TERM NOTE
Philadelphia, Pennsylvania
October 1, 1997
$10,000,000
FOR VALUE RECEIVED, and intending to be legally bound hereby, XXXXX
APPAREL GROUP, INC., a Pennsylvania corporation with offices at 000
Xxxxxxxxxxx Xxxxxx, Xxxxxxx, XX 00000 (the "Borrower") unconditionally
promises to pay to the order of FIRST UNION NATIONAL BANK (the "Bank")
the principal sum of Ten Million Dollars ($10,000,000), with interest,
in accordance with the provisions hereinafter set forth.
A. Terms of Note.
1. Interest Rate. Interest will accrue on the outstanding
principal balance of this Note during each Interest
Period at a rate per annum (computed on the basis of a
360-day year and the actual number of days elapsed)
equal to the sum of the One Month LIBOR for such
Interest Period, plus 60 basis points (.6 of 1%). The
term "Interest Period" means the calendar month. The
term "One Month LIBOR" means the rate for U.S. dollar
deposits of one month maturity as reported on Telerate
page 3750 as of 11:00 a.m., London time, on the second
London business day before the relevant Interest Period
begins (or if not so reported, then as determined by
the Bank from another recognized source or interbank
quotation).
2. Payment of Principal and Interest. This Note shall be
Paid in one hundred nineteen (119) consecutive monthly
installments of principal and interest on the first day
Of each month (or, if not a business day, the next
succeeding business day) commencing on November 3,
1997, in an amount equal to the sum of (i) all accrued
and unpaid interest on the Note plus (ii) a principal
payment of $83,333.33, with a final installment of
principal and interest on the Maturity Date in an
amount equal to the sum of (i) all accrued and unpaid
interest on the Note plus (ii) a principal payment of
$83,333.73.
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3. Payment Terms. All payments made hereunder shall be
made on the due date thereof, in immediately available
funds and in lawful currency of the United States of
America. All payments made hereunder shall be made to
the Bank at its offices set forth in this Note or at
such other address as the Bank shall notify the
Borrower of in writing.
4. Late Charge. If any payment is not paid in full when
the same is due, the Borrower shall pay the Bank a fee
on such unpaid amount equal to five percent (5%) of
such amount.
5. Default Rate. At the Bank's option, interest will be
assessed on any principal which remains unpaid at the
maturity of this Note, whether by acceleration or
otherwise, at a rate which is two percent (2%) higher
than the rate otherwise charged hereunder (the "Default
Rate") provided that at no time shall the Default Rate
exceed the highest rate of interest allowed by law.
Such Default Rate of interest shall also be charged on
the amounts owed by the Borrower to the Bank pursuant
to any judgment entered in favor of Bank with respect
to this Note.
6. Prepayment. Borrower may, without penalty or premium,
on any date installments of principal are due, prepay
the principal amount of this Note in whole or in part,
any partial prepayment to be made in the sum of
$83,333.33 or an integral multiple thereof. All such
partial prepayments shall be applied against the
installments of principal due under Paragraph A.2 above
in the inverse order of maturity thereof.
7. Security for Note.
7.1. As security for the payment of all amounts owing
under this Note, the Borrower will execute and
deliver to the Bank the Deed of Trust (as
hereinafter defined) at the time of the
acquisition of the Project (as hereinafter
defined).
7.2 As security for the payment of all amounts owing
under this Note, the Borrower hereby assigns and
grants to the Bank a security interest in and to
the Project Account (as hereinafter defined)
pursuant to a separate Assignment of Interest in a
Custodian Account of even date herewith. Unless
there has occurred an Event of Default under this
Note, Borrower may withdraw from the Project
Account (i) all accrued earnings for any corporate
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purpose or use, and (ii) amounts in excess of the
accrued earnings so long as the funds withdrawn
are used for the acquisition or construction of
the Project or the purchase of equipment to be
installed on the Project; provided, however, that
until the Deed of Trust is recorded, aggregate
withdrawals from the Project Account (other than
withdrawals of accrued earnings) will not exceed
$500,000.00. At the time of any permitted
withdrawal from the Project Account (other than
withdrawals of accrued earnings), the Chief
Financial Officer of the Borrower (or his written
designee) will certify in writing to the Bank that
the funds withdrawn are for the uses herein
permitted.
B. Certain Definitions. As used herein, the following terms
shall have the following meanings (additional terms are defined
elsewhere in this Note):
1. Affiliate. The term "Affiliate" means First Union
Corporation and any of its direct and indirect
affiliates and subsidiaries.
2. Consolidated Net Income. The term "Consolidated Net
Income" means, for any period, the net income after
taxes of the Borrower and its subsidiaries for such
period, as shown by the consolidated income statement
of the Borrower and its subsidiaries, calculated in
accordance with GAAP.
3. Consolidated Tangible Net Worth. The term "Consolidated
Tangible Net Worth" means, at any time, the sum of
Stockholders' Equity plus the lesser of the cost of the
Borrower's treasury stock purchased after June 29,
1997, or Fifty Million Dollars ($50,000,000), less the
sum of:
(a) Any surplus resulting from any write-up of assets;
(b) Goodwill, including any amounts, however
designated on the consolidated balance sheet of
the Borrower and its subsidiaries, representing
the excess of the purchase price paid for assets
or stock acquired over the value assigned thereto
on the books of the Borrower and its subsidiaries;
(c) Patents, trademarks, trade names and copyrights;
(d) Any amount at which shares of capital stock of the
Borrower or any subsidiary appear as an asset on
the consolidated balance sheet of the Borrower and
its subsidiaries;
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(e) Loans and advances to stockholders, directors,
officers or employees or to any affiliate of the
Borrower or any subsidiary; and
(f) Deferred expenses
4. Funded Debt. The term "Funded Debt" means any and all
indebtedness, obligations or liabilities (whether
matured or unmatured, liquidated or unliquidated,
direct or indirect, absolute or contingent, or joint or
several) for or in respect of: W borrowed money, (ii)
amounts raised under or liabilities in respect of any
note purchase or acceptance credit facility,(iii)
reimbursement obligations under any letter of credit,
currency swap agreement, interest rate swap, cap,
collar or floor agreement or other interest rate
management device, (iv) any other transaction
(including without limitation forward sale or purchase
agreements, capitalized leases, synthetic leases and
conditional sales agreements) having the commercial
effect of a borrowing of money entered into to finance
its operations or capital requirements (but not
including trade payables and accrued expenses incurred
in the ordinary course of business which are not
represented by a promissory note or other evidence of
indebtedness), or (v) any guaranty of Funded Debt for
borrowed money.
