Exhibit 10.20
SECURITY AGREEMENT
AGREEMENT made as of the 31st day of March, 2003, between MICHAEL
ANTHONY JEWELERS, INC., a Delaware corporation ("Debtor"), and SOVEREIGN
PRECIOUS METALS, LLC, a Pennsylvania limited liability company ("Secured
Party"), as collateral agent for the ratable benefit of the Banks (as defined in
the Consignment Agreement).
WHEREAS, Debtor, the Banks and Secured Party are parties to a certain
Consignment Agreement of even date herewith (the "Consignment Agreement");
WHEREAS, Secured Party, for the ratable benefit of the Banks, desires
to maintain security for all indebtedness, liabilities and obligations of Debtor
to the Banks and the Secured Party, now existing or hereafter arising, under the
Consignment Agreement, and Debtor is willing to grant such security interest to
the Secured Party on the terms and conditions hereinafter set forth;
NOW, THEREFORE, for good and valuable consideration, the receipt
whereof is hereby acknowledged, the parties hereto hereby agree as follows:
SECTION 1. THE SECURITY INTERESTS.
In order to secure the due and punctual payment and performance of all
Obligations (as defined in the Consignment Agreement), Debtor hereby grants to
Secured Party, for the ratable benefit of the Banks, a continuing security
interest in the following described personal property whether now owned or
hereafter acquired or arising and wherever located (hereinafter called the
"Collateral"):
All gold bullion, gold granule and other gold or precious
metals in whatever form including all substitutions, replacements and
products in which any such gold or other precious metals are
incorporated or into which such gold or other precious metals are
processed or converted, whether now owned or hereafter acquired by
Debtor or in which Debtor now or hereafter acquires an interest, and
all additions and accessions thereto and all replacements and
substitutions therefor and all proceeds and products of all of the
foregoing, wherever situated.
All inventory now owned or hereafter acquired by Debtor or in
which Debtor now or hereafter acquires an interest, including all
merchandise, returned and repossessed goods, raw materials, goods in
process, finished goods and proceeds therefor (hereinafter called the
"Inventory"), and all accounts of Debtor, including all accounts
receivable, notes, drafts, acceptances, chattel paper, electronic
chattel paper and other forms of obligations and receivables now owned
or hereafter arising from Inventory sold or otherwise disposed of by
Debtor and all proceeds and products thereof (hereinafter called the
"Customer Receivables").
The security interests granted pursuant to this Section 1 (the
"Security Interests") are granted as security only and shall not subject Secured
Party to, or transfer or in any way affect or modify, any obligation or
liability of Debtor under any of the Collateral or any transaction which gave
rise thereto.
SECTION 2. FILING; FURTHER ASSURANCES. Debtor will, at its expense,
execute, deliver, file and record (in such manner and form as Secured Party may
require), or permit Secured Party to file and record (provided that so long as
an Event of Default shall not have occurred, the Secured Party shall first
request the Debtor to immediately take such action before taking such action on
its own), any financing statements, specific assignment or other paper that may
be necessary or desirable, or that Secured Party may reasonably request, in
order to create, preserve, perfect or validate any Security Interest or to
enable Secured Party to exercise and enforce its rights hereunder with respect
to any of the Collateral. Secured Party may at any time or from time to time, at
its sole discretion, require Debtor to cause any chattel paper included in the
Customer Receivables to be delivered to Secured Party, or any agent or
representative designated by it, or to cause a legend referring to the Security
Interests to be placed on such chattel paper and upon any ledgers or other
records concerning the Customer Receivables.
