<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter ended October 28, 1995
Commission file number: 0-15230
MICHAEL ANTHONY JEWELERS, INC.
(Exact name of registrant as specified in its charter)
Delaware No. 13-2910285
(State of Incorporation) (I.R.S. Employer Identification No.)
115 South MacQuesten Parkway
Mount Vernon, New York 10550-1724
(Address of principal executive offices)
Registrant's telephone number, including area code:
(914) 699-0000
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15 (d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No .
-------- --------
CLASS
----- Number of Shares
Common Stock, Par Value $.001 Outstanding as of
November 29, 1995
-----------------
8,333,000
<PAGE> 2
<TABLE>
MICHAEL ANTHONY JEWELERS, INC. AND SUBSIDIARIES
<CAPTION>
INDEX
-----
PAGE
----
<S> <C>
PART I - FINANCIAL INFORMATION:
ITEM 1. FINANCIAL STATEMENTS
Consolidated Condensed Balance Sheets,
October 28, 1995 (Unaudited) and
January 28, 1995 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Consolidated Condensed Statements of Operations
Three-Month and Nine-Month Periods Ended
October 28, 1995 and October 29, 1994 (Unaudited) . . . . . . . . . . . . . . . . . . . . 4
Consolidated Condensed Statement of Changes in
Stockholders' Equity, Nine-Month Period Ended
October 28, 1995 (Unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Consolidated Condensed Statements of Cash Flows,
For The Nine-Month Period Ended
October 28, 1995 and October 29, 1994 (Unaudited) . . . . . . . . . . . . . . . . . . . . 6
Notes to Consolidated Condensed Financial
Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF
OPERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-14
PART II - OTHER INFORMATION:
Items 1 Through Item 6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Signature Page . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
</TABLE>
-ii-
<PAGE> 3
<TABLE>
MICHAEL ANTHONY JEWELERS, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
<CAPTION>
October 28, January 28,
ASSETS 1995 1995
------ -------------- -------------
(Unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash and equivalents $ 129 $5,815
Accounts receivable:
Trade (less allowances of $1,649 and $1,400) 39,485 26,671
Other 58 150
Inventories 21,274 20,150
Prepaid expenses and other current assets 1,018 659
Deferred taxes 651 651
-------- --------
Total current assets 62,615 54,096
PROPERTY, PLANT AND EQUIPMENT - net 17,772 16,281
INTANGIBLES - net 1,057 705
OTHER ASSETS 1,042 957
--------- ----------
$82,486 $72,039
========= ==========
LIABILITIES AND STOCKHOLDERS' EQUIT
-----------------------------------
CURRENT LIABILITIES:
Line of credit $ 5,000 $ -
Accounts payable - trade 3,494 4,989
Current portion of long term debt
and lease liability 3,040 2,680
Accrued expenses 4,563 3,255
Taxes payable 549 394
--------- --------
Total current liabilities 16,646 11,318
--------- --------
LONG TERM DEBT 18,255 12,528
--------- --------
DEFERRED TAXES 994 994
--------- --------
CAPITAL LEASE LIABILITY 572 754
--------- --------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred stock - par value $1.00 per share;
1,000,000 shares authorized; none issued - -
Common stock - par value $.001 per share;
20,000,000 shares authorized, 9,239,000
shares issued and outstanding as of October 28,
1995 and January 28, 1995, respectively 9 9
Additional paid-in capital 35,170 35,170
Retained earnings 13,825 13,578
Treasury stock, 799,000 and 578,000 shares,
respectively (2,985) (2,312)
--------- --------
Total stockholders' equity 46,019 46,445
--------- --------
$82,486 $72,039
========= ========
<FN>
The accompanying notes are an integral part of these consolidated condensed
financial statements.
</TABLE>
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<PAGE> 4
<TABLE>
MICHAEL ANTHONY JEWELERS, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
(IN THOUSANDS, EXCEPT EARNINGS PER SHARE)
<CAPTION>
Three Months Ended Nine Months Ended
October 28, October 29, October 28, October 29,
1995 1994 1995 1994
-------- ----------- --------- --------
<S> <C> <C> <C> <C>
NET SALES $47,037 $46,389 $99,198 $105,547
COST OF GOODS SOLD 38,789 37,034 82,463 85,422
-------- ------- ------- -------
GROSS PROFIT ON SALES 8,248 9,355 16,735 20,125
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 5,431 5,773 14,061 13,624
-------- ------- -------- --------
OPERATING INCOME 2,817 3,582 2,674 6,501
OTHER INCOME (EXPENSES):
Gold consignment fee, net (485) (440) (1,347) (1,104)
Interest expense (428) (366) (1,336) (1,166)
Interest income 55 53 314 364
Other income 8 13 89 55
---------- -------- -------- --------
Total Other Income (Expense) (850) (740) (2,280) (1,851)
--------- ------- ------- ---------
INCOME BEFORE INCOME TAXES 1,967 2,842 394 4,650
INCOME TAX PROVISION 776 1,137 147 1,730
--------- --------- ----- --------
NET INCOME $ 1,191 $ 1,705 $ 247 $2,920
======== ========= ======= ========
EARNINGS PER SHARE $ .14 $ .19 $ .03 $ .33
======== ======== ======= ========
WEIGHTED AVERAGE NUMBER OF SHARES 8,441 8,750 8,527 8,751
<FN>
The accompanying notes are an integral part of these consolidated condensed
financial statements.
</TABLE>
- 4 -
<PAGE> 5
<TABLE>
MICHAEL ANTHONY JEWELERS, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
(UNAUDITED)
(IN THOUSANDS)
<CAPTION>
Common Stock Additional Treasury Stock
--------------- Paid-In Retained -------------------
Shares Dollars Capital Earnings Shares Dollars Total
------ ------- ----------- -------- ------ -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance -
January 28, 1995 9,239 $ 9 $35,170 $13,578 (578) $(2,312) $46,445
Purchase of treasury stock - - - - (221) (673) (673)
Net income - - - 247 - - 247
-------- ------- --------- -------- ----- --------- ---------
Balance -
October 28, 1995 9,239 $ 9 $35,170 $13,825 (799) $(2,985) $46,019
====== ====== ======= ======== ===== ======== =======
<FN>
The accompanying notes are an integral part of these consolidated condensed
financial statements.
</TABLE>
- 5 -
<PAGE> 6
<TABLE>
MICHAEL ANTHONY JEWELERS, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS)
<CAPTION>
Nine Months Ended
October 28, October 29,
1995 1994
-------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income 247 $2,920
Adjustments to reconcile net income
to net cash provided by/(used in) operating activities:
Depreciation and amortization 2,691 1,576
Provision for accounts receivable 270 141
Provision for sales returns (80) (1,048)
Provision for deferred taxes - 124
(Increase)/decrease in operating assets:
Accounts receivable (12,912) (13,550)
Inventories (1,124) (6,263)
Prepaid expenses and other current assets (359) (183)
Other assets (287) (129)
Intangibles (427) 27
Increase/(decrease) in operating liabilities:
Accounts payable (1,495) 792
Accrued expenses 1,308 (5,084)
Taxes payable 155 (170)
--------- ---------
Net cash used in operating activities (12,013) (20,847)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant and equipment (3,905) (3,465)
--------- ---------
Net cash used in investing activities (3,905) (3,465)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from stock options - 244
Principal payments of long-term debt
and capital lease liabilities (2,595) (2,543)
Proceeds from long term debt 6,000 -
Purchase of treasury stock (673) (125)
Proceeds from line of credit 5,000 4,000
Proceeds from mortgage 2,500 -
--------- ---------
Net cash provided by financing activities 10,232 1,576
--------- ---------
NET DECREASE IN CASH AND EQUIVALENTS (5,686) (22,736)
CASH AND EQUIVALENTS AT BEGINNING OF PERIOD 5,815 22,742
--------- ---------
CASH AND EQUIVALENTS AT END OF PERIOD $ 129 $ 6
======== =========
SUPPLEMENTAL DISCLOSURE OF
CASH FLOW INFORMATION:
Cash paid during the period for:
Interest and gold consignment fees $2,817 $2,412
Taxes $ 176 $1,445
<FN>
The accompanying notes are an integral part of these consolidated condensed
financial statements.
</TABLE>
- 6 -
<PAGE> 7
MICHAEL ANTHONY JEWELERS, INC. AND SUBSIDIARIES
FORM 10-Q FOR QUARTER ENDED OCTOBER 28, 1995
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(INFORMATION SUBSEQUENT TO JANUARY 28, 1995 IS UNAUDITED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
------------------------------------------
The unaudited interim consolidated condensed balance sheet as of
October 28, 1995 and the consolidated condensed statements of operations
for the three months and nine months ended October 28, 1995 and October 29,
1994, and the consolidated condensed statements of cash flows for the nine
months ended October 28, 1995 and October 29, 1994, and related notes have
been prepared pursuant to the rules and regulations of the Securities and
Exchange Commission. Accordingly, certain information and footnote
disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been omitted
pursuant to such rules and regulations. The accompanying unaudited interim
consolidated condensed financial statements and related notes should be
read in conjunction with the financial statements and related notes
included in the 1995 Transition Report to Stockholders of Michael Anthony
Jewelers, Inc. (the "Company").
The information furnished reflects, in the opinion of the management of the
Company, all adjustments, consisting of normal recurring accruals, which are
necessary to present a fair statement of the results for the interim periods
presented.
The interim figures are not necessarily indicative of the results to be
expected for the fiscal year due to the seasonal nature of the business.
Earnings Per Share
------------------
Earnings per share for all periods presented were computed on a primary
basis using the weighted average number of shares of common stock
outstanding. Options and warrants outstanding were not materially dilutive.
Reclassifications
-----------------
Certain reclassifications were made to the prior year's financial
statements to conform to the current year's presentation.
2. PRODUCT PRICING
---------------
The Company's products, the principal component of which is gold, are
generally sold at prices which are based on the market price of gold on the
date merchandise is shipped to the customer.
- 7 -
<PAGE> 8
MICHAEL ANTHONY JEWELERS, INC. AND SUBSIDIARIES
FORM 10-Q FOR QUARTER ENDED OCTOBER 28, 1995
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(INFORMATION SUBSEQUENT TO JANUARY 28, 1995 IS UNAUDITED)
2. PRODUCT PRICING (Continued)
---------------
Therefore, the Company's sales volume is significantly influenced by
the market price of gold. The selling prices for certain customers may be
fixed for a specific period of time. In such cases, the Company is able to
shift a substantial portion of the risks of gold price fluctuation by
hedging against changes in the price of gold by entering into forward
contracts or purchasing futures or options on futures.
The Company's consigned gold inventory is hedged against the effects of
price fluctuations. The Company has entered into arrangements with certain
gold lenders (the "Gold Lenders") pursuant to which the Company does not
purchase gold from the Gold Lenders until receipt of a purchase order from,
or shipment of jewelry to, its customers. These arrangements permit the
Company to match the sales price of the product with the price the Company
pays for the gold.
The average price of gold in the current quarter was $383 per ounce as
compared to $387 per ounce for the quarter ended October 29, 1994.
3. INVENTORIES
-----------
<TABLE>
<CAPTION>
Inventories consist of:
October 28, January 28,
1995 1995
---------- --------
(Unaudited)
(In thousands)
<S> <C> <C>
Finished goods $67,953 $60,411
Work in process 29,010 21,807
Raw materials 2,955 10,868
-------- ------
99,918 93,086
Less:
Consigned gold 78,644 72,936
-------- -------
$21,274 $20,150
======= =======
<FN>
Inventories as of October 28, 1995 and January 28, 1995 excluded 205,500 and
192,700 ounces of gold on consignment, respectively.
</TABLE>
- 8 -
<PAGE> 9
MICHAEL ANTHONY JEWELERS, INC. AND SUBSIDIARIES
FORM 10-Q FOR QUARTER ENDED OCTOBER 28, 1995
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(INFORMATION SUBSEQUENT TO JANUARY 28, 1995 IS UNAUDITED)
4. STOCK REPURCHASE PROGRAM
------------------------
In May 1994, the Company announced a Common Stock repurchase program
pursuant to which the Company may repurchase up to 500,000 shares of Common
Stock. As of November 29, 1995, the Company had repurchased a total of
441,600 shares on the open market for an aggregate price of approximately
$1,439,000.
5. MORTGAGE PAYABLE
----------------
On October 6, 1995, the Company obtained a loan from a bank in the
amount of $2,500,000. As collateral for the loan, the Company granted the
bank a first mortgage on the Company's corporate headquarters. The
mortgage has a ten-year term and interest on the mortgage will accrue at 8%
per annum.
- 9 -
<PAGE> 10
ITEM 2 MICHAEL ANTHONY JEWELERS, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(INFORMATION SUBSEQUENT TO JANUARY 28, 1995 IS UNAUDITED)
RESULTS OF OPERATIONS FOR THE THREE MONTHS
- -------------------------------------------
ENDED OCTOBER 28, 1995 AND OCTOBER 29, 1994
- -------------------------------------------
Net sales for the three months ended October 28, 1995 were approximately
$47,037,000, an increase of approximately 1.4% from net sales of approximately
$46,389,000 for the comparable period of the prior year. The increase in net
sales resulted from increased shipments to the retail segment of the Company's
customer base which was offset in part by decreased shipments to the wholesale
segment of the Company's customer base and lower sales of the Company's
licensed professional sports products.
Gross profit margin decreased to 17.5% of net sales for the three months ended
October 28, 1995 as compared to 20.2% of net sales for the comparable period of
the prior year. The decrease in gross profit margin was attributable to a
change in the Company's product mix and the liquidation of discontinued
inventory and other inventory adjustments, compared to the comparable period of
the prior year.
Selling, general and administrative expenses for the three months ended October
28, 1995 were approximately $5,431,000, a decrease of approximately 5.9% from
$5,773,000 for the comparable period of the prior year. The decrease is
primarily attributable to decreased salaries and benefits and decreased rental
expense. As a percentage of sales, selling, general and administrative
expenses decreased to approximately 11.5% for the three months ended October
28, 1995 compared to 12.4% in the comparable period of the prior year.
The cost reduction program which the Company initiated in April 1995 is
beginning to have a positive impact on the Company's selling, general and
administrative expenses. In an effort to increase sales and promote new
products, the Company has committed to additional media and other related
advertising expenses for the fourth fiscal quarter.
Interest expense (including gold consignment fees) for the three months October
28, 1995 was approximately $913,000, an increase of $107,000 from the
comparable period of the prior year. This increase was due to the placement of
$6,000,000 senior secured notes and higher levels of consignment inventory.
As a result of the above factors, the Company's net income for the three months
ended October 28, 1995 was $1,191,000 compared to net income of $1,705,000 for
the comparable period of the prior year.
- 10 -
<PAGE> 11
ITEM 2 MICHAEL ANTHONY JEWELERS, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(INFORMATION SUBSEQUENT TO JANUARY 28, 1995 IS UNAUDITED)
RESULTS OF OPERATIONS FOR THE NINE MONTHS
- -------------------------------------------
ENDED OCTOBER 28, 1995 AND OCTOBER 29, 1994
- -------------------------------------------
Net sales for the nine months ended October 28, 1995 were approximately
$99,198,000 a decrease of approximately 6% from net sales of approximately
$105,547,000 for the comparable period of the prior year. The decrease in net
sales resulted from decreased shipments to the wholesale segment of the
Company's customer base and lower sales of the Company's licensed professional
sports products. The decrease also resulted from a weak retail sales
environment and a more conservative purchasing policy by certain customers.
Gross profit margin decreased to 16.9% of net sales for the nine months ended
October 28, 1995 as compared to 19.1% of net sales for the comparable period of
the prior year. The decrease in gross profit margin was attributable to a
change in the Company's product mix and the liquidation of discontinued
inventory and other inventory adjustments, compared to the comparable period of
the prior year.
Selling, general and administrative expenses for the nine months ended October
28, 1995 were approximately $14,061,000, an increase of approximately 3.2% from
$13,624,000 for the comparable period of the prior year. The increase is
primarily attributable to (i) higher advertising expenses incurred in
connection with a higher percentage of sales to the retail segment of the
Company's customer base and (ii) a recovery of bad debt in the nine-month
period ended October 29, 1994. As a percentage of sales, selling, general and
administrative expenses increased to approximately 14.2% for the nine months
ended October 28, 1995 compared to 12.9% in the comparable period of the prior
year.
Interest expense (including gold consignment fees) for the nine months ended
October 28, 1995 was approximately $2,683,000, an increase of $413,000 from the
comparable period of the prior year. This increase was due to the placement of
$6,000,000 senior secured notes and higher levels of consignment inventory.
As a result of the above factors, the Company's net income for the nine months
ended October 28, 1995 was $247,000 compared to net income of $2,920,000 for
the comparable period of the prior year.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
The Company relies on a gold consignment program, short-term and long-term
borrowings and internally generated funds to finance inventories and accounts
receivable. The Company fills most of its gold supply needs through gold
consignment arrangements with the Gold Lenders.
- 11 -
<PAGE> 12
ITEM 2 MICHAEL ANTHONY JEWELERS, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(INFORMATION SUBSEQUENT TO JANUARY 28, 1995 IS UNAUDITED)
Liquidity and Capital Resources (Continued)
- -------------------------------------------
Under the terms of those arrangements, the Company is entitled to lease the
lesser of (i) an aggregate of 250,000 ounces of fine gold or an aggregate
consigned gold value not to exceed $108,471,000. The consigned gold is secured
by certain property of the Company including inventory and machinery and
equipment. The Company pays the Gold Lenders a consignment fee based on the
dollar value of ounces of gold outstanding under their respective agreements,
which value is based on the daily Second London Gold Fix. The Company believes
that its financing rate under the consignment arrangements is substantially
similar to the financing rates charged to gold consignees similarly situated to
the Company.
The consignment agreements are terminable by the Company or the respective Gold
Lenders upon 30 days notice. If any Gold Lender were to terminate its existing
gold consignment arrangement, the Company does not believe it would experience
an interruption of its gold supply that would materially adversely affect its
business. The Company believes that other consignors would be willing to enter
into similar arrangements if any Gold Lender terminates its relationship with
the Company.
On October 20, 1995, the Company entered into a gold consignment agreement with
a new Gold Lender. On October 25, 1995, the Company received notice from an
existing Gold Lender that it plans to discontinue its involvement in the
jewelry lending business and will be terminating its gold consignment agreement
with the Company in February 1996. This change does not impact the
availability of aggregate ounces or gold value under the arrangements to the
Company.
Consigned gold is not included in the Company's inventory, and there is no
related liability recorded. As a result of these consignment arrangements the
Company is able to shift a substantial portion of the risk of market
fluctuations in the price of gold to the Gold Lenders, since the Company does
not purchase gold from the Gold Lenders until receipt of a purchase order from,
or shipment of jewelry to, its customers. The Company then either locks in the
selling price of the jewelry to its customers concurrently with the required
purchase of gold from the Gold Lenders or hedges against changes in the price
of gold by entering into forward contracts or purchasing futures or options on
futures.
In 1987 and 1992, the Company placed $10,000,000 principal amount of senior
secured notes with various insurance companies, which accrue interest at 10.5%
and 8.61% per annum, respectively. In February 1995, the Company issued an
additional $6,000,000 principal amount of senior secured notes with various
insurance companies, which currently accrue interest at 7.44% per annum, which
is 1.5% above the three-month London Interbank Offered Rate, adjusted
quarterly.
- 12 -
<PAGE> 13
ITEM 2 MICHAEL ANTHONY JEWELERS, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(INFORMATION SUBSEQUENT TO JANUARY 28, 1995, IS UNAUDITED)
Liquidity and Capital Resources (Continued)
- -------------------------------
These notes are secured by the Company's accounts receivable, machinery and
equipment, inventory (secondary lien to the Gold Lenders) and proceeds. In
addition, the note purchase agreements contain certain restrictive financial
covenants and restrict the payment of dividends. At October 28, 1995, the
Company was in compliance with the covenants. As of October 28, 1995,
$18,528,000 of principal remained outstanding under these notes.
In September 1994, the Company entered into a line of credit arrangement with a
commercial bank (the "Line of Credit"), under which the Company may borrow up
to $15,000,000. Borrowings under the facility bear interest at the Bank's
prime rate. The Line of Credit is secured by certain assets of the Company,
including accounts receivable and inventory. As of October 28, 1995, there was
$5,000,000 outstanding under the Line of Credit. The Line of Credit currently
expires on January 31, 1996, subject to annual renewal.
On October 6, 1995, the Company obtained a loan from a bank in the amount of
$2,500,000. As collateral for the loan, the Company granted the bank a first
mortgage on the Company's corporate headquarters. The mortgage has a ten-year
term and interest on the mortgage will accrue at 8% per annum. In addition,
the mortgage contains certain restrictive financial covenants. At October 28,
1995, the Company was in compliance with the covenants. As of October 28,
1995, $2,500,000 of principal remained outstanding under the mortgage.
Cash and equivalents decreased from $5,815,000 at January 28, 1995 to $129,000
at October 28, 1995, primarily due to the Company's increased level of accounts
receivable. Accounts receivable-trade increased from $26,671,000 at January
28, 1995 to $39,485,000 at October 28, 1995. The increase in accounts
receivable-trade results from the seasonal nature of the Company's sales.
Accounts payable-trade decreased from $4,989,000 at January 28, 1995 to
$3,494,000 at October 28, 1995. The decrease in accounts payable-trade
resulted primarily from lower accrued gold purchases. Accrued expenses
increased from $3,255,000 at January 28, 1995 to $4,563,000 at October 28,
1995. The increase is primarily related to increased advertising expenses in
connection with a higher percentage of sales to the retail segment of the
Company's customer base. Long term debt increased from $12,528,000 at January
28, 1995 to $18,255,000 at October 28, 1995. The increase in long-term debt is
related to the Company's placement of $6,000,000 of notes in February of 1995
and the $2,500,000 real estate loan obtained on October 6, 1995. The increase
was offset in part by two principal payments totalling $2,595,000 during the
year.
During the nine months ended October 28, 1995, the Company utilized $12,013,000
of cash from operations as compared with a utilization of $20,847,000 for the
comparable period of the prior year. The decrease in the utilization of cash
from operations is primarily due to (i) a decrease in cash used for inventory
as a result of the Company's better inventory management and (ii) an accrued
expense decrease which was principally due to a refund of an accounts
receivable advance.
- 13 -
<PAGE> 14
ITEM 2 MICHAEL ANTHONY JEWELERS, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(INFORMATION SUBSEQUENT TO JANUARY 28, 1995, IS UNAUDITED)
Liquidity and Capital Resources (Continued)
- -------------------------------
The Company used $3,905,000 of cash from investing activities as compared to
$3,465,000 for the comparable period of the prior last year. The increase was
due to the purchase of land, machinery and equipment. During the nine months
ended October 28, 1995 financing activities provided the Company with
$10,232,000 of cash compared with $1,576,000 in the comparable period last
year. The increase is due to the receipt of the proceeds of $6,000,000 senior
secured notes and the proceeds of the real estate loan of $2,500,000 which was
offset in part by the purchase of treasury stock and repayment of the Company's
long term debt and capital lease liabilities.
For fiscal 1996, the Company projects that its remaining capital expenditures
will be approximately $500,000, which includes certain leasehold improvements
on its owned and leased properties and additional machinery and equipment
purchases.
The Company believes that its long-term debt and existing lines of credit
provide sufficient funding for the Company's operations. In the event that the
Company requires additional financing during fiscal 1996, it will be necessary
to fund this requirement through expanded credit facilities with its existing
or other lenders. The Company believes that such additional financing can be
arranged.
- 14 -
<PAGE> 15
MICHAEL ANTHONY JEWELERS, INC. AND SUBSIDIARIES
PART II - OTHER INFORMATION
Item 1 through Item 4
Not applicable.
Item 5.
On October 16, 1995, Jerome Peterson notified the Company that he was
resigning from the Board of Directors due to his time commitments with other
business interests. On December 1, 1995, the Board elected Donald R. Miller to
fill the vacancy created by Mr. Peterson's resignation.
<TABLE>
<CAPTION>
Item 6.
(a) Exhibits
--------
<S> <C>
10.1 Loan Agreement dated October 6, 1995 between First Fidelity Bank,
National Association ("First Fidelity") and Registrant.
10.2 Mortgage Note in principal amount of $2,500,000 dated October 6, 1995
issued by Registrant in favor of First Fidelity.
10.3 Mortgage and Security Agreement dated October 6, 1995 by Registrant
for the benefit of First Fidelity.
10.4 Consignment Agreement dated October 20, 1995 between Registrant and
Union Bank of Switzerland ("UBS").
10.5 Fourth Amendment to Amended and Restated Security Agreement dated
October 20, 1995 among Registrant, UBS and Registrant's other gold
lenders.
10.6 Fifth Amendment to Amended and Restated Intercreditor Agreement dated
October 20, 1995 among Registrant, UBS and Registrant's other lenders.
10.7 Fifth Amendment to Assignment of Trademarks and Servicemarks dated
October 20, 1995 among Registrant, UBS and Registrant's other lenders.
10.8 Seventh Amendment to Amended and Restated Consignment Agreement dated
October 20, 1995 between Registrant and Rhode Island Hospital Trust
National Bank.
27 Financial Data Schedule
</TABLE>
(b) Reports on Form 8-K
-------------------
Not applicable.
- 15 -
<PAGE> 16
MICHAEL ANTHONY JEWELERS, INC. AND SUBSIDIARIES
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MICHAEL ANTHONY JEWELERS, INC.
Dated: December 11, 1995 By:/s/Allan Corn
------------------------
Allan Corn
Senior Vice President and
Chief Financial Officer
- 16 -
<PAGE> 17
<TABLE>
EXHIBIT INDEX
-------------
<CAPTION>
Exhibits
--------
<S> <C>
10.1 Loan Agreement dated October 6, 1995 between First Fidelity Bank,
National Association ("First Fidelity") and Registrant.
10.2 Mortgage Note in principal amount of $2,500,000 dated October 6, 1995
issued by Registrant in favor of First Fidelity.
10.3 Mortgage and Security Agreement dated October 6, 1995 by Registrant
for the benefit of First Fidelity.
10.4 Consignment Agreement dated October 20, 1995 between Registrant and
Union Bank of Switzerland ("UBS").
10.5 Fourth Amendment to Amended and Restated Security Agreement dated
October 20, 1995 among Registrant, UBS and Registrant's other gold
lenders.
10.6 Fifth Amendment to Amended and Restated Intercreditor Agreement dated
October 20, 1995 among Registrant, UBS and Registrant's other lenders.
10.7 Fifth Amendment to Assignment of Trademarks and Servicemarks dated
October 20, 1995 among Registrant, UBS and Registrant's other lenders.
10.8 Seventh Amendment to Amended and Restated Consignment Agreement dated
October 20, 1995 between Registrant and Rhode Island Hospital Trust
National Bank.
27 Financial Data Schedule
</TABLE>
- 17 -
<PAGE> 1
EXHIBIT 10.1
[logo]
Commercial Mortgage Loan - NY
LOAN AGREEMENT
--------------
LOAN AGREEMENT dated October 6, 1995 (together with any amendments or
modifications hereto in effect from time to time, the "AGREEMENT"), between
FIRST FIDELITY BANK, NATIONAL ASSOCIATION ("BANK") and Michael Anthony
Jewelers, Inc. ("BORROWER").
Bank has agreed to make a loan to Borrower and Borrower has agreed to
accept the loan proceeds in the principal amount of Two Million Five Hundred
Thousand and 00/100 Dollars ($2,500,000.00) (the "LOAN"), on the terms and
conditions set forth herein. The Loan shall be evidenced by a Mortgage Note of
even date herewith from Borrower to Bank (the "NOTE").
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, and intending to be legally bound
hereby, Bank and Borrower agree as follows:
1. DEFINITIONS
-----------
1.1. "AFFILIATE" means First Fidelity Bancorporation and any of its
direct and indirect affiliates and subsidiaries.
1.2. "COMMITMENT LETTER" means the commitment letter dated September
20, 1995 pursuant to which Bank committed to make the Loan to Borrower.
1.3. "LIABILITIES" means, collectively: (i) the repayment of all
sums due under the Note (and all extensions, renewals, replacements,
substitutions, amendments and modifications thereof) and the other Loan
Documents; (ii) the performance of all terms, conditions and covenants set
forth in the Loan Documents; and (iii) all obligations and indebtedness of
every kind and description of Borrower to Bank or to any Affiliate, whether
primary or secondary, absolute or contingent, direct or indirect, 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, and whether incurred by Borrower as principal, surety, endorser,
guarantor, accommodation party or otherwise, including, without limitation,
principal, interest, fees, late charges and expenses, including attorneys' fees
and/or allocated fees of Bank's in-house legal counsel.