5. GAAP. The term "GAAP" means generally accepted
accounting principles as in effect at the time of
application to the provisions hereof, consistently
applied.
6. Guarantors. The term "Guarantors" means, individually
and collectively, Melru Corp., Xxxxx Investment Company
Inc., Xxxxx International Ltd., and Xxxxx Holding Corp.
7. Guaranties. The term "Guaranties" means those
agreements now or hereafter in effect, from the
Guarantors in favor of the Bank.
8. Liabilities. The term "Liabilities" means any and all
obligations and indebtedness of every kind and
description of the Borrower owing to the Bank or to any
Affiliate, whether under the Loan Documents or not and
whether such debts or obligations are primary or
secondary, direct or indirect, absolute or contingent,
sole, joint or several, secured or unsecured, due or to
become due, contractual or tortious, arising by
operation of law or otherwise, or now or hereafter
existing, including, without limitation, principal,
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interest, fees, late fees, expenses, attorneys' fees
and costs.
9. Loan Documents. The term "Loan Documents" means this
Note, the Deed of Trust, the Guaranties and any and all
credit accommodations, notes, mortgages, loan
agreements, other agreements and documents, now or
hereafter existing, creating, evidencing, guarantying,
securing or relating to any or all of the Liabilities,
together with all amendments, modifications, renewals,
or extensions thereof.
10. Deed of Trust. The term "Deed of Trust" means a Deed
of Trust and Security Agreement in form and substance
reasonably acceptable to the Borrower and the Bank to
be executed and delivered by the Borrower to the Bank
which, when recorded, will grant to the Bank a first
lien on and first priority security interest in the
Project and all equipment to be installed thereon.
11. Note. The term "Note" means this Term Note together
with all attachments hereto and all amendments and
modifications hereto in effect from time to time.
12. Obligor. The term "Obligor" means the Borrower and
each and every maker, endorser, guarantor or surety
including, without limitation, the Guarantors, of or
For the Liabilities or any part thereof.
13. Maturity Date. The term "Maturity Date" means
October 1, 2007.
14. Project. The term "Project" means approximately 47.3
acres of land in South Xxxx, Xxxxxxxx, to be acquired
by the Borrower and all improvements, including the
warehouse and distribution center buildings, to be
constructed thereon.
15. Project Account. The term "Project Account" means the
Borrower's Money Management Custodian Account at the
Bank (No. 1556594048) into which the
loan proceeds of the Note have been deposited.
16. Stockholders' Equity. The term "Stockholders' Equity"
means, at any time, sum of the following accounts set
forth in a consolidated balance sheet of the Borrower
and its subsidiaries, prepared in accordance with GAAP:
(a) the par or stated value of all outstanding capital
stock; (b) capital surplus; and (c) retained earnings.
17. Total Capital. The term "Total Capital" means
Stockholders, Equity plus Funded Debt.
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C. Representations and Warranties. The Borrower represents and
warrants to the Bank that:
1. Use of Proceeds. The proceeds of the Note will be used
only for the acquisition or construction of the Project
or the purchase of equipment installed on the Project.
2. Financial Statements. All financial statements
heretofore delivered by the Borrower to the Bank are
true, correct, and complete in all material respects,
fairly represent the Borrower's and Guarantors'
financial condition as of the date hereof, and no
information has been omitted which would make the
information previously furnished misleading or
incorrect in any material respect. There have been no
material adverse changes in the Borrower's or
Guarantors' financial condition or business since the
date of such statements.
3. Suits and Defaults. There are no actions, suits,
proceedings, or claims pending or threatened against
the Borrower or Guarantors or any of their property,
and the Borrower and Guarantors are not in violation of
any applicable order, law, rule or regulation, which
would have material adverse effect on the Borrower's or
Guarantors' business. The Borrower and Guarantors are
not in default under any agreement to which the
Borrower or the Guarantors are a party or by which the
Borrower or the Guarantors or any of their property is
bound, or under any instrument evidencing any
indebtedness of the Borrower or Guarantors, and neither
the Borrower's nor Guarantors' execution of or
performance under the Loan Documents will create a
default or any lien or encumbrance under any such
agreement or instrument other than a lien or
encumbrance in favor of the Bank.
D. Affirmative Covenants. The Borrower covenants and agrees
that so long as there are any outstanding amounts due under this
Note, the Borrower shall:
1. Financial Reporting. Promptly deliver to the Bank (but
in no event later than thirty (30) days after they are
filed) all regular and periodic reports including, but
not limited to, Forms 10-K, 10-Q and 8-K filed by the
Borrower with the U.S. Securities and Exchange
Commission, or its successor. If the Borrower ceases to
be subject to the reporting requirements under the
Securities Exchange Act of 1934, the Borrower will
deliver to the Bank audited annual consolidated
financial statements within ninety (90) days of the end
of each year and unaudited quarterly consolidated
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financial statements within forty-five (45) days of the
end of each of the first three fiscal quarters
certified as accurate by the Borrower's Chief Financial
Officer, such financial statements to be prepared in
accordance with GAAP in form reasonably acceptable to
the Bank.
2. Project Account. Maintain and operate the Project
Account in accordance with Paragraph A.7.2 hereof.
3. Notice of Certain Events. Promptly give written notice
to the Bank of: (i) the occurrence of any event which
alone or with notice, the passage of time, or both,
would constitute an Event of Default; and (ii) the
commencement of any proceeding or litigation which, if
adversely determined, would materially and adversely
affect its financial condition or ability to conduct
its business.