SECTION 3. REPRESENTATIONS, WARRANTIES AND COVENANTS OF DEBTOR. Debtor
hereby represents, warrants and covenants as follows:
A. Debtor is, or to the extent that certain of the Collateral
is to be acquired after the date hereof, will be, the owner of the
Collateral free from any adverse lien, security interest or
encumbrance, and that Debtor will defend the Collateral against all
claims and demands of all persons at any time claiming any interest
therein, excluding, however, from the operation of the foregoing
restrictions the following:
(i) Liens created under this Security Agreement and
the other Loan Documents;
(ii) Permitted Liens;
(iii) Liens existing on the date hereof and described
on SCHEDULE 3 hereto
(iv) Liens arising in connection with capitalized
leases; provided that no such Lien shall extend to or cover
any collateral or assets other than the assets subject to such
capitalized leases;
(v) purchase money Liens upon or in real property or
equipment acquired or held by the Buyer or any of its
Subsidiaries in the ordinary course of business to secure the
purchase price of such property or equipment or to secure
indebtedness incurred solely for the purpose of financing the
acquisition of any such property or equipment to be subject to
such Liens, or Liens existing on any such property or
equipment at the
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time of acquisition (other than any such Liens created in
contemplation of such acquisitions that do not secure the
purchase price), or extensions, renewals or replacements of
any of the foregoing for the same or lesser amount; provided,
however, that no such Liens shall extend to or cover any
property other than the property or equipment being acquired,
and no such extension, renewal or replacement shall extend to
or cover any property not theretofore subject to the Lien
being extended, renewed or replaced;
(vi) the replacement, extension or renewal of any
Lien permitted by clause (iii) above upon or in the same
property theretofore subject thereto or the replacement,
extension or renewal (without increase in the amount or change
in any direct or contingent obligor) of the indebtedness
secured thereby; and
(vii) Liens in favor of Mitsui & Co. Precious Metals,
Inc. ("Mitsui") pursuant to the term of that certain Security
Agreement of even date herewith of Debtor in favor of Mitsui
(the "Mitsui Security Agreement").
B. Except as identified on SCHEDULE 3, no financing statement
covering the Collateral is on file in any public office, other than the
financing statements filed pursuant to this Security Agreement and the
Mitsui Security Agreement..
C. That all additional information, representations and
warranties contained in EXHIBIT A attached hereto and made a part
hereof are true, accurate and complete.
D. Debtor will promptly pay any and all taxes, assessments and
governmental charges upon the Collateral prior to the date penalties or
liens are attached thereto, except to the extent that such taxes,
assessments and charges shall be contested in good faith by Debtor in
appropriate proceedings. Such amount which is being contested shall be
fully reserved on the financial statements of Debtor in accordance with
generally accepted accounting principles.
E. Debtor will immediately notify Secured Party of any event
causing a substantial loss or diminution in the value of all or any
material part of the Collateral and the amount or an estimate of the
amount of such loss or diminution.
F. Debtor will not sell or offer to sell or otherwise transfer
or dispose of the Collateral or any interest therein without the prior
written consent of the Secured Party; provided, however, that as long
as no Event of Default has occurred and is continuing and subject to
the terms of the Consignment Agreement, Debtor may, without the consent
of the Secured Party, sell its Inventory in the ordinary course of its
business.
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G. Except for the Liens described in Subsection 3.A hereof,
Debtor will keep the Collateral free from any adverse lien, security
interest or encumbrance and in good order and repair and will not waste
or destroy the Collateral or any part thereof; and Debtor will not use
the Collateral in violation of any statute or ordinance.
H. Debtor will provide Secured Party with not less than thirty
(30) days' prior written notice of any change in (i) the name of
Debtor, and (ii) any change in the principal office of Debtor or the
office where Debtor maintains its books and records pertaining to the
Collateral.
I. Debtor shall maintain complete and accurate books and
records and shall make all necessary entries therein to reflect the
costs, values and locations of the Collateral and the transactions and
documents giving rise to Customer Receivables and all payments, credits
and adjustments thereof. Debtor shall keep Secured Party fully informed
as to the location of all such books and records and shall permit
Secured Party and its agents and representatives to have full, complete
and unrestricted access thereto at any reasonable time and to inspect,
examine and make copies of all books and records, data storage and
processing media, software, printouts, journals, orders, receipts,
invoices, correspondence and other documents and written or printed
matter related to any of the Collateral. Secured Party's rights
hereunder shall be enforceable at law or in equity, and Debtor consents
to the entry of judicial orders or injunctions enforcing specific
performance of such obligations hereunder.
J. Debtor shall permit Secured Party and its agents or
representatives to inspect any or all of the Collateral at all
reasonable times.
K. Debtor shall keep the Collateral insured against such
perils, in such amounts and with such insurance companies as Secured
Party may reasonably require. All insurance policies (including
insurance covering Customer Receivables) shall name Secured Party as
additional insured and as loss payee, as its interests may appear and
shall provide for not less than thirty (30) days' advance notice in
writing to Secured Party of any cancellation thereof. Secured Party
shall have the right (but shall be under no obligation) to pay any of
the premiums on such insurance. Any premiums paid by Secured Party
shall, if Secured Party so elects, be considered an advance at the
highest rate of interest provided in the Consignment Agreement, and all
such accrued interest shall be payable on demand. Debtor expressly
authorizes its insurance carriers to pay proceeds of all insurance
policies covering any or all of the Collateral directly to the Secured
Party.
