan
Agreement (and which are not otherwise specifically defined herein) shall have
the meanings provided in the Uniform Commercial Code of the State of
Massachusetts to the extent the same are used or defined therein.
2. REVOLVING CREDIT
2.1. REVOLVING LOAN
(a) ADVANCES. Atec agrees, on the terms and subject to the conditions
herein set forth, to make Advances to Borrower from time to time
during the period from the date
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hereof until the earlier of the "Maturity Date" or the date the
Credit has been terminated pursuant to Sections 2.2(d) or
7.1(a), in an aggregate amount of any amount requested by
Borrower, as long as, at any time the aggregate outstanding ,
does not exceed the lesser of (i) an amount equal to the
Maximum Credit, or (ii) the Borrowing Base as calculated in
good faith by Atec, and that such Advances are made in
accordance with the budget which is attached hereto as Exhibit
"A", which Advances shall be secured by the Collateral as
provided in Article 3 hereof. The Credit shall be a revolving
facility and it is contemplated that Borrower will request
Advances, make prepayments and request additional Advances.
Borrower agrees to comply with the following procedures in
requesting Advances under this SECTION 2.1(a). Advances shall
be made upon entry of the Interim Order or the Final Financing
Order and execution of the DIP Loan Agreement and related
documents and in accordance therewith. Atec may increase the
Borrowing Base from time to time without notice or court
approval so long as the amount extended under this Borrowing
Base does not exceed the Maximum Credit.
1. Borrower will not request any Advance under this SECTION 2.1(a)
if, after giving effect to such requested Advance, the sum of the outstanding
and unpaid Advances under this SECTION 2.1 (A) or otherwise would exceed the
Borrowing Base.
2. Each request for an Advance may be made in writing specifying the
date of the requested Advance and the amount thereof and shall be by (i) any
officer of Borrower (ii) any person designated as Borrower's agent by any
officer of Borrower in a writing delivered to Atec; or (iii) any person
reasonably believed by Atec to be an officer of Borrower or such a designated
agent, (iv) such written request must be received prior to 12:00 p.m. on the
Business Day of the requested Advance (requests far Advances received by Atec
after 12:00 p.m. shall be processed on the immediately succeeding Business
day). Such written request may be made by facsimile. Borrower may not make more
than one request for an Advance per Business Day.
3. Upon fulfillment of the applicable conditions set forth in Article
4 hereof, Atec shall disburse loan proceeds, if any, as Atec and Borrower
shall agree in writing. Borrower shall be obligated to repay all Advances under
this SECTION 2.1(a) notwithstanding the failure of Atec to receive written
confirmation of Borrower's request for an Advance and notwithstanding the fact
that the person requesting the same and identifying himself as an Authorized
Person, was not in fact authorized to do so. Any request for an Advance under
this SECTION 2.1(a) shall be deemed to be a representation by Borrower that (i)
the condition set forth in SECTION 2. 1(a)(1) has been met, and (ii) the
conditions set forth in ARTICLE 4 hereof have been met as of the time of the
request
(b) REVOLVING NOTE The obligation to repay all Advances under the
Revolving Loan and interest accrued thereon shall be evidenced by
a single promissory note of Borrower payable to the order of Atec
(the "REVOLVING NOTE").
(c) PAYMENT. All Advances under the Revolving Loan shall be paid by
Borrower on the Maturity Date, but at Borrower's election, may be
repaid in whole or in part at any time prior to such date without
premium or penalty. Borrower shall pay to Atec all proceeds of
Collateral in accordance with the procedures established by Atec
for payment into the Collateral Account. Borrower agrees that the
amount and interest rate or rates shown on the books and records
of Atec as being the
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aggregate amount of Advances outstanding and the interest rate
or rates applicable thereto shall be prima facie evidence of
the principal balance of the Revolving Loan and the applicable
interest rate or rates. Each month Atec shall render to
Borrower a statement setting forth the principal balance of the
Advances and the interest due thereon. Each statement shall be
subject to subsequent adjustment by Atec but shall be presumed
to be correct and binding upon Borrower, and shall constitute
an account stated unless, within ten (10) Business Days of the
date of such statement Borrower shall deliver to Atec its
written objection thereto specifying the error or errors, if
any, which Borrower believes are contained in such statement.
In the absence of a written objection delivered to Atec, Atec's
statement shall be conclusive evidence against Borrower of the
amounts owing to Atec by Borrower. Any payment received by Atec
may be applied to the Advances including interest thereon and
any fees, costs and reasonable expenses hereunder, and under
the Loan Documents, in such order and in such amounts as Atec,
in its discretion, may from time to time determine.
(d) INTEREST RATE; PAYMENT OF INTEREST. Interest on the principal
of the Advances shall be a fixed flat rate of eight and
one-quarter percent (8.25%) per annum. Accrued interest shall
be due and payable, in arrears, monthly, commencing on the
first Business Day of the month immediately following execution
of this DIP Loan Agreement and continuing on the first Business
Day of each month thereafter until all of the Obligations have
been paid in full in cash and Atec's commitment to extend the
Credit has been terminated pursuant to Section 2.2(d) or
Section 7.3(a). Interest under the Revolving Note shall be
computed on the basis of actual number of days elapsed in a
year of 360 days. Borrower hereby authorizes Atec, if and to
the extent an interest payment is not made timely, to make an
Advance, in an amount equal to the accrued interest then due
and payable to Atec under the Revolving Note or hereunder and
to apply the same to the accrued interest due.
(e) DEFAULT INTEREST. Upon the occurrence of an Event of Default, and
at all times thereafter during the continuance of such event,
Borrower shall on demand from time to time pay interest, to the
extent permitted by law, on the Obligations during the period of
time such default continues until (but not including) the date of
actual payment at a rate equal to eleven (11%) percent per annum.
(f) PAYMENT ON NON-BUSINESS DAYS. Whenever any payment to be made
hereunder or under the Revolving Note shall be stated to be
due on a day other than a Business Day, such payment shall be
made on the immediately succeeding Business Day, and such
extension of time shall in such case be included in the
computation of payment of interest an the Revolving Note or the
fees hereunder, as the case may be.
(g) USURY PROVISIONS. The Revolving Note shall be governed by and
construed in accordance with applicable statutes. The parties
hereto intend to conform strictly
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to the applicable usury laws. Therefore, all agreements between
Borrower and Atec , whether now existing or hereafter arising
and whether written or oral, are hereby expressly limited to
the extent that in no event, whether by reason of acceleration
of the maturity hereof or otherwise, shall the amount paid or
agreed to be paid to Atec for the use, forbearance, or
detention of money hereunder or otherwise, exceed the maximum
amount permissible under applicable law. If the fulfillment of
any provision hereof or other document evidencing or securing
the indebtedness evidenced hereby, at the time performance of
such provision shall be due, shall involve transcending the
limit of validity prescribed by law, then, IPSO FACTO, the
obligation to be fulfilled shall be reduced to the limit of
such validity. If Atec shall ever receive anything of value
deemed interest under applicable law that would exceed interest
at the highest lawful rate, an amount equal to any such
excessive interest shall be applied to the reduction of the
principal amount owing hereunder and not to the payment of'
interest. If such excessive interest exceeds the unpaid balance
of principal hereof, such excess shall be refunded to the
Borrower. All sums paid or agreed to be paid to Atec for the
use, forbearance, or detention of the indebtedness of the
Borrower to the Atec shall, to the extent provided by
applicable law, be amortized, prorated, allocated, and spread
throughout the term thereof. The provisions of this paragraph
shall control all agreements between the Borrower and Atec.
2.2. THE CREDIT
(a) USE OF PROCEEDS. The proceeds of the Revolving Loan shall be
used only: (i) for general working capital purposes or (ii) for
purchase of Inventory (iii) the Carve Out; (iv) for the
purposes detailed in the budget.
(b) MANDATORY PAYMENT. If at any time the Aggregate Outstanding
exceeds the lesser of (i) an amount equal to the Maximum
Credit, or (ii) an amount equal to the Borrowing Base, Borrower
shall immediately pay into the Collateral Account an amount
sufficient to cause the Aggregate Outstanding to be equal to or
less than the lesser of (i) the Maximum Credit or (ii) the sum
of the Borrowing Base.
(c) TERMINATION OF COMMITMENT. Unless otherwise agreed to in
writing by Atec, the commitment by Atec to extend the Credit
shall terminate in full upon the earlier of (i) written notice
by Atec to Borrower that Atec is terminating the Credit and
commitment to lend hereunder pursuant to SECTION 7.3(a); (ii)
the occurrence of an Event of Default; the earlier of (A) 90
days from the Petition Date (B) the consummation of a sale of
all or substantially all of the assets or capital stock of
Borrower; and (C) confirmation of a plan of reorganization;
thereafter Atec's commitment shall be of no further force or
effect unless otherwise agreed in writing by Atec.