4. Consolidated Tangible Net Worth. Maintain Consolidated
Tangible Net Worth, measured at the end of each fiscal
quarter, of Three Hundred Twenty-Five Million Dollars
($325,000,000) plus fifty percent (50%) of Consolidated
Net Income for each of the fiscal quarters after
December 31, 1996, with no deduction for any quarterly
losses.
5. Additional Affirmative Covenants. Shall perform any
other affirmative covenants set forth in the Loan
Documents to which the Borrower is a party.
6. Covenant Compliance Certificate. Within ninety (90)
days after the end each fiscal year, deliver to the
Bank a covenant compliance certificate in form
acceptable to the Bank indicating with specificity the
compliance or non-compliance with each of the
affirmative and negative covenants in the Loan
Documents.
E. Negative Covenants. So long as any amounts due under this
Note are outstanding, the Borrower shall not, without the
prior written consent of the Bank:
1. Funded Debt. Permit the ratio of its Funded Debt
divided by its Total Capital to exceed forty-five
percent (45%).
2. Additional Negative Covenants. Undertake any
activities prohibited by any negative covenant set
forth in the Loan Documents to which the Borrower is a
party.
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F. Event of Default. The occurrence of any one of the
following shall-constitute an Event of Default under this
Note:
1. Nonpayment. Failure to pay any principal or interest
payment when due under the Liabilities and such failure
shall continue for a period of three (3) days;
2. Breach. A breach by any obligor of any term,
obligation, provision, covenant, representation or
warranty, arising under (i) this Note, or any other
Loan Document; (ii) any present or future agreement
with or in favor of the Bank and/or any Affiliate,
including the failure to make any payment when due; or
(iii) any present or future agreement or instrument for
borrowed money or other financial accommodations with
any person or entity, which breach is not cured or
satisfied within ten (10)days;
3. Bankruptcy; Insolvency. (i) Any obligor commences any
bankruptcy, reorganization, debt arrangement, or other
case or proceeding under the United States Bankruptcy
Code or under any similar foreign, federal, state, or
local statute, or any dissolution or liquidation
proceeding, or makes a general assignment for the
benefit of creditors, or takes any action for the
purpose of effecting any of the foregoing; (ii) Any
bankruptcy, reorganization, debt arrangement, or other
case or proceeding under the United States Bankruptcy
Code or under any similar foreign, federal, state or
local statute, or any dissolution or liquidation
proceeding, is involuntarily commenced against or in
respect of any Obligor or an order for relief is
entered in any such proceeding; (iii) The appointment,
or the filing of a petition seeking the appointment, of
a custodian, receiver, trustee, or liquidator for any
Obligor or any of its property, or the taking of
possession of any part of the property of any Obligor
at the instance of any governmental authority; or (iv)
Any Obligor becomes insolvent (however defined), is
generally not paying its debts as they become due, or
has suspended transaction of its usual business;
4. Material Misstatement. Any statement, representation or
warranty made in or pursuant to this Note or any
other Loan Document or to induce the Bank to enter into
this Note shall prove to be untrue or misleading in any
material respect;
5. Transfer of Assets. Any Obligor transfers or sells all
or substantially all of its assets, without the prior
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written consent of the Bank, which consent shall not be
unreasonably withheld.
G. Remedies.
1. Acceleration of Liabilities; Rights of Bank. Upon the
occurrence of an Event of Default described in Section
F hereof (other than any Event of Default described in
Paragraph F.3), at the Bank's sole option, the Bank's
commitment, if any, to make any further advances or
loans to the Borrower under any Loan Document shall
terminate and the Loan and all other Liabilities shall
immediately become due and payable in full, all without
protest, presentment, demand or further notice of any
kind to the Borrower or any other Obligor, all of which
are expressly waived. Upon the occurrence of an Event
of Default described in Paragraph F.3 hereof,
immediately and automatically, the Bank's commitment,
if any, to make any further advances or loans to the
Borrower under any Loan Document, shall terminate, and
the Loan and all other Liabilities shall immediately
become due and payable in full, all without protest,
presentment, demand or further notice of any kind to
the Borrower or any other obligor, all of which are
expressly waived. Upon and following an Event of
Default, the Bank, at its option, may exercise any and
all rights and remedies it has under this Note, the
other Loan Documents and under applicable law,
including, without limitation, the right to charge and
collect interest on the principal portion of the
Liabilities at the Default Rate, which rate shall, at
the Bank's option, apply upon and after an Event of
Default, maturity, whether by acceleration or
otherwise, and the entry of judgment with respect to
any or all of the Liabilities. Upon and following an
Event of Default hereunder, the Bank may proceed to
protect and enforce the Bank's rights under any Loan
Document and/or under applicable law by action at law,
in equity, or other appropriate proceeding, including,
without limitation, an action for specific performance
to enforce or aid in the enforcement of any provision
contained herein or in any other Loan Document.
2. Right of Set-off. If any of the Liabilities shall be
due and payable and whether or not the Bank shall have
made any demand under this Note and regardless of the
adequacy of any collateral for the Liabilities or other
means of obtaining repayment of the Liabilities, the
Bank shall have the right, without notice to the
Borrower or to any other Obligor, and is specifically
authorized hereby to set-off against and apply to the
then unpaid balance of the Liabilities any items or
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funds of the Borrower and/or any Obligor held by the
Bank or any Affiliate, any and all deposits (whether
general or special, time or demand, matured or
unmatured) or any other property of the Borrower and/or
any Obligor, including, without limitation, securities
and/or certificates of deposit, now or hereafter
maintained by the Borrower and/or any Obligor for its
or their own account with the Bank or any Affiliate,
and any other indebtedness at any time held or owing by
the Bank or any Affiliate to or for the credit or the
account of the Borrower and/or any Obligor, even if
effecting such set-off results in a loss or reduction
of interest or the imposition of a penalty applicable
to the early withdrawal of time deposits. For such
purpose, the Bank shall have, and the Borrower hereby
grants to the Bank, a first lien on and security
interest in such deposits, property, funds and accounts
and the proceeds thereof. The Borrower further
authorizes any Affiliate, upon and following the
occurrence of an Event of Default, at the request of
the Bank, and without notice to the Borrower, to turn
over to the Bank any property of the Borrower,
including, without limitation, funds and securities
held by the Affiliate for the Borrower's account, and
to debit any deposit account maintained by the Borrower
with such Affiliate (even if such deposit account is
not then due or there results a loss or reduction of
interest or the imposition of a penalty in accordance
with law applicable to the early withdrawal of time
deposits), in the amount requested by the Bank up to
the amount of the Liabilities, and to pay or transfer
such amount or property to the Bank for application to
the Liabilities.
