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FINLAY FINE JEWELRY CORPORATION
8 3/8% SENIOR NOTES DUE JUNE 1, 2012
INDENTURE
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Dated as of June 3, 2004
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HSBC Bank USA
Trustee
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CROSS-REFERENCE TABLE*
Trust Indenture Act Section Indenture Section
310(a)(1).................................................................7.10
(a)(2).................................................................7.10
(a)(3).................................................................N.A.
(a)(4).................................................................N.A.
(a)(5).................................................................7.10
(b)....................................................................7.10
(c)....................................................................N.A.
311(a)....................................................................7.11
(b)....................................................................7.11
(c)....................................................................N.A.
312(a)....................................................................2.05
(b)...................................................................11.03
(c)...................................................................11.03
313(a)....................................................................7.06
(b)(1).................................................................N.A.
(b)(2)...........................................................7.06; 7.07
(c).............................................................7.06; 11.02
(d)....................................................................7.06
314(a).......................................................4.03; 4.04; 11.02
(b)....................................................................N.A.
(c)(1)................................................................11.04
(c)(2)................................................................11.04
(c)(3).................................................................N.A.
(d)....................................................................N.A.
(e)...................................................................11.05
(f)....................................................................N.A.
315(a)....................................................................7.01
(b).............................................................7.05; 11.02
(c)....................................................................7.01
(d)....................................................................7.01
(e)....................................................................6.11
316(a)(last sentence).....................................................2.09
(a)(1)(A)..............................................................6.05
(a)(1)(B)..............................................................6.04
(a)(2).................................................................N.A.
(b)....................................................................6.07
(c)....................................................................2.13
317(a)(1).................................................................6.08
(a)(2).................................................................6.09
(b)....................................................................2.04
318(a)...................................................................11.01
(b)....................................................................N.A.
(c)...................................................................11.01
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N.A. means not applicable.
*This Cross-Reference Table is not part of the Indenture.
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TABLE OF CONTENTS
Page
ARTICLE I. DEFINITIONS AND INCORPORATION BY REFERENCE.......................1
Section 1.01 Definitions............................................1
Section 1.02 Other Definitions.....................................17
Section 1.03 Terms of TIA..........................................18
Section 1.04 Rules Of Construction.................................18
ARTICLE II. THE NOTES.......................................................19
Section 2.01 Form and Dating.......................................19
Section 2.02 Execution and Authentication..........................19
Section 2.03 Registrar and Paying Agent............................20
Section 2.04 Paying Agent to Hold Money in Trust...................20
Section 2.05 Holder Lists..........................................20
Section 2.06 Transfer and Exchange.................................21
Section 2.07 Replacement Notes.....................................21
Section 2.08 Outstanding Notes.....................................21
Section 2.09 Treasury Notes........................................22
Section 2.10 Temporary Notes.......................................22
Section 2.11 Cancellation..........................................22
Section 2.12 Defaulted Interest....................................22
Section 2.13 Record Date...........................................23
Section 2.14 CUSIP Number..........................................23
Section 2.15 Issuance of Additional Notes..........................23
ARTICLE III. REDEMPTION AND PREPAYMENT.......................................24
Section 3.01 Notices to Trustee....................................24
Section 3.02 Selection of Notes to be Redeemed.....................24
Section 3.03 Notice of Redemption..................................24
Section 3.04 Effect of Notice of Redemption........................25
Section 3.05 Deposit of Redemption Price...........................25
Section 3.06 Notes Redeemed in Part................................26
Section 3.07 Optional Redemption...................................26
Section 3.08 Mandatory Redemption..................................27
Section 3.09 Offer to Purchase by Application of Excess Proceeds...27
ARTICLE IV. COVENANTS.......................................................29
Section 4.01 Payment of Notes......................................29
Section 4.02 Maintenance of Office or Agency.......................29
Section 4.03 Reports...............................................29
Section 4.04 Compliance Certificate................................30
Section 4.05 Taxes.................................................31
Section 4.06 Stay, Extension and Usury Laws........................31
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Section 4.07 Restricted Payments...................................31
Section 4.08 Dividend and Other Payment Restrictions Affecting
Subsidiaries..........................................35
Section 4.09 Incurrence of Indebtedness and Issuance of
Preferred Stock.......................................36
Section 4.10 Asset Sales...........................................40
Section 4.11 Equity Interests of Subsidiaries......................41
Section 4.12 Transactions with Affiliates..........................41
Section 4.13 Liens.................................................42
Section 4.14 Corporate Existence...................................42
Section 4.15 Offer to Repurchase upon Change of Control............42
Section 4.16 Payments for Consent..................................43
ARTICLE V. SUCCESSORS......................................................43
Section 5.01 Merger, Consolidation or Sale of Assets...............43
Section 5.02 Successor Corporation Substituted.....................44
ARTICLE VI. DEFAULTS AND REMEDIES...........................................45
Section 6.01 Events of Default.....................................45
Section 6.02 Acceleration..........................................46
Section 6.03 Other Remedies........................................48
Section 6.04 Waiver of Past Defaults...............................48
Section 6.05 Control by Majority...................................48
Section 6.06 Limitation on Suits...................................49
Section 6.07 Rights of Holders of Notes to Receive Payment.........49
Section 6.08 Collection Suit by Trustee............................49
Section 6.09 Trustee May File Proofs of Claim......................50
Section 6.10 Priorities............................................50
Section 6.11 Undertaking for Costs.................................50
ARTICLE VII. TRUSTEE.........................................................51
Section 7.01 Duties of Trustee.....................................51
Section 7.02 Rights of Trustee.....................................52
Section 7.03 Individual Rights of Trustee..........................52
Section 7.04 Trustee's Disclaimer..................................53
Section 7.05 Notice of Defaults....................................53
Section 7.06 Reports by Trustee to Holders of The Notes............53
Section 7.07 Compensation and Indemnity............................53
Section 7.08 Replacement of Trustee................................54
Section 7.09 Successor Trustee by Xxxxxx, etc......................55
Section 7.10 Eligibility; Disqualification.........................55
Section 7.11 Preferential Collection of Claims against Company.....56
ARTICLE VIII. LEGAL DEFEASANCE AND COVENANT DEFEASANCE........................56
Section 8.01 Option to Effect Legal Defeasance or Covenant
Defeasance............................................56
Section 8.02 Legal Defeasance and Discharge........................56
Section 8.03 Covenant Defeasance...................................56
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Section 8.04 Conditions to Legal or Covenant Defeasance............57
Section 8.05 Deposited Money and Government Securities to be
Held in Trust; Other Miscellaneous Provisions.........58
Section 8.06 Repayment to Company..................................59
Section 8.07 Reinstatement.........................................59
ARTICLE IX. AMENDMENT, SUPPLEMENT AND WAIVER................................60
Section 9.01 Without Consent of Holders of Notes...................60
Section 9.02 With Consent of Holders of Notes......................60
Section 9.03 Compliance with Trust Indenture Act...................62
Section 9.04 Revocation and Effect of Consents.....................62
Section 9.05 Notation on or Exchange of Notes......................62
Section 9.06 Trustee to Sign Amendments, etc.......................62
ARTICLE X. SUBSIDIARY GUARANTEES...........................................63
Section 10.01 Application...........................................63
Section 10.02 Guarantee.............................................63
Section 10.03 Limitation on Subsidiary Guarantor Liability..........64
Section 10.04 Execution and Delivery of Subsidiary Guarantee........65
Section 10.05 Subsidiary Guarantors May Consolidate, etc., on
Certain Terms.........................................65
Section 10.06 Releases Following Sale of Assets.....................65
Section 10.07 Transfers of Intangible Assets........................66
ARTICLE XI. MISCELLANEOUS...................................................66
Section 11.01 Trust Indenture Act Controls..........................66
Section 11.02 Notices...............................................66
Section 11.03 Communication by Holders of Notes with Other
Holders of Notes......................................67
Section 11.04 Certificate and Opinion as to Conditions Precedent....68
Section 11.05 Statements Required in Certificate or Opinion.........68
Section 11.06 Rules by Trustee and Agents...........................68
Section 11.07 No Personal Liability of Directors, Officers,
Employees and Stockholders............................68
Section 11.08 Governing Law.........................................69
Section 11.09 No Adverse Interpretation of Other Agreements.........69
Section 11.10 Successors............................................69
Section 11.11 Severability..........................................69
Section 11.12 Counterpart Originals.................................69
Section 11.13 Table of Contents, Headings, Etc......................69
APPENDIX A Rule 144A/Regulation S Appendix
EXHIBIT 1 Form of Initial Note
EXHIBIT A Form of Exchange Note or Private Exchange Note
EXHIBIT B Form of License Agreement
EXHIBIT C Form of Subsidiary Guarantee
EXHIBIT D Form of Supplemental Indenture
EXHIBIT E Form of Subsidiary Intercompany Note
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INDENTURE dated as of June 3, 2004 between Finlay Fine Jewelry
Corporation, a Delaware corporation (the "Company" or "Finlay Jewelry"), and
HSBC Bank USA, as trustee (the "Trustee").
The Company and the Trustee agree as follows for the benefit of each
other and for the equal and ratable benefit of the Holders of the Initial Notes,
the Exchange Notes and Private Exchange Notes (collectively, the "Notes").
ARTICLE I.
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.01 Definitions.
"Acquired Debt" means, with respect to any specified Person: (i)
Indebtedness of any other Person existing at the time such other Person is
merged with or into or becomes a Subsidiary of such specified Person, including,
without limitation, Indebtedness incurred in connection with, or in
contemplation of, such other Person merging with or into or becoming a
Subsidiary of such specified Person; (ii) Indebtedness secured by a Lien
encumbering any asset acquired by such specified Person; and (iii) Indebtedness
incurred by such Person in connection with the acquisition of assets from
another Person, including Indebtedness incurred by such other Person in
connection with, or in contemplation of, such specified Person acquiring such
assets.
"Additional Notes" means, subject to the Company's compliance with
Section 4.09, any additional 8 3/8% Senior Notes due June 1, 2012 issued from
time to time after the Issue Date under the terms of this Indenture (other than
pursuant to Section 2.06, 2.07, 2.10, 3.06 or 9.05 of this Indenture or Section
2.3 of the Appendix and other than Exchange Notes or Private Exchange Notes
issued pursuant to an exchange offer for other Notes outstanding under this
Indenture).
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling", "controlled by"
and "under common control with"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise; provided that
beneficial ownership of 10% or more of the voting securities of a Person shall
be deemed to be control.
"Agent" means any Paying Agent, Registrar or co-registrar.
"Asset Sale" means (i) the sale, lease, conveyance or other disposition
of any assets (including, without limitation, by way of a sale and leaseback)
other than sales of inventory or accounts receivable in the ordinary course of
business consistent with past practices; provided that the sale, lease,
conveyance or other disposition of all or substantially all of the assets of the
Company and its Subsidiaries taken as a whole will be governed by the provisions
of Section 4.15 hereof or the provisions of Article 5 hereof and not by the
provisions of Section 4.10 hereof; and (ii) the issue or sale by the Company or
any of its Subsidiaries of Equity
Interests of any of the Company's Subsidiaries, in the case of either clause (i)
or (ii), whether in a single transaction or a series of related transactions (a)
that have a fair market value in excess of $2.0 million or (b) for net proceeds
in excess of $2.0 million. Notwithstanding the foregoing, the following will not
be deemed an Asset Sale: (i) a transfer of assets by the Company to a Wholly
Owned Subsidiary of the Company or by a Wholly Owned Subsidiary of the Company
to the Company or to another Wholly Owned Subsidiary of the Company; (ii) an
issuance of Equity Interests by a Wholly Owned Subsidiary of the Company to the
Company or to another Wholly Owned Subsidiary of the Company; (iii) a Restricted
Payment that is permitted by the provisions of Section 4.07 hereof; (iv) any
sale of any item pursuant to the Gold Consignment Agreement or any item deemed
to be Consignment Inventory immediately prior to such sale; (v) any sale and
leaseback of any assets within 60 calendar days after the acquisition of such
assets; (vi) any sale, conveyance or other disposition, without recourse, of
Receivables to a Receivables Subsidiary; provided that cash or Cash Equivalents
in an amount at least equal to the fair market value thereof is received in
consideration thereof; and, provided, further, that any such transfer to an
entity that is not a Receivables Subsidiary or that ceases to be a Receivables
Subsidiary shall not be exempted from the definition of "Asset Sale" by reason
of this clause (vi); (vii) sales of surplus and other property or equipment that
has become worn-out, obsolete, damaged or otherwise unsuitable for use in
connection with the business of the Company or any Subsidiary of the Company, as
the case may be, will not be deemed to be Asset Sales; and (viii) the entering
into by the Company of Factor Guaranties in respect of Receivables in an amount
permitted pursuant to clause (xvi) of Section 4.09(b) hereof. Any Asset Sale
that occurs by reason of an entity ceasing to be a Receivables Subsidiary as
contemplated in clause (vi) above shall be deemed to have been made as of the
date of such cessation.
"Attributable Debt" in respect of a sale and leaseback transaction
means, at the time of determination, the present value (discounted at the rate
of interest implicit in such transaction, determined in accordance with GAAP) of
the obligation of the lessee for net rental payments during the remaining term
of the lease included in such sale and leaseback transaction (including any
period for which such lease has been extended or may, at the option of the
lessor, be extended).
"Bankruptcy Law" means Title 11, U.S. Code or any similar federal or
state law for the relief of debtors.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and
Friday, other than a day on which banking institutions in The City of New York
or at a place of payment are authorized by law, legislation or executive order
to remain closed. If a payment date is a day other than a Business Day at a
place of payment, payment may be made at that place on the next succeeding
Business Day, and no interest shall accrue on such payment for the intervening
period.
"Capital Lease Obligation" means, at the time any determination thereof
is to be made, the amount of the liability in respect of a capital lease that
would at such time be required to be capitalized on a balance sheet in
accordance with GAAP and the stated maturity thereof shall be the date of the
last payment of rent or any other amount due under such lease prior to the first
date upon which such lease may be prepaid by the lessee without payment of a
penalty.
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"Capital Stock" means (i) in the case of a corporation, corporate
stock; (ii) in the case of an association or business entity, any and all
shares, interests, participations, rights or other equivalents (however
designated) of corporate stock; (iii) in the case of a partnership, partnership
interests (whether general or limited); (iv) in the case of a limited liability
company, membership interests; and (v) any other interest or participation that
confers on a Person the right to receive a share of the profits and losses of,
or distributions of assets of, the issuing Person.
"Cash Equivalents" means (i) United States dollars; (ii) securities
issued or directly and fully guaranteed or insured by the United States
government or any agency or instrumentality thereof having maturities of not
more than one year from the date of acquisition; (iii) certificates of deposit
and Eurodollar time deposits with maturities of six months or less from the date
of acquisition, bankers' acceptances with maturities not exceeding six months
and overnight bank deposits, in each case with any domestic commercial bank
having capital and surplus in excess of $500.0 million and whose long-term debt
is rated at least "A" or the equivalent thereof by Standard & Poor's Rating
Group or at least "A" or the equivalent thereof by Xxxxx'x Investors Service,
Inc.; (iv) repurchase obligations with a term of not more than 30 days for
underlying securities of the types described in clauses (ii) and (iii) above
entered into with any financial institution meeting the qualifications specified
in clause (iii) above; and (v) commercial paper having one of the two highest
ratings obtainable from Xxxxx'x Investors Service, Inc. or Standard & Poor's
Rating Group and in each case maturing within six months after the date of
acquisition.
"Change of Control" means the occurrence of any of the following: (i)
the sale, lease, transfer, conveyance or other disposition, in one or a series
of related transactions, of all or substantially all of the assets of the
Company and its Subsidiaries or of Finlay Enterprises taken as a whole to any
"person" (as such term is used in Section 13(d)(3) of the Exchange Act); (ii)
the adoption of a plan relating to the liquidation or dissolution of the Company
or Finlay Enterprises; (iii) the consummation of any transaction (including,
without limitation, any merger or consolidation) the result of which is that any
"person" (as defined above), becomes the "beneficial owner" (as such term is
defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act, except that such
person shall be deemed to be the "beneficial owner" of all shares that such
person has the right to acquire, whether such right is exercisable immediately
or only after the passage of time), directly or indirectly, of more than 50% of
the voting power of the Company; (iv) the first day on which a majority of the
members of the Board of Directors of the Company or Finlay Enterprises are not
Continuing Directors; (v) the first day on which Finlay Enterprises ceases to
own 100% of the outstanding Equity Interests of the Company; or (vi) the merger
or consolidation of the Company or Finlay Enterprises with or into another
person or the merger of another person with or into the Company or Finlay
Enterprises, other than a transaction following which holders of securities that
represented 100% of the voting Capital Stock of Finlay Enterprises immediately
prior to such transaction (or other securities into which such securities are
converted as part of such merger or consolidation transaction) own directly or
indirectly at least a majority of the voting power of the Capital Stock of the
surviving person in such merger or consolidation transaction immediately after
such transaction and in substantially the same proportion as before the
transaction. For purposes of this definition, any transfer of an Equity Interest
of an entity that was formed for the purpose of acquiring voting stock of the
Company shall be deemed to be a transfer of such portion of such voting stock as
corresponds to the portion of the equity of such entity that has been so
transferred.
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"Commission" means the U.S. Securities and Exchange Commission.
"Company" means Finlay Fine Jewelry Corporation, and any and all
successors thereto.
"Consignment Inventory" means, at any time, each item of merchandise
(including any gold content thereof) which (i) at such time is in possession of
the Company, Finlay Enterprises or any of their respective Subsidiaries as
consignee pursuant to a written consignment agreement or other consignment
arrangement including, without limitation, a consignment order or consignment
invoice, (ii) at such time is identified in computer records of the Company or
any of its Subsidiaries as being "memo" or "consigned inventory", (iii) as of
such time has not been sold, and (iv) to which title, at such time, is retained
by a consignor under such consignment agreement or other consignment arrangement
until such item of merchandise is sold or deemed sold by the consignor to the
consignee. Title to an item of merchandise described in the foregoing sentence
is deemed to be retained by such consignor until, in accordance with the
applicable consignment agreement or other consignment arrangement, title is
transferred (or deemed to be transferred) to a buyer, the Company or any of its
Subsidiaries, regardless of whether any procedures have been performed to
protect the consignor's title with respect to such item of merchandise.
"Consolidated Cash Flow" means, with respect to any Person for any
period, the Consolidated Net Income of such Person for such period, adjusted as
follows (in each case without duplication): plus (i) an amount equal to any
extraordinary loss plus any net loss realized in connection with an Asset Sale
(to the extent such losses were deducted in computing such Consolidated Net
Income); plus (ii) provision for taxes based on income or profits of such Person
and its Subsidiaries for such period, to the extent that such provision for
taxes was deducted in computing such Consolidated Net Income; plus (iii)
consolidated interest expense of such Person and its Subsidiaries for such
period, whether paid or accrued and whether or not capitalized (including,
without limitation, amortization of original issue discount, non-cash interest
payments, the interest component of any deferred payment obligations, the
interest component of all payments associated with Capital Lease Obligations,
imputed interest with respect to Attributable Debt, commissions, discounts and
other fees and charges incurred in respect of letter of credit or bankers'
acceptance financings, and net payments (if any) pursuant to Hedging
Obligations), to the extent that any such expense was deducted in computing such
Consolidated Net Income; plus (iv) depreciation and amortization (including
amortization of goodwill and other intangibles but excluding amortization of
prepaid cash expenses that were paid in a prior period) of such Person and its
Subsidiaries for such period to the extent that such depreciation and
amortization were deducted in computing such Consolidated Net Income; plus (v)
the nonrecurring expenses (including without limitation call premiums and
deferred financing costs) of such Person and its Subsidiaries relating to the
Refinancing to the extent that any such expense was deducted (and not
capitalized) in computing such Person's Consolidated Net Income; plus (vi)
dividends in respect of all Disqualified Stock held by Persons other than the
Company or a Wholly-Owned Subsidiary (other than dividends payable solely in
Capital Stock (other than Disqualified Stock) of the Company), to the extent
such dividends were deducted in computing such Consolidated Net Income;
provided, however, that such dividends shall be multiplied by a fraction the
numerator of which is one and the denominator of which is one minus the
effective combined tax rate of the issuer of such Disqualified Stock (expressed
as a
4
decimal) for such period; plus (vii) interest accruing on any Indebtedness of
any other Person, to the extent such Indebtedness is Guaranteed by (or secured
by the assets of) the Company or any Subsidiary; plus (viii) all other non-cash
charges of such Person and its Subsidiaries, to the extent such charges were
deducted in computing such Consolidated Net Income (excluding any such non-cash
charge to the extent that it represents an accrual of or reserve for cash
expenditures in any future period); minus (ix) non-cash items increasing
consolidated revenues in determining such Consolidated Net Income for such
period, in each case on a consolidated basis and determined in accordance with
GAAP. Notwithstanding the foregoing, the provision for taxes on the income or
profits of, and the depreciation and amortization of a Subsidiary of the
referent Person shall be added to Consolidated Net Income to compute
Consolidated Cash Flow only to the extent (and in the same proportion) that the
Net Income of such Subsidiary was included in calculating the Consolidated Net
Income of such Person and only if a corresponding amount would be permitted at
the date of determination to be dividended to the Company by such Subsidiary
without prior governmental approval (that has not been obtained), and without
direct or indirect restriction pursuant to the terms of its charter and all
agreements, instruments, judgments, decrees, orders, statutes, rules and
governmental regulations applicable to that Subsidiary or its stockholders.
"Consolidated Net Income" means, with respect to any Person for any
period, the aggregate of the Net Income of such Person and its Subsidiaries for
such period, on a consolidated basis, determined in accordance with GAAP;
provided that (i) the Net Income (but not loss) of any Person that is not a
Subsidiary or that is accounted for by the equity method of accounting shall be
included only to the extent of the amount of dividends or distributions paid in
cash to the referent Person or a Wholly Owned Subsidiary thereof; (ii) the Net
Income of any Subsidiary shall be excluded to the extent that the declaration or
payment of dividends or similar distributions by that Subsidiary of that Net
Income is not at the date of determination permitted without any prior
governmental approval (that has not been obtained) or, directly or indirectly,
by operation of the terms of its charter or any agreement, instrument, judgment,
decree, order, statute, rule or governmental regulation applicable to that
Subsidiary or its stockholders; (iii) the Net Income of any Person acquired in a
pooling of interests transaction for any period prior to the date of such
acquisition shall be excluded; and (iv) the cumulative effect of a change in
accounting principles shall be excluded.
"Consolidated Net Worth" means, with respect to any Person as of any
date, the sum of (i) the consolidated equity of the common stockholders of such
Person and its consolidated Subsidiaries as of such date plus (ii) the
respective amounts reported on such Person's balance sheet as of such date with
respect to any series of preferred stock (other than Disqualified Stock) that by
its terms is not entitled to the payment of dividends unless such dividends may
be declared and paid only out of net earnings in respect of the year of such
declaration and payment, but only to the extent of any cash received by such
Person upon issuance of such preferred stock, less (x) all write-ups (other than
write-ups resulting from foreign currency translations and write-ups of tangible
assets of a going concern business made within 12 months after the acquisition
of such business) subsequent to the date of this Indenture in the book value of
any asset owned by such Person or a consolidated Subsidiary of such Person, (y)
all Investments as of such date in unconsolidated Subsidiaries and in Persons
that are not Subsidiaries (except, in each case, Permitted Investments), and (z)
all unamortized debt
5
discount and expense and unamortized deferred charges as of such date, all of
the foregoing determined in accordance with GAAP.
"Continuing Directors" means, as of any date of determination, any
member of the Board of Directors of the Company or Finlay Enterprises who (i)
was a member of such Board of Directors on the date of this Indenture or (ii)
was nominated for election or elected to such Board of Directors with the
approval of two-thirds of the Continuing Directors who were members of such
Board at the time of such nomination or election.
"Corporate Trust Office of the Trustee" shall be at the address of the
Trustee specified in Section 11.02 hereof or such other address as to which the
Trustee may give notice to the Company.
"Default" means any event that is or with the passage of time or the
giving of notice or both would be an Event of Default.
"Disqualified Stock" means any Capital Stock that, by its terms (or by
the terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, (i) matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, (ii) is
redeemable, convertible or exchangeable at the option of the Holder thereof for
Indebtedness or Disqualified Stock, or (iii) is mandatorily redeemable or must
be purchased upon the occurrence of certain events or otherwise, in each case,
in whole or in part, on or prior to the date that is 91 days after the date on
which the Notes mature; provided that any Capital Stock issued to employees,
consultants or directors of the Company or any of its Subsidiaries pursuant to a
stock option or other compensation plan of the Company or any of its
Subsidiaries shall not be deemed to be Disqualified Stock solely because of any
mandatory repurchase features contained in such plan, except to the extent that
the repurchase obligations of the Company and its Subsidiaries in respect
thereof exceed $5.0 million in the aggregate since the date of this Indenture.
"Equity Interests" means Capital Stock and all warrants, options or
other rights to acquire Capital Stock (including, without limitation, Restricted
Stock Units issued pursuant to any employee incentive plan existing on the date
hereof, and any substantially similar instrument but excluding any debt security
that is convertible into, or exchangeable for, Capital Stock).
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Notes" means the debt securities of the Company issued
pursuant to this Indenture in exchange for, and in an aggregate principal amount
equal to, the Notes (and any Additional Notes), in compliance with the terms of
the Registration Rights Agreement.
"Existing Indebtedness" means Indebtedness of the Company and its
Subsidiaries (other than Indebtedness under the Senior Revolving Debt and after
giving effect to the Refinancing) in existence on the date of this Indenture,
until such amounts are repaid.
"Factor Guaranties" means, collectively, the factor guaranties dated as
of December 9, 2002 issued by GE Capital Commercial Services, Inc. to the
Company, guaranteeing Receivables from certain customers of the Company, and any
future factor
6
guaranties entered into by the Company, in form and substance no less favorable
to the Company than such existing factor guaranties, entered into in the
ordinary course of business consistent with the past practice of the Company.
"Finlay Enterprises" means Finlay Enterprises, Inc., a Delaware
corporation and the sole stockholder of the Company.
"Fixed Charge Coverage Ratio" means with respect to any Person for any
period, the ratio of the Consolidated Cash Flow of such Person for such period
to the Fixed Charges of such Person for such period. In the event that the
Company or any of its Subsidiaries incurs, assumes, Guarantees, repays,
repurchases or redeems, defeases or otherwise discharges any Indebtedness (other
than revolving credit borrowings) or issues, repurchases or redeems preferred
stock subsequent to the commencement of the period for which the Fixed Charge
Coverage Ratio is being calculated but prior to the date on which the event for
which the calculation of the Fixed Charge Coverage Ratio is made (the
"Calculation Date"), then the Fixed Charge Coverage Ratio shall be calculated
giving pro forma effect to such incurrence, assumption, repayment, Guarantee or
redemption, defeasance or other discharge of Indebtedness, or such issuance,
repurchase or redemption of preferred stock, as if the same had occurred at the
beginning of the applicable four-quarter reference period. In addition, for
purposes of making the computation referred to above, (i) acquisitions of
Persons that have become Subsidiaries that have been made by the Company or any
of its Subsidiaries, including through mergers or consolidations and including
any related financing transactions, during the four-quarter reference period or
subsequent to such reference period and on or prior to the Calculation Date
shall be deemed to have occurred on the first day of the four-quarter reference
period and Consolidated Cash Flow for such reference period shall be calculated
without giving effect to clause (iii) of the proviso set forth in the definition
of Consolidated Net Income and shall reflect any pro forma expense and cost
reductions attributable to such acquisitions (to the extent such expense and
cost reduction would be permitted under Regulation S-X promulgated pursuant to
the Securities Act to be reflected in pro forma financial statements included in
a registration statement filed with the Commission) and (ii) the Consolidated
Cash Flow attributable to discontinued operations, as determined in accordance
with GAAP, and operations or businesses disposed of (including ownership
interests representing the entire ownership thereof) prior to the Calculation
Date, shall be excluded; and (iii) the Fixed Charges attributable to
discontinued operations, as determined in accordance with GAAP, and operations
or businesses disposed of, or assets that are the subject of an Asset Sale
consummated, in each case prior to the Calculation Date, shall be excluded, but
only to the extent that the obligations giving rise to such Fixed Charges will
not be obligations of the referent Person or any of its Subsidiaries following
the Calculation Date.
"Fixed Charges" means, with respect to any Person for any period, the
sum of (i) the consolidated interest expense of such Person and its Subsidiaries
for such period, whether paid or accrued (including, without limitation,
amortization of original issue discount and deferred financing costs, non-cash
interest payments, the interest component of any deferred payment obligations,
the interest component of all payments associated with Capital Lease
Obligations, imputed interest with respect to Attributable Debt, commissions,
discounts and other fees and charges incurred in respect of letter of credit or
bankers' acceptance financings, and net payments (if any) pursuant to Hedging
Obligations); and (ii) the consolidated interest expense of such Person and its
Subsidiaries that was capitalized during such period; and (iii) to
7
the extent not included in clause (i), any interest expense on Indebtedness of
another Person for such period that is Guaranteed by such Person or one of its
Subsidiaries or secured by a Lien on assets of such Person or one of its
Subsidiaries (whether or not such Guarantee or Lien is called upon), but only to
the extent the value of the assets so secured; (iv) to the extent not included
in clause (i), any costs, commissions, discounts, other fees or charges relating
to or in respect of any Receivables Subsidiary; and (v) the product of (a) all
cash dividend payments (and non-cash dividend payments in the case of a Person
that is a Subsidiary) for such period on any series of preferred stock of such
Person, times (b) a fraction, the numerator of which is one and the denominator
of which is one minus the then current combined federal, state and local
statutory tax rate of such Person for such period, expressed as a decimal, in
each case, on a consolidated basis and in accordance with GAAP; provided,
however, that in no event shall any amortization or write-off of deferred
financing costs incurred in connection with the Refinancing be included in Fixed
Charges.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as have been approved by a significant segment of the accounting
profession, which are in effect on the date of this Indenture; provided,
however, that all reports and other financial information provided by the
Company to the Holders, the Trustee and/or Commission shall be prepared in
connection with GAAP, as in effect on the day of such report or other financial
information.
"Gold Consignment Agreement" means the Amended and Restated Gold
Consignment Agreement, dated as of March 30, 2001, by and between Finlay Jewelry
and eFinlay, Inc., such other Consignee subsidiaries (as defined therein) as may
become Consignees (as defined therein) thereunder and Sovereign Bank, including
any related notes, guarantees, collateral documents, instruments and agreements
executed in connection therewith, and in each case as amended, modified,
restated, renewed, supplemented, refunded, replaced or refinanced from time to
time.
"Government Securities" means direct obligations of, or obligations
guaranteed or insured by, the United States of America for the payment of which
guarantee or obligations the full faith and credit of the United States is
pledged.
"Guarantee" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, by way of a pledge of
assets or through letters of credit and reimbursement agreements in respect
thereof), of all or any part of any Indebtedness.
"Hedging Obligation" means, with respect to any Person, the obligations
of such Person under (i) interest rate swap agreements, currency swap
agreements, interest rate cap agreements and interest rate collar agreements,
(ii) other agreements or arrangements designed to protect such Person against
fluctuations in interest rates and foreign exchange rates and (iii) commodity
and raw material options and futures contracts and other agreements or
arrangements designed to protect against or manage exposure to fluctuations in
the price of commodities or other raw materials, including precious metals.
8
"Holder" means a Person in whose name a Note is registered.
"Indebtedness" means, with respect to any Person, any indebtedness of
such Person, whether or not contingent, in respect of borrowed money or
evidenced by bonds, notes, debentures or similar instruments or letters of
credit (or reimbursement agreements in respect thereof) or banker's acceptances
or representing Capital Lease Obligations or the balance deferred and unpaid of
the purchase price of any property (excluding trade accounts payable or accrued
expenses arising in the ordinary course of business which are not overdue) or
representing any Hedging Obligations, except any such balance that constitutes
an accrued expense or trade payable, if and to the extent any of the foregoing
indebtedness (other than letters of credit and Hedging Obligations) would appear
as a liability upon a balance sheet of such Person prepared in accordance with
GAAP, as well as, to the extent not otherwise included, all indebtedness of
others secured by a Lien on any asset of such Person (whether or not such
indebtedness is assumed by such Person) and, to the extent not otherwise
included, the Guarantee by such Person of any indebtedness of any other Person.
Notwithstanding the foregoing, the term "Indebtedness" shall not include up to
$3.0 million at any one time outstanding of deferred compensation arrangements
that are not evidenced by bonds, notes, debentures or similar instruments. The
amount of any Indebtedness outstanding as of any date shall be (i) the accreted
value thereof, in the case of any Indebtedness that does not require current
payments of interest, (ii) the principal amount thereof, together with any
interest thereon that is more than 30 days past due in the case of any other
Indebtedness and (iii) for purposes of calculating the amount of Indebtedness of
any Receivables Subsidiaries, the Receivables Financing Amount relating thereto.
"Investments" means, with respect to any Person, all investments by
such Person in other Persons (including Affiliates) in the forms of direct or
indirect loans (including guarantees of Indebtedness or other obligations),
advances (other than advances to customers in the ordinary course of business
that are recorded as accounts receivable on the balance sheet of the lender) or
capital contributions (excluding commission, travel and similar advances to
officers and employees made in the ordinary course of business), purchases or
other acquisitions for consideration of Indebtedness, Equity Interests or other
securities of such other Persons, together with all items of such other Persons
that are or would be classified as investments on a balance sheet prepared in
accordance with GAAP. If the Company or any Subsidiary of the Company sells or
otherwise disposes of any Equity Interest of any direct or indirect Subsidiary
of the Company such that, after giving effect to any such sale or disposition,
such Person is no longer a Subsidiary of the Company, the Company shall be
deemed to have made an Investment on the date of any such sale or disposition
equal to the fair market value of the Equity Interests of such Subsidiary not
sold or disposed of.
"Issue Date" means the date on which the Notes (other than any
Additional Notes) are originally issued.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement under
9
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction);
provided, however, that licenses of intellectual property or similar assets
granted pursuant to and in compliance with the provisions of Section 10.07
hereof shall not be deemed to be Liens.
"Net Income" means, with respect to any Person, the net income (loss)
of such Person, determined in accordance with GAAP and before any reduction in
respect of preferred stock dividends, excluding, however, (i) any gain (but not
loss), together with any related provision for taxes on such gain (but not
loss), realized in connection with (a) any Asset Sale (including, without
limitation, dispositions pursuant to sale and leaseback transactions) or (b) the
disposition of any securities by such Person or any of its Subsidiaries or the
extinguishment of any Indebtedness of such Person or any of its Subsidiaries and
(ii) any extraordinary or nonrecurring gain (but not loss), together with any
related provision for taxes on such extraordinary or nonrecurring gain (but not
loss).
"Net Proceeds" means the aggregate cash proceeds received by the
Company or any of its Subsidiaries in respect of any Asset Sale (including,
without limitation, any cash received upon the sale or other disposition of any
non-cash consideration received in any Asset Sale), net of the direct costs
relating to such Asset Sales (including, without limitation, legal, accounting
and investment banking fees, and sales commissions) and any relocation expenses
incurred as a result thereof, taxes paid or payable as a result thereof (after
taking into account any available tax credits or deductions and any tax sharing
arrangements), amounts required to be applied to the repayment of Indebtedness
(other than Indebtedness under the Revolving Credit Agreement) secured by a Lien
on the asset or assets that were the subject of such Asset Sale and any reserve
for adjustment in respect of the sale price of such asset or assets established
in accordance with GAAP; all distributions and other payments required to be
made to minority interest holders in Subsidiaries as a result of such Asset
Sale; and any reserve established in accordance with GAAP against liabilities
associated with the assets disposed of in such Asset Sale and retained by the
Company or any Subsidiary of the Company after such Asset Sale; provided that
any reduction in such reserve after consummation of the Asset Sale will be
deemed a new Asset Sale with Net Proceeds equal to the amount of such reduction.
"Non-Recourse Debt" means Indebtedness (i) as to which neither the
Company nor any of its Subsidiaries (other than a Receivables Subsidiary with
respect to its own Indebtedness) (a) provides credit support of any kind
(including any undertaking, agreement or instrument that would constitute
Indebtedness) or (b) is directly or indirectly liable (as a guarantor or
otherwise); and (ii) no default with respect to which would permit (upon notice,
lapse of time or both) any holder of any other Indebtedness of the Company or
any of its Subsidiaries to declare a default on such other Indebtedness or cause
the payment thereof to be accelerated or payable prior to its Stated Maturity;
and (iii) as to which the lenders have been notified in writing that they will
not have any recourse to the stock or assets of the Company or any of its
Subsidiaries (other than a Receivables Subsidiary with respect to its own
Indebtedness); provided that, notwithstanding the foregoing, the Company and any
of its Subsidiaries that sell Receivables to the Person incurring such
Indebtedness shall be allowed to provide such representations, warranties,
covenants and indemnities as are customarily required in such transactions so
long as no such representations, warranties, covenants or indemnities constitute
a Guarantee of payment or recourse against credit losses.
10
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"Officer" means, with respect to any Person, the Chairman of the Board,
the Chief Executive Officer, the President, the Chief Operating Officer, the
Chief Financial Officer, the Treasurer, any Assistant Treasurer, the Controller,
the Secretary or any Vice-President of such Person.