1.4. "LOAN DOCUMENTS" means, collectively, this Agreement, the Note,
that certain Mortgage and Security Agreement of even date herewith from
Borrower to Bank (the "MORTGAGE"), that certain Assignment of Leases and Rents
of even date herewith from Borrower to Bank (the "ASSIGNMENT OF LEASES") and
any other document, certificate or instrument executed by Borrower or any other
obligated party in connection with the Loan, together with all amendments,
modifications, renewals or extensions thereof.
1.5. "MORTGAGED PREMISES" means the real, personal and mixed property
described in the Mortgage as the "Mortgaged Premises" and located at
111/115-119 South MacQuesten Parkway, Mount Vernon, New York.
2. THE LOAN
--------
2.1. TERMS OF LOAN. Bank agrees to make the Loan to Borrower on the
terms and conditions hereinafter set forth. The Loan will bear interest at the
rate and will be repaid as set forth in the Note.
2.2. USE OF LOAN PROCEEDS. Borrower shall use the proceeds of the
Loan to refinance the acquisition costs of the Mortgaged Premises.
2.3. INCORPORATION. All of the Loan Documents are hereby made a part
of this Agreement to the extent and with the same effect as if fully set forth
herein.
<PAGE> 2
3. CONDITIONS PRECEDENT Bank's obligations hereunder are conditioned
upon the satisfaction of each of the following conditions precedent:
3.1. Borrower shall have delivered or caused to be delivered to Bank
each of the Loan Documents, in form and substance satisfactory to Bank, duly
executed by Borrower or Guarantor, as applicable;
3.2. Borrower shall have delivered or caused to be delivered to Bank
each of the other documents, certificates and instruments required by the
Commitment Letter within the applicable time periods specified therein, each in
form and substance satisfactory to Bank; and
3.3. Each of the other conditions contained in the Commitment Letter
shall have been satisfied.
4. REPRESENTATIONS AND WARRANTIES Borrower represents and warrants as of
the date hereof and, unless otherwise indicated, at all times hereafter until
the Liabilities are fully paid and performed, as follows:
4.1. ORGANIZATION, POWERS. Borrower (i) is a corporation duly
organized, validly existing and in good standing under the laws of the state of
its organization, and is authorized to do business in each other jurisdiction
wherein its ownership of property or conduct of business legally requires such
authorization; (ii) has the power and authority to own its properties and
assets and to carry on its business as now being conducted and as now
contemplated; and (iii) has the power and authority to execute, deliver and
perform all of its obligations under each Loan Document to which it is a party.
4.2. EXECUTION OF LOAN DOCUMENTS. Each of the Loan Documents to which
Borrower is a party have been duly executed and delivered by Borrower.
Execution, delivery and performance of each of the Loan Documents to which
Borrower is a party will not: (i) violate any of its organizational documents,
provision of law, order of any court, agency or instrumentality of government,
or any provision of any indenture, agreement or other instrument to which it is
a party or by which it or any of its properties is bound; (ii) result in the
creation or imposition of any lien, charge or encumbrance of any nature, other
than the liens created by the Loan Documents; and (iii) require any
authorization, consent, approval, license, exemption of, or filing or
registration with, any court or governmental authority.
4.3. OBLIGATIONS OF BORROWER. Each of the Loan Documents to which
Borrower is a party are the legal, valid and binding obligations of Borrower,
enforceable against it in accordance with their terms, except as the same may
be limited by bankruptcy, insolvency, reorganization or other laws or equitable
principles relating to or affecting the enforcement of creditors' rights
generally. Borrower is obtaining the Loan for commercial purposes.
4.4. LITIGATION; COMPLIANCE WITH LAWS. There is no action, suit, or
proceeding at law or in equity or by or before any governmental authority,
agency or other instrumentality now pending or, to the knowledge of Borrower,
threatened against or affecting Borrower or any of its properties or rights
which, if adversely determined, would materially impair or affect: (i) the
value of any collateral securing the Liabilities; (ii) Borrower's right to
carry on its business substantially as now conducted (and as now contemplated);
(iii) its financial condition; or (iv) its capacity to consummate and perform
its obligations under the Loan Documents to which Borrower is a party.
Borrower is in compliance with all laws, ordinances, rules, regulations and
requirements which affect Borrower, its assets or the operation of its
business, and is not in violation of or in default with respect to any order,
writ, injunction, decree or demand of any court or governmental authority.
4.5. PAYMENT OF TAXES. Borrower has filed or caused to be filed all
federal, state and local tax returns which are required to be filed, and has
paid or caused to be paid all taxes as shown on said returns or on any
assessment received by it, to the extent that such taxes or assessments have
become due, except such that are contested in good faith by Borrower by
appropriate proceedings and for which adequate reserves have been established.
Borrower is not aware of any material unasserted claims for prior taxes against
it for which adequate reserves satisfactory to Bank have not been established.
2
<PAGE> 3
4.6. NO DEFAULTS. Borrower is not in default in the performance,
observance or fulfillment of any of the obligations, covenants or conditions
contained herein or in any material agreement or instrument to which it is a
party or by which it or any of its properties is bound.
4.7. FINANCIAL STATEMENTS. All financial statements delivered by
Borrower to Bank, are true, correct and complete in all material respects,
fairly represent Borrower's financial condition as of the date hereof and
thereof, and no information has been omitted which would make the information
previously furnished misleading or incorrect in any material respect.
4.8. NO MATERIAL ADVERSE CHANGE. As of the date hereof, there has
been no material adverse change in the financial condition, operations,
affairs, prospects, or business of Borrower from the date of the most recent
financial statements provided by Borrower to Bank.
4.9. NO UNTRUE STATEMENTS. No Loan Document or other document,
certificate or statement furnished to Bank by or on behalf of Borrower contains
any untrue statement of a material fact or omits to state a material fact
necessary in order to make the statements contained herein and therein not
misleading. It is specifically understood by Borrower that all such
statements, representations and warranties shall be deemed to have been relied
upon by Bank as an inducement to make the Loan to Borrower.
4.10. TITLE TO PROPERTY. Borrower has good and marketable title to
all of its properties and assets listed in the most recent financial statements
delivered to Bank on or prior to the date hereof, except as otherwise expressly
described in said financial statements, and except those properties and assets
disposed of since the date of said financial statements in the ordinary course
of business.
5. COVENANTS
---------
5.1. MERGERS, RESTRUCTURE. Borrower shall not merge into, consolidate
with or into, or sell, assign, lease or otherwise dispose of (whether in one
transaction or a series of transactions) all or substantially all of its assets
(now owned or hereafter acquired) to any person or entity, without the prior
written consent of Bank.
Notwithstanding the provisions on this Section 5.1, Borrower shall be
permitted to (A) create wholly-owned subsidiaries in connection with
acquisitions and (B) effect mergers that do not involve a change of control,
including mergers of a wholly-owned subsidiary with or into Borrower or to
effect a change in Borrower's state of incorporation.
5.2. MAINTENANCE OF BUSINESS. Borrower shall: (i) continue to remain
in and operate substantially the same line of business presently engaged in by
it; (ii) not suspend transaction of its usual business; (iii) conduct its
business in an orderly, efficient and customary manner; (iv) comply with all
laws, ordinances, rules, regulations and requirements and shall maintain its
business, properties and assets necessary to conduct its business in compliance
with all applicable governmental laws, ordinances, approvals, rules,
regulations and requirements, including without limitation, zoning, sanitary,
pollution, building, environmental and safety laws and ordinances, and the
rules and regulations promulgated thereunder; and (v) except with respect to
the renovation of the parking lot section of the Mortgaged Premises, not
remove, demolish, materially alter, discontinue the use of, sell, transfer,
assign, hypothecate, pledge or otherwise dispose of any part of its properties
and assets necessary for the continuance of its business, as presently
conducted and as presently contemplated, other than in the normal course of its
business.
5.3. BOOKS AND RECORDS. Borrower shall keep and maintain complete and
accurate books and records in accordance with generally accepted accounting
principles consistently applied, reflecting all of the financial affairs of
Borrower. Borrower shall permit representatives of Bank to examine and audit
Borrower's (and its parent's and its subsidiaries') books and records, to
inspect Borrower's facilities and properties, and to discuss Borrower's
financial condition and the contents of Borrower's financial statements with
Borrower's accountants.
5.4. FINANCIAL STATEMENTS; COMPLIANCE CERTIFICATE.
5.4.1. Borrower shall furnish to Bank the following
financial information, in each instance prepared in accordance with generally
accepted accounting principles consistently applied:
3
<PAGE> 4
(a) As soon as available, but in any event within one
hundred twenty (120) days after the close of its Fiscal Year(s) during the term
of the Loan, "audited" annual consolidated financial statements of Borrower and
its subsidiaries together with the Form 10-K filed with the Securities and
Exchange Commission or any successor governmental authority; and when sent to
the shareholders the annual report to shareholders for said fiscal year. Such
financial statements are to include (a) a consolidated balance sheet for
Borrower and its subsidiaries as at the end of Borrower's fiscal year, (b) a
consolidated statement of profit or loss for Borrower and its subsidiaries for
the twelve (12) months then ended, and (c) a consolidated statement of cash
flows for the twelve (12) months then ended, all with respect to the operations
of Borrower and its subsidiaries. All such financial statements shall state in
comparative form the respective figures for the corresponding date and period
in the prior fiscal year. Such consolidated financial statements shall be
prepared in accordance with generally accepted accounting principles
consistently applied, and shall be accompanied by an unqualified report from
Borrower's independent certified public accountant.
(b) As soon as available, but in any event within ninety
(90) days after the end of each of the first three fiscal quarters of each
fiscal year during the term of this Loan Agreement, unaudited quarterly
consolidated financial statements of Borrower and its subsidiaries together
with the Form 10-Q filed with the Securities and Exchange Commission or any
successor governmental authority; and when sent to the shareholders any
quarterly reports to shareholders for said fiscal quarter. Such consolidated
financial statements are to include (a) a consolidated balance sheet for
consolidated statement of profit or loss for Borrower and its subsidiaries for
the Borrower's fiscal quarter then ended and for the period commencing at the
end of the previous fiscal year and ending with the end of such fiscal quarter,
and (c) a consolidated statement of cash flows for the three (3) months then
ended and for the period commencing at the end of the previous fiscal year and
ending with the end of such fiscal quarter. All such consolidated financial
statements shall state in comparative form the respective figures for the
corresponding date and period in the prior year's fiscal quarter and for the
year-to-date period. Such chief financial officer of Borrower, as being true
and correct and consistent with prior practices (except as otherwise required
by generally accepted accounting principles) and as having been prepared in
accordance with generally accepted accounting principles.
(c) Such other information respecting the operations of
Borrower and/or the Mortgaged Premises as Bank may from time to time reasonably
request.
5.4.2. Borrower shall furnish to Bank, with each set of
financial statements described in Section 5.4.1. above, a compliance
certificate signed by Borrower's chief financial officer certifying that: (i)
all representations and warranties of Borrower set forth in this Agreement or
any other Loan Document remain true and correct; (ii) none of the covenants of
Borrower contained in this Agreement or any other Loan Document has been
breached; and (iii) to its knowledge, no event has occurred which, with the
giving of notice or the passage of time, or both, would constitute an Event of
Default under this Agreement or any other Loan Document. In addition, Borrower
shall promptly notify Bank of the occurrence of any default, Event of Default
or adverse litigation which has or may have a material adverse affect on its
financial condition.
5.5. TAXES AND OTHER CHARGES. Borrower shall prepare and timely file
all federal, state and local tax returns required to be filed by Borrower and
promptly pay and discharge all taxes, assessments, water and sewer rents, and
other governmental charges, imposed upon Borrower or on any of Borrower's
property when due, but in no event after interest or penalties commence to
accrue thereon or become a lien upon such property, except for those taxes,
assessments, water and sewer rents, and other governmental charges then being
contested in good faith by Borrower by appropriate proceedings and for which
Borrower has established on its books or by deposit of cash with Bank at the
option of Bank, a reserve for the payment thereof in such amount as Bank may
require, and so long as such contest: (i) operates to prevent collection, stay
any proceedings which may be instituted to enforce payment of such item, and
prevent a sale of Borrower's property to pay such item; (ii) is maintained and
prosecuted with due diligence; and (iii) shall not have been terminated or
discontinued adversely to Borrower. Borrower shall submit to Bank, upon
request, an affidavit signed by Borrower certifying that all federal, state and
local income tax returns have been filed to date and all real property taxes,
assessments and other governmental charges with respect to Borrower's
properties have been paid to date.
4
<PAGE> 5
5.6. INDEMNIFICATION.
---------------
5.6.1. Borrower hereby indemnifies and agrees to protect,
defend and hold harmless Bank, any entity which "controls" Bank within the
meaning of Section 15 of the Securities Act of 1933, as amended, or is under
common control with Bank, and any member, officer, director, official, agent,
employee or attorney of Bank, and their respective heirs, administrators,
executors, successors and assigns (collectively, the "INDEMNIFIED PARTIES"),
from and against any and all losses, damages, expenses or liabilities of any
kind or nature and from any suits, claims or demands, including reasonable
attorneys' fees incurred in investigating or defending such claim, suffered by
any of them and caused by, relating to, arising out of, resulting from, or in
any way connected with the Loan Documents or the transactions contemplated
therein (unless determined by a final judgment of a court of competent
jurisdiction to have been caused solely by the gross negligence or willful
misconduct of the Indemnified Parties) including, without limitation: (i)
disputes with any architect, general contractor, subcontractor, materialman or
supplier, or on account of any act or omission to act by Bank in connection
with the Mortgaged Premises; (ii) losses, damages (including consequential
damages), expenses or liabilities sustained by Bank in connection with any
environmental inspection, monitoring, sampling or cleanup of the Mortgaged
Premises required or mandated by any applicable environmental law; (iii) any
untrue statement of a material fact contained in information submitted to Bank
by Borrower or the omission of any material fact necessary to be stated therein
in order to make such statement not misleading or incomplete; (iv) the failure
of Borrower to perform any obligations herein required to be performed by
Borrower; and (v) the ownership, construction, occupancy, operation, use or
maintenance of the Mortgaged Premises.
5.6.2. In case any action shall be brought against Bank or
any other Indemnified Party in respect to which indemnity may be sought against
Borrower, Bank or such other Indemnified Party shall promptly notify Borrower
and Borrower shall assume the defense thereof, including the employment of
counsel selected by Borrower and satisfactory to Bank, the payment of all costs
and expenses and the right to negotiate and consent to settlement. The failure
of Bank to so notify Borrower shall not relieve Borrower of any liability it
may have under the foregoing indemnification provisions or from any liability
which it may otherwise have to Bank or any of the other Indemnified Parties.
Bank shall have the right, at its sole option, to employ separate counsel in
any such action and to participate in the defense thereof, all at Borrower's
sole cost and expense. Borrower shall not be liable for any settlement of any
such action effected without its consent (unless Borrower fails to defend such
claim), but if settled with Borrower's consent, or if there be a final judgment
for the claimant in any such action, Borrower agrees to indemnify and save
harmless Bank from and against any loss or liability by reason of such
settlement or judgment.
5.6.3. The provisions of this Section 5.6 shall survive the
repayment or other satisfaction of the Liabilities.
5.7. FINANCIAL COVENANTS. Borrower shall comply with each of the
following financial covenants:
5.7.1. Borrower shall, at all times during the term of the
Loan, maintain a tangible net worth of not less than $37,000,000.00, as
determined in accordance with generally accepted accounting principles
consistently applied.
5.7.2. Borrower shall, at all times during the term of the
Loan, maintain Working Capital of not less than $30,000,000.00. For purposes
of this Commitment Letter, "WORKING CAPITAL" shall be defined as the sum of
Borrower's current assets MINUS Borrower's current liabilities; all as
determined in accordance with generally accepted accounting principles
consistently applied.
5.7.3. Borrower shall, at all times during the term of the
Loan, not permit nor suffer to permit its Current Ratio to be less than 1.75 to
1.0. For purposes of this Commitment Letter, "CURRENT RATIO" shall be defined
as the ratio of Borrower's current assets DIVIDED BY Borrower's current
liabilities; all as determined in accordance with generally accepted accounting
principles consistently applied.
5.7.4. Borrower shall, at all times during the term of the
Loan, not permit nor suffer to permit its Leverage Ratio to exceed 2.0 to 1.0.
For purposes of this Commitment Letter, "LEVERAGE RATIO" shall be defined as
the ration of Borrower's total debt obligations DIVIDED BY Borrower's tangible
net worth; all as determined in accordance with generally accepted accounting
principles consistently applied.
5
<PAGE> 6
5.7.5. Borrower will not permit nor suffer to permit its
Coverage Ratio to be less than the following levels during the corresponding
periods:
Period Ratio
------ ------
Fiscal Year 1996 1.0 to 1.0
Fiscal Year 1997
and thereafter 1.2 to 1.0
For purposes of this Commitment Letter "COVERAGE RATIO" shall be defined as the
ration of Borrower's EBITDA (Earnings before Interest, Taxes, Depreciation and
Amortization) DIVIDED BY the sum of (i) payment of all interest payments made
by Borrower (inclusive of all gold consignment fees incurred by Borrower) PLUS
(ii) the current maturities of long term debt; all as determined in accordance
with generally accepted accounting principles consistently applied. All
calculations of the Coverage Ratio shall be calculated on an annual basis after
the end of each fiscal year of Borrower.
5.7.6. Borrower shall maintain a Loan to Value Ratio of not
greater than 80%. "LOAN TO VALUE RATIO" means the outstanding principal
balance of the Loan at the time in question divided by the then current fair
market value of the Mortgaged Premises, as determined by Bank in its reasonable
judgment.
5.7.7. Borrower shall not pledge, grant a security interest
in, mortgage, assign, encumber or otherwise create a lien on the Mortgaged
Premises (whether real or personal, tangible or intangible, and now owned or
hereafter acquired) in favor of any person or entity other than Bank, except
for those liens, security interests and encumbrances existing on the date
hereof and previously disclosed in writing to and approved by Bank or as may be
set forth in that certain Certificate and Report of Title No. P-11547 issued
by Commonwealth Land Title Insurance Company dated January 15, 1995.
5.7.8. Borrower shall not make any loans or advances to any
other person or entity, including without limitation, officers, directors,
shareholders, principals, partners or affiliates of Borrower which would create
a default or an event of default under the Loan Documents.
6. EVENTS OF DEFAULT AND REMEDIES
------------------------------
6.1. Each of the following shall constitute a default (each,
an "EVENT OF DEFAULT") hereunder:
6.1.1. Non-payment when due of any sum required to be paid to
Bank under any of the Loan Documents;
6.1.2. A breach of the covenants contained in Sections 5.1.,
5.2., 5.5. or 5.7. hereof;
6.1.3. A breach by Borrower of any other term, covenant,
condition, obligation or agreement under this Agreement and the continuation of
such breach for a period of thirty (30) days after written notice by Bank to
Borrower;
6.1.4. Any intentional representation or warranty made by
Borrower in this Agreement shall prove to be materially false, incorrect or
misleading in any material respect as of the date when made; or
6.1.5. An Event of Default under any of the other Loan
Documents
6.2. Upon or at any time after the occurrence of an Event of Default,
Bank may exercise any right, power or remedy permitted by law or as set forth
in any of the Loan Documents.
7. CONTINUING ENFORCEMENT OF AGREEMENT.
-----------------------------------
If, after receipt of any payment of all or any part of the
Liabilities, Bank is compelled or agrees, for settlement purposes, to surrender
such payment to any person or entity for any reason (including, without
limitation, a determination that such payment is void or voidable as a
preference or fraudulent conveyance, an impermissible setoff, or a diversion of
trust funds), then this Agreement and the other
6
<PAGE> 7
Loan Documents shall continue in full force and effect, and Borrower shall be
liable for, and shall indemnify, defend and hold harmless Bank with respect to
the full amount so surrendered. The provisions of this Section shall survive
the termination of this Agreement and the other Loan Documents and shall remain
effective notwithstanding the payment of the Liabilities, the cancellation of
the Note or any other Loan Document, the release of any security interest, lien
or encumbrance securing the Liabilities or any other action which Bank may have
taken in reliance upon its receipt of such payment. Any cancellation, release
or other such action by Bank shall be deemed to have been conditioned upon any
payment of the Liabilities having become final and irrevocable.
8. MISCELLANEOUS
-------------
8.1. INTEGRATION. This Agreement and the other Loan Documents
constitute the sole agreement of the parties with respect to the transaction
contemplated hereby and supersede all oral negotiations and prior writings with
respect thereto.
8.2. ATTORNEYS' FEES AND EXPENSES. If Bank retains the services of
counsel by reason of a claim of a default or an Event of Default hereunder or
under any of the other Loan Documents, or on account of any matter involving
this Agreement, or for examination of matters subject to Bank's approval under
the Loan Documents, all costs of suit and collection and all reasonable
attorneys' fees (and/or allocated fees of Bank's in-house legal counsel) and
such other reasonable expenses so incurred by Bank shall forthwith, on demand,
become due and payable and shall be secured hereby.
8.3. NO IMPLIED WAIVER. Bank shall not be deemed to have modified or
waived any of its rights or remedies hereunder unless such modification or
waiver is in writing and signed by Bank, and then only to the extent
specifically set forth therein. A waiver in one event shall not be construed
as continuing or as a waiver of or bar to such right or remedy on a subsequent
event.
8.4. PARTIAL INVALIDITY. The invalidity or unenforceability of any
one or more provisions of this Agreement shall not render any other provisions
herein contained invalid or unenforceable. In lieu of any invalid or
unenforceable provision, there shall be added automatically a valid and
enforceable provision as similar in terms to such invalid or unenforceable
provision as may be possible.
8.5. BINDING EFFECT. The covenants, conditions, waivers, releases and
agreements contained in this Agreement shall bind, and the benefits thereof
shall inure to, the parties hereto and their respective heirs, executors,
administrators, successors and assigns; provided, however, that this Agreement
cannot be assigned by Borrower without the prior written consent of Bank, and
any such assignment or attempted assignment by Borrower shall be void and of no
effect with respect to Bank.
8.6. MODIFICATIONS. This Agreement may not be supplemented, extended,
modified or terminated except by an agreement in writing signed by the party
against whom enforcement of any waiver, change, modification or discharge is
sought.
8.7. JURISDICTION. Borrower irrevocably appoints each and every
officer of the Borrower as its attorneys upon whom may be served, by regular or
certified mail at the address set forth below, any notice, process or pleading
in any action or proceeding against it arising out of or in connection with
this Agreement or any other Loan Document; and Borrower hereby consents that
any action or proceeding against it may be commenced and maintained in any
court within the State of New York or in the United States District Court for
the Southern District of New York by service of process on any such owner,
partner and/or officer; and Borrower agrees that the courts of the State of New
York and the United States District Court for the Southern District of New York
shall have jurisdiction with respect to the subject matter hereof and the
person of Borrower and all collateral securing the obligations of Borrower.
Borrower agrees not to assert any defense to any proceeding initiated by Bank
based upon improper venue or inconvenient forum. Borrower agrees that any
action brought by Borrower shall be commenced and maintained only in a court in
the federal judicial district or county in which Bank has its principal place
of business in New York.
8.8. NOTICES. All notices and communications under this Agreement
shall be in writing and shall be given by either (a) hand-delivery, (b) first
class mail (certified mail, return receipt requested), or (c) reliable
overnight commercial courier (charges prepaid) to the addresses listed in this
Agreement. Notice shall be deemed to have been given and received: (i) if by
hand delivery, upon delivery; (ii) if by mail, three (3) calendar days after
the date first deposited in the United States mail; and (iii) if by overnight
courier, on the date scheduled for delivery. A party may change its address by
giving written
7
<PAGE> 8
notice to the other party as specified herein.
8.9. GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the substantive laws of the State of New York, or the laws
of any State in which the Loan was made or is repayable, or the laws of any
State in which any collateral for the Loan is located, at the sole discretion
of Bank.
8.10. WAIVER OF JURY TRIAL. BORROWER AND BANK AGREE THAT ANY SUIT,
ACTION OR PROCEEDING, WHETHER CLAIM OR COUNTERCLAIM, BROUGHT BY BANK OR
BORROWER ON OR WITH RESPECT TO THIS AGREEMENT 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. BANK AND BORROWER EACH HEREBY KNOWINGLY,
VOLUNTARILY, INTENTIONALLY AND INTELLIGENTLY, AND WITHOUT THE ADVICE OF THEIR
RESPECTIVE COUNSEL, WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY SUCH SUIT, ACTION
OR PROCEEDING. FURTHER, BORROWER WAIVES ANY RIGHT IT MAY HAVE TO CLAIM OR
RECOVER, IN ANY SUCH SUIT, ACTION OR PROCEEDING, ANY SPECIAL, EXEMPLARY,
PUNITIVE, CONSEQUENTIAL OR OTHER DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL
DAMAGES. BORROWER ACKNOWLEDGES AND AGREES THAT THIS SECTION IS A SPECIFIC AND
MATERIAL ASPECT OF THIS AGREEMENT AND THAT BANK WOULD NOT EXTEND CREDIT TO
BORROWER IF THE WAIVERS SET FORTH IN THIS SECTION WERE NOT A PART OF THIS
AGREEMENT.
8
<PAGE> 9
IN WITNESS WHEREOF, Borrower and Bank, intending to be legally bound,
have duly executed and delivered this Loan Agreement as of the day and year
first above written.
ATTEST MICHAEL ANTHONY JEWELERS, INC.
By: /s/ M. Frances Durden By: /s/ Michael A. Paolercio
---------------------- ----------------------------
M. Frances Durden Michael A. Paolercio
Secretary Senior Vice President and Treasurer
FIRST FIDELITY BANK, NATIONAL ASSOCIATION
By: /s/ Charles Van Benschoten
---------------------------
Charles Van Benschoten
Assistant Vice President
Address: 570 Broad Street
Newark, New Jersey 07102
9
<PAGE> 1
EXHIBIT 10.2
FOR INTERNAL USE ONLY
OBLIGOR #
--------------------
OBLIGATION #
-----------------
Commercial Mortgage Loan - NY
Fixed Rate
MORTGAGE NOTE
-------------
$2,500,000.00 Mount Vernon, New York
October 6, 1995
FOR VALUE RECEIVED, the undersigned, jointly and severally, hereby
promises to pay to the order of FIRST FIDELITY BANK, NATIONAL ASSOCIATION (the
"BANK"), the principal sum of Two Million Five Hundred Thousand and 00/100
($2,500,000.00) Dollars (the "LOAN") in United States Dollars, together with
interest thereon as hereinafter provided.
1. INTEREST RATE. Interest shall be charged on the outstanding principal
balance from the date hereof until the full amount of principal due hereunder
has been paid at the rate of eight percent (8.0%) per annum. Interest shall be
calculated daily on the basis of the actual number of days elapsed over a 360
day year.
2. PAYMENT OF PRINCIPAL AND INTEREST.
---------------------------------
Principal and interest shall be due and payable in equal consecutive
monthly installments of Twenty Four Thousand Fifty One and 94/100 Dollars
($24,051.94), commencing on the 10th day of November, 1995 and continuing on
the 10th day of each month thereafter until October 10, 2005 (the "MATURITY
DATE"), when all then unpaid principal and accrued interest thereon and all
other amounts payable hereunder shall be due and payable.
"COMMENCEMENT DATE" means October 10, 1995.
3. APPLICATION OF PAYMENTS. Except as otherwise specified herein, each
payment or prepayment, if any, made under this Note shall be applied to pay
late charges, accrued and unpaid interest, principal, escrows (if any), and any
other fees, costs and expenses which the undersigned is obligated to pay under
this Note, in such order as Bank may elect from time to time in its sole
discretion.
4. TENDER OF PAYMENT.
-----------------
All payments on this Note are payable on or before 10:00 a.m. on the
due date thereof, at the office of Bank located at 570 Broad Street, Newark,
New Jersey 07102, or at such other place as Bank shall designate in writing
from time to time and shall be credited on the date the funds become available
lawful money of the United States.
All sums payable to Bank which are due on a day on which Bank is not
open for business shall be made on the next succeeding business day and such
extended time shall be included in the computation of interest.
5. PREPAYMENT.
----------
5.1. The principal amount of this Note may be prepaid in whole or
in part at any time, and from time to time, provided that the undersigned gives
Bank not less than thirty (30) days prior
<PAGE> 2
written notice of such intended prepayment (which notice shall be irrevocable)
and pays to Bank an additional sum (the "PREPAYMENT CONSIDERATION") equal to
the following:
(a) three percent (3%) of the principal amount prepaid during the
first, second and third (1st, 2nd and 3rd) loan years;
(b) two percent (2%) of the principal amount prepaid during the
fourth, fifth and sixth (4th, 5th and 6th) loan years;
(c) one percent (1%) of the principal amount prepaid during the
seventh, eighth and ninth (7th, 8th and 9th) loan years; and
(d) there shall not be any Prepayment Consideration due the Bank for
any prepayment made during the tenth (10th) loan year.
