FINANCING AGREEMENT
The CIT Group/Business Credit, Inc.
(as Lender)
And
ICON CMT CORP.
(as Borrower)
Dated: August 13, 1996
TABLE OF CONTENTS
Page
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SECTION 1. Definitions.....................................................3
SECTION 2. Conditions Precedent............................................8
SECTION 3. Revolving Loans................................................10
SECTION 4. Intentionally Omitted..........................................12
SECTION 5. Letters of Credit..............................................12
SECTION 6. Collateral.....................................................14
SECTION 7. Representations, Warranties and Covenants......................17
SECTION 8. Interest, Fees and Expenses....................................21
SECTION 9. Powers.........................................................22
SECTION 10. Events of Default and Remedies.................................22
SECTION 11. Termination....................................................24
SECTION 12. Miscellaneous..................................................25
Schedule I -- List of UCC Filing Locations
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THE CIT GROUP/BUSINESS CREDIT, INC., a New York corporation,
(hereinafter "CITBC") with offices located at 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx
Xxxx, XX 00000, is pleased to confirm the terms and conditions under which CITBC
shall make revolving loans, advances and other financial accommodations to ICON
CMT CORP. (herein the "Company"), a Delaware corporation with a principal place
of business at 0000 Xxxxxx Xxxxxxxxx, Xxxxxxxxx, XX 00000.
SECTION 1. DEFINITIONS
ACCESS GRAPHICS shall mean Access Graphics, Inc., a Delaware corporation.
ACCOUNTS shall mean all of the Company's now existing and future: (a) accounts
receivable, (whether or not specifically listed on schedules furnished to
CITBC), and any and all instruments, documents, contract rights, chattel paper,
general intangibles, including, without limitation, all accounts created by or
arising from all of the Company's sales of goods or rendition of services to its
customers, and all accounts arising from sales or rendition of services made
under any of the Company's trade names or styles, or through any of the
Company's divisions; (b) unpaid seller's rights (including rescission, replevin,
reclamation and stoppage in transit) relating to the foregoing or arising
therefrom; (c) rights to any goods represented by any of the foregoing,
including rights to returned or repossessed goods; (d) reserves and credit
balances arising hereunder; (e) guarantees or collateral for any of the
foregoing; (f) insurance policies or rights relating to any of the foregoing;
and (g) cash and non-cash proceeds of any and all the foregoing.
ANNIVERSARY DATE shall mean the date occurring one (1) year from the date hereof
and the same date in every year thereafter.
AVAILABILITY shall mean at any time the excess of Eligible Accounts Receivable
multiplied by the percentage provided for in paragraph I of Section 3 of this
Financing Agreement over the sum of x) the outstanding aggregate amount of all
Obligations of the Company, y) the Availability Reserve, and z) after the
occurrence of an Event of Default and until such time that the Event of Default
is waived in writing by CITBC, all payments of the Company to CITBC coming due
within sixty (60) days from the date of computation.
AVAILABILITY RESERVE shall mean, at any time of determination, the sum of i) the
then outstanding amount of all Letters of Credit; ii) $500,000.00, iii) all then
outstanding deposits given the Company by customers or prospective customers;
iv) $10,000.00 to cover the maximum amount that the Company's casualty insurance
carrier may set-off for past due premiums owed by the Company under its
insurance policy therewith, as set forth in the insurance loss payable
endorsement issued by such insurance carrier on or about the date hereof and
acceptable to CITBC ("Insurance Premium Reserve"), against all amounts payable
to CITBC under such insurance policy as loss payee, or such other amount of
Insurance Premium Reserve (higher or lower) that must be acceptable to CITBC
with respect to such policy or any other casualty insurance policy entered into
by the Company after the date hereof and V) at the sole discretion of CITBC, an
amount equal to the sum of two (2) times the monthly rent ( "Rental Reserve")
for each leased location where a Company has Inventory and/or Equipment but for
which CITBC has not received a Landlord Waiver, provided, however, that solely
with respect to any lease in effect on the date hereof, a Rental Reserve shall
not be taken by CITBC with respect thereto if a duly executed Landlord Waiver is
delivered to CITBC within ninety (90) days from the date hereof.
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BALANCE SHEET shall mean a balance sheet for the Company and prepared in
accordance with GAAP.
BUSINESS DAY shall mean any day on which both CITBC and The Chase Manhattan Bank
are open for business.
CHASE MANHATTAN BANK Rate shall mean the rate of interest per annum announced by
The Chase Manhattan Bank from time to time as its prime rate in effect at its
principal office in the City of New York. (The prime rate is not intended to be
the lowest rate of interest charged by Chase Manhattan Bank to its borrowers).
COLLATERAL shall mean all present and future Accounts, Inventory, Equipment,
Documents of Title and General Intangibles of the Company.
COLLATERAL MANAGEMENT FEE shall mean the sum of $18,000.00 which shall be paid
to CITBC in accordance with paragraph 8 of Section 8 hereof to offset the
expenses and costs of CITBC in connection with record keeping, periodic
examinations, analyzing and evaluating the Collateral.
CUSTOMARILY PERMITTED LIENS shall mean
(a) liens of local or state authorities for franchise or other like taxes
provided the aggregate amounts of such liens shall not exceed $50,000 in the
aggregate at any one time;
(b) statutory liens of landlords and liens of carriers, warehousemen,
mechanics, materialmen and other like liens imposed by law, created in the
ordinary course of business and for amounts not yet due (or which are being
contested in good faith by appropriate proceedings or other appropriate actions
which are sufficient to prevent imminent foreclosure of such liens) and with
respect to which adequate reserves or other appropriate provisions are being
maintained in accordance with GAAP;
(c) deposits made (and the liens thereon) in the ordinary course of business
(including, without limitation, security deposits for leases, surety bonds and
appeal bonds) in connection with workers' compensation, unemployment insurance
and other types of social security benefits or to secure the performance of
tenders, bids, contracts (other than for the repayment or guarantee of borrowed
money or purchase money obligations), statutory obligations and other similar
obligations arising as a result of progress payments under government contracts;
and
(d) easements (including, without limitation, reciprocal easement agreements
and utility agreements), encroachments, minor defects or irregularities in
title, variation and other restrictions, charges or encumbrances (whether or not
recorded) affecting the Real Estate.
DEFAULT shall mean any event specified in Section 10 hereof, whether or not any
requirement for the giving of notice, the lapse of time, or both, or any other
condition, event or act, has been satisfied.
DEFAULT RATE OF INTEREST shall mean a rate of interest per annum equal to the
sum of: a) four percent (4%) and b) the Chase Manhattan Bank Rate, which CITBC
shall be entitled to charge the Company on all Obligations due CITBC by the
Company to the extent provided in paragraph 2 of Section 10 of this Financing
Agreement.
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DEPOSITORY ACCOUNT shall mean those accounts owned by CITBC and designated for
the deposit of proceeds of Collateral.
DOCUMENTATION FEE shall mean i) the amount, which shall be included in the Loan
Facility Fee, intended to compensate CITBC for the use of CITBC's in-house Legal
Department and facilities in documenting, in whole or in part, the initial
transaction solely on behalf of CITBC, exclusive of Out-of-Pocket Expenses, and
ii) CITBC's standard fees relating to any and all modifications, waivers,
releases, amendments or additional collateral with respect to this Financing
Agreement, the Collateral and/or the Obligations.
DOCUMENTS OF TITLE shall mean all present and future warehouse receipts, bills
of lading, shipping documents, chattel paper, instruments and similar documents,
all whether negotiable or not and all goods and inventory relating thereto and
all cash and non-cash proceeds of the foregoing.
EARLY TERMINATION DATE shall mean the date on which the Company terminates this
Financing Agreement or the Line of Credit which date is prior to the second
Anniversary Date.
EARLY TERMINATION FEE shall: i) mean the fee CITBC is entitled to charge the
Company in the event the Company terminates the Line of Credit or this Financing
Agreement on a date prior to the second Anniversary Date; and ii) be determined
by calculating the average daily loan balance under the Revolving Loan for the
period from the date of this Financing Agreement to the Early Termination Date
and multiplying that number by one percent (1%) per annum for the number of days
from the Early Termination Date to the second Anniversary Date provided,
however, that no Early Termination Fee shall be due and payable by the Company
hereunder in the event the Company terminates the Line of Credit or this
Financing Agreement as a direct result of an initial public offering of the
Company's capital stock or a similar private equity financing.
EVENT(S) OF DEFAULT shall have the meaning provided for in Section 10 of this
Financing Agreement.