(d) PAYMENT OF OBLIGATIONS. Any time any of the Obligations are due
and
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payable under the Loan Documents (whether by acceleration or
otherwise), Atec shall be entitled to immediate payment of such
Obligations without further application to or order of the
Bankruptcy Court.
(e) NO DISCHARGE OF CLAIMS: NO WAIVER BY ATEC. The Obligations
hereunder shall not be discharged by the entry of an order
confirming a plan of reorganization in the Case. The Security
Interest granted to Atec hereunder shall not be affected in any
manner by entry of an order confirming a plan of reorganization
in the Case, or the entry of an order dismissing or converting
the Case.
3. COLLATERAL AND GRANT OF SECURITY INTERESTS
3.1. GRANT OF SECURITY INTEREST To secure payment and performance of
the Obligations of Borrower to Atec, Borrower hereby grants to Atec a first
priority perfected Security Interest pursuant to 11 U.S.C. Section 364(d) in and
to all of Borrower's right, title and interest in and to the following property,
whether now owned or existing or hereafter acquired or coming into existence and
whether acquired before or after the commencement of the Case, wherever now or
hereafter located (all such property is hereinafter referred to collectively as
the "COLLATERAL"):
(a) Accounts;
(b) Inventory (whether or not Eligible Inventory);
(c) General Intangibles;
(d) Receivables;
(e) Cash and cash equivalents;
(f) All chattel paper, instruments and documents of title, as
those terms are defined In Article 9 of the Uniform
Commercial Code as currently enacted in the State of
Massachusetts;
(g) Any and all balances, credits, deposits (general or
special, time or demand, provisional or final), accounts or
monies of or in the name of Borrower now or hereafter
with Atec or any other financial institution and any and
all property of every kind or description of or in the name
of Borrower now or hereafter, for any reason or purpose
whatsoever, in the possession or control of; or in transit
to, or standing to Borrower's credit on the books of Atec,
any agent or bailee for Atec.
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(h) All interest of Borrower in any goods the sale or lease of
which shall have given or shall give rise to, and in all
other property securing the payment of or performance
under, any Accounts, General Intangibles, Receivables or
any chattel paper or instruments referred to above;
(i) All Equipment
(j) All Intellectual Property rights including patents, trade
names and trademarks held by Borrower or any subsidiary;
(k) All tax refunds;
(l) All replacements, substitutions, additions or accessions to
or for any of the foregoing;
(m) To the extent related to the property described in CLAUSES
(A) through (j) above, all books, correspondence; credit
files, records, invoices and other papers and documents,
including, without limitation, to the extent so related,
ALL tapes, cards, computer runs, computer programs and
other papers and documents in the possession or control of
Borrower or any computer bureau from time to time acting
for Borrower, and, to the extent so related, all rights in,
to and under all policies of insurance, including claims of
rights to payments thereunder and proceeds therefrom,
including any credit insurance;
and
(n) All products and proceeds (including but not limited
to any Accounts, Receivables or other proceeds
arising from the sale or other disposition of any
Collateral, any returns of any Inventory sold by
Borrower, and the proceeds of any insurance covering
any of the Collateral) of all of the foregoing.
Notwithstanding anything to the contrary contained in this Section 3.1,
the security interests granted herein shall not attach to any of the fixtures
and leasehold improvements of Borrower or any of the leases or contracts of
Borrower or rights thereunder to the extent and for so long as the granting of a
security interest therein to Atec is prohibited (a) with respect to any fixture,
the lease for any location relating to such fixtures, and (b) with respect to
any of the leases and contracts of Borrower, the terms and provisions of such
leases and contracts (collectively, the Non-Assignment Provisions"); provided
however that the security interests herein shall attach to such assets to the
extent that Borrower has obtained the consent of the other party to the relevant
contract, or agreement containing Non-Assignment Provisions, or the Non-
11
Assignment Provisions are ineffective or unenforceable pursuant to Section
9-318 of the Uniform Commercial Code as in effect in the State of
Massachusetts or other applicable law.
3.2 CASH PROCEEDS; ACCOUNTS: RECEIVABLES.
(a) If requested by Atec, Borrower shall advise Atec promptly of any
Inventory returned to Vendor, or returned as damaged, following
the sale thereof, or otherwise recovered (calculated in the
aggregate on a monthly basis). All Receivables and all net amounts
received by Atec in settlement adjustment or liquidation of any
Account or Receivable may be applied by Atec to Borrower's
Obligations. If requested by Atec, Borrower will make proper
entries in its books, disclosing the assignment of Accounts and
Receivables to Atec.
(b) Atec shall retain the right to require Borrower to warrant that:
(i) all of the Accounts are and will continue to be bona fide
existing obligations created by the sale and delivery of goods,
the rendering of' services, or the furnishing of other good and
sufficient consideration to account debtors in the regular course
of business; and (ii) all sales receipts and other documents
furnished or to be furnished to Atec in connection therewith are
and will be genuine.
(c) Atec is authorized and empowered upon an occurrence of an Event Of
Default, and at any time thereafter during the continuance of such
event, and after giving five (5) days written notice to Borrower
and Borrower has failed to cure said default, within the five (5)
day period, and without further order of or application to the
Bankruptcy Court to have the automatic stay imposed by Section 362
of the Bankruptcy Court modified or lifted, in its sole and
absolute discretion:
1. To request but not unreasonably, in Atec's name, Borrower's
name or the name of a third party, confirmation from any account
debtor or party obligated under or with respect to any Collateral
of the amount shown by the Accounts or other Collateral to be
payable, or any other matter stated therein;
2. To endorse in Borrower's name and to collect any chattel
paper, checks, notes, drafts, instruments or other items of
payment tendered to or received by Atec in payment of any Account
or other obligation owing to Borrower;
3. To notify, either in Atec's name or Borrower's name, and/or
to require Borrower to direct, any account, debtor or other Person
obligated under or in respect of any Collateral, of the fact of
Atec's Security Interest therein and of the collateral assignment
thereof to Atec;
4. To direct, either in Atec's name or Borrower's name, and/or
to require Borrower to direct, any account debtor or other Person
obligated under or in respect of any Collateral, to make payment
directly to Atec of any amounts due or to become due thereunder or
with respect thereto; and
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5. After the occurrence of an Event of Default, to demand,
collect, surrender, release or exchange all or any part of any
Collateral or any amounts due thereunder or with respect thereto,
or compromise or extend or renew for any period (whether or not
longer than the initial period) any and all sums which are now or
may hereafter become due or owing upon or with respect to any of
the Collateral, or enforce, by suit or otherwise, payment or
performance of any of the Collateral either in Atec's own name or
in the name of Borrower.
Under no circumstances shall Atec be under any duty to act in regard to
any of the foregoing matters set forth in SECTION 3.2(c)(1)-(5). The costs
relating to any of the foregoing matters, including reasonable attorneys' fees
and out-of-pocket expenses, and the cost of the Collateral Account or other Atec
account or accounts which may be required hereunder, shall be borne solely by
Borrower whether the same are incurred by Atec or Borrower.
(d) Unless otherwise consented to by Atec, Borrower will, forthwith
upon receipt by Borrower of all checks, drafts, cash and other
remittances in payment or as proceeds of, or on account of, any of
the Accounts, the Receivables or other Collateral (except Advances
made by Atec and excess amounts referenced in the last sentence of
this SECTION 3.2(d) paid over to Borrower by Atec), deposit the
same in a special Atec account (the "COLLATERAL ACCOUNT") with
such financial institution as Atec shall consent, over which Atec
alone has power of withdrawal. Borrower acknowledges that the
maintenance of the Collateral Account is solely for the
convenience of Atec in facilitating its own operations, and
Borrower does not and shall not have any right, title or interest
in the Collateral Account or in the amounts at any time appearing
to the credit thereof. All deposits into the Collateral Account
shall be applied to the outstanding principal balance, if any, of
the Advances at the time such accounts are actually and finally
collected as determined by Atec. Said proceeds shall be deposited
in precisely the form received except for Borrower's endorsement
where necessary to permit collection of items, which endorsement
Borrower agrees to make. Pending such deposit, Borrower agrees not
to commingle any such checks, drafts, cash and other remittances
with any of its funds or property, but will hold them separate and
apart therefrom and upon an express trust for Atec until deposit
thereof is made in the Collateral Account. Upon payment in full in
cash of all outstanding Obligations, Atec will pay over to
Borrower any excess amounts received by Atec as payment or
proceeds of Collateral, whether received by Atec as a deposit in
the Collateral Account or received by Atec as a direct payment on
any of the sums due hereunder.
