Exhibit 10.35
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PROMISSORY NOTE
(Term Loan B)
$2,012,500.00
June 5, 2003
Paragon Technologies, Inc.
000 Xxxxxxx Xxxx
Xxxxxx, Xxxxxxxxxxxx 00000
(Hereinafter referred to as "Borrower")
Ermanco Incorporated
0000 Xxxxx Xxxxx Xxxx
Xxxxxx Xxxx, Xxxxxxxx 00000
(Individually and collectively "Borrower")
Wachovia Bank, National Association
000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxxx 00000
(Hereinafter referred to as "Bank")
Borrower promises to pay to the order of Bank, in lawful money of the United
States of America, at its office indicated above or wherever else Bank may
specify, the sum of Two Million Twelve Thousand Five Hundred and No/100 Dollars
($2,012,500.00) or such sum as may be advanced and outstanding from time to
time, with interest on the unpaid principal balance at the rate and on the terms
provided in this Promissory Note (including all renewals, extensions or
modifications hereof, this "Note").
LOAN AGREEMENT. This Note is subject to the provisions of that certain Loan
Agreement between Bank and Borrower of even date herewith, as modified from time
to time.
USE OF PROCEEDS. Borrower shall use the proceeds of the loan(s) evidenced by
this Note for the commercial purposes of Borrower, as follows: refinance of
existing debt.
SECURITY. Xxxxxxxx has granted Bank a security interest in the collateral
described in the Loan Documents, including, but not limited to, personal
property collateral described in those two (2) certain Security Agreements dated
September 30, 1999 and that certain Security Agreement executed
contemporaneously herewith.
INTEREST RATE. Interest shall accrue on the unpaid principal balance of this
Note during each Interest Period from the date hereof at a rate per annum equal
to 3-month LIBOR plus 2.65% ("Interest Rate"). The Interest Rate for each
Interest Period shall accrue each day during such Interest Period. "Interest
Period" means each calendar quarter; provided (i) the first Interest Period
shall commence on the date hereof and end on the first day thereafter that
interest is due, (ii) any Interest Period that ends in a month for which there
is no day which numerically corresponds to the last day of the immediately
preceding Interest Period shall end on the last day of the month and (iii) any
Interest Period that would otherwise extend past the maturity date of this Note
shall end on the maturity date of this Note. "LIBOR" means, with respect to each
Interest Period, the rate for U.S. dollar deposits with a maturity equal to the
number of months specified above, as reported on Telerate page 3750 as of 11:00
a.m., London time, on the second London business day before such Interest Period
begins (or if not so reported, then as determined by the Bank from another
recognized source or interbank quotation).
INDEMNIFICATION. Borrower shall indemnify Bank against Bank's loss or expense in
employing deposits as a consequence of Borrower's failure to make any payment
when due under this Note ("Indemnified Loss or Expense"). The amount of such
Indemnified Loss or Expense shall be determined
by Bank based upon the assumption that Bank funded 100% of that portion of the
loan in the London interbank market.
DEFAULT RATE. In addition to all other rights contained in this Note, if a
Default (as defined herein) occurs and as long as a Default continues, all
outstanding Obligations shall bear interest at the Interest Rate plus 3%
("Default Rate"). The Default Rate shall also apply from acceleration until the
Obligations or any judgment thereon is paid in full.
INTEREST AND FEE(S) COMPUTATION (ACTUAL/360). Interest and fees, if any, shall
be computed on the basis of a 360-day year for the actual number of days in the
applicable period ("Actual/360 Computation"). The Actual/360 Computation
determines the annual effective yield by taking the stated (nominal) rate for a
year's period and then dividing said rate by 360 to determine the daily periodic
rate to be applied for each day in the applicable period. Application of the
Actual/360 Computation produces an annualized effective interest rate exceeding
the nominal rate.