3. Remedies Cumulative; No Waiver. The rights, powers and
remedies hereunder and under the other Loan Documents
are cumulative and concurrent, and are not exclusive of
any other rights, powers or remedies available to the
Bank. No failure or delay on the part of the Bank in
the exercise of any right, power or remedy shall
operate as a waiver thereof, nor shall any single or
partial exercise of any right, power or remedy preclude
any other or further exercise thereof, or the exercise
of any other right, power or remedy.
4. Continuing Enforcement of the Loan Documents. If,
after receipt of any payment of all or any part of the
Note or the Liabilities, the Bank is compelled or
agrees, for settlement purposes, to surrender such
payment to any person or entity for any reason, then
this Note and the other Loan Documents shall continue
in full force and effect or be reinstated, as the case
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may be. The provisions of this Paragraph shall survive
the termination of this Note and the other Loan
Documents and shall be and remain effective
notwithstanding the payment of the Liabilities, the
cancellation of the Note, the release of any security
interest, lien or encumbrance securing the Liabilities
or any other action which the Bank may have taken in
reliance upon its receipt of such payment.
H. Miscellaneous.
1. Waiver of Demand. The Borrower (i) waives presentment,
notice of dishonor and protest of this Note; (ii)
consents to any and all extensions of time, renewals,
waivers, or modifications that may be granted by the
Bank with respect to the payment or other provisions
of this Note; and (iii) agrees that makers, endorsers,
guarantors, including but not limited to the
Guarantors, and sureties for the indebtedness evidenced
hereby may be added or released without notice to the
Borrower and without affecting the Borrower's liability
hereunder. The liability of the Borrower hereunder
shall be absolute and unconditional.
2. Notices. Notices and communications under this Note
shall be in writing and shall be given by either (i)
hand-delivery, (ii) first class mail (postage prepaid),
or (iii) reliable overnight commercial courier (charges
prepaid) to the addresses listed in this Note. Notice
shall be deemed to have been given and received (a) if
by hand delivery, upon delivery, (b) if by mail, three
(3) calendar days after the date first deposited in the
United States mail, and (c) if by overnight courier, on
the date scheduled for delivery. A party may change
its address by giving written notice to the other party
as specified herein.
3. Costs and Expenses. The Borrower shall promptly pay
(or reimburse, as the Bank may elect) all costs and
expenses which the Bank may hereafter incur after the
occurrence of an Event of Default in connection with
the enforcement of this Note and the other Loan
Documents, the collection of all amounts due under this
Note and the other Loan Documents. The Borrower's
reimbursement obligations under this Paragraph shall
survive any termination of this Note or any other Loan
Document.
4. Payment Due on a Day Other than a Business Day. If any
payment due or action to be taken under this Note or
any other Loan Document falls due or is required to be
taken on a day that the Bank is not open for business,
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such payment or action shall be made or taken on the
next succeeding day when the Bank is open for business
and such extended time shall be included in the
computation of interest.
5. Governing Law. This Note shall be construed in
accordance with and governed by the substantive laws of
the Commonwealth of Pennsylvania without reference to
conflict of laws principles.
6. Integration; Amendment. This Note and the other Loan
Documents constitute the sole agreement of the parties
with respect to the subject matter hereof and thereof
and supersede all oral negotiations and prior writings
with respect to the subject matter hereof and thereof.
No amendment of this Note, and no waiver of any one or
more of the provisions hereof shall be effective unless
set forth in writing and signed by the parties hereto.
7. Successors and Assigns. This Note (i) shall be binding
upon the Borrower and the Bank and, where applicable,
their respective heirs, executors, administrators,
successors and permitted assigns, and (ii) shall inure
to the benefit of the Borrower and the Bank and, where
applicable, their respective heirs, executors,
administrators, successors and permitted assigns;
provided, however, that the Borrower may not assign its
rights or obligations hereunder or any interest herein
without the prior written consent of the Bank, and any
such assignment or attempted assignment by the Borrower
shall be void and of no effect with respect to the
Bank. The Bank may from time to time sell or assign,
in whole or in part, or grant participations in the
Loan and/or the Note and/or the obligations evidenced
thereby. The Borrower authorizes the Bank to provide
information concerning the Borrower to any prospective
purchaser, assignee or participant in compliance with
the banks internal confidentiality procedures.
8. Severability and Consistency. The illegality,
unenforceability or inconsistency of any provision of
this Note or any instrument or agreement required
hereunder shall not in any way affect or impair the
legality, enforceability or consistency of the
remaining provisions of this Note or any instrument or
agreement required hereunder. The Loan Documents are
intended to be consistent. However, in the event of
any inconsistencies among any of the Loan Documents,
such inconsistency shall not affect the validity or
enforceability of any Loan Document. The Borrower
agrees that in the event of any inconsistency or
ambiguity in any of the Loan Documents, the Loan
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Documents shall not be construed against any one party
but shall be interpreted consistent with the Bank's
policies and procedures
9. Consent to Jurisdiction and Service of Process. The
Borrower hereby consents and agrees that (i) any action
or proceeding against it may be commenced and
maintained in any court within the Commonwealth of
Pennsylvania or in the United States District Court for
any District of Pennsylvania by service of process on
it and (ii) the courts of the Commonwealth of
Pennsylvania and the United States District Court for
any District of Pennsylvania shall have Jurisdiction
with respect to the subject matter hereof and the
person of the Borrower and all collateral for the
Liabilities. The Borrower agrees that any action
brought by the Borrower shall be commenced and
maintained only in a court in the federal judicial
district or county in which the Bank has its principal
place of business in Pennsylvania.