ELIGIBLE ACCOUNTS RECEIVABLE shall mean the gross amount of the Company's
accounts receivable that conform to the warranties contained herein and at all
times continue to be acceptable to CITBC in the exercise of its reasonable
business judgment, less, without duplication, the sum of a) any returns,
discounts, claims, credits and allowances of any nature (whether issued, owing,
granted or outstanding) and b) reserves for: i) sales to the United States of
America or to any agency, department or division thereof, ii) foreign sales
other than sales x) secured by stand-by letters of credit (in form and substance
satisfactory to CITBC in its reasonable business discretion) issued or confirmed
by, and payable at, banks having a place of business in the United States of
America and payable in United States currency, and which sales otherwise comply
with all other criteria for eligibility hereunder or y) to customers residing in
Canada provided such sales otherwise comply with all of the other criteria for
eligibility hereunder, are payable in United States currency and such sales do
not exceed $750,000.00 in the aggregate at any one time; iii) accounts that
remain unpaid more than ninety (90) days from invoice date; iv) contras; v)
sales to any subsidiary or to any company affiliated with the Company in any
way; vi) xxxx and hold (deferred shipment) or consignment sales; vii) sales to
any customer which is a) insolvent, b) the debtor in any bankruptcy, insolvency,
arrangement, reorganization, receivership or similar proceedings under any
federal or state law, c) negotiating, or has called a meeting of its creditors
for purposes of negotiating, a compromise of its debts or d) financially
unacceptable to CITBC or has a credit rating unacceptable to CITBC; viii) all
sales to any customer if fifty percent (50%) or more
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of either x) all outstanding invoices or y) the aggregate dollar amount of all
outstanding invoices, are unpaid more than ninety (90) days from invoice date;
ix) all sales to Access Graphics; x) any other reasons deemed necessary by CITBC
in its reasonable business judgment and which are customary either in the
commercial finance industry or in the lending practices of CITBC; and xi) an
amount representing, historically, returns, discounts, claims, credits and
allowances.
EQUIPMENT shall mean all present and hereafter acquired machinery, equipment,
furnishings and fixtures, and all additions, substitutions and replacements
thereof, wherever located, together with all attachments, components, parts,
equipment and accessories installed thereon or affixed thereto and all proceeds
of whatever sort.
ERISA shall mean the Employee Retirement Income Security Act of 1974, as amended
from time to time and the rules and regulations promulgated thereunder from time
to time.
GAAP shall mean generally accepted accounting principles in the United States of
America as in effect from time to time and for the period as to which such
accounting principles are to apply.
GENERAL INTANGIBLES shall have the meaning set forth in the Uniform Commercial
Code as in effect in the State of New York and shall include, without
limitation, all present and future right, title and interest in and to all
tradenames, trademarks (together with the goodwill associated therewith),
patents, licenses, customer lists, distribution agreements, supply agreements
and tax refunds, together with all monies and claims for monies now or hereafter
due and payable in connection with any of the foregoing or otherwise, and all
cash and non-cash proceeds thereof.
INDEBTEDNESS shall mean, without duplication, all liabilities, contingent or
otherwise, which are any of the following: (a) obligations in respect of
borrowed money or for the deferred purchase price of property, services or
assets, other than Inventory, or (b) lease obligations which, in accordance with
GAAP, have been, or which should be capitalized.
INTERCREDITOR AGREEMENT shall mean that certain intercreditor agreement between
CITBC and Access Graphics, in form and substance satisfactory to CITBC, pursuant
to which Access Graphics agrees that any security interest and lien it may have
in or on any Accounts or Inventory of the Company is subject and subordinate to
CITBC's lien thereupon or security interest therein.
INVENTORY shall mean all of the Company's present and hereafter acquired
merchandise, inventory and goods, and all additions, substitutions and
replacements thereof, wherever located, together with all goods and materials
used or usable in manufacturing, processing, packaging or shipping same; in all
stages of production - from raw materials through work-in-process to finished
goods - and all proceeds thereof of whatever sort.
ISSUING BANK shall mean the bank issuing Letters of Credit for the Company.
LANDLORD WAIVER shall mean a waiver executed by a landlord of a premises not
owned by the Company but otherwise leased, used, or occupied thereby, in form
and substance satisfactory to CITBC, containing provisions that, inter alia, (i)
waive any lien such party may have on any of the Inventory and/or Equipment of
the Company and ii) grant to CITBC access rights to the premises.
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LETTERS OF CREDIT shall mean all letters of credit issued with the assistance of
CITBC by the Issuing Bank for or on behalf of the Company.
LETTER OF CREDIT GUARANTY shall mean the guaranty delivered by CITBC to the
Issuing Bank of the Company's reimbursement obligation under the Issuing Bank's
Reimbursement Agreement, Application for Letter of Credit or other like
document.
LETTER OF CREDIT GUARANTY FEE shall mean the fee CITBC may charge the Company
under paragraph 3 of Section 8 of this Financing Agreement for: i) issuing the
Letter of Credit Guaranty or ii) otherwise aiding the Company in obtaining
Letters of Credit.
LINE OF CREDIT shall mean the commitment of CITBC to make loans and advances
pursuant to Section 3 of this Financing Agreement and to assist the Company in
obtaining Letters of Credit under Section 4 of this Financing Agreement in the
aggregate amount equal to $10,000,000.00.
LINE OF CREDIT FEE shall: I) mean the fee due CITBC at the end of each month for
the Line of Credit, and II) be determined by multiplying the difference between
the Line of Credit and the sum of a) the average daily Revolving Loans of the
Company for said month and b) the average daily balance of outstanding Letters
of Credit by .3 75% per annum for the number of days in said month.
LOAN FACILITY FEE shall mean the fee payable to CITBC in accordance with, and
pursuant to, the provisions of paragraph 7 of Section 8 of this Financing
Agreement.
OBLIGATIONS shall mean all loans and advances made or to be made by CITBC to the
Company or to others for the Company's account; any and all indebtedness and
obligations which may at any time be owing by the Company to CITBC howsoever
arising, whether now in existence or incurred by the Company from time to time
hereafter; whether secured by pledge, hen upon or security interest in any of
the Company's assets or property or the assets or property of any other person,
firm entity or corporation; whether such indebtedness is absolute or contingent,
joint or several, matured or unmatured, direct or indirect and whether the
Company is liable to CITBC for such indebtedness as principal, surety, endorser,
guarantor or otherwise. Obligations shall also include indebtedness owing to
CITBC by the Company under this Financing Agreement or under any other agreement
or arrangement now or hereafter entered into between the Company and CITBC;
indebtedness or obligations incurred by, or imposed on, CITBC as a result of
environmental claims arising out of the Company's operation, premises or waste
disposal practices or sites; the Company's liability to CITBC as maker or
endorser on any promissory note or other instrument for the payment of money;
the Company's liability to CITBC under any instrument of guaranty or indemnity,
or arising under any guaranty, endorsement or undertaking which CITBC may make
or issue to others for the Company's account, including any accommodation
extended with respect to applications for Letters of Credit, CITBC's acceptance
of drafts or CITBC's endorsement of notes or other instruments for the Company's
account and benefit.
OUT-OF-POCKET EXPENSES shall mean all of CITBC's future expenses incurred
relative to this Financing Agreement, whether incurred heretofore or hereafter,
which expenses shall include, without being limited to, the cost of record
searches, all costs and expenses incurred by CITBC in opening bank accounts,
depositing checks, receiving and
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transferring funds, and any charges imposed on CITBC due to "insufficient funds"
of deposited checks and CITBC's standard fees relating thereto, any amounts paid
by, incurred by or charged to, CITBC by the Issuing Bank under the Letter of
Credit Guaranty or the Company's Reimbursement Agreement, Application for Letter
of Credit or other like document which pertain either directly or indirectly to
such Letters of Credit, and CITBC's standard fees relating to the Letters of
Credit and any drafts thereunder, local counsel fees (if any), fees and taxes
relative to the filing of financing statements, and all expenses, costs and fees
set forth in paragraph 3 of Section 10 of this Financing Agreement.
PERMITTED ENCUMBRANCES shall mean: i) liens expressly permitted, or consented
to, by CITBC; ii) Purchase Money Liens; iii) Customarily Permitted Liens; iv)
liens granted CITBC by the Company; v) liens of judgment creditors provided such
hens do not exceed, in the aggregate, at any time, $50,000.00 (other than liens
bonded or insured to the reasonable satisfaction of CITBC); and vi) liens for
taxes not yet due and payable or which are being diligently contested in good
faith by the Company by appropriate proceedings and which liens are not x) other
than with respect to Real Estate, senior to the liens of CITBC or y) for taxes
due the United States of America.
PERMITTED INDEBTEDNESS shall mean: i) current indebtedness maturing in less than
one year and incurred in the ordinary course of business for raw materials,
supplies, equipment, services, taxes or labor; ii) the indebtedness secured by
the Purchase Money Liens; iii) indebtedness arising under the Letters of Credit
and this Financing Agreement; iv) deferred taxes and other expenses incurred in
the ordinary course of business, v) indebtedness arising under that certain
letter of credit, issued by The Chase Manhattan Bank (formerly known as
"Chemical Bank"); in the face amount of $500,000.00, provided that such letter
of credit is not secured by a lien upon or a security interest in any of the
Collateral of the Company; and vi) other indebtedness existing on the date of
execution of this Financing Agreement and listed in the most recent financial
statement delivered to CITBC or otherwise disclosed to CITBC in writing.
PURCHASE MONEY LIENS shall mean liens on any item of Equipment acquired after
the date of this Financing Agreement provided that i) each such lien shall
attach only to the property to be acquired, ii) a description of the property so
acquired is furnished to CITBC, and iii) the debt incurred in connection with
such acquisitions shall not exceed in the aggregate $2,000,000.00 in any fiscal
year.
REAL ESTATE shall mean the Company's fee and/or leasehold interests in real
property.
REVOLVING LOANS shall mean the loans and advances made, from time to time, to or
for the account of the Company by CITBC pursuant to Section 3 of this Financing
Agreement.
