EXHIBIT 10.38
-------------
NINTH AMENDMENT TO
LINE OF CREDIT NOTE AND LOAN AGREEMENT
(LINE OF CREDIT)
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 NINTH AMENDMENT TO LINE OF CREDIT NOTE AND LOAN AGREEMENT is
entered into as of August 4, 2003 by and between Bank and Borrower.
RECITALS
Bank is the holder of a Line of Credit Note executed and delivered by
Borrower, dated September 30, 1999, in the original principal amount of
$6,000,000.00 (as amended, the "Note"); and certain other loan documents,
including without limitation, a Loan Agreement, dated September 30, 1999 (as
amended, the "Loan Agreement").
Borrower desires to make a principal payment of $500,000.00 under Term
Loan B dated June 5, 2003, as amended, and Borrower and Bank have agreed to
modify the terms of the Note and the Loan Agreement in connection therewith.
In consideration of the $500,000.00 principal payment under Term Loan B
dated June 5, 2003, as amended, and 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 Invoice sent to Borrower with respect to the Obligations under the Note is
correct.
MODIFICATIONS.
1. The Loan Agreement is hereby modified by deleting the provision
regarding Minimum Liquidity.
2. The Loan Agreement is hereby modified by amending the provision
regarding the Subordinated Debt as follows:
Subordinated Debt. 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. Simultaneously
with making a $500,000.00 payment of principal under Term Loan B dated
June 5, 2003, as amended, Borrower may also make a principal payment
of $500,000.00 under the Subordinated Debt. 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. At any time
after payment in full of the obligations under that Promissory Note
(Term Loan B) dated June 5, 2003, Borrower may prepay all amounts of
Subordinated Debt then or thereafter outstanding.
3. 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)
-------------------------------------
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 September 30, 1999, as amended,
between First Union National Bank, now 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:_______________________________
