Exhibit 10.31
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LOAN AGREEMENT
Wachovia Bank, National Association
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
(Hereinafter referred to as the "Bank")
Paragon Technologies, Inc.
000 Xxxxxxx Xxxx
Xxxxxx, Xxxxxxxxxxxx 00000
Ermanco Incorporated
0000 Xxxxx Xxxxx Xxxx
Xxxxxx Xxxx, Xxxxxxxx 00000
(Individually and collectively "Borrower")
This Loan Agreement ("Agreement") is entered into /s/ June 20, 2005 by and
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between Bank and Borrower.
This Agreement amends and restates in its entirety that certain Loan Agreement
dated August 6, 2004 and applies to the loan or loans (individually and
collectively, the "Loan") evidenced by one or more promissory notes dated /s/
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June 20, 2005 or other notes subject hereto, as modified from time to time
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(whether one or more, the "Note"), the commercial letters of credit and standby
letters of credit issued hereunder (each, a "Letter of Credit" and collectively,
the "Letters of Credit") and all Loan Documents. The terms "Loan Documents" and
"Obligations," as used in this Agreement, are defined in the Note.
Relying upon the covenants, agreements, representations and warranties contained
in this Agreement, Bank is willing to extend credit to Borrower upon the terms
and subject to the conditions set forth herein, and Bank and Borrower agree as
follows:
LETTERS OF CREDIT. Upon the request of Borrower, Bank shall issue commercial
Letters of Credit and standby Letters of Credit, provided, the aggregate amount
available to be drawn under all commercial Letters of Credit plus the aggregate
amount of unreimbursed drawings under all commercial Letters of Credit at any
one time does not exceed $5,000,000.00, and the aggregate amount available to be
drawn under all standby Letters of Credit plus the aggregate amount of
unreimbursed drawings under all standby Letters of Credit at any one time does
not exceed $5,000,000.00, and further provided, no commercial Letter of Credit
shall expire more than 365 days after the date it is issued and no standby
Letter of Credit shall expire more than 365 days after the date it is issued.
Notwithstanding anything to the contrary contained herein, the aggregate
outstanding principal balance of Advances (as defined in the line of credit
Promissory Note in the amount of $5,000,000.00, dated /s/ June 20, 2005 plus the
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aggregate amount available to be drawn under all Letters of Credit plus the
aggregate amount of unreimbursed drawings under all Letters of Credit at any one
time shall not exceed $5,000,000.00. The Letters of Credit are to be used by
Borrower for any purpose. Bank's obligation to issue Letters of Credit shall
terminate if Borrower is in default (however denominated) under the Note or the
other Loan Documents, or in any case, if not sooner terminated, on June 30,
2006.
LETTER OF CREDIT FEES. Borrower shall pay to Bank, at such times as Bank shall
require, Bank's standard fees in connection with Letters of Credit, as in effect
from time to time, and with respect to standby Letters of Credit, an additional
fee equal to 1.00% per annum on the face amount of each standby Letter of
Credit, payable annually, in advance, for so long as such Letter of Credit is
outstanding.
REPRESENTATIONS.?Borrower represents that from the date of this Agreement and
until final payment in full of the Obligations: Accurate Information. All
information now and hereafter furnished to Bank is and will be true, correct and
complete. Any such information relating to Borrower's financial condition will
accurately reflect Borrower's financial condition as of the date(s) thereof,
(including all contingent liabilities of every type), and Borrower further
represents that its financial condition has not changed materially or adversely
since the date(s) of such documents. Authorization; Non-Contravention. The
execution, delivery and performance by Borrower and any guarantor, as
applicable, of this Agreement and other Loan Documents to which it is a party
are within its power, have been duly authorized as may be required and, if
necessary, by making appropriate filings with any governmental agency or unit
and are the legal, binding, valid and enforceable obligations of Borrower and
any guarantors; and do not (i) contravene, or constitute (with or without the
giving of notice or lapse of time or both) a violation of any provision of
applicable law, a violation of the organizational documents of Borrower or any
guarantor, or a default under any agreement, judgment, injunction, order, decree
or other instrument binding upon or affecting Borrower or any guarantor, (ii)
result in the creation or imposition of any lien (other than the lien(s) created
by the Loan Documents) on any of Borrowers or any guarantor's assets, or (iii)
give cause for the acceleration of any obligations of Borrower or any guarantor
to any other creditor. Asset Ownership. Borrower has good and marketable title
to all of the properties and assets reflected on the balance sheets and
financial statements supplied Bank by Borrower, and all such properties and
assets are free and clear of mortgages, security deeds, pledges, liens, charges,
and all other encumbrances, except as otherwise disclosed to Bank by Borrower in
writing and approved by Bank ("Permitted Liens"). To Borrower's knowledge, no
default has occurred under any Permitted Liens and no claims or interests
adverse to Borrower's present rights in its properties and assets have arisen.