(e) Borrower appoints Atec, or any Person whom Atec may from time
to time designate, as Borrower's attorney and agent-in-fact
with power, at any time after the occurrence (and during the
continuance) of an Event of Default: (i) to notify the post
office authorities to change the address for delivery of
Borrower's mail to an address designated by Atec; (ii) to
receive and to open and sort together with an Authorized Person
or a person designated by an Authorized Person all mail
addressed to Borrower (provided however that the inadvertent or
accidental disclosure of any attorney/client privileged
communication shall not operate as a waiver of the Borrower's
attorney/client privilege); (iii) to send requests for
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verification of Accounts, Receivables or other Collateral to
account debtors; (iv) to open an escrow account or other
account under Atec's sole control for the collection of
Accounts, Receivables or other Collateral, if not required
contemporaneously with the execution hereof, and (v) to do all
other things which Atec is permitted to do under this DIP Loan
Agreement or which are necessary to carry out this DIP Loan
Agreement and the Loan Documents. Neither Atec nor any of its
directors, officers, employees or agents will be liable for any
reasonable acts of commission or omission for any reasonable
error in judgment or mistake of fact or law, unless the same
shall have resulted from gross negligence or willful
misconduct. This power, being coupled with an interest, is
irrevocable until either: (i) all of the Obligations are paid
in full in cash, or (ii) this DIP Loan Agreement is terminated,
whichever shall last occur. Borrower expressly waives
presentment, demand, notice of dishonor and protest of all
instruments and any other notice to which it might otherwise be
entitled.
(f) If any Account or Receivable arises out of contracts with the
United States or any department, agency, or instrumentality
thereof, Borrower will, unless Atec shall otherwise agree,
immediately notify Atec in writing and execute any instruments and
take any steps required by Atec in order that all monies due and
to became due under such contracts shall be assigned to Atec and
notice thereof given to the government under the Federal
Assignment of Claims Act of 1940, as amended.
(g) If any Account or Receivable is evidenced by chattel paper or
promissory notes, trade acceptances, or other instruments for the
payment of money, Borrower will, unless Atec shall otherwise
agree, deliver the originals of same to Atec, appropriately
endorsed to Atec's order and, regardless of the form of such
endorsement, Borrower hereby expressly waives presentment, demand,
notice of dishonor, protest and notice of protest and all other
notices with respect thereto.
3.3. INVENTORY.
(a) Unless Atec shall otherwise agree, if Borrower sells Inventory
for cash, all full and partial payments therefor shall
immediately be delivered by Borrower to Atec or in accordance
with the cash management systems referenced in SECTION 4.2(f)
in their original form for deposit into the Collateral Account
or other application to reduction of the Obligations. All such
cash shall be held by Borrower in trust for Atec and shall be
remitted to Atec on the day following the day received, or at
such other time as Atec may reasonably designate.
(b) Except as provided in this SUBSECTION 3.3(b), Atec shall not be
liable or responsible in any way for the safekeeping of any
Inventory delivered to it, to any bailee appointed by or for it,
to any warehouseman, or under any other circumstances. Atec shall
not be responsible for collection of any proceeds or for losses in
collected proceeds held by Borrower in trust for Atec. Any and all
risk of loss for any or all of the foregoing shall be upon
Borrower, except for such loss as shall result from Atec's gross
negligence or wilful
14
misconduct. Atec shall exercise reasonable care in a
commercially reasonable manner with respect to any Inventory
which comes into its possession.
(c) If requested by Atec, Borrower shall, consistent with its usual
reporting systems, upon acquiring an interest in any Inventory,
deliver to Atec schedules of such Inventory, including a
description of the location of such Inventory, together with
suppliers' invoices, warranties, production, cost and other
records as Atec may reasonably request. If requested by Atec,
Borrower shall deliver to Atec schedules of the sale of any
Inventory as soon as possible. Any material adverse change in the
value or condition of any Inventory, and any errors discovered in
schedules delivered to Atec, shall be reported to Atec
immediately. Borrower confirms that the warranties and
representations in this DIP Loan Agreement shall apply to each
schedule. Borrower represents and warrants that, as to each
schedule of Inventory delivered to Atec:
1. The descriptions, origins, size, qualities, quantities,
weights, and markings of all goods stated thereon, or on any
attachment thereto, are true and correct in all material
respects to the best of Borrower's information and knowledge.
2. None of the goods is defective, used, or goods returned
by Borrower after receipt thereof, except where described as
such; and
3. All Inventory not included on such schedule has been
previously scheduled.
(d) If requested by Atec, Borrower will notify Atec monthly if
Borrower obtains possession (by return, repossession or otherwise)
of any Inventory which has been sold, and will inform Atec of the
aggregate Book Value of the returned or repossessed Inventory, if
such value is greater than Ten Thousand Dollars ($10,000.00).
(e) Except for Inventory moved in the ordinary course of business,
Borrower shall provide Atec with at least five (5) days' written
notice prior to twenty-five percent (25%) or more of the Inventory
being moved from said locations which notice shall include the
location(s) where the Inventory or a portion thereof will be
relocated and which notice shall be accompanied by all UCC
financing statements and other instruments and documents duly
executed by Borrower which are necessary to maintain Atec's first
priority Security Interest therein.
3.4. ASSIGNMENT OF INSURANCE. As additional security for the payment
and performance of the Obligations, Borrower hereby assigns to Atec as Lender
Loss Payee any and
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all monies (including, without limitation, proceeds of insurance and refunds
of unearned premiums) due or to become due under, and all other rights of
Borrower with respect to, any and all policies of insurance now or at any
time hereafter covering the Collateral or any evidence thereof or any
business records or valuable papers pertaining thereto, and Borrower hereby
directs the issuer of any such policy to pay all such monies directly to
Atec. At any time, after the occurrence of, and during the continuance of,
any Event of Default, Atec may (but need not), in Atec's name or in
Borrower's name, execute and deliver proof of claim, receive all such monies,
endorse checks and other instruments representing payment of such monies, and
adjust, litigate, compromise or release any claim against the issuer of any
such policy.
3.5. OCCUPANCY.
(a) The Borrower hereby irrevocably grants to Atec the right to take
possession of the Premises at any time after the occurrence of an
Event of Default and at any time thereafter during the
continuance of such event, and after giving five (5) days written
notice to Borrower and Borrower has failed to cure said default,
within the five (5) day period, and without further order of or
application to the Bankruptcy Court to have the automatic stay
imposed by Section 362 of the Bankruptcy Court modified or lifted,
in its sole and absolute discretion:
(b) Atec may use the Premises only to hold, process, manufacture,
sell, use, store, liquidate, realize upon or otherwise dispose of
goods that are Collateral and for other purposes that Atec may in
good ▇▇▇▇▇ ▇▇▇▇ to be related or incidental purposes.
(c) The right of Atec to hold the Premises shall cease and terminate
upon the earlier of (i) payment in full and discharge of all
Obligations, and (ii) final sale or disposition of all goods
constituting Collateral and delivery of all such goods to
purchasers.
(d) Atec may, immediately, upon nonpayment of any of Borrower's rental
obligations, pay such rent, but shall not be obligated to pay or
account for any rent or other compensation for the possession,
occupancy or use of any of the Premises; provided, however, in the
event that Atec does pay or account for any rent or other
compensation for the possession, occupancy or use of any of the
Premises, Borrower shall reimburse Atec promptly for the full
amount thereof. In addition, Borrower will pay, or reimburse Atec
for, all taxes, fees, duties, imposts, charges and expenses at any
time incurred by or imposed upon Atec by reason of the execution,
delivery, existence, recordation, performance or enforcement of
this DIP Loan Agreement or the provisions of this SECTION 3.5.
3.6. LICENSE. Borrower hereby grants Atec, a non-exclusive, worldwide
and royalty free license to use or otherwise exploit all trademarks, franchises,
trade names, copyrights and patents of Borrower, for the purpose of selling,
leasing or otherwise disposing of any or all Collateral following an Event of
Default.