L. Debtor represents and warrants that all books and records
concerning the Collateral are located at the locations listed in
EXHIBIT A hereto, and that all Inventory of Debtor is located at the
locations listed in EXHIBIT A hereto. Debtor shall immediately notify
Secured Party of any new locations of Inventory not
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specified hereinabove, and if any such location is on leased or
mortgaged premises, promptly furnish Secured Party with landlord's or
mortgagee's waivers in form and substance satisfactory to Secured
Party.
M. Debtor agrees to cooperate and join, at its expense, with
the Secured Party in taking such steps as are necessary, in Secured
Party's judgment, to perfect or continue the perfected status of the
security interests granted hereunder, including, without limitation,
the execution and delivery of any financing statements, amendments
thereto and continuation statements, the delivery of chattel paper to
Secured Party, and the obtaining of landlord's and mortgagees' waivers
required by Secured Party.
N. Debtor agrees to reimburse the Secured Party on demand for
out-of-pocket expenses incurred in connection with Secured Party's
exercise of its rights under this Security Agreement. Debtor agrees to
indemnify Secured Party and hold it harmless against any costs,
expenses, losses, damages and liability (including reasonable
attorney's fees) incurred in connection with this Security Agreement,
other than as a result of Secured Party's gross negligence or willful
misconduct.
SECTION 4. RECORDS RELATING TO COLLATERAL. Debtor will keep its records
concerning the Collateral, including the Customer Receivables and all chattel
paper included in the Customer Receivables, at its principal office identified
in EXHIBIT A, or at such other place or places of business as the Secured Party
may approve in writing. Debtor will hold and preserve such records and chattel
paper and will permit representatives of Secured Party at any time during normal
business hours to examine and inspect the Collateral and to take abstracts from
such records and chattel paper, and will furnish to Secured Party such
information and reports regarding the Collateral as Secured Party may from time
to time reasonably request.
SECTION 5. COLLECTIONS WITH RESPECT TO CUSTOMER RECEIVABLES. Debtor
will, at its expense, as agent for Secured Party and subject at all times to
Secured Party's right to give directions and instructions and subject to the
terms of the Intercreditor Agreement (as defined in the Consignment Agreement):
(i) endeavor to collect or cause to be collected from
customers indebted on Customer Receivables, as and when due, any and
all amounts, including interest, owing under or on account of each
Customer Receivable;
(ii) compromise and settle any dispute relating to any
Customer Receivable; and
(iii) take or cause to be taken such appropriate action to
repossess goods, the sale of which gave rise to any Customer
Receivable, or to enforce any rights or liens under Customer
Receivables, as Debtor or Secured Party may deem proper, and in the
name of Debtor, or Secured Party, as Secured Party may deem proper;
provided that (x) in the absence of specific instructions from Secured
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Party, Debtor will use its best judgment to protect the interests of
the Secured Party, and (y) Debtor shall not be required under this
Section 5 to take any action which would be contrary to any applicable
law or court order.
SECTION 6. GENERAL AUTHORITY. Debtor hereby irrevocably appoints
Secured Party, and its President and each of its Vice Presidents, Debtor's true
and lawful attorney-in-fact, with full power of substitution, in the name of
Debtor, at Debtor's expense, to the extent permitted by law to exercise, at any
time and from time to time to do all acts and things which Secured Party deems
necessary or desirable to effectuate its rights and the rights of the Banks
under this Security Agreement including, but not limited to, (a) executing and
filing financing statements on behalf of Debtor and otherwise perfecting any
security interest granted hereby, (b) corresponding and negotiating directly
with insurance carriers and customers indebted on Customer Receivables (as
further described in Section 5 above) and (c) while any Event of Default has
occurred and is continuing, to have and exercise all or any of the following
powers with respect to all or any of the Collateral:
(i) to demand, sue for, collect, receive and give acquittance
for any and all monies due or to become due upon or by virtue thereof;
(ii) to receive, take, endorse, assign and deliver any and all
checks, notes, drafts, documents and other negotiable and
non-negotiable instruments and chattel paper taken or received by
Secured Party in connection therewith;
(iii) to settle, compromise, compound, prosecute or defend any
action or proceeding with respect thereto;
(iv) to sell, transfer, assign or otherwise deal in or with
the same or the proceeds or avails thereof or the related goods
securing the Customer Receivables, as fully and effectually as if
Secured Party were the absolute owner thereof;
(v) to extend the time of payment of any or all thereof and to
make any allowance and other adjustments with reference thereto;
(vi) to discharge any taxes, liens, security interests or
other encumbrances at any time placed thereon; and
(vii) to receive any and all mail addressed to Debtor;
provided that Secured Party shall give Debtor not less than ten (10) days' prior
written notice of the time and place of any sale or other intended disposition
of any of the Collateral, except any Collateral which is perishable or threatens
to decline speedily in value or is of a type customarily sold on a recognized
market. Secured Party and Debtor agree that such notice constitutes "reasonable
notification" within the meaning of Sections 9-611 and 9-612(b) of the Uniform
Commercial Code.
