1
EXHIBIT 4.1
ZALE CORPORATION, AS ISSUER,
ZALE DELAWARE, INC., AS GUARANTOR, AND
BANK ONE, N.A., AS TRUSTEE
________________
INDENTURE
DATED AS OF SEPTEMBER 30, 1997
UP TO $125,000,000
8 1/2% SENIOR NOTES DUE 2007
2
Reconciliation and tie between Trust Indenture Act of 1939,
as amended, and Indenture, dated as of September 30, 1997
Trust Indenture Indenture
Act Section Section
- --------------- ---------
Section 310 (a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 609
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 609
(b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 608, 610
Section 311 (a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 613
(c). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
Section 312 (a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 701
(b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 702
(c). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 702
Section 313 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 703
Section 314 (a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 704
(b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(a)(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1019
(c)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103, 104, 404, 1201
(c)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103, 104, 404, 1201
(d). . . . . . . . . . . . . . . . . . . . . . . . .. . . . .. Not Applicable
(e). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
Section 315 (a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 601(b)
(b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 602
(c). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 601(a)
(d). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 601(c), 603
(e). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 514
Section 316 (a)(last sentence) . . . . . . . . . . . . . . . . . . . . . . 101 ("Outstanding")
(a)(1)(A). . . . . . . . . . . . . . . . . . . . . . . . . . . 502, 512
(a)(1)(B). . . . . . . . . . . . . . . . . . . . . . . . . . . 513
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 508
(c). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105
Section 317 (a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 503
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 504
(b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1003
Section 318 (a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108
Note: This reconciliation and tie shall not, for any purpose, be deemed to be
a part of this Indenture.
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TABLE OF CONTENTS
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PARTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
Section 101. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Accounts Receivable Subsidiary". . . . . . . . . . . . . . . . 2
"Acquired Indebtedness" . . . . . . . . . . . . . . . . . . . . 2
"Affiliate" . . . . . . . . . . . . . . . . . . . . . . . . . . 3
"Asset Acquisition" . . . . . . . . . . . . . . . . . . . . . . 3
"Asset Sale" . . . . . . . . . . . . . . . . . . . . . . . . . 3
"Average Life to Stated Maturity" . . . . . . . . . . . . . 4
"Bankruptcy Law" . . . . . . . . . . . . . . . . . . . . . . . 4
"Board of Directors". . . . . . . . . . . . . . . . . . . . . . 4
"Board Resolution" . . . . . . . . . . . . . . . . . . . . . . 4
"Book-Entry Security" . . . . . . . . . . . . . . . . . . . . . 4
"Business Day" . . . . . . . . . . . . . . . . . . . . . . . . 4
"Capital Stock" . . . . . . . . . . . . . . . . . . . . . . . . 5
"Capitalized Lease Obligation". . . . . . . . . . . . . . . . . 5
"Cash Equivalents". . . . . . . . . . . . . . . . . . . . . . . 5
"Change of Control" . . . . . . . . . . . . . . . . . . . . . . 5
"Change of Control Triggering Event". . . . . . . . . . . . . . 6
"Commission" . . . . . . . . . . . . . . . . . . . . . . . . . 6
"Commodity Price Protection Agreement" . . . . . . . . . . . . 6
"Common Stock". . . . . . . . . . . . . . . . . . . . . . . . . 6
"Company" . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
"Company Request" or "Company Order" . . . . . . . . . . . . . 7
"Consolidated Cash Flow Available for Fixed Charges" . . . . . 7
"Consolidated Fixed Charge Coverage Ratio". . . . . . . . . . . 7
"Consolidated Fixed Charges". . . . . . . . . . . . . . . . . . 8
"Consolidated Income Tax Expense" . . . . . . . . . . . . . . . 8
"Consolidated Interest Expense" . . . . . . . . . . . . . . . . 8
"Consolidated Net Income" . . . . . . . . . . . . . . . . . . . 9
"Consolidated Non-cash Charges" . . . . . . . . . . . . . . . . 9
"Consolidation" . . . . . . . . . . . . . . . . . . . . . . . . 9
"Corporate Trust Office" . . . . . . . . . . . . . . . . . . . 10
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"Credit Facility" . . . . . . . . . . . . . . . . . . . . . . . 10
"Currency Agreement". . . . . . . . . . . . . . . . . . . . . . 10
"Default" . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
"Depositary" . . . . . . . . . . . . . . . . . . . . . . . . . 10
"Disinterested Director". . . . . . . . . . . . . . . . . . . . 10
"Exchange Act". . . . . . . . . . . . . . . . . . . . . . . . . 10
"Exchange Offer". . . . . . . . . . . . . . . . . . . . . . . . 10
"Exchange Offer Registration Statement" . . . . . . . . . . . . 10
"Excluded Assets" . . . . . . . . . . . . . . . . . . . . . . . 11
"Fair Market Value" . . . . . . . . . . . . . . . . . . . . . . 11
"GAAP" or "Generally Accepted Accounting
Principles". . . . . . . . . . . . . . . . . . . . . . . . . 11
"Global Securities" . . . . . . . . . . . . . . . . . . . . . . 11
"Guarantee" . . . . . . . . . . . . . . . . . . . . . . . . . . 11
"guarantee" . . . . . . . . . . . . . . . . . . . . . . . . . . 11
"Guarantor" . . . . . . . . . . . . . . . . . . . . . . . . . . 11
"Holder". . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
"Indebtedness". . . . . . . . . . . . . . . . . . . . . . . . . 12
"Indenture" . . . . . . . . . . . . . . . . . . . . . . . . . . 13
"Indenture Obligations" . . . . . . . . . . . . . . . . . . . . 13
"Initial Securities". . . . . . . . . . . . . . . . . . . . . . 13
"Initial Purchasers" . . . . . . . . . . . . . . . . . . . . . 13
"Interest Payment Date" . . . . . . . . . . . . . . . . . . . . 13
"Interest Rate Protection Obligations". . . . . . . . . . . . . 13
"Investment". . . . . . . . . . . . . . . . . . . . . . . . . . 13
"Investment Grade Rating" . . . . . . . . . . . . . . . . . . . 14
"Issue Date" . . . . . . . . . . . . . . . . . . . . . . . . . 14
"Lien". . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
"Material Subsidiary" . . . . . . . . . . . . . . . . . . . . . 14
"Maturity". . . . . . . . . . . . . . . . . . . . . . . . . . . 14
"Moody's" . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
"Net Cash Proceeds" . . . . . . . . . . . . . . . . . . . . . . 14
"Non-U.S. Person" . . . . . . . . . . . . . . . . . . . . . . . 15
"Non-U.S. Subsidiaries" . . . . . . . . . . . . . . . . . . . . 15
"Officers' Certificate" . . . . . . . . . . . . . . . . . . . . 15
"Opinion of Counsel" . . . . . . . . . . . . . . . . . . . . . 15
"Opinion of Independent Counsel". . . . . . . . . . . . . . . . 15
"Outstanding" . . . . . . . . . . . . . . . . . . . . . . . . . 15
"Pari Passu Indebtedness" . . . . . . . . . . . . . . . . . . . 16
"Paying Agent" . . . . . . . . . . . . . . . . . . . . . . . . 16
"Permitted Investment". . . . . . . . . . . . . . . . . . . . . 16
"Permitted Liens" . . . . . . . . . . . . . . . . . . . . . . . 17
"Person". . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
"Predecessor Security". . . . . . . . . . . . . . . . . . . . . 19
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"Preferred Stock" . . . . . . . . . . . . . . . . . . . . . . . 19
"Prospectus". . . . . . . . . . . . . . . . . . . . . . . . . . 19
"Public Equity Offering". . . . . . . . . . . . . . . . . . . . 19
"Purchase Money Indebtedness" . . . . . . . . . . . . . . . . . 19
"QIB" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
"Rating Agencies" . . . . . . . . . . . . . . . . . . . . . . . 20
"Rating Category" . . . . . . . . . . . . . . . . . . . . . . . 20
"Rating Date" . . . . . . . . . . . . . . . . . . . . . . . . . 20
"Rating Decline" . . . . . . . . . . . . . . . . . . . . . . . 20
"Redeemable Capital Stock" . . . . . . . . . . . . . . . . . . 21
"Redemption Date" . . . . . . . . . . . . . . . . . . . . . . . 21
"Redemption Price". . . . . . . . . . . . . . . . . . . . . . . 21
"Refinance" . . . . . . . . . . . . . . . . . . . . . . . . . . 21
"Registration Rights Agreement" . . . . . . . . . . . . . . . . 21
"Registration Statement". . . . . . . . . . . . . . . . . . . . 21
"Regular Record Date" . . . . . . . . . . . . . . . . . . . . . 21
"Regulation S Global Securities". . . . . . . . . . . . . . . . 21
"Responsible Officer" . . . . . . . . . . . . . . . . . . . . . 22
"Restricted Subsidiary" . . . . . . . . . . . . . . . . . . . . 22
"Rule 144A Global Security" . . . . . . . . . . . . . . . . . . 22
"Sale and Leaseback Transaction". . . . . . . . . . . . . . . . 22
"S&P" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
"Securities Act". . . . . . . . . . . . . . . . . . . . . . . . 22
"Senior Guarantor Indebtedness" . . . . . . . . . . . . . . . . 22
"Senior Indebtedness" . . . . . . . . . . . . . . . . . . . . . 22
"Shelf Registration Statement". . . . . . . . . . . . . . . . . 22
"Special Record Date" . . . . . . . . . . . . . . . . . . . . . 23
"Stated Maturity" . . . . . . . . . . . . . . . . . . . . . . . 23
"Subordinated Indebtedness" . . . . . . . . . . . . . . . . . . 23
"Subsidiary". . . . . . . . . . . . . . . . . . . . . . . . . . 23
"Trustee" . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
"Trust Indenture Act" . . . . . . . . . . . . . . . . . . . . . 23
"Unrestricted Subsidiary" . . . . . . . . . . . . . . . . . . . 23
"Voting Stock". . . . . . . . . . . . . . . . . . . . . . . . . 23
"Wholly-Owned Restricted Subsidiary". . . . . . . . . . . . . . 24
Section 102. Other Definitions . . . . . . . . . . . . . . . . . . . . . . . 24
Section 103. Compliance Certificates and Opinions. . . . . . . . . . . . . . 25
Section 104. Form of Documents Delivered to Trustee. . . . . . . . . . . . . 26
Section 105. Acts of Holders. . . . . . . . . . . . . . . . . . . . . . . . 27
Section 106. Notices, etc., to the Trustee, the Company and any
Guarantor . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 107. Notice to Holders; Waiver . . . . . . . . . . . . . . . . . . . 29
Section 108. Conflict with Trust Indenture Act.. . . . . . . . . . . . . . . 29
Section 109. Effect of Headings and Table of Contents. . . . . . . . . . . . 30
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Section 110. Successors and Assigns. . . . . . . . . . . . . . . . . . . . . 30
Section 111. Separability Clause . . . . . . . . . . . . . . . . . . . . . . 30
Section 112. Benefits of Indenture . . . . . . . . . . . . . . . . . . . . . 30
Section 113. GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 114. Legal Holidays. . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 115. Independence of Covenants . . . . . . . . . . . . . . . . . . . 31
Section 116. Schedules and Exhibits. . . . . . . . . . . . . . . . . . . . . 31
Section 117. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . 31
ARTICLE TWO
SECURITY FORMS
Section 201. Forms Generally . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 202. Form of Face of Security. . . . . . . . . . . . . . . . . . . . 32
Section 203. Form of Reverse of Securities . . . . . . . . . . . . . . . . . 42
Section 204. Form of Trustee's Certificate of Authentication . . . . . . . . 50
Section 205. Form of Guarantee of any Guarantor. . . . . . . . . . . . . . . 52
Section 206. Form of Option of Holder to Elect Purchase. . . . . . . . . . . 52
ARTICLE THREE
THE SECURITIES
Section 301. Title and Terms . . . . . . . . . . . . . . . . . . . . . . . . 54
Section 302. Denominations . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 303. Execution, Authentication, Delivery and Dating. . . . . . . . . 55
Section 304. Temporary Securities. . . . . . . . . . . . . . . . . . . . . . 57
Section 305. Registration, Registration of Transfer
and Exchange. . . . . . . . . . . . . . . . . . . . . . . . . 57
Section 306. Book-Entry Provisions for U.S. Global Security. . . . . . . . . 59
Section 307. Special Transfer Provisions . . . . . . . . . . . . . . . . . . 61
Section 308. Mutilated, Destroyed, Lost and Stolen Securities. . . . . . . . 64
Section 309. Payment of Interest; Interest Rights Preserved. . . . . . . . . 65
Section 310. CUSIP Numbers . . . . . . . . . . . . . . . . . . . . . . . . . 66
Section 311. Persons Deemed Owners . . . . . . . . . . . . . . . . . . . . . 66
Section 312. Cancellation. . . . . . . . . . . . . . . . . . . . . . . . . . 67
Section 313. Computation of Interest . . . . . . . . . . . . . . . . . . . . 67
ARTICLE FOUR
DEFEASANCE AND COVENANT DEFEASANCE
Section 401. Company's Option to Effect Defeasance or Covenant Defeasance. . 67
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Section 402. Defeasance and Discharge. . . . . . . . . . . . . . . . . . . . 67
Section 403. Covenant Defeasance . . . . . . . . . . . . . . . . . . . . . . 68
Section 404. Conditions to Defeasance or Covenant Defeasance . . . . . . . . 69
Section 405. Deposited Money and U.S. Government
Obligations to Be Held in Trust; Other
Miscellaneous Provisions. . . . . . . . . . . . . . . . . . . 71
Section 406. Reinstatement . . . . . . . . . . . . . . . . . . . . . . . . . 72
ARTICLE FIVE
REMEDIES
Section 501. Events of Default . . . . . . . . . . . . . . . . . . . . . . . 72
Section 502. Acceleration of Maturity; Rescission and
Annulment . . . . . . . . . . . . . . . . . . . . . . . . . . 74
Section 503. Collection of Indebtedness and Suits for
Enforcement by Trustee. . . . . . . . . . . . . . . . . . . . 75
Section 504. Trustee May File Proofs of Claim. . . . . . . . . . . . . . . . 76
Section 505. Trustee May Enforce Claims without Possession of
Securities. . . . . . . . . . . . . . . . . . . . . . . . . . 77
Section 506. Application of Money Collected. . . . . . . . . . . . . . . . . 77
Section 507. Limitation on Suits . . . . . . . . . . . . . . . . . . . . . . 78
Section 508. Unconditional Right of Holders to Receive
Principal, Premium and Interest . . . . . . . . . . . . . . . 79
Section 509. Restoration of Rights and Remedies. . . . . . . . . . . . . . . 79
Section 510. Rights and Remedies Cumulative. . . . . . . . . . . . . . . . . 79
Section 511. Delay or Omission Not Waiver. . . . . . . . . . . . . . . . . . 79
Section 512. Control by Holders. . . . . . . . . . . . . . . . . . . . . . . 80
Section 513. Waiver of Past Defaults . . . . . . . . . . . . . . . . . . . . 80
Section 514. Undertaking for Costs . . . . . . . . . . . . . . . . . . . . . 80
Section 515. Waiver of Stay, Extension or Usury Laws . . . . . . . . . . . . 81
Section 516. Remedies Subject to Applicable Law. . . . . . . . . . . . . . . 81
ARTICLE SIX
THE TRUSTEE
Section 601. Duties of Trustee . . . . . . . . . . . . . . . . . . . . . . . 81
Section 602. Notice of Defaults. . . . . . . . . . . . . . . . . . . . . . . 83
Section 603. Certain Rights of Trustee . . . . . . . . . . . . . . . . . . . 83
Section 604. Trustee Not Responsible for Recitals, Dispositions
of Securities or Application of Proceeds Thereof. . . . . . . 85
Section 605. Trustee and Agents May Hold Securities;
Collections; etc. . . . . . . . . . . . . . . . . . . . . . . 85
Section 606. Money Held in Trust . . . . . . . . . . . . . . . . . . . . . . 85
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Section 607. Compensation and Indemnification of Trustee and
Its Prior Claim . . . . . . . . . . . . . . . . . . . . . . . 85
Section 608. Conflicting Interests . . . . . . . . . . . . . . . . . . . . . 86
Section 609. Trustee Eligibility . . . . . . . . . . . . . . . . . . . . . . 86
Section 610. Resignation and Removal; Appointment of
Successor Trustee . . . . . . . . . . . . . . . . . . . . . . 87
Section 611. Acceptance of Appointment by Successor. . . . . . . . . . . . . 88
Section 612. Merger, Conversion, Consolidation or Succession
to Business . . . . . . . . . . . . . . . . . . . . . . . . . 89
Section 613. Preferential Collection of Claims Against
Company . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
Section 701. Company to Furnish Trustee Names and Addresses
of Holders . . . . . . . . . . . . . . . . . . . . . . . . . 90
Section 702. Disclosure of Names and Addresses of Holders. . . . . . . . . . 91
Section 703. Reports by Trustee. . . . . . . . . . . . . . . . . . . . . . . 91
Section 704. Reports by Company and Guarantors . . . . . . . . . . . . . . . 91
ARTICLE EIGHT
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
Section 801. Company and Guarantors May Consolidate, etc.,
Only on Certain Terms . . . . . . . . . . . . . . . . . . . . 92
Section 802. Successor Substituted . . . . . . . . . . . . . . . . . . . . . 94
ARTICLE NINE
SUPPLEMENTAL INDENTURES
Section 901. Supplemental Indentures and Agreements without
Consent of Holders . . . . . . . . . . . . . . . . . . . . . 94
Section 902. Supplemental Indentures and Agreements with
Consent of Holders. . . . . . . . . . . . . . . . . . . . . . 95
Section 903. Execution of Supplemental Indentures and
Agreements . . . . . . . . . . . . . . . . . . . . . . . . . 97
Section 904. Effect of Supplemental Indentures . . . . . . . . . . . . . . . 97
Section 905. Conformity with Trust Indenture Act.. . . . . . . . . . . . . . 98
Section 906. Reference in Securities to Supplemental Indentures. . . . . . . 98
Section 907. Notice of Supplemental Indentures. . .. . . . . . . . . . . . . 98
Section 908. Revocation and Effect of Consents. . .. . . . . . . . . . . . . 98
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ARTICLE TEN
COVENANTS
PAGE
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Section 1001. Payment of Principal, Premium and Interest. . . . . . . . . . . 99
Section 1002. Maintenance of Office or Agency . . . . . . . . . . . . . . . . 99
Section 1003. Money for Security Payments to Be Held in Trust . . . . . . . . 99
Section 1004. Corporate Existence . . . . . . . . . . . . . . . . . . . . . 101
Section 1005. Payment of Taxes and Other Claims . . . . . . . . . . . . . . 101
Section 1006. Maintenance of Properties . . . . . . . . . . . . . . . . . . 102
Section 1007. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . 102
Section 1008. Limitation on Indebtedness. . . . . . . . . . . . . . . . . . 102
Section 1009. Limitation on Restricted Payments . . . . . . . . . . . . . . 105
Section 1010. Limitation on Transactions with Affiliates. . . . . . . . . . 109
Section 1011. Disposition of Proceeds of Asset Sales. . . . . . . . . . . . 110
Section 1012. Limitation on Liens . . . . . . . . . . . . . . . . . . . . . 115
Section 1013. Limitation on Guarantees by Restricted
Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . . 116
Section 1014. Purchase of Securities upon a Change of Control
Triggering Even . . . . . . . . . . . . . . . . . . . . . . 117
Section 1015. Restrictions on Preferred Stock of Restricted
Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . . 121
Section 1016. Limitation on Dividend and Other Payment
Restrictions Affecting Restricted Subsidiaries. . . . . . . 121
Section 1017. Limitation on Designations of Unrestricted
Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . . 122
Section 1018. Reporting Requirements. . . . . . . . . . . . . . . . . . . . 124
Section 1019. Statement by Officers as to Default . . . . . . . . . . . . . 125
Section 1020. Waiver of Certain Covenants . . . . . . . . . . . . . . . . . 125
ARTICLE ELEVEN
REDEMPTION OF SECURITIES
Section 1101. Rights of Redemption. . . . . . . . . . . . . . . . . . . . . 126
Section 1102. Applicability of Article. . . . . . . . . . . . . . . . . . . 126
Section 1103. Election to Redeem; Notice to Trustee . . . . . . . . . . . . 126
Section 1104. Selection by Trustee of Securities to Be Redeemed . . . . . . 127
Section 1105. Notice of Redemption. . . . . . . . . . . . . . . . . . . . . 127
Section 1106. Deposit of Redemption Price . . . . . . . . . . . . . . . . . 128
Section 1107. Securities Payable on Redemption Date . . . . . . . . . . . . 128
Section 1108. Securities Redeemed or Purchased in Part. . . . . . . . . . . 129
(vii)
10
ARTICLE TWELVE
SATISFACTION AND DISCHARGE
PAGE
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Section 1201. Satisfaction and Discharge of Indenture.. . . . . . . . . . . 130
Section 1202. Application of Trust Money. . . . . . . . . . . . . . . . . . 131
ARTICLE THIRTEEN
GUARANTEES
Section 1301. Guarantor's Guarantee . . . . . . . . . . . . . . . . . . . . 131
Section 1302. Continuing Guarantee; No Right of Set-Off;
Independent Obligation. . . . . . . . . . . . . . . . . . . 132
Section 1303. Guarantee Absolute. . . . . . . . . . . . . . . . . . . . . . 133
Section 1304. Right to Demand Full Performance. . . . . . . . . . . . . . . 136
Section 1305. Waivers. . . . . . . . . . . . . . . . . . . . . . . . . . . 136
Section 1306. The Guarantor Remains Obligated in Event the
Company is No Longer Obligated to Discharge
Indenture Obligations . . . . . . . . . . . . . . . . . . . 137
Section 1307. Fraudulent Conveyance; Contribution; Subrogation. . . . . . . 137
Section 1308. Guarantee is in Addition to Other Security. . . . . . . . . . 138
Section 1309. Release of Security Interests . . . . . . . . . . . . . . . . 138
Section 1310. No Bar to Further Actions . . . . . . . . . . . . . . . . . . 139
Section 1311. Failure to Exercise Rights Shall Not Operate as a
Waiver; No Suspension of Remedies. . . . . . . . . . . . . 139
Section 1312. Trustee's Duties; Notice to Trustee. . . . . . . . . . . . . 139
Section 1313. Successors and Assigns. . . . . . . . . . . . . . . . . . . . 140
Section 1314. Release of Guarantee . . . . . . . . . . . . . . . . . . . . 140
Section 1315. Execution of Guarantee . . . . . . . . . . . . . . . . . . . 140
TESTIMONIUM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 141
SIGNATURES AND SEALS . . . . . . . . . . . . . . . . . . . . . . . . . . . 141
ACKNOWLEDGMENTS
SCHEDULE I Existing Indebtedness
SCHEDULE II Excluded Assets
EXHIBIT A Form of Intercompany Note
EXHIBIT B Form of Certificate to be Delivered in Connection with Transfers
Pursuant to Regulation S
(viii)
11
PAGE
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APPENDIX I Form of Transferee Certificate for Series A Securities
APPENDIX II Form of Transferee Certificate for Series B Securities
(ix)
12
INDENTURE, dated as of September 30, 1997, among Zale
Corporation, a Delaware corporation (the "Company"), Zale Delaware, Inc., a
Delaware corporation (the "Guarantor"), and Bank One, N.A., as trustee (the
"Trustee").
RECITALS OF THE COMPANY AND THE GUARANTOR
The Company has duly authorized the creation of an issue of 8
1/2% Senior Notes due 2007, Series A (the "Series A Securities" or the "Initial
Securities"), and an issue of 8 1/2% Senior Notes due 2007, Series B (the
"Series B Securities" and, together with the Series A Securities, the
"Securities"), of substantially the tenor and amount hereinafter set forth, and
to provide therefor the Company has duly authorized the execution and delivery
of this Indenture and the Securities;
The Guarantor has duly authorized the issuance of a Guarantee of
the Securities, of substantially the tenor hereinafter set forth, and to
provide therefor, the Guarantor has duly authorized the execution and delivery
of this Indenture and its Guarantee;
This Indenture is subject to, and shall be governed by, the
provisions of the Trust Indenture Act that are required to be part of and to
govern indentures qualified under the Trust Indenture Act;
All acts and things necessary have been done to make (i) the
Securities, when duly issued and executed by the Company and authenticated and
delivered hereunder, the valid obligations of the Company, (ii) the Guarantee,
when executed by the Guarantor and delivered hereunder, the valid obligation of
the Guarantor and (iii) this Indenture a valid agreement of the Company and the
Guarantor in accordance with the terms of this Indenture;
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the
Securities by the Holders thereof, it is mutually covenanted and agreed, for
the equal and proportionate benefit of all Holders of the Securities, as
follows:
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
Section 101. Definitions.
For all purposes of this Indenture, except as otherwise expressly
provided or unless the context otherwise requires:
13
(a) the terms defined in this Article have the meanings
assigned to them in this Article, and include the plural as well as the
singular;
(b) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, have the meanings
assigned to them therein;
(c) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with GAAP;
(d) the words "herein", "hereof" and "hereunder" and other
words of similar import refer to this Indenture as a whole and not to any
particular Article, Section or other subdivision;
(e) all references to $, US$, dollars or United States dollars
shall refer to the lawful currency of the United States of America; and
(f) all references herein to particular Sections or Articles
refer to this Indenture unless otherwise so indicated.
Certain terms used principally in Article Four are defined in
Article Four.
"Accounts Receivable Subsidiary" means Zale Funding Trust,
Jewelers National Bank, Jewelers Credit Corporation, Jewelers Financial
Services, Inc., Diamond Funding Corp. and any other present or future
Subsidiary (including any credit card bank) of the Company that is, directly or
indirectly, wholly owned by the Company (other than director qualifying shares)
and organized for the purpose of and engaged in (i) purchasing, financing, and
collecting accounts receivable obligations of customers of the Company or its
Subsidiaries, (ii) issuing credit cards and financing accounts receivable
obligations of customers of the Company and its Subsidiaries, (iii) the sale or
financing of such accounts receivable or interests therein and (iv) other
activities incident thereto.
"Acquired Indebtedness" means, with respect to any specified
Person, Indebtedness of any other Person (i) assumed in connection with an
Asset Acquisition from such Person or (ii) existing at the time such Person
becomes a Restricted Subsidiary of any other Person (other than any
Indebtedness incurred in connection with, or in contemplation of, such Asset
Acquisition or such Person becoming such a Restricted Subsidiary). Acquired
Indebtedness shall be deemed to be incurred on the date of the related
acquisition of assets from any Person or the date the acquired Person becomes a
Restricted Subsidiary, as the case may be.
"Affiliate" means, with respect to any specified Person, (i) any
other Person directly or indirectly controlling or controlled by or under
direct or indirect common control with such specified Person; (ii) any other
Person that owns, directly or indirectly, 10% or more of such specified
Person's Capital Stock or any officer or director of any
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such specified Person or other Person or, with respect to any natural Person,
any person having a relationship with such Person by blood, marriage or
adoption not more remote than first cousin; or (iii) any other Person 10% or
more of the Voting Stock of which is beneficially owned or held directly or
indirectly by such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of Voting Stock, by contract or otherwise; and
the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Asset Acquisition" means (i) an Investment by the Company or any
Restricted Subsidiary in any other Person pursuant to which such Person will
become a Restricted Subsidiary or will be merged or consolidated with or into
the Company or any Restricted Subsidiary or (ii) the acquisition by the Company
or any Restricted Subsidiary of the assets of any Person which constitute
substantially all of the assets of such Person, or any division or line of
business of such Person, or which is otherwise outside of the ordinary course
of business.
"Asset Sale" means any direct or indirect sale, issuance,
conveyance or transfer or other disposition (including, without limitation, any
merger, consolidation or Sale and Leaseback Transaction) to any Person other
than the Company or a Wholly-Owned Restricted Subsidiary, in one or a series of
related transactions, of (i) any Capital Stock of any Restricted Subsidiary;
(ii) all or substantially all of the assets of any division or line of business
of the Company or any Restricted Subsidiary; or (iii) any other properties or
assets of the Company or any Restricted Subsidiary other than in the ordinary
course of business. For the purposes of this definition, the term "Asset Sale"
will not include (a) any sale, issuance, conveyance, transfer, lease or other
disposition of properties or assets that is governed by the provisions
described in paragraph (a) of Section 801 herein; (b) sales of surplus and
other property or equipment that has become worn out, obsolete or damaged or
otherwise unsuitable for use in connection with the business of the Company or
any Restricted Subsidiary, as the case may be; or (c) any transaction
consummated in compliance with Section 1009 hereof. For purposes of the
covenant described under Section 1011 hereof, the term "Asset Sale" shall not
include any sale, conveyance, transfer, lease or other disposition of (A) any
property or asset, whether in one transaction or a series of related
transactions (1) constituting a Capitalized Lease Obligation or a transfer
consisting solely of a grant of a security interest permitted by the Indenture
or (2) involving assets with a Fair Market Value not in excess of $1,000,000,
(B) accounts receivable to an Accounts Receivable Subsidiary or to third
parties that are not Affiliates of the Company or any Subsidiary of the Company
in the ordinary course of business, (C) any property or assets pursuant to the
Asset Purchase Agreement, dated as of September 3, 1997, among Finlay
Enterprises, Inc., Finlay Fine Jewelry Corporation, Zale Corporation and Zale
Delaware, Inc., as such agreement may be amended from time to time or (D) the
Excluded Assets.
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"Average Life to Stated Maturity" means, with respect to any
Indebtedness, as at any date of determination, the quotient obtained by
dividing (i) the sum of the products of (a) the number of years from such date
to the date or dates of each successive scheduled principal payment (including,
without limitation, any sinking fund requirements) of such Indebtedness
multiplied by (b) the amount of each such principal payment by (ii) the sum of
all such principal payments.
"Bankruptcy Law" means Title 11, United States Bankruptcy Code of
1978, as amended, or any similar United States federal or state law relating to
bankruptcy, insolvency, receivership, winding up, liquidation, reorganization
or relief of debtors or any amendment to, succession to or change in any such
law.
"Board of Directors" means the board of directors of the Company
or any Guarantor, as the case may be, or any duly authorized committee of such
board.
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company or any Guarantor, as the
case may be, to have been duly adopted by the Board of Directors and to be in
full force and effect on the date of such certification, and delivered to the
Trustee.
"Book-Entry Security" means any Rule 144A Global Securities or
Regulation S Global Securities bearing the legend specified in Section 202
evidencing all or part of a series of Securities, authenticated and delivered
to the Depositary for such series or its nominee, and registered in the name of
such Depositary or nominee.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday
and Friday which is not a day on which banking institutions or trust companies
in New York, New York, Dallas, Texas or the city in which the Corporate Trust
Office of the Trustee is located are authorized or obligated by law, regulation
or executive order to close.
"Capital Stock" means, with respect to any Person, any and all
shares, interests, participations, rights in or other equivalents (however
designated) of such Person's capital stock, any other interest or participation
that confers on a Person the right to receive a share of the profits and losses
of, or distributions of assets of, the issuing Person and any rights (other
than debt securities convertible into capital stock), warrants or options
exchangeable for or convertible into such capital stock.