The term "LOAN YEAR" shall mean each twelve (12) month period during
the term of the Loan commencing with the period beginning on the Commencement
Date. Any prepayment shall include accrued and unpaid interest to the date of
prepayment on the principal amount prepaid and all other sums due and payable
hereunder. Any partial prepayment shall be applied to installments of
principal in their inverse order of maturity. The monthly payment installments
shall not be reamortized following a partial prepayment.
Notwithstanding the provisions of this Section 5 to the contrary,
Borrower shall not be required to pay any Prepayment Consideration to Bank upon
a transfer of title of the Mortgaged Premises to an affiliated entity of
Borrower provided such proposed transfer has been agreed and consented to by
Bank. Borrower acknowledges and agrees that it is not permitted, irrespective
of the provisions of this paragraph, to transfer any interest or title in the
Mortgaged Premises without Bank's prior express written consent.
5.2. The undersigned agrees that the Prepayment Consideration has
been freely bargained for to provide Bank with compensation for the cost of
reinvesting the Loan proceeds and for the loss of the contracted-for return on
the Loan, and that such Prepayment Consideration is reasonable and constitutes
a means of providing Bank with a substitute or alternative source of cash flow
if the Loan is prepaid prior to the Maturity Date. The Prepayment
Consideration shall apply to a voluntary or involuntary prepayment of this
Note, whether by acceleration of the principal balance due upon a default
hereunder or otherwise.
6. SECURITY FOR THE NOTE.
---------------------
6.1. This Note is executed and delivered in accordance with a
commercial transaction described in a Loan Agreement dated this date between
the undersigned and Bank (the "LOAN AGREEMENT"). As security for the payment
of the monies owing under this Note, the undersigned has delivered or has
caused to be delivered to Bank the following (each a "LOAN DOCUMENT" and
collectively with this Note and the Loan Agreement, the "LOAN DOCUMENTS"):
A Mortgage and Security Agreement (the "MORTGAGE") on certain real
property and the improvements situated thereon in the City of Mount Vernon,
County of Westchester, State of New York as more fully described in the
Mortgage (the "MORTGAGED PREMISES");
An Assignment of Leases and Rents (the "ASSIGNMENT OF LEASES")
assigning all of the assignor's rights as lessor under all leases affecting the
Mortgaged Premises;
A security interest including proceeds and after acquired property in
all fixtures attached and appurtenant to the Mortgaged Premises.
6.2. The undersigned hereby grants to Bank a continuing security
interest in all property of the undersigned, now or hereafter in the possession
of Bank or any Affiliate (as defined below) in any capacity whatsoever,
including, but not limited to, any balance or share of any deposit, trust
2
<PAGE> 3
or agency account, as security for the payment of this Note and any other
liabilities of the undersigned to Bank, which security interest shall be
enforceable and subject to all the provisions of this Note, as if such property
were specifically pledged hereunder.
7. ADDITIONAL PAYMENTS; LATE CHARGE; DEFAULT RATE.
----------------------------------------------
7.1. In addition to the payments provided for in Section 2 above, the
undersigned promises to pay on demand any additional monies required to be paid
or advanced by the undersigned or by any other party obligated under any of the
Loan Documents or paid or advanced on behalf of the undersigned or such party
by Bank pursuant to the terms of the Loan Agreement, the Mortgage or any other
Loan Document, which obligation shall be continuing and shall survive any
judgment entered with respect to this Note or a foreclosure of the Mortgage.
This Note shall evidence, and the Mortgage and other Loan Documents shall
secure the payment of, all such sums so advanced or paid.
7.2. In the event that any installment of principal or interest
required to be made by the undersigned under this Note shall not be received by
Bank on or before its due date, the undersigned shall pay to Bank, on demand, a
late charge of five percent (5%) of such delinquent payment for the purpose of
defraying the expense incident to the processing of such delinquent payment.
The foregoing right is in addition to, and not in limitation of, any other
rights which Bank may have upon the undersigned's failure to make timely
payment of any amount due hereunder.
7.3. From and after the Maturity Date or from and after the occurrence
of an Event of Default hereunder, irrespective of any declaration of maturity,
all amounts remaining unpaid or thereafter accruing hereunder, as well as any
amounts owing under Section 7.1., shall, at Bank's option, bear interest at a
default rate of four percent (4%) per annum above the interest rate then in
effect as set forth herein (the "DEFAULT RATE"), or the highest permissible
rate under applicable usury law, whichever is less. Such default rate of
interest shall be payable upon demand, but in no event later than when
scheduled interest payments are due, and shall also be charged on the amounts
owed by the undersigned to Bank pursuant to any judgments entered in favor of
Bank with respect to this Note.
8. EVENTS OF DEFAULT. Each of the following shall constitute an event of
default hereunder (an "EVENT OF DEFAULT"): (a) the failure of the undersigned
to make any installment of principal or interest hereunder when due and
payable; or (b) the occurrence of any other default in any term, covenant or
condition hereunder or any Event of Default under the Loan Agreement, the
Mortgage or any other Loan Document.
9. REMEDIES. If an Event of Default exists, Bank may exercise any right,
power or remedy permitted by law or as set forth herein or in the Loan
Agreement, the Mortgage or any other Loan Document including, without
limitation, the right to declare the entire unpaid principal amount hereof and
all interest accrued hereon, and all other sums secured by the Mortgage or any
other Loan Document to be, and such principal, interest and other sums shall
thereupon become, forthwith due and payable.
10. CONTINUING ENFORCEMENT OF NOTE. If, after receipt of any payment of
all or any part of this Note, Bank is compelled or agrees, for settlement
purposes, to surrender such payment to any person or entity for any reason
(including, without limitation, a determination that such payment is void or
voidable as a preference or fraudulent conveyance, an impermissible setoff, or
a diversion of trust funds), then this Note and the other Loan Documents shall
continue in full force and effect or be reinstated, as the case may be, and the
undersigned shall be liable for, and shall indemnify, defend and hold harmless
Bank with respect to the full amount so surrendered. The provisions of this
Section shall survive the cancellation or termination of this Note and shall
remain effective notwithstanding the payment of the obligations evidenced
hereby, the release of any security interest, lien or encumbrance securing this
Note or any other action which Bank may have taken in reliance upon its receipt
of such payment. Any cancellation, release or other such action shall be
deemed to have been conditioned upon any payment of the obligations evidenced
hereby having become final and irrevocable.
3
<PAGE> 4
11. MISCELLANEOUS.
-------------
11.1. DISCLOSURE OF FINANCIAL INFORMATION. Bank is hereby
authorized to reasonably disclose any financial or other information about the
undersigned to any regulatory body or agency having jurisdiction over Bank or
to any present, future or prospective participant or successor in interest in
any loan or other financial accommodation made by Bank to the undersigned. The
information provided may include, without limitation, amounts, terms, balances,
payment history, return item history and any financial or other information
about the undersigned. The undersigned agrees to indemnify, defend, release
Bank, and hold Bank harmless, at the undersigned's cost and expense, from and
against any and all lawsuits, claims, actions, proceedings, or suits against
Bank or against the undersigned and Bank, arising out of or relating to Bank's
reporting or disclosure of such information. Such indemnity shall survive the
repayment or other satisfaction of the obligations evidenced hereby.
11.2. REMEDIES CUMULATIVE. The rights and remedies of Bank as
provided herein and in any other Loan Document shall be cumulative and
concurrent, may be pursued separately, successively or together against the
undersigned or the Mortgaged Premises or any other collateral security for
payment of amounts due hereunder, or any guarantor thereof, at the sole
discretion of Bank, may be exercised as often as occasion therefor shall arise,
and shall be in addition to any other rights or remedies conferred upon Bank at
law or in equity. The failure, at any one or more times, of Bank to exercise
any such right or remedy shall in no event be construed as a waiver or release
thereof. Bank shall have the right to take any action it deems appropriate
without the necessity of resorting to any collateral securing this Note.
11.3. INTEGRATION. This Note and the other Loan Documents
constitute the sole agreement of the parties with respect to the transaction
contemplated hereby and supersede all oral negotiations and prior writings with
respect thereto.
11.4. RIGHT OF SETOFF BY BANK. Upon the occurrence of an Event of
Default, to the extent permitted by and in addition to any other remedy
provided by law, and regardless of the adequacy of any collateral or other
means of obtaining repayment of the obligations evidenced hereby, Bank shall
have the right immediately and without notice or other act, and is specifically
authorized hereby, to setoff against any of the undersigned's obligations under
this Note any sum owed by Bank or any Affiliate in any capacity to the
undersigned whether due or not, or any property of the undersigned in the
possession of Bank or any Affiliate, even if effecting such setoff results in a
loss or reduction of interest to the undersigned or the imposition of a penalty
applicable to the early withdrawal of time deposits. Bank shall be deemed to
have exercised such right of setoff and to have made a charge against any such
sum or property immediately upon the occurrence of the Event of Default, even
though the actual book entries may be made at some time subsequent.
11.5. ATTORNEYS' FEES AND EXPENSES. If Bank retains the services of
counsel by reason of a claim of a default or an Event of Default hereunder or
under any of the other Loan Documents, or to institute and maintain an action
to foreclose the Mortgage or appoint a receiver of rents, or on account of any
matter involving this Note, or for examination of matters subject to Bank's
approval under the Loan Documents, all costs of suit and collection and all
reasonable attorneys' fees (and/or allocated fees of Bank's in-house legal
counsel) and such other reasonable expenses so incurred by Bank shall
forthwith, on demand, become due and payable and shall be evidenced hereby.
11.6. NO IMPLIED WAIVER. Bank shall not be deemed to have modified
or waived any of its rights or remedies hereunder unless such modification or
waiver is in writing and signed by Bank, and then only to the extent
specifically set forth therein. A waiver in one event shall not be construed
as continuing or as a waiver of or bar to such right or remedy on a subsequent
event. After any acceleration of, or the entry of any judgment on, this Note,
the acceptance by Bank of any payments by or on behalf of the undersigned on
account of the indebtedness evidenced by this Note shall not cure or be deemed
to cure any Event of Default or reinstate or be deemed to reinstate the terms
of this Note absent an express written agreement duly executed by Bank and the
undersigned.
4
<PAGE> 5
11.7. WAIVER. The undersigned, jointly and severally, waives
demand, notice, presentment, protest, demand for payment, notice of dishonor,
notice of protest and diligence of collection of this Note. The undersigned
consents to any and all extensions of time, renewals, waivers, or modifications
that may be granted by Bank with respect to the payment or other provisions of
this Note, and to the release of any collateral, with or without substitution.
The undersigned agrees that makers, endorsers, guarantors and sureties may be
added or released without notice and without affecting the undersigned's
liability hereunder. The liability of the undersigned shall not be affected by
the failure of Bank to perfect or otherwise obtain or maintain the priority or
validity of any security interest in any collateral. The liability of the
undersigned shall be absolute and unconditional and without regard to the
liability of any other party hereto.
11.8. NO USURIOUS AMOUNTS. Anything herein contained to the
contrary notwithstanding, the undersigned does not agree and shall not be
obligated to pay interest hereunder at a rate which is in excess of the maximum
rate permitted by law. If by the terms of this Note, the undersigned is at any
time required to pay interest at a rate in excess of such maximum rate, the
rate of interest under this Note shall be deemed to be immediately reduced to
such maximum legal rate and the portion of all prior interest payments in
excess of such maximum legal rate shall be applied to and shall be deemed to
have been payments in reduction of the outstanding principal balance. The
undersigned agrees that in determining whether or not any interest payable
under this Note exceeds the highest rate permitted by law, any non-principal
payment, including without limitation, late charges, shall be deemed to the
extent permitted by law to be an expense, fee, premium or penalty rather than
interest.
11.9. PARTIAL INVALIDITY. The invalidity or unenforceability of any
one or more provisions of this Note shall not render any other provision
invalid or unenforceable. In lieu of any invalid or unenforceable provision,
there shall be added automatically a valid and enforceable provision as similar
in terms to such invalid or unenforceable provision as may be possible.
11.10. BINDING EFFECT. The covenants, conditions, waivers, releases
and agreements contained in this Note shall bind, and the benefits thereof
shall inure to, the parties hereto and their respective heirs, executors,
administrators, successors and assigns; provided, however, that this Note
cannot be assigned by the undersigned without the prior written consent of
Bank, and any such assignment or attempted assignment by the undersigned shall
be void and of no effect with respect to Bank.
11.11. MODIFICATIONS. This Note may not be supplemented, extended,
modified or terminated except by an agreement in writing signed by the party
against whom enforcement of any such waiver, change, modification or discharge
is sought.
11.12. SALES OR PARTICIPATIONS. Bank may from time to time sell or
assign, in whole or in part, or grant participations in the Loan, this Note
and/or the obligations evidenced thereby. The holder of any such sale,
assignment or participation, if the applicable agreement between Bank and such
holder so provides, shall be: (a) entitled to all of the rights, obligations
and benefits of Bank; and (b) deemed to hold and may exercise the rights of
setoff or banker's lien with respect to any and all obligations of such holder
to the undersigned, in each case as fully as though the undersigned were
directly indebted to such holder. Bank may in its discretion give notice to
the undersigned of such sale, assignment or participation; however, the failure
to give such notice shall not affect any of Bank's or such holder's rights
hereunder.
11.13. AFFILIATE. As used herein, "AFFILIATE" shall mean First
Fidelity Bancorporation and any of its direct and indirect affiliates and
subsidiaries.
11.14. JURISDICTION. The undersigned irrevocably appoints each and
every officer of the undersigned as its attorneys upon whom may be served, by
regular or certified mail at the address set forth below, any notice, process
or pleading in any action or proceeding against it arising out of or in
connection with this Note or any other Loan Document; and the undersigned
hereby consents that any action or proceeding against it may be commenced and
maintained in any court within the State of New York or in the United States
District Court for the Southern District of New York by
5
<PAGE> 6
service of process on any such owner, partner and/or officer; and the
undersigned agrees that the courts of the State of New York and the United
States District Court for the Southern District of New York shall have
jurisdiction with respect to the subject matter hereof and the person of the
undersigned. The undersigned agrees not to assert any defense to any action or
proceeding initiated by Bank based upon improper venue or inconvenient forum.
The undersigned agrees that any action brought by the undersigned shall be
commenced and maintained only in a court in the federal judicial district or
county in which Bank has its principal place of business in New York.
11.15. NOTICES. All notices and communications under this Note shall
be in writing and shall be given by either (a) hand-delivery, (b) first class
mail (certified mail, return receipt requested), or (c) reliable overnight
commercial courier (charges prepaid), to the addresses listed in the Loan
Documents. Notice shall be deemed to have been given and received: (i) if by
hand delivery, upon delivery; (ii) if by mail, three (3) calendar days after
the date first deposited in the United States mail; and (iii) 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.
11.16. GOVERNING LAW. This Note shall be governed by and construed
in accordance with the substantive laws of the State of New York, or the laws
of any State in which the Loan was made or is repayable, or the laws of any
State in which any collateral for the Loan is located, at the sole discretion
of Bank.
11.17. JOINT AND SEVERAL LIABILITY. If the undersigned consists of
more than one person or entity, the word "UNDERSIGNED" shall mean each of them
and their liability shall be joint and several.
11.18. WAIVER OF JURY TRIAL. THE UNDERSIGNED AND BANK AGREE THAT ANY
SUIT, ACTION OR PROCEEDING, WHETHER CLAIM OR COUNTERCLAIM, BROUGHT BY BANK OR
THE UNDERSIGNED, 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. BANK AND THE UNDERSIGNED EACH HEREBY KNOWINGLY,
VOLUNTARILY, INTENTIONALLY AND INTELLIGENTLY, AND WITH THE ADVICE OF THEIR
RESPECTIVE COUNSEL, WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY SUCH SUIT, ACTION
OR PROCEEDING. FURTHER, THE UNDERSIGNED WAIVES ANY RIGHT IT MAY HAVE TO CLAIM
OR RECOVER, IN ANY SUCH SUIT, ACTION OR PROCEEDING, ANY SPECIAL, EXEMPLARY,
PUNITIVE, CONSEQUENTIAL OR OTHER DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL
DAMAGES. THE UNDERSIGNED ACKNOWLEDGES AND AGREES THAT THIS SECTION IS A
SPECIFIC AND MATERIAL ASPECT OF THIS NOTE AND THAT BANK WOULD NOT EXTEND CREDIT
TO THE UNDERSIGNED IF THE WAIVERS SET FORTH IN THIS SECTION WERE NOT A PART OF
THIS NOTE.
IN WITNESS WHEREOF, the undersigned, intending to be legally bound,
has duly executed and delivered this Note as of the day and year first above
written.
ATTEST: MICHAEL ANTHONY JEWELERS, INC.
By: /s/ M. Frances Durden By: /s/ Michael A. Paolercio
---------------------- -------------------------
M. Frances Durden Michael A. Paolercio
Secretary Senior Vice President and Treasurer
6
<PAGE> 1
EXHIBIT 10.3
[LOGO]
Commercial Mortgage Loan - NY
MORTGAGE AND SECURITY AGREEMENT
-------------------------------
Date: October 6, 1995
MORTGAGEE: FIRST FIDELITY BANK, NATIONAL ASSOCIATION
570 Broad Street, Newark, New Jersey 07102
Attention: Commercial Real Estate Department Head
MORTGAGOR: Michael Anthony Jewelers, Inc.
Type of Entity: Corporation
State of Organization: Delaware
Mailing Address: 115 South MacQuesten Parkway
Mount Vernon, New York 10550
MORTGAGED Street Address: 111/115-119 South MacQuesten
Parkway
PREMISES: Municipality of: Mount Vernon
County of Westchester, State of New York
Tax Map Designation: Lot No. 4, 5, 6, 7, 8, 27, 28 & 29
Block No. 1060
1. DEBT; LOAN DOCUMENTS.
--------------------
Mortgagor is indebted to Mortgagee in the principal sum of Two Million
Five Hundred Thousand and 00/100 Dollars ($2,500,000.00), together with
interest thereon, as evidenced by a certain Mortgage Note of even date herewith
(the "NOTE").
This Mortgage is the Mortgage referred to in the Note. The
indebtedness evidenced by the Note has been or will be advanced pursuant to a
Loan Agreement of even date herewith (the "LOAN AGREEMENT"). As additional
security for the payment and performance to Mortgagee of the Liabilities (as
defined below), Mortgagor has executed and delivered to Mortgagee an Assignment
of Leases and Rents assigning all of Mortgagor's rights as lessor under all
leases affecting the Mortgaged Premises now or hereafter in effect (the
"ASSIGNMENT OF LEASES"), and other collateral documents described in or
accompanying the Loan Agreement. This Mortgage, the Loan Agreement, the Note,
the Guaranty (if any), the Assignment of Leases, and all other guarantees,
documents, certificates and instruments executed in connection therewith are
sometimes hereinafter referred to collectively as the "LOAN DOCUMENTS" or
individually as a "LOAN DOCUMENT". The terms of the Loan Documents are hereby
made a part of this Mortgage to the same extent and with the same effect as if
fully set forth herein.
2. LIABILITIES; GRANT OF MORTGAGE. To secure to Mortgagee (i) the
repayment of all sums due under this Mortgage, the Note (and all extensions,
renewals, replacements, substitutions, amendments and modifications thereof)
and the other Loan Documents; (ii) the performance of all terms, conditions and
covenants set forth in the Loan Documents; and (iii) all obligations and
indebtedness of every kind and description of Mortgagor or Borrower, as
applicable, to Mortgagee or to any Affiliate (as hereinafter defined), whether
primary or secondary, absolute or contingent, direct or indirect, 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, and whether incurred by Mortgagor as principal, surety, endorser,
guarantor, accommodation party or otherwise, including without limitation,
principal, interest, fees, late charges and expenses, including attorneys' fees
and/or allocated fees of Mortgagee's in-house legal counsel (subsections 2 (i),
(ii) and (iii) collectively, the "LIABILITIES"), Mortgagor has mortgaged,
granted and conveyed and by these presents does hereby mortgage, grant and
convey to Mortgagee, its successors and assigns, all of Mortgagor's right,
title
<PAGE> 2
and interest now owned or hereafter acquired in and to each of the following
(collectively, the "MORTGAGED PREMISES").
2.1. All those certain tracts of land set forth above as the
Mortgaged Premises and more particularly described in Schedule "A" attached
hereto and made a part hereof (the "REAL ESTATE");
2.2. Any and all buildings and improvements now or hereafter
erected on, under or over the Real Estate (the "IMPROVEMENTS");
2.3. Any and all fixtures and other articles of real property,
belonging to Mortgagor, at any time now or hereafter installed in, attached to
or situated in or upon the Real Estate, or the buildings and improvements now
or hereafter erected thereon, or used or intended to be used in connection with
the Real Estate, or in the operation of the buildings and improvements, plant
or dwelling situate thereon, whether or not such real property is or shall be
affixed thereto, and all replacements, substitutions and proceeds of the
foregoing (all of the foregoing herein called the "SERVICE EQUIPMENT"),
including without limitation (but not employed in Mortgagor's ordinary couse of
business): (i) all appliances, furniture and furnishings; all articles of
interior decoration, floor, wall and window coverings; all office, restaurant,
bar, kitchen and laundry fixtures, utensils, appliances and equipment; all
storm and screen windows, shutters, doors, decorations, awnings, shades,
blinds, signs, trees, shrubbery and other plantings; (ii) all building service
fixtures; all lighting, heating, ventilating, air conditioning, refrigerating,
sprinkling, plumbing, security, irrigating, cleaning, incinerating, waste
disposal, communications, alarm, fire prevention and extinguishing systems,
fixtures; all elevators, escalators, lifts, cranes, hoists and platforms; all
pipes, conduits, pumps, boilers, tanks, motors, engines, furnaces and
compressors; all dynamos, transformers and generators; (iii) all building
materials, building machinery and building equipment delivered on site to the
Real Estate during the course of, or in connection with any construction or
repair or renovation of the buildings and improvements; (iv) all parts,
fittings, accessories, accessions, substitutions and replacements therefor and
thereof; and (v) all files, books, ledgers, reports and records relating to any
of the foregoing;
2.4. Any and all leases, subleases, tenancies, licenses, occupancy
agreements or agreements to lease all or any portion of the Real Estate,
Improvements, Service Equipment or all or any other portion of the Mortgaged
Premises and all extensions, renewals, amendments, modifications and
replacements thereof, and any options, rights of first refusal or guarantees
relating thereto (collectively, the "LEASES"); all rents, income, receipts,
revenues, security deposits, escrow accounts, reserves, issues, profits, awards
and payments of any kind payable under the Leases or otherwise arising from the
Real Estate, Improvements, Service Equipment or all or any other portion of the
Mortgaged Premises including, without limitation, minimum rents, additional
rents, percentage rents, parking, maintenance and deficiency rents
(collectively, the "RENTS"); all of the following personal property
(collectively referred to as the "CONTRACTS"): all accounts, general
intangibles and contract rights (including any right to payment thereunder,
whether or not earned by performance) of any nature relating to the Real
Estate, Improvements, Service Equipment or all or any other portion of the
Mortgaged Premises or the use, occupancy, maintenance, construction, repair or
operation thereof; all management agreements, franchise agreements, utility
agreements and deposits, building service contracts, maintenance contracts,
construction contracts and architect's agreements; all maps, plans, surveys and
specifications; all warranties and guaranties; all permits, licenses and
approvals; and all insurance policies, books of account and other documents, of
whatever kind or character, relating to the use, construction upon, occupancy,
leasing, sale or operation of the Real Estate, Improvements, Service Equipment
or all or any other portion of the Mortgaged Premises;
2.5. Any and all estates, rights, tenements, hereditament,
privileges, easements, reversions, remainders and appurtenances of any kind
benefitting or appurtenant to the Real Estate, Improvements or all or any other
portion of the Mortgaged Premises; all means of access to and from the Real
Estate, Improvements or all or any other portion of the Mortgaged Premises,
whether public or private; all streets, alleys, passages, ways, water courses,
water and mineral rights relating to the Real Estate, Improvements or all or
any other portion of the Mortgaged Premises; all rights of Mortgagor as
declarant or unit owner under any declaration of condominium or association
applicable to the Real Estate, Improvements or all or any other portion of the
Mortgaged Premises including, without limitation, all development rights and
special declarant rights; and all other claims or demands of Mortgagor, either
at law or in equity, in possession or expectancy of, in, or to the Real Estate,
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Improvements or all or any other portion of the Mortgaged Premises (all of the
foregoing described in this Section 2.5 herein called the "APPURTENANCES"); and
2.6. Any and all "proceeds" of any of the above-described Real
Estate, Improvements, Service Equipment, Leases, Rents, Contracts and
Appurtenances, which term "proceeds" shall have the meaning given to it in the
New York Uniform Commercial Code (collectively, the "PROCEEDS") and shall
additionally include whatever is received upon the use, lease, sale, exchange,
transfer, collection or other utilization or any disposition or conversion of
any of the Real Estate, Improvements, Service Equipment, Leases, Rents,
Contracts and Appurtenances, voluntary or involuntary, whether cash or
non-cash, including proceeds of insurance and condemnation awards, rental or
lease payments, accounts, chattel paper, instruments, documents, contract
rights, general intangibles, equipment and inventory.
TO HAVE AND TO HOLD the above granted and conveyed Mortgaged Premises
unto and to the proper use and benefit of Mortgagee, its successors and
assigns, forever.
3. FUTURE ADVANCES.
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This Mortgage shall secure any and all present or future advances and
readvances under the Liabilities made by Mortgagee to or for the benefit of
Mortgagor or the Mortgaged Premises, including, without limitation: (i)
principal, interest, late charges, fees and other amounts due under the
Liabilities or this Mortgage; (ii) all advances by Mortgagee to Mortgagor or
any other person to pay costs of erection, construction, alteration, repair,
restoration, maintenance and completion of any improvements on the Mortgaged
Premises; (iii) all advances made or costs incurred by Mortgagee for the
payment of real estate taxes, assessments or other governmental charges,
maintenance charges, insurance premiums, appraisal charges, environmental
inspection, audit, testing or compliance costs, and costs incurred by Mortgagee
for the enforcement and protection of the Mortgaged Premises or the lien of
this Mortgage; and (iv) all legal fees, costs and other expenses incurred by
Mortgagee by reason of any default or otherwise in connection with the
Liabilities, PROVIDED, HOWEVER, that the maximum principal sum secured by this
Mortgage, or which under any contingency may be secured hereby at any time in
the future, shall not exceed the principal sum state in Section 1 above.
Mortgagor agrees that if, at any time during the term of this Mortgage or
following a foreclosure hereof, Mortgagor fails to perform or observe any
covenant or obligation under this Mortgage including, without limitation,
payment of any of the foregoing, Mortgagee may (but shall not be obligated to)
take such steps as are reasonably necessary to remedy any such nonperformance
or nonobservance for the account and at the expense of Mortgagor, and may enter
upon the Mortgaged Premises for such purpose and take all such action thereon
as, in Mortgagee's opinion, may be necessary or appropriate thereof. No such
entry and no such action shall be deemed an eviction of any tenant of the
Mortgaged Premises or any part thereof. All amounts advanced by Mortgagee
shall be added to the amount secured by this Mortgage and the other Loan
Documents, and shall be due and payable on demand, together with interest at
four percent (4%) per annum above the rate of interest then in effect under the
Note, such interest to be calculated from the date of such advance to the date
of repayment thereof. Mortgagor's obligations hereunder shall be continuing
and shall survive notwithstanding a foreclosure of this Mortgage.
4. ASSIGNMENT OF LEASES.
--------------------
4.1. Mortgagor hereby assigns to Mortgagee, as further security for
the payment of the Liabilities, all Leases and Rents. Mortgagor shall, upon
demand, deliver to Mortgagee an executed copy of each such Lease. This
assignment shall continue in effect until the Liabilities are paid in full and
this Mortgage is canceled or discharged of record; however, so long as no Event
of Default (as defined below) exists, Mortgagor shall have a license to
collect, and may retain, use and enjoy the Rents as they become due, but not
prior to accrual, subject to the terms and conditions set forth in the
Assignment of Leases. Such license granted to Mortgagor shall be immediately
revoked without further notice or demand upon the occurrence of an Event of
Default.
4.2. Mortgagor shall timely perform all of its obligations under
the Leases. Mortgagor represents and warrants that: (i) there are no leases
or agreements to lease all or any part of the Real Estate now in effect, except
those specifically set forth in, and assigned to Mortgagee by, the Assignment
of Leases; and (ii) there is no assignment or pledge of any rents, issues or
profits of or from the Mortgaged Premises now in effect, except pursuant to the
Assignment of Leases, and
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Mortgagor shall not make any assignment or pledge thereof to anyone other than
Mortgagee until the satisfaction in full of the Liabilities.