"Officers' Certificate" means a certificate signed on behalf of the
Company by two Officers of the Company, one of whom must be the principal
executive officer, the principal financial officer, the treasurer or the
principal accounting officer of the Company, that meets the requirements of
Sections 11.04(a) and 11.05 hereof.
"Opinion of Counsel" means an opinion from legal counsel who is
reasonably acceptable to the Trustee, that meets the requirements of Sections
11.04(b) and 11.05 hereof. The counsel may be an employee of or counsel to the
Company, any Subsidiary of the Company or the Trustee.
"Permitted Investments" means (a) any Investment in the Company or in a
Wholly Owned Subsidiary of the Company that is evidenced by Capital Stock or
Subsidiary Intercompany Notes; (b) any Investment in Cash Equivalents; (c) any
Investment by the Company or any Subsidiary of the Company in a Person that is
evidenced by Capital Stock or Subsidiary Intercompany Notes if as a result of
such Investment (i) such Person becomes a Wholly Owned Subsidiary of the Company
or (ii) such Person is merged, consolidated or amalgamated with or into, or
transfers or conveys substantially all of its assets to, or is liquidated into,
the Company or a Wholly Owned Subsidiary of the Company; (d) any capital
contribution (including any transaction deemed to be a capital contribution in
accordance with GAAP) by the Company to any of its Wholly Owned Subsidiaries;
(e) any Restricted Investment made as a result of the receipt of non-cash
consideration from an Asset Sale that was made pursuant to and in compliance
with the provisions of Section 4.10 hereof; (f) advances to vendors in the
ordinary course of business consistent with past practices; (g) any Investment
existing on the date of this Indenture; (h) loans and relocation, travel and
similar advances to employees and officers of the Company or its Subsidiaries in
the ordinary course of business for bona-fide purposes reasonably related to the
business of the Company and its Subsidiaries, not in excess of $5.0 million at
any one time outstanding; (i) any acquisition, redemption or repurchase of the
Notes, Exchange Notes or Senior Notes due 2008; (j) Equity Interests,
obligations or securities of any Person received in compromise or settlement of
debts created in the ordinary course of business and owing to the Company or a
Subsidiary of the Company or in satisfaction of litigation, arbitration or
judgments; (k) Investments in any Person where such Investment was acquired by
the Company or any Subsidiary of the Company in exchange for any other
Investment or accounts receivable held by the Company or such Subsidiary in
connection with or as a result of a bankruptcy, insolvency or reorganization of
the issuer of such other Investment or accounts receivable or as a result of a
foreclosure by the Company or a Subsidiary of the Company with respect to any
secured Investment or other transfer of title with respect to any secured
Investment in default; (l) any Investments relating to a Receivables Subsidiary;
provided that any Investment in an entity that ceases to be a Receivables
Subsidiary shall cease to be a Permitted Investment
11
by virtue of this clause and shall be deemed to constitute a new Investment as
of the date of such cessation; (m) Hedging Obligations otherwise permitted under
Section 4.09 hereof; (n) investments in Permitted Joint Ventures in an aggregate
amount not to exceed $5.0 million at any time outstanding and (o) other
Investments in any Person having an aggregate fair market value (measured on the
date each such Investment was made and without giving effect to subsequent
changes in value), when taken together with all other Investments made pursuant
to this clause (o), not to exceed $10.0 million at any time outstanding.
"Permitted Joint Ventures" means any joint venture between the Company
or any Subsidiary and any other Person, regardless of legal form, entered into
for the purpose of owning or operating a business related, ancillary to or
complementary to any business of the Company or any of its Subsidiaries on the
date hereof.
"Permitted Liens" means (i) Liens securing Senior Revolving Debt that
were permitted by the terms of this Indenture to be incurred; (ii) Liens in
favor of the Company; (iii) Liens on property or assets of a Person existing at
the time such Person is merged into or consolidated with the Company or any
Subsidiary of the Company; provided that such Liens were in existence prior to
the contemplation of such merger or consolidation and do not extend to any
assets other than those of the Person merged into or consolidated with the
Company; (iv) Liens on property or assets existing at the time of acquisition
thereof by the Company or any Subsidiary of the Company; provided that such
liens were in existence prior to the contemplation of such acquisition; (v)
Liens to secure the performance of statutory obligations, surety or appeal
bonds, performance bonds, landlords', carriers', warehousemen's, mechanics',
suppliers', materialmen's or other like Liens incurred in the ordinary course of
business; (vi) Liens to secure Indebtedness (including Capital Lease
Obligations) permitted by Section 4.09(b)(v) hereof covering only the assets
acquired with such Indebtedness); (vii) Liens on Consignment Inventory; (viii)
Liens under the Gold Consignment Agreement; (ix) Liens existing on the date of
this Indenture; (x) Liens for taxes, assessments or governmental charges or
claims that are not yet delinquent or that are being contested in good faith by
appropriate proceedings promptly instituted and diligently concluded; provided
that any reserve or other appropriate provision as shall be required in
conformity with GAAP shall have been made therefor; (xi) Liens incurred in the
ordinary course of business of the Company or any Subsidiary of the Company with
respect to obligations that do not exceed $5.0 million at any one time
outstanding and that (a) are not incurred in connection with the borrowing of
money or the obtaining of advances or credit (other than trade credit in the
ordinary course of business) and (b) do not in the aggregate materially detract
from the value of the property or materially impair the use thereof in the
operation of business by the Company or such Subsidiary; (xii) Liens securing
Capital Lease Obligations and purchase money Indebtedness incurred in accordance
with clause (v) of Section 4.09(b) hereof; provided, however, that in the case
of purchase money Indebtedness (a) the Indebtedness shall not exceed the cost of
such property or assets being acquired or constructed and shall not be secured
by any property or assets of the Company or any Subsidiary of the Company other
than the property and assets being acquired or constructed and (b) the Lien
securing such Indebtedness shall be created within 30 days of such acquisition
or construction; (xiii) Liens granted to lessors or licensors in the ordinary
course of business consistent with past practice with respect to fixtures and
equipment at store locations leased or licensed from such lessors or licensors;
(xiv) Liens securing any Permitted Refinancing Indebtedness to the extent the
Indebtedness being exchanged, extended, renewed, replaced or refunded (and such
Permitted
12
Refinancing Indebtedness) was permitted to be so secured; (xv) zoning
restrictions, survey exceptions, encumbrances, easements, or reservations of, or
rights of other for, rights of way, licenses and sewers, electric lines,
telephone lines and other similar purposes, restrictions on the use of real
property or minor irregularities in title thereto, which do not materially
impair the use of such property in the normal operation of the business of the
Company or any of its Subsidiaries or the value of such property for the purpose
of such business; (xvi) Liens for judgments, attachments, seizures or levies not
to exceed $1.0 million in the aggregate outstanding at any time; provided,
however, that such Liens arose out of judgments or awards against such Person
(or any Subsidiary of such Person) not giving rise to an Event of Default, are
adequately bonded, and with respect to which such Person shall then be
proceeding with an appeal or other proceedings for review of such judgments or
awards (which proceedings have not finally terminated) or with respect to which
the period within which such proceedings may be initiated shall not have
expired; (xvii) Liens securing Hedging Obligations so long as such Hedging
Obligations relate to Indebtedness that is and that is permitted to be under the
Senior Notes Indenture, secured by a Lien on the same property securing such
Hedging Obligation; (xviii) Liens on Receivables transferred to a Receivables
Subsidiary or on assets of a Receivables Subsidiary; (xix) Liens on Receivables
securing Factor Guaranties in an amount permitted pursuant to clause (xvi) of
Section 4.09(b) hereof; (xx) Liens in favor of customs and revenue authorities
arising as a matter of law to secure payment of customs duties in connection
with the importation of goods; and (xxi) unperfected Liens upon specific items
of inventory or other goods purchased by the Company or any of its Subsidiaries
in the ordinary course of business in favor of the vendors thereof, for so long
as payment for such inventory or goods is not overdue or delinquent, provided
that such Lien is released immediately upon payment in full for such inventory
or goods.
"Permitted Refinancing Indebtedness" means any Indebtedness of the
Company or any of its Subsidiaries issued in exchange for, or the net proceeds
of which are used to extend, refinance, renew, replace, defease or refund, other
Indebtedness of the Company or any of its Subsidiaries that was permitted by
this Indenture to be incurred pursuant to Section 4.09(a) hereof or clauses
(ii), (iii) or (vi) of Section 4.09(b) hereof; provided that: (i) the principal
amount (or accreted value, if applicable) of such Permitted Refinancing
Indebtedness does not exceed the principal amount (or accreted value, if
applicable) of the Indebtedness so extended, refinanced, renewed, replaced,
defeased or refunded (plus the amount of reasonable expenses, premiums,
penalties, consent fees and interest incurred in connection therewith); (ii)
such Permitted Refinancing Indebtedness has a final maturity date later than the
final maturity date of, and has a Weighted Average Life to Maturity equal to or
greater than the Weighted Average Life to Maturity of, the Indebtedness being
extended, refinanced, renewed, replaced, defeased or refunded; (iii) if the
Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded
is subordinated in right of payment to the Notes, such Permitted Refinancing
Indebtedness is subordinated in right of payment to, the Notes on terms at least
as favorable to the Holders of Notes as those contained in the documentation
governing the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded; (iv) such Indebtedness is incurred either by the Company
or by the Subsidiary of the Company which is the obligor on the Indebtedness
being extended, refinanced, renewed, replaced, defeased or refunded; and (v)
such Permitted Refinancing Indebtedness shall be secured (if secured) in a
manner no more adverse (including, without limitation, by way of any increase in
the amount of Indebtedness secured) to
13
the holders of the Notes than the terms of the Liens (if any) securing such
refinanced Indebtedness.
"Person" means a natural person, partnership, corporation, limited
liability company, unincorporated organization, association, joint stock
company, trust or joint venture, or a governmental agency or political
subdivision thereof.
"Public Equity Offering" means an underwritten public offering for cash
of Capital Stock (other than Disqualified Stock) of Finlay Enterprises
registered under the Securities Act (other than a public offering registered on
Form S-8 under the Securities Act) after the date of this Indenture that results
in net proceeds of at least $10.0 million to Finlay Enterprises.
"Qualified Proceeds" means any of the following or any combination of
the following: (i) assets (other than cash or Cash Equivalents) or inventory
that are used or useable in the business engaged in by the Company or any of its
Subsidiaries on the date of this Indenture (or in a business reasonably related
thereto) or (ii) the Equity Interests of any Person engaged primarily in a
business similar to that of the Company or any of its Subsidiaries as of the
date of this Indenture, if, in connection with the receipt by the Company or any
Subsidiary of the Company of such Equity Interests, (a) such Person becomes a
Wholly Owned Subsidiary of the Company or (b) such Person is merged,
consolidated or amalgamated with or into, or transfers or conveys substantially
all of its assets to, or is liquidated into, the Company or any Wholly Owned
Subsidiary of the Company.
"Receivables" means, collectively, (a) the Indebtedness and other
obligations owed to the Company or any of its Subsidiaries (before giving effect
to any sale or transfer thereof pursuant to a Receivables Facility), whether
constituting an account, chattel paper, an instrument, a document or general
intangible, arising in connection with the sale of goods and/or services by the
Company or such Subsidiary, including the obligation to pay any late fees,
interest or other finance charges with respect thereto (each of the foregoing,
collectively, an "Account Receivable"), (b) all of the Company's or such
Subsidiary's interest in the goods (including returned goods), if any, the sale
of which gave rise to any Account Receivable, and all insurance contracts with
respect thereto, (c) all other security interests or Liens and property subject
thereto from time to time, if any, purporting to secure payment of any Account
Receivable, together with all financing statements and security agreements
describing any collateral securing such Account Receivable, (d) all Guarantees,
insurance and other agreements or arrangements of whatever character from time
to time supporting or securing payment of any Account Receivable, (e) all
contracts, invoices, books and records of any kind related to any Account
Receivable, (f) all cash collections in respect of, and cash proceeds of, any of
the foregoing and any and all lockboxes, lockbox accounts, collection accounts,
concentration accounts and similar accounts in or into which such collections
and cash proceeds are now or hereafter deposited, collected or concentrated, and
(g) all proceeds of any of the foregoing.
"Receivables Facility" means, with respect to any Person, any
Receivables securitization or factoring program pursuant to which such Person
receives proceeds pursuant to a sale, pledge or other encumbrance of its
Receivables.
14
"Receivables Financing Amount" means at any date, with respect to any
Receivables Facility of any Person, the sum on such date of (a) the aggregate
uncollected balances of Accounts Receivable (as defined in the definition of
"Receivables") transferred ("Transferred Receivables") in such Receivables
Facility plus (b) the aggregate amount of all collections of Transferred
Receivables theretofore received by such Person but not yet remitted to the
purchaser, net of all reserves and holdbacks retained by or for the benefit of
the purchaser and net of any interest retained by such Person and reasonable
costs and expenses (including fees and commissions and taxes other than income
taxes) incurred by such Person in connection therewith and not payable to any
Affiliate of such Person.
"Receivables Subsidiary" means any Wholly Owned Subsidiary created
primarily to purchase or finance the Receivables of the Company and/or its
Subsidiaries pursuant to a Receivables Facility, so long as it: (a) has no
Indebtedness other than Non-Recourse Debt and (b) is a Person with respect to
which neither the Company nor any of its other Subsidiaries has any direct
obligation to maintain or preserve such Person's financial condition or to cause
such Person to achieve any specified levels of operating results other than to
act as servicer of Receivables. If, at any time, such Receivables Subsidiary
would fail to meet the foregoing requirements as a Receivables Subsidiary, it
shall thereafter cease to be a Receivables Subsidiary for purposes of this
Indenture and any Indebtedness of such Receivables Subsidiary shall be deemed to
be incurred by a Subsidiary of the Company as of such date (and, if such
Indebtedness is not permitted to be incurred as of such date under provisions of
Section 4.09 hereof, the Company shall be in default of such covenant).
"Refinancing" means (i) the offering by the Company of the Senior
Notes, (ii) the repurchase or redemption of the Senior Debentures due 2008 by
Finlay Enterprises, the repurchase or redemption of the Senior Notes due 2008,
(iii) any amendments to the Revolving Credit Agreement and Gold Consignment
Agreement in connection with the transactions described in clauses (i) and (ii)
of this definition, and (iv) the Exchange Offer (as defined in the Registration
Rights Agreement).
"Responsible Officer", when used with respect to the Trustee, means any
officer within the Corporate Trust Administration of the Trustee (or any
successor group of the Trustee) having direct responsibility for the
administration of this Indenture and also means, with respect to a particular
corporate trust matter, any other officer to whom such matter is referred
because of his or her knowledge of and familiarity with the particular subject.
"Restricted Investment" means an Investment other than a Permitted
Investment.
"Revolving Credit Agreement" means the Second Amended and Restated
Credit Agreement, dated as of January 22, 2003, among Finlay Jewelry and Finlay
Enterprises, as Borrowers (as defined therein), and General Electric Capital
Corporation, as Agent (as defined therein) and Lender (as defined therein),
Fleet Precious Metals, Inc., as Documentation Agent and Lender and the other
Lenders named therein, providing for revolving credit borrowings, including any
related notes, guarantees, collateral documents, instruments and agreements
executed in connection therewith, and in each case as amended, modified,
restated, renewed, supplemented, refunded, replaced or refinanced from time to
time.
15
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Debentures due 2008" means the 9% Senior Debentures due May 1,
2008 issued by Finlay Enterprises pursuant to an Indenture dated April 24, 1998
between Finlay Enterprises and HSBC Bank USA (formerly known as Marine Midland
Bank), as trustee.
"Senior Notes due 2008" means the 8 3/8% Senior Notes due May 1, 2008
issued by the Company pursuant to an Indenture dated April 24, 1998 between
Finlay Fine Jewelry Corporation and HSBC Bank USA (formerly known as Marine
Midland Bank), as trustee.
"Senior Revolving Debt" means revolving credit borrowings under the
Revolving Credit Agreement and revolving consignments under the Gold Consignment
Agreement and, if any, a substantially similar gold consignment agreement
pursuant to Section 4.09(b)(iv)(y)(b) hereof.
"Significant Subsidiary" means any Subsidiary that would be a
"significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X,
promulgated pursuant to the Securities Act, as such Regulation is in effect on
the date hereof.
"Stated Maturity" means, with respect to any installment of interest or
principal on any series of Indebtedness, the date on which such payment of
interest or principal was scheduled to be paid in the original documentation
governing such Indebtedness, and shall not include any contingent obligations to
repay, redeem or repurchase any such interest or principal prior to the date
originally scheduled for the payment thereof.
"Subsidiary" means, with respect to any Person, (i) any corporation,
association or other business entity of which more than 50% of the total voting
power of share of Capital Stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by such
Person or one or more of the other Subsidiaries of that Person (or a combination
thereof) and (ii) any partnership (a) the sole general partner or the managing
general partner of which is such Person or a Subsidiary of such Person or (b)
the only general partners of which are such Person or of one or more
Subsidiaries of such Person (or any combination thereof).
"Subsidiary Guarantee" means a guarantee of the Company's payment
obligations under this Indenture and the Notes.
"Subsidiary Guarantor" means each direct and indirect Subsidiary of the
Company that executes a Subsidiary Guarantee in accordance with the provisions
of this Indenture, and their respective successors and assigns.
"Subsidiary Intercompany Notes" means the intercompany notes,
subordinate (in accordance with the terms of this Indenture) in right of payment
to all existing Indebtedness of the issuer (other than Indebtedness which by its
terms is subordinate in right of payment to other Indebtedness of such issuer),
issued by the Company or a Subsidiary of the Company in favor of the Company or
a Subsidiary of the Company to evidence advances by the Company or a Subsidiary
of the Company, in each case, in the form attached as Exhibit E to this
Indenture.
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"Tax Allocation Agreement" means the Tax Allocation Agreement, dated as
of November 1, 1992, between the Company and Finlay Enterprises.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. SS
77aaa-77bbbb), as in effect on the date on which this Indenture is qualified
under the TIA provided, however, that, in the event the Trust Indenture Act of
1939 is amended after such date, "TIA" means, to the extent required by any such
amendment, the Trust Indenture Act of 1939, as amended.
"Trustee" means the party named as such above until a successor
replaces it in accordance with the applicable provisions of this Indenture and
thereafter means the successor serving hereunder.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (i) the sum
of the products obtained by multiplying (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (b) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment, by (ii) the then outstanding principal
amount of such Indebtedness.
"Wholly Owned Subsidiary" of any Person means a Subsidiary of such
Person all of the outstanding Capital Stock or other ownership interests of
which (other than directors' qualifying shares) shall at the time be owned by
such Person or by one or more Wholly Owned Subsidiaries of such Person and one
or more Wholly Owned Subsidiaries of such Person.
Section 1.02 Other Definitions.
Defined in
Term Section
"Affiliate Transaction"..................................... 4.12
"Asset Sale Offer".......................................... 3.09
"Authentication Order"...................................... 2.02
"Change of Control Offer"................................... 4.15
"Change of Control Payment"................................. 4.15
"Change of Control Payment Date"............................ 4.15
"Covenant Defeasance"....................................... 8.03
"Definitive Note"........................................... Appendix
"Depository"................................................ Appendix
"Event of Default".......................................... 6.01
"Excess Proceeds"........................................... 4.10
"Exchange Notes"............................................ Appendix
"Finlay Enterprises Statement".............................. 4.07(b)(viii)
"Global Note"............................................... Appendix
"incur"..................................................... 4.09
"Initial Notes"............................................. Appendix
"Legal Defeasance".......................................... 8.02
"Offer Amount".............................................. 3.09
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"Offer Period".............................................. 3.09
"Paying Agent".............................................. 2.03
"Payment Default"........................................... 6.01
"Permitted Debt"............................................ 4.09
"Private Exchange Notes".................................... Appendix
"Purchase Date"............................................. 3.09
"Registrar"................................................. 2.03
"Registration Rights Agreement.............................. Appendix
"Restricted Payments"....................................... 4.07
"Successor Company"......................................... 5.1
"Transfer Restricted Notes"................................. Appendix
Section 1.03 Terms of TIA.
Whenever this Indenture refers to a provision of the TIA, the provision
is incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following
meanings:
"indenture securities" means the Notes;
"indenture security Holder" means a Holder of a Note;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee; and
"obligor" on the Notes and the Subsidiary Guarantees, if any, means the
Company and the Subsidiary Guarantors, respectively, and any successor obligor
upon the Notes and the Subsidiary Guarantees, respectively.
All other terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by Commission rule under
the TIA have the meanings so assigned to them.
Section 1.04 Rules Of Construction.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning assigned
to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and in the plural
include the singular;
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(5) provisions apply to successive events and transactions;
(6) references to sections of or rules under the Securities Act shall
be deemed to include substitute, replacement of successor sections
or rules adopted by the Commission from time to time; and
(7) words implying the feminine or masculine gender shall be deemed to
include all genders.
ARTICLE II.
THE NOTES
Section 2.01 Form and Dating.
Provisions relating to the Initial Notes, the Private Exchange Notes
and the Exchange Notes are set forth in the Rule 144A/Regulation S Appendix
attached hereto (the "Appendix") which is hereby incorporated in and expressly
made part of this Indenture. The Initial Notes and the Trustee's certificate of
authentication shall be substantially in the form of Exhibit 1 to the Appendix
which is hereby incorporated in and expressly made a part of this Indenture. The
Exchange Notes, the Private Exchange Notes and the Trustee's certificate of
authentication shall be substantially in the form of Exhibit A, which is hereby
incorporated in and expressly made a part of this Indenture. The Notes may have
notations, legends or endorsements required by law, stock exchange rule or usage
(provided that any such notation, legend or endorsement is in a form acceptable
to the Company). Each Note shall be dated the date of its authentication. The
terms of the Notes set forth in the Appendix and Exhibit A are part of the terms
of this Indenture.
Section 2.02 Execution and Authentication.
An Officer shall sign the Notes for the Company by manual or facsimile
signature. The Company's seal shall be reproduced on the Notes and may be in
facsimile form.
If an Officer whose signature is on a Note no longer holds that office
at the time a Note is authenticated, the Note shall nevertheless be valid.
A Note shall not be valid until authenticated by the manual signature
of the Trustee. The signature shall be conclusive evidence that the Note has
been authenticated under this Indenture.
On the Issue Date, the Trustee shall authenticate and deliver $200
million of 8 3/8% Senior Notes due June 1, 2012, and, at any time and from time
to time thereafter, the Trustee shall authenticate and deliver Notes for
original issue in an aggregate principal amount specified in such order, in each
case upon a written order of the Company signed by two Officers or by an Officer
and either an Assistant Treasurer or an Assistant Secretary of the Company (an
"Authentication Order"). Such order shall specify the amount of the Notes to be
authenticated and the date on which the original issue of Notes is to be
authenticated and, in the case of an
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issuance of Additional Notes pursuant to Section 2.15 after the Issue Date,
shall certify that such issuance is in compliance with Section 4.09 hereof.
The Trustee may appoint an authenticating agent acceptable to the
Company to authenticate Notes. An authenticating agent may authenticate Notes
whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as an Agent to deal with Holders or an
Affiliate of the Company.
Section 2.03 Registrar and Paying Agent.
The Company shall maintain an office or agency where Notes may be
presented for registration of transfer or for exchange ("Registrar") and an
office or agency where Notes may be presented for payment ("Paying Agent"). The
Registrar shall keep a register of the Notes and of their registration of
transfer and exchange. The Company may appoint one or more co-registrars and one
or more additional paying agents. The term "Registrar" includes any co-registrar
and the term "Paying Agent" includes any additional paying agent. The Company
may change any Paying Agent or Registrar without notice to any Holder. The
Company shall notify the Trustee in writing of the name and address of any Agent
not a party to this Indenture. If the Company fails to appoint or maintain
another entity as Registrar or Paying Agent, the Trustee shall act as such and
shall be entitled to appropriate compensation in accordance with Section 7.07
hereof. The Company or any of its Subsidiaries may act as Paying Agent or
Registrar.
The Company initially appoints the Trustee to act as the Registrar and
Paying Agent with respect to the Global Notes.
Section 2.04 Paying Agent to Hold Money in Trust.
The Company shall require each Paying Agent other than the Trustee to
agree in writing that the Paying Agent will hold in trust for the benefit of
Holders or the Trustee all money held by the Paying Agent for the payment of
principal, premium, if any, or interest on the Notes, and will notify the
Trustee of any default by the Company in making any such payment. While any such
default continues, the Trustee may require a Paying Agent to pay all money held
by it to the Trustee. The Company at any time may require a Paying Agent to pay
all money held by it to the Trustee. Upon payment over to the Trustee, the
Paying Agent (if other than the Company or a Subsidiary) shall have no further
liability for the money. If the Company or a Subsidiary acts as Paying Agent, it
shall segregate and hold in a separate trust fund for the benefit of the Holders
all money held by it as Paying Agent. Upon any bankruptcy or reorganization
proceedings relating to the Company, the Trustee shall serve as Paying Agent for
the Notes.
Section 2.05 Holder Lists.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
all Holders and shall otherwise comply with TIA ss. 312(a). If the Trustee is
not the Registrar, the Company shall furnish to the Trustee at least seven
Business Days before each interest payment date and at such other times as the
Trustee may request in writing, a list in such form and as of such date as the
Trustee may
20
reasonably require of the names and addresses of the Holders of Notes and the
Company shall otherwise comply with TIA ss. 312(a).
Section 2.06 Transfer and Exchange.
The Notes shall be issued in registered form and shall be transferable
only upon the surrender of a Note for registration of transfer. When a Note is
presented to the Registrar or a co-registrar with a request to register a
transfer, the Registrar shall register the transfer as requested if the
requirements of this Indenture and Section 8-401(1) of the Uniform Commercial
Code are met. When Notes are presented to the Registrar or a co-registrar with a
request to exchange them for an equal principal amount of Notes of other
denominations, the Registrar shall make the exchange as requested if the same
requirements are met. No service charge shall be made for any registration of
transfer or exchange or redemption of the Notes, but the Company may require
payment of a sum sufficient to cover any transfer tax or similar governmental
charge payable in connection therewith (other than any such transfer taxes or
other similar governmental charge payable upon exchanges pursuant to Section
2.10, 3.06, 4.10, 4.15 or 9.05).
Section 2.07 Replacement Notes.
If any mutilated Note is surrendered to the Trustee, or the Company and
the Trustee receive evidence to their satisfaction of the destruction, loss or
theft of any Note, the Company shall issue and the Trustee, upon receipt of an
Authentication Order, shall authenticate a replacement Note if the Trustee's
requirements are met. If required by the Trustee or the Company, an indemnity
bond must be supplied by the Holder that is sufficient in the judgment of the
Trustee and the Company to protect the Company, the Trustee, any Agent and any
authenticating agent from any loss that any of them may suffer if a Note is
replaced. The Company may charge for its expenses in replacing a Note.
Every replacement Note is an additional obligation of the Company and
shall be entitled to all of the benefits of this Indenture equally and
proportionately with all other Notes duly issued hereunder.
Section 2.08 Outstanding Notes.
The Notes outstanding at any time are all the Notes authenticated by
the Trustee except for those cancelled by it, those delivered to it for
cancellation, those reductions in the interest in a Global Note effected by the
Trustee in accordance with the provisions hereof, and those described in this
Section as not outstanding. Except as set forth in Section 2.09 hereof, a Note
does not cease to be outstanding because the Company or an Affiliate of the
Company holds the Note; however, Notes held by the Company or a Subsidiary of
the Company shall not be deemed to be outstanding for purposes of Section
3.07(b) hereof.
If a Note is replaced pursuant to Section 2.07 hereof, it ceases to be
outstanding unless the Trustee receives proof satisfactory to it that the
replaced Note is held by a protected purchaser.
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If the principal amount of any Note is considered paid under Section
4.01 hereof, it ceases to be outstanding and interest on it ceases to accrue.
If the Paying Agent (other than the Company, a Subsidiary or an
Affiliate of any thereof) holds, on a redemption date or maturity date, money
sufficient to pay Notes payable on that date, then on and after that date such
Notes shall be deemed to be no longer outstanding and shall cease to accrue
interest.
Section 2.09 Treasury Notes.
In determining whether the Holders of the required principal amount of
Notes have concurred in any direction, waiver or consent, Notes owned by the
Company, or by any Affiliate of the Company, shall be considered as though not
outstanding, except that for the purposes of determining whether the Trustee
shall be protected in relying on any such direction, waiver or consent, only
Notes that a Responsible Officer of the Trustee knows are so owned shall be so
disregarded. Notwithstanding the foregoing, Notes that are to be acquired by the
Company, any Subsidiary of the Company or an Affiliate of the Company pursuant
to an exchange offer, tender offer or other agreement shall not be deemed to be
owned by the Company, such Subsidiary of the Company or an Affiliate of the
Company until legal title to such Notes passes to the Company or such Subsidiary
or Affiliate, as the case may be.
Section 2.10 Temporary Notes.
Until certificates representing Notes are ready for delivery, the
Company may prepare and the Trustee, upon receipt of an Authentication Order,
shall authenticate temporary Notes. Temporary Notes shall be substantially in
the form of certificated Notes but may have variations that the Company
considers appropriate for temporary Notes and as shall be reasonably acceptable
to the Trustee. Without unreasonable delay, the Company shall prepare and the
Trustee shall authenticate definitive Notes in exchange for temporary Notes.
Holders of temporary Notes shall be entitled to all of the benefits of
this Indenture.
Section 2.11 Cancellation.
The Company at any time may deliver Notes to the Trustee for
cancellation. The Registrar and Paying Agent shall forward to the Trustee any
Notes surrendered to them for registration of transfer, exchange or payment. The
Trustee and no one else shall cancel all Notes surrendered for registration of
transfer, exchange, payment, replacement or cancellation and shall destroy
cancelled Notes (subject to the record retention requirement of the Exchange
Act). Upon the Company's written request, certification of the destruction of
all cancelled Notes shall be delivered to the Company. The Company may not issue
new Notes to replace Notes that it has paid or that have been delivered to the
Trustee for cancellation.
Section 2.12 Defaulted Interest.
If the Company defaults in a payment of interest on the Notes, it shall
pay the defaulted interest in any lawful manner plus, to the extent lawful,
interest payable on the
22
defaulted interest, to the Persons who are Holders on a subsequent special
record date, in each case at the rate provided in the Notes and in Section 4.01
hereof. The Company shall notify the Trustee in writing of the amount of
defaulted interest proposed to be paid on each Note and the date of the proposed
payment. The Company shall fix or cause to be fixed each such special record
date and payment date; provided that no such special record date shall be less
than 10 days prior to the related payment date for such defaulted interest. At
least 15 days before the special record date, the Company (or, upon the written
request of the Company, the Trustee in the name and at the expense of the
Company) shall mail or cause to be mailed to Holders a notice that states the
special record date, the related payment date and the amount of such interest to
be paid.
Section 2.13 Record Date.
The record date for purposes of determining the identity of Holders of
the Notes entitled to vote or consent to any action by vote or consent
authorized or permitted under this Indenture shall be determined as provided for
in TIA ss.316(c).
Section 2.14 CUSIP Number.
The Company in issuing the Notes may use a "CUSIP" number and, if it
does so, the Trustee shall use the CUSIP number in notices of redemption or
exchange as a convenience to Holders; provided that any such notice may state
that no representation is made as to the correctness or accuracy of the CUSIP
number printed in the notice or on the Notes and that reliance may be placed
only on the other identification numbers printed on the Notes. The Company shall
promptly notify the Trustee in writing of any change in the CUSIP number. The
Temporary Regulation S Global Note (as defined in Section 2.1(a) of the Appendix
hereto) and the Rule 144A Global Note (as defined in Section 2.1(a) of the
Appendix hereto) shall be assigned separate CUSIP numbers.
Section 2.15 Issuance of Additional Notes.
The Company shall be entitled, subject to its compliance with Section
4.09, to issue Additional Notes under this Indenture, which shall have identical
terms as the Initial Notes issued on the Issue Date, other than with respect to
the date of issuance, the date from which interest will accrue thereon, the
issue price and the amount of interest payable upon a registration default as
provided under a registration rights agreement related thereto (and if such
Additional Notes shall be issued in the form of Exchange Notes, other than with
respect to transfer restrictions). The Initial Notes issued on the Issue Date,
any Additional Notes and all Exchange Notes or Private Exchange Notes issued in
exchange therefor shall be treated as a single class for all purposes under this
Indenture.
With respect to any Additional Notes, the Company shall set forth in a
resolution of the Board of Directors and an Officers' Certificate, a copy of
each of which shall be delivered to the Trustee, the following information:
(1) the aggregate principal amount of such Additional Notes to be
authenticated and delivered pursuant to this Indenture;
23
(2) the issue price, the issue date and the CUSIP numbers of such
Additional Notes; provided, however, that no Additional Notes may
be issued at a price that would cause such Additional Notes to
have "original issue discount" within the meaning of Section 1273
of the Code; and
(3) whether such Additional Notes shall be Transfer Restricted Notes
(as defined in the Appendix hereto) and issued in the form of
Initial Notes as set forth in the Appendix to this Indenture or
shall be issued in the form of Exchange Notes as set forth in
Exhibit A.
ARTICLE III.
REDEMPTION AND PREPAYMENT
Section 3.01 Notices to Trustee.
If the Company elects to redeem Notes pursuant to the optional
redemption provisions of Section 3.07 hereof, it shall furnish to the Trustee,
at least 35 days (unless a shorter period shall be satisfactory to the Trustee)
but not more than 60 days before a redemption date, an Officers' Certificate
setting forth (i) the clause of this Indenture pursuant to which the redemption
shall occur, (ii) the redemption date, (iii) the principal amount of Notes to be
redeemed, and (iv) the redemption price.
Section 3.02 Selection of Notes to be Redeemed.
If less than all of the Notes are to be redeemed or purchased in an
offer to purchase at any time, the Trustee shall select the Notes to be redeemed
or purchased among the Holders of the Notes in compliance with the requirements
of the principal national securities exchange, if any, on which the Notes are
listed or, if the Notes are not so listed, on a pro rata basis, by lot or in
accordance with any other method the Trustee considers fair and appropriate. In
the event of partial redemption by lot, the particular Notes to be redeemed
shall be selected, unless otherwise provided herein, not less than 30 nor more
than 60 days prior to the redemption date by the Trustee from the outstanding
Notes not previously called for redemption.
The Trustee shall promptly notify the Company in writing of the Notes
selected for redemption and, in the case of any Note selected for partial
redemption, the principal amount thereof to be redeemed. Notes and portions of
Notes selected shall be in amounts of $1,000 or whole multiples of $1,000;
except that if all of the Notes of a Holder are to be redeemed, the entire
outstanding amount of Notes held by such Holder, even if not a multiple of
$1,000, shall be redeemed. Except as provided in the preceding sentence,
provisions of this Indenture that apply to Notes called for redemption also
apply to portions of Notes called for redemption.
Section 3.03 Notice of Redemption.
Subject to the provisions of Section 3.09 hereof, at least 30 days but
not more than 60 days before a redemption date, the Company shall mail or cause
to be mailed, by first class mail to its registered address, a notice of
redemption to each Holder whose Notes are to be redeemed.
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The notice shall identify the Notes to be redeemed and shall state:
(a) the redemption date;
(b) the redemption price;
(c) if any Note is being redeemed in part, the portion of the principal
amount of such Note to be redeemed and that, after the redemption date
upon surrender of such Note, a new Note or Notes in principal amount
equal to the unredeemed portion shall be issued upon cancellation of
the original Note;
(d) the name and address of the Paying Agent;
(e) that Notes called for redemption must be surrendered to the Paying
Agent to collect the redemption price;
(f) that, unless the Company defaults in making such redemption payment,
interest on Notes called for redemption ceases to accrue on and after
the redemption date;
(g) the paragraph of the Notes and/or Section of this Indenture pursuant to
which the Notes called for redemption are being redeemed; and
(h) that no representation is made as to the correctness or accuracy of the
CUSIP number, if any, listed in such notice or printed on the Notes.
At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at its expense; provided, however, that the
Company shall have delivered to the Trustee, at least 45 days prior to the
redemption date, an Officers' Certificate requesting that the Trustee give such
notice and setting forth the information to be stated in such notice pursuant to
this Section 3.03.
Section 3.04 Effect of Notice of Redemption.
Once notice of redemption is mailed in accordance with Section 3.03
hereof, Notes called for redemption become irrevocably due and payable on the
redemption date at the redemption price, and a notice of redemption may not be
conditional.
Section 3.05 Deposit of Redemption Price.
One Business Day prior to the redemption date, the Company shall
deposit with the Trustee or with the Paying Agent money sufficient to pay the
redemption price of and accrued interest on all Notes to be redeemed on that
date. The Trustee or the Paying Agent shall promptly return to the Company any
money deposited with the Trustee or the Paying Agent by the Company in excess of
the amounts necessary to pay the redemption price of and accrued interest on all
Notes to be redeemed.
If the Company complies with the provisions of the preceding paragraph,
on and after the redemption date, interest shall cease to accrue on the Notes or
the portions of Notes
25
called for redemption. If a Note is redeemed on or after an interest record date
but on or prior to the related interest payment date, then any accrued and
unpaid interest shall be paid to the Person in whose name such Note was
registered at the close of business on such record date. If any Note called for
redemption shall not be so paid upon surrender for redemption because of the
failure of the Company to comply with the preceding paragraph, interest shall be
paid on the unpaid principal, from the redemption date until such principal is
paid, and to the extent lawful on any interest not paid on such unpaid
principal, in each case at the rate provided in the Notes and in Section 4.01
hereof.
