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AMENDED AND RESTATED GOLD CONSIGNMENT AGREEMENT
DATED as of March 30, 2001
between
FINLAY FINE JEWELRY CORPORATION,
EFINLAY, INC.
such other CONSIGNEE SUBSIDIARIES
which may become Consignees hereunder,
and
SOVEREIGN BANK, as successor to Fleet National Bank, f/k/a BankBoston,
N.A., f/k/a The First National Bank of Boston, as successor to
Rhode Island Hospital Trust National Bank
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TABLE OF CONTENTS
1. DEFINITIONS.....................................................................................1
2. CONSIGNMENT FACILITY............................................................................18
2.1. Agreement to Make Purchases and Consignments of Precious Metal.......................18
2.2. Requests For Purchases and Consignments..............................................20
2.3. Daily Consignment Fee................................................................21
2.4. Payment on Account of Repurchase or Redelivery of Consigned Precious Metal...........22
2.5. Conversion Options...................................................................25
2.6. Repurchase at Maturity...............................................................26
2.7. Overdue Amounts......................................................................26
2.8. Settlements for Consignments.........................................................26
2.9. Obligations of the Participating Institutions in Respect of Consignments.............27
2.10. Change in Fronting Institutions' Commitment Percentages..............................28
3. INSURANCE; TAXES................................................................................28
3.1. Insurance............................................................................28
3.2. Taxes, Etc.; Certain Rights of the Agent.............................................30
4. CHANGES IN CIRCUMSTANCES........................................................................31
4.1. Capital Adequacy.....................................................................31
4.2. Inability to Determine Eurodollar Rate or Consignment Fixed Rate.....................31
4.3. Illegality of Consignment Fixed Rate Amounts.........................................32
4.4. Indemnity............................................................................32
4.5. Termination of Commitment............................................................32
5. FEES AND PAYMENTS...............................................................................33
5.1. Fees.................................................................................33
5.2. No Setoff, etc.......................................................................33
5.3. Institutions that are not U.S. Persons...............................................34
5.4. Payment and Redelivery...............................................................35
5.5. Maximum Rate of Interest.............................................................35
6. REPRESENTATIONS AND WARRANTIES..................................................................35
6.1. Incorporation; Good Standing; Authorization..........................................36
6.2. Enforceability.......................................................................36
6.3. Title to Properties; Leases..........................................................36
6.4. Financial Statements.................................................................36
6.5. No Material Changes..................................................................37
6.6. Litigation...........................................................................37
6.7. No Conflict..........................................................................37
6.8. Compliance with other Instruments, Laws, etc.........................................37
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6.9. Tax Status...........................................................................37
6.10. Holding Company and Investment Company Acts..........................................38
6.11. Use of Proceeds......................................................................38
6.12. No Event of Default..................................................................38
6.13. Locations of Specified Gold Jewelry..................................................38
6.14. Other Credit.........................................................................38
6.15. Perfection of Security Interest......................................................38
6.16. Subsidiaries.........................................................................39
7. CONDITIONS PRECEDENT............................................................................39
7.1. Closing Conditions...................................................................39
7.1.1. Consignment Documents.....................................................39
7.1.2. Financial Statements......................................................39
7.1.3. Representations True; No Material Adverse Change..........................39
7.1.4. Opinion of Counsel........................................................40
7.1.5. Satisfaction with Systems.................................................40
7.1.6. Perfection Certificates and UCC Search Results............................40
7.1.7. UCC Filings and Notices...................................................40
7.1.8. Proceedings; Copies of Documents..........................................40
7.1.9. Copies of Agreements......................................................40
7.1.10. License Arrangements......................................................41
7.1.11. Intercreditor Agreement...................................................41
7.1.12. Insurance.................................................................41
7.1.13. Fees......................................................................41
7.1.14. Letter of Credit..........................................................42
7.1.15. Approvals.................................................................42
7.1.16. Vendor Letters etc........................................................42
7.1.17. Consignment Limit Report..................................................42
7.1.18. Other Documents...........................................................42
7.2. Conditions to All Purchases and Consignments.........................................42
7.2.1. Representations True......................................................42
7.2.2. No Event of Default.......................................................43
7.2.3. Government Regulation.....................................................43
7.2.4. Consignment Requests......................................................43
7.2.5. Proceedings and Documents.................................................43
7.2.6. Fees......................................................................43
8. COVENANTS.......................................................................................43
8.1. Affirmative Covenants................................................................43
8.1.1. Financial Statements, Certificates and Information........................43
8.1.2. Records and Accounts. Each Consignee will,
and will cause each of its Subsidiaries to................................45
8.1.3. Corporate Existence; Maintenance of Properties............................46
8.1.4. Notices...................................................................46
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8.1.5. Use of Proceeds...........................................................47
8.1.6. Payment of Claims.........................................................47
8.1.7. Systems...................................................................47
8.1.8. Other Credit..............................................................47
8.1.9. Location of Specified Jewelry.............................................48
8.1.10. Further Assurances........................................................48
8.1.11. Certain Payments..........................................................48
8.1.12. eFinlay...................................................................49
8.2. Negative Covenants...................................................................49
8.2.1. Indebtedness..............................................................49
8.2.2. Liens.....................................................................52
8.2.3. Investments...............................................................54
8.2.4. Distributions.............................................................57
8.2.5. Merger, Consolidation and Disposition of Assets...........................59
8.2.6. Joint Ventures; Nature of Business; Accounting Practices..................61
8.2.7. Other Consignments........................................................61
8.2.8. Payments in Respect of Other Indebtedness.................................61
8.2.9. Certain Transactions......................................................62
8.2.10. Commitments to Open Factory Outlet Stores.................................62
8.3. Financial Covenants..................................................................62
8.3.1. EBITDA to Financial Obligations...........................................62
8.3.2. Indebtedness to EBITDA....................................................63
8.3.3. Minimum EBITDA............................................................63
9. EVENTS OF DEFAULT; ACCELERATION.................................................................63
9.1. Events of Default and Acceleration...................................................63
9.2. Agent's Rights with respect to Consigned Precious Metal..............................69
9.3. Remedies.............................................................................69
9.4. Distribution of Proceeds.............................................................70
10. SETOFF.........................................................................................70
11. EXPENSES.......................................................................................71
12. INDEMNIFICATION................................................................................72
13. THE AGENT......................................................................................73
13.1. Authorization.......................................................................73
13.2. Employees and Agents................................................................73
13.3. No Liability........................................................................73
13.4. No Representations..................................................................74
13.5. Payments............................................................................74
13.5.1. Payments to Agent........................................................74
13.5.2. Distribution by Agent....................................................74
13.5.3. Delinquent Institutions..................................................75
13.6. Holders of Notes....................................................................75
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13.7. Indemnity...........................................................................75
13.8. Agent as Institution................................................................76
13.9. Resignation.........................................................................76
13.10. Notification of Defaults and Events of Default......................................76
13.11. Duties in the Case of Enforcement...................................................76
14. ASSIGNMENT AND PARTICIPATION...................................................................77
14.1. Conditions to Assignments...........................................................77
14.1.1. Assignment by Institutions..............................................77
14.2. Certain Representations and Warranties; Limitations; Covenants......................77
14.3. Register............................................................................78
14.4. Participations......................................................................79
14.5. Disclosure..........................................................................79
14.6. Assignee or Participant Affiliated with Consignees..................................79
14.7. Miscellaneous Assignment Provisions.................................................80
14.8. Assignment by Consignees............................................................80
15. CONSENTS, AMENDMENTS, WAIVERS, ETC.............................................................80
16. NEW CONSIGNEES.................................................................................81
17. CONCERNING JOINT AND SEVERAL LIABILITY OF THE CONSIGNEES.......................................81
18. NOTICES, ETC...................................................................................84
19. GOVERNING LAW..................................................................................85
20. HEADINGS.......................................................................................85
21. COUNTERPARTS...................................................................................85
22. ENTIRE AGREEMENT, ETC..........................................................................86
23. WAIVER OF JURY TRIAL...........................................................................86
24. TRANSITIONAL ARRANGEMENTS......................................................................86
24.1. Original Consignment Agreement Superseded...........................................86
24.2. Fees Under Original Consignment Agreement...........................................87
25. MISCELLANEOUS..................................................................................87
AMENDED AND RESTATED GOLD CONSIGNMENT AGREEMENT
AMENDED AND RESTATED GOLD CONSIGNMENT AGREEMENT ("Agreement") made as of
the 30th day of March 2001, by and between SOVEREIGN BANK, as successor to Fleet
National Bank, f/k/a BankBoston, N.A., f/k/a The First National Bank of Boston,
as successor to Rhode Island Hospital Trust National Bank, with an office at 1
West Mezzanine, 00 Xxxxxxxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxx Xxxxxx 00000
("Sovereign") and the other lending institutions from time to time listed on
Schedule XII hereto (together with Sovereign, the "Institutions"), Sovereign as
agent for the Institutions (the "Agent"), FINLAY FINE JEWELRY CORPORATION, a
Delaware corporation with its principal office at 000 Xxxxx Xxxxxx, Xxx Xxxx,
Xxx Xxxx 00000 ("Finlay"), EFINLAY, INC., a Delaware corporation with its
principal office at 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 ("eFinlay") and
such other Consignee Subsidiaries that may become Consignees hereunder from time
to time pursuant to ss.16 and which are listed on Schedule XIII hereto (together
with Finlay and eFinlay, the "Consignees").
Finlay and Sovereign have previously entered into a Consignment Agreement,
dated as of June 15, 1995 (as amended or otherwise modified and in effect from
time to time immediately prior to the effectiveness of this Agreement, the
"Original Consignment Agreement"), pursuant to which Sovereign agreed to
purchase Precious Metal (as defined therein) from Finlay and deliver Precious
Metal (as defined therein) on consignment for sale to Finlay. Finlay and
Sovereign wish to amend and restate the Original Consignment Agreement in its
entirety in order to increase the Consignment Limit, to cause the Institutions
to join this Agreement on the terms set forth herein and to allow eFinlay and
any additional Consignees that may from time to time be set forth on Schedule
XIII hereto to join this Agreement on the terms and conditions set forth herein.
Accordingly, Finlay and eFinlay hereby request the Agent on behalf of the
Institutions (and, by joining this Agreement at any time after the Closing Date,
any other Consignee that becomes party hereto and the other Consignment
Documents pursuant to ss.16 hereof at such time requests the Agent on behalf of
the Institutions) to purchase from such Persons and deliver Precious Metal (as
defined herein) on consignment for sale to such Persons. The Agent, on behalf of
the Institutions, is willing to make those purchases, consignments and sales on
the terms and conditions of this Agreement. To effectuate this arrangement, the
Agent, the Institutions and the Consignees agree to amend and restate the
Original Consignment Agreement as follows:
1. DEFINITIONS.
For the purposes of this Agreement:
Additional Vendor Notice: A Notice given by the Consignees at their option
to the Agent no more frequently than once during any fiscal quarter of the
Consignees, pursuant to which the Consignees shall request the Agent's consent
to the addition of additional Approved Vendors hereunder.
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Affiliate: Any Person that would be considered to be an affiliate of a
Consignee under Rule 144(a) of the Rules and Regulations of the Securities and
Exchange Commission, as in effect on the date hereof, if such Consignee were
issuing securities.
Agent. As defined in the preamble hereto, or any successor thereto pursuant
to the provisions of this Agreement.
Agreement: As defined in the preamble hereto, which term shall include this
Agreement and the Schedules and Exhibits hereto, all as amended and in effect
from time to time.
Approved Vendor Agreement: Those certain letter agreements, substantially
in the form of Exhibit A hereto, addressed by each of the Approved Vendors,
respectively, to the Agent.
Approved Vendors: The vendors of gold jewelry Inventory listed on Schedule
I hereto or such other vendors of gold jewelry Inventory as may be approved in
writing by the Agent (in its sole discretion) following receipt by the Agent of
an Additional Vendor Notice; provided, however, that each such Approved Vendor
shall have executed and delivered to the Agent an Approved Vendor Agreement, and
such UCC-3 termination statements with respect to such Approved Vendor's
existing financing statements previously filed against any Consignee, if any,
and other documentation as the Agent shall deem necessary or appropriate in
order to preserve and maintain its first priority perfected Lien for the benefit
of the Agent and the Institutions in all Specified Gold Jewelry provided by such
Approved Vendor.
Base Rate: The higher of (i) the annual rate of interest announced from
time to time by the Agent at its head office as the Agent's "base rate" and (ii)
one-half of one percent (1/2%) above the Federal Funds Effective Rate.
Business Day: Any day on which banks in Providence, Rhode Island, are open
for business generally.
Capital Expenditures: For any Person, any expenditures or costs (excluding
any franchise or other fee or other expense paid in cash by any of the
Consignees as consideration for the initial granting of a license under any
license agreement or arrangement entered into with any lessor or licensor of a
store location) made by such Person for the acquisition, maintenance or repair
of fixed or capital assets (which are required to be capitalized on the balance
sheet of such Person in accordance with GAAP), including, without limitation,
the incurrence or assumption of any Indebtedness in respect of such fixed or
capital assets, and, without double counting, any payment made in respect of
such incurrence or assumption.
Capitalized Leases: Leases under which any Consignee or any of such
Consignee's Subsidiaries is the Lessee or obligor, the discounted, future rental
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payment obligations under which are required to be capitalized on the
consolidated balance sheet of such Consignee and its Subsidiaries in accordance
with GAAP.
Cash Collateral Agreement: The Cash Collateral Agreement dated as of the
date hereof, between the Consignees and the Agent, as the same may be amended,
restated, modified or supplemented from time to time.
Cash Deposits: The cash deposits of the Consignees in a depository account
established and maintained by the Consignees with the Agent.
Cash Interest Expense: For any period, the aggregate amount of cash
required to be applied by the Parent and its Subsidiaries to Interest Expense of
the Consignees and its Subsidiaries during such period.
Charter Documents: In respect of any entity, the certificate or articles of
incorporation or organization and the by-laws of such entity, or other
constitutive documents of such entity.
Closing Date. The first date on which the conditions set forth in ss.7 have
been satisfied and any Purchase and Consignments are to be made hereunder.
Code. The Internal Revenue Code of 1986, as amended from time to time.
Collateral: All of the property, rights and assets of any Consignee that
are or are intended to be subject to the security interest created by the
Security Documents.
Commerz. Commerzbank International S.A.
Commitment. With respect to each Institution, the amount set forth on
Schedule XII hereto as the amount of such Institution's commitment to make
Consignment Participations, as the same may be modified pursuant to ss.14 hereof
and as the same may be reduced from time to time; or, if such commitment is
terminated pursuant to the provisions hereof, zero.
Commitment Percentage. With respect to each Institution, the percentage set
forth on Schedule XII hereto as such Institution's percentage of the Total
Commitment, as the same may be modified pursuant to ss.14 hereof.
Consent: In respect of any person or entity, any permit, license or
exemption from, approval, consent of, registration or filing with any local,
state or federal governmental or regulatory agency or authority, required under
applicable law.
Consigned Precious Metal: Precious Metal (a) subject to a Purchase and
Consignment and consigned by the Agent on behalf of the Institutions to the
Consignees pursuant to the terms of this Agreement and (b) for which payment has
not been received or which has not been Redelivered to the Agent.
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Consigned Precious Metal Statement: See ss.2.1(e).
Consignee: As defined in the preamble hereto.
Consignee Subsidiaries: On the Closing Date, eFinlay, and, on any date
subsequent to the Closing Date, such other Subsidiaries of Finlay that have
become Consignees hereunder pursuant to and on the terms and conditions set
forth on ss.16.
Consignment Base Rate: A rate determined by the Agent from time to time in
its sole discretion, which rate may be changed by the Agent following seven (7)
days' prior Notice to the Consignees.
Consignment Base Rate Amounts: Consigned Precious Metal which is accruing a
Daily Consignment Fee calculated by reference to the Consignment Base Rate.
Consignment Conversion Request: A Notice given by the Consignees to the
Agent of the Consignees' election to convert or continue the Daily Consignment
Fee applicable to portions of Consigned Precious Metals outstanding in
accordance with ss.2.5.
Consignment Documents: This Agreement, the Security Documents, the
Intercreditor Agreement, the Intercompany Subordination Agreement, the Post
Closing Letter and the Fee Letter, in each case as from time to time amended,
restated, modified or supplemented.
Consignment Fixed Rate: With respect to any Interest Period, the amount
equal to (a) the greater of (i) the Eurodollar Rate for such Interest Period
minus the average of rates quoted to the Agent as the London Interbank Bullion
Rates as displayed on Xxxxxx'x gold loan screen or, if Xxxxxx'x gold loan screen
is not available, as set by the Agent, for Precious Metal forwards for such
period (the "Contango Rate"), and (ii) zero (O), plus (b) one and three-quarters
percent (1-3/4%).
Consignment Fixed Rate Amounts: Consigned Precious Metal which is accruing
a Daily Consignment Fee calculated by reference to the Consignment Fixed Rate.
Consignment Limit: The least of (a) 130,000 fine xxxx ounces of Precious
Metal, (b) Consigned Precious Metal having a Fair Market Value or unpaid
purchase price equal to the Total Commitment, or (c) the sum of (i) the product
of (A) ninety percent (90%) times (B) the number of xxxx ounces of Precious
Metal contained in Eligible Specified Gold Jewelry of the Consignees plus (ii)
the product of (A) ninety percent (90%) times (B) the sum of (1) the amount of
Eligible Cash Deposits divided by the Second London Gold Fixing for any day of
reference, plus (2) the Maximum Drawing Amount of the Letter of Credit divided
by the Second London Gold Fixing for such day of reference.
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Notwithstanding the foregoing, each of the advance rate percentages set
forth in clauses (c)(i)(A) and (c)(ii)(A) of the first paragraph of this
definition shall remain subject to modification by the Agent in its reasonable
judgment based upon the results of further examinations of the Consignees and
their businesses.
Consignment Limit Report: A report, in form and with supporting details
satisfactory to the Agent (including, without limitation, information as to what
portion, if any, of the Consigned Precious Metal is subject to Liens permitted
by ss.8.2.2 hereof (other than the junior Lien, subject to the terms and
provisions of the Intercreditor Agreement, in favor of the Dollar Agent)),
setting forth the Consignees' computation of the Consignment Limit.
Consignment Participation. See ss.2.9.
Consolidated or consolidated: With reference to any term defined herein,
shall mean that term as applied to the accounts of the Parent and its
Subsidiaries, consolidated in accordance with GAAP.
Consolidated EBITDA: For any period, the sum of (a) the net income (or net
loss) from the operations of the Parent and its Subsidiaries on a consolidated
basis for such period determined in accordance with GAAP (without giving effect
to any extraordinary gains or non-cash extraordinary losses, but giving effect
to cash extraordinary losses), plus (b) to the extent deducted in calculating
such net income, income tax expense of the Parent and its Subsidiaries on a
consolidated basis with respect to operations for such period, plus (c) to the
extent deducted in calculating such net income, the amount of all depreciation
and amortization of the Parent and its Subsidiaries on a consolidated basis for
such period, plus (d) without double counting items taken into account in clause
(c) above, all other non-cash charges or credits, including without limitation
any charges or credits for such period relating to valuation of Inventory by
application of the "LIFO" method of accounting, provided, that such non-cash
charges or credits cannot become cash in accordance with GAAP, plus (e) to the
extent deducted in calculating such net income, Interest Expense of the Parent
and its Subsidiaries on a consolidated basis for such period plus (f) to the
extent deducted in calculating such net income, the gross amount of the
write-off associated with the Sonab Transfer, the liquidation of the balance of
the net assets of Sonab following the Sonab Transfer and the closure of the
Sonab operation following the Sonab Transfer, with the amounts contemplated by
this subsection (f) not to exceed $28,631,000 in the aggregate. Any calculation
of Consolidated EBITDA for the Parent and its Subsidiaries for any period shall
exclude any negative "Consolidated EBITDA" (as calculated solely for the Parent
and its Subsidiaries) of up to $1,000,000.
Consolidated Periodic Financial Obligations: With respect to any fiscal
period, an amount equal to the sum of (a) Cash Interest Expense for such period,
plus (b) the amount of payments of principal on Indebtedness for Borrowed Money,
including, without limitation, payments in respect of Capitalized Leases
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scheduled to be made during such fiscal period but excluding payments of
Indebtedness in respect of revolving loans made, or letters of credit (or
guaranties thereof) issued, under the Dollar Facility, plus (c) dividends paid
in cash by the Parent during such period.
Contango Rate: As defined in the definition of Consignment Fixed Rate.
Contingent Obligations: With respect to any Person, any direct or indirect
liability, contingent or otherwise, of such Person:
(i) with respect to any indebtedness, lease, dividend, letter of
credit or other obligation of another if the primary purpose or intent in
creating such liability is to provide assurance to the obligee of such
obligation of another that such obligation of another will be paid or
discharged, or that any agreements relating thereto will be complied with,
or that the holders of such obligation will be protected (in whole or in
part) against loss in respect thereof;
(ii) under any letter of credit issued for the account of such Person
or for which such Person is otherwise liable for reimbursement thereof;
(iii) under any Hedge Agreement; or
(iv) to advance or supply funds or otherwise to assure or hold
harmless the owner of such primary obligation against loss in respect
thereof.
Contingent Obligations shall include, without limitation:
(a) any direct or indirect guarantee, endorsement (otherwise than for
collection or deposit in the ordinary course of business), co-making,
discounting with recourse or sale with recourse by such Person of the
obligation of another, and
(b) any liability of such Person for the obligations of another
through any agreement (contingent or otherwise):
(i) to purchase, repurchase or otherwise acquire such obligation
or any security therefor, or to provide funds for the payment or
discharge of such obligation (whether in the form of loans, advances,
stock purchases, capital contributions or otherwise);
(ii) to maintain the solvency or any balance sheet item, level of
income or financial condition of another; or
(iii) to make take-or-pay or similar payments if required
regardless of non-performance by any other party or parties to an
agreement,
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if, in the case of any agreement described under subclause (b)(i) or (b)(ii) of
this sentence, the primary purpose or intent thereof is as described in the
immediately preceding sentence. The amount of any Contingent Obligation shall be
equal to the amount of the obligation so guaranteed or otherwise supported.
Current Liabilities: With respect to any Person, determined at any time,
all liabilities of such Person which would, in accordance with GAAP, be
classified as current liabilities excluding revolving loans made under the
Dollar Facility and the current portion of long-term Indebtedness for Borrowed
Money.
Daily Consignment Fee: See ss.2.3.
Default: An event or act which with the giving of notice and/or the lapse
of time, would become an Event of Default.
Delinquent Institution: See ss.13.5.3.
Distribution. The declaration or payment of any dividend on or in respect
of any shares of any class of capital stock of any Consignee, other than
dividends payable solely in shares of common stock of such Consignee; the
purchase, redemption, or other retirement of any shares of any class of capital
stock of any Consignee, directly or indirectly through a Subsidiary of such
Consignee or otherwise; the return of capital by any Consignee to its
shareholders as such; or any other distribution on or in respect of any shares
of any class of capital stock of any Consignee.
Dollar Agent: The Agent, as such term is defined in the Dollar Facility.
Dollar Facility: Collectively, the Loan Documents, as such term is defined
in the Amended and Restated Credit Agreement dated as of September 11, 1997,
among Finlay, the Parent, the Dollar Agent and the Lenders (as defined therein),
as such facility has been or may be amended, restated or otherwise modified or
as such facility may be replaced, increased, renewed, supplemented, refunded or
refinanced by another facility, provided that such Dollar Facility shall be
subject at all times to the terms and provisions of the Intercreditor Agreement.
Dollars: Dollars in lawful currency of the United States of America.
Drawdown Date: The Date on which any Purchase and Consignment is made or is
to be made.
eFinlay. As defined in the preamble hereto.
eFinlay Contribution Agreement. The Contribution Agreement dated as of
September 29, 2000 between Finlay and eFinlay, as in effect on September 29,
2000.
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eFinlay FM Services Agreement. The Services Agreement dated as of September
29, 2000 between Finlay Merchandising and eFinlay, as in effect on September 29,
2000.
eFinlay Lease Agreement. The Lease Agreement dated as of September 29, 2000
between Finlay and eFinlay, as in effect on September 29, 2000.
eFinlay Marketing Agreement. The Marketing Agreement dated as of July 6,
2000 between Finlay and 000-Xxxxxxx.xxx, Inc., as in effect on September 29,
2000.
eFinlay Services Agreement. The Services Agreement dated as of September
29, 2000 between Finlay and eFinlay.
Eligible Assignee. Any of (i) a commercial bank or finance company
organized under the laws of the United States, or any State thereof or the
District of Columbia, and having total assets in excess of $1,000,000,000; (ii)
a savings and loan association or savings bank organized under the laws of the
United States, or any State thereof or the District of Columbia, and having a
net worth of at least $100,000,000, calculated in accordance with generally
accepted accounting principles; (iii) a commercial bank organized under the laws
of any other country which is a member of the Organization for Economic
Cooperation and Development (the "OECD"), or a political subdivision of any such
country, and having total assets in excess of $1,000,000,000, provided that such
bank is acting through a branch or agency located in the country in which it is
organized or another country which is also a member of the OECD; (iv) the
central bank of any country which is a member of the OECD; and (v) any other
bank, insurance company, commercial finance company or other financial
institution or other Person approved by the Agent, such approval not to be
unreasonably withheld.
Eligible Cash Deposits: Cash Deposits in which the Agent has a first
priority perfected Lien for the benefit of the Agent and the Institutions
pursuant to the Cash Collateral Agreement and which are subject to no other
Liens.
Eligible Specified Gold Jewelry: Specified Gold Jewelry which (a) is
located at Permitted Inventory Locations, (b) is (i) subject to a first priority
perfected Lien, subject to the terms and provisions of the Intercreditor
Agreement, in favor of the Agent for the benefit of the Institutions and the
Agent or (ii) is owned by the Agent, (c) is subject to no other Liens other than
a junior Lien, subject to the terms and provisions of the Intercreditor
Agreement, in favor of the Dollar Agent, and, subject to the provisions of
subclause (e) of this definition, other Liens permitted by ss.8.2.2 hereof, (d)
is not part of the borrowing base under the Dollar Facility or any other credit
facility or other arrangement pursuant to which any lender makes loans or
advances of credit to any Consignee, and (e) the Agent, in its sole discretion,
shall deem eligible, minus such reserves as the Agent, in its sole discretion,
shall from time to time deem appropriate.
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Environmental Laws: All laws pertaining to environmental matters, including
without limitation, the Resource Conservation and Recovery Act, the
Comprehensive Environmental Response Compensation and Liability Act of 1980, the
Superfund Amendments and Reauthorization Act of 1986, the Federal Clean Water
Act, the Federal Clean Air Act, the Toxic Substances Control Act, in each case
as amended, and all rules, regulations, judgments, decrees, orders and licenses
arising under all such laws.