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SECTION 7. EVENTS OF DEFAULT. Debtor shall be in default under this
Security Agreement upon the occurrence of any one of the following events
(herein referred to as an "Event of Default"):
(a) any representation or warranty made by Debtor to Secured
Party herein or in the Consignment Agreement shall prove to be false or
misleading in any material respect;
(b) default by Debtor in the due observance or performance of
any covenant or agreement herein contained and such default shall
continue unremedied for ten (10) days after written notice thereof by
Secured Party to Debtor;
(c) any default in the payment when due of any indebtedness of
Debtor to the Banks or Secured Party, including, without limitation,
indebtedness, obligations or liabilities under the Consignment
Agreement;
(d) the occurrence of any Event of Default under the
provisions of the Consignment Agreement;
(e) any attachment (other than Liens described in Subsection
3.A hereof) on any of the Collateral shall remain in existence for a
period of ten (10) days from the date such attachment was made; or
(f) the occurrence of any other event of default under any of
the Obligations.
SECTION 8. REMEDIES UPON EVENT OF DEFAULT. If any Event of Default
shall have occurred and be continuing, the Secured Party may exercise all the
rights and remedies of a secured party under the Uniform Commercial Code
(whether or not the Uniform Commercial Code is in effect in the jurisdiction
where such rights and remedies are exercised) and any and all other remedies and
rights at law or equity and, in addition, Secured Party may, without being
required to give any notice, except as herein provided or as may be required by
mandatory provisions of law, (i) apply the cash, if any, then held by it as
Collateral in the manner specified in Section 9, and (ii) if there shall be no
such cash or if such cash shall be insufficient to pay all the Obligations in
full, sell the Collateral, or any part thereof, at public or private sale or at
any broker's board, for cash, upon credit or for future delivery, and at such
price or prices as Secured Party may deem satisfactory. Secured Party shall have
the right to take immediate possession of the Collateral and any and all
Consigned Precious Metal (as defined in the Consignment Agreement) and for the
purpose may, so far as Debtor may give authority therefor, enter upon any
premises on which any Collateral or Consigned Precious Metal is located without
notice and remove the same therefrom. Debtor hereby expressly consents to such
repossession of the Collateral and waives all rights to demand and notice with
respect thereto. Secured Party may require Debtor to assemble all or part of the
Collateral and make it available to Secured Party at a place to be designated by
Secured Party which is reasonably convenient. Secured Party may be the purchaser
of any or all of the Collateral so sold at any public sale (or, if the
Collateral is of a
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type customarily sold in a recognized market or is a type which is the subject
of widely distributed standard price quotations, at any private sale), and may
apply all or any portion of the Obligations towards the payment for any
Collateral purchased by Secured Party, and may thereafter hold the same,
absolutely, free from any right or claim of whatsoever kind. Upon any such sale
Secured Party shall have the right to deliver, assign and transfer to the
purchaser thereof the Collateral so sold. Each purchaser at any such sale shall
hold the Collateral so sold absolutely, free from any claim or right of
whatsoever kind, including any equity or right of redemption. Debtor, to the
extent permitted by law, hereby specifically waives all rights of redemption,
stay or appraisal which it has or may have under any rule of law or statute now
existing or hereafter adopted. Secured Party shall give ten (10) days' written
notice of its intention to make any such public or private sale or sale at a
broker's board. Such notice, in case of a public sale, shall state the time and
place fixed for such sale, and in case of a sale at a broker's board, shall
state the board at which such sale is to be made and the day on which the
Collateral, or a portion thereof so being sold, will first be offered for sale
at such board. Any such public sale shall be held at such time or times within
ordinary business hours and at such place or places as Secured Party may fix in
the notice of such sale. At any such sale the Collateral may be sold in one lot
as an entirety or in separate parcels, as Secured Party may determine. Secured
Party shall not be obligated to make any such sale pursuant to any such notice.