REQUIRED HEDGE. Borrower hedged this Note's floating interest expense by
entering into an interest rate swap (the "Swap") with Bank (or other
counterparty acceptable to Bank) contemporaneously with the closing of this
loan, pursuant to which Borrower shall receive the amount necessary to pay the
interest expense due under this loan (exclusive of default interest or other
adjustments provided for in the Loan Documents) and shall pay the amount that
would be equal to the interest that would accrue on this loan at a fixed rate.
Borrower shall maintain the Swap for the full amount and full term of this loan.
The Swap will be governed by an ISDA Master Agreement and shall be secured by
the collateral described in the Loan Documents.
PREPAYMENT. Borrower may prepay this loan in whole or in part without penalty,
except Borrower shall pay such additional amounts deemed necessary by Bank to
compensate Bank for any losses, costs or expenses which Bank may be deemed to
incur as a result of such prepayments pursuant to the compensation provisions
which shall be more fully set out in the ISDA Master Agreement for the Swap. Any
prepayment in whole or in part shall include accrued interest and all other sums
then due under any of the Loan Documents. No partial prepayment shall affect the
obligation of Borrower to make any payment of principal or interest due under
this Note on the due dates specified.
REPAYMENT TERMS. This Note shall be due and payable in consecutive quarterly
payments of principal of $287,500.00, plus accrued interest, commencing on June
30, 2003, and continuing on the same day of each third month thereafter until
fully paid. In any event, all principal and accrued interest shall be due and
payable on December 31, 2004.
AUTOMATIC DEBIT OF CHECKING ACCOUNT FOR LOAN PAYMENT. Borrower authorizes Bank
to debit demand deposit account number or any other account with
Bank (routing number) designated in writing by Borrower, beginning
June 30, 2003 for any payments due under this Note. Borrower further certifies
that Xxxxxxxx holds legitimate ownership of this account and preauthorizes this
periodic debit as part of its right under said ownership.
APPLICATION OF PAYMENTS. Monies received by Bank from any source for application
toward payment of the Obligations shall be applied to accrued interest and then
to principal. If a Default occurs, monies may be applied to the Obligations in
any manner or order deemed appropriate by Bank.
If any payment received by Bank under this Note or other Loan Documents is
rescinded, avoided or for any reason returned by Bank because of any adverse
claim or threatened action, the returned payment shall remain payable as an
obligation of all persons liable under this Note or other Loan Documents as
though such payment had not been made.
DEFINITIONS. Loan Documents. The term "Loan Documents", as used in this Note and
the other Loan Documents, refers to all documents executed in connection with or
related to the loan evidenced by this Note and any prior notes which evidence
all or any portion of the loan evidenced by this Note, and any
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letters of credit issued pursuant to any loan agreement to which this Note is
subject, any applications for such letters of credit and any other documents
executed in connection therewith or related thereto, and may include, without
limitation, a commitment letter that survives closing, a loan agreement, this
Note, guaranty agreements, security agreements, security instruments, financing
statements, mortgage instruments, any renewals or modifications, whenever any of
the foregoing are executed, but does not include swap agreements (as defined in
11 U.S.C. ss. 101). Obligations. The term "Obligations", as used in this Note
and the other Loan Documents, refers to any and all indebtedness and other
obligations under this Note, all other obligations under any other Loan
Document(s), and all obligations under any swap agreements (as defined in 11
U.S.C. ss. 101) between Xxxxxxxx and Bank whenever executed. Certain Other
Terms. All terms that are used but not otherwise defined in any of the Loan
Documents shall have the definitions provided in the Uniform Commercial Code.
LATE CHARGE. If any payments are not timely made, Borrower shall also pay to
Bank a late charge equal to 5% of each payment past due for 10 or more days.
Acceptance by Bank of any late payment without an accompanying late charge shall
not be deemed a waiver of Bank's right to collect such late charge or to collect
a late charge for any subsequent late payment received.
ATTORNEYS' FEES AND OTHER COLLECTION COSTS. Borrower shall pay all of Bank's
reasonable expenses incurred to enforce or collect any of the Obligations
including, without limitation, reasonable arbitration, paralegals', attorneys'
and experts' fees and expenses, whether incurred without the commencement of a
suit, in any trial, arbitration, or administrative proceeding, or in any
appellate or bankruptcy proceeding.