10. Judicial Proceeding; Waivers.
THE BORROWER AND THE BANK ACKNOWLEDGE AND AGREE THAT
(i) ANY SUIT, ACTION OR PROCEEDING, WHETHER CLAIM OR
COUNTERCLAIM, BROUGHT OR INSTITUTED BY THE BANK OR THE
BORROWER OR ANY SUCCESSOR OR ASSIGN OF THE BANK OR THE
BORROWER, ON OR WITH RESPECT TO THIS NOTE OR ANY OTHER
LOAN DOCUMENT OR THE DEALINGS OF THE PARTIES WITH
RESPECT HERETO, OR THERETO, SHALL BE TRIED ONLY BY A
COURT AND NOT BY A JURY AND EACH PARTY WAIVES THE RIGHT
TO TRIAL BY JURY; (ii) EACH WAIVES ANY RIGHT IT MAY
HAVE TO CLAIM OR RECOVER, IN ANY SUCH SUIT, ACTION OR
PROCEEDING, ANY SPECIAL, EXEMPLARY, PUNITIVE OR
CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER THAN, OR IN
ADDITION TO, ACTUAL DAMAGES; AND (iii) THIS SECTION IS
A SPECIFIC AND MATERIAL ASPECT OF THIS NOTE AND THAT
THE BANK WOULD NOT EXTEND CREDIT TO THE BORROWER IF THE
WAIVERS SET FORTH IN THIS SECTION WERE NOT A PART OF
THIS NOTE.
11. Arbitration. Upon demand of any party hereto, whether
made before or after institution of any judicial
proceeding, any dispute, claim or controversy arising
out of, connected with or relating to this Note and
other Loan Documents ("Disputes") between or among
parties to this Note shall be resolved by binding
arbitration as provided herein. Institution of a
judicial proceeding by a party does not waive the right
of that party to demand arbitration hereunder.
Disputes may include, without limitation, tort claims,
counterclaims, disputes as to whether a matter is
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subject to arbitration, claims brought as class
actions, claims arising from Loan Documents executed in
the future, or claims arising out of or connected with
the transaction reflected by this Note.
Arbitration shall be conducted under and governed
by the Commercial Financial Disputes Arbitration Rules
(the "Arbitration Rules") of the American Arbitration
Association (the "AAA") and Title 9 of the U.S. Code.
All arbitration hearings shall be conducted in the city
in which the office of Bank first stated above is
located. The expedited procedures set forth in Rule 51
et seq. of the Arbitration Rules shall be applicable to
claims of less than $1,000,000. All applicable
statutes of limitation shall apply to any Dispute. A
judgment upon the award may be entered in any court
having jurisdiction. The panel from which all
arbitrators are selected shall be comprised of licensed
attorneys. The single arbitrator selected for
expedited procedure shall be a retired judge from the
highest court of general jurisdiction, state or
federal, of the state where the hearing will be
conducted or if such person is not available to serve,
the single arbitrator may be a licensed attorney.
Notwithstanding the foregoing, this arbitration
provision does not apply to disputes under or related
to swap agreements.
Notwithstanding the preceding binding arbitration
provisions, the Bank and the Borrower agree to
preserve, without diminution, certain remedies that any
party hereto may employ or exercise freely,
independently or in connection with an arbitration
proceeding or after an arbitration action is brought.
The Bank and the Borrower shall have the right to
proceed in any court of proper jurisdiction or by self-
help to exercise or prosecute the following remedies,
as applicable: (i) all rights to foreclose against any
real or personal property or other security by
exercising a power of sale granted under Loan Documents
or under applicable law or by judicial foreclosure and
sale, including a proceeding to confirm the sale; (ii)
all rights of self-help including peaceful occupation
of real property and collection of rents, set-off, and
peaceful possession of personal property; (iii)
obtaining provisional or ancillary remedies including
injunctive relief, sequestration, garnishment,
attachment, appointment of receiver and filing an
involuntary bankruptcy proceeding; and (iv) when
applicable, a judgment by confession of judgment.
Preservation of these remedies does not limit the power
of an arbitrator to grant similar remedies that may be
requested by a party in a Dispute.
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15
The Borrower and the Bank agree that they shall
not have a remedy of punitive or exemplary damages
against the other in any Dispute and hereby waive any
right or claim to punitive or exemplary damages they
have now or which may arise in the future in connection
with any Dispute whether the Dispute is resolved by
arbitration or judicially.
IN WITNESS WHEREOF, the Borrower has executed and delivered
to the Bank this Note as of the day and year first above written.
ATTEST XXXXX APPAREL GROUP, INC.
BY: /s/ Xxxx X. Xxxxxx
Name: Name: Xxxx X. Xxxxxx
Title: Title: Corporate Controller
FIRST UNION NATIONAL BANK
Address: 000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000-0000
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16
FIRST UNION
UNCONDITIONAL GUARANTY
October 1, 1997
Xxxxx Apparel Group, Inc.
000 Xxxxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxxxx 00000
(individually and collectively "Borrower")
Melru Corp.; Xxxxx Investment Company, Inc.; Xxxxx International, Ltd.; and
Xxxxx Holding Corp.
000 Xxxxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxxxx 00000
(Individually and collectively "Guarantor")
First Union National Bank
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
(Hereinafter referred to as "Bank")
To induce Bank to make, extend or renew loans, advances, credit, or other
financial accommodations to or for the benefit of Borrower, and in
consideration of loans, advances, credit, or other financial accommodations
made, extended or renewed to or for the benefit of Borrower, Guarantor hereby
absolutely, irrevocably and unconditionally guarantees to Bank and its
successors, assigns and affiliates the timely payment and performance of all
liabilities and obligations of Borrower to Bank and its affiliates, including,
but not limited to, all obligations under any notes, loan agreements, security
agreements, letters of credit, swap agreements (as defined in 11 U.S. Code
Sec. 101), instruments, accounts receivable, contracts, drafts, leases, chattel
paper, indemnities, acceptances, repurchase agreements, overdrafts, and the
Loan Documents defined below, however and whenever incurred or evidenced,
whether primary, secondary, direct, indirect, absolute, contingent, due or to
become due, now existing or hereafter contracted or acquired, and all
modifications, extensions or renewals thereof, including without limitation
all principal, interest, charges, and costs and expenses incurred thereunder
(including attorneys' fees and other costs of collection incurred, regardless
of whether suit is commenced) (collectively, the "Guaranteed Obligations").