"Capitalized Lease Obligation" means any obligation under a lease
of (or other agreement conveying the right to use) any property (whether real,
personal or mixed) that is required to be classified and accounted for as a
capital lease obligation under GAAP, and, for the purpose of this Indenture,
the amount of such obligation at any date shall be the capitalized amount
thereof at such date, determined in accordance with GAAP consistently applied.
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"Cash Equivalents" means, at any time, (i) any evidence of
Indebtedness with a maturity of not more than one year issued or directly and
fully guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States of America is pledged in support thereof); (ii) certificates of deposit,
Eurodollar time deposits or bankers' acceptances with a maturity of not more
than one year of any financial institution that is a member of the Federal
Reserve System having combined capital and surplus and undivided profits of not
less than $500,000,000, whose debt has a rating, at the time as of which any
investment therein is made, of A-1 (or higher) according to S&P or any
successor rating agency or P-1 (or higher) according to Moody's or any
successor rating agency; (iii) commercial paper with a maturity of not more
than one year issued by a corporation that is not an Affiliate or a Subsidiary
of the Company organized under the laws of any state of the United States or
the District of Columbia and rated A-1 (or higher) by S&P, P-1 (or higher) by
Moody's or the equivalent of any such category used by another nationally
recognized Rating Agency; (iv) repurchase obligations with a term of not more
than seven days for underlying securities of the types described in clauses (i)
and (ii) above; and (v) transaction deposit accounts and money market deposit
accounts with a domestic commercial bank having capital and surplus in excess
of $500,000,000; provided that the short term debt of such commercial bank has
a rating at the time of Investment of A-1 (or higher) according to S&P or P-1
(or higher) according to Moody's.
"Change of Control" means the occurrence of any of the following
events (whether or not approved by the Board of Directors of the Company): (i)
any "person" or "group" (as such terms are used in Sections 13(d) and 14(d) of
the Exchange Act) is or becomes the "beneficial owner" (as defined in Rules
13d-3 and 13d-5 under the Exchange Act, except that a Person will be deemed to
have "beneficial ownership" of all securities that such Person has the right to
acquire, whether such right is exercisable immediately or only after the
passage of time), directly or indirectly, of more than 35% of the total voting
power of the then outstanding Voting Stock of the Company; (ii) the Company
consolidates with, or merges with or into, another Person or sells, assigns,
conveys, transfers, leases or otherwise disposes of all or substantially all of
its assets to any Person, other than any such transaction where the holders of
the Voting Stock of the Company immediately prior to such transaction own,
directly or indirectly, not less than a majority of the total voting power of
the then outstanding Voting Stock of the surviving or transferee corporation
immediately after such transaction and the preceding clause (i) is not
applicable; (iii) during any consecutive two-year period, individuals who at
the beginning of such period constituted the Board of Directors of the Company
(together with any new directors whose election by such board or whose
nomination for election by the stockholders of the Company was approved by a
vote of 66 2/3% of the directors then still in office who were either 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 Board of Directors of the Company then in office; or (iv) any order,
5
17
judgment or decree shall be entered against the Company decreeing the
dissolution or liquidation of the Company and such order shall remain
undischarged or unstayed for a period in excess of sixty days.
"Change of Control Triggering Event" means the occurrence of both
a Change of Control and a Rating Decline.
"Commission" means the Securities and Exchange Commission, as
from time to time constituted, created under the Exchange Act, or if at any
time after the execution of this Indenture such Commission is not existing and
performing the duties now assigned to it, then the body performing such duties
at such time.
"Commodity Price Protection Agreement" means any forward
contract, commodity swap, commodity option or other similar financial agreement
or arrangement relating to, or the value of which is dependent upon,
fluctuations in commodity prices.
"Common Stock" means the common stock, par value $.01 per share,
of the Company.
"Company" means Zale Corporation, a corporation incorporated
under the laws of Delaware, until a successor Person shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Company" shall mean such successor Person. To the extent necessary to comply
with the requirements of the provisions of Sections 310 through 317 of the
Trust Indenture Act as they are applicable to the Company, the term "Company"
shall include any other obligor with respect to the Securities for purposes of
complying with such provisions.
"Company Request" or "Company Order" means a written request or
order signed in the name of the Company by any one of its Chairman of the
Board, its President, its Chief Executive Officer, its Chief Financial Officer
or a Vice President (regardless of Vice Presidential designation), and by any
one of its Treasurer, an Assistant Treasurer, its Secretary or an Assistant
Secretary, and delivered to the Trustee.
"Consolidated Cash Flow Available for Fixed Charges" means, for
any period, (i) the sum of, without duplication, the amounts for such period,
taken as a single accounting period, of (a) Consolidated Net Income, (b) to the
extent reducing Consolidated Net Income, Consolidated Non-cash Charges, (c) to
the extent reducing Consolidated Net Income, Consolidated Interest Expense, and
(d) to the extent reducing Consolidated Net Income, Consolidated Income Tax
Expense less all cash payments during such period relating to non-cash charges
that were added back in determining Consolidated Cash Flow Available for Fixed
Charges in any prior period.
"Consolidated Fixed Charge Coverage Ratio" means the ratio of the
aggregate amount of Consolidated Cash Flow Available for Fixed Charges of the
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Company for the four full fiscal quarters immediately preceding the date of the
transaction for which consolidated financial information of the Company is
available (the "Transaction Date") giving rise to the need to calculate the
Consolidated Fixed Charge Coverage Ratio (such four full fiscal quarter period
being referred to herein as the "Four Quarter Period") to the aggregate amount
of Consolidated Fixed Charges of the Company for such Four Quarter Period. For
purposes of this definition, "Consolidated Cash Flow Available for Fixed
Charges" and "Consolidated Fixed Charges" will be calculated, without
duplication, after giving effect on a pro forma basis for the period of such
calculation to (i) the incurrence of any Indebtedness of the Company or any of
the Restricted Subsidiaries during the period commencing on the first day of
the Four Quarter Period to and including the Transaction Date (the "Reference
Period"), including, without limitation, the incurrence of the Indebtedness
giving rise to the need to make such calculation, as if such incurrence
occurred on the first day of the Reference Period, (ii) an adjustment to
eliminate or include, as applicable, the Consolidated Cash Flow Available for
Fixed Charges and Consolidated Fixed Charges of the Company directly
attributable to assets which are the subject of any Asset Sale or Asset
Acquisition (including, without limitation, any Asset Acquisition giving rise
to the need to make such calculation as a result of the Company or one of the
Restricted Subsidiaries (including any Person who becomes a Restricted
Subsidiary as a result of the Asset Acquisition) incurring, assuming or
otherwise being liable for Acquired Indebtedness) occurring during the
Reference Period, as if such Asset Sale or Asset Acquisition occurred on the
first day of the Reference Period, and (iii) the retirement of Indebtedness
during the Reference Period which cannot thereafter be reborrowed occurring as
if retired on the first day of the Reference Period. For purposes of
calculating "Consolidated Fixed Charges" for this "Consolidated Fixed Charge
Coverage Ratio," interest on Indebtedness incurred during the Reference Period
under any revolving credit facility which may be borrowed and repaid without
reducing the commitments thereunder shall be the actual interest during the
Reference Period. Furthermore, in calculating "Consolidated Fixed Charges" for
purposes of determining the denominator (but not the numerator) of this
"Consolidated Fixed Charge Coverage Ratio," (1) interest on Indebtedness
determined on a fluctuating basis as of the Transaction Date and which will
continue to be so determined thereafter will be deemed to accrue at a fixed
rate per annum equal to the rate of interest on such Indebtedness in effect on
the Transaction Date; (2) if interest on any Indebtedness actually incurred on
the Transaction Date may optionally be determined on a fluctuating basis like
prime or a similar rate or a factor thereof, a eurocurrency interbank offered
rate, or other rates, then the interest rate in effect on the Transaction Date
shall be deemed to have been in effect during the Reference Period; and (3)
notwithstanding clause (1) above, interest on Indebtedness determined on a
fluctuating basis, to the extent such interest is covered by agreements
relating to Interest Rate Protection Obligations, will be deemed to accrue at
the rate per annum resulting after giving effect to the operation of such
agreements. If the Company or any Restricted Subsidiary directly or indirectly
guarantees Indebtedness of a third Person, the above definition will give
effect to the
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incurrence of such guaranteed Indebtedness as if the Company or any Restricted
Subsidiary had directly incurred or otherwise assumed such guaranteed
Indebtedness and incurred the related interest expense.
"Consolidated Fixed Charges" means, for any period, the sum of,
without duplication, the amounts for such period of (i) Consolidated Interest
Expense; and (ii) the product of (x) the aggregate amount of cash dividends and
other distributions paid, accrued or scheduled to be paid or accrued during
such period in respect of Redeemable Capital Stock of the Company or Preferred
Stock of a Restricted Subsidiary times (y) a fraction, the numerator of which
is one and the denominator of which is one minus the then-current effective
Consolidated federal, state and local tax rate of such Person expressed as a
decimal.
"Consolidated Income Tax Expense" means, for any period, the
provision for federal, state, local and foreign income taxes payable by the
Company and the Restricted Subsidiaries for such period as determined on a
Consolidated basis in accordance with GAAP.
"Consolidated Interest Expense" means, for any period, without
duplication, the sum of (a) the interest expense of the Company and the
Restricted Subsidiaries for such period as determined on a Consolidated basis
in accordance with GAAP, including, without limitation, (i) any amortization of
debt discount attributable to such period, (ii) the net costs under Interest
Rate Protection Obligations, Currency Agreements and Commodity Price Protection
Agreements (including any amortization of discounts), (iii) the interest
portion of any deferred payment obligation, (iv) all commissions, discounts and
other fees and charges owed with respect to letters of credit and bankers'
acceptance financing and (v) all capitalized interest and all accrued interest,
and (b) the interest component of Capitalized Lease Obligations paid, accrued
and/or scheduled to be paid or accrued by the Company and the Restricted
Subsidiaries during such period and as determined on a Consolidated basis in
accordance with GAAP.
"Consolidated Net Income" means, for any period, the Consolidated
net income (or net loss) of the Company and the Restricted Subsidiaries for
such period as determined in accordance with GAAP, adjusted, to the extent
included in calculating such net income (or net loss), by excluding, without
duplication, (i) all extraordinary gains or losses net of taxes (net of fees
and expenses relating to the transaction giving rise thereto), (ii) net income
of the Company and the Restricted Subsidiaries derived from or in respect of
Investments in Unrestricted Subsidiaries, except to the extent that cash
dividends or distributions are actually received by the Company or a Restricted
Subsidiary, (iii) the portion of net income (or net loss) of the Company and
the Restricted Subsidiaries allocable to minority interests in unconsolidated
Persons, except to the extent that cash dividends or distributions are actually
received by the Company or one of the Restricted Subsidiaries, (iv) net income
(or net loss) of any Person combined with the Company or
8
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one of the Restricted Subsidiaries on a "pooling of interests" basis
attributable to any period prior to the date of combination, (v) gains or
losses in respect of any Asset Sales by the Company or any of the Restricted
Subsidiaries (on an after-tax basis and net of fees and expenses relating to
the transaction giving rise thereto), and (vi) the net income of any Restricted
Subsidiary to the extent that the declaration of dividends or similar
distributions by that Restricted Subsidiary of that income is not at the time
permitted, directly or indirectly, by operation of the terms of its charter or
any agreement, instrument, judgment, decree, order, statute, rule or
governmental regulations applicable to that Restricted Subsidiary or its
stockholders.
"Consolidated Non-cash Charges" means, for any period, the
aggregate depreciation, amortization and other noncash expenses of the Company
and the Restricted Subsidiaries reducing Consolidated Net Income for such
period (other than any non-cash item requiring an accrual or reserve for cash
disbursements in any future period), determined on a Consolidated basis in
accordance with GAAP.
"Consolidation" means, with respect to any Person, the
consolidation of the accounts of such Person and each of its subsidiaries if
and to the extent the accounts of such Person and each of its Restricted
Subsidiaries would normally be consolidated with those of such Person, all in
accordance with GAAP. The term "Consolidated" shall have a similar meaning.
"Corporate Trust Office" means the office of the Trustee or an
affiliate or agent thereof at which at any particular time the corporate trust
business for the purposes of this Indenture shall be principally administered,
which office at the date of execution of this Indenture is located at 100 East
Broad Street, Columbus, Ohio 43215.
"Credit Facility" means the Revolving Credit Agreement dated as
of March 31, 1997, among the Company, Zale Delaware, Inc., The First National
Bank of Boston, as Agent, and the other financial institutions signatory
thereto, as in effect on the Issue Date, and as such agreement may be amended,
renewed, extended, substituted, refinanced, replaced, supplemented or otherwise
modified from time to time, and includes related notes, guarantees and other
agreements executed in connection therewith.
"Currency Agreement" means the obligations of any Person pursuant
to any foreign exchange contract, currency swap agreement or other similar
agreement or arrangement designed to protect the Company or any Restricted
Subsidiary against fluctuations in currency values.
"Default" means any event that is, or after notice or passage of
time or both would be, an Event of Default.
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"Depositary" means, with respect to the Securities issued in the
form of one or more Book-Entry Securities, The Depository Trust Company
("DTC"), its nominees and successors, or another Person designated as
Depositary by the Company, which must be a clearing agency registered under the
Exchange Act.
"Disinterested Director" means, with respect to any transaction
or series of related transactions, a member of the Board of Directors of the
Company who does not have any material direct or indirect financial interest in
or with respect to such transaction or series of related transactions.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated by the Commission
thereunder, or any successor statute.
"Exchange Offer" means the exchange offer by the Company and the
Guarantor of Series B Securities for Series A Securities to be effected
pursuant to Section 2.1 of the Registration Rights Agreement.
"Exchange Offer Registration Statement" means the registration
statement under the Securities Act contemplated by Section 2.1 of the
Registration Rights Agreement.
"Excluded Assets" means certain surplus assets of the Company
which are set forth on Schedule II to the Indenture.
"Fair Market Value" means, with respect to any asset, the price
which could be negotiated in an arm's-length free market transaction, for cash,
between an informed and willing seller and an informed and willing buyer,
neither of which is under pressure or compulsion to complete the transaction.
Fair Market Value shall be determined by the Board of Directors of the Company
acting in good faith conclusively evidenced by a Board Resolution thereof
delivered to the Trustee or, with respect to any asset valued at up to
$1,000,000, such determination may be made by a duly authorized officer of the
Company evidenced by an Officer's Certificate delivered to the Trustee.
"GAAP" or "Generally Accepted Accounting Principles" means
generally accepted accounting principles in effect in the United States as in
effect from time to time and which are consistently applied for all applicable
periods.
"Global Securities" means a security evidencing all or a part of
the Securities to be issued as Book-Entry Securities issued to the Depositary
in accordance with Section 306.
"Guarantee" means the guarantee by each of the Guarantors of the
Securities and the Company's obligations under the Indenture.
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"guarantee" means, as applied to any obligation, (i) a guarantee
(other than by endorsement of negotiable instruments for collection in the
ordinary course of business), direct or indirect, in any manner, of any part or
all of such obligation and (ii) an agreement, direct or indirect, contingent or
otherwise, the practical effect of which is to assure in any way the payment or
performance (or payment of damages in the event of non-performance) of all or
any part of such obligation, including, without limiting the foregoing, the
payment of amounts drawn down by letters of credit. A guarantee shall include,
without limitation, any agreement to maintain or preserve any other Person's
financial condition or to cause any other Person to achieve certain levels of
operating results.
"Guarantor" means (i) Zale Delaware, Inc. and (ii) each other
Subsidiary formed, created or acquired before or after the Issue Date required
to become a Guarantor after the Issue Date pursuant to Section 1013 hereof or
which becomes a Guarantor after the Issue Date in accordance with the terms of
the Indenture. "Holder" means a Person in whose name a Security is registered
in the Security Register.
"Indebtedness" means, with respect to any Person, without
duplication, (i) all indebtedness of such Person for borrowed money or for the
deferred purchase price of property or services, excluding any trade payable
and other accrued current liabilities incurred in the ordinary course of
business, but including, without limitation, all obligations, contingent or
otherwise, of such Person in connection with any letters of credit (but
excluding obligations with respect to trade letters of credit to the extent
such trade letters of credit are not drawn upon or, if drawn upon, to the
extent such drawing is reimbursed not later than the third business day
following receipt by such Person of a demand for reimbursement), bankers'
acceptances or other similar credit transaction, (ii) all obligations of such
Person evidenced by bonds, notes, debentures or other similar instruments,
(iii) all indebtedness created or arising under any conditional sale or other
title retention agreement with respect to property acquired by such Person
(even if the rights and remedies of the seller or lender under such agreement
in the event of default are limited to repossession or sale of such property),
but excluding trade accounts payable arising in the ordinary course of
business, (iv) all Capitalized Lease Obligations of such Person, (v) all
Indebtedness referred to in the preceding clauses of other Persons and all
dividends of other Persons, the payment of which is secured by (or for which
the holder of such Indebtedness has an existing right, contingent or otherwise,
to be secured by) any Lien upon property (including, without limitation,
accounts and contract rights) owned by such Person, even though such Person has
not assumed or become liable for the payment of such Indebtedness (the amount
of such obligation being deemed to be the lesser of the value of such property
or asset or the amount of the obligation so secured), (vi) all guarantees by
such Person of Indebtedness of another Person (other than guarantees of
operating leases of a Restricted Subsidiary of such Person), (vii) all
Redeemable Capital
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Stock valued at its involuntary maximum fixed repurchase price plus accrued and
unpaid dividends, (viii) Preferred Stock of any Restricted Subsidiary of the
Company, (ix) all net payment obligations under or in respect of Currency
Agreements, Interest Rate Protection Obligations and Commodity Price Protection
Agreements of such Person, and (x) any amendment, supplement, modification,
deferral, renewal, extension or refunding of any liability of the types
referred to in clauses (i) through (ix) above. For purposes hereof, the
"maximum fixed repurchase price" of any Redeemable Capital Stock which does not
have a fixed repurchase price will be calculated in accordance with the terms
of such Redeemable Capital Stock as if such Redeemable Capital Stock were
purchased on any date on which Indebtedness will be required to be determined
pursuant to the Indenture, and if such price is based upon, or measured by, the
Fair Market Value of such Redeemable Capital Stock, such Fair Market Value to
be determined in good faith by the Board of Directors of the issuer of such
Redeemable Capital Stock. Sales (on a "true-sale" non-recourse basis) and the
servicing of receivables transferred from the Company or a Restricted
Subsidiary, or transfers of cash, to an Accounts Receivable Subsidiary as a
capital contribution or in exchange for Indebtedness of such Accounts
Receivable Subsidiary or cash shall not be deemed Indebtedness hereunder.
"Indenture" means this instrument as originally executed
(including all exhibits and schedules thereto) and as it may from time to time
be supplemented or amended by one or more indentures supplemental hereto
entered into pursuant to the applicable provisions hereof.
"Indenture Obligations" means the obligations of the Company and
any other obligor under this Indenture or under the Securities, including any
Guarantor, to pay principal of, premium, if any, and interest on the Securities
when due and payable, and all other amounts due or to become due under or in
connection with this Indenture and the Securities, and the performance of all
other obligations to the Trustee and the Holders under this Indenture and the
Securities, according to the respective terms hereof and thereof.
"Initial Securities" has the meaning stated in the first recital
of this Indenture.
"Initial Purchasers" means Merrill Lynch, Pierce, Fenner & Smith
Incorporated, Goldman, Sachs & Co. and BancBoston Securities Inc.
"Interest Payment Date" means the Stated Maturity of an
installment of interest on the Securities.
"Interest Rate Protection Obligations" means the obligations of
any Person pursuant to any arrangement with any other Person whereby, directly
or indirectly, such Person is entitled to receive from time to time periodic
payments calculated by applying
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either a floating or a fixed rate of interest on a stated notional amount in
exchange for periodic payments made by such Person calculated by applying a
fixed or a floating rate of interest on the same notional amount or any other
arrangement involving payments by or to such Person based upon fluctuations in
interest rates.
"Investment" means, with respect to any Person, any direct or
indirect advance, loan or other extension of credit (including by means of a
guarantee) or capital contribution to (by means of any transfer of cash or
other property to others or any payment for property or services for the
account or use of others or otherwise), or any purchase or acquisition by such
Person of any Capital Stock, bonds, notes, debentures or other securities or
evidences of Indebtedness issued by any other Person. Investments shall exclude
extensions of trade credit in accordance with normal trade practices. In
addition to the foregoing, any foreign exchange contract, Currency Agreement,
Interest Rate Protection Obligation, Commodity Price Protection Agreement or
similar agreement shall constitute an Investment.
"Investment Grade Rating" means a Rating of BBB- and Baa3 or
higher, in each case by the applicable Rating Agency, or the equivalents
thereof.
"Issue Date" means the original issue date of the Securities
under this Indenture.
"Lien" means any mortgage, charge, pledge, lien (statutory or
other), privilege, security interest, hypothecation, cessation and transfer,
assignment for security, claim, deposit arrangement or other encumbrance upon
or with respect to any property of any kind, whether real, personal or mixed,
movable or immovable, now owned or hereafter acquired. A Person will be deemed
to own subject to a Lien any property which it has acquired or holds subject to
the interest of a vendor or lessor under any conditional sale agreement,
Capitalized Lease Obligation or other title retention agreement.
"Material Subsidiary" means each Restricted Subsidiary of the
Company that is a "significant subsidiary" as defined in Rule 1-02 of
Regulation S-X under the Securities Act and the Exchange Act (as such
regulation is in effect on the Issue Date).
"Maturity" means, when used with respect to the Securities, the
date on which the principal of the Securities becomes due and payable as
therein provided or as provided in this Indenture, whether at Stated Maturity,
the Offer Date or the Redemption Date and whether by declaration of
acceleration, Offer in respect of Unutilized Net Cash Proceeds, Change of
Control Offer in respect of a Change of Control Triggering Event, call for
redemption or otherwise.
"Moody's" means Moody's Investors Service, Inc. or any successor
rating agency.
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"Net Cash Proceeds" means, with respect to any Asset Sale, the
proceeds thereof in the form of cash or Cash Equivalents including payments in
respect of deferred payment obligations when received in the form of cash or
Cash Equivalents (except to the extent that such obligations are financed or
sold with recourse to the Company or any Restricted Subsidiary) net of (i)
brokerage commissions and other reasonable fees and expenses (including fees
and expenses of legal counsel and investment bankers) related to such Asset
Sale, (ii) provisions for all taxes payable as a result of such Asset Sale,
(iii) amounts required to be paid to any Person (other than the Company or any
Restricted Subsidiary) owning a beneficial interest in the assets subject to
the Asset Sale and (iv) appropriate amounts to be provided by the Company or
any Restricted Subsidiary, as the case may be, as a reserve required in
accordance with GAAP consistently applied against any liabilities associated
with such Asset Sale and retained by the Company or any Restricted Subsidiary,
as the case may be, after such Asset Sale, including, without limitation,
pension and other post-employment benefit liabilities, liabilities related to
environmental matters and liabilities under any indemnification obligations
associated with such Asset Sale (provided that the amount of any such reserves
shall be deemed to constitute Net Cash Proceeds at the time such reserves shall
have been released or are not otherwise required to be retained as a reserve).
"Non-U.S. Person" means a Person that is not a "U.S. person" as
defined in Regulation S under the Securities Act.
"Non-U.S. Subsidiaries" means Subsidiaries organized under the
laws of jurisdictions other than the United States and the states and
territories thereof.
"Officers' Certificate" means a certificate signed by the
Chairman of the Board, the President, the Chief Executive Officer, the Chief
Financial Officer or a Vice President (regardless of Vice Presidential
designation), and by the Treasurer, an Assistant Treasurer, the Secretary or an
Assistant Secretary, of the Company or any Guarantor, as the case may be, and
delivered to the Trustee.
"Opinion of Counsel" means a written opinion of counsel, who may
be counsel for the Company, any Guarantor or the Trustee, unless an Opinion of
Independent Counsel is required pursuant to the terms of this Indenture, and
who shall be reasonably acceptable to the Trustee.
"Opinion of Independent Counsel" means a written opinion of
counsel which is issued by a Person who is not an employee, director or
consultant (other than non-employee legal counsel) of the Company or any
Guarantor and who shall be reasonably acceptable to the Trustee.
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"Outstanding" when used with respect to Securities means, as of
the date of determination, all Securities theretofore authenticated and
delivered under this Indenture, except:
(a) Securities theretofore canceled by the Trustee or
delivered to the Trustee for cancellation;
(b) Securities, or portions thereof, for whose payment or
redemption money in the necessary amount has been theretofore deposited with
the Trustee or any Paying Agent (other than the Company or any Affiliate
thereof) in trust or set aside and segregated in trust by the Company or any
Affiliate thereof (if the Company or any Affiliate thereof shall act as its own
Paying Agent) for the Holders of such Securities; provided that if such
Securities are to be redeemed, notice of such redemption has been duly given
pursuant to this Indenture or provision therefor reasonably satisfactory to the
Trustee has been made;
(c) Securities, to the extent provided in Sections 402 and
403, with respect to which the Company has effected defeasance or covenant
defeasance as provided in Article Four; and
(d) Securities in exchange for or in lieu of which other
Securities have been authenticated and delivered pursuant to this Indenture,
other than any such Securities in respect of which there shall have been
presented to the Trustee and the Company proof reasonably satisfactory to each
of them that such Securities are held by a bona fide purchaser in whose hands
the Securities are valid obligations of the Company;
provided, however, that in determining whether the Holders of the requisite
principal amount of Outstanding Securities have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Securities owned
by the Company, any Guarantor, or any other obligor upon the Securities or any
Affiliate of the Company, any Guarantor or such other obligor shall be
disregarded and deemed not to be Outstanding, except that, in determining
whether the Trustee shall be protected in relying upon any such request,
demand, authorization, direction, notice, consent or waiver, only Securities
which the Trustee knows to be so owned shall be so disregarded. Securities so
owned which have been pledged in good faith may be regarded as Outstanding if
the pledgee establishes to the reasonable satisfaction of the Trustee the
pledgee's right so to act with respect to such Securities and that the pledgee
is not the Company, any Guarantor or any other obligor upon the Securities or
any Affiliate of the Company, any Guarantor or such other obligor.
"Pari Passu Indebtedness" means (a) any Indebtedness of the
Company which ranks pari passu in right of payment with the Securities and (b)
with respect to any Guarantee, Indebtedness which ranks pari passu in right of
payment with such Guarantee.
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"Paying Agent" means any Person (including the Company)
authorized by the Company to pay the principal of, premium, if any, or interest
on, any Securities on behalf of the Company.
"Permitted Investment" means (a) Cash Equivalents; (b)
Investments in prepaid expenses, negotiable instruments held for collection and
lease, utility and workers' compensation, performance and other similar
deposits; (c) loans, extensions of credit and advances to officers, directors
and employees which are outstanding on the Issue Date or which do not exceed
$5,000,000 in the aggregate at any one time outstanding and payroll, travel and
similar advances to cover matters that are expected at the time of such
advances ultimately to be treated as expenses in accordance with GAAP; (d)
Interest Rate Protection Obligations, Commodity Price Protection Agreements and
Currency Agreements permitted under clause (viii), (ix) or (x) of paragraph
(b) under Section 1008; (e) Investments by any Restricted Subsidiary in the
Company; (f) Investments by the Company or any Restricted Subsidiary in a
Restricted Subsidiary that is a Guarantor or another Person, if as a result of
or in connection with such Investment such other Person becomes a Wholly-Owned
Restricted Subsidiary; (g) Investments represented by accounts receivable
created or acquired in the ordinary course of business; (h) Investments in the
form of the sale (on a "true-sale" non-recourse basis) or the servicing of
receivables transferred from the Company or any Restricted Subsidiary, or
transfers of cash, to an Accounts Receivable Subsidiary as a capital
contribution or in exchange for Indebtedness of such Accounts Receivable
Subsidiary or cash in the ordinary course of business; (i) loans or other
advances to vendors in connection with in store merchandising to be repaid
either on a lump sum basis or over a period of time by delivery of merchandise;
(j) Investments representing capital stock or obligations issued to the Company
or any Restricted 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 the Company or such Restricted Subsidiary; (k) Investments in credit
card receivables arising from any proprietary credit card issued by or for the
benefit of the Company or an Affiliate of the Company; (l) Investments acquired
by the Company or any Restricted Subsidiary in connection with an Asset Sale
permitted under Section 1011 hereof (other than pursuant to the second sentence
of the first paragraph thereof); (m) Investments in any of the Securities; and
(n) Investments, other than those enumerated in (a) through (m) above, in an
aggregate amount of $20,000,000.
"Permitted Liens" means (a) Liens on property of (or on shares of
Capital Stock or debt securities of) a Person existing at the time such Person
(i) is merged into or consolidated with the Company or any Restricted
Subsidiary or (ii) becomes a Restricted Subsidiary; provided, however, that
such Liens were in existence prior to the contemplation of such merger,
consolidation or acquisition and do not secure any property or assets of the
Company or any Restricted Subsidiary other than the property or assets subject
to the Liens prior to such merger, consolidation or acquisition; (b) Liens
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imposed by law such as landlords', carriers', warehousemen's and mechanics'
Liens and other similar Liens arising in the ordinary course of business which
secure payment of obligations not more than 60 days past due or which are being
contested in good faith and by appropriate proceedings; (c) Liens existing on
the Issue Date; (d) Liens securing only the Securities; (e) Liens in favor of
the Company or Liens on any property or assets of a Restricted Subsidiary (or
on shares of Capital Stock or debt securities of a Restricted Subsidiary) in
favor of the Company or any Restricted Subsidiary; (f) Liens for taxes,
assessments or governmental charges or claims that are not yet delinquent for
more than 90 days or that are being contested in good faith by appropriate
proceedings promptly instituted and diligently concluded; provided, however,
that any reserve or other appropriate provision as shall be required in
conformity with GAAP shall have been made therefor; (g) easements, reservation
of rights of way, restrictions and other similar easements, licenses,
restrictions on the use of properties, or imperfections of title that in the
aggregate are not material in amount and do not in any case materially detract
from the properties subject thereto or interfere with the ordinary conduct of
the business of the Company and the Restricted Subsidiaries; (h) Liens
resulting from the deposit of cash or notes in connection with contracts,
tenders or expropriation proceedings, or to secure workers' compensation,
surety or appeal bonds, costs of litigation when required by law, public and
statutory obligations, obligations under franchise arrangements entered into in
the ordinary course of business and other obligations of a similar nature
arising in the ordinary course of business; (i) Liens securing Indebtedness
consisting of Capitalized Lease Obligations, Purchase Money Indebtedness (other
than Indebtedness incurred to finance an Asset Acquisition), mortgage
financings, industrial revenue bonds or other monetary obligations, in each
case incurred solely for the purpose of financing all or any part of the
purchase price or cost of construction or installation of assets used in the
business of the Company or the Restricted Subsidiaries, or repairs, additions
or improvements to such assets; provided, however, that (I) such Liens secure
Indebtedness in an amount not in excess of the original purchase price or the
original cost of any such assets or repair, addition or improvement thereto
(plus an amount equal to the reasonable fees and expenses in connection with
the incurrence of such Indebtedness), (II) such Liens do not extend to any
other assets of the Company or the Restricted Subsidiaries (and, in the case of
repair, addition or improvements to any such assets, such Lien extends only to
the assets (and improvements thereto or thereon) repaired, added to or
improved), (III) the incurrence of such Indebtedness is permitted by Section
1008 hereof and (IV) such Liens attach prior to 90 days after such purchase,
construction, installation, repair, addition or improvement; (j) Liens to
secure any Refinancings (or successive Refinancings), in whole or in part, of
any Indebtedness secured by Liens referred to in the clauses above so long as
such Lien does not extend to any other property (other than improvements
thereto); (k) Liens securing trade letters of credit entered into in the
ordinary course of business; (l) Liens on and pledges of the capital stock of
(A) any Unrestricted Subsidiary securing any Indebtedness of such Unrestricted
Subsidiary and (B) an Accounts Receivable Subsidiary; (m) leases or subleases
granted to others that do
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not materially interfere with the ordinary course of business of the Company
and the Restricted Subsidiaries, taken as a whole; (n) any interest or title of
a lessor in any property that is (i) subject to any lease or (ii) located on
the real property subject to any lease; (o) Liens arising from the rendering of
a final judgment or order against the Company or any Restricted Subsidiary that
does not give rise to an Event of Default; (p) Liens arising out of conditional
sale, title retention, consignment or similar arrangements for the sale of
goods entered into by the Company or any Restricted Subsidiary in the ordinary
course of business; and (q) Liens on the property or assets or Capital Stock of
Accounts Receivable Subsidiaries and Liens arising out of any sale of accounts
receivable in the ordinary course to or by an Accounts Receivable Subsidiary.