SECTION 2. CONDITIONS PRECEDENT
The obligation of CITBC to make loans hereunder is subject to the
satisfaction of, or waiver of, immediately prior to or concurrently with the
making of such loans, the following conditions precedent (unless otherwise
indicated below):
a) LIEN SEARCHES - CITBC shall have received tax, judgment and Uniform
Commercial Code searches satisfactory to CITBC for all locations presently
occupied or used by the Company.
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b) CASUALTY INSURANCE - The Company shall have delivered to CITBC evidence
satisfactory to CITBC that casualty insurance policies listing CITBC as loss
payee or mortgagee, as the case may be, are in full force and effect, all as set
forth in Section 7, paragraph 5 of this Financing Agreement.
c) UCC FILINGS - Any documents (including without limitation, financing
statements) required to be filed in order to create, in favor of CITBC, a first
and exclusive perfected security interest in the Collateral with respect to
which a security interest may be perfected by a filing under the Uniform
Commercial Code shall have been properly filed in each office in each
jurisdiction required in order to create in favor of CITBC a perfected lien on
the Collateral. CITBC shall have received acknowledgment copies of all such
filings (or, in lieu thereof, CITBC shall have received other evidence
satisfactory to CITBC that all such filings have been made); and CITBC shall
have received evidence that all necessary filing fees and all taxes or other
expenses related to such filings have been paid in full.
d) EXAMINATION & VERIFICATION - CITBC shall have completed to the
satisfaction of CITBC an examination and verification of the Accounts,
Inventory, and books and records of the Company.
e) OPINIONS - Counsel for the Company shall have delivered to CITBC opinions
satisfactory to CITBC opining, inter alia, that, subject to the i) filing,
priority and remedies provisions of the Uniform Commercial Code, ii) the
provisions of the Bankruptcy Code, insolvency statutes or other like laws, iii)
the equity powers of a court of law and iv) such other matters as may be agreed
upon with CITBC all documents of the Company are x) valid, binding and
enforceable according to their terms, y) are duly authorized and z) do not
violate any terms, provisions, representations or covenants in the charter or
by-laws of the Company or, to the best knowledge of such counsel, of any loan
agreement, mortgage, deed of trust, note, security or pledge agreement or
indenture to which the Company is a signatory or by which the Company or its
assets are bound.
f) ADDITIONAL DOCUMENTS - The Company shall have executed and delivered to
CITBC all loan documents necessary to consummate the lending arrangement
contemplated between the Company and CITBC.
g) CITBC COMMITMENT LETTER - The Company has fully complied, to the
satisfaction of CITBC, with all of the terms and conditions of the commitment
letter, dated July 16, 1996, issued by CITBC to, and accepted by, the Company.
h) BOARD RESOLUTION - CITBC shall have received a copy of the resolutions of
the Board of Directors of the Company authorizing the execution, delivery and
performance of (i) this Financing Agreement, and (ii) any related agreements, in
each case certified by the Secretary or Assistant Secretary of the Company as of
the date hereof, together with a certificate of the Secretary or Assistant
Secretary of the Company as to the incumbency and signature of the officers of
the Company executing this Financing Agreement and any certificate or other
documents to be delivered by it pursuant hereto, together with evidence of the
incumbency of such Secretary or Assistant Secretary.
i) CORPORATE ORGANIZATION CITBC shall have received (i) a copy of the
Certificate of Incorporation of the Company certified by the Secretary of State
of its incorporation, and (ii) a copy of the By-Laws (as amended through the
date hereof) of the Company and certified by the Secretary or Assistant
Secretary of the Company.
j) OFFICER'S CERTIFICATE - CITBC shall have received an executed Officer's
Certificate of the Company, satisfactory in form and substance to CITBC,
certifying that (i) the representations and warranties contained herein are true
and correct in all material respects on and as of the date hereof, (ii) the
Company is in compliance with all of the terms and provisions set forth herein;
and (iii) no Event of Default or Default has occurred.
k) ABSENCE OF DEFAULT - No Default, Event of Default or material adverse
change in the financial condition, business, prospects, profits, operations or
assets of the Company shall have occurred.
l) LEGAL RESTRAINTS/LITIGATION - At the date of execution of this Financing
Agreement, there shall be no x) litigation, investigation or proceeding
(judicial or administrative) pending or threatened against the Company or its
assets, by any agency, division or department of any county, city, state or
federal government, y) injunction, writ
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or restraining order restraining or prohibiting the consummation of the
financing arrangements contemplated under this Financing Agreement or z) suit,
action, investigation or proceeding (judicial or administrative) pending or
threatened against the Company or its assets, which, in the opinion of CITBC, if
adversely determined could have a material adverse effect on the business,
operation, assets, financial condition or Collateral of the Company.
m) DISBURSEMENT AUTHORIZATION - The Company shall have delivered to CITBC all
information necessary for CITBC to issue wire transfer instructions on behalf of
the Company for the initial and subsequent loans and/or advances to be made
under this Agreement including, but not limited to, disbursement authorizations
in form acceptable to CITBC.
n) INTERCREDITOR AGREEMENT - CITBC has received a fully executed
Intercreditor Agreement together with at least four (4) UCC-3 financing
statements for each of the locations listed on Schedule I attached hereto and
made a part hereof.
o) LANDLORD WAIVERS - Within ninety (90) days from the date hereof, CITBC
shall have received from the landlord of each premises not owned by the Company
but otherwise leased, used, or occupied thereby, a Landlord Waiver provided,
however, that the failure of the Company to deliver or have delivered to CITBC
any Landlord Waiver shall not be deemed to be a Default or an Event of Default
under this Financing Agreement.
Except as otherwise set forth hereinabove, upon the execution of this Financing
Agreement and the initial disbursement of loans hereunder, all of the above
Conditions Precedent shall have been deemed satisfied except as the Company and
CITBC shall otherwise agree herein or in a separate writing.
SECTION 3. REVOLVING LOANS
1. CITBC agrees, subject to the terms and conditions of this Financing
Agreement from time to time, and within the Availability and y) the Line of
Credit, but subject to CITBC's right to make "overadvances", to make loans and
advances to the Company on a revolving basis (i.e. subject to the limitations
set forth herein, the Company may borrow, repay and re-borrow Revolving Loans).
Such loans and advances shall be in amounts up to eighty percent (80%) of the
outstanding Eligible Accounts Receivable of the Company. All requests for loans
and advances must be received by an officer of CITBC no later than 1:00 p.m.,
New York time, of the Business Day on which such loans and advances are
required. Should CITBC for any reason honor requests for advances in excess of
the limitations set forth herein, such advances shall be considered
"overadvances" and shall be made in CITBC's sole discretion, subject to any
additional terms CITBC deems necessary.
2. In furtherance of the continuing assignment and security interest in the
Company's Accounts, the Company will, upon the creation of Accounts, execute and
deliver to CITBC in such form and manner as CITBC may reasonably require, solely
for CITBC's convenience in maintaining records of collateral, such confirmatory
schedules of Accounts as CITBC may reasonably request, and such other
appropriate reports designating, identifying and describing the Accounts as
CITBC may reasonably require. In addition, upon CITBC's request the Company
shall provide CITBC with copies of agreements with, or purchase orders from, the
Company's customers, and copies of invoices to customers, proof of shipment or
delivery and such other documentation and information relating to said Accounts
and other collateral as CITBC may reasonably require. Failure to provide CITBC
with any of the foregoing shall in no way affect, diminish, modify or otherwise
limit the security interests granted herein. The
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Company hereby authorizes CITBC to regard the Company's printed name or rubber
stamp signature on assignment schedules or invoices as the equivalent of a
manual signature by one of the Company's authorized officers or agents.
3. The Company hereby represents and warrants that: each Account is based on
an actual and bona fide sale and delivery of goods or rendition of services to
customers, made by the Company in the ordinary course of its business; the
Inventory being sold and the Accounts created are the exclusive property of the
Company and are not and shall not be subject to any lien, consignment
arrangement, encumbrance, security interest or financing statement whatsoever,
other than the Permitted Encumbrances; the invoices evidencing such Accounts are
in the name of the Company; and the customers of the Company have accepted the
goods or services, owe and are obligated to pay the full amounts stated in the
invoices according to their terms, without dispute, offset, defense,
counterclaim or contra, except for disputes and other matters arising in the
ordinary course of business of which the Company has advised CITBC pursuant to
paragraph 5 of this Section 3. The Company confirms to CITBC that any and all
taxes or fees relating to its business, its sales, the Accounts or goods
relating thereto, are its sole responsibility and that same will be paid by the
Company when due and that none of said taxes or fees represent a lien on or
claim against the Accounts. The Company also warrants and represents that it is
a duly and validly existing corporation and is qualified in all states where the
failure to so qualify would have an adverse effect on the business of the
Company or the ability of the Company to enforce collection of Accounts due from
customers residing in that state. The Company agrees to maintain such books and
records regarding Accounts as CITBC may reasonably require and agrees that the
books and records of the Company will reflect CITBC's interest in the Accounts.
Upon reasonable prior notice, all of the books and records of the Company will
be available to CITBC at normal business hours, including any records handled or
maintained for the Company by any other company or entity provided, however,
that CITBC is not required to provide any such prior notice upon the occurrence
of i) a Default that has not been waived in writing or cured to the satisfaction
of CITBC or ii) an Event of Default that has not been waived in writing by
CITBC.