Guarantor further covenants and agrees:
GUARANTOR'S LIABILITY. This Guaranty is a continuing and unconditional
guaranty of payment and performance and not of collection. The parties to
this Guaranty are jointly and severally obligated hereunder. This Guaranty
does not impose any obligation on Bank to extend or continue to extend credit
or otherwise deal with Borrower at any subsequent time. This Guaranty shall
continue to be effective or be reinstated, as the case may be, if at any time
any payment of the Guaranteed Obligations is rescinded, avoided or for any
other reason must be returned by Bank, and the returned payment shall remain
payable as part of the Guaranteed Obligations, all as though such payment had
not been made. Except to the extent the provisions of this Guaranty give the
Bank additional rights, this Guaranty shall not be deemed to supersede or
replace any other guaranties given to Bank by Guarantor; and the obligations
guaranteed hereby shall be in addition to any other obligations guaranteed by
Guarantor pursuant to any other agreement of guaranty given to Bank and other
guaranties of the Guaranteed Obligations.
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TERMINATION OF GUARANTY. Guarantor may terminate this Guaranty by written
notice, delivered personally to or received by certified or registered United
States Mail by an authorized officer of the Bank at the address for notices
provided herein. Such termination shall be effective with respect to
Guaranteed Obligations arising more than 15 days after the date such written
notice is received by said Bank officer. Guarantor may not terminate this
Guaranty as to Guaranteed Obligations (including any subsequent extensions,
modifications or compromises of the Guaranteed Obligations) then existing, or
to Guaranteed Obligations arising subsequent to receipt by Bank of said notice
if such Guaranteed Obligations are a result of Bank's obligation to make
advances pursuant to a commitment entered into prior to expiration of the 15
day notice period, or are a result of advances which are necessary for Bank to
protect its collateral or otherwise preserve its interests. Termination of this
Guaranty by any single Guarantor will not affect the existing and continuing
obligations of any other guarantor hereunder.
APPLICATION OF PAYMENTS, BANK LIEN AND SET-OFF. Monies received from any source
by Bank for application toward payment of the Guaranteed Obligations may be
applied to such Guaranteed Obligations in any manner or order deemed
appropriate by Bank. Except as prohibited by law, Guarantor grants Bank a
security interest in all of Guarantor's accounts maintained with Bank and any
of its affiliates (collectively, the "Accounts"). If a Default occurs, Bank is
authorized to exercise its right of set-off or to foreclose its lien against any
obligation of Bank to Guarantor including, without limitation, all Accounts or
any other debt of any maturity, without notice.
CONSENT TO MODIFICATIONS. Guarantor consents and agrees that Bank may from time
to time, in its sole discretion, without affecting, impairing, lessening or
releasing the obligations of the Guarantor hereunder: (a) extend or modify the
time, manner, place or terms of payment or performance and/or otherwise change
or modify the credit terms of the Guaranteed Obligations; (b) increase, renew,
or enter into a novation of the Guaranteed Obligations; (c) waive or consent to
the departure from terms of the Guaranteed Obligations; (d)permit any change in
the business or other dealings and relations of Borrower or any other guarantor
with Bank; (e) proceed against, exchange, release, realize upon, or otherwise
deal with in any manner any collateral that is or may be held by Bank in
connection with the Guaranteed Obligations or any liabilities or obligations
of Guarantor; and (f) proceed against, settle, release, or compromise with
Borrower, any insurance carrier, or any other person or entity liable as to
any part of the Guaranteed Obligations, and/or subordinate the payment of any
part of the Guaranteed Obligations to the payment of any other obligations,
which may at any time be due or owing to Bank; all in such manner and upon
such terms as Bank may deem appropriate, and without notice to or further
consent from Guarantor. No invalidity, irregularity, discharge or
unenforceability of, or action or omission by Bank relating to any part of,
the Guaranteed Obligations or any security therefor shall affect or impair this
Guaranty.
WAIVERS AND ACKNOWLEDGMENTS. Guarantor waives and releases the following
rights, demands, and defenses Guarantor may have with respect to Bank and
collection of the Guaranteed Obligations: (a) promptness and diligence in
collection of any of the Guaranteed Obligations from Borrower or any other
person liable thereon, and in foreclosure of any security interest and sale
of any property serving as collateral for the Guaranteed Obligations; (b) any
law or statute that requires that Bank make demand upon, assert claims against,
or collect from Borrower or other persons or entities, foreclose any security
interest, sell collateral, exhaust any remedies, or take any other action
against Borrower or other persons or entities prior to making demand upon,
collecting from or taking action against Guarantor with respect to the
Guaranteed Obligations, including any such rights Guarantor might otherwise
have had under Va. Code Sec. 49-25 and 49-26, et seq., N.C.G.S. Secs. 26-7, et
seq., Tenn. Code Xxx. Sec. 00-00-000, O.C.G.A. 10-7-24 (and any successor
statute) and any other applicable law; (c) any law or statute that requires
that Borrower or any
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18
other person be joined in, notified of or made part of any action against
Guarantor; (d) that Bank preserve, insure or perfect any security interest
in collateral or sell or dispose of collateral in a particular manner or at
a particular time; (e) notice of extensions, modifications, renewals, or
novations of the Guaranteed Obligations, of any new transactions or other
relationships between Bank, Borrower and/or any guarantor, and of changes in
the financial condition of, ownership of, or business structure of Borrower
or any other guarantor; (f) presentment, protest, notice of dishonor, notice
of default, demand for payment, notice of intention to accelerate maturity,
notice of acceleration of maturity, notice of sale, and all other notices of
any kind whatsoever; (g) the right to assert against Bank any defense (legal or
equitable), set-off, counterclaim, or claim that Guarantor may have at any time
against Borrower or any other party liable to Bank; (h) all defenses relating
to invalidity, insufficiency, unenforceability, enforcement, release or
impairment of Bank's lien on any collateral, of the Loan Documents, or of
any other guaranties held by Bank; (i) any claim or defense that acceleration
of maturity of the Guaranteed Obligations is stayed against Guarantor because
of the stay of assertion or of acceleration of claims against any other
person or entity for any reason including the bankruptcy or insolvency of
that person or entity; and (j) the benefit of any exemption claimed by
Guarantor. Guarantor acknowledges and represents that it has relied upon
its own due diligence in making its own independent appraisal of Borrower,
Xxxxxxxx's business affairs and financial condition, and any collateral;
Guarantor will continue to be responsible for making its own independent
appraisal of such matters; and Guarantor has not relied upon and will not
hereafter rely upon Bank for information regarding Borrower or any collateral.