4.3. Mortgagor shall not, without the prior written consent of
Mortgagee with respect to any part of the Mortgaged Premises in excess of
10,000 square feet: (i) enter into any lease of all or any portion of the
Mortgaged Premises; (ii) amend, modify, terminate or accept a surrender of any
Lease; or (iii) collect or accept rent from any tenant of the Mortgaged
Premises for a period of more than one month in advance. Reference is hereby
made for purposes of this Section 4.3 to Section 291-f of the Real Property Law
of the State of New York.
5. SECURITY AGREEMENT.
------------------
This Mortgage constitutes a security agreement under the New York
Uniform Commercial Code (the "CODE") and shall be deemed to constitute a
fixture financing statement. Mortgagor hereby grants to Mortgagee a security
interest in the property included in the Mortgaged Premises, and all
replacements of, substitutions for, and additions to, such property, and the
proceeds thereof. Mortgagor shall, at Mortgagor's own expense, execute,
deliver, file and refile any financing or continuation statements or other
security agreements Mortgagee may require from time to time to perfect, confirm
or maintain the lien of this Mortgage with respect to such property. Without
limiting the foregoing, Mortgagor hereby irrevocably appoints Mortgagee
attorney-in-fact for Mortgagor to execute, deliver and file such instruments
for or on behalf of Mortgagor at Mortgagor's expense, which appointment, being
for security, is coupled with an interest and shall be irrevocable.
6. REPRESENTATIONS, WARRANTIES AND COVENANTS.
-----------------------------------------
6.1. PAYMENT AND PERFORMANCE. Mortgagor shall (i) pay to Mortgagee
all sums required to be paid by Mortgagor under the Loan Documents, in
accordance with their stated terms and conditions; (ii) perform and comply with
all terms, conditions and covenants set forth in each of the Loan Documents by
which Mortgagor is bound; and (iii) perform and comply with all of Mortgagor's
obligations and duties as landlord under any Leases.
6.2. SEISIN AND WARRANTY. Mortgagor is seized of an indefeasible
estate in fee simple in, and warrants the title to, the Mortgaged Premises; has
good and valid title to all rents, issues and profits therefrom, and has the
right, full power and lawful authority to grant, convey and assign the same to
Mortgagee in the manner and form set forth herein; and this Mortgage is a valid
and enforceable first lien on the Mortgaged Premises. Mortgagor hereby
covenants that Mortgagor shall (i) preserve such title and the validity and
priority of the lien of this Mortgage and shall forever warrant and defend the
same to Mortgagee against all lawful claims whatsoever; and (ii) execute,
acknowledge and deliver all such further documents or assurances, and cause to
be done all such further acts as may at any time hereafter be required by
Mortgagee to protect fully the lien of this Mortgage.
6.3. INSURANCE. (a) Mortgagor shall obtain and maintain at all
times throughout the term of this Mortgage the following insurance in amounts,
with deductibles and with companies satisfactory to Mortgagee from time to
time: (i) comprehensive general public liability insurance covering all
operations of Mortgagor; (ii) "All-Risk" fire and extended coverage hazard
insurance (together with vandalism and malicious mischief endorsements) in an
aggregate amount not less than 100% of the full insurable replacement value of
the Mortgaged Premises, including coverage for loss of contents owned by
Mortgagor; (iii) during the course of any construction, reconstruction,
remodeling or repair of improvements on the Mortgaged Premises, builders'
all-risk extended coverage insurance in amounts based upon the completed
replacement value of the improvements (excluding roads, foundations, parking
areas, paths, walkways and like improvements), including coverage for loss of
contents and endorsed to provide that occupancy by any person shall not void
such coverage; (iv) if the Mortgaged Premises are required to be insured
pursuant to the Flood Disaster Protection Act of 1973 or the National Flood
Insurance Act of 1968, and the regulations promulgated thereunder, flood
insurance in an amount at least equal to the lesser of the outstanding
principal balance of this Mortgage or the maximum limit of coverage available;
(v) insurance which complies with the workers' compensation and employers'
liability laws of all states in which Mortgagor shall have employees; (vi)
business interruption and/or rental loss insurance sufficient to pay, for a
period of not less than six (6) months, normal operating expenses of or gross
income from the Mortgaged Premises; (vii) boiler and machinery insurance
covering pressure vessels, air tanks, boilers, machinery, pressure piping,
heating, air conditioning and elevator equipment in such amounts as Mortgagee
shall require from time to time,
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provided that the Mortgaged Premises contains equipment of such nature; and
(viii) such other insurance as Mortgagee may reasonably require.
(b) Each insurance policy required under this Section 6.3.
shall be written by an insurance company authorized or licensed to do business
in New York having an Alfred M. Best Company, Inc. rating of A or higher and a
financial size category of not less than VII, and shall be on such forms and
written by such companies as shall be reasonably approved by Mortgagee.
(c) Each insurance policy required under this Section 6.3.
providing insurance against loss or damage to property, business interruption
or rent loss shall be written or endorsed so as to (i) name Mortgagee as
mortgagee under a New York non-contributory standard mortgagee endorsement, or
its equivalent; and (ii) make all losses payable directly to Mortgagee, without
contribution.
(d) Each insurance policy required under this Section 6.3.
providing public liability coverage shall be written and endorsed so as to name
Mortgagee as a certificate holder with thirty (30) days prior written notice of
cancellation.
(e) Each insurance policy required under this Section 6.3.
shall contain a provision (i) requiring the insurer to notify Mortgagee, in
writing and at least thirty (30) days in advance, of any cancellation or
material change in the policy; (ii) waiving all rights of setoff, counterclaim,
deduction or subrogation against Mortgagor; and (iii) excluding Mortgagee from
the operation of any coinsurance clause, or, alternatively, stating that the
amount of insurance is sufficient to exclude the insured from the operation of
any co-insurance clause.
(f) At least thirty (30) days prior to the expiration of any
insurance policy, Mortgagor shall furnish evidence satisfactory to Mortgagee
that such policy has been renewed or replaced or is no longer required by this
Section 6.3.
(g) Mortgagor shall not take out any separate or additional
insurance with respect to the Mortgaged Premises which is contributing in the
event of loss unless approved by Mortgagee and in conformity with the
requirements of this Section 6.3.
(h) Notwithstanding the foregoing, in the event that
Mortgagor fails to maintain insurance in accordance with this Section 6.3., and
Mortgagee elects to obtain insurance to protect its interests hereunder,
Mortgagee may obtain insurance in any amount and of any type Mortgagee deems
appropriate to protect Mortgagee's interest only and Mortgagee shall have no
duty or obligation to Mortgagor to maintain insurance in any greater amount or
of any other type for the benefit of Mortgagor. All insurance premiums
incurred or paid by Mortgagee shall be at Mortgagor's sole cost and expense in
accordance with Section 3 hereof. Mortgagee's election to obtain insurance
shall not be deemed to waive any Event of Default (as hereinafter defined)
hereunder.
(i) In the event of any conflict, inconsistency or ambiguity
between the provisions of this Section 6.3 and the provisions of subsection 4
of Section 254 of the Real Property Law of the State of New York covering the
insurance of buildings against loss by fire, the provisions of this Section 6.3
shall control.
6.4 TAXES AND OTHER CHARGES. Mortgagor shall prepare and timely
file all federal, state and local tax returns required to be filed by Mortgagor
and promptly pay and discharge all taxes, assessments, water and sewer rents,
and other governmental charges imposed upon Mortgagor, the Mortgaged Premises
or on any of Mortgagor's other property when due, but in no event after
interest or penalties commence to accrue thereon or become a lien upon such
property, except for those taxes, assessments, water and sewer rents, or other
governmental charges then being contested in good faith by Mortgagor by
appropriate proceedings and for which Mortgagor has established on its books or
by deposit of cash with Mortgagee, at the option of Mortgagee, a reserve for
the payment thereof in such amount as Mortgagee may require, and so long as
such contest: (i) operates to prevent collection, stay any proceedings which
may be instituted to enforce payment of such item, and prevent a sale of the
Mortgaged Premises to pay such item; (ii) is maintained and prosecuted with due
diligence; and (iii) shall not have been terminated or discontinued adversely
to Mortgagor. Mortgagor shall submit to Mortgagee, upon request, an affidavit
signed by Mortgagor certifying that all federal, state and local tax returns
have been filed to date and all taxes, assessments, water and sewer rents, and
other governmental charges with respect to Mortgagor's properties have been
paid to date.
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6.5. ESCROWS. If required by Mortgagee, Mortgagor shall pay to
Mortgagee at the time of each installment of principal and interest due under
the Note, and commencing with the first payment due after the date of such
request, a sum equal to (a) the amount of the next installment of taxes and
assessments levied or assessed against the Mortgaged Premises, and/or (b) the
premiums which will next become due on the insurance policies required by this
Mortgage, all in amounts as estimated by Mortgagee, less all sums already paid
therefor or deposited with Mortgagee for the payment thereof, divided by the
number of payments to become due before one (1) month prior to the date when
such taxes and assessments and/or premiums, as applicable, will become due,
such sums to be held by Mortgagee to pay the same when due. If such escrow
funds are not sufficient to pay such taxes and assessments and/or insurance
premiums, as applicable, as the same become due, Mortgagor shall pay to
Mortgagee, upon request, such additional amounts as Mortgagee shall estimate to
be sufficient to make up any deficiency. No amount paid to Mortgagee hereunder
shall be deemed to be trust funds but may be commingled with general funds of
Mortgagee and no interest shall be payable thereon. Upon the occurrence of an
Event of Default, Mortgagee shall have the right, at its sole discretion, to
apply any amounts so held against the Liabilities. If Mortgagor is not
required to pay tax escrows pursuant to this Section 6.5., Mortgagor shall
promptly provide to Mortgagee on a quarterly basis, copies of receipted tax
bills, cancelled checks or other evidence satisfactory to Mortgagee evidencing
that such taxes and assessments have been timely paid.
6.6. TRANSFER OF TITLE. Without the prior written consent of
Mortgagee in each instance, Mortgagor shall not cause or permit any transfer of
the Mortgaged Premises or any part thereof, whether voluntarily, involuntarily
or by operation of law, nor shall Mortgagor enter into any agreement or
transaction to transfer, or accomplish in form or substance a transfer, of the
Mortgaged Premises. A "TRANSFER" of the Mortgaged Premises includes: (i) the
direct or indirect sale, transfer or conveyance of the Mortgaged Premises or
any portion thereof or interest therein; (ii) the execution of an installment
sale contract or similar instrument affecting all or any portion of the
Mortgaged Premises; and (iii) an agreement by Mortgagor leasing all or a
substantial part of the Mortgaged Premises for other than actual occupancy by a
space tenant thereunder or a sale, assignment or other transfer of or the grant
of a security interest in and to any Leases.
Notwithstanding the provisions of this Section 6.6, Mortgagor shall be
permitted to (A) create wholly-owned subsidiaries in connection with
acquisitions and (B) effect mergers that do not involve a change of control,
including mergers of a wholly-owned subsidiary with or into Mortgagor or to
effect a change in Mortgagor's state of incorporation.
6.7. NO ENCUMBRANCES. (a) Mortgagor shall not create or permit to
exist any mortgage, pledge, lien, security interest (including, without
limitation, a purchase money security interest), on the Mortgaged Premises or
an encumbrance, attachment, levy, distraint or other judicial process in excess
of $100,000.00 on or against the Mortgaged Premises or any part thereof
(including, without limitation and fixtures), whether superior or inferior to
the lien of this Mortgage, without the prior written consent of Mortgagee. If
any lien or encumbrance is filed or entered without Mortgagor's consent,
Mortgagor shall have it released, bonded, satisfied, vacated dismissed or
stayed within thirty (30) days after it is filed or entered.
(b) By placing or accepting a mortgage, lien or encumbrance
of any type, whether voluntary or involuntary, against the Mortgaged Premises,
the holder thereof shall be deemed to have agreed, without any further act or
documentation being required, that its mortgage, lien or encumbrance shall be
subordinate in lien priority to this Mortgage and to any future amendments,
consolidations or extensions hereof (including, without limitation, amendments
which increase the interest rate on the Note, extend the term of the
Liabilities, provide for future advances secured by this Mortgage, or provide
for the release of portions of the Mortgaged Premises with or without
consideration).
(c) The holder of any subordinate mortgage or other lien,
whether or not consented to by Mortgagee, expressly agrees by acceptance of
such subordinate mortgage or other lien that it waives and relinquishes any
rights it may have, whether under a legal theory of marshalling of assets or
any other theory at law or in equity, to restrain Mortgagee from, or recover
damages from Mortgagee as a result of, Mortgagee exercising its various
remedies hereunder or under any other documents evidencing or securing the
Liabilities, in such order and with such timing as Mortgagee deems appropriate
in its sole discretion.
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(d) Mortgagee may, at any time or from time to time, renew,
extend or increase the amount of this Mortgage, alter or modify the terms
hereof or of the Note in any way, waive any of the terms, covenants or
conditions hereof or of the Note in whole or in part, release any portion of
the Mortgaged Premises or any other security, and grant such extensions and
indulgences in relation to the Liabilities as Mortgagee may determine, without
the consent of any junior lienor or encumbrancer or any obligation to give
notice of any kind thereto, and without in any manner affecting the priority or
the lien hereof on all or any part of the Mortgaged Premises.
6.8. REMOVAL OF FIXTURES. Mortgagor shall not remove or permit to
be removed from the Mortgaged Premises any fixtures presently or in the future
owned by Mortgagor as the term "fixtures" is defined by the law in New York
(unless such fixtures have been replaced with similar fixtures of equal or
greater utility and value or have been removed for safety or health reasons).
6.9. MAINTENANCE AND REPAIR; ALTERATIONS. (a) Mortgagor
shall (i) abstain from and not permit the commission of waste in or about the
Mortgaged Premises; (ii) keep the Mortgaged Premises, at Mortgagor's own cost
and expense, in good and substantial repair, working order and condition; (iii)
make or cause to be made, as and when necessary, all repairs and replacements,
whether or not insurance proceeds are available therefor; and (iv) except with
respect to the renovation of the parking lot area of the Mortgaged Premises,
not remove, demolish, materially alter, discontinue the use of, permit to
become vacant or deserted, or otherwise dispose of all or any part of the
Mortgaged Premises. All alterations, replacements, renewals or additions made
pursuant to this Section 6.9. shall automatically become a part of the
Mortgaged Premises and shall be covered by the lien of this Mortgage.
(b) Mortgagee, and any persons authorized by Mortgagee, shall
have the right, but not the obligation, to enter upon the Mortgaged Premises at
any reasonable time to inspect and photograph its condition and state of
repair. In the event any such inspection reveals, in the sole discretion of
Mortgagee, the necessity for any repair, alteration, replacement, clean-up or
maintenance, Mortgagor shall, at the sole reasonable discretion of Mortgagee,
either: (i) cause such work to be effected immediately; or (ii) promptly
establish an interest bearing reserve fund with Mortgagee in an amount
determined by Mortgagee for the purpose of effecting such work.
6.10. COMPLIANCE WITH APPLICABLE LAWS. Mortgagor agrees to observe,
conform and comply, and to endeavor to cause its tenants to observe, conform
and comply with all federal, state, county, municipal and other governmental or
quasi-governmental laws, rules, regulations, ordinances, codes, requirements,
covenants, conditions, orders, licenses, permits, approvals and restrictions,
including without limitation, the Americans with Disabilities Act of 1990
(collectively, the "LEGAL REQUIREMENTS"), now or hereafter affecting all or any
part of the Mortgaged Premises, its occupancy or the business or operations now
or hereafter conducted thereon and the personalty contained therein, within
such time as required by such Legal Requirements. Mortgagor represents and
warrants that it has caused the Mortgaged Premises to be designed, and the
Mortgaged Premises currently is, in compliance with all Legal Requirements
applicable to the Mortgaged Premises. Mortgagor further represents and
warrants that any funds used to acquire the Mortgaged Premises were not
obtained in violation of any Legal Requirements, and that such funds, including
any Loan proceeds, are not being used and are not intended to be used to
facilitate any violations of any Legal Requirements.
6.11. DAMAGE, DESTRUCTION AND CONDEMNATION. (a) If all or any part
of the Mortgaged Premises shall be damaged or destroyed, or if title to or the
temporary use of the whole or any part of the Mortgaged Premises shall be taken
or condemned by a competent authority for any public or quasi-public use or
purpose, there shall be no abatement or reduction in the amounts payable by
Mortgagor under the Loan Documents and Mortgagor shall continue to be obligated
to make such payments.
(b) If all or any part of the Mortgaged Premises is partially
or totally damaged or destroyed, Mortgagor shall give prompt notice thereof to
Mortgagee, and Mortgagee may make proof of loss if not made promptly by
Mortgagor. Mortgagor hereby authorizes and directs any affected insurance
company to make payment under such insurance, including return of unearned
premiums, to Mortgagee instead of to Mortgagor and Mortgagee jointly, and
Mortgagor appoints Mortgagee as Mortgagor's attorney-in-fact to endorse any
draft thereof, which appointment, being for security, is coupled with an
interest and irrevocable. Mortgagee is hereby authorized and empowered by
Mortgagor to settle, adjust or compromise, in consultation with Mortgagor, any
claims for loss, damage
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or destruction to the Mortgaged Premises. Mortgagor shall pay all costs of
collection of insurance proceeds payable on account of such damage or
destruction. Mortgagor shall have no claim against the insurance proceeds, or
be entitled to any portion thereof, and all rights to the insurance proceeds
are hereby assigned to Mortgagee as additional security for payment of the
Liabilities. Mortgagee shall have the option, in its sole discretion, of
paying or applying all or any part of the insurance proceeds to: (i) reduction
of the Liabilities; (ii) restoration, replacement or repair of the Mortgaged
Premises in accordance with Mortgagee's standard construction loan disbursement
conditions and requirements; or (iii) Mortgagor.
(c) Immediately upon obtaining knowledge of the institution
of any proceeding for the condemnation of all or any part of the Mortgaged
Premises, Mortgagor shall give notice to Mortgagee. Mortgagor shall, at its
sole cost and expense, diligently prosecute any such proceeding and shall
consult with Mortgagee, its attorneys and experts, and shall cooperate with it
in the defense of any such proceeding. Mortgagee may participate in any such
proceeding and Mortgagor shall from time to time deliver to Mortgagee all
instruments requested by it to permit such participation. Mortgagor shall not,
without Mortgagee's prior written consent, enter into any agreement (i) for the
taking or conveyance in lieu thereof of all or any part of the Mortgaged
Premises, or (ii) to compromise, settle or adjust any such proceeding.
Mortgagor shall not, without Mortgagee's prior written consent, enter into any
agreement for the taking or conveyance in lieu thereof of all or any part of
the Mortgaged Premises. All awards and proceeds of condemnation are hereby
assigned to Mortgagee, and Mortgagor, upon request by Mortgagee, agrees to
make, execute and deliver any additional assignments or documents necessary
from time to time to enable Mortgagee to collect the same. Such awards and
proceeds shall be paid or applied by Mortgagee, in its sole discretion, to:
(i) reduction of the Liabilities; (ii) restoration, replacement or repair of
the Mortgaged Premises in accordance with Mortgagee's standard construction
loan disbursement conditions and requirements; or (iii) Mortgagor.
(d) Nothing is this Section 6.11. shall relieve Mortgagor of
its duty to repair, restore, rebuild or replace the Mortgaged Premises
following damage or destruction or partial condemnation if no or inadequate
insurance proceeds or condemnation awards are available to defray the cost of
repair, restoration, rebuilding or replacement.
(e) In the event of any conflict, inconsistency or ambiguity
between the provisions of this Section 6.11 and the provisions of subsection 4
of Section 254 of the Real Property Law of the State of New York covering the
insurance of buildings against loss by fire, the provisions of this Section
6.11 shall control.
(f) Notwithstanding the provisions of the subparagraphs
above, in the event that all or any part of the Mortgaged Premises is damaged
by fire or other casualty, and Mortgagor promptly notifies Mortgagee of its
desire to repair and restore the same, then provided that the following terms
and conditions are and remain fully satisfied by Mortgagor, Mortgagee shall
disburse insurance proceeds for repair and restoration of the Mortgaged
Premises against completed work in accordance with Mortgagee's standard
construction loan disbursement conditions and requirements (which may be
contained in an agreement which Mortgagee may require Mortgagor to sign);
otherwise, and to the extent of any excess proceeds, Mortgagee shall have the
right to apply the proceeds toward reduction of the Liabilities:
(i) no Event of Default or event which, with
the giving of notice or the passage of time, or both, would constitute an Event
of Default under any of the Loan Documents shall have occurred;
(ii) Mortgagor shall have delivered evidence
satisfactory to Mortgagee that the Mortgaged Premises can be fully repaired and
restored at least 6 months prior to the maturity of the Note;
(iii) the work is performed under a fixed price
or guaranteed maximum price contract satisfactory to Mortgagee in accordance
with plans and specifications satisfactory to Mortgagee and in compliance with
all Legal Requirements;
(iv) Mortgagor shall have deposited with
Mortgagee for disbursement in connection with the restoration the greater of:
(1) the applicable deductible under the insurance policies covering the loss;
or (2) the amount by which the cost of restoration of the Mortgaged
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Premises to substantially the same value, condition and character as existed
prior to such damage is estimated by Mortgagee to exceed the net insurance
proceeds available for restoration; and
(v) Mortgagor has paid as and when due all of
Mortgagee's costs and expenses incurred in connection with the collection and
disbursement of insurance proceeds, including without limitation, inspection,
monitoring, engineering and legal fees. If not paid on demand, and at
Mortgagee's option, such costs may be deducted from the disbursements made by
Mortgagee or added to the sums secured by this Mortgage in accordance with the
provisions of Section 3 hereof.
6.12. REQUIRED NOTICES. Mortgagor shall notify Mortgagee within ten
(10) days of: (i) receipt of any notice from any governmental or
quasi-governmental authority relating to the structure, use or occupancy of the
Mortgaged Premises and alleging a violation of any Legal Requirement; (ii) a
substantial change in the occupancy or use of all or any part of the Mortgaged
Premises; (iii) receipt of any notice from the holder of any lien or security
interest in all or any part of the Mortgaged Premises in excess of $100,000.00;
(iv) commencement of any litigation affecting or potentially affecting the
financial ability of Mortgagor in excess of $100,000.00 or the value of the
Mortgaged Premises; (v) a pending or threatened condemnation of all or any part
of the Mortgaged Premises; (vi) a fire or other casualty causing damage to all
or any part of the Mortgaged Premises; (vii) receipt of any notice with regard
to any Release of Hazardous Substances (as such terms are defined in Section
9.2. hereof) or any other environmental matter affecting the Mortgaged Premises
or Mortgagor's interest therein; (viii) receipt of any request for information,
demand letter or notification of potential liability from any entity relating
to potential responsibility for investigation or clean-up of Hazardous
Substances on the Mortgaged Premises or at any other site owned or operated by
Mortgagor; (ix) receipt of any notice from any tenant of all or any part of the
Mortgaged Premises alleging a default, failure to perform or any right to
terminate its lease or to set-off rents; or (x) receipt of any notice of the
imposition of, or of threatened or actual execution on, any lien on or security
interest in all or any part of the Mortgaged Premises.
6.13. NO CREDITS ON ACCOUNT OF THE LIABILITIES. Mortgagor shall not
claim or demand or be entitled to any credit on account of the Liabilities for
any part of the taxes paid with respect to the Mortgaged Premises or any part
thereof and no deduction shall otherwise be made or claimed from the taxable
value of the Mortgaged Premises, or any part thereof, by reason of this
Mortgage.
6.14. BOOKS AND RECORDS. Mortgagor shall keep and maintain complete
and accurate books and records in accordance with generally accepted accounting
principles consistently applied, reflecting all of the financial affairs of
Mortgagor and all items of income and expense in connection with the operation
of the Mortgaged Premises. Mortgagor shall permit representatives of Mortgagee
to examine and audit Mortgagor's (and its parent's and its subsidiaries') books
and records, to inspect Mortgagor's facilities and properties, and to discuss
Mortgagor's financial condition and the contents of Mortgagor's financial
statements with Mortgagor's accountants.
6.15. RIGHT TO REAPPRAISE. Mortgagee shall have the right to
conduct or have conducted by an independent appraiser acceptable to Mortgagee
appraisals of the Mortgaged Premises in form and substance satisfactory to
Mortgagee at the sole cost and expense of Mortgagor; PROVIDED, HOWEVER, that
Mortgagor shall not be obligated to bear the expense of such appraisals so long
as (i) no Event of Default exists, and (ii) such appraisals are not required by
applicable law, rule or regulation or the interpretation or administration
thereof by any governmental authority or comparable agency charged with the
interpretation or administration thereof. The cost of such appraisals, if
chargeable to Mortgagor as aforesaid, shall be added to the Liabilities and
shall be secured by this Mortgage in accordance with the provisions of Section
3 hereof.
6.16. PAYMENT OF CONSTRUCTION COSTS. All costs arising from
construction of any improvements erected on, under or over the Real Estate and
the purchase of all equipment located on the Mortgaged Premises have been paid
in full.
6.17. RECORDATION. Mortgagor, at its expense, will at all times
cause this Mortgage, and any and all supplements or amendments thereto, to be
recorded, registered and filed in such manner and in such places, and will pay
all such recording, registration, filing fees and other charges, and will
comply with all such statutes and regulations as may be required by law in
order to establish, preserve, perfect and protect the lien of this Mortgage as
a valid, direct mortgage lien and priority perfected security interest in the
Mortgaged Premises. Mortgagor will pay or cause to be paid, and will indemnify
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Mortgagee in respect of, all taxes (including interest and penalties) at any
time payable in connection with the filing and recording of this Mortgage and
any and all supplements and amendments thereto.
7. DECLARATION OF NO OFFSET. Mortgagor represents to Mortgagee that
Mortgagor has no knowledge of any offsets, counterclaims or defenses to the
Liabilities either at law or in equity. Mortgagor shall, within three (3) days
upon request in person or within seven (7) days upon request by mail, furnish
to Mortgagee or Mortgagee's designee a written statement in form satisfactory
to Mortgagee stating the amount due under the Liabilities and whether there are
offsets or defenses against the same, and if so, the nature and extent thereof.
8. CHANGE IN LAWS.
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In the event of the passage, after the date of this Mortgage, of any
law changing in any way the laws now in force for the taxation of mortgages or
debts secured thereby, for state or local purposes, or the manner of the
operation of any such taxes, so as to affect the interest of Mortgagee or
impose upon Mortgagee the obligation to pay the whole or any part of any taxes,
assessments, charges or liens ("CHARGES") herein required to be paid by
Mortgagor, then Mortgagor shall pay the full amount of the Charges; provided
that if payment by Mortgagor of any Charges would be unlawful or usurious,
Mortgagee may, at Mortgagee's option: (i) declare the Liabilities to be
immediately due and payable; or (ii) pay that portion of the Charges as renders
the Liabilities unlawful or usurious, in which event Mortgagor shall
concurrently therewith pay the remaining lawful and nonusurious portion of said
Charges.
9. ENVIRONMENTAL MATTERS.
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9.1. DEFINITIONS. For purposes of this Section 9, "APPLICABLE
ENVIRONMENTAL LAWS" shall mean any and all existing or future federal, state
and local statutes, ordinances, regulations, rules, executive orders, standards
and requirements, including the requirements imposed by common law, concerning
or relating to industrial hygiene and the protection of health and the
environment including, without limitation: (i) the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended, 42 U.S.C. 9601 ET
SEQ. ("CERCLA"); (ii) the Resource Conservation and Recovery Act of 1976, as
amended, 42 U.S.C. 6901 ET SEQ. ("RCRA"); (iii) the Clean Air Act, as amended,
42 U.S.C. 7901 ET SEQ.; (iv) the Clean Water Act, as amended, 33 U.S.C. 1251 ET
SEQ.; (v) the Hazardous Materials Transportation Act, as amended, 49 U.S.C.
1801 ET SEQ.; and (vi) the New York Environmental Conservation Law, as amended,
("ECL"). Any terms mentioned in this Section 9 which are defined in any
Applicable Environmental Law shall have the meanings ascribed to such terms in
said laws; provided, however, that if any of such laws are amended so as to
broaden any term defined therein, such broader meaning shall apply subsequent
to the effective date of such amendment.
9.2. REPRESENTATIONS, WARRANTIES AND COVENANTS. Mortgagor
represents, warrants, covenants and agrees as follows:
(a) Neither Mortgagor nor the Mortgaged Premises or any
occupant thereof are in violation of or subject to any existing, pending or to
the best of its knowledge threatened investigation or inquiry by any
governmental authority pertaining to any Applicable Environmental Law.
Mortgagor shall not cause or permit the Mortgaged Premises to be in violation
of, or do anything which would subject the Mortgaged Premises to any remedial
obligations under, any Applicable Environmental Law, and shall promptly notify
Mortgagee in writing of any existing, pending or to the best of its knowledge
threatened investigation or inquiry by any governmental authority in connection
with any Applicable Environmental Law. In addition, Mortgagor shall provide
Mortgagee with copies of any and all material written communications with any
governmental authority in connection with any Applicable Environmental Law,
concurrently with Mortgagor's giving or receiving of same.