4. The Company may and will enforce, collect and receive all amounts owing on
the Accounts for CITBC's benefit and on CITBC's behalf, but at the Company's
expense, however, such privilege shall terminate automatically upon the
institution by or against the Company of any proceeding under any bankruptcy or
insolvency law or, at the election of CITBC, upon the occurrence of any other
Event of Default and until such Event of Default is waived. Any checks, cash,
notes or other instruments or property received by the Company with respect to
any Accounts shall be held by the Company in trust for CITBC, separate from the
Company's own property and funds, and immediately turned over to CITBC with
proper assignments or endorsements by deposit to the Depository Accounts. All
amounts received by CITBC in payment of Accounts will be credited to the
Company's accounts upon CITBC's receipt of "collected funds" at CITBC's bank
account in New York, New York on the Business Day of receipt if received no
later than 1:00 pm or on the next succeeding Business Day if received after 1:00
pm. No checks, drafts or other instrument received by CITBC shall constitute
final payment to CITBC unless and until such instruments have actually been
collected.
5. The Company agrees to notify CITBC promptly of any matters materially
affecting the value, enforceability or collectibility of any Account and of all
material customer disputes, offsets, defenses, counterclaims, returns,
rejections and all reclaimed or repossessed merchandise or goods. The Company
agrees to issue credit memoranda promptly (with duplicates to CITBC upon request
after the occurrence of an Event of Default and until such Event of Default is
waived in writing by CITBC) upon accepting returns or granting allowances, and
may continue to do so until CITBC has notified the Company that an Event of
Default has occurred (that has not been waived in writing by
-11-
CITBC) and that all future credits or allowances are to be made only after
CITBC's prior written approval. Upon the occurrence of an Event of Default and
until such time as such Event of Default is waived and on notice from CITBC, the
Company agrees that all returned, reclaimed or repossessed merchandise or goods
shall be set aside by the Company, marked with CITBC's name and held by the
Company for CITBC's account as owner and assignee.
6. CITBC shall maintain a separate account on its books in the Company's name
in which the Company will be charged with loans and advances made by CITBC to it
or for its account, and with any other Obligations, including any and all costs,
expenses and reasonable attorney's fees which CITBC may incur in connection with
the exercise by or for CITBC of any of the rights or powers herein conferred
upon CITBC, or in the prosecution or defense of any action or proceeding to
enforce or protect any rights of CITBC in connection with this Financing
Agreement or the Collateral assigned hereunder, or any Obligations owing to
CITBC by the Company. The Company will be credited with all amounts received by
CITBC from the Company or from others for the Company's account, including, as
above set forth, all amounts received by CITBC in payment of assigned Accounts
and such amounts will be applied to payment of the Obligations. In no event
shall prior recourse to any Accounts or other security granted to or by the
Company be a prerequisite to CITBC's right to demand payment of any Obligation.
Further, it is understood that CITBC shall have no obligation whatsoever to
perform in any respect any of the Company's contracts or obligations relating to
the Accounts.
7. After the end of each month, CITBC shall promptly send the Company a
statement showing the accounting for the charges, loans, advances and other
transactions occurring between CITBC and the Company during that month. The
monthly statements shall be deemed correct and binding upon the Company and
shall constitute an account stated between the Company and CITBC unless CITBC
receives a written statement of the exceptions within thirty (30)days of the
date of the monthly statement.
SECTION 4. INTENTIONALLY OMITTED
SECTION 5. LETTERS OF CREDIT
In order to assist the Company in establishing or opening Letters of
Credit with an Issuing Bank to cover the purchase of Equipment or otherwise,
(but not for the purchase of Inventory, nor to secure payment of the Company's
obligations to its suppliers) the Company has requested CITBC to join in the
applications for such Letters of Credit, and/or guarantee payment or performance
of such Letters of Credit and any drafts or acceptances thereunder through the
issuance of the Letters of Credit Guaranty, thereby lending CITBC's credit to
the Company and CITBC has agreed to do so. These arrangements shall be handled
by CITBC subject to the terms and conditions set forth below.
1. The amount, purpose and extent of the Letters of Credit and changes or
modifications thereof by the Company and/or the Issuing Bank of the terms and
conditions thereof shall in all respects be subject to the prior approval of
CITBC in the exercise of its reasonable discretion provided however, that: a) in
no event may the aggregate amount of all such outstanding Letters of Credit
exceed, in the aggregate, at any one time $500,000.00, and b) the Letter of
Credit and all documentation in connection therewith shall be in form and
substance satisfactory to the Company, CITBC and the Issuing Bank.
-12-
2. CITBC shall have the right, without notice to the Company, to charge the
Company's account on CITBC's books with the amount of any and all indebtedness,
liability or obligation of any kind incurred by CITBC under the Letters of
Credit Guaranty at the earlier of a) payment by CITBC under the Letters of
Credit Guaranty, or b) the occurrence of an Event of Default that has not been
waived in writing by CITBC. Any amount charged to Company's loan account shall
be deemed a Revolving Loan hereunder and shall incur interest at the rate
provided in Section 8, paragraph 1 of this Financing Agreement.
3. The Company unconditionally indemnifies CITBC and holds CITBC harmless
from any and all loss, claim or liability incurred by CITBC arising from any
transactions or occurrences relating to Letters of Credit established or opened
for the Company's account, the collateral relating thereto and any drafts or
acceptances thereunder, and all Obligations thereunder, including any such loss
or claim due to any action taken by any Issuing Bank, other than for any such
loss, claim or liability arising out of the gross negligence or willful
misconduct by CITBC under the Letters of Credit Guaranty. The Company further
agrees to hold CITBC harmless from any errors or omission, negligence or
misconduct by the Issuing Bank. The Company's unconditional obligation to CITBC
hereunder shall not be modified or diminished for any reason or in any manner
whatsoever, other than as a result of CITBC's gross negligence or willful
misconduct. The Company agrees that any charges incurred by CITBC for the
Company's account by the Issuing Bank shall be conclusive on CITBC and may be
charged to the Company's account.
4. CITBC shall not be responsible for: the existence, character, quality,
quantity, condition, packing, value or delivery of the goods purporting to be
represented by any documents; any difference or variation in the character,
quality, quantity, condition, packing, value or delivery of the goods from that
expressed in the documents; the validity, sufficiency or genuineness of any
documents or of any endorsements thereon, even if such documents should in fact
prove to be in any or all respects invalid, insufficient, fraudulent or forged;
the time, place, manner or order in which shipment is made; partial or
incomplete shipment, or failure or omission to ship any or all of the goods
referred to in the Letters of Credit or documents; any deviation from
instructions; delay, default, or fraud by the shipper and/or anyone else in
connection with the Collateral or the shipping thereof, or any breach of
contract between the shipper or vendors and the Company. Furthermore, without
being limited by the foregoing, CITBC shall not be responsible for any act or
omission with respect to or in connection with any Collateral.
5. The Company agrees that any action taken by CITBC, if taken in good faith,
or any action taken by any Issuing Bank, under or in connection with the Letters
of Credit, the guarantees, the drafts or acceptances, or the Collateral, shall
be binding on the Company and shall not put CITBC in any resulting liability to
the Company. In furtherance thereof but subject to paragraph 6 below, CITBC
shall have the full right and authority to clear and resolve any questions of
non-compliance of documents; to give any instructions as to acceptance or
rejection of any documents or goods; to execute any and all steamship or airways
guaranties (and applications therefore), indemnities or delivery orders; to
grant any extensions of the maturity of, time of payment for, or time of
presentation of, any drafts, acceptances, or documents; and to agree to any
amendments, renewals, extensions, modifications, changes or cancellations of any
of the terms or conditions of any of the applications, Letters of Credit, drafts
or acceptances; all in CITBC's sole name, and the Issuing Bank shall be entitled
to comply with and honor any and all such documents or instruments executed by
or received solely from CITBC, all without any notice to or any consent from the
Company.
6. Without CITBC's express consent and endorsement in writing, the Company
agrees: a) not to execute any and all applications for steamship or airway
guaranties, indemnities or delivery orders; to grant any extensions of the
-13-
maturity of, time of payment for, or time of presentation of, any drafts,
acceptances or documents; or to agree to any amendments, renewals, extensions,
modifications, changes or cancellations of any of the terms or conditions of any
of the applications, Letters of Credit, drafts or acceptances; and b) after the
occurrence of an Event of Default which is not waived by CITBC, not to i) clear
and resolve any questions of non-compliance of documents, or ii) give any
instructions as to acceptances or rejection of any documents or goods.
7. The Company agrees that any necessary import, export or other licenses or
certificates for the import or handling of Equipment will have been promptly
procured; all foreign and domestic governmental laws and regulations in regard
to the shipment and importation of Equipment, or the financing thereof will have
been promptly and full complied with; and any certificates in that regard that
CITBC may at any time request will be promptly furnished. In this connection,
the Company warrants and represents that all shipments made under any such
Letters of Credit are in accordance with the laws and regulations of the
countries in which the shipments originate and terminate, and are not prohibited
by any such laws and regulations. The Company assumes all risk, liability and
responsibility for, and agrees to pay and discharge, all present and future
local, state, federal or foreign taxes, duties, or levies. Any embargo,
restriction, laws, customs or regulations of any country, state, city, or other
political subdivision, where the Collateral is or may be located, or wherein
payments are to be made, or wherein drafts may be drawn, negotiated, accepted,
or paid, shall be solely the Company's risk, liability and responsibility.