3.7. SUPER-PRIORITY CLAIM: CARVE-OUT. Upon entry of the Interim Order
and Final
16
Financing Order, pursuant to Section 364(c)(l) of the Bankruptcy Code,
the Obligations of Borrower to Atec shall at all times constitute allowed
administrative expense claims in the Case having priority over all
administrative expenses of the kind specified in Sections 503(b), 506(c) and
507(b) of the Bankruptcy Code, subject only to, , the payment of (x) accrued
and unpaid and future fees and disbursements incurred by the Debtor's
professionals appointed in the case in an aggregate amount not in excess of
$50,000.00, and (y) U.S. Trustee fees pursuant to 28 U.S.C. 1930 (collectively
the "CARVE OUT"), PROVIDED THAT THE CARVE-OUT SHALL NOT INCLUDE ANY PROFESSIONAL
FEES OR DISBURSEMENTS INCURRED IN CONNECTION WITH INVESTIGATING OR ASSERTING
CLAIMS OR CAUSES OF ACTIONS AGAINST ATEC UNDER THE LOAN DOCUMENTS AND/OR
INVESTIGATING OR CHALLENGING THE VALIDITY, PERFECTION, PRIORITY, ENFORCEABILITY,
AVOIDANCE, EXTENT OR AMOUNT OF ANY SECURITY INTEREST OF ATEC UNDER THE LOAN
DOCUMENTS. Atec shall deduct $50,000.00 from the first advance to Borrower and
shall deposit said $50,000.00 in an escrow account held by counsel for Nexar
for the payment of the Carve Out. The Carve Out shall only be paid upon the
entry of an appropriate order of the Bankruptcy Court.
3.8. SUPPLEMENTAL DOCUMENTATION. At Atec's request, Borrower shall
execute and deliver to Atec, at any time or times hereafter, such agreements,
documents, financing statements, warehouse receipts, bills of lading, notices of
assignment of Account; schedules of Accounts assigned, and other written matter
necessary or reasonably requested by Atec to perfect and maintain perfected
Atec's Security Interest in the Collateral (all the above hereinafter referred
to as "SUPPLEMENTAL DOCUMENTATION"), in form and substance acceptable to Atec,
and pay all taxes, fees and other costs and expenses associated with any
recording or filing of the same.
4. CONDITIONS PRECEDENT
4.1. CONDITIONS PRECEDENT TO THE INITIAL ADVANCE. The obligation of
Atec to make the initial Advance under the Revolving Loan is subject to the
conditions precedent that Atec shall first receive all of the following, all in
form and substance satisfactory to Atec:
(a) DIP LOAN AGREEMENT. This DIP Loan Agreement properly executed by
the parties.
(b) REVOLVING NOTE. The Revolving Note, duly executed by Borrower.
(c) FINANCING STATEMENTS. All financing statements and other writings,
properly executed, which are deemed by Atec to be necessary or
desirable to grant Atec an attached, perfected first priority
Security Interest in the Collateral.
(d) RESOLUTIONS. Certified Resolutions of the Board of Directors of
Borrower authorizing the execution and delivery of this DIP Loan
Agreement and the other Loan Documents as well as performance by
Borrower hereunder and under the
17
other Loan Documents. In addition, all Certified Resolutions of
the Board of Directors of Borrower which may be required by
Atec authorizing Borrower to open accounts or perform other
operational functions at Atec.
(e) CERTIFIED ARTICLES AND BY-LAWS. Certified copies of the Articles
of Incorporation and By-Laws of Borrower's certified by Borrower's
corporate secretary that either there are no amendments thereto or
that all amendments are attached to such certificate.
(f) CERTIFICATE OF INCUMBENCY. Certificate of Incumbency showing the
names, offices and specimen signatures of the officers of Borrower
authorized to execute this DIP Loan Agreement and the other Loan
Documents as well as of each Person identified in as an Authorized
Person.
(g) GOOD STANDING CERTIFICATES. Certificates of good standing or
existence in Delaware and Massachusetts.
(h) INTERIM ORDER. A file stamped copy of the Interim Order.
(i) UCC SEARCHES; TERMINATION STATEMENTS. UCC search results to
Atec's satisfaction that Atec is being granted a first priority
Security Interest in the Collateral, except for Permitted Liens.
(j) LEASES. True and correct copies of all Ieases (or reasonable
access thereto) pursuant to which Borrower is or will be a lessee,
any license agreement and/or mortgage waivers or warehouse
agreements requested by Atec, with respect to each such lease in
form and substance acceptable to Atec, along with evidence
satisfactory to Atec indicating that the leases have been properly
assumed and assigned to Borrower pursuant to the Final Financing
Order.
(k) PROJECTIONS. Financial projections of the business of Borrower in
form and substance acceptable to Atec.
(l) INVENTORY CERTIFICATION. Inventory Certifications in form and
substance acceptable to Atec.
(m) OTHER DOCUMENTS. Such other documents and opinions as Atec may
reasonably request.
4.2. ADDITIONAL CONDITIONS PRECEDENT. The obligations of Atec to make
each Advance, including the initial Advance under the Revolving Loan shall be
subject to the further conditions precedent that on the date of each such
Advance:
(a) REPRESENTATIONS AND WARRANTIES, All of the representations and
warranties contained in this DIP Loan Agreement and the other Loan
Documents or otherwise made in writing by Borrower are true and
correct in all material respects, on and as of the date of such
Advance, as the case may be, as though
18
made on and as of such date, except to the extent that such
representations and warranties relate solely to an earlier date
in which event they shall be true and correct as of such
earlier date.
(b) NO DEFAULT. No event has occurred and continues which would result
from such Advance, which constitutes a Default or an Event of
Default or would constitute an Event of Default but for any
requirement that notice be given or time elapse or both.
(c) FINAL FINANCING ORDER AND INTERIM ORDER. The Final Financing Order
shall be in full force and effect and shall not have been
appealed, reversed, vacated, modified, amended, or stayed in any
respect. However, the Atec shall advance funds upon entry of the
Interim Order or the Final Financing Order, if the DIP Loan
Agreement and related documents are fully completed and executed,
and Borrower has met the conditions contained in such documents to
Atec's satisfaction.
(d) NO MATERIAL CHANGE. No material adverse change in the business,
assets, results of operations or condition of Borrower taken as a
whole which, in the determination of Atec, applying commercially
reasonable standards, materially adversely affects (or could
reasonably be expected to materially adversely affect) the
prospect of repayment of the Obligations, shall have occurred
since the date of execution of this DIP Loan Agreement, A change
of the makeup of Key Officers without the prior notice and consent
of Atec shall constitute a material adverse change as that term is
used in this paragraph.
(e) CASH MANAGEMENT SYSTEM. Borrower has established cash management
systems satisfactory to Atec and such cash management systems are
operating to the satisfaction of Atec.
(f) INVENTORY. Atec shall be satisfied that the Inventory of
Borrower is located at such places and is in the amounts
represented by Borrower.
(g) OTHER BANKS. Atec has received written evidence, satisfactory to
Atec that Borrower has sent to each of its depository banks a
notice, advising such banks and financial institutions of Atec's
first priority Security Interest in funds deposited in such
accounts.
(h) DOCUMENTATION. All other documents in connection with the
transactions contemplated by this DIP Loan Agreement shall have
been delivered and executed or recorded in form and substance
satisfactory to Atec.
5. REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants to Atec as follows:
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5.1. CORPORATE EXISTENCE AND POWER; NAME; CHIEF EXECUTIVE OFFICE;
INVENTORY AND EQUIPMENT LOCATIONS. Borrower is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of Delaware,
and is duly licensed or qualified to transact business in all jurisdictions
where the character of the property owned or leased or the nature of the
business transacted by it makes such licensing or qualification necessary.
Borrower has all requisite power and authority, corporate or otherwise, to
conduct its business, to own its properties and to execute and deliver, and to
perform all of its obligations under, the Loan Documents. During its corporate
existence, Borrower has done business solely under the name Nexar Technologies,
Inc. The chief executive office and principal place of business of Borrower is
located at the address set forth in the first page of this DIP Loan Agreement,
and all of Borrower's records relating to its business or the Collateral are
kept at that location. All Inventory and Equipment is located at that location
or at one of the other locations set forth in EXHIBIT B hereto.
5.2. QUALIFICATION. Borrower is in good standing and is qualified to do
business in all states and locations where qualifications are necessary and
failure to so qualify would preclude it from enforcing its rights with respect
to any material asset, expose it to any material liability or have a material
adverse effect on its business.
5.3. TITLE TO ASSETS. Except for Permitted Liens and the Security
Interests granted to Atec hereunder, Borrower has good and marketable title to
all of its property and assets free and clear of all other Security Interests.
5.4. PRIORITY SECURITY INTERESTS. Pursuant to the Interim Order and
the Final Financing Order, the Security Interests granted to Atec hereunder
shall have priority over all other Security Interests in the Collateral.
5.5. LEGAL AGREEMENTS. This DIP Loan Agreement and the other Loan
Documents, upon execution by the respective parties, will constitute the legal,
valid and binding obligations of Borrower, enforceable in accordance with their
respective terms.
5.6. FINANCIAL STATEMENTS. The financial statements and notes prepared
by Borrower for Borrower's fiscal year ended , which
Borrower has furnished to Atec, including all schedules and notes pertaining
thereto, were prepared in accordance with GAAP consistently applied, and fully
and fairly present the financial condition of Borrower on the dates thereof and
the results of its operations for the periods covered thereby.