Section 3.06 Notes Redeemed in Part.
Upon surrender of a Note that is redeemed in part, the Company shall
issue and, upon the Company's written request, the Trustee shall authenticate
for the Holder at the expense of the Company a new Note equal in principal
amount to the unredeemed portion of the Note surrendered.
Section 3.07 Optional Redemption.
(a) Except as set forth in clause (b) of this Section 3.07, the Company
shall not have the option to redeem the Notes pursuant to this Section
3.07 prior to June 1, 2008. Thereafter, the Notes will be subject to
redemption at any time at the option of the Company, in whole or in
part, upon not less than 30 nor more than 60 days' notice, at the
redemption prices (expressed as percentages of principal amount) set
forth below plus accrued and unpaid interest thereon to the applicable
redemption date, if redeemed during the twelve-month period beginning
on June 1 of the years indicated below:
Year Percentage
---- ----------
2008............................................ 104.188%
2009............................................ 102.094%
2010 and thereafter............................. 100.000%
(b) Notwithstanding the provisions of clause (a) of this Section 3.07,
until June 1, 2007, the Company may on any one or more occasions redeem
an aggregate principal amount not to exceed 35% of the aggregate
principal amount of the Notes (which includes Additional Notes, if any)
originally issued at a redemption price of 108.375% of the principal
amount thereof, plus accrued and unpaid interest thereon, if any, to
the redemption date, with the net cash proceeds from one or more Public
Equity Offerings by the Company; provided that at least 65% of such
aggregate principal amount of Notes (which includes Additional Notes,
if any) originally issued remains outstanding immediately after the
occurrence of each such redemption (excluding Notes held, directly or
indirectly, by the Company or its Affiliates); and provided, further,
that such redemption shall occur within 120 days of the date of the
closing of such Public Equity Offering.
(c) Any redemption pursuant to this Section 3.07 shall be made pursuant to
the provisions of Section 3.01 through 3.06 hereof.
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Section 3.08 Mandatory Redemption.
Except as set forth in Sections 4.10 and 4.15 hereof, the Company shall
not be required to make mandatory redemption payments with respect to the Notes.
There are no sinking fund payments with respect to the Notes.
Section 3.09 Offer to Purchase by Application of Excess Proceeds.
In the event that, pursuant to Section 4.10 hereof, the Company shall
be required to commence an offer to all Holders to purchase Notes (an "Asset
Sale Offer"), it shall follow the procedures specified below.
The Asset Sale Offer shall remain open for a period of 20 Business Days
following its commencement and no longer, except to the extent that a longer
period is required by applicable law (the "Offer Period"). No later than five
Business Days after the termination of the Offer Period (the "Purchase Date"),
the Company shall purchase the principal amount of Notes required to be
purchased pursuant to Section 4.10 hereof (the "Offer Amount") or, if less than
the Offer Amount has been tendered, all Notes tendered in response to the Asset
Sale Offer. Payment for any Notes so purchased shall be made in the same manner
as interest payments are made.
If the Purchase Date is on or after an interest record date and on or
before the related interest payment date, any accrued and unpaid interest shall
be paid to the Person in whose name a Note is registered at the close of
business on such record date, and no additional interest shall be payable to
Holders who tender Notes pursuant to the Asset Sale Offer.
Upon the commencement of an Asset Sale Offer, the Company shall send,
by first class mail, a notice to the Trustee and each of the Holders, with a
copy to the Trustee. The notice shall contain all instructions and materials
necessary to enable such Holders to tender Notes pursuant to the Asset Sale
Offer. The Asset Sale Offer shall be made to all Holders. The notice, which
shall govern the terms of the Asset Sale Offer, shall state:
(a) that the Asset Sale Offer is being made pursuant to this Section 3.09
and Section 4.10 hereof and the length of time the Asset Sale Offer
shall remain open;
(b) the Offer Amount, the purchase price and the Purchase Date;
(c) that any Note not tendered or accepted for payment shall continue to
accrue interest;
(d) that, unless the Company defaults in making such payment, any Note
accepted for payment pursuant to the Asset Sale Offer shall cease to
accrue interest after the Purchase Date;
(e) that Holders electing to have a Note purchased pursuant to an Asset
Sale Offer may only elect to have all of such Note purchased and may
not elect to have only a portion of such Note purchased;
27
(f) that Holders electing to have a Note purchased pursuant to any Asset
Sale Offer shall be required to surrender the Note, with the form
entitled "Option of Holder to Elect Purchase" on the reverse of the
Note completed, or transfer by book-entry transfer, to the Company, a
depository, if appointed by the Company, or a Paying Agent at the
address specified in the notice at least three days before the Purchase
Date;
(g) that Holders shall be entitled to withdraw their election if the
Company, the depository or the Paying Agent, as the case may be,
receives, not later than the expiration of the Offer Period, a
telegram, telex, facsimile transmission or letter setting forth the
name of the Holder, the principal amount of the Note the Holder
delivered for purchase and a statement that such Xxxxxx is withdrawing
his or her election to have such Note purchased;
(h) that, if the aggregate principal amount of Notes surrendered by Holders
exceeds the Offer Amount, the Trustee shall select the Notes to be
purchased on a pro rata basis (with such adjustments as may be deemed
appropriate by the Company so that only Notes in denominations of
$1,000, or integral multiples thereof, shall be purchased); and
(i) that Holders whose Notes were purchased only in part shall be issued
new Notes equal in principal amount to the unpurchased portion of the
Notes surrendered (or transferred by book-entry transfer).
On or before the Purchase Date, the Company shall, to the extent
lawful, accept for payment, on a pro rata basis to the extent necessary, the
Offer Amount of Notes or portions thereof tendered pursuant to the Asset Sale
Offer, or if less than the Offer Amount has been tendered, all Notes tendered,
and shall deliver to the Trustee an Officers' Certificate stating that such
Notes or portions thereof were accepted for payment by the Company in accordance
with the terms of this Section 3.09. The Company, the depository or the Paying
Agent, as the case may be, shall promptly (but in any case not later than five
days after the Purchase Date) mail or deliver to each tendering Holder an amount
equal to the purchase price of the Notes tendered by such Holder and accepted by
the Company for purchase, and the Company shall promptly issue a new Note, and
the Trustee, upon written request from the Company shall authenticate and mail
or deliver such new Note to such Holder, in a principal amount equal to any
unpurchased portion of the Note surrendered. Any Note not so accepted shall be
promptly mailed or delivered by the Company to the Holder thereof. The Company
shall publicly announce the results of the Asset Sale Offer on the Purchase
Date.
Other than as specifically provided in this Section 3.09, any purchase
pursuant to this Section 3.09 shall be made pursuant to the provisions of
Sections 3.01 through 3.06 hereof. Upon completion of an Asset Sale Offer, the
amount of Excess Proceeds shall be reset at zero.
28
ARTICLE IV.
COVENANTS
Section 4.01 Payment of Notes.
The Company shall pay or cause to be paid the principal of, premium, if
any, and interest on the Notes on the dates and in the manner provided in the
Notes. Principal, premium, if any, and interest shall be considered paid on the
date due if the Paying Agent, if other than the Company or a Subsidiary thereof,
holds as of 10:00 a.m. Eastern Time on the due date money deposited by the
Company in immediately available funds and designated for and sufficient to pay
all principal, premium, if any, and interest then due.
The Company shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue principal and premium, if any,
at the rate equal to 1% per annum in excess of the then applicable interest rate
on the Notes to the extent lawful; it shall pay interest (including
post-petition interest in any proceeding under any Bankruptcy Law) on overdue
installments of interest (without regard to any applicable grace period) at the
same rate to the extent lawful.
Section 4.02 Maintenance of Office or Agency.
The Company shall maintain in the Borough of Manhattan, The City of New
York, an office or agency (which may be an office of the Trustee or an affiliate
of the Trustee, Registrar or co-registrar) where Notes may be surrendered for
registration of transfer or for exchange and where notices and demands to or
upon the Company in respect of the Notes and this Indenture may be served. The
Company shall give prompt written notice to the Trustee of the location, and any
change in the location, of such office or agency. If at any time the Company
shall fail to maintain any such required office or agency or shall fail to
furnish the Trustee with the address thereof, such presentations, surrenders,
notices and demands may be made or served at the Corporate Trust Office of the
Trustee.
The Company may also from time to time designate one or more other
offices or agencies where the Notes may be presented or surrendered for any or
all such purposes and may from time to time rescind such designations; provided,
however, that no such designation or rescission shall in any manner relieve the
Company of its obligation to maintain an office or agency in the Borough of
Manhattan, The City of New York for such purposes. The Company shall give prompt
written notice to the Trustee of any such designation or rescission and of any
change in the location of any such other office or agency.
The Company hereby designates the Corporate Trust Office of the Trustee
as one such office or agency of the Company in accordance with Section 2.03.
Section 4.03 Reports.
(a) Notwithstanding that the Company may not be subject to the reporting
requirements of Section 13 or 15(d) of the Exchange Act, the Company
shall furnish to the Trustee and the Holders of Notes (1) all annual
and quarterly financial information that would be
29
required to be contained in a filing with the Commission on Forms 10-K
and 10-Q, respectively, if the Company were required to file such
Forms, including a "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and, with respect to the annual
financial statements only, a report thereon by the Company's certified
independent accountants; and (2) all current reports that would be
required to be filed with the Commission on Form 8-K if the Company
were required to file such reports (other than such reports that are
required as a result of Regulation S sales of equity securities), all
such information to be furnished at the time such filings would have
been required for a U.S. corporation that is required by such sections
to file such forms. In addition, whether or not required by the rules
and regulations of the Commission, the Company shall file a copy of all
such information and reports with the Commission for public
availability within the time periods specified in the Commission's
rules and regulations (unless the Commission will not accept such
filing) and make such information available to securities analysts and
prospective investors upon request. Any materials required to be
furnished to Holders of Notes by this Section 4.03 shall discuss, in
reasonable detail, either on the face of the financial statements
included therein or in the footnotes thereto and in any Management's
Discussion and Analysis of Financial Condition and Results of
Operations, the financial condition and results of operations of the
Company and the Subsidiary Guarantors, if any, separate from the
financial condition and results of operations of the other Subsidiaries
of the Company.
(b) The Company shall furnish to the Holders of Notes and to prospective
investors, upon the requests of such Holders of Notes, any information
required to be delivered pursuant to Rule 144A(d)(4) under the
Securities Act so long as the Notes are not freely transferable under
the Securities Act. The Company also shall comply with the other
provisions of TIA ss. 314(a).
(c) Delivery of such reports to the Trustee is for informational purposes
only and the Trustee's receipt of such reports shall not constitute
constructive notice of any information contained therein or
determinable from information contained therein, including the
Company's compliance with any of its covenants hereunder (as to which
the Trustee is entitled to rely exclusively on Officers' Certificates).
Section 4.04 Compliance Certificate.
(a) The Company and each Subsidiary Guarantor (to the extent that such
Subsidiary Guarantor is so required under the TIA) shall deliver to the
Trustee, within 120 days after the end of each fiscal year, an
Officers' Certificate stating that a review of the activities of the
Company and its Subsidiaries during the preceding fiscal year has been
made under the supervision of the signing Officers with a view to
determining whether the Company has kept, observed, performed and
fulfilled its obligations under this Indenture, and further stating, as
to each such Officer signing such certificate, that to the best of his
or her knowledge the Company has kept, observed, performed and
fulfilled each and every covenant contained in this Indenture and is
not in default in the performance or observance of any of the terms,
provisions and conditions of this Indenture (or, if a Default or Event
of Default shall have occurred, describing all such Defaults or Events
of Default of which he or she may have knowledge and what action the
Company is taking
30
or proposes to take with respect thereto) and that to the best of his
or her knowledge no event has occurred and remains in existence by
reason of which payments on account of the principal of or interest, if
any, on the Notes are prohibited or, if such event has occurred, a
description of the event and what action the Company is taking or
proposes to take with respect thereto.
(b) So long as not contrary to the then current recommendations of the
American Institute of Certified Public Accountants, the year-end
financial statements delivered pursuant to Section 4.03 above shall be
accompanied by a written statement of the Company's independent public
accountants (who shall be a firm of established national reputation)
that in performing the audit of such financial statements, nothing has
come to their attention that would lead them to believe that the
Company has violated any provisions of Article 4 (other than Sections
4.02, 4.03, 4.04, 4.06 and 4.16, as to which no belief need be
expressed) or Article 5 hereof insofar as they relate to financial and
accounting matters or, if any such violation has occurred, specifying
the nature and period of existence thereof; it being understood that
such accountants shall not be liable directly or indirectly to any
Person for any failure to obtain knowledge of any such violation.
(c) The Company shall, so long as any of the Notes are outstanding, deliver
to the Trustee, forthwith upon any Officer becoming aware of any
Default or Event of Default, an Officers' Certificate specifying such
Default or Event of Default and what action the Company is taking or
proposes to take with respect thereto.
Section 4.05 Taxes.
The Company shall pay, and shall cause each of its Subsidiaries to pay,
prior to delinquency, all material taxes, assessments, and governmental levies
except such as are contested in good faith and by appropriate proceedings or
where the failure to effect such payment is not adverse in any material respect
to the Holders of the Notes.
Section 4.06 Stay, Extension and Usury Laws.
The Company hereby, and each of the Subsidiary Guarantors by execution
and delivery of its Subsidiary Guarantee, covenants (to the extent that it may
lawfully do so) that it shall not at any time insist upon, plead, or in any
manner whatsoever claim or take the benefit or advantage of, any stay, extension
or usury law wherever enacted, now or at any time hereafter in force, that may
affect the covenants or the performance of this Indenture; and the Company and
each of the Subsidiary Guarantors (to the extent that it may lawfully do so)
hereby expressly waives all benefit or advantage of any such law, and covenants
that it shall not, by resort to any such law, hinder, delay or impede the
execution of any power herein granted to the Trustee, but shall suffer and
permit the execution of every such power as though no such law has been enacted.
Section 4.07 Restricted Payments.
(a) The Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly:
31
(i) declare or pay any dividend or make any other payment or
distribution of any sort in respect of the Company's or any of
its Subsidiaries' Equity Interests (including, without
limitation, any payment in connection with any merger or
consolidation involving such Person) or to the direct or
indirect holders of the Company's or any of its Subsidiaries'
Equity Interests (other than dividends or distributions payable
in Equity Interests (other than Disqualified Stock) of the
Company or dividends or distributions payable solely to the
Company or any Wholly Owned Subsidiary of the Company);
(ii) purchase, redeem or otherwise acquire or retire for value
(including, without limitation, in connection with any merger or
consolidation involving the Company) any Equity Interests in the
Company or any Affiliate of the Company (other than any such
Equity Interests owned by the Company or any Wholly Owned
Subsidiary of the Company and other than pursuant to the
exercise of an Equity Interest to exchange such Equity Interest
into an Equity Interest of the Company that is not Disqualified
Stock);
(iii) make any payment on or with respect to, or purchase, redeem,
defease or otherwise acquire or retire for value any
Indebtedness that is subordinated to the Notes or any Guarantee
thereof, other than a payment of interest or principal at the
Stated Maturity for such payment; or
(iv) make any Restricted Investment (all such payments and other
actions set forth in clauses (i) through (iv) above being
collectively referred to as "Restricted Payments"), unless, at
the time of and after giving effect to such Restricted Payment:
(x) no Default or Event of Default shall have occurred and
be continuing or would occur as a consequence thereof; and
(y) the Company would, at the time of such Restricted
Payment and after giving pro forma effect thereto as if such
Restricted Payment had been made at the beginning of the
applicable four-quarter period, have been permitted to incur at
least $1.00 of additional Indebtedness pursuant to the
provisions of Section 4.09(a) hereof; and
(z) such Restricted Payment, together with the aggregate
of all other Restricted Payments made by the Company and its
Subsidiaries after the date of this Indenture (excluding
Restricted Payments permitted by the provisions of Sections
4.07(b)(ii), (iii), (v), (vi) (to the extent that payments to
Finlay Enterprises pursuant to the Tax Allocation Agreement are
less than or equal to the total tax liabilities of the Company
and its Subsidiaries that would be payable if the Company and
its Subsidiaries were to file a separate consolidated return)
hereof), and (viii) is less than the sum of (1) 50% of the
Consolidated Net Income of the Company (which Consolidated Net
Income shall first be reduced by the amount of any payments to
Finlay Enterprises of the type described in Section 4.07(b)(x)
hereof) for the period (taken as one accounting period) from May
2,
32
2004 to the end of the Company's most recently ended fiscal
quarter for which internal financial statements are available at
the time of such Restricted Payment (or, if such Consolidated
Net Income for such period is a deficit, less 100% of such
deficit), plus (2) 100% of the aggregate net cash proceeds
received by the Company from the issue or sale since the date of
this Indenture of, or capital contributions with respect to,
Equity Interests of the Company, or of debt securities of the
Company that have been converted into such Equity Interests
(other than Equity Interests (or convertible debt securities)
sold to a Subsidiary of the Company and other than Disqualified
Stock or debt securities that have been converted into
Disqualified Stock), plus (3) to the extent that any Restricted
Investment that was made after the date of this Indenture is
sold for cash or otherwise liquidated or repaid for cash, the
lesser of (A) the cash return of capital with respect to such
Restricted Investment (less the cost of disposition, if any) and
(B) the initial amount of such Restricted Investment, plus (4)
100% of any dividends, distributions or other interest actually
received in cash by the Company after the date of this Indenture
from a Subsidiary of the Company, the Net Income of which
Subsidiary has been excluded from the computation of
Consolidated Net Income; plus (5) $15.0 million.
(b) The provisions of Section 4.07(a) hereof will not prohibit:
(i) the payment of any dividend within 60 days after the date of
declaration thereof, if at said date of declaration such payment
would have complied with the provisions of this Indenture;
(ii) the redemption, repurchase, retirement or other acquisition of
any Equity Interests of the Company in exchange for, or out of
the proceeds of, the substantially concurrent sale (other than
to a Subsidiary of the Company) of other Equity Interests of the
Company (other than any Disqualified Stock); provided that the
amount of any such net cash proceeds that are utilized for any
such redemption, repurchase, retirement or other acquisition
shall be excluded for purposes of Section 4.07(a)(z)(2) hereof;
(iii) the defeasance, redemption or repurchase of subordinated
Indebtedness of the Company with the net cash proceeds from an
incurrence of Permitted Refinancing Indebtedness or the
substantially concurrent sale (other than to a Subsidiary of the
Company) of Equity Interests of the Company (other than
Disqualified Stock); provided that the amount of any such net
cash proceeds that are utilized for any such defeasance,
redemption or repurchase shall be excluded for purposes of
Section 4.07(a)(z)(2) hereof;
(iv) payments to Finlay Enterprises to permit the substantially
concurrent repurchase, redemption or other acquisition or
retirement for value of any Equity Interests of Finlay
Enterprises held by any officer, employee, consultant or
director of Finlay Enterprises or any of its Subsidiaries, or by
the estate of any such Person, pursuant to any equity
subscription, stock option, employee benefit, employment or
similar agreement, plan or arrangement upon the death,
retirement or termination, as the
33
case may be, of such Person; provided that, the aggregate price
paid for all such repurchased, redeemed, acquired or retired
Equity Interests shall not exceed $3.0 million during any fiscal
year (with any unused amounts up to $3.0 million in any fiscal
year being carried over to the next fiscal year for use only in
such next fiscal year), plus (A) the aggregate cash proceeds
received by Finlay Enterprises during such twelve-month period
from any reissuance of Equity Interests by Finlay Enterprises to
any officer, employee, consultant or director of Finlay
Enterprises or any of its Subsidiaries, plus (B) the aggregate
amount, if any, paid during such twelve-month period in
connection with the repurchase, redemption, retirement or
acquisition of Equity Interests of Finlay Enterprises pursuant
to any one or more agreements between Finlay Enterprises and
Xxxxxx X. Xxxxxx as in effect on the date of this Indenture,
and, provided, further, no Default or Event of Default shall
have occurred and be continuing immediately after such
transaction;
(v) purchases of Equity Interests upon cashless exercise of options,
to the extent cashless exercise is permitted under the terms of
the relevant stock option agreement and of the incentive plan
pursuant to which such options were issued;
(vi) payments to Finlay Enterprises pursuant to the Tax Allocation
Agreement, as it may be amended from time to time in a manner
that is not materially adverse to the Company;
(vii) payments to Finlay Enterprises in an amount not to exceed $3.5
million in any fiscal year (which amount shall not be
cumulative) in order to pay expenses incurred by Finlay
Enterprises in the ordinary course of business;
(viii) payments to Finlay Enterprises to enable Finlay Enterprises to
purchase Senior Debentures due 2008 validly tendered, and not
validly withdrawn, in the Offer (as defined in the Offer to
Purchase and Consent Solicitation Statement (the "Finlay
Enterprises Statement") dated May 7, 2004, as amended prior to
the date hereof, by Finlay Enterprises), on the terms and
conditions set forth in the Finlay Enterprises Statement or,
after the Final Payment Date (as defined in the Finlay
Enterprises Statement), to redeem any outstanding Senior
Debentures due 2008 in accordance with the terms and conditions
of, and at the applicable redemption price set forth in, such
Senior Debentures due 2008 or to otherwise purchase or acquire
Senior Debentures at a price no greater than the then-applicable
redemption price; provided that such amounts are used by Finlay
Enterprises to purchase or redeem such Senior Debentures due
2008 in accordance with this clause (viii) promptly after
receipt of such payment;
(ix) required purchases of subordinated Indebtedness upon a Change of
Control or similar event constituting a "change in control" for
purposes of the agreement or agreements governing such
subordinated Indebtedness; provided that, prior to making any
such purchases of such Subordinated Indebtedness, the Company
makes a Change of Control Offer and makes the Change of Control
Payments on the Change of Control Payment Date (in each case,
whether or not otherwise
34
required to do so by this Indenture) that would be required if a
Change in Control had occurred;
(x) payments to Finlay Enterprises to enable Finlay Enterprises to
pay when due accrued but unpaid interest on the Senior
Debentures due 2008; provided no Default or Event of Default
then exists; and provided, further, that such amounts are
promptly used by Finlay Enterprises to pay such interest;
(xi) the purchase by the Company of fractional shares arising out of
stock dividends, splits or combinations; and
(xii) payments to Finlay Enterprises in an amount not to exceed
$500,000 in the aggregate to pay expenses incurred by Finlay
Enterprises in connection with the Refinancing.
(c) The amount of all Restricted Payments (other than cash) shall be the
fair market value on the date of the Restricted Payment of the asset(s)
proposed to be transferred by the Company or such Subsidiary, as the
case may be, pursuant to the Restricted Payment. The fair market value
of any non-cash Restricted Payment shall be determined by the Board of
Directors, whose resolutions with respect thereto shall be set forth in
Officers' Certificate delivered to the Trustee, such determination to
be based upon an opinion or appraisal issued by an accountant,
appraisal or investment banking firm of national standing if such fair
market value exceeds $10.0 million. Not later than the date of making
any Restricted Payment, the Company shall deliver to the Trustee an
Officers' Certificate stating that such Restricted Payment is permitted
and setting forth the basis upon which the calculations required by
this Section 4.07 were computed, which calculations shall be based upon
the Company's latest available financial statements.
Section 4.08 Dividend and Other Payment Restrictions Affecting
Subsidiaries.
The Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, create or otherwise cause or suffer to exist or become
effective any encumbrance or restriction on the ability of any Subsidiary of the
Company to (i)(a) pay dividends or make any other distributions to the Company
or any of its Subsidiaries (1) on its Capital Stock or (2) with respect to any
other interest or participation in, or measured by, its profits, or (b) pay any
indebtedness owed to the Company or any of its Subsidiaries; (ii) make loans or
advances to the Company or any of its Subsidiaries; or (iii) sell, lease or
transfer any of its properties or assets to the Company or any of its
Subsidiaries, except for such encumbrances or restrictions existing under or by
reason of (a) Existing Indebtedness as in effect on the date hereof, (b) the
Revolving Credit Agreement and the Gold Consignment Agreement as in effect as of
the date hereof, and any amendments, modifications, restatements, renewals,
increases, supplements, refundings, replacements or refinancings thereof;
provided that any such amendment, modification, restatement, renewal, increase,
supplement, refunding, replacement or refinancing is no more restrictive with
respect to such encumbrances and restrictions than those contained in the
Revolving Credit Agreement or the Gold Consignment Agreement, as the case may
be, as in effect on the date, (c) this Indenture, the Notes and the Exchange
Notes, (d) applicable law, rule or regulation, (e) any instrument governing
Indebtedness or Capital Stock of a Person acquired
35
by the Company or any of its Subsidiaries as in effect at the time of such
acquisition (except to the extent such Indebtedness was incurred in connection
with or in contemplation of such acquisition), which encumbrance or restriction
is not applicable to any Person, or the properties or assets of any Person,
other than the Person and its Subsidiaries, or the property or assets of the
Person and its Subsidiaries, so acquired; provided that, in the case of
Indebtedness, such Indebtedness was permitted by the terms hereof to be
incurred, (f) customary non-assignment or subletting provisions in leases and
other contracts entered into in the ordinary course of business, (g) purchase
money obligations for property acquired in the ordinary course of business and
Capital Lease Obligations that impose restrictions of the nature described in
the beginning of this clause (iii) on the property so acquired; provided that
such purchase money obligations and Capital Lease Obligations are otherwise in
compliance with the Senior Notes Indenture, (h) Permitted Refinancing
Indebtedness; provided that the restrictions contained in any agreement
governing such Permitted Refinancing Indebtedness are no more restrictive in any
material respect than those contained in the agreements governing the
Indebtedness being refinanced, (i) Permitted Liens, (j) any instrument binding
upon a Receivables Subsidiary; provided that such instrument does not bind or
apply to the Company or any other Subsidiary of the Company or any of their
respective properties or assets, (k) any restriction with respect to a
Subsidiary imposed pursuant to an agreement entered into for the sale or
disposition of all or substantially all of the Capital Stock or assets of such
Subsidiary pending the closing of such sale or disposition or (l) any
encumbrance or restriction consisting of provisions in a joint venture agreement
relating to a Permitted Joint Venture with respect to the disposition or
distribution of interests (or distributions payable on interests) in, or assets
or property of, such Permitted Joint Venture.
Section 4.09 Incurrence of Indebtedness and Issuance of Preferred
Stock.
(a) The Company
(i) shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, create, incur, issue, assume, guaranty or
otherwise become directly or indirectly liable, contingently or
otherwise, with respect to (collectively, "incur") any
Indebtedness (including Acquired Debt), and
(ii) shall not issue any Disqualified Stock and shall not permit any of
its Subsidiaries to issue any shares of preferred stock;
provided, however, that the Company and any Subsidiary of the Company may incur
Indebtedness (including Acquired Debt) or issue shares of Disqualified Stock and
any Subsidiary of the Company may issue preferred stock to the Company or a
Wholly-Owned Subsidiary of the Company if the Fixed Charge Coverage Ratio for
the Company's most recently ended four full fiscal quarters for which internal
financial statements are available immediately preceding the date on which such
additional Indebtedness is incurred or such Disqualified Stock or preferred
stock is issued would have been at least 2.0 to 1, determined after giving
effect to such incurrence or issuance on a pro forma basis (including a pro
forma application of the net proceeds therefrom), as if the additional
Indebtedness had been incurred, or the Disqualified Stock had been issued, as
the case may be, at the beginning of such four-quarter period.
36
(b) The provisions of Section 4.09(a) hereof shall not apply to any of the
following (collectively, "Permitted Debt"):
(i) the incurrence by the Company or any of its Subsidiaries of
revolving credit Indebtedness and letter of credit obligations
pursuant to the Revolving Credit Agreement in an aggregate
principal amount not to exceed at the time of incurrence thereof
the greater of (x) $275.0 million or (y) 70% of inventory plus
85% of accounts receivable (each as determined in accordance
with GAAP, but excluding accounts receivable that are past due
by more than 60 days at any one time outstanding; provided that
the amounts specified in clause (i)(x) above or determinable on
any relevant date of incurrence of Indebtedness pursuant to
clause (i)(y) above shall be reduced by (A) the aggregate amount
of Indebtedness incurred after the date hereof by any
Receivables Subsidiary of the Company or any of its Subsidiaries
and (B) the Receivables Financing Amount relating to all Factor
Guaranties;
(ii) the incurrence by the Company or any of its Subsidiaries of the
Existing Indebtedness;
(iii) the incurrence by the Company and its Subsidiaries of
Indebtedness represented by the Notes (other than any Additional
Notes) and the Exchange Notes and any guarantees thereof;
(iv) the incurrence by Finlay Jewelry of Indebtedness or other
obligations in an aggregate principal amount of up to the
greater of (x) $85.0 million and (y) 90% of the fair market
value of the fine gold content of specified Consignment
Inventory eligible to be consigned under (a) the Gold
Consignment Agreement or (b) a substantially similar gold
consignment agreement that Finlay Jewelry may enter into
subsequent to the date of this Indenture which provides for the
transfer of title to the gold content of Consignment Inventory
from the relevant vendor to a gold consignor; provided that such
$85.0 million specified in clause (x) above shall be permanently
reduced by the aggregate amount of all Net Proceeds of Asset
Sales applied to repay such Indebtedness pursuant to Section
4.10(b)(i) hereof;
(v) the incurrence by the Company or any of its Subsidiaries of
Indebtedness represented by Capital Lease Obligations or by
mortgage financings or purchase money obligations, in each case
incurred for the purpose of financing all or any part of the
purchase price or cost of construction or improvement of
property, plant or equipment used in the business of the Company
or such Subsidiary, in an aggregate principal amount not to
exceed $10.0 million at any time outstanding;
(vi) the incurrence by the Company or any of its Subsidiaries of
Permitted Refinancing Indebtedness;
(vii) the incurrence by the Company or any of its Subsidiaries of
intercompany Indebtedness between or among the Company and any
of its Wholly Owned Subsidiaries; provided, however, that (x) if
the Company is the obligor on such
37
Indebtedness, such Indebtedness is expressly subordinate (in
accordance with the terms of this Indenture) to the payment in
full of all Obligations with respect to the Notes and (y)(A) any
subsequent issuance or transfer of Equity Interests that results
in any such Indebtedness being held by a Person other than the
Company or a Wholly Owned Subsidiary of the Company and (B) any
sale or other transfer of any such Indebtedness to a Person that
is not the Company or a Wholly Owned Subsidiary of the Company
shall be deemed, in each case, to constitute an incurrence of
such Indebtedness by the Company or such Subsidiary, as the case
may be;
(viii) the incurrence by the Company or any of its Subsidiaries of
Hedging Obligations that are incurred for the purpose of fixing
or hedging interest rate risk with respect to any floating rate
Indebtedness that is permitted by the terms of this Indenture to
be outstanding;
(ix) the incurrence by the Company or any of its Subsidiaries of
Hedging Obligations that are incurred for the purpose of fixing
or hedging commodity price risk, entered into in the ordinary
course of business and not for speculative purposes, to protect
against fluctuations in the prices of raw materials used in the
Company's or such Subsidiary's business in amounts reasonably
related to such business;
(x) the incurrence by the Company or any of its Subsidiaries of
Hedging Obligations that are incurred for the purpose of fixing
or hedging foreign exchange rate risk, entered into in the
ordinary course of business and not for speculative purposes and
in amounts reasonably related to the businesses of the Company
and its Subsidiaries;
(xi) the incurrence by the Company or any of its Subsidiaries of
Acquired Debt of a Person incurred prior to the date upon which
such Person was (or such Person's assets were) acquired by the
Company or any of its Subsidiaries (excluding Indebtedness
incurred by such Person in connection with, or in contemplation
of, such acquisition) in an aggregate principal amount not to
exceed $20.0 million at any one time outstanding;
(xii) the incurrence by the Company or any of its Subsidiaries of
Indebtedness in respect of worker's compensation claims,
self-insurance obligations, performance, surety and similar
bonds and completion guarantees provided by the Company or any
of its Subsidiaries in the ordinary course of business;
(xiii) the incurrence by the Company or any of its Subsidiaries of
Indebtedness arising from any agreement entered into by the
Company or any of its Subsidiaries providing for
indemnification, purchase price adjustment or similar
obligations, in each case incurred or assumed in connection with
any asset purchase or sale, other than Indebtedness or
guarantees of Indebtedness Incurred by any Person acquiring all
or any portion of such assets for the purpose of financing such
acquisition; provided that the maximum aggregate liability in
respect of such Indebtedness with
38
respect to an asset sale shall at no time exceed the gross
proceeds actually received by the Company and its Subsidiaries
in connection with the disposition;
(xiv) the incurrence of Indebtedness by the Company or any of its
Subsidiaries in connection with a Guarantee of any Indebtedness
of the Company or any of its Subsidiaries that was permitted to
be incurred by another provision of this Section 4.09;
(xv) the incurrence by the Company or any of its Subsidiaries of
Indebtedness arising from the honoring by a bank or other
financial institution of a check, draft or similar instrument
inadvertently (except in the case of daylight overdrafts) drawn
against insufficient funds in the ordinary course of business;
provided, however, that such Indebtedness is extinguished within
five Business Days of incurrence;
(xvi) the entering into by the Company of Factor Guaranties in respect
of Receivables in an aggregate amount not exceeding $10 million
at any time; and
(xvii) the incurrence by the Company or any of its Subsidiaries of
Indebtedness (in addition to Indebtedness permitted by any other
clause of this Section 4.09(b) in an aggregate principal amount
(or accreted value, as applicable) at any time outstanding not
to exceed $40.0 million.
(c) Notwithstanding the foregoing, the term "Permitted Debt" shall not
include (A) any Indebtedness incurred by the Company or any Subsidiary
if the proceeds thereof are used, directly or indirectly, to refinance
any obligations of the Company or any Subsidiary that is subordinated
in right of payment to the Notes or any applicable Subsidiary Guaranty
unless such Indebtedness shall be subordinated to the Notes and any
applicable Subsidiary Guaranty to at least the same extent as such
subordinated obligations or (B) any Indebtedness incurred by a
Subsidiary if the proceeds thereof are used, directly or indirectly to
refinance any obligations of the Company.
(d) For purposes of determining compliance with this Section 4.09:
(i) any Indebtedness remaining outstanding under the Revolving
Credit Agreement after the application of the net proceeds from
the sale of the Notes will be treated as Incurred on the date
hereof under clause (i) of Section 4.09(b) above,
(ii) any Indebtedness remaining outstanding under the Gold
Consignment Agreement after the application of the net proceeds
from the sale of the Notes will be treated as Incurred on the
date hereof under clause (iv) of Section 4.09(b) above,
(iii) in the event that an item of Indebtedness meets the criteria of
more than one of the categories of Permitted Debt described in
clauses (i) through (xvii) of Section 4.09(b) above or is
entitled to be incurred pursuant to the Section 4.09(a) above,
except as set forth in clauses (i) and (ii) of this Section
4.09(d), the Company shall, in its sole discretion, classify
such item of Indebtedness at the time of its incurrence in any
manner that complies with this Section 4.09 and such item of
Indebtedness
39
will be treated as having been incurred pursuant to only one
clause of Section 4.09(b) above or pursuant to Section 4.09(a)
above, and
(iv) in the case of Permitted Debt incurred pursuant to clauses (i),
(v), (xi) or (xvii) of Section 4.09(b) above, the Company will
be entitled to from time to time reclassify items of such
Indebtedness; provided, however, that the amount and type of
such Indebtedness will be required to be included in one of such
clauses (i), (v), (xi) or (xvii) of Section 4.09(b) above and
must qualify as such Indebtedness at the time of
reclassification.
(e) Indebtedness permitted to be incurred pursuant to clauses (i) through
(xvii) of Section 4.09(b) above may be incurred pursuant to one
agreement or several agreements with one lender or several lenders.
Section 4.10 Asset Sales.
(a) The Company shall not, and shall not permit any of its Subsidiaries to,
engage in an Asset Sale unless (i) the Company (or the Subsidiary, as
the case may be) receives consideration at the time of such Asset Sale
at least equal to the fair market value (evidenced by a resolution of
the Board of Directors set forth in an Officers' Certificate delivered
to the Trustee) of the assets or Equity Interests issued or sold or
otherwise disposed of and (ii) at least 75% of the consideration
therefor received by the Company or such Subsidiary is in the form of
(a) cash or Cash Equivalents or (b) Qualified Proceeds; provided, that
the aggregate fair market value of Qualified Proceeds that may be
received pursuant to this clause (ii)(b) shall not exceed an aggregate
of $10.0 million after the date of this Indenture; provided, further,
that the amount of (x) any liabilities (as shown on the Company's or
such Subsidiary's most recent balance sheet), of the Company or any
Subsidiary of the Company (other than contingent liabilities and
liabilities that are by their terms subordinated to the Notes or any
guarantee thereof) that are assumed by the transferee of any such
assets pursuant to a customary novation agreement that releases the
Company or such Subsidiary from further liability and (y) any
securities, notes or other obligations received by the Company or any
such Subsidiary from such transferee that are promptly (and in any
event, in not more than 60 days) converted by the Company or such
Subsidiary into cash or Cash Equivalents (to the extent of the cash or
Cash Equivalents received), shall be deemed to be cash for purposes of
this provision.
