EXHIBIT 10.28
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LOAN AGREEMENT
Wachovia Bank, National Association
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(Hereinafter referred to as the "Bank")
Paragon Technologies, Inc.
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Ermanco Incorporated
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(Individually and collectively "Borrower")
This Loan Agreement ("Agreement") is entered into August 6 , 2004, by
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and between Bank and Borrower.
This Agreement applies to the loan or loans (individually and collectively, the
"Loan") evidenced by one or more promissory notes of even date herewith or other
notes subject hereto, as modified from time to time (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 August 6 , 2004)
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plus the 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 solely to 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, 2005.
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
Borrower's 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 time. 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, unless there is an event of default, 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 . 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
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
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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 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.
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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/▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ (SEAL)
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, President/CEO
Ermanco Incorporated
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ (SEAL)
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Treasurer
Wachovia Bank, National Association
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ (SEAL)
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▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Vice President
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