5.7. NO ADVERSE CHANGE There has been no material adverse change in the
assets acquired by Borrower since the inventory statement dated
furnished to Atec by Borrower.
5.8. TAXES. Borrower has filed all required tax returns, has paid all
due and payable taxes, including without limitation payroll, real and personal
property taxes, sales taxes, assessments and other governmental charges levied
or imposed upon it or upon its income or profits or upon any of its property,
and has made adequate provision for the payment of such taxes, assessments and
other charges accruing but not yet due and payable.
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5.9. LITIGATION. There is no pending or overtly threatened notice,
claim, litigation. proceeding or investigation against or affecting Borrower or
any property of Borrower, whether or not covered by insurance, that would have a
material adverse effect on the financial condition, business, prospects,
property or operations of Borrower, and there is no basis for any such order,
notice, claim, litigation, proceedings or investigation, except as identified on
SCHEDULE 5.9.
5.10. MARGIN STOCK. Borrower, is not engaged in the business of
extending credit for the purpose of purchasing or carrying margin stock (within
the meaning of Regulation U of the Board of Governors of the Federal Reserve
System), and no part of the proceeds of the Revolving Loan will be used to
purchase or carry any margin stock or to extend credit to others for the purpose
of purchasing or carrying any margin stock.
5.11. NO STOCK OR SECURITIES. Borrower owns no shares of stock or
securities of any non-governmental entity.
5.12. INVESTMENT COMPANY ACT. Borrower is not nor will not, during the
term of this DIP Loan Agreement be, (a) an "investment company" or a company
"controlled" by an "investment company", within the meaning of the Investment
Company Act of 1940, as amended or (b) subject to regulation under the Public
Utility Holding Company Act of 1935, the Federal Power Act or any foreign,
federal or local statute, or regulation limiting its ability to incur
indebtedness for money borrowed.
5.13. ERISA.
(a) To the best of Borrower's knowledge Borrower is in compliance in
all material respects with the provisions of ERISA, the Internal
Revenue Code applicable to employee benefit plans and other plans
covered by Title IV of ERISA, and the regulations and published
interpretations thereunder, if any, which are applicable to it;
(b) As of the date hereof, Borrower has not, with respect to any plan
established or maintained by it, engaged in a prohibited
transaction which would subject it to a material tax or penalty or
prohibited transactions imposed by ERISA or Section 4975 of the
Internal Revenue Code.
(c) No liability to the PBGC (other than liability for premiums to be
paid in the normal course) that is material to Borrower has been
or to Borrowers knowledge is reasonably expected to be incurred
with respect to the plans and, except with respect to any plan
which is a multi-employer plan within the meaning of Section 3(37)
of ERISA (a "Multi-Employer Plan"), there has been no Reportable
Event and no other event or condition that presents a material
risk of termination of a plan by the PBGC;
(d) Borrower has not engaged in any transaction which would result in
the incurring of a material liability under Section 4069 of ERISA;
and
(e) Borrower has not taken any action and no event has occurred with
respect to any Multi-Employer Plan which would subject Borrower to
liability under either
21
Section 4201 or 4204 or ERISA.
5.14 ENVIRONMENTAL LIABILITIES. Borrower, has not used, stored,
treated, transported, manufactured, retied, handled, produced or disposed of any
Hazardous Substances on, under, at, from, or in any way affecting any of their
respective properties or assets. in any manner which at the time of the action
in question materially violated any applicable Environmental Law governing the
use, storage, treatment transportation, manufacture, refinement, handling,
production or disposal of Hazardous Substances. To the best of Borrower's
knowledge, no prior owner of such property or asset or any tenant, subtenant,
prior tenant or prior subtenant thereof has used Hazardous Substances on, from
or affecting such property or asset, in any manner which at the time of the
action in question materially violated any applicable Environmental Law
governing the use, storage, treatment, transportation, manufacture, refinement,
handling, production or disposal of Hazardous Substances. There is no ongoing
federal, state, local or other governmental investigation, proceeding or
environmentally related problem relating to any of Borrower's properties or
assets, Borrower has received no notices or advice (written or oral) from any
Governments Authority of any non-compliance by Borrower with any Environmental
Law or of any investigation, proceeding or problem referred to in the
immediately preceding sentence.
5.15. PATENTS; LICENSES; INTELLECTUAL PROPERTY.
(a) All of the patents, trademarks, trade names, and other
Intellectual Property owned or licensed by Borrower as of date of
this DIP Loan Agreement are identified on Schedule 5.15, and there
are no other patents, trademarks, trade names or Intellectual
Property owned by Borrower or in which Borrower holds an interest.
All such assets identified on Schedule 5.15 are free and clear of
any Liens and other encumbrances except for the Security Interests
granted to Atec hereunder.
(b) Borrower owns and has pledged to Atec, all patents, trademarks,
trade names, copyrights, and other Intellectual Property necessary
to own and operate its business as heretofore operated by it
without conflict with the rights of other Persons.
5.16. INVENTORY LOCATIONS. None of Borrower's Inventory, except
Inventory in transit in the ordinary course of business, is located any place
other than as identified on SCHEDULE 5.16.
5.17. INSURANCE. All policies of insurance owned by or issued to
Borrower are identified (by type, amount of coverage, policy number and
insurance company) in SCHEDULE 5.17 and are in full force and effect as of the
date hereof and are of a nature and provide such coverage as is sufficient and
as is customarily carried by companies of the size and character of Borrower
consistent with industry practice.
5.18. STATEMENTS. All statements, written or oral, which Borrower has
made or provided to Atec in connection with any Loan Document, and financial
statements delivered on, (except to the extent that any such statements
constitute projections), taken as a whole, contain no untrue statement of a
material fact and do not omit stating a material fact necessary to make such
statements not misleading.
5.19. PROJECTIONS. The financial projections (the "Projections")
delivered to Atec on, along with the assumptions included therewith, were
prepared in good faith on the basis
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of assumptions, methods, data, tests and information believed by Borrower to
be valid and accurate at the time the Projections were provided to Atec.
Based upon the Projections, the financial accommodations being extended by
Atec hereunder are reasonable and adequate to meet Borrower's credit needs
during the term of this DIP Loan Agreement.
5.20. CONSIGNED GOODS. All goods title to which is held by a consignor
or concessionaire and which are in the possession of Borrower as of the date
hereof are identified in SCHEDULE 5.20 by type and location.
5.21. BORROWER'S LANDLORDS The name and correct address of each of
Borrower's landlords is listed on the attached SCHEDULE 5.21 and there are no
Borrower's landlords other than those set forth in SCHEDULE 5.21.
5.22. NO DEFAULT. No Event of Default has occurred and is continuing and
no event which would constitute an Event of Default but for the giving of notice
and lapse of time or both has occurred, and no such event or Event of Default
will occur as a result of the execution and delivery of this DIP Loan Agreement
and the other Loan Documents.
5.23. COMPLIANCE. Except to the extent that failure to comply could not
reasonably be expected to have a material adverse effect on Borrower, (i)
Borrower is in compliance with all applicable law, rules, regulations and
ordinances of any Governmental Authority having jurisdiction over its business
operations; and (ii) Borrower is in compliance with all contracts entered into
after the commencement of the Case to which it has become a party.
5.24. BUY-BACK AGREEMENTS. All buy-back agreements and other such
contracts and arrangements which Borrower has entered into with any of its
vendors are identified on SCHEDULE 5.24, and there are no other buy-back
agreements, agreements or arrangements in to which Borrower is a party.
5.25. LABOR/EMPLOYMENT MATTERS. Except as identified on SCHEDULE
5.25, as of the date of this DIP Loan Agreement (i) no employee of Borrower is a
member of a labor union, (ii) there is no strike or work stoppage in effect at
any of Borrower's retail stores, distribution centers or warehouses, and (iii)
Borrower has no knowledge of a pending or threatened strike or work stoppage at
any such location.
5.26. BANK ACCOUNTS. As of the date hereof, Borrower does not
maintain any bank account (whether general or special, time or demand,
provisional or final) other than those identified on SCHEDULE 5.26.