(b) Within 360 days after the receipt of any Net Proceeds from an Asset
Sale, the Company may apply such Net Proceeds at its option to (i)
permanently retire revolving indebtedness or other obligations either
under the Revolving Credit Agreement or the Gold Consignment Agreement
(or a substantially similar gold consignment agreement pursuant to
Section 4.09(b)(iv)(y)(b) hereof) or a combination thereof (and to
correspondingly permanently reduce revolving borrowing commitments or
revolving consignment commitments or a combination thereof with respect
thereto) or (ii) the acquisition of Capital Stock of a person that is
or becomes as a result of such acquisition a Wholly-Owned Subsidiary,
the making of capital expenditures or the acquisition of other assets
(other than Investments) that are or promptly after such acquisition
will be
40
used in the business engaged in by the Company or any of its
Subsidiaries on the date hereof or in a business reasonably related
thereto. Pending the final application of any such Net Proceeds, the
Company may temporarily reduce Senior Revolving Debt or otherwise make
an Investment of such Net Proceeds in any manner that is not prohibited
by the terms of this Indenture. Any Net Proceeds from Asset Sales that
are not applied or invested as provided in the first sentence of this
Section 4.10(b) will be deemed to constitute "Excess Proceeds". Within
45 days after the first day of a calendar month in which the aggregate
amount of Excess Proceeds exceeds $10.0 million, the Company shall make
an offer to all Holders of Notes (an "Asset Sale Offer") in accordance
with the provisions of Section 3.09 hereof to purchase the maximum
principal amount of Notes that may be purchased out of such Excess
Proceeds, at an offer price in cash in an amount equal to 100% of the
principal amount thereof plus accrued and unpaid interest thereon, if
any, to the date of purchase. To the extent that the aggregate amount
of Notes tendered pursuant to any such offer is less than the remaining
Excess Proceeds, the Company or any of its Subsidiaries may use any
remaining Excess Proceeds for general corporate purposes or otherwise
make an Investment of such remaining amounts in any manner that is not
prohibited by this Indenture. If the aggregate principal amount of
Notes surrendered by Holders (or holders) thereof exceeds the amount of
Excess Proceeds, the Trustee shall select the Notes to be purchased on
a pro rata basis.
Section 4.11 Equity Interests of Subsidiaries.
The Company (a) shall not, and shall not permit any Subsidiary of the
Company to, transfer, convey, sell, lease or otherwise dispose of any Capital
Stock of any Subsidiary of the Company to any Person (other than to the Company
or to a Wholly Owned Subsidiary of the Company), unless (i) such transfer,
conveyance, sale, lease or other disposition is of all the Capital Stock of such
Subsidiary and (ii) the Net Proceeds from such transfer, conveyance, sale, lease
or other disposition are applied in accordance with the provisions of Section
4.10 and, if applicable pursuant to the provisions of Section 4.10 hereof,
Section 3.09 hereof and (b) shall not permit any Subsidiary of the Company to
issue any of its Equity Interests (other than, if necessary, shares of its
Capital Stock constituting directors' qualifying shares) to any Person other
than to the Company or to a Wholly Owned Subsidiary of the Company.
Section 4.12 Transactions with Affiliates.
The Company shall not, and shall not permit any of its Subsidiaries to,
make any payment to or Investment in, or sell, lease, transfer or otherwise
dispose of any of its properties or assets to, or purchase any property or
assets from, or enter into or make or amend any contract, agreement,
understanding, loan, advance or guarantee with, or for the benefit of, any
Affiliate (each of the foregoing, an "Affiliate Transaction"), unless (i) such
Affiliate Transaction is on terms that are no less favorable to the Company or
the relevant Subsidiary than those that would have been obtained in a comparable
transaction by the Company or such Subsidiary with an unrelated Person and (ii)
the Company delivers to the Trustee (a) with respect to any Affiliate
Transaction or series of related Affiliate Transactions involving aggregate
consideration in excess of $2.5 million, a resolution approved by a majority of
the disinterested members of the Board of Directors set forth in an Officers'
Certificate certifying that such Affiliate Transaction complies with clause (i)
above and (b) with respect to any Affiliate Transaction or series of
41
related Affiliate Transactions involving aggregate consideration in excess of
$15 million, an opinion issued by an accounting, appraisal or investment banking
firm of national standing as to the fairness to the Company and its Subsidiaries
of such Affiliate Transaction, from a financial point of view, to the Holders;
provided that (a) any employment, deferred compensation, stock option,
noncompetition, consulting, indemnification or similar agreement entered into by
the Company or any of its Subsidiaries in the ordinary course of business and
consistent with the past practice of the Company or such Subsidiary, and the
payment by the Company and its Subsidiaries of reasonable and customary
directors' fees, indemnification payments permitted by applicable law, employee
salaries and bonuses, (b) transactions between or among the Company and/or its
Wholly Owned Subsidiaries, (c) Restricted Payments and Permitted Investments
that are permitted by the provisions of Section 4.07 hereof, (d) any payments by
or to the Company or any Wholly Owned Subsidiary of the Company pursuant to the
terms of the Tax Allocation Agreement, as amended as of the date hereof and as
the same may be amended, modified or replaced so long as such amendment,
modification or replacement is not more disadvantageous to the Company or its
Subsidiaries than the agreement in effect on the date hereof, (e) transfers,
conveyances, sales, leases or other dispositions of Receivables to a Receivables
Subsidiary, and (f) contracts, agreements and understandings in existence in
writing on the date hereof and as in effect on such date, in each case, shall
not be deemed Affiliate Transactions.
Section 4.13 Liens.
The Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly create, incur, assume or otherwise cause or suffer to
exist or become effective any Lien of any kind, other than Permitted Liens, upon
any of their property or assets, now owned or hereafter acquired, or any income
or profits therefrom or assign or convey any right to receive income therefrom,
securing Indebtedness or trade payables, unless all payments due hereunder and
under the Notes are secured on an equal and ratable basis with the obligations
so secured until such time as such obligations are no longer secured by a Lien.
Section 4.14 Corporate Existence.
Subject to Article 5 hereof, the Company shall do or cause to be done
all things necessary to preserve and keep in full force and effect (i) its
corporate existence, and the corporate, partnership or other existence of each
of its Subsidiaries, in accordance with the respective organizational documents
(as the same may be amended from time to time) of the Company or any such
Subsidiary and (ii) the rights (charter and statutory), licenses and franchises
of the Company and its Subsidiaries; provided, however, that the Company shall
not be required to preserve any such right, license or franchise, or the
corporate, partnership or other existence of any of its Subsidiaries, if the
Board of Directors shall determine that the preservation thereof is no longer
desirable in the conduct of the business of the Company and its Subsidiaries,
taken as a whole, and that the loss thereof is not adverse in any material
respect to the Holders of the Notes.
Section 4.15 Offer to Repurchase upon Change of Control.
(a) Upon the occurrence of a Change of Control, each Holder of Notes shall
have the right to require the Company to repurchase all or any part
(equal to $1,000 or an integral multiple
42
thereof) of such Xxxxxx's Notes pursuant to the offer described below
(the "Change of Control Offer") at an offer price in cash equal to 101%
of the aggregate principal amount thereof plus accrued and unpaid
interest thereon, if any, to the date of purchase (the "Change of
Control Payment").
(b) Within 30 days following any Change of Control, the Company shall mail
a notice to each Holder describing the transaction or transactions that
constitute the Change of Control and offering to repurchase Notes
pursuant to the procedures required by this Section 4.15, which
procedures shall be described in such notice. The Company shall comply
with the requirements of Rule 14e-1 under the Exchange Act and any
other securities laws and regulations thereunder to the extent such
laws and regulations are applicable in connection with the repurchase
of the Notes as a result of a Change of Control.
(c) On a date that is at least 30 but no more than 60 days from the date on
which the Company mails notice of the Change of Control (the "Change of
Control Payment Date"), the Company shall, to the extent lawful, (1)
accept for payment all Notes or portions thereof properly tendered
pursuant to the Change of Control Offer, (2) deposit with the Paying
Agent an amount equal to the Change of Control Payment in respect of
all Notes or portions thereof so tendered and (3) deliver or cause to
be delivered to the Trustee the Notes so accepted together with an
Officers' Certificate stating the aggregate principal amount of Notes
or portions thereof being purchased by the Company. The Paying Agent
will promptly mail to each Holder of Notes so tendered the Change of
Control Payment for such Notes, and the Trustee will promptly
authenticate and mail (or cause to be transferred by book entry) to
each tendering Holder a new Note equal in principal amount to any
unpurchased portion of the Notes surrendered, if any; provided that
each such new Note will be in a principal amount of $1,000 or an
integral multiple thereof. The Company shall publicly announce the
results of the Change of Control Offer on or as soon as practicable
after the Change of Control Payment Date.
The Change of Control provisions described above shall apply whether or
not any other provision hereof is applicable.
(d) Notwithstanding anything to the contrary in this Section 4.15, the
Company shall not be required to make a Change of Control Offer upon a
Change of Control if a third party makes the Change of Control Offer in
the manner, at the times and otherwise in compliance with the
requirements set forth in this Section 4.15 and Section 3.09 hereof and
purchases all Notes validly tendered and not withdrawn under such
Change of Control Offer.
Section 4.16 Payments for Consent.
Neither the Company nor any of its Subsidiaries shall, directly or
indirectly, pay or cause to be paid any consideration, whether by way of
interest, fee or otherwise, to any Holder of any Notes for or as an inducement
to any consent, waiver or amendment of any of the terms or provisions of this
Indenture or the Notes unless such consideration is offered to be paid or is
paid
43
to all Holders of the Notes that consent, waive or agree to amend in the
time frame set forth in the solicitation documents relating to such consent,
waiver or agreement.
ARTICLE V.
SUCCESSORS
Section 5.01 Merger, Consolidation or Sale of Assets.
The Company shall not consolidate or merge with or into (whether or not
the Company is the surviving corporation), or sell, assign, transfer, lease,
convey or otherwise dispose of all or substantially all of its properties or
assets in one or more related transactions, to another corporation, Person or
entity unless (i) the Company is the surviving corporation or the entity or the
Person formed by or surviving any such consolidation or merger (if other than
the Company) or to which such sale, assignment, transfer, lease, conveyance or
other disposition shall have been made (the "Successor Company") is a
corporation organized or existing under the laws of the United States, any state
thereof or the District of Columbia; (ii) the Successor Company assumes all the
obligations of the Company under the Notes and hereunder pursuant to a
supplemental indenture in a form reasonably satisfactory to the Trustee; (iii)
immediately after giving pro forma effect to such transaction (and treating any
Indebtedness which becomes an obligation of the Successor Company or any
Subsidiary as a result of such transaction as having been Incurred by such
Successor Company or such Subsidiary at the time of such transaction) no Default
or Event of Default exists; and (iv) except in the case of a merger of the
Company with or into a Wholly Owned Subsidiary of the Company, the Company or
the Successor Company (A) shall have Consolidated Net Worth immediately after
the transaction equal to or greater than 90% of the Consolidated Net Worth of
the Company immediately preceding the transaction and (B) shall, at the time of
such transaction and after giving pro forma effect thereto as if such
transaction had occurred at the beginning of the applicable four-quarter period,
be permitted to incur at least $1.00 of additional Indebtedness pursuant to the
Fixed Charge Coverage Ratio test set forth in the Section 4.09(a) hereof.
Notwithstanding the foregoing, clause (iv) will not be applicable to a merger of
the Company with an Affiliate of the Company solely for the purpose and with the
sole effect of reincorporating the Company in another state of the United
States.
For purposes of this Section 5.01, the sale, assignment, transfer,
lease, conveyance or other disposition of properties or assets of one or more
Subsidiaries of the Company, which properties and assets, if held by the Company
instead of such Subsidiaries, would constitute all or substantially all of the
properties and assets of the Company on a consolidated basis, shall be deemed to
be the transfer of all or substantially all of the properties and assets of the
Company.
Section 5.02 Successor Corporation Substituted.
Upon any consolidation or merger, or any sale, assignment, transfer,
lease, conveyance or other disposition of all or substantially all of the
properties or assets of the Company in a transaction that is subject to, and
that complies with the provisions of Section 5.01 hereof, the successor Person
formed by such consolidation or into or with which the Company is merged or to
which such sale, assignment, transfer, lease, conveyance or other disposition is
44
made shall succeed to, and be substituted for (so that from and after the date
of such consolidation, merger, sale, assignment, transfer, lease, conveyance or
other disposition, the provisions of this Indenture referring to the "Company"
shall refer instead to the successor Person and not to the Company), and may
exercise every right and power of the Company under this Indenture with the same
effect as if such successor Person had been named as the Company herein;
provided, however, that the predecessor Company shall not be relieved from the
obligation to pay the principal of and interest on the Notes except in the case
of a sale of all of the Company's assets in a transaction that is subject to,
and that complies with the provisions of Section 5.01 hereof.
ARTICLE VI.
DEFAULTS AND REMEDIES
Section 6.01 Events of Default.
An "Event of Default" occurs if:
(a) default for 30 days in the payment when due of interest on the Notes;
(b) default in payment of the principal of or premium, if any, on the Notes
when due at maturity, upon optional redemption, upon required
repurchase, upon declaration of acceleration or otherwise;
(c) failure by the Company to comply with the provisions of Sections 3.09,
4.10 or 4.15 or Article 5 hereof;
(d) failure by the Company or any Subsidiary Guarantor for 45 days after
notice to comply with any of its covenants hereunder or under the Notes
(other than those covenants addressed elsewhere in this Section 6.01);
(e) default under any mortgage, indenture or instrument under which there
may be issued or by which there may be secured or evidenced any
Indebtedness for money borrowed by the Company or any of its
Subsidiaries (including any Indebtedness the payment of which is
guaranteed by the Company or any of its Subsidiaries) other than a
Receivables Subsidiary whether such Indebtedness or guarantee now
exists, or is created after the date hereof, which default:
(i) is caused by a failure to pay principal or a premium, if any, on
such Indebtedness at the Stated Maturity for such payment of
principal or premium, if any, or such later date as has been
agreed in a writing (provided such writing is entered into prior
to such Stated Maturity) by the parties to the documentation
relating to such Indebtedness (a "Payment Default") or
(ii) results in the acceleration of such Indebtedness prior to its
express maturity
45
and, in each case, the principal amount of any such Indebtedness, together with
the principal amount of any other such Indebtedness under which there has been a
Payment Default or the maturity of which has been so accelerated, aggregates
$12.5 million or more;
(f) failure by the Company or any of its Subsidiaries other than a
Receivables Subsidiary to pay final judgments aggregating in excess of
$12.5 million, which judgments are not paid, discharged or stayed for a
period of 60 days (or 90 days if prior to such sixtieth day the Company
has delivered to the Trustee an Officers' Certificate attesting that a
financially responsible insurance company of recognized national
standing has acknowledged in writing complete liability for such
judgment and attached a copy of such acknowledgment thereto);
(g) repudiation by any Subsidiary Guarantor of its obligations under any
Subsidiary Guarantee or, except as permitted hereunder, any Subsidiary
Guarantee shall be held in a judicial proceeding to be unenforceable or
invalid in any material respect or shall cease to be in full force and
effect;
(h) the Company or any of its Subsidiaries (other than a Receivables
Subsidiary) within the meaning of any Bankruptcy Law:
(i) commences a voluntary case,
(ii) consents to the entry of an order for relief against it in an
involuntary case,
(iii) consents to the appointment of a custodian of it or for all or
substantially all of its property,
(iv) makes a general assignment for the benefit of its creditors, or
(v) generally is not paying its debts as they become due; or
(i) a court of competent jurisdiction enters an order or decree under any
Bankruptcy Law that:
(i) is for relief against the Company or any of its Subsidiaries
(other than a Receivables Subsidiary);
(ii) appoints a custodian of the Company or any of its Subsidiaries
or for all or substantially all of the property of the Company
or any of its Subsidiaries (other than a Receivables
Subsidiary); or
(iii) orders the liquidation of the Company or any of its Subsidiaries
(other than a Receivables Subsidiary);
and the order or decree remains unstayed and in effect for 60 consecutive days.
46
Section 6.02 Acceleration.
(a) If any Event of Default occurs and is continuing (other than as
specified in Sections 6.01(h) or (i)), the Trustee or the Holders of at
least 25% in principal amount of the then outstanding Notes by written
notice to the Trustee and the Company may declare all the Notes to be
due and payable immediately. Notwithstanding the foregoing, in the case
of an Event of Default arising from Sections 6.01(h) or (i) hereof,
with respect to the Company, any Significant Subsidiary of the Company
or any group of its Subsidiaries that, taken together, would constitute
a Significant Subsidiary of the Company, all outstanding Notes will
become due and payable without further action or notice. The Holders of
a majority in aggregate principal amount of the then outstanding Notes
by written notice to the Trustee may on behalf of all of the Holders
rescind an acceleration and its consequences provided (a) the Company
has paid or deposited with the Trustee a sum sufficient to pay (i) all
sums paid or advanced by the Trustee hereunder and the reasonable
compensation, expenses, disbursements and advances of the Trustee, its
agents and counsel, and all other amounts due to the Trustee under
Section 7.07, (ii) all overdue interest on all Notes, (iii) the
principal of and premium, if any, on any Notes that have become due
otherwise than by such declaration or occurrence of acceleration and
interest thereon at the rate prescribed therefor by such Notes and (iv)
to the extent that payment of such interest is lawful, interest upon
overdue interest, if any, at the rate prescribed therefor by such
Notes, (b) all existing Events of Default, other than the non-payment
of principal of, premium, if any, and accrued interest on the Notes
that have become due solely by such declaration of acceleration, have
been cured or waived and (c) the rescission would not conflict with any
judgment or decree of a court of competent jurisdiction. No such
rescission shall affect any subsequent Default or impair any right
consequent thereto.
(b) If an Event of Default occurs on or after June 1, 2008 by reason of any
willful action (or inaction) taken (or not taken) by or on behalf of
the Company with the intention of avoiding payment of the premium that
the Company would have had to pay if the Company then had elected to
redeem the Notes pursuant to Section 3.07 hereof, then, upon
acceleration of the Notes, an equivalent premium shall also become and
be immediately due and payable to the extent permitted by law, anything
in this Indenture or in the Notes to the contrary notwithstanding. If
an Event of Default occurs prior to June 1, 2008 by reason of any
willful action (or inaction) taken (or not taken) by or on behalf of
the Company with the intention of avoiding the prohibition on
redemption of the Notes prior to such date, then, upon acceleration of
the Notes, an additional premium shall also become and be immediately
due and payable in an amount, for each of the years beginning on June 1
of the years set forth below, as set forth below (expressed as a
percentage of the principal amount to the date of payment that would
otherwise be due but for the provisions of this sentence):
-------------------------------------------------------------------------
Year Percentage
-------------------------------------------------------------------------
2004............................................ 108.375%
-------------------------------------------------------------------------
2005............................................ 107.328%
-------------------------------------------------------------------------
2006............................................ 106.282%
-------------------------------------------------------------------------
47
-------------------------------------------------------------------------
2007............................................ 105.235%
-------------------------------------------------------------------------
2008............................................ 104.188%
-------------------------------------------------------------------------
(c) In the event of a declaration of acceleration of the Notes because an
Event of Default has occurred and is continuing as a result of a
Payment Default or the acceleration of any Indebtedness described in
Section 6.01(e) hereof, the declaration of acceleration of the Notes
shall be automatically annulled if
(i) any Payment Default described in clause (i) of such Section has
been cured or waived and
(ii) the holders of any accelerated Indebtedness described in clause
(ii) of such Section have rescinded the declaration of
acceleration in respect of such Indebtedness; provided in each
such case, that (a) such cure, waiver or rescission of such
declaration of acceleration shall have been made in writing
within 30 days of the date of such Payment Default or
declaration, as the case may be, and (b) the annulment of the
acceleration of such Notes would not conflict with any judgment
or decree of a court of competent jurisdiction and (c) all
existing Events of Default, except nonpayment of principal or
interest on the Notes that became due solely because of the
acceleration of the Notes, have been cured or waived.
(d) A Default under Section 6.01(d) hereof is not an Event of Default until
the Trustee or the Holders of at least 25% in principal amount of the
then outstanding Notes give written notice to the Company of the
default and the Company does not cure the Default within the period
provided therein. The notice must specify in reasonable detail the
Default, demand that it be remedied and state that the notice is a
"Notice of Default". If the Holders of 25% or more in principal amount
of the then outstanding Notes request the Trustee to give such notice
on their behalf, the Trustee shall do so.
Section 6.03 Other Remedies.
If an Event of Default occurs and is continuing, the Trustee may pursue
any available remedy to collect the payment of principal, premium, if any, and
interest on the Notes or to enforce the performance of any provision of the
Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any
of the Notes or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Holder of a Note in exercising any right or
remedy accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. All remedies are
cumulative to the extent permitted by law.
Section 6.04 Waiver of Past Defaults.
Subject to Section 6.02, holders of not less than a majority in
aggregate principal amount of the Notes then outstanding by notice to the
Trustee may on behalf of the Holders of all of the Notes waive any existing
Default or Event of Default and its consequences hereunder, except a continuing
Default or Event of Default in the payment of the principal of, premium, if
48
any, or interest on the Notes (including in connection with an offer to
purchase). Upon such waiver, such Default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured for every purpose
of this Indenture; but no such waiver shall extend to any subsequent or other
Default or impair any right consequent thereon.
Section 6.05 Control by Majority.
Holders of a majority in principal amount of the then outstanding Notes
may direct the time, method and place of conducting any proceeding for
exercising any remedy available to the Trustee or otherwise direct the Trustee
in its exercise of any trust or power conferred on it; provided, however, that
if an Event of Default occurs and is continuing, the Trustee will be under no
obligation to exercise any of the rights or powers under this Indenture at the
request or direction of any of the Holders of the Notes unless such Holders have
offered to the Trustee reasonable indemnity or security against any loss,
liability or expense. The Trustee may, however, refuse to follow any direction
that conflicts with law or this Indenture that the Trustee determines may be
unduly prejudicial to the rights of other Holders of Notes or that may involve
the Trustee in personal liability. Notwithstanding any provision to the contrary
in this Indenture, the Trustee shall not be obligated to take any action with
respect to the provisions of Section 6.02(b) unless directed to do so pursuant
to this Section 6.05.
Section 6.06 Limitation on Suits.
Except to enforce the right to receive payment of principal, premium
(if any) or interest when due, no Holder of a Note may pursue a remedy with
respect to this Indenture or the Notes unless:
(a) the Holder of a Note gives to the Trustee written notice of a
continuing Event of Default;
(b) the Holders of at least 25% in principal amount of the then outstanding
Notes make a written request to the Trustee to pursue the remedy;
(c) such Holder of a Note or Holders of Notes offer and, if requested,
provide to the Trustee reasonable security or indemnity satisfactory to
the Trustee against any loss, liability or expense;
(d) the Trustee does not comply with the request within 60 days after
receipt of the request and the offer and, if requested, the provision
of security or indemnity; and
(e) during such 60-day period the Holders of a majority in principal amount
of the then outstanding Notes do not give the Trustee a direction
inconsistent with the request.
A Holder of a Note may not use this Indenture to prejudice the rights
of another Holder of a Note or to obtain a preference or priority over another
Holder of a Note.
Section 6.07 Rights of Holders of Notes to Receive Payment.
Notwithstanding any other provision of this Indenture, the right of any
Holder of a Note to receive payment of principal, premium, if any, and interest
on the Note, on or after the
49
respective due dates expressed in the Note (including in connection with an
offer to purchase), or to bring suit for the enforcement of any such payment on
or after such respective dates, shall not be impaired or affected without the
consent of such Holder.
Section 6.08 Collection Suit by Trustee.
If an Event of Default specified in Section 6.01(a) or (b) occurs and
is continuing, the Trustee is authorized to recover judgment in its own name and
as trustee of an express trust against the Company for the whole amount of
principal of, premium, if any, and interest remaining unpaid on the Notes and
interest on overdue principal and, to the extent lawful, interest and such
further amount as shall be sufficient to cover the costs and expenses of
collection, including the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel.
Section 6.09 Trustee May File Proofs of Claim.
The Trustee is authorized to file such proofs of claim and other papers
or documents as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
Holders of the Notes allowed in any judicial proceedings relative to the Company
(or any other obligor upon the Notes), its creditors or its property and shall
be entitled and empowered to collect, receive and distribute any money or other
property payable or deliverable on any such claims and any custodian in any such
judicial proceeding is hereby authorized by each Holder to make such payments to
the Trustee, and, in the event that the Trustee shall consent to the making of
such payments directly to the Holders, to pay to the Trustee any amount due to
it for the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 7.07 hereof. To the extent that the payment of any such compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel, and
any other amounts due the Trustee under Section 7.07 hereof out of the estate in
any such proceeding, shall be denied for any reason, payment of the same shall
be secured by a Lien on, and shall be paid out of, any and all distributions,
dividends, money, securities and other properties that the Holders may be
entitled to receive in such proceeding whether in liquidation or under any plan
of reorganization or arrangement or otherwise. Nothing herein contained shall be
deemed to authorize the Trustee to authorize or consent to or accept or adopt on
behalf of any Holder any plan of reorganization, arrangement, adjustment or
composition affecting the Notes or the rights of any Holder, or to authorize the
Trustee to vote in respect of the claim of any Holder in any such proceeding.
Section 6.10 Priorities.
If the Trustee collects any money pursuant to this Article, it shall
pay out the money in the following order:
First: to the Trustee, its agents and attorneys for amounts due under
Section 7.07 hereof, including payment of all compensation, expense and
liabilities incurred, and all advances made, by the Trustee and the costs and
expenses of collection;
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Second: to Holders of Notes for amounts due and unpaid on the Notes for
principal, premium, if any, and interest, ratably, without preference or
priority of any kind, according to the amounts due and payable on the Notes for
principal, premium, if any and interest, respectively; and
Third: to the Company or to such party as a court of competent
jurisdiction shall direct.
The Trustee may fix a record date and payment date for any payment to
Holders of Notes pursuant to this Section 6.10.
Section 6.11 Undertaking for Costs.
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as a Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in the suit, having due regard to
the merits and good faith of the claims or defenses made by the party litigant.
This Section does not apply to a suit by the Trustee, a suit by a Holder of a
Note pursuant to Section 6.07 hereof, or a suit by Holders of more than 10% in
principal amount of the then outstanding Notes.
ARTICLE VII.
TRUSTEE
Section 7.01 Duties of Trustee.
(a) If an Event of Default has occurred and is continuing, the Trustee
shall exercise such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in its exercise,
as a prudent person would exercise or use under the circumstances in
the conduct of such person's own affairs.
(b) Except during the continuance of an Event of Default:
(i) the duties of the Trustee shall be determined solely by the
express provisions of this Indenture and the Trustee need
perform only those duties that are specifically set forth in
this Indenture and no others, and no implied covenants or
obligations shall be read into this Indenture against the
Trustee; and
(ii) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates
or opinions furnished to the Trustee and conforming to the
requirements of this Indenture. The Trustee shall examine the
certificates and opinions, however, to determine whether or not
they conform to the requirements of this Indenture.
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(c) The Trustee may not be relieved from liabilities for its own negligent
action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) this clause does not limit the effect of clause (b) of this
Section;
(ii) the Trustee shall not be liable for any error of judgment made
in good faith by a Responsible Officer, unless it is proved that
the Trustee was negligent in ascertaining the pertinent facts;
and
(iii) the Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a
direction received by it pursuant to Section 6.05 hereof.
(d) Whether or not therein expressly so provided, every provision of this
Indenture that in any way relates to the Trustee is subject to clauses
(a), (b), and (c) of this Section.
(e) No provision of this Indenture shall require the Trustee to expend or
risk its own funds or incur any liability. The Trustee shall be under
no obligation to exercise any of its rights and powers under this
Indenture at the request of any Holders, unless such Holder shall have
offered to the Trustee security and indemnity satisfactory to it
against any loss, liability or expense.
(f) The Trustee shall not be liable for interest on any money received by
it except as the Trustee may agree in writing with the Company. Money
held in trust by the Trustee need not be segregated from other funds
except to the extent required by law.
Section 7.02 Rights of Trustee.
(a) The Trustee may conclusively rely upon any document believed by it to
be genuine and to have been signed or presented by the proper Person.
The Trustee need not investigate any fact or matter stated in the
document.
(b) Before the Trustee acts or refrains from acting, it may require an
Officers' Certificate or an Opinion of Counsel or both. The Trustee
shall not be liable for any action it takes or omits to take in good
faith in reliance on such Officers' Certificate or Opinion of Counsel.
The Trustee may consult with counsel and the written advice of such
counsel or any Opinion of Counsel shall be full and complete
authorization and protection from liability in respect of any action
taken, suffered or omitted by it hereunder in good faith and in
reliance thereon.
(c) The Trustee may act through its attorneys and agents and shall not be
responsible for the misconduct or negligence of any agent appointed
with due care.
(d) The Trustee shall not be liable for any action it takes or omits to
take in good faith, including without limitation, pursuant to the
provisions of Section 6.05 hereof, that it believes to be authorized or
within the rights or powers conferred upon it by this Indenture.
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(e) Unless otherwise specifically provided in this Indenture, any demand,
request, direction or notice from the Company shall be sufficient if
signed by an Officer of the Company.
(f) The Trustee shall be under no obligation to exercise any of the rights
or powers vested in it by this Indenture at the request or direction of
any of the Holders unless such Holders shall have offered to the
Trustee reasonable security or indemnity against the costs, expenses
and liabilities that might be incurred by it in compliance with such
request or direction.
Section 7.03 Individual Rights of Trustee.
The Trustee in its individual or any other capacity may become the
owner or pledgee of Notes and may otherwise deal with the Company or any
Affiliate of the Company with the same rights it would have if it were not
Trustee. In the event that the Trustee acquires any conflicting interest,
however, it must eliminate such conflict within 90 days, apply to the Commission
for permission to continue as trustee or resign. Any Agent may do the same with
like rights and duties. The Trustee is also subject to Sections 7.10 and 7.11
hereof.
Section 7.04 Trustee's Disclaimer.
The Trustee shall not be responsible for and makes no representation as
to the validity or adequacy of this Indenture or the Notes, it shall not be
accountable for the Company's use of the proceeds from the Notes or any money
paid to the Company or upon the Company's direction under any provision of this
Indenture, it shall not be responsible for the use or application of any money
received by any Paying Agent other than the Trustee, and it shall not be
responsible for any statement or recital herein or any statement in the Notes or
any other document in connection with the sale of the Notes or pursuant to this
Indenture other than its certificate of authentication.
Section 7.05 Notice of Defaults.
If a Default or Event of Default occurs and is continuing and if it is
actually known to a Responsible Officer of the Trustee, the Trustee shall mail
to Holders of Notes a notice of the Default or Event of Default within 90 days
after it occurs. Except in the case of a Default or Event of Default relating to
the payment of principal or interest on any Note, the Trustee may withhold the
notice if it determines in good faith that withholding the notice is in the
interests of the Holders of the Notes.
Section 7.06 Reports by Trustee to Holders of The Notes.
Within 60 days after each May 15 beginning with the May 15 following
the date of this Indenture, and for so long as Notes remain outstanding, the
Trustee shall mail to the Holders of the Notes a brief report dated as of such
reporting date that complies with TIA ss. 313(a) (but if no event described in
TIA ss. 313(a) has occurred within the twelve months preceding the reporting
date, no report need be transmitted). The Trustee also shall comply with TIA ss.
313(b)(2). The Trustee shall also transmit by mail all reports as required by
TIA ss. 313(c).
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A copy of each report at the time of its mailing to the Holders of
Notes shall be mailed to the Company and filed with the Commission and each
stock exchange on which the Notes are listed in accordance with TIA ss. 313(d).
The Company shall promptly notify the Trustee when the Notes are listed on any
stock exchange.
Section 7.07 Compensation and Indemnity.
The Company shall pay to the Trustee from time to time reasonable
compensation for its acceptance of this Indenture and services hereunder. The
Trustee's compensation shall not be limited by any law on compensation of a
trustee of an express trust. The Company shall reimburse the Trustee promptly
upon request for all reasonable disbursements, advances and expenses incurred or
made by it in addition to the compensation for its services. Such expenses shall
include the reasonable compensation, disbursements and expenses of the Trustee's
agents and counsel.
The Company shall indemnify the Trustee against any and all losses,
liabilities or expenses incurred by it arising out of or in connection with the
acceptance or administration of its duties under this Indenture, including the
costs and expenses of enforcing this Indenture against the Company (including
this Section 7.07) and defending itself against any claim (whether asserted by
the Company or any Holder or any other person) or liability in connection with
the exercise or performance of any of its powers or duties hereunder, except to
the extent any such loss, liability or expense may be attributable to its
negligence or bad faith. The Trustee shall notify the Company promptly of any
claim for which it may seek indemnity. Failure by the Trustee to so notify the
Company shall not relieve the Company of its obligations hereunder. The Company
shall defend the claim and the Trustee shall cooperate in the defense. The
Trustee may have separate counsel and the Company shall pay the reasonable fees
and expenses of such counsel. The Company need not pay for any settlement made
without its consent, which consent shall not be unreasonably withheld.
The obligations of the Company under this Section 7.07 shall survive
the resignation or removal of the Trustee and the satisfaction and discharge of
this Indenture.
To secure the Company's payment obligations in this Section, the
Trustee shall have a Lien prior to the Notes on all money or property held or
collected by the Trustee, except that held in trust to pay principal and
interest on particular Notes. Such Lien shall survive the satisfaction and
discharge of this Indenture.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.01(h) or (i) hereof occurs, the expenses and the
compensation for the services (including the fees and expenses of its agents and
counsel) are intended to constitute expenses of administration under any
Bankruptcy Law.
The Trustee shall comply with the provisions of TIA ss. 313(b)(2) to
the extent applicable.
54
Section 7.08 Replacement of Trustee.
A resignation or removal of the Trustee and appointment of a successor
Trustee shall become effective only upon the successor Trustee's acceptance of
appointment as provided in this Section.
The Trustee may resign in writing at any time and be discharged from
the trust hereby created by so notifying the Company. The Holders of Notes of a
majority in principal amount of the then outstanding Notes may remove the
Trustee by so notifying the Trustee and the Company in writing. The Company may
remove the Trustee if:
(a) the Trustee fails to comply with Section 7.10 hereof;
(b) the Trustee is adjudged a bankrupt or an insolvent or an order for
relief is entered with respect to the Trustee under any Bankruptcy Law;
(c) a custodian or public officer takes charge of the Trustee or its
property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Holders
of a majority in principal amount of the then outstanding Notes may appoint a
successor Trustee to replace the successor Trustee appointed by the Company.
If a successor Xxxxxxx does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company, or
the Holders of Notes of at least 10% in principal amount of the then outstanding
Notes may petition any court of competent jurisdiction for the appointment of a
successor Trustee.
If the Trustee, after written request by any Holder of a Note who has
been a Holder of a Note for at least six months, fails to comply with Section
7.10, such Holder of a Note may petition any court of competent jurisdiction for
the removal of the Trustee and the appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon, the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to the Holders of the Notes. The retiring Trustee shall promptly
transfer all property held by it as Trustee to the successor Trustee; provided
all sums owing to the Trustee hereunder have been paid and subject to the Lien
provided for in Section 7.07 hereof. Notwithstanding replacement of the Trustee
pursuant to this Section 7.08, the Company's obligations under Section 7.07
hereof shall continue for the benefit of the retiring Trustee.
55
Section 7.09 Successor Trustee by Xxxxxx, etc.
If the Trustee consolidates, merges or converts into, or transfers all
or substantially all of its corporate trust business to, another corporation,
the successor corporation without any further act shall be the successor
Trustee.
Section 7.10 Eligibility; Disqualification.
There shall at all times be a Trustee hereunder that is a corporation
organized and doing business under the laws of the United States of America or
of any state thereof that is authorized under such laws to exercise corporate
trustee power, that is subject to supervision or examination by federal or state
authorities and that has a combined capital and surplus of at least $100 million
as set forth in its most recent published annual report of condition.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA ss. 310(a)(1), (2) and (5). The Trustee is subject to TIA
ss. 310(b).
Section 7.11 Preferential Collection of Claims against Company.
The Trustee is subject to TIA ss. 311(a), excluding any creditor
relationship listed in TIA ss. 311(b). A Trustee who has resigned or been
removed shall be subject to TIA ss. 311(a) to the extent indicated therein.
ARTICLE VIII.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Section 8.01 Option to Effect Legal Defeasance or Covenant Defeasance.
The Company may, at the option of its Board of Directors evidenced by a
resolution set forth in an Officers' Certificate, at any time, elect to have
either Section 8.02 or 8.03 hereof be applied to all outstanding Notes upon
compliance with the conditions set forth below in this Article 8.
Section 8.02 Legal Defeasance and Discharge.
Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.02 and subject to the satisfaction of the
conditions set forth in Section 8.04 hereof, the Company shall be deemed to have
been discharged from its obligations with respect to all outstanding Notes on
the date the conditions set forth below are satisfied (hereinafter, "Legal
Defeasance") and the obligations of the Subsidiary Guarantors under the
Subsidiary Guarantees, if any, then existing shall concurrently terminate. For
this purpose, Legal Defeasance means that the Company shall be deemed to have
paid and discharged the entire Indebtedness represented by the outstanding
Notes, which shall thereafter be deemed to be "outstanding" only for the
purposes of Section 8.05 hereof and the other Sections of this Indenture
referred to in (a) and (b) below, and to have satisfied all its other
obligations under such Notes and this Indenture (and the Trustee, on demand of
and at the expense of the Company, shall execute proper instruments
acknowledging the same), except for the following
56
provisions which shall survive until otherwise terminated or discharged
hereunder: (a) the rights of Holders of outstanding Notes to receive, solely
from the trust fund described in Section 8.04 hereof, and as more fully set
forth in such Section, payments in respect of the principal of, premium, if any,
and interest on such Notes when such payments are due, (b) the Company's
obligations with respect to such Notes under Articles 2 and 7 and Section 4.02
hereof, (c) the rights, powers, trusts, duties and immunities of the Trustee
hereunder and the Company's obligations in connection therewith and (d) this
Article 8. Subject to compliance with this Article 8, the Company may exercise
its option under this Section 8.02 notwithstanding the prior exercise of its
option under Section 8.03 hereof.