(b) There are no underground storage tanks, except
certain oil heating tanks, radon, asbestos materials, polychlorinated biphenyls
or urea formaldehyde insulation present at or installed in the Mortgaged
Premises. Mortgagor covenants and agrees that if any such materials are found
to be present at the Mortgaged Premises, Mortgagor shall remove or remediate
the same promptly upon discovery at its sole cost and expense.
(c) Mortgagor has taken all steps necessary to determine
and has determined that there has been no release, spill, discharge, leak,
disposal or emission (individually a "RELEASE" and
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collectively, "RELEASES") of any Hazardous Material, Hazardous Substance or
Hazardous Waste, including gasoline, petroleum products, explosives, toxic
substances, solid wastes and radioactive materials (collectively, "HAZARDOUS
SUBSTANCES") at, upon, under or within the Mortgaged Premises. The use which
Mortgagor or any other occupant of the Mortgaged Premises makes or intends to
make of the Mortgaged Premises will not result in Release of any Hazardous
Substances on or to the Mortgaged Premises. During the term of this Mortgage,
Mortgagor shall take all steps necessary to determine whether there has been a
Release of any Hazardous Substances on or to the Mortgaged Premises and if
Mortgagor finds a Release has occurred, Mortgagor shall remove or remediate the
same promptly upon discovery at its sole cost and expense.
(d) None of the real property owned and/or occupied by
Mortgagor and located in the State of New York, including without limitation,
the Mortgaged Premises, has ever been used by the present or previous owners
and/or operators or will be used in the future to refine, produce, store,
handle, transfer, process, transport, generate, manufacture, heat, treat,
recycle or dispose of Hazardous Substances except in the ordinary course of its
business.
(e) Mortgagor has not received any notice of violation,
request for information, summons, citation, directive or other communication,
written or oral, from the New York Department of Environmental Conservation or
the United States Environmental Protection Agency concerning any intentional or
unintentional act or omission on Mortgagor's or any occupant's part resulting
in the Release of Hazardous Substances except in the ordinary course of its
business.
(f) To the best of its knowledge, the Mortgaged Premises
are not located within a "freshwater wetlands" as defined by ECL 24-0107, or
the rules and regulations promulgated thereunder.
(g) The real property owned and/or occupied by Mortgagor
and located in the State of New York, including without limitation, the
Mortgaged Premises: (i) are being and have been operated in compliance with all
Applicable Environmental Laws, and all permits required thereunder have been
obtained and complied with in all respects; and (ii) do not have any Hazardous
Substances present excepting such quantities of petroleum and chemical
products, in proper storage containers, as are necessary for the operation of
the commercial business of Mortgagor and its tenants, and the usual waste
products therefrom ("PERMITTED SUBSTANCES").
(h) Mortgagor will and will cause its tenants to operate
the Mortgaged Premises in compliance with all Applicable Environmental Laws
and, other than Permitted Substances, will not place or permit to be placed any
Hazardous Substances on the Mortgaged Premises.
(i) No lien has been attached to or threatened to be
imposed upon any revenue or any real or personal property owned by Mortgagor,
including without limitation, the Mortgaged Premises, and there is no basis for
the imposition of any such lien based on any governmental action under
Applicable Environmental Laws. Except in the ordinary course of its business,
neither Mortgagor nor any other party has been, is or will be involved in
operations at the Mortgaged Premises which could lead to the imposition of
environmental liability on Mortgagor, or on any subsequent or former owner of
the Mortgaged Premises, or the creation of an environmental lien on the
Mortgaged Premises. In the event that any such lien is filed, Mortgagor shall,
within (30) days from the date that the Mortgagor is given notice of such lien
(or within such shorter period of time as is appropriate in the event that the
State of New York or the United States has commenced steps to have the
Mortgaged Premises sold), either: (i) pay the claim and remove the lien from
the Mortgaged Premises; or (ii) furnish a cash deposit, bond or other security
satisfactory in form and substance to Mortgagee in an amount sufficient to
discharge the claim out of which the lien arises.
(j) In the event that Mortgagor shall cause or permit to
exist a Release of Hazardous Substances without having obtained a permit issued
by the appropriate governmental authorities, Mortgagor shall promptly clean up
such Release in accordance with the provisions of all Applicable Environmental
Laws.
9.3. RIGHT TO INSPECT AND CURE. Mortgagee shall have the right to
conduct or have conducted by its agents or contractors such environmental
inspections, audits and tests as Mortgagee shall deem necessary or advisable
from time to time at the sole cost and expense of Mortgagor; PROVIDED, HOWEVER,
that Mortgagor shall not be obligated to bear the expense of such environmental
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inspections, audits and tests so long as (i) no Event of Default exists, and
(ii) Mortgagee has no cause to believe in its sole reasonable judgment that
there has been a Release or threatened Release of Hazardous Substances at the
Mortgaged Premises that cause Mortgagor or the Mortgaged Premises to be in
violation of any Applicable Environmental Law. The cost of such inspections,
audits and tests, if chargeable to Mortgagor as aforesaid, shall be added to
the Liabilities and shall be secured by this Mortgage. Mortgagor shall, and
shall endeavor to cause each tenant of the Mortgaged Premises to, cooperate
with such inspection efforts; such cooperation shall include, without
limitation, supplying all information requested concerning the operations
conducted and Hazardous Substances located at the Mortgaged Premises. In the
event that Mortgagor fails to comply with any Applicable Environmental Law,
Mortgagee may, in addition to any of its other remedies under this Mortgage,
cause the Mortgaged Premises to be in compliance with such laws and the cost of
such compliance shall be added to the sums secured by this Mortgage in
accordance with the provisions of Section 3 hereof.
10. INDEMNIFICATION.
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10.1. Mortgagor hereby indemnifies and agrees to protect, defend and
hold harmless Mortgagee, any entity which "controls" Mortgagee, within the
meaning of Section 15 of the Securities Act of 1933, as amended, or is under
common control with Mortgagee, and any member, officer, director, official,
agent, employee or attorney of Mortgagee, and their respective heirs,
administrators, executors, successors and assigns (collectively, the
"INDEMNIFIED PARTIES"), from and against any and all losses, damages, expenses
or liabilities of any kind or nature and from any suits, claims or demands,
including reasonable attorneys' fees incurred in investigating or defending
such claim, suffered by any of them and caused by, relating to, arising out of,
resulting from, or in any way connected with the Loan Documents or the
transactions contemplated therein (unless determined by a final judgment of a
court of competent jurisdiction to have been caused solely by the gross
negligence or willful misconduct of the Indemnified Parties) including, without
limitation: (i) disputes with any architect, general contractor,
subcontractor, materialman or supplier, or on account of any act or omission to
act by Mortgagee in connection with the Mortgaged Premises; (ii) losses,
damages (including consequential damages), expenses or liabilities sustained by
Mortgagee in connection with any environmental inspection, monitoring, sampling
or cleanup of the Mortgaged Premises required or mandated by any Applicable
Environmental Law; (iii) any untrue statement of a material fact contained in
information submitted to Mortgagee by Mortgagor or the omission of any material
fact necessary to be stated therein in order to make such statement not
misleading or incomplete; (iv) the failure of Mortgagor to perform any
obligations herein required to be performed by Mortgagor; and (v) the
ownership, construction, occupancy, operation, use or maintenance of the
Mortgaged Premises.
10.2. In case any action shall be brought against Mortgagee or any
other Indemnified Party in respect to which indemnity may be sought against
Mortgagor, Mortgagee or such other Indemnified Party shall promptly notify
Mortgagor and Mortgagor shall assume the defense thereof, including the
employment of counsel selected by Mortgagor and satisfactory to Mortgagee, the
payment of all costs and expenses, and the right to negotiate and consent to
settlement. The failure of Mortgagee to so notify Mortgagor shall not relieve
Mortgagor of any liability it may have under the foregoing indemnification
provisions or from any liability which it may otherwise have to Mortgagee or
any of the other Indemnified Parties. Mortgagee shall have the right, at its
sole option, to employ separate counsel in any such action and to participate
in the defense thereof, all at Mortgagor's sole cost and expense. Mortgagor
shall not be liable for any settlement of any such action effected without its
consent (unless Mortgagor fails to defend such claim), but if settled with
Mortgagor's consent, or if there be a final judgment for the claimant in any
such action, Mortgagor agrees to indemnify and save harmless Mortgagee from and
against any loss or liability by reason of such settlement or judgment.
10.3. The provisions of this Section 10 shall survive the repayment
of the Liabilities and the release or discharge of this Mortgage.
11. EVENTS OF DEFAULT.
-----------------
Each of the following shall constitute a default (each, an "EVENT OF
DEFAULT") hereunder:
11.1. Non-payment when due of any sum required to be paid to
Mortgagee under any of the Loan Documents, including without limitation,
principal and interest;
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11.2. A breach of any covenant contained in Sections 6.3., 6.4.,
6.6., 6.7. or 6.12. hereof;
11.3. A breach by Mortgagor of any other term, covenant, condition,
obligation or agreement under this Mortgage and the continuance of such breach
for a period of thirty (30) days after written notice by Bank to Borrower;
11.4. An Event of Default under any of the other Loan Documents;
11.5. Any intentional representation or warranty made by Mortgagor
or in any Loan Document in or to induce Mortgagee to enter into the
transactions contemplated hereunder shall prove to be materially false,
incorrect or misleading in any material respect as of the date when made;
11.6. The filing by or against Mortgagor of a petition seeking
relief, or the granting of relief, under the Federal Bankruptcy Code or any
similar federal or state statute which has not been dismissed within sixty (60)
days after the filing of same; any assignment for the benefit of creditors made
by Mortgagor, the appointment of a custodian, receiver, liquidator or trustee
for Mortgagor or for any of the property of Mortgagor, or any action by
Mortgagor to effect any of the foregoing; or if Mortgagor becomes insolvent
(however defined) or is not paying its debts generally as they become due;
11.7. The dissolution, liquidation, merger, consolidation or
reorganization of Mortgagor or the institution of any proceeding to effect any
of the foregoing, provided, however, Borrower may create operating subsidiaries
of Borrower in connection with acquisition and (ii) effect mergers that do not
involve a change of contract, including mergers of a wholly-owned subsidiary
with or into Mortgagor or to effect a change in Mortgagor's state of
incorporation;
11.8. A material deterioration in the financial condition of
Mortgagor or the occurrence of any event which, in the reasonable opinion of
Mortgagee, impairs the financial responsibility of Mortgagor and their ability
to repay the Liabilities;
11.9. The filing, entry or issuance of any judgment, execution,
garnishment, attachment, distraint or lien against Mortgagor (except for such
liens granted by Mortgagor in favor of third party lenders in the ordinary
course of business) or its property in excess of $100,000.00 and which is not
released, bonded, satisfied, vacated, dismissed or stayed within thirty (30)
days after the filing, entering or issuance of same;
11.10. A default under any other obligation secured by the Mortgaged
Premises or any part thereof; or
11.11. A default under any other obligation by Mortgagor in favor of
Mortgagee, or under any document securing or evidencing such obligation,
whether or not such obligation is secured by the Mortgaged Premises, in excess
of $100,000.00.
12. REMEDIES.
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If an Event of Default shall have occurred, Mortgagee may take any of
the following actions (without the obligation to marshall):
12.1. ACCELERATION. Mortgagee may declare the entire amount of the
Liabilities immediately due and payable, without presentment, demand, notice of
any kind, protest or notice of protest, all of which are expressly waived,
notwithstanding anything to the contrary contained in any of the Loan
Documents. Mortgagee may collect interest from the date of default on the
unpaid balance of the Liabilities, at the Default Rate (as defined and
described in the Note). In addition, any and all accelerations of any portion
of the remaining principal balance of the Liabilities (including, without
limitation, foreclosure by Mortgagee under this Mortgage) shall be subject to
the Prepayment Consideration (as defined and described in the Note), if any.
12.2. POSSESSION. Mortgagee may enter upon and take possession of
the Mortgaged Premises, with or without legal action, lease the Mortgaged
Premises, collect therefrom all rentals and, after deducting all costs of
collection and administration expense, apply the net rentals to any one or more
of the following items in such manner and in such order of priority as
Mortgagee, in Mortgagee's sole discretion, may elect: the payment of any sums
due under any prior lien, taxes, water and sewer
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rents, charges and claims, insurance premiums and all other carrying charges,
to the maintenance, repair or restoration of the Mortgaged Premises, to
compensation, salaries, expenses and disbursements of Mortgagee's agents,
attorneys, or any other representatives of Mortgagee, the receiver in
connection with the possession, control and/or operation of the Mortgaged
Premises and the business operations conducted therefrom, or on account of the
Liabilities. Mortgagee is given full authority to do any act which Mortgagor
could do in connection with the management and operation of the Mortgaged
Premises. This covenant becomes effective either with or without any action
brought to foreclose this Mortgage and without applying for a receiver of such
rents. In addition to the foregoing, upon the occurrence of an Event of
Default, Mortgagor shall pay monthly in advance to Mortgagee or to any receiver
appointed to collect said rents the fair and reasonable rental value for
Mortgagor's use and occupation of the Mortgaged Premises, and upon default in
any such payment Mortgagor shall vacate and surrender the possession of the
Mortgaged Premises to Mortgagee or to such receiver. If Mortgagor does not
vacate and surrender the Mortgaged Premises then Mortgagor may be evicted by
summary proceedings.
12.3. FORECLOSURE. Mortgagee may institute any one or more actions
of mortgage foreclosure against all or any part of the Mortgaged Premises, or
take such other action available to Mortgagee at law, equity or by Contract for
the enforcement of this Mortgage and realization on the security herein or
elsewhere provided for, as the law may allow, and may proceed therein to final
judgment and execution for the entire unpaid balance of the Liabilities,
together with all future advances and any other sums due by Mortgagor in
accordance with the provisions of this Mortgage, together with interest from
the date of default at the Default Rate and all costs of suit and attorneys'
fees. The unpaid balance of any judgment shall bear interest at the greater of
(a) the statutory rate, or (b) the Default Rate. Without limiting the
foregoing, Mortgagee may foreclose this Mortgage and exercise its rights as a
secured party for all or any portion of the Liabilities which are then due and
payable, subject to the continuing lien of this Mortgage for the balance not
then due and payable. In case of any sale of the Mortgaged Premises by
judicial proceedings, the Mortgaged Premises may be sold in one parcel or in
such parcels, manner or order as Mortgagee in its sole discretion may elect.
Mortgagor, for itself and anyone claiming by, through or under it, hereby
agrees that Mortgagee shall in no manner, in law or in equity, be limited,
except as herein provided, in the exercise of its rights in the Mortgaged
Premises or in any other security hereunder or otherwise appertaining to the
Liabilities or any other obligation secured by this Mortgage, whether by any
statute, rule or precedent which may otherwise require said security to be
marshalled in any manner and Mortgagor, for itself and others as aforesaid,
hereby expressly waives and releases any right to or benefit thereof. The
failure to make any tenant a defendant to a foreclosure proceeding shall not be
asserted by Mortgagor as a defense in any proceeding instituted by Mortgagee to
collect the Liabilities or any deficiency remaining unpaid after the
foreclosure sale of the Mortgaged Premises.
12.4. APPOINTMENT OF RECEIVER. If an Event of Default shall have
occurred and be continuing, then for so long as and until the Liabilities are
repaid in full, Mortgagee shall, as a matter of right and without regard to the
adequacy of any security for the Liabilities and without regard to whether
Mortgagee has commenced an action to foreclose the lien of this Mortgage, be
entitled to the appointment of a receiver for all or any part of the Mortgaged
Premises, whether such receivership be part of the Mortgaged Premises or
otherwise, and without regard to the nature of the action in which the
appointment of a receiver is sought, and Mortgagor hereby consents to the
appointment of such a receiver and will not oppose any such appointment.
Mortgagee may also seek a temporary restraining order or other injunctive
relief with respect to any act or omission constituting an Event of Default.
12.5. RIGHTS AS A SECURED PARTY. Mortgagee shall have, in addition
to other rights and remedies available at law or in equity, the rights and
remedies of a secured party under the Code. Mortgagee may elect to foreclose
such of the Mortgaged Premises as then comprise fixtures pursuant either to the
law applicable to foreclosure of an interest in real estate or to that
applicable to fixtures under the Code. To the extent permitted by law,
Mortgagor waives the right to any stay of execution and the benefit of all
exemption laws now or hereafter in effect.
12.6. EXCESS MONIES. Mortgagee may apply on account of the
Liabilities any unexpended monies still retained by Mortgagee that were paid by
Mortgagor to Mortgagee: (i) for the payment of, or as security for the payment
of taxes, assessments or other governmental charges, insurance premiums, or any
other charges; or (ii) to secure the performance of some act by Mortgagor.
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12.7. OTHER REMEDIES. Mortgagee shall have the right, from time to
time, to bring an appropriate action to recover any sums required to be paid by
Mortgagor under the terms of this Mortgage, as they become due, without regard
to whether or not any other Liabilities shall be due, and without prejudice to
the right of Mortgagee thereafter to bring an action of mortgage foreclosure,
or any other action, for any default by Mortgagor existing at the time the
earlier action was commenced. In addition, Mortgagee shall have the right to
set-off all or any part of any amount due by Mortgagor to Mortgagee under any
of the Liabilities, against any indebtedness, liabilities or obligations owing
by Mortgagee or any Affiliate in any capacity to Mortgagor, including any
obligation to disburse to Mortgagor any funds or other property on deposit with
or otherwise in the possession, control or custody of Mortgagee.
13. CONTINUING ENFORCEMENT OF MORTGAGE.
----------------------------------
If, after receipt of any payment of all or any part of the
Liabilities, Mortgagee is compelled or agrees, for settlement purposes, to
surrender such payment to any person or entity for any reason (including,
without limitation, a determination that such payment is void or voidable as a
preference or fraudulent conveyance, an impermissible setoff, or a diversion of
trust funds), then this Mortgage and the other Loan Documents shall continue in
full force and effect, and Mortgagor shall be liable for, and shall indemnify,
defend and hold harmless Mortgagee with respect to the full amount so
surrendered. The provisions of this Section shall survive the cancellation or
discharge of this Mortgage and shall 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 Mortgagee may have taken in reliance upon its receipt of such
payment. Any cancellation, release or other such action by Mortgagee shall be
deemed to have been conditioned upon any payment of the Liabilities having
become final and irrevocable.
14. MISCELLANEOUS.
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14.1. REMEDIES CUMULATIVE. The rights and remedies of Mortgagee as
provided in this Mortgage or in any other Loan Document shall be cumulative and
concurrent, may be pursued separately, successively or together, may be
exercised as often as occasion therefor shall arise, and shall be in addition
to any other rights or remedies conferred upon Mortgagee at law or in equity.
The failure, at any one or more times, of Mortgagee to assert the right to
declare the Liabilities due, grant any extension of time for payment of the
Liabilities, take other or additional security for the payment thereof, release
any security, change any of the terms of the Loan Documents, or waive or fail
to exercise any right or remedy under any Loan Document shall not in any way
affect this Mortgage or the rights of Mortgagee.
14.2. INTEGRATION. This Mortgage and the other Loan Documents
constitute the sole agreement of the parties with respect to the transaction
contemplated hereby and supersede all oral negotiations and prior writings with
respect thereto.
14.3. ATTORNEYS' FEES AND EXPENSES. If Mortgagee retains the
services of counsel by reason of a claim of a default or an Event of Default
hereunder or under any of the other Loan Documents, or to institute and
maintain an action to foreclose this Mortgage or to have a receiver appointed,
or on account of any matter involving the Liabilities or Mortgagor's title to
the Mortgaged Premises or the security interest intended to be granted hereby,
or for examination of matters subject to Mortgagee's approval under the Loan
Documents, all costs of suit and collection and all reasonable attorneys' fees
(and/or allocated fees of Mortgagee's in-house legal counsel) and such other
reasonable expenses so incurred by Mortgagee shall forthwith become due and
payable, on demand, and shall be secured hereby.
14.4. NO IMPLIED WAIVER. Mortgagee shall not be deemed to have
modified or waived any of its rights or remedies hereunder unless such
modification or waiver is in writing and signed by Mortgagee, and then only to
the extent specifically set forth therein. A waiver in one event shall not be
construed as continuing or as a waiver of or bar to such right or remedy on a
subsequent event.
14.5. PARTIAL INVALIDITY. The invalidity or unenforceability of any
one or more provisions of this Mortgage shall not render any other provision
invalid or unenforceable. In lieu of any invalid or unenforceable provision,
there shall be added automatically a valid and enforceable provision as similar
in terms to such invalid or unenforceable provision as may be possible.
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<PAGE> 16
14.6. BINDING EFFECT. The covenants, conditions, waivers, releases
and agreements contained in this Mortgage shall bind, and the benefits thereof
shall inure to, the parties hereto and their respective heirs, executors,
administrators, successors and assigns and are intended and shall be held to be
real covenants running with the land; provided, however, that this Mortgage
cannot be assigned by Mortgagor without the prior written consent of Mortgagee,
and any such assignment or attempted assignment by Mortgagor shall be void and
of no effect with respect to Mortgagee.
14.7. MODIFICATIONS. This Mortgage may not be supplemented,
extended, modified or terminated except by an agreement in writing signed by
the party against whom enforcement of any waiver, change, modification or
discharge is sought.
14.8. AFFILIATE. As used herein, "AFFILIATE" shall mean First
Fidelity Bancorporation and any of its direct and indirect affiliates and
subsidiaries.
14.9. COMMERCIAL LOAN. Mortgagor represents and warrants that the
loans or other financial accommodations included as Liabilities secured by this
Mortgage were obtained solely for the purpose of carrying on or acquiring a
business or commercial investment and not for residential, consumer or
household purposes.
14.10. NON-RESIDENTIAL MORTGAGE. This Mortgage does not cover real
property principally improved or to be improved by one or more structures
containing in the aggregate not more than six residential dwelling units, each
having its own separate cooking facilities.
14.11. LIEN LAW. Mortgagor will, in compliance with Section 13 of
the New York Lien Law, receive the advances secured hereby and will hold the
right to receive such advances as a trust fund to be applied first for the
purpose of paying the cost of any improvement on the Mortgaged Premises and
will apply the same first to the payment of the cost of any such improvement on
the Mortgaged Premises before using any part of the total of the same for any
other purpose.
14.12. JURISDICTION. Mortgagor irrevocably appoints each and every
officer of Mortgagor as its attorneys upon whom may be served, by regular or
certified mail at the address set forth in this Mortgage, any notice, process
or pleading in any action or proceeding against it arising out of or in
connection with this Mortgage or any of the other Loan Documents; and Mortgagor
hereby consents that any action or proceeding against it may be commenced and
maintained in any court within the State of New York or in the United States
District Court for the Southern District of New York by service of process on
any such owner, partner and/or officer; and Mortgagor agrees that the courts of
the State of New York and the United States District Court for the Southern
District of New York shall have jurisdiction with respect to the subject matter
hereof and the person of Mortgagor and all collateral securing the obligations
of Mortgagor. Mortgagor agrees not to assert any defense to any action or
proceeding initiated by Mortgagee based upon improper venue or inconvenient
forum. Mortgagor agrees that any action brought by Mortgagor shall be
commenced and maintained only in a court in the federal district or county in
which Mortgagee has its principal place of business in New York.
14.13. NOTICES. All notices and communications under this Mortgage
shall be in writing and shall be given by either (a) hand-delivery, (b) first
class mail (certified mail, return receipt requested), or (c) reliable
overnight commercial courier (charges prepaid), to the addresses listed in this
Mortgage. Notice shall be deemed to have been given and received: (i) if by
hand delivery, upon delivery; (ii) if by mail, three (3) calendar days after
the date first deposited in the United States mail; and (iii) 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.
14.14. GOVERNING LAW. This Mortgage shall be governed by and
construed in accordance with the substantive laws of the State of New York, or
the laws of any State in which the Loan was made or is repayable, or the laws
of any State in which any collateral for the Loan is located, at the sole
discretion of Bank.
14.15. JOINT AND SEVERAL LIABILITY. If Mortgagor consists of more
than one person or entity, the word "Mortgagor" shall mean each of them and
their liability shall be joint and several.
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<PAGE> 17
14.16. WAIVER OF JURY TRIAL. MORTGAGOR AND MORTGAGEE AGREE THAT ANY
SUIT, ACTION OR PROCEEDING, WHETHER CLAIM OR COUNTERCLAIM, BROUGHT BY MORTGAGEE
OR MORTGAGOR ON OR WITH RESPECT TO THIS MORTGAGE 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. MORTGAGEE AND MORTGAGOR EACH HEREBY KNOWINGLY,
VOLUNTARILY, INTENTIONALLY AND INTELLIGENTLY, AND WITH THE ADVICE OF THEIR
RESPECTIVE COUNSEL, WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY SUCH SUIT, ACTION
OR PROCEEDING. FURTHER, MORTGAGOR WAIVES ANY RIGHT IT MAY HAVE TO CLAIM OR
RECOVER, IN ANY SUCH SUIT, ACTION OR PROCEEDING, ANY SPECIAL, EXEMPLARY,
PUNITIVE, CONSEQUENTIAL OR OTHER DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL
DAMAGES. MORTGAGOR ACKNOWLEDGES AND AGREES THAT THIS SECTION IS A SPECIFIC AND
MATERIAL ASPECT OF THIS MORTGAGE AND THAT MORTGAGEE WOULD NOT EXTEND CREDIT TO
MORTGAGOR OR BORROWER (AS APPLICABLE) IF THE WAIVERS SET FORTH IN THIS SECTION
WERE NOT A PART OF THIS MORTGAGE.
14.17. NON-MERGER. In the event Mortgagee shall acquire title to the
Mortgaged Premises by conveyance from Mortgagor or as a result of the
foreclosure, this Mortgage shall not merge in the fee estate of the Mortgaged
Premises but shall remain and continue as an existing and enforceable lien for
the Liabilities secured hereby until the same shall be released of record by
Mortgagee in writing.
15. DEFEASANCE.
----------
This Mortgage shall terminate upon the payment in full of the
Liabilities and the fulfillment or performance of all of the conditions of this
Mortgage and the Liabilities. Thereupon, Mortgagee shall release the Mortgaged
Premises and shall execute at the request of Mortgagor a certificate of
discharge of this Mortgage and any other instrument to that effect deemed
necessary or desirable.
IN WITNESS WHEREOF, Mortgagor, intending to be legally bound, has duly
executed and delivered this Mortgage and Security Agreement as of the day and
year first above written.
ATTEST: MICHAEL ANTHONY JEWELERS,INC.
By: /s/ M. Frances Durden By: /s/ Michael A. Paolercio
---------------------------- ------------------------------------
M. Frances Durden Michael A. Paolercio
Secretary Senior Vice President and Treasurer
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<PAGE> 1
EXHIBIT 10.4
CONSIGNMENT AGREEMENT
CONSIGNMENT AGREEMENT ("Agreement") made as of October 20, 1995, by and between
UNION BANK OF SWITZERLAND, with its principal office at 299 Park Avenue, New
York, New York 10171 ("Consignor"), and MICHAEL ANTHONY JEWELERS, INC., a
Delaware corporation with its principal office at 115 South MacQuesten Parkway,
Mount Vernon, New York 10550 ("Consignee").
Consignee has requested Consignor to deliver Precious Metal (as defined herein)
on consignment for sale to Consignee. To effectuate this arrangement,
Consignor and Consignee agree that the Consignment Agreement governing this
agreement is stated as follows:
1. DEFINITIONS.
-----------
For the purposes of this Agreement:
"Base Rate" shall mean the higher of (i) the base commercial lending rate
announced from time to time by Union Bank of Switzerland, New York Branch, or
(ii) the rate quoted by Union Bank of Switzerland, New York Branch, at
approximately 11:00 am, New York City time, to dealers in the New York Federal
Funds Market for the overnight offering of dollars by Union Bank of
Switzerland, New York Branch, for deposit, plus one-half of the percent (1/2%).
"Consignee's Counsel" shall mean Benesch, Friedlander, Coplan and Aronoff.
"Consigned Precious Metal" shall mean Precious Metal which Consignor has
consigned to Consignee pursuant to the terms of this Agreement for which
payment has not been received or which has not been Redelivered to Consignor.
"Consignment Fees" shall mean the outstanding total of fees agreed to (based on
specified quantities and time periods) by Duly Authorized Officers of both
parties at the time of each Delivery of Consigned Precious Metal.
"Consignment Limit" shall mean the lesser of (a) 25,000 troy ounces of fine
gold, or (b) Consigned Precious Metal with a Fair Market Value (or unpaid
Purchase Price in the case of Consigned Precious Metal for which the Purchase
Price has been agreed but payment has not been received by Consignor) equal to
$10,000,000.