FINANCIAL CONDITION. Guarantor warrants, represents and covenants to Bank that
on and after the date hereof: (a) the fair saleable value of Guarantor's assets
exceeds its liabilities, Guarantor is meeting its current liabilities as they
mature, and Guarantor is and shall remain solvent; (b) all financial statements
of Guarantor furnished to Bank are correct and accurately reflect the financial
condition of Guarantor as of the respective dates thereof; (c) since the date of
such financial statements, there has not occurred a material adverse change in
the financial condition of Guarantor; (d) there are not now pending any court or
administrative proceedings or undischarged judgments against Guarantor, no
federal or state tax liens have been filed or threatened against Guarantor,
and Guarantor is not in default or claimed default under any agreement; and
(e) at such reasonable times as Bank requests, Guarantor will furnish Bank with
such other financial information as Bank may reasonably request.
INTEREST. Regardless of any other provision of this Guaranty or other Loan
Documents, if for any reason the effective interest on any of the Guaranteed
Obligations should exceed the maximum lawful interest, the effective interest
shall be deemed reduced to and shall be such maximum lawful interest, and any
sums of interest which have been collected in excess of such maximum lawful
interest shall be applied as a credit against the unpaid principal balance of
the Guaranteed Obligations.
DEFAULT. If any of the following events occur, a default ("Default") under
this Guaranty shall exist: (a) Failure of timely payment or performance of the
Guaranteed Obligations or a default under any Loan Document; (b) A breach of any
agreement or representation contained or referred to in the Guaranty, or any of
the Loan Documents, or contained in any other contract or agreement of
Guarantor with Bank or its affiliates, whether now existing or hereafter
arising; (c) The death of, appointment of a guardian for, dissolution of,
termination of existence of, loss of good standing status by, appointment of
a receiver for, assignment for the benefit of creditors of, or the commencement
of any insolvency or bankruptcy proceeding by or against, Guarantor or any
general partner of or the holder(s) of the majority ownership interests of
Guarantor; and/or (d) The entry of
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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 Guarantor.
If a Default occurs, the Guaranteed Obligations shall be due immediately and
payable without notice. Guarantor shall pay interest on the Guaranteed
Obligations from such Default at the highest rate of interest charged on any
of the Guaranteed Obligations.
ATTORNEY'S FEES AND OTHER COSTS OF COLLECTION. Guarantor shall pay all of
Bank's reasonable expenses incurred to enforce or collect any of the Guaranteed
Obligations, including, without limitation, reasonable arbitration, paralegals',
attorneys' and experts' fees and expenses, whether incurred without the
commencement of a suit, in any suit, arbitration, or administrative proceeding,
or in any appellate or bankruptcy proceeding.
SUBORDINATION OF OTHER DEBTS. Guarantor agrees: (a) to subordinate the
obligations now or hereafter owed by Borrower to Guarantor ("Subordinated
Debt") to any and all obligations of Borrower to Bank now or hereafter existing
while this Guaranty is in effect, provided however that Guarantor may receive
regularly scheduled principal and interest payments on the Subordinated Debt
so long as (i) all sums due and payable by Borrower to Bank have been paid in
full on or prior to such date, and (ii) no event or condition which constitutes
or which with notice or the lapse or time would constitute an event of default
with respect to the Guaranteed Obligations, shall be continuing on or as of the
payment date; (b) Guarantor will place a legend indicating such subordination
on every note, ledger page or other document evidencing any part of the
Subordinated Debt; and (c) except as permitted by this paragraph, Guarantor
will not request or accept payment of or any security for any part of the
Subordinated Debt, and any proceeds of the Subordinated Debt paid to Guarantor,
through error or otherwise, shall immediately be forwarded to Bank by Guarantor,
properly endorsed to the order of Bank, to apply to the Guaranteed Obligations.
MISCELLANEOUS. (a) Assignment. This Guaranty and other Loan Documents shall
inure to the benefit of and be binding upon the parties and their respective
heirs, legal representatives, successors and assigns. Bank's interests in and
rights under this Guaranty and other Loan Documents are freely assignable, in
whole or in part, by Bank. Any assignment shall not release Guarantor from the
Guaranteed Obligations. (b) Applicable Law; Conflict Between Documents. This
Guaranty and other Loan Documents shall be governed by and construed under the
laws of the state in which office of Bank first shown above is located without
regard to that state's conflict of laws principles. If the terms of this
Guaranty should conflict with the terms of any commitment letter that survives
closing, the terms of this Guaranty shall control. (c) Jurisdiction.
Guarantor irrevocably agrees to non-exclusive personal jurisdiction in the
state in which the office of Bank first shown above is located. (d)
Severability. If any provision of this Guaranty or of the other Loan
Documents shall be prohibited or invalid under applicable law, such
provision shall be ineffective but only to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Guaranty or other document. (e) Notices. Any
notices to Guarantor shall be sufficiently given, if in writing and mailed or
delivered to the Guarantor's address shown above or such other address as
provided hereunder, and to Bank, if in writing and mailed or delivered to
Bank's office address shown above or such other address as Bank may specify
in writing from time to time. In the event that Guarantor changes Guarantor's
address at any time prior to the date the Guaranteed Obligations are paid in
full, Guarantor agrees to promptly give written notice of said change of address
by registered or certified mail, return receipt requested, all charges prepaid.
