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EXHIBIT 10.58
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PROMISSORY NOTE
$15,000,000 New York, New York
February 1, 1996
FOR VALUE RECEIVED, MICHAEL ANTHONY JEWELERS, INC. (the "Debtor"),
HEREBY PROMISES TO PAY to the order of CHEMICAL BANK (the "Bank"), at its
offices located at 111 West 40th Street, New York, New York, or at such other
place as the Bank or any holder hereof may from time to time designate, the
principal sum of FIFTEEN MILLION DOLLARS ($15,000,000), or such lesser amount
as may constitute the outstanding balance hereof, in lawful money of the United
States, on the Maturity Date (as hereinafter defined) set forth on the Grid
Schedule attached hereto (or earlier as hereinafter referred to), and to pay
interest in like money at such office or place from the date hereof on the
unpaid principal balance of each Loan (as hereinafter defined) made hereunder
at a rate equal to the Applicable Interest Rate (as hereinafter defined) for
such Loan, which shall be payable on the last day of the Interest Period
relating to such Loan and, if such Interest Period is greater than three (3)
months, at three (3) month intervals after such Loan is made, until such Loan
shall be due and payable (whether at maturity, by acceleration or otherwise)
and thereafter, on demand. Interest after maturity shall be payable at a rate
of two percent (2%) per annum above the Bank's Prime Rate which rate shall be
computed for actual number of days elapsed on the basis of a 360-day year and
shall be adjusted as of the date of such change, but in no event higher than
the maximum permitted under applicable law. "Prime Rate" shall mean the rate
of interest as is publicly announced at the Banks's principal office from time
to time as its Prime Rate.
INTEREST/GRID SCHEDULE
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The Bank is authorized to enter on the Grid Schedule attached
hereto (i) the amount of each Loan made from time to time hereunder, (ii) the
date on which each Loan is made, (iii) the date on which each Loan shall be due
and payable to the Bank which in no event shall be later than July 31, 1996
(the "Maturity Date"), (iv) the interest rate agreed between the Debtor and the
Bank as the interest rate to be paid to the Bank on each Loan (each such rate,
the "Applicable Interest Rate"), which rate, at the Debtor's option in
accordance herewith, shall be at (a) the Prime Rate (the "Prime Rate Loan(s)"),
(b) a fixed rate of interest determined by and available at the Bank in its
sole discretion (the "Fixed Rate") for the
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applicable Interest Period (the "Fixed Rate Loan(s)") or (c) the Adjusted
Eurodollar Rate (as hereafter defined) plus 2.5% (the "Eurodollar Loan"), (v)
the amount of each payment made hereunder, and (vi) the outstanding principal
balance of the Loans hereunder from time to time, all of which entries, in the
absence of manifest error, shall be rebuttably presumed correct and binding on
the Debtor; PROVIDED, HOWEVER, that the failure of the Bank to make any such
entries shall not relieve the Debtor from its obligations to pay any amount due
hereunder.
PREPAYMENT
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The Debtor shall not have the right to repay any Loan, other than
Loans based on the Prime Rate, prior to the Maturity Date of such Loan. Except
with respect to Prime Rate Loans, in the event the Debtor does prepay a Loan
prior to the Maturity Date, the Debtor shall reimburse the Bank on demand for
any loss incurred or to be incurred by it in the reemployment of the funds
released by any prepayment.
DISCRETIONARY LOANS BY THE BANK
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The Bank may lend, in its sole discretion in each instance, such
amounts (each a "Loan" and collectively the "Loans") as may be requested by the
Debtor hereunder, which Loans shall in no event exceed $15,000,000 in aggregate
principal amount outstanding at any time. Any Eurodollar Loan shall be in a
minimum principal amount of $500,000 and in increments of $100,000. Each such
request for a Loan shall be made by any officer of the Debtor or any person
designated in writing by any such officer, all of which are hereby designated
and authorized by the Debtor to request Loans and agree to the terms thereof
(including without limitation the Applicable Interest Rate and Maturity Date
with respect thereto). The Debtor shall give the Bank notice at least three
(3) Business Days prior to the date hereof and the end of each Interest Period
(as hereafter defined) specifying whether the Loan shall bear interest at the
Prime Rate, the Fixed Rate or the Eurodollar Rate and the Interest Period
applicable thereof. In the event the Debtor shall fail to provide such notice,
the Loan shall be deemed to bear interest at the applicable Prime Rate and
shall have an Interest Period of one month. The principal amount of each Loan
shall be prepaid on the earlier to occur of the Maturity Date applicable
thereto, or the date upon which the entire unpaid balance hereof shall
otherwise become due and payable.