"Current Liabilities" shall mean, at any date as of which the amount thereof
shall be determined, all amounts that should, in accordance with generally
accepted accounting principles, be included as current liabilities on the
balance sheet of Consignee as at such date, plus, to the extent not already
included therein, all Indebtedness that is payable upon demand or within one
(1) year from the date of determination thereof unless such Indebtedness is
renewable or extendible at the
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"Deliver" or "Delivery" shall mean either actual shipment, creating the right
in Consignee to demand actual shipment through a writing, instrument or a
statement of account, or Consignor's crediting Precious Metal to the account of
Consignee with one or more third parties when no physical movement thereof is
contemplated by the parties.
"Duly Authorized Officer" shall mean the President of Consignee, or other
officer or employee who is authorized by the Board of Directors or an executive
committee of such Board of Directors.
"Environmental Requirement(s)" shall mean any present or future law, statute,
ordinance, rule, regulation, order, code, license, permit, decree, judgment,
directive or the equivalent of or by any Governmental Authority and relating to
or addressing the protection of human health or the environment.
"Event of Default" shall mean an Event of Default under Section 13 of this
Agreement.
"Fair Market Value" on any day shall mean the Second London Gold Fixing for
that day. If no such price is available for a particular day, the Fair Market
Value for such day shall be the price for the immediately preceding day for
which such price is available.
"Financial Statements" shall mean the balance sheet, income statement,
statement of cash flows and stockholder's equity statement of Consignee for the
year or other period then ended, together with supporting schedules, certified
(without qualification) by Deloitte and Touche or other independent public
accountants approved by Consignor and prepared in accordance with generally
accepted accounting principles consistently applied.
"First Insurance Companies" shall mean the companies defined as such in
Subsection 13(m).
"Governmental Authority" shall mean the United States government, any state or
other political subdivision thereof, any agency, court of body of the United
States government, any state or other political subdivision thereof, or any
quasi-governmental agency or authority exercising executive, legislative,
judicial, regulatory or administrative functions.
"Guarantees" shall mean, as applied to Consignee, all guarantees, endorsements
or other contingent or surety obligations with respect to obligations of others
whether or not reflected on the balance sheet of Consignee, including any
obligation to furnish funds, directly or indirectly (whether by virtue of
Partnership arrangements, by agreement to keep-well or otherwise), through the
purchase of goods, supplies or services, or by way of stock purchase, capital
contribution, advance or loan, or to enter into a contract for any of the
foregoing, for the purpose of payment of obligations of any other person or
entity.
"Hazardous Material" shall mean any material or substance (i) which, whether by
its nature or use, is now or hereafter defined as a hazardous waste, hazardous
substance, pollutant or contaminant under any Environmental Requirement, (ii)
which is toxic, explosive, corrosive, flammable, infectious, radioactive,
carcinogenic, mutagenic or otherwise hazardous to human
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<PAGE> 3
health or the environment, (iii) which is or contains petroleum or any fraction
thereof, including crude oil. heating oil, gasoline or diesel fuel, or (iv) the
presence of which requires investigation or remediation under any Environmental
Requirement.
"Indebtedness" shall mean, as applied to Consignee, (i) all obligations for
borrowed money or other extensions of credit whether or not secured or
unsecured, absolute or contingent, including, without limitation, unmatured
reimbursement obligations with respect to letters of credit or guarantees
issued for the account of or on behalf of Consignee and all obligations
representing the deferred purchase price of property, other than accounts
payable arising in the ordinary course of business, (ii) all obligations
evidenced by bonds, notes, debentures or other similar instruments, (iii) all
obligations secured by any mortgage, pledge, security interest or other lien on
property owned or acquired by Consignee whether or not the obligations secured
thereby shall have been assumed, including but not limited to obligations to
the First Insurance Companies, the Second Insurance Companies and the Third
Insurance Companies, (iv) that portion of all obligations arising under capital
leases that is required to be capitalized on the balance sheet of Consignee,
(v) all Guarantees, (vi) all obligations with respect to Precious Metal leased
or consigned to consignee, including but not limited to obligations pursuant to
this Agreement, and (vii) all obligations that are immediately due and payable
out of the proceeds of or production from property now or hereafter owned or
acquired by Consignee.
"Notice" or "Notices" shall mean all requests, demands and other
communications, in writing (including telegraphic and telecopy communications),
sent by registered or certified mail, return receipt requested, overnight
delivery service, telegraph, facsimile transmission or hand-delivery to the
other party at that party's Principal Office.
"Precious Metal" shall mean gold having a fineness of not less than .9995
without regard to whether such gold is alloyed or unalloyed, in bullion form or
is contained in or processed into other materials which contain elements other
than gold.
"Principal Office" shall mean:
FOR CONSIGNOR:
Union Bank of Switzerland
299 Park Avenue
New York, New York 10171
Attention: Cathleen Callahan
Fax Number: 212-821-3459
FOR CONSIGNEE:
Michael Anthony Jewelers, Inc.
115 South MacQuesten Parkway
Mount Vernon, New York 10550
Attention: Michael A. Paolercio, Senior
Vice President and Treasurer
Fax Number: 914-699-2335
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<PAGE> 4
"Purchase Price" shall mean a price to which both parties' Duly Authorized
Officers agree and shall be stated in dollars per troy ounce of Precious Metal
content.
"Redeliver" or "Redelivery" shall mean that Consignee deliver to Consignor's
Principal Office or as otherwise directed by Consignor, at Consignee's sole
risk and expense, Precious Metal of a fineness equal to the fineness specified
for that Precious Metal and of a type and quality and in a form acceptable to
consignor.
"Second Insurance Companies" shall mean the companies defined as such in
Subsection 13(m).
"Security Agreement" shall mean that certain Amended and Restated Security
Agreement dated as of the date hereof, among Consignor, Rhode Island Hospital
Trust National Bank, individually and as agent ("RIHT"), ABN AMRO Bank N.V.,
New York Branch ("ABN"), Fleet Precious Metals Inc. ("FPM"), Fleet National
Bank ("FNB"), The Mocatta Group, a Division of Standard Chartered Bank
("Mocatta"), Credit Suisse ("CS"), and Deutsche Bank Sharps Pixley Inc..
"Tangible Net Worth" shall mean, at any date as of which the amount
thereof shall be determined, the total assets of Consignee MINUS (i) the sum of
any amounts attributable to (a) goodwill, (b) intangible items such as
unamortized debt discount and expense, patents, trade and service marks and
names, customer lists, copyrights and research and development expenses except
prepaid expenses, (c) all reserves not already deducted from assets, (d) to the
extent not otherwise approved in advance by Consignor, any write-up in the book
value of assets resulting from any revaluation thereof subsequent to the
December 31, 1992 Financial Statements, (e) the value of any minority interests
in any subsidiaries and (f) amounts and loans due from affiliates and/or
officers of Consignee, and (ii) Total Liabilities.
"Third Insurance Companies" shall mean the companies defined as such
in Section 13(m).
"Total Liabilities shall mean, at any date as of which the amount
thereof shall be determined, all obligations that should, in accordance with
generally accepted accounting principles consistently applied, be classified as
liabilities on the balance sheet of Consignee, including in any event all
Indebtedness as shown on the balance sheet of Consignee.
"Working Capital" shall mean the excess of Consignee's current assets,
computed in accordance with generally accepted accounting principles
consistently applied, over the sum of Current Liabilities PLUS long-term
Indebtedness secured by current assets (including, but not limited to,
obligations of consignee to the First Insurance Companies, the Second Insurance
Companies and the Third Insurance Companies).
2. AMOUNT OF CONSIGNMENT.
---------------------
Provided (i) no notice of election to terminate this Agreement (as
provided in Section 14 hereof) has been given by either party and (ii) no Event
of Default nor any other event which with notice or lapse of time, or both,
would constitute an Event of Default has occurred hereunder, Consignor will
deliver from time to time to Consignee upon its request Precious Metal under
the terms and conditions of this Agreement. In no event will Consignor be
obligated to deliver
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Precious Metal if aggregate amount of troy ounces or Fair Market Value of
Precious Metal requested when added to Consigned Precious Metal exceeds
Consignee's Consignment Limit.
If for any reason the number of troy ounces or Fair Market Value (or
unpaid Purchase Price in the case of Consigned Precious Metal for which
Purchase Price has been agreed but payment has not been received by Consignor)
of all consigned Precious Metal at any time exceeds Consignee's Consignment
Limit, Consignee shall immediately Redeliver to Consignor, or purchase and pay
for, Precious Metal of a quantity, or with a Fair Market Value, sufficient to
eliminate such excess.
Consignor shall provide Consignee with a monthly statement of the
quantity of Consigned Precious Metal (in whatever form) held by Consignee. If
Consignee does not agree with the information reported in the statement,
Consignee shall give notice of such disagreement to Consignor within fifteen
(15) days of the date of receipt of such statement. If Consignee fails to give
Notice to Consignor within the fifteen (15) day period, Consignee shall be
deemed to have affirmed the accuracy of the information reported in the
statement and to have waived any claim Consignee may have by reason of a
dispute as to such statement. On or about March 30 of each year, Consignee
shall provide Consignor with a written confirmation, signed by a duly
authorized Officer of Consignee, of the quantity of Consigned Precious Metal as
of the date of such confirmation. Upon and after the occurrence of an Event of
Default, Consignee shall provide to Consignor on a daily basis written
confirmation, in form acceptable to the Consignor, of the quantity and location
of all Consigned Precious Metal.
Consignee shall give Consignor at least two (2) full business days'
Notice of its requirements for Precious Metal. Consignor shall not be liable
to Consignee if Consignor fails to deliver Precious Metal by reason of an Act
of God or other catastrophe, force majeure, lack of supply, delay in
transportation, war or other hostilities, strike, lockout, epidemic, acts of
government or other public authority, requirements of any regulatory board,
agency or authority, unavoidable casualties or any other causes beyond the
Consignor's control. CONSIGNOR MAKES NO WARRANTY OF MERCHANTABILITY IN RESPECT
TO PRECIOUS METAL CONSIGNED OR SOLD UNDER THIS AGREEMENT NOR OF FITNESS FOR ANY
PARTICULAR PURPOSE NOR ANY OTHER WARRANTIES, EXPRESS OR IMPLIED, except that
Consignor does warrant to Consignee that all Precious Metal will be of the
fineness stated in Section 1 for that Precious Metal.
3. DELIVERY OF PRECIOUS METAL.
--------------------------
All Deliveries of Precious Metal by Consignor will be made to
Consignee by Consignor crediting an account of Consignee at a third party
supplier of Precious Metal or by delivery at Consignee's Principal Office or
other such location approved by Consignor, such Deliveries to be on terms and
conditions satisfactory to Consignor. At the time of Delivery or crediting,
Consignor shall provide Consignee with particulars of the total quantity of
Precious Metal being Delivered or credited to Consignee. A Duly Authorized
Officer of Consignee receiving any Delivery shall give receipt to Consignor for
the same in a form satisfactory to Consignor. All shipping expenses (including
insurance) shall be borne by Consignee, and such expenses paid or
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incurred by Consignor shall be reimbursed immediately in the same manner as
payments under Section 5 hereof.
4. TITLE
-----
Title to Consigned Precious Metal shall remain with Consignor and
shall not vest in Consignee until Consignor has received payment for the
Consigned Precious Metal as required by Section 5 of this Agreement. Upon each
Precious Metal Delivery, Consignee shall bear the entire risk of loss, theft,
damage or destruction of the Consigned Precious Metal from any cause
whatsoever, whether or not insured, and Consignee agrees to hold the Consigned
Precious Metal IN TRUST for Consignor and to indemnify and hold harmless
Consignor against any and all liabilities, damages, losses, costs, expenses,
suits, claims, demands or judgments of any nature (including, without
limitation, attorneys' fees and expenses) arising from or connected with any
loss, theft, damage or destruction of the Consigned Precious metal. Consignee
shall execute such financing statements, security agreements and other
documents as Consignor shall request to protect Consignor's interest under the
Uniform Commercial Code.
5. CONFIRMATION AND PAYMENTS.
-------------------------
Promptly after Consignee requests and Consignor agrees to, through
their respective Duly Authorized Officers, delivery and payment terms for a
specified quantity of Consigned Precious Metal, Consignor shall send Consignee
a telecopy (with signature) confirmation (in the form of Exhibit A attached
hereto) which shall set forth (among other things) the following items: (i)
the type and fineness of Precious Metal, (ii) the quantity of such Precious
Metal and applicable Consignment Fees, (iii) the date on which or the period
within which Delivery and settlement are to be made, and (iv) the manner of
delivery. Absent manifest error, the provisions of each such confirmation
shall be binding and shall supersede any terms hereof not consistent with such
provisions. Consignee agrees to examine each such confirmation and, in the
event of error therein, to notify Consignor of such error by telecopy (with
signature) within one (1) business day after Consignee's receipt thereof
(Consignee being conclusively deemed to have waived any such error in the
absence of such notification). Unless otherwise agreed to not later than two
(2) business days prior to an agreed settlement date, Consignee shall be
obligated to Redeliver or (if a Purchase Price has been agreed upon) purchase
and pay for the specified quantity of Consigned Precious Metal plus all
Consignment Fees related thereto.
Payment of the Purchase Price and all other amounts due by Consignee
to Consignor shall be made in the following manner: (i) by bank wire to the
Federal Reserve Bank of New York for the account of Consignor to the attention
of the Precious Metals Department, ABA Number 026- 008-439, (ii) by Consignee
authorizing Consignor to charge its account with Consignor, or (iii) by other
means which Consignor approves in writing. If Consignor in its discretion
grants payment terms different from the foregoing for a particular purchase,
then the Purchase Price shall not be deemed to be paid in full for the purposes
of this Agreement until all payments under such terms have been made.
Any amount not paid when due under this Agreement shall bear interest
at four percent (4%) in excess of the Base Rate until paid in full (whether or
not this Agreement has been
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terminated), such rate to be a floating rate to be redetermined daily in
accordance with changes in the Base Rate. Such interest shall be paid on
demand in the manner provided above.
6. COMMINGLING; REDELIVERY OF PRECIOUS METAL.
-----------------------------------------
Consignee may use the Consigned Precious Metal only in the ordinary
course of its business as now conducted. No Consigned Precious Metal shall be
removed from Consignee's Principal Office (except as provided in this Section
or Section 12(i) hereof or as may be agreed upon by the parties hereto) or sold
to any third party prior to the fixing of the Purchase Price for such Consigned
Precious Metal. Notwithstanding a contrary provision in this Section,
Consignee shall have the right, on terms and conditions approved in writing by
Consignor, to remove scrap from its Principal Office for refining in the
ordinary course of its business, it being agreed that all such scrap Consigned
Precious Metal shall be and remain property of Consignor until purchased and
paid for in pursuant to Section 5 hereof.
At any time prior to termination of this Agreement, any or all of the
amount of the Consigned Precious Metal (excluding any Consigned Precious Metal
as to which a Purchase Price has been agreed to under Section 5) may be
Redelivered by Consignee to Consignor.
7. INSURANCE.
---------
Consignee, at its sole cost and expense shall procure and maintain
property insurance to cover all locations where Consigned Precious Metal will
be located on an all risk form, including flood and earthquake and other such
insurance (including but not limited to, fidelity insurance for all employees,
including officers) with respect to the Consigned Precious Metal as may from
time to time be reasonably required by Consignor. All insurance provided for
in this section shall be effected under valid and enforceable policies, in such
forms and in such amounts as may from time to time be reasonably required by
Consignor, issued by financially sound and responsible insurance companies
which are admitted in the jurisdiction in which the Consigned Precious Metal is
located, or are approved under the applicable states' surplus lines insurance
laws. At least ten (10) days Prior to Consignee's first Delivery of Precious
Metal to Consignee and thereafter not less than fifteen (15) days prior to the
expiration dates of insurance policies theretofore furnished pursuant to this
Agreement, Consignee shall deliver to Consignor copies of all insurance
policies (together with Accord Form 27 (2/84) or other similar forms
satisfactory to Consignor) evidencing the insurance coverage required by
Consignor. All policies of insurance shall provide for thirty (30) days
notification in advance of any cancellation, non-renewal or material change in
policy conditions, including cancellation for non-payment of premium.
All policies of insurance provided for or contemplated by this
Agreement shall name Consignor as an additional insured or loss payee, as its
interests may appear.
All Policies of insurance provided for in this Agreement shall, to the
extent obtainable, contain clauses or endorsements to the effect that:
(a) No act or negligence of Consignee, or anyone acting for
Consignee, which might otherwise result in a forfeiture of such insurance or
any part thereof shall in any way affect the validity or enforceability of such
insurance insofar as Consignor is concerned; and
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<PAGE> 8
(b) Consignor shall not be liable for any premiums or subject to
any assessments on the policies.
Losses under each policy of insurance provided for or contemplated by
this Section shall be adjusted with the insurers and/or underwriters and paid
directly to Consignor and Consignee as their interests may appear. Consignee
shall pay all costs and expenses of collecting or recovering any insurance
proceeds under such policies, including, but not limited to, any and all fees
of attorneys, appraisers and adjusters.
8. TAXES, ETC.; CERTAIN RIGHTS OF CONSIGNOR.
----------------------------------------
Consignee will promptly pay any and all taxes, assessments and
governmental charges upon the Consigned Precious Metal prior to the date of any
penalties and prior to the date any liens would attach thereto. Consignee will
not use the Consigned Precious Metal in violation of any statute or ordinance.
Consignor may examine and inspect the Consigned Precious Metal at any time,
wherever located, and Consignee agrees to keep all records relating to the
Consigned Precious Metal at its Principal Office.
At its option, Consignor may discharge taxes, liens, security
interests or other encumbrances at any time levied or placed on the Consigned
Precious Metal (which are not being contested in good faith), may pay for
insurance on the Consigned Precious Metal and may pay for the maintenance and
preservation of the Consigned Precious Metal. Consignee agrees to reimburse
Consignor on demand for any payment made, or any excuse incurred, by Consignor
in connection with the forgoing, together with interest thereon at the Base
Rate plus four percent (4%), computed from the date of such payment or expense
until paid.
9. REPRESENTATIONS AND WARRANTIES.
------------------------------
The following representations and warranties shall survive the
delivery of this Agreement and the Delivery of Precious Metal by Consignor to
Consignee. Consignee represents and warrants to Consignor that:
(a) Consignee has heretofore furnished to Consignor Consignee's
Financial Statements which fairly present the financial condition of Consignee
as of their date, and the results of its operations for the year or other
period then ended in conformity with generally accepted accounting principles
consistently applied. To the best of Consignee's knowledge and belief,
Consignee does not have any contingent obligations, liabilities for taxes or
unusual forward or long-term commitments except as specifically mentioned in
the Financial Statements. Since the date of the Financial Statements, there
has been no material adverse change in the business, prospects, operations,
results or operations, assets, liabilities or condition (financial or
otherwise) of Consignee;
(b) Consignee (i) is duly organized, validly existing and in good
standing under the laws of the state of its incorporation as of the date
hereof, (ii) has full power and authority to own its properties and to carry on
business as now being conducted and is qualified to do business in every
jurisdiction (including the State of New York) where such qualification is
necessary except
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<PAGE> 9
where the failure to so qualify would not have a material adverse effect on the
business or financial condition of Consignee or the Security granted to
Consignor under the Security Agreement or any other security documents and
(iii) has full power to execute, deliver and perform this Agreement, the
Security Agreement and any other documents securing the obligations of
Consignee under this Agreement;
(c) The execution, delivery and performance by Consignee of the
terms and provisions of this Agreement, the Security Agreement and any other
security documents (i) have been duly authorized by all requisite corporate
action, (ii) will not violate any provision of law, any order of any court or
other agency of government, or the corporate charter or by-laws of Consignee,
(iii) will not violate any indenture, agreement or other instrument to which it
is a party, or by which it is bound, or be in conflict with, result in a breach
or constitute (with notice or lapse of time or both) a default under such
agreement, and (iv) except as this Agreement may provide, will not result in
the creation or imposition of any lien, charge or encumbrance of any nature
whatsoever upon any of the property or assets of Consignee pursuant to any such
indenture, agreement or instrument;
(d) There is no action, suit or proceeding at law or in equity or
by or before any governmental instrumentality or other agency now pending or,
to the best knowledge of Consignee, threatened against or affecting Consignee,
except as listed on Schedule A attached hereto;
(e) Consignee is not in default in the performance, observance or
fulfillment of any of the obligations, covenants or conditions contained in any
agreement or instrument to which it is a party where such default, with or
without the passage of time or the giving of notice which would have a material
adverse effect on the business or financial condition of Consignee;
(f) No financing statement or agreement is on file in any public
office pertaining to or affecting any property of Consignee, now owned or
hereafter acquired, except as listed on Schedule B attached hereto;
(g) Consignee has obtained all necessary approvals, permits,
licenses, authorizations and other consents required by, is not in material
violation of, and has performed all of its obligations under, all Environmental
Requirements;
(h) Except as described on Schedule C attached hereto, Consignee
has not received any notice, citation, summons, directive, order or other
communication, written or oral, from, and Consignee has no knowledge, after
reasonable inquiry, of any notice, citation, summons, directive, order or other
communication by, any Governmental Authority or any other person concerning the
presence, generation, treatment, storage, transportation, transfer, disposal,
release or other handling of any hazardous Material within, on, from, related
to, or affecting any real property owned or occupied by Consignee;
(i) To the best of Consignee's knowledge (after reasonable
inquiry) and except as described in Schedule C attached hereto, no real
property owned or occupied by Consignee has ever been used, either by
Consignee, any tenant or any predecessor in interest, to generate, treat,
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<PAGE> 10
store, transport, transfer, dispose of, release or otherwise handle any
Hazardous Material, except in compliance with all Environmental Requirements;
and
(j) No Hazardous Material is currently located within, on, under
or about any real property owned or occupied by Consignee in a manner which
violates any Environmental Requirement, or which requires cleanup or corrective
action of any kind under any Environmental Requirement.
10. CONDITIONS OF CONSIGNMENT.
-------------------------
Delivery by Consignor of any Precious Metal under this Agreement is
further subject to the following conditions precedent;
(a) The representations an warranties set forth in Section 9 of
this Agreement shall be true and correct on and as of the date of this
Agreement and the date the Delivery is made.
(b) Consignee shall have executed and delivered to Consignor, upon
the execution of this Agreement, the following:
(i) All required security documents, including but not
limited to any and all UCC-1 financing statements
executed by a Duly Authorized Officer of Consignee
as may be required by Consignor;
(ii) A certificate of the Secretary or Assistant Secretary
of Consignee certifying to the votes of Consignee's
Board of Directors authorizing the execution,
delivery and performance of this Agreement and any
security documents,
(iii) A certificate of the Secretary or Assistant Secretary
of Consignee certifying the names of the officers of
Consignee authorized to sign this Agreement, any
security documents and any other documents or
certificates (or any amendments thereto) to be
delivered pursuant to this Agreement (or any
amendments thereto) by Consignee or any of its
officers, together with the true signatures of such
officers, on which certificates Consignor may
conclusively rely until it shall receive a further
certificate canceling or amending the prior
certificate and submitting the signatures of the
offices names in such further certificate;
(iv) A certificate of the Secretary of State of the state
of incorporation of Consignee, dated reasonably near
the date of this Agreement, stating that Consignee is
duly incorporated and in good standing in such state
and has filed all annual reports and has paid all
franchise taxes required to be filed or paid to the
date of such certificate;
(v) A favorable written opinion of Consignee's Counsel,
dated the date of this Agreement, satisfactory to
Consignor and its counsel in scope and substance,
with respect to the matters set forth in subsections
9(b), (c), (d) and (e); and further to the effect
that this Agreement and all required
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<PAGE> 11
security documents have been duly authorized, executed
and delivered by Consignee and constitute the legal,
valid, binding obligations of Consignee enforceable
in accordance with their terms;
(vi) A certificate signed by Consignee's chief
executive or chief financial officer to the
effect stated in (c) above; and
(vii) Such other supporting documents and legal opinions as
Consignor May reasonably request.
11. AFFIRMATIVE COVENANTS.
---------------------
Consignee covenants and agrees that, from the date of this Agreement
and until payment and performance in full by Consignee of its indebtedness,
obligations and liabilities to Consignor under this Agreement or any other
agreement or instrument, whether now existing or arising hereafter, Consignee
shall:
(a) Do or cause to be done all things necessary to preserve, renew
and keep in full force and effect its corporate existence, rights, licenses,
permits and franchises and comply with all laws and regulations applicable to
it; at all times maintain, preserve and protect all franchises and trade names
and preserve all the remainder of its property used or useful in the conduct of
its business and keep the same in good repair, working order and condition, and
from time to time, make, or cause to be made, all needful and proper repairs,
renewals, replacements, betterments and improvements thereto, so that the
business carried on in connection therewith may be properly and advantageously
conducted all times;
(b) Comply with all applicable laws and regulations, whether now
in effect or hereafter enacted or promulgated by any Governmental Authority
having jurisdiction in the premises;
(c) Pay and discharge or cause to be paid and discharged all
taxes, assessments and governmental charges or levies imposed upon it or upon
its respective income and profits or upon any of its property, real, personal
or mixed, or upon any part thereof, before the same shall become in default, as
well as all lawful claims for labor, materials and supplies or otherwise,
which, if unpaid, might become a lien or charge upon such properties or any
part thereof; provided that Consignee shall not be required to pay and
discharge or cause to be paid and discharged any such tax, assessment, charge,
levy or claim so long as the validity thereof shall be contested in good faith
by appropriate proceedings and it shall have set aside on its books adequate
reserves with respect to any such tax, assessment, charge, levy or claim so
contested, and provided further, that payment with respect to any such tax,
assessment, charge, levy or claim shall be made before any of its property
shall be seized and sold in satisfaction thereof;
(d) Give prompt written notice to Consignor of any proceedings
instituted against it by or in any Federal or state court or before any
commission or other regulatory body, Federal, state or local, which, if
adversely determined, would have a materially adverse effect upon its business,
operations, properties, assets, or condition, financial or otherwise or could
result in the forfeiture of assets of Consignee;
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<PAGE> 12
(e) Furnish to Consignor:
(i) within ninety (90) days after the end of each fiscal
year, Financial Statements showing its financial
condition at the close of such fiscal year, the
results of operations during such year and containing
a statement to the effect that its independent public
accountants have examined the provisions of this
Agreement and that no Event of Default nor any event
which with notice or lapse of time, or both, would
constitute an Event of Default has occurred:
(ii) within forty-five (45) days after the end of the
first and third quarter in each such fiscal year,
Financial Statements for such period and the fiscal
year to that date, subject to changes resulting from
routine year-end audit adjustments, in form
satisfactory to Consignor. Notwithstanding
provisions in the definition of "Financial
Statements" requiring certification by independent
public accountants, Financial Statements for this
subsection (ii) may be prepared and certified by the
chief financial officer of Consignee to the best of
his or her information and belief;
(iii) within ninety (90) days after the end of the six
month period ending December 31, Financial Statements
for such period and the fiscal year to date, subject
to changes resulting from routine year-end audit
adjustments in form satisfactory to Consignor,
provided that Financial Statements for this
subsection (iii) shall be reviewed by its independent
public accountants as opposed to certified;
(iv) simultaneously with the furnishing of each of the
Financial Statements to be delivered pursuant to
subsections (i) and (ii) above, a narrative statement
of the President or chief financial officer of
Consignee which shall comment upon and explain any
material changes, both positive and negative,
reflected in such statements from prior periods, and
which shall also contain a declaration to the effect
that such officer has reviewed the terms of this
Agreement and has no knowledge of any event or
condition which constitutes an Event of Default or
which with notice or lapse of time, or both, would
constitute an Event of Default or, if he or she has
such knowledge, specifying the nature and period of
existence of such event or condition;
(v) within twenty (20) days after the end of each month,
a consignment base certificate of Consignee as of the
last business day of the preceding month (such
certificate to be in the form of Exhibit B attached
hereto and certified by Consignee's Chief Financial
Officer or Treasurer);
(vi) within forty-five (45) after the end of each quarter
in each fiscal year, a certificate of Consignee as to
the status of Consignee's compliance with its
agreements with Consignor (such certificate to be in
the form of Exhibit C
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<PAGE> 13
attached hereto and certified by Consignee's Chief
Financial Officer or Treasurer);
(f) Promptly, from time to time, furnish such other information
regarding its operations, assets, business affairs and financial condition as
Consignor may reasonably request;
(g) Permit agents or representatives of Consignor, at Consignee's
expense (including without limitation, the fees and expenses of such agents or
representatives), (i) to inspect, at any time during normal business hours and
without notice, the Consigned Precious Metal and Consignee's books and records
and to make abstracts or reproductions of such books and records, (ii) to
conduct field examinations of the Consigned Precious Metal in the possession
and control of Consignee (which examinations shall include the observance
thereof by its independent public accountants as to two of such examinations
per year including an annual audit review of Consignee's control system), such
examinations to be done at reasonable times and at any time in the case of an
emergency (provided, however, that Consignee only shall be required to pay for
two (2) field examinations per year unless an Event of Default has occurred and
is continuing, in which case all field examinations shall be at Consignee's
expense), (iii) to observe the taking of any physical inventory of Consigned
Precious Metal in Consignee's possession (Consignee shall give Consignor not
less that ten (10) days' prior Notice of the taking of each such inventory, and
(iv) at reasonable times and at any time in case of emergency, to take a
physical inventory of the Consigned Precious Metal in Consignee's possession;
(h) Promptly advise Consignor of any material adverse changes in
its condition, financial or otherwise, and of any condition or event which
constitutes or with notice of lapse of time or both would constitute, and Event
of Default;
(i) Promptly join with Consignor from time to time in executing
one or more financing statements pursuant to the Uniform Commercial Code in
form satisfactory to Consignor, and execute such other instruments in form
suitable for recording or filing as Consignor May reasonably require;
(j) Defend the Consigned Precious Metal against the claims and
demands of any persons (other than Consignor of those persons listed as secure
parties on Schedule B attached hereto) at any time claiming the same or any
interest therein;
(k) Consent, and Consignee does hereby consent to the delivery by
Consignor to any lender, lessor or consignor to Consignee of all information
and reports prepared or received by Consignor with respect to Consignee;
(l) Expect as to past violations being cured by Consignee as
described on Schedule C attached hereto, comply, and cause all tenants or other
occupants of any real property which Consignee owns or occupies to comply, in
all respects with all Environmental Requirements, and not generate, treat,
store, handle, process, transfer, transport, dispose of, release or otherwise
use, and not permit any tenant or other occupant of such property to generate,
treat, store, handle, process, transfer, transport, dispose of, release or
otherwise use, Hazardous Materials within, on, under or about such property, in
a manner that could lead to the imposition on Consignee,
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<PAGE> 14
Consignor or any such real property of any liability or lien of any nature
whatsoever under any Environmental Requirement;
(m) Except as to matters described on Schedule C attached hereto,
notify Consignor promptly in the event of any spill or other release of any
Hazardous Material within, on, under or about any real property owned or
occupied by consignee which is required to be reported to a Governmental
Authority under any Environmental Requirement, promptly forward to Consignor
copies of any notices received by Consignee relating to alleged violation of
any Environmental Requirement and (as to all matters including, without
limitation, those disclosed on Schedule C attached hereto) promptly pay when
due any fine or assessment against Consignee, Consignor or any such real
property relating to any Environmental Requirement;
(n) Upon receipt of Notice by Consignee from a third party to whom
Consignee from a third party to whom Consignee has reconsigned Consigned
Precious Metal that such reconsigned Consigned Precious metal has been sold,
reconsigned or otherwise transferred or disposed of by such third party, and
within one (1) business day after receipt of such notice, purchase such
Consigned Precious Metal from Consignor pursuant to terms of this Agreement;
(o) Own equity Precious Metal (namely Precious Metal owned
outright by Consignee and not delivered to it pursuant to a "consignment",
"lease", "loan", "conditional sale" or other agreement) in an amount at least
equal to the sum of (i) five percent (5%) of Consignee's entire inventory of
Precious Metal consigned or leased to Consignee (including, without limitation,
Consigned Precious Metal) plus (ii) twenty percent (20%) of the amount of
Precious Metal physically located other than at Consignee's Principal office;
(p) Maintain at all times a Tangible Net Worth in an amount at
least equal to $37,000,000;
(q) Maintain at all times Working Capital in an amount at least
equal to $22,000,000;
(r) Maintain at all times a ratio of Total Liabilities (including,
without limitation, all obligations under this Agreement, any other precious
metal facility or similar agreements and any loan agreements) to Tangible Net
Worth of not more than 3.50:1.00 (4.00:1.00 during the period from September 1
through December 31), determined in accordance with generally accepted
accounting principles consistently applied;
(s) Maintain at all items a ratio of Current Liabilities PLUS
long-term Indebtedness secured by current assets (including, but not limited
to, obligations of Consignee to the First Insurance Companies and the Second
Insurance Companies) to Working Capital of not more than 6.30:1.00; and
(t) Maintain key-man life insurance with insurance companies
satisfactory to Consignor on the lives of Michael Paolercio and Anthony
Paolercio, Jr. in the amount of not less than $5,000,000 each; provided,
however, that in the event that either of such individuals shall terminate his
employment with Consignee during his life, the insurance on the terminated
individual's life may be canceled.