(f) Plural; Captions. All references in the Loan Documents to borrower,
guarantor, person, document or other nouns of reference mean both the singular
and plural form, as the case may be, and the term "person" shall mean any
individual, person or entity.
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The captions contained in the Loan Documents are inserted for convenience only
and shall not affect the meaning or interpretation of the Loan Documents. (g)
Binding Contract. Guarantor by execution of and Bank by acceptance of this
Guaranty agree that each party is bound to all terms and provisions of this
Guaranty. (h) Amendments, Waivers an& Remedies. No waivers, amendments or
modifications of this Guaranty and other Loan Documents shall be valid unless
in writing and signed by an officer of Bank. No waiver by Bank of any Default
shall operate as a waiver of any other Default or the same Default on a future
occasion. Neither the failure nor any delay on the part of Bank in exercising
any right, power, or privilege granted pursuant to this Guaranty and other Loan
Documents shall operate as a waiver thereof, nor shall a single or partial
exercise thereof preclude any other or further exercise or the exercise of any
other right, power or privilege. All remedies available to Bank with respect
to this Guaranty and other Loan Documents and remedies available at law or in
equity shall be cumulative and may be pursued concurrently or successively.
(i) Partnerships. If Guarantor is a partnership, the obligations, liabilities
and agreements on the part of Guarantor shall remain in full force and effect
and fully applicable notwithstanding any changes in the individuals comprising
the partnership. The term "Guarantor" includes any altered or successive
partnerships, and predecessor partnership(s) and the partners shall not be
released from any obligations or liabilities hereunder. (j) Loan Documents.
The term "Loan Documents" refers to all documents executed in connection with
the Guaranteed Obligations and may include, without limitation, commitment
letters that survive closing, loan agreements, other guaranty agreements,
security agreements, instruments, financing statements, mortgages, deeds of
trust, deeds to secure debt, letters of credit and any amendments or
supplements (excluding swap agreements as defined in 11 U.S. Code Sec. 101).
ARBITRATION. Upon demand of any party hereto, whether made before or after
institution of any judicial proceeding, any dispute, claim or controversy
arising out of, connected with or relating to this Guaranty and other Loan
Documents ("Disputes") between or among parties to this Guaranty shall be
resolved by binding arbitration as provided herein. Institution of a judicial
proceeding by a party does not waive the right of that party to demand
arbitration hereunder. Disputes may include, without limitation, tort claims,
counterclaims, disputes as to whether a matter is subject to arbitration, claims
brought as class actions, claims arising from Loan Documents executed in the
future, or claims arising out of or connected with the transaction reflected by
this Guaranty.
Arbitration shall be conducted under and governed by the Commercial Financial
Disputes Arbitration Rules (the "Arbitration Rules") of the American Arbitration
Association (the "AAA") and Title 9 of the U.S. Code. All arbitration hearings
shall be conducted in the city in which the office of Bank first stated above
is located. The expedited procedures set forth in Rule 51 et seq. of the
Arbitration Rules shall be applicable to claims of less than $1,000,000.00.
All applicable statutes of limitation shall apply to any Dispute. A judgment
upon the award may be entered in any court having jurisdiction. The panel
from which all arbitrators are selected shall be comprised of licensed
attorneys. The single arbitrator selected for expedited procedure shall be a
retired judge from the highest court of general jurisdiction, state or federal,
of the state where the hearing will be conducted or if such person is not
available to serve, the single arbitrator may be a licensed attorney.
Notwithstanding the foregoing, this arbitration provision does not apply to
disputes under or related to swap agreements.
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21
PRESERVATION AND LIMITATION OF REMEDIES. Notwithstanding the preceding binding
arbitration provisions, Bank and Guarantor agree to preserve, without
diminution, certain remedies that any party hereto may employ or exercise
freely, independently or in connection with an arbitration proceeding or
after an arbitration action is brought. Bank and Guarantor shall have the
right to proceed in any court of proper jurisdiction or by self-help to
exercise or prosecute the following remedies, as applicable: (i) all rights
to foreclose against any real or personal property or other security by
exercising a power of sale granted under Loan Documents or under applicable
law or by judicial foreclosure and sale, including a proceeding to confirm
the sale; (ii) all rights of self-help including peaceful occupation of real
property and collection of rents, set-off, and peaceful possession of personal
property; (iii) obtaining provisional or ancillary remedies including
injunctive relief, sequestration, garnishment, attachment, appointment of
receiver and filing an involuntary bankruptcy proceeding; and (iv) when
applicable, a judgment by confession of judgment. Preservation of these
remedies does not limit the power of an arbitrator to grant similar remedies
that may be requested by a party in a Dispute. Guarantor and Bank agree that
they shall not have a remedy of punitive or exemplary damages against the other
in any Dispute and hereby waive any right or claim to punitive or exemplary
damages they have now or which may arise in the future in connection with any
Dispute whether the Dispute is resolved by arbitration or judicially.
IN WITNESS WHEREOF, Guarantor, on the day and year first written above, has
caused this Unconditional Guaranty to be executed under seal.
Melru Corp.
Taxpayer Identification Number: 00-0000000
By: /s/ Xxxxxxx X. Xxxxxxx
Name: Xxxxxxx X. Xxxxxxx
Title: V.P., Finance and Administration
Xxxxx Investment, Inc.
Taxpayer Identification Number: 00-0000000
By: /s/ Xxxxxx X. Card
Name: Xxxxxx X. Xxxx
Title: President
Xxxxx International, Ltd.
Taxpayer Identification Number: Not applicable
By: /s/ Xxxxxx X. Card
Name: Xxxxxx X. Xxxx
Title: Director
Xxxxx Holding Corporation
Taxpayer Identification Number: 00-0000000
By: /s/ Xxxxxx X. Card
Name: Xxxxxx X. Xxxx
Title: Director
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