Discharge of Liens and Taxes. Borrower has duly filed, paid and/or discharged
all taxes or other claims that may become a lien on any of its property or
assets, except to the extent that such items are being appropriately contested
in good faith and an adequate reserve for the payment thereof is being
maintained. Sufficiency of Capital. Borrower is not, and after consummation of
this Agreement and after giving effect to all indebtedness incurred and liens
created by Borrower in connection with the Note and any other Loan Documents,
will not be, insolvent within the meaning of 11 U.S.C. ss. 101, as in effect
from time to lime. Compliance with Laws. Borrower is in compliance in all
respects with all federal, state and local laws, rules and regulations
applicable to its properties, operations, business, and finances, including,
without limitation, any federal or state laws relating to liquor (including 18
U.S.C. ss. 3617, et seq.) or narcotics (including 21 U.S.C. ss. 801. et seq.)
and/or any commercial crimes; all applicable federal, state and local laws and
regulations intended to protect the environment; and the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), if applicable. Organization
and Authority. Each corporation, partnership or limited liability company
Borrower and/or guarantor, as applicable, is duly created, validly existing and
in good standing under the laws of the state of its organization, and has all
powers, governmental licenses, authorizations, consents and approvals required
to operate its business as now conducted. Each corporation, partnership or
limited liability company Borrower and/or guarantor, as applicable, is duly
qualified, licensed and in good standing in each jurisdiction where
qualification or licensing is required by the nature of its business or the
character and location of its property, business or customers, and in which the
failure to so qualify or be licensed, as the case may be, in the aggregate,
could have a material adverse effect on the business, financial position,
results of operations, properties or prospects of Borrower or any such
guarantor. No Litigation. There are no pending or threatened suits, claims or
demands against Borrower or any guarantor that have not been disclosed to Bank
by Borrower in writing, and approved by Bank.
AFFIRMATIVE COVENANTS. Borrower agrees that from the date hereof and until final
payment in full of the Obligations, unless Bank shall otherwise consent in
writing, Borrower will: Access to Books and Records. Allow Bank, or its agents,
during normal business hours, access to the books, records and such other
documents of Borrower as Bank shall reasonably require, and allow Bank, at
Bank's expense, to inspect, audit and examine the same and to make extracts
therefrom and to make copies thereof. Business Continuity. Conduct its business
in substantially the same manner and locations as such business is now and has
previously been conducted. Certificate of Full Compliance From Accountant.
Deliver to Bank, with the financial statements required herein, a certification
that Borrower is in full compliance with the Loan Documents. Compliance with
Other Agreements. Comply with all terms and conditions contained in this
Agreement, and any other Loan Documents, and swap
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agreements, if applicable, as defined in the 11 U.S.C. ss. 101, as in effect
from time to time. Estoppel Certificate. Furnish, within 15 days after request
by Bank, a written statement duly acknowledged of the amount due under the Loan
and identifying each outstanding Letter of Credit, if any, and whether offsets
or defenses exist against the Obligations. Insurance. Maintain adequate
insurance coverage with respect to its properties and business against loss or
damage of the kinds and in the amounts customarily insured against by companies
of established reputation engaged in the same or similar businesses including,
without limitation, commercial general liability insurance, workers compensation
insurance, and business interruption insurance; all acquired in such amounts and
from such companies as Bank may reasonably require. Maintain Properties.
Maintain, preserve and keep its property in good repair, working order and
condition, making all replacements, additions and improvements thereto necessary
for the proper conduct of its business, unless prohibited by the Loan Documents.