8. Upon any payments made to the Issuing Bank under the Letter of Credit
Guaranty, CITBC shall acquire by subrogation, any rights, remedies, duties or
obligations granted or undertaken by the Company to the Issuing Bank in any
application for Letters of Credit, any standing agreement relating to Letters of
Credit or otherwise, all of which shall be deemed to have been granted to CITBC
and apply in all respects to CITBC and shall be in addition to any rights,
remedies, duties or obligations contained herein.
SECTION 6. COLLATERAL
1. As security for the prompt payment in full of all loans and advances made
and to be made to the Company from time to time by CITBC pursuant hereto, as
well as to secure the payment in full of the other Obligations, the Company
hereby pledges and grants to CITBC a continuing general lien upon and security
interest in all of its:
(a) present and hereafter acquired Equipment;
(b) present and future Accounts;
(c) present and hereafter acquired Inventory;
(d) present and future Documents of Title; and
(e) present and future General Intangibles.
-14-
2. The security interests granted hereunder shall extend and attach to:
(a) All Collateral which is presently in existence and which is owned by the
Company or in which the Company has any interest, whether held by the Company or
others for its account, and, if any Collateral is Equipment, whether the
Company's interest in such Equipment is as owner or lessee (excluding any
Equipment for which the applicable lease prohibits the Company from granting an
assignment of rights therein or any lien thereon or security interest therein
solely with respect to such Equipment) or conditional vendee;
(b) All Equipment whether the same constitutes personal property or fixtures,
including, but without limiting the generality of the foregoing, component parts
thereof and additions thereto, as well as all accessories, motors, engines and
auxiliary parts used in connection with or attached to the Equipment; and
(c) All Inventory and any portion thereof which may be returned, rejected,
reclaimed or repossessed by either CITBC or the Company from the Company's
customers as well as to all supplied, goods, incidentals, packaging materials,
labels and any other items which contribute to the finished goods or products
manufactured or processed by the Company, or to the sale, promotion or shipment
thereof.
3. The Company agrees to dispose of Inventory only in the regular course of
the business of the Company as herein provided. Inventory may only be sold and
shipped by the Company to its customers in the ordinary course of the Company's
business, on open account and on terms currently being extended by the Company
to its customers, provided that all proceeds of all sales on open account
(including cash, accounts receivable, checks, notes, instruments for the payment
of money and similar proceeds) are forthwith transferred, endorsed, and turned
over and delivered to CITBC by deposit in the Depository Accounts. Sales of
Inventory in which a lien upon, or security interest in, Inventory is retained
by the Company shall be made by the Company only with the approval of CITBC, and
the proceeds of such sales or sales of Inventory for cash shall not be
commingled with the Company's other property, but shall be segregated, held by
the Company in trust for CITBC as CITBC's exclusive property, and shall be
delivered immediately by the Company to CITBC in the identical form received by
the Company by deposit to the Depository Accounts. Upon the sale, exchange, or
other disposition of Inventory, as herein provided, the security interest in the
Company's Accounts provided for herein shall, without further formality or act,
continue in, and attach to, all proceeds, including any instruments for the
payment of money, accounts receivable, contract rights, documents of title,
shipping documents, chattel paper and all other cash and non-cash proceeds of
such sale, exchange or disposition. As to any such sale, exchange or other
disposition, CITBC shall have all of the rights of an unpaid seller, including
stoppage in transit, replevin, rescission and reclamation.
4. The Company agrees at its own cost and expense to keep the Equipment in as
good and substantial repair and condition as the same is now or at the time the
lien and security interest granted herein shall attach thereto, reasonable wear
and tear excepted, making any and all repairs and replacements when and where
necessary. The Company also agrees to safeguard, protect and hold all Equipment
for CITBC's account and make no disposition thereof unless the Company first
obtains the prior written approval of CITBC. Any sale, exchange or other
disposition of any Equipment shall only be made by the Company with the prior
written approval of CITBC, and the proceeds of any such sales shall not be
commingled with the Company's other property, but shall be segregated, held by
the Company in trust for CITBC as CITBC's exclusive property, and shall be
delivered immediately by the Company to CITBC in the identical form received by
the Company by deposit to the Depository Accounts. Upon
-15-
the sale, exchange, or other disposition of the Equipment, as herein provided,
the security interest provided for herein shall, without break in continuity and
without further formality or act, continue in, and attach to, all proceeds,
including any instruments for the payment of money, accounts receivable,
contract rights, documents of title, shipping documents, chattel paper and all
other cash and non-cash proceeds of such sales, exchange or disposition. As to
any such sale, exchange or other disposition, CITBC shall have all of the rights
of an unpaid seller, including stoppage in transit, replevin, rescission and
reclamation. Notwithstanding anything hereinabove contained to the contrary, the
Company may sell, exchange or otherwise dispose of obsolete Equipment or
Equipment no longer needed in the Company's operations, provided, however,
that (a) the then book value of the Equipment so disposed of does not exceed
$500,000.00 in the aggregate in any fiscal year and (b) the proceeds of such
sales or dispositions are delivered to CITBC in accordance with the foregoing
provisions of this paragraph, except that the Company may retain and use such
proceeds to purchase forthwith replacement Equipment which the Company
determines in its reasonable business judgment to have a collateral value at
least equal to the Equipment so disposed of or sold, provided, however, that the
aforesaid right shall automatically cease upon the occurrence of an Event of
Default which is not waived.
5. The rights and security interests granted to CITBC hereunder are to
continue in full force and effect, notwithstanding the termination of this
Financing Agreement or the fact that the account maintained in the Company's
name on the books of CITBC may from time to time be temporarily in a credit
position, until the final payment in full to CITBC of all Obligations and the
termination of this Financing Agreement. Any delay, or omission by CITBC to
exercise any right hereunder, shall not be deemed a waiver thereof, or be deemed
a waiver of any other right, unless such waiver be in writing and signed by
CITBC. A waiver on any one occasion shall not be construed as a bar to or waiver
of any right or remedy on any future occasion.
6. To the extent that the Obligations are now or hereafter secured by any
assets or property other than the Collateral or by the guarantee, endorsement,
assets or property of any other person, then CITBC shall have the right in its
sole discretion to determine which rights, security, liens, security interests
or remedies CITBC shall at any time pursue, foreclose upon, relinquish,
subordinate, modify or take any other action with respect to, without in any way
modifying or affecting any of them, or any of CITBC's rights hereunder.
7. Any reserves or balances to the credit of the Company and any other
property or assets of the Company in the possession of CITBC may be held by
CITBC as security for any Obligations and applied in whole or partial
satisfaction of such Obligations when due. The liens and security interests
granted herein and any other lien or security interest CITBC may have in any
other assets of the Company, shall secure payment and performance of all now
existing and future Obligations. CITBC may in its discretion charge any or all
of the Obligations to the account of the Company when due.
8. The Company shall give to CITBC from time to time such pledge or security
agreements with respect to General Intangibles (now or hereafter acquired) and
of the Company as CITBC shall require to obtain valid first liens thereon. In
furtherance of the foregoing, the Company shall provide timely notice to CITBC
of any and all United States patents, trademarks, service marks, copyrights,
brand names, trade names, logos and other trade designations acquired or applied
for on or subsequent to the date hereof and the Company shall execute such
documentation as CITBC may reasonably require to obtain and perfect its lien
thereon.
-16-
9. The Company shall give to CITBC or shall cause the appropriate party to
give to CITBC a Landlord Waiver from each landlord of any premises not owned but
otherwise leased, used, or occupied by the Company on or after the date hereof,
provided, however, that the failure of the Company to deliver or have delivered
to CITBC any Landlord Waiver shall not be a Default or Event of Default
hereunder.
SECTION 7. REPRESENTATIONS, WARRANTIES AND COVENANTS
1. The Company hereby warrants and represents and/or covenants that: i) the
fair value of the Company's assets exceeds the book value of the Company's
liabilities; ii) the Company is generally able to pay its debts as they become
due and payable; and iii) the Company does not have unreasonably small capital
to carry on its business as it is currently conducted absent extraordinary and
unforeseen circumstances. The Company further warrants and represents that
except for the Permitted Encumbrances, the security interests granted herein
constitute and shall at all times constitute the first and only liens on the
Collateral; that, except for the Permitted Encumbrances, the Company is or will
be at the time Inventory or additional Collateral is acquired by it, the
absolute owner of such Inventory or the Collateral with full right to pledge,
sell, consign, transfer and create a security interest therein, free and clear
of any and all claims or liens in favor of others; that the Company will at its
expense forever warrant and, at CITBC's request, defend the same from any and
all claims and demands of any other person other than the Permitted
Encumbrances; that the Company will not grant, create or permit to exist, any
lien upon or security interest in the Inventory or Collateral, or any proceeds
thereof, in favor of any other person other than the holders of the Permitted
Encumbrances; and that the Equipment does not comprise a part of the Inventory
of the Company and that the Equipment is and will only be used by the Company in
its business and will not be held for sale or lease, or removed from its
premises, or otherwise disposed of by the Company without the prior written
approval of CITBC except as otherwise permitted in paragraph 4 of Section 6 of
this Financing Agreement.