USURY. If at any time the effective interest rate under this Note would, but for
this paragraph, exceed the maximum lawful rate, the effective interest rate
under this Note shall be the maximum lawful rate, and any amount received by
Bank in excess of such rate shall be applied to principal and then to fees and
expenses, or, if no such amounts are owing, returned to Borrower.
DEFAULT. If any of the following occurs, a default ("Default") under this Note
shall exist: Nonpayment; Nonperformance. The failure of timely payment or
performance of the Obligations or Default under this Note or any other Loan
Documents. False Warranty. A warranty or representation made or deemed made in
the Loan Documents or furnished Bank in connection with the loan evidenced by
this Note proves materially false, or if of a continuing nature, becomes
materially false. Cross Default. At Bank's option, any default in payment or
performance of any obligation under any other loans, contracts or agreements of
Borrower, any Subsidiary or Affiliate of Borrower, any general partner of or the
holder(s) of the majority ownership interests of Borrower with Bank or its
affiliates ("Affiliate" shall have the meaning as defined in 11 U.S.C. ss. 101,
except that the term "Borrower" shall be substituted for the term "Debtor"
therein; "Subsidiary" shall mean any business in which Borrower holds, directly
or indirectly, a controlling interest). Cessation; Bankruptcy. The death of,
appointment of a guardian for, dissolution of, termination of existence of, loss
of good standing status by, appointment of a receiver for, assignment for the
benefit of creditors of, or commencement of any bankruptcy or insolvency
proceeding by or against Borrower, its Subsidiaries or Affiliates, if any, or
any general partner of or the holder(s) of the majority ownership interests of
Borrower, or any party to the Loan Documents. Material Capital Structure or
Business Alteration. Without prior written consent of Bank, (i) a material
alteration in the kind or type of Borrower's business or that of Borrower's
Subsidiaries or Affiliates, if any; (ii) the sale of substantially all of the
business or assets of Borrower, any of Borrower's Subsidiaries or Affiliates or
any guarantor, or a material portion (10% or more) of such business or assets if
such a sale is outside the ordinary course of business of Borrower, or any of
Borrower's Subsidiaries or Affiliates or any guarantor, or more than 50% of the
outstanding stock or voting power of or in any such entity in a single
transaction or a series of transactions; (iii) the acquisition of substantially
all of the business or assets or more than 50% of the outstanding stock or
voting power of any other entity; or (iv) should any Borrower or any of
Borrower's Subsidiaries or Affiliates or any guarantor enter into any merger or
consolidation.
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REMEDIES UPON DEFAULT. If a Default occurs under this Note or any Loan
Documents, Bank may at any time thereafter, take the following actions: Bank
Lien. Foreclose its security interest or lien against Xxxxxxxx's accounts
without notice. Acceleration Upon Default. Accelerate the maturity of this Note
and, at Bank's option, any or all other Obligations, other than Obligations
under any swap agreements (as defined in 11 U.S.C. ss. 101) between Borrower and
Bank, which shall be governed by the default and termination provisions of said
swap agreements; whereupon this Note and the accelerated Obligations shall be
immediately due and payable; provided, however, if the Default is based upon a
bankruptcy or insolvency proceeding commenced by or against Borrower or any
guarantor or endorser of this Note, all Obligations (other than Obligations
under any swap agreement as referenced above) shall automatically and
immediately be due and payable. Cumulative. Exercise any rights and remedies as
provided under the Note and other Loan Documents, or as provided by law or
equity.
FINANCIAL AND OTHER INFORMATION. Borrower shall deliver to Bank such information
as Bank may reasonably request from time to time, including without limitation,
financial statements and information pertaining to Borrower's financial
condition. Such information shall be true, complete, and accurate in all
materials respects.