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<PAGE> 15
12. NEGATIVE COVENANTS.
------------------
Consignee covenants and agrees that, until Consignee makes payment and
performs in full its indebtedness, obligations and liabilities to Consignor
under this Agreement or any other agreement of instrument, whether now existing
or arising hereafter, unless Consignor consents in writing, Consignee will not,
directly or indirectly:
(a) Create, incur, assume or suffer to exist any mortgage, pledge,
lien, attachment, charge or other encumbrance of any nature whatsoever on any
of the Consigned Precious Metal or any products or property now or hereafter
owned by Consignee or in which Consignee presently has or hereafter acquires an
interest which does or will include the consigned Precious Metal other (i) than
security interests in favor of Consignor or as listed on Schedule B attached
hereto and (ii) mortgages on Consignee's Mount Vernon, New York real property;
(b) Sell, lease, transfer or otherwise dispose of its properties,
assets, rights, licenses and franchises to any person, except in the ordinary
course of its business, or turn over the management of, or enter into a
management contract with respect to, such properties, assets, rights, licenses
and franchises;
(c) Dissolve, liquidate, consolidate with or merge with, or
acquire all or substantially all of the assets or properties of, any other
corporation or entity, or make any substantial change in its executive
management;
(d) Sell, assign, encumber, pledge, discount or dispose of in any
way any accounts receivable, promissory notes or trade acceptances held by
Consignee, with or without recourse, except for (i) security interests as
listed on Schedule B attached hereto and (ii) collection (including
endorsements) in the ordinary course of business;
(e) Grant any security interest or ownership rights to any
customer of Consignee with respect to any of the Consigned Precious Metal while
at Consignee's premises whether or not such customers have prepaid orders for
the Consigned Precious Metal or any products or property which does or will
include the Consigned Precious Metal;
(f) Guarantee, endorse or otherwise in any way become or be
responsible for obligations of any other person, except endorsements of
negotiable instruments for collection in the ordinary course of business, or
guarantees on behalf of employees not to exceed $100,000 in the aggregate;
(g) Obtain precious Metal on consignment or loan from any source
other than Consignor or those persons listed as secured parties on Schedule B
attached hereto;
(h) Permit the aggregate amount of Consigned Precious Metal PLUS
Precious Metal consigned to Consignee by other consignors to exceed 275,000
troy ounces of fine gold; or
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<PAGE> 16
(i) Permit the amount of Consignee's Precious metal inventory
physically located other than at consignee's Principal Office to exceed at any
time (i) 45,000 troy ounces of Precious Metal in the aggregate, (ii) 10,000
troy ounces at, or in transit to or from any one location (excluding Wal-Mart
locations) or (iii) 4,000 troy ounces outside the United States.
13. EVENTS OF DEFAULT; RIGHTS AND REMEDIES OF CONSIGNOR UPON DEFAULT.
----------------------------------------------------------------
In each case of happening of any of the following events (each of
which is herein sometimes called an "Event of Default"):
(a) Any representation or warranty made herein, or in any report,
certificate, financial statement or other instrument furnished in connection
with this Agreement, or the Delivery of Precious Metal by Consignor hereunder,
shall prove to be false or misleading in any material respect;
(b) Consignee fails to make punctual payment or perform any
obligation required by the provisions of Section 2, 5 6 or 14 of this
Agreement;
(c) Consignee fails to pay any amount due hereunder or any other
indebtedness, obligation or liability of Consignee to Consignor when the same
shall become due and payable, whether at the due date thereof or at a date
fixed for prepayment or by acceleration or otherwise;
(d) Consignee fails to observe or perform any covenant condition
or agreement required by the terms of Sections 7, 8, 11(g), 11(n), 11(o),
11(p), 11(q), 11(r), 11(s), 11(t), 12(a), 12(c), 12(e), 12(f), 12(g), 12(h) or
12(i) of this Agreement;
(e) Consignee fails to observe or perform any other covenant,
condition or agreement required by the terms of this Agreement and such failure
shall continue unremedied for ten (10) days:
(f) Default with respect to any evidence of indebtedness,
obligations or liabilities of Consignee (including, but not limited to,
consignment agreements and any other agreements between Consignee and any
parent, affiliate or subsidiary of Consignor), if the effect of such default is
to accelerate the maturity of such indebtedness or to permit the holder thereof
to cause such indebtedness to become due prior to the stated maturity thereof,
or if any indebtedness of Consignee is not paid, when due and payable, whether
at the due date thereof or by acceleration or otherwise;
(g) Consignee shall (i) apply for, consent to, or suffer the
appointment of a custodian, receiver, trustee or liquidator of it or any of its
property, (ii) admit in writing its inability to pay its debts as they mature,
(iii) make a general assignment for the benefit of creditors, (iv) file, or
have filed against it, a petition for relief under Title 11 of the United
States Code, or (V) file, or have filed against it, a petition in bankruptcy,
or a petition or an answer seeking reorganization or an arrangement with
creditors or to take advantage of any bankruptcy, reorganization, insolvency,
readjustment of debt, dissolution or liquidation law or insolvency,
readjustment of debt,
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<PAGE> 17
dissolution or liquidation law or statute, or an answer admitting the material
allegations of a petition filed against it in any proceeding under any such
law, or corporate action shall be taken for the purpose of effecting any of the
foregoing;
(h) An order, judgment or decree shall be entered, without the
application, approval or consent of Consignee by any court of competent
jurisdiction, approving a petition seeking reorganization of Consignee or
appointing a custodian, receiver, trustee or liquidator of Consignee or of all
or a substantial part or the assets of Consignee;
(i) Occurrence of any loss, theft, or destruction of or damage to
the Consigned Precious Metal or any products or property which includes
Consigned Precious Metal;
(j) Discontinuance of the operation of Consignee's business for
any reason;
(k) For any reason the present chief financial officer shall cease
to be or function as the chief financial officer of Consignee and a successor
is not appointed within sixty (60) days of such cessation;
(l) For any reason the present President shall cease to be or
function as President and chief executive officer of Consignee and a successor
is not appointed with sixty (60) days of such cessation;
(m) Occurrence of an event of default under any credit, loan or
consignment agreement to which Consignee is a party, as amended or modified
from time to time, including, without limitation, (i) that certain Note
Purchase Agreement dated as December 1, 1987 between Consignee and Northwestern
National Life Insurance Company, Northern Life Insurance Company and The North
Atlantic Life Insurance Company of America (collectively, the "First Insurance
Companies"), (ii) that certain Note Purchase Agreement dated May 1, 1992
between Consignee and Northern Life Insurance Company, Royal Maccabees Life
Insurance Company, The North Atlantic Life Insurance Company of America, Farm
Bureau Life Insurance Company of Michigan, FB Annuity Company and Farm Bureau
Mutual Insurance Company of Michigan (collectively, the "Second Insurance
Companies"), (iii) that certain Note Purchase Agreement dated as of February
15, 1995 between Consignee and Northwestern National Life Insurance Company and
Northern Life Insurance Company (collectively, the "Third Insurance
Companies"), (iv) those certain Consignment Agreements or Amended and Restated
Consignment Agreements dated as of August 20, 1993 between Consignee and each
of RIHT, ABN, Mocatta, CS and FPM, respectively, (v) that certain Consignment
Agreement dated as of September 1, 1994 between Consignee and Deutsche Bank
Sharps Pixley Inc. and (vi) any promissory note (including, without
limitation, that promissory note of Debtor in favor of Chemical Bank dated
March 29, 1995) and/or agreements in favor of Chemical Bank;
(n) Occurrence of any Event of Default as defined in the Security
Agreement;
(o) Occurrence of any attachment on any Precious Metal owned by
Consignee or on any Consigned Precious Metal; or
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<PAGE> 18
(p) Determination by Consignor in good faith that Consignee has
suffered a material adverse change in its business or financial condition.
Upon the occurrence of any such Event of Default and at any time
thereafter during the continuance of such Event of Default, Consignor may, by
Notice to Consignee, terminate this Agreement as provided in Section 14 and
declare all liabilities, indebtedness or obligations of Consignee to be due and
payable. Upon Consignor's declaration, such liabilities, indebtedness and
obligations shall become immediately due and payable, both as to principal
and/or interest, without presentment, demand, protest or notice of any kind,
all of which are hereby expressly waived, anything contained herein or in any
other evidence of such indebtedness, obligations and liabilities to the
contrary notwithstanding. Consignor may enforce payment of the same and
exercise any or all of the rights, powers and remedies possessed by Consignor,
under this Agreement or under any agreement securing the obligations of
Consignee hereunder, whether afforded by the Uniform Commercial Code or
otherwise by law or in equity. The remedies provided for herein are cumulative
and are not exclusive of any other remedies provided by law. Consignee agrees
to pay Consignor's reasonable attorney's fees and legal expenses incurred in
enforcing Consignor's rights, powers and remedies under this Agreement, the
Security Agreement and any agreement securing the liabilities, indebtedness or
obligations of Consignee to Consignor.
Without limiting the foregoing, upon the occurrence of any Event of
Default and at any time thereafter during the continuance thereof, Consignor
shall have the right to enter and/or remain upon the premises of Consignee or
any other place or places where any Consigned Precious Metal is located and
kept (without any obligation to pay rent to Consignee or others) and; (i)
remove Consigned Precious Metal or inventory containing the same therefrom to
the premises of Consignor or any agent of Consignor, for such time as Consignor
may desire, in order to maintain, collect, sell and/or liquidate said Consigned
Precious Metal or (ii) use such premises, together with equipment, materials,
supplies, books and records of Consignee, to maintain possession, refine and
prepare said Consigned Precious Metal for sale, liquidation, or collection.
Consignor may require Consignee to assemble the Consigned Precious Metal and
make it available to Consignor at a place or places to be designated by
Consignor which is reasonably convenient for the parties. Consignor may at any
time and from time to time employ and maintain in any premises of Consignee or
any place where any of the Consigned Precious Metal is located a custodian
selected by Consignor who shall have full authority to do all acts necessary to
protect Consignor's interests and to report to Consignor thereon. Consignee
agrees to cooperate with any such custodian and to do whatever Consignor may
reasonably request to preserve the Consigned Precious Metal. All reasonable
expenses incurred by reason of the employment of the custodian shall be paid by
Consignee pursuant to the last sentence in Section 8 hereof.
14. TERMINATION.
-----------
This Agreement shall terminate, at the election of the Consignor, upon
the occurrence of any Event of Default. Unless otherwise terminated in
accordance with the terms hereof, this Agreement shall continue until either
Consignor or Consignee elects to terminate this Agreement by not less than
thirty (30) days' prior Notice to the other party. Unless otherwise mutually
agreed in writing by Consignor and Consignee, no Delivery of Precious Metal to
Consignee will be made following the giving of Notice by either Consignor or
Consignee of its election to
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<PAGE> 19
terminate this Agreement. Termination of this Agreement shall not affect
Consignee's duty to pay and perform in full its obligations to Consignor
hereunder. On the effective date of the termination of this Agreement,
Consignee shall either Redeliver or purchase and pay for all Consigned Precious
Metal which Consignor has previously Delivered and which has not been paid for
or Redelivered, the price to be based on Consignor's spot market price on the
date of such purchase and shall reimburse Consignor for any and all outstanding
fees, costs, expenses and other obligations of Consignee to Consignor.
15. INDEMNITY.
---------
Consignee will defend, indemnify and hold harmless Consignor, its
employees, agents, officers, and directors, from and against any and all
claims, demands, penalties, causes of action, fines, liabilities, settlements,
damages, costs or expenses of whatever kind or nature, known or unknown,
foreseen or unforeseen, contingent or otherwise (including, without limitation,
counsel and consultant fees and expenses, (investigation and laboratory fees
and expenses, court costs, and litigation expenses) arising out of, or in any
way related to, (i) any breach by Consignee of any of the provisions of this
Agreement, (ii) the presence, disposal, spillage, discharge, emission, leakage,
release, or threatened release of any Hazardous Material within, on, under,
about, from or affecting any real property owned or occupied by Consignee,
including, without limitation, any damage or injury resulting from any such
Hazardous Material to or affecting such property or the soil, water, air,
vegetation, buildings, personal property, persons or animals located on such
property or on any other property or otherwise, (iii) any personal injury
(including wrongful death) or property damage (real or personal) arising out of
or related to any such Hazardous Material, (iv) any lawsuit brought or
threatened, settlement reached, or order or directive of or by any Governmental
Authority relating to such Hazardous Material or (V) any violation of any
Environmental Requirement.
16. MISCELLANEOUS.
-------------
(a) This Agreement and all covenants, agreements, representations
and warranties made herein and in the certificates delivered pursuant hereto,
shall survive the execution and delivery to Consignor of this Agreement, and
shall continue in full force and effect so long as this Agreement and any other
indebtedness of Consignee to Consignor is outstanding and unpaid. In this
Agreement, reference to a party shall be deemed to include the successors and
permitted assigns of such party, and all covenants and agreements in this
Agreement by or on behalf of Consignee shall inure to the benefit of the
successors and assigns of Consignor.
(b) Consignee will reimburse Consignor upon demand for all
out-of-pocket costs, charges and expenses of Consignor (including costs of
searches of public records and filing and recording documents with public
offices and reasonable fees and disbursements of counsel to Consignor) in
connection with (i) the preparation, execution and delivery of this Agreement,
(ii) any amendments, modifications, consents or waivers in respect hereof and
(iii) any enforcement hereof.
(c) This Agreement shall be construed in accordance with and
governed by the laws of the State of New York.
19
<PAGE> 20
(d) No modification or waiver of any provision of this Agreement,
or of any security document, nor consent to any departure of Consignee from a
provision, shall be effective unless the same shall be in writing. A written
consent shall be effective only in the specific instance, and for the purpose,
for which given. No notice to, or demand on Consignee, in any one case, shall
entitle Consignee to any other or future notice or demand in the same, similar
or other circumstances.
(e) Neither any failure nor any delay on the part of Consignor in
exercising any right, power or privilege hereunder, or in any other instrument
given as a security therefor, shall operate as a waiver thereof, nor shall a
single or partial exercise thereof preclude any other or future exercise, or
the exercise of any other right, power or privilege.
(f) Consignee shall not have the right to assign its rights
hereunder or any interest herein without the prior written consent of the
Consignor.
(g) Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof or affecting the validity or
enforceability of such provision in any other jurisdiction.
(h) Any Section headings in this Agreement are included herein for
convenience of reference only and shall not constitute a part of this Agreement
for any other purpose. As used in this Agreement, the term "person" shall
include any individual, corporation, partnership, joint venture, trust or
unincorporated organization, or a government or any agency or political
subdivision thereof.
(i) Consignee hereby submits to the jurisdiction of the courts of
the state of New York and the United States District Court for the Southern
District of New York, as well as the jurisdiction of all courts to which an
appeal may be taken or other review sought from the aforesaid courts, for the
purpose of any suit, action or other proceeding arising out of any of the
Consignee's obligations under or with respect to this Agreement, and expressly
waives any and all objections it may have as to value in any such courts.
CONSIGNEE AND CONSIGNOR EACH WAIVES TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM BROUGHT BY EITHER OF THEM AGAINST THE OTHER IN ANY MANNER
WHATSOEVER (INCLUDING, WITHOUT LIMITATION, ANY ACTION, PROCEEDING OR
COUNTERCLAIM ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS AGREEMENT ANY
OTHER DOCUMENTS EXECUTED IN CONNECTION HEREWITH OR ANY OF THE TRANSACTIONS
CONTEMPLATED HEREIN OR THEREIN). No party to this Agreement, including BUT NOT
LIMITED to any assignee or successor or a party, shall seek a jury trial in any
lawsuit, proceeding, counterclaim, or any other litigation procedure based
upon, or arising out of, this Agreement, any related instruments, any
collateral or the dealings or relationship between the parties. No party will
seek to consolidate any such action, in which a jury trial has been waived,
with any other action in which a jury trial cannot be or has not been waived.
THE PROVISIONS OF THIS PARAGRAPH HAVE BEEN FULLY DISCUSSED BY THE PARTIES
HERETO, AND THESE PROVISIONS SHALL BE SUBJECT TO NO EXCEPTIONS. NO PARTY HAS
IN ANY WAY AGREED WITH OR REPRESENTED TO
20
<PAGE> 21
ANY OTHER PARTY THAT THE PROVISIONS OF THIS PARAGRAPH WILL NOT BE FULLY
ENFORCED IN ALL INSTANCES.
IN WITNESS WHEREOF, Consignor and Consignee have caused this Agreement
to be duly executed by their duly authorized officers, all as of the day and
year first above written.
UNION BANK OF SWITZERLAND
New York Branch
Consignor
By /s/ Cathleen Callahan
--------------------------
Title:Vice President
By: /s/ Edward A. Aldrich
---------------------------
Title:Vice President
Michael Anthony Jewelers, Inc.
Consignee
By: /s/ Michael A. Paolercio
------------------------------
Title Treasurer
21
<PAGE> 1
EXHIBIT 10.5
FOURTH AMENDMENT TO AMENDED AND
RESTATED SECURITY AGREEMENT
THIS FOURTH AMENDMENT is made as of the 20 day of October,
1995, among MICHAEL ANTHONY JEWELERS, INC., a Delaware corporation
(the "Debtor"), each of the Secured Parties (as defined below) and
RHODE ISLAND HOSPITAL TRUST NATIONAL BANK, a national banking
association (the "Agent"), individually and as agent for each of the
following: RHODE ISLAND HOSPITAL TRUST NATIONAL BANK; ABN AMRO BANK
N.V., NEW YORK BRANCH; THE MOCATTA GROUP, A DIVISION OF STANDARD
CHARTERED BANK; FLEET PRECIOUS METALS INC.; CREDIT SUISSE, NEW YORK
BRANCH ("Credit Suisse"); DEUTSCHE BANK AG, NEW YORK BRANCH (AS
ASSIGNEE OF DEUTSCHE BANK SHARPS PIXLEY INC.) ("DBSPI"); and UNION
BANK OF SWITZERLAND ("UBS") (jointly and severally, the "Secured
Parties).
W I T N E S S E T H T H A T:
- - - - - - - - - - - - - -
WHEREAS, the Secured Parties (other than UBS), the Agent and
the Debtor are parties to a certain Amended and Restated Security
Agreement dated as of August 20, 1993 (hereinafter, as amended by a
certain First Amendment dated as of May 16, 1994, a certain Second
Amendment dated as of September 1, 1994 and a certain Third Amendment
dated as of January 15, 1995, the "Security Agreement"), pursuant to
which the Debtor granted to the Secured Parties (other than UBS) and
the Agent a security interest in the Collateral (as defined therein)
and provided for the enforcement of such security interests; and
WHEREAS, the Debtor and UBS desire to add UBS as a "Secured
Party" pursuant to the terms of the Security Agreement as UBS will be
entering into a Consignment Agreement dated as of October 20, 1995
(hereinafter, as amended or modified from time to time, the "UBS
Agreement") with the Debtor; and
WHEREAS, UBS is willing to comply with the covenants and terms
of such Security Agreement and any documents executed by the Secured
Parties in connection with the Security Agreement;
NOW, THEREFORE, in consideration of the premises and the
agreements hereinafter set forth and for other good and valuable
consideration, the receipt whereof is hereby acknowledged, the parties
hereto agree as follows:
1. The Secured Parties, the Agent and the Debtor hereby consent to the
addition of UBS as a party to the Security Agreement, with UBS to be
included as a Secured Party pursuant to the terms of the Security
Agreement and all references in the Security Agreement to "the
Consignment Agreements" shall include the UBS Agreement.
1
<PAGE> 2
2. The Security Agreement is hereby amended so that the term "Secured
Parties" as used therein and herein shall include, from and after the
date hereof, UBS and UBS shall be entitled to all of the rights and
benefits of a Secured Party thereunder.
3. The second "WHEREAS" clause on page 1 in the Security Agreement is
hereby amended to read as follows:
"WHEREAS, the Debtor and each of the Secured Parties
have entered into Consignment Agreements or Amended and
Restated Consignment Agreements dated as of August 20, 1993
(January 31, 1994 in the case of Credit Suisse, September 1,
1994 in the case of DBSPI and October 20, 1995 in the case of
UBS) (hereinafter, as amended from time to time, the
"Consignment Agreements") pursuant to which such Secured
Parties may deliver or have delivered gold on consignment for
sale to the Debtor (hereinafter collectively referred to as
the "Precious Metal"); and"
4. In order to secure the due and punctual payment and performance of all
indebtedness, liabilities and obligations of the Debtor contained in
the UBS Agreement and any related security instruments, and to secure
the due and punctual payment and performance of all indebtedness,
liabilities and obligations of the Debtor to UBS of every kind and
description, direct, indirect or contingent, now or hereafter
existing, secured or unsecured, due or to become due, including
(without limitation) the obligations of the Debtor under the Security
Agreement, obligations with respect to forward contracts for the
purchase or sale of precious metal and obligations of the Debtor
relating to unpaid purchase price for Precious Metal (which
indebtedness, liabilities and obligations shall be deemed to be
included as "Obligations" for all purposes of the Security Agreement),
the Debtor hereby grants to the Agent on behalf of UBS and to UBS, and
hereby ratifies and reaffirms its grant to the Agent on behalf of the
other Secured Parties and to each of the other Secured Parties of, a
continuing security interest in and a lien upon the Collateral.
5. Exhibit A attached to the Security Agreement is hereby deleted and
Exhibit A attached hereto is hereby added to and made a part of the
Security Agreement as Exhibit A thereto.
6. Any necessary, conforming changes to the Security Agreement occasioned
by reason of this Fourth Amendment shall be deemed to have been made.
7. This Fourth Amendment shall be binding upon the parties and their
respective successors and assigns.
8. Each of the Debtor, each Secured Party and the Agent acknowledge and
agree that, except as expressly provided herein, the terms and
provisions of the Security Agreement remain unchanged and the Security
Agreement remains in full force and effect in accordance with its
terms. The term "Security Agreement" as used in the Security
Agreement and all references to the Security Agreement in any other
documents or agreements between any of the parties
2
<PAGE> 3
hereto which relate to the Debtor shall refer, from and after the date
hereof, to the Security Agreement as amended and supplemented by this
Fourth Amendment.
9. Unless otherwise defined herein or the context otherwise requires, all
terms and phrases which are defined in the Security Agreement shall
have the same meaning when used herein.
10. This Fourth Amendment shall be construed in accordance with and
governed by the laws of the State of New York, without giving effect
to the conflict of laws principles thereof.
11. This Fourth Amendment may be executed with one or more counterparts
hereof, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Fourth
Amendment to be executed by their duly authorized officers as of the date first
above written.
MICHAEL ANTHONY JEWELERS, INC.
By: /s/ Michael A. Paolercio
-------------------------------
Title: Treasurer
RHODE ISLAND HOSPITAL TRUST
NATIONAL BANK, INDIVIDUALLY AND AS
AGENT FOR EACH OF THE SECURED PARTIES
By: /s/ Albert Brown
-------------------------------
Title: Senior Vice President
ABN AMRO BANK N.V., NEW YORK BRANCH
By: /s/ Jeffrey Sarfaty
-------------------------------
Title: Vice President
By: /s/ Ned Koppelson
-------------------------------
Title: Vice President
THE MOCATTA GROUP, A DIVISION OF
STANDARD CHARTERED BANK
By: /s/ Joseph Lizewski
-------------------------------
Title: SVP-CFO
(Signatures continued on page 4)
3
<PAGE> 4
FLEET PRECIOUS METALS, INC.