2. The Company agrees to maintain books and records pertaining to the
Inventory and Collateral in such detail, form and scope as CITBC shall
reasonably require. The Company agrees that CITBC or its agents may enter upon
the Company's premises at any time after reasonable notice during normal
business hours, and from time to time, for the purpose of inspecting the
Collateral and the Inventory, and any and all records pertaining thereto
provided, however, that CITBC is not required to provide any such prior notice
upon the occurrence of i) a Default that has not been waived in writing or cured
to the satisfaction of CITBC or ii) an Event of Default that has not been waived
in writing by CITBC. The Company agrees to afford CITBC prior written notice of
any change in the location of any Collateral, other than to locations, that as
of the date hereof, are known to CITBC and at which CITBC has filed financing
statements and otherwise fully perfected its liens thereon. The Company is also
to advise CITBC promptly, in sufficient detail, of any material adverse change
relating to the type, quantity or quality of the Collateral or on the security
interests granted to CITBC therein.
3. The Company agrees to: execute and deliver to CITBC, from time to time,
solely for CITBC's convenience in maintaining a record of the Collateral, such
written statements, and schedules as CITBC may reasonably require, designating,
identifying or describing the Collateral pledged to CITBC hereunder. The
Company's failure, however, to promptly give CITBC such statements, or schedules
shall not affect, diminish, modify or otherwise limit CITBC's security interests
in the Collateral.
-17-
4. The Company agrees to comply with the requirements of all state and
federal laws in order to grant to CITBC valid and perfected first security
interests in the Collateral, subject only to the Permitted Encumbrances. CITBC
is hereby authorized by the Company to file any financing statements covering
the Collateral whether or not the Company's signature appears thereon. The
Company agrees to do whatever CITBC may reasonably request, from time to time,
by way of filing notices of liens, financing statements, amendments, renewals
and continuations thereof, cooperating with CITBC's agents and employees;
keeping Collateral records; transferring proceeds of Collateral to CITBC's
possession; and performing such further acts as CITBC may reasonably require in
order to effect the purposes of this Financing Agreement.
5.(a) The Company agrees to maintain insurance on the Real Estate, Equipment
and Inventory under such policies of insurance, with such insurance companies,
in such reasonable amounts and covering such insurable risks as are at all times
reasonably satisfactory to CITBC. All policies covering the Inventory and
Equipment are, subject to the rights of any holders of Permitted Encumbrances
holding claims senior to CITBC, to be made payable to CITBC, in case of loss,
under a standard non-contributory "mortgagee", "lender" or "secured party"
clause and are to contain such other provisions as CITBC may require to fully
protect CITBC's interest in the Inventory and Equipment and to any payments to
be made under such policies. All original policies or true copies thereof are to
be delivered to CITBC, premium prepaid, with the loss payable endorsement in
CITBC's favor, and shall provide for not less than thirty (30) days prior
written notice to CITBC of the exercise of any right of cancellation. At the
Company's request, or if the Company fails to maintain such insurance, CITBC may
arrange for such insurance, but at the Company's expense and without any
responsibility on CITBC's part for: obtaining the insurance, the solvency of the
insurance companies, the adequacy of the coverage, or the collection of claims.
Upon the occurrence of an Event of Default which is not waived, CITBC shall,
subject to the rights of any holders of Permitted Encumbrances holding claims
senior to CITBC, have the sole right, in the name of CITBC or the Company, to
file claims under any insurance policies, to receive, receipt and give
acquittance for any payments that may be payable thereunder, and to execute any
and all endorsements, receipts, releases, assignments, reassignments or other
documents that may be necessary to effect the collection, compromise or
settlement of any claims under any such insurance policies.
(b) In the event of any loss or damage by fire or other casualty, insurance
proceeds relating to the Equipment or Inventory shall reduce the Company's
Revolving Loan.
6. The Company agrees to pay, when due, all taxes, assessments, claims and
other charges (herein "taxes") lawfully levied or assessed upon the Company or
the Collateral and if such taxes remain unpaid after the date fixed for the
payment thereof unless such taxes are being diligently contested in good faith
by the Company by appropriate proceedings or if any lien shall be claimed
thereunder x) for taxes due the United States of America or y) which in CITBC's
opinion might create a valid obligation having priority over the rights granted
to CITBC herein, CITBC may, on the Company's behalf, pay such taxes, and the
amount thereof shall be an Obligation secured hereby and due to CITBC on demand.
7. The Company: (a) agrees to comply with all acts, rules, regulations and
orders of any legislative, administrative or judicial body or official, which
the failure to comply with would have a material and adverse impact on the
Collateral, or any material part thereof, or on the operation of the Company's
business, provided that the Company may contest any acts, rules, regulations,
orders and directions of such bodies or officials in any reasonable manner which
will not, in CITBC's reasonable opinion, materially and adversely effect CITBC's
rights or priority in the Collateral; (b) agrees to comply with all
environmental statutes, acts, rules, regulations or orders as presently existing
-18-
or as adopted or amended in the future, applicable to the ownership and/or use
of its Real Estate and operation of its business, which the failure to comply
with would have a material and adverse impact on the Collateral, or any material
part thereof, or on the operation of the business of the Company. The Company
hereby indemnifies CITBC and agrees to defend and hold CITBC harmless from and
against any and all loss, damage, claim, liability, injury or expense witch
CITBC may sustain or incur in connection with: any claim or expense asserted
against CITBC as a result of any environmental pollution, hazardous material or
environmental clean-up of the Company's Real Estate; or any claim or expense
which results from the Company's operations (including, but not limited to, the
Company's off-site disposal practices) and the Company further agrees that this
indemnification shall survive termination of this Financing Agreement as well as
the payment of all Obligations or amounts payable hereunder; and (c) shall not
be deemed to have breached any provision of this paragraph 7 if (i) the failure
to comply with the requirements of this paragraph 7 resulted from good faith
error or innocent omission, (ii) the Company promptly commences and diligently
pursues a cure of such breach and (iii) such failure is cured within fifteen
(15) Business Days following the Company's receipt of notice of such failure.
8. Until termination of the Financing Agreement and payment and satisfaction
of all Obligations due hereunder, the Company agrees that, unless CITBC shall
have otherwise consented in writing, the Company will furnish to CITBC, within
ninety (90) days after the end of each fiscal year of the Company, a Balance
Sheet as at the close of such year, and statements of profit and loss, cash flow
and reconciliation of surplus of the Company for such year, audited by
independent public accountants selected by the Company and reasonably
satisfactory to CITBC; within sixty (60) days after the end of each fiscal
quarter a Balance Sheet as at the end of such period and statements of profit
and loss, cash flow and surplus of the Company, certified by an authorized
financial or accounting officer of the Company; and within thirty (30) days
after the end of each month a Balance Sheet as at the end of such period and
statements of profit and loss, cash flow and surplus of the Company for such
period, certified by an authorized financial or accounting officer of the
Company; and from time to time, such further information regarding the business
affairs and financial condition of the Company as CITBC may reasonably request,
including without limitation annual cash flow projections in form satisfactory
to CITBC in its reasonable business judgment. Each financial statement which the
Company is required to submit hereunder must be accompanied by an officer's
certificate, signed by the President, Vice President, Controller, or Treasurer,
pursuant to which any one such officer must certify that: (i) the financial
statement(s) fairly and accurately represent(s) the Company's financial
condition at the end of the particular accounting period, as well as the
Company's operating results during such accounting period, subject to year-end
audit adjustments; (ii) during the particular accounting period: (x) there has
been no Default or Event of Default under this Financing Agreement, provided,
however, that if any such officer has knowledge that any such Default or Event
of Default, has occurred during such period, the existence of and a detailed
description of same shall be set forth in such officer's certificate; and (y)
the Company has not received any notice of cancellation with respect to its
property insurance policies; and (iii) the exhibits attached to such financial
statement(s) constitute detailed calculations showing compliance with all
financial covenants contained in this Financing Agreement.
9. INTENTIONALLY OMITTED
10. Until termination of the Financing Agreement and payment and satisfaction
of all Obligations due hereunder, the Company agrees that, without the prior
written consent of CITBC, except as otherwise herein provided, the Company will
not:
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A. Mortgage, assign, pledge, transfer or otherwise permit any lien,
charge, security interest, encumbrance or judgment, (whether as a
result of a purchase money or title retention transaction, or other
security interest, or otherwise) to exist on any of its assets or
goods, whether real, personal or mixed, whether now owned or hereafter
acquired, except for the Permitted Encumbrances;
B. Incur or create any Indebtedness other than the Permitted
Indebtedness;
C. Borrow any money on the security of the Company's Inventory or
Collateral from sources other than CITBC (other than Permitted
Indebtedness incurred by the granting of Purchase Money Liens);
D. Sell, lease, assign, transfer or otherwise dispose of i) Collateral,
except as otherwise specifically permitted by this Financing
Agreement, or ii) either all or substantially all of the Company's
assets, which do not constitute Collateral;
E. Merge, consolidate or otherwise alter or modify its corporate name,
principal place of business, structure, status or existence, or enter
into or engage in any operation or activity materially different from
that presently being conducted by the Company;
F. Assume, guarantee, endorse, or otherwise become liable upon the
obligations of any person, firm, entity or corporation, except by the
endorsement of negotiable instruments for deposit or collection or
similar transactions in the ordinary course of business;
G. Declare or pay any dividend of any kind on, or purchase, acquire,
redeem or retire, any of the capital stock or equity interest, of any
class whatsoever, whether now or hereafter outstanding; or
H. Make any advance or loan to, or any investment in, any firm, entity,
person or corporation i) such that the original principal amount of
any one (1) loan exceeds $50,000.00 or ii) the aggregate outstanding
principal amount of all loans made by the Company exceeds $300,000.00
at any one time.