Secured Party may, without notice or publication, adjourn any public or private
sale or cause the same to be adjourned from time to time by announcement at the
time and place fixed for the sale, and such sale may be made at any time or
place to which the same may be so adjourned. In case of any sale of all or any
part of the Collateral on credit or for future delivery, the Collateral so sold
may be retained by Secured Party until the selling price is paid by the
purchaser thereof, but Secured Party shall not incur any liability in case of
the failure of such purchaser to take up and pay for the Collateral so sold and,
in case of any such failure, such Collateral may again be sold upon like notice.
Secured Party, instead of exercising the power of sale herein conferred upon it,
may proceed by a suit or suits at law or in equity to foreclose the Security
Interests and sell the Collateral, or any portion thereof, under a judgment or
decree of a court or courts of competent jurisdiction. If any Event of Default
shall have occurred and be continuing, for purposes of exercising the rights and
powers granted to Secured Party in this Section 8 or by applicable law, and
until all Obligations are satisfied in full, Debtor hereby grants to Secured
Party an irrevocable license to use all trademarks and trade names (and to sell
goods bearing any such trademark or trade name), registered or unregistered,
which are now or hereafter owned by or licensed to Debtor or in which Debtor now
has or hereafter acquires an interest.
SECTION 9. APPLICATION OF PROCEEDS. The proceeds of any sale of, or
other realization upon, all or any part of the Collateral shall be applied in
the following order of priorities:
first, to pay the expenses of such sale or other realization,
including out-of-pocket expenses of Secured Party and reasonable fees
and expenses of its agents and counsel, and all expenses, liabilities
and advances incurred or made by Secured Party in connection therewith,
and any other unreimbursed expenses for which Secured Party is to be
reimbursed pursuant to Section 10;
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second, apply all proceeds hereunder (except proceeds applied
pursuant to clause first above) to the payment of the Obligations in
such order as Secured Party shall determine; and
finally, to pay to Debtor, or its successors or assigns, or as
a court of competent jurisdiction may direct, any surplus then
remaining from such proceeds.
SECTION 10. EXPENSES. Debtor will forthwith upon demand pay to Secured
Party:
(i) the amount of any taxes which Secured Party may have been
required to pay by reason of the Security Interests (including any
applicable transfer taxes) or to free any of the Collateral from any
lien thereon; and
(ii) the amount of any and all reasonable out-of-pocket
expenses, including the reasonable fees and disbursements of its
counsel and of any agents not regularly in its employ, which Secured
Party may incur in connection with (w) the preparation and
administration of this Security Agreement and related documents, (x)
the collection, sale or other disposition of any of the Collateral, (y)
the exercise by Secured Party of any of the powers conferred upon it
hereunder, or (z) any default on Debtor's part hereunder.
SECTION 11. NONABATEMENT OF SECURITY INTERESTS; TERMINATION. (a) The
Security Interests granted hereby shall not abate or lapse, but shall continue
in full force and effect so as to secure all Obligations, whether now existing
or hereafter arising, without regard to whether any or no such liability,
obligation or indebtedness shall be outstanding at any particular time.
(b) Upon termination of the Consignment Agreement and satisfaction in
full of all Obligations, the Security Interests granted under this Agreement and
under any related instruments shall terminate and be released. In connection
therewith, the Secured Party will send to Debtor termination statements for all
Uniform Commercial Code financing statements of record filed by it hereunder,
and will take all reasonable actions, and do all other things reasonably
necessary to release the Security Interest granted to it hereunder.