"Person" means any individual, corporation, limited liability
company, partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political
subdivision thereof.
"Predecessor Security" of any particular Security means every
previous Security evidencing all or a portion of the same debt as that
evidenced by such particular Security; and, for the purposes of this
definition, any Security authenticated and delivered under Section 308 in
exchange for a mutilated Security or in lieu of a lost, destroyed or stolen
Security shall be deemed to evidence the same debt as the mutilated, lost,
destroyed or stolen Security.
"Preferred Stock" means, with respect to any Person, Capital
Stock of any class or classes (however designated) which is preferred as to the
payment of dividends or distributions, or as to the distribution of assets upon
any voluntary or involuntary liquidation or dissolution of such Person, over
Capital Stock of any other class of such Person.
"Prospectus" means the prospectus included in a Registration
Statement, including any preliminary prospectus, and any such prospectus as
amended or supplemented by any prospectus supplement, including any such
prospectus supplement with respect to the terms of the offering of any portion
of the Series A Securities covered by a Shelf Registration Statement, and by
all other amendments and supplements to a prospectus, including post-effective
amendments, and in each case including all material incorporated by reference
therein.
"Public Equity Offering" means an underwritten primary offering
of Common Stock of the Company with gross cash proceeds to the Company of at
least $50,000,000 pursuant to a registration statement under the Securities Act
that has been declared effective by the Commission (other than a registration
statement on Form S-8 or any successor form or otherwise relating to equity
securities issuable under any employee benefit plan of the Company).
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"Purchase Money Indebtedness" means Indebtedness of the Company
or any Restricted Subsidiary incurred for the purpose of financing all or any
part of the purchase price or the cost of construction or improvement of any
real or personal property; provided, however, that the aggregate principal
amount of such Indebtedness does not exceed the lesser of the Fair Market Value
of such property or the original purchase price or the original cost of any
such assets or repair, addition or improvement thereto (plus an amount equal to
the reasonable fees and expenses in connection with the incurrence of such
Indebtedness).
"QIB" means a "Qualified Institutional Buyer" under Rule 144A
under the Securities Act.
"Rating Agencies" means (i) Standard & Poor's Ratings Group and
(ii) Moody's Investors Service, Inc. or (iii) if Standard & Poor's Ratings
Group or Moody's Investors Service, Inc. or both shall not make a rating of the
Securities publicly available, a nationally recognized securities rating agency
or agencies, as the case may be, selected by the Company, which shall be
substituted for Standard & Poor's Ratings Group, Moody's Investors Services,
Inc. or both, as the case may be.
"Rating Category" means (i) with respect to Standard & Poor's
Ratings Group, any of the following categories: BB, B, CCC, CC, C and D (or
equivalent successor categories); (ii) with respect to Moody's Investors
Service, Inc., any of the following categories: Ba, B, Caa, Ca, C and D (or
equivalent successor categories); and (iii) the equivalent of any such category
of Standard & Poor's Ratings Group or Moody's Investors Service, Inc. used by
another Rating Agency. In determining whether the rating of the Notes has
decreased by one or more gradations, gradations within Rating Categories (+ and
- - for Standard & Poor's Ratings Group; 1, 2 and 3 for Moody's Investors
Service, Inc.; or the equivalent gradations for another Rating Agency) shall be
taken into account (e.g., with respect to Standard & Poor's Ratings Group, a
decline in a rating from BB+ to BB, as well as from BB- to B+, will constitute
a decrease of one gradation).
"Rating Date" means the date which is 90 days prior to the
earlier of (i) a Change of Control and (ii) public notice of the occurrence of
a Change of Control or of the intention by the Company to effect a Change of
Control.
"Rating Decline" means the occurrence of the following on, or
within 90 days after, the earlier of (i) the occurrence of a Change of Control
and (ii) the date of public notice of the occurrence of a Change of Control or
of the public notice of the intention of the Company to effect a Change of
Control (which period shall be extended so long as the rating of the Securities
is under publicly announced consideration for possible downgrading by any of
the Rating Agencies): (a) in the event that the Securities have an Investment
Grade Rating, the rating of the Securities by both such Rating
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Agencies shall be reduced below Investment Grade, or (b) in the event the
Securities are rated below Investment Grade by both such Rating Agencies on the
Rating Date, the rating of the Securities by either Rating Agency shall be
decreased by one or more gradations (including gradations within Rating
Categories as well as between Rating Categories).
"Redeemable Capital Stock" means any class or series of Capital
Stock to the extent that, either by its terms, by the terms of any security
into which it is convertible or exchangeable, or by contract or otherwise, it
is or upon the happening of an event or passage of time would be, required to
be redeemed prior to the final Stated Maturity of the Securities or is
redeemable at the option of the holder thereof at any time prior to such Stated
Maturity, or is convertible into or exchangeable at the option of the holder
thereof for debt securities at any time prior to such Stated Maturity.
"Redemption Date" when used with respect to any Security to be
redeemed pursuant to any provision in this Indenture means the date fixed for
such redemption by or pursuant to this Indenture.
"Redemption Price" when used with respect to any Security to be
redeemed pursuant to any provision in this Indenture means the price at which
it is to be redeemed pursuant to this Indenture.
"Refinance" means, with respect to any Indebtedness, any
refinancing, redemption, retirement, renewal, replacement, extension or
refunding of such Indebtedness.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of September 30, 1997, among the Company, the Guarantor and
the Initial Purchasers.
"Registration Statement" means any registration statement of the
Company and the Guarantor which covers any of the Series A Securities (and
related guarantees) or Series B Securities (and related guarantees) pursuant to
the provisions of the Registration Rights Agreement, and all amendments and
supplements to any such Registration Statement, including post-effective
amendments, in each case including the Prospectus contained therein, all
exhibits thereto and all material incorporated by reference therein.
"Regular Record Date" for the interest payable on any Interest
Payment Date means the March 15 or September 15 (whether or not a Business Day)
next preceding such Interest Payment Date.
"Regulation S Global Securities" means a permanent global note in
registered form representing the aggregate principal amount of Securities sold
in reliance on Regulation S under the Securities Act.
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"Responsible Officer" when used with respect to the Trustee means
any officer assigned to the Corporate Trust Office or any agent of the Trustee
appointed hereunder, including any vice president, assistant vice president,
assistant secretary, or any other officer or assistant officer of the Trustee
or any agent of the Trustee appointed hereunder to whom any corporate trust
matter is referred because of his or her knowledge of and familiarity with the
particular subject.
"Restricted Subsidiary" means any Subsidiary (other than an
Accounts Receivable Subsidiary) of the Company that has not been designated by
the Board of Directors of the Company, by a Board Resolution delivered to the
Trustee, as an Unrestricted Subsidiary pursuant to and in compliance with
Section 1017. Any such designation may be revoked by a Board Resolution of the
Company delivered to the Trustee, subject to the provisions of such covenant.
"Rule 144A Global Securities" means a permanent global note in
registered form representing the aggregate principal amount of Securities sold
in reliance on Rule 144A under the Securities Act.
"Sale and Leaseback Transaction" means any transaction or series
of related transactions pursuant to which the Company or a Restricted
Subsidiary sells or transfers any property or asset in connection with the
leasing, or the resale against installment payments, of such property or asset
to the seller or transferor.
"S&P" means Standard & Poor's Rating Group, a division of McGraw
Hill, Inc., or any successor rating agency.
"Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations promulgated by the Commission thereunder, or any
successor statute.
"Senior Guarantor Indebtedness" means any Indebtedness of a
Guarantor which is not expressly subordinated in right of payment to any other
Indebtedness of such Guarantor.
"Senior Indebtedness" means any Indebtedness of the Company which
is not expressly subordinated in right of payment to any other Indebtedness of
the Company.
"Shelf Registration Statement" means a "shelf" registration
statement of the Company and the Guarantor pursuant to Section 2.2 of the of
the Registration Rights Agreement, which covers all of the Registrable
Securities (as defined in the Registration Rights Agreement) on an appropriate
form under Rule 415 under the Securities Act, or any similar rule that may be
adopted by the Commission, and all amendments and supplements to such
registration statement, including post-effective amendments, in each
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case including the Prospectus contained therein, all exhibits thereto and all
material incorporated by reference therein.
"Special Record Date" for the payment of any Defaulted Interest
means a date fixed by the Trustee pursuant to Section 309.
"Stated Maturity" means, with respect to any Security or any
installment of interest thereon, the dates specified in such Security as the
fixed date on which the principal of such Security or such installment of
interest is due and payable, and when used with respect to any other
Indebtedness, means the date specified in the instrument governing such
Indebtedness as the fixed date on which the principal of such Indebtedness or
any installment of interest is due and payable.
"Subordinated Indebtedness" means, with respect to the Company,
Indebtedness of the Company which is expressly subordinated in right of payment
to any other Indebtedness of the Company or, with respect to any Guarantor,
Indebtedness of such Guarantor which is expressly subordinated in right of
payment to any other Indebtedness of such Guarantor.
"Subsidiary" means, with respect to any Person, (a) any
corporation of which the outstanding shares of Voting Stock having at least a
majority of the votes entitled to be cast in the election of directors shall at
the time be owned, directly or indirectly, by such Person, or (b) any other
Person of which at least a majority of the shares of Voting Stock are at the
time, directly or indirectly, owned by such first named Person.
"Trustee" means the Person named as the "Trustee" in the first
paragraph of this Indenture, until a successor trustee shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Trustee" shall mean such successor trustee.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended, or any successor statute.
"Unrestricted Subsidiary" means each Accounts Receivable
Subsidiary and each Subsidiary of the Company (other than a Guarantor)
designated as such pursuant to and in compliance with Section 1017 hereof. Any
such Designation may be revoked by a Board Resolution of the Company delivered
to the Trustee, subject to the provisions of such covenant.
"Voting Stock" means any class or classes of Capital Stock
pursuant to which the holders thereof have the general voting power under
ordinary circumstances to elect at least a majority of the Board of Directors,
managers or trustees of any Person (irrespective of whether or not, at the
time, stock of any other class or classes shall have, or might have, voting
power by reason of the happening of any contingency).
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"Wholly-Owned Restricted Subsidiary" means any Restricted
Subsidiary of which 100% of the outstanding Capital Stock is owned by the
Company and/or another Wholly-Owned Restricted Subsidiary. For purposes of this
definition, any directors' qualifying shares or investments by foreign
nationals mandated by applicable law shall be disregarded in determining the
ownership of a Restricted Subsidiary.
Section 102. Other Definitions.
Term Defined in Section
---- ------------------
"Act" 105
"Additional Securities" 301
"Affiliate Transactions" 1010
"Agent Members" 306
"Asset Sale Offer" 1011
"Change of Control Offer" 1014
"Change of Control Purchase Date" 1014
"Change of Control Purchase Notice" 1014
"Change of Control Purchase Price" 1014
"covenant defeasance" 403
"Defaulted Interest" 309
"defeasance" 402
"Defeasance Redemption Date" 404
"Defeased Securities" 401
"Designation" 1017
"Designation Amount" 1017
"Event of Default" 501
"Four Quarter Period" 101
"Global Security" 201
"incur" 1008
"Initial Securities" Recitals
"Offer Date" 1011
"Offered Price" 1011
"Other Indebtedness" 1013
"Pari Passu Debt Amount" 1013
"Pari Passu Offer" 1013
"Permitted Indebtedness" 1008
"Physical Securities" 306
"Private Placement Legend" 202
"Reference Period" 101
"Registration Default" 202
"Required Filing Date" 1018
"Restricted Payment" 1009
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"Revocation" 1017
"Rule 144A" 201
"Securities" Recitals
"Security Amount" 1011
"Security Register" 305
"Security Registrar" 305
"Series A Securities" Recitals
"Series B Securities" Recitals
"Special Payment Date" 309
"Surviving Entity" 801
"Transaction Date" 101
"Unutilized Net Cash Proceeds" 1011
"U.S. Government Obligations" 404
Section 103. Compliance Certificates and Opinions.
Upon any application or request by the Company to the Trustee to
take any action under any provision of this Indenture, the Company and any
Guarantor (if applicable) and any other obligor on the Securities (if
applicable) shall furnish to the Trustee an Officers' Certificate in a form and
substance reasonably acceptable to the Trustee stating that all conditions
precedent, if any, provided for in this Indenture (including any covenant
compliance with which constitutes a condition precedent) relating to the
proposed action have been complied with, and an Opinion of Counsel in a form
and substance reasonably acceptable to the Trustee stating that in the opinion
of such counsel all such conditions precedent, if any, have been complied with,
except that, in the case of any such application or request as to which the
furnishing of such certificates or opinions is specifically required by any
provision of this Indenture relating to such particular application or request,
no additional certificate or opinion need be furnished.
Every certificate or Opinion of Counsel with respect to
compliance with a condition or covenant provided for in this Indenture shall
include:
(a) a statement that each individual signing such certificate
or individual or firm signing such opinion has read such covenant or condition
and the definitions herein relating thereto;
(b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions contained in
such certificate or opinion are based;
(c) a statement that, in the opinion of each such individual
or such firm, he or it has made such examination or investigation as is
necessary to enable him or it to
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express an informed opinion as to whether or not such covenant or condition has
been complied with; and
(d) a statement as to whether, in the opinion of each such
individual or such firm, such condition or covenant has been complied with.
Section 104. Form of Documents Delivered to Trustee.
In any case where several matters are required to be certified
by, or covered by an opinion of, any specified Person, it is not necessary that
all such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company, any
Guarantor or other obligor on the Securities may be based, insofar as it
relates to legal matters, upon a certificate or opinion of, or representations
by, counsel, unless such officer knows, or in the exercise of reasonable care
should know, that the certificate or opinion or representations with respect to
the matters upon which his certificate or opinion is based are erroneous. Any
such certificate or opinion may be based, insofar as it relates to factual
matters, upon a certificate or opinion of, or representations by, an officer or
officers of the Company, any Guarantor or other obligor on the Securities
stating that the information with respect to such factual matters is in the
possession of the Company, any Guarantor or other obligor on the Securities,
unless such officer or counsel knows, or in the exercise of reasonable care
should know, that the certificate or opinion or representations with respect to
such matters are erroneous. Opinions of Counsel required to be delivered to
the Trustee may have qualifications customary for opinions of the type required
and counsel delivering such Opinions of Counsel may rely on certificates of the
Company or government or other officials customary for opinions of the type
required, including certificates certifying as to matters of fact, including
that various financial covenants have been complied with.
Any certificate or opinion of an officer of the Company, any
Guarantor or other obligor on the Securities may be based, insofar as it
relates to accounting matters, upon a certificate or opinion of, or
representations by, an accountant or firm of accountants in the employ of the
Company, unless such officer knows, or in the exercise of reasonable care
should know, that the certificate or opinion or representations with respect to
the accounting matters upon which his certificate or opinion may be based are
erroneous. Any certificate or opinion of any independent firm of public
accountants filed with the Trustee shall contain a statement that such firm is
independent with respect to the Company.
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Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
Section 105. Acts of Holders.
(a) Any request, demand, authorization, direction, notice,
consent, waiver or other action provided by this Indenture to be given or taken
by Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by an agent
duly appointed in writing; and, except as herein otherwise expressly provided,
such action shall become effective when such instrument or instruments are
delivered to the Trustee and, where it is hereby expressly required, to the
Company. Such instrument or instruments (and the action embodied therein and
evidenced thereby) are herein sometimes referred to as the "Act" of the Holders
signing such instrument or instruments. Proof of execution of any such
instrument or of a writing appointing any such agent shall be sufficient for
any purpose of this Indenture and conclusive in favor of the Trustee and the
Company, if made in the manner provided in this Section 105.
(b) The ownership of Securities shall be proved by the
Security Register.
(c) Any request, demand, authorization, direction, notice,
consent, waiver or other Act by the Holder of any Security shall bind every
future Holder of the same Security or the Holder of every Security issued upon
the transfer thereof or in exchange therefor or in lieu thereof, in respect of
anything done, suffered or omitted to be done by the Trustee, any Paying Agent
or the Company, any Guarantor or any other obligor of the Securities in
reliance thereon, whether or not notation of such action is made upon such
Security.
(d) The fact and date of the execution by any Person of any
such instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where
such execution is by a signer acting in a capacity other than his individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of his authority. The fact and date of the execution of any such instrument or
writing, or the authority of the Person executing the same, may also be proved
in any other manner which the Trustee deems sufficient.
(e) If the Company shall solicit from the Holders any request,
demand, authorization, direction, notice, consent, waiver or other Act, the
Company may, at its option, by or pursuant to a Board Resolution, fix in
advance a record date for the determination of such Holders entitled to give
such request, demand, authorization,
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direction, notice, consent, waiver or other Act, but the Company shall have no
obligation to do so. Notwithstanding Trust Indenture Act Section 316(c), any
such record date shall be the record date specified in or pursuant to such
Board Resolution, which shall be a date not more than 30 days prior to the
first solicitation of Holders generally in connection therewith and no later
than the date such first solicitation is completed.
If such a record date is fixed, such request, demand,
authorization, direction, notice, consent, waiver or other Act may be given
before or after such record date, but only the Holders of record at the close
of business on such record date shall be deemed to be Holders for purposes of
determining whether Holders of the requisite proportion of Securities then
Outstanding have authorized or agreed or consented to such request, demand,
authorization, direction, notice, consent, waiver or other Act, and for this
purpose the Securities then Outstanding shall be computed as of such record
date; provided that no such request, demand, authorization, direction, notice,
consent, waiver or other Act by the Holders on such record date shall be deemed
effective unless it shall become effective pursuant to the provisions of this
Indenture not later than six months after such record date.
(f) For purposes of this Indenture, any action by the Holders
which may be taken in writing may be taken by electronic means or as otherwise
reasonably acceptable to the Trustee.
Section 106. Notices, etc., to the Trustee, the Company and any
Guarantor.
Any request, demand, authorization, direction, notice, consent,
waiver or Act of Holders or other document provided or permitted by this
Indenture to be made upon, given or furnished to, or filed with:
(a) the Trustee by any Holder or by the Company or any
Guarantor or any other obligor on the Securities shall be sufficient for every
purpose (except as provided in Section 501(d)) hereunder if in writing and
mailed, first-class postage prepaid, or delivered by recognized overnight
courier, to or with the Trustee at its Corporate Trust Office, Attention:
Corporate Trust Department, or at any other address previously furnished in
writing to the Holders, the Company, any Guarantor or any other obligor on the
Securities by the Trustee; or
(b) the Company or any Guarantor by the Trustee or any Holder
shall be sufficient for every purpose (except as provided in Section 501(d))
hereunder if in writing and mailed, first-class postage prepaid, or delivered
by recognized overnight courier, to the Company or such Guarantor addressed to
it c/o Zale Corporation, 901 W. Walnut Hill Lane, Irving, Texas 75038,
attention: Chief Financial Officer, or at any other address previously
furnished in writing to the Trustee by the Company or such Guarantor.
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Section 107. Notice to Holders; Waiver.
Where this Indenture provides for notice to Holders of any event,
such notice shall be sufficiently given (unless otherwise herein expressly
provided) if in writing and mailed, first-class postage prepaid, or delivered
by recognized overnight courier, to each Holder affected by such event, at its
address as it appears in the Security Register, not later than the latest date,
and not earlier than the earliest date, prescribed for the giving of such
notice. In any case where notice to Holders is given by mail, neither the
failure to mail such notice, nor any defect in any notice so mailed, to any
particular Holder shall affect the sufficiency of such notice with respect to
other Holders. Any notice when mailed to a Holder in the aforesaid manner
shall be conclusively deemed to have been received by such Holder whether or
not actually received by such Holder. Where this Indenture provides for notice
in any manner, such notice may be waived in writing by the Person entitled to
receive such notice, either before or after the event, and such waiver shall be
the equivalent of such notice. Waivers of notice by Holders shall be filed
with the Trustee, but such filing shall not be a condition precedent to the
validity of any action taken in reliance upon such waiver.
In case by reason of the suspension of regular mail service or by
reason of any other cause, it shall be impracticable to mail notice of any
event as required by any provision of this Indenture, then any method of giving
such notice as shall be reasonably satisfactory to the Trustee shall be deemed
to be a sufficient giving of such notice.
Section 108. Conflict with Trust Indenture Act.
If any provision hereof limits, qualifies or conflicts with any
provision of the Trust Indenture Act or another provision which is required or
deemed to be included in this Indenture by any of the provisions of the Trust
Indenture Act, the provision or requirement of the Trust Indenture Act shall
control. If any provision of this Indenture modifies or excludes any provision
of the Trust Indenture Act that may be so modified or excluded, the latter
provision shall be deemed to apply to this Indenture as so modified or to be
excluded, as the case may be.
Section 109. Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of Contents
are for convenience only and shall not affect the construction hereof.
Section 110. Successors and Assigns.
All covenants and agreements in this Indenture by the Company and
the Guarantors shall bind their respective successors and assigns, whether so
expressed or not.
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Section 111. Separability Clause.
In case any provision in this Indenture or in the Securities or
Guarantees shall be invalid, illegal or unenforceable, the validity, legality
and enforceability of the remaining provisions shall not in any way be affected
or impaired thereby.
Section 112. Benefits of Indenture.
Nothing in this Indenture or in the Securities or Guarantees,
express or implied, shall give to any Person (other than the parties hereto and
their successors hereunder, any Paying Agent and the Holders) any benefit or
any legal or equitable right, remedy or claim under this Indenture.
SECTION 113. GOVERNING LAW.
THIS INDENTURE, THE SECURITIES AND THE GUARANTEES SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK, WITHOUT GIVING EFFECT TO THE CONFLICTS OF LAWS PRINCIPLES THEREOF.
Section 114. Legal Holidays.
In any case where any Interest Payment Date, Redemption Date,
Maturity or Stated Maturity of any Security shall not be a Business Day, then
(notwithstanding any other provision of this Indenture or of the Securities)
payment of interest or principal or premium, if any, need not be made on such
date, but may be made on the next succeeding Business Day with the same force
and effect as if made on such Interest Payment Date or Redemption Date, or at
the Maturity or Stated Maturity and no interest shall accrue with respect to
such payment for the period from and after such Interest Payment Date,
Redemption Date, Maturity or Stated Maturity, as the case may be, to the next
succeeding Business Day.
Section 115. Independence of Covenants.
All covenants and agreements in this Indenture shall be given
independent effect so that if a particular action or condition is not permitted
by any such covenants, the fact that it would be permitted by an exception to,
or be otherwise within the limitations of, another covenant shall not avoid the
occurrence of a Default or an Event of Default if such action is taken or
condition exists.
Section 116. Schedules and Exhibits.
All schedules and exhibits attached hereto are by this reference
made a part hereof with the same effect as if herein set forth in full.
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Section 117. Counterparts.
This Indenture may be executed in any number of counterparts,
each of which shall be deemed an original; but all such counterparts shall
together constitute but one and the same instrument.
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ARTICLE TWO
SECURITY FORMS
Section 201. Forms Generally.
The Securities, the Guarantee and the Trustee's certificate of
authentication thereon shall be in substantially the forms set forth in this
Article Two, with such appropriate insertions, omissions, substitutions and
other variations as are required or permitted hereby and may have such letters,
numbers or other marks of identification and such legends or endorsements
placed thereon as may be required to comply with the rules of any securities
exchange, any organizational document or governing instrument or applicable law
or as may, consistently herewith, be determined by the officers executing such
Securities and Guarantee, as evidenced by their execution of the Securities and
Guarantees. Any portion of the text of any Security may be set forth on the
reverse thereof, with an appropriate reference thereto on the face of the
Security.
The definitive Securities shall be printed, lithographed or
engraved or produced by any combination of these methods or may be produced in
any other manner permitted by the rules of any securities exchange on which the
Securities may be listed, all as determined by the officers executing such
Securities, as evidenced by their execution of such Securities.
Initial Securities offered and sold in reliance on Rule 144A
under the Securities Act ("Rule 144A") and Initial Securities offered and sold
in reliance on Regulation S shall be issued initially in the form of one or
more permanent global Securities substantially in the form set forth in Section
202 (the "Global Security") deposited with the Trustee, as custodian for the
Depositary, duly executed by the Company and authenticated by the Trustee as
hereinafter provided. The aggregate principal amount of the Global Security
may from time to time be increased or decreased by adjustments made on the
records of the Trustee, as custodian for the Depositary or its nominee, as
hereinafter provided. Initial Securities offered and sold in reliance on
Regulation S shall remain in the form of a Global Security until the
consummation of the Exchange Offer pursuant to the Registration Rights
Agreement.
Section 202. Form of Face of Security.
(a) The form of the face of any Series A Securities
authenticated and delivered hereunder shall be substantially as follows:
Unless and until (i) an Initial Security is sold under an
effective Registration Statement or (ii) an Initial Security is exchanged for a
Series B Security in connection with an effective Registration Statement, in
each case pursuant to the Registration Rights
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Agreement, then the Global Security shall bear the legend set forth below (the
"Private Placement Legend") on the face thereof:
THE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE
SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED,
TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT
FROM, OR NOT SUBJECT TO, REGISTRATION AS SET FORTH BELOW.
BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT
IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A
UNDER THE SECURITIES ACT ("RULE 144A")) OR (B) IT IS NOT A U.S.
PERSON AND IS ACQUIRING THIS SECURITY IN AN OFFSHORE TRANSACTION,
(2) AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY,
PRIOR TO THE DATE WHICH IS TWO YEARS AFTER THE LATER OF THE
ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY
OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS SECURITY
(OR ANY PREDECESSOR OF THIS SECURITY) ONLY (A) TO THE COMPANY,
(B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED
EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE
SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A INSIDE
THE UNITED STATES, TO A PERSON IT REASONABLY BELIEVES IS A
"QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A THAT
PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS
BEING MADE IN RELIANCE ON RULE 144A, (D) OUTSIDE THE UNITED
STATES PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS IN AN
OFFSHORE TRANSACTION WITHIN THE MEANING OF REGULATION S UNDER THE
SECURITIES ACT, OR (E)
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PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE COMPANY'S AND
THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER (I)
PURSUANT TO CLAUSES (D) OR (E) TO REQUIRE THE DELIVERY OF AN
OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION
SATISFACTORY TO EACH OF THEM, AND (II) IN EACH OF THE FOREGOING
CASES, TO REQUIRE THAT A CERTIFICATE OF TRANSFER IN THE FORM
APPEARING ON THE OTHER SIDE OF THIS SECURITY IS COMPLETED AND
DELIVERED BY THE TRANSFEROR TO THE TRUSTEE. AS USED HEREIN, THE
TERMS "UNITED STATES," "OFFSHORE TRANSACTION," AND "U.S. PERSON"
HAVE THE RESPECTIVE MEANINGS GIVEN TO THEM BY REGULATION S UNDER
THE SECURITIES ACT.
[Legend if Security is a Global Security]
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE
INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME
OF A DEPOSITARY OR A NOMINEE OF A DEPOSITARY OR A SUCCESSOR
DEPOSITARY. TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED
TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF CEDE & CO.
OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND
TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO
TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN
SECTIONS 306 AND 307 OF THE INDENTURE.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK
CORPORATION ("DTC"), TO THE COMPANY OR ITS AGENT FOR REGISTRATION
OF TRANSFER, EXCHANGE, OR PAYMENT AND ANY SUCH CERTIFICATE ISSUED
IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS
IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
PAYMENT IS
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MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER
USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN.
ZALE CORPORATION
-------------------
8 1/2% SENIOR NOTE DUE 2007, SERIES A
CUSIP NO. 988858AA4
No. 1 $_________________
---
Zale Corporation, a Delaware corporation (herein called the
"Company," which term includes any successor Person under the Indenture
hereinafter referred to), for value received, hereby promises to pay to Cede &
Co. or registered assigns, the principal sum of _________________ United States
dollars on October 1, 2007, at the office or agency of the Company referred to
below, and to pay interest thereon from September 30, 1997, or from the most
recent Interest Payment Date to which interest has been paid or duly provided
for, semiannually on April 1 and October 1 in each year, commencing April 1,
1998 at the rate of 8 1/2% per annum, subject to adjustments as described in
the second following paragraph, in United States dollars, until the principal
hereof is paid or duly provided for. Interest shall be computed on the basis
of a 360-day year comprised of twelve 30-day months.
The Holder of this Series A Security is entitled to the benefits
of the Registration Rights Agreement among the Company, the Guarantor and the
Initial Purchasers, dated September 30, 1997, pursuant to which, subject to the
terms and conditions thereof, the Company and the Guarantor are obligated to
consummate the Exchange Offer pursuant to which the Holder of this Security
(and the related Guarantee) shall have the right to exchange this Security (and
the related Guarantee) for 8 1/2% Senior Notes due 2007, Series B and related
guarantees (herein called the "Series B Securities") in like principal amount
as provided therein. The Series A Securities and the Series B Securities are
together (including related Guarantees) referred to as the
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"Securities." The Series A Securities rank pari passu in right of payment with
the Series B Securities.
In the event that either (a) the Exchange Offer Registration
Statement is not filed with the Commission on or prior to the 35th calendar day
following the date of original issue of the Series A Securities, (b) the
Exchange Offer Registration Statement has not been declared effective on or
prior to the 120th calendar day following the date of original issue of the
Series A Securities, (c) the Exchange Offer is not consummated on or prior to
the 150th calendar day following the date of original issue of the Series A
Securities or (d) a Shelf Registration Statement is not filed within 30 days
after the obligation to file such Shelf Registration Statement arises or is not
declared effective within 90 days of such date (each such event referred to in
clauses (a) through (d) above, a "Registration Default"), the interest rate
borne by the Series A Securities shall be increased by one-quarter of one
percent per annum upon the occurrence of each Registration Default, which rate
(as increased as aforesaid) will increase by one quarter of one percent each
90-day period that such additional interest continues to accrue under any such
circumstance, with an aggregate maximum increase in the interest rate equal to
one percent (1%) per annum. Following the cure of all Registration Defaults
the accrual of additional interest will cease and the interest rate will revert
to the original rate.