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INCREASED COST
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If at any time after the date hereof, the Board of Governors of the
Federal Reserve System or any political subdivision of the United States of
America or any other government, governmental agency or central bank shall
impose or modify any reserve or capital requirement on or in respect of loans
made or deposits with the Bank or shall impose on the Bank or the Eurodollar
market any other conditions affecting Fixed Rate Loans or Eurodollar Loans, and
the result of the foregoing is to increase the cost to (or, in the case of
Regulation D, to impose a cost on) the Bank of making or maintaining any Fixed
Rate Loans or Eurodollar Loans or to reduce the amount of any sum receivable by
the Bank in respect thereof, by an amount deemed by the Bank to be material,
then, within 30 days after notice and demand by the Bank, the Debtor shall pay
to the Bank such additional amounts as will compensate the Bank for such
increased cost or reduction; PROVIDED, that the Debtor shall not be obligated
to compensate the Bank for any increased cost resulting from the application of
Regulation D as required by the definition of Adjusted Eurodollar Rate. Any
such obligation by the Debtor to the Bank shall not be due and owing until the
Bank has delivered written notice to the Debtor. Failure by the Bank to
provide such notice shall not be deemed a waiver of any of its rights
hereunder. A certificate of the Bank claiming compensation hereunder and
setting forth the additional amounts to be paid to it hereunder and the method
by which such amounts were calculated shall be conclusive in the absence of
manifest error.
INDEMNITY
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The Debtor shall indemnify the Bank against any loss or expense which
the Bank may sustain or incur as a consequence of the occurrence of any Event
of Default or any loss or reasonable expense sustained or incurred in
liquidating or employing deposits from third parties acquired to effect or
maintain any Fixed Rate Loan or Eurodollar Loan or any part thereof which the
Bank may sustain or incur as a consequence of any default in payment of the
principal amount of the Loan or any part thereof or interest accrued thereon.
The Bank shall provide to the Debtor a statement, supported where applicable by
documentary evidence, explaining the amount of any such loss or expense, which
statement shall be conclusive absent manifest error.
CHANGE IN LEGALITY
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(a) Notwithstanding anything to the contrary contained elsewhere in
this Note, if any change after the date hereof in any law or regulation or in
the interpretation thereof by any governmental authority charged with the
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administration thereof shall make it unlawful (based on the opinion of any
counsel, whether in-house, special or general, for the Bank) for the Bank to
make or maintain any Eurodollar Loan or to give effect to its obligations as
contemplated hereby with respect to any Eurodollar Loan, then, by written
notice to the Debtor by the Bank, the Bank may require that all outstanding
Eurodollar Loans made hereunder be converted to Prime Loans, whereupon all such
Eurodollar Loans shall be automatically converted to Prime Loans as of the
effective date of such notice as provided in paragraph (b) below.
(b) For purposes of this Section, a notice to the Debtor by the Bank
pursuant to paragraph (a) above shall be effective, if unlawful and if any
Eurodollar Loans shall then be outstanding, on the last day of the then current
Interest Period; otherwise, such notice shall be effective on the date of
receipt by the Debtor.
EVENTS OF DEFAULT
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If the Debtor shall default in the punctual payment of any sum payable
with respect to, or in the observance or performance of any of the terms and
conditions of this Note, or any other agreement with or in favor of the Bank,
or if a default or event of default that is accelerated shall occur for any
reason under any such agreement, or in the event of default in any other
indebtedness of the Debtor in excess of $100,000, or if the Bank shall, in its
sole discretion, consider any of the obligations of the Debtor hereunder
insecure, or if any warranty, representation or statement of fact made in
writing to the Bank at any time by an officer, agent or employee of the Debtor
is false or misleading in any material respect when made, or if the Debtor
refuses upon the request of the Bank to furnish any information or to permit
inspection of any of its books or records within a reasonable amount of time,
or if the Debtor shall be dissolved or shall fail to maintain its existence in
good standing, or if the usual business of the Debtor shall be suspended or
terminated, of if any levy, execution, seizure, attachment or garnishment shall
be issued, made or filed on or against any material portion of the property of
the Debtor, or if the Debtor shall become insolvent (however defined or
evidenced), made an assignment for the benefit of creditors or make or send a
notice of intended bulk transfer, or if a committee of creditors is appointed
for, or any petition or proceeding for any relief under any bankruptcy,
reorganization, arrangement, insolvency, readjustment of debt, receivership,
liquidation or dissolution law or statute now or hereafter in affect (whether
at law or in equity) is filed or commenced by or against the Debtor or any
material portion of its property which, if such petition or proceeding for
relief is involuntarily commenced, shall not have been vacated, discharged or
stayed or bonded pending appeal within 60 days from the entry thereof, or if
any trustee or receiver is
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appointed for the Debtor or any such property, then and in any such event, in
addition to all rights and remedies of the Bank under applicable law and
otherwise, all such rights and remedies cumulative, not exclusive and
enforceable alternatively, successively and concurrently, the Bank may, at its
option, declare any and all of the amounts owing under the Note to be due and
payable, whereupon the maturity of the then unpaid balance hereof shall be
accelerated and the same, together with all interest accrued hereon, shall
forthwith become due and payable.