Equity Interests: Capital stock and all warrants, options or other rights
to acquire capital stock or that are measured by the value of capital stock (but
excluding any debt security that is convertible into, or exchangeable for,
capital stock).
ERISA: The Employee Retirement Income Security Act of 1974, as amended, and
all rules, regulations, judgments, decrees, and orders arising thereunder.
Eurocurrency Reserve Rate: For any day with respect to a Consignment Fixed
Rate Amount, the maximum rate (expressed as a decimal) at which any lender
subject thereto would be required to maintain reserves under Regulation D of the
Board of Governors of the Federal Reserve System (or any successor or similar
regulations relating to such reserve requirements) against "Eurocurrency
Liabilities" (as that term is used in Regulation D), if such liabilities were
outstanding. The Eurocurrency Reserve Rate shall be adjusted automatically on
and as of the effective date of any change in the Eurocurrency Reserve Rate.
Eurodollar Business Day: Any day on which commercial banks are open for
international business (including dealings in Dollar deposits) in London or such
other eurodollar interbank market as may be used for determination of the
Eurodollar Rate.
Eurodollar Lending Office: The office designated by the Agent from time to
time as its Eurodollar Lending Office.
Eurodollar Rate: For any Interest Period for purposes of determining the
Consignment Fixed Rate, the rate of interest equal to (a) the rate per annum
(rounded upwards to the nearest 1/16 of one percent) at which the Agent's
Eurodollar Lending Office offers Dollar deposits two Business Days prior to the
beginning of such Interest Period in the interbank eurodollar market where the
eurodollar and foreign currency and exchange operations of such Eurodollar
Lending Office are customarily conducted, for delivery on the first day of such
Interest Period for the number of days comprised therein and in an amount
comparable to the Consignment Fixed Rate Amount to which such Interest Period
applies, divided by (b) a number equal to 1.00 minus the Eurocurrency Reserve
Rate.
Event of Default: Any of the events listed in ss.9 hereof.
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Xxxx Xxxxxx Value: On any day, with respect to the calculation of the
Dollar value of Precious Metal, the Second London Gold Fixing for that day times
the number of ounces of such Precious Metal. If no such price is available for a
particular day, the Fair Market Value for such day shall be the price for the
immediately preceding day for which such price is available. In the event that
the London Bullion Brokers shall discontinue or alter its usual practice of
quoting a price in United States dollars for gold, the Fair Market Value for
such day shall be the Agent's Spot Value for that day.
Federal Funds Effective Rate: For any day, the rate per annum equal to the
weighted average of the rates on overnight federal funds transactions with
members of the Federal Reserve System arranged by federal funds brokers, as
published for such day (or, if such day is not a Business Day, for the next
preceding Business Day) by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day that is a Business Day, the average of the
quotations for such day on such transactions received by the Agent from three
funds brokers of recognized standing selected by the Agent.
Fee Letter. The Fee Letter, of even date herewith, among Sovereign and the
Consignees.
Final Repayment Amount: See ss.2.6.
Financials: In respect of any period, (a) the consolidated balance sheet
the Parent and its Subsidiaries as at the end of such period, and the related
consolidated statement of income and consolidated statement of cash flow of the
Parent and its Subsidiaries for such period, each setting forth in comparative
form the figures for the previous comparable fiscal period, all in reasonable
detail and prepared in accordance with GAAP, (b) the unconsolidated balance
sheet of Finlay as at the end of such period, and the related unconsolidated
statement of income and unconsolidated statement of cash flow of Finlay for such
period, each setting forth in comparative form the figures for the previous
comparable fiscal period, all in reasonable detail and prepared in accordance
with GAAP or, as the case may be, (c) the consolidated balance sheet of Finlay
and its Subsidiaries as at the end of such period, and the related consolidated
statement of income and consolidated statement of cash flow of Finlay and its
Subsidiaries for such period, each setting forth in comparative form the figures
for the previous comparable fiscal period, all in reasonable detail and prepared
in accordance with GAAP.
Finlay. As defined in the preamble hereto.
Finlay Merchandising. Finlay Merchandising and Buying, Inc., a Delaware
corporation.
Finlay Merchandising Contribution Agreement. The Contribution Agreement
dated as of October 28, 1998 between Finlay Merchandising and the Finlay, as in
effect on such date.
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Finlay Merchandising License Agreement. The Trade Name License Agreement
dated as of October 28, 1998 between Finlay Merchandising and Finlay, as in
effect on such date.
Finlay Merchandising Services Agreement. The Services Agreement dated as of
October 28, 1998 between Finlay Merchandising and Finlay, as in effect on such
date.
First Sonab Intercompany Note: The demand promissory note dated October 28,
1994 executed by Sonab to the order of Finlay in the original principal amount
of $12,000,000, together with any replacement or substitution thereof and any
amendment or modification thereof provided that the aggregate principal amount
in respect thereof shall not exceed $12,000,000.
Fronting Institutions. Institutions that participate in Settlements
pursuant to Section 2.8 hereof and that are otherwise subject to the provisions
hereof applicable to Fronting Institutions, which, on the Closing Date, are
Sovereign and Commerz and, ten (10) Business Days after the Agent's receipt of
notice of any other Institution's intention to become a Fronting Institution,
shall include such other Institutions which give such notice.
GAAP: Generally accepted accounting principles consistent with those
adopted by the Financial Accounting Standards Board and its predecessor, (i)
generally, as in effect from time to time, and (ii) for purposes of determining
compliance by the Consignees with their financial covenants set forth herein, as
in effect on October 28, 2000.
Hedge Agreements: (i) Interest rate swap agreements, currency swap
agreements, interest rate cap agreements and interest rate collar agreements,
(ii) other agreements or arrangements designed to hedge against fluctuations in
interest rates or foreign exchange rates and (iii) precious metal options and
futures contracts and other precious metal hedging obligations.
Histoire d'Or: Collectively, Histoire d'Or, a French "societe anonyme", and
its wholly owned Subsidiary, Cogestand, a French "societe anonyme".
Indebtedness: With respect to any Person, all items (including all debt and
similar monetary obligations, whether direct or indirect) which, in accordance
with GAAP, would be included in determining total liabilities of such Person as
shown on the liability side of a balance sheet as at the date Indebtedness of
such Person is to be determined and, in any event, shall include (without
limitation and without duplication):
(i) all trade accounts payable of such Person;
(ii) any liability of such Person secured by any Lien on property
owned or acquired by such Person, whether or not such liability shall have
been assumed;
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(iii) all Contingent Obligations of such Person;
(iv) letters of credit issued for the account of such Person or an
Affiliate thereof, and all obligations of such Person relating thereto;
(v) all obligations (other than obligations to pay fees in connection
therewith) of such Person in respect of Hedge Agreements; and
(vi) all of the Obligations, whether or not due; provided, however,
that if in accordance with GAAP any such Obligations would not be included
in determining total liabilities of the Consignees as shown on the
liability side of a balance sheet of the Consignees, then for purposes of
the calculation of the financial covenants in ss.8.3 hereof, such excluded
Obligations shall not constitute "Indebtedness".
Indebtedness for Borrowed Money: With respect to any Person, all
Indebtedness for borrowed money or evidenced by notes, bonds, debentures or
similar evidences of Indebtedness of such Person (including, in the event that
any of the Obligations would, in accordance with GAAP, be included in
determining total liabilities of the Consignees as shown on the liability side
of a balance sheet of the Consignees, such Obligations), all obligations of such
Person for the deferred and unpaid purchase price of any property, service, or
business (other than trade accounts payable incurred in the ordinary course of
business and constituting Current Liabilities and other than Hedge Agreements),
and all obligations of such Person in respect of Capitalized Leases and finance
leases.
Institutions. As defined in the preamble hereto.
Intercompany Subordination Agreement: The Intercompany Subordination
Agreement dated as of October 28, 1998 among the Agent, Finlay and Finlay
Merchandising.
Intercreditor Agreement: The Intercreditor Agreement dated as of June 15,
1995 between the Agent and the Dollar Agent (and acknowledged and consented to
by Finlay), as the same is amended and/or restated on the Closing Date and as
further amended, restated, modified, renewed, replaced or supplemented from time
to time.
Interest Expense: With respect to any Person for any period, the interest
expense (whether cash or accretion) of such Person during such period determined
in accordance with GAAP, and shall include in any event, without limitation,
interest expense with respect to Indebtedness for Borrowed Money (including, in
the event that any of the Obligations would, in accordance with GAAP, be
included in determining total liabilities of the Consignees as shown on the
liability side of a balance sheet of the Consignees, Daily Consignment Fees) and
payments under Hedge Agreements that are designed to hedge against fluctuations
in interest rates and shall exclude the write off of deferred financing fees.
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Interest Period: With respect to each Consignment Fixed Rate Amount, (a)
initially, the period commencing on the Drawdown Date of the Purchase and
Consignment relating to such Consignment Fixed Rate Amount and ending on the
last day of any period of 1, 2 or 3 months, as selected by the Consignees in a
Purchase and Consignment Request; and (b) thereafter, each period commencing on
the last day of the next preceding Interest Period applicable to such
Consignment Fixed Rate Amount and ending on the last day of one of the periods
set forth above, as selected by the Consignees in a Consignment Conversion
Request; provided that all of the foregoing provisions relating to Interest
Periods are subject to the following:
(A) if any Interest Period with respect to a Consignment Fixed Rate
Amount would otherwise end on a day that is not a Eurodollar Business Day,
that Interest Period shall be extended to the next succeeding Eurodollar
Business Day unless the result of such extension would be to carry such
Interest Period into another calendar month, in which event such Interest
Period shall end on the immediately preceding Eurodollar Business Day;
(B) if the Consignees shall fail to give Notice as provided in ss.2.5,
the Consignees shall be deemed to have requested a conversion of the
affected Consignment Fixed Rate Amount to a Consignment Base Rate Amount on
the last day of the then current Interest Period with respect thereto;
(C) any Interest Period relating to any Consignment Fixed Rate Amount
that begins on the last Eurodollar Business Day of a calendar month (or on
a day for which there is no numerically corresponding day in the calendar
month at the end of such Interest Period) shall end on the last Eurodollar
Business Day of a calendar month; and
(D) any Interest Period relating to any Consignment Fixed Rate Amount
that would otherwise extend beyond the Maturity Date shall end on the
Maturity Date.
Inventory: All goods, merchandise and other personal property, now owned or
hereafter acquired by, or consigned by the Agent to, a Consignee, which are held
for sale.
JBR Acquisition: The acquisition by Finlay of the JBR Assets pursuant to
the JBR Asset Purchase Agreement.
JBR Asset Purchase Agreement: The Asset Purchase Agreement dated as of
February 10, 2000 among Xxxxxx, Xxx X. Xxxxxxx, Inc., a Florida corporation,
Xxxxxxx X. Xxxxxxx and Xxxxxx X. Xxxxxxx, in the form attached to Amendment No.
9 and Limited Consent to the Original Consignment Agreement dated as of March
23, 2000 between Sovereign and Finlay as Exhibit A.
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JBR Assets. The "Assets", as defined in the JBR Asset Purchase Agreement.
Letter of Credit: The standby letter of credit issued on or before the date
hereof by Deutsche Bank, or such other issuer as shall be approved by the Agent
in writing in advance, in favor of the Agent for the benefit of the Agent and
the Institutions, having a Maximum Drawing Amount of $2,000,000, which Letter of
Credit is being issued to secure the Obligations of the Consignees hereunder, as
the same may be replaced, amended, increased, modified, extended or renewed from
time to time upon terms and conditions approved by the Agent in writing in
advance and otherwise in accordance with the provisions hereof; provided that
such Letter of Credit shall either (a) have an expiry date not earlier than the
Maturity Date or (b) be drawable without condition by the Agent no later than
thirty (30) days prior to the stated expiry thereof (if not previously renewed).
Liens: Any encumbrance, mortgage, pledge, hypothecation, charge,
restriction or other security interest of any kind securing any obligation of
any entity or person.
Materially Adverse Effect: Any materially adverse effect on the financial
condition or business operations of the Parent and its Subsidiaries (including
the Consignees) taken together or of the Consignees taken together or any
material impairment of the ability of the Parent and any of its Subsidiaries
taken together or the Consignees taken together to perform its obligations
hereunder or under any of the other Consignment Documents.
Maturity Date: The earliest of (a) December 31, 2001, (b) the maturity date
from time to time in effect under the Dollar Facility, or (c) such other date on
which all Obligations may become due and payable pursuant to the terms hereof.
Maximum Drawing Amount: The maximum aggregate amount from time to time that
the Agent may draw under the Letter of Credit.
Notice or Notices: All requests, demands and other communications, in
writing (including telegraphic and telecopy communications), sent by registered
or certified mail, return receipt requested, overnight delivery service,
telegraph, telecopy or hand-delivery to the other party at that party's
Principal Office.
Obligations: All indebtedness, obligations and liabilities of each
Consignee and each of their respective Subsidiaries to any of the Institutions
or the Agent, existing on the date of this Agreement or arising thereafter,
direct or indirect, joint or several, absolute or contingent, matured or
unmatured, liquidated or unliquidated, secured or unsecured, arising by
contract, operation of law or otherwise, arising or incurred under this
Agreement or any other Consignment Document or in respect of any instruments at
any time evidencing any thereof.
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Original Consignment Agreement. As defined in the preamble hereto.
Parent: Finlay Enterprises, Inc., a Delaware corporation.
Participating Institutions. Collectively, each of the Institutions other
than the Agent.
Permitted Inventory Locations: The locations of the Consignees in the
United States listed on Schedule II hereto, as such Schedule II may be modified
from time to time in accordance with the provisions of ss.8.1.9 hereof.
Perfection Certificate: As defined in the Security Agreement.
Person: Any individual, corporation, partnership, trust, unincorporated
association, business, or other legal entity, and any government or any
governmental agency or political subdivision thereof.
Post Closing Letter: The letter agreement regarding post closing items
dated as of the Closing Date among the Agent and the Consignees, in form and
substance satisfactory to the Agent.
Precious Metal: Gold having a fineness of not less than .9995, without
regard to whether such gold is alloyed or unalloyed, in bullion form or is
contained in or processed into other materials which contain elements other than
gold.
Principals: Xxxxx X. Xxxxxxxxx, Xxxxxx Xxxxxx, Xxxxxx X. Xxx, employees of
the Xxxxxx X. Xxx Company, a sole proprietorship, Equity-Linked Investors, L.P.
and Equity-Linked Investors-II.
Principal Office: With respect to each party, the following address:
For the Agent:
Sovereign Bank
1 West Mezzanine
00 Xxxxxxxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxx Xxxxxx 00000
Attention: Xxxxxx X. Xxxxx
Telecopier Number: 000-000-0000
with a copy to:
Xxxxxxx Xxxx LLP
000 Xxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxx X.X. Xxxxx, Xx., Esq. or Xxxxxxxx Xxxxxx Xxxxxx,
Esq.
Telecopier Number: 000-000-0000
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For the Consignees:
Finlay Fine Jewelry Corporation
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxxxx, Chief Financial Officer
Telecopier Number: 000-000-0000
with a copy to:
Finlay Fine Jewelry Corporation
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxx, Esq.
Telecopier Number: 212-808-0349
Purchase and Consignment: See ss.2.1.
Purchase and Consignment Request: See ss.2.2.
Redeliver or Redelivery: Any delivery by a Consignee to the Agent's
Principal Office, at such Consignee's sole risk and expense, of Precious Metal
or of Eligible Specified Gold Jewelry of a type and quality and in a form
acceptable to the Agent.
Related Party: With respect to any Principal, (a) any controlling
stockholder, general or limited partner, 80% (or more) owned Subsidiaries, or
(in the case of an individual) spouse or immediate family member of such
Principal or (b) trust, corporation, partnership or other entity, the
beneficiaries, stockholders, partners, owners or Persons beneficially holding an
80% or more controlling interest of which consist of such Principal and/or such
other Persons referred to in the immediately preceding clause (a).
Required Institutions. As of any date, the Institutions (other than
Delinquent Institutions) whose aggregate Commitments constitute at least
sixty-six and two thirds percent (66-2/3%) of the outstanding amount of the
Commitments belonging to non-Delinquent Institutions, provided, however, that if
on any date there exist no more than two Institutions that are not Delinquent
Institutions, the definition of Required Institutions on such date shall be
calculated by reference to non-Delinquent Institutions.
Requirement of Law: In respect of any person or entity, any law, treaty,
rule, regulation or determination of an arbitrator, court, or other governmental
authority, in each case applicable to or binding upon such person or entity or
affecting any of its property.
Second Sonab Intercompany Note: The demand promissory note dated October
28, 1994 executed by Sonab to the order of Finlay in the original
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principal amount of $13,000,000, together with any replacement or substitution
thereof and any amendment or modification thereof provided that the aggregate
principal amount in respect thereof shall not exceed $33,000,000.
Security Agreement: The Amended and Restated Security Agreement dated as of
the date hereof, among Finlay, eFinlay and the Agent, as the same may be
amended, restated, modified or supplemented from time to time, including any
amendments to add additional Consignees as parties thereto.
Security Documents: Collectively, the Security Agreement, the Cash
Collateral Agreement and the Letter of Credit.
Senior Debentures: The Parent's Senior Debentures due 2008 in the original
principal amount of $75,000,000, as in effect on the date hereof.
Senior Notes: Finlay's Senior Notes due 2008 in the original principal
amount of $150,000,000, as in effect on the date hereof.
Settlement. The actual shipment, or the credit of Precious Metal by the
Fronting Institutions to the extent necessary to cause each Fronting
Institution's actual share of the outstanding amount of Consignment Fixed Rate
Amounts to be equal to each Fronting Institution's Commitment Percentage of the
Consignment Fixed Rate Amounts outstanding, in any case where, prior to such
event or action, the actual share is not so equal.
Settlement Amount. See ss.2.8.
Settlement Date. The Drawdown Date of any Consignment Fixed Rate Amounts or
the date on which any Consignment Base Rate Amounts are converted into
Consignment Fixed Rate Amounts.
Settling Fronting Institution. See ss.2.8(a).
Sonab: Societe Nouvelle D'Achat De Bijouterie - S.O.N.A.B., a French
"societe en nom collectif".
Sonab Intercompany Notes: Collectively, the First Sonab Intercompany Note
and the Second Sonab Intercompany Note.
Sonab Purchase Agreement: The Asset Purchase Agreement dated December 23,
1999 among Sonab and Histoire d'Or, and the ancillary documents associated
therewith, each respectively in the forms attached to Amendment No. 8 and
Limited Consent to the Original Consignment Agreement dated as of December 30,
1999 between Sovereign and Finlay as Exhibits A, X-0, X-0, X-0 and A-4.
Sonab Transfer: The sale by Sonab to Histoire d'Or of certain of its assets
pursuant to and on the terms and conditions set forth in the Sonab Purchase
Agreement. Without limiting the foregoing, neither Sonab nor Finlay shall
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retain any liabilities or obligations with respect to such assets other than
such liabilities or obligations as are specifically set forth in the Sonab
Purchase Agreement.
Sovereign. As defined in the preamble hereto.
Specified Gold Jewelry: Gold jewelry Inventory of a Consignee having no
stone content, which (a) has been sold to such Consignee by Approved Vendors,
and (b) has been marked with the hallmark of the applicable Approved Vendor and
with an item or SKU number identifying it as Specified Gold Jewelry.
Spot Value: At any time, with respect to the calculation of the Dollar
value of Precious Metal, (a) (i) in all cases in which a Consignee is purchasing
Precious Metal or in which the value of Consigned Precious Metal for purposes of
the Consignment Limit is being calculated, the Agent's "ask" spot quotation for
Precious Metal at such time times the number of ounces of such Precious Metal
and (ii) in all cases in which the Agent is purchasing Precious Metal, the
Agent's "bid" spot quotation for Precious Metal at such time times (b) the
number of ounces of such Precious Metal.
Subsidiary: In respect of the Parent or a Consignee, any business entity of
which the Parent or such Consignee, as the case may be, at any time owns or
controls directly or indirectly more than fifty percent (50%) of the outstanding
shares of stock having voting power, regardless of whether such right to vote
depends upon the occurrence of a contingency.
Supervisory Policy: See ss.8.2.3(xviii).
Tax Allocation Agreement: That certain Tax Allocation Agreement dated as of
November 1, 1992, between Finlay and the Parent, as the same is currently in
effect.
Total Commitment. The sum of the Commitments of the Institutions, as in
effect from time to time.
Vendor Agreement: Those certain letter agreements, substantially in the
form of Exhibit B hereto, addressed by each of the consignment vendors listed on
Schedule III hereto, respectively (as such Schedule III may be amended from time
to time pursuant to ss.8.2.7 hereof) to the Agent.
2. CONSIGNMENT FACILITY.
2.1. Agreement to Make Purchases and Consignments of Precious Metal.
(a) Subject to the terms and conditions set forth in this Consignment
Agreement, the Agent agrees, at the option of the Consignees, that it will,
on behalf of the Institutions, purchase from and consign back to the
Consignees (each such purchase and consignment, a
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"Purchase and Consignment"), from time to time between the date hereof and
the Maturity Date, upon Notice by a Consignee to the Agent given in
accordance with ss.2.2, such amounts of the Precious Metal content of
Eligible Specified Gold Jewelry as such Consignee shall request under the
terms and conditions of this Agreement. Notwithstanding the foregoing, in
no event will the Agent be obligated to make a Purchase and Consignment if
either the Fair Market Value of all Consigned Precious Metal or the number
of xxxx ounces of all Consigned Precious Metal (after giving effect to all
amounts requested) exceeds the Consignment Limit. Notwithstanding the
foregoing, (i) for at least one period of seven consecutive days during
each month from January 1 through October 31 of each year, and (ii) for at
least one day during each week from November 1 through December 31 of each
year, the Consignees shall assure that the outstanding amount of Consigned
Precious Metal does not exceed the sum of (i) the number of xxxx ounces of
the Precious Metal content of Eligible Specified Gold Jewelry of the
Consignees (including Consigned Precious Metal), plus (ii) the amount of
Eligible Cash Deposits divided by the Second London Gold Fixing for any day
of reference.
(b) The purchase price to be paid by the Agent on behalf of the
Institutions for the Precious Metal content of Eligible Specified Gold
Jewelry in respect of each Purchase and Consignment shall be, at the
Consignees' option, (i) the Fair Market Value of such Precious Metal
content two (2) Business Days prior to the Drawdown Date of such Purchase
and Consignment, (ii) the Spot Value of such Precious Metal content two (2)
Business Days prior to the Drawdown Date of such Purchase and Consignment,
or (iii) the amount of xxxx ounces of such Precious Metal content. Each
request for a Purchase and Consignment hereunder shall constitute a
representation and warranty by each Consignee that the conditions set forth
in ss.7 have been satisfied on the date of such request.
(c) This Agreement is intended to be a true consignment agreement.
Upon each Purchase and Consignment, the Agent shall take title to the
Precious Metal content of such Eligible Specified Gold Jewelry which is the
subject of such Purchase and Consignment. Thereafter, title to such
Precious Metal shall remain in the Agent and shall not vest in the
Consignee of such Precious Metal until the Agent has received payment for
such Consigned Precious Metal in accordance with the requirements of
ss.ss.2.4 or 2.6, as applicable. If, notwithstanding the foregoing, it is
determined for any reason that the consignment created hereby is one
intended as security or that the consignment is a sale or return or other
sale, the Consigned Precious Metal shall constitute Collateral under the
terms of the Security Agreement, and the terms of the Security Agreement
shall govern the Agent's and the Institutions' security interest therein.
Following each Purchase and Consignment, the Consignees shall bear the
entire risk of loss, theft, damage or destruction of the Consigned Precious
Metal from any cause whatsoever, whether or not insured, and
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the Consignees agree to hold the Consigned Precious Metal in trust for the
Agent and the Institutions (until the Agent has received payment for such
Consigned Precious Metal in accordance with the requirements of ss.ss.2.4
or 2.6, as applicable) and to indemnify and hold harmless the Agent and the
Institutions against any and all liabilities, damages, losses, costs,
expenses, suits, claims, demands or judgment of any nature (including,
without limitation, attorneys' fees and expenses) arising from or connected
with any loss, theft, damage or destruction of the Consigned Precious
Metal.
(d) Each Consignee irrevocably authorizes the Agent, at or about the
time of the Drawdown Date of any Purchase and Consignment or at the time of
any payment or Redelivery with respect to Consigned Precious Metal, to make
an appropriate notation in the records of the Agent customarily maintained
by the Agent reflecting the making of such Purchase and Consignment or the
receipt of such payment or Redelivery. The outstanding amount of Consigned
Precious Metal set forth in the records of the Agent customarily maintained
by the Agent shall be prima facie evidence of the amount thereof owing and
unpaid or not Redelivered, but the failure to record or any error in so
recording any such amount in the records of the Agent shall not limit or
otherwise affect the obligations of any Consignee hereunder to make
payments or Redeliveries in accordance with the terms hereof.
(e) The Agent shall provide the Consignees with a monthly statement of
the quantity of Consigned Precious Metal held by the Consignees (a
"Consigned Precious Metal Statement"). If the Consignees do not agree with
the information reported in the Consigned Precious Metal Statement, the
Consignees shall give Notice of such disagreement to the Agent within
fifteen (15) days following the date of receipt of such Consigned Precious
Metal Statement. If the Consignees fail to give Notice to the Agent within
such fifteen (15) day period, each Consignee shall be deemed to have
affirmed the accuracy of the information reported in the Consigned Precious
Metal Statement and to have waived any claim that any Consignee may have by
reason of a dispute as to such Consigned Precious Metal Statement. At least
once each year, the Consignees shall provide the Agent with a written
confirmation, signed by duly authorized officers of the Consignees, of the
quantity of Consigned Precious Metal as of the date of such confirmation.
Upon and after the occurrence of an Event of Default, each Consignee shall
provide to the Agent, on a daily basis, written confirmation, in form
acceptable to the Agent, of the quantity and location of all Consigned
Precious Metal and Specified Gold Jewelry.