Section 8.03 Covenant Defeasance.
Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.03, the Company shall, subject to the satisfaction
of the conditions set forth in Section 8.04 hereof, be released from its
obligations under the covenants contained in Sections 4.03, 4.07, 4.08, 4.09,
4.10, 4.11, 4.12, 4.13, 4.15 and 4.16 hereof with respect to the outstanding
Notes on and after the date the conditions set forth in Section 8.04 are
satisfied (hereinafter, "Covenant Defeasance"), and the Notes shall thereafter
be deemed not "outstanding" for the purposes of any direction, waiver, consent
or declaration or act of Holders (and the consequences of any thereof) in
connection with such covenants, but shall continue to be deemed "outstanding"
for all other purposes hereunder (it being understood that such Notes shall not
be deemed outstanding for accounting purposes). For this purpose, Covenant
Defeasance means that, with respect to the outstanding Notes, the Company may
omit to comply with and shall have no liability in respect of any term,
condition or limitation set forth in any such covenant, whether directly or
indirectly, by reason of any reference elsewhere herein to any such covenant or
by reason of any reference in any such covenant to any other provision herein or
in any other document and such omission to comply shall not constitute a Default
or an Event of Default under Section 6.01 hereof, but, except as specified
above, the remainder of this Indenture and such Notes shall be unaffected
thereby. In addition, upon the Company's exercise under Section 8.01 hereof of
the option applicable to this Section 8.03, subject to the satisfaction of the
conditions set forth in Section 8.04 hereof, the Company's failure to perform
its obligations pursuant to Sections 4.03, 4.07, 4.08, 4.09, 4.10, 4.11, 4.12,
4.13, 4.15 and 4.16 hereof shall not result in an Event of Default pursuant to
Section 6.01(d) hereof, nor shall Sections 6.01(e) or 6.01(f) hereof constitute
Events of Default. In connection with any Covenant Defeasance, the Company may,
at its option, by written notice given to the Trustee prior to the delivery to
the Trustee of the Opinion of Counsel referred to in Section 8.04(c) hereof,
elect that any or all of the Subsidiary Guarantees, if any, then existing will
be terminated on the date the obligations set forth in Section 8.04 hereof are
satisfied. If no such notice is given to the Trustee with respect to a
Subsidiary Guarantee, such Subsidiary Guarantee shall remain in full force and
effect following such Covenant Defeasance.
Section 8.04 Conditions to Legal or Covenant Defeasance.
The following shall be the conditions to the application of either
Section 8.02 or 8.03 hereof to the outstanding Notes:
In order to exercise either Legal Defeasance or Covenant Defeasance:
57
(a) the Company must irrevocably deposit with the Trustee, in trust, for
the benefit of the Holders of the Notes, cash in United States dollars,
non-callable Government Securities, or a combination thereof, in such
amounts as will be sufficient, in the opinion of a nationally
recognized firm of independent public accountants, to pay the principal
of, premium, if any, and interest on the outstanding Notes on the
Stated Maturity or on the applicable redemption date, as the case may
be, and the Company must specify whether the Notes are being defeased
to maturity or to a particular redemption date;
(b) in the case of an election under Section 8.02 hereof, the Company shall
have delivered to the Trustee an Opinion of Counsel in the United
States reasonably acceptable to the Trustee confirming that (A) the
Company has received from, or there has been published by, the Internal
Revenue Service a ruling or (B) since the date of this Indenture, there
has been a change in the applicable federal income tax law, in either
case to the effect that, and based thereon such Opinion of Counsel
shall confirm that, the Holders of the outstanding Notes will not
recognize income, gain or loss for federal income tax purposes as a
result of such Legal Defeasance and will be subject to federal income
tax on the same amounts, in the same manner and at the same times as
would have been the case if such Legal Defeasance had not occurred;
(c) in the case of an election under Section 8.03 hereof, the Company shall
have delivered to the Trustee an Opinion of Counsel in the United
States reasonably acceptable to the Trustee confirming that the Holders
of the outstanding Notes will not recognize income, gain or loss for
federal income tax purposes as a result of such Covenant Defeasance and
will be subject to federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if such
Covenant Defeasance had not occurred;
(d) no Default or Event of Default shall have occurred and be continuing on
the date of such deposit (other than a Default or Event of Default
resulting from the borrowing of funds to be applied to such deposit)
or, insofar as Sections 6.01(h) or 6.01(i) hereof is concerned, at any
time in the period ending on the 91st day after the date of deposit;
(e) such Legal Defeasance or Covenant Defeasance shall not result in a
breach or violation of, or constitute a default under, any material
agreement or instrument (other than this Indenture) to which the
Company or any of its Subsidiaries is bound including, without
limitation, the Revolving Credit Agreement and the Gold Consignment
Agreement;
(f) the Company shall have delivered to the Trustee an Opinion of Counsel
to the effect that after the 91st day following the deposit, the trust
funds will not be subject to the effect of any applicable bankruptcy,
insolvency, reorganization or similar laws affecting creditors' rights
generally;
(g) the Company shall have delivered to the Trustee an Officers'
Certificate stating that the deposit was not made by the Company with
the intent of preferring the Holders of Notes over any other creditors
of the Company with the intent of defeating, hindering, delaying or
defrauding any other creditors of the Company or others; and
58
(h) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided for or relating to the Legal Defeasance or the
Covenant Defeasance have been complied with.
Section 8.05 Deposited Money and Government Securities to be Held in
Trust; Other Miscellaneous Provisions.
Subject to Section 8.06 hereof, all money and non-callable Government
Securities (including the proceeds thereof) deposited with the Trustee (or other
qualifying trustee, collectively for purposes of this Section 8.05, the
"Trustee") pursuant to Section 8.04 hereof in respect of the outstanding Notes
shall be held in trust and applied by the Trustee, in accordance with the
provisions of such Notes and this Indenture, to the payment, either directly or
through any Paying Agent (including the Company acting as Paying Agent) as the
Trustee may determine, to the Holders of such Notes of all sums due and to
become due thereon in respect of principal, premium, if any, and interest, but
such money need not be segregated from other funds except to the extent required
by law.
The Company shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the cash or non-callable Government
Securities deposited pursuant to Section 8.04 hereof or the principal and
interest received in respect thereof other than any such tax, fee or other
charge which by law is for the account of the Holders of the outstanding Notes.
Anything in this Article 8 to the contrary notwithstanding, the Trustee
shall deliver or pay to the Company from time to time upon the request of the
Company any money or non- callable Government Securities held by it as provided
in Section 8.04 hereof which, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Trustee (which may be the opinion delivered under Section
8.04(a) hereof), are in excess of the amount thereof that would then be required
to be deposited to effect an equivalent Legal Defeasance or Covenant Defeasance.
Section 8.06 Repayment to Company.
Any money deposited with the Trustee or any Paying Agent, or then held
by the Company, in trust for the payment of the principal of, premium, if any,
or interest on any Note and remaining unclaimed for two years after such
principal, and premium, if any, or interest has become due and payable shall be
paid to the Company on its request or (if then held by the Company) shall be
discharged from such trust; and the Holder of such Note shall thereafter, as a
secured creditor, look only to the Company for payment thereof, and all
liability of the Trustee or such Paying Agent with respect to such trust money,
and all liability of the Company as trustee thereof, shall thereupon cease;
provided, however, that the Trustee or such Paying Agent, before being required
to make any such repayment, may at the expense of the Company cause to be
published once, in the New York Times and The Wall Street Journal (national
edition), notice that such money remains unclaimed and that, after a date
specified therein, which shall not be less than 30 days from the date of such
notification or publication, any unclaimed balance of such money then remaining
will be repaid to the Company.
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Section 8.07 Reinstatement.
If the Trustee or Paying Agent is unable to apply any United States
dollars or non- callable Government Securities in accordance with Section 8.02
or Section 8.03 hereof, as the case may be, by reason of any order or judgment
of any court or governmental authority enjoining, restraining or otherwise
prohibiting such application, then the Company's obligations under this
Indenture and the Notes shall be revived and reinstated as though no deposit had
occurred pursuant to Section 8.02 or Section 8.03 hereof until such time as the
Trustee or Paying Agent is permitted to apply all such money in accordance with
Section 8.02 or Section 8.03 hereof, as the case may be; provided, however,
that, if the Company makes any payment of principal of, premium, if any, or
interest on any Note following the reinstatement of its obligations, the Company
shall be subrogated to the rights of the Holders of such Notes to receive such
payment from the money held by the Trustee or Paying Agent.
ARTICLE IX.
AMENDMENT, SUPPLEMENT AND WAIVER
Section 9.01 Without Consent of Holders of Notes.
Notwithstanding Section 9.02 of this Indenture, the Company and the
Trustee may amend or supplement this Indenture or the Notes without the consent
of any Holder of a Note:
(a) to cure any ambiguity, defect or inconsistency;
(b) to provide for uncertificated Notes in addition to or in place of
certificated Notes (provided that the uncertificated notes are issued
in registered form for purposes of Section 163(f) of the Internal
Revenue Code (the "Code"), or in a manner such that the uncertificated
notes are described in Section 163(f)(2)(B) of the Code) or to alter
the provisions of Article 2 hereof (including the related definitions)
in a manner that does not materially adversely affect any Holder;
(c) to provide for the assumption of the Company's (and Subsidiary
Guarantors') obligations to the Holders of the Notes in the case of a
merger or consolidation or sale of all or substantially all of the
Company's (and Subsidiary Guarantors') assets pursuant to Article 5 or
Article 10 hereof;
(d) to make any change that would provide any additional rights or benefits
to the Holders of the Notes or that does not adversely affect the legal
rights hereunder of any Holder of the Note; and
(e) to comply with requirements of the Commission in order to effect or
maintain the qualification of this Indenture under the TIA;
Upon the request of the Company accompanied by a resolution of its
Board of Directors authorizing the execution of any such amended or supplemental
Indenture, and upon receipt by the Trustee of the documents described in Section
7.02(b) hereof, the Trustee shall
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join with the Company and the Subsidiary Guarantors, if any, in the execution of
any amended or supplemental Indenture authorized or permitted by the terms of
this Indenture and to make any further appropriate agreements and stipulations
that may be therein contained, but the Trustee shall not be obligated to enter
into such amended or supplemental Indenture that affects its own rights, duties
or immunities under this Indenture or otherwise.
Section 9.02 With Consent of Holders of Notes.
Except as provided below in this Section 9.02, the Company and the
Trustee may amend or supplement this Indenture and the Notes and any Subsidiary
Guarantees may be amended or supplemented with the consent of the Holders of at
least a majority in principal amount of the Notes then outstanding (including
consents obtained in connection with a purchase of, or tender offer or exchange
offer for, Notes), and, subject to Sections 6.04 and 6.07 hereof, any existing
Default or Event of Default (other than a Default or Event of Default in the
payment of the principal of, premium, if any, or interest on the Notes, except a
payment default resulting from an acceleration that has been rescinded) or
compliance with any provision of this Indenture or the Notes may be waived with
the consent of the Holders of a majority in principal amount of the then
outstanding Notes (including consents obtained in connection with a purchase of,
tender offer or exchange offer for, Notes). The determination as to which Notes
are considered to be "outstanding" for purposes of this Section 9.02 shall be
made in accordance with the provisions of Section 2.08 hereof.
Upon the request of the Company accompanied by a resolution of its
Board of Directors authorizing the execution of any such amended or supplemental
Indenture, and upon the filing with the Trustee of evidence satisfactory to the
Trustee of the consent of the Holders of Notes as aforesaid, and upon receipt by
the Trustee of the documents described in Section 7.02 hereof, the Trustee shall
join with the Company in the execution of such amended or supplemental Indenture
unless such amended or supplemental Indenture directly affects the Trustee's own
rights, duties or immunities under this Indenture or otherwise, in which case
the Trustee may in its discretion, but shall not be obligated to, enter into
such amended or supplemental Indenture.
It shall not be necessary for the consent of the Holders of Notes under
this Section 9.02 to approve the particular form of any proposed amendment or
waiver, but it shall be sufficient if such consent approves the substance
thereof.
After an amendment, supplement or waiver under this Section becomes
effective, the Company shall mail to the Holders of Notes affected thereby a
notice briefly describing the amendment, supplement or waiver. Any failure of
the Company to mail such notice, or any defect therein, shall not, however, in
any way impair or affect the validity of any such amended or supplemental
Indenture or waiver. Subject to Sections 6.04 and 6.07 hereof, the Holders of a
majority in aggregate principal amount of the Notes then outstanding may waive
compliance in a particular instance by the Company with any provision of this
Indenture or the Notes. However, without the consent of each Holder affected, an
amendment or waiver under this Section 9.02 may not (with respect to any Notes
held by a non-consenting Holder):
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(a) reduce the principal amount of Notes whose Holders must consent to an
amendment, supplement or waiver;
(b) reduce the principal of or premium, if any, or the rate of interest on
any Note;
(c) change the stated maturity of the principal of, or any installment of
interest on any Note;
(d) waive a Default or Event of Default in the payment of principal of or
premium, if any, or interest on the Notes (except a rescission of
acceleration of the Notes by the Holders of at least a majority in
aggregate principal amount of the Notes then outstanding and a waiver
of the payment default that resulted from such acceleration);
(e) make any Note payable in money other than that stated in the Notes;
(f) make any change in the provisions of this Indenture relating to waivers
of past Defaults or the rights of Holders of Notes to receive payments
of principal of or premium, if any, or interest on the Notes;
(g) waive a redemption payment with respect to any Note;
(h) make any change in the ranking or priority of any Note that would
adversely affect the Holders of Notes;
(i) make any change in any Subsidiary Guaranty that would adversely affect
the Holders of the Notes;
(j) reduce the premium payable upon repurchase of any Note or change the
time at which any Note is required to be repurchased pursuant to the
provisions under Sections 4.10 or 4.15; and
(k) make any change in Sections 6.04 or 9.02.
Section 9.03 Compliance with Trust Indenture Act.
Every amendment or supplement to this Indenture or the Notes shall be
set forth in a amended or supplemental Indenture that complies with the TIA as
then in effect.
Section 9.04 Revocation and Effect of Consents.
Until an amendment, supplement or waiver becomes effective, a consent
to it by a Holder of a Note is a continuing consent by the Holder of a Note and
every subsequent Holder of a Note or portion of a Note that evidences the same
debt as the consenting Xxxxxx's Note, even if notation of the consent is not
made on any Note. Any such Holder of a Note or subsequent Holder of a Note,
however, may revoke the consent as to its Note if the Trustee receives written
notice of revocation before the date the waiver, supplement or amendment becomes
effective. An amendment, supplement or waiver becomes effective in accordance
with its terms and thereafter binds every Holder of a Note.
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Section 9.05 Notation on or Exchange of Notes.
The Trustee may place an appropriate notation about an amendment,
supplement or waiver on any Note thereafter authenticated. The Company in
exchange for all Notes may issue and the Trustee shall, upon receipt of an
Authentication Order, authenticate new Notes that reflect the amendment,
supplement or waiver.
Failure to make the appropriate notation or issue a new Note shall not
affect the validity and effect of such amendment, supplement or waiver.
Section 9.06 Trustee to Sign Amendments, etc.
The Trustee shall sign any amended or supplemental Indenture authorized
pursuant to this Article 9 if the amendment or supplement does not adversely
affect the rights, duties, liabilities or immunities of the Trustee. The Company
may not sign an amendment or supplemental Indenture until the Board of Directors
approves it. In executing any amended or supplemental indenture, the Trustee
shall be entitled to receive and (subject to Section 7.01 hereof) shall be fully
protected in relying upon, in addition to the documents required by Section
11.04 hereof, an Officer's Certificate and an Opinion of Counsel stating that
the execution of such amended or supplemental indenture is authorized or
permitted by this Indenture.
ARTICLE X.
SUBSIDIARY GUARANTEES
Section 10.01 Application.
The provisions of Sections 10.02 through 10.06 hereof shall apply in
respect of (i) (a) each Subsidiary of the Company (other than a Subsidiary
organized under the laws of a jurisdiction other than the United States of
America, its territories and possessions, any State thereof or the District of
Colombia) to which the Company conveys, transfers, contributes, sells, leases or
assigns or otherwise distributes any tangible property or assets after the date
of this Indenture and (b) each Subsidiary of the Company which is acquired or
created by the Company after the date of this Indenture, in either case, in any
transaction or series of transactions involving aggregate value or consideration
in excess of $10.0 million and (ii) each Subsidiary of the Company whose total
assets at any time exceed $10 million.
Section 10.02 Guarantee.
Subject to this Article 10, the Company shall cause each of the
Subsidiary Guarantors, jointly and severally, unconditionally to guarantee to
each Holder of a Note authenticated and delivered by the Trustee and to the
Trustee and its successors and assigns, irrespective of the validity and
enforceability of this Indenture, the Notes or the obligations of the Company
hereunder or thereunder, that: (a) the principal of and interest on the Notes
will be promptly paid in full when due, whether at maturity, by acceleration,
redemption or otherwise, and interest on the overdue principal of and interest
on the Notes, if any, if lawful, and all other obligations of the Company to the
Holders or the Trustee hereunder or thereunder will be promptly paid in full or
performed, all in accordance with the terms hereof and thereof; and (b)
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in case of any extension of time of payment or renewal of any Notes or any of
such other obligations, that same will be promptly paid in full when due or
performed in accordance with the terms of the extension or renewal, whether at
stated maturity, by acceleration or otherwise. The Company shall cause each
Subsidiary Guarantor, failing payment when due of any amount so guaranteed or
any performance so guaranteed for whatever reason, to be jointly and severally
obligated to pay the same immediately. The Company shall cause each Subsidiary
Guarantor further to agree that such guarantee is a guarantee of payment and not
a guarantee of collection.
The Company shall further cause each Subsidiary Guarantor (i) to agree
that its obligations under its Subsidiary Guarantee shall be unconditional,
irrespective of the validity, regularity or enforceability of the Notes or this
Indenture, the absence of any action to enforce the same, any waiver or consent
by any Holder of the Notes with respect to any provisions hereof or thereof, the
recovery of any judgment against the Company, any action to enforce the same or
any other circumstance which might otherwise constitute a legal or equitable
discharge or defense of a guarantor; (ii) to waive diligence, presentment,
demand of payment, filing of claims with a court in the event of insolvency or
bankruptcy of the Company, any right to require a proceeding first against the
Company, protest, notice and all demands whatsoever; and (iii) to covenant that
its Subsidiary Guarantee shall not be discharged except by complete performance
of the obligations contained in the Notes and this Indenture.
If any Holder or the Trustee is required by any court or otherwise to
return to the Company, the Subsidiary Guarantors or any custodian, trustee,
liquidator or other similar official acting in relation to either the Company or
any Subsidiary Guarantor, any amount paid by the Company or any Subsidiary
Guarantor either to the Trustee or to such Holder, each Subsidiary Guarantee, to
the extent theretofore discharged, shall be reinstated in full force and effect.
The Company shall further cause each Subsidiary Guarantor to agree that
(i) it shall not be entitled to any right of subrogation in relation to the
Holders in respect of any obligations guaranteed hereby until payment in full of
all obligations guaranteed hereby, and (ii) as between the Subsidiary
Guarantors, on the one hand, and the Holders and the Trustee, on the other hand,
(x) the maturity of the obligations guaranteed by the Subsidiary Guarantees may
be accelerated as provided in Article 6 hereof for the purposes of the
Subsidiary Guarantees notwithstanding any stay, injunction or other prohibition
preventing such acceleration in respect of the obligations guaranteed by the
Subsidiary Guarantees, and (y) in the event of any declaration of acceleration
of such obligations as provided in Article 6 hereof, such obligations (whether
or not due and payable) shall forthwith become due and payable by the Subsidiary
Guarantors for the purpose of the Subsidiary Guarantees. The Subsidiary
Guarantors shall have the right to seek contribution from any non- paying
Subsidiary Guarantor so long as the exercise of such right does not impair the
rights of the Holders under the Guarantee.
Section 10.03 Limitation on Subsidiary Guarantor Liability.
By its execution of its Subsidiary Guarantee, each Subsidiary
Guarantor, and by its acceptance of Notes, each Holder, confirms that it is the
intention of all such parties that the Subsidiary Guarantee of such Subsidiary
Guarantor not constitute a fraudulent transfer or conveyance for purposes of any
Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent
Transfer Act or any similar federal or state law to the extent applicable to
64
any Subsidiary Guarantee. To effectuate the foregoing intention, the Trustee and
the Holders hereby irrevocably agree, and by its execution of its Subsidiary
Guarantee each Subsidiary Guarantor shall irrevocably agree, that the
obligations of such Subsidiary Guarantor under its Subsidiary Guarantee and this
Article 10 shall be limited to such maximum amount as will, after giving effect
to such maximum amount and all other contingent and fixed liabilities of such
Subsidiary Guarantor that are relevant under such laws, and after giving effect
to any collections from, rights to receive contribution from or payments made by
or on behalf of any other Subsidiary Guarantor in respect of the obligations of
such other Subsidiary Guarantor under this Article 10, result in the obligations
of such Subsidiary Guarantor under its Subsidiary Guarantee not constituting a
fraudulent transfer or conveyance.
Section 10.04 Execution and Delivery of Subsidiary Guarantee.
To evidence its Subsidiary Guarantee, the Company shall cause each
Subsidiary Guarantor to agree that a notation of such Subsidiary Guarantee
substantially in the form included in Exhibit D hereto shall be endorsed by an
Officer of such Subsidiary Guarantor on each Note authenticated and delivered by
the Trustee on or after the date of such Guarantee. Further, the Company shall
cause each Subsidiary Guarantor promptly to execute a supplemental indenture
substantially in the form of Exhibit E hereto.
The Company shall further cause each Subsidiary Guarantor to agree that
its Subsidiary Guarantee shall remain in full force and effect notwithstanding
any failure to endorse on each Note a notation of such Subsidiary Guarantee.
If an Officer whose signature is on any Subsidiary Guarantee no longer
holds that office at the time the Trustee authenticates the Note on which such
Subsidiary Guarantee is endorsed, such Subsidiary Guarantee shall be valid
nevertheless.
The delivery of any Note by the Trustee, after the authentication
thereof hereunder, shall constitute due delivery of each Subsidiary Guarantee
theretofore or thereafter executed and delivered by or on behalf of the
Subsidiary Guarantors or any of them.
In the event that the Company creates or acquires any new Subsidiaries
subsequent to the date of this Indenture, the Company shall cause such
Subsidiaries to execute supplemental indentures to this Indenture and Subsidiary
Guarantees in accordance with this Article 10.
Section 10.05 Subsidiary Guarantors May Consolidate, etc., on Certain
Terms.
No Subsidiary Guarantor may consolidate with or merge with or into
(whether or not such Subsidiary Guarantor is the surviving Person) another
corporation, Person or other entity whether or not affiliated with such
Subsidiary Guarantor unless (i) subject to the provisions of Section 10.06
hereof, the Person formed by or surviving any such consolidation or merger (if
other than such Subsidiary Guarantor) assumes all the obligations of such
Subsidiary Guarantor under its Subsidiary Guarantee, the Notes and the Indenture
pursuant to a supplemental indenture, in form and substance reasonably
satisfactory to the Trustee; (ii) immediately after giving effect to such
transaction, no Default or Event of Default exists; and (iii) the Company would
be permitted immediately after giving effect to such transaction to incur
65
at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage
Ratio test set forth in Section 4.09(a) hereof.
Section 10.06 Releases Following Sale of Assets.
In the event of a sale or other disposition of all of the assets of any
Subsidiary Guarantor (other than to the Company or another Subsidiary
Guarantor), by way of merger, consolidation or otherwise, or a sale or other
disposition of all of the Capital Stock of any Subsidiary Guarantor (other than
to the Company or another Subsidiary Guarantor), then such Subsidiary Guarantor
(in the event of a sale or other disposition, by way of such a merger,
consolidation or otherwise, of all of the Capital Stock of such Subsidiary
Guarantor) or the corporation acquiring the property (in the event of a sale or
other disposition of all of the assets of such Subsidiary Guarantor) will be
released and relieved of any obligations under its Subsidiary Guarantee and any
such acquiring corporation will not be required to assume any obligations of
such Subsidiary Guarantor under the applicable Subsidiary Guarantee; provided
that such sale or other disposition complies with all applicable provisions of
this Indenture including, without limitation, Section 4.10 hereof.
Any Subsidiary Guarantor not released from its obligations under its
Subsidiary Guarantee shall remain liable for the full amount of principal of and
interest on the Notes and for the other obligations of such Subsidiary Guarantor
under this Indenture as provided in this Article 10.
Section 10.07 Transfers of Intangible Assets.
If the Company or any Wholly Owned Subsidiary of the Company proposes
to convey, transfer, contribute, sell, lease or assign or otherwise distribute
(collectively, "transfer") any intellectual property or similar assets to any
other Subsidiary of the Company after the date of this Indenture, (i) such
transfer shall be made only to another Wholly Owned Subsidiary of the Company
and (ii) prior to or concurrently with such transfer, the Company or such Wholly
Owned Subsidiary effecting such transfer shall enter into a license agreement
with such other Wholly Owned Subsidiary in the form attached hereto as Exhibit B
(with such modifications as may be agreed to by the Trustee and the Company (or
the Trustee and such Wholly Owned Subsidiary of the Company, as the case may
be)), pursuant to which the Company or such Wholly Owned Subsidiary effecting
such transfer, as the case may be, shall be permitted to utilize such property
or assets in the same manner and to the same extent as such property or assets
were used by such entity prior to the transfer thereof.
ARTICLE XI.
MISCELLANEOUS
Section 11.01 Trust Indenture Act Controls.
If any provision of this Indenture limits, qualifies or conflicts with
the duties imposed by TIA ss. 318(c), the imposed duties shall control.
66
Section 11.02 Notices.
Any notice or communication by the Company, any Subsidiary Guarantor or
the Trustee to the others is duly given if in writing and delivered in person or
mailed by first class mail (registered or certified, return receipt requested),
telex, telecopier or overnight air courier guaranteeing next day delivery, to
the other's address:
If to the Company and/or any Subsidiary Guarantor:
Finlay Fine Jewelry Corporation
000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000
Telecopier No.: (000) 000-0000
Attention: Secretary and Corporate Counsel
With a copy to:
Blank Rome LLP
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxx Xxxxxx
If to the Trustee:
HSBC Bank USA
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx, 00000
Telecopier No. (000)000-0000
Attention: Corporate Trust Administration
The Company, any Subsidiary Guarantor or the Trustee, by notice to the
others, may designate additional or different addresses for subsequent notices
or communications.
All notices and communications (other than those sent to Holders) shall
be deemed to have been duly given: at the time delivered by hand, if personally
delivered; five Business Days after being deposited in the mail, postage
prepaid, if mailed; when answered back, if telexed; when receipt acknowledged,
if telecopied; and the next Business Day after timely delivery to the courier,
if sent by overnight air courier guaranteeing next day delivery.
Any notice or communication to a Holder shall be mailed by first class
mail, certified or registered, return receipt requested, or by overnight air
courier guaranteeing next day delivery to its address shown on the register kept
by the Registrar. Any notice or communication shall also be so mailed to any
Person described in TIA ss. 313(c), to the extent required by the TIA. Failure
to mail a notice or communication to a Holder or any defect in it shall not
affect its sufficiency with respect to other Holders.
If a notice or communication is mailed in the manner provided above
within the time prescribed, it is duly given, whether or not the addressee
receives it.
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If the Company mails a notice or communication to Holders, it shall
mail a copy to the Trustee and each Agent at the same time.
Section 11.03 Communication by Holders of Notes with Other Holders of
Notes.
Holders may communicate pursuant to TIA ss. 312(b) with other Holders
with respect to their rights under this Indenture or the Notes. The Company, the
Trustee, the Registrar and anyone else shall have the protection of TIA ss.
312(c).
Section 11.04 Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Company to the Trustee to take
any action under this Indenture, the Company shall furnish to the Trustee:
(a) an Officers' Certificate in form and substance reasonably satisfactory
to the Trustee (which shall include the statements set forth in Section
11.05 hereof) stating that, in the opinion of the signers, all
conditions precedent and covenants, if any, provided for in this
Indenture relating to the proposed action have been satisfied; and
(b) an Opinion of Counsel in form and substance reasonably satisfactory to
the Trustee (which shall include the statements set forth in Section
11.05 hereof) stating that, in the opinion of such counsel, all such
conditions precedent and covenants have been satisfied.
Section 11.05 Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a condition
or covenant provided for in this Indenture (other than a certificate provided
pursuant to TIA ss. 314(a)(4)) shall comply with the provisions of TIA ss.
314(e) and shall include:
(a) a statement that the Person making such certificate or opinion has read
such covenant or condition;
(b) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(c) a statement that, in the opinion of such Person, he or she has made
such examination or investigation as is necessary to enable him or her
to express an informed opinion as to whether or not such covenant or
condition has been satisfied; and
(d) a statement as to whether or not, in the opinion of such Person, such
condition or covenant has been satisfied.
Section 11.06 Rules by Trustee and Agents.
The Trustee may make reasonable rules for action by or at a meeting of
Holders. The Registrar or Paying Agent may make reasonable rules and set
reasonable requirements for its functions.
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Section 11.07 No Personal Liability of Directors, Officers, Employees
and Stockholders.
No past, present or future director, officer, employee, incorporator or
stockholder of the Company, as such, shall have any liability for any
obligations of the Company under the Notes or this Indenture or for any claim
based on, in respect of, or by reason of, such obligations or their creation.
Each Holder by accepting a Note waives and releases all such liability. The
waiver and release are part of the consideration for issuance of the Notes.
Section 11.08 Governing Law.
THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO
CONSTRUE THIS INDENTURE, THE NOTES AND THE SUBSIDIARY GUARANTEES, IF ANY,
WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT
THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED
THEREBY.
Section 11.09 No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret any other indenture, loan
or debt agreement of the Company or its Subsidiaries or of any other Person. Any
such indenture, loan or debt agreement may not be used to interpret this
Indenture.
Section 11.10 Successors.
All agreements of the Company in this Indenture and the Notes shall
bind its successors. All agreements of the Trustee in this Indenture shall bind
its successors.
Section 11.11 Severability.
In case any provision in this Indenture or in the Notes shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
Section 11.12 Counterpart Originals.
The parties may sign any number of copies of this Indenture. Each
signed copy shall be an original, but all of them together constitute the same
agreement.
Section 11.13 Table of Contents, Headings, Etc.
The Table of Contents, Cross-Reference Table and Headings of the
Articles and Sections of this Indenture have been inserted for convenience of
reference only, are not to be considered a part of this Indenture and shall in
no way modify or restrict any of the terms or provisions hereof.
[Signatures on following page]
69
SIGNATURES
Dated as of June 3, 2004 FINLAY FINE JEWELRY CORPORATION
By: /s/ Xxxxx X. Xxxxxxxx
---------------------
Name: Xxxxx X. Xxxxxxxx
Title: Senior Vice President,
Treasurer and CFO
Attest: /s/ Xxxxx X. Xxxxx
------------------
Name: Xxxxx X. Xxxxx
Title: Vice President,
Secretary and
General Counsel
Dated as of June 3, 2004 HSBC BANK USA, as Trustee
By: /s/ Xxxxx X. Xxxxxx
-------------------
Name: Xxxxx X. Xxxxxx
Title: Vice President
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RULE 144A/REGULATION S APPENDIX
PROVISIONS RELATING TO INITIAL NOTES,
PRIVATE EXCHANGE NOTES
AND EXCHANGE NOTES
1. Definitions
1.1 Definitions
Capitalized terms used but not otherwise defined in this Appendix shall
have the meanings assigned in the Indenture. For the purposes of this Appendix
the following terms shall have the meanings indicated below:
"Applicable Procedures" means, with respect to any transfer or
transaction involving a Temporary Regulation S Global Note or beneficial
interest therein, the rules and procedures of the Depository, Euroclear and
Clearstream for such a Temporary Regulation S Global Note, in each case to the
extent applicable to such transaction and as in effect from time to time.
"Clearstream" means Clearstream Banking, Societe Anonyme, or any
successor securities clearing agency.
"Definitive Note" means a certificated Initial Note or Exchange Note or
Private Exchange Note bearing, if required, the restricted securities legend set
forth in Section 2.3(e).
"Depository" means The Depository Trust Company, its nominees and their
respective successors.
"Distribution Compliance Period", with respect to any Notes, means the
period of 40 consecutive days beginning on and including the later of (i) the
day on which such Notes are first offered to Persons other than distributors (as
defined in Regulation S under the Securities Act) in reliance on Regulation S
and (ii) the Issue Date with respect to such Notes.
"Euroclear" means Euroclear Bank S.A., as operator of the Euroclear
System or any successor securities clearing agency.
"Exchange Notes" means (1) the 8 3/8% Senior Notes due June 1, 2012
issued pursuant to the Indenture in connection with the Registered Exchange
offer pursuant to the Registration Rights Agreement and (2) Additional Notes, if
any, issued pursuant to a registration statement filed with the Commission under
the Securities Act.
Appendix - 1
"Initial Notes" means $200,000,000 aggregate principal amount of 8 3/8%
Senior Notes due June 1, 2012 issued on the Issue Date and (2) Additional Notes,
if any, issued in a transaction exempt from the registration requirements of the
Securities Act.
"Initial Purchasers" means with respect to the Initial Notes issued on
the Issue Date, Credit Suisse First Boston LLC, X.X. Xxxxxx Securities Inc., and
SG Americas Securities, LLC and (2) with respect to each issuance of Additional
Notes, the Persons purchasing such Additional Notes under the related Purchase
Agreement.
"Notes Custodian" means the custodian with respect to a Global Note (as
appointed by the Depository) or any successor Person thereto, and shall
initially be the Trustee.
"Private Exchange" means the offer by the Company, pursuant to a
Registration Rights Agreement, to the Initial Purchasers to issue and deliver to
each Initial Purchaser, in exchange for the Initial Notes held by the Initial
Purchaser as part of its initial distribution, a like aggregate principal amount
of Private Exchange Notes.
"Private Exchange Notes" means any 8 3/8% Senior Notes due June 1, 2012
issued in connection with a Private Exchange.
"Purchase Agreement" means (1) with respect to the Initial Notes issued
on the Issue Date, the Purchase Agreement dated May 27, 2004, among the Company
and the Initial Purchasers and (2) with respect to each issuance of Additional
Notes, the purchase agreement or underwriting agreement among the Issuer, the
Company, any Subsidiary Guarantors and the Persons purchasing such Additional
Notes.
"QIB" means a "qualified institutional buyer" as defined in Rule 144A.
"Registered Exchange Offer" means the offer by the Company, pursuant to
a Registration Rights Agreement, to certain Holders of Initial Notes, to issue
and deliver to such Holders, in exchange for the Initial Notes, a like aggregate
principal amount of Exchange Notes registered under the Securities Act.
"Registration Rights Agreement" means (1) with respect to the Initial
Notes issued on the Issue Date, the Registration Rights Agreement dated June 3,
2004, among the Company and the Initial Purchasers and (2) with respect to each
issuance of Additional Notes issued in a transaction exempt from the
registration requirements of the Securities Act, the registration rights
agreement, if any, among the Issuer, the Company and the Persons purchasing such
Additional Notes under the related Purchase Agreement.
"Shelf Registration Statement" means the registration statement issued
by the Company in connection with the offer and sale of Initial Notes or Private
Exchange Notes pursuant to a Registration Rights Agreement.
"Transfer Restricted Notes" means Notes that bear or are required to
bear the legend set forth in Section 2.3(e) hereto.
Appendix - 2
1.2 Other Definitions
Defined
Term in Section:
---- ----------
"Agent Members".......................................... 2.1(b)
"Global Notes"........................................... 2.1(a)
"Permanent Regulation S Global Note"..................... 2.1(a)
"Regulation S"........................................... 2.1(a)
"Rule 144A".............................................. 2.1(a)
"Rule 144A Global Note".................................. 2.1(a)
"Temporary Regulation S Global Note"..................... 2.1(a)
2. The Notes.
2.1 (a) Form and Dating. The Initial Notes will be offered and sold by
the Company pursuant to a Purchase Agreement. The Initial Notes will be resold
initially only to (i) QIBs in reliance on Rule 144A under the Securities Act
("Rule 144A") and (ii) Persons other than U.S. Persons (as defined in Regulation
S) in reliance on Regulation S under the Securities Act ("Regulation S").