CONFESSION OF JUDGMENT. THE FOLLOWING PARAGRAPH SETS FORTH A POWER OF AUTHORITY
FOR ANY ATTORNEY TO CONFESS JUDGMENT AGAINST XXXXXXXX. IN GRANTING THIS WARRANT
OF ATTORNEY TO CONFESS JUDGMENT AGAINST XXXXXXXX, THE BORROWER, FOLLOWING
CONSULTATION WITH (OR DECISION NOT TO CONSULT) SEPARATE COUNSEL FOR BORROWER AND
WITH KNOWLEDGE OF THE LEGAL EFFECT HEREOF, HEREBY KNOWINGLY, INTENTIONALLY,
VOLUNTARILY, INTELLIGENTLY AND UNCONDITIONALLY WAIVES ANY AND ALL RIGHTS THE
BORROWER HAS OR MAY HAVE TO PRIOR NOTICE AND AN OPPORTUNITY FOR HEARING UNDER
THE RESPECTIVE CONSTITUTIONS AND LAWS OF THE UNITED STATES OF AMERICA,
COMMONWEALTH OF PENNSYLVANIA, OR ELSEWHERE INCLUDING, WITHOUT LIMITATION, A
HEARING PRIOR TO GARNISHMENT AND ATTACHMENT OF THE BORROWER'S BANK ACCOUNT AND
OTHER ASSETS. XXXXXXXX ACKNOWLEDGES AND UNDERSTANDS THAT BY ENTERING INTO THIS
NOTE CONTAINING A CONFESSION OF JUDGMENT CLAUSE THAT XXXXXXXX IS VOLUNTARILY,
INTELLIGENTLY AND KNOWINGLY GIVING UP ANY AND ALL RIGHTS, INCLUDING
CONSTITUTIONAL RIGHTS, THAT XXXXXXXX HAS OR MAY HAVE TO NOTICE AND A HEARING
BEFORE JUDGMENT CAN BE ENTERED AGAINST BORROWER AND BEFORE THE BORROWER'S
ASSETS, INCLUDING, WITHOUT LIMITATION, ITS BANK ACCOUNTS, MAY BE GARNISHED,
LEVIED, EXECUTED UPON AND/OR ATTACHED. XXXXXXXX UNDERSTANDS THAT ANY SUCH
GARNISHMENT, LEVY, EXECUTION AND/OR ATTACHMENT SHALL RENDER THE PROPERTY
GARNISHED, LEVIED, EXECUTED UPON OR ATTACHED IMMEDIATELY UNAVAILABLE TO
BORROWER. IT IS SPECIFICALLY ACKNOWLEDGED BY BORROWER THAT THE BANK HAS RELIED
ON THIS WARRANT OF ATTORNEY AND THE RIGHTS WAIVED BY XXXXXXXX HEREIN IN
RECEIVING THIS NOTE AND AS AN INDUCEMENT TO GRANT FINANCIAL ACCOMMODATIONS TO
THE BORROWER.
If a Default occurs under this Note or any other Loan Documents, each Borrower
hereby jointly and severally authorizes and empowers any attorney of any court
of record or the prothonotary or clerk of any county in the Commonwealth of
Pennsylvania, or in any jurisdiction where permitted by law or the clerk of any
United States District Court, to appear for Borrower in any and all actions
which may be brought hereunder and enter and confess judgment against the
Borrower or any of them in favor of the Bank for such sums as are due or may
become due hereunder or under any other Loan Documents, together with costs of
suit and actual collection costs including, without limitation, reasonable
attorneys' fees but in no event less than $5,000.00, with or without
declaration, without prior notice, without stay of execution and with release of
all procedural errors and the right to issue executions forthwith. To the extent
permitted by law, Xxxxxxxx waives the right of inquisition on any real estate
levied on, voluntarily condemns the same, authorizes the prothonotary or clerk
to enter upon the writ of execution this voluntary condemnation and agrees that
such real estate may be sold on a writ of execution; and also waives any relief
from any appraisement, stay or exemption law of any state now in force or
hereafter enacted. Borrower further waives the right to any notice and hearing
prior to the execution, levy, attachment or other type of enforcement of any
judgment obtained hereunder, including, without limitation, the right to be
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notified and heard prior to the garnishment, levy, execution upon and attachment
of Xxxxxxxx's bank accounts and other property. If a copy of this Note verified
by affidavit of any officer of the Bank shall have been filed in such action, it
shall not be necessary to file the original thereof as a warrant of attorney,
any practice or usage to the contrary notwithstanding. The authority herein
granted to confess judgment shall not be exhausted by any single exercise
thereof, but shall continue and may be exercised from time to time as often as
the Bank shall find it necessary and desirable and at all times until full
payment of all amounts due hereunder and under any other Loan Documents. The
Bank may confess one or more judgments in the same or different jurisdictions
for all or any part of the Obligations arising hereunder or under any other Loan
Documents to which Xxxxxxxx is a party, without regard to whether judgment has
theretofore been confessed on more than one occasion for the same Obligations.
