Exhibit 10.37
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FIRST AMENDMENT TO
TERM LOAN A AND B AGREEMENT
Paragon Technologies, Inc., formerly
SI Handling Systems, Inc. and Ermanco Incorporated
000 Xxxxxxx Xxxx
Xxxxxx, Xxxxxxxxxxxx 00000
(Hereinafter referred to as "Borrower")
Wachovia Bank, National Association
000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxxx 00000
(Hereinafter referred to as "Bank")
THIS FIRST AMENDMENT TO TERM LOAN A AND B LOAN AGREEMENT is entered
into as of August 4, 2003 by and between Bank and Borrower.
RECITALS
Bank is the holder of a promissory note (Term Loan B) executed and
delivered by Borrower, dated June 5, 2003, in the original principal amount of
$2,012,500.00 (the "Note"); and certain other loan documents, including without
limitation, a Loan Agreement, dated June 5, 2003 (the "Loan Agreement").
Borrower and Bank have agreed to modify the terms of the Loan
Agreement.
In consideration of Bank's continued extension of credit and the
agreements contained herein, the parties agree as follows:
AGREEMENT
ACKNOWLEDGMENT OF BALANCE. Borrower acknowledges that the most recent Commercial
Loan Invoices sent to Borrower with respect to the Obligations under the Note is
correct.
MODIFICATIONS.
1. The Loan Agreement is hereby modified by deleting all references to
Term Loan A, the same having been paid and satisfied in its entirety.
2. The Loan Agreement is hereby modified by deleting the provision
regarding Minimum Liquidity.
3. The Loan Agreement is hereby modified by amending the provision
regarding Prepayment of Other Debt as follows:
Prepayment of Other Debt. Retire any long-term debt entered into prior to the
date of this Agreement at a date in advance of its legal obligation to do so;
provided, however, that (a) at any time without penalty or fee, Borrower may
prepay indebtedness to Bank, subject to the provisions set forth in the Note,
(b) at any time, Borrower may prepay indebtedness to former shareholders of
Ermanco Incorporated (the
"Subordinated Debt") so long as the outstanding principal amount of the
Subordinated Debt is not less than $1,500,000.00, (c) simultaneously with making
a $500,000.00 principal payment to Bank under the Note, as amended, Borrower may
also make a principal payment of $500,000.00 under the Subordinated Debt, and
thereafter, Borrower may make cash payments of interest only on the Subordinated
Debt provided that (i) Borrower is in full compliance with all Financial
Covenants as set forth herein, including without limitation, the Funds Flow
Coverage Ratio set forth herein, and (ii) said payments do not cause to exist
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, and (d) at any time after payment in full of the
obligations under the Note, Borrower may prepay all amounts of Subordinated Debt
then or thereafter outstanding.
4. Attached hereto as Exhibit "A" is a revised Compliance Certificate
which is hereby substituted for the prior Compliance Certificate in its
place and stead.
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. Xxxxxxx (SEAL)
-------------------------------------
Xxxxxxx X. Xxxxxxx, President
ERMANCO INCORPORATED
By: /s/ Xxxxxx X. Xxxxxxxx (SEAL)
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Xxxxxx X. Xxxxxxxx, Treasurer
WACHOVIA BANK, NATIONAL ASSOCIATION
By: /s/ Xxxxx Xxxx (SEAL)
-------------------------------------
Xxxxx Xxxx, Vice President
Exhibit A
Quarterly Compliance Certificate
Borrowers: Paragon Technologies, Inc. and Ermanco Incoporated
Account#______________
Wachovia Bank, National Association No. ________________
000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxxx 00000 Date ________________
I hereby certify that as of ___________ (the "effective date"), the Borrowers
are in full and complete compliance with all terms, conditions and covenants
contained in that certain Loan Agreement dated June 5, 2003, as amended, between
Wachovia Bank, National Association and the Borrowers and all Loan Documents as
referenced therein, as amended, including without limitation, the following
financial covenants:
1. Funds Flow Coverage Ratio for the subject quarter is _________ to 1.00, calculated as follows:
Quarterly earnings before interest expense, taxes, depreciation, amortization
and extraordinary gains (as defined by generally accepted
accounting principles) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $_______________
Minus quarterly earnings attributed to SI/XXXXX . . . . . . . . . . . . . . . . . . . . . . . . $_______________
Plus quarterly dividends distributed by SI/XXXXX . . . . . . . . . . . . . . . . . . . . . . . . $_______________
(a) Total . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $_______________
Current maturity of long-term debt due and payable for subject quarter . . . . . . . . . . . . . $_______________
Quarterly interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $_______________
(b) Total . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $_______________
(a) Divided by (b) = ________ to 1.00 [not less than 1.25 to 1.00]
2. Total Liabilities to Net Worth Ratio is ________ to 1.00, calculated as follows:
(a) Total Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $_______________
(b) Total Liabilities (excluding subordinated debt) . . . . . . . . . . . . . . . . . . . . . . . . $_______________
(c) Net Worth (a less b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $_______________
Total Liabilities (excluding subordinated debt) to Net Worth Ratio (b divided by c) is __________ to 1.00
[must be not more than 1.75 to 1.00]
3. Current Ratio is __________ to 1.00, calculated as follows:
(a) Current Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $_______________
(b) Current Liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $_______________
(a) Divided by (b) = ________ to 1.00 [must be not less than 1.20 to 1.00]
4. Borrower's Aggregate Debt
Borrower's Outstanding Debt (List)
Obligations to Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $_______________
Obligations to Other Institutional Lenders . . . . . . . . . . . . . . . . . . . . . . . . . . . $_______________
Obligations to Shareholders, Subsidiaries and Other Affiliates . . . . . . . . . . . . . . . . . $_______________
Capital Lease Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $_______________
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $_______________
(a) Total Outstanding Obligations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $_______________
Bank Obligations ($___________)
Subordinated Notes to former Ermanco shareholders ($__________)
[not to exceed $3,000,000.00]
(b) Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $_______________
(a) minus (b) = $________________ [not
to exceed $400,000.00]
I hereby certify to the best of the undersigned's knowledge, information, and
belief, this above financial information, as derived from each Borrower's
accounting records, as true and correct in all material respects, and that no
material adverse change in the financial condition of either Borrower has
occurred since the effective date of this certification.
PARAGON TECHNOLOGIES, INC.
By:__________________________________
Name:________________________________
Title:_______________________________