Initial Notes may thereafter be transferred to QIBs, purchasers in reliance on
Regulation S and others as provided in the Notes, in each case subject to the
restrictions on transfer set forth herein. Initial Notes initially resold
pursuant to Rule 144A shall be issued initially in the form of one or more
permanent global Notes in definitive, fully registered form (collectively, the
"Rule 144A Global Note") and Initial Notes initially resold pursuant to
Regulation S shall be issued initially in the form of one or more temporary
global securities in definitive, fully registered form (collectively, the
"Temporary Regulation S Global Note"), in each case without interest coupons and
with the global securities legend and restricted securities legend set forth in
Exhibit 1 hereto, which shall be deposited on behalf of the purchasers of the
Initial Notes represented thereby with the Notes Custodian, and registered in
the name of the Depository or a nominee of the Depository, duly executed by the
Company and authenticated by the Trustee as provided in the Indenture. Except as
set forth in this Section 2.1(a), beneficial ownership interests in the
Temporary Regulation S Global Note (x) will not be exchangeable for interests in
the Rule 144A Global Note, a permanent global security (the "Permanent
Regulation S Global Note") or any other Note without a legend containing
restrictions on transfer of such Note, prior to the expiration of the
Distribution Compliance Period and (y) then only upon certification in form
reasonably satisfactory to the Trustee that beneficial ownership interests in
such Temporary Regulation S Global Note are owned either by non-U.S. persons or
U.S. persons who purchased such interests in a transaction that did not require
registration under the Securities Act.
Beneficial interests in the Temporary Regulation S Global Note may be
exchanged for interests in Rule 144A Global Notes only if (1) such exchange
occurs in connection with a transfer of Notes in compliance with Rule 144A, and
(2) the transferor of the beneficial interest in the Temporary Regulation S
Global Note first delivers to the
Appendix - 3
Trustee a written certificate (in the form provided in Exhibit 1 hereto) to the
effect that the beneficial interest in the Temporary Regulation S Global Note is
being transferred to a Person (a) who the transferor reasonably believes to be a
QIB, (b) purchasing for its own account or the account of a QIB in a transaction
meeting the requirements of Rule 144A, and (c) in accordance with all applicable
securities laws of the States of the United States and other jurisdictions.
Beneficial interests in the Rule 144A Global Note may be transferred to
a Person who takes delivery in the form of an interest in the Regulation S
Global Note, whether before or after the expiration of the Distribution
Compliance Period, only if the transferor first delivers to the trustee a
written certificate (in the form provided in Exhibit 1 hereto) to the effect
that if such transfer is being made in accordance with rule 903 or 904 of
Regulation S or Rule 144 (if available) and that, if such transfer occurs prior
to the expiration of the Distribution Compliance Period, the interest
transferred will be held immediately thereafter through Euroclear Bank S.A./N.A.
or Clearstream Banking Societe Anonyme.
The Rule 144A Global Note, the Temporary Regulation S Global Note and
the Permanent Regulation S Global Note are collectively referred to herein as
"Global Notes". The aggregate principal amount of the Global Notes may from time
to time be increased or decreased by adjustments made on the records of the
Trustee and the Depository or its nominee as hereinafter provided.
(b) Book-Entry Provisions. This Section 2.1(b) shall apply only to a
Global Note deposited with or on behalf of the Depository.
The Company shall execute and the Trustee shall, in accordance with
this Section 2.1(b), authenticate and deliver initially one or more Global Notes
that (a) shall be registered in the name of the Depository for such Global Note
or Global Notes or the nominee of such Depository and (b) shall be delivered by
the Trustee to such Depository or pursuant to such Depository's instructions or
held by the Trustee as custodian for the Depository.
Members of, or participants in, the Depository ("Agent Members") shall
have no rights under the Indenture with respect to any Global Note held on their
behalf by the Depository or by the Trustee as the custodian of the Depository or
under such Global Note, and the Company, the Trustee and any agent of the
Company or the Trustee shall be entitled to treat the Depository as the absolute
owner of such Global Note for all purposes whatsoever. Notwithstanding the
foregoing, nothing herein shall prevent the Company, the Trustee or any agent of
the Company or the Trustee from giving effect to any written certification,
proxy or other authorization furnished by the Depository or impair, as between
the Depository and its Agent Members, the operation of customary practices of
such Depository governing the exercise of the rights of a holder of a beneficial
interest in any Global Note.
Appendix - 4
(c) Certificated Notes. Except as provided in this Section 2.1 or
Section 2.3 or 2.4, owners of beneficial interests in Global Notes shall not be
entitled to receive physical delivery of Definitive Notes.
2.2 Authentication. The Trustee shall authenticate and deliver: (1) on
the Issue Date, an aggregate principal amount of $200.0 million 8 3/8% Senior
Notes due June 1, 2012, (2) any Additional Notes for an original issue in an
aggregate principal amount specified in the written order of the Company
pursuant to Section 2.02 of the Indenture and (2) Exchange Notes or Private
Exchange Notes for issue only in a Registered Exchange Offer or a Private
Exchange, respectively, pursuant to the Registration Rights Agreement, for a
like principal amount of Initial Notes, in each case upon a written order of the
Company signed by two Officers or by an Officer and either an Assistant
Treasurer or an Assistant Secretary of the Company. Such order shall specify the
amount of the Notes to be authenticated and the date on which the original issue
of Notes is to be authenticated and, in the case of any issuance of Additional
Notes pursuant to Section 2.15 of the Indenture, shall certify that such
issuance is in compliance with Section 4.09 of the Indenture.
2.3 Transfer and Exchange. (a) Transfer and Exchange of Definitive
Notes. When Definitive Notes are presented to the Registrar or a co-registrar
with a request:
(x) to register the transfer of such Definitive Notes; or
(y) to exchange such Definitive Notes for an equal principal
amount of Definitive Notes of other authorized denominations,
the Registrar or co-registrar shall register the transfer or make the exchange
as requested if its reasonable requirements for such transaction are met;
provided, however, that the Definitive Notes surrendered for registration of
transfer or exchange:
(i) shall be duly endorsed or accompanied by a written instrument
of transfer in form reasonably satisfactory to the Company and the
Registrar or co-registrar, duly executed by the Holder thereof or its
attorney duly authorized in writing; and
(ii) if such Definitive Notes are required to bear a restricted
securities legend, they are being transferred or exchanged pursuant to
an effective registration statement under the Securities Act, pursuant
to Section 2.3 (b) or pursuant to clause (A), (B) or (C) below, and are
accompanied by the following additional information and documents, as
applicable:
(A) if such Definitive Notes are being delivered to the
Registrar by a Holder for registration in the name of such Holder,
without transfer, a certification from such Holder to that effect;
or
(B) if such Definitive Notes are being transferred to the
Company, a certification to that effect; or
Appendix - 5
(C) if such Definitive Notes are being transferred (x)
pursuant to an exemption from registration in accordance with Rule
144A, Regulation S or Rule 144 under the Securities Act; or (y) in
reliance upon another exemption from the requirements of the
Securities Act: (i) a certification to that effect (in the form
set forth on the reverse of the Note) and (ii) if the Company so
requests, an opinion of counsel or other evidence reasonably
satisfactory to it as to the compliance with the restrictions set
forth in the legend set forth in Section 2.3(e)(i).
(b) Restrictions on Transfer of a Definitive Note for a Beneficial
Interest in a Global Note. A Definitive Note may not be exchanged for a
beneficial interest in a Rule 144A Global Note or a Permanent Regulation S
Global Note except upon satisfaction of the requirements set forth below.
Upon receipt by the Trustee of a Definitive Note, duly endorsed or
accompanied by appropriate instruments of transfer, in form satisfactory to
the Trustee, together with:
(i) certification, in the form set forth on the reverse of the
Note, that such Definitive Note is either (A) being transferred to a
QIB in accordance with Rule 144A or (B) is being transferred after
expiration of the Distribution Compliance Period by a Person who
initially purchased such Note in reliance on Regulation S to a buyer
who elects to hold its interest in such Note in the form of a
beneficial interest in the Permanent Regulation S Global Note; and
(ii) written instructions directing the Trustee to make, or to
direct the Notes Custodian to make, an adjustment on its books and
records with respect to such Rule 144A Global Note (in the case of a
transfer pursuant to clause (b)(i)(A)) or Permanent Regulation S Note
(in the case of a transfer pursuant to clause (b)(i)(B)) to reflect an
increase in the aggregate principal amount of the Notes represented by
the Rule 144A Global Note or Permanent Regulation S Global Note, as
applicable, such instructions to contain information regarding the
Depository account to be credited with such increase,
then the Trustee shall cancel such Definitive Note and cause, or direct the
Notes Custodian to cause, in accordance with the standing instructions and
procedures existing between the Depository and the Notes Custodian, the
aggregate principal amount of Notes represented by the Rule 144A Global Note or
Permanent Regulation S Global Note, as applicable, to be increased by the
aggregate principal amount of the Definitive Note to be exchanged and shall
credit or cause to be credited to the account of the Person specified in such
instructions a beneficial interest in the Rule 144A Global Note or Permanent
Regulation S Global Note, as applicable, equal to the principal amount of the
Definitive Note so canceled. If no Rule 144A Global Notes or Permanent
Regulation S Global Notes, as applicable, are then outstanding, the Company
shall issue and the Trustee shall authenticate, upon written order of the
Company in the form of an Officers' Certificate, a new Rule 144A Global Note or
Permanent Regulation S Global Note, as applicable, in the appropriate principal
amount.
Appendix - 6
(c) Transfer and Exchange of Global Notes. (i) The transfer and
exchange of Global Notes or beneficial interests therein shall be effected
through the Depository, in accordance with the Indenture (including applicable
restrictions on transfer set forth herein, if any) and the procedures of the
Depository therefor. A transferor of a beneficial interest in a Global Note
shall deliver to the Registrar a written order given in accordance with the
Depository's procedures containing information regarding the participant account
of the Depository to be credited with a beneficial interest in the Global Note.
The Registrar shall, in accordance with such instructions, instruct the
Depository to credit to the account of the Person specified in such instructions
a beneficial interest in the Global Note and to debit the account of the Person
making the transfer the beneficial interest in the Global Note being
transferred.
(ii) If the proposed transfer is a transfer of a beneficial interest in
one Global Note to a beneficial interest in another Global Note, the
Registrar shall reflect on its books and records the date and an increase in
the principal amount of the Global Note to which such interest is being
transferred in an amount equal to the principal amount of the interest to be
so transferred, and the Registrar shall reflect on its books and records the
date and a corresponding decrease in the principal amount of the Global Note
from which such interest is being transferred.
(iii) Notwithstanding any other provisions of this Appendix (other than
the provisions set forth in Section 2.4), a Global Note may not be
transferred except as a whole and not in part by the Depository to a nominee
of the Depository or by a nominee of the Depository to the Depository or
another nominee of the Depository or by the Depository or any such nominee
to a successor Xxxxxxxxxx or a nominee of such successor Depository.
(iv) In the event that a Global Note is exchanged for Definitive Notes
pursuant to Section 2.4 of this Appendix prior to the consummation of a
Registered Exchange Offer or the effectiveness of a Shelf Registration
Statement with respect to such Notes, such Notes may be exchanged only in
accordance with such procedures as are substantially consistent with the
provisions of this Section 2.3 (including the certification requirements set
forth on the reverse of the Initial Notes intended to ensure that such
transfers comply with Rule 144A or Regulation S, as the case may be) and
such other procedures as may from time to time be adopted by the Company.
(d) Restrictions on Transfer of Temporary Regulation S Global Notes.
During the Distribution Compliance Period, beneficial ownership interests in
Temporary Regulation S Global Notes may only be sold, pledged or transferred
through Euroclear or Clearstream in accordance with the Applicable Procedures
and only (i) to the Company, (ii) so long as such Note is eligible for resale
pursuant to Rule 144A, to a Person whom the selling holder reasonably believes
is a QIB that purchases for its own account or for the account of a QIB in a
transaction meeting the requirements of Rule 144A, (iii) in an offshore
transaction in accordance with Regulation S (other than a transaction resulting
in an exchange for interest in a Permanent Regulation S Global Note), (iv)
pursuant to an exemption from registration under the Securities Act provided by
Rule 144 (if applicable)
Appendix - 7
under the Securities Act or (v) pursuant to an effective registration statement
under the Securities Act, in each case in accordance with any applicable
securities laws of any state of the United States.
(e) Legend.
(i) Except as permitted by the following paragraphs (ii), (iii) and
(iv), each Note certificate evidencing the Global Notes (and all Notes
issued in exchange therefore or in substitution thereof), in the case of
Notes offered otherwise than in reliance on Regulation S, shall bear a
legend in substantially the following form:
THIS NOTE (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A
TRANSACTION EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"), AND THIS NOTE MAY NOT BE OFFERED,
SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN
APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THIS NOTE IS HEREBY
NOTIFIED THAT THE SELLER OF THIS NOTE MAY BE RELYING ON THE EXEMPTION
FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE
144A THEREUNDER.
THE HOLDER OF THIS NOTE AGREES FOR THE BENEFIT OF THE COMPANY THAT
(A) THIS NOTE MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED,
ONLY (I) TO THE COMPANY, (II) IN THE UNITED STATES TO A PERSON WHOM THE
SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING
THE REQUIREMENTS OF RULE 144A, (III) OUTSIDE THE UNITED STATES IN AN
OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 904 UNDER THE SECURITIES
ACT, (IV) PURSUANT TO EXEMPTION FROM REGISTRATION UNDER THE SECURITIES
ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE) OR (V) PURSUANT TO
AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH
OF CASES (I) THROUGH (V) IN ACCORDANCE WITH ANY APPLICABLE SECURITIES
LAWS OF ANY STATE OF THE UNITED STATES AND OTHER JURISDICTIONS, AND (B)
THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY
PURCHASER OF THIS NOTE FROM IT OF THE RESALE RESTRICTIONS REFERRED TO
IN (A) ABOVE.
Each certificate evidencing a Note offered in reliance on Regulation S
shall, in lieu of the foregoing, bear a legend in substantially the
following form:
Appendix - 8
THIS NOTE (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A
TRANSACTION ORIGINALLY EXEMPT FROM REGISTRATION UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND MAY NOT
BE TRANSFERRED IN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR
BENEFIT OF, ANY U.S. PERSON EXCEPT PURSUANT TO AN AVAILABLE EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND ALL
APPLICABLE STATE SECURITIES LAWS. TERMS USED ABOVE HAVE THE MEANINGS
GIVEN TO THEM IN REGULATION S UNDER THE SECURITIES ACT.
Each Definitive Note will also bear the following additional legend:
IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE
REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS
SUCH REGISTRAR AND TRANSFER AGENT MAY REASONABLY REQUIRE TO CONFIRM
THAT THE TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS.
(ii) Upon any sale or transfer of a Transfer Restricted Note (including
any Transfer Restricted Note represented by a Global Note) pursuant to Rule
144(k) under the Securities Act, the Registrar shall permit the transferee
thereof to exchange such Transfer Restricted Note for a certificated Note
that does not bear the legend set forth above and rescind any restriction on
the transfer of such Transfer Restricted Note, if the transferor thereof
certifies in writing to the Registrar that such sale or transfer was made in
reliance on Rule 144(k) (such certification to be in the form set forth on
the reverse of the Note).
(iii) After a transfer of any Initial Notes or Private Exchange Notes
pursuant to and during the period of the effectiveness of a Shelf
Registration Statement with respect to such Initial Notes or Private
Exchange Notes, as the case may be, all requirements pertaining to legends
on such Initial Note or such Private Exchange Note will cease to apply, the
requirements requiring any such Initial Note or such Private Exchange Note
issued to certain Holders be issued in global form will cease to apply, and
a certificated Initial Note or Private Exchange Note or an Initial Note or
Private Exchange Note in global form, in each case without restrictive
transfer legends, will be available to the transferee of the Holder of such
Initial Notes or Private Exchange Notes upon exchange of such transferring
Holders certificated Initial Note or Private Exchange Note or appropriate
directions to transfer such Holder's interest in the Global Note, as
applicable.
(iv) Upon the consummation of a Registered Exchange Offer with respect
to the Initial Notes, all requirements pertaining to such Initial Notes that
Initial Notes issued to certain Holders be issued in global form will still
apply
Appendix - 9
with respect to Holders of such Initial Notes that do not exchange their
Initial Notes, and Exchange Notes in certificated or global form, in each
case without the restrictive securities legend set forth in Exhibit 1 hereto
will be available to Holders that exchange such Initial Notes in such
Registered Exchange Offer.
(v) Upon the consummation of a Private Exchange with respect to the
Initial Notes, all requirements pertaining to such Initial Notes that
Initial Notes issued to certain Holders be issued in global form will still
apply with respect to Holders of such Initial Notes that do not exchange
their Initial Notes, and Private Exchange Notes in global form with the
global securities legend and the Restricted Notes Legend set forth in
Exhibit 1 hereto will be available to Holders that exchange such Initial
Notes in such Private Exchange.
(f) Cancellation or Adjustment of Global Note. At such time as all
beneficial interests in a Global Note have either been exchanged for Definitive
Notes, redeemed, purchased or canceled, such Global Note shall be returned to
the Depository for cancellation or retained and canceled by the Trustee. At any
time prior to such cancellation, if any beneficial interest in a Global Note is
exchanged for certificated Notes, redeemed, purchased or canceled, the principal
amount of Notes represented by such Global Note shall be reduced and an
adjustment shall be made on the books and records of the Trustee (if it is then
the Notes Custodian for such Global Note) with respect to such Global Note, by
the Trustee or the Notes Custodian, to reflect such reduction.
(g) Obligations with Respect to Transfers and Exchanges of Notes.
(i) To permit registrations of transfers and exchanges, the Company
shall execute and the Trustee shall authenticate Definitive Notes and Global
Notes at the Registrar's or co-registrar's request.
(ii) No service charge shall be made for any registration of transfer
or exchange, but the Company may require payment of a sum sufficient to
cover any transfer tax, assessments, or similar governmental charge payable
in connection therewith (other than any such transfer taxes, assessments or
similar governmental charge payable upon exchange or transfer pursuant to
Sections 2.10, 3.06, 4.10, 4.15 or 9.05 of the Indenture).
(iii) The Registrar or co-registrar shall not be required to register
the transfer of or exchange of (a) any Definitive Note selected for
redemption in whole or in part pursuant to Article 3 of the Indenture,
except the unredeemed portion of any Definitive Note being redeemed in part,
or (b) any Note for a period beginning 15 Business Days before the mailing
of a notice of an offer to repurchase or redeem Notes or 15 Business Days
before an interest payment date.
(iv) Prior to the due presentation for registration of transfer of any
Note, the Company, the Trustee, the Paying Agent, the Registrar or any
co-registrar may deem and treat the person in whose name a security is
registered as
Appendix - 10
the absolute owner of such Note for the purpose of receiving payment of
principal of and interest on such Note and for all other purposes
whatsoever, whether or not such Note is overdue, and none of the Company,
the Trustee, the Paying Agent, the Registrar or any co-registrar shall be
affected by notice to the contrary.
(v) All Notes issued upon any registration of transfer or exchange
pursuant to the terms of the Indenture shall evidence the same debt and
shall be entitled to the same benefits under the Indenture as the Notes
surrendered upon such registration of transfer or exchange.
(h) No obligation of the Trustee.
(i) The Trustee shall have no responsibility or obligation to any
beneficial owner of a Global Note, a member of, or a participant in the
Depository or other Person with respect to the accuracy of the records of
the Depository or its nominee or of any participant or member thereof, with
respect to any ownership interest in the Notes or with respect to the
delivery to any participant, member, beneficial owner or other Person (other
than the Depository) of any notice (including any notice of redemption) or
the payment of any amount, under or with respect to such Notes. All notices
and communications to be given to the Holders and all payments to be made to
Holders under the Notes shall be given or made only to or upon the order of
the registered Holders (which shall be the Depository or its nominee in the
case of a Global Note). The rights of beneficial owners in any Global Note
shall be exercised only through the Depository subject to the applicable
rules and procedures of the Depository. The Trustee may rely and shall be
fully protected in relying upon information furnished by the Depository with
respect to its members, participants and any beneficial owners.
(ii) The Trustee shall have no obligation or duty to monitor, determine
or inquire as to compliance with any restrictions on transfer imposed under
the Indenture or under applicable law with respect to any transfer of any
interest in any Note (including any transfers between or among Depository
participants, members or beneficial owners in any Global Note) other than to
require delivery of such certificates and other documentation or evidence as
are expressly required by, and to do so if and when expressly required by,
the terms of the Indenture, and to examine the same to determine substantial
compliance as to form with the express requirements hereof.
2.4 Certificated Notes.
(a) A Global Note deposited with the Depository or with the Trustee as
Custodian for the Depository pursuant to Section 2.1 shall be transferred to the
beneficial owners thereof in the form of Definitive Notes in an aggregate
principal amount equal to the principal amount of such Global Note, in exchange
for such Global Note, only if such transfer complies with Section 2.3 hereof and
(i) the Depository notifies the Company that it is unwilling or unable to
continue as Depository for such Global Note or if at any time such Depository
ceases to be a "clearing agency" registered
Appendix - 11
under the Exchange Act and, in either case, a successor Depository is not
appointed by the Company within 90 days of such notice, or (ii) an Event of
Default has occurred and is continuing.
(b) Any Global Note that is transferable to the beneficial owners
thereof pursuant to this Section 2.4 shall be surrendered by the Depository to
the Trustee located at its principal corporate trust office in Atlanta, Georgia,
to be so transferred, in whole or from time to time in part, without charge, and
the Trustee shall authenticate and deliver, upon such transfer of each portion
of such Global Note, an equal aggregate principal amount of Definitive Notes of
authorized denominations. Any portion of a Global Note transferred pursuant to
this Section 2.4 shall be executed, authenticated and delivered only in
denominations of $1,000 principal amount and any integral multiple thereof and
registered in such names as the Depository shall direct. Any Definitive Note
delivered in exchange for an interest in the Transfer Restricted Note shall,
except as otherwise provided by Section 2.3(e) hereof, bear the restricted
securities legend and definitive security legend set forth in Exhibit 1 hereto.
(c) Subject to the provisions of Section 2.4(b) hereof, the registered
Holder of a Global Note shall be entitled to grant proxies and otherwise
authorize any Person, including Agent Members and Persons that may hold
interests through Agent Members, to take any action which a Holder is entitled
to take under the Indenture or the Notes.
(d) In the event of the occurrence of one of the events specified in
Section 2.4(a) hereof, the Company shall promptly make available to the Trustee
a reasonable supply of Definitive Notes in definitive, fully registered form
without interest coupons.
Appendix - 12
EXHIBIT 1 to RULE 144A/REGULATION S APPENDIX
[FORM OF FACE OF INITIAL NOTE]
[Global Notes Legend]
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), NEW YORK, NEW YORK, TO
THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND
ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER
NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS
MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC) ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN
PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE
AND TRANSFERS OF PORTIONS OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS MADE
IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE INDENTURE REFERRED TO ON
THE REVERSE HEREOF.
[For Permanent Regulation S Global Note]
UNTIL 40 DAYS AFTER THE COMMENCEMENT OF THE OFFERING, AN OFFER OR SALE OF NOTES
WITHIN THE UNITED STATES BY A DEALER (AS DEFINED IN THE U.S. SECURITIES ACT) MAY
VIOLATE THE REGISTRATION REQUIREMENTS OF THE U.S. SECURITIES ACT IF SUCH OFFER
OR SALE IS MADE OTHERWISE THAN IN ACCORDANCE WITH THE RULE 144A THEREUNDER.
[For Notes Offered Otherwise than in Reliance on Regulation S]
THIS NOTE (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT
FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND THIS NOTE MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH
PURCHASER OF THIS NOTE IS HEREBY NOTIFIED THAT THE SELLER OF THIS NOTE MAY BE
RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT
PROVIDED BY RULE 144A THEREUNDER.
THE HOLDER OF THIS NOTE AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) THIS NOTE
MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE
Ex. 1-1
TRANSFERRED, ONLY (I) TO THE COMPANY, (II) IN THE UNITED STATES TO A PERSON WHOM
THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN
RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF
RULE 144A, (III) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN
ACCORDANCE WITH RULE 904 UNDER THE SECURITIES ACT, (IV) PURSUANT TO AN EXEMPTION
FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF
AVAILABLE) OR (V) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT, IN EACH OF CASES (I) THROUGH (V) IN ACCORDANCE WITH ANY
APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES AND OTHER
JURISDICTIONS, AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED
TO, NOTIFY ANY PURCHASER OF THIS NOTE FROM IT OF THE RESALE RESTRICTIONS
REFERRED TO IN (A) ABOVE.
[For Notes Offered in Reliance on Regulation S]
THIS NOTE (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION ORIGINALLY
EXEMPT FROM REGISTRATION UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND MAY NOT BE TRANSFERRED IN THE UNITED STATES OR TO, OR FOR
THE ACCOUNT OR BENEFIT OF, ANY U.S. PERSON EXCEPT PURSUANT TO AN AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND ALL
APPLICABLE STATE SECURITIES LAWS. TERMS USED ABOVE HAVE THE MEANINGS GIVEN TO
THEM IN REGULATION S UNDER THE SECURITIES ACT.
[For Temporary Regulation S Global Note]
EXCEPT AS SET FORTH BELOW, BENEFICIAL OWNERSHIP INTERESTS IN THIS TEMPORARY
REGULATION S GLOBAL NOTE WILL NOT BE EXCHANGEABLE FOR INTERESTS IN THE PERMANENT
REGULATION S GLOBAL NOTE OR ANY OTHER NOTE REPRESENTING AN INTEREST IN THE NOTES
REPRESENTED HEREBY WHICH DO NOT CONTAIN A LEGEND CONTAINING RESTRICTIONS ON
TRANSFER, UNTIL THE EXPIRATION OF THE "40-DAY DISTRIBUTION COMPLIANCE PERIOD"
(WITHIN THE MEANING OF RULE 903(b)(2) OF REGULATION S UNDER THE SECURITIES ACT)
AND THEN ONLY UPON CERTIFICATION IN FORM REASONABLY SATISFACTORY TO THE TRUSTEE
THAT SUCH BENEFICIAL INTERESTS ARE OWNED EITHER BY NON-U.S. PERSONS OR U.S.
PERSONS WHO PURCHASED SUCH INTERESTS IN A TRANSACTION THAT DID NOT REQUIRE
REGISTRATION UNDER THE SECURITIES ACT. DURING SUCH 40-DAY DISTRIBUTION
COMPLIANCE PERIOD, BENEFICIAL OWNERSHIP INTERESTS IN THIS TEMPORARY REGULATION S
GLOBAL NOTE MAY ONLY BE SOLD, PLEDGED OR TRANSFERRED THROUGH EUROCLEAR BANK
S.A./N.A., AS OPERATOR OF THE EUROCLEAR SYSTEM OR CLEARSTREAM BANKING, SOCIETE
ANONYME AND ONLY (I) TO THE COMPANY, (II) IN THE UNITED STATES TO A PERSON WHOM
THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN
RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS
Ex. 1-2
OF RULE 144A, (III) OUTSIDE THE UNITED STATES IN A TRANSACTION IN ACCORDANCE
WITH RULE 904 UNDER THE SECURITIES ACT, OR (IV) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH OF CASES (I) THROUGH
(IV) IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE
UNITED STATES AND OTHER JURISDICTIONS. HOLDERS OF INTERESTS IN THIS TEMPORARY
REGULATION S GLOBAL NOTE WILL NOTIFY ANY PURCHASER OF THIS NOTE OF THE RESALE
RESTRICTIONS REFERRED TO ABOVE, IF THEN APPLICABLE.
BENEFICIAL INTERESTS IN THIS TEMPORARY REGULATION S GLOBAL NOTE MAY BE EXCHANGED
FOR INTERESTS IN A RULE 144A GLOBAL NOTE ONLY IF (1) SUCH EXCHANGE OCCURS IN
CONNECTION WITH A TRANSFER OF THE NOTES IN COMPLIANCE WITH RULE 144A AND (2) THE
TRANSFEROR OF THE REGULATION S GLOBAL NOTE FIRST DELIVERS TO THE TRUSTEE A
WRITTEN CERTIFICATE (IN THE FORM ATTACHED TO THIS CERTIFICATE) TO THE EFFECT
THAT THE REGULATION S GLOBAL NOTE IS BEING TRANSFERRED TO A PERSON (A) WHO THE
TRANSFEROR REASONABLY BELIEVES TO BE A QUALIFIED INSTITUTIONAL BUYER WITHIN THE
MEANING OF RULE 144A (B) WHO IS PURCHASING FOR ITS OWN ACCOUNT OR THE ACCOUNT OF
A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF
RULE 144A, AND (C) IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE
STATES OF THE UNITED STATES AND OTHER JURISDICTIONS.
BENEFICIAL INTEREST IN A RULE 144A GLOBAL NOTE MAY BE TRANSFERRED TO A PERSON
WHO TAKES DELIVERY IN THE FORM OF AN INTEREST IN THE REGULATION S GLOBAL NOTE,
WHETHER BEFORE OR AFTER THE EXPIRATION OF THE 40-DAY DISTRIBUTION COMPLIANCE
PERIOD, ONLY IF THE TRANSFEROR FIRST DELIVERS TO THE TRUSTEE A WRITTEN
CERTIFICATE (IN THE FORM ATTACHED TO THIS CERTIFICATE) TO THE EFFECT THAT SUCH
TRANSFER IS BEING MADE IN ACCORDANCE WITH RULE 903 OR 904 OF REGULATION S OR
RULE 144 (IF AVAILABLE) AND THAT, IF SUCH TRANSFER OCCURS PRIOR TO THE
EXPIRATION OF THE 40-DAY DISTRIBUTION COMPLIANCE PERIOD, THE INTEREST
TRANSFERRED WILL BE HELD IMMEDIATELY THEREAFTER THROUGH EUROCLEAR BANK S.A./N.A.
OR CLEARSTREAM BANKING SOCIETE ANONYME.
Ex. 1-3
[For Definitive Notes]
IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE REGISTRAR AND
TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS SUCH REGISTRAR AND
TRANSFER AGENT MAY REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES WITH
THE FOREGOING RESTRICTIONS.
Ex. 1-4
--------------------------------------------------------------------------------
CUSIP/CINS [________]
8 3/8% Senior Note due June 1, 2012
No. __________ $_____________
Finlay Fine Jewelry Corporation promises to pay to _______________
or registered assigns, the principal sum of _______________ Dollars on June 1,
2012.
Interest Payment Dates: June 1 and December 1.
Record Dates: May 15 and November 15.
Reference is hereby made to the further provisions of this Note set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Dated: FINLAY FINE JEWELRY CORPORATION
---------------------------
By:
--------------------------------------
Name:
Title:
By:
--------------------------------------
Name:
Title:
This is one of the Global
Notes referred to in the
within-mentioned Indenture:
HSBC BANK USA, as Trustee
By:
--------------------------------------
Authorized Officer
--------------------------------------------------------------------------------
Ex. 1-5
(Back of Note)
8 3/8% Senior Note due June 1, 2012
Capitalized terms used herein shall have the meanings assigned to them
in the Indenture referred to below unless otherwise indicated.
1. Interest. Finlay Fine Jewelry Corporation, a Delaware corporation
(the "Company"), promises to pay interest on the principal amount of this Note
at 8 3/8% per annum from June 3, 2004 until maturity; provided, however, that if
a Registration Default (as defined in the Registration Rights Agreement) occurs,
additional interest will accrue on this Note at a rate of 0.50% per annum
(increasing by an additional 0.50% per annum after each consecutive 90-day
period that occurs after the date on which such Registration Default occurs up
to a maximum additional interest rate of 2.00%) from and including the date on
which any such Registration Default shall occur to but excluding the date on
which all Registration Defaults have been cured or otherwise cease to exist. The
Company shall pay interest semiannually in arrears on June 1 and December 1 of
each year, or if any such day is not a Business Day, on the next succeeding
Business Day (each an "Interest Payment Date"). Interest on the Notes will
accrue from the most recent date to which interest has been paid or, if no
interest has been paid, from June 3, 2004; provided that if there is no existing
Default in the payment of interest, and if this Note is authenticated between a
record date referred to on the face hereof and the next succeeding Interest
Payment Date, interest shall accrue from such next succeeding Interest Payment
Date; provided, further, that the first Interest Payment Date shall be December
1, 2004. The Company shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue principal and premium, if any,
from time to time on demand at a rate that is 1% per annum in excess of the rate
then in effect; it shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue installments of interest
(without regard to any applicable grace periods) from time to time on demand at
the same rate to the extent lawful. Interest will be computed on the basis of a
360-day year of twelve 30-day months.
2. Method of Payment. The Company shall pay interest on the Notes
(except defaulted interest) to the Persons who are registered Holders of Notes
at the close of business on the May 15 or November 15 next preceding the
Interest Payment Date, even if such Notes are canceled after such record date
and on or before such Interest Payment Date, except as provided in Section 2.12
of the Indenture with respect to defaulted interest. Principal, premium, if any,
and interest on the Notes will be payable at the office or agency of the Company
maintained for such purpose within the City and State of New York or, at the
option of the Company, payment of interest may be made by check mailed to the
Holders of the Notes at their respective addresses set forth in the register of
Holders of Notes; provided that all payments of principal, premium and interest
with respect to Notes the Holders of which have given wire transfer instructions
to the Company prior to the relevant record date will be required to be made by
wire transfer of immediately available funds to the accounts specified by the
Holders thereof. Until otherwise designated by the Company, the Company's office
or agency in New York will be the office of the Trustee maintained for such
purpose. Such payment shall be in such coin or currency of the United States of
America as at the time of payment is legal tender for payment of public and
private debts.
Ex. 1-6
3. Paying Agent and Registrar. Initially, HSBC Bank USA, the Trustee
under the Indenture, will act as Paying Agent and Registrar. The Company may
change any Paying Agent or Registrar without notice to any Holder. The Company
or any of its Subsidiaries may act in any such capacity.
4. Indenture. The Company issued the Notes under an Indenture dated as
of June 3, 2004 ("Indenture") between the Company and the Trustee. The terms of
the Notes include those stated in the Indenture and those made part of the
Indenture by reference to the Trust Indenture Act of 1939, as amended (15 U.S.
Code SS 77aaa-77bbbb), as in effect on the date on which the Indenture is
qualified thereunder. The Notes are subject to all such terms, and Holders are
referred to the Indenture and such Act for a statement of such terms. To the
extent any provision of this Note conflicts with the express provisions of the
Indenture, the provisions of the Indenture shall govern and be controlling.
The Notes are general, unsecured senior obligations of the Company. The
Company shall be entitled, subject to its compliance with Section 4.09 of the
Indenture, to issue Additional Notes pursuant to Section 2.15 of the Indenture.
The Notes issued on the Issue Date and any Additional Notes will be treated as a
single class for all purposes under the Indenture.
5. Optional Redemption. (a) Except as set forth in subparagraph (b) of
this Paragraph 5, the Notes are not redeemable at the Company's option prior to
June 1, 2008. Thereafter, the Notes will be subject to redemption at any time at
the option of the Company, in whole or in part, upon not less than 30 nor more
than 60 days' notice, at the redemption prices (expressed as percentages of
principal amount) set forth below plus accrued and unpaid interest thereon to
the applicable redemption date, if redeemed during the twelve-month period
beginning on June 1 of the years indicated below:
Year Percentage
---- ----------
2008...................................... 104.188%
2009...................................... 102.094%
2010 and thereafter....................... 100.00%
(b) Notwithstanding the foregoing, until June 1, 2007, the Company may
on any one or more occasions redeem an aggregate principal amount not to exceed
35% of the aggregate principal amount of Notes (which includes Additional Notes,
if any) originally issued at a redemption price of 108.375% of the principal
amount thereof, plus accrued and unpaid interest thereon, if any, to the
redemption date, with the net cash proceeds of Public Equity Offerings by the
Company; provided that at least 65% of such aggregate principal amount of Notes
(which includes Additional Notes, if any) originally issued remains outstanding
immediately after the occurrence of each such redemption (excluding Notes held
by the Company and its Subsidiaries); and provided, further, that such
redemption shall occur within 120 days of the date of the closing of such Public
Equity Offering.
6. Mandatory Redemption. Except as set forth in Paragraph 7 below, the
Company shall not be required to make mandatory redemption payments with respect
to the Notes. There are no sinking fund payments with respect to the Notes.
Ex. 1-7
7. Repurchase at Option of Holder. (a) If there is a Change of Control,
each Holder of Notes will have the right to require the Company to make an offer
(a "Change of Control Offer") to repurchase all or any part (equal to $1,000 or
an integral multiple thereof) of such Holder's Notes at an offer price in cash
equal to 101% of the aggregate principal amount thereof plus accrued and unpaid
interest thereon, if any, to the date of purchase (the "Change of Control
Payment"). Within 30 days following any Change of Control, the Company shall
mail a notice to each Holder describing the transaction or transactions that
constitute the Change of Control and offering to repurchase Notes on the date
specified in such notice, which date shall be no earlier than 30 days and no
later than 60 days from the date such notice is mailed (the "Change of Control
Payment Date"), pursuant to the procedures required by the Indenture and
described in such notice. The Company shall comply with the requirements of Rule
14e-1 under the Exchange Act and any other securities laws and regulations
thereunder to the extent such laws and regulations are applicable in connection
with the repurchase of Notes as a result of a Change of Control.