The interest so payable, and punctually paid or duly provided
for, on any Interest Payment Date will, as provided in such Indenture, be paid
to the Person in whose name this Security (or any Predecessor Security) is
registered at the close of business on the Regular Record Date for such
interest, which shall be the March 15 or September 15 (whether or not a
Business Day), as the case may be, next preceding such Interest Payment Date.
Any such interest not so punctually paid, or duly provided for, and interest on
such defaulted interest at the interest rate borne by the Series A Securities,
to the extent lawful, shall forthwith cease to be payable to the Holder on such
Regular Record Date, and may either be paid to the Person in whose name this
Security (or any Predecessor Security) is registered at the close of business
on a Special Record Date for the payment of such defaulted interest to be fixed
by the Trustee, notice whereof shall be given to Holders of Securities not less
than 10 days prior to such Special Record Date, or be paid at any time in any
other lawful manner not inconsistent with the requirements of any securities
exchange on which the Securities may be listed, and upon such notice as may be
required by such exchange, all as more fully provided in this Indenture.
Payment of the principal of, premium, if any, and interest on,
this Security, and exchange or transfer of the Security, will be made at the
office or agency of the Company in The City of New York maintained for that
purpose, or at such other office or agency as may be maintained for such
purpose, in such coin or currency of the United States of America as at the
time of payment is legal tender for payment of public and private debts;
provided, however, that payment of interest may be made at the option of
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the Company by check mailed to the address of the Person entitled thereto as
such address shall appear on the Security Register.
Reference is hereby made to the further provisions of this
Security set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.
This Security is entitled to the benefits of the Guarantee by the
Guarantor of the punctual payment when due of the Indenture Obligations made in
favor of the Trustee for the benefit of the Holders. Reference is hereby made
to Article Thirteen of the Indenture for a statement of the respective rights,
limitations of rights, duties and obligations under the Guarantee of the
Guarantor.
Unless the certificate of authentication hereon has been duly
executed by the Trustee referred to on the reverse hereof or by the
authenticating agent appointed as provided in the Indenture by manual signature
of an authorized signer, this Security shall not be entitled to any benefit
under the Indenture, or be valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be
duly executed by the manual or facsimile signature of its authorized officers
and its corporate seal to be affixed or reproduced hereon.
Dated: ZALE CORPORATION
By:
----------------------------------
Name:
Title:
Attest:
- ----------------------------
Name:
Title:
(b) The form of the face of any Series B Securities
authenticated and delivered hereunder shall be substantially as follows:
[Legend if Security is a Global Security]
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THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE
INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME
OF A DEPOSITORY OR A NOMINEE OF A DEPOSITORY OR A SUCCESSOR
DEPOSITORY. TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED
TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF CEDE & CO.
OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND
TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO
TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN
SECTIONS 306 AND 307 OF THE INDENTURE.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK
CORPORATION ("DTC"), TO THE COMPANY OR ITS AGENT FOR REGISTRATION
OF TRANSFER, EXCHANGE, OR PAYMENT AND ANY SUCH CERTIFICATE ISSUED
IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS
IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER,
PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY
PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE
& CO., HAS AN INTEREST HEREIN.
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ZALE CORPORATION
-------------------
8 1/2% SENIOR NOTE DUE 2007, SERIES B
CUSIP NO. ______________
No. 1 $_________________
---
Zale Corporation, a Delaware corporation (herein called the
"Company," which term includes any successor Person under the Indenture
hereinafter referred to), for value received, hereby promises to pay to Cede &
Co. or registered assigns, the principal sum of __________________ United
States dollars on October 1, 2007, at the office or agency of the Company
referred to below, and to pay interest thereon from September 30, 1997, or from
the most recent Interest Payment Date to which interest has been paid or duly
provided for, semiannually on April 1 and October 1 in each year, commencing
April 1, 1998 at the rate of 8 1/2% per annum, in United States dollars, until
the principal hereof is paid or duly provided for; provided that to the extent
interest has not been paid or duly provided for with respect to the Series A
Security exchanged for this Series B Security, interest on this Series B
Security shall accrue from the most recent Interest Payment Date to which
interest on the Series A Security which was exchanged for this Series B
Security has been paid or duly provided for. Interest shall be computed on the
basis of a 360-day year comprised of twelve 30-day months.
This Series B Security was issued pursuant to the Exchange Offer
pursuant to which the 8 1/2% Senior Notes due 2007, Series A, and related
Guarantees (herein called the "Series A Securities") in like principal amount
were exchanged for the Series B Securities and related Guarantees. The Series
B Securities rank pari passu in right of payment with the Series A Securities.
In addition, for any period in which the Series A Security
exchanged for this Series B Security was outstanding, in the event that either
(a) the Exchange Offer Registration Statement is not filed with the Commission
on or prior to the 35th calendar day following the date of original issue of
the Series A Security, (b) the Exchange Offer Registration Statement has not
been declared effective on or prior to the 120th calendar day following the
date of original issue of the Series A Security, (c) the Exchange Offer is not
consummated on or prior to the 150th calendar day following the date of
original issue of the Series A Security or (d) a Shelf Registration Statement
is not filed within 30 days after the obligation to file such Shelf
Registration Statement arises or is not declared effective within 90 days of
such date (each such event referred to in clauses (a) through (d) above, a
"Registration Default"), the interest rate borne by the Series A Securities
shall be increased by one-quarter of one percent per annum upon the
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50
occurrence of each Registration Default, which rate (as increased as aforesaid)
will increase by one quarter of one percent each 90-day period that such
additional interest continues to accrue under any such circumstance, with an
aggregate maximum increase in the interest rate equal to one percent (1%) per
annum. Following the cure of all Registration Defaults the accrual of
additional interest will cease and the interest rate will revert to the
original rate; provided that, to the extent interest at such increased interest
rate has been paid or duly provided for with respect to the Series A Security,
interest at such increased interest rate, if any, on this Series B Security
shall accrue from the most recent Interest Payment Date to which such interest
on the Series A Security has been paid or duly provided for; provided, however,
that, if after any such reduction in interest rate, a different event specified
in clause (a), (b), (c) or (d) above occurs, the interest rate shall again be
increased pursuant to the foregoing provisions.
The interest so payable, and punctually paid or duly provided
for, on any Interest Payment Date will, as provided in such Indenture, be paid
to the Person in whose name this Security (or any Predecessor Security) is
registered at the close of business on the Regular Record Date for such
interest, which shall be the March 15 or September 15 (whether or not a
Business Day), as the case may be, next preceding such Interest Payment Date.
Any such interest not so punctually paid, or duly provided for, and interest on
such defaulted interest at the interest rate borne by the Series B Securities,
to the extent lawful, shall forthwith cease to be payable to the Holder on such
Regular Record Date, and may either be paid to the Person in whose name this
Security (or any Predecessor Security) is registered at the close of business
on a Special Record Date for the payment of such defaulted interest to be fixed
by the Trustee, notice whereof shall be given to Holders of Securities not less
than 10 days prior to such Special Record Date, or be paid at any time in any
other lawful manner not inconsistent with the requirements of any securities
exchange on which the Securities may be listed, and upon such notice as may be
required by such exchange, all as more fully provided in this Indenture.
Payment of the principal of, premium, if any, and interest on,
this Security, and exchange or transfer of the Security, will be made at the
office or agency of the Company in The City of New York maintained for such
purpose, or at such other office or agency as may be maintained for such
purpose, in such coin or currency of the United States of America as at the
time of payment is legal tender for payment of public and private debts;
provided, however, that payment of interest may be made at the option of the
Company by check mailed to the address of the Person entitled thereto as such
address shall appear on the Security Register.
Reference is hereby made to the further provisions of this
Security set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.
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This Security is entitled to the benefits of the Guarantee by the
Guarantor of the punctual payment when due of the Indenture Obligations made in
favor of the Trustee for the benefit of the Holders. Reference is hereby made
to Article Thirteen of the Indenture for a statement of the respective rights,
limitations of rights, duties and obligations under the Guarantee of the
Guarantor.
Unless the certificate of authentication hereon has been duly
executed by the Trustee referred to on the reverse hereof or by the
authenticating agent appointed as provided in the Indenture by manual signature
of an authorized signer, this Security shall not be entitled to any benefit
under the Indenture, or be valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be
duly executed by the manual or facsimile signature of its authorized officers
and its corporate seal to be affixed or reproduced hereon.
Dated: ZALE CORPORATION
By:
----------------------------------
Name:
Title:
Attest:
- ----------------------------
Name:
Title:
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Section 203. Form of Reverse of Securities.
(a) The form of the reverse of the Series A Securities shall
be substantially as follows:
ZALE CORPORATION
8 1/2% Senior Note due 2007, Series A
This Security is one of a duly authorized issue of Securities of
the Company designated as its 8 1/2% Senior Notes due 2007, Series A (herein
called the "Securities"), limited (except as otherwise provided in the
Indenture referred to below) in aggregate principal amount to $100,000,000,
issued under and subject to the terms of an indenture (herein called the
"Indenture") dated as of September 30, 1997, among the Company, the Guarantor
and Bank One, N.A., as trustee (herein called the "Trustee," which term
includes any successor trustee under the Indenture), to which Indenture and all
indentures supplemental thereto reference is hereby made for a statement of the
respective rights, limitations of rights, duties, obligations and immunities
thereunder of the Company, the Guarantor, the Trustee and the Holders of the
Securities, and of the terms upon which the Securities are, and are to be,
authenticated and delivered.
The Indenture contains provisions for defeasance at any time of
(a) the entire Indebtedness on the Securities and (b) certain restrictive
covenants and related Defaults and Events of Default, in each case upon
compliance with certain conditions set forth therein.
The Securities are subject to redemption at any time on or after
October 1, 2002, at the option of the Company, in whole or in part, on not less
than 30 nor more than 60 days' prior notice to the Holders by first-class mail,
in amounts of $1,000 or an integral multiple thereof, at the following
redemption prices (expressed as percentages of the principal amount), if
redeemed during the 12-month period beginning October 1 in the years indicated
below:
Redemption
Year Price
---- ----------
2002 . . . . . . . . . . . . . . . . . . . 104.250%
2003 . . . . . . . . . . . . . . . . . . . 102.833%
2004 . . . . . . . . . . . . . . . . . . . 101.417%
and thereafter at 100% of the principal amount, in each case, together with
accrued and unpaid interest, if any, to the Redemption Date (subject to the
rights of Holders of record on relevant Regular Record Dates or Special Record
Dates to receive interest due on an Interest Payment Date).
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53
In addition, at any time or from time to time on or prior to
October 1, 2000, the Company may, at its option, use all or a portion of the
net proceeds of one or more Public Equity Offerings to redeem up to an
aggregate of 30% of the aggregate principal amount of Securities originally
issued under the Indenture at a redemption price equal to 108.5% of the
aggregate principal amount thereof, plus accrued and unpaid interest thereon,
if any, to the Redemption Date; provided that at least seventy percent of the
aggregate principal amount of Securities (including any Additional Securities)
originally issued under the Indenture remains outstanding immediately after the
occurrence of such redemption. In order to effect the foregoing redemption,
the Company must mail a notice of redemption no later than 60 days after the
related Public Equity Offering and must consummate such redemption within 90
days of the closing of the Public Equity Offering.
If less than all of the Securities are to be redeemed, the
Trustee shall select the Securities or portions thereof to be redeemed pro
rata, by lot or by any other method the Trustee shall deem fair and reasonable.
Upon the occurrence of a Change of Control Triggering Event, each
Holder may require the Company to purchase such Holder's Securities in whole or
in part in integral multiples of $1,000, at a purchase price in cash in an
amount equal to 101% of the principal amount thereof, plus accrued and unpaid
interest, if any, to the date of purchase, pursuant to a Change of Control
Offer in accordance with the procedures set forth in the Indenture.
Under certain circumstances, in the event the Net Cash Proceeds
received by the Company from any Asset Sale, which proceeds are not used to
repay Senior Indebtedness (other than the Securities), Senior Guarantor
Indebtedness (other than the Guarantees) or Indebtedness of a Wholly-Owned
Restricted Subsidiary, or invested in capital expenditures, properties or other
assets that replace the properties and assets that were the subject of the
Asset Sale or which will be used in the business of the Company or its
Restricted Subsidiaries existing on the date of the Indenture or in businesses
reasonably related thereto, exceeds a specified amount the Company will be
required to apply such proceeds to the repayment of the Securities and certain
Indebtedness ranking pari passu in right of payment to the Securities.
In the case of any redemption or repurchase of Securities in
accordance with the Indenture, interest installments whose Stated Maturity is
on or prior to the Redemption Date will be payable to the Holders of such
Securities of record as of the close of business on the relevant Regular Record
Date or Special Record Date referred to on the face hereof. Securities (or
portions thereof) for whose redemption and payment provision is made in
accordance with the Indenture shall cease to bear interest from and after the
Redemption Date.
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54
In the event of redemption or repurchase of this Security in
accordance with the Indenture in part only, a new Security or Securities for
the unredeemed portion hereof shall be issued in the name of the Holder hereof
upon the cancellation hereof.
If an Event of Default shall occur and be continuing, the
principal amount of all the Securities may be declared due and payable in the
manner and with the effect provided in the Indenture.
The Indenture permits, with certain exceptions (including certain
amendments permitted without the consent of any Holders) as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Company and the Guarantor and the rights of the Holders under the Indenture and
the Securities and the Guarantees at any time by the Company and the Trustee
with the consent of the Holders of a specified percentage in aggregate
principal amount of the Securities at the time Outstanding. The Indenture also
contains provisions permitting the Holders of specified percentages in
aggregate principal amount of the Securities at the time Outstanding, on behalf
of the Holders of all the Securities, to waive compliance by the Company and
the Guarantor with certain provisions of the Indenture and the Securities and
the Guarantees and certain past Defaults under the Indenture and the Securities
and the Guarantees and their consequences. Any such consent or waiver by or on
behalf of the Holder of this Security shall be conclusive and binding upon such
Holder and upon all future Holders of this Security and of any Security issued
upon the registration of transfer hereof or in exchange herefor or in lieu
hereof whether or not notation of such consent or waiver is made upon this
Security.
No reference herein to the Indenture and no provision of this
Security or of the Indenture shall alter or impair the obligation of the
Company, any Guarantor or any other obligor on the Securities (in the event
such Guarantor or such other obligor is obligated to make payments in respect
of the Securities), which is absolute and unconditional, to pay the principal
of, premium, if any, and interest on, this Security at the times, place, and
rate, and in the coin or currency, herein prescribed.
If this Series A Security is in certificated form, then as
provided in the Indenture and subject to certain limitations therein set forth,
the transfer of this Security is registrable on the Security Register of the
Company, upon surrender of this Security for registration of transfer at the
office or agency of the Company maintained for such purpose in The City of New
York or at such other office or agency of the Company as may be maintained for
such purpose, duly endorsed by, or accompanied by a written instrument of
transfer in form satisfactory to the Company and the Security Registrar duly
executed by, the Holder hereof or its attorney duly authorized in writing, and
thereupon one or more new Securities, of authorized denominations and for the
same aggregate principal amount, will be issued to the designated transferee or
transferees.
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55
If this Series A Security is in certificated form, then as
provided in the Indenture and subject to certain limitations therein set forth,
the Holder, provided it is a Qualified Institutional Buyer, may exchange this
Series A Security for a Book-Entry Security by instructing the Trustee (by
completing the Transferee Certificate in the form in Appendix I) to arrange for
such Series A Security to be represented by a beneficial interest in a Global
Security in accordance with the customary procedures of the Depository, unless
the Company has elected not to issue a Global Security.
If this Series A Security is a Global Security, it is
exchangeable for a Series A Security in certificated form as provided in the
Indenture and in accordance with the rules and procedures of the Trustee and
the Depositary. In addition, certificated securities shall be transferred to
all beneficial holders in exchange for their beneficial interests in the Global
Securities if (x) the Depositary notifies the Company that it is unwilling or
unable to continue as depository for the Global Security and a successor
depositary is not appointed by the Company within 90 days or (y) there shall
have occurred and be continuing an Event of Default and the Security Registrar
has received a request from the Depositary. Upon any such issuance, the
Trustee is required to register such certificated Series A Securities in the
name of, and cause the same to be delivered to, such Person or Persons (or the
nominee of any thereof). All such certificated Series A Securities would be
required to include the Private Placement Legend.
Series A Securities in certificated form are issuable only in
registered form without coupons in denominations of $1,000 and any integral
multiple thereof. As provided in the Indenture and subject to certain
limitations therein set forth, the Series A Securities are exchangeable for a
like aggregate principal amount of Securities of a differing authorized
denomination, as requested by the Holder surrendering the same.
At any time when the Company is not subject to Sections 13 or
15(d) of the Exchange Act, upon the written request of a Holder of a Series A
Security, the Company will promptly furnish or cause to be furnished such
information as is specified pursuant to Rule 144A(d)(4) under the Securities
Act (or any successor provision thereto) to such Holder or to a prospective
purchaser of such Series A Security who such Holder informs the Company is
reasonably believed to be a "Qualified Institutional Buyer" within the meaning
of Rule 144A under the Securities Act, as the case may be, in order to permit
compliance by such Holder with Rule 144A under the Securities Act.
No service charge shall be made for any registration of transfer
or exchange of Securities, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith.
Prior to due presentment of this Security for registration of
transfer, the Company, any Guarantor, the Trustee and any agent of the Company,
any Guarantor or the Trustee may treat the Person in whose name this Security
is registered as the owner
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hereof for all purposes, whether or not this Security is overdue, and neither
the Company, any Guarantor, the Trustee nor any such agent shall be affected by
notice to the contrary.
After the Securities have been assigned an Investment Grade
Rating by both Rating Agencies, and notwithstanding that the Securities may
later cease to have an Investment Grade Rating, the Company and the Restricted
Subsidiaries will no longer be subject to the covenants set forth in Sections
1008, 1009, 1010, 1011, 1015, and 1016, clauses (a)(iii) and (c)(iii) of
Section 1017, and clause (a)(iii) of Section 801 of the Indenture; provided,
that no Default has occurred and is continuing at the time the Securities have
been assigned such rating.
THIS SECURITY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAWS
PRINCIPLES THEREOF.
All terms used in this Security which are defined in the
Indenture and not otherwise defined herein shall have the meanings assigned to
them in the Indenture.
[The Transferee Certificate, in the form of Appendix I hereto,
will be attached to the Series A Security.]
(b) The form of the reverse of the Series B Securities shall
be substantially as follows:
ZALE CORPORATION
8 1/2% Senior Note due 2007, Series B
This Security is one of a duly authorized issue of Securities of
the Company designated as its 8 1/2% Senior Notes due 2007, Series B (herein
called the "Securities"), limited (except as otherwise provided in the
Indenture referred to below) in aggregate principal amount to $100,000,000,
issued under and subject to the terms of an indenture (herein called the
"Indenture") dated as of September 30, 1997, among the Company, the Guarantor
and Bank One, N.A., as trustee (herein called the "Trustee," which term
includes any successor trustee under the Indenture), to which Indenture and all
indentures supplemental thereto reference is hereby made for a statement of the
respective rights, limitations of rights, duties, obligations and immunities
thereunder of the Company, the Guarantor, the Trustee and the Holders of the
Securities, and of the terms upon which the Securities are, and are to be,
authenticated and delivered.
The Indenture contains provisions for defeasance at any time of
(a) the entire Indebtedness on the Securities and (b) certain restrictive
covenants and related Defaults and Events of Default, in each case upon
compliance with certain conditions set forth therein.
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57
The Securities are subject to redemption at any time on or after
October 1, 2002, at the option of the Company, in whole or in part, on not less
than 30 nor more than 60 days' prior notice to the Holders by first-class mail,
in amounts of $1,000 or an integral multiple thereof, at the following
redemption prices (expressed as percentages of the principal amount), if
redeemed during the 12-month period beginning October 1 of the years indicated
below:
Redemption
Year Price
---- ----------
2002 . . . . . . . . . . . . . . . . . 104.250%
2003 . . . . . . . . . . . . . . . . . 102.833%
2004 . . . . . . . . . . . . . . . . . 101.417%
and thereafter at 100% of the principal amount, in each case, together with
accrued and unpaid interest, if any, to the Redemption Date (subject to the
rights of Holders of record on relevant Regular Record Dates or Special Record
Dates to receive interest due on an Interest Payment Date).
In addition, at any time or from time to time on or prior to
October 1, 2000, the Company may, at its option, use all or a portion of the
net proceeds of one or more Public Equity Offerings to redeem up to an
aggregate of 30% of the aggregate principal amount of Securities originally
issued under the Indenture at a redemption price equal to 108.5% of the
aggregate principal amount thereof, plus accrued and unpaid interest thereon,
if any, to the Redemption Date; provided that at least seventy percent of the
aggregate principal amount of Securities (including any Additional Securities)
originally issued under the Indenture remains outstanding immediately after the
occurrence of such redemption. In order to effect the foregoing redemption,
the Company must mail a notice of redemption no later than 60 days after the
related Public Equity Offering and must consummate such redemption within 90
days of the closing of the Public Equity Offering.
If less than all of the Securities are to be redeemed, the
Trustee shall select the Securities or portions thereof to be redeemed pro
rata, by lot or by any other method the Trustee shall deem fair and reasonable.
Upon the occurrence of a Change of Control Triggering Event, each
Holder may require the Company to purchase such Holder's Securities in whole or
in part in integral multiples of $1,000, at a purchase price in cash in an
amount equal to 101% of the principal amount thereof, plus accrued and unpaid
interest, if any, to the date of purchase, pursuant to a Change of Control
Offer in accordance with the procedures set forth in the Indenture.
Under certain circumstances, in the event the Net Cash Proceeds
received by the Company from any Asset Sale, which proceeds are not used to
repay Senior
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Indebtedness (other than the Securities), Senior Guarantor Indebtedness (other
than the Guarantees) or Indebtedness of a Wholly-Owned Restricted Subsidiary,
or invested in capital expenditures, properties or other assets that replace
the properties and assets that were the subject of the Asset Sale or which will
be used in the business of the Company or its Restricted Subsidiaries existing
on the date of the Indenture or in businesses reasonably related thereto,
exceeds a specified amount the Company will be required to apply such proceeds
to the repayment of the Securities and certain Indebtedness ranking pari passu
in right of payment to the Securities.
In the case of any redemption or repurchase of Securities in
accordance with the Indenture, interest installments whose Stated Maturity is
on or prior to the Redemption Date will be payable to the Holders of such
Securities of record as of the close of business on the relevant Regular Record
Date or Special Record Date referred to on the face hereof. Securities (or
portions thereof) for whose redemption and payment provision is made in
accordance with the Indenture shall cease to bear interest from and after the
Redemption Date.
In the event of redemption or repurchase of this Security in
accordance with the Indenture in part only, a new Security or Securities for
the unredeemed portion hereof shall be issued in the name of the Holder hereof
upon the cancellation hereof.
If an Event of Default shall occur and be continuing, the
principal amount of all the Securities may be declared due and payable in the
manner and with the effect provided in the Indenture.
The Indenture permits, with certain exceptions (including certain
amendments permitted without the consent of any Holders) as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Company and the Guarantor and the rights of the Holders under the Indenture and
the Securities and the Guarantees at any time by the Company and the Trustee
with the consent of the Holders of a specified percentage in aggregate
principal amount of the Securities at the time Outstanding. The Indenture also
contains provisions permitting the Holders of specified percentages in
aggregate principal amount of the Securities at the time Outstanding, on behalf
of the Holders of all the Securities, to waive compliance by the Company and
the Guarantor with certain provisions of the Indenture and the Securities and
the Guarantees and certain past Defaults under the Indenture and the Securities
and the Guarantees and their consequences. Any such consent or waiver by or on
behalf of the Holder of this Security shall be conclusive and binding upon such
Holder and upon all future Holders of this Security and of any Security issued
upon the registration of transfer hereof or in exchange herefor or in lieu
hereof whether or not notation of such consent or waiver is made upon this
Security.
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59
No reference herein to the Indenture and no provision of this
Security or of the Indenture shall alter or impair the obligation of the
Company, any Guarantor or any other obligor on the Securities (in the event
such Guarantor or such other obligor is obligated to make payments in respect
of the Securities), which is absolute and unconditional, to pay the principal
of, and premium, if any, and interest on, this Security at the times, place,
and rate, and in the coin or currency, herein prescribed.
If this Series B Security is in certificated form, then as
provided in the Indenture and subject to certain limitations therein set forth,
the transfer of this Series B Security is registrable on the Security Register
of the Company, upon surrender of this Series B Security for registration of
transfer at the office or agency of the Company maintained for such purpose in
The City of New York or at such other office or agency of the Company as may be
maintained for such purpose, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Company and the Security
Registrar duly executed by, the Holder hereof or its attorney duly authorized
in writing, and thereupon one or more new Series B Securities, of authorized
denominations and for the same aggregate principal amount, will be issued to
the designated transferee or transferees.
If this Series B Security is a Global Security, it is
exchangeable for a Series B Security in certificated form as provided in the
Indenture and in accordance with the rules and procedures of the Trustee and
the Depositary. In addition, certificated securities shall be transferred to
all beneficial holders in exchange for their beneficial interests in the Global
Security if (x) the Depositary notifies the Company that it is unwilling or
unable to continue as depository for the Global Security and a successor
depositary is not appointed by the Company within 90 days or (y) there shall
have occurred and be continuing an Event of Default and the Security Registrar
has received a request from the Depositary. Upon any such issuance, the
Trustee is required to register such certificated Series B Securities in the
name of, and cause the same to be delivered to, such Person or Persons (or the
nominee of any thereof).
Series B Securities in certificated form are issuable only in
registered form without coupons in denominations of $1,000 and any integral
multiple thereof. As provided in the Indenture and subject to certain
limitations therein set forth, the Series B Securities are exchangeable for a
like aggregate principal amount of Securities of a differing authorized
denomination, as requested by the Holder surrendering the same.
No service charge shall be made for any registration of transfer
or exchange of Securities, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith.
Prior to due presentment of this Security for registration of
transfer, the Company, any Guarantor, the Trustee and any agent of the Company,
any Guarantor or
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the Trustee may treat the Person in whose name this Security is registered as
the owner hereof for all purposes, whether or not this Security is overdue, and
neither the Company, any Guarantor, the Trustee nor any such agent shall be
affected by notice to the contrary.
After the Securities have been assigned an Investment Grade
Rating by both Rating Agencies, and notwithstanding that the Securities may
later cease to have an Investment Grade Rating, the Company and the Restricted
Subsidiaries will no longer be subject to the covenants set forth in Sections
1008, 1009, 1010, 1011, 1015, and 1016, clauses (a)(iii) and (c)(iii) of
Section 1017, and clause (a)(iii) of Section 801 of the Indenture; provided,
that no Default has occurred and is continuing at the time the Securities have
been assigned such rating.
THIS SECURITY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAWS
PRINCIPLES THEREOF.
All terms used in this Security which are defined in the
Indenture and not otherwise defined herein shall have the meanings assigned to
them in the Indenture.
[The Transferee Certificate, in the form of Appendix II hereto,
will be attached to the Series B Security.]
Section 204. Form of Trustee's Certificate of Authentication.
The Trustee's certificate of authentication shall be included on
the form of the face of the Securities substantially in the following form:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION.
[Series A Securities]
This is one of the 8 1/2% Senior Notes due 2007, Series A referred to in
the within-mentioned Indenture.
BANK ONE, N.A.,
as Trustee
By:
-------------------------------
Name:
Title:
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[Series B Securities]
This is one of the 8 1/2% Senior Notes due 2007, Series B referred to in
the within-mentioned Indenture.
BANK ONE, N.A.,
as Trustee
By:
-------------------------------
Name:
Title:
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Section 205. Form of Guarantee of any Guarantor.
The form of Guarantee shall be set forth on the Securities substantially
as follows:
GUARANTEE
For value received, the undersigned hereby absolutely, fully and
unconditionally and irrevocably guarantees, jointly and severally with each
other Guarantor, if any, to the holder of this Security the payment of
principal of, premium, if any, and interest on this Security upon which this
Guarantee is endorsed in the amounts and at the time when due and payable
whether by declaration thereof, or otherwise, and interest on the overdue
principal and interest, if any, of this Security, if lawful, and the payment or
performance of all other obligations of the Company under the Indenture or the
Securities, to the holder of this Security and the Trustee, all in accordance
with and subject to the terms and limitations of this Security and Article
Thirteen of the Indenture. This Guarantee will not become effective until the
Trustee duly executes the certificate of authentication on this Security. This
Guarantee shall be governed by and construed in accordance with the laws of the
State of New York, without regard to conflict of law principles thereof.
Dated:
ZALE DELAWARE, INC.
Attest: By:
------------------------ ----------------------------
Name: Name:
Title: Title:
Section 206. Form of Option of Holder to Elect Purchase.
The form of Option of Holder to Elect Purchase Form shall be set
forth on the Securities substantially as follows:
OPTION OF HOLDER TO ELECT PURCHASE
If you wish to have this Security purchased by the Company
pursuant to Section 1011 or Section 1014, as applicable, of the Indenture,
check the Box: [ ].
If you wish to have a portion of this Security purchased by the
Company pursuant to Section 1011 or Section 1014 as applicable, of the
Indenture, state the amount (in original principal amount):
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$ _______________.
Date: ___________________Your Signature: _____________________
(Sign exactly as your name appears on the other side of this Security)
Signature Guarantee: __________________________________
[Signature must be guaranteed by an eligible Guarantor Institution (banks,
stock brokers, savings and loan associations and credit unions) with membership
in an approved guarantee medallion program pursuant to Securities and Exchange
Commission Rule 17Ad-15]
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ARTICLE THREE
THE SECURITIES
Section 301. Title and Terms.
The aggregate principal amount of Securities which may be
authenticated and delivered under this Indenture is limited to $100,000,000 in
aggregate principal amount of Securities, except for Securities authenticated
and delivered upon registration of transfer of, or in exchange for, or in lieu
of, other Securities pursuant to Section 303, 304, 305, 306, 307, 308, 906,
1011, 1014 or 1108; provided, however, that notwithstanding anything else
stated herein the Company may issue up to an additional $25,000,000 in
aggregate principal amount of Securities (the "Additional Securities")
initially to the Initial Purchasers (as defined in the Registration Rights
Agreement) pursuant to this Indenture on one occasion at any time through and
including October 23, 1997 and such Additional Securities shall be treated as
Securities for all purposes of this Indenture.
The Securities shall be known and designated as the "8 1/2%
Senior Notes due 2007" of the Company. The Stated Maturity of the Securities
shall be October 1, 2007, and the Securities shall each bear interest at the
rate of 8 1/2% per annum, as such interest rate may be adjusted as set forth in
the Securities, from September 30, 1997, or from the most recent Interest
Payment Date to which interest has been paid, payable semiannually on April 1
and October 1 in each year, commencing April 1, 1998, until the principal
thereof is paid or duly provided for. Interest on any overdue principal,
interest (to the extent lawful) or premium, if any, shall be payable on demand.