2.2. Requests For Purchases and Consignments. The Consignees shall give to
the Agent Notice of each Purchase and Consignment requested hereunder (a
"Purchase and Consignment Request") no later than 2:00 p.m. two (2) Business
Days prior to the proposed Drawdown Date of any Consignment
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Base Rate Amount or Consignment Fixed Rate Amount. Each such Notice shall
specify (i) the number of xxxx ounces of Precious Metal content of Eligible
Specified Gold Jewelry to be purchased and consigned, (ii) the proposed Drawdown
Date of such Purchase and Consignment, (iii) whether such Purchase and
Consignment is to be a Consignment Fixed Rate Amount or a Consignment Base Rate
Amount, (iv) if such Purchase and Consignment is to be a Consignment Fixed Rate
Amount, the Interest Period applicable to such Purchase and Consignment, (v)
whether the purchase price for such Purchase and Consignment pursuant to
ss.2.1(b) is to be determined by reference to the Fair Market Value, the Spot
Value or the number of xxxx ounces, and (vi) whether the purchase price for such
Purchase and Consignment pursuant to ss.2.1(b) (whether in Dollars or in ounces)
is to be delivered to the Consignees or to a third party designated by the
Consignees. Promptly after receipt of any such Purchase and Consignment Request,
the Agent shall notify each of the Institutions thereof. Each Purchase and
Consignment Request shall be irrevocable and binding on the Consignees and shall
obligate the Consignees to sell and take on consignment such Precious Metal
content of Eligible Specified Gold Jewelry on the proposed Drawdown Date. Each
Purchase and Consignment Request for Consignment Base Rate Amounts shall, unless
otherwise agreed by the Agent, be in a minimum aggregate amount of 1,000 xxxx
ounces or an integral multiple of one hundred (100) xxxx ounces in excess
thereof, and each Purchase and Consignment Request for Consignment Fixed Rate
Amounts shall, unless otherwise agreed by the Agent, be in a minimum aggregate
amount of three thousand (3,000) xxxx ounces or an integral multiple of one
thousand (1,000) xxxx ounces in excess thereof.
2.3. Daily Consignment Fee. With respect to Consigned Precious Metal, the
Consignees jointly and severally agree to pay to the Agent, for the accounts of
the Agent and the Institutions to be allocated amount them as set forth below, a
consignment fee (the "Daily Consignment Fee") equal to:
(a) for each day with respect to Consignment Base Rate Amounts, the
product of the Consignment Base Rate times a fraction, the numerator of
which is one (1) and the denominator of which is three hundred and sixty
(360) times the Fair Market Value (as of such date) of Consigned Precious
Metal outstanding on such day which are Consignment Base Rate Amounts; and
(b) for each day during each Interest Period with respect to
Consignment Fixed Rate Amounts, the product of the Consignment Fixed Rate
applicable to such Interest Period times a fraction, the numerator of which
is one (1) and the denominator of which is three hundred and sixty (360)
times the Fair Market Value (as of such date) of Consigned Precious Metal
outstanding for such Interest Period which are Consignment Fixed Rate
Amounts.
The Daily Consignment Fee for each day shall be allocated as follows: (i) for
the account of the Institutions in accordance with their respective Commitment
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Percentages, that portion of the Daily Consignment Fee for such day equal to the
product of (A) one and three quarters percent (1.75%) times (B) a fraction, the
numerator of which is one (1) and the denominator of which is three hundred and
sixty (360) times the Fair Market Value (as of such date) of Consigned Precious
Metal outstanding on such day and (ii) for the account of the Fronting
Institutions (other than the Agent) in accordance with their respective
Commitment Percentages, that portion of the Daily Consignment Fee for such day
equal to the product of (A) the Consignment Fixed Rate applicable to such
Interest Period minus one and three quarters percent (1.75%) times (B) a
fraction, the numerator of which is one (1) and the denominator of which is
three hundred and sixty (360) times the Fair Market Value (as of such date) of
Consigned Precious Metal outstanding on such day which are Consignment Fixed
Rate Amounts, and (iii) for the account of the Agent the remainder of the Daily
Consignment Fee for such day. The Daily Consignment Fee with respect to
Consignment Base Rate Amounts shall be payable monthly in arrears on the first
Business Day of each calendar month, commencing on the first such date following
the date hereof, with a final payment on the Maturity Date. The Daily
Consignment Fee with respect to Consignment Fixed Rate Amounts shall be payable
on the last day of each Interest Period applicable thereto, with a final payment
on the Maturity Date. Notwithstanding the foregoing, upon the occurrence and
during the continuance of an Event of Default, the Daily Consignment Fee shall
be an amount equal to the Base Rate plus two percent (2%).
2.4. Payment on Account of Repurchase or Redelivery of Consigned Precious
Metal.
(a) Upon the occurrence of an Event of Default (other than an Event of
Default described in ss.ss.9.1(j) and 9.1(k)) and upon Notice from the
Agent to the Consignees of the purchase referred to below, unless the
Consignees shall, on the date of dispatch of such Notice, immediately
Redeliver to the Agent an amount of Precious Metal, in bullion form (which
Precious Metal shall be subject to no Liens), equal to all outstanding
Consigned Precious Metal, the Consignees shall be deemed to have purchased
from the Agent, on the date of dispatch of such Notice, all outstanding
Consigned Precious Metal at the then applicable Fair Market Value thereof,
and the Consignees shall immediately pay (such obligation to pay to be
borne jointly and severally by the Consignees) to the Agent such amount
equal to the Fair Market Value of all outstanding Consigned Precious Metal.
(b) If, on any date, either the number of xxxx ounces or the Fair
Market Value of all Consigned Precious Metal shall exceed the Consignment
Limit, the Agent shall calculate the amount of Consigned Precious Metal
(measured in xxxx ounces) of such excess, and the Consignees jointly and
severally agree to either (i) pay to the Agent an amount in Dollars equal
to the Fair Market Value (on the Business Day following the date of
determination) of such excess plus twenty-five cents
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($0.25) per xxxx ounce of such excess, and the Agent shall be deemed to
have sold to the Consignees an amount of Consigned Precious Metal equal to
such excess, (ii) Redeliver to the Agent Consigned Precious Metal in
quantities (measured in xxxx ounces) equal to such excess, or (iii)
Redeliver to the Agent, Precious Metal, in bullion form, in an amount
(measured in xxxx ounces) equal to the amount of such excess; provided,
that any such Precious Metal Redelivered to the Agent in bullion form shall
not be subject to any Lien.
(c) In connection with any sale by any Consignee of Consigned Precious
Metal (other than as part of a Purchase and Consignment pursuant to the
terms hereof), so long as no Default or Event of Default has occurred and
is continuing, the Consignees jointly and severally agree that they shall
immediately either (i) pay to the Agent an amount in Dollars equal to the
Fair Market Value (on the Business Day following the date of such sale) of
such sold Consigned Precious Metal plus twenty-five cents ($0.25) per xxxx
ounce of such sold Consigned Precious Metal, (ii) Redeliver to the Agent,
Precious Metal, in bullion form, in an amount (measured in xxxx ounces)
equal to the amount of such sold Consigned Precious Metal; provided, that
any such Precious Metal Redelivered to the Agent in bullion form shall not
be subject to any Lien, or (iii) Redeliver to the Agent additional Eligible
Specified Gold Jewelry (which Redelivery, if the Consignees shall not have
purchased such sold Consigned Precious Metal pursuant to clause (i) hereof
or Redelivered such Precious Metal, in bullion form, pursuant to clause
(ii) hereof, shall be automatic) which shall constitute Consigned Precious
Metal in quantities equal to any Consigned Precious Metal sold. At all
times following the occurrence and during the continuance of an Event of
Default, upon any sale by any Consignee of Precious Metal which prior to
such Consignee's purchase thereof pursuant to ss.2.4(a) constituted
Consigned Precious Metal, the Consignees shall (except as otherwise
provided in the Intercreditor Agreement) hold the proceeds of such sale in
trust for the Agent and shall immediately deliver to the Agent the proceeds
of such sale to be applied to the Obligations in accordance with ss.9.4
hereof. Prior to the occurrence of a Default or an Event of Default and
absent other instruction by the Consignees, the Agent shall apply Dollar
amounts received to reduction of Consigned Precious Metal, for application
first to Consignment Base Rate Amounts and then to Consignment Fixed Rate
Amounts and, subject to a Gold Settlement, for allocation among the
Fronting Institutions in accordance with their respective Commitment
Percentages of the Consignment Fixed Rate Amounts reduced.
(d) At any time before the Maturity Date, any Consignee may, at its
election, purchase any or all Consigned Precious Metal from the Agent in
whole or in part, without penalty, provided that any full or partial
repurchase of the outstanding amount of Consignment Fixed Rate Amounts of
Consigned Precious Metal pursuant to this ss.2.4(d) may be made only on the
last day of the Interest Period relating thereto. The
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Consignees shall give the Agent, no later than 2:00 p.m., Boston time, two
(2) Business Days' prior Notice of any proposed purchase of Consigned
Precious Metal specifying the amount of Consigned Precious Metal to be so
purchased, the proposed date of purchase and the identity of the Consignee
making such purchase, which Notice shall be irrevocable and binding on the
Consignees and shall obligate the Consignees to purchase such Consigned
Precious Metal on the proposed date of purchase. Each such purchase of
Consignment Base Rate Amounts shall, unless otherwise agreed by the Agent,
be in a minimum amount of one thousand (1,000) xxxx ounces or an integral
multiple of one hundred (100) xxxx ounces in excess thereof, with accrued
Daily Consignment Fees on the Consignment Base Rate Amounts so purchased
being due on the earliest to occur of a Default or Event of Default and the
first day of the calendar month following the calendar month in which such
purchase is made, and each such purchase of Consignment Fixed Rate Amounts
shall, unless otherwise agreed by the Agent, be in a minimum amount three
thousand (3,000) xxxx ounces or an integral multiple of one thousand
(1,000) xxxx ounces in excess thereof and shall be accompanied by a payment
of all accrued but unpaid Daily Consignment Fees on the amount so
purchased. Each such purchase shall be at a price equal to, at the
Consignees' option, (i) the sum of (A) the Fair Market Value of Precious
Metal two (2) Business Days prior to the date of the Consignee's purchase
of Consigned Precious Metal, plus (B) twenty-five cents ($0.25) per xxxx
ounce of Precious Metal being purchased, or (ii) the Spot Value on the date
of the Agent's receipt of the Notice described above, and, prior to the
occurrence of a Default or an Event of Default, shall be applied to effect
a reduction of Consigned Precious Metal, for application first to
Consignment Base Rate Amounts and then to Consignment Fixed Rate Amounts
for allocation among the Fronting Institutions other than the Agent in
accordance with their respective Commitment Percentages of the Consignment
Fixed Rate Amounts reduced; provided, however, that, in lieu of paying in
Dollars the Fair Market Value, or Spot Value, as the case may be, of such
Consigned Precious Metal, the Consignees may, at their option, Redeliver to
the Agent, Precious Metal, in bullion form, in an amount (measured in xxxx
ounces) equal to the amount of Consigned Precious Metal being purchased;
provided, that any such Precious Metal Redelivered to the Agent in bullion
form shall not be subject to any Lien.
(e) All purchases of Consignment Fixed Rate Amounts prior to the end
of an Interest Period shall jointly and severally obligate the Consignees
to pay any breakage costs associated with such Consignment Fixed Rate
Amounts in accordance with ss.4.3 hereof.
(f) The Consignees shall have the right at any time and from time to
time upon five (5) Business Days' prior written notice to the Agent to
reduce the Total Commitment by $5,000,000 or an integral multiple thereof;
provided that the Total Commitment shall not be reduced below $10,000,000
at any time; and provided further that any repurchase of any
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outstanding amount of Consignment Fixed Rate Amounts of Consigned Precious
Metal resulting from any such reduction of the Total Commitment pursuant to
this ss.2.4(f) may be made only on the last day of the Interest Period
relating thereto and provided further that any such reduction in the Total
Commitment shall result in a pro rata reduction in the Commitments of each
Institution. Promptly after receiving any notice of the Consignees
delivered pursuant to this ss.2.4(f), the Agent will notify the
Institutions of the substance thereof. Upon the effective date of any such
reduction of the Total Commitment, the Consignees shall, at their option,
(a) purchase from the Agent all Consigned Precious Metal outstanding in
excess of such reduced Total Commitment by paying to the Agent, for the
respective accounts of the Fronting Institutions to the extent the
Consignment Fixed Rate Amounts are reduced, an amount equal to the Fair
Market Value as of such date of the amount of such excess Consigned
Precious Metal plus twenty-five cents ($0.25) per xxxx ounce of such excess
Consigned Precious Metal, together with any and all accrued and unpaid
Daily Consignment Fees and other amounts accrued thereon, or (b) Redeliver
to the Agent, for its own account, and for the respective accounts of the
Fronting Institutions to the extent that Consignment Fixed Rate Amounts are
reduced, Precious Metal, in bullion form, in an amount (measured in xxxx
ounces) equal to all Consigned Precious Metal outstanding in excess of such
reduced Total Commitment, together with any and all accrued and unpaid
Daily Consignment Fees and other amounts accrued thereon. No reduction of
the Total Commitment pursuant to this ss.2.4(f) may be reinstated.
2.5. Conversion Options.
(a) Prior to the occurrence of a Default or an Event of Default, the
Consignees may elect from time to time to have the Daily Consignment Fee
applicable to portions of Consigned Precious Metal outstanding which are
not subject to a Settlement calculated based upon either the Consignment
Base Rate or Consignment Fixed Rate, provided that (i) with respect to any
such conversion of Consigned Precious Metal, the Consignees shall give the
Agent, no later than 2:00 p.m. (Boston time), at least two (2) Eurodollar
Business Days' prior Notice of such election; and (ii) with respect to any
such conversion of a Consignment Fixed Rate Amount into a Consignment Base
Rate Amount or another Consignment Fixed Rate Amount, such conversion shall
only be made on the last day of the Interest Period with respect thereto.
All or any part of outstanding Consigned Precious Metal may be converted
into a Consignment Fixed Rate Amount or Consignment Base Rate Amount as
provided herein, provided that any partial conversion of Consignment Base
Rate Amounts shall, unless otherwise agreed by the Agent, be for Precious
Metal in a minimum amount at least equal to one thousand (1,000) xxxx
ounces or an integral multiple of one hundred (100) xxxx ounces in excess
thereof and any partial conversion of Consignment Fixed Rate Amounts shall,
unless otherwise agreed by the Agent, be for Precious Metal in an amount
equal
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to three thousand (3,000) xxxx ounces or an integral multiple of one
thousand (1,000) xxxx ounces in excess thereof. Each conversion request
relating to the conversion of Consigned Precious Metal to a Consignment
Fixed Rate Amount shall be irrevocable by the Consignees.
(b) Prior to the occurrence of a Default or an Event of Default,
Consigned Precious Metal may be continued as Consignment Fixed Rate Amounts
upon the expiration of an Interest Period with respect thereto by
compliance by the Consignees with the notice provisions contained in
ss.2.5(a).
(c) Any conversion to or from Consignment Fixed Rate Amounts shall be
in such amounts and be made pursuant to such elections so that, after
giving effect thereto, the aggregate principal amount of all Consignment
Fixed Rate Amounts having the same Interest Period shall not be less than
three thousand (3,000) xxxx ounces or a whole multiple of one thousand
(1,000) xxxx ounces in excess thereof.
2.6. Repurchase at Maturity. Subject to the option set forth in clause (b)
of this ss.2.6, there shall become absolutely due and payable on the Maturity
Date, an amount in Dollars (the "Final Repayment Amount") equal to the Fair
Market Value as of the Maturity Date of the outstanding amount of Consigned
Precious Metal plus twenty-five cents ($0.25) per xxxx ounce of such outstanding
Consigned Precious Metal, together with any and all accrued and unpaid Daily
Consignment Fees and other amounts accrued thereon, and the Consignees jointly
and severally agree, on the Maturity Date and at their option, (a) to purchase
from the Agent all Consigned Precious Metal and to pay to the Agent all amounts
constituting the Final Repayment Amount or (b) to Redeliver to the Agent,
Precious Metal, in bullion form, in an amount (measured in xxxx ounces) equal to
all Consigned Precious Metal outstanding, together with payment of all other
amounts owed under this Agreement.
2.7. Overdue Amounts. Any amount not paid when due under this Agreement
shall bear interest at two percent (2%) in excess of the Base Rate until paid in
full (whether or not this Agreement has been terminated), whether before or
after judgment.
2.8. Settlements for Consignments.
(a) On each Settlement Date, the Agent shall, not later than 11:00
a.m. (Boston time), give telephonic or facsimile notice (i) to the Fronting
Institutions and the Consignees of the outstanding amount of Consigned
Precious Metal which is, or is intended to be, subject to a Consignment
Fixed Rate and (ii) to the Fronting Institutions of the amount (a
"Settlement Amount") that each Fronting Institution (each, a "Settling
Fronting Institution") shall pay to effect a Settlement. A statement of the
Agent submitted to the Fronting Institutions and the Consignees or to the
Fronting Institutions with respect to any amounts owing under this ss.2.8
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shall be prima facie evidence of the amount due and owing. Each Settling
Fronting Institution shall, not later than 3:00 p.m. (Boston time) on such
Settlement Date, effect a transfer of Precious Metal to the Agent in the
amount of such Fronting Institution's Settlement Amount.
(b) The Agent may, unless notified to the contrary by any Fronting
Institution prior to a Settlement Date, assume that such Institution has
made available to the Agent on such Settlement Date the amount of such
Fronting Institution's Settlement Amount. If any Fronting Institution makes
available to the Agent such amount on a date after such Settlement Date,
such Fronting Institution shall pay to the Agent on demand an amount
determined by the Agent which will compensate the Agent for any loss, cost
or expense (including loss of anticipated profits) that the Agent sustains
as a result of such Fronting Institution's failure to deliver such amounts.
(c) The failure or refusal of any Fronting Institution to make
available to the Agent at the aforesaid time and place on any Settlement
Date the amount of its Settlement Amount (i) shall not relieve any other
Fronting Institution from its several obligations hereunder to make
available to the Agent the amount of such other Fronting Institution's
Settlement Amount and (ii) shall not impose upon such other Fronting
Institution any liability with respect to such failure or refusal or
otherwise increase the Commitment of such other Fronting Institution. If
such Fronting Institution's Settlement Amount is not made available to the
Agent by such Fronting Institution within three (3) Business Days following
such Settlement Date, the Agent shall be entitled to recover such amount
from the Consignees on demand (the Consignees to be jointly and severally
liable therefor), with consignment fees thereon at the rate per annum
applicable to the Consignment Base Rate Amounts as of such Settlement Date.
2.9. Obligations of the Participating Institutions in Respect of
Consignments. In the event that the Consignees shall fail to repurchase or
Redeliver to the Agent any Consigned Precious Metal in accordance with the terms
of this ss.2, each Participating Institution severally agrees that it shall be
absolutely liable, without regard to the occurrence of any Default or Event of
Default or any other condition precedent whatsoever, upon demand by the Agent
either (a) pay to the Agent an amount in Dollars equal to the Fair Market Value
(on the Business Day following the date of determination) of such excess plus
twenty-five cents ($0.25) per xxxx ounce of such excess of (i) in the case of
Participating Institutions which are not Fronting Institutions, such
Participating Institution's Commitment Percentage of such Consigned Precious
Metal and (ii) in the case of Fronting Institutions, the difference between such
Fronting Institution's Commitment Percentage of such Consigned Precious Metal
and such Fronting Institution's Commitment Percentage of Consignment Fixed Rate
Amounts with respect to which the Fronting Institution has made a Settlement or
(b) deliver to the Agent an amount of Precious Metal equal to (i) in
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the case of Participating Institutions which are not Fronting Institutions, such
Participating Institution's Commitment Percentage of such Consigned Precious
Metal and (ii) in the case of Fronting Institutions, the difference between such
Fronting Institution's Commitment Percentage of such Consigned Precious Metal
and such Fronting Institution's Commitment Percentage of Consignment Fixed Rate
Amounts with respect to which the Fronting Institution has made a Settlement
(such agreement of a Participating Institution or Fronting Institution being
called herein the "Consignment Participation" of such Institution). If any
Institution shall fail to make the payment or delivery required hereby, it shall
also be liable to the Agent for any hedging or other cost incurred by the Agent
in its discretion. Each such payment or delivery made by a Participating
Institution shall be treated as the purchase by such Institution of a
participating interest in such Purchase and Consignment in an amount equal to
its Commitment Percentage thereof. Each Participating Institution shall share in
accordance with its participating interest in any Daily Consignment Fees which
accrue with respect to such Purchase and Consignment pursuant to ss.2.3 as if
such Participating Institution was the Agent with respect to its participating
interest.
2.10 Change in Fronting Institutions' Commitment Percentages. In the event
of any change in the Fronting Institutions' respective Commitment Percentages as
a result of any assignment by any Institution of any interests, rights and
obligations under this Agreement in accordance with ss.14 or any election of any
assignee Institution as to whether to become a Fronting Institution, any
Fronting Institution whose Commitment Percentage has increased as a result of
such change shall purchase from the Fronting Institution whose Commitment
Percentage has decreased as a result of such change that percentage equal to the
resulting increase in such Fronting Institution's Commitment Percentage of all
Consignment Fixed Rate Amounts multiplied by the Fair Market Value thereof as of
the effective date of such change.
3. INSURANCE; TAXES.
3.1. Insurance.
(a) Each Consignee, at its sole cost and expense, shall, and, where
applicable, shall cause each of its Subsidiaries to, procure and maintain
(i) property insurance to cover all locations where Specified Gold Jewelry
or other properties or assets of such Consignee or such Subsidiary will be
located on an all risk form, including flood and earthquake and such other
insurance (including but not limited to, fidelity insurance for all
employees, including officers) with respect to the Specified Gold Jewelry
and all other properties and assets of such Consignee or such Subsidiary as
may from time to time be reasonably required by the Agent and as shall be
in accordance with such insurance customarily maintained by owners or users
of such properties and assets in similar businesses in similar geographic
areas, and (ii) commercial general liability insurance,
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workers' compensation insurance, business interruption insurance and such
other insurance with respect to its business properties or assets as may
from time to time be reasonably required by the Agent and as shall be in
accordance with such insurance customarily maintained by businesses engaged
in similar activities in similar geographic areas. All insurance provided
for in this ss.3.1 shall be effected under valid and enforceable policies,
in such forms, in such amounts and with such deductibles as may from time
to time be reasonably required by the Agent, issued by financially sound
and responsible insurance companies which are qualified in the jurisdiction
in which the Specified Gold Jewelry and such other property and assets are
located, or are approved under the applicable states' surplus lines
insurance laws. On or prior to the first Drawdown Date hereunder and
promptly following any renewal, extension or replacement of any insurance
policy maintained pursuant hereto, the Consignees shall deliver to the
Agent such certificates of insurance or endorsements to the Consignees'
(and such Subsidiaries') insurance policies as shall be reasonably
acceptable to the Agent, demonstrating the Consignees' compliance with the
provisions of this ss.3.1. Upon request of the Agent, as soon as
practicable following the date hereof and following any renewal, extension
or replacement of any insurance policy maintained pursuant hereto, the
Consignees shall deliver to the Agent copies of all insurance policies
(together with Accord Form 27 (2/84) or other similar forms satisfactory to
the Agent) evidencing the insurance coverage required by the Agent. All
policies of insurance shall provide for thirty (30) days notification in
advance of any cancellation, non-renewal or material change in policy
conditions, including cancellation for non-payment of premium. All policies
of insurance provided for or contemplated by this Agreement with respect to
Specified Gold Jewelry shall name the Agent, for the benefit of the
Institutions and the Agent, as an additional insured (with respect to
liability insurance policies) or loss payee (with respect to property
insurance policies), as its interest may appear.
(b) All property insurance policies provided for or contemplated by
this Agreement shall contain clauses or endorsements to the effect that no
act or negligence of any Consignee or any of its Subsidiaries, or anyone
acting for any Consignee or any such Subsidiary, which might otherwise
result in a forfeiture of such insurance or any part thereof shall in any
way affect the validity or enforceability of such insurance insofar as the
Agent is concerned.
(c) Losses under each policy of insurance provided for or contemplated
by this ss.3.1 shall be adjusted with the insurers and/or underwriters and
paid directly to the Agent and the Consignees or, as the case may be, any
of its Subsidiaries, as their interests may appear. As between the Agent
and the Consignees, the Consignees jointly and severally agree to pay all
costs and expenses of collecting or recovering
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any insurance proceeds under such policies, including, but not limited to,
any and all fees of attorneys, appraisers and adjusters.
3.2. Taxes, Etc.; Certain Rights of the Agent.
(a) Each Consignee will, and will cause each of its Subsidiaries to,
make or file all federal and state income and all other tax returns,
reports and declarations at the times required by any jurisdiction to which
any of them is subject, except where the failure to do so does not have and
could not reasonably be expected to have a Materially Adverse Effect, and
set aside, on its books, provisions reasonably adequate for the payment of
all taxes for periods subsequent to the periods to which such returns,
reports or declarations apply. Each Consignee will, and will cause its
Subsidiaries to, pay all material taxes, assessments and other governmental
charges (including without limitation all sales taxes and withholding
taxes) shown or determined to be due on such returns, reports and
declarations, and including without limitation, all such taxes, assessments
and governmental charges upon the Consigned Precious Metal or Specified
Gold Jewelry or other properties or assets of such Consignee or such
Subsidiary, prior to the date on which penalties attach thereto, unless (A)
such Consignee or such Subsidiary shall be contesting, in good faith by
appropriate proceedings, the validity or amount of any such taxes,
assessments or governmental charges, (B) such Consignee or such Subsidiary
has established adequate reserves in accordance with GAAP with respect
thereto, and (C) no Lien (other than Liens which, in the aggregate, are
permitted under ss.8.2.2(ix) hereof) arising from the non-payment thereof
when due has attached to any property or assets of such Consignee or any of
its Subsidiaries in a manner which could have priority over the Lien of the
Agent thereon and there is no imminent risk of the sale of or foreclosure
on any property or assets of such Consignee or any of its Subsidiaries by
the holder of any Liens arising from the non-payment thereof when due. No
Consignee will use the Consigned Precious Metal or Specified Gold Jewelry
in violation of any statute or ordinance. The Agent may examine and inspect
the Consigned Precious Metal or Specified Gold Jewelry at any time during
normal business hours (provided that no unreasonable interference with the
Consignees' business shall result therefrom), wherever located, and each
Consignee agrees to keep all records relating to the Consigned Precious
Metal at its Principal Office.
(b) At its option, upon the occurrence and during the continuance of
an Event of Default, the Agent may discharge Liens, security interests or
other encumbrances at any time levied or placed on the Consigned Precious
Metal or Specified Gold Jewelry (which are not being contested in good
faith), may pay for insurance on the Consigned Precious Metal or Specified
Gold Jewelry and may pay for the maintenance and preservation of the
Consigned Precious Metal or Specified Gold Jewelry. The Consignees jointly
and severally agree to reimburse the Agent on
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demand for any payment made, or any expense incurred, by the Agent in
connection with the foregoing, together with interest thereon at the Base
Rate plus two percent (2%), computed from the date of such payment or
expense until paid.