In the event that any judgment confessed against the Borrower is stricken or
opened upon application by or on behalf of Borrower or any obligor for any
reason, the Bank is hereby authorized and empowered to again appear for and
confess judgment against Borrower for any part or all of the Obligations owing
under this Note and/or for any other liabilities, as herein provided.
WAIVERS AND AMENDMENTS. No waivers, amendments or modifications of this Note and
other Loan Documents shall be valid unless in writing and signed by an officer
of Bank. No waiver by Bank of any Default shall operate as a waiver of any other
Default or the same Default on a future occasion. Neither the failure nor any
delay on the part of Bank in exercising any right, power, or remedy under this
Note and other Loan Documents shall operate as a waiver thereof, nor shall a
single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or remedy.
Each Borrower or any person liable under this Note waives presentment, protest,
notice of dishonor, demand for payment, notice of intention to accelerate
maturity, notice of acceleration of maturity, notice of sale and all other
notices of any kind. Further, each agrees that Bank may extend, modify or renew
this Note or make a novation of the loan evidenced by this Note for any period,
and grant any releases, compromises or indulgences with respect to any
collateral securing this Note, or with respect to any other Borrower or any
other person liable under this Note or other Loan Documents, all without notice
to or consent of each Borrower or each person who may be liable under this Note
or any other Loan Document and without affecting the liability of Borrower or
any person who may be liable under this Note or any other Loan Document.
MISCELLANEOUS PROVISIONS. Assignment. This Note and the other Loan Documents
shall inure to the benefit of and be binding upon the parties and their
respective heirs, legal representatives, successors and assigns. Bank's
interests in and rights under this Note and the other Loan Documents are freely
assignable, in whole or in part, by Bank. In addition, nothing in this Note or
any of the other Loan Documents shall prohibit Bank from pledging or assigning
this Note or any of the other Loan Documents or any interest therein to any
Federal Reserve Bank. Borrower shall not assign its rights and interest
hereunder without the prior written consent of Bank, and any attempt by Xxxxxxxx
to assign without Bank's prior written consent is null and void. Any assignment
shall not release Borrower from the Obligations. Applicable Law; Conflict
Between Documents. This Note and, unless otherwise provided in any other Loan
Document, the other Loan Documents shall be governed by and construed under the
laws of the state named in Bank's address on the first page hereof without
regard to that state's conflict of laws principles. If the terms of this Note
should conflict with the terms of any loan agreement or any commitment letter
that survives closing, the terms of this Note shall control. Xxxxxxxx's
Accounts. Except as prohibited by law, Borrower grants Bank a security interest
in all of Xxxxxxxx's accounts with Bank and any of its affiliates. Jurisdiction.
Borrower irrevocably agrees to non-exclusive personal jurisdiction in the state
named in Bank's address on the first page hereof. Severability. If any provision
of this Note or of the other Loan Documents shall be prohibited or invalid under
applicable law, such provision shall be ineffective but only to the extent of
such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Note or other such document.