(b) If the Company or any Subsidiary of the Company consummates any
Asset Sales, within 45 days after the first day of a calendar month in which the
aggregate amount of Excess Proceeds exceeds $10.0 million, the Company shall be
required to make an offer to all Holders of Notes (an "Asset Sale Offer") to
purchase the maximum principal amount of Notes that may be purchased out of the
Excess Proceeds, at an offer price in cash in an amount equal to 100% of the
principal amount thereof plus accrued and unpaid interest thereon, if any, to
the date of purchase, in accordance with the procedures set forth in the
Indenture. To the extent that the aggregate amount of Notes tendered pursuant to
any such offer is less than the remaining Excess Proceeds, the Company or any of
its Subsidiaries may use any remaining Excess Proceeds for general corporate
purposes or otherwise make an investment of such remaining amounts in any manner
that is not prohibited by the Indenture. If the aggregate principal amount of
Notes tendered in connection with such Asset Sale Offer and surrendered by
Holders thereof exceeds the amount of Excess Proceeds, the Trustee shall select
the Notes to be purchased on a pro rata basis. Upon completion of such offer to
purchase, the amount of Excess Proceeds shall be reset at zero.
8. Notice of Redemption. Notice of redemption will be mailed by first
class mail at least 30 days but not more than 60 days before the redemption date
to each Holder of Notes to be redeemed at its registered address. Notices of
redemption may not be conditional. Notes and portions of Notes selected for
redemption shall be in amounts of $1,000 or whole multiples of $1,000, except
that if all of the Notes of a Holder are to be redeemed, the entire outstanding
amount of Notes held by such Holder, even if not a multiple of $1,000, shall be
redeemed. If any Note is to be redeemed in part only, the notice of redemption
that relates to such Note shall state the portion of the principal amount
thereof to be redeemed. A new Note in principal amount equal to the unredeemed
portion thereof will be issued in the name of the Holder thereof upon
cancellation of the original Note. On and after the redemption date, interest
ceases to accrue on Notes or portions thereof called for redemption.
9. Denominations, Transfer, Exchange. The Notes are in registered form
without coupons in denominations of $1,000 and integral multiples of $1,000. The
transfer of Notes may be registered and Notes may be exchanged as provided in
the Indenture. The Registrar and the Trustee may require a Holder, among other
things, to furnish appropriate
Ex. 1-8
endorsements and transfer documents and the Company may require a Holder to pay
any taxes and fees required by law or permitted by the Indenture. The Company is
not required (a) to issue, to register the transfer of or to exchange any Notes
during a period beginning at the opening of business 15 days before the day of
any selection of Notes for redemption and ending at the close of business on the
day of selection, (b) to register the transfer of or to exchange any Note so
selected for redemption in whole or in part, except the unredeemed portion of
any Note being redeemed in part or (c) to register the transfer of or to
exchange a Note between a record date and the next succeeding Interest Payment
Date.
10. Persons Deemed Owners. The registered Holder of a Note may be
treated as its owner for all purposes, subject to the provisions of the
Indenture with respect to record dates for the payment of interest.
11. Amendment, Supplement and Waiver. Subject to certain exceptions,
the Indenture or the Notes may be amended or supplemented with the consent of
the Holders of at least a majority in principal amount of the Notes then
outstanding (including, without limitation, consents obtained in connection with
a purchase of, or tender offer or exchange offer for, Notes) and, subject to the
provisions of Sections 6.04 and 6.07 of the Indenture, any existing Default or
Event of Default (other than a Default or Event of Default in the payment of the
principal of, premium, if any, or interest on the Notes, except a payment
default resulting from an acceleration that has been rescinded) or compliance
with any provision of the Indenture or the Notes may be waived with the consent
of the Holders of a majority in principal amount of the Notes then outstanding
(including, without limitation, consents obtained in connection with a purchase
of, or tender offer or exchange offer for, Notes). Without the consent of any
Holder of Notes, the Company and the Trustee may amend or supplement the
Indenture or the Notes to cure any ambiguity, defect or inconsistency, to
provide for uncertificated Notes in addition to or in place of certificated
Notes (provided that the uncertificated notes are issued in registered form for
purposes of Section 163(f) of the Internal Revenue Code (the "Code"), or in a
manner such that the uncertificated notes are described in Section 163(f)(2)(B)
of the Code), to provide for the assumption of the Company's obligations to
Holders of the Notes in case of a merger or consolidation, or sale of all or
substantially all of the Company's assets, to make any change that would provide
any additional rights or benefits to the Holders of the Notes or that does not
adversely affect the legal rights under the Indenture of any such Holder, or to
comply with the requirements of the Commission in order to effect or maintain
the qualification of the Indenture under the Trust Indenture Act.
12. Defaults and Remedies. Events of Default include: (i) default for
30 days in the payment when due of interest on the Notes; (ii) default in
payment of the principal of or premium, if any, on the Notes when due at
maturity, upon optional redemption, upon required repurchase, upon declaration
of acceleration or otherwise; (iii) failure by the Company to comply with the
provisions of Sections 3.09, 4.10, 4.15 or Article 5 of the Indenture; (iv)
failure by the Company or any Subsidiary Guarantor for 45 days after notice to
comply with any of the covenants in the Indenture or the Notes (other than those
covenants addressed elsewhere in Section 6.01 of the Indenture); (v) default
under any mortgage, indenture or instrument under which there may be issued or
by which there may be secured or evidenced any Indebtedness for money borrowed
by the Company or any of its Subsidiaries (including any Indebtedness the
payment of which is guaranteed by the Company or any of its Subsidiaries) other
than a
Ex. 1-9
Receivables Subsidiary whether such Indebtedness or guarantee now exists,
or is created after the date of the Indenture, which default (a) is caused by a
failure to pay principal or a premium, if any, on such Indebtedness at the
Stated Maturity for such payment of principal or premium, if any, or such later
date as has been agreed in a writing (provided such writing is entered into
prior to such Stated Maturity) by the parties to the documentation relating to
such Indebtedness (a "Payment Default") or (b) results in the acceleration of
such Indebtedness prior to its express maturity and, in each case, the principal
amount of any such Indebtedness, together with the principal amount of any other
such Indebtedness under which there has been a Payment Default or the maturity
of which has been so accelerated, aggregates $12.5 million or more; (vi) failure
by the Company or any of its Subsidiaries other than a Receivables Subsidiary to
pay final judgments aggregating in excess of $12.5 million, which judgments are
not paid, discharged or stayed for a period of 60 days (or 90 days if prior to
such sixtieth day the Company has delivered to the Trustee an Officers'
Certificate attesting that a financially responsible insurance company of
recognized national standing has acknowledged in writing complete liability for
such judgment and attached a copy of such acknowledgment thereto); (vii)
repudiation by any Subsidiary Guarantor of its obligations under any Subsidiary
Guarantee or, except as permitted by the Indenture, any Subsidiary Guarantee
shall be held in a judicial proceeding to be unenforceable or invalid in any
material respect or shall cease to be in full force and effect; (viii) the
Company or any of its Subsidiaries (other than a Receivables Subsidiary) within
the meaning of any Bankruptcy Law (a) commences a voluntary case, (b) consents
to the entry of an order for relief against it in an involuntary case, (c)
consents to the appointment of a custodian of it or for all or substantially all
of its property, (d) makes a general assignment for the benefit of its
creditors, or (e) generally is not paying its debts as they become due; or (ix)
a court of competent jurisdiction enters an order or decree under any Bankruptcy
Law that (a) is for relief against the Company or any of its Subsidiaries (other
than a Receivables Subsidiary), (b) appoints a custodian of the Company or any
of its Subsidiaries or for all or substantially all of the property of the
Company or any of its Subsidiaries (other than a Receivables Subsidiary) or (c)
orders the liquidation of the Company or any of its Subsidiaries (other than a
Receivables Subsidiary) and any such order or decree described in this clause
(ix) remains unstayed and in effect for 60 consecutive days.
In the event of a declaration of acceleration of the Notes because an
Event of Default has occurred and is continuing as a result of a Payment Default
or the acceleration of any Indebtedness described in clause (v) of the preceding
paragraph, the declaration of acceleration of the Notes shall be automatically
annulled if (i) any Payment Default described in clause (v)(a) of the preceding
paragraph has been cured or waived and (ii) the holders of any accelerated
Indebtedness described in clause (v)(b) of the preceding paragraph have
rescinded the declaration of acceleration in respect of such Indebtedness;
provided in each such case that (a) such cure, waiver or rescission of such
declaration of acceleration shall have been made in writing within 30 days of
the date of such Payment Default or declaration, as the case may be, and (b) the
annulment of the acceleration of such Notes would not conflict with any judgment
or decree of a court of competent jurisdiction and (c) all existing Events of
Default, except nonpayment of principal or interest on the Notes that became due
solely because of the acceleration of the Notes, have been cured or waived.
A Default under clause (iv) the first paragraph of this Paragraph 12 is
not an Event of Default until the Trustee or the Holders of at least 25% in
principal amount of the then
Ex. 1-10
outstanding Notes give written notice to the Company of the default and the
Company does not cure the Default within the period provided in such clause. The
notice must specify in reasonable detail the Default, demand that it be remedied
and state that the notice is a "Notice of Default". If the Holders of 25% or
more in principal amount of the then outstanding Notes request the Trustee to
give such notice on their behalf, the Trustee shall do so.
If any Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in principal amount of the then outstanding Notes by
written notice to the Trustee and the Company may declare all the Notes to be
due and payable immediately. Notwithstanding the foregoing, in the case of an
Event of Default arising under clause (viii) or (ix) of the first paragraph of
this Paragraph 12, with respect to the Company, any Significant Subsidiary or
any group of Subsidiaries, that taken together would constitute a Significant
Subsidiary, all outstanding Notes will become due and payable without further
action or notice. Holders of the Notes may not enforce the Indenture or the
Notes except as provided in the Indenture. Subject to certain limitations,
Holders of a majority in principal amount of the then outstanding Notes may
direct the Trustee in its exercise of any trust or power. The Trustee may
withhold from Holders of the Notes notice of any continuing Default or Event of
Default (except a Default or Event of Default relating to the payment of
principal or interest) if it determines that withholding notice is in their
interest. Under certain circumstances, the Holders of a majority in aggregate
principal amount of the Notes then outstanding by notice to the Trustee may on
behalf of the Holders of all of the Notes rescind an acceleration or waive any
existing Default or Event of Default and its consequences under the Indenture
except a continuing Default or Event of Default in the payment of interest on,
or the principal of, the Notes. The Company is required to deliver to the
Trustee annually a statement regarding compliance with the Indenture, and the
Company is required upon becoming aware of any Default or Event of Default, to
deliver to the Trustee a statement specifying such Default or Event of Default.
In the case of any Event of Default occurring by reason of any willful
action (or inaction) taken (or not taken) by or on behalf of the Company with
the intention of avoiding payment of the premium that the Company would have had
to pay if the Company then had elected to redeem the Notes pursuant to the
optional redemption provisions of the Indenture, an equivalent premium shall
also become and be immediately due and payable to the extent permitted by law
upon the acceleration of the Notes. If an Event of Default occurs prior to June
1, 2008 by reason of any willful action (or inaction) taken (or not taken) by or
on behalf of the Company with the intention of avoiding the prohibition on
redemption of the Notes prior to June 1, 2008, then the premium specified in the
Indenture shall also become immediately due and payable to the extent permitted
by law upon the acceleration of the Notes.
13. Trustee Dealings With Company. The Trustee, in its individual or
any other capacity, may make loans to, accept deposits from, and perform
services for the Company or its Affiliates, and may otherwise deal with the
Company or its Affiliates, as if it were not the Trustee; however, if it
acquires any conflicting interest it must eliminate such conflict within 90
days, apply to the Commission for permission to continue or resign.
14. No Recourse Against Others. No past, present or future director,
officer, employee, incorporator or stockholder of the Company, as such, shall
have any liability for any obligations of the Company under the Notes or the
Indenture or for any claim based on, in
Ex. 1-11
respect of, or by reason of, such obligations or their creation. Each Holder by
accepting a Note waives and releases all such liability. The waiver and release
are part of the consideration for the issuance of the Notes. Such waiver may not
be effective to waive liabilities under the federal securities laws and it is
the view of the Commission that such a waiver is against public policy.
15. Authentication. This Note shall not be valid until authenticated by
the manual signature of the Trustee or an authenticating agent.
16. Abbreviations. Customary abbreviations may be used in the name of a
Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (-- joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
17. Cusip Numbers. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers
in notices of redemption as a convenience to Holders. No representation is made
as to the accuracy of such numbers either as printed on the Notes or as
contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
18. Additional Information. The Company shall furnish to any Holder
upon written request and without charge a copy of the Indenture. Requests may be
made to:
Finlay Fine Jewelry Corporation
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Secretary and Corporate Counsel
Ex. 1-12
ASSIGNMENT FORM
To assign this Note, fill in the form below:
I or we assign and transfer this Note to
(Print or type assignee's name, address and zip code)
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint
agent to transfer this Note on the books of the Company. The agent may
substitute another to act for him.
--------------------------------------------------------------------------------
Date: Your Signature:
------------------- -----------------------------------
--------------------------------------------------------------------------------
Sign exactly as your name appears on the other side of this Note.
In connection with any transfer of any of the Notes evidenced by this
certificate occurring prior to the expiration of the period referred to in Rule
144(k) under the U.S. Securities Act of 1933, as amended (the "Securities Act")
after the later of the date of original issuance of such Notes and the last
date, if any, on which such Notes were owned by the Company or any Affiliate of
the Company, the undersigned confirms that such Notes are being transferred in
accordance with its terms:
CHECK ONE BOX BELOW
(1) [ ] to the Company; or
(2) [ ] pursuant to an effective registration statement under
the Securities Act; or
(3) [ ] inside the United States to a "qualified institutional buyer"
(as defined in Rule 144A under the Securities Act) that
purchases for its own account or for the account of a
qualified institutional buyer to whom notice is given that
such transfer is being made in reliance on Rule 144A, in each
case pursuant to and in compliance with Rule 144A under the
Securities Act; or
(4) [ ] outside the United States in an offshore transaction within
the meaning of Regulation S under the Securities Act in
compliance with Rule 904 of Regulation S under the Securities
Act; or
(5) [ ] pursuant to the exemption from registration provided
by Rule 144 under the Securities Act.
Ex. 1-13
Unless one of the boxes is checked, the Trustee will refuse to register any of
the Notes evidenced by this certificate in the name of any person other than the
registered holder thereof; provided, however, that if box (4) or (5) is checked,
the Trustee shall be entitled to require, prior to registering any such transfer
of the Notes, such legal opinions, certifications and other information as the
Company or Registrar has reasonably requested to confirm that such transfer is
being made pursuant to an exemption from, or in a transaction not subject to,
the registration requirements of the Securities Act, such as the exemption
provided by Rule 144 under such Act.
-----------------------------------
Signature
Signature Guarantee:
----------------------------------- -----------------------------------
Signature must be guaranteed Signature
Signatures must be guaranteed by an "eligible guarantor institution"
meeting the requirements of the Registrar, which requirements include membership
or participation in the Securities Transfer Agent Medallion Program ("STAMP") or
such other "signature guarantee program" as may be determined by the Registrar
in addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.
================================================================================
Ex. 1-14
TO BE COMPLETED BY PURCHASER IF (3) ABOVE IS CHECKED
The undersigned represents and warrants that it is purchasing this Note
for its own account or an account with respect to which it exercises sole
investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act of
1933, as amended and is aware that the sale to it is being made in reliance on
Rule 144A and acknowledges that it has received such information regarding the
Company as the undersigned has requested pursuant to Rule 144A or has determined
not to request such information and that it is aware that the transferor is
relying upon the undersigned's foregoing representations in order to claim the
exemption from registration provided by Rule 144A.
Date:
-------------------------- ----------------------------------------------
NOTICE: To be executed by an executive officer
Ex. 1-15
[TO BE ATTACHED TO GLOBAL NOTES]
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY
The following increases or decreases in this Global Note have been made:
Principal
Amount of Amount of amount of Signature of
decrease in increase in this Global authorized
principal principal Note officer of
amount of amount of following Trustee or
Date of this Global this Global such decrease Notes
Exchange Note Note or increase Custodian
-------- ----------- ----------- ----------- ----------
Ex. 1-16
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Company
pursuant to Section 4.10 or 4.15 of the Indenture, check the box below:
[ ] Section 4.10 [ ] Section 4.15
If you want to elect to have only part of the Note purchased by the
Company pursuant to Section 4.10 or Section 4.15 of the Indenture, state the
amount you elect to have purchased (if all, write "ALL"): $_________
Your Signature:
------------------------------------
(Sign exactly as your name
appears on the face of this
Note)
Tax Identification No:
-----------------------------
Signature Guarantee.*
* NOTICE: The signature must be guaranteed by an institution which is a member
of one of the following recognized signature guarantee programs:
(1) The Securities Transfer Agent Medallion Program (STAMP);
(2) The New York Stock Exchange Medallion Program (MSP);
(3) The Stock Exchange Medallion Program (SEMP).
Ex. 1-17
EXHIBIT A
[FORM OF FACE OF EXCHANGE NOTE
OR PRIVATE EXCHANGE NOTE * * *]
------------------------
* If the Note is to be issued in global form add the Global Notes Legend
from Exhibit 1 to Appendix A and the attachment from such Exhibit 1 captioned
"TO BE ATTACHED TO GLOBAL NOTES - SCHEDULE OF INCREASES OR DECREASES IN GLOBAL
NOTE".
** If the Note is a Private Exchange Note issued in a Private Exchange to an
Initial Purchaser holding an unsold portion of its initial allotment, add the
Restricted Notes Legend from Exhibit 1 to Appendix A and replace the Assignment
Form included in this Exhibit A with the Assignment Form included in such
Exhibit 1.
A-1
--------------------------------------------------------------------------------
CUSIP/CINS [________]
8 3/8% Senior Note due June 1, 2012
No. __________ $_____________
Finlay Fine Jewelry Corporation promises to pay to _______________
or registered assigns, the principal sum of _______________ Dollars on June 1,
2012.
Interest Payment Dates: June 1 and December 1.
Record Dates: May 15 and November 15.
Reference is hereby made to the further provisions of this Note set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Dated: FINLAY FINE JEWELRY CORPORATION
---------------------------
By:
--------------------------------------
Name:
Title:
By:
--------------------------------------
Name:
Title:
This is one of the Global Notes referred to in the within-mentioned Indenture:
HSBC BANK USA, as Trustee
By:
--------------------------------------
Authorized Officer
--------------------------------------------------------------------------------
A-2
(Back of Exchange Note or Private Exchange Note)
8 3/8% Senior Note due June 1, 2012
Capitalized terms used herein shall have the meanings assigned to them
in the Indenture referred to below unless otherwise indicated.
1. Interest. Finlay Fine Jewelry Corporation, a Delaware corporation
(the "Company"), promises to pay interest on the principal amount of this Note
at 8 3/8% per annum from June 3, 2004 until maturity[; PROVIDED, HOWEVER, THAT
IF A REGISTRATION DEFAULT (AS DEFINED IN THE REGISTRATION RIGHTS AGREEMENT)
OCCURS, ADDITIONAL INTEREST WILL ACCRUE ON THIS NOTE AT A RATE OF 0.50% PER
ANNUM (INCREASING BY AN ADDITIONAL 0.50% PER ANNUM AFTER EACH CONSECUTIVE 90-DAY
PERIOD THAT OCCURS AFTER THE DATE ON WHICH SUCH REGISTRATION DEFAULT OCCURS UP
TO A MAXIMUM ADDITIONAL INTEREST RATE OF 2.00%) FROM AND INCLUDING THE DATE ON
WHICH ANY SUCH REGISTRATION DEFAULT SHALL OCCUR TO BUT EXCLUDING THE DATE ON
WHICH ALL REGISTRATION DEFAULTS HAVE BEEN CURED OR OTHERWISE CEASE TO EXIST](1).
The Company shall pay interest semiannually in arrears on June 1 and December 1
of each year, or if any such day is not a Business Day, on the next succeeding
Business Day (each an "Interest Payment Date"). Interest on the Notes will
accrue from the most recent date to which interest has been paid or, if no
interest has been paid, from June 3, 2004; provided that if there is no existing
Default in the payment of interest, and if this Note is authenticated between a
record date referred to on the face hereof and the next succeeding Interest
Payment Date, interest shall accrue from such next succeeding Interest Payment
Date; provided, further, that the first Interest Payment Date shall be December
1, 2004. The Company shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue principal and premium, if any,
from time to time on demand at a rate that is 1% per annum in excess of the rate
then in effect; it shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue installments of interest
(without regard to any applicable grace periods) from time to time on demand at
the same rate to the extent lawful. Interest will be computed on the basis of a
360-day year of twelve 30-day months.
2. Method of Payment. The Company shall pay interest on the Notes
(except defaulted interest) to the Persons who are registered Holders of Notes
at the close of business on the May 15 or November 15 next preceding the
Interest Payment Date, even if such Notes are canceled after such record date
and on or before such Interest Payment Date, except as provided in Section 2.12
of the Indenture with respect to defaulted interest. Principal, premium, if any,
and interest on the Notes will be payable at the office or agency of the Company
maintained for such purpose within the City and State of New York or, at the
option of the Company, payment of interest may be made by check mailed to the
Holders of the Notes at their respective addresses set forth in the register of
Holders of Notes; provided that all payments of principal, premium
------------------------
1 Insert if at the date of issuance of the Exchange Note or Private
Exchange Note (as the case may be) any Registration Default has occurred with
respect to the related Initial Notes during the interest period in which such
date of issuance occurs.
A-3
and interest with respect to Notes the Holders of which have given wire transfer
instructions to the Company prior to the relevant record date will be required
to be made by wire transfer of immediately available funds to the accounts
specified by the Holders thereof. Until otherwise designated by the Company, the
Company's office or agency in New York will be the office of the Trustee
maintained for such purpose. Such payment shall be in such coin or currency of
the United States of America as at the time of payment is legal tender for
payment of public and private debts.
3. Paying Agent and Registrar. Initially, HSBC Bank USA, the Trustee
under the Indenture, will act as Paying Agent and Registrar. The Company may
change any Paying Agent or Registrar without notice to any Holder. The Company
or any of its Subsidiaries may act in any such capacity.
4. Indenture. The Company issued the Notes under an Indenture dated as
of June 3, 2004 ("Indenture") between the Company and the Trustee. The terms of
the Notes include those stated in the Indenture and those made part of the
Indenture by reference to the Trust Indenture Act of 1939, as amended (15 U.S.
Code SS 77aaa-77bbbb), as in effect on the date on which the Indenture is
qualified thereunder. The Notes are subject to all such terms, and Holders are
referred to the Indenture and such Act for a statement of such terms. To the
extent any provision of this Note conflicts with the express provisions of the
Indenture, the provisions of the Indenture shall govern and be controlling.
The Notes are general, unsecured senior obligations of the Company. The
Company shall be entitled, subject to its compliance with Section 4.09 of the
Indenture, to issue Additional Notes pursuant to Section 2.15 of the Indenture.
The Notes issued on the Issue Date and any Additional Notes will be treated as a
single class for all purposes under the Indenture.
5. Optional Redemption. (a) Except as set forth in subparagraph (b) of
this Paragraph 5, the Notes are not redeemable at the Company's option prior to
June 1, 2008. Thereafter, the Notes will be subject to redemption at any time at
the option of the Company, in whole or in part, upon not less than 30 nor more
than 60 days' notice, at the redemption prices (expressed as percentages of
principal amount) set forth below plus accrued and unpaid interest thereon to
the applicable redemption date, if redeemed during the twelve-month period
beginning on June 1 of the years indicated below:
---------------------------------------------------------------
Year Percentage
---------------------------------------------------------------
2008...................................... 104.188%
---------------------------------------------------------------
2009...................................... 102.094%
---------------------------------------------------------------
2010 and thereafter....................... 100.00%
---------------------------------------------------------------
(b) Notwithstanding the foregoing, until June 1, 2007, the Company may
on any one or more occasions redeem an aggregate principal amount not to exceed
35% of the aggregate principal amount of Notes (which includes Additional Notes,
if any) originally issued at a redemption price of 108.375% of the principal
amount thereof, plus accrued and unpaid interest thereon, if any, to the
redemption date, with the net cash proceeds of Public Equity Offerings by the
Company; provided that at least 65% of such aggregate principal amount of Notes
(which includes Additional Notes, if any) originally issued remains outstanding
A-4
immediately after the occurrence of each such redemption (excluding Notes held
by the Company and its Subsidiaries); and provided, further, that such
redemption shall occur within 120 days of the date of the closing of such Public
Equity Offering.
6. Mandatory Redemption. Except as set forth in Paragraph 7 below, the
Company shall not be required to make mandatory redemption payments with respect
to the Notes. There are no sinking fund payments with respect to the Notes.
7. Repurchase at Option of Holder. (a) If there is a Change of Control,
each Holder of Notes will have the right to require the Company to make an offer
(a "Change of Control Offer") to repurchase all or any part (equal to $1,000 or
an integral multiple thereof) of such Holder's Notes at an offer price in cash
equal to 101% of the aggregate principal amount thereof plus accrued and unpaid
interest thereon, if any, to the date of purchase (the "Change of Control
Payment"). Within 30 days following any Change of Control, the Company shall
mail a notice to each Holder describing the transaction or transactions that
constitute the Change of Control and offering to repurchase Notes on the date
specified in such notice, which date shall be no earlier than 30 days and no
later than 60 days from the date such notice is mailed (the "Change of Control
Payment Date"), pursuant to the procedures required by the Indenture and
described in such notice. The Company shall comply with the requirements of Rule
14e-1 under the Exchange Act and any other securities laws and regulations
thereunder to the extent such laws and regulations are applicable in connection
with the repurchase of Notes as a result of a Change of Control.
(b) If the Company or any Subsidiary of the Company consummates any
Asset Sales, within 45 days after the first day of a calendar month in which the
aggregate amount of Excess Proceeds exceeds $10.0 million, the Company shall be
required to make an offer to all Holders of Notes (an "Asset Sale Offer") to
purchase the maximum principal amount of Notes that may be purchased out of the
Excess Proceeds, at an offer price in cash in an amount equal to 100% of the
principal amount thereof plus accrued and unpaid interest thereon, if any, to
the date of purchase, in accordance with the procedures set forth in the
Indenture. To the extent that the aggregate amount of Notes tendered pursuant to
any such offer is less than the remaining Excess Proceeds, the Company or any of
its Subsidiaries may use any remaining Excess Proceeds for general corporate
purposes or otherwise make an investment of such remaining amounts in any manner
that is not prohibited by the Indenture. If the aggregate principal amount of
Notes tendered in connection with such Asset Sale Offer and surrendered by
Holders thereof exceeds the amount of Excess Proceeds, the Trustee shall select
the Notes to be purchased on a pro rata basis. Upon completion of such offer to
purchase, the amount of Excess Proceeds shall be reset at zero.
8. Notice of Redemption. Notice of redemption will be mailed by first
class mail at least 30 days but not more than 60 days before the redemption date
to each Holder of Notes to be redeemed at its registered address. Notices of
redemption may not be conditional. Notes and portions of Notes selected for
redemption shall be in amounts of $1,000 or whole multiples of $1,000, except
that if all of the Notes of a Holder are to be redeemed, the entire outstanding
amount of Notes held by such Holder, even if not a multiple of $1,000, shall be
redeemed. If any Note is to be redeemed in part only, the notice of redemption
that relates to such Note shall state the portion of the principal amount
thereof to be redeemed. A new Note in
A-5
principal amount equal to the unredeemed portion thereof will be issued in the
name of the Holder thereof upon cancellation of the original Note. On and after
the redemption date, interest ceases to accrue on Notes or portions thereof
called for redemption.
9. Denominations, Transfer, Exchange. The Notes are in registered form
without coupons in denominations of $1,000 and integral multiples of $1,000. The
transfer of Notes may be registered and Notes may be exchanged as provided in
the Indenture. The Registrar and the Trustee may require a Holder, among other
things, to furnish appropriate endorsements and transfer documents and the
Company may require a Holder to pay any taxes and fees required by law or
permitted by the Indenture. The Company is not required (a) to issue, to
register the transfer of or to exchange any Notes during a period beginning at
the opening of business 15 days before the day of any selection of Notes for
redemption and ending at the close of business on the day of selection, (b) to
register the transfer of or to exchange any Note so selected for redemption in
whole or in part, except the unredeemed portion of any Note being redeemed in
part or (c) to register the transfer of or to exchange a Note between a record
date and the next succeeding Interest Payment Date.
10. Persons Deemed Owners. The registered Holder of a Note may be
treated as its owner for all purposes, subject to the provisions of the
Indenture with respect to record dates for the payment of interest.
11. Amendment, Supplement and Waiver. Subject to certain exceptions,
the Indenture or the Notes may be amended or supplemented with the consent of
the Holders of at least a majority in principal amount of the Notes then
outstanding (including, without limitation, consents obtained in connection with
a purchase of, or tender offer or exchange offer for, Notes) and, subject to the
provisions of Sections 6.04 and 6.07 of the Indenture, any existing Default or
Event of Default (other than a Default or Event of Default in the payment of the
principal of, premium, if any, or interest on the Notes, except a payment
default resulting from an acceleration that has been rescinded) or compliance
with any provision of the Indenture or the Notes may be waived with the consent
of the Holders of a majority in principal amount of the Notes then outstanding
(including, without limitation, consents obtained in connection with a purchase
of, or tender offer or exchange offer for, Notes). Without the consent of any
Holder of Notes, the Company and the Trustee may amend or supplement the
Indenture or the Notes to cure any ambiguity, defect or inconsistency, to
provide for uncertificated Notes in addition to or in place of certificated
Notes (provided that the uncertificated notes are issued in registered form for
purposes of Section 163(f) of the Internal Revenue Code (the "Code"), or in a
manner such that the uncertificated notes are described in Section 163(f)(2)(B)
of the Code), to provide for the assumption of the Company's obligations to
Holders of the Notes in case of a merger or consolidation, or sale of all or
substantially all of the Company's assets, to make any change that would provide
any additional rights or benefits to the Holders of the Notes or that does not
adversely affect the legal rights under the Indenture of any such Holder, or to
comply with the requirements of the Commission in order to effect or maintain
the qualification of the Indenture under the Trust Indenture Act.
12. Defaults and Remedies. Events of Default include: (i) default for
30 days in the payment when due of interest on the Notes; (ii) default in
payment of the principal of or premium, if any, on the Notes when due at
maturity, upon optional redemption, upon required
A-6
repurchase, upon declaration of acceleration or otherwise; (iii) failure by the
Company to comply with the provisions of Sections 3.09, 4.10, 4.15 or Article 5
of the Indenture; (iv) failure by the Company or any Subsidiary Guarantor for 45
days after notice to comply with any of the covenants in the Indenture or the
Notes (other than those covenants addressed elsewhere in Section 6.01 of the
Indenture); (v) default under any mortgage, indenture or instrument under which
there may be issued or by which there may be secured or evidenced any
Indebtedness for money borrowed by the Company or any of its Subsidiaries
(including any Indebtedness the payment of which is guaranteed by the Company or
any of its Subsidiaries) other than a Receivables Subsidiary whether such
Indebtedness or guarantee now exists, or is created after the date of the
Indenture, which default (a) is caused by a failure to pay principal or a
premium, if any, on such Indebtedness at the Stated Maturity for such payment of
principal or premium, if any, or such later date as has been agreed in a writing
(provided such writing is entered into prior to such Stated Maturity) by the
parties to the documentation relating to such Indebtedness (a "Payment Default")
or (b) results in the acceleration of such Indebtedness prior to its express
maturity and, in each case, the principal amount of any such Indebtedness,
together with the principal amount of any other such Indebtedness under which
there has been a Payment Default or the maturity of which has been so
accelerated, aggregates $12.5 million or more; (vi) failure by the Company or
any of its Subsidiaries other than a Receivables Subsidiary to pay final
judgments aggregating in excess of $12.5 million, which judgments are not paid,
discharged or stayed for a period of 60 days (or 90 days if prior to such
sixtieth day the Company has delivered to the Trustee an Officers' Certificate
attesting that a financially responsible insurance company of recognized
national standing has acknowledged in writing complete liability for such
judgment and attached a copy of such acknowledgment thereto); (vii) repudiation
by any Subsidiary Guarantor of its obligations under any Subsidiary Guarantee
or, except as permitted by the Indenture, any Subsidiary Guarantee shall be held
in a judicial proceeding to be unenforceable or invalid in any material respect
or shall cease to be in full force and effect; (viii) the Company or any of its
Subsidiaries (other than a Receivables Subsidiary) within the meaning of any
Bankruptcy Law (a) commences a voluntary case, (b) consents to the entry of an
order for relief against it in an involuntary case, (c) consents to the
appointment of a custodian of it or for all or substantially all of its
property, (d) makes a general assignment for the benefit of its creditors, or
(e) generally is not paying its debts as they become due; or (ix) a court of
competent jurisdiction enters an order or decree under any Bankruptcy Law that
(a) is for relief against the Company or any of its Subsidiaries (other than a
Receivables Subsidiary), (b) appoints a custodian of the Company or any of its
Subsidiaries or for all or substantially all of the property of the Company or
any of its Subsidiaries (other than a Receivables Subsidiary) or (c) orders the
liquidation of the Company or any of its Subsidiaries (other than a Receivables
Subsidiary) and any such order or decree described in this clause (ix) remains
unstayed and in effect for 60 consecutive days.
In the event of a declaration of acceleration of the Notes because an
Event of Default has occurred and is continuing as a result of a Payment Default
or the acceleration of any Indebtedness described in clause (v) of the preceding
paragraph, the declaration of acceleration of the Notes shall be automatically
annulled if (i) any Payment Default described in clause (v)(a) of the preceding
paragraph has been cured or waived and (ii) the holders of any accelerated
Indebtedness described in clause (v)(b) of the preceding paragraph have
rescinded the declaration of acceleration in respect of such Indebtedness;
provided in each such case that (a) such cure, waiver or rescission of such
declaration of acceleration shall have been made in
A-7
writing within 30 days of the date of such Payment Default or declaration, as
the case may be, and (b) the annulment of the acceleration of such Notes would
not conflict with any judgment or decree of a court of competent jurisdiction
and (c) all existing Events of Default, except nonpayment of principal or
interest on the Notes that became due solely because of the acceleration of the
Notes, have been cured or waived.
A Default under clause (iv) the first paragraph of this Paragraph 12 is
not an Event of Default until the Trustee or the Holders of at least 25% in
principal amount of the then outstanding Notes give written notice to the
Company of the default and the Company does not cure the Default within the
period provided in such clause. The notice must specify in reasonable detail the
Default, demand that it be remedied and state that the notice is a "Notice of
Default". If the Holders of 25% or more in principal amount of the then
outstanding Notes request the Trustee to give such notice on their behalf, the
Trustee shall do so.
If any Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in principal amount of the then outstanding Notes by
written notice to the Trustee and the Company may declare all the Notes to be
due and payable immediately. Notwithstanding the foregoing, in the case of an
Event of Default arising under clause (viii) or (ix) of the first paragraph of
this Paragraph 12, with respect to the Company, any Significant Subsidiary or
any group of Subsidiaries, that taken together would constitute a Significant
Subsidiary, all outstanding Notes will become due and payable without further
action or notice. Holders of the Notes may not enforce the Indenture or the
Notes except as provided in the Indenture. Subject to certain limitations,
Holders of a majority in principal amount of the then outstanding Notes may
direct the Trustee in its exercise of any trust or power. The Trustee may
withhold from Holders of the Notes notice of any continuing Default or Event of
Default (except a Default or Event of Default relating to the payment of
principal or interest) if it determines that withholding notice is in their
interest. Under certain circumstances, the Holders of a majority in aggregate
principal amount of the Notes then outstanding by notice to the Trustee may on
behalf of the Holders of all of the Notes rescind an acceleration or waive any
existing Default or Event of Default and its consequences under the Indenture
except a continuing Default or Event of Default in the payment of interest on,
or the principal of, the Notes. The Company is required to deliver to the
Trustee annually a statement regarding compliance with the Indenture, and the
Company is required upon becoming aware of any Default or Event of Default, to
deliver to the Trustee a statement specifying such Default or Event of Default.
In the case of any Event of Default occurring by reason of any willful
action (or inaction) taken (or not taken) by or on behalf of the Company with
the intention of avoiding payment of the premium that the Company would have had
to pay if the Company then had elected to redeem the Notes pursuant to the
optional redemption provisions of the Indenture, an equivalent premium shall
also become and be immediately due and payable to the extent permitted by law
upon the acceleration of the Notes. If an Event of Default occurs prior to June
1, 2008 by reason of any willful action (or inaction) taken (or not taken) by or
on behalf of the Company with the intention of avoiding the prohibition on
redemption of the Notes prior to June 1, 2008, then the premium specified in the
Indenture shall also become immediately due and payable to the extent permitted
by law upon the acceleration of the Notes.
A-8
13. Trustee Dealings With Company. The Trustee, in its individual or
any other capacity, may make loans to, accept deposits from, and perform
services for the Company or its Affiliates, and may otherwise deal with the
Company or its Affiliates, as if it were not the Trustee; however, if it
acquires any conflicting interest it must eliminate such conflict within 90
days, apply to the Commission for permission to continue or resign.
14. No Recourse Against Others. No past, present or future director,
officer, employee, incorporator or stockholder of the Company, as such, shall
have any liability for any obligations of the Company under the Notes or the
Indenture or for any claim based on, in respect of, or by reason of, such
obligations or their creation. Each Holder by accepting a Note waives and
releases all such liability. The waiver and release are part of the
consideration for the issuance of the Notes. Such waiver may not be effective to
waive liabilities under the federal securities laws and it is the view of the
Commission that such a waiver is against public policy.
15. Authentication. This Note shall not be valid until authenticated by
the manual signature of the Trustee or an authenticating agent.