11. INTENTIONALLY OMITTED
12. INTENTIONALLY OMITTED
13. INTENTIONALLY OMITTED
14. The Company agrees to advise CITBC in writing of a) all expenditures
(actual or anticipated) in excess of $150,000.00 for x) environmental clean-up,
y) environmental compliance or z) environmental testing and the impact of said
expenses on the Company's Working Capital; and b) any notices the Company
receives from any local, state or federal authority advising the Company of any
environmental liability (real or potential) stemming from the Company's
operations, its premises, its waste disposal practices, or waste disposal sites
used by the Company and to provide CITBC with copies of all such notices if so
required.
15. Without the prior written consent of CITBC, the Company agrees that it
will not enter into any transaction, including, without limitation, any
purchase, sale, lease, loan or exchange of property with any subsidiary or
affiliate of the Company.
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SECTION 8. INTEREST, FEES AND EXPENSES
1. Interest on the Revolving Loan shall be payable monthly as of the end of
each month and shall be an amount equal to the sum of one percent (1%) and the
Chase Manhattan Bank Rate, on a per annum basis, on the average of the net
balances owing by the Company to CITBC in the Company's account at the close of
each day during such month. In the event of any change in said Chase Manhattan
Bank Rate, the rate hereunder shall change, as of the first of the month
following any change, so as to remain one percent (1%) above the Chase Manhattan
Bank Rate. The rate hereunder shall be calculated based on a 360-day year. CITBC
shall be entitled to charge the Company's account at the rate provided for
herein when due until all Obligations have been paid in full.
2. INTENTIONALLY OMITTED
3. In consideration of the Letter of Credit Guaranty of CITBC, the Company
shall pay CITBC the Letter of Credit Guaranty Fee which shall be an amount equal
to two percent (2%) per annum, payable monthly, on the face amount of each
Letter of Credit less the amount of any and all amounts previously drawn under
the Letter of Credit.
4. Any charges, fees, commissions, costs and expenses charged to CITBC for
the Company's account by any Issuing Bank in connection with or arising out of
Letters of Credit issued pursuant to this Financing Agreement or out of
transactions relating thereto will be charged to the Company's account in full
when charged to or paid by CITBC and when made by any such Issuing Bank shall be
conclusive on CITBC.
5. The Company shall reimburse or pay CITBC, as the case may be, for: i) all
Out-of-Pocket Expenses of CITBC and b) any applicable Documentation Fee.
6. Upon the last Business Day of each month, commencing with August 30, 1996,
the Company shall pay CITBC the Line of Credit Fee.
7. To induce CITBC to enter into this Financing Agreement and to extend to
the Company the Revolving Loan, the Company shall pay to CITBC a Loan Facility
Fee in the amount of $75,000.00 payable upon execution of this Financing
greement.
8. Upon each Anniversary Date, the Company shall pay to CITBC the Collateral
Management Fee.
9. Upon the occurrence of an Event of Default and until such time that such
Event of Default is waived in writing by CITBC, the Company shall pay CITBC's
standard charges for, and the fees and expenses of, the CITBC personnel used by
CITBC for reviewing the books and records of the Company and for verifying,
testing, protecting, safeguarding, preserving or disposing of all or any part of
the Collateral which shall be in addition to the Collateral Management Fee.
10. The Company hereby authorizes CITBC to charge the Company's accounts with
CITBC with the amount of all payments due hereunder as such payments become due.
The Company confirms that any charges which CITBC may so make to the Company's
account as herein provided will be made as an accommodation to the Company and
solely at CITBC's discretion.
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SECTION 9. POWERS
The Company hereby constitutes CITBC or any person or agent CITBC may
designate as its attorney-in-fact, at the Company's cost and expense, to
exercise all of the following powers, which being coupled with an interest,
shall be irrevocable until all of the Company's Obligations to CITBC have been
paid in full:
(a) To receive, take, endorse, sign, assign and deliver, all in the name of
CITBC or the Company, any and all checks, notes, drafts, and other documents or
instruments relating to the Collateral;
(b) To receive, open and dispose of all mail addressed to the Company and to
notify postal authorities to change the address for delivery thereof to such
address as CITBC may designate;
(c) To request from customers indebted on Accounts at any time, in the name
of CITBC or the Company or that of CITBC's designee, information concerning the
amounts owing on the Accounts;
(d) To transmit to customers indebted on Accounts notice of CITBC's interest
therein and to notify customers indebted on Accounts to make payment directly to
CITBC for the Company's account; and
(e) To take or bring, in the name of CITBC or the Company, all steps,
actions, suits or proceedings deemed by CITBC necessary or desirable to enforce
or effect collection of the Accounts.
Notwithstanding anything hereinabove contained to the contrary, the powers
set forth in (b), (d) and (e) above may only be exercised after the occurrence
of an Event of Default and until such time as such Event of Default is waived.
SECTION 10. EVENTS OF DEFAULT AND REMEDIES
1. Notwithstanding anything hereinabove to the contrary, CITBC may terminate
this Financing Agreement immediately upon the occurrence of any of the following
(herein "Events of Default"):
a) cessation of the business of the Company or the calling of a meeting
of the creditors of the Company for purposes of compromising the debts
and obligations of the Company;
b) the failure of the Company to generally meet debts as they mature;
c) the commencement by or against the Company of any bankruptcy,
insolvency, arrangement, reorganization, receivership or similar
proceedings under any federal or state law;
d) breach by the Company of any warranty, representation or covenant
contained herein (other than those referred to in sub-paragraph e
below) or in any other written agreement between the Company or CITBC,
provided that such Default by the Company of any of the warranties,
representations or covenants referred in this clause d shall not be
deemed to be an Event of Default unless and until such Default shall
remain unremedied to CITBC's satisfaction for a period of ten (10)
Business Days from the date of such Default;
e) breach by the Company of any warranty, representation or covenant of
Section 3, Paragraphs 3 (other than the third sentence of paragraph 3)
and 4; Section 6, Paragraphs 3 and 4 (other than the first sentence of
paragraph 4); Section 7, Paragraphs 1,5,6, and 10;
-22-
f) failure of the Company to pay any of the Obligations within five (5)
Business Days of the due date thereof, provided that nothing contained
herein shall prohibit CITBC from charging such amounts to the
Company's account on the due date thereof; or
g) the Company shall i) engage in any "prohibited transaction" as defined
in ERISA, ii) have any "accumulated funding deficiency" as defined in
ERISA, iii) have any Reportable Event as defined in ERISA, iv)
terminate any Plan, as defined in ERISA or v) be engaged in any
proceeding in which the Pension Benefit Guaranty Corporation shall
seek appointment, or is appointed, as trustee or administrator of any
Plan, as defined in ERISA, and with respect to this sub-paragraph h
such event or condition x) remains uncured for a period of thirty (30)
Business Days from date of occurrence and y) could, in the reasonable
opinion of CITBC, subject the Company to any tax, penalty or other
liability material to the business, operations or financial condition
of the Company.
2. Upon the occurrence of i) a Default that has not been cured to the
satisfaction of CITBC or waived in writing by CITBC and/or ii) an Event of
Default that has not been waived in writing by CITBC, at the option of CITBC,
all loans and advances provided for in paragraph 1 of Section 3 of this
Financing Agreement shall be thereafter in CITBC's sole discretion and the
obligation of CITBC to make revolving loans and/or open Letters of Credit shall
cease unless such Default is cured to CITBC's reasonable satisfaction within the
applicable grace period or Event of Default is waived by CITBC and at the option
of CITBC upon the occurrence of an Event of Default: i) all Obligations shall
become immediately due and payable; ii) CITBC may charge the Company the Default
Rate of Interest on all then outstanding or thereafter incurred Obligations in
lieu of the interest provided for in paragraph one of Section 8 of this
Financing Agreement provided a) CITBC has given the Company written notice of
the Event of Default, provided, however, that no notice is required if the Event
of Default is the Event of Default listed in paragraph I (c) of this Section 10
and b) the Company has failed to cure the Event of Default within ten (10)
Business Days after x) CITBC deposited such notice in the United States mail or
y) the occurrence of the Event of Default fisted in paragraph I (c) of this
Section 10; and iii) CITBC may immediately terminate this Financing Agreement
upon notice to the Company, provided, however, that no notice of termination is
required if the Event of Default is the Event of Default fisted in paragraph
l(c) of this Section 10. The exercise of any option is not exclusive of any
other option which may be exercised at any time by CITBC.