4. CHANGES IN CIRCUMSTANCES.
4.1. Capital Adequacy. If after the date hereof any Institution or the
Agent determines that (i) the adoption of or any change in any banking law,
rule, regulation or guideline or the administration thereof (whether or not
having the force of law), or (ii) compliance by any Institution or the Agent or
such Institution's or the Agent's parent bank holding company with any
guideline, request or directive (whether or not having the force of law), has
the effect of reducing the return on such Institution's or the Agent's or such
holding company's (as the case may be) capital as a consequence of such
Institution's Commitment or the Purchases and Consignments to a level below that
which such Institution, the Agent or such holding company (as the case may be)
could have achieved but for such adoption, change or compliance by any amount
deemed by the such Institution or the Agent (as the case may be) to be material,
such Institution or the Agent (as the case may be) may notify the Consignees
thereof. The Consignees jointly and severally agree to pay such Institution or
the Agent (as the case may be) the amount of the Consignees' allocable share of
the amount of such reduction in the return on capital as and when such reduction
is determined, upon presentation by the Agent or such Institution of a statement
in the amount and setting forth the Agent's or such Institution's calculation
thereof, which statement shall be deemed true and correct absent manifest error.
The Agent or such Institution (as the case may be) agree to allocate shares of
such reduction among the Consignees and the Agent's or such Institution's other
customers similarly situated on a fair and non-discriminatory basis.
4.2. Inability to Determine Eurodollar Rate or Consignment Fixed Rate. In
the event, prior to the commencement of any Interest Period relating to any
Consignment Fixed Rate Amount, the Agent shall determine in good faith that
adequate and reasonable methods do not exist for ascertaining the Eurodollar
Rate or the Contango Rate that would otherwise determine the rate of interest to
be applicable to any Consignment Fixed Rate Amount during any Interest Period,
the Agent shall forthwith give Notice of such determination and the basis
therefor (which shall be conclusive and binding on the Consignees) to the
Consignees. In such event (a) any request for Consignment Fixed Rate Amounts
shall be automatically withdrawn, and shall be deemed a request for Consignment
Base Rate Amounts, (b) each Consignment Fixed Rate Amount will automatically, on
the last day of the then current Interest Period relating thereto, become a
Consignment Base Rate Amount, and (c) the obligations of the Agent and the
Institutions to make Consignment Fixed Rate Amounts shall be suspended until the
Agent determines that the circumstances giving rise to such suspension no longer
exist, whereupon the Agent shall so notify the Consignees.
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4.3. Illegality of Consignment Fixed Rate Amounts. Notwithstanding any
other provisions herein, if any present or future law, regulation, treaty or
directive or in the interpretation or application thereof shall make it unlawful
for any Institution to make or maintain Consignment Fixed Rate Amounts, such
Institution shall forthwith give Notice of such circumstances to the Consignees
and thereupon (a) the commitment of such Institution to make Consignment Fixed
Rate Amounts or convert Consigned Precious Metal into Consignment Fixed Rate
Amounts shall forthwith be suspended, and (b) such Institution's Consigned
Precious Metal then outstanding as Consignment Fixed Rate Amounts, if any, shall
be converted automatically to Consignment Base Rate Amounts on the last day of
each Interest Period applicable to such Consignment Fixed Rate Amounts or within
such earlier period as may be required by law. The Consignees hereby jointly and
severally agree promptly to pay to such Institution, upon demand by such
Institution, any additional amounts necessary to compensate such Institution for
any reasonable costs incurred by such Institution in making any conversion in
accordance with this ss.4.3, including any interest or fees payable by such
Institution to lenders of funds obtained by it in order to make or maintain its
Consignment Fixed Rate Amounts hereunder.
4.4. Indemnity. The Consignees jointly and severally agree to indemnify the
Agent and each Institution and to hold the Agent and each Institution harmless
from and against any loss, cost or expense (including loss of anticipated
profits) that such Institution may sustain or incur as a consequence of (i)
default by any Consignee in making a Purchase and Consignment, including a
Purchase and Consignment as a Consignment Fixed Rate Amount, or a conversion
after the Consignees have given (or are deemed to have given) a Purchase and
Consignment Request or a conversion request relating thereto in accordance with
ss.2.2 or ss.2.5 or (ii) the making of any payment of a Consignment Fixed Rate
Amount or the making of any conversion of any such Consignment Fixed Rate Amount
to a Consignment Base Rate Amount on a day that is not the last day of the
applicable Interest Period with respect thereto, including interest or fees
payable by such Institution to lenders of funds obtained by it in order to
maintain any such Purchases and Consignments.
4.5. Termination of Commitment. If, as a direct result of any of the
changes in circumstances described in the foregoing provisions of this ss.4, a
material increase shall occur in the amounts payable by the Consignees to the
Agent or the Institutions under this Agreement, then the Consignees shall have
the right within thirty (30) Business Days following such change in
circumstances and upon five (5) Business Days' prior written notice to the Agent
and the Institutions, to terminate the Total Commitment in full by repurchasing
from the Agent all Consigned Precious Metal in accordance with the requirements
of this ss.4.5; provided that any repurchase of any outstanding amount of
Consignment Fixed Rate Amounts of Consigned Precious Metal resulting from any
such termination of the Total Commitment pursuant to this ss.4.5 may be made
only on the last day of the Interest Period relating thereto. Upon the effective
date of any such termination of the Total Commitment, the
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Consignees shall, at their option, (a) purchase from the Agent all Consigned
Precious Metal outstanding by paying to the Agent an amount equal to the Fair
Market Value as of such date of the amount of such Consigned Precious Metal plus
twenty-five cents ($0.25) per xxxx ounce of such Consigned Precious Metal,
together with any and all accrued and unpaid Daily Consignment Fees and other
amounts accrued thereon, or (b) Redeliver to the Agent, Precious Metal, in
bullion form, in an amount (measured in xxxx ounces) equal to all Consigned
Precious Metal outstanding, together with any and all accrued and unpaid Daily
Consignment Fees and other amounts accrued thereon. No termination of the Total
Commitment pursuant to this ss.4.5 may be reinstated.
5. FEES AND PAYMENTS.
5.1. Fees. The Consignees jointly and severally agree to pay to the Agent
for its own account the fees set forth in the Fee Letter. The Consignees shall
also pay to the Agent, for the pro rata accounts of the Institutions, on the
first day of each calendar month following the Closing Date and upon the earlier
to occur of the Maturity Date or the date upon which the Commitment is no longer
in effect, a commitment fee calculated at a rate per annum which is equal to one
half of one percent (1/2%) of the average daily difference by which the Total
Commitment amount (in Dollars) exceeds the aggregate of the Fair Market Value of
all Consigned Precious Metal outstanding during the preceding calendar month or
portion thereof; provided, however, that no such commitment fee shall accrue or
be payable with respect to any calendar month or portion thereof during which
the average Fair Market Value of all Consigned Precious Metal outstanding during
such calendar month or portion thereof during which the Fair Market Value of all
Consigned Precious Metal outstanding during such calendar month or portion
thereof shall exceed $12,000,000.
5.2. No Setoff, etc. All payments made by the Consignees hereunder or under
any of the other Consignment Documents shall be made in Dollars in immediately
available funds (except as otherwise provided with respect to Redeliveries of
Precious Metal or Eligible Specified Gold Jewelry) at the Agent's office at 1
West Mezzanine, 00 Xxxxxxxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxx Xxxxxx 00000, without
set-off or counterclaim and without any withholding or deduction whatsoever
(unless the Consignees are compelled to make such withholding or deduction
pursuant to any law). If any such obligation is imposed upon any of the
Consignees with respect to any amount payable by it hereunder or under any of
the other Consignment Documents, the Consignees will, except as provided in
ss.5.3, pay to the Agent, for the account of the Institutions or (as the case
may be) the Agent, on the date on which such amount is due and payable hereunder
or under such other Consignment Document, such additional amount in Dollars as
shall be necessary to enable the Institutions or the Agent to receive the same
net amount which the Institutions or the Agent would have received on such due
date had no such obligation been imposed upon the Borrower. The Borrower will
deliver promptly to the Agent certificates or other valid vouchers for all taxes
or other charges deducted from or paid with respect to payments made by the
Borrower hereunder or under such other Loan Document. The Agent shall be
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entitled to charge any account of any Consignee with the Agent for any sum due
and payable by any Consignee to the Agent or any Institution hereunder or under
any of the other Consignment Documents. Except as otherwise expressly set forth
herein, if any payment hereunder is required to be made on a day which is not a
Business Day, it shall be paid on the immediately succeeding Business Day, with
interest and any applicable fees adjusted accordingly. All computations of
interest or of the commitment fee payable hereunder shall be made by the Agent
on the basis of actual days elapsed and on a 360-day year.
5.3. Institutions that are not U.S. Persons. (a) Each Institution that is
not a U.S. Person as defined in Section 7701(a)(30) of the Code hereby agrees
that, if and to the extent it is legally able to do so, it shall, prior to the
date of the first payment by the Consignees hereunder to be made to such
Institution or for such Institution's account, deliver to the Consignees and the
Agent, as applicable, such certificates, documents or other evidence, as and
when required by the Code or Treasury Regulations issued pursuant thereto,
including two (2) duly completed copies of Internal Revenue Service Form W-8BEN
or Form W-8ECI and any other certificate or statement of exemption required by
Treasury Regulations, or any subsequent versions thereof or successors thereto,
properly completed and duly executed by such Institution establishing that with
respect to payments of any amounts hereunder including purchases in Dollars of
Consigned Precious Metal and amounts which may be considered principal, interest
or fees hereunder it is (i) not subject to United States federal withholding tax
under the Code because such payment is effectively connected with the conduct by
such Institution of a trade or business in the United States or (ii) totally
exempt or partially exempt from United States federal withholding tax under a
provision of an applicable tax treaty. Each Institution agrees that it shall,
promptly upon a change of its lending office or the selection of any additional
lending office, to the extent the forms previously delivered by it pursuant to
this section are no longer effective, and promptly upon the Consignees' or the
Agent's reasonable request after the occurrence of any other event (including
the passage of time) requiring the delivery of a Form W-8BEN or Form W-8ECI in
addition to or in replacement of the forms previously delivered, deliver to the
Consignees and the Agent, as applicable, if and to the extent it is properly
entitled to do so, a properly completed and executed Form W-8BEN or Form W-8ECI
(or any successor forms thereto). Unless the Consignees and the Agent have
received forms or other documents satisfactory to them indicating that such
payments hereunder or under the other Consignment Documents are not subject to
the United States federal withholding tax, the Consignees or the Agent shall
withhold taxes from such payments at the applicable statutory rate, or a reduced
rate pursuant to an applicable tax treaty if such Institution has delivered a
form evidencing such tax treaty benefit.
(b) Notwithstanding anything to the contrary set forth in the second
sentence of ss.5.2, the Consignees shall not be required to pay any additional
amounts to any Institution or the Agent for the account of the lending office of
such Institution, pursuant to the second sentence of ss.5.2 above, if (i) the
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obligation to pay such additional amounts would not have arisen but for a
failure by such Institution to comply with the provisions of paragraph (a) of
this ss.5.3 or (ii) the Institution is not eligible, in respect of such lending
office, for complete exemption from United States federal withholding tax with
respect to payments of interest, principal or fees under this Agreement or under
any of the other Consignment Documents, other than by reason of any change,
after the Initial Date, of any applicable law, treaty or regulation by any
governmental authority or other agency charged with the interpretation or
administration thereof. For purposes of this subsection (d), the term "Initial
Date" shall mean, with respect to any Institution which is a party hereto on the
Closing Date, the Closing Date, and with respect to each assignee or transferee
of any Institution, the date of the grant of the participation in, or transfer
or assignment of an interest hereunder to such assignee or transferee.
5.4. Payment and Redelivery. The Consignees may accomplish any purchase of
Consigned Precious Metal required or permitted by ss.ss.2.4, 2.6 or 4.5 hereof,
to the extent that such provision gives such Consignee an option to pay for such
purchase in Dollars or by Redelivery of Consigned Precious Metal and/or Precious
Metal in bullion form, by a combination of cash payment in Dollars and
Redelivery of Consigned Precious Metal and/or Precious Metal in bullion form;
provided that (i) the aggregate amount of Consigned Precious Metal paid for in
Dollars (calculated in accordance with the requirements of the applicable
provision of ss.ss.2.4, 2.6 or 4.5, including, where applicable, an additional
twenty-five cents ($.25) per xxxx ounce for Dollar purchases calculated by
reference to the Fair Market Value) and/or paid for by Redelivery of additional
Consigned Precious Metal and/or paid for by Redelivery of Precious Metal in
bullion form shall be equal to the aggregate amount of Consigned Precious Metal
to be purchased, and (ii) such Consignee shall not have an option among such
methods of purchase unless so specified in the applicable provision of this
Agreement pursuant to which such purchase is being made.
5.5. Maximum Rate of Interest. If for any reason it is determined that any
fees or other charges or amounts due to the Agent or any Institution hereunder
constitute interest under applicable law and, further, if such amounts
determined to constitute interest shall be deemed by any court, governmental
agency or tribunal of competent jurisdiction to exceed the maximum rate of
interest permitted by the laws, rules or regulations of the applicable
jurisdiction, then, during such time as such rate of interest would be deemed
excessive, that portion of such interest which exceeds the maximum rate of
interest so permitted shall be deemed to be a voluntary purchase of Consigned
Precious Metal undertaken pursuant to ss.2.4(d) hereof at a price equal to the
Spot Value of such Consigned Precious Metal deemed to be purchased as of the
date of determination.
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6. REPRESENTATIONS AND WARRANTIES.
Each Consignee represents and warrants to the Agent on the date hereof, on
the date of any Purchase and Consignment Request, and on each Drawdown Date
that:
6.1. Incorporation; Good Standing; Authorization. Each Consignee and its
Subsidiaries is duly organized, validly existing, and in good standing, to the
extent that such entity's jurisdiction of incorporation recognizes the concept
of good standing, under the laws of its jurisdiction of incorporation and is
duly qualified and in good standing in every other jurisdiction where it is
doing business (except where the failure to so qualify in any such other
jurisdiction where it is doing business has or could reasonably be expected to
have a Materially Adverse Effect), and the execution, delivery and performance
by each Consignee and each of its Subsidiaries of the Consignment Documents to
which it is a party (i) are within its corporate authority, and (ii) have been
duly authorized;
6.2. Enforceability. Upon execution and delivery thereof, each Consignment
Document shall constitute the legal, valid and binding obligation of each of
each Consignee and its Subsidiaries party thereto, enforceable in accordance
with its terms, except as limited by bankruptcy, insolvency, reorganization,
moratorium or other laws affecting the enforcement of creditors' rights
generally;
6.3. Title to Properties; Leases. Subject to the provisions of ss.2.1(c)
hereof, each Consignee has good and marketable title to all its material
properties, subject only to Liens permitted hereunder, and possesses all assets,
including intellectual properties (if any), leasehold interests, license rights,
franchises and Consents, adequate for the conduct of its business as now
conducted, without known conflict with any rights of others. Each Consignee
maintains insurance policies which comply in all respects with ss.3.1 hereof;
6.4. Financial Statements. The Consignees have provided to the Agent and
the Institutions (i) the audited consolidated Financials of the Parent and its
Subsidiaries as at January 29, 2000 and for the fiscal year then ended, (ii) the
audited consolidated Financials of Finlay and its Subsidiaries as at January 29,
2000 and for the fiscal year then ended, (iii) the unaudited consolidated
Financials of the Parent and its Subsidiaries for the fiscal quarter and nine
month period ended on October 28, 2000 and the unaudited unconsolidated
Financials of Finlay and its Subsidiaries for such quarter, and such Financials
described in clauses (i), (ii) and (iii) are complete and correct in all
material respects and fairly present the position of the Parent and its
Subsidiaries and Finlay and its Subsidiaries, as the case may be, as at such
date and for such period in accordance with GAAP consistently applied. The
Consignees have also provided to the Agent and the Institutions their forecast
of the consolidated operations of the Parent and its Subsidiaries for the period
commencing February 4, 2001 and ending on or about February 2, 2002, and such
forecast has been prepared in good faith based upon assumptions believed by each
Consignee to be reasonable at the time made, it being recognized by the Agent
and the
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Institutions that such forecasts as to future events are not to be viewed as
facts and that actual results during the period covered thereby may differ from
the forecasted results;
6.5. No Material Changes. Since October 28, 2000, there has been no change
of any kind in the financial condition or business operations of the Parent or
any of its Subsidiaries which has or could reasonably be expected to have a
Materially Adverse Effect;
6.6. Litigation. Except as set forth on Schedule IV hereto, there are no
legal or other proceedings or investigations pending or, to the best of any
Consignee's knowledge, threatened against any Consignee or any of its
Subsidiaries before any court, tribunal or regulatory authority which have or
could, if adversely determined, alone or together, be reasonably expected to
have a Materially Adverse Effect;
6.7. No Conflict. The execution, delivery, performance of its obligations,
and exercise of its rights under the Consignment Documents by each Consignee,
including Purchase and Consignments and borrowing under this Agreement (i) do
not require any Consents except those obtained on or prior to the first Drawdown
Date; and (ii) are not and will not be in conflict with or prohibited or
prevented by (A) any Requirement of Law, in a manner which has or could
reasonably be expected to have a Materially Adverse Effect, (B) any Charter
Document, corporate minute or resolution, or (C) any instrument, agreement or
provision thereof, in each case binding on it or affecting its property, in a
manner which has or could reasonably be expected to have a Materially Adverse
Effect;
6.8. Compliance with other Instruments, Laws, etc. No Consignee is in
violation of (i) any Charter Document, corporate minute or resolution, (ii) any
instrument or agreement, in each case binding on it or affecting its property,
in a manner, in the case of any violation in respect of this clause (ii), which
has or could reasonably be expected to have a Materially Adverse Effect, or
(iii) any Requirement of Law, including, without limitation, all applicable
federal and state tax laws, ERISA and Environmental Laws, in a manner, in the
case of any violation in respect of this clause (iii), which has or could
reasonably be expected to have a Materially Adverse Effect;
6.9. Tax Status. The Parent and its Subsidiaries (i) have made or filed all
federal and state income and all other tax returns, reports and declarations
required by any jurisdiction to which any of them is subject, except where the
failure to do so does not have and could not reasonably be expected to have a
Materially Adverse Effect, (ii) have paid all material taxes and other
governmental assessments and charges shown or determined to be due on such
returns, reports and declarations, prior to the date on which any fine, penalty,
interest, late charge or loss could be added thereto for non-payment thereof (or
any such fine, penalty, interest, late charge or loss has been paid) except
those being contested in good faith and by appropriate proceedings for which
adequate
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reserves have been taken and as to which no Lien (other than Liens which, in the
aggregate, are permitted under ss.8.2.2(ix) hereof) arising from the non-payment
thereof when due has attached to any property or assets of the Parent or any of
its Subsidiaries in a manner which could have priority over the Lien of the
Agent for the benefit of the Institutions and the Agent thereon and there is no
imminent risk of the sale of or foreclosure on any property or assets of the
Parent or any of its Subsidiaries by the holder of any Liens arising from the
non-payment thereof when due, and (iii) have set aside on their books provisions
reasonably adequate for the payment of all taxes for periods subsequent to the
periods to which such returns, reports or declarations apply; there are no
unpaid taxes in any material amount claimed to be due by the taxing authority of
any jurisdiction, and the officers of each Consignee and its Subsidiaries know
of no basis for any such claim;
6.10. Holding Company and Investment Company Acts. No Consignee or any of
its Subsidiaries is a "holding company", or a "subsidiary company" of a "holding
company", or an affiliate" of a "holding company", as such terms are defined in
the Public Utility Holding Company Act of 1935; nor is any Consignee or its
Subsidiaries an "investment company", or an "affiliated company" or a "principal
underwriter" of an "investment company", as such terms are defined in the
Investment Company Act of 1940.
6.11. Use of Proceeds. The proceeds of the Purchases and Consignments shall
be used (i) initially to refinance or finance the purchase of the Precious Metal
content of Specified Gold Jewelry and (ii) on an on-going basis, for financing
and purchasing the Precious Metal content of Specified Gold Jewelry. No portion
of the proceeds of any Purchase and Consignment is to be used for the purpose of
purchasing or carrying any "margin security" or "margin stock" as such terms are
used in Regulations U and X of the Board of Governors of the Federal Reserve
System, 12 C.F.R. Parts 221 and 224;
6.12. No Event of Default. No Default or Event of Default has occurred and
is continuing;
6.13. Locations of Specified Gold Jewelry. Schedule II hereto sets forth
all locations at which Specified Gold Jewelry is located;
6.14. Other Credit. Finlay has in place not less than $100,000,000 of
credit facilities in addition to the credit facilities provided under this
Agreement;
6.15. Perfection of Security Interest. Upon execution and delivery of the
Security Documents and the filing of documents thereby required (including the
filing of such financing statements or other notices necessary or appropriate in
order to perfect and maintain the Agent's first priority Lien for the benefit of
the Institutions and the Agent, subject to the terms of the Intercreditor
Agreement, on the Collateral), the Agent for the benefit of the Institutions and
the Agent shall have first-priority perfected Liens on the Collateral, subject
only to Liens permitted hereunder and entitled to priority under applicable law
and
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subject to the terms of the Intercreditor Agreement, with no financing
statements, chattel mortgages, real estate mortgages or similar filings on
record anywhere which conflict with such first-priority Liens of the Agent for
the benefit of the Institutions and the Agent (other than financing statements
filed against the Consignees (i) by the Dollar Agent, to the extent contemplated
by the Intercreditor Agreement, and (ii) by consignment vendors which have
executed a Vendor Agreement with respect to the collateral described in such
financing statements);
6.16. Subsidiaries. No Consignee is party to any partnership or joint
venture; Schedule V hereto lists each of the Subsidiaries of each Consignee; and
7. CONDITIONS PRECEDENT.
7.1. Closing Conditions. In addition to the making of the foregoing
representations and warranties and the delivery of the Consignment Documents and
such other documents and the taking of such actions as the Agent may require at
or prior to the time of executing this Agreement, the obligation of the Agent
and the Institutions to make the initial Purchase and Consignment hereunder is
subject to the satisfaction of the following further conditions precedent:
7.1.1. Consignment Documents. Each of the Consignment Documents shall
have been duly executed and delivered by the respective parties thereto,
shall be in full force and effect and shall be in form and substance
satisfactory to the Agent and the Institutions; the Agent shall have
received a fully executed copy of each such document.
7.1.2. Financial Statements. The Agent and the Institutions shall have
received the most recent audited consolidated Financials of the Parent and
its Subsidiaries, the most recent unaudited monthly and quarterly
consolidated Financials of the Parent and its Subsidiaries, the most recent
audited consolidated Financials of Finlay and its Subsidiaries and the most
recent unaudited monthly and quarterly consolidated Financials of Finlay
and its Subsidiaries.
7.1.3. Representations True; No Material Adverse Change. There shall
have been no material misstatements in or omissions from the materials
previously furnished to the Agent or any Institution for its review, and in
the sole judgment of the Agent and the Institutions (i) the Financials
delivered to the Agent shall fairly present the business and financial
condition of the Parent and its Subsidiaries or, as the case may be, of
Finlay and its Subsidiaries, for the periods covered thereby, and (ii)
there shall have been no material adverse change in the business, assets,
financial condition or prospects of the Parent and its Subsidiaries or
Finlay and its Subsidiaries since the date of such Financials.
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7.1.4. Opinion of Counsel. The Agent and the Institutions shall have
received a legal opinion satisfactory in form and substance to the Agent
from Blank Rome Xxxxxx Xxxxxxxxxx LLP, counsel to the Consignees.
7.1.5. Satisfaction with Systems. The Agent and the Institutions shall
be satisfied in their sole discretion with (i) the operations, procedures
and systems of the Consignees relating to gold tracking and valuation, and
(ii) the cash management systems of the Consignees.
7.1.6. Perfection Certificates and UCC Search Results. The Agent shall
have received from the Consignees a completed and fully executed Perfection
Certificate and the results of UCC searches or other evidence satisfactory
to the Agent (in each case dated as of a date reasonably satisfactory to
the Agent) indicating the absence of Liens on the assets of the Consignees
except for Liens permitted by ss.8.2.2 hereof and Liens for which
termination statements and releases satisfactory to the Agent are being
tendered prior to or concurrently with the initial extension of credit by
the Agent.
7.1.7. UCC Filings and Notices. The Agent shall have filed all such
financing statements and given all such notices (including, without
limitation, all notices and filings under Sections 2-326 and 9-114 of the
UCC) as may be necessary or appropriate for the Agent to evidence the
consignment arrangements contemplated hereby (and its ownership interest in
all Consigned Precious Metal), to perfect its security interest in the
Collateral, and to assure its first priority status Lien for the benefit of
the Institutions and the Agent (subject to the terms and conditions of the
Intercreditor Agreement) in the Collateral.
7.1.8. Proceedings; Copies of Documents. All corporate and judicial
proceedings and all instruments and agreements in connection with the
transactions between the Consignees, the Institutions and the Agent
contemplated by the Consignment Documents shall be reasonably satisfactory
in form and substance to the Agent and the Institutions and the Agent and
the Institutions shall have received all information and copies of all
documents or papers reasonably requested by the Agent and the Institutions,
including, without limitation, the Charter Documents, good standing
certificates and certificates of foreign qualification of the Consignees
and resolutions of the board of directors of the Consignees authorizing the
transactions contemplated hereby and by each of the other Consignment
Documents.
7.1.9. Copies of Agreements. The Agent shall have received copies of
(i) to the extent requested by the Agent, the Consignees' standard license
agreements with Federated Department Stores and May Company under which
Finlay is the licensee, (ii) to the extent requested by the Agent, such
other license agreements with host department stores
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under which a Consignee is a licensee as the Agent shall reasonably
request, and (iii) all such other material agreements of a Consignee as the
Agent shall reasonably request (it being acknowledged and agreed by the
Agent and the Institutions that such agreements and all information
contained therein shall remain confidential and shall not, without the
written consent of the Consignees, be disclosed by the Agent and the
Institutions to any third party other than any employee, director, agent,
attorney, accountant or other professional advisor of the Agent or an
Institution except (A) to actual or potential assignees of or participants
in the Purchases and Consignments and the Consignment Documents, provided
that any such Person shall agree to treat in confidence all such
information to the same extent that the Agent and the Institutions are
required to treat such information, (B) in response to any request or order
of any court or other governmental or regulatory authority having
jurisdiction over the Agent or as required by any other Requirement of Law,
and (C) where such information has been publicly disclosed other than in
breach of this provision).
7.1.10. License Arrangements. The Agent shall be satisfied in all
respects with the Consignees' license arrangements with its host department
stores, including without limitation, that the Inventory (including
Specified Gold Jewelry) and Precious Metal (including Consigned Precious
Metal) of the Consignees located at such host department stores is not
subject to any prior Liens or claims of any such host department store or
of any creditor of any such host department store.
7.1.11. Intercreditor Agreement. An amendment and restatement of the
Intercreditor Agreement shall have been duly executed and delivered by each
of the Agent, the Dollar Agent and the Consignees, and such amendment and
restatement of the Intercreditor Agreement shall be satisfactory in form
and substance to the Agent and the Institutions and shall be in full force
and effect.