The principal of, premium, if any, and interest on, the
Securities shall be payable and the Securities will be exchangeable and
transferable at an office or agency of the Company in The City of New York
maintained for such purposes; provided, however, that payment of interest may
be made at the option of the Company by check mailed to addresses of the
Persons entitled thereto as such addresses shall appear on the Security
Register.
For all purposes hereunder, the Series A Securities and the
Series B Securities will be treated as one class and are together referred to
as the "Securities." The Series A Securities rank pari passu in right of
payment with the Series B Securities.
The Securities shall be subject to repurchase by the Company
pursuant to an Offer as provided in Section 1011.
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Holders shall have the right to require the Company to
purchase their Securities, in whole or in part, in the event of a Change of
Control Triggering Event pursuant to Section 1014.
The Securities shall be redeemable as provided in Article
Eleven and in the Securities.
The Indebtedness evidenced by the Securities shall be pari
passu in right of payment with Senior Indebtedness.
At the election of the Company, the entire Indebtedness on the
Securities or certain of the Company's obligations and covenants and certain
Events of Default thereunder may be defeased as provided in Article Four.
Section 302. Denominations.
The Securities shall be issuable only in fully registered form
without coupons and only in denominations of $1,000 and any integral multiple
thereof.
Section 303. Execution, Authentication, Delivery and Dating.
The Securities shall be executed on behalf of the Company by
one of its Chairman of the Board, its President, its Chief Executive Officer,
its Chief Financial Officer or one of its Vice Presidents under its corporate
seal reproduced thereon attested by its Secretary or one of its Assistant
Secretaries or Vice Presidents. The signatures of any of these officers on the
Securities may be manual or facsimile.
Securities bearing the manual or facsimile signatures of
individuals who were at any time the proper officers of the Company shall bind
the Company, notwithstanding that such individuals or any of them have ceased
to hold such offices prior to the authentication and delivery of such
Securities or did not hold such offices at the date of such Securities. At any
time and from time to time after the execution and delivery of this Indenture,
the Company may deliver Securities executed by the Company to the Trustee (with
Guarantees endorsed thereon) for authentication, together with a Company Order
for the authentication and delivery of such Securities; and the Trustee in
accordance with such Company Order shall authenticate and deliver such
Securities as provided in this Indenture and not otherwise.
Each Security shall be dated the date of its authentication.
No Security or Guarantee endorsed thereon shall be entitled to
any benefit under this Indenture or be valid or obligatory for any purpose
unless there appears on
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such Security a certificate of authentication substantially in the form
provided for herein duly executed by the Trustee by manual signature of an
authorized officer, and such certificate upon any Security shall be conclusive
evidence, and the only evidence, that such Security has been duly authenticated
and delivered hereunder and is entitled to the benefits of this Indenture.
In case the Company or any Guarantor, pursuant to Article
Eight, shall, in a single transaction or through a series of related
transactions, be consolidated or merged with or into any other Person or shall
sell, assign, convey, transfer, lease or otherwise dispose of all or
substantially all of its properties and assets to any Person, and the successor
Person resulting from such consolidation or surviving such merger, or into
which the Company or such Guarantor shall have been merged, or the successor
Person which shall have participated in the sale, assignment, conveyance,
transfer, lease or other disposition as aforesaid, shall have executed an
indenture supplemental hereto with the Trustee pursuant to Article Eight, any
of the Securities authenticated or delivered prior to such consolidation,
merger, sale, assignment, conveyance, transfer, lease or other disposition may,
from time to time, at the request of the successor Person, be exchanged for
other Securities executed in the name of the successor Person with such changes
in phraseology and form as may be appropriate, but otherwise in substance of
like tenor as the Securities surrendered for such exchange and of like
principal amount; and the Trustee, upon Company Request of the successor
Person, shall authenticate and deliver Securities as specified in such request
for the purpose of such exchange. If Securities shall at any time be
authenticated and delivered in any new name of a successor Person pursuant to
this Section 303 in exchange or substitution for or upon registration of
transfer of any Securities, such successor Person, at the option of the Holders
but without expense to them, shall provide for the exchange of all Securities
at the time Outstanding for Securities authenticated and delivered in such new
name.
The Trustee may appoint an authenticating agent acceptable to
the Company to authenticate Securities on behalf of the Trustee. Unless
limited by the terms of such appointment, an authenticating agent may
authenticate Securities whenever the Trustee may do so. Each reference in this
Indenture to authentication by the Trustee includes authentication by such
agent. An authenticating agent has the same rights as any Security Registrar
or Paying Agent to deal with the Company and its Affiliates.
If an officer whose signature is on a Security no longer holds
that office at the time the Trustee authenticates such Security such Security
shall be valid nevertheless.
Section 304. Temporary Securities.
Pending the preparation of definitive Securities, the
Company may execute, and upon Company Order the Trustee shall authenticate and
deliver, temporary Securities which are printed, lithographed, typewritten or
otherwise produced, in any authorized
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denomination, substantially of the tenor of the definitive Securities in lieu
of which they are issued and with such appropriate insertions, omissions,
substitutions and other variations as the officers executing such Securities
may determine, as conclusively evidenced by their execution of such Securities.
If temporary Securities are issued, the Company will cause
definitive Securities to be prepared without unreasonable delay. After the
preparation of definitive Securities, the temporary Securities shall be
exchangeable for definitive Securities upon surrender of the temporary
Securities at the office or agency of the Company designated for such purpose
pursuant to Section 1002, without charge to the Holder. Upon surrender for
cancellation of any one or more temporary Securities, the Company shall execute
and the Trustee shall authenticate and deliver in exchange therefor a like
principal amount of definitive Securities of authorized denominations. Until
so exchanged the temporary Securities shall in all respects be entitled to the
same benefits under this Indenture as definitive Securities.
Section 305. Registration, Registration of Transfer and Exchange.
The Company shall cause the Trustee to keep, so long as it is
the Security Registrar, at the Corporate Trust Office of the Trustee, or such
other office as the Trustee may designate, a register (the register maintained
in such office or in any other office or agency designated pursuant to Section
1002 being herein sometimes referred to as the "Security Register") in which,
subject to such reasonable regulations as the Security Registrar may prescribe,
the Company shall provide for the registration of Securities and of transfers
of Securities. The Trustee shall initially be the "Security Registrar" for the
purpose of registering Securities and transfers of Securities as herein
provided. The Company may appoint one or more co-Security Registrars.
Upon surrender for registration of transfer of any Security at
the office or agency of the Company designated pursuant to Section 1002, the
Company shall execute, and the Trustee shall authenticate and deliver, in the
name of the designated transferee or transferees, one or more new Securities of
the same series of any authorized denomination or denominations, of a like
aggregate principal amount.
Furthermore, any Holder of a Global Security shall, by
acceptance of such Global Security, agree that transfers of beneficial
interests in such Global Security may be effected only through a book-entry
system maintained by the Holder of such Global Security (or its agent), and
that ownership of a beneficial interest in a Security shall be required to be
reflected in a book entry.
At the option of the Holder, Securities may be exchanged for
other Securities of any authorized denomination or denominations, of a like
aggregate principal amount, upon surrender of the Securities to be exchanged at
such office or agency.
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Whenever any Securities are so surrendered for exchange, the Company shall
execute, and the Trustee shall authenticate and deliver, Securities of the same
series which the Holder making the exchange is entitled to receive; provided
that no exchange of Series A Securities for Series B Securities shall occur
until an Exchange Offer Registration Statement shall have been declared
effective by the Commission and that the Series A Securities exchanged for the
Series B Securities shall be canceled.
All Securities issued upon any registration of transfer or
exchange of Securities shall be the valid obligations of the Company,
evidencing the same Indebtedness, and entitled to the same benefits under this
Indenture, as the Securities surrendered upon such registration of transfer or
exchange.
Every Security presented or surrendered for registration of
transfer, or for exchange, repurchase or redemption, shall (if so required by
the Company or the Trustee) be duly endorsed, or be accompanied by a written
instrument of transfer in form satisfactory to the Company and the Security
Registrar, duly executed by the Holder thereof or his attorney duly authorized
in writing.
No service charge shall be made to a Holder for any
registration of transfer, exchange or redemption of Securities, except in
certain circumstances for any tax or other governmental charge that may be
imposed in connection therewith, other than exchanges pursuant to Sections 303,
304, 305, 308, 906, 1011, 1014 or 1108 not involving any transfer.
The Company shall not be required (a) to issue, register the
transfer of or exchange any Security during a period beginning at the opening
of business 15 days before the mailing of a notice of redemption of the
Securities selected for redemption under Section 1104 and ending at the close
of business on the day of such mailing or (b) to register the transfer of or
exchange any Security so selected for redemption in whole or in part, except
the unredeemed portion of Securities being redeemed in part.
Every Security shall be subject to the restrictions on
transfer provided in the legend required to be set forth on the face of each
Security pursuant to Section 202, and to the restrictions set forth in this
Section 305, and the Holder of each Security, by such Holder's acceptance
thereof (or interest therein), agrees to be bound by such restrictions on
transfer.
The restrictions imposed by this Section 305 upon the
transferability of any particular Security shall cease and terminate on (a) the
later of September 30, 1999 or two years after the last date on which the
Company or any Affiliate of the Company was the owner of such Security (or any
predecessor of such Security) or (b) (if earlier) if and when such Security has
been sold pursuant to an effective registration statement under the Securities
Act or transferred pursuant to Rule 144 or Rule 904 under the Securities Act
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(or any successor provision), unless the Holder thereof is an affiliate of the
Company within the meaning of Rule 144 (or such successor provisions). Any
Security as to which such restrictions on transfer shall have expired in
accordance with their terms or shall have terminated may, upon surrender of
such Security for exchange to the Security Registrar in accordance with the
provision of this Section 305 (accompanied, in the event that such restrictions
on transfer have terminated pursuant to Rule 144 or Rule 904 (or any successor
provision), by an Opinion of Counsel satisfactory to the Company and the
Trustee, to the effect that the transfer of such Security has been made in
compliance with Rule 144 or Rule 904 (or any such successor provision)), be
exchanged for a new Security, of like tenor and aggregate principal amount,
which shall not bear the Private Placement Legend. The Company shall inform
the Trustee of the effective date of any Registration Statement registering the
Securities under the Securities Act no later than two Business Days after such
effective date.
Except as provided in the preceding paragraph, any Security
authenticated and delivered upon registration of transfer of, or in exchange
for, or in lieu of, any U.S. Global Security, whether pursuant to this Section
305, Section 304, 308, 906 or 1108 or otherwise, shall also be a U.S. Global
Security and bear the legend specified in Section 202.
Section 306. Book-Entry Provisions for Global Securities.
(a) The Global Securities initially shall (i) be registered
in the name of the Depositary for such Global Security or the nominee of such
Depositary, (ii) be deposited with, or on behalf of, the Depositary or with the
Trustee as custodian for such Depositary and (iii) bear legends as set forth in
Section 202.
Members of, or participants in, the Depositary ("Agent
Members") shall have no rights under this Indenture with respect to any Global
Security held on their behalf by the Depositary, or the Trustee as its
custodian, or under such Global Security, and the Depositary may be treated by
the Company, the Trustee and any agent of the Company or the Trustee as the
absolute owner of such Global Security for all purposes whatsoever.
Notwithstanding the foregoing, nothing herein shall prevent the Company, the
Trustee or any agent of the Company or the Trustee from giving effect to any
written certification, proxy or other authorization furnished by the Depositary
or shall impair, as between the Depositary and its Agent Members, the operation
of customary practices governing the exercise of the rights of a holder of any
Security.
(b) Transfers of Global Securities shall be limited to
transfers of such Global Security in whole, but not in part, to the Depositary,
its successors or their respective nominees. Interests of beneficial owners in
the Global Security may be transferred in accordance with the rules and
procedures of the Depositary and the provisions of Section 307. Beneficial
owners may obtain physical securities (the
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"Physical Securities") in exchange for their beneficial interests in the Global
Security upon request in accordance with the Depositary's and the Security
Registrar's procedures. In connection with the execution, authentication and
delivery of such Physical Securities, the Security Registrar shall reflect on
its books and records a decrease in the principal amount of the relevant Global
Security equal to the principal amount of such Physical Securities and the
Company shall execute and the Trustee shall authenticate and deliver one or
more Physical Securities having an equal aggregate principal amount. In
addition, Physical Securities shall be issued to all beneficial owners in
exchange for their beneficial interests in the Global Security if (i) the
Depositary notifies the Company that it is unwilling or unable to continue as
Depositary for the Global Security and a successor Depositary is not appointed
by the Company within 90 days of such notice or (ii) an Event of Default has
occurred and is continuing and the Security Registrar has received a request
from the Depositary.
(c) In connection with any transfer of a portion of the
beneficial interest in the Global Security pursuant to subsection (b) of this
Section to beneficial owners who are required to hold Physical Securities, the
Security Registrar shall reflect on its books and records the date and a
decrease in the principal amount of the Global Security in an amount equal to
the principal amount of the beneficial interest in the Global Security to be
transferred, and the Company shall execute, and the Trustee shall authenticate
and deliver, one or more Physical Securities of like tenor and amount.
(d) In connection with the transfer of the entire Global
Security to beneficial owners pursuant to subsection (b) of this Section, the
Global Security shall be deemed to be surrendered to the Trustee for
cancellation, and the Company shall execute, and the Trustee shall authenticate
and deliver, to each beneficial owner identified by the Depositary in exchange
for its beneficial interest in the Global Security, an equal aggregate
principal amount of Physical Securities of authorized denominations.
(e) Any Physical Security constituting a "restricted
security" within the meaning of Rule 144(a)(3) of the Securities Act delivered
in exchange for an interest in Global Securities pursuant to subsection (c) or
subsection (d) of this Section shall, except as otherwise provided by Section
307, bear the Private Placement Legend.
(f) The registered holder of the Global Security may grant
proxies and otherwise authorize any person, including Agent Members and Persons
that may hold interests through Agent Members, to take any action which a
Holder is entitled to take under this Indenture or the Securities.
Section 307. Special Transfer Provisions.
Unless and until (i) an Initial Security is sold under an
effective Registration Statement, or (ii) an Initial Security is exchanged for
a Series B Security in connection
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with the Exchange Offer, in each case pursuant to the Registration Rights
Agreement, the following provisions shall apply:
(a) Transfers to QIBs. The following provisions shall apply
with respect to the registration of any proposed transfer of an Initial
Security to a QIB (excluding Non-U.S. Persons):
(i) the Registrar shall register the transfer of any
Initial Security, whether or not such Security bears the
Private Placement Legend, if (x) the requested transfer is
after the second anniversary of the Issue Date; provided,
however, that neither the Company nor any Affiliate of the
Company has held any beneficial interest in such Security, or
portion thereof, at any time on or prior to the second
anniversary of the Issue Date and such transfer can otherwise
lawfully be made under the Securities Act without registering
such Initial Security thereunder or (y) such transfer is being
made by a proposed transferor who has checked the box provided
for on the form of Initial Security stating, or has otherwise
advised the Company and the Security Registrar in writing,
that the sale has been made in compliance with the provisions
of Rule 144A to the transferee who has signed the
certification provided for on the form of Initial Security
stating, or has otherwise advised the Company and the Security
Registrar in writing, that it is purchasing the Initial
Security for its own account or an account with respect to
which it exercises sole investment discretion and that it, or
the person on whose behalf it is acting with respect to any
such account, is a QIB within the meaning of Rule 144A, and is
aware that the sale to it is being made in reliance on Rule
144A and acknowledges that it has received such information
regarding the Company as it has requested pursuant to Rule
144A or has determined not to request such information and
that it is aware that the transferor is relying upon its
foregoing representations in order to claim the exemption from
registration provided by Rule 144A.
(ii) If the proposed transferee is an Agent Member, and
the Initial Security to be transferred consists of Physical
Securities which after transfer are to be evidenced by an
interest in the Rule 144A Global Security, upon receipt by the
Security Registrar of instructions given in accordance with
the Depositary's and the Security Registrar's procedures
therefor, the Security Registrar shall reflect on its books
and records the date and an increase in the principal amount
of the Rule 144A Global Security in an amount equal to the
principal amount of the Physical Securities to be transferred,
and the Trustee shall cancel the Physical Security so
transferred.
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(iii) If the proposed transferor is an Agent
Member seeking to transfer an interest in a Global Security,
upon receipt by the Registrar of written instructions given in
accordance with the Depositary's and the Registrar's
procedures, the Registrar shall register the transfer and
reflect on its books and records the date and (A) a decrease
in the principal amount of the Global Security from which
interests are to be transferred in an amount equal to the
principal amount of the Securities to be transferred and (B)
an increase in the principal amount of the Rule 144A Global
Security in an amount equal to the principal amount of the
Global Security to be transferred.
(b) Transfers to Non-U.S. Persons. The following provisions
shall apply with respect to any transfer of an Initial Security to a Non-U.S.
Person:
(i) Prior to November 10, 1997, an owner of a
beneficial interest in the Regulation S Global Security may
not transfer such interest to a transferee that is a U.S.
Person or for the account or benefit of a U.S. Person within
the meaning of Rule 902(o) of the Securities Act. During such
time, all beneficial interests in the Regulation S Global
Security shall be transferred only through Cedel or Euroclear,
either directly if the transferor and transferee are
participants in such system, or indirectly through
organizations that are participants.
(ii) The Registrar shall register the transfer
of any Initial Security, whether or not such Security bears
the Private Placement Legend, if (x) the requested transfer is
after the second anniversary of the Issue Date; provided,
however, that neither the Company nor any Affiliate of the
Company has held any beneficial interest in such Security, or
portion thereof, at any time on or prior to the second
anniversary of the Issue Date and such transfer can otherwise
be lawfully made under the Securities Act without registering
such Initial Securities thereunder or (y) the proposed
transferor has delivered to the Registrar a certificate
substantially in the form of Exhibit ___ hereto.
(iii) If the proposed transferee is an Agent
Member and the Securities to be transferred consist of
Physical Securities which after transfer are to be evidenced
by an interest in the Regulation S Global Security, upon
receipt by the Registrar of (x) written instructions given in
accordance with the Depositary's and the Registrar's
procedures and (y) the appropriate certificate, if any,
required by clause (y) of paragraph (ii) above, together with
any required legal opinions and certifications, the Registrar
shall register the transfer and reflect on its books and
records the date and an increase in the principal amount of
the Regulation S Global Security in
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an amount equal to the principal amount of Physical Securities
to be transferred, and the Trustee shall cancel the Physical
Securities so transferred.
(iv) If the proposed transferor is an Agent Member
seeking to transfer an interest in a Global Security,
upon receipt by the Registrar of (x) written instructions
given in accordance with the Depositary's and the Registrar's
procedures and (y) the appropriate certificate, if any,
required by clause (y) of paragraph (i) above, together with
any required legal opinions and certificates, the Registrar
shall register the transfer and reflect on its books and
records the date and (A) a decrease in the principal amount of
the Global Security from which such interests are to be
transferred in an amount equal to the principal amount of the
Securities to be transferred and (B) an increase in the
principal amount of the Regulation S Global Security in an
amount equal to the principal amount of the Global Security to
be transferred.
(c) Private Placement Legend. Upon the registration of
transfer, exchange or replacement of Securities not bearing the Private
Placement Legend, the Security Registrar shall deliver Securities that do not
bear the Private Placement Legend. Upon the registration of transfer, exchange
or replacement of Securities bearing the Private Placement Legend, the Security
Registrar shall deliver only Securities that bear the Private Placement Legend
unless there is delivered to the Security Registrar an Opinion of Counsel
reasonably satisfactory to the Company and the Trustee to the effect that
neither such legend nor the related restrictions on transfer are required in
order to maintain compliance with the provisions of the Securities Act.
(d) General. By its acceptance of any Security bearing the
Private Placement Legend, each Holder of such a Security acknowledges the
restrictions on transfer of such Security set forth in this Indenture and in
the Private Placement Legend and agrees that it will transfer such Security
only as provided in this Indenture.
The Security Registrar shall retain copies of all letters,
notices and other written communications received pursuant to Section 306 or
this Section 307. The Company shall have the right to inspect and make copies
of all such letters, notices or other written communications at any reasonable
time upon the giving of reasonable written notice to the Security Registrar.
In the event that Regulation S is amended during the term of
this Indenture to alter the applicable holding period, all reference in this
Indenture to a holding period for Non-U.S. Persons will be deemed to include
such amendment.
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Section 308. Mutilated, Destroyed, Lost and Stolen Securities.
If (a) any mutilated Security is surrendered to the Trustee,
or (b) the Company and the Trustee receive evidence to their satisfaction of
the destruction, loss or theft of any Security, and there is delivered to the
Company, any Guarantor and the Trustee, such security or indemnity, in each
case, as may be required by them to save each of them harmless, then, in the
absence of notice to the Company, any Guarantor or the Trustee that such
Security has been acquired by a bona fide purchaser, the Company shall execute
and upon a Company Request the Trustee shall authenticate and deliver, in
exchange for any such mutilated Security or in lieu of any such destroyed, lost
or stolen Security, a replacement Security of like tenor and principal amount,
bearing a number not contemporaneously outstanding and the Guarantor shall
execute a replacement Guarantee.
In case any such mutilated, destroyed, lost or stolen Security
has become or is about to become due and payable, the Company in its discretion
may, instead of issuing a replacement Security, pay such Security. Upon the
issuance of any replacement Securities under this Section, the Company may
require the payment of a sum sufficient to pay all documentary, stamp or
similar issue or transfer taxes or other governmental charges that may be
imposed in relation thereto and any other expenses (including the fees and
expenses of the Trustee) connected therewith.
Every replacement Security and Guarantee issued pursuant to
this Section in lieu of any destroyed, lost or stolen Security shall constitute
an original additional contractual obligation of the Company and any Guarantor,
whether or not the destroyed, lost or stolen Security shall be at any time
enforceable by anyone, and shall be entitled to all benefits of this Indenture
equally and proportionately with any and all other Securities duly issued
hereunder.
The provisions of this Section are exclusive and shall
preclude (to the extent lawful) all other rights and remedies with respect to
the replacement or payment of mutilated, destroyed, lost or stolen Securities.
Section 309. Payment of Interest; Interest Rights Preserved.
Interest on any Security which is payable, and is punctually
paid or duly provided for, on the Stated Maturity of such interest shall be
paid to the Person in whose name the Security (or any Predecessor Securities)
is registered at the close of business on the Regular Record Date for such
interest payment.
Any interest on any Security which is payable, but is not
punctually paid or duly provided for, on the Stated Maturity of such interest,
and interest on such defaulted interest at the then applicable interest rate
borne by the Securities, to the extent lawful
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(such defaulted interest and interest thereon herein collectively called
"Defaulted Interest"), shall forthwith cease to be payable to the Holder on the
Regular Record Date; and such Defaulted Interest may be paid by the Company, at
its election in each case, as provided in Subsection (a) or (b) below:
(a) The Company may elect to make payment of any Defaulted
Interest to the Persons in whose names the Securities (or any
relevant Predecessor Securities) are registered at the close
of business on a Special Record Date for the payment of such
Defaulted Interest, which shall be fixed in the following
manner. The Company shall notify the Trustee in writing of
the amount of Defaulted Interest proposed to be paid on each
Security and the date (not less than 30 days after such
notice) of the proposed payment (the "Special Payment Date"),
and at the same time the Company shall deposit with the
Trustee an amount of money equal to the aggregate amount
proposed to be paid in respect of such Defaulted Interest or
shall make arrangements satisfactory to the Trustee for such
deposit prior to the Special Payment Date, such money when
deposited to be held in trust for the benefit of the Persons
entitled to such Defaulted Interest as in this Subsection
provided. Thereupon the Trustee shall fix a Special Record
Date for the payment of such Defaulted Interest which shall be
not more than 15 days and not less than 10 days prior to the
date of the Special Payment Date and not less than 10 days
after the receipt by the Trustee of the notice of the proposed
payment. The Trustee shall promptly notify the Company in
writing of such Special Record Date. In the name and at the
expense of the Company, the Trustee shall cause notice of the
proposed payment of such Defaulted Interest and the Special
Record Date therefor to be mailed, first-class postage
prepaid, to each Holder at its address as it appears in the
Security Register, not less than 10 days prior to such Special
Record Date. Notice of the proposed payment of such Defaulted
Interest and the Special Record Date and Special Payment Date
therefor having been so mailed, such Defaulted Interest shall
be paid to the Persons in whose names the Securities are
registered on such Special Record Date and shall no longer be
payable pursuant to the following Subsection (b).
(b) The Company may make payment of any Defaulted Interest in
any other lawful manner not inconsistent with the requirements
of any securities exchange on which the Securities may be
listed, and upon such notice as may be required by such
exchange, if, after written notice given by the Company to the
Trustee of the proposed payment pursuant to this Subsection,
such payment shall be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section 309, each
Security delivered under this Indenture upon registration of transfer of or in
exchange for or in lieu
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of any other Security shall carry the rights to interest accrued and unpaid,
and to accrue, which were carried by such other Security.
Section 310. CUSIP Numbers.
The Company in issuing the Securities may use "CUSIP" numbers
(if then generally in use), and the Company, or the Trustee on behalf of the
Company, shall use CUSIP numbers in notices of redemption or exchange as a
convenience to Holders; provided, however, that any such notice shall state
that no representation is made as to the correctness of such numbers either as
printed on the Securities or as contained in any notice of redemption or
exchange and that reliance may be placed only on the other identification
numbers printed on the Securities; and provided further, however, that failure
to use CUSIP numbers in any notice of redemption or exchange shall not affect
the validity or sufficiency of such notice.
Section 311. Persons Deemed Owners.
Prior to and at the time of due presentment of a Security for
registration of transfer, the Company, any Guarantor, the Trustee and any agent
of the Company, any Guarantor or the Trustee may treat the Person in whose name
any Security is registered as the owner of such Security for the purpose of
receiving payment of principal of, premium, if any, and (subject to Section
309) interest on, such Security and for all other purposes whatsoever, whether
or not such Security is overdue, and neither the Company, any Guarantor, the
Trustee nor any agent of the Company, any Guarantor or the Trustee shall be
affected by notice to the contrary.
Section 312. Cancellation.
All Securities surrendered for payment, purchase, redemption,
registration of transfer or exchange shall be delivered to the Trustee and, if
not already canceled, shall be promptly canceled by it. The Company and any
Guarantor may at any time deliver to the Trustee for cancellation any
Securities previously authenticated and delivered hereunder which the Company
or such Guarantor may have acquired in any manner whatsoever, and all
Securities so delivered shall be promptly canceled by the Trustee. No
Securities shall be authenticated in lieu of or in exchange for any Securities
canceled as provided in this Section 312, except as expressly permitted by this
Indenture. All canceled Securities held by the Trustee shall be destroyed and
certification of their destruction delivered to the Company, unless by a
Company Order received by the Trustee prior to such destruction, the Company
shall direct that the canceled Securities be returned to it. The Trustee shall
provide the Company a list of all Securities that have been canceled from time
to time as requested by the Company.
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Section 313. Computation of Interest.
Interest on the Securities shall be computed on the basis of a
360-day year comprised of twelve 30-day months.
ARTICLE FOUR
DEFEASANCE AND COVENANT DEFEASANCE
Section 401. Company's Option to Effect Defeasance or Covenant
Defeasance.
The Company may, at its option by Board Resolution, at any
time, with respect to the Securities, elect to have either Section 402 or
Section 403 be applied to all of the Outstanding Securities (the "Defeased
Securities"), upon compliance with the conditions set forth below in this
Article Four.
Section 402. Defeasance and Discharge.
Upon the Company's exercise under Section 401 of the option
applicable to this Section 402, the Company, each Guarantor and any other
obligor upon the Securities, if any, shall be deemed to have been discharged
from its obligations with respect to the Defeased Securities on the date the
conditions set forth in Section 404 below are satisfied (hereinafter,
"defeasance"). For this purpose, such defeasance means that the Company, each
Guarantor and any other obligor upon the Securities shall be deemed to have
paid and discharged the entire Indebtedness represented by the Defeased
Securities, which shall thereafter be deemed to be "Outstanding" only for the
purposes of Section 405 and the other Sections of this Indenture referred to in
(a) and (b) below, and to have satisfied all its other obligations under such
Securities and this Indenture insofar as such Securities are concerned (and the
Trustee, at the expense of the Company and upon Company Request, shall execute
proper instruments acknowledging the same), except for the following which
shall survive until otherwise terminated or discharged hereunder: (a) the
rights of Holders of Defeased Securities to receive, solely from the trust fund
described in Section 404 and as more fully set forth in such Section, payments
in respect of the principal of, premium, if any, and interest on, such
Securities, when such payments are due, (b) the Company's obligations with
respect to such Defeased Securities under Sections 304, 305, 308 and 1002, (c)
the rights, powers, trusts, duties and immunities of the Trustee hereunder,
including, without limitation, the Trustee's rights under Section 607, and (d)
this Article Four. Subject to compliance with this Article Four, the Company
may exercise its option under this Section 402 notwithstanding the prior
exercise of its option under Section 403 with respect to the Securities.
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Section 403. Covenant Defeasance.
Upon the Company's exercise under Section 401 of the option
applicable to this Section 403, the Company and each Guarantor shall be
released from its obligations under any covenant or provision contained or
referred to in Sections 1005 through 1018, inclusive, and the provisions of
clause (iii) of Section 801(a), with respect to the Defeased Securities on and
after the date the conditions set forth in Section 404 below are satisfied
(hereinafter, "covenant defeasance"), and the Defeased Securities shall
thereafter be deemed to be not "Outstanding" for the purposes of any direction,
waiver, consent or declaration or Act of Holders (and the consequences of any
thereof) in connection with such covenants, but shall continue to be deemed
"Outstanding" for all other purposes hereunder. For this purpose, such
covenant defeasance means that, with respect to the Defeased Securities, the
Company and each Guarantor may omit to comply with and shall have no liability
in respect of any term, condition or limitation set forth in any such Section
or Article, whether directly or indirectly, by reason of any reference
elsewhere herein to any such Section or Article or by reason of any reference
in any such Section or Article to any other provision herein or in any other
document and such omission to comply shall not constitute a Default or an Event
of Default under Sections 501(c), (d), (e) or (g), but, except as specified
above, the remainder of this Indenture and such Defeased Securities shall be
unaffected thereby.
Section 404. Conditions to Defeasance or Covenant Defeasance.