6. COVENANTS
AFFIRMATIVE COVENANTS
So long as any of the Obligations shall remain outstanding, and unless
Atec otherwise consents in writing, Borrower shall comply with the following
requirements:
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6.1. FINANCIAL STATEMENTS AND OTHER INFORMATION. Borrower shall deliver
to Atec, in form and substance acceptable to Atec:
(a) OTHER MONTHLY REPORTING. As soon as available and in any event
within twenty (20) days after the end of each fiscal month:
1. the balance sheet, a report of Inventory by location, an
aged listing of accounts payable, both pre-petition and
post-petition (or in lieu of such, a listing of all payables,
identified by vendor, over thirty (30) days past due) of
Borrower as of the end of such month and related statements of
income, retained earnings and cash flow of Borrower for such
month and for the year to date, including all supporting
schedules and notes, all in reasonable detail, prepared and
certified by the chief financial officer of Borrower to have
been prepared in accordance with GAAP applied on a basis
consistent with the accounting practices applied in the annual
financial statements previously furnished to Atec, subject
however to year-end audit adjustments, and
2. a written certification executed by the chief financial
officer of Borrower as to whether or not such chief financial
officer has knowledge of the occurrence of any Event of Default or
of any event not theretofore reported and remedied which would
constitute an Event of Default with notice or passage of time or
both and, if so, stating in reasonable detail the facts with
respect thereto.
(b) FISCAL YEAR END. Audited financial statements within one
hundred twenty (120) days after the end of Borrower's fiscal
year.
(c) LITIGATION. As promptly as practicable (but in any event no later
than two (2) Business Days for litigation affecting the ordinary
course of business) after any officer of Borrower obtains
knowledge thereof, written notice of all orders, notices, claims,
litigation, proceedings and investigations materially and
adversely effecting Borrower or any property of Borrower of the
type described in SECTION 5.9,
(d) DEFAULT. As promptly as practicable (but in any event no later
than five (5) Business Days) after any officer of Borrower obtains
knowledge of the occurrence of any event which constitutes an
Event of Default or would constitute an Event of Default with
notice or passage of time or both, written notice of such
occurrence to Atec together with a detailed statement by a
responsible officer of Borrower of the steps being taken by
Borrower to cure the effect of such event.
(e) AUTHORIZED PERSON REPORT. Upon execution hereof, Borrower shall
provide to Atec a certified list identifying the names and titles
of those individuals set forth in the definition of "Authorized
Person" in ARTICLE I a copy of which is set forth in Schedule
6.1(f). Hereafter, Borrower shall
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promptly notify Atec in writing of any and all changes to said
list.
(f) ACCOUNT VERIFICATION. Borrower will at any time and from time to
time upon request of Atec send requests for verification of
accounts or notices of assignment to account debtors and other
obligors.
(g) OTHER. Such other information respecting the financial
condition, business and property of Borrower as Atec may from
time to rime reasonably request.
6.2 BOOKS AND RECORDS Borrower shall keep accurate books and
records in which true and complete entries will be made in accordance with
GAAP consistently applied. Borrower shall at all times maintain its inventory
control system in place as of the date of this DIP Loan Agreement. Upon
reasonable notice and request by Atec, Borrower; during normal business
hours, shall give to any representative of Atec access to examine, copy and
make extracts from all books, records and other writings in its possession,
to inspect its property the Collateral, and to discuss its finances,
accounts, property and business with any of its officers. Upon such notice
and request, Borrower shall provide Atec with information sufficient for Atec
to conduct its own audit and Borrower shall assume the expenses of each such
audit. Atec agrees to limit the number of such audits to three per year so
long as Borrower is not in default.
6.3 TAXES AND OTHER CLAIMS. Borrower shall file when due all required
tax returns, shall pay when due all taxes, including without limitation payroll,
real and personal property taxes, sales taxes, assessments and other
governmental charges levied or imposed upon it or upon its income or profits or
upon any of its property and shall pay when due all law claims for labor;
materials and if unpaid, might become a lien or charge upon any property of
Borrower; provided that Borrower shall not be required to pay any such tax
assessment, charge or claim whose amount, applicability or validity is being
contested by Borrower in good faith in appropriate proceedings, provided that
adequate reserve has been set aside for the amount in question.
6.4 MAINTENANCE OF PROPERTIES. Borrower shall keep and maintain all of
its Inventory Equipment, and all other property necessary or useful in its
business in good condition and repair, normal wear and tear excepted, and shall
pay when due all rental payments, if any, due on such property.
6.5 INSURANCE. Borrower shall maintain existing insurance to the
extent of Atec's interests, insurance with insurers which are reasonably
acceptable to Atec, in such amounts and with such coverage (including, without
limitation, public liability insurance, business interruption, fire, hazard and
extended coverage insurance on all other coverage as are consistent with
industry practice) as are reasonably acceptable to Atec. Borrower shall cause
all insurance policies to contain a provision whereby they cannot be canceled
except after thirty (30) days' written notice to Atec. In the event Borrower
fails to pay any premium on any such insurance, Atec may do so (but shall not be
obligated to do so), and Borrower shall reimburse Atec for any
25
such payment on demand. Borrower hereby authorizes Atec, to the extent that
Borrower does not make such reimbursements timely, to make an Advance,
subject to availability, in the amount of such unpaid reimbursements and
apply the same thereto. Borrower shall cause all such policies to contain a
separate standard lender's loss payable clause, to the extent of Atec's
collateral.
6.6. CORPORATE EXISTENCE AND LICENSES. Borrower shall preserve and
maintain its corporate existence and all of its rights, privileges, licenses
including permits and franchises, and shall comply in all material respects with
all applicable laws, regulations and ordinances, including without limitation
Environmental Laws and laws relating to ERISA, applicable to Borrower, the
operation of its business and such permits and licenses necessary for its
business.
6.7. PHYSICAL TEST COUNTS. Borrower shall permit at any time before or
after regular business hours (upon advance reasonable notice to Borrower) any
third party test counting agency experienced in the industry designated by Atec,
access to its location for the purpose of conducting physical test counts.
6.8. FINANCIAL COVENANTS.
(a) In lieu of other financial covenants Borrower agrees to achieve
the following benchmarks:
1. Obtain court approval of a Disclosure Statement by May 15,
1999; and
2. Obtain confirmation of its Plan of Reorganization by June
30, 1999.
6.9. USE OF PROCEEDS. Borrower shall use the proceeds of this Credit
for working capital, and general corporate purposes.
NEGATIVE COVENANTS
So long as any of the Obligations shall remain outstanding, and unless
Atec otherwise agrees in writing, Borrower shall comply with the following
requirements:
6.10. LIENS. Borrower shall not treat; incur or permit to exist in favor
of any Person (other than Security Interests in favor of Atec and Permitted
Liens) any Security Interest in any of its property now owned or hereafter
acquired.
6.11. INDEBTEDNESS: GUARANTIES.
(a) Borrower shall not incur or permit to remain outstanding any
indebtedness or liability on account of deposits or advances or
any indebtedness for borrowed money or any other indebtedness or
liability evidenced by notes, bonds, debentures or similar
obligations except: (i) the Obligations in favor of Atec, and (ii)
indebtedness identified on SCHEDULE 6.11.
(b) Borrower shall not guarantee, endorse, assume or otherwise become
directly or contingently liable in connection with any obligation
of any other Person, except by the endorsement of negotiable
instruments by Borrower for deposit or collection
26
or similar transactions in the ordinary course of business.
6.12. SALE OF ASSETS. Borrower shall not sell, lease, assign, transfer
or otherwise dispose of all or a substantial part of its assets (whether in one
transaction or in a series of transactions) to any Person unless the Obligations
shall be paid in full.
6.13. INVESTMENTS. Borrower shall not purchase or hold beneficially any
shares of stock or other securities or evidences of Indebtedness of, or make any
investment or acquire any interest whatsoever in, any other Person.
6.14. SALE AND LEASEBACK. Borrower shall not enter into any
arrangement, directly or indirectly, with any other Person whereby Borrower
shall sell or transfer any real or personal property and then or thereafter rent
or lease as lessee such property or any part thereof or any other property which
Borrower intends to use for substantially the same purpose as the property being
sold or transferred.
6.16. MAINTENANCE OF ACCOUNTS. Borrower shall maintain all Atec accounts
at institutions acceptable to Atec. A list identifying all of its accounts and
the financial institutions at which such accounts are maintained is set forth in
SCHEDULE 6.16. Borrower shall notify Atec in writing of any changes in and
additions to such list as soon as any change or addition occurs.
6.17. INTERIM ORDER AND FINAL FINANCING ORDER. Borrower shall not
violate nor shall Borrower seek to modify appeal or otherwise affect, without
the consent of Atec, the terms of the Interim Order or the Final Financing
Order.
6.18. DIVIDENDS: CAPITAL STOCK. Borrower shall not declare or pay,
directly or indirectly, any dividends or make any other distribution or payment,
whether in cash, property, securities or a combination thereof, with respect to
(whether by reduction of capital or otherwise) any shares of capital stock (or
any options, warrants, rights or other equity securities or agreements relating
to any capital stock), or set apart any sum for the aforesaid purposes.
6.19. BUSINESS. Borrower shall not engage in business other than the
manufacturing of upgradable personal computers.