7.1.12. Insurance. The Agent shall have received evidence (including
certificates of insurance and endorsements, if applicable) of all hazard,
property, liability and other insurance maintained by the Consignees in
accordance with the requirements of ss.3.1 hereof; such insurance shall be
in such amounts and of such types as shall be reasonably satisfactory to
the Agent; and the Agent shall be named as either loss payee or additional
insured with respect to all Specified Gold Jewelry and Consigned Precious
Metal, as required by the Agent, on each such policy of insurance.
7.1.13. Fees. The Consignees shall have paid to the Agent and the
Institutions all fees then payable as set forth herein or in the other
Consignment Documents.
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7.1.14. Letter of Credit. The Letter of Credit, in form and substance
satisfactory to the Agent, shall have been issued in favor of the Agent for
the benefit of the Institutions and the Agent and shall have been delivered
to the Agent.
7.1.15. Approvals. There shall have been obtained, by all parties to
the transaction, any director or shareholder approvals required by law for
this Agreement and each of the other Consignment Documents and any
necessary regulatory approvals, including without limitation, compliance
with all state and federal laws applicable to any party to the transaction.
7.1.16. Vendor Letters etc. The Consignees shall have received, (i)
from each of the Approved Vendors listed on Schedule I hereto, (A) UCC-3
termination statements with respect to such Approved Vendor's existing
financing statements previously filed against the Consignees, if any, (B)
an Approved Vendor Agreement, and (C) such other documentation as the Agent
shall deem necessary or appropriate in order to establish, preserve and
maintain its first priority perfected Lien in all Specified Gold Jewelry,
and (ii) from each of the consignment vendors listed on Schedule III
hereto, a Vendor Agreement;
7.1.17. Consignment Limit Report. The Agent shall have received from
the Consignees the initial Consignment Limit Report
7.1.18. Other Documents. The Agent and the Institutions shall have
received such other closing documents, satisfactory, in form and substance,
to the Agent and the Institutions, as the Agent and the Institutions shall
have requested.
7.2. Conditions to All Purchases and Consignments. The obligation of the
Agent and the Institutions to make any Purchase and Consignment, including the
initial Purchase and Consignment, hereunder shall be subject to the satisfaction
of the following further conditions precedent:
7.2.1. Representations True. Each of the representations and
warranties of each Consignee to the Agent herein, in any of the other
Consignment Documents or any document, certificate or other paper or notice
in connection herewith shall be true and correct in all material respects
as of the date of such Purchase and Consignment (except to the extent of
any changes resulting from transactions contemplated or permitted by this
Agreement and changes occurring in the ordinary course of business that do
not result in a Materially Adverse Effect and except to the extent that
such representations and warranties expressly relate to an earlier date, in
which case they shall be true and correct in all material respects as of
such earlier date) and as of the time made or claimed to have been made;
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7.2.2. No Event of Default. No Default or Event of Default shall be
continuing.
7.2.3. Government Regulation. No change shall have occurred in any law
or regulation or in the interpretation thereof that in the reasonable
opinion of the Agent would make it unlawful for the Agent to make such
Purchase and Consignment.
7.2.4. Consignment Requests. The Consignees shall have given to the
Agent a Purchase and Consignment Request in accordance with the
requirements of ss.2.2 hereof, such Purchase and Consignment Request
constituting a representation and warranty by each Consignee that the
conditions set forth in this ss.7.2 shall have been satisfied.
7.2.5. Proceedings and Documents. All proceedings in connection with
the transactions contemplated by this Agreement, the other Consignment
Documents and all other documents incident thereto shall be satisfactory in
substance and in form to the Agent and the Institutions, and the Agent and
the Institutions shall have received all information and such counterpart
originals or certified or other copies of such documents as the Agent or
any Institution may reasonably request or as may be required pursuant to
the terms hereof, including without limitation, the most recent Consignment
Limit Report required to be delivered by the Consignees pursuant to the
terms hereof and the most recent monthly, quarterly and annual Financials
required to be delivered by the Consignees pursuant to the terms hereof.
7.2.6. Fees. The Consignees shall have paid the balance of all fees
then due and payable pursuant to the terms of this Agreement or any of the
other Consignment Documents.
8. COVENANTS.
8.1. Affirmative Covenants. Each Consignee agrees that until the
termination of the Total Commitment and the payment and satisfaction in full of
all of the Obligations:
8.1.1. Financial Statements, Certificates and Information. Each
Consignee will, and will cause each of its Subsidiaries to furnish the
Agent and the Institutions:
(i) within ninety (90) days after the close of each fiscal year,
(A) the audited consolidated Financials of the Parent and its
Subsidiaries for such fiscal year, certified by the Consignees'
accountants and containing an audit of the Precious Metal content of
the Consignees' Inventory, and (B) the unaudited unconsolidated
Financials of Finlay for such fiscal year, certified by Finlay's chief
financial officer or treasurer;
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(ii) within forty-five (45) days after the end of each of the
first three fiscal quarters of each fiscal year, the unaudited
consolidated Financials of the Parent and its Subsidiaries for such
quarter and the unaudited unconsolidated Financials of Finlay for such
quarter, each containing the certification by the Parent's or Finlay's
(as applicable) chief financial officer or treasurer that such
Financials fairly present the financial position in accordance with
GAAP of the Parent and its Subsidiaries or, as the case may be, Finlay
and its Subsidiaries on the date thereof (subject to year-end
adjustments);
(iii) within forty-five (45) days after the end of each fiscal
month the unaudited consolidated Financials of the Parent and its
Subsidiaries for such month, containing the certification by the
Parent's chief financial officer or treasurer that such Financials
fairly present the financial position in accordance with GAAP of the
Parent and its Subsidiaries on the date thereof (subject to year-end
adjustments and without footnotes); provided that notwithstanding such
time periods within which Finlay is required to deliver such
Financials pursuant to the foregoing clauses (i), (ii) or (iii), the
Consignees agree to notify the Agent promptly, but in any event within
ten (10) Business Days, following the incurrence by the Parent or any
of its Subsidiaries of any expense which has or could reasonably be
expected to have a Materially Adverse Effect;
(iv) together with the quarterly and annual Financials described
in clauses (i) and (ii) above, a certificate of the Consignees' chief
financial officer(s) or treasurer(s) setting forth computations
demonstrating compliance with the Consignees' financial covenants set
forth herein and demonstrating compliance by the Consignees with the
covenant contained in ss.8.1.8 hereof, and certifying that, to the
best of such officer's knowledge, no Default or Event of Default has
occurred, or if it has, the actions taken by the Consignees with
respect thereto;
(v) within five (5) days after Saturday of each calendar week, or
at such other time or times as the Agent may request, a Consignment
Limit Report, in form and detail satisfactory to the Agent (but
including, without limitation, information as to what portion, if any,
of the Consigned Precious Metal is subject to Liens permitted by
ss.8.2.2 hereof (other than the junior Lien, subject to the terms and
provisions of the Intercreditor Agreement, in favor of the Dollar
Agent)), certified by the chief financial officer(s) or treasurer(s)
of the Consignees, and demonstrating the Consignment Limit as at the
end of such week or other applicable date requested;
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(vi) within five (5) days after Saturday of each calendar week,
the unaudited consolidated sales figures of the Parent and its
Subsidiaries and the unaudited unconsolidated gross sales figures of
the Consignees;
(vii) contemporaneously with the delivery thereof to the Dollar
Agent, copies of all monthly borrowing base reports provided by Finlay
to the Dollar Agent in connection with, and as required by, the Dollar
Facility;
(viii) as soon as available but in any event within ninety (90)
days after the close of each fiscal year, a forecast of the
consolidated operations of the Parent and its Subsidiaries for the
next fiscal year updating the forecast delivered to the Agent and
referred to in ss.6.4, or, if applicable, updating any later such
forecasts delivered pursuant to this ss.8.1.1;
(ix) promptly upon the filing thereof, copies of all reports or
other documents filed by the Parent or any of its Subsidiaries with
the Securities and Exchange Commission (including the audited
consolidated financials of Finlay and its Subsidiaries for each fiscal
year and the unaudited consolidated financials of Finlay and its
Subsidiaries for each of the first three fiscal quarters of each
fiscal year) or sent or received by the Parent or any of its
Subsidiaries to or from the holders of any equity interests of the
Parent or such Subsidiary or of any Indebtedness for Borrowed Money of
the Parent or any such Subsidiary registered under the Securities Act
of 1933 or to or from the trustee under any indenture under which the
same is issued; and
(x) such other financial information or reports as the Agent may
from time to time reasonably request.
8.1.2. Records and Accounts. Each Consignee will, and will cause each
of its Subsidiaries to (i) keep true and accurate books of account in
accordance with GAAP; (ii) maintain its current fiscal year; and (iii)
permit the Agent or its designated representatives and agents (including
consultants, commercial finance examiners or other professional advisors),
without any unreasonable interference with the Consignees' business (A) to
inspect the Consignees' premises during normal business hours, including,
without limitation leased store locations, insofar as the Consignees can
give authority therefor, (B) to examine and be advised as to such or other
business records (to the extent not privileged, and if any materials are
privileged, the Agent and the Institutions shall be permitted to discuss
with the Consignees and its officers and professional advisors the matters
covered by such privileged materials) upon the request of the Agent, (C) to
conduct examinations and verifications of the
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systems and procedures of the Consignees, including those related to gold
tracking and valuation and to cash management; (D) to conduct periodic
commercial finance examinations, to conduct Specified Gold Jewelry counts
and audits and to obtain periodic collateral reports or appraisals from
independent collateral auditors or appraisers satisfactory to the Agent
with respect to, among other things, the location, amount and value
(including the current fair market, orderly liquidation and forced
liquidation values) of Inventory, Specified Gold Jewelry, Precious Metal
and Consigned Precious Metal held by the Consignees and set forth in the
Consignment Limit Reports of the Consignees), and (E) to communicate
directly with the Consignees' independent certified public accountants
concerning the business, financial condition and other affairs of the
Consignees, all during regular business hours (with respect to any visits
to the Consignees' premises).
8.1.3. Corporate Existence; Maintenance of Properties. Each Consignee
will, and will cause each of its Subsidiaries to (i) maintain its corporate
existence, rights and franchises (except for the abandonment of
intellectual property rights of the Consignees or such Subsidiary permitted
by ss.8.2.5(iii)(E) and for the dissolution of Sonab following the
consummation of the transactions contemplated by the Sonab Purchase
Agreement and the liquidation of any remaining assets of Sonab), (ii)
except as otherwise permitted in ss.8.2.5, cause all of its material
properties used or useful in the conduct of its business to be maintained
and kept in good condition, repair and working order (reasonable wear and
tear excepted) and supplied with all necessary equipment, (iii) keep its
business and assets adequately insured in accordance with the provisions of
ss.3.1 hereof and of the Security Agreement, (iv) maintain its chief
executive office in the United States, (v) continue to engage in the
business of retail jewelry sales (including in host-store departments or in
stand-alone locations); provided that nothing in this ss.8.1.3 shall
prevent any Consignee or its Subsidiaries from discontinuing the operation
and maintenance of any of its properties if such discontinuance is in the
judgment of such Consignee or such Subsidiary, desirable in the conduct of
its business and that does not have or could not be reasonably expected to
have a Materially Adverse Effect, and (vi) comply with all Requirements of
Law, including ERISA and Environmental Laws except where any non-compliance
does not have or could not reasonably be expected to have a Materially
Adverse Effect.
8.1.4. Notices. Each Consignee will, and will cause each of its
Subsidiaries to notify the Agent and each of the Institutions promptly in
writing of (i) the occurrence of any Default or Event of Default of which
such Consignee or such Subsidiary has, or should have, knowledge, (ii) any
noncompliance with ERISA or any Environmental Law or proceeding in respect
thereof or any other Requirement of Law of which such Consignee or such
Subsidiary has, or should have, knowledge, which noncompliance has or could
reasonably be expected to have a Materially
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Adverse Effect, (iii) any change of address, (iv) any threatened or pending
litigation or similar proceeding affecting any Consignee or any Subsidiary
of which such Consignee or such Subsidiary has, or should have, knowledge,
or any material change in any such litigation or proceeding previously
reported, which threatened or pending litigation or proceeding or material
change therein has or could reasonably be expected to have a Materially
Adverse Effect, and (v) claims against any assets or properties of any
Consignee or any Subsidiary encumbered in favor of the Agent for the
benefit of the Institutions and the Agent of which such Consignee or such
Subsidiary has, or should have, knowledge.
8.1.5. Use of Proceeds. Each Consignee will, and will cause each of
its Subsidiaries to use the proceeds of the Purchases and Consignments
solely (i) initially to refinance or finance the purchase of the Precious
Metal content of Specified Gold Jewelry and (ii) on an on-going basis, for
financing and purchasing the Precious Metal content of Specified Gold
Jewelry, and not for the carrying of "margin security" or "margin stock"
within the meaning of Regulations U and X of the Board of Governors of the
Federal Reserve System, 12 C.F.R. Parts 221 and 224.
8.1.6. Payment of Claims. Each Consignee will, and will cause each of
its Subsidiaries to pay, before the same shall become overdue, all claims
for labor, materials or supplies that if unpaid might by law become a Lien
or charge upon any of its property or assets, unless, in each case, the
validity or amount thereof is being contested in good faith by appropriate
proceedings, such Consignee or any such Subsidiary has established adequate
reserves in accordance with GAAP with respect thereto, Liens (other than
Liens which, in the aggregate, are permitted under ss.8.2.2(ix) hereof)
arising from the non-payment thereof when due have not attached to any of
the property or assets of such Consignee or any of its Subsidiaries in a
manner which could have priority over the Lien of the Agent thereon and
there is no imminent risk of the sale of or foreclosure on any property or
assets of such Consignee or any of its Subsidiaries by the holder of any
Liens arising from the non-payment thereof when due.
8.1.7. Systems. Each Consignee will, and will cause each of its
Subsidiaries to maintain in effect such systems and procedures (including
without limitation those relating to cash management and gold tracking and
valuation), satisfactory in all respects to the Agent, in order to assure
and maintain the Agent's and the Institutions' first priority security
interest, subject to the provisions of the Intercreditor Agreement, in the
Collateral.
8.1.8. Other Credit. Finlay shall, at all times have in place not less
than $100,000,000 of credit facilities (including the Dollar Facility
and/or other credit facilities satisfactory in all respects to the Agent
but other than this Agreement).
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8.1.9. Location of Specified Jewelry. Each Consignee will, and will
cause each of its Subsidiaries to (A) keep all Specified Gold Jewelry at
Permitted Inventory Locations at all times; and (B) thirty (30) days prior
(or, to the extent that the giving of such prior Notice is impracticable,
as soon as practicable, but in any event not less than ten (10) days prior)
to any Consignee's establishing any new licensed or leased locations or any
other location at which any Specified Gold Jewelry shall be kept, the
Consignees shall give Notice thereof to the Agent and to its counsel at the
address specified in the definition of Principal Office and shall promptly
take all such actions required by the Agent in order to evidence the
Agent's ownership interest in all Consigned Precious Metal to be located
thereat and in order to preserve and maintain the Agent's and the
Institutions' security interest in the Collateral, including, without
limitation, the execution and delivery of such UCC financing statements or
other filings reasonably required by the Agent (upon the completion of such
actions reasonably required by the Agent, Schedule II hereto shall be
deemed to be revised to include any such new locations, which locations
shall thereupon become Permitted Inventory Locations hereunder, provided
that notwithstanding the foregoing, no Specified Gold Jewelry shall in any
event be located at, and Schedule II and the "Permitted Inventory
Locations" shall not include (whether or not included in any such Notice
given by the Consignees to the Agent), any factory outlet stores or other
stand-alone locations of any Consignee).
8.1.10. Further Assurances. Each Consignee will, and will cause each
of its Subsidiaries to cooperate with the Agent, take such action, execute
such documents, and provide such information as the Agent may from time to
time reasonably request in order further to effect the transactions
contemplated by and the purposes of the Consignment Documents, including
without limitation, the delivery at the Consignees' joint and several
expense of additional security documents and appraisals and the agreements
described in ss.ss.7.1.9 and 7.1.10.
8.1.11. Certain Payments. Each Consignee will, and will cause each of
its Subsidiaries to cause (i) all payments (net of amounts (which amounts
may be paid in cash) equal to the reasonable, ordinary course operating
expenses of Finlay Merchandising for the then current and immediately
succeeding fiscal months, including, without limitation, payroll expenses
for employees of Finlay Merchandising) from any Consignee to Finlay
Merchandising in respect of amounts owed under the Finlay Merchandising
License Agreement and the Finlay Merchandising Services Agreement to be
made by means of appropriate intercompany book entries, (ii) Finlay
Merchandising to declare and distribute to Finlay as a dividend, within
thirty (30) days following the end of each fiscal quarter during which
payments described in clause (i) of this ss.8.1.11 or in clause (i) of
ss.8.1.12 are made to Finlay Merchandising, an amount equal to the sum (net
of amounts (which amounts may be paid in cash) equal to the reasonable,
ordinary course operating expenses of Finlay
-49-
Merchandising for the then current fiscal month and immediately succeeding
fiscal month, including, without limitation, payroll expenses for employees
of Finlay Merchandising), of such payments under clause (i) of this
ss.8.1.11 plus such payments to Finlay Merchandising, under ss.8.1.12(i)
and (iii) all obligations of any Consignee to Finlay Merchandising under
and in respect of the Finlay Merchandising License Agreement and/or the
Finlay Merchandising Services Agreement to be subordinated (subject to the
Intercreditor Agreement) to the Obligations upon terms and conditions, and
pursuant to documentation, in each case satisfactory to the Agent.
8.1.12. eFinlay. Each Consignee will, and will cause each of its
Subsidiaries to cause (i) all amounts owed to any Consignee or, as the case
may be, Finlay Merchandising under any purchase orders or other requests
for merchandise or inventory issued by eFinlay to Finlay, the eFinlay
Services Agreement, the eFinlay FM Services Agreement, the eFinlay Lease
Agreement or any other agreement between eFinlay and Finlay or, as the case
may be, Finlay Merchandising to be paid to Finlay or, as the case may be,
Finlay Merchandising at least quarterly, commencing with the quarter ending
December 31, 2000, either by means of appropriate intercompany book entries
or by payment in cash, and (ii) eFinlay to declare and distribute to Finlay
as a dividend, within thirty (30) days following the end of each fiscal
quarter, an amount equal to all amounts retained by eFinlay following
payment to Finlay or, as the case may be, Finlay Merchandising of the
amounts required by clause (i) of this subsection (n) (which amounts may be
net of amounts equal to the reasonable, ordinary operating expenses of
eFinlay for the then current fiscal month and the immediately succeeding
fiscal month, including, without limitation, payroll expenses for employees
of eFinlay).
8.2. Negative Covenants. Each Consignee agrees that until the termination
of the Total Commitment and the payment and satisfaction in full of all the
Obligations:
8.2.1. Indebtedness. The Consignees will not and where applicable will
not permit any of their Subsidiaries to create, incur or assume any
Indebtedness other than:
(i) Indebtedness to the Agent and the Institutions under this
Agreement;
(ii) Indebtedness of any Consignee or any Subsidiary thereof
secured by Liens permitted by ss.8.2.2(vii) hereof;
(iii) unsecured Current Liabilities of a Consignee or any
Subsidiaries incurred in the ordinary course of business, other than
unsecured Current Liabilities for Indebtedness for Borrowed Money;
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(iv) Indebtedness in respect of taxes, assessments, other
governmental charges, or levies and claims for labor, materials and
supplies, in each case to the extent that payment therefor shall not
at the time be required by ss.3.2 or ss.8.1.6 hereof;
(v) Indebtedness in respect of the Dollar Facility;
(vi) Indebtedness of a Consignee (A) evidenced by the Senior
Notes in an aggregate principal amount not to exceed $150,000,000;
(vii) with respect to leases of real or personal property (A)
obligations in any amount in respect of percentage rentals under
license agreements or arrangements entered into with lessors or
licensors of store locations, (B) rental obligations or other
commitments thereunder (other than obligations in respect of
Capitalized Leases permitted hereunder) to make any direct or indirect
payment, whether as rent or otherwise, for fixed or minimum rentals
(including minimum payments, but excluding all other payments, under
license agreements or arrangements entered into with lessors or
licensors of store locations) not in excess of (1) $15,000,000 in the
aggregate for the Parent and its Subsidiaries for any fiscal year;
provided, however, that the amount set forth in this clause (B)(1)
shall not include (y) rental obligations resulting from the
acquisition of the Diamond Park Fine Jewelry division of Xxxx
Delaware, Inc. pursuant to the terms of a certain Asset Purchase
Agreement dated September 3, 1997 among the Parent, Xxxxxx, Xxxx
Delaware, Inc. and Xxxx Corporation, or (z) rental obligations
incurred by the Consignee under leases referred to in the JBR Asset
Purchase Agreement;
(viii) obligations of a Consignee and its Subsidiaries under
Capitalized Leases not exceeding $5,000,000 in aggregate notional
principal amount at any time outstanding;
(ix) Indebtedness in respect of the Tax Allocation Agreement;
(x) Indebtedness in respect of (A) any Hedge Agreement which is
not speculative in nature and which is entered into by a Consignee in
the ordinary course of its business consistent with past practices in
order to hedge against fluctuations in the price of gold, and (B) any
Hedge Agreement which is designed to hedge against fluctuations in
interest rates; provided, however, that in the case of any Hedge
Agreement constituting an interest rate swap for which a Consignee or
any Subsidiary has swapped exposure on a fixed rate in exchange for
taking on exposure on a
-51-
floating rate, such hedging transaction covers a notional principal
amount of not more than $50,000,000;
(xi) Indebtedness in respect of judgments, attachments, seizures
or levies not to exceed $500,000 in the aggregate outstanding at any
time;
(xii) to the extent such expenses have not been paid by a
Consignee through a dividend permitted under ss.8.2.4 hereof,
Indebtedness of a Consignee to the Parent for expenses of the Parent
incurred in the ordinary course of business not to exceed in the
aggregate during any fiscal year of the Parent 0.25% of the
Consignees' net sales as indicated in the Consignees' audited annual
Financials for the immediately preceding fiscal year (it being
understood that such Indebtedness shall not be evidenced by a
promissory note, bond, debenture or other instrument);
(xiii) Indebtedness to lessors or licensors of store locations in
respect of (A) equipment and fixtures and (B) Inventory purchased from
such lessors or licensors not in excess of $3,000,000 in the aggregate
at any time outstanding;
(xiv) endorsements for collection, deposit or negotiation and
warranties of products or services, in each case incurred in the
ordinary course of business;
(xv) guaranties in respect of Indebtedness otherwise permitted by
clauses (v) and (vi) of this ss.8.2.1 and guaranties in respect of the
Senior Debentures;
(xvi) Indebtedness of Sonab (A) consisting of the liquidation of
the balance of the net assets of Sonab, (B) to Finlay pursuant to and
evidenced by the Sonab Intercompany Notes, and (C) to Histoire d'Or
consisting of indemnification obligations, purchase price adjustments
and other similar obligations incurred or assumed in connection with
the Sonab Transfer in accordance with the terms and conditions of the
Sonab Purchase Agreement;
(xvii) Indebtedness secured by Liens permitted by
ss.ss.8.2.2(iv), (v), (vi) and (viii) hereof, in each case to the
extent that payment therefor shall not at the time be required by such
sections;
(xviii) Indebtedness not included above and listed on Schedule VI
hereto (but not any increase thereof or any refinancings, renewals,
extensions, replacements or exchanges of any thereof except
refinancings, renewals, extensions, replacements or exchanges on terms
no less favorable to the
-52-
Consignees or any Subsidiary than that being refinanced, renewed,
extended, replaced or exchanged);
(xix) Indebtedness of Finlay consisting of indemnification
obligations to the Sellers (as defined in the JBR Asset Purchase
Agreement) incurred in connection with the JBR Acquisition in
accordance with the terms and conditions of the JBR Asset Purchase
Agreement; and
(xx) Indebtedness of the Consignees and their Subsidiaries not
included in subsections (i) - (xix) above and not in excess of
$15,000,000 in aggregate principal amount at any time outstanding;
8.2.2. Liens. The Consignees will not and where applicable will not
permit any of their Subsidiaries to create or incur any Liens on any of the
property or assets of any Consignee or any of its Subsidiaries (including
without limitation all Inventory, Specified Gold Jewelry, Consigned
Precious Metal and Collateral) except:
(i) Liens (described in ss.2.1(c) hereof) in favor of the Agent
and the Institutions securing the Obligations;
(ii) Liens in favor of the Dollar Agent for the benefit of the
lenders under the Dollar Facility subject to the provisions of the
Intercreditor Agreement;
(iii) Liens securing taxes, assessments or other governmental
charges or levies and claims for labor, materials and supplies
provided the payment thereof shall not at the time be required by
ss.3.2 or ss.8.1.6 hereof;
(iv) deposits, Liens or pledges to secure payments of workers'
compensation and other payments, unemployment and other insurance,
old-age pensions or other social security obligations;
(v) Liens of workmen, repairmen, carriers, warehousemen,
mechanics, vendors, suppliers and materialmen, and other similar Liens
arising in the ordinary course of business and securing sums which are
not past due or which are being contested in good faith (and there
shall be no material risk of forfeiture of the property subject to
such Lien or foreclosure of such Lien), or deposits or pledges to
obtain the release of any such Liens;
(vi) easements, rights-of-way, zoning restrictions, licenses and
restrictions on the use of real property or minor irregularities in
title thereto, which do not materially impair the use of such
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property in the normal operation of the business of the Consignees or
any of their Subsidiaries or the value of such property for the
purpose of such business;
(vii) purchase money mortgages or other purchase money Liens, or
any refinancing of any thereof, upon any fixed or capital assets
(other than Inventory) constituting real property interests or related
machinery and equipment, or purchase money mortgages on any such
assets hereafter acquired or existing at the time of acquisition of
such assets by such Consignee or such Subsidiary, whether or not
assumed, so long as (A) any such Lien does not extend to or cover any
other asset of any Consignee or any of its Subsidiaries, (B) such Lien
secures the obligation to pay the purchase price of such asset,
interest thereon and other customary incidental obligations relating
thereto only, and (C) the outstanding principal amount of the
aggregate Indebtedness secured by all such purchase money Liens shall
not exceed $4,000,000 at any time;
(viii) deposits, Liens or pledges to secure the performance of
tenders, bids, leases and other contracts (other than contracts for
the payment of money), or public or statutory obligations, surety,
stay or appeal bonds, or other similar obligations, in each case
arising in the ordinary course of business;
(ix) Liens on assets (other than Specified Gold Jewelry) not to
exceed $200,000 in the aggregate outstanding at any time;
(x) Liens on consigned Inventory (other than Specified Gold
Jewelry) pursuant to consignment arrangements permitted by ss.8.2.7
below in favor of any person or entity which retains title thereto;
(xi) Liens granted to lessors or licensors of store locations
with respect to fixtures and equipment at store locations leased or
licensed from such lessors or licensors;
(xii) Liens for judgments, attachments, seizures or levies not to
exceed $500,000 in the aggregate outstanding at any time;
(xiii) Liens on assets of Subsidiaries of a Consignee granted by
such Subsidiaries in favor of such Consignee;
(xiv) Liens in respect of Capitalized Leases securing
Indebtedness permitted by ss.8.2.1(viii), covering only the assets
subject to such permitted Capitalized Leases;
(xv) other Liens existing on the date hereof and listed on
Schedule VII hereto and any renewals thereof (but not any
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increase in amount thereof and not any extension thereof to any other
property); and
(xvi) such other Liens as the Agent may from time to time approve
in advance in writing;
8.2.3. Investments. The Consignees will not and where applicable will
not permit any of their Subsidiaries to make any investments other than
investments:
(i) in securities issued by, or that are directly and fully
guaranteed or insured by, the United States government or any agency
or instrumentality thereof having maturities of not more than twelve
months from the date of acquisition;
(ii) in certificates of deposit, bankers' acceptances and time
and demand deposits of United States banks or other financial
institutions having capital and surplus in excess of $500,000,000, the
holding company of which has outstanding commercial paper meeting the
requirements specified in clause 8.2(c)(iii) below;
(iii) in commercial paper rated (as of the date of acquisition
thereof) at least A-1 or the equivalent thereof by Standard & Poor's
Corporation and P-1 or the equivalent thereof by Xxxxx'x Investors
Service, Inc. and in either case maturing within six (6) months after
the date of its acquisition;
(iv) in mutual funds holding solely investments otherwise
permitted by the foregoing clauses (i) - (iii);
(v) representing Indebtedness of any Person owing as a result of
the sale by a Consignee or any of its Subsidiaries of products or
services in the ordinary course of business on customary trade terms;
(vi) in the capital stock of Subsidiaries existing on the Closing
Date or any other Subsidiary created with the prior written consent of
the Agent, (B) in the case of Finlay Merchandising, consisting of
those items set forth and described on Schedule I to the Contribution
Agreement and (C) in the case of eFinlay, consisting of those items
set forth and described on Schedule A to the eFinlay Contribution
Agreement, as in effect on the Closing Date; provided, however, that
for each of the foregoing clauses (A), (B) and (C), no Consignee shall
make any additional investments therein other than additional
investments approved in advance in writing by the Agent and other than
increases in such investments arising solely by reason of increases in
the retained earnings of any such Subsidiary".