The following shall be the conditions to application of either
Section 402 or Section 403 to the Defeased Securities:
(1) The Company shall irrevocably have deposited or caused to
be deposited with the Trustee as trust funds in trust for the purpose of making
the following payments, specifically pledged as security for, and dedicated
solely to, the benefit of the Holders of such Securities, (a) United States
dollars in an amount, (b) U.S. Government Obligations which through the
scheduled payment of principal and interest in respect thereof in accordance
with their terms and with no further reinvestment will provide, not later than
one day before the due date of any payment, money in an amount, or (c) a
combination thereof, in such amounts as will be sufficient, in the opinion of a
nationally recognized firm of independent public accountants expressed in a
written certification thereof delivered to the Trustee, to pay and discharge,
and which shall be applied by the Trustee to pay and discharge, the principal
of, premium, if any, and interest on, the Defeased Securities, on the Stated
Maturity of such principal or interest (or on any date after October 1, 2002
(such date being referred to as the "Defeasance Redemption Date") if at or
prior to electing to exercise either its option applicable to Section 402 or
its option applicable to Section 403, the Company has delivered to the Trustee
an irrevocable notice to redeem all of the Outstanding Securities on the
Defeasance Redemption Date). For this purpose, "U.S. Government Obligations"
means securities that are (i) direct
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obligations of the United States of America for the timely payment of which its
full faith and credit is pledged or (ii) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States
of America the timely payment of which is unconditionally guaranteed as a full
faith and credit obligation by the United States of America, which, in either
case, are not callable or redeemable at the option of the issuer thereof, and
shall also include a depository receipt issued by a bank (as defined in Section
3(a)(2) of the Securities Act), as custodian with respect to any such U.S.
Government Obligation or a specific payment of principal of or interest on any
such U.S. Government Obligation held by such custodian for the account of the
holder of such depository receipt, provided that (except as required by law)
such custodian is not authorized to make any deduction from the amount payable
to the holder of such depository receipt from any amount received by the
custodian in respect of the U.S. Government Obligation or the specific payment
of principal of or interest on the U.S. Government Obligation evidenced by such
depository receipt;
(2) In the case of an election under Section 402, the Company
shall have delivered to the Trustee an Opinion of Independent Counsel in the
United States stating that (A) the Company has received from, or there has been
published by, the Internal Revenue Service a ruling or (B) since the date
hereof, there has been a change in the applicable federal income tax law, in
either case to the effect that, and based thereon such Opinion of Independent
Counsel in the United States shall confirm that, the Holders of the Outstanding
Securities will not recognize income, gain or loss for federal income tax
purposes as a result of such defeasance and will be subject to federal income
tax on the same amounts, in the same manner and at the same times as would have
been the case if such defeasance had not occurred;
(3) In the case of an election under Section 403, the Company
shall have delivered to the Trustee an Opinion of Independent Counsel in the
United States to the effect that the Holders of the Outstanding Securities will
not recognize income, gain or loss for federal income tax purposes as a result
of such covenant defeasance and will be subject to federal income tax on the
same amounts, in the same manner and at the same times as would have been the
case if such covenant defeasance had not occurred;
(4) No Default or Event of Default shall have occurred and be
continuing on the date of such deposit or, insofar as Section 501(h) or (i) is
concerned, at any time during the period ending on the 91st day after the date
of deposit (it being understood that this condition shall not be satisfied
until the expiration of such period);
(5) Such defeasance or covenant defeasance shall not cause
the Trustee for the Securities to have a conflicting interest in violation of
and for purposes of the Trust Indenture Act with respect to any other
securities of the Company or any Guarantor;
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(6) Such defeasance or covenant defeasance shall not result
in a breach or violation of, or constitute a Default under, this Indenture or
any other material agreement or instrument to which the Company or any
Guarantor is a party or by which it is bound;
(7) Such defeasance or covenant defeasance shall not result
in the trust arising from such deposit constituting an investment company
within the meaning of the Investment Company Act of 1940, as amended, unless
such trust shall be registered under such Act or exempt from registration
thereunder;
(8) The Company shall have delivered to the Trustee an
Opinion of Independent Counsel to the effect that after the 91st day following
the deposit, the trust funds will not be subject to the effect of any
applicable bankruptcy, insolvency, reorganization or similar laws affecting
creditors' rights generally;
(9) The Company shall have delivered to the Trustee an
Officers' Certificate stating that the deposit was not made by the Company with
the intent of preferring the holders of the Securities or any Guarantee over
the other creditors of the Company or any Guarantor with the intent of
defeating, hindering, delaying or defrauding creditors of the Company, any
Guarantor or others; and
(10) The Company shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Independent Counsel, each stating that
all conditions precedent under this Indenture to either the defeasance under
Section 402 or the covenant defeasance under Section 403, as the case may be,
have been complied with.
Opinions of Counsel or Opinions of Independent Counsel
required to be delivered under this Section shall be in form and substance
reasonably satisfactory to the Trustee and may have qualifications customary
for opinions of the type required and counsel delivering such opinions may rely
on certificates of the Company or government or other officials customary for
opinions of the type required, which certificates shall be limited as to
matters of fact, including that various financial covenants have been complied
with.
Section 405. Deposited Money and U.S. Government Obligations to Be
Held in Trust; Other Miscellaneous Provisions.
Subject to the provisions of the last paragraph of Section
1003, all United States dollars and U.S. Government Obligations (including the
proceeds thereof) deposited with the Trustee pursuant to Section 404 in respect
of the Defeased Securities shall be held in trust and applied by the Trustee,
in accordance with the provisions of such Securities and this Indenture, to the
payment, either directly or through any Paying Agent (excluding the Company or
any of its Affiliates acting as Paying Agent), as the Trustee
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may determine, to the Holders of such Securities of all sums due and to become
due thereon in respect of principal, premium, if any, and interest, but such
money need not be segregated from other funds except to the extent required by
law.
The Company shall pay and indemnify the Trustee against any
tax, fee or other charge imposed on or assessed against the U.S. Government
Obligations deposited pursuant to Section 404 or the principal and interest
received in respect thereof other than any such tax, fee or other charge which
by law is imposed, assessed or for the account of the Holders of the Defeased
Securities.
Anything in this Article Four to the contrary notwithstanding,
the Trustee shall deliver or pay to the Company from time to time upon Company
Request any United States dollars or U.S. Government Obligations held by it as
provided in Section 404 which, in the opinion of a nationally recognized firm
of independent public accountants expressed in a written certification thereof
delivered to the Trustee, are in excess of the amount thereof which would then
be required to be deposited to effect defeasance or covenant defeasance.
Section 406. Reinstatement.
If the Trustee or Paying Agent is unable to apply any United
States dollars or U.S. Government Obligations in accordance with Section 402 or
403, as the case may be, by reason of any order or judgment of any court or
governmental authority enjoining, restraining or otherwise prohibiting such
application, then the Company's obligations under this Indenture and the
Securities and any Guarantor's obligations under any Guarantee shall be revived
and reinstated, with present and prospective effect, as though no deposit had
occurred pursuant to Section 402 or 403, as the case may be, until such time as
the Trustee or Paying Agent is permitted to apply all such United States
dollars or U.S. Government Obligations in accordance with Section 402 or 403,
as the case may be; provided, however, that if the Company makes any payment to
the Trustee or Paying Agent of principal of, premium, if any, or interest on
any Security following the reinstatement of its obligations, the Trustee or
Paying Agent shall promptly pay any such amount to the Holders of the
Securities and the Company shall be subrogated to the rights of the Holders of
such Securities to receive such payment from the United States dollars and U.S.
Government Obligations held by the Trustee or Paying Agent.
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ARTICLE FIVE
REMEDIES
Section 501. Events of Default.
"Event of Default," wherever used herein, means any one of the
following events (whatever the reason for such Event of Default and whether it
shall be voluntary or involuntary or be effected by operation of law or
pursuant to any judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body):
(a) default in the payment of the principal of or premium, if
any, when due and payable, on any of the Securities (at its Stated Maturity,
upon optional redemption, required repurchase, scheduled principal payment or
otherwise);
(b) default in the payment of an installment of interest on
any of the Securities, when due and payable, continued for 30 days or more;
(c) the Company or any Guarantor fails to comply with any of
its obligations described in Article Eight or in Sections 1011 or 1014 hereof;
(d) the Company or any Guarantor fails to perform or observe
any other term, covenant or agreement contained in the Securities, the
Guarantees or this Indenture (other than a default specified in (a), (b) or (c)
above) for a period of 45 days after written notice of such failure requiring
the Company to remedy the same shall have been given (x) to the Company by the
Trustee or (y) to the Company and the Trustee by the holders of 25% in
aggregate principal amount of the Securities then Outstanding;
(e) default or defaults under one or more agreements,
indentures or instruments under which the Company or any Restricted Subsidiary
then has outstanding Indebtedness in excess of $20,000,000 individually or in
the aggregate and either (i) such Indebtedness is already due and payable in
full or (ii) such default or defaults results in the acceleration of the
maturity of such Indebtedness;
(f) any Guarantee ceases to be in full force and effect or is
declared null and void or any Guarantor denies that it has any further
liability under any Guarantee, or gives notice to such effect (other than by
reason of the termination of this Indenture or the release of any such
Guarantee in accordance with the terms of this Indenture);
(g) one or more judgments, orders or decrees of any court or
regulatory or administrative agency for the payment of money in excess of
$20,000,000 either individually or in the aggregate shall have been rendered
against the Company or any Restricted Subsidiary or any of their respective
properties and shall not have been
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discharged and either (a) any creditor shall have commenced an enforcement
proceeding upon such judgment, order or decree or (b) there shall have been a
period of 60 consecutive days during which a stay of enforcement of such
judgment, order or decree, by reason of a pending appeal or otherwise, shall
not be in effect;
(h) there shall have been the entry by a court of competent
jurisdiction of (i) a decree or order for relief in respect of the Company, any
Guarantor or any Material Subsidiary in an involuntary case or proceeding under
any applicable Bankruptcy Law or (ii) a decree or order adjudging the Company,
any Guarantor or any Material Subsidiary bankrupt or insolvent, or seeking
reorganization, arrangement, adjustment or composition of or in respect of the
Company, any Guarantor or any Material Subsidiary under any applicable federal
or state law, or appointing a custodian, receiver, liquidator, assignee,
trustee, sequestrator (or other similar official) of the Company, any Guarantor
or any Material Subsidiary or of any substantial part of their respective
properties, or ordering the winding up or liquidation of their respective
affairs, and any such decree or order for relief shall continue to be in
effect, or any such other decree or order shall be unstayed and in effect, for
a period of 60 consecutive days; or
(i) (i) the Company, any Guarantor or any Material Subsidiary
commences a voluntary case or proceeding under any applicable Bankruptcy Law or
any other case or proceeding to be adjudicated bankrupt or insolvent, (ii) the
Company, any Guarantor or any Material Subsidiary consents to the entry of a
decree or order for relief in respect of the Company, such Guarantor or such
Material Subsidiary in an involuntary case or proceeding under any applicable
Bankruptcy Law or to the commencement of any bankruptcy or insolvency case or
proceeding against it, (iii) the Company, any Guarantor or any Material
Subsidiary files a petition or answer or consent seeking reorganization or
relief under any applicable federal or state law, (iv) the Company, any
Guarantor or any Material Subsidiary (1) consents to the filing of such
petition or the appointment of, or taking possession by, a custodian, receiver,
liquidator, assignee, trustee, sequestrator or similar official of the Company,
any Guarantor or such Material Subsidiary or of any substantial part of their
respective properties, (2) makes an assignment for the benefit of creditors or
(3) admits in writing its inability to pay its debts generally as they become
due, (v) a custodian, receiver, liquidator, assignee, trustee, sequestrator or
similar official shall be appointed out of court with respect to the Company or
any Material Subsidiary or any substantial part of their assets or properties
or (vi) the Company, any Guarantor or any Material Subsidiary takes any
corporate action in furtherance of any such actions in this paragraph (i).
Section 502. Acceleration of Maturity; Rescission and Annulment.
If an Event of Default (other than an Event of Default specified in
Sections 501(h) and (i)) shall occur and be continuing, the Trustee or the
Holders of not less than 25% in aggregate principal amount of the Securities
then Outstanding, may, and the
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Trustee at the request of such Holders, shall, declare all unpaid principal of,
premium, if any, and accrued interest on all Securities to be due and payable,
by a notice in writing to the Company (and to the Trustee if given by the
Holders of the Securities) and upon any such declaration, such principal,
premium, if any, and interest shall become due and payable immediately. If an
Event of Default specified in clause (h) or (i) of Section 501 occurs and is
continuing, then all the Securities shall ipso facto become and be due and
payable immediately in an amount equal to the principal amount of the
Securities, together with accrued and unpaid interest, if any, to the date the
Securities become due and payable, without any declaration or other act on the
part of the Trustee or any Holder. Thereupon, the Trustee may, at his or her
discretion, proceed to protect and enforce the rights of the Holders of the
Securities by appropriate judicial proceedings.
After such declaration of acceleration with respect to the
Securities, but before a judgment or decree for payment of the money due has
been obtained by the Trustee as hereinafter in this Article provided, the
Holders of a majority in aggregate principal amount of the Securities
Outstanding, by written notice to the Company and the Trustee, may rescind such
declaration if:
(a) the Company has paid or deposited with the Trustee a sum
sufficient to pay
(i) all sums paid or advanced by the Trustee under this
Indenture and the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and
counsel,
(ii) all overdue interest on all Outstanding Securities,
(iii) the principal of and premium, if any, on any
Outstanding Securities which have become due otherwise than by
such declaration of acceleration and interest thereon at a
rate borne by the Securities, and
(iv) to the extent that payment of such interest is
lawful, interest upon overdue interest at the rate borne by
the Securities; and
(b) all Events of Default, other than the non-payment of
principal of, premium, if any, and interest on the Securities that has become
due solely by such declaration of acceleration, have been cured or waived as
provided in Section 513. No such rescission shall affect any subsequent
Default or impair any right consequent thereon.
Section 503. Collection of Indebtedness and Suits for Enforcement by
Trustee.
The Company and each Guarantor covenant that if
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(a) default is made in the payment of any interest on any
Security when such interest becomes due and payable and such default continues
for a period of 30 days, or
(b) default is made in the payment of the principal of or
premium, if any, on any Security at the Stated Maturity thereof or otherwise,
the Company and such Guarantor will, upon demand of the Trustee, pay to it, for
the benefit of the Holders of such Securities, the whole amount then due and
payable on such Securities for principal and premium, if any, and interest,
with interest upon the overdue principal and premium, if any, and, to the
extent that payment of such interest shall be legally enforceable, upon overdue
installments of interest, at the rate borne by the Securities; and, in addition
thereto, such further amount as shall be sufficient to cover the costs and
expenses of collection, including the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel.
If the Company or any Guarantor, as the case may be, fails to
pay such amounts forthwith upon such demand, the Trustee, in its own name and
as trustee of an express trust, may institute a judicial proceeding for the
collection of the sums so due and unpaid and may prosecute such proceeding to
judgment or final decree, and may enforce the same against the Company or any
Guarantor or any other obligor upon the Securities and collect the moneys
adjudged or decreed to be payable in the manner provided by law out of the
property of the Company, any Guarantor or any other obligor upon the
Securities, wherever situated.
If an Event of Default occurs and is continuing, the Trustee
may in its discretion proceed to protect and enforce its rights and the rights
of the Holders under this Indenture or any Guarantee by such appropriate
private or judicial proceedings as the Trustee shall deem most effectual to
protect and enforce such rights, including seeking recourse against any
Guarantor pursuant to the terms of any Guarantee, whether for the specific
enforcement of any covenant or agreement in this Indenture or in aid of the
exercise of any power granted herein or therein, or to enforce any other proper
remedy, including, without limitation, seeking recourse against any Guarantor
pursuant to the terms of a Guarantee, or to enforce any other proper remedy,
subject however to Section 512. No recovery of any such judgment upon any
property of the Company or any Guarantor shall affect or impair any rights,
powers or remedies of the Trustee or the Holders.
Section 504. Trustee May File Proofs of Claim.
In case of the pendency of any receivership, insolvency,
liquidation, bankruptcy, reorganization, arrangement, adjustment, composition
or other judicial proceeding relative to the Company or any other obligor,
including any Guarantor, upon
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the Securities or the property of the Company or of such other obligor or their
creditors, the Trustee (irrespective of whether the principal of the Securities
shall then be due and payable as therein expressed or by declaration or
otherwise and irrespective of whether the Trustee shall have made any demand on
the Company for the payment of overdue principal or interest) shall be entitled
and empowered, by intervention in such proceeding or otherwise,
(a) to file and prove a claim for the whole amount of
principal, premium, if any, and interest owing and unpaid in respect of the
Securities and to file such other papers or documents as may be necessary or
advisable in order to have the claims of the Trustee (including any claim for
the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel) and of the Holders allowed in such judicial
proceeding, and
(b) to collect and receive any moneys or other property
payable or deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
similar official in any such judicial proceeding is hereby authorized by each
Holder to make such payments to the Trustee and, in the event that the Trustee
shall consent to the making of such payments directly to the Holders, to pay
the Trustee any amount due it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any
other amounts due the Trustee under Section 607.
Nothing herein contained shall be deemed to authorize the
Trustee to authorize or consent to or accept or adopt on behalf of any Holder
any plan of reorganization, arrangement, adjustment or composition affecting
the Securities or the rights of any Holder thereof, or to authorize the Trustee
to vote in respect of the claim of any Holder in any such proceeding.
Section 505. Trustee May Enforce Claims without Possession of
Securities.
All rights of action and claims under this Indenture, the
Securities or the Guarantees may be prosecuted and enforced by the Trustee
without the possession of any of the Securities or the production thereof in
any proceeding relating thereto, and any such proceeding instituted by the
Trustee shall be brought in its own name and as trustee of an express trust,
and any recovery of judgment shall, after provision for the payment of the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel, be for the ratable benefit of the Holders of the
Securities in respect of which such judgment has been recovered.
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Section 506. Application of Money Collected.
Any money collected by the Trustee pursuant to this Article or
otherwise on behalf of the Holders or the Trustee pursuant to this Article or
through any proceeding or any arrangement or restructuring in anticipation or
in lieu of any proceeding contemplated by this Article shall be applied,
subject to applicable law, in the following order, at the date or dates fixed
by the Trustee and, in case of the distribution of such money on account of
principal, premium, if any, or interest, upon presentation of the Securities
and the notation thereon of the payment if only partially paid and upon
surrender thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee under
Section 607;
SECOND: To the payment of the amounts then due and unpaid
upon the Securities for principal, premium, if any, and interest, in respect of
which or for the benefit of which such money has been collected, ratably,
without preference or priority of any kind, according to the amounts due and
payable on such Securities for principal, premium, if any, and interest; and
THIRD: The balance, if any, to the Person or Persons entitled thereto,
including the Company, provided that all sums due and owing to the Holders and
the Trustee have been paid in full as required by this Indenture.
Section 507. Limitation on Suits.
No Holder of any Securities shall have any right to institute
any proceeding, judicial or otherwise, with respect to this Indenture or the
Securities, or for the appointment of a receiver or trustee, or for any other
remedy hereunder, unless
(a) such Holder has previously given written notice to the
Trustee of a continuing Event of Default;
(b) the Holders of not less than 25% in principal amount of
the Outstanding Securities shall have made written request to the Trustee to
institute proceedings in respect of such Event of Default in its own name as
trustee hereunder;
(c) such Holder or Holders have offered to the Trustee an
indemnity satisfactory to the Trustee against the costs, expenses and
liabilities to be incurred in compliance with such request;
(d) the Trustee for 15 days after its receipt of such notice,
request and offer (and if requested, provision) of indemnity has failed to
institute any such proceeding; and
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(e) no direction inconsistent with such written request has
been given to the Trustee during such 15-day period by the Holders of a
majority in principal amount of the Outstanding Securities;
it being understood and intended that no one or more Holders shall have any
right in any manner whatever by virtue of, or by availing of, any provision of
this Indenture, any Security or any Guarantee to affect, disturb or prejudice
the rights of any other Holders, or to obtain or to seek to obtain priority or
preference over any other Holders or to enforce any right under this Indenture,
any Security or any Guarantee, except in the manner provided in this Indenture
and for the equal and ratable benefit of all the Holders.
Section 508. Unconditional Right of Holders to Receive Principal,
Premium and Interest.
Notwithstanding any other provision in this Indenture, the
Holder of any Security shall have the right based on the terms stated herein,
which is absolute and unconditional, to receive payment of the principal of,
premium, if any, and (subject to Section 309) interest on such Security on the
respective Stated Maturities expressed in such Security (or, in the case of
redemption or repurchase, on the Redemption Date or the repurchase date) and to
institute suit for the enforcement of any such payment, and such rights shall
not be impaired without the consent of such Holder.
Section 509. Restoration of Rights and Remedies.
If the Trustee or any Holder has instituted any proceeding to
enforce any right or remedy under this Indenture or any Guarantee and such
proceeding has been discontinued or abandoned for any reason, or has been
determined adversely to the Trustee or to such Holder, then and in every such
case the Company, any Guarantor, any other obligor on the Securities, the
Trustee and the Holders shall, subject to any determination in such proceeding,
be restored severally and respectively to their former positions hereunder, and
thereafter all rights and remedies of the Trustee and the Holders shall
continue as though no such proceeding had been instituted.
Section 510. Rights and Remedies Cumulative.
No right or remedy herein conferred upon or reserved to the
Trustee or to the Holders is intended to be exclusive of any other right or
remedy, and every right and remedy shall, to the extent permitted by law, be
cumulative and in addition to every other right and remedy given hereunder or
now or hereafter existing at law or in equity or otherwise. The assertion or
employment of any right or remedy hereunder, or otherwise, shall not prevent
the concurrent assertion or employment of any other appropriate right or
remedy.
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Section 511. Delay or Omission Not Waiver.
No delay or omission of the Trustee or of any Holder of any
Security to exercise any right or remedy accruing upon any Event of Default
shall impair any such right or remedy or constitute a waiver of any such Event
of Default or an acquiescence therein. Every right and remedy given by this
Article or by law to the Trustee or to the Holders may be exercised from time
to time, and as often as may be deemed expedient, by the Trustee or by the
Holders, as the case may be.
Section 512. Control by Holders.
The Holders of not less than a majority in aggregate principal
amount of the Outstanding Securities shall have the right to direct the time,
method and place of conducting any proceeding for exercising any remedy
available to the Trustee, or exercising any trust or power conferred on the
Trustee, provided that
(a) such direction shall not be in conflict with any rule of
law or with this Indenture (including, without limitation, Section 507) or any
Guarantee, expose the Trustee to personal liability, or be unduly prejudicial
to Holders not joining therein; and
(b) subject to the provisions of Section 315 of the Trust
Indenture Act, the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction.
Section 513. Waiver of Past Defaults.
The Holders of not less than a majority in aggregate principal
amount of the Outstanding Securities may on behalf of the Holders of all
Outstanding Securities waive any past Default hereunder and its consequences,
except a Default
(a) in the payment of the principal of, premium, if any, or
interest on any Security; or
(b) in respect of a covenant or a provision hereof which
under this Indenture cannot be modified or amended without the consent of the
Holder of each Security Outstanding affected by such modification or amendment.
Upon any such waiver, such Default shall cease to exist, and
any Event of Default arising therefrom shall be deemed to have been cured, for
every purpose of this Indenture; but no such waiver shall extend to any
subsequent or other Default or impair any right consequent thereon.
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Section 514. Undertaking for Costs.
All parties to this Indenture agree, and each Holder of any
Security by his acceptance thereof shall be deemed to have agreed, that any
court may in its discretion require, in any suit for the enforcement of any
right or remedy under this Indenture, or in any suit against the Trustee for
any action taken, suffered or omitted by it as Trustee, the filing by any party
litigant in such suit of an undertaking to pay the costs of such suit, and that
such court may in its discretion assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in such suit, having due regard to
the merits and good faith of the claims or defenses made by such party
litigant, but the provisions of this Section shall not apply to any suit
instituted by the Trustee, to any suit instituted by any Holder, or group of
Holders, holding in the aggregate more than 10% in principal amount of the
Outstanding Securities, or to any suit instituted by any Holder for the
enforcement of the payment of the principal of, premium, if any, or interest
on, any Security on or after the respective Stated Maturities expressed in such
Security (or, in the case of redemption, on or after the Redemption Date).
Section 515. Waiver of Stay, Extension or Usury Laws.
Each of the Company and the Guarantors covenants (to the
extent that it may lawfully do so) that it will not at any time insist upon, or
plead, or in any manner whatsoever claim or take the benefit or advantage of,
any stay or extension law or any usury or other law wherever enacted, now or at
any time hereafter in force, which would prohibit or forgive the Company or any
Guarantor from paying all or any portion of the principal of, premium, if any,
or interest on the Securities contemplated herein or in the Securities or which
may affect the covenants or the performance of this Indenture; and each of the
Company and the Guarantors (to the extent that it may lawfully do so) hereby
expressly waives all benefit or advantage of any such law, and covenants that
it will not hinder, delay or impede the execution of any power herein granted
to the Trustee, but will suffer and permit the execution of every such power as
though no such law had been enacted.
Section 516. Remedies Subject to Applicable Law.
All rights, remedies and powers provided by this Article Five
may be exercised only to the extent that the exercise thereof does not violate
any applicable provision of law in the premises, and all the provisions of this
Indenture are intended to be subject to all applicable mandatory provisions of
law which may be controlling in the premises and to be limited to the extent
necessary so that they will not render this Indenture invalid, unenforceable or
not entitled to be recorded, registered or filed under the provisions of any
applicable law.
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ARTICLE SIX
THE TRUSTEE
Section 601. Duties of Trustee.
Subject to the provisions of Trust Indenture Act Sections
315(a) through 315(d):
(a) if a Default or an Event of Default has occurred and is
continuing, the Trustee shall exercise such of the rights and powers vested in
it by this Indenture and use the same degree of care and skill in its exercise
thereof as a prudent person would exercise or use under the circumstances in
the conduct of his own affairs;
(b) except during the continuance of a Default or an Event of
Default:
(1) the Trustee need perform only those duties as are
specifically set forth in this Indenture and no covenants or
obligations shall be implied in this Indenture that are
adverse to the Trustee; and
(2) in the absence of bad faith or willful misconduct
on its part, the Trustee may conclusively rely, as to the
truth of the statements and the correctness of the opinions
expressed therein, upon certificates or opinions furnished to
the Trustee and conforming to the requirements of this
Indenture. However, the Trustee shall examine the certificates
and opinions to determine whether or not they conform to the
requirements of this Indenture;
(c) the Trustee may not be relieved from liability for its
own negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(1) this Subsection (c) does not limit the effect of
Subsection (b) of this Section 601;
(2) the Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer, unless
it is proved that the Trustee was negligent in ascertaining
the pertinent facts; and
(3) the Trustee shall not be liable with respect to
any action it takes or omits to take in good faith, in
accordance with a direction of the Holders of a majority in
principal amount of Outstanding Securities relating to the
time, method and place of conducting any proceeding for any
remedy available to the Trustee, or exercising any trust or
power confirmed upon the Trustee under this Indenture;
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(d) no provision of this Indenture shall require the
Trustee to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder or in the exercise
of any of its rights or powers if it shall have reasonable grounds for
believing that repayment of such funds or adequate indemnity against such risk
or liability is not reasonably assured to it;
(e) whether or not therein expressly so provided, every
provision of this Indenture that in any way relates to the Trustee is subject
to Subsections (a), (b), (c) and (d) of this Section 601; and
(f) the Trustee shall not be liable for interest on any money
or assets received by it except as the Trustee may agree with the Company.
Assets held in trust by the Trustee need not be segregated from other assets
except to the extent required by law.
Section 602. Notice of Defaults.
Within 30 days after a Responsible Officer of the Trustee
receives notice of the occurrence of any Default, the Trustee shall transmit by
mail to all Holders and any other Persons entitled to receive reports pursuant
to Section 313(c) of the Trust Indenture Act, as their names and addresses
appear in the Security Register, notice of such Default hereunder known to the
Trustee, unless such Default shall have been cured or waived; provided,
however, that, except in the case of a Default in the payment of the principal
of, premium, if any, or interest on any Security, the Trustee shall be
protected in withholding such notice if and so long as a trust committee of
Responsible Officers of the Trustee in good faith determines that the
withholding of such notice is in the interest of the Holders.
Section 603. Certain Rights of Trustee.
Subject to the provisions of Section 601 hereof and Trust
Indenture Act Sections 315(a) through 315(d):
(a) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, debenture,
note, other evidence of Indebtedness or other paper or document believed by it
to be genuine and to have been signed or presented by the proper party or
parties;
(b) any request or direction of the Company mentioned herein
shall be sufficiently evidenced by a Company Request or Company Order and any
resolution of the Board of Directors may be sufficiently evidenced by a Board
Resolution;
(c) the Trustee may consult with counsel and any written
advice of such counsel or any Opinion of Counsel shall be full and complete
authorization and protection
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in respect of any action taken, suffered or omitted by it hereunder in good
faith and in reliance thereon in accordance with such advice or Opinion of
Counsel;
(d) the Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by this Indenture at the request or
direction of any of the Holders pursuant to this Indenture, unless such Holders
shall have offered to the Trustee security or indemnity satisfactory to the
Trustee against the costs, expenses and liabilities which might be incurred
therein or thereby in compliance with such request or direction;
(e) the Trustee shall not be liable for any action taken or
omitted by it in good faith and believed by it to be authorized or within the
discretion, rights or powers conferred upon it by this Indenture other than any
liabilities arising out of the negligence, bad faith or willful misconduct of
the Trustee;
(f) the Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
approval, appraisal, bond, debenture, note, coupon, security or other paper or
document unless requested in writing to do so by the Holders of not less than a
majority in aggregate principal amount of the Securities then Outstanding;
provided that, if the payment within a reasonable time to the Trustee of the
costs, expenses or liabilities likely to be incurred by it in the making of
such investigation is, in the opinion of the Trustee, not reasonably assured to
the Trustee by the security afforded to it by the terms of this Indenture, the
Trustee may require reasonable indemnity against such expenses or liabilities
as a condition to proceeding; the reasonable expenses of every such
investigation so requested by the Holders of not less than 25% in aggregate
principal amount of the Securities Outstanding shall be paid by the Company or,
if paid by the Trustee or any predecessor Trustee, shall be repaid by the
Company upon demand; provided, further, the Trustee in its discretion may make
such further inquiry or investigation into such facts or matters as it may deem
fit, and, if the Trustee shall determine to make such further inquiry or
investigation, it shall be entitled to examine the books, records and premises
of the Company, personally or by agent or attorney;
(g) whenever in the administration of this Indenture the
Trustee shall deem it desirable that a matter be proved or established prior to
taking, suffering or omitting any action hereunder, the Trustee (unless other
evidence be herein specifically prescribed) may, in the absence of bad faith on
its part, rely upon an Officers' Certificate; and
(h) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents or attorneys and the Trustee shall not be responsible for any misconduct
or negligence on the part of any agent or attorney appointed with due care by
it hereunder.
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Section 604. Trustee Not Responsible for Recitals, Dispositions of
Securities or Application of Proceeds Thereof.
The recitals contained herein and in the Securities, except
the Trustee's certificates of authentication, shall be taken as the statements
of the Company and the Guarantor, and the Trustee assumes no responsibility for
their correctness. The Trustee makes no representations as to the validity or
sufficiency of this Indenture or of the Securities, except that the Trustee
represents that it is duly authorized to execute and deliver this Indenture,
authenticate the Securities and perform its obligations hereunder and that the
statements made by it in any Statement of Eligibility and Qualification on Form
T-1 to be supplied to the Company will be true and accurate subject to the
qualifications set forth therein. The Trustee shall not be accountable for the
use or application by the Company of Securities or the proceeds thereof nor
shall the Trustee be responsible for any statement in any registration
statement for the Securities under the Securities Act or responsible for the
determination as to which beneficial owners are entitled to receive notices
hereunder.