DEFINITIONS
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A. ADJUSTED EURODOLLAR RATE
"Adjusted Eurodollar Rate" shall mean, with respect to any
Eurodollar Loan for any Interest Period, an interest rate per
annum (rounded upwards, if necessary, to the next 1/8 of 1%)
equal to the product of (i) the Eurodollar Rate in effect for
such Interest Period and (ii) Statutory Reserves.
"Eurodollar Rate" shall mean, with respect to any Eurodollar
Loan for any Interest Period, the rate (rounded upwards, if
necessary, to the next 1/8 of 1% at which dollar deposits
approximately equal in principal amount to the Bank's
Eurodollar Loan and for the maturity equal to the applicable
Interest Period are offered by the Bank in immediately
available funds in an Interbank Market for Eurodollars at
approximately 11:00am, New York City time two Business Days
prior to the commencement of such Interest Period.
B. BUSINESS DAY
A "Business Day" shall mean any day other than a Saturday,
Sunday or other day on which the Bank is authorized or
required by law or regulation to close, and which is a day on
which transactions in dollar deposits are being carried out in
London, England for Eurodollar Loans and New York City for
Fixed Rate Loans and Prime Loans.
C. INTEREST PERIOD
(i) For Eurodollar Loans, "Interest Period" shall mean
the period commencing on the date of move such Loan
and ending 1, 2, 3 or 6 months (as selected by the
Debtor and recorded on the grid attached hereto)
after the date of
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such Loan, however, the Interest Period shall not
exceed past the Maturity Date.
(ii) For Fixed Rate Loans, "Interest Period" shall mean
the period requested by the Debtor and agreed to by
the Bank, as available, however, the Interest Period
shall not extend past the Maturity Date.
(iii) For Prime Loans, "Interest Period" shall mean the
period agreed to by the parties hereto, however, the
Interest Period shall not extend past the Maturity
Date.
If any Interest Period would end on a day which shall not be a
Business Day, such Interest Period shall be extended to the
next succeeding Business Day.
D. STATUTORY RESERVES
"Statutory Reserves" shall mean a fraction (expressed as a
decimal) the numerator of which is the number one and the
denominator of which is the number one minus the aggregate of
the maximum reserve percentages (including, without
limitation, any marginal, special emergency, or supplemental
reserves) expressed as a decimal established by the Board of
Governors of the Federal Reserve System and any other banking
authority to which the Bank is subject, (a) with respect to
the Adjusted Certificate of Deposit Rate, for new negotiable
time deposits in dollars of over $100,000 with maturities
approximately equal to the applicable Interest Period, and (b)
with respect to the Adjusted Eurodollar Rate, for Eurocurrency
Liabilities as defined in Regulation D. Eurodollar Loans
shall be deemed to constitute Eurocurrency Liabilities and as
such shall be deemed to be subject to such reserve
requirements without benefit of or credit for
proration, exceptions or offsets which may be available from
time to time to the Bank under such Regulation D. Statutory
Reserves shall be adjusted automatically on and as of the
effective date of any change in any reserve percentage.
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MISCELLANEOUS
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The Debtor hereby waives diligence, demand, presentment, protest and
notice of any kind, and assents to extensions of the time of payment, release,
surrender or substitution of security, or forbearance or other indulgence,
without notice.
This note may not be changed, modified or terminated orally, but only
by an agreement in writing signed by the party to be charged and consented to
in writing by the party hereof.
In the event the Bank or any holder hereof shall refer this note to an
attorney for collection, the Debtor agrees to pay, in addition to unpaid
principal and interest, all the costs and expenses incurred in attempting or
effecting collection hereunder, including reasonable attorney's fees, whether
or not suit is instituted.
In the event of any litigation with respect to this Note, THE BORROWER
WAIVES THE RIGHT TO A TRIAL BY JURY and all rights of setoff and rights to
interpose counter-claims and cross-claims. The Debtor hereby irrevocably
consents to the jurisdiction of the courts of the State of New York and of any
Federal court located in such State in connection with any action or proceeding
arising out of or relating to this Note. The execution and delivery of this
Note has been authorized by the Board of Directors and by any necessary vote or
consent of the stockholders of the Debtor. The Debtor hereby authorizes the
Bank to complete this Note in any particulars according to the terms of the
loan evidenced hereby. This Note shall be governed by and construed in
accordance with the laws of the State of New York applicable to contract made
and to be performed in such State, and shall be binding upon the successors and
assigns of the Debtor and inure to the benefit of the Bank, its successors,
endorsees and assigns.
If any term or provision of this Note shall be held invalid, illegal
or unenforceable the validity of all other terms and provisions hereof shall in
no way be affected thereby.
MICHAEL ANTHONY JEWELERS, INC.
BY: /s/ Michael A. Paolercio
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Treasurer
BY: /s/ Allan Corn
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Chief Financial Officer
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