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(vii) outstanding on the date hereof and listed on Schedule VIII
hereto but not any additional investments therein;
(viii) (i) represented by lockbox or other accounts established
in connection with, or as permitted by, the Dollar Facility (subject
to the provisions of the Intercreditor Agreement) and (ii) by SONAB
represented by bank accounts listed on Schedule IX hereto;
(ix) consisting of (A) loans and advances to officers, directors
or employees not to exceed at any time outstanding $20,000 in the
aggregate to any one individual or at any time outstanding $150,000 in
the aggregate to all such individuals, (B) loans and advances to
employees for entertainment, travel and other similar expenses in the
ordinary course of business, (C) advances to employees for relocation
expenses in an aggregate amount not to exceed $50,000 to any one
individual at any time outstanding and $200,000 to all employees at
any time outstanding, and (D) advances to employees of bonuses
actually earned and as to which the treasurer or chief financial
officer of the Consignees has certified in writing to the Agent that
such bonus was actually earned and that at the time of such advance
under this clause (D), no Default or Event of Default was continuing;
(x) consisting of payments required pursuant to the Tax
Allocation Agreement;
(xi) consisting of franchise or other fees or expenses paid in
cash by a Consignee as consideration for the initial granting of a
license from a host store licensee, which fees and expenses shall not
exceed $2,500,000 in the aggregate in any fiscal year of the
Consignees;
(xii) in respect of hedging transactions which are otherwise
permitted by ss.8.2.1(x) hereof;
(xiii) consisting of advances made to consignment vendors in the
ordinary course of the Consignees' business pursuant to consignment
arrangements otherwise permitted by ss.8.2.7 hereof;
(xiv) representing stock or obligations issued to such Consignee
or such Subsidiary in settlement of claims against any other Person by
reason of a composition or readjustment of debt or a reorganization of
any debtor of such Consignee or such Subsidiary;
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(xv) consisting of guaranties of Indebtedness entered into by a
Consignee or any Subsidiary and otherwise permitted by ss.ss.8.2.1(v)
and (vi) hereof and guaranties in respect of the Senior Debentures;
(xvi) resulting from transactions permitted pursuant to ss.8.2.4
or ss.8.2.8 hereof;
(xvii) consisting of promissory notes received in connection with
any sale or transfer of property to the extent that such sale or
transfer is permitted by ss.8.2.5(iii) hereof; provided that the
aggregate amount of such promissory notes outstanding shall not exceed
$10,000,000 at any time;
(xviii) in repurchase agreements with a term of not more than
thirty-one days for underlying securities of the type described in
clauses 8.2.3(i) and (ii) above (provided that the underlying
securities of the type described in clause 8.2.3(i) may not have
maturities of more than six (6) months from the date of acquisition)
entered into with any financial institution meeting the qualifications
specified in clause 8.2.3(ii) above or with securities dealers of
recognized national standing, provided that the terms of such
agreements comply with the guidelines set forth in the Federal
Financial Institutions Examination Council Supervisory Policy
Repurchase Agreements of Depository Institutions With Securities
Dealers and Others as adopted by the Comptroller of the Currency on
October 31, 1985 (the "Supervisory Policy"), and provided further,
that possession or control of the underlying securities is established
as provided in the Supervisory Policy;
(xix) consisting of endorsements of negotiable instruments for
deposit or collection in the ordinary course of business;
(xx) (A) in the form of intercompany Indebtedness for Borrowed
Money in amounts up to $12,000,000 in the aggregate at any time
outstanding (1) in the form of intercompany Indebtedness for Borrowed
Money evidenced by the First Sonab Intercompany Note, or (2) in the
form of common equity existing on or after February 1, 1996 as a
result of the conversion and/or exchange of the First Sonab
Intercompany Note into or for common equity of Sonab, and (B) in the
form of intercompany Indebtedness for Borrowed Money evidenced by the
Second Sonab Intercompany Note (provided that the aggregate unpaid
principal amount of such Indebtedness for Borrowed Money evidenced by
the Second Sonab Intercompany Note shall not at any time exceed
$33,000,000);
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(xxi) consisting of the Cash Collateral Account or the Time
Deposits (as each of such terms is defined in the Cash Collateral
Agreement);
(xxii) such other investments as the Agent may from time to time
approve in writing (which approval shall not be unreasonably
withheld);
(xxiii) in addition to those set forth above in this ss.8.2.3, in
an aggregate amount not to exceed $5,000,000 at any time outstanding;
and
(xxiv) investments by Sonab consisting of that portion of the
aggregate purchase price of the Sonab Transfer to be paid to Sonab on
a deferred basis or to be held in escrow, in each case pursuant to the
terms and conditions of the Sonab Purchase Agreement;
provided, however, that in each such case referred to in this
ss.8.2.3, to the extent applicable, arrangements have been made to the
satisfaction of the Agent for the perfection, protection and preservation
of the Agent's Lien for the benefit of the Institutions and the Agent on
all proceeds of the Collateral and on the Cash Collateral Account and the
Time Deposits (as each of such terms is defined in the Cash Collateral
Agreement);
8.2.4. Distributions. The Consignees will not and where applicable
will not permit any of their Subsidiaries to make any Distribution except:
(A) such Consignee or such Subsidiary may make dividends payable
solely in shares of common stock of such Consignee or such Subsidiary;
(B) any wholly-owned Subsidiary of a Consignee may declare or pay
cash dividends to such Consignee or to any other wholly-owned
Subsidiary of such Consignee which is its shareholder;
(C) so long as no Default or Event of Default shall have occurred
and be continuing or would result therefrom, (1) Finlay may declare or
pay dividends to the Parent on an annual basis to pay expenses of the
Parent incurred in the ordinary course of business of the Parent not
to exceed in the aggregate in any fiscal year of the Parent 0.25% of
Finlay's net sales as indicated in Finlay's audited annual Financials
for the immediately preceding fiscal year, (2) Finlay may purchase,
repurchase, redeem, retire or acquire Equity Interests of the Parent
from former employees, officers and directors pursuant to the
agreements, plans or
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arrangements entered into by the Parent and/or Finlay and listed on
Schedule X hereto, or other written agreements permitted hereby, and
may make payments in respect of promissory notes or other Indebtedness
or evidence thereof issued or incurred in connection with any such
purchase, repurchase, redemption, retirement or acquisition, and
Finlay may pay dividends to the Parent in an amount sufficient for the
Parent to make such purchases, repurchases, redemptions, retirements
and acquisitions so long as the amount of such purchases, repurchases,
redemptions, retirements and acquisitions (including, without
limitation, amounts paid directly by Finlay to make, or amounts paid
by dividend to the Parent to enable the Parent to make, payments in
respect of promissory notes or other Indebtedness or evidence thereof
issued or incurred in connection with any such purchase, repurchase,
redemption, retirement or acquisition) does not exceed, in the
aggregate in any fiscal year, $5,000,000; provided, however, that the
portion, if any, of such amount which is not applied to such
purchases, repurchases, redemptions, retirements or acquisitions (or
to the payment of dividends by Finlay to the Parent therefor) in any
fiscal year may be applied to purchases, repurchases, redemptions,
retirements or acquisitions of Equity Interests from former employees
of the Parent or Finlay whose employment was terminated in such fiscal
year (and for the payments of dividends by Finlay to the Parent
therefor) so long as such application (and payments) is made during
the first three months of the immediately succeeding fiscal year, and
any such portion so paid during such first three months as permitted
by this proviso shall not be included in calculating the sum for such
succeeding fiscal year; and (3) Finlay may declare or pay dividends to
the Parent in an aggregate amount not to exceed $20,000,000 in order
to enable the Parent to repurchase up to $20,000,000 of its own Equity
Interests in open market transactions"; and
(D) so long as no Default or Event of Default is continuing, on
any date on which any tax payments are made or required to be made,
the Consignees may make payments to the Parent of amounts required to
be paid on such tax payment date under sections 4(c) and 5 of the Tax
Allocation Agreement; provided, however, that (1) no payment on any
tax payment date made by the Consignees to the Parent shall exceed in
the aggregate the amount payable by the Parent to any taxing authority
on such payment date, and (2) in any taxable year (or portion
thereof), the aggregate amount payable by a Consignee to the Parent
under this ss.8.2.4(D) in respect of federal, state and local income
taxes shall not exceed the lesser of (x) the federal, state and local
income tax liability that would have been payable by such Consignee
for such taxable year (or portion thereof) determined as if such
Consignee had filed separate federal, state and local income tax
returns for
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such taxable year (or portion thereof) and for all previous taxable
years beginning after October 31, 1992, computed in accordance with
actual elections, conventions and other determinations with respect to
such Consignee reflected in the consolidated or combined returns of
the Parent and including any carryforwards of tax attributes from all
prior taxable years (as limited under the Internal Revenue Code of
1986, as the same shall be in effect at such date) and (y) the
consolidated or combined federal, state and local income tax liability
of the consolidated or combined group that includes such Consignee and
the Parent. For purposes of subsection (2) above, the provisions
relating to state and local income taxes shall only apply if and to
the extent that the Consignees and the Parent file consolidated or
combined income tax returns in such jurisdictions;
(E) so long as no Default or Event of Default has occurred and is
continuing or would occur after giving effect thereto, Finlay may make
payments to the Parent in such amounts as are necessary to enable the
Parent to make interest payments on the Senior Debentures; and
(F) The Consignees may purchase all, but not less than all of the
capital stock of each of Finlay Merchandising and eFinlay in
connection with the creation thereof by the Consignees.
8.2.5. Merger, Consolidation and Disposition of Assets. The Consignees
will not and where applicable will not permit any of their Subsidiaries to
(i) become a party to any transaction of merger or consolidation
or acquire all or a substantial portion of the assets of any Person
except the merger or consolidation of one or more of the Subsidiaries
of a Consignee with and into such Consignee, or the merger or
consolidation of two or more Subsidiaries of a Consignee;
(ii) except for Purchases and Consignments made pursuant to the
terms hereof, sell or transfer any property owned by it in order then
or thereafter to lease such property or lease other property that any
Consignee or any Subsidiary of any Consignee intends to use for
substantially the same purpose as the property being sold or
transferred; provided, however, that notwithstanding the foregoing,
Finlay may transfer, sell or assign its trade name "Finlay Fine
Jewelry Corporation," as well as certain of its marketing operations,
to Finlay Merchandising and such of its assets to Finlay Merchandising
as are set forth on Schedule I to the Contribution Agreement, and may
lease such trade name from Finlay Merchandising pursuant to the Finlay
Merchandising
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License Agreement and may enter into the Services Agreement with
Finlay Merchandising; or
(iii) become a party to or agree to or effect any other
disposition of assets, other than (A) the disposition of Inventory of
such Consignee or such Subsidiary in the ordinary course of business,
consistent with past practices, (B) the disposition of worn out or
obsolete personal property of such Consignee or such Subsidiary (other
than obsolete jewelry, watches or other Inventory which such Consignee
believes cannot be advantageously sold in the ordinary course of
business) having a book value, together with the book value of all
other such property of the Consignees and their Subsidiaries so sold
in the same fiscal year, of not greater than $300,000, plus sales of
obsolete jewelry, watches or other Inventory (other than Specified
Gold Jewelry) which such Consignee believes cannot be advantageously
sold in the ordinary course of business, (C) sales or transfers in the
ordinary course of business of assets and properties of such Consignee
or such Subsidiary which are no longer necessary or useful for the
proper conduct of its business, having a book value, together with the
book value of all other such property of the Consignees and their
Subsidiaries so sold in the same fiscal year, of not greater than
$250,000, (D) the sale of Inventory, fixtures and equipment in
connection with the termination of any lease or license agreement (or
similar arrangement regarding the operation of Sonab) as to any one or
more locations, to the extent that such Inventory, equipment and
fixtures were used or retained at such locations in the ordinary
course of business, (E) the abandonment of any assets and properties
of the such Consignee or such Subsidiary which are no longer used or
useful in its business and cannot be sold, (F) sales or transfers of
assets of any Consignee or any Subsidiary of a Consignee to any
Consignee or Subsidiary of a Consignee, provided that such sale or
transfer is on an arm's length basis for a purchase price not
exceeding the fair market value of the assets being so transferred,
(G) in connection with the transfer of Finlay's "buying and
merchandising functions" to Finlay Merchandising pursuant to the
Contribution Agreement, transfer from Finlay to Finlay Merchandising
of the assets described on Schedule I to the Contribution Agreement,
(H) the Sonab Transfer pursuant to the Sonab Transfer Agreement, (I)
in connection with the transactions contemplated by the eFinlay
Contribution Agreement and eFinlay's sale from time to time to
000-Xxxxxxx.xxx, Inc., a New York corporation, of inventory pursuant
to the eFinlay Marketing Agreement, the transfer from Finlay to
eFinlay of the assets described on Exhibit A to the Amendment No. 11
and Limited Consent dated as of September 29, 2000 to the Original
Consignment Agreement and inventory pursuant to purchase orders issued
from time to time by eFinlay to Finlay for the
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purchase of inventory for a purchase price at least equal to the cost
thereof to Finlay, or (J) sales or other transfers of assets other
than the foregoing, having a value, together with the value of all
other such property of the Consignees and their Subsidiaries so sold
since June 15, 1995, of not greater than $5,000,000; provided that in
connection with all dispositions of Consigned Precious Metal entered
into pursuant to this ss.8.2.5(iii) or otherwise, the Consignees shall
comply with the provisions of ss.2.4(c).
8.2.6. Joint Ventures; Nature of Business; Accounting Practices. The
Consignees will not and where applicable will not permit any of their
Subsidiaries to (i) enter into any joint ventures or (other than with
respect to Sonab as it exists on the date hereof) any partnerships; (ii)
alter the nature of its business in any material respect; provided,
however, that Sonab may provide transition services as required by the
Sonab Purchase Agreement, liquidate its remaining assets and close its
operations; or (iii) effect any significant change in accounting practices
or treatment except as may be permitted or required by GAAP.
8.2.7. Other Consignments. The Consignees will not and where
applicable will not permit any of their Subsidiaries to except pursuant to
this Agreement, enter into any consignment transactions, including Precious
Metal consignments, other than consignments of Inventory (other than
Specified Gold Jewelry) in the ordinary course of business consistent with
past practices, provided, that no Consignee shall allow the filing of any
financing statements in respect of its gold jewelry Inventory to be made by
(i) any Approved Vendors or (ii) any other consignment vendors, to the
extent that any such financing statement would conflict with the
first-priority Liens of the Agent and the Institutions in the Collateral,
unless and until such consignment vendor shall have executed and delivered
to the Agent a Vendor Agreement and Schedule III shall have been amended to
the extent necessary to add such consignment vendor to such schedule;
provided, however, that the Consignees shall have a period of thirty (30)
days following the date of filing of any financing statement by a
consignment vendor other than an Approved Vendor to cure any breach of this
clause (ii) arising from the filing of one or more financing statements
covering or giving notice as to an interest in gold jewelry Inventory of
the Consignees having an aggregate value less than or equal to $250,000.
8.2.8. Payments in Respect of Other Indebtedness. The Consignees will
not and where applicable will not permit any of their Subsidiaries to make
any prepayments or other payments of principal or interest on account of,
or purchase, defease, acquire or redeem, any Indebtedness for Borrowed
Money of any Consignee or any of its Subsidiaries (or give notice thereof
or establish a sinking fund, reserve or like set aside of funds or other
property therefor) other than (i) payments of Indebtedness under the Dollar
Facility and (ii) regular, scheduled
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payments by such Consignee or such Subsidiary of interest on, and required
payments of principal of (in each case to the extent due and payable), the
Senior Notes and other Indebtedness for Borrowed Money permitted under
ss.8.2.1 hereof, provided that Sonab may at any time and from time to time
make payments and prepayments in whole and in part to Finlay in cash
without discount under either or both of the First Sonab Intercompany Note
or the Second Sonab Intercompany Note.
8.2.9. Certain Transactions. Except for the transactions listed on
Schedule XI hereto, the Consignees will not and where applicable will not
permit any of their Subsidiaries to conduct transactions with any other
Consignee or any other Subsidiaries of a Consignee or other Affiliates
except for any transaction which is in the ordinary course of business of
such Consignee or such Subsidiary, and which transaction is on fair and
reasonable terms no less favorable to such Consignee or such Subsidiary
than each party to such transaction could obtain in a comparable arm's
length transaction with a Person not an Affiliate of such Consignee (in no
event shall any such transaction involve loans or extensions of credit to
or other investments in such Subsidiaries or Affiliates except as expressly
permitted by the terms of this Agreement).
8.2.10. Commitments to Open Factory Outlet Stores. The Consignees will
not and where applicable will not permit any of its Subsidiaries to,
notwithstanding anything to the contrary contained elsewhere in this
Agreement or in any other Consignment Document, open or enter into
commitments to open any factory outlet stores to be operated by a
Consignee. Notwithstanding anything to the contrary contained herein the
Consignees may continue to operate the two factory outlet stores being
operated as of the date hereof.
8.3. Financial Covenants. Each Consignee agrees that until the termination
of the Commitment and the payment and satisfaction in full of all the
Obligations:
8.3.1. EBITDA to Financial Obligations. No Consignee will, and where
applicable, will not permit its Subsidiaries to permit the ratio of (i) the
difference of (A) Consolidated EBITDA of the Parent and its Subsidiaries
for any period of four consecutive fiscal quarters minus (B) Capital
Expenditures of the Parent and its Subsidiaries on a consolidated basis
made during such period minus (C) the amount of cash paid in respect of
income taxes of the Parent and its Subsidiaries on a consolidated basis for
such period, whether directly or pursuant to the Tax Allocation Agreement,
plus (D) the amount of the tax credit to the Parent and its Subsidiaries as
a result of the write-off associated with the Sonab Transfer, the
subsequent liquidation of the balance of the net assets of Sonab and the
closure of the Sonab operation to (ii) the amount of Consolidated Periodic
Financial Obligations of the Parent and its Subsidiaries on a consolidated
basis during such period, to be less than
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the ratio set forth opposite the date set forth in the table below upon
which such period shall have ended:
Period Ending Ratio
------------- -----
01/31/01 1.35:1
and thereafter
8.3.2. Indebtedness to EBITDA. No Consignee will, and where
applicable, will not permit its Subsidiaries to permit the ratio of (i) the
aggregate principal amount of all Indebtedness for Borrowed Money of the
Parent and its Subsidiaries on a consolidated basis as of any fiscal
quarter ending date set forth in the table below to (ii) Consolidated
EBITDA of the Parent and its Subsidiaries for the period of four
consecutive fiscal quarters ending on such fiscal quarter ending date in
such table, to exceed the ratio set forth opposite such date in such table:
Fiscal Quarter
Ending Date: Ratio:
----------- ------
1/31/01 3.85:1
4/30/01 4.95:1
7/31/01 4.95:1
10/31/01 4.73:1
1/31/02 3.52:1
8.3.3. Minimum EBITDA. No Consignee will, and where applicable, will
not permit its Subsidiaries to permit Consolidated EBITDA of the Parent and
its Subsidiaries for any period of four consecutive fiscal quarters ending
on any date set forth in the table below to be less than the amount set
forth opposite such date in such table:
Date: Amount:
---- ------
1/31/01 $72,000,000
4/30/01 $73,800,000
7/31/01 $73,800,000
10/31/01 $73,800,000
1/31/02 $78,300,000
9. EVENTS OF DEFAULT; ACCELERATION.
9.1. Events of Default and Acceleration. If any of the following events
("Events of Default") shall occur:
(a) any Consignee shall fail to purchase or pay for (whether by
payment of cash or by Redelivery) any Consigned Precious Metal when
required to do so pursuant to the terms of this Agreement;
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(b) any Consignee shall fail to pay Daily Consignment Fees, commitment
fees or any other sum due under this Agreement or any of the other
Consignment Documents within three (3) Business Days after the date on
which the same shall have first become due and payable;
(c) any Consignee or any of its Subsidiaries shall fail to perform any
term, covenant or agreement contained in ss.ss.3.1, 3.2, 8.1 (other than
8.1.2(i) and 8.1.3(ii)), 8.2 and 8.3;
(d) any Consignee or any of its Subsidiaries shall fail to perform (i)
any term, covenant or agreement contained in ss.8.1.2(i) or ss.8.1.3(ii) or
any other term, covenant or agreement contained in the Consignment
Documents (other than those terms, covenants and agreements contained in
ss.4 of the Security Agreement), and such failure shall continue unremedied
for a period of thirty (30) days after Notice thereof shall have been given
by the Agent to a Consignee, or (ii) any term, covenant or agreement
contained in ss.4 of the Security Agreement, and such failure shall
continue unremedied for a period of thirty (30) days;
(e) any representation or warranty of any Consignee or any of its
Subsidiaries in the Consignment Documents or in any certificate or notice
given in connection therewith shall have been false or misleading in any
material respect at the time made or deemed to have been made;
(f) any Consignee or any of its Subsidiaries shall fail to pay at
maturity, or within any applicable period of grace, any obligation owed by
it under the Senior Notes or any other obligation for borrowed money or
credit received or in respect of Capitalized Leases (other than in respect
of the Dollar Facility and the Senior Debentures) which other obligation
shall be in excess of $1,000,000 in aggregate principal amount, or fail to
observe or perform any material term, covenant or agreement contained in
the Senior Notes or the documents executed in connection therewith or any
material term, covenant or agreement contained in any other obligation for
borrowed money or credit received or in respect of Capitalized Leases
(other than in respect of the Dollar Facility and the Senior Debentures)
which other obligation shall be in excess of $1,000,000 for such period of
time as would permit (assuming the giving of appropriate notice if
required) the holder or holders thereof or of any obligations issued
thereunder to accelerate the maturity thereof;
(g) the Parent shall fail to pay at maturity, or within any applicable
period of grace, any obligation owed by it under the Senior Debentures or
any other obligation for borrowed money or credit received or in respect of
Capitalized Leases (other than in respect of the Dollar Facility and the
Senior Notes) which other obligation shall be in excess of $1,000,000 in
aggregate principal amount, or fail to observe or perform any material
term, covenant or agreement contained in the Senior Debentures or the
documents executed in connection therewith or any
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material term, covenant or agreement contained in any other obligation for
borrowed money or credit received or in respect of Capitalized Leases
(other than in respect of the Dollar Facility and the Senior Notes) which
other obligation shall be in excess of $1,000,000 for such period of time
as would permit (assuming the giving of appropriate notice if required) the
holder or holders thereof or of any obligations issued thereunder to
accelerate the maturity thereof;
(h) any Consignee or the Parent shall fail to pay at maturity, or
within any applicable period of grace, any obligation owed by it under the
Dollar Facility, or shall fail to observe or perform any material term,
covenant or agreement contained in the Dollar Facility, for such period of
time as would permit (assuming the giving of appropriate notice if
required) the Dollar Agent or the Lenders (as defined in the Dollar
Facility) to accelerate the maturity thereof;
(i) except in accordance with the terms thereof or with the express
prior written agreement, consent or approval of the Agent, (i) (A) any of
the Consignment Documents shall be cancelled, terminated, revoked or
rescinded, (B) the Agent's Liens for the benefit of the Institutions and
the Agent in all or any portion of the Collateral having an aggregate value
in excess of the lesser of two and one-half percent (2 1/2%) of the Fair
Market Value of all Consigned Precious Metal then outstanding and $500,000,
shall cease to be perfected or shall cease to have the priority
contemplated by the Security Documents and the Intercreditor Agreement, or
(C) the Agent's Liens for the benefit of the Institutions and the Agent in
any portion of the Collateral having an aggregate value less than or equal
to the lesser of two and one-half percent (2 1/2%) of the Fair Market Value
of all Consigned Precious Metal then outstanding and $500,000 shall cease
to be perfected or shall cease to have the priority contemplated by the
Security Documents and the Intercreditor Agreement, and such cessation of
perfection or priority shall continue unremedied for a period of thirty
(30) days, or (ii) any action at law, suit or in equity or other legal
proceeding to cancel, revoke or rescind any of the Consignment Documents
shall be commenced by or on behalf of any Consignee or any of its
Subsidiaries party thereto or any of their respective stockholders, or
(iii) any court or any other governmental or regulatory authority or agency
of competent jurisdiction shall make a determination that, or issue a
judgment, order, decree or ruling to the effect that, any one or more of
the Consignment Documents is illegal, invalid or unenforceable in
accordance with the terms thereof;
(j) any of the Parent, any Consignee or any of its Subsidiaries (i)
shall make an assignment for the benefit of creditors, (ii) shall be
adjudicated bankrupt or insolvent, (iii) shall seek the appointment of, or
be the subject of an order appointing, a trustee, liquidator or receiver as
to all or a substantial part of its assets, (iv) shall commence, approve or
consent to, any case or proceeding under any bankruptcy, reorganization
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or similar law and, in the case of an involuntary case or proceeding, such
case or proceeding is not dismissed within sixty (60) days following the
commencement thereof, or (v) shall be the subject of an order for relief in
an involuntary case under federal bankruptcy law;
(k) any of the Parent, any Consignee or any of its Subsidiaries shall
be unable to pay its debts generally as they mature;
(l) there shall remain undischarged and unstayed for more than thirty
(30) days any final judgment or execution action against any of the Parent,
any Consignee or any of its Subsidiaries that, together with other
outstanding claims and execution actions against the Parent, the Consignees
and their Subsidiaries exceeds $1,000,000 in the aggregate;
(m) any Consignee or any of its Subsidiaries shall be enjoined,
restrained or in any way prevented by the order of any court or any
administrative or regulatory agency from conducting any material part of
its domestic business and such order shall continue in effect for more than
thirty (30) days;
(n) there shall occur any material damage to, or loss, theft or
destruction of, any Consigned Precious Metal, or any products or property
which includes Consigned Precious Metal, for which additional Eligible
Specified Gold Jewelry in replacement thereof is not immediately delivered
or as to which immediate payment therefor (equal to the Fair Market Value
thereof at the time of such loss, theft or destruction plus twenty-five
cents ($0.25) per xxxx ounce thereof) has not been made by the Consignees
to the Agent;
(o) there shall occur any strike, lockout, labor dispute, embargo,
condemnation, act of God or public enemy, or other casualty, which in any
such case causes, for more than thirty (30) consecutive days, the cessation
or substantial curtailment of revenue producing activities at any facility
of any Consignee or any of its Subsidiaries if such event or circumstance
is not covered by business interruption insurance satisfactory to the Agent
and has or could reasonably be expected to have a Materially Adverse
Effect;
(p) there shall occur the loss, suspension or revocation of, or
failure to renew, any license or permit now held or hereafter acquired by
any Consignee or any of its Subsidiaries if such loss, suspension,
revocation or failure to renew has or could reasonably be expected to have
a Materially Adverse Effect;
(q) the Parent shall at any time, legally or beneficially, own less
than 100% of the outstanding capital stock of Finlay or Finlay shall at any
time, legally or beneficially, own less than 100% of the outstanding
capital stock of any Consignee Subsidiary, including eFinlay;
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(r) (i) any "person" or "group" (within the meaning of Section 13(d)
or 14(d)(2) of the Securities Exchange Act of 1934, as amended), other than
the Principals and their Related Parties, or an entity controlled by the
Principals and their Related Parties, becomes the "beneficial owner"
(within the meaning of Rule 13d-3 promulgated by the Securities and
Exchange Commission under said Act) of more than 50% of the total aggregate
voting power of all classes of the voting stock of any Consignee or the
Parent and/or warrants or options to acquire such voting stock, calculated
on a fully diluted basis; or (ii) during any period of two consecutive
calendar years, individuals who at the beginning of such period constituted
any Consignee's board of directors (together with any new directors whose
election by such Consignee's board of directors or whose nomination for
election by such Consignee's stockholders was approved by a vote of at
least two-thirds of the directors then still in office who either were
directors at the beginning of such period or whose election or nomination
for election was previously so approved) cease for any reason to constitute
a majority of the directors of such Consignee then in office, unless such
majority of the directors then in office has been elected or nominated for
election by the Principals or their Related Parties or an entity controlled
by the Principals or their Related Parties;
(s) the Parent shall engage in any activities other than the ownership
of the stock of Finlay, compliance with the terms of the Senior Debentures,
and such other activities which are incidental to either of the foregoing;
(t) there shall be less than thirty (30) days until the expiration of
the Letter of Credit and such Letter of Credit shall not have been extended
or renewed by the issuer thereof; or
(u) the credit rating of the issuer of the Letter of Credit shall fall
below a "B" LACE rating, and the Consignees shall not, within thirty (30)
days following such change in rating, have obtained a substitute Letter of
Credit in form and substance acceptable to the Institutions and the Agent
and issued by an issuer having at least a "B" LACE rating and otherwise
acceptable to the Institutions and the Agent;
THEN, or at any time thereafter:
(1) If any Event of Default under clause (j) or (k) shall occur, (A)
the Commitments shall automatically terminate and the Agent and the
Institutions shall be relieved of all further obligations to make Purchases
and Consignments to any Consignee, (B) the Consignees shall be immediately
jointly and severally obligated to (i) Redeliver an amount of Consigned
Precious Metal and/or (ii) pay to the Agent an amount equal to the Spot
Value of any Consigned Precious Metal on the date of such payment divided
by the Second London Fixing for such date, such that the combined amount of
Consigned Precious Metal Redelivered and/or paid
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for pursuant to subclauses (i) and (ii) of this clause (B) shall be equal
to the aggregate number of ounces of Consigned Precious Metal outstanding,
and (C) all accrued and unpaid Daily Consignment Fees and commitment fees,
and all other amounts payable hereunder and under the other Consignment
Documents shall automatically become forthwith due and payable, without
presentment, demand, protest or notice of any kind, all of which are hereby
expressly waived by each Consignee;
(2) If any Event of Default other than an Event of Default under (h),
(j) and (k) shall occur and be continuing, the Agent may, and upon the
request of the Required Institutions shall, by Notice to the Consignees,
(A) terminate the Commitment and the Agent and the Institutions shall be
relieved of all further obligations to make Purchases and Consignments to
any Consignee, (B) require that the Consignees immediately (such obligation
of the Consignees to be joint and several) (i) Redeliver an amount of
Consigned Precious Metal and/or (ii) pay to the Agent an amount equal to
the Spot Value of any Consigned Precious Metal on the date of such payment
divided by the Second London Gold Fixing for such date, such that the
combined amount of Consigned Precious Metal Redelivered and/or paid for
pursuant to subclauses (i) and (ii) of this clause (B) shall be equal to
the aggregate number of ounces of Consigned Precious Metal outstanding,
and/or (C) declare all accrued and unpaid Daily Consignment Fees and
commitment fees, and all other amounts payable hereunder and under the
other Consignment Documents to be forthwith due and payable, without
presentment, demand, protest or further notice of any kind, all of which
are hereby expressly waived by each Consignee; and
(3) If any Event of Default under clause (h) shall have occurred and
be continuing, the Agent may, and upon the request of the Required
Institutions shall, by Notice to the Consignees no earlier than ninety (90)
days following the occurrence of such Event of Default (A) terminate the
Commitments and the Agent and the Institutions shall be relieved of all
further obligations to make Purchases and Consignments to any Consignee,
(B) require that the Consignees immediately (such obligation of the
Consignees to be joint and several) (i) Redeliver an amount of Consigned
Precious Metal and/or (ii) pay to the Agent an amount equal to the Spot
Value of any Consigned Precious Metal on the date of such payment divided
by the Second London Gold Fixing for such date, such that the combined
number of ounces of Consigned Precious Metal Redelivered and/or paid for
pursuant to subclauses (i) and (ii) of this clause (B) shall be equal to
the aggregate amount of Consigned Precious Metal outstanding, and/or (C)
declare all accrued and unpaid Daily Consignment Fees and commitment fees,
and all other amounts payable hereunder and under the other Consignment
Documents to be forthwith due and payable, without presentment, demand,
protest or further notice of any kind, all of which are hereby expressly
waived by each Consignee.
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9.2. Agent's Rights with respect to Consigned Precious Metal. Without
limiting the foregoing, upon the occurrence of any Default or Event of Default
and at any time thereafter during the continuance thereof, the Agent shall have
the right to (a) enter and/or remain upon the premises of any Consignee or any
other place or places where any Consigned Precious Metal is located and kept
(without any obligation to pay rent to any Consignee) and (i) remove Consigned
Precious Metals or Specified Gold Jewelry containing the same therefrom to the
premises of the Agent or any agent of the Agent, for such time as the Agent may
desire, in order to maintain, collect, sell and/or liquidate said Consigned
Precious Metal or (ii) use such premises, together with equipment, materials,
supplies, books and records of any Consignee, to maintain possession, refine and
prepare said Consigned Precious Metal for sale, liquidation, or collection, (b)
require each Consignee to assemble the Consigned Precious Metal and make it
available to the Agent at a place or places to be designated by the Agent which
is reasonably convenient for the parties, or (c) at any time and from time to
time employ and maintain in any premises of any Consignee or any place where any
of the Consigned Precious Metal is located a custodian selected by the Agent who
shall have full authority to do all acts necessary to protect the Agent's and
the Institutions' interests and to report to the Agent thereon. Each Consignee
agrees to cooperate with any such custodian and to do whatever the Agent may
reasonably require to preserve the Consigned Precious Metal. All reasonable
expenses incurred by reason of the employment of the custodian shall be paid by
the Consignees upon demand by the Agent (such obligation to be borne by the
Consignees jointly and severally).
9.3. Remedies. In case any one or more of the Events of Default shall have
occurred and be continuing, and whether or not the Institutions shall have
accelerated the Obligations pursuant to ss.9.1, each Institution, if owed any
amount with respect to the Consigned Precious Metal, may, with the consent of
the Required Institutions but not otherwise, proceed to protect and enforce its
rights by suit in equity, action at law or other appropriate proceeding, whether
for the specific performance of any covenant or agreement contained in this
Agreement and the other Consignment Documents or any instrument pursuant to
which the Obligations to such Institution are evidenced, including as permitted
by applicable law the obtaining of the ex parte appointment of a receiver, and,
if such amount shall have become due, by declaration or otherwise, proceed to
enforce the payment thereof or any other legal or equitable right of such
Institution. No remedy herein conferred upon any Institution or the Agent or
purchaser of any Consignment Participation is intended to be exclusive of any
other remedy and each and every remedy shall be cumulative and shall be in
addition to every other remedy given hereunder or now or hereafter existing at
law or in equity or by statute or any other provision of law. No remedy herein
conferred upon the Agent or the Institutions is intended to be exclusive of any
other remedy and each and every remedy shall be cumulative and in addition to
every other remedy hereunder, now or hereafter existing at law or in equity or
otherwise.
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9.4. Distribution of Proceeds. In the event that, following the occurrence
or during the continuance of any Default or Event of Default, the Agent or any
Institution, as the case may be, receives any monies pursuant to in connection
with the enforcement of this Agreement or any of the other Consignment
Documents, or otherwise with respect to the realization upon any of the
Collateral, such monies shall, except as otherwise provided in the Intercreditor
Agreement, be distributed for application as follows:
(a) First, to the payment of, or (as the case may be) the
reimbursement of the Agent for or in respect of all reasonable costs,
expenses, disbursements and losses which shall have been incurred or
sustained by the Agent in connection with the collection of such monies by
the Agent, for the exercise, protection or enforcement by the Agent of all
or any of the rights, remedies, powers and privileges of the Agent under
this Agreement or any of the other Consignment Documents or in respect of
the Collateral or in support of any provision of adequate indemnity to the
Agent against any taxes or liens which by law shall have, or may have,
priority over the rights of the Agent to such monies;
(b) Second, to all other Obligations in such order or preference as
the Required Institutions may determine; provided, however, that (i)
distributions shall be made (A) pari passu among Obligations with respect
to the Agent's fee payable pursuant to ss.5.1 and all other Obligations and
(B) with respect to each type of Obligation owing to the Institutions, such
as interest, principal, fees and expenses, among the Institutions pro rata,
and (ii) the Agent may in its discretion make proper allowance to take into
account any Obligations not then due and payable;
(c) Third, upon payment and satisfaction in full or other provisions
for payment in full satisfactory to the Institutions and the Agent of all
of the Obligations, to the payment of any obligations required to be paid
pursuant to ss.9-504(1)(c) of the Uniform Commercial Code of the
Commonwealth of Massachusetts; and
(d) Fourth, the excess, if any, shall be returned to the Consignees or
to such other Persons as are entitled thereto.
10. SETOFF.
Regardless of the adequacy of any collateral for the Obligations, any
deposits or other sums credited by or due from any of the Institutions to any
Consignee may be applied to or set off by such Institution against the payment
of Obligations and any and all other liabilities, direct, or indirect, absolute
or contingent, due or to become due, now existing or hereafter arising, of any
Consignee to such Institution at any time without notice to any Consignee, or
compliance with any other procedure imposed by statute other otherwise, all of
which are hereby expressly waived by each of the Consignees. Each of the
Institutions agrees with each other Institution that (a) if an amount to be set
off
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is to be applied to Indebtedness of any Consignee to such Institution, other
than Indebtedness constituting obligations in respect of Consigned Precious
Metal owed to such Institution, such amount shall be applied ratably to such
other Indebtedness constituting obligations in respect of Consigned Precious
Metal owed to such Institution, and (b) if such Institution shall receive from
any Consignee, whether by voluntary payment, exercise of the right of setoff,
counterclaim, cross action, enforcement of the claim constituting obligations in
respect of Consigned Precious Metal owed to such Institution by proceedings
against any Consignee at law or in equity or by proof thereof in bankruptcy,
reorganization, liquidation, receivership or similar proceedings, or otherwise,
and shall retain and apply to the payment of obligations in respect of Consigned
Precious Metal owed to such Institution any amount in excess of its ratable
portion of the payments received by all of the Institutions with respect to the
obligations in respect of Consigned Precious Metal owed to, all of the
Institutions, such Institution will make such disposition and arrangements with
the other Institutions with respect to such excess, either by way of
distribution, pro tanto assignment of claims, subrogation or otherwise as shall
result in each Institution receiving in respect of the obligations in respect of
Consigned Precious Metal owed to it, its proportionate payment as contemplated
by this Agreement; provided that if all or any part of such excess payment is
thereafter recovered from such Institution, such disposition and arrangements
shall be rescinded and the amount restored to the extent of such recovery, but
without interest.
11. EXPENSES.
The Consignees jointly and severally agree to pay (i) the reasonable costs
of producing and reproducing this Agreement, the other Consignment Documents and
the other agreements and instruments mentioned herein, (ii) any taxes (including
any interest and penalties in respect thereto) payable by the Agent or any of
the Institutions (other than taxes based upon the Agent's or any Institution's
net income, whether or not incurred in connection with the consignment,
purchase, delivery or redelivery of Consigned Precious Metal) on or with respect
to the transactions contemplated by this Agreement (the Consignees jointly and
severally agreeing to indemnify the Agent and each Institution with respect
thereto), (iii) the reasonable fees, expenses and disbursements of the Agent's
counsel or any local counsel to the Agent incurred in connection with the
preparation, administration or interpretation of the Consignment Documents and
other instruments mentioned herein, the closing hereunder, and amendments,
modifications, approvals, consents or waivers hereto or hereunder, (iv) the
reasonable fees, expenses and disbursements of the Agent incurred by the Agent
in connection with the preparation, administration or interpretation of the
Consignment Documents and other instruments mentioned herein, (v) all reasonable
out-of-pocket expenses or fees incurred by the Agent in connection with the
performance of any commercial finance examinations or collateral reports or
appraisals (including all fees of any independent collateral auditors or
appraisers or other professional advisors employed by the Agent) pursuant to
ss.8.1.2 hereof, (vi) all reasonable out-of-
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pocket expenses (including without limitation reasonable attorneys' fees and
costs, which attorneys may be employees of the Agent or any Institution, and
reasonable consulting, accounting, appraisal, investment banking and similar
professional fees and charges) incurred by the Agent or any Institution in
connection with (A) the enforcement of or preservation of rights under any of
the Consignment Documents against any Consignee or any of its Subsidiaries or
the administration thereof after the occurrence of a Default or Event of Default
and (B) any litigation, proceeding or dispute whether arising hereunder or
otherwise, in any way related to the Agent's or any Institution's relationship
with any Consignee or any of its Subsidiaries, and (vii) all reasonable fees,
expenses and disbursements of the Agent or any Institution incurred in
connection with UCC searches or UCC filings (including, without limitation, all
filings made pursuant to Section 9-184 of the UCC). The covenants contained in
this ss.11 shall survive payment of satisfaction in full of all other
Obligations.
12. INDEMNIFICATION.
The Consignees jointly and severally agree to indemnify and hold harmless
the Agent and the Institutions from and against any and all claims, actions and
suits whether groundless or otherwise, and from and against any and all
liabilities, losses, damages and expenses of every nature and character arising
out of this Agreement or any of the other Consignment Documents or the
transactions contemplated hereby including, without limitation, (i) any actual
or proposed use by any Consignee or any of its Subsidiaries of the proceeds of
the Purchases and Consignments, (ii) any Consignee or any of its Subsidiaries
entering into or performing this Agreement or any of the other Consignment
Documents or (iii) with respect to any Consignee and its Subsidiaries and their
respective properties and assets, the violation of any Environmental Law, in
each case including, without limitation, the reasonable fees and disbursements
of counsel and allocated costs of internal counsel incurred in connection with
any such investigation, litigation or other proceeding; provided that the
foregoing indemnity will not, as to any indemnified person, apply to losses,
claims, damages, liabilities or related expenses to the extent that they arise
from the bad faith, willful misconduct or gross negligence of such indemnified
person; and provided further that such indemnity shall not apply to the portion,
if any, of any losses, claims, damages, liabilities or related expenses of any
indemnified person resulting solely and directly from any breach by such
indemnified person of its obligations under this Agreement. In litigation, or
the preparation therefor, the Institutions and the Agent shall be entitled to
select its own counsel and, in addition to the foregoing indemnity, the
Consignees jointly and severally agree to pay promptly the reasonable fees and
expenses of such counsel. If, and to the extent that the obligations of any
Consignee under this ss.12 are unenforceable for any reason, the Consignees
hereby jointly and severally agree to make the maximum contribution to the
payment in satisfaction of such obligations which is permissible under
applicable law. The covenants contained in this ss.12 shall survive payment of
satisfaction in full of all other Obligations.
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13. THE AGENT.
13.1. Authorization.
(a) The Agent is authorized to take such action on behalf of each of
the Institutions and to exercise all such powers as are hereunder and under
any of the other Consignment Documents and any related documents delegated
to the Agent, together with such powers as are reasonably incident thereto,
provided that no duties or responsibilities not expressly assumed herein or
therein shall be implied to have been assumed by the Agent.
(b) The relationship between the Agent and each of the Institutions is
that of an independent contractor. The use of the term "Agent" is for
convenience only and is used to describe, as a form of convention, the
independent contractual relationship between the Agent and each of the
Institutions. Nothing contained in this Agreement nor the other Consignment
Documents shall be construed to create an agency, trust or other fiduciary
relationship between the Agent and any of the Institutions.
(c) As independent contractors empowered by the Institutions to
exercise certain rights and perform certain duties and responsibilities
hereunder and under the other Consignment Documents, the Agent is
nevertheless a "representative" of the Institutions, as that term is
defined in Article 1 of the Uniform Commercial Code, for purposes of
actions for the benefit of the Institutions and the Agent with respect to
all collateral security and guaranties contemplated by the Consignment
Documents. Such actions include the designation of the Agent as "secured
party", "mortgagee" or the like on all financing statements and other
documents and instruments, whether recorded or otherwise, relating to the
attachment, perfection, priority or enforcement of any security interests,
mortgages or deeds of trust in collateral security intended to secure the
payment or performance of any of the Obligations, all for the benefit of
the Institutions and the Agent.
13.2. Employees and Agents. The Agent may exercise its powers and execute
its duties by or through employees or agents and shall be entitled to take, and
to rely on, advice of counsel concerning all matters pertaining to its rights
and duties under this Agreement and the other Consignment Documents. The Agent
may utilize the services of such Persons as the Agent in its sole discretion may
reasonably determine, and all reasonable fees and expenses of any such Persons
shall be paid by the Consignees.
13.3. No Liability. Neither the Agent nor any of its shareholders,
directors, officers or employees nor any other Person assisting them in their
duties nor any agent or employee thereof, shall be liable for any waiver,
consent or approval given or any action taken, or omitted to be taken, in good
faith by
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them hereunder or under any of the other Consignment Documents, or in connection
herewith or therewith, or be responsible for the consequences of any oversight
or error of judgment whatsoever, except that the Agent or such other Person, as
the case may be, may be liable for losses due to its willful misconduct or gross
negligence.
13.4. No Representations. The Agent shall not be responsible for the
execution or validity or enforceability of this Agreement or any of the other
Consignment Documents or any instrument at any time constituting, or intended to
constitute, collateral security for the Obligations, or for the value of any
such collateral security or for the validity, enforceability or collectability
of any such amounts owing with respect to the Obligations, or for any recitals
or statements, warranties or representations made herein or in any of the other
Consignment Documents or in any certificate or instrument hereafter furnished to
it by or on behalf of any Consignee or any of its Subsidiaries, or be bound to
ascertain or inquire as to the performance or observance of any of the terms,
conditions, covenants or agreements herein or in any instrument at any time
constituting, or intended to constitute, collateral security for the Notes or
the obligations in respect of Consigned Precious Metal or to inspect any of the
properties, books or records of any Consignee or any of its Subsidiaries. The
Agent shall not be bound to ascertain whether any notice, consent, waiver or
request delivered to it by any Consignee or any holder of any right in respect
of Consigned Precious Metal shall have been duly authorized or is true, accurate
and complete. The Agent has not made nor does it now make any representations or
warranties, express or implied, nor do they assume any liability to the
Institutions, with respect to the credit-worthiness or financial conditions of
any Consignee or any of its Subsidiaries. Each Institution acknowledges that it
has, independently and without reliance upon the Agent or any other Institution,
and based upon such information and documents as it has deemed appropriate, made
its own credit analysis and decision to enter into this Agreement.
13.5. Payments.
13.5.1. Payments to Agent. A payment by any Consignee to the Agent
hereunder or any of the other Consignment Documents for the account of any
Institution shall constitute a payment to such Institution. The Agent
agrees promptly to distribute to each Institution such Institution's pro
rata share of payments received by the Agent for the account of the such
Institutions except as otherwise expressly provided herein or in any of the
other Consignment Documents.
13.5.2. Distribution by Agent. If in the opinion of the Agent the
distribution of any amount received by it in such capacity hereunder or
under any of the other Consignment Documents might involve it in liability,
it may refrain from making distribution until its right to make
distribution shall have been adjudicated by a court of competent
jurisdiction. If a court of competent jurisdiction shall adjudge that any
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amount received and distributed by the Agent is to be repaid, each Person
to whom any such distribution shall have been made shall either repay to
the Agent its proportionate share of the amount so adjudged to be repaid or
shall pay over the same in such manner and to such Persons as shall be
determined by such court.
13.5.3. Delinquent Institutions. Notwithstanding anything to the
contrary contained in this Agreement or any of the other Consignment
Documents, any Institution that fails (i) to make available to the Agent
its pro rata share of any Purchase and Consignment or (ii) to comply with
the provisions of ss.10 with respect to making dispositions and
arrangements with the other Institutions, where such Institution's share of
any payment received, whether by setoff or otherwise, is in excess of its
pro rata share of such payments due and payable to all of the Institutions,
in each case as, when and to the full extent required by the provisions of
this Agreement, shall be deemed delinquent (a "Delinquent Institution") and
shall be deemed a Delinquent Institution until such time as such
delinquency is satisfied. A Delinquent Institution shall be deemed to have
assigned any and all payments due to it from each Consignee, whether on
account of Consigned Precious Metal, Daily Consignment Fees, other fees or
otherwise, to the remaining nondelinquent Institutions or Fronting
Institutions, as applicable, for application to, and reduction of, their
respective pro rata shares of all Consigned Precious Metal. The Delinquent
Institution hereby authorizes the Agent to distribute such payments to the
nondelinquent Institutions or Fronting Institutions, as applicable, in
proportion to their respective pro rata shares of all outstanding Consigned
Precious Metal. A Delinquent Institution shall be deemed to have satisfied
in full a delinquency when and if, as a result of application of the
assigned payments to all outstanding Consigned Precious Metal, of the
nondelinquent Institutions, the Institutions' respective pro rata shares of
all outstanding Consigned Precious Metal, have returned to those in effect
immediately prior to such delinquency and without giving effect to the
nonpayment causing such delinquency.
13.6. Holders of Notes. The Agent may deem and treat the purchaser of any
Consignment Participation as the absolute owner or purchaser thereof for all
purposes hereof until it shall have been furnished in writing with a different
name by such payee or by a subsequent holder, assignee or transferee.
13.7. Indemnity. The Institutions ratably agree hereby to indemnify and
hold harmless the Agent from and against any and all claims, actions and suits
(whether groundless or otherwise), losses, damages, costs, expenses (including
any expenses for which the Agent has not been reimbursed by the Consignees as
required by ss.11), and liabilities of every nature and character arising out of
or related to this Agreement or any of the other Consignment Documents or the
transactions contemplated or evidenced hereby or thereby, or the Agent's actions
taken hereunder or thereunder, except to the extent that any
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of the same shall be directly caused by the Agent's willful misconduct or gross
negligence.
13.8. Agent as Institution. In its individual capacity, Sovereign shall
have the same obligations and the same rights, powers and privileges in respect
to its Commitment, as the holder of any of any obligations in respect of
Consigned Precious Metal and as the purchaser Consignment Participations, as it
would have were it not also the Agent.
13.9. Resignation. The Agent may resign at any time by giving sixty (60)
days' prior written notice thereof to the Institutions and the Consignees. Upon
any such resignation, the Required Institutions shall have the right to appoint
a successor Agent. Unless a Default or an Event of Default shall have occurred
and be continuing, such successor Agent shall be reasonably acceptable to the
Consignees. If no successor Agent shall have been so appointed by the Required
Institutions and shall have accepted such appointment within thirty (30) days
after the retiring Agent's giving of notice of resignation, then the retiring
Agent may, on behalf of the Institutions, appoint a successor Agent, which shall
be a financial institution having a rating of not less than A or its equivalent
by Standard & Poor's Corporation. Upon the acceptance of any appointment as an
Agent hereunder by a successor Agent, such successor Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring Agent, and the retiring Agent shall be discharged from its
duties and obligations hereunder. After any retiring Agent's resignation, the
provisions of this Agreement and the other Consignment Documents shall continue
in effect for its benefit in respect of any actions taken or omitted to be taken
by it while it was acting as Agent.
13.10. Notification of Defaults and Events of Default. Each Institution
hereby agrees that, upon learning of the existence of a Default or an Event of
Default, it shall promptly notify the Agent thereof. The Agent hereby agrees
that upon receipt of any notice under this ss.13.10 it shall promptly notify the
other Institutions of the existence of such Default or Event of Default.