Section 605. Trustee and Agents May Hold Securities; Collections; etc.
The Trustee, any Paying Agent, Security Registrar or any other
agent of the Company, in its individual or any other capacity, may become the
owner or pledgee of Securities, with the same rights it would have if it were
not the Trustee, Paying Agent, Security Registrar or such other agent and,
subject to Sections 608 and 613 hereof and Trust Indenture Act Sections 310 and
311, may otherwise deal with the Company and receive, collect, hold and retain
collections from the Company with the same rights it would have if it were not
the Trustee, Paying Agent, Security Registrar or such other agent.
Section 606. Money Held in Trust.
All moneys received by the Trustee shall, until used or
applied as herein provided, be held in trust for the purposes for which they
were received, but need not be segregated from other funds except to the extent
required by mandatory provisions of law. Except for funds or securities
deposited with the Trustee pursuant to Article Four, the Trustee shall be
required to invest all moneys received by the Trustee, until used or applied as
herein provided, in Cash Equivalents in accordance with the directions of the
Company.
Section 607. Compensation and Indemnification of Trustee and Its Prior
Claim.
The Company covenants and agrees to pay to the Trustee from
time to time, and the Trustee shall be entitled to, reasonable compensation for
all services rendered by it hereunder (which compensation shall not be limited
by any provision of law in regard
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to the compensation of a trustee of an express trust) and the Company covenants
and agrees to pay or reimburse the Trustee and each predecessor Trustee upon
its request for all reasonable expenses, disbursements and advances incurred or
made by or on behalf of the Trustee in accordance with any of the provisions of
this Indenture (including the reasonable compensation and the expenses and
disbursements of its counsel and of all agents and other persons not regularly
in its employ) except any such expense, disbursement or advance as may arise
from its negligence, bad faith or willful misconduct. The Company also
covenants and agrees to indemnify the Trustee and each predecessor Trustee for,
and to hold it harmless against, any claim, loss, liability, tax, assessment or
other governmental charge (other than taxes applicable to the Trustee's
compensation hereunder) or expense incurred without negligence, bad faith or
willful misconduct on its part, arising out of or in connection with the
acceptance or administration of this Indenture or the trusts hereunder and its
duties hereunder, including enforcement of this Section 607 and also including
any liability which the Trustee may incur as a result of failure to withhold,
pay or report any tax, assessment or other governmental charge, and the costs
and expenses of defending itself against or investigating any claim or
liability in connection with the exercise or performance of any of its powers
or duties hereunder. The obligations of the Company under this Section 607 to
compensate and indemnify the Trustee and each predecessor Trustee and to pay or
reimburse the Trustee and each predecessor Trustee for reasonable expenses,
disbursements and advances shall constitute an additional obligation hereunder
and shall survive the satisfaction and discharge of this Indenture and the
resignation or removal of the Trustee and each predecessor Trustee.
Section 608. Conflicting Interests.
The Trustee shall comply with the provisions of Section 310(b)
of the Trust Indenture Act.
Section 609. Trustee Eligibility.
There shall at all times be a Trustee hereunder which shall be
eligible to act as trustee under Trust Indenture Act Section 310(a) and which
shall have a combined capital and surplus of at least $250,000,000, to the
extent there is an institution eligible and willing to serve. If the Trustee
does not have an office in The City of New York, the Trustee may appoint an
agent in The City of New York reasonably acceptable to the Company to conduct
any activities which the Trustee may be required under this Indenture to
conduct in The City of New York. If such Trustee publishes reports of
condition at least annually, pursuant to law or to the requirements of federal,
state, territorial or District of Columbia supervising or examining authority,
then for the purposes of this Section 609, the combined capital and surplus of
such corporation shall be deemed to be its combined capital and surplus as set
forth in its most recent report of condition so published. If at any time the
Trustee shall cease to be eligible in accordance
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with the provisions of this Section 609, the Trustee shall resign immediately
in the manner and with the effect hereinafter specified in this Article.
Section 610. Resignation and Removal; Appointment of Successor Trustee.
(a) No resignation or removal of the Trustee and no
appointment of a successor trustee pursuant to this Article shall become
effective until the acceptance of appointment by the successor trustee under
Section 611.
(b) The Trustee, or any trustee or trustees hereafter
appointed, may at any time resign by giving written notice thereof to the
Company no later than 20 Business Days prior to the proposed date of
resignation. Upon receiving such notice of resignation, the Company shall
promptly appoint a successor trustee by written instrument executed by
authority of the Board of Directors of the Company, a copy of which shall be
delivered to the resigning Trustee and a copy to the successor trustee. If an
instrument of acceptance by a successor trustee shall not have been delivered
to the Trustee within 30 days after the giving of such notice of resignation,
the resigning Trustee may, or any Holder who has been a bona fide Holder of a
Security for at least six months may, on behalf of himself and all others
similarly situated, petition any court of competent jurisdiction for the
appointment of a successor trustee. Such court may thereupon, after such
notice, if any, as it may deem proper, appoint and prescribe a successor
trustee.
(c) The Trustee may be removed at any time for any cause or
for no cause by an Act of the Holders of not less than a majority in aggregate
principal amount of the Outstanding Securities, delivered to the Trustee and to
the Company.
(d) If at any time:
(1) the Trustee shall fail to comply with the
provisions of Trust Indenture Act Section 310(b) after written
request therefor by the Company or by any Holder who has been
a bona fide Holder of a Security for at least six months,
(2) the Trustee shall cease to be eligible under
Section 609 and shall fail to resign after written request
therefor by the Company or by any Holder who has been a bona
fide Holder of a Security for at least six months, or
(3) the Trustee shall become incapable of acting or
shall be adjudged a bankrupt or insolvent, or a receiver of
the Trustee or of its property shall be appointed or any
public officer shall take charge or control of the Trustee or
of its property or affairs for the purpose of rehabilitation,
conservation or liquidation,
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then, in any case, (i) the Company by a Board Resolution may remove the
Trustee, or (ii) subject to Section 514, the Holder of any Security who has
been a bona fide Holder of a Security for at least six months may, on behalf of
himself and all others similarly situated, petition any court of competent
jurisdiction for the removal of the Trustee and the appointment of a successor
trustee. Such court may thereupon, after such notice, if any, as it may deem
proper and prescribe, remove the Trustee and appoint a successor trustee.
(e) If the Trustee shall resign, be removed or become
incapable of acting, or if a vacancy shall occur in the office of Trustee for
any cause, the Company, by a Board Resolution, shall promptly appoint a
successor trustee and shall comply with the applicable requirements of Section
611. If, within one year after such resignation, removal or incapability, or
the occurrence of such vacancy, the Company has not appointed a successor
Trustee, a successor trustee shall be appointed by the Act of the Holders of a
majority in principal amount of the Outstanding Securities delivered to the
Company and the retiring Trustee. Such successor trustee so appointed shall
forthwith upon its acceptance of such appointment become the successor trustee
and supersede the successor trustee appointed by the Company. If no successor
trustee shall have been so appointed by the Company or the Holders of the
Securities and accepted appointment in the manner hereinafter provided, the
Holder of any Security who has been a bona fide Holder for at least six months
may, subject to Section 514, on behalf of himself and all others similarly
situated, petition any court of competent jurisdiction for the appointment of a
successor trustee.
(f) The Company shall give notice of each resignation and
each removal of the Trustee and each appointment of a successor trustee by
mailing written notice of such event by first-class mail, postage prepaid, to
the Holders of Securities as their names and addresses appear in the Security
Register. Each notice shall include the name of the successor trustee and the
address of its Corporate Trust Office or agent hereunder.
Section 611. Acceptance of Appointment by Successor.
Every successor trustee appointed hereunder shall execute,
acknowledge and deliver to the Company and to the retiring Trustee an
instrument accepting such appointment, and thereupon the resignation or removal
of the retiring Trustee shall become effective and such successor trustee,
without any further act, deed or conveyance, shall become vested with all the
rights, powers, trusts and duties of the retiring Trustee as if originally
named as Trustee hereunder; but, nevertheless, on the written request of the
Company or the successor trustee, upon payment of its charges pursuant to
Section 607 then unpaid, such retiring Trustee shall pay over to the successor
trustee all moneys at the time held by it hereunder and shall execute and
deliver an instrument transferring to such successor trustee all such rights,
powers, duties and obligations. Upon request of any such successor trustee,
the Company shall execute any and all instruments for more fully
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and certainly vesting in and confirming to such successor trustee all such
rights and powers.
No successor trustee with respect to the Securities shall
accept appointment as provided in this Section 611 unless at the time of such
acceptance such successor trustee shall be eligible to act as trustee under the
provisions of Trust Indenture Act Section 310(a) and this Article Six and shall
have a combined capital and surplus of at least $250,000,000 and have a
Corporate Trust Office or an agent selected in accordance with Section 609.
Upon acceptance of appointment by any successor trustee as
provided in this Section 611, the Company shall give notice thereof to the
Holders of the Securities, by mailing such notice to such Holders at their
addresses as they shall appear on the Security Register. If the acceptance of
appointment is substantially contemporaneous with the appointment, then the
notice called for by the preceding sentence may be combined with the notice
called for by Section 610. If the Company fails to give such notice within 10
days after acceptance of appointment by the successor trustee, the successor
trustee shall cause such notice to be given at the expense of the Company.
Section 612. Merger, Conversion, Consolidation or Succession to
Business.
Any corporation into which the Trustee may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which the Trustee shall be a
party, or any corporation succeeding to all or substantially all of the
corporate trust business of the Trustee (including the trust created by this
Indenture) shall be the successor of the Trustee hereunder, provided that such
corporation shall be eligible under Trust Indenture Act Section 310(a) and this
Article Six and shall have a combined capital and surplus of at least
$250,000,000 and have a Corporate Trust Office or an agent selected in
accordance with Section 609, without the execution or filing of any paper or
any further act on the part of any of the parties hereto.
In case at the time such successor to the Trustee shall
succeed to the trusts created by this Indenture any of the Securities shall
have been authenticated but not delivered, any such successor to the Trustee
may adopt the certificate of authentication of any predecessor Trustee and
deliver such Securities so authenticated; and, in case at that time any of the
Securities shall not have been authenticated, any successor to the Trustee may
authenticate such Securities either in the name of any predecessor hereunder or
in the name of the successor trustee; and in all such cases such certificate
shall have the full force which it is anywhere in the Securities or in this
Indenture provided that the certificate of the Trustee shall have; provided
that the right to adopt the certificate of authentication of any predecessor
Trustee or to authenticate Securities in the name of any
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predecessor Trustee shall apply only to its successor or successors by merger,
conversion or consolidation.
Section 613. Preferential Collection of Claims Against Company.
If and when the Trustee shall be or become a creditor of the
Company (or other obligor under the Securities), the Trustee shall be subject
to the provisions of the Trust Indenture Act regarding the collection of claims
against the Company (or any such other obligor). A Trustee who has resigned or
been removed shall be subject to Trust Indenture Act Section 311(a) to the
extent indicated therein.
ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
Section 701. Company to Furnish Trustee Names and Addresses of Holders.
The Company will furnish or cause to be furnished to the
Trustee
(a) semiannually, not more than 10 days after each Regular
Record Date, a list, in such form as the Trustee may reasonably require, of the
names and addresses of the Holders as of such Regular Record Date; and
(b) at such other times as the Trustee may request in
writing, within 30 days after receipt by the Company of any such request, a
list of similar form and content to that in subsection (a) hereof as of a date
not more than 15 days prior to the time such list is furnished;
provided, however, that if and so long as the Trustee shall be the Security
Registrar, no such list need be furnished.
Section 702. Disclosure of Names and Addresses of Holders.
Holders may communicate pursuant to Trust Indenture Act
Section 312(b) with other Holders with respect to their rights under this
Indenture or the Securities, and the Trustee shall comply with Trust Indenture
Act Section 312(b). The Company, the Trustee, the Security Registrar and any
other Person shall have the protection of Trust Indenture Act Section 312(c).
Further, every Holder of Securities, by receiving and holding the same, agrees
with the Company and the Trustee that neither the Company nor the Trustee or
any agent of either of them shall be held accountable by reason of the
disclosure of any information as to the names and addresses of the Holders in
accordance with Trust Indenture Act Section 312, regardless of the source from
which such
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information was derived, and that the Trustee shall not be held accountable by
reason of mailing any material pursuant to a request made under Trust Indenture
Act Section 312.
Section 703. Reports by Trustee.
(a) Within 60 days after May 15 of each year commencing with
the first May 15 after the issuance of Securities, the Trustee, if so required
under the Trust Indenture Act, shall transmit by mail to all Holders, in the
manner and to the extent provided in Trust Indenture Act Section 313(c), a
brief report dated as of such May 15 in accordance with and with respect to the
matters required by Trust Indenture Act Section 313(a). The Trustee shall also
transmit by mail to all Holders, in the manner and to the extent provided in
Trust Indenture Act Section 313(c), a brief report in accordance with and with
respect to the matters required by Trust Indenture Act Section 313(b)(2). (b)A
copy of each report transmitted to Holders pursuant to this Section 703 shall,
at the time of such transmission, be mailed to the Company and filed with each
stock exchange, if any, upon which the Securities are listed and also with the
Commission. The Company will notify the Trustee promptly if the Securities are
listed on any stock exchange.
Section 704. Reports by Company and Guarantors.
The Company, and each Guarantor, as the case may be, shall:
(a) file with the Trustee, within 15 days after the Company
or any Guarantor, as the case may be, is required to file the same with the
Commission, copies of the annual reports and of the information, documents and
other reports (or copies of such portions of any of the foregoing as the
Commission may from time to time by rules and regulations prescribe) which the
Company or any Guarantor may be required to file with the Commission pursuant
to Section 13 or Section 15(d) of the Exchange Act; or, if the Company or any
Guarantor, as the case may be, is not required to file information, documents
or reports pursuant to either of said Sections, then it shall (i) deliver to
the Trustee annual audited financial statements of the Company and its
Subsidiaries, prepared on a Consolidated basis in conformity with GAAP as then
in effect, within 120 days after the end of each fiscal year of the Company,
and (ii) file with the Trustee and, to the extent permitted by law, the
Commission, in accordance with the rules and regulations prescribed from time
to time by the Commission, such of the supplementary and periodic information,
documents and reports which may be required pursuant to Section 13 of the
Exchange Act in respect of a security listed and registered on a national
securities exchange as may be prescribed from time to time in such rules and
regulations;
(b) file with the Trustee and the Commission, in accordance
with the rules and regulations prescribed from time to time by the Commission,
such additional
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information, documents and reports with respect to compliance by the Company or
any Guarantor, as the case may be, with the conditions and covenants of this
Indenture as are required from time to time by such rules and regulations
(including such information, documents and reports referred to in Trust
Indenture Act Section 314(a)); and
(c) within 15 days after the filing thereof with the Trustee,
transmit by mail to all Holders in the manner and to the extent provided in
Trust Indenture Act Section 313(c), such summaries of any information,
documents and reports required to be filed by the Company or any Guarantor, as
the case may be, pursuant to Section 1019 hereunder and subsections (a) and (b)
of this Section as are required by rules and regulations prescribed from time
to time by the Commission.
ARTICLE EIGHT
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
Section 801. Company and Guarantors May Consolidate, etc., Only on
Certain Terms.
(a) The Company will not, in any transaction or series of
related transactions, merge or consolidate with or into, or sell, assign,
convey, transfer, lease or otherwise dispose of all or substantially all of its
properties and assets as an entirety to, any Person or Persons, and the Company
will not permit any of the Restricted Subsidiaries to enter into any such
transaction or series of related transactions if such transaction or series of
related transactions, in the aggregate, would result in a sale, assignment,
conveyance, transfer, lease or other disposition of all or substantially all of
the properties and assets of the Company and the Restricted Subsidiaries
(determined on a Consolidated basis for the Company and the Restricted
Subsidiaries), to any other Person or Persons, unless at the time and after
giving effect thereto (i) either (A)(1) if the transaction or transactions is a
merger or consolidation involving the Company, the Company shall be the
surviving Person of such merger or consolidation or (2) if the transaction or
transactions is a merger or consolidation involving a Restricted Subsidiary,
such Restricted Subsidiary shall be the surviving Person of such merger or
consolidation, or (B)(1) the Person formed by such consolidation or into which
the Company or such Restricted Subsidiary is merged or to which the properties
and assets of the Company or such Restricted Subsidiary, as the case may be,
substantially as an entirety, are transferred (any such surviving Person or
transferee Person being the "Surviving Entity") shall be a corporation
organized and existing under the laws of the United States of America, any
State thereof or the District of Columbia and (2)(x) in the case of a
transaction involving the Company, the Surviving Entity shall expressly assume
by a supplemental indenture executed and delivered to the Trustee, in form
reasonably satisfactory to the Trustee, all the obligations of the Company
under the Securities and this Indenture and, in each case,
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the Securities and this Indenture shall remain in full force and effect, or (y)
in the case of a transaction involving a Restricted Subsidiary that is a
Guarantor, the Surviving Entity shall expressly assume by a supplemental
indenture executed and delivered to the Trustee, in form reasonably
satisfactory to the Trustee, all the obligations of such Restricted Subsidiary
under its Guarantee and this Indenture and, in each case, such Guarantee and
Indenture shall remain in full force and effect; (ii) immediately after giving
effect to such transaction or series of related transactions on a pro forma
basis, no Default shall have occurred and be continuing; and (iii) if the
Company is then subject to Section 1008 hereof, the Company, or the Surviving
Entity, as the case may be, immediately after giving effect to such transaction
or series of transactions on a pro forma basis (including, without limitation,
any Indebtedness incurred or anticipated to be incurred in connection with or
in respect of such transaction or series of transactions), could incur $1.00 of
additional Indebtedness (other than Permitted Indebtedness) under Section 1008
hereof.
(b) No Guarantor (other than a Guarantor whose Guarantee
is to be released in accordance with the terms of its Guarantee and this
Indenture as provided in paragraph (b) of Section 1013 hereof) shall, in any
transaction or series of related transactions, consolidate with or merge with
or into another Person, whether or not such Person is affiliated with such
Guarantor and whether or not such Guarantor is the Surviving Entity, unless (i)
the Surviving Entity (if other than such Guarantor) is a corporation organized
and validly existing under the laws of the United States, any State thereof or
the District of Columbia; (ii) the Surviving Entity (if other than such
Guarantor) expressly assumes by a supplemental indenture all the obligations of
such Guarantor under its Guarantee and the performance and observance of every
covenant of the Indenture and the Registration Rights Agreement to be performed
or observed by such Guarantor and (iii) immediately after giving effect to such
transaction or series of related transactions on a pro forma basis, no Default
shall have occurred and be continuing.
(c) In connection with any consolidation, merger, transfer,
lease or other disposition contemplated hereby, the Company shall deliver, or
cause to be delivered, to the Trustee, in form and substance reasonably
satisfactory to the Trustee, an Officers' Certificate and an Opinion of
Counsel, each stating that such consolidation, merger, transfer, lease or other
disposition and the supplemental indenture in respect thereof comply with the
requirements under this Indenture. In addition, each Guarantor, unless it is
the other party to the transaction or unless its Guarantee will be released and
discharged in accordance with its terms as a result of the transaction, will be
required to confirm, by supplemental indenture, that its Guarantee will
continue to apply to the obligations of the Company or the Surviving Entity
under this Indenture.
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Section 802. Successor Substituted.
Upon any consolidation or merger of the Company or any
Guarantor or any transfer of all or substantially all of the assets of the
Company in accordance with the foregoing, in which the Company or a Guarantor
is not the continuing corporation, the successor corporation formed by such a
consolidation or into which the Company or such Guarantor is merged or to which
such transfer is made, shall succeed to, and be substituted for, and may
exercise every right and power of, the Company under this Indenture and the
Securities, as the case may be, or such Guarantor, as the case may be, under
the Indenture and the Guarantee of such Guarantor, as the case may be, with the
same effect as if such successor corporation had been named as the Company or
Guarantor, as the case may be, therein; and thereafter, except in the case of
(a) a lease or (b) any sale, assignment, conveyance, transfer, lease or other
disposition to a Restricted Subsidiary of the Company or such Guarantor, the
Company or such Guarantor, as the case may be, shall be discharged from all
obligations and covenants under the Indenture and the Notes and/or the
Guarantee of such Guarantor, as the case may be.
ARTICLE NINE
SUPPLEMENTAL INDENTURES
Section 901. Supplemental Indentures and Agreements without Consent of
Holders.
Without the consent of any Holders, the Company and the
Guarantor, and any other obligor upon the Securities, when authorized by a
Board Resolution, and the Trustee, at any time and from time to time, may enter
into one or more indentures supplemental hereto or agreements or other
instruments with respect to the Indenture, the Securities or any Guarantee, in
form and substance satisfactory to the Trustee, for any of the following
purposes:
(a) to evidence the succession of another Person to the
Company, any Guarantor or any other obligor upon the Securities, and the
assumption by any such successor of the covenants of the Company or such
Guarantor or obligor herein and in the Securities and in any Guarantee in
accordance with Article Eight;
(b) to add to the covenants of the Company, any Guarantor or
any other obligor upon the Securities for the benefit of the Holders, or to
surrender any right or power conferred upon the Company or any Guarantor or any
other obligor upon the Securities, as applicable, herein, in the Securities or
in any Guarantee;
(c) to cure any ambiguity, or to correct or supplement any
provision herein or in any supplemental indenture, the Securities or any
Guarantee which may be
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defective or inconsistent with any other provision herein or in the Securities
or any Guarantee or to make any other provisions with respect to matters or
questions arising under this Indenture, the Securities or the Guarantees;
provided that, in each case, such provisions shall not materially adversely
affect the interest of the Holders;
(d) to comply with the requirements of the Commission in
order to effect or maintain the qualification of this Indenture under the Trust
Indenture Act, as contemplated by Section 905 hereof or otherwise;
(e) to add a Guarantor pursuant to the requirements of
Section 1013 hereof or otherwise;
(f) to evidence and provide the acceptance of the appointment
of a successor trustee hereunder; or
(g) to mortgage, pledge, hypothecate or grant a security
interest in favor of the Trustee for the benefit of the Holders as additional
security for the payment and performance of the Company's or any Guarantor's
Indenture Obligations, in any property, or assets, including any of which are
required to be mortgaged, pledged or hypothecated, or in which a security
interest is required to be granted to the Trustee pursuant to this Indenture or
otherwise;
provided, however, that the Company has delivered to the Trustee an Opinion of
Counsel stating that such change, agreement or waiver does not materially
adversely affect the legal rights of any Holder.
Section 902. Supplemental Indentures and Agreements with Consent of
Holders.
Except as permitted by Section 901, with the consent of the
Holders of at least a majority in aggregate principal amount of the Outstanding
Securities, by Act of said Holders delivered to the Company, each Guarantor, if
any, and the Trustee, the Company and each Guarantor (if a party thereto) when
authorized by Board Resolutions, and the Trustee may (i) enter into an
indenture or indentures supplemental hereto or agreements or other instruments
with respect to any Guarantee in form and substance satisfactory to the
Trustee, for the purpose of adding any provisions to or amending, modifying or
changing in any manner or eliminating any of the provisions of this Indenture,
the Securities or any Guarantee (including but not limited to, for the purpose
of modifying in any manner the rights of the Holders under this Indenture, the
Securities or any Guarantee) or (ii) waive compliance with any provision in
this Indenture, the Securities or any Guarantee (other than waivers of past
Defaults covered by Section 513 and waivers of covenants which are covered by
Section 1020); provided, however, that no such supplemental indenture,
agreement or instrument shall, without the consent of the Holder of each
Outstanding Security affected thereby:
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(a) reduce the principal of or change the Stated Maturity of
any Security, or alter the provisions with respect to the redemption or
repurchase of the Notes in any manner adverse to the Holders of the Securities;
(b) reduce the rate of or change the time for payment of
interest on any such Security;
(c) change the place or currency of payment of principal of
(or premium) or interest on any such Security;
(d) modify any provisions of this Indenture relating to the
waiver of past defaults (including Sections 513 and 1020) (other than to add
sections of this Indenture or the Securities subject thereto) or the right of
the Holders to institute suit for the enforcement of any payment on or with
respect to any such Security or Guarantee in respect thereof or the
modification and amendment provisions of this Indenture and the Securities
(other than to add sections of this Indenture or the Securities which may not
be amended, supplemented or waived without the consent of each Holder therein
affected);
(e) modify any of the provisions of this Section 902 or
reduce the percentage of the principal amount of outstanding Securities
necessary for amendment to or waiver of compliance with any provision of this
Indenture or the Securities or for waiver of any Default in respect thereof;
(f) waive a default in the payment of principal of, interest
on, or redemption payment with respect to, the Securities (except a rescission
of acceleration of the Securities by the Holders thereof as provided in this
Indenture and a waiver of the payment default that resulted from such
acceleration);
(g) modify the ranking or priority of any Security or the
Guarantee in respect thereof of any Guarantor in any manner adverse to the
Holders of the Securities;
(h) modify the provisions of Sections 1011 or 1014 or modify
any of the provisions or definitions with respect thereto in a manner
materially adverse to the Holders of Notes affected thereby otherwise than in
accordance with this Indenture; or
(i) release any Guarantor from any of its obligations under
its Guarantee or this Indenture otherwise than in accordance with this
Indenture.
Upon the written request of the Company and each Guarantor, if
any, accompanied by a copy of Board Resolutions authorizing the execution of
any such supplemental indenture or Guarantee, and upon the filing with the
Trustee of evidence of the consent of Holders as aforesaid, the Trustee shall
join with the Company and each Guarantor in the execution of such supplemental
indenture or Guarantee.
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It shall not be necessary for any Act of Holders under this
Section 902 to approve the particular form of any proposed supplemental
indenture or Guarantee or agreement or instrument relating to any Guarantee,
but it shall be sufficient if such Act shall approve the substance thereof.
Section 903. Execution of Supplemental Indentures and Agreements.
In executing, or accepting the additional trusts created by,
any supplemental indenture, agreement, instrument or waiver permitted by this
Article Nine or the modifications thereby of the trusts created by this
Indenture, the Trustee shall be entitled to receive, and (subject to Trust
Indenture Act Sections 315(a) through 315(d) and Section 602 hereof) shall be
fully protected in relying upon, an Opinion of Counsel and an Officers'
Certificate stating that the execution of such supplemental indenture,
agreement or instrument (a) is authorized or permitted by this Indenture and
(b) does not violate the provisions of any agreement or instrument evidencing
any other Indebtedness of the Company, any Guarantor or any other Restricted
Subsidiary. The Trustee may, but shall not be obligated to, enter into any
such supplemental indenture, agreement or instrument which affects the
Trustee's own rights, duties or immunities under this Indenture, any Guarantee
or otherwise.
Section 904. Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this
Article, this Indenture shall be modified in accordance therewith, and such
supplemental indenture shall form a part of this Indenture for all purposes;
and every Holder of Securities theretofore or thereafter authenticated and
delivered hereunder shall be bound thereby.
Section 905. Conformity with Trust Indenture Act.
Every supplemental indenture executed pursuant to this Article
Nine shall conform to the requirements of the Trust Indenture Act as then in
effect.
Section 906. Reference in Securities to Supplemental Indentures.
Securities authenticated and delivered after the execution of
any supplemental indenture pursuant to this Article Nine may, and shall if
required by the Trustee, bear a notation in form approved by the Trustee as to
any matter provided for in such supplemental indenture. If the Company shall
so determine, new Securities so modified as to conform, in the opinion of the
Trustee and the Board of Directors, to any such supplemental indenture may be
prepared and executed by the Company and each Guarantor and authenticated and
delivered by the Trustee in exchange for Outstanding Securities.
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Section 907. Notice of Supplemental Indentures.
Promptly after the execution by the Company, any Guarantor and
the Trustee of any supplemental indenture pursuant to the provisions of Section
902, the Company shall give notice thereof to the Holders of each Outstanding
Security affected, in the manner provided for in Section 106, setting forth in
general terms the substance of such supplemental indenture.
Section 908. Revocation and Effects of Consents.
Until an amendment or waiver becomes effective, a consent to
it by a Holder of a Security is a continuing consent by the Holder and every
subsequent Holder of a Security or portion of a Security that evidences the
same Indebtedness as the consenting Holder's Security, even if a notation of
the consent is not made on any Security. However, any such Holder, or
subsequent Holder, may revoke the consent as to his Security or portion of a
Security if the Trustee receives the notice of revocation before the date the
amendment or waiver becomes effective. An amendment or waiver shall become
effective in accordance with its terms and thereafter bind every Holder.
ARTICLE TEN
COVENANTS
Section 1001. Payment of Principal, Premium and Interest.
The Company shall duly and punctually pay the principal of,
premium, if any, and interest on the Securities in accordance with the terms of
the Securities and this Indenture.
Section 1002. Maintenance of Office or Agency.
The Company shall maintain an office or agency where
Securities may be presented or surrendered for payment. The Company also will
maintain in The City of New York an office or agency where Securities may be
surrendered for registration of transfer, redemption or exchange and where
notices and demands to or upon the Company in respect of the Securities and
this Indenture may be served. The Company will give prompt written notice to
the Trustee of the location and any change in the location of any such offices
or agencies. If at any time the Company shall fail to maintain any such
required offices or agencies or shall fail to furnish the Trustee with the
address thereof, such presentations, surrenders, notices and demands may be
made or served at the office of the agent of the Trustee and the Company hereby
appoints the Trustee such agent as its agent to receive all such presentations,
surrenders, notices and demands.
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The Company may from time to time designate one or more other
offices or agencies (in or outside of The City of New York) where the
Securities may be presented or surrendered for any or all such purposes, and
may from time to time rescind such designation. The Company will give prompt
written notice to the Trustee of any such designation or rescission and any
change in the location of any such office or agency.
The Trustee shall initially act as Paying Agent for the
Securities.
Section 1003. Money for Security Payments to Be Held in Trust.
If the Company or any of its Affiliates shall at any time act
as Paying Agent, it will, on or before each due date of the principal of,
premium, if any, or interest on any of the Securities, segregate and hold in
trust for the benefit of the Holders entitled thereto a sum sufficient to pay
the principal, premium, if any, or interest so becoming due until such sums
shall be paid to such Persons or otherwise disposed of as herein provided, and
will promptly notify the Trustee of its action or failure so to act.
If the Company or any of its Affiliates is not acting as
Paying Agent, the Company will, on or before each due date of the principal of,
premium, if any, or interest on any of the Securities, deposit with a Paying
Agent a sum in same day funds sufficient to pay the principal, premium, if any,
or interest so becoming due, such sum to be held in trust for the benefit of
the Persons entitled to such principal, premium or interest, and (unless such
Paying Agent is the Trustee) the Company will promptly notify the Trustee of
such action or any failure so to act.
If the Company is not acting as Paying Agent, the Company will
cause each Paying Agent other than the Trustee to execute and deliver to the
Trustee an instrument in which such Paying Agent shall agree with the Trustee,
subject to the provisions of this Section, that such Paying Agent will:
(a) hold all sums held by it for the payment of the principal
of, premium, if any, or interest on the Securities in trust for the benefit of
the Persons entitled thereto until such sums shall be paid to such Persons or
otherwise disposed of as herein provided;
(b) give the Trustee notice of any Default by the Company or
any Guarantor (or any other obligor upon the Securities) in the making of any
payment of principal, premium, if any, or interest on the Securities;
(c) at any time during the continuance of any such Default,
upon the written request of the Trustee, forthwith pay to the Trustee all sums
so held in trust by such Paying Agent; and
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(d) acknowledge, accept and agree to comply in all aspects
with the provisions of this Indenture relating to the duties, rights and
liabilities of such Paying Agent.