SECTION 12. RIGHT OF SET-OFF. Debtor hereby grants to Secured Party a
lien, security interest and a right of setoff as security for all liabilities
and obligations of the Debtor to the Banks and to the Secured Party, whether now
existing or hereafter arising, upon and against all deposits, credits,
collateral and property, now or hereafter in the possession, custody,
safekeeping or control of Secured Party or any entity under the control of
Secured Party, or in transit to any of them. At any time, without demand or
notice, Secured Party may set off the same or any part thereof and apply the
same to any liability or obligation of Debtor even though unmatured and
regardless of the adequacy of any other collateral securing the Consignment
Agreement. ANY AND ALL RIGHTS TO REQUIRE SECURED PARTY TO EXERCISE ITS RIGHTS OR
REMEDIES WITH RESPECT TO ANY OTHER COLLATERAL WHICH SECURES THE CONSIGNMENT
AGREEMENT, PRIOR TO EXERCISING ITS RIGHT OF SETOFF WITH RESPECT TO SUCH
DEPOSITS, CREDITS OR OTHER PROPERTY OF
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DEBTOR, ARE HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED. Secured Party
shall not be required to marshal any present or future security for, or
guarantees of, the obligations or to resort to any such security or guarantee in
any particular order and Debtor waives, to the fullest extent that it lawfully
can, (a) any right it might have to require Secured Party to pursue any
particular remedy before proceeding against it and (b) any right to the benefit
of, or to direct the application of the proceeds of any collateral until the
obligations are paid in full.
SECTION 13. NOTICES. All notices, requests, demands and other
communications provided for hereunder shall be in writing and in the manner set
forth in the Consignment Agreement.
SECTION 14. WAIVERS, NON-EXCLUSIVE REMEDIES. No failure on the part of
Secured Party to exercise, and no delay in exercising, and no course of dealing
with respect to, any right, power or remedy under this Security Agreement shall
operate as a waiver thereof; nor shall any single or partial exercise by Secured
Party of any right, power or remedy under this Security Agreement preclude any
other or further exercise thereof or the exercise of any other right, power or
remedy. The remedies in this Security Agreement are cumulative and are not
exclusive of any other remedies provided by law.
SECTION 15. CHANGES IN WRITING. Neither this Security Agreement nor any
provision hereof may be changed, waived, discharged or terminated orally but
only by a statement in writing signed by the party against which enforcement of
the change, waiver, discharge or termination is sought.
SECTION 16. NEW YORK LAW; MEANING OF TERMS. This Security Agreement
shall be construed in accordance with and governed by the laws of the State of
New York, except to the extent that remedies provided by the laws of any State
other than New York are governed by the laws of said State. Unless otherwise
defined herein, or unless the context otherwise requires, all terms used herein
which are defined in the New York Uniform Commercial Code have the meanings
therein stated.
SECTION 17. SEVERABILITY. If any provision hereof is invalid or
unenforceable in any jurisdiction, the other provisions hereof shall remain in
full force and effect in such jurisdiction and shall be liberally construed in
favor of Secured Party in order to carry out the intentions of the parties
hereto as nearly as may be possible; and the invalidity or unenforceability of
any provision hereof in any jurisdiction shall not affect the validity or
enforceability of such provision in any other jurisdiction.
SECTION 18. HEADINGS. The headings in this Security Agreement are for
the purposes of reference only and shall not limit or otherwise affect the
meaning hereof.
SECTION 19. PARTIES IN INTEREST. All the terms and provisions of this
Security Agreement shall be binding upon and inure to the benefit of and be
enforceable by the respective successors and assigns of the parties hereto,
whether so expressed or not.
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SECTION 20. COUNTERPARTS. This Security Agreement may be executed
simultaneously with one or more counterparts thereof, each of which shall be
deemed an original but all of which together shall constitute one and the same
instrument.
SECTION 21. CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL. Debtor
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 to 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 Debtor's Obligations under the
Consignment Agreement or with respect to this Security Agreement, and expressly
waives any and all objections Debtor may have as to venue in any of such courts.
DEBTOR AND SECURED PARTY EACH WAIVES TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM BROUGHT BY EITHER OF THEM AGAINST THE OTHER ON ANY MATTER
WHATSOEVER (INCLUDING, WITHOUT LIMITATION, ANY ACTION, PROCEEDING OR
COUNTERCLAIM ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS SECURITY
AGREEMENT, ANY OTHER DOCUMENTS EXECUTED IN CONNECTION HEREWITH OR ANY OF THE
TRANSACTIONS CONTEMPLATED HEREIN OR THEREIN). No party to this Security
Agreement, including but not limited to any assignee or successor of a party,
shall seek a jury trial in any lawsuit, proceeding, counterclaim, or any other
litigation procedure based upon, or arising out of, this Security Agreement, any
related instruments, any Collateral or the dealings or the 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 SECTION 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 ANY OTHER PARTY THAT THE
PROVISIONS OF THIS SECTION WILL NOT BE FULLY ENFORCED IN ALL INSTANCES.