13.11. Duties in the Case of Enforcement. In case one or more Events of
Default have occurred and shall be continuing, and whether or not acceleration
of the Obligations shall have occurred, the Agent shall, if (a) so requested by
the Required Institutions and (b) the Institutions have provided to the Agent
such additional indemnities and assurances against expenses and liabilities as
the Agent may reasonably request, proceed to enforce the provisions of the
Security Documents authorizing the sale or other disposition of all or any part
of the Collateral and exercise all or any such other legal and equitable and
other rights or remedies as it may have in respect of such Collateral. The
Required Institutions may direct the Agent in writing as to the method and the
extent of any such sale or other disposition, the Institutions hereby agreeing
to indemnify and hold the Agent, harmless from all liabilities incurred in
respect of all actions taken or omitted in accordance with such directions,
provided that the Agent need not comply with any such direction to
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the extent that the Agent reasonably believes the Agent's compliance with such
direction to be unlawful or commercially unreasonable in any applicable
jurisdiction.
14. ASSIGNMENT AND PARTICIPATION.
14.1. Conditions to Assignments.
14.1.1. Assignment by Institutions. Except as provided herein, each
Institution may assign to one or more Eligible Assignees all or a portion
of its interests, rights and obligations under this Agreement (including
all or a portion of its Commitment Percentage, Commitment and the same
portion of the Fair Market Value of Consigned Precious Metal at the time
owing to it and its participating interest in the risk relating to any
Purchases and Consignments); provided that (a) the Agent and, unless a
Default or an Event of Default shall have occurred and be continuing, the
Consignees shall have given their prior written consent to such assignment,
which consent will not be unreasonably withheld, (b) each such assignment
shall be of a constant, and not a varying, percentage of all the assigning
Institution's rights and obligations under this Agreement, (c) each
assignment shall be in an amount that is at least equal to $5,000,000 or
such lesser amount equal to all of the Assignor's remaining interests,
rights and obligations under this Agreement, and (d) the parties to such
assignment shall execute and deliver to the Agent, for recording in the
Register (as hereinafter defined), an Assignment and Acceptance,
substantially in the form of Exhibit C hereto (an "Assignment and
Acceptance"). Upon such execution, delivery, acceptance and recording, from
and after the effective date specified in each Assignment and Acceptance,
which effective date shall be at least five (5) Business Days after the
execution thereof, (i) the assignee thereunder shall be a party hereto and,
to the extent provided in such Assignment and Acceptance, have the rights
and obligations of an Institution hereunder, and (ii) the assigning
Institution shall, to the extent provided in such assignment and upon
payment to the Agent of the registration fee referred to in ss.14.3, be
released from its obligations under this Agreement.
14.2. Certain Representations and Warranties; Limitations; Covenants. By
executing and delivering an Assignment and Acceptance, the parties to the
assignment thereunder confirm to and agree with each other and the other parties
hereto as follows:
(a) other than the representation and warranty that it is the legal
and beneficial owner of the interest being assigned thereby free and clear
of any adverse claim, the assigning Institution makes no representation or
warranty, express or implied, and assumes no responsibility with respect to
any statements, warranties or representations made in or in connection with
this Agreement or the execution, legality, validity,
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enforceability, genuineness, sufficiency or value of this Agreement, the
other Consignment Documents or any other instrument or document furnished
pursuant hereto or the attachment, perfection or priority of any security
interest or mortgage;
(b) the assigning Institution makes no representation or warranty and
assumes no responsibility with respect to the financial condition of any
Consignee and its Subsidiaries or any other Person primarily or secondarily
liable in respect of any of the Obligations, or the performance or
observance by any Consignee and its Subsidiaries or any other Person
primarily or secondarily liable in respect of any of the Obligations of any
of their obligations under this Agreement or any of the other Consignment
Documents or any other instrument or document furnished pursuant hereto or
thereto;
(c) such assignee confirms that it has received a copy of this
Agreement, together with copies of the most recent financial statements
referred to in ss.6.4 and ss.8.1.1 and such other documents and information
as it has deemed appropriate to make its own credit analysis and decision
to enter into such Assignment and Acceptance;
(d) such assignee will, independently and without reliance upon the
assigning Institution, the Agent or any other Institution and based on such
documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action
under this Agreement;
(e) such assignee represents and warrants that it is an Eligible
Assignee;
(f) such assignee appoints and authorizes the Agent to take such
action as agent on its behalf and to exercise such powers under this
Agreement and the other Consignment Documents as are delegated to the Agent
by the terms hereof or thereof, together with such powers as are reasonably
incidental thereto;
(g) such assignee agrees that it will perform in accordance with their
terms all of the obligations that by the terms of this Agreement are
required to be performed by it as an Institution; and
(h) such assignee represents and warrants that it is legally
authorized to enter into such Assignment and Acceptance.
14.3. Register. The Agent shall maintain a copy of each Assignment and
Acceptance delivered to it and a register or similar list (the "Register") for
the recordation of the names and addresses of the Institutions and the
Commitment Percentage of, Purchases and Consignments made by and Consignment
Participations purchased by, the Institutions from time to time.
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The entries in the Register shall be conclusive, in the absence of manifest
error, and the Borrower, the Agent and the Institutions may treat each Person
whose name is recorded in the Register as an Institution hereunder for all
purposes of this Agreement. The Register shall be available for inspection by
the Consignees and the Institutions at any reasonable time and from time to time
upon reasonable prior notice. Upon each such recordation, the assignee
Institution agrees to pay to the Agent a registration fee in the sum of $3,500.
14.4. Participations. Each Institution may sell participations to one or
more banks or other entities in all or a portion of such Institution's rights
and obligations under this Agreement and the other Consignment Documents;
provided that (a) each such participation shall be in an amount of not less than
$5,000,000, (b) any such sale or participation shall not affect the rights and
duties of the selling Institution hereunder to the Consignees and (c) the only
rights granted to the participant pursuant to such participation arrangements
with respect to waivers, amendments or modifications of the Consignment
Documents shall be the rights to approve waivers, amendments or modifications
that would reduce the Fair Market Value of Consigned Precious Metal or Daily
Consignment Fees, extend the term or increase the amount of the Commitment of
such Institution as it relates to such participant or extend any regularly
scheduled payment date for principal or interest or any scheduled payment or
redelivery date for Consigned Precious Metal or Daily Consignment Fees.
14.5. Disclosure. Each Consignee agrees that, in addition to disclosures
made in accordance with standard and customary banking practices, any
Institution may disclose information obtained by such Institution pursuant to
this Agreement to assignees or participants and potential assignees or
participants hereunder; provided that such assignees or participants or
potential assignees or participants shall agree (a) to treat in confidence such
information unless it otherwise becomes public knowledge, (b) not to disclose
such information to a third party, except as required by law or legal process,
and (c) not to make use of such information for purposes of transactions
unrelated to such contemplated assignment or participation.
14.6. Assignee or Participant Affiliated with Consignees. If any assignee
Institution is an Affiliate of any Consignee, then any such assignee Institution
shall have no right to vote as an Institution hereunder or under any of the
other Consignment Documents for purposes of granting consents or waivers or for
purposes of agreeing to amendments or other modifications to any of the
Consignment Documents or for purposes of making requests to the Agent pursuant
to ss.9, and the determination of the Required Institutions shall for all
purposes of this Agreement and the other Consignment Documents be made without
regard to such assignee Institution's interest in any of the Obligations. If any
Institution sells a participating interest in Consigned Precious Metal to a
participant, and such participant is a Consignee or an Affiliate of a Consignee,
then such transferor Institution shall promptly notify the Agent of the sale of
such participation. A transferor Institution shall have no right to vote as an
Institution hereunder or under any of the other Consignment Documents for
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purposes of granting consents or waivers or for purposes of agreeing to
amendments or modifications to any of the Consignment Documents or for purposes
of making requests to the Agent pursuant to ss.9 to the extent that such
participation is beneficially owned by a Consignee or any Affiliate of a
Consignee, and the determination of the Required Institutions shall for all
purposes of this Agreement and the other Consignment Documents be made without
regard to the interest of such transferor Institution in the Obligations to the
extent of such participation.
14.7. Miscellaneous Assignment Provisions. Any assigning Institution shall
retain its rights to be indemnified pursuant to ss.12 with respect to any claims
or actions arising prior to the date of such assignment. If any assignee
Institution is not incorporated under the laws of the United States of America
or any state thereof, it shall, prior to the date on which any interest or fees
are payable hereunder or under any of the other Consignment Documents for its
account, deliver to Finlay and the Agent certification as to its exemption from
deduction or withholding of any United States federal income taxes. Anything
contained in this ss.14 to the contrary notwithstanding, any Institution may at
any time pledge all or any portion of its interest and rights under this
Agreement to any of the twelve Banks organized under ss.4 of the Federal Reserve
Act, 12 U.S.C. ss.341. No such pledge or the enforcement thereof shall release
the pledgor Institution from its obligations hereunder or under any of the other
Consignment Documents.
14.8. Assignment by Consignees. No Consignee shall assign or transfer any
of its rights or obligations under any of the Consignment Documents without the
prior written consent of each of the Institutions.
15. CONSENTS, AMENDMENTS, WAIVERS, ETC.
Any consent or approval required or permitted by this Agreement to be given
by all of the Institutions may be given, and any term of this Agreement, the
other Consignment Documents or any other instrument related hereto or mentioned
herein may be amended, and the performance or observance by any Consignee or any
of its Subsidiaries of any terms of this Agreement, the other Consignment
Documents or such other instrument or the continuance of any Default or Event of
Default may be waived (either generally or in a particular instance and either
retroactively or prospectively) with, but only with, the written consent of the
Consignees and the written consent of the Required Institutions. Notwithstanding
the foregoing (a) without the written consent of the Consignees and the written
consent of each Institution affected thereby, the definition of Maturity Date
may not be changed, the basis for calculation of Daily Consignment Fees may not
be decreased, the amounts of the Commitments may not be increased, and all or
any substantial portion of the Collateral may not be released; (b) the
definition of Required Institutions may not be amended without the written
consent of all of the Institutions; and (c) ss.13 may not be amended without the
written consent of the Agent. No waiver shall extend to or affect any obligation
not expressly waived or impair any right
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consequent thereon. No course of dealing or delay or omission on the part of the
Agent or any Institution in exercising any right shall operate as a waiver
thereof or otherwise be prejudicial thereto. No notice to or demand upon any
Consignee shall entitle any Consignee to other or further notice or demand in
similar or other circumstances.
16. NEW CONSIGNEES.
Finlay may request that any Subsidiary of Finlay become a Consignee, and
such Subsidiary shall become a Consignee if the Agent, in its sole discretion,
consents thereto and such Subsidiary (i) executes and delivers a joinder to this
Agreement in form and substance satisfactory to the Agent and the Required
Institutions, (ii) executes and delivers a joinder to the Security Documents in
form and substance satisfactory to the Agent and the Required Institutions or
such additional Security Documents in substantially the same form as those to
which the existing Consignees are party and otherwise satisfactory to the Agent
and the Required Institutions as the Agent shall request, and (iii) providing
such other documentation as the Agent may reasonably request, including, without
limitation, Uniform Commercial Code searches and filings, legal opinions and
corporate or other appropriate authorization documentation with respect to such
new Subsidiary and other documentation with respect to the conditions specified
in ss.7 hereof. In such event, the Agent is hereby authorized by the parties
hereto to amend Schedule XIII to include each such new Subsidiary as a
Consignee.
17. CONCERNING JOINT AND SEVERAL LIABILITY OF THE CONSIGNEES.
(a) Each of the Consignees is accepting joint and several liability
hereunder and under the other Consignment Documents in consideration of the
financial accommodations to be provided by the Institutions and the Agent under
this Agreement, for the mutual benefit, directly and indirectly, of each of the
Consignees and in consideration of the undertakings of each of the other
Consignees to accept joint and several liability for the Obligations.
(b) Each of the Consignees, jointly and severally, hereby irrevocably and
unconditionally accepts, not merely as a surety but also as a co-debtor, joint
and several liability with the other Consignees, with respect to the payment and
performance of all of the Obligations (including, without limitation, any
Obligations arising under this ss.17), it being the intention of the parties
hereto that all the Obligations shall be the joint and several obligations of
each of the Consignees without preferences or distinction among them.
(c) If and to the extent that any of the Consignees shall fail to make any
payment with respect to any of the Obligations as and when due or to perform any
of the Obligations in accordance with the terms thereof, then in each such event
the other Consignees will make such payment with respect to, or perform, such
Obligation.
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(d) The Obligations of each of the Consignees under the provisions of this
ss.17 constitute the full recourse Obligations of each of the Consignees
enforceable against each such Person to the full extent of its properties and
assets, irrespective of the validity, regularity or enforceability of this
Agreement or the other Consignment Documents or any other circumstance
whatsoever as to any other Consignee.
(e) Except as otherwise expressly provided herein, each Consignee hereby
waives promptness, diligence, presentment, demand, protest, notice of acceptance
of its joint and several liability, notice of any and all Purchase and
Consignments made under this Agreement and the Consignment Documents, notice of
occurrence of any Default or Event of Default (except to the extent notice is
expressly required to be given pursuant to the terms of this Agreement or any of
the other Consignment Documents), or of any demand for any payment under this
Agreement, notice of any action at any time taken or omitted by the Agent or the
Institutions under or in respect of any of the Obligations hereunder, any
requirement of diligence and, generally, all demands, notices and other
formalities of every kind in connection with this Agreement and the other
Consignment Documents. Each Consignee hereby waives all defenses which may be
available by virtue of any valuation, stay, moratorium law or other similar law
now or hereafter in effect, any right to require the marshaling of assets of the
Consignees and any other entity or Person primarily or secondarily liable with
respect to any of the Obligations, and all suretyship defenses generally. Each
Consignee hereby assents to, and waives notice of, any extension or postponement
of the time for the payment, or place or manner for payment, compromise,
refinancing, consolidation or renewals of any of the Obligations hereunder, the
acceptance of any partial payment thereon, any waiver, consent or other action
or acquiescence by the Agent and the Institutions at any time or times in
respect of any default by any Consignee in the performance or satisfaction of
any term, covenant, condition or provision of this Agreement and the other
Consignment Documents, any and all other indulgences whatsoever by the Agent and
the Institutions in respect of any of the Obligations hereunder, and the taking,
addition, substitution or release, in whole or in part, at any time or times, of
any security for any of such Obligations or the addition, substitution or
release, in whole or in part, of any Consignee or any other entity or Person
primarily or secondarily liable for any Obligation. Such Consignee further
agrees that its Obligations shall not be released or discharged, in whole or in
part, or otherwise affected by the adequacy of any rights which the Agent or any
Institution may have against any collateral security or other means of obtaining
repayment of any of the Obligations, the impairment of any collateral security
securing the Obligations, including, without limitation, the failure to protect
or preserve any rights which the Agent or any Institution may have in such
collateral security or the substitution, exchange, surrender, release, loss or
destruction of any such collateral security, any other act or omission which
might in any manner or to any extent vary the risk of such Consignee, or
otherwise operate as a release or discharge of such Consignee, all of which may
be done without notice to such Consignee; provided, however, that the foregoing
shall in no way be deemed to create commercially unreasonable standards as to
the Agent's duties as secured party under the Consignment Documents (as such
rights and duties are set forth therein). If for any reason any of the other
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Consignees has no legal existence or is under no legal obligation to discharge
any of the Obligations, or if any of the Obligations have become irrecoverable
from any of the other Consignees by reason of such other Consignee's insolvency,
bankruptcy or reorganization or by other operation of law or for any reason,
this Agreement and the other Consignment Documents to which it is a party shall
nevertheless be binding on such Consignee to the same extent as if such
Consignee at all times had been the sole obligor on such Obligations. Without
limiting the generality of the foregoing, each Consignee assents to any other
action or delay in acting or failure to act on the part of the Agent and the
Institutions, including, without limitation, any failure strictly or diligently
to assert any right or to pursue any remedy or to comply fully with applicable
laws or regulations thereunder which might, but for the provisions of this
ss.17, afford grounds for terminating, discharging or relieving such Consignee,
in whole or in part, from any of its obligations under this ss.17, it being the
intention of each Consignee that, so long as any of the Obligations hereunder
remain unsatisfied, the obligations of such Consignee under this ss.17 shall not
be discharged except by performance and then only to the extent of such
performance. The Obligations of each Consignee under this ss.17 shall not be
diminished or rendered unenforceable by any winding up, reorganization,
arrangement, liquidation, reconstruction or similar proceeding with respect to
any reconstruction or similar proceeding with respect to any other Consignee, or
any of the Institutions. The joint and several liability of the Consignees
hereunder shall continue in full force and effect notwithstanding any
absorption, merger, amalgamation or any other change whatsoever in the name,
ownership, membership, constitution or place of formation of any Consignee or
the Institutions. Each of the Consignees acknowledges and confirms that it has
itself established its own adequate means of obtaining from each of the other
Consignees on a continuing basis all information desired by such Consignee
concerning the financial condition of each of the other Consignees and that each
such Consignee will look to each of the other Consignees and not to the Agent or
any Institution in order for such Consignee to keep adequately informed of
changes in each of the other Consignees' respective financial conditions.
(f) The provisions of this ss.17 are made for the benefit of the
Institutions and the Agent and their respective permitted successors and
assigns, and may be enforced by it or them from time to time against any or all
of the Consignees as often as occasion therefor may arise and without
requirement on the part of the Institutions or the Agent or such successor or
assign first to xxxxxxxx any of its or their claims or to exercise any of its or
their rights against any of the other Consignees or to exhaust any remedies
available to it or them against any of the other Consignees or to resort to any
other source or means of obtaining payment of any of the Obligations hereunder
or to elect any other remedy. The provisions of this ss.17 shall remain in
effect until all of the Obligations shall have been paid in full or otherwise
fully satisfied. If at any time, any payment, or any part thereof, made in
respect of any of the Obligations, is rescinded or must otherwise be restored or
returned by any Institution or the Agent upon the insolvency, bankruptcy or
reorganization of any of the Consignees, or otherwise, the provisions of this
ss.17 will forthwith be reinstated in effect, as though such payment had not
been made.
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(g) Each of the Consignees hereby agrees that it will not enforce any of
its rights of reimbursement, contribution, subrogation or the like against the
other Consignees with respect to any liability incurred by it hereunder or under
any of the other Consignment Documents, any payments made by it to any of the
Institutions or the Agent with respect to any of the Obligations or any
collateral security therefor until such time as all of the Obligations have been
irrevocably paid in full in cash. Any claim which any Consignee may have against
any other Consignee with respect to any payments to the Institutions or the
Agent hereunder or under any other Consignment Documents are hereby expressly
made subordinate and junior in right of payment, without limitation as to any
increases in the Obligations arising hereunder or thereunder, to the prior
payment in full of the Obligations and, in the event of any insolvency,
bankruptcy, receivership, liquidation, reorganization or other similar
proceeding under the laws of any jurisdiction relating to any Consignee, its
debts or its assets, whether voluntary or involuntary, all such Obligations
shall be paid in full before any payment or distribution of any character,
whether in cash, securities or other property, shall be made to any other
Consignee therefor.
(h) Each of the Consignees hereby agrees that the payment of any amounts
due with respect to the indebtedness owing by any Consignee to any other
Consignees is hereby subordinated to the prior payment in full in cash of the
Obligations. Each Consignee hereby agrees that after the occurrence and during
the continuance of any Default or Event of Default, such Consignee will not
demand, xxx for or otherwise attempt to collect any indebtedness of any other
Consignee owing to such Consignee until the Obligations shall have been paid in
full in cash. If, notwithstanding the foregoing sentence, such Consignee shall
collect, enforce or receive any amounts in respect of such indebtedness, such
amounts shall be collected, enforced and received by such Consignee as trustee
for the Agent and be paid over to the Agent for the pro rata accounts of the
Institutions to be applied to repay the Obligations.
18. NOTICES, ETC.
Except as otherwise expressly provided in this Agreement, all notices and
other communications made or required to be given pursuant to this Agreement
shall be in writing and shall be delivered in hand, mailed by United States
registered or certified first class mail, postage prepaid, sent by overnight
courier, or sent by telegraph, telecopy, facsimile or telex and confirmed by
delivery via courier or postal service, addressed as follows:
(a) if to the Consignees, at 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000, Attention: Xxxxx Xxxxxxxx, Chief Financial Officer, with a copy to
Xxxxx Xxxxx, Esq., or at such other address for notice as the Consignees
shall last have furnished in writing to the Person giving the notice and
with a copy to Blank Rome Xxxxxx Xxxxxxxxxx LLP, the Chrysler Building, 000
Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxxx X. Xxxxxx,
Esq.
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(b) if to the Agent, at 1 West Mezzanine, 15 Westminster Street,
Providence, Rhode Island 02903, Attention, Xxxxxx X. Xxxxx, or such other
address for notice as the Agent shall last have furnished in writing to the
Person giving the notice; and
(c) if to any Institution, at such Institution's address set forth on
Schedule XII hereto, or such other address for notice as such Institution
shall have last furnished in writing to the Person giving the notice.
Any such notice or demand shall be deemed to have been duly given or made
and to have become effective (i) if delivered by hand, overnight courier or
facsimile to a responsible officer of the party to which it is directed, at the
time of the receipt thereof by such officer or the sending of such facsimile and
(ii) if sent by registered or certified first-class mail, postage prepaid, on
the third Business Day following the mailing thereof.
19. GOVERNING LAW.
THIS AGREEMENT AND, EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED THEREIN, EACH
OF THE OTHER CONSIGNMENT DOCUMENTS ARE CONTRACTS UNDER THE LAWS OF THE
COMMONWEALTH OF MASSACHUSETTS AND SHALL FOR ALL PURPOSES BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF SAID COMMONWEALTH OF MASSACHUSETTS
(EXCLUDING THE LAWS APPLICABLE TO CONFLICTS OR CHOICE OF LAW). EACH CONSIGNEE
AGREES THAT ANY SUIT FOR THE ENFORCEMENT OF THIS AGREEMENT OR ANY OF THE OTHER
CONSIGNMENT DOCUMENTS MAY BE BROUGHT IN THE COURTS OF THE COMMONWEALTH OF
MASSACHUSETTS OR ANY FEDERAL COURT SITTING THEREIN AND CONSENTS TO THE
NONEXCLUSIVE JURISDICTION OF SUCH COURT AND SERVICE OF PROCESS IN ANY SUCH SUIT
BEING MADE UPON EACH CONSIGNEE BY MAIL AT THE ADDRESS SPECIFIED IN ss.18. EACH
CONSIGNEE HEREBY WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE
VENUE OF ANY SUCH SUIT OR ANY SUCH COURT OR THAT SUCH SUIT IS BROUGHT IN AN
INCONVENIENT COURT.
20. HEADINGS.
The captions in this Agreement are for convenience of reference only and
shall not define or limit the provisions hereof.
21. COUNTERPARTS.
This Agreement and any amendment hereof may be executed in several
counterparts and by each party on a separate counterpart, each of which when
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executed and delivered shall be an original, and all of which together shall
constitute one instrument. In proving this Agreement it shall not be necessary
to produce or account for more than one such counterpart signed by the party
against whom enforcement is sought.
22. ENTIRE AGREEMENT, ETC.
The Consignment Documents and any other documents executed in connection
herewith or therewith express the entire understanding of the parties with
respect to the transactions contemplated hereby. Neither this Agreement nor any
term hereof may be changed, waived, discharged or terminated, except as provided
in ss.15.
23. WAIVER OF JURY TRIAL.
Each Consignee hereby waives its right to a jury trial with respect to any
action or claim arising out of any dispute in connection with this Agreement or
any of the other Consignment Documents, any rights or obligations hereunder or
thereunder or the performance of such rights and obligations. Except as
prohibited by law, each Consignee hereby waives any right it may have to claim
or recover in any litigation referred to in the preceding sentence any special,
exemplary, punitive or consequential damages or any damages other than, or in
addition to, actual damages. Each Consignee (i) certifies that no
representative, agent or attorney of any Institution or the Agent has
represented, expressly or otherwise, that such Institution or the Agent would
not, in the event of litigation, seek to enforce the foregoing waivers and (ii)
acknowledges that the Agent and the Institutions have been induced to enter into
this Agreement, the other Consignment Documents to which it is a party by, among
other things, the waivers and certifications contained herein.
24. TRANSITIONAL ARRANGEMENTS
24.1. Original Consignment Agreement Superseded. This Agreement shall
supersede the Original Consignment Agreement in its entirety, except as provided
in this ss.24. On the Closing Date, the rights and obligations of the parties
under the Original Consignment Agreement (other than any rights available to
Sovereign under Section 12 of the Original Consignment Agreement), shall be
subsumed within and be governed by this Agreement and the other Consignment
Documents, provided, however, that all of the Consigned Precious Metal (as
defined in the Original Consignment Agreement) outstanding under the Original
Consignment Agreement on the Closing Date shall, for purposes of this Agreement,
be Consigned Precious Metal, with each Consignee being responsible for, and
hereby confirming its obligation to pay, any breakage costs associated with the
payment of the purchase of any Consigned Precious Metal under the Original
Consignment Agreement on a date which is not the last day of the applicable
Interest Period (as defined in the Original Consignment Agreement) with respect
thereto.
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24.2. Fees Under Original Consignment Agreement. All Daily Consignment Fees
and other fees and expenses owing or accruing under or in respect of the
Original Consignment Agreement through the Closing Date shall be calculated as
of the Closing Date (prorated in the case of any fractional periods), and shall
be paid in accordance with the method, and on the dates, specified in the
Original Consignment Agreement, as if the Original were still in effect.
25. MISCELLANEOUS.
This Agreement shall be binding upon and inure to the benefit of each party
hereto and its successors and assigns. The provisions of this Agreement are
severable and if any one clause or provision hereof shall be held invalid or
unenforceable in whole or in part in any jurisdiction, then such invalidity or
unenforceability shall affect only such clause or provision, or part thereof, in
such jurisdiction, and shall not in any manner affect such clause or provision
in any other jurisdiction, or any other clause or provision of this Agreement in
any jurisdiction.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, the undersigned have duly executed this Agreement as a
sealed instrument as of the date first above written.
FINLAY FINE JEWELRY CORPORATION
By: /s/ Xxxxx Xxxxxxxx
-----------------------------------
Name: Xxxxx Xxxxxxxx
Title: Senior Vice President, Treasurer
and Chief Financial Officer
EFINLAY, INC.
By: /s/ Xxxxx Xxxxxxxx
-----------------------------------
Name: Xxxxx Xxxxxxxx
Title: Senior Vice President, Treasurer
and Chief Financial Officer
SOVEREIGN BANK (as successor to
Fleet National Bank, f/k/a BankBoston,
N.A., f/k/a The First National Bank of
Boston, as successor to Rhode Island
Hospital Trust National Bank),
individually and as Agent
By: /s/ Xxxxxxxx Xxxxxxx
-----------------------------------
Name: Xxxxxxxx Xxxxxxx
Title: V.P.
COMMERZBANK INTERNATIONAL
S.A.
By: /s/ Xxxx Xxxxxxxxxxx
-----------------------------------
Name: Xxxx Xxxxxxxxxxx
Title: Senior Vice President
By: /s/ E. Winter
-----------------------------------
Name: E. Winter
Title: Legal Advisor