3. Immediately upon the occurrence of any Event of Default, CITBC may to the
extent permitted by law: (a) remove from any premises where same may be located
any and all documents, instruments, files and records, and any receptacles or
cabinets containing same, relating to the Accounts, or CITBC may use, at the
Company's expense, such of the Company's personnel, supplies or space at the
Company's places of business or otherwise, as may be necessary to properly
administer and control the Accounts or the handling of collections and
realizations thereon; (b) bring suit, in the name of the Company or CITBC, and
generally shall have all other rights respecting said Accounts, including
without limitation the right to: accelerate or extend the time of payment,
settle, compromise, release in whole or in part any amounts owing on any
Accounts and issue credits in the name of the Company or CITBC; (c) in a
commercially reasonable manner sell, assign and deliver the Collateral and any
returned, reclaimed or repossessed merchandise, with or without advertisement,
at public or private sale, for cash, on credit or otherwise, at CITBC's sole
option and discretion, and CITBC may bid or become a purchaser at any such sale,
free from any right of redemption, which right is hereby expressly waived by the
Company; (d) in a commercially reasonable manner, foreclose the security
interests created herein by any available judicial procedure, or to take
possession of
-23-
any or all of the returned, reclaimed or repossessed Inventory and Equipment
without judicial process, and to enter any premises where any such Inventory and
Equipment may be located for the purpose of taking possession of or removing the
same and (e) exercise any other rights and remedies provided in law, in equity,
by contract or otherwise. CITBC shall have the right, without notice or
advertisement, to sell, lease, or otherwise dispose of all or any part of the
Collateral whether in its then condition or after further preparation or
processing, in the name of the Company or CITBC, or in the name of such other
party as CITBC may designate, either at public or private sale or at any
broker's board, in lots or in bulk, for cash or for credit, with or without
warranties or representations, and upon such other terms and conditions as CITBC
in its sole discretion may deem advisable, and CITBC shall have the right to
purchase at any such sale. If any such Inventory and Equipment shall require
rebuilding, repairing, maintenance or preparation, CITBC shall have the right,
at its option, to do such of the aforesaid as is necessary, for the purpose of
putting such Inventory and Equipment in such saleable form as CITBC shall deem
appropriate in its reasonable business discretion. The Company agrees, at the
request of CITBC, to assemble such Inventory and Equipment and to make it
available to CITBC at premises of the Company or elsewhere and to make available
to CITBC the premises and facilities of the Company for the purpose of CITBC's
taking possession of, removing or putting such Inventory and Equipment in
saleable form. However, if notice of intended disposition of any Collateral is
required by law, it is agreed that ten (10) Business Days notice shall
constitute reasonable notification an compliance with the law. The net cash
proceeds resulting from CITBC's exercise of any of the foregoing rights, (after
deducting all charges, costs and expenses, including reasonable attorneys' fees)
shall be applied by CITB to the payment of the Company's Obligations, whether
due or to become due, in such order as CITBC may elect, and the Company shall
remain liable to CITBC for any deficiencies, and CITBC in turn agrees to remit
to the Company or its successors or assigns, any surplus resulting therefrom.
The enumeration of the foregoing rights is not intended to be exhaustive and the
exercise of any right shall not preclude the exercise of any other rights, all
of which shall be cumulative.
SECTION 11. TERMINATION
Except as otherwise permitted herein, CITBC may terminate this Financing
Agreement and the Line of Credit only as of the second or any subsequent
Anniversary Date and then only by giving the Company at least sixty (60) days
prior written notice of termination. Notwithstanding the foregoing CITBC may
terminate the Financing Agreement immediately upon the occurrence of an Event of
Default that has not been waived in writing by CITBC, provided, however, that if
the Event of Default is an event listed in paragraph 1 (c) of Section 10 of this
Financing Agreement, CITBC may regard the Financing Agreement as terminated and
notice to that effect is not required. This Financing Agreement, unless
terminated as herein provided, shall automatically continue from Anniversary
Date to Anniversary Date. The Company may terminate this Financing Agreement and
the Line of Credit at any time upon at least sixty (60) days' prior written
notice to CITBC, provided, however, that if such termination is prior to the
second Anniversary Date that the Company pays to CITBC immediately on demand, an
Early Termination Fee. All Obligations shall become due and payable as of any
termination hereunder or under Section 10 hereof and, pending a final
accounting, CITBC may withhold any balances in the Company's account (unless
supplied with an indemnity satisfactory to CITBC) to cover all of the Company's
Obligations, whether absolute or contingent. All of CITBC'S rights, liens and
security interests shall continue after any termination until all Obligations
have been paid and satisfied in full.
-24-
SECTION 12. MISCELLANEOUS
1. The Company hereby waives diligence, demand, presentment and protest and
any notices thereof as well as notice of nonpayment. No delay or omission of
CITBC or the Company to exercise any right or remedy hereunder, whether before
or after the happening of any Event of Default, shall impair any such right or
shall operate as a waiver thereof or as a waiver of any such Event of Default.
No single or partial exercise by CITBC of any right or remedy precludes any
other or further exercise thereof, or precludes any other right or remedy.
2. This Financing Agreement and the documents executed and delivered in
connection therewith constitute the entire agreement between the Company and
CITBC; supersede any prior agreements; can be changed only by a writing signed
by both the Company and CITBC; and shall bind and benefit the Company and CITBC
and their respective successors and assigns,
3. In no event shall the Company, upon demand by CITBC for payment of any
indebtedness relating hereto, by acceleration of the maturity thereof, or
otherwise, be obligated to pay interest and fees in excess of the amount
permitted by law. Regardless of any provision herein or in any agreement made in
connection herewith, CITBC shall never be entitled to receive, charge or apply,
as interest on any indebtedness relating hereto, any amount in excess of the
maximum amount of interest permissible under applicable law. If CITBC ever
receives, collects or applies any such excess, it shall be deemed a partial
repayment of principal and treated as such; and if principal is paid in full,
any remaining excess shall be refunded to the Company. This paragraph shall
control every other provision hereof and of any other agreement made in
connection herewith.
4. If any provision hereof or of any other agreement made in connection
herewith is held to be illegal or unenforceable, such provision shall be fully
severable, and the remaining provisions of the applicable agreement shall remain
in fall force and effect and shall not be affected by such provision's
severance. Furthermore, in lieu of any such provision, there shall be added
automatically as a part of the applicable agreement a legal and enforceable
provision as similar in terms to the severed provision as may be possible.
5. THE COMPANY AND CITBC EACH HEREBY WAIVE ANY RIGHT TO A TRIAL BY JURY IN
ANY ACTION OR PROCEEDING ARISING OUT OF THIS FINANCING AGREEMENT. THE COMPANY
HEREBY IRREVOCABLY WAIVES PERSONAL SERVICE OF PROCESS AND CONSENTS TO SERVICE OF
PROCESS BY CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED.
6. Except as otherwise herein provided, any notice or other communication
required hereunder shall be in writing, and shall be deemed to have been validly
served, given or delivered when hand delivered or sent by facsimile (receipt
acknowledged), or three Business Days after deposit in the United States mails,
with proper first class postage prepaid, or one day after delivery by overnight
carrier, and addressed to the party to be notified as follows:
-25-
(A) if to CITBC, at:
The CIT Group/Business Credit, Inc.
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Regional Manager
(B) if to the Company at:
0000 Xxxxxx Xxxxxxxxx
Xxxxxxxxx, Xxx Xxxxxx 00000
Attn: President
or to such other address as any party may designate for itself by like notice.
7. THE VALIDITY, INTERPRETATION AND ENFORCEMENT OF THIS FINANCING AGREEMENT
SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
IN WITNESS WHEREOF, the parties hereto have caused this Financing Agreement
to be executed, agreed to, accepted and delivered in New York, New York by their
proper and duly authorized officers as of the date set forth above.
Very truly yours,
THE CIT GROUP/BUSINESS CREDIT, INC.
By /s/ [Signature Illegible]
---------------------------------------
Vice President
Read and Agreed to:
ICON CMT CORP.
By /s/ [Signature Illegible] (Seal)
----------------------------- -------------
Title: President Secretary
Executed and Accepted at
New York, New York
THE CIT GROUP/BUSINESS CREDIT, INC.
By /s/ [Signature Illegible]
----------------------------------------
Title: Vice President
-27-
(A) if to CITBC, at:
The CIT Group/Business Credit, Inc.
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Regional Manager
(B) if to the Company at:
0000 Xxxxxx Xxxxxxxxx
Xxxxxxxxx, Xxx Xxxxxx 00000
Attn: President
or to such other address as any party may designate for itself by like notice.
7. THE VALIDITY, INTERPRETATION AND ENFORCEMENT OF THIS FINANCING AGREEMENT
SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
IN WITNESS WHEREOF, the parties hereto have caused this Financing Agreement
to be executed, agreed to, accepted and delivered in New York, New York by their
proper and duly authorized officers as of the date set forth above.
Very truly yours,
THE CIT GROUP/BUSINESS CREDIT, INC.
By /s/ [Signature Illegible]
---------------------------------------
Vice President
Read and Agreed to:
ICON CMT CORP.
By /s/ [Signature Illegible] /s/ [Signature Illegible] (Seal)
----------------------------- ------------------------
Title: President Secretary
Executed and Accepted at
New York, New York
THE CIT GROUP/BUSINESS CREDIT, INC.
By /s/ [Signature Illegible]
----------------------------------------
Title: Vice President
-27-