By: /s/ Eleanor Vander Mel
-------------------------------
Title: Vice President
By:
-------------------------------
Title:
----------------------------
CREDIT SUISSE, NEW YORK BRANCH
By: /s/ Stanley Steinberg
-------------------------------
Title: Associate
By: /s/ Michael A. Bloomquist
-------------------------------
Title: Associate
DEUTSCHE BANK AG, NEW YORK BRANCH
By: /s/ Richard D. Leigh
-------------------------------
Title: Vice President
By: /s/ Surendra V. Shah
-------------------------------
Title: Vice President
UNION BANK OF SWITZERLAND
By: /s/ Cathleen Callahan
-------------------------------
Title: Vice President
By: /s/ Edward A. Aldrich
-------------------------------
Title: Vice President
4
<PAGE> 1
EXHIBIT 10.6
FIFTH AMENDMENT TO AMENDED AND RESTATED
INTERCREDITOR AGREEMENT
THIS FIFTH AMENDMENT is made as of October 20, 1995, among NORTHWESTERN
NATIONAL LIFE INSURANCE COMPANY, a Minnesota corporation, NORTHERN LIFE
INSURANCE COMPANY, a Washington corporation and THE NORTH ATLANTIC LIFE
INSURANCE COMPANY OF AMERICA, a New York corporation, each having a mailing
address at c/o Washington Square Capital, Inc., 100 Washington Square, Suite
800, Minneapolis, Minnesota 55401 (collectively, in their capacity as lenders
under the First Note Purchase Agreement, the "First Insurance Companies", and
individually, a "First Insurance Company"); NORTHERN LIFE INSURANCE COMPANY, a
Washington corporation, ROYAL MACCABEES LIFE INSURANCE COMPANY, a Michigan
corporation, THE NORTH ATLANTIC LIFE INSURANCE COMPANY OF AMERICA, a New York
corporation, FARM BUREAU LIFE INSURANCE COMPANY OF MICHIGAN, a Michigan
corporation, FB ANNUITY COMPANY, a Michigan corporation, and FARM BUREAU MUTUAL
INSURANCE COMPANY OF MICHIGAN, a Michigan corporation, each having a mailing
address at c/o Washington Square Capital, Inc., 100 Washington Square, Suite
800, Minneapolis, Minnesota 55401 (collectively, in their capacity as lenders
under the Second Note Purchase Agreement the "Second Insurance Companies",
and individually, a "Second Insurance Company"); NORTHERN LIFE INSURANCE
COMPANY, a Washington corporation and NORTHWESTERN NATIONAL LIFE INSURANCE
COMPANY, a Minnesota corporation (collectively, in their capacity as lenders
under the Third Note Purchase Agreement, the "Third Insurance Companies" and
individually, a "Third Insurance Company", and together with the First
Insurance Companies, the Second Insurance Companies and the Third Insurance
Companies sometimes collectively referred to herein as the "Insurance
Companies" and individually as an "Insurance Company"); RHODE ISLAND HOSPITAL
TRUST NATIONAL BANK; ABN AMRO BANK N.V., NEW YORK BRANCH; THE MOCATTA GROUP, A
DIVISION OF STANDARD CHARTERED BANK; FLEET PRECIOUS METALS INC.; CREDIT SUISSE,
NEW YORK BRANCH ("Credit Suisse"); DEUTSCHE BANK AG, NEW YORK BRANCH (AS
ASSIGNEE OF DEUTSCHE BANK SHARPS PIXLEY INC.) ("DBSPI"); and UNION BANK OF
SWITZERLAND ("UBS") (collectively, in their capacity as consignors under the
Consignment Agreements referred to below, the "Consignors", and individually a
"Consignor"); and CHEMICAL BANK ("Chemical").
1
<PAGE> 2
W I T N E S S E T H T H A T:
WHEREAS, the Insurance Companies, the Consignors (other than UBS) and
Chemical are parties to a certain Amended and Restated Intercreditor Agreement
dated as of August 20, 1993 (hereinafter, as amended by a certain First
Amendment dated as of November 15, 1993, a certain Second Amendment dated as
of May 16, 1994, and a certain Third Amendment dated as of September 1, 1994
and a certain Fourth Amendment dated as of February 15, 1995, the
"Intercreditor Agreement"), pursuant to which the Insurance Companies, the
Consignors (other than UBS) and Chemical have established among themselves the
priority of their security interests in the Collateral (as defined therein) of
MICHAEL ANTHONY JEWELERS, INC., a Delaware corporation ("Debtor") and have
provided for the enforcement of such security interests; and
WHEREAS, UBS has requested that it be added as a "Consignor" pursuant to the
terms of the Intercreditor Agreement as UBS will be entering into a consignment
arrangement with Debtor; and
WHEREAS, UBS is willing to assume all obligations and liabilities under the
Intercreditor Agreement as a Consignor thereunder and to comply with the
covenants and terms of such Intercreditor Agreement and any documents executed
by the Consignors in connection with the Intercreditor Agreement;
NOW, THEREFORE, in consideration of the premises and the agreements
hereinafter set forth and for other good and valuable consideration, the
receipt whereof is hereby acknowledged, the parties hereto agree as follows:
1. Capitalized terms used herein and not otherwise defined herein shall have
the meanings given to such terms in the Intercreditor Agreement.
2. UBS is hereby added as a party to the Intercreditor Agreement, with UBS to
be included as a Consignor pursuant to the terms of the Intercreditor
Agreement.
3. The Intercreditor Agreement is hereby amended so that the terms "Consignor"
and "Consignors" as used therein and herein shall include, from and after the
date hereof, UBS and UBS shall be entitled to all of the rights and benefits as
a Consignor thereunder and hereby assumes full liability for the performance
and observance of all and singular of the covenants, agreements and conditions
of the Intercreditor Agreement which are to be performed by the Consignors
thereunder.
2
<PAGE> 3
4. The third "WHEREAS" clause of the Intercreditor Agreement is hereby amended
to read as follows:
"WHEREAS, the Consignors, severally and not jointly,
may (in their sole and individual discretion) extend financial
accommodations to Debtor pursuant to certain Consignment Agreements or
Amended and Restated Consignment Agreements dated as of August 20, 1993
(January 31, 1994 in the case of Credit Suisse, September 1, 1994 in the
case of DBSPI and October 20, 1995 in the case of UBS) between Debtor and
each of the Consignors (as amended, and as the same may be amended from
time to time, the "Consignment Agreements"); and"
5. Any necessary, conforming changes to the Intercreditor Agreement occasioned
by reason of this Fifth Amendment shall be deemed to have been made.
6. This Fifth Amendment shall be binding upon the parties and their respective
successors and assigns.
7. Each of the Insurance Companies, each of the Consignors, UBS and Chemical
acknowledge and agree that, except as expressly provided herein, the terms and
provisions of the Intercreditor Agreement remain unchanged and the
Intercreditor Agreement remains in full force and effect in accordance with its
terms. The term "Agreement" as used in the Intercreditor Agreement and all
references to the Intercreditor Agreement in any other documents or agreements
between any of the parties hereto which relate to Debtor shall refer, from and
after the date hereof, to the Intercreditor Agreement as amended and
supplemented by this Fifth Amendment.
8. This Fifth Amendment shall be construed in accordance with and governed by
the laws of the State of New York, without giving effect to the conflict of
laws principles thereof.
9. This Fifth Amendment may be executed with one or more counterparts hereof,
each of which shall be deemed an original but all of which together shall
constitute one and the same instrument.
3
<PAGE> 4
IN WITNESS WHEREOF, the parties hereto have caused this Fifth Amendment to be
executed by their duly authorized officers as of the date first above written.
NORTHWESTERN NATIONAL LIFE
INSURANCE COMPANY
By: /s/ ?????
-------------------------------------
Title:___________________________________
NORTHERN LIFE INSURANCE COMPANY
By: /s/ ?????
-------------------------------------
Title:___________________________________
ROYAL MACCABEES LIFE INSURANCE
COMPANY
By: /s/ Leonard D. Davenport, CFA
-------------------------------------
Title: Vice President, Senior Portfolio Manager
THE NORTH ATLANTIC LIFE INSURANCE
COMPANY OF AMERICA
By: /s/ ?????
------------------------------------
Title:__________________________________
FARM BUREAU LIFE INSURANCE
COMPANY OF MICHIGAN
By: /s/ Steven R. Harkins
------------------------------------
Title:______________________________________
FB ANNUITY COMPANY
By: /s/ Steven R. Harkins
-------------------------------------
Title:_______________________________________
(Signatures continued on page 5)
4
<PAGE> 5
FARM BUREAU MUTUAL INSURANCE
COMPANY OF MICHIGAN
By: /s/ Steven R. Harkins
--------------------------------
Title:______________________________________
RHODE ISLAND HOSPITAL TRUST
NATIONAL BANK
By: /s/ Albert Brown
---------------------------------
Title: Senior Vice President
Address: One Hospital Trust Plaza
Providence, Rhode Island 02903
Attention: Precious Metals Dept.
Telecopier: (401) 278-7329
ABN AMRO BANK N.V., NEW YORK BRANCH
By: /s/ Jeffrey Sarfaty
------------------------------------
Title: Vice President
By: /s/ Ned Koppelson
------------------------------------
Title: Vice President
Address: 500 Park Avenue
New York, New York 10017
Attention: Jeffrey Sarfaty
Telecopier: (212) 644-6905
THE MOCATTA GROUP, A DIVISION OF
STANDARD CHARTERED BANK
By: /s/ Joseph Lizewski
------------------------------------
Title: SVP - CFO
By: /s/ ????
-------------------------------------
Title: Vice President
Address: Four World Trade Center
Suite 5200
New York, New York 10048
Attention: Randy Weinerman
Telecopier:
(Signatures continued on page 6)
5
<PAGE> 6
FLEET PRECIOUS METALS INC.
By: /s/ Eleanor Vander Mel
-------------------------------
Title: Vice President
By: /s/ ?????
---------------------------------
Title: Vice President
Address: 111 Westminster Street
Providence, Rhode Island 02903
Attention: Eleanor Vander Mel
Telecopier: (401) 278-3077
CREDIT SUISSE, NEW YORK BRANCH
By: /s/ Stanley R. Steinberg
-------------------------
Title: Associate
By: /s/ Michael A. Bloomquist
-------------------------------
Title: Associate
Address: 165 Broadway, 2nd Floor
New York, New York 10006
Attention: Stanley Steinberg
Telecopier: (212) 238-2426
DEUTSCHE BANK AG, NEW YORK BRANCH
By: /s/ Richard D. Leigh
---------------------------------
Title: Vice President
By: /s/ Surendra V. Shah
---------------------------------
Title: Vice President
Address: 31 West 52nd Street
New York, New York 10019
Attention: Jeffrey Stufsky
Telecopier:
(Signatures continued on page 7)
6
<PAGE> 7
UNION BANK OF SWITZERLAND
By: /s/ Cathleen Callahan
---------------------------------
Title: Vice President
By: /s/ Edward A. Aldrich
---------------------------------
Title: Vice President
Address: 299 Park Avenue
New York, New York 10171
Attention: Cathy Callahan
Telecopier: (212) 821-3459
CHEMICAL BANK
By: /s/ Orin D. Port
----------------------------------
Title: Vice President
By:__________________________________________
Title:_________________________________________
Address: 111 West 40th Street, 10th Fl.
New York, New York 10018
Attention: Orin D. Port
Telecopier: (212) 403-5112
CONSENTED AND AGREED TO:
MICHAEL ANTHONY JEWELERS, INC.
By: /s/ Michael A. Paolercio
--------------------------
Title: Treasurer
MFD/mh:
fran\fifthamd
7
<PAGE> 1
EXHIBIT 10.7
FIFTH AMENDMENT TO ASSIGNMENT OF
TRADEMARKS AND SERVICE MARKS AS COLLATERAL
THIS FIFTH AMENDMENT is made as of the 20 day of October, 1995, among
MICHAEL ANTHONY JEWELERS, INC., a Delaware corporation (the "Company"), each of
the Lenders (as defined below) and RHODE ISLAND HOSPITAL TRUST NATIONAL BANK, a
national banking association (the "Agent"), individually and as agent for each
of the following: RHODE ISLAND HOSPITAL TRUST NATIONAL BANK; ABN AMRO BANK
N.V., NEW YORK BRANCH; THE MOCATTA GROUP, A DIVISION OF STANDARD CHARTERED
BANK; FLEET PRECIOUS METALS INC.; CREDIT SUISSE, NEW YORK BRANCH (Credit
Suisse"); DEUTSCHE BANK AG, NEW YORK BRANCH (AS ASSIGNEE OF DEUTSCHE BANK
SHARPS PIXLEY INC.) ("DBSPI"); UNION BANK OF SWITZERLAND ("UBS") and CHEMICAL
BANK ("Chemical") (jointly and severally, the "Lenders").
W I T N E S S E T H T H A T:
WHEREAS, the Lenders (other than UBS), the Agent and the Company are
parties to a certain Assignment of Trademarks and Service Marks as Collateral
dated as of July 12, 1990 (hereinafter, as amended by a certain First Amendment
dated as of June 5, 1992, a certain Second Amendment dated as of August 20,
1993, a certain Third Amendment dated as of May 16, 1994, and a certain Fourth
Amendment dated as of September 1, 1994, the "Assignment"), pursuant to which
the Company assigned, transferred and granted the Lenders (other than UBS) and
the Agent an interest in certain Trademarks (as defined therein and as
described in Exhibit A attached hereto and thereto), which Assignment was
recorded with the United States Patent and Trademark Office on May 11, 1992 at
Reel 0864, Frame 0966; and
WHEREAS, the Company and UBS desire to add UBS as a "Lender" pursuant
to the terms of the Assignment as UBS will be entering into a consignment
arrangement with the Company; and
WHEREAS, UBS is willing to comply with the covenants and terms of such
Assignment and any documents executed by the Agent and/or the Lenders in
connection with the Assignment;
NOW, THEREFORE, in consideration of the premises and the agreements
hereinafter set forth and for good and valuable consideration, the receipt
whereof is hereby acknowledged, the parties hereto agree as follows:
1
<PAGE> 2
1. The Agent, the Lenders and the Company hereby consent to the
addition of UBS as a party to the Assignment, with UBS to be included as a
Lender pursuant to the terms of the Assignment.
2. The Assignment is hereby amended from and after the date
hereof so that the term "Lenders" as used therein and herein shall include UBS
and UBS shall be entitled to all of the rights and benefits as a Lender
thereunder and hereby assumes full liability for the performance and observance
of all and singular of the covenants, agreements and conditions of the
Assignment which are to be performed by the Lenders thereunder.
3. The first "RECITAL" of the Assignment is hereby amended to
read as follows:
"WHEREAS, the Company and each of the Lenders (other
than Chemical) are parties to certain Consignment Agreements
or Amended and Restated Consignment Agreements dated as of
August 20, 1993, (January 31, 1994 in the case of Credit
Suisse, September 1, 1994 in the case of DBSPI and October 20,
1995 in the case of UBS) (hereinafter, as the same may be
amended, modified or restated hereafter from time to time, the
"Consignment Agreements"); and"
4. Any necessary, conforming changes to the Assignment occasioned
by reason of this Fifth Amendment shall be deemed to have been made.
5. This Fifth Amendment shall be binding upon the parties and
their respective successors and assigns.
6. Each of the Company, each Lender and the Agent acknowledge and
agree that, except as expressly provided herein, the terms and provisions of
the Assignment remain unchanged and the Assignment remains in full force and
effect in accordance with its terms. The term "Assignment" as used in the
Assignment and all references to the Assignment in any other documents or
agreements between any of the parties hereto which relate to the Company shall
refer, from and after the date hereof, to the Assignment as amended and
supplemented by this Fifth Amendment.
7. This Fifth Amendment shall be construed in accordance with and
governed by the laws of the State of New York, without giving effect to the
conflict of laws principles thereof.
8. This Fifth Amendment may be executed with one or more
counterparts hereof, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
2
<PAGE> 3
IN WITNESS WHEREOF, the parties hereto have caused this Fifth
Amendment to be executed by their duly authorized officers as of the date
first above written.
MICHAEL ANTHONY JEWELERS, INC.
By: /s/ Michael A. Paolercio
Title: Treasurer
RHODE ISLAND HOSPITAL TRUST
NATIONAL BANK, INDIVIDUALLY AND AS
AGENT FOR EACH OF THE LENDERS
By: /s/ Albert Brown
Title: Senior Vice President
ABN AMRO BANK N.V., NEW YORK BRANCH
By: /s/ Jeffrey Sarfaty
Title: Vice President
By: /s/ Ned Koppelson
Title: Vice President
THE MOCATTA GROUP, A DIVISION OF
STANDARD CHARTERED BANK
By: /s/ Joseph A. Lizewski
Title: SVP-CFO
By: /s/ ?????
Title: Vice President
FLEET PRECIOUS METALS INC.
By: /s/ Eleanor Vander Mel
Title: Vice President
By: /s/ ?????
Title: Vice President
(Signatures continued on next page)
3
<PAGE> 4
CREDIT SUISSE, NEW YORK BRANCH
By: /s/ Stanley R. Steinberg
Title: Associate
By: /s/ Michael A. Bloomquist
Title: Associate
DEUTSCHE BANK AG, NEW YORK BRANCH
By: /s/ Richard D. Leigh
Title: Vice President
By: /s/ Surendra V. Shah
Title: Vice President
UNION BANK OF SWITZERLAND
By: /s/ Cathleen Callahan
Title: Vice President
By: /s/ Edward A. Aldrich
Title: Vice President
CHEMICAL BANK
By: /s/ Orin D. Port
Title: Vice President
4
<PAGE> 5
STATE OF NEW YORK
COUNTY OF WESTCHESTER
On the 20 day of October, 1995, before me personally appeared
Michael A. Paolercio, of Michael Anthony Jewelers, Inc., to me known and known
by me to be the person executing the foregoing instrument, and acknowledged
said instrument by him executed to be his free act and deed in said capacity
and the free act and deed of said corporation.
/s/ M. Frances Durden
Notary Public
My commission expires:
M. FRANCES DURDEN
NOTARY PUBLIC, STATE OF NEW YORK
NO. 02DU5050792
QUALIFIED IN WESTCHESTER COUNTY
COMMISSION EXPIRES APRIL 4, 1996
STATE OF NEW YORK
COUNTY OF NEW YORK
On the 10th day of October, 1995, before me personally appeared
JEFFREY SARFATY, VICE PRESIDENT, and
NED KOPPELSON, VICE PRESIDENT of ABN AMRO BANK N.V., New York
Branch, to me known and known by me to be the persons executing the foregoing
instrument, and acknowledged said instrument by them executed to be their free
act and deed in said capacity and the free act and deed of said bank.
/s/ PATRICIA MCELVEEN
Notary Public
My commission expires:
PATRICIA MCELVEEN
NOTARY PUBLIC, STATE OF NEW YORK
NO. 01MC5034929
QUALIFIED IN WESTCHESTER COUNTY
CERTIFICATE FILED IN NEW YORK COUNTY
COMMISSION EXPIRES OCTOBER 24, 1996
5
<PAGE> 6
STATE OF NEW YORK
COUNTY OF QUEENS
On the 5 day of October, 1995, before me personally appeared
Randy Westverns, and Joseph A. Lizewski of The Mocatta Group, a Division
of Standard Chartered Bank, to me known and known by me to be the
persons executing the foregoing instrument, and acknowledged said instrument by
them executed to be their free act and deed in said capacity and the free act
and deed of said bank.
/s/ BRIAN STUDLEY
Notary Public
My commission expires: 4/4/96
BRIAN STUDLEY
NOTARY PUBLIC, STATE OF NEW YORK
NO. 01ST5025907
QUALIFIED IN QUEENS COUNTY
COMMISSION EXPIRES APRIL 4, 1996
STATE OF RHODE ISLAND
COUNTY OF PROVIDENCE
On the 6 day of October, 1995, before me personally appeared
Eleanor M. VanderMel, Vice President, and
John H. Ream, Vice President of Fleet Precious Metals Inc., to
me known and known by me to be the persons executing the foregoing instrument,
and acknowledged said instrument by them executed to be their free act and deed
in said capacity and the free act and deed of said Fleet Precious Metals Inc.
/s/ DIANE L. HALEY
Notary Public
My commission expires: 8/30/97
STATE OF NEW YORK
COUNTY OF NEW YORK
On the 6 day of October, 1995, before me personally appeared
MICHAEL BLOOMQUIST, and STANLEY STEINBERG, of Credit Suisse, New York Branch,
to me known and known by me to be the persons executing the foregoing
instrument, and acknowledged said instrument by them executed to be their free
act and deed in said capacity and the free act and deed of said Credit Suisse,
New York Branch.
/s/ JULIE A. CHI
Notary Public
My commission expires:
JULIE A. CHI
NOTARY PUBLIC, STATE OF NEW YORK
NO. 31-5028638
QUALIFIED IN NEW YORK COUNTY
COMMISSION EXPIRES: MAY 31, 1996
6
<PAGE> 7
STATE OF NEW YORK
COUNTY OF SUFFOLK
On the 13th day of October, 1995, before me personally appeared
Richard L. Leigh, V.P. and Surendra V. Shah, V.P. of Deutsche Bank AG, New
York Branch (as assignee of Deutsche Bank Sharps Pixley Inc.), to me known and
known by me to be the persons executing the foregoing instrument, and
acknowledged said instrument by them executed to be their free act and deed in
said capacity and the free act and deed of said Deutsche Bank AG, New York
Branch. Notary Public My commission expires
ROY A. BARRERA
NOTARY PUBLIC, STATE OF NEW YORK
NO. 4795014
QUALIFIED IN SUFFOLK COUNTY
COMMISSION EXPIRES MAY 31, 1997
STATE OF NEW YORK
COUNTY OF NASSAU
On the day of October, 1995, before me personally appeared
Cathleen Callahan, V.P. and Edward F. Aldrich, V.P. of Deutsche Bank AG, New
York Branch (as assignee of Deutsche Bank Sharps Pixley Inc.), to me known and
known by me to be the persons executing the foregoing instrument, and
acknowledged said instrument by them executed to be their free act and deed in
said capacity and the free act and deed of said Deutsche Bank AG, New York
Branch. Notary Public My commission expires
/s/ Susan F. Altamore
---------------------------
Notary Public
My commission expires:
SUSAN F. ALTAMORE
NOTARY PUBLIC, STATE OF NEW YORK
NO. 01AL5020142
QUALIFIED IN NASSAU COUNTY
COMMISSION EXPIRES NOVEMBER 8, 1995
STATE OF NEW YORK
COUNTY OF WESTCHESTER
On the 6 day of October, 1995, before me personally appeared
Orin Port, Vice President of Chemical Bank, to me known and known by me to be
the persons executing the foregoing instrument, and acknowledged said
instrument by him executed to be free act and deed in said capacity and the
free act and deed of said Chemical Bank.
/s/ M. Frances Durden
----------------------------------
Notary Public
My commission expires:
M. FRANCES DURDEN
NOTARY PUBLIC, STATE OF NEW YORK
NO. 02DU5050792
QUALIFIED IN WESTCHESTER COUNTY
COMMISSION EXPIRES APRIL 4, 1996
MFD/MH
FRAN\T&S
7
<PAGE> 1
EXHIBIT 10.8
SEVENTH AMENDMENT TO AMENDED AND
RESTATED CONSIGNMENT AGREEMENT
DATED AS OF AUGUST 20, 1993
---------------------------
THIS SEVENTH AMENDMENT is made as of the 20th day of October, 1995,
between RHODE ISLAND HOSPITAL TRUST NATIONAL BANK, a national banking
association with its principal office at One Hospital Trust Plaza, Providence,
Rhode Island 02903 ("Consignor") and MICHAEL ANTHONY JEWELERS, INC., a
Delaware corporation with its principal office at 115 South MacQuesten Parkway,
Mount Vernon, New York 10550 ("Consignee").
W I T N E S S E T H T H A T:
- - - - - - - - - - - - - -
WHEREAS, Consignor and Consignee are parties to a certain Amended and
Restated Consignment Agreement dated as of August 20, 1993 (hereinafter, as
amended by a certain First Amendment dated as of September 24, 1993, a letter
agreement dated January 27, 1994, a certain Second Amendment dated as of May
16, 1994, a certain Third Amendment dated as of July 26, 1994, a certain
additional Third Amendment dated as of September 1, 1994, a certain Fourth
Amendment dated as of November 22, 1994, a certain Fifth Amendment dated as of
February 15, 1995 and a certain Sixth Amendment dated as of April 28, 1995,
called the "Consignment Agreement"), relating to the consignment by Consignor
to Consignee of Precious Metal (as defined therein); and
WHEREAS, Consignor and Consignee desire to further amend and modify
the Consignment Agreement in certain respects;
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
1. The definition of "Security Agreement" in Section 1 of the
Consignment Agreement is hereby amended to read as follows:
"Security Agreement" shall mean that certain Amended and
Restated Agreement dated as of August 20, 1993, as amended, modified
or restated from time to time, among Consignor, individually and
as agent for itself, ABN AMRO Bank N.V., New York Branch ("ABN"),
Fleet Precious Metals Inc. ("FPM"), The Mocatta Group, a Division of
Standard Chartered Bank ("Mocatta"), Credit Suisse, New York Branch
("Credit Suisse"), Deutsche Bank AG, New York Branch
1
<PAGE> 2
(as assignee of Deutsche Bank Sharps Pixley Inc.) ("DBSPI") and
Union Bank of Switzerland, New York Branch ("UBS").
2. Subsection 13(m) of the Consignment Agreement is hereby amended to
read as follows:
"(m) Occurrence of an event of default under any credit, loan or
consignment agreement to which Consignee is a party, as amended or
modified from time to time, including, without limitation, (i) that
certain Note Purchase Agreement dated as of December 1, 1987
between Consignee and Northwestern National Life Insurance
Company, Northern Life Insurance Company and The North Atlantic Life
Insurance Company of America (collectively, the 'First Insurance
Companies'), (ii) that certain Note Purchase Agreement dated May 1,
1992 between Consignee and Northern Life Insurance Company,
Royal Maccabees Life Insurance Company, The North Atlantic Life
Insurance Company of America, Farm Bureau Life Insurance Company of
Michigan, FB Annuity Company and Farm Bureau Mutual Insurance
Company of Michigan (collectively, the 'Second Insurance
Companies'), (iii) that certain Note Purchase Agreement dated as of
February 15, 1995 between Consignee and Northwestern National Life
Insurance Company and Northern Life Insurance Company (collectively,
the 'Third Insurance Companies'), (iv) those certain Consignment
Agreements or Amended and Restated Consignment Agreements
dated as of August 20, 1993 between Consignee and each of ABN,
Mocatta and FPM, respectively, (v) any promissory note (including,
without limitation, that certain promissory note of Consignee in
favor of Chemical Bank dated September 12, 1994) and/or agreements in
favor of Chemical Bank, (vi) that certain Consignment Agreement
dated as of January 31, 1994 between Consignee and Credit Suisse,
(vii) that certain Consignment Agreement dated as of September 1,
1994 between Consignee and DBSPI, and (viii) that certain Consignment
Agreement dated as of October 20, 1995 between Consignee and
UBS."
3. Schedule B attached to the Consignment Agreement is hereby deleted and
Schedule B attached hereto is hereby added and made a part of the Consignment
Agreement as Schedule B thereto.
4. Consignee and Consignor each agree that, except as expressly provided
herein, the terms and provisions of the Consignment Agreement remain unchanged
and the Consignment Agreement remains in full force and effect in accordance
with its terms. The term "Agreement" as used in the Consignment Agreement and
all references to the Consignment Agreement in any other documents or
agreements by and between any of the parties
2
<PAGE> 3
hereto which relate to Consignee shall refer, from and after the date hereof,
to the Consignment Agreement as amended and supplemented by this Seventh
Agreement.
5. Consignee hereby ratifies and reaffirms that (i) the representations
and warranties contained in the Consignment Agreement, as amended by the terms
hereof, are true and correct as of the date hereof, except that references to
financial statements shall refer to the latest financial statements furnished
pursuant to the Consignment Agreement and (ii) no Event of Default (as defined
in the Consignment Agreement) nor any event which with notice or the lapse of
time, or both, would constitute an Event of Default exists as of the date
hereof.
IN WITNESS WHEREOF, each of the parties hereto has caused this
instrument to be executed in several counterparts, each of which shall be
deemed to be an original as of the day and year first above written.
RHODE ISLAND HOSPITAL TRUST
NATIONAL BANK
Consignor
By: /s/ Albert Brown
------------------------
Title: Sr. Vice President
MICHAEL ANTHONY JEWELERS, INC.
Consignee
By: /s/ Michael A. Paolercio
------------------------
Title: Sr. Vice President
3
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The Schedule contains summary financial information extracted from the financial
statements for Michael Anthony Jewelers, Inc. and is qualified in its entirety
by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-27-1996
<PERIOD-START> JUL-30-1995
<PERIOD-END> OCT-28-1995
<CASH> 129
<SECURITIES> 0
<RECEIVABLES> 41,494
<ALLOWANCES> (1,649)
<INVENTORY> 21,274
<CURRENT-ASSETS> 62,615
<PP&E> 33,335
<DEPRECIATION> 15,563
<TOTAL-ASSETS> 82,486
<CURRENT-LIABILITIES> 16,646
<LONG TERM DEBT> 18,827
<BONDS> 0
<COMMON> 9
0
0
<OTHER-SE> 46,019
<TOTAL-LIABILITY-AND-EQUITY> 82,486
<SALES> 47,037
<TOTAL-REVENUES> 0
<CGS> 38,789
<TOTAL-COSTS> 8,248
<OTHER-EXPENSES> (63)
<PROVISION> 90
<INTEREST-EXPENSE> 913
<INCOME-PRETAX> 1,967
<INCOME-TAX> 776
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,191
<EPS-PRIMARY> .14
<EPS-DILUTED> 0
</TABLE>