16. Abbreviations. Customary abbreviations may be used in the name of a
Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (-- joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
17. Cusip Numbers. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers
in notices of redemption as a convenience to Holders. No representation is made
as to the accuracy of such numbers either as printed on the Notes or as
contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
18. Additional Information. The Company shall furnish to any Holder
upon written request and without charge a copy of the Indenture. Requests may be
made to:
Finlay Fine Jewelry Corporation
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Secretary and Corporate Counsel
A-9
================================================================================
ASSIGNMENT FORM
To assign this Note, fill in the form below:
I or we assign and transfer this Note to
(Print or type assignee's name, address and zip code)
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint agent to
transfer this Note on the books of the Company. The agent may substitute another
to act for him.
--------------------------------------------------------------------------------
Date: Your Signature:
------------------- -----------------------------------
--------------------------------------------------------------------------------
Sign exactly as your name appears on the other side of this Note.
A-10
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Company
pursuant to Section 4.10 or 4.15 of the Indenture, check the box below:
[ ] Section 4.10 [ ] Section 4.15
If you want to elect to have only part of the Note purchased by the
Company pursuant to Section 4.10 or Section 4.15 of the Indenture, state the
amount you elect to have purchased (if all, write "ALL"): $_________
Your Signature:
-----------------------------------
(Sign exactly as your name
appears on the face of this
Note)
Tax Identification No:
----------------------------
Signature Guarantee.*
* NOTICE: The signature must be guaranteed by an institution which is
a member of one of the following recognized signature guarantee
programs:
(1) The Securities Transfer Agent Medallion Program (STAMP);
(2) The New York Stock Exchange Medallion Program (MSP);
(3) The Stock Exchange Medallion Program (SEMP).
A-11
EXHIBIT B
[FORM OF TRADE NAME LICENSE AGREEMENT]
Trade Name License Agreement (this "Agreement"), dated as of
____________, ________, between [________], a corporation organized and existing
under the laws of [state] (the "Licensor"), and [________], a corporation
organized and existing under the laws of [state] (the "Licensee").
Whereas, the Licensee is the owner of certain trade names and service
marks shown on Schedule A hereto and has utilized such trade names and services
marks in the operation of jewelry departments or stores and related activities;
and
Whereas, on the date hereof Licensee has sold, transferred, conveyed
and assigned its right, title and interest to use such trade names and service
marks and goodwill associated therewith in the United States (but not elsewhere)
to Licensor; and
Whereas, pursuant to the Indenture dated as of June 3, 2004 between
Finlay Fine Jewelry Corporation and HSBC Bank USA, as trustee (the "Indenture"),
relating to Finlay Fine Jewelry Corporation's 8 3/8% Senior Notes due 2012 (the
"Senior Notes"), in connection with such sale, transfer, conveyance and
assignment, Licensee and Licensor are required to enter into this Agreement; and
Whereas, the Licensee desires to obtain, and the Licensor desires to
grant to the Licensee, an exclusive right to use the Licensed Trade Names (as
defined in Section 1) in the Territory (as defined in Section 1) on or in
connection with the operation of jewelry departments or stores and related
purchasing, consigning, merchandising, selling, marketing, promoting,
advertising, distributing, manufacturing, importing of or other activities
relating to jewelry upon the terms and conditions set forth below;
Now therefore, to effect the foregoing, the parties hereto agree as
follows:
SECTION 1. Definitions.
"Affiliate" as used herein means, with respect to either party, any
entity controlling, controlled by or under common control with such party. For
purposes of the foregoing definition, the term "control" (and correlative terms)
means the power, whether by contract, equity ownership or otherwise, to direct
the policies or management of an entity.
"Governmental Authority" as used herein means any federal, state,
county, local or other governmental department, regulatory body, commission,
board, bureau, agency or instrumentality.
"Licensed Products" as used herein means jewelry products which are
sold in jewelry departments or stores operated by the Licensee or any other
products sold in any other venue with the prior approval of the Licensor.
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"Licensed Trade Names" as used herein means the trade names and service
marks shown on Schedule A attached hereto.
"Licensee" as used herein means the Licensee, its Affiliates (other
than the Licensor), sublicensees and successors to the Licensee's business.
"Parties" as used herein means the Licensor and the Licensee.
"Quality" as used herein means products marketed and promoted as
quality items which meet or exceed the quality standards set forth in Section 4
below.
"Revenues" as used herein means gross revenues generated by sales of
the Licensed Products in the Territory less sales taxes, shipping, freight, or
transport charges if separately stated on an invoice; actual discounts or
allowances to customers; and returns in the normal course of business.
"Territory" as used herein means the United States of America, any
political subdivisions thereof and its territories, commonwealths and
possessions.
SECTION 2. Xxxxx to the Licensee and Related Matters.
(a) Exclusivity. The Licensor hereby grants to the Licensee, except as
otherwise provided herein, an exclusive right in the Territory to use the
Licensed Trade Names in connection with the operation of jewelry departments and
stores whether now existing or hereafter established and the related purchasing,
consigning, merchandising, selling, marketing, promoting, advertising,
distributing, manufacturing, importing of or other activities relating to the
Licensed Products.
(b) Reserved Rights. All rights in the Licensed Trade Names other than
those specifically granted herein are reserved to the Licensor for its own use
and benefit.
(c) Ownership. The parties acknowledge and agree that the Licensed
Trade Names are the sole and exclusive property of the Licensor. The Licensee
acknowledges and agrees that the Licensee shall not acquire any right, title or
interest in or to the Licensed Trade Names as a result of this License
Agreement, or the Licensee's use thereof, or as a result of any other act or
thing, that the Licensee shall not attack the Licensor's title to or ownership
of the Licensed Trade Names, and that all use of the Licensed Trade Names by the
Licensee and all goodwill generated thereby shall inure to the benefit of the
Licensor. The Licensee shall not use or register or claim rights in any trade
name, trade dress or other indicia confusingly similar, in whole or in part, to
the Licensed Trade Names.
(d) Sublicenses. The Licensee shall not grant any sublicense to use the
Licensed Trade Names, other than to Licensee's Affiliates without the express
prior written approval of the Licensor.
(e) Royalty Provisions. Upon receipt of an invoice from the Licensor,
Licensee agrees to pay the Licensor a royalty equal to [___] percent (__%) of
Revenues generated from sales of the Licensed Products by the Licensee in the
Territory.]
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(f) Statements and Payments.
(i) Licensor has the option to request payment of such royalties
at the end of each six-month period by sending an invoice to Licensee. Within
thirty (30) days after receipt of such invoice, Licensee shall furnish a
statement, certified as accurate by an officer of Licensee, showing in
reasonable detail Licensee's sales of the Licensed Products, applicable
allowances or credits, uncollectible amounts, invoiced free or sample items
distributed and a calculation of Revenues for the Licensed Products, as well as
the amount of royalties payable with respect to such prior six month period.
(ii) Acceptance by the Licensor of any statement furnished or
royalty paid shall not preclude the Licensor from questioning its correctness
and, if any inconsistencies or mistakes are discovered, they shall immediately
be rectified.
(iii) All payments made by Licensee hereunder will be paid to
Licensor or its designee in United States Dollars.
(iv) The Licensee shall pay interest on any overdue royalty
payment at the prime rate in effect on the date on which such payment was due,
and such interest shall accrue from the date on which such payment was due.
(v) If the Licensee does not receive an invoice from the Licensor,
all royalties due and payable shall be paid within thirty (30) days after
receiving the next invoice, together with interest on such royalties at the
prime rate in effect on the date such payment was initially due, and such
interest shall accrue from the date on which such payment was due.
(g) Audit.
(i) The Licensee shall keep complete and accurate records and
books of account at its principal place of business covering all transactions
relating to this Agreement, and the Licensor and/or its duly authorized
representative shall have the right, during regular business hours and upon ten
(10) days reasonable notice, at least once quarterly, to examine such books and
all other documents and materials in Licensee's possession or control with
respect to this Agreement. Neither Licensor nor any of its representatives shall
disclose to any other person, firm or corporation any information acquired as a
result of such examination; provided, however, that nothing herein contained
shall be construed to prevent Licensor and/or Licensee or their duly authorized
representatives from testifying in any court of competent jurisdiction with
respect to the information obtained as a result of any such examination in any
action instituted to enforce the rights of Licensor under the terms of this
Agreement. If such an audit reveals an underpayment by the Licensee, the
Licensee shall immediately remit payment to the Licensor in the amount of the
underpayment plus interest calculated at the prime rate then in effect from the
date such payment(s) were actually due. If such underpayment is greater than __%
of the royalties payable for the audited period, the Licensee shall reimburse
the Licensor for the costs and expenses of such audit.
(ii) All books of account and records of the Licensee relating to
this Agreement shall be retained for at least two (2) years after termination of
this Agreement.
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SECTION 3. Method of Use of the Licensed Trade Names.
(a) Use. The Licensee acknowledges that the Licensed Trade Names have
acquired a valuable secondary meaning and goodwill to department stores and
vendors in the retail jewelry market place. Accordingly, the Licensee undertakes
and agrees not to use the Licensed Trade Names in any manner whatsoever which,
directly or indirectly, would derogate or detract from its repute or which would
dilute, demean, ridicule or reflect adversely upon the Licensed Trade Names or
the Licensor, it being mutually agreed that use by the Licensee of the Licensed
Trade Names in the manner being used on the date hereof shall meet Licensor's
standards. The Licensee acknowledges that the Licensed Trade Names have become
associated generally with products and services that possess a positive and
quality image, and the Licensee agrees not to use the Licensed Trade Names in
any manner inconsistent with such image. The Licensee agrees to utilize the
Licensed Trade Names in a Quality manner in connection with the operation of
jewelry departments or stores and the purchasing, consigning, merchandising,
selling, marketing, promoting, advertising, distributing, manufacturing,
importing of or other activities relating to the Licensed Products.
(b) Form and Manner. Except as may be otherwise specifically provided
in this Agreement, the Licensee may not (i) make any change in the form of the
Licensed Trade Names, (ii) use any partial version of the Licensed Trade Names
at any time for any purpose, or (iii) use the Licensed Trade Names in
combination, juxtaposition or conjunction with, or as part of, any other
trademarks, service marks or trade names without the express prior written
approval of the Licensor, which approval may not be unreasonably withheld, it
being mutually agreed that use by the Licensee of the Licensed Trade Names in
the manner being used on the date hereof shall meet Licensor's standards. Any
mark approved pursuant to this paragraph shall be owned solely and exclusively
by the Licensor and after approval shall be deemed a Licensed Trade Name
pursuant to this Agreement.
(c) Marking. The Licensee shall apply such trade name notices,
copyright notices or other markings in connection with the Licensed Trade Names
as may be necessary or reasonably deemed desirable by the Licensor under the
laws or regulations of each jurisdiction of the Territory where such Licensed
Trade Names are used.
SECTION 4. Quality Standards.
(a) Quality. The Licensee shall not sell any Licensed Products or
operate any jewelry departments or stores or conduct related activities in
connection with the Licensed Trade Names that shall fail to meet the quality
standards and specifications employed in connection with use of the Licensed
Trade Names as of the date hereof or such additional standards or specifications
as may be reasonably specified by the Licensor from time to time, it being
mutually agreed that use by the Licensee of the Licensed Trade Names in the
manner being used on the date hereof shall meet Licensor's standards. The
Licensee shall operate jewelry departments or stores or conduct related
activities in connection with the Licensed Trade Names only in a manner that
will protect the reputation of the Licensed Trade Names.
(b) On Site Inspections. Upon reasonable notice, the Licensor or its
representatives shall have access for inspection purposes to the jewelry
departments or stores
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operated by Licensee during regular business hours at such time or times as to
not unduly interfere with the operations of the Licensee to determine compliance
with quality control standards. If any inspection of any premises reveals that
the Licensee has failed to comply with the quality standards or other
requirements of this Section 4, the Licensor shall be entitled to reinspect such
premises until receipt of notice of cure by the Licensee. All expenses of
conducting such inspections shall be borne by the Licensor.
(c) Governmental Inquiries. The Licensee shall immediately notify the
Licensor in writing of any investigation, inquiry, claim or sanction by any
Governmental Authority regarding any quality, labeling, advertising or other
regulatory matter relating to the Licensed Products and shall keep the Licensor
advised of the progress and findings of such investigation or inquiry.
(d) Compliance; Fitness for Use. The Licensee shall be solely
responsible for and shall comply with all laws, rules and regulations, if any,
of Governmental Authorities in connection with the operation of jewelry
departments or stores in connection with the Licensed Trade Names and the
related purchasing, consigning, merchandising, selling, marketing, promoting,
advertising, distributing, manufacturing, importing of or other activities
relating to any goods or services.
SECTION 5. Term.
The term of this License Agreement shall commence as of the date hereof
and continue until the earlier of (a) the date on which none of the Senior Notes
is outstanding and all obligations of Finlay Fine Jewelry Corporation under the
Indenture have been satisfied in full, (b) the date on which Licensee
permanently ceases operating jewelry departments and stores and the related
purchasing, consigning, merchandising, selling, marketing, promoting,
advertising, distributing, manufacturing, importing of or other activities
relating to the Licensed Products, or (c) the date on which the Licensor sells,
transfers, conveys and assigns to the Licensee all of the Licensor's right,
title and interest in and to the Licensed Trade Names. Upon the termination of
this Agreement, all the rights of the Licensee hereunder shall automatically
revert to the Licensor, the parties shall perform all other acts which may be
necessary or useful to render effective the termination of the interest of the
Licensee in the Licensed Trade Names, and the Licensee shall execute any
assignment, conveyance, acknowledgment or other document that the Licensor may
require, relinquishing or conveying to the Licensor any and all rights to or
interest in use of the Licensed Trade Names that the Licensee has and any
goodwill associated therewith. Without any limitation of the foregoing, the
Licensee hereby consents to any application which the Licensor may make, upon
termination of this Agreement, to limit or terminate the Licensee's status as a
registered user and hereby irrevocably agrees not to contest, oppose or dispute
such application.
SECTION 6. Remedies.
(a) In the event of a breach of this Agreement, the aggrieved party's
sole and exclusive remedy shall be specific performance of this Agreement,
including any injunctive relief necessary to effect such specific performance.
In particular and without any limitation of the foregoing, the Licensor shall
not institute litigation against any person or entity for
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infringement of any Licensed Trade Name based in whole or in part on any
activities or rights covered or protected by this Agreement, and Licensee shall
not commence any action seeking a declaration of invalidity, unenforceability or
noninfringement of any registrations or applications covering the Licensed Trade
Names or asserting any rights to the Licensed Trade Names or any mark or name
confusingly similar thereto.
(b) The parties further agree that this Agreement and the license
granted herein may under no circumstances be rescinded and may be terminated
only as expressly provided in Section 5 above.
SECTION 7. Protection of the Licensed Trade Names.
(a) Maintenance. The Licensor shall maintain at its expense each of the
registrations for the Licensed Trade Names shown on Schedule A, if any, in full
force and effect as long as this Agreement continues in effect, and the Licensee
agrees to provide such assistance and documentation as is required for such
maintenance. The Licensor shall file such additional applications as Licensee
shall reasonably request to protect the Licensed Trade Names, and Licensor shall
diligently prosecute such applications and maintain any registrations issuing
thereon.
(b) Infringement. The Licensee shall notify the Licensor of any
suspected, actual or threatened infringement of or act of unfair competition or
other harmful or wrongful activities of third parties with respect to the
Licensed Trade Names as to which it has notice. The Licensee shall cooperate
with the Licensor with respect to any action to be taken with respect thereto.
The Licensor will have the obligation to take whatever steps are reasonably
necessary or desirable to protect the Licensed Trade Names from any such
infringement or other harmful or wrongful activities of third parties and shall
have the right to control any litigation or other proceeding undertaken by it
for any such purpose. Such steps may include the filing and prosecution of (i)
litigation against infringement or unfair competition by third parties, (ii)
opposition proceedings to oppose applications for trade name or service mark
registration for marks that are confusingly similar to any one or more of the
Licensed Trade Names, and (iii) cancellation proceedings to cancel registration
of trade names or service marks that are confusingly similar to any one or more
of the Licensed Trade Names.
(c) Claims Against the Licensee. The Licensee shall promptly notify the
Licensor of any claim of infringement or any complaint based upon the Licensee's
use of the Licensed Trade Names and of any suit, action or proceeding brought
against the Licensee based upon said claim or complaint, and the provisions of
Section 10 shall apply.
SECTION 8. Recordation of Agreement.
The parties shall cooperate to determine and comply with applicable
laws or regulations throughout the Territory with respect to the recordation of,
validation of, or otherwise to render effective this Agreement. In countries
having registered user or license recordation requirements, the parties shall
execute all documents which may be necessary to record the Licensee as a
registered user or licensee for the Licensed Trade Names, and all costs of
preparing
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and recording any necessary documents or other costs in connection therewith
shall be borne by the Licensee.
SECTION 9. Representations and Warranties.
(a) Representations and Warranties of the Licensor. The Licensor
represents and warrants as follows:
(i) Due Organization and Power of the Licensor. The Licensor is a
corporation duly organized, validly existing and in good standing under the laws
of [state] and has all requisite corporate power and authority to enter into
this Agreement and perform its obligations hereunder.
(ii) Authorization and Validity of the Agreement. The execution,
delivery and performance by the Licensor of this Agreement and the consummation
by it of the transactions contemplated hereby has been duly authorized by its
Board of Directors and, if necessary, its shareholders, and no other corporate
action on the part of the Licensor is necessary for the execution, delivery and
performance by the Licensor of this Agreement and the consummation by the
Licensor of the transactions contemplated hereby. This Agreement has been duly
executed and delivered by the Licensor, and this License Agreement is the legal,
valid and binding obligation of the Licensor, enforceable against the Licensor
in accordance with and subject to its terms except as may be limited by
bankruptcy, insolvency, reorganization, fraudulent conveyance or transfer,
moratorium, or other similar laws and equitable principles relating to or
limiting creditor's rights generally.
(iii) No Conflict. The execution, delivery and performance by
the Licensor of this Agreement and the consummation by the Licensor of the
transactions contemplated hereby does not and will not (A) violate any provision
of any federal, state, local or foreign law, rule or regulation or any order,
injunction, judgment or decree applicable to the Licensor; (B) require any
consent or approval of, or filing with or notice to, any Governmental Authority
under any provision of law applicable to the Licensor other than filings under
applicable trade name laws or except as may be contemplated under any provision
of this Agreement; (C) violate any provision of the Certificate of Incorporation
or By- Laws or other constituent documents of the Licensor; or (D) require any
consent, approval or notice under, conflict with, or result in the breach,
lapse, cancellation or termination of, or result in the acceleration (whether
after the filing of notice or the lapse of time or both) of any right or
obligation of or the performance by the Licensor under, or result in a loss of
any benefit to which the Licensor is entitled under, or constitute a default
under any indenture, mortgage, deed of trust, lease, license, franchise,
contract, agreement, concession or other instrument to which the Licensor is a
party or by which it, or any of its assets, are bound or encumbered, where the
failure to obtain such consent, approval or notice or the occurrence of any of
the matters referred to in this subsection (D) would materially adversely affect
the Licensee's rights hereunder.
Except as expressly provided above in this Section 9(a) or elsewhere in this
Agreement, the Licensor makes no other representations or warranties regarding
this Agreement or the rights Licensed hereunder.
B-7
(b) Representations and of Warranties of the Licensee. The Licensee
represents and warrants as follows:
(i) Due Organization and Power of the Licensee. The Licensee is a
corporation duly organized, validly existing and in good standing under the laws
of [state] and has all requisite corporate power and authority to enter into
this Agreement and perform its obligations hereunder.
(ii) Authorization and Validity of the Agreement. The execution,
delivery and performance by the Licensee of this Agreement and the consummation
by it of the transactions contemplated hereby have been duly authorized by its
Board of Directors, and no other corporate action on the part of the Licensee is
necessary for the execution, delivery and performance by the Licensee of this
Agreement and the consummation by the Licensee of the transactions contemplated
hereby. This Agreement has been duly executed and delivered by the Licensee, and
this Agreement is the legal, valid and binding obligation of the Licensee,
enforceable against the Licensee in accordance with and subject to its terms
except as may be limited by bankruptcy, insolvency, reorganization, fraudulent
conveyance or transfer, moratorium or other similar laws and equitable
principles relating to or limiting creditors' rights generally.
(iii) No Conflict. The execution, delivery and performance by the
Licensee of this Agreement and the consummation by the Licensee of the
transactions contemplated hereby does not and will not (A) violate any provision
of any federal, state, local or foreign law, rule or regulation or any order,
injunction, judgment or decree applicable to the Licensee; (B) require any
consent or approval of, or filing with or notice to, any Governmental Authority
under any provision of law applicable to the Licensee; (C) violate any provision
of the Certificate of Incorporation or By-Laws or other constituent documents of
the Licensee; or (D) require any consent, approval or notice under, conflict
with, or result in the breach, lapse, cancellation or termination of, or result
in the acceleration (whether after the filing of notice or the lapse of time or
both) of any right or obligation of or the performance by the Licensee under, or
result in a loss of any benefit to which the Licensee is entitled under, or
constitute a default under any indenture, mortgage, deed of trust, lease,
license, franchise, contract, agreement, concession or other instrument to which
the Licensee is a party or by which it or any of its assets are bound or
encumbered, where the failure to obtain such consent, approval or notice or the
occurrence of any of the matters referred to in this subsection (D) would
materially adversely affect the Licensee's rights hereunder.
SECTION 10. Indemnification.
(a) By the Licensor. The Licensor shall indemnify, defend and hold
harmless the Licensee from and against and in respect of any and all claims,
losses, damages, expenses, obligations, penalties, demands, suits, procedures,
assessments, judgments, costs and liabilities (including costs of collection,
investigation, reasonable attorneys' fees and other costs of defense) ("Losses")
incurred by it, arising out of or resulting from any breach of any
representation, warranty, covenant or agreement made by the Licensor herein.
B-8
(b) By the Licensee. The Licensee shall indemnify, defend and hold
harmless the Licensor and its Affiliates from and against and in respect of any
and all Losses incurred by them arising out of or resulting from any breach of
any representation, warranty, covenant or agreement made by the Licensee herein.
(c) Procedure. If a claim by a third party is made against an
indemnified party, the indemnified party shall promptly notify the indemnifying
party of such claim. Failure to so notify the indemnifying party shall not
relieve the indemnifying party of any liability which the indemnifying party
might have, except to the extent that such failure materially prejudices the
indemnifying party's legal rights. The indemnifying party shall have thirty days
after receipt of such notice to undertake, conduct and control, through counsel
of its own choosing (subject to the consent of the indemnified party, such
consent not to be unreasonably withheld) and at its expense, the settlement or
defense of such claim, and the indemnified party shall cooperate with the
indemnifying party in connection therewith; provided, however, that (i) the
indemnifying party shall permit the indemnified party to participate in such
settlement or defense through counsel chosen by the indemnified party; provided
that the fees and expenses of such counsel shall be borne by the indemnified
party and (ii) the indemnifying party shall reimburse the indemnified party for
the full amount of any Loss resulting from such claim and all related expenses
incurred by the indemnified party within the limits of this Section 10 as such
are incurred. Notwithstanding anything contained herein, the indemnifying party
shall not enter into any settlement without the consent of the indemnified
party, unless the settlement involves the payment of money only and the
indemnified party is solely liable for payment of said money. So long as the
indemnifying party is reasonably contesting any such claim in good faith, the
indemnified party shall not pay or settle any such claim. Notwithstanding the
foregoing, the indemnified party shall have the right to pay or settle any such
contested claim (provided that such settlement does not adversely affect any
rights of the indemnifying party with respect to the Licensed Trade Names), but
in such event it shall automatically waive any right to indemnity therefor by
the indemnifying party. If the indemnifying party does not notify the
indemnified party within thirty days after receipt of the indemnified party's
notice of a claim of indemnity hereunder that it elects to undertake the defense
thereof, or so notifies the indemnified party but fails to undertake or maintain
such defense promptly and in good faith, the indemnified party shall have the
right to contest, settle or compromise the claim in the exercise of its
reasonable judgment and without prejudice to the rights of the indemnified party
to indemnification hereunder.
(d) Survival. The provisions of this Section 10 shall survive the
termination or expiration of this Agreement.
SECTION 11. Miscellaneous.
(a) Notices. Except as otherwise provided herein, all notices,
requests, demands, waivers and other communications required or permitted to be
given under this Agreement shall be in writing and shall be deemed to have been
duly given if delivered personally or by overnight courier with delivery charges
prepaid, or mailed by certified or registered mail, postage prepaid, receipt
requested, or sent by telecopy, as follows:
B-9
If to the Licensor, to it at:
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with a copy to:
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If to the Licensee, to it at:
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with a copy to:
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or to such other person or address as either party shall specify by notice in
writing to the other party. All such notices, requests, demands, waivers and
communications shall be deemed to have been received on the date of delivery.
(f) Binding Effect; Benefit. This Agreement shall inure to the benefit
of and be binding upon the parties hereto and their respective successors and
permitted assigns. Nothing in this Agreement, expressed or implied, is intended
to confer on any person other than the parties hereto or their respective
successors and assigns, any rights, remedies, obligations or liabilities under
or by reason of this Agreement.
(g) Entire Agreement. This Agreement (including the Schedule hereto)
constitutes the entire agreement between the parties hereto with respect to the
subject matter hereof and supersedes all other prior agreements and
understandings, oral and written, between the parties hereto with respect to the
subject matter hereof.
(h) Assignability. This Agreement shall be freely assignable by the
Licensee to any successor of the Licensee's business which is a wholly owned
subsidiary of the Licensee with respect to the operation of jewelry departments
and the related purchasing, consigning, merchandising, selling, marketing,
promoting, advertising, distributing, manufacturing,
B-10
importing of or other activities relating to jewelry products. This Agreement
shall not be assignable by the Licensor.
(i) Relationship of the Parties. This Agreement shall in no way
constitute or give rise to a partnership, joint venture or agency between the
parties, it being acknowledged and agreed that the relationship created hereby
is strictly that of licensor and licensee. Except as may be expressly provided
to the contrary herein, nothing in this Agreement shall constitute or be deemed
to constitute either party as the legal representative or agent of the other,
nor shall either party have the right or authority to assume, create or incur
any liability or any obligation of any kind, express or implied, in the name of
or on behalf of the other party.
(j) Amendment and Modification; Waiver. Subject to applicable law, this
Agreement (including Schedule A hereto) may only be amended, modified and
supplemented by written instrument expressly identified as an amendment hereto
authorized and executed by the Licensor and the Licensee at any time prior to
the termination hereof with respect to any of the terms contained herein. No
waiver by any party of any of the provisions hereof shall be effective unless
explicitly set forth in writing and executed by the party so waiving. The waiver
by any party hereto of a breach of any provision of this Agreement shall not
operate or be construed as a waiver of any other or subsequent breach. No
failure on the part of either party hereto to exercise, and no delay in
exercising, any right hereunder shall operate as a waiver thereof.
(k) Further Assurances. From time to time, pursuant to the request of
the Licensee delivered to the Licensor, the Licensor, at the Licensee's expense,
shall execute and deliver such instruments and documents and take such actions
as the Licensee may reasonably request in order to allow the Licensee the use of
the Licensed Trade Names contemplated hereby or otherwise to carry out the
purposes and intent of this Agreement. From time to time, pursuant to the
request of the Licensor delivered to the Licensee, the Licensee, at the
Licensor's expense, shall execute and deliver such instruments and documents and
take such actions as the Licensor may reasonably request to carry out the
purposes and intent of this Agreement.
(l) Section Headings. The section headings contained in this Agreement
are inserted for reference purposes only and shall not affect the meaning or
interpretation of this Agreement.
(m) Counterparts. This Agreement may be executed in several
counterparts, each of which shall be an original, and all of which shall be
deemed to be one and the same agreement.
(n) Applicable Law. This Agreement and the legal relations between the
parties hereto shall be governed by and construed in accordance with the laws of
the State of New York without regard to choice of laws or principles thereof.
(o) Severability of Provisions. 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 enforceability
without invalidating the remaining provisions hereof or affecting the validity
or enforceability of such provisions in any other jurisdiction.
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IN WITNESS WHEREOF, the parties hereto have executed this License
Agreement as of the date first above written.
[NAME OF LICENSOR]
By:
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Name:
Title:
[NAME OF LICENSEE]
By:
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Name:
Title:
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SCHEDULE A
Licensed Trade Names
B-13
EXHIBIT C
FORM OF SUBSIDIARY GUARANTEE
For good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the undersigned Subsidiary Guarantor (which term
includes any successor Person under the Indenture) jointly and severally, hereby
unconditionally guarantees, subject to the provisions in the Indenture dated as
of June 3, 2004 (the "Indenture") among Finlay Fine Jewelry Corporation and HSBC
Bank USA, as trustee (the "Trustee"), but irrespective of the validity and
enforceability of the Indenture, the Notes and the obligations of the Company
thereunder, (a) the due and punctual payment of the principal of, premium, if
any, and interest on the Notes (as defined in the Indenture), whether at
maturity, by acceleration, redemption or otherwise, the due and punctual payment
of interest on overdue principal and premium, and, to the extent permitted by
law, interest, and the due and punctual performance of all other obligations of
the Company to the Holders or the Trustee all in accordance with the terms of
the Indenture and (b) in case of any extension of time of payment or renewal of
any Notes or any of such other obligations, that the same will be promptly paid
in full when due or performed in accordance with the terms of the extension or
renewal, whether at stated maturity, by acceleration or otherwise. The
obligations of the Subsidiary Guarantors to the Holders of Notes and to the
Trustee pursuant to the Subsidiary Guarantee and the Indenture are expressly set
forth in Article 10 of the Indenture and reference is hereby made to the
Indenture for the precise terms of the Subsidiary Guarantee. Each Holder of a
Note, by accepting the same, agrees to and shall be bound by such provisions.
[Name of Subsidiary Guarantor]
By:
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Name:
Title:
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EXHIBIT D
FORM OF SUPPLEMENTAL INDENTURE
TO BE DELIVERED BY SUBSIDIARY GUARANTORS
SUPPLEMENTAL INDENTURE (this "Supplemental Indenture"), dated as of
_______________, among ___________________ (the "Guaranteeing Subsidiary"), a
subsidiary of Finlay Fine Jewelry Corporation (or its permitted successor), a
Delaware corporation (the "Company"), the other Subsidiary Guarantors (as
defined in the Indenture referred to herein) and HSBC Bank USA, as trustee under
the Indenture referred to below (the "Trustee").
WITNESSETH
WHEREAS, the Company has heretofore executed and delivered to the
Trustee an indenture (the "Indenture"), dated as of June 3, 2004 providing for
the issuance of 8 3/8% Notes due June 1, 2012 (the "Notes");
WHEREAS, the Indenture provides that under certain circumstances the
Guaranteeing Subsidiary shall execute and deliver to the Trustee a supplemental
indenture pursuant to which the Guaranteeing Subsidiary shall unconditionally
guarantee all of the Company's Obligations under the Notes and the Indenture on
the terms and conditions set forth herein and in the Indenture (the "Subsidiary
Guarantee"); and
WHEREAS, pursuant to Sections 9.01 and 9.06 of the Indenture, the
Trustee is authorized to execute and deliver this Supplemental Indenture;
NOW THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt of which is hereby acknowledged, the
Guaranteeing Subsidiary, the Company and the Trustee mutually covenant and agree
for the equal and ratable benefit of the Holders of the Notes as follows:
1. Capitalized Terms. Capitalized terms used herein without definition
shall have the meanings assigned to them in the Indenture.
2. Agreement to Guarantee. The Guaranteeing Subsidiary hereby
unconditionally guarantees all of the Company's Obligations as set forth in
Article 10 of the Indenture in the same manner and to the same extent as if it
had executed the Indenture on the date thereof as Subsidiary Guarantor
thereunder.
3. Continuing Agreement. Except as herein amended, all terms,
provisions and conditions of the Indenture, all Exhibits thereto and all
instruments executed in connection therewith shall continue in full force and
effect and shall remain enforceable and binding in accordance with their
respective terms.
4. New York Law to Govern. THE INTERNAL LAW OF THE STATE OF NEW YORK
SHALL GOVERN AND BE USED TO CONSTRUE THIS SUPPLEMENTAL INDENTURE BUT WITHOUT
GIVING EFFECT TO APPLICABLE PRINCIPLES OF
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CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER
JURISDICTION WOULD BE REQUIRED THEREBY.
5. Counterparts. The parties may sign any number of copies of this
Supplemental Indenture. Each signed copy shall be an original, but all of them
together constitute the same agreement.
6. Effect of Headings. The Section headings herein are for convenience
only and shall not affect the construction hereof.
7. The Trustee. The Trustee shall not be responsible in any manner
whatsoever for or in respect of the validity or sufficiency of this Supplemental
Indenture or for or in respect of the recitals contained herein, all of which
recitals are made solely by the Guaranteeing Subsidiary and the Company.
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed and attested, all as of the date first above
written.
Dated: ______________, ____
[GUARANTEEING SUBSIDIARY]
By:
--------------------------------------
Name:
Title:
FINLAY FINE JEWELRY CORPORATION
By:
--------------------------------------
Name:
Title:
HSBC BANK USA, as Trustee
By:
--------------------------------------
Name:
Title:
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EXHIBIT E
[FORM OF SUBSIDIARY INTERCOMPANY NOTE]
PROMISSORY NOTE
$[____________________] New York, New York
[date]
FOR VALUE RECEIVED, [________________], a [____________] corporation
("Borrower"), promises to pay to the order of [__________________], a
[_____________] corporation ("Payee"), [upon demand by the Payee] [on
[_______________]], at its office at [___________________], or at such other
place as Payee may, from time to time, designate in writing, in lawful money of
the United States of America, in immediately available funds, the principal sum
of [___________] Dollars ($[_______]) [together with interest thereon at a rate
of [___]% per annum from [___________] until maturity].
PAYEE AND ANY HOLDER HEREOF, BY ITS ACCEPTANCE OF THIS PROMISSORY NOTE,
AGREES THAT THE PAYMENT OF THE PRINCIPAL OF AND INTEREST ON, IF ANY, THIS
PROMISSORY NOTE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE PRIOR PAYMENT IN FULL
IN CASH OF ALL INDEBTEDNESS OF THE BORROWER OTHER THAN INDEBTEDNESS WHICH BY ITS
TERMS IS SUBORDINATE IN RIGHT OF PAYMENT TO OTHER INDEBTEDNESS OF THE BORROWER
("SENIOR DEBT"), WHETHER OUTSTANDING ON THE DATE HEREOF OR HEREAFTER CREATED,
INCURRED, ASSUMED OR GUARANTEED, AND THAT THE SUBORDINATION IS FOR THE BENEFIT
OF THE HOLDERS OF THE SENIOR NOTES.
[Borrower will pay interest [semi-annually] in arrears on [ ] and
[ ] of each year, or if any such day is not a Business Day, on the next
succeeding Business Day (each an "Interest Payment Date"). Interest on this
Promissory Note will accrue from the most recent date to which interest has been
paid or, if no interest has been paid, from the date of issuance; provided that
the first Interest Payment Date shall be [ ]. [Borrower shall pay interest
(including post-petition interest in any proceeding under any Bankruptcy Law) on
overdue principal from time to time on demand at a rate that is [ ]% per annum
in excess of the rate then in effect; it shall pay interest (including
post-petition interest in any proceeding under any Bankruptcy Law) on overdue
installments of interest (without regard to any applicable grace periods) from
time to time on demand at the same rate to the extent lawful.] Interest will be
computed on the basis of a 360-day year of twelve 30-day months.]
Upon any distribution to creditors of Borrower in an insolvency or in
connection with any proceeding under Bankruptcy Law relating to Borrower or its
property, (i) holders of Senior Debt shall be entitled to receive payment in
full in cash of all Obligations due in respect of such Senior Debt (including
post-petition interest in any proceeding under Bankruptcy Law) before the holder
hereof shall be entitled to receive any payment of the principal hereof or
interest, if any, hereon and (ii) until all Obligations with respect to Senior
Debt are paid in full in
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cash, any distribution to which the holder hereof would otherwise be entitled
shall be made to the holders of such Senior Debt on a pro rata basis.
Any contrary provision hereof notwithstanding, Borrower may not make
any payment of the principal hereof or interest, if any, hereon if a default
occurs and is continuing with respect to any Senior Debt.
Upon the failure of the Borrower to pay principal [or accrued interest]
when due and at any time thereafter [(but prior to the payment in full of all
such accrued and unpaid interest)] the holder of this Promissory Note may
declare the unpaid principal balance and all accrued and unpaid interest hereon
to be immediately due and payable.
In the event that any action shall be brought for the enforcement
hereof, the undersigned hereby promises to pay all costs and expenses hereof,
including, but not limited to, reasonable attorneys' fees and disbursements.
Borrower's obligations hereunder shall be unconditional and shall not
be subject to any defense (other than prior payment), set-off, deduction,
counterclaim or recoupment whatsoever by Borrower.
Any amounts due under this Promissory Note may be prepaid at any time
or times in whole or in part without premium or penalty.
Presentation, notice of protest, and demand are hereby expressly waived
by the undersigned.
Capitalized terms used but not defined herein have the meanings
ascribed to such terms in the Indenture, dated as of June 3, 2004, between
Finlay Fine Jewelry Corporation and HSBC Bank USA, as trustee.
THE TERMS OF THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE
PERFORMED ENTIRELY WITHIN SUCH STATE.
BORROWER
By:
------------------------------
Name:
Title:
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