SECTION 22. ADDITIONAL DEFINITIONS. For purposes herein, the following
terms shall have the following meanings:
(a) "Lien" means any mortgage, pledge, hypothecation, assignment,
deposit arrangement, encumbrance, lien (statutory or other) or preference,
priority or other security interest of any kind or nature whatsoever (including,
without limitation, any conditional sale or other title retention agreement, any
financing lease having substantially the same effect as any of the foregoing,
any assignment or other conveyance of any right to receive income and any
assignment of receivables with recourse against the assignor), any filing of a
financing statement as debtor under the Uniform Commercial Code or any similar
statute and any agreement to give or make any of the foregoing.
(b) "Permitted Lien" means such of the following as to which no
enforcement, collection, execution, levy or foreclosure proceeding shall have
been commenced: (i) Liens for taxes, assessments and governmental charges or
levies to the extent not required to be paid under Section 12(c) of the
Consignment Agreement; (ii) Liens imposed by law, such as materialmen's
mechanics', carriers', workmen's and repairmen's Liens and other similar Liens
arising in the
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ordinary course of business securing obligations that (x) are not overdue for a
period of more than 30 days and (y) either individually or when aggregated with
all other Permitted Liens outstanding on any date of determination, do not
materially affect the use or value of the property to which they relate or do
not, in the aggregate, have a material adverse effect on the assets, properties
condition (financial or otherwise) or prospects of the Debtor; (iii) pledges or
deposits to secure obligations under workers' compensation laws or similar
legislation or to secure public or statutory obligations; (iv) easements, rights
of way and other encumbrances on title to real property that do not render title
to the property encumbered thereby unmarketable or materially adversely affect
the use of such property for its present purposes; and (v) those Financing
Statements of record listed on SCHEDULE 3.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, this Security Agreement has been executed by the
parties hereto all as of the day and year first above written.
MICHAEL ANTHONY JEWELERS, INC.
By
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Print Name
----------------------------
Title
---------------------------------
SOVEREIGN PRECIOUS METALS, LLC
By
---------------------------------------
Print Name
----------------------------
Title
---------------------------------
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EXHIBIT A
ADDITIONAL REPRESENTATIONS AND WARRANTIES
1. The exact title of Debtor is: Michael Anthony Jewelers, Inc. Debtor
has not used any other name within the previous ten (10) years. Debtor's Federal
Tax Identification Number is #13-2910285. Debtor's state of formation is
Delaware and Debtor's organizational identification number is #[].
2. Debtor uses in its business and owns the following trade names:
___________________________.
3. Debtor is not required to qualify to transact business in any
jurisdiction other than [New York and Delaware].
4. The chief executive office of Debtor is: 115 South MacQuesten
Parkway, Mount Vernon, New York 10550-1724.
5. The mailing address of Debtor is: 115 South MacQuesten Parkway,
Mount Vernon, New York 10550-1724.
6. Debtor has places of business at the following locations:
___________________________.
7. In addition to the places of business set forth in number 6 above,
Debtor owns or has an interest in [inventory] located elsewhere at the locations
set forth on SCHEDULE 2, and SCHEDULE 3 of the Consignment Agreement.
[8. Debtor owns property consisting of fixtures at the following
locations:
Address Record Owner of Real Estate]
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SCHEDULE 3
Place of Filing
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PLACE OF FILING FILING NO. SECURED PARTY DESCRIPTION OF
COLLATERAL
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1. Delaware Sec. of State 20745657 The CIT Group/Commercial
Services, Inc.
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2. New York Sec. of State 190914 Chemical Bank
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3. New York Sec. of State 190915 Chemical Bank
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4. New York Sec. of State 190916 Chemical Bank
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5. New York Sec. of State 032600 General Electric Capital
Business Asset Funding
Corporation
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6. New York Sec. of State 054410 General Electric Capital
Business Asset Funding
Corporation
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7. New York County 96PN17725 Chemical Bank
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