6.20. CONSOLIDATION AND MERGER: ASSET ACQUISITIONS. The Borrower will
not consolidate with or merge into any Person, or permit any other Person to
merge into it, or acquire (in a transaction analogous in purpose or effect to a
consolidation or merger) all or substantially all the assets of any other
Person.
6.21. RESTRICTIONS ON ACQUISITIONS The Borrower will not purchase, lease
or otherwise acquire assets not related to its business.
6.22. ACCOUNTING. The Borrower will not adopt any material change in
accounting principles other than as required by generally accepted accounting
principles. The Borrower will not adopt, permit or consent to any change in its
fiscal year.
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6.23. PLACE OF BUSINESS: NAME. Without notice and prior consent of Atec,
Borrower will not transfer its principal place of business, or move, relocate,
close or sell any business location; will not permit any tangible Collateral or
any records pertaining to the Collateral to be located in any state or area in
which, in the event of such location, a financing statement covering such
Collateral would be required to be, but has not in fact been, filed in order to
perfect the Security Interests; and will not change its name.
6.24. SALARIES. The Borrower will not increase the salary, bonus,
commissions, consultant fees or other compensation of any director, officer or
consultant, or any member of their families, by more than ten percent (10%) in
any one year, either individually or for all such person in the aggregate, or
pay any such increase from any source other than profits earned in the year of
payment.
6.25. CHANGE IN OWNERSHIP. The Borrower will not issue or sell (but can
issue stock options to employees) any stock of the Borrower so as to change the
percentage of voting and nonvoting stock owned by each of the Borrowers
shareholders, and it shall be an Event of Default if there is a change in
majority ownership of the company without five days' prior notice to Atec.
6.26. CHANGE IN MANAGEMENT. The Borrower will not replace or terminate
any Key Officer of Borrower without the prior notice and consent of Atec.
6.27. POINT OF SALE EQUIPMENT Borrower shall not permit any material
adverse change, as determined by Atec, to occur with respect to the point of
sale equipment if any, or to occur with respect to the lease arrangements, if
any, for such equipment.
6.28. NO DISTRIBUTIONS. Except compensation and benefits (e.g., medical
and retirement) and expense reimbursements paid in the ordinary course of
business, and as permitted by Section 6.24, Borrower shall not make payments of
indebtedness or other distributions to officers or shareholders.
6.29. CONSIGNED GOODS. Borrower shall not, without providing Atec with
twenty (20) Business Days' prior notice, maintain consigned goods at any
locations other than those listed in SCHEDULE 5.20 or hold types of consigned
goods other than those listed in SCHEDULE 5.20.
7. EVENTS OF DEFAULT, RIGHTS, AND REMEDIES
7.1. EVENTS OF DEFAULT. The occurrence of any of the following events,
following written notice from Atec to Borrower (where such notice would not
unreasonably jeopardize Atec's ability to maintain its collateral position) of a
default, and Borrower's failure to cure such default within five days after
receipt of such notice (by facsimile or otherwise) shall constitute an "Event of
Default", unless Atec in writing otherwise consents:
(a) NON-PAYMENT AT MATURITY. Failure by Borrower to pay in full in
cash the Obligations on the Maturity Date; or
(b) NON-PAYMENT. Failure by Borrower to pay in full any of the
Obligations other than the Obligations due on the Maturity Date;
or
28
(c) MISREPRESENTATION. Any written statement, representation or
warranty of Borrower (or any officer of Borrower) to Atec at any
time, including without limitation any statement, representation
or warranty made in this DIP Loan Agreement or in any writing
contemplated by this DIP Loan Agreement, shall prove to have been
incorrect or misleading in any material respect when made; or
(d) NON-PAYMENT OF TAXES. Failure by Borrower to make the payments
required by SECTION 5.8; or
(e) NON-PAYMENT OF OTHER INDEBTEDNESS. A default under any other bond,
debenture, note or other evidence of Indebtedness of Borrower
(except for debts reasonably in dispute), or under any indenture
or other writing except for Indebtedness incurred by Borrower
prior to the commencement of the Case; or
(f) PENSION PLAN. Occurrence of a "Reportable Event" (as described in
Section 4043(b) of ERISA) relating to a failure to meet minimum
finding standards or an inability to pay benefits when due shall
have occurred with respect to any plan under the control of
Borrower or any affiliate thereof and shall not have been remedied
within thirty (30) days after the occurrence of such Reportable
Event or a trustee shall be appointed by a United States District
Court to administer such plan, or the PBGC shall institute
proceedings to terminate such plan and any of the foregoing will
result in a liability of Borrower; or
(g) FINAL FINANCING ORDER. Except with Atec's written consent, entry
of an order of the Bankruptcy Court modifying, amending,
reversing, vacating or staying the Interim Order or the Final
Financing Order, or Borrower shall violate the terms of the
Interim Order or the Final Financing Order; or
(h) INVALIDITY ASSERTION. Assertion by Borrower in any pleading filed
in any court asserting that any material provision in any of the
Loan Documents is invalid or not binding on Borrower; or
(i) NON-COMPLIANCE. Default or failure by Borrower in the performance
of, or breach of, any other covenant or agreement of Borrower in
this DIP Loan Agreement.
(j) NON-PAYMENT OF RENT. Failure by Borrower to make any postpetition
rent payment, before such payment becomes a default under such
lease, shall constitute an immediate Event of Default. Upon such
default, Atec shall have the immediate right to pay such rent, add
such payment to the existing Indebtedness and advance funds to
repay such Indebtedness.
7.2. NOTICE BY BORROWER. As required by SECTION 6.1(E), Borrower shall
provide Atec with written notice of the occurrence of an Event of Default.
7.3. RIGHTS AND REMEDIES. UPON THE OCCURRENCE OF AN EVENT OF DEFAULT,
AND AT ANY TIME THEREAFTER DURING THE CONTINUANCE OF SUCH EVENT, AND AFTER
GIVING FIVE (5) DAYS WRITTEN NOTICE TO BORROWER AND BORROWER HAS FAILED TO CURE
SAID DEFAULT, WITHIN THE FIVE (5) DAY PERIOD, AND WITHOUT FURTHER ORDER OF OR
APPLICATION TO THE BANKRUPTCY COURT TO HAVE THE AUTOMATIC STAY IMPOSED BY
SECTION 362 OF THE BANKRUPTCY COURT MODIFIED OR LIFTED, ATEC
29
MAY TAKE ANY OR ALL OF THE FOLLOWING ACTIONS AT THE SAME OR DIFFERENT TIMES,
ALL OF WHICH ARE CUMULATIVE AND NON-EXCLUSIVE:
(a) TERMINATE THE CREDIT AND THE COMMITMENT TO LEND EXTENDED UNDER
THIS DIP LOAN AGREEMENT;
(b) DECLARE THE OBLIGATIONS TO BE FORTHWITH DUE AND PAYABLE, WHEREUPON
THE SAME SHALL BECOME AND BE FORTHWITH DUE AND PAYABLE, WITHOUT
PRESENTMENT, DEMAND, PROTEST, NOTICE OF ACCELERATION, NOTICE OF
INTENT TO ACCELERATE OR OTHER NOTICE OF ANY KIND, ALL OF WHICH ARE
HEREBY EXPRESSLY WAIVED, ANYTHING IN THIS DIP LOAN AGREEMENT TO
THE CONTRARY NOTWITHSTANDING;
(c) SET OFF AND APPLY, TO THE FULLEST EXTENT PERMITTED BY LAW AND
WITHOUT FURTHER ORDER OF OR APPLICATION TO THE BANKRUPTCY COURT,
ANY AND ALL DEPOSIT ACCOUNTS (GENERAL OR SPECIAL, TIME OR DEMAND,
PROVISIONAL OR FINAL) AT ANY TIME HELD AND ANY OTHER INDEBTEDNESS
AT ANY TIME OWING BY ATEC TO OR FOR THE CREDIT OR THE ACCOUNT OF
BORROWER AGAINST ANY AND ALL OF THE OBLIGATIONS, WHETHER OR NOT
ANY DEMAND HAS BEEN MADE UNDER THE LOAN DOCUMENTS AND ALTHOUGH
SUCH OBLIGATIONS MAY NOT HAVE MATURED;
(d) EXERCISE ANY AND ALL RIGHTS OR REMEDIES CONTAINED IN THIS DIP LOAN
AGREEMENT OR ANY LOAN DOCUMENT;
(e) EXERCISE ANY AND ALL RIGHTS AND REMEDIES AVAILABLE TO ATEC UNDER
THE UNIFORM COMMERCIAL CODE AND ALLY OTHER APPLICABLE LAW; AND
(f) EXERCISE ANY AND ALL RIGHTS CONFERRED IN THE INTERIM ORDER AND
FINAL FINANCING ORDER OR IN ANY OTHER DOCUMENTS OR AGREEMENTS
BORROWER HAS EXECUTED AND DELIVERED TO ATEC.