Notice of Default and Other Notices. (a) Notice of Default. Furnish to Bank
immediately upon becoming aware of the existence of any condition or event which
constitutes a Default (as defined in the Loan Documents) or any event which,
upon the giving of notice or lapse of time or both, may become a Default,
written notice specifying the nature and period of existence thereof and the
action which Borrower is taking or proposes to take with respect thereto. (b)
Other Notices. Promptly notify Bank in writing of (i) any material adverse
change in its financial condition or its business; (ii) any default under any
material agreement, contract or other instrument to which it is a party or by
which any of its properties are bound, or any acceleration of the maturity of
any indebtedness owing by Borrower; (iii) any material adverse claim against or
affecting Borrower or any part of its properties; (iv) the commencement of, and
any material determination in, any litigation with any third party or any
proceeding before any governmental agency or unit affecting Borrower; and (v) at
least 30 days prior thereto, any change in Borrower's name or address as shown
above, and/or any change in Borrower's structure. Other Financial Information.
Deliver promptly such other information regarding the operation, business
affairs, and financial condition of Borrower which Bank may reasonably request.
Payment of Debts. Pay and discharge when due, and before subject to penalty or
further charge, and otherwise satisfy before maturity or delinquency, all
obligations, debts, taxes, and liabilities of whatever nature or amount, except
those which Borrower in good faith disputes. Reports and Proxies. Deliver to
Bank, promptly, a copy of all financial statements, reports, notices, and proxy
statements, sent by Borrower to stockholders, and all regular or periodic
reports required to be filed by Borrower with any governmental agency or
authority.
NEGATIVE COVENANTS. Borrower agrees that from the date hereof and until final
payment in full of the Obligations, unless Bank shall otherwise consent in
writing, Borrower will not: Default on Other Contracts or Obligations. Default
on any material contract with or obligation when due to a third party or default
in the performance of any obligation to a third party incurred for money
borrowed. Government Intervention. Permit the assertion or making of any
seizure, vesting or intervention by or under authority of any governmental
entity, as a result of which the management of Borrower or any guarantor is
displaced of its authority in the conduct of its respective business or such
business is curtailed or materially impaired. Judgment Entered. Permit the entry
of any monetary judgment or the assessment against, the filing of any tax lien
against, or the issuance of any writ of garnishment or attachment against any
property of or debts due.
ANNUAL FINANCIAL STATEMENTS. Borrower shall deliver to Bank, within 120 days
after the close of each fiscal year, audited financial statements reflecting its
operations during such fiscal year, including, without limitation, a balance
sheet, profit and loss statement and statement of cash flows, with supporting
schedules and in reasonable detail, prepared in conformity with generally
accepted accounting principles, applied on a basis consistent with that of the
preceding year. If audited statements are required, all such statements shall be
examined by an independent certified public accountant acceptable to Bank. The
opinion of such independent certified public accountant shall not be acceptable
to Bank if qualified due to any limitations in scope imposed by Borrower or any
other person or entity. Any other qualification of the opinion by the accountant
shall render the acceptability of the financial statements subject to Bank's
approval.
PERIODIC FINANCIAL STATEMENTS.?Borrower shall deliver to Bank, within 75 days
after the end of each fiscal quarter, unaudited management-prepared quarterly
financial statements including, without limitation, a balance sheet, profit and
loss statement and statement of cash flows, with supporting
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schedules; all in reasonable detail and prepared in conformity with generally
accepted accounting principles, applied on a basis consistent with that of the
preceding year. Such statements shall be certified as to their correctness by a
principal financial officer of Borrower and in each case, if audited statements
are required, subject to audit and year-end adjustments.
CONDITIONS PRECEDENT.?The obligations of Bank to make the loan and any advances
and to issue any Letters of Credit pursuant to this Agreement are subject to the
following conditions precedent: Letter of Credit Documents. Receipt by Bank of
all documents required by Bank in connection with Letters of Credit, including
without limitation, applications therefor, all in form satisfactory to Bank.
Additional Documents. Receipt by Bank of such additional supporting documents as
Bank or its counsel may reasonably request.
IN WITNESS WHEREOF, Borrower and Bank, on the day and year first written above,
have caused this Agreement to be executed under seal.
Paragon Technologies, Inc.
By: /s/ Xxxxxxx X. Xxxxxxxx (SEAL)
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Xxxxxxx X. Xxxxxxxx, President/CEO
Ermanco Incorporated
By: /s/ Xxxxxx X. Xxxxxxxx (SEAL)
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Xxxxxx X. Xxxxxxxx, Treasurer
Wachovia Bank, National Association
By: /s/ Xxxxxxx Xxxxxxxx, Vice President (SEAL)
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Xxxxxxx Xxxxxxxx, Vice President
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