Notices. Any notices to Borrower shall be sufficiently given, if in writing and
mailed or delivered to the Borrower's address shown above or such other address
as provided hereunder, and to Bank, if in writing and mailed or delivered to
Wachovia Bank, National Association, Mail Code VA7391, P. O. Box 00000, Xxxxxxx,
XX 00000 or Wachovia Bank, National Association, Mail Code VA7391, 00 Xxxxx
Xxxxxxxxx Xxxxxx, Xxxxxxx, XX 00000 or such other address as Bank may specify in
writing from time to time. Notices to Bank must
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include the mail code. In the event that Xxxxxxxx changes Xxxxxxxx's address at
any time prior to the date the Obligations are paid in full, Xxxxxxxx agrees to
promptly give written notice of said change of address by registered or
certified mail, return receipt requested, all charges prepaid. Plural; Captions.
All references in the Loan Documents to Borrower, guarantor, person, document or
other nouns of reference mean both the singular and plural form, as the case may
be, and the term "person" shall mean any individual, person or entity. The
captions contained in the Loan Documents are inserted for convenience only and
shall not affect the meaning or interpretation of the Loan Documents. Advances.
Bank may, in its sole discretion, make other advances which shall be deemed to
be advances under this Note, even though the stated principal amount of this
Note may be exceeded as a result thereof. Posting of Payments. All payments
received during normal banking hours after 2:00 p.m. local time at the office of
Bank first shown above shall be deemed received at the opening of the next
banking day. Joint and Several Obligations. Each person who signs this Note as a
Borrower (as defined herein) is jointly and severally obligated. Fees and Taxes.
Borrower shall promptly pay all documentary, intangible recordation and/or
similar taxes on this transaction whether assessed at closing or arising from
time to time.
WAIVER OF JURY TRIAL. TO THE EXTENT PERMITTED BY APPLICABLE LAW, BORROWER BY
EXECUTION HEREOF AND BANK BY ACCEPTANCE HEREOF, KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE ANY RIGHT THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION BASED ON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS NOTE,
THE LOAN DOCUMENTS OR ANY AGREEMENT CONTEMPLATED TO BE EXECUTED IN CONNECTION
WITH THIS NOTE, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER
VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY WITH RESPECT HERETO. THIS PROVISION
IS A MATERIAL INDUCEMENT TO BANK TO ACCEPT THIS NOTE.
XXXXXXXX AND BANK AGREE THAT THEY SHALL NOT HAVE A REMEDY OF INDIRECT,
CONSEQUENTIAL, PUNITIVE OR EXEMPLARY DAMAGES AGAINST THE OTHER IN ANY DISPUTE
AND HEREBY WAIVE ANY RIGHT OR CLAIM TO INDIRECT, CONSEQUENTIAL, PUNITIVE OR
EXEMPLARY DAMAGES THEY HAVE NOW OR WHICH MAY ARISE IN THE FUTURE IN CONNECTION
WITH ANY DISPUTE WHETHER THE DISPUTE IS RESOLVED BY ARBITRATION OR JUDICIALLY.
This Note, together with the Promissory Note (Term Loan A) of even date and in
like amount, amends, restates and supersedes in its entirety that certain
Promissory Note dated September 30, 1999, in the principal amount of
$14,000,000, as heretofore amended.
IN WITNESS WHEREOF, Xxxxxxxx, on the day and year first above written, has
caused this Note to be executed under seal.
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PLACE OF EXECUTION AND DELIVERY. Borrower hereby certifies that this Note and
the Loan Documents were executed in the Commonwealth of Pennsylvania and
delivered to Bank in the Commonwealth of Pennsylvania.
Paragon Technologies, Inc.
Taxpayer Identification Number:
By: /s/ Xxxxxxx X. Xxxxxxx (SEAL)
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Xxxxxxx X. Xxxxxxx, President
Ermanco Incorporated
Taxpayer Identification Number:
By: /s/ Xxxxxx X. Xxxxxxxx (SEAL)
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Name: Xxxxxx X. Xxxxxxxx
Title: Treasurer