7.4. APPLICATION OF PROCEEDS ON DEFAULT. Upon the occurrence of an
Event of Default, the balances in the Collateral Account, all other proceeds
from the Collateral, and all proceeds from any sale of the Collateral pursuant
hereto shall be applied to the outstanding Obligations as set forth in the
Interim Order and Final Financing Order at Atec's sole and absolute discretion.
Any amounts remaining after such payment in full shall be remitted to Borrower.
7.5. FINANCING STATEMENTS: DIRECT PAYMENTS; CONFIRMATION OF RECEIVABLES
AND AUDIT RIGHTS. Borrower hereby authorizes Atec to file UCC financing
statements and any amendments thereto or continuations thereof and any other
appropriate security documents or instruments and to give any notices necessary
or desirable to perfect the Lien of Atec in the Collateral, in all cases without
the signatures of Borrower or with the signature by Atec as attorney-in-fact for
Borrower. Atec will provide Borrower with notice simultaneously with any such
filings made or notices given by Atec, however; failure by Atec to provide such
notice to Borrower shall not affect the validity of such filings or notices.
Borrower further authorizes Atec (i) upon the occurrence of and during the
continuance of, an Event of Default, to notify any account debtors or parties
to any Receivables Agreement that all sums payable to Borrower relating to the
Collateral shall be paid directly to Atec and to confirm with any account
debtors or parties to any Receivables Agreement the amounts payable by them to
Borrower with regard to the Collateral and (ii) to participate with Borrower in
the audits of its account debtors.
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8. MISCELLANEOUS
8.1. WAIVER AND AMENDMENT No provision of this DIP Loan Agreement or
any Loan Document or writing contemplated hereby can be waived, modified,
amended, abridged. supplemented or terminated, except by a writing executed by
Atec. A waiver shall be effective only in the specific instance and for the
specific purpose given and only if in a writing signed by Atec. No delay or
failure by Atec to exercise any right or remedy shall be a waiver thereof, nor
shall any single or partial exercise by Atec of any right or remedy preclude any
other exercise thereof or the exercise of any other right or remedy. All rights
and remedies of Atec under this DIP Loan Agreement and any other writing are
cumulative and not exclusive.
8.2. COSTS AND EXPENSES. WHETHER OR NOT THE TRANSACTIONS CONTEMPLATED
BY THIS DIP LOAN AGREEMENT SHALL BE CONSUMMATED, BORROWER SHALL PAY, OR SHALL
REIMBURSE ATEC FOR, ALL EXPENSES, INCLUDING WITHOUT LIMITATION THE REASONABLE
FEES AND DISBURSEMENTS OF PLATZER, SWERGOLD, KARLIN, LEVINE, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇,
OR SUCH OTHER COUNSEL, EMPLOYED BY ATEC, IN CONNECTION WITH THE PERFORMANCE,
COLLECTION AND ENFORCEMENT OF THE OBLIGATIONS AND ALL SUCH DOCUMENTS AND
AGREEMENTS FOR THE PROTECTION, SATISFACTION, FORECLOSURE OR ENFORCEMENT OF THE
SECURITY INTERESTS IN FAVOR OF ATEC. SUCH PAYMENTS SHALL BE PAID WHEN DUE. IF
BORROWER DOES NOT OBJECT, IN WRITING TO ATEC, AS TO THE REASONABLENESS OF SUCH
FEES AND EXPENSES WITHIN TWENTY (20) DAYS OF WHEN PAYMENTS ARE DUE, BORROWER
SHALL BE DEEMED TO HAVE WAIVED ANY SUCH OBJECTION. THE OBLIGATIONS OF BORROWER
UNDER THIS SECTION 8.2 SHALL SURVIVE THE TERMINATION OF THIS DIP LOAN AGREEMENT
AND THE PAYMENT OF ALL OF THE OBLIGATIONS OTHER THAN THOSE UNDER THIS SECTION
8.2.
8.3. ADDRESSES. All notices, requests, demands and other communications
provided for under this DIP Loan Agreement and the writings contemplated by this
DIP Loan Agreement shall be in writing and shall be delivered in person,
deposited in the mail postage prepaid, via overnight courier or by facsimile
addressed as follows:
IF TO BORROWER:
Nexar Technologies, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
President and Chief Operating Officer
WITH A COPY TO:
Robins ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇, LLP
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Fax no. ▇▇▇-▇▇▇-▇▇▇▇
IF TO ATEC:
ATEC Group, Inc.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
WITH A COPY TO:
Platzer, Swergold, Karlin, Levine, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, LLC.
▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇
▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
or, as to each party, at such other address as shall be designated by such party
in a written notice to the other party complying as to delivery with the terms
of this section. All such notices, requests, demands and other communications
shall be effective when actually delivered, deposited in the mail or with
overnight courier service or faxed, except that notices and requests to Atec
pursuant to Article 2 shall not be effective until received by Atec.
8.4. BINDING EFFECT AND ASSIGNMENT. This DIP Loan Agreement and the
other writings contemplated by this DIP Loan Agreement shall be binding upon and
inure to the benefit of the parties hereto and thereto and their respective
successors and assigns, except that Borrower shall have no right to assign any
of its rights hereunder or thereunder or any interest herein or therein without
the prior written consent of Atec. If any provision or application of this DIP
Loan Agreement, the Revolving Note or any other writing contemplated hereby is
held unlawful or unenforceable in any respect, such illegality or
unenforceability shall not affect the other provisions or applications which can
be given effect, and this DIP Loan Agreement and such writings shall be
construed as if the unlawful or unenforceable provision or application had never
been contained herein or therein or prescribed hereby or thereby.
8.5. PRIOR AGREEMENTS. This DIP Loan Agreement represents the entire
agreement of the parties with regard to the subject matter hereof and the terms
of any letters and other documentation entered into between Borrower and Atec
prior to the execution of this DIP Loan Agreement which relate to Advances shall
be replaced by the terms of this DIP Loan Agreement. Borrower acknowledges that
Borrower has no claim against Atec, its officers, directors, agents and
representatives, arising out of or relating to this DIP Loan Agreement or any
other agreements as of the date of this DIP Loan Agreement.
8.6. SURVIVAL OF AGREEMENT, REPRESENTATIONS, AND WARRANTIES, ETC. All
warranties, representations and covenants made herein by Borrower or in any
certificate or other instrument delivered by it or on its behalf in connection
with this DIP Loan Agreement shall be considered to have been relied upon by
Atec and shall survive the making of the Advances herein contemplated and the
issuance and delivery to Atec of the Revolving Note regardless of any
investigation made by Atec or on its behalf and shall continue in full force and
effect so long as any amount due or to become due hereunder is outstanding and
unpaid and so long as the Credit has not been terminated. All statements in any
such certificate or other instrument shall constitute representations and
warranties by Borrower.
8.7. HEADINGS. Article and Section headings in this DIP Loan Agreement
are for convenience of reference only, and shall not constitute a part of this
DIP Loan Agreement for any other purpose or a limitation of the scope of the
particular Articles or Sections to which they refer.
8.8 SEVERABILITY. ANY provision of this DIP Loan Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceable without
invalidating the remaining provisions hereof and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
8.9 EXECUTION IN COUNTERPARTS. This DIP Loan Agreement may be executed
in any number of counterparts, each of which shall constitute an original, but
all of which taken together shall constitute one and the same instrument.
8.10. FURTHER ASSURANCES. Whenever and so often as reasonably requested
by Atec,
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Borrower shall promptly execute and deliver or cause to be executed and
delivered all such other and further instruments, documents or assurances,
and promptly do or cause to be done all such other and further things as may
be necessary and reasonably required in order to further and more fully vest
in Atec all rights, interests, powers, benefits or privileges and advantages
conferred or intended to be conferred by this DIP Loan Agreement and the
other Loan Documents.
8.11. WAIVER OF JURY TRIAL. Each of Borrower and Atec hereby irrevocably
waives all right to trial by jury in any action, proceeding or counterclaim
arising cut of or relating to any of the Loan Documents or the transactions
contemplated thereby.
8.12. GOVERNING LAW. This DIP Loan Agreement, the Revolving Note and the
other Loan Documents shall be governed by and construed in accordance with the
laws of the State of New York.
8.13. MLBR 4001-2(C). Some of the proposed terms and conditions in this
DIP Loan Agreement vary from the requirements of MLBR 4001-2(c), and are
conspicuously and specifically set forth herein.
IN WITNESS WHEREOF, the parties have executed this DIP Loan Agreement on
the date first above written.
NEXAR TECHNOLOGIES, INC.
Borrower
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------
Title: Chief Executive Officer
ATEC GROUP, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------------
Title: President
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