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Company Order direct any Paying Agent to pay, to the Trustee all sums held
in trust by the Company or such Paying Agent, such sums to be held by the
Trustee upon the same trusts as those upon which such sums were held by the
Company or such Paying Agent; and, upon such payment by any Paying Agent to the
Trustee, such Paying Agent shall be released from all further liability with
respect to such money.
Any money deposited with the Trustee or any Paying Agent, or
then held by the Company, in trust for the payment of the principal of,
premium, if any, or interest on any Security and remaining unclaimed for two
years after such principal and premium, if any, or interest has become due and
payable shall promptly be paid to the Company on Company Request, or (if then
held by the Company) shall be discharged from such trust; and the Holder of
such Security shall thereafter, as an unsecured general creditor, look only to
the Company for payment thereof, and all liability of the Trustee or such
Paying Agent with respect to such trust money, and all liability of the Company
as trustee thereof, shall thereupon cease; provided, however, that the Trustee
or such Paying Agent, before being required to make any such repayment, may at
the expense of the Company cause to be published once, in the New York Times
and The Wall Street Journal (national edition), and mail to each such Holder,
notice that such money remains unclaimed and that, after a date specified
therein, which shall not be less than 30 days from the date of such
notification, publication and mailing, any unclaimed balance of such money then
remaining will promptly be repaid to the Company.
Section 1004. Corporate Existence.
Subject to Article Eight, the Company shall do or cause to be
done all things necessary to preserve and keep in full force and effect the
corporate existence and related rights and franchises (charter and statutory)
of the Company and each Restricted Subsidiary; provided, however, that the
Company shall not be required to preserve any such right or franchise or the
corporate existence of any such Restricted Subsidiary if the Board of Directors
of the Company shall determine that the preservation thereof is no longer
necessary or desirable in the conduct of the business of the Company and its
Restricted Subsidiaries as a whole and that the loss thereof would not
reasonably be expected to have a material adverse effect on the ability of the
Company to perform its obligations hereunder; and provided, further, however,
that the foregoing shall not prohibit a sale, transfer or conveyance of a
Restricted Subsidiary or any of its assets in compliance with the terms of this
Indenture.
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Section 1005. Payment of Taxes and Other Claims.
The Company shall pay or discharge or cause to be paid or
discharged, on or before the date the same shall become due and payable, (a)
all taxes, assessments and governmental charges levied or imposed upon the
Company or any of its Restricted Subsidiaries shown to be due on any return of
the Company or any of its Restricted Subsidiaries or otherwise assessed or upon
the income, profits or property of the Company or any of its Restricted
Subsidiaries if failure to pay or discharge the same could reasonably be
expected to have a material adverse effect on the ability of the Company or any
Guarantor to perform any of their obligations hereunder and (b) all lawful
claims for labor, materials and supplies, which, if unpaid, would by law become
a Lien upon the property of the Company or any of its Restricted Subsidiaries,
except for any Lien permitted to be incurred under Section 1012, if failure to
pay or discharge the same could reasonably be expected to have a material
adverse effect on the ability of the Company or any Guarantor to perform any of
their obligations hereunder; provided, however, that the Company shall not be
required to pay or discharge or cause to be paid or discharged any such tax,
assessment, charge or claim whose amount, applicability or validity is being
contested in good faith by appropriate proceedings properly instituted and
diligently conducted and in respect of which appropriate reserves (in the good
faith judgment of management of the Company) are being maintained in accordance
with GAAP.
Section 1006. Maintenance of Properties.
The Company shall cause all material properties owned by the
Company and any of its Restricted Subsidiaries or used or held for use in the
conduct of its business or the business of any of its Restricted Subsidiaries
to be maintained and kept in good condition, repair and working order (ordinary
wear and tear excepted) and supplied with all necessary equipment and will
cause to be made all necessary repairs, renewals, replacements, betterments and
improvements thereof, all as in the reasonable judgment of the Company may be
consistent with sound business practice and necessary so that the business
carried on in connection therewith may be properly conducted at all times;
provided, however, that nothing in this Section shall prevent the Company from
discontinuing the maintenance of any of such properties if such discontinuance
is, in the reasonable judgment of the Company, desirable in the conduct of its
business or the business of any of its Restricted Subsidiaries and not
reasonably expected to have a material adverse effect on the ability of the
Company to perform its obligations hereunder.
Section 1007. Insurance.
The Company shall at all times keep all of its and its
Restricted Subsidiaries' properties which are of an insurable nature insured
with insurers, believed
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by the Company in good faith to be financially sound and responsible, against
loss or damage to the extent that property of similar character is usually so
insured by corporations similarly situated and owning like properties in the
same general geographic areas in which the Company and its Restricted
Subsidiaries operate, except where the failure to do so could not reasonably be
expected to have a material adverse effect on the condition (financial or
otherwise), earnings, business affairs or prospects of the Company and its
Restricted Subsidiaries, taken as a whole.
Section 1008. Limitation on Indebtedness.
(a) The Company will not, and will not cause or permit any of
the Restricted Subsidiaries to, directly or indirectly, create, incur, assume,
issue, guarantee or in any manner become liable for or with respect to the
payment of, contingently or otherwise (in each case, to "incur"), any
Indebtedness (including any Acquired Indebtedness but excluding any Permitted
Indebtedness); provided, however, that (i) the Company and any Guarantor may
incur Indebtedness (including Acquired Indebtedness) and (ii) any Restricted
Subsidiary may incur Acquired Indebtedness, if, in either case, immediately
after giving pro forma effect thereto, the Consolidated Fixed Charge Coverage
Ratio of the Company is at least equal to 2.00:1.
(b) Notwithstanding the foregoing, the Company and, to the
extent specifically set forth below, the Restricted Subsidiaries may incur each
and all of the following (collectively, "Permitted Indebtedness"):
(i) Indebtedness of the Company and Zale Delaware,
Inc. under the Credit Facility in an aggregate principal
amount at any one time outstanding not to exceed $325,000,000;
(ii) Indebtedness of the Company or any Guarantor
under this Indenture, the Securities (including any Additional
Securities) and the Guarantees;
(iii) Indebtedness of the Company or any Restricted
Subsidiary not otherwise referred to in this paragraph (b)
that is outstanding on the Issue Date and is set forth on a
schedule hereto;
(iv) Indebtedness of the Company or any Restricted
Subsidiary in respect of performance bonds, bankers'
acceptances, trade letters of credit of the Company or any
Restricted Subsidiary and surety bonds provided by the Company
or any Restricted Subsidiary in the ordinary course of
business;
(v) Indebtedness of the Company owing to a Restricted
Subsidiary; provided that any Indebtedness for borrowed money
of the Company owing to a Restricted Subsidiary is made
pursuant to an intercompany note in the form of Exhibit A
attached hereto and is subordinated in accordance with
provisions set
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forth in the intercompany note attached hereto; provided,
further, that any disposition, pledge or transfer of any such
Indebtedness to a Person (other than a disposition, pledge or
transfer to a Restricted Subsidiary) shall be deemed to be an
incurrence of such Indebtedness by the Company not permitted
by this clause (v);
(vi) Indebtedness of a Wholly-Owned Restricted
Subsidiary or a Guarantor owing to the Company or another
Wholly-Owned Restricted Subsidiary; provided that any such
Indebtedness for borrowed money is made pursuant to an
intercompany note in the form of Exhibit A attached hereto;
provided, further, that (a) any disposition, pledge or
transfer of any such Indebtedness to a Person (other than the
Company or a Wholly- Owned Restricted Subsidiary) shall be
deemed to be an incurrence of such Indebtedness by the obligor
not permitted by this clause (vi), and (b) any transaction
pursuant to which any Wholly-Owned Restricted Subsidiary or
Guarantor, as the case may be, which has Indebtedness owing to
the Company or any other Wholly-Owned Restricted Subsidiary,
ceases to be a Wholly-Owned Restricted Subsidiary or
Guarantor, as the case may be, shall be deemed to be the
incurrence of Indebtedness by such Wholly-Owned Restricted
Subsidiary that is not permitted by this clause (vi);
(vii) Any guarantees of Indebtedness by a Restricted
Subsidiary incurred in compliance with Section 1013 hereof;
(viii) Interest Rate Protection Obligations of the
Company or any Restricted Subsidiary covering Indebtedness of
the Company or any Restricted Subsidiary (which Indebtedness
is otherwise permitted to be incurred under this covenant) to
the extent the notional principal amount of such Interest Rate
Protection Obligations does not exceed the principal amount of
the Indebtedness to which such Interest Rate Protection
Obligations relate;
(ix) Indebtedness of the Company or any Restricted
Subsidiary under any Commodity Price Protection Agreements
which do not increase the amount of obligations of the Company
or any Restricted Subsidiary outstanding other than as a
result of fluctuations in commodity prices or by reason of
fees, indemnities and compensation payable thereunder;
(x) Indebtedness of the Company or any Restricted
Subsidiary under Currency Agreements relating to (a)
Indebtedness of the Company or any Restricted Subsidiary
and/or (b) obligations to purchase or sell assets or
properties, in each case, incurred in the ordinary course of
business of the Company or any Restricted Subsidiary;
provided, however, that such Currency Agreements do not
increase the Indebtedness or other obligations of the Company
or any Restricted Subsidiary outstanding other than as a
result of fluctuations in foreign currency
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exchange rates or by reason of fees, indemnities and
compensation payable thereunder;
(xi) Purchase Money Indebtedness (other than
Indebtedness incurred in connection with an Asset Acquisition)
and Capitalized Lease Obligations of the Company or any
Restricted Subsidiary, together in an aggregate amount not
exceeding $25,000,000 outstanding at any time;
(xii) (a) Indebtedness of the Company or any Guarantor
to the extent the proceeds thereof are used to Refinance
Indebtedness of the Company or any Guarantor or any
Restricted Subsidiary referred to under clause (ii) or (iii)
above and (b) Indebtedness of any Restricted Subsidiary used
to Refinance Indebtedness of such Restricted Subsidiary
referred to under clause (iii) above; provided, however, that,
in the case of either clause (a) or (b), the principal amount
of Indebtedness incurred pursuant to this clause (xii) (or, if
such Indebtedness provides for an amount less than the
principal amount thereof to be due and payable upon a
declaration of acceleration of the maturity thereof, the
original issue price of such Indebtedness plus any accreted
value attributable thereto since the original issuance of such
Indebtedness) shall not exceed the sum of the principal amount
of Indebtedness so Refinanced (or, if such Indebtedness
provides for an amount less than the principal amount thereof
to be due and payable upon a declaration of acceleration of
the maturity thereof, the original issue price of such
Indebtedness, plus any accreted value attributable thereto
since the original issuance of such Indebtedness), plus the
amount of any premium required to be paid in connection with
such Refinancing pursuant to the terms of such Indebtedness or
the amount of any premium reasonably determined by the Company
or a Restricted Subsidiary, as applicable, as necessary to
accomplish such Refinancing by means of a tender offer or
privately negotiated purchase, plus the amount of expenses in
connection with such Refinancing; and
(xiii) in addition to the items referred to in clauses
(i) through (xii) above, additional Indebtedness of the
Company and the Restricted Subsidiaries not to exceed an
aggregate principal amount at any time outstanding of
$25,000,000.
For purposes of determining compliance with this Section 1008,
in the event that an item of Indebtedness meets the criteria of more than one
of the types of Indebtedness permitted by this covenant, the Company in its
sole discretion shall classify such item of Indebtedness and only be required
to include the amount of such Indebtedness as one of such types.
After the Securities have been assigned an Investment Grade
Rating by both Rating Agencies, and notwithstanding that the Securities may
later cease to have an Investment Grade Rating, the Company and the Restricted
Subsidiaries will not be
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subject to the provisions of this Section 1008; provided, that no Default has
occurred and is continuing at the time the Securities have been assigned such
rating.
Section 1009. Limitation on Restricted Payments.
(a) The Company will not, and will not cause or permit
any of the Restricted Subsidiaries to, directly or indirectly:
(i) declare or pay any dividend or make any other distribution
or payment on or in respect of Capital Stock of the Company or any
Restricted Subsidiary or any payment made to the direct or indirect
holders (in their capacities as such) of Capital Stock of the Company or
any Restricted Subsidiary (other than dividends or distributions made to
the Company or a Restricted Subsidiary and dividends and distributions
payable solely in Capital Stock of the Company (other than Redeemable
Capital Stock) or in options, warrants or rights to purchase Capital Stock
of the Company (other than Redeemable Capital Stock) or dividends and
distributions made by a Restricted Subsidiary on a pro rata basis to all
stockholders of such Restricted Subsidiary); or
(ii) purchase, redeem, defease or otherwise acquire or retire
for value any Capital Stock of the Company or any Affiliate of the Company
(other than any such Capital Stock owned by the Company or a Restricted
Subsidiary that is a Guarantor); or
(iii) make any principal payment on, or purchase, defease,
repurchase, redeem or otherwise acquire or retire for value, prior to any
scheduled maturity, scheduled repayment, scheduled sinking fund payment or
other Stated Maturity, any Subordinated Indebtedness (other than any
Subordinated Indebtedness owed to and held by the Company or a Restricted
Subsidiary that is a Guarantor); or
(iv) make any Investment (other than a Permitted Investment)
(such payments or Investments (other than an exception thereto) described in
the preceding clauses (i), (ii), (iii) and (iv) are collectively referred to as
"Restricted Payments"), unless, at the time of and after giving effect to the
proposed Restricted Payment (the amount of any such Restricted Payment, if
other than in cash, shall be the Fair Market Value of the asset(s) proposed to
be transferred by the Company or such Restricted Subsidiary, as the case may
be, pursuant to such Restricted Payment as determined by the Board of Directors
of the Company, whose determination shall be conclusive and evidenced by a
Board Resolution):
(A) no Default or Event of Default shall have occurred and be
continuing and such Restricted Payment shall not be an event which is, or
after notice or lapse
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of time or both, would be, an "event of default" under the terms of any
Indebtedness of the Company or its Restricted Subsidiaries;
(B) the aggregate amount of all Restricted Payments declared
or made from and after the Issue Date and all Designation Amounts would
not exceed the sum of (1) 50% of cumulative Consolidated Net Income of
the Company during the period (treated as one accounting period)
beginning on the first day of the fiscal quarter beginning after the
Issue Date and ending on the last day of the fiscal quarter of the
Company immediately preceding the date of such proposed Restricted
Payment for which consolidated financial information of the Company is
available (or, if such cumulative Consolidated Net Income of the
Company for such period shall be a loss, minus 100% of such loss), plus
(2) the aggregate Net Cash Proceeds received by the Company either (x)
as capital contributions to the Company increasing its common equity
after the Issue Date or (y) from the issuance or sale of Capital Stock
(excluding Redeemable Capital Stock but including Capital Stock issued
upon the conversion of convertible Indebtedness in exchange for
outstanding Indebtedness of the Company issued after the Issue Date or
from the exercise of options, warrants or rights to purchase Capital
Stock (other than Redeemable Capital Stock)) of the Company to any
Person (other than to a Subsidiary of the Company) after the Issue Date
(excluding the Net Cash Proceeds from any issuance and sale of Capital
Stock financed, directly or indirectly, using funds borrowed from the
Company or any Restricted Subsidiary until and to the extent such
borrowing is repaid), plus (3) without duplication of any amounts
included in clause (1) above, in the case of the disposition or
repayment of any Investment constituting a Restricted Payment made
after the Issue Date, an amount (to the extent not included in
Consolidated Net Income) equal to the lesser of the return of capital
with respect to such Investment and the initial amount of such
Investment which was treated as a Restricted Payment, in either case,
less the cost of the disposition of such Investment and net of taxes,
plus (4) without duplication of any amounts included in clause (1)
above so long as the Designation thereof was treated as a Restricted
Payment made after the Issue Date, with respect to any Unrestricted
Subsidiary that has been redesignated as a Restricted Subsidiary after
the Issue Date in accordance with Section 1017 hereof, the Fair Market
Value of the Company's interest in such Restricted Subsidiary;
provided, however, that such amount shall not in any case exceed the
Designation Amount with respect to such Restricted Subsidiary at the
time of its Designation; and
(C) the Company could incur $1.00 of additional Indebtedness
(other than Permitted Indebtedness) under Section 1008 hereof.
(b) None of the foregoing provisions of this covenant will
prohibit or restrict (i) the payment of any dividend within 60 days after the
date of its declaration, if at the date of declaration such payment would be
permitted by the provisions of this
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Indenture; (ii) so long as no Default shall have occurred and be continuing or
would arise therefrom, the redemption, repurchase or other acquisition or
retirement of any shares of any class of Capital Stock of the Company in
exchange for, or out of the Net Cash Proceeds of, a substantially concurrent
issue and sale of other shares of Capital Stock (other than Redeemable Capital
Stock) of the Company to any Person (other than to a Subsidiary); provided,
however, that any such Net Cash Proceeds and the value of any Capital Stock
issued in exchange for such retired Capital Stock are excluded from clause
(B)(2) of the preceding paragraph; (iii) so long as no Default shall have
occurred and be continuing or would arise therefrom, any redemption, repurchase
or other acquisition or retirement of Subordinated Indebtedness made by
exchange for, or out of the Net Cash Proceeds of, a substantially concurrent
issue and sale of (A) Capital Stock (other than Redeemable Capital Stock) of
the Company to any Person (other than to a Subsidiary); provided, however, that
any such Net Cash Proceeds and the value of any Capital Stock issued in
exchange for Subordinated Indebtedness are excluded from clause (B)(2) of the
preceding paragraph or (B) Indebtedness of the Company or any Guarantor so long
as such Indebtedness (1) is subordinated to the Securities or the Guarantee of
such Guarantor, as the case may be, at least to the same extent as the
Subordinated Indebtedness so purchased, exchanged, redeemed, repurchased,
acquired or retired and (2) does not have a Stated Maturity earlier than the
Stated Maturity for the Subordinated Indebtedness being redeemed, repurchased
or otherwise acquired or retired; (iv) so long as no Default shall have
occurred and be continuing, any purchase, redemption or other acquisition or
retirement for value of any Capital Stock (including any option, warrant or
right to purchase Capital Stock) (other than Redeemable Capital Stock) of the
Company for purposes of making contributions of such Capital Stock of the
Company to employees or directors of the Company or its Subsidiaries pursuant
to any employee benefit, stock purchase or similar plan; (v) a Restricted
Payment to pay for the repurchase, retirement or other acquisition or
retirement for value of Capital Stock (or warrants or options convertible into
or exchangeable for such Capital Stock) of the Company held by any future,
present or former employee, director or consultant of the Company or any
Subsidiary pursuant to any management equity plan or stock option plan or any
other management or employee benefit plan or agreement; provided, however, that
the aggregate amount of Restricted Payments made pursuant to this clause (v)
does not exceed in any calendar year $5,000,000 (with the unused amount in any
calendar year being carried over to succeeding calendar years subject to a
maximum of $10,000,000 in any calendar year); (vi) payments or distributions to
dissenting stockholders pursuant to applicable law, pursuant to or in
connection with an Asset Sale or Asset Acquisition that complies with the
provisions of this Indenture; (vii) repurchases of Capital Stock (or warrants
or options convertible into or exchangeable for such Capital Stock) deemed to
occur upon exercise of stock options to the extent that shares of such Capital
Stock (or warrants or options convertible into or exchangeable for such Capital
Stock) represent a portion of the exercise price of such options; and (viii)
any declaration of a dividend in connection with implementation of any
stockholders' right plan, or the issuance of rights,
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stock or other property under any such plan, or the redemption, repurchase or
other acquisition of any such rights pursuant thereto. In computing the amount
of Restricted Payments previously made for purposes of clause (B) of the
preceding paragraph, Restricted Payments (to the extent not otherwise included
therein) under the immediately preceding clauses (i), (iv), (v), (vi) and (vii)
shall be included.
After the Securities have been assigned an Investment Grade
Rating by both Rating Agencies, and notwithstanding that the Securities may
later cease to have an Investment Grade Rating, the Company and the Restricted
Subsidiaries will not be subject to the provisions of this Section 1009;
provided that no Default has occurred and is continuing at the time the
Securities have been assigned such rating.
Section 1010. Limitation on Transactions with Affiliates.
The Company will not, and will not cause or permit any of the
Restricted Subsidiaries to, directly or indirectly, conduct any business or
enter into any transaction or series of related transactions with, or for the
benefit of, any of their respective Affiliates or any officer or director of
the Company or any Subsidiary (each, an "Affiliate Transaction"), unless (i)
such Affiliate Transaction is entered into in good faith and on terms that are
no less favorable to the Company or the Restricted Subsidiary, as the case may
be, than those which could have been obtained in a comparable transaction at
such time from Persons who do not have such a relationship and (ii) with
respect to any Affiliate Transaction or series of Affiliate Transactions
involving aggregate payments or value equal to or greater than $5,000,000, the
Company shall have delivered an Officer's Certificate to the Trustee certifying
that such Affiliate Transaction or series of related Affiliate Transactions
complies with the preceding clause (i) and, with respect to any Affiliate
Transaction or series of Affiliate Transactions involving aggregate payments or
value equal to or greater than $10,000,000, further certifying that (a) such
Affiliate Transaction or series of Affiliate Transactions has been approved by
a majority of the Board of Directors of the Company, including a majority of
the Disinterested Directors of the Board of Directors of the Company or (b) the
Company has received a written opinion of an investment banking firm of
national standing or other recognized independent expert with experience
appraising the terms and conditions of the type of transactions or series of
related transactions for which an opinion is required stating that the
transaction or series of related transactions is fair to the Company or such
Restricted Subsidiary from a financial point of view.
Notwithstanding the foregoing, the restrictions set forth in
this covenant shall not apply to (i) transactions with or among the Company and
its Wholly-Owned Restricted Subsidiaries; (ii) customary directors' fees,
indemnification and similar arrangements, consulting fees, employee salaries,
bonuses or employment agreements, compensation or employee benefit arrangements
and incentive arrangements with any officer, director or employee of the
Company or any Restricted Subsidiary entered into in
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the ordinary course of business (including customary benefits thereunder) and
payments under any indemnification arrangements permitted by applicable law;
(iii) any dividends made in compliance with Section 1009 hereof; (iv) loans and
advances to officers, directors, employees and consultants of the Company or
any Restricted Subsidiary for travel, entertainment, moving and other
relocation expenses, in each case made in the ordinary course of business; (v)
transactions with or by any Accounts Receivable Subsidiary made in the ordinary
course of business and transactions related to any proprietary credit card
issued by or for the benefit of the Company or an Affiliate of the Company in
the ordinary course of business; (vi) any agreement or Affiliate Transactions
as in effect on the Issue Date and any transaction contemplated thereby; and
(vii) tax sharing agreements between the Company and any of its Subsidiaries
providing for the payment by such Subsidiary of an amount equal to the
hypothetical United States tax liability of the Subsidiary as if such
Subsidiary had filed its own U.S. federal tax return for any given taxable
year.
After the Securities have been assigned an Investment Grade
Rating by both Rating Agencies, and notwithstanding that the Securities may
later cease to have an Investment Grade Rating, the Company and the Restricted
Subsidiaries will not be subject to the provisions of this Section 1010;
provided that no Default has occurred and is continuing at the time the
Securities have been assigned such rating.
Section 1011. Disposition of Proceeds of Asset Sales.
(a) The Company will not, and will not cause or permit any
Restricted Subsidiary to, directly or indirectly, make any Asset Sale, unless
(i) the Company or such Restricted Subsidiary, as the case may be, receives
consideration at the time of such Asset Sale at least equal to the Fair Market
Value of the assets sold or otherwise disposed of and (ii) at least 75% of such
consideration consists of cash or Cash Equivalents. The amount of any (i)
Indebtedness of a Restricted Subsidiary that is not a Guarantor that is
actually assumed by the transferee in such Asset Sale and from which the
Company and the Restricted Subsidiaries are fully released shall be deemed to
be cash for purposes of determining the percentage of cash consideration
received by the Company or the Restricted Subsidiaries (and excluding any
liabilities that are incurred in connection with or in anticipation of such
Asset Sale) and (ii) notes or other similar obligations received by the Company
or any Restricted Subsidiary from such transferee that are immediately
converted, sold or exchanged (or are converted, sold or exchanged within thirty
days of the related Asset Sale) by the Company or the Restricted Subsidiaries
into cash shall be deemed to be cash, in an amount equal to the Net Cash
Proceeds realized upon such conversion, sale or exchange for purposes of
determining the percentage of cash consideration received by the Company or the
Restricted Subsidiaries.
(b) If all or a portion of the Net Cash Proceeds of any Asset
Sale are not required to be applied to repay permanently any Senior
Indebtedness (other than the
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Securities), Senior Guarantor Indebtedness (other than the Guarantees) or
Indebtedness of a Wholly-Owned Restricted Subsidiary outstanding as required by
the terms thereof, or the Company determines not to apply such Net Cash
Proceeds to the permanent repayment of the Senior Indebtedness (other than the
Securities), Senior Guarantor Indebtedness (other than the Guarantees) or
Indebtedness of a Wholly-Owned Restricted Subsidiary, or if no Senior
Indebtedness (other than the Securities), Senior Guarantor Indebtedness (other
than the Guarantees) or Indebtedness of a Wholly-Owned Restricted Subsidiary is
outstanding, then the Company or a Restricted Subsidiary may, within 365 days
of such Asset Sale, invest the Net Cash Proceeds in capital expenditures,
properties and other assets that replace the properties and assets that were
the subject of the Asset Sale or in properties and assets that will be used in
the business of the Company or its Restricted Subsidiaries existing on the date
hereof or in businesses reasonably related thereto.
(c) To the extent all or part of the Net Cash Proceeds of any
Asset Sale are not applied within 365 days of such Asset Sale as described in
the immediately preceding paragraph (such Net Cash Proceeds, the "Unutilized
Net Cash Proceeds"), the Company will apply the Unutilized Net Cash Proceeds to
the repayment of the Securities and any other Pari Passu Indebtedness
outstanding with similar provisions requiring the Company to make an offer to
purchase such Indebtedness as follows: (A) the Company shall, within 20 days
after such 365th day, make an offer to purchase (the "Asset Sale Offer") all
outstanding Securities in the maximum principal amount (expressed as a multiple
of $1,000) of Securities that may be purchased out of an amount (the "Security
Amount") equal to the product of such Unutilized Net Cash Proceeds multiplied
by a fraction, the numerator of which is the outstanding principal amount of
the Securities, and the denominator of which is the sum of the outstanding
principal amount of the Securities and such Pari Passu Indebtedness (subject to
proration in the event such amount is less than the aggregate Offered Price (as
defined herein) of all Securities tendered) and (B) to the extent required by
such Pari Passu Indebtedness to permanently reduce the principal amount of such
Pari Passu Indebtedness, the Company will make an offer to purchase or
otherwise repurchase or redeem Pari Passu Indebtedness (a "Pari Passu Offer")
in an amount (the "Pari Passu Debt Amount") equal to the excess of the
Unutilized Net Cash Proceeds over the Security Amount; provided that in no
event will the Company be required to make a Pari Passu Offer in a Pari Passu
Debt Amount exceeding the principal amount of such Pari Passu Indebtedness plus
the amount of any premium required to be paid to repurchase such Pari Passu
Indebtedness. The offer price (the "Offered Price") for the Securities will be
payable in cash in an amount equal to 100% of the principal amount thereof,
plus accrued and unpaid interest thereon, if any, to the date of purchase, in
accordance with the procedures set forth herein. Notwithstanding the above,
the Asset Sale Offer may be deferred until there are aggregate Unutilized Net
Cash Proceeds equal to or in excess of $10,000,000, at which time the entire
amount of such Unutilized Net
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Cash Proceeds, and not just the amount in excess of $10,000,000, shall be
applied as required pursuant to this paragraph.
(d) With respect to any Asset Sale Offer effected pursuant to
this covenant, among the Securities, to the extent the aggregate principal
amount of Securities and Pari Passu Indebtedness tendered pursuant to such
Asset Sale Offer exceeds the Unutilized Net Cash Proceeds to be applied to the
repurchase, such Securities shall be purchased pro rata based on the aggregate
principal amount of such Securities and Pari Passu Indebtedness tendered by
each holder. To the extent the aggregate Offered Price of the Securities
tendered pursuant to the Asset Sale Offer is less than the Security Amount
relating thereto or the aggregate principal amount of Pari Passu Indebtedness
that is purchased in a Pari Passu Offer is less than the Pari Passu Debt
Amount, the Company may retain and utilize any portion of the Unutilized Net
Cash Proceeds not applied to repurchase the Securities and Pari Passu
Indebtedness for any purpose consistent with the other terms of this Indenture.
Upon the completion of the purchase of all the Securities tendered pursuant to
an Asset Sale Offer and the completion of a Pari Passu Offer, the amount of
Unutilized Net Cash Proceeds, if any, shall be reset at zero.
(e) If the Company becomes obligated to make an Asset Sale
Offer pursuant to this Section, the Securities and the Pari Passu Indebtedness
shall be purchased by the Company, at the option of the holders thereof, in
whole or in part in integral multiples of $1,000, on a date (the "Offer Date")
that is not earlier than 45 days and not later than 60 days from the date the
notice of the Asset Sale Offer is given to holders, or such later date as may
be necessary for the Company to comply with the requirements of the Exchange
Act.
(f) In the event that the Company makes an Asset Sale Offer,
the Company shall comply, to the extent applicable, with the requirements of
Section 14(e) of the Exchange Act, and any other applicable securities laws or
regulations and any applicable requirements of any securities exchange on which
the Securities are listed, and any violation of the provisions of this
Indenture relating to such Asset Sale Offer occurring as a result of such
compliance shall not be deemed a Default or an Event of Default.
(g) Subject to paragraph (f) above, within 20 days after the
date on which the amount of Unutilized Net Cash Proceeds equals or exceeds
$10,000,000, the Company shall send or cause to be sent by first-class mail,
postage prepaid, to the Trustee and to each Holder, at his address appearing in
the Security Register, a notice stating or including:
(1) that the Holder has the right to require the
Company to repurchase, subject to proration, such Holder's
Securities at the Offered Price;
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(2) the Offer Date;
(3) the instructions a Holder must follow in order
to have his Securities purchased in accordance with paragraph
(c) of this Section;
(4) (i) the most recently filed Annual Report on Form
10-K (including audited consolidated financial statements) of
the Company, the most recent subsequently filed Quarterly
Report on Form 10-Q, as applicable, and any Current Report on
Form 8- K of the Company filed subsequent to such Quarterly
Report, other than Current Reports describing Asset Sales
otherwise described in the offering materials (or
corresponding successor reports) (or in the event the Company
is not required to prepare any of the foregoing Forms, the
comparable information required pursuant to Section 1020),
(ii) a description of material developments, if any, in the
Company's business subsequent to the date of the latest of
such Reports, (iii) if material, appropriate pro forma
financial information, and (iv) such other information, if
any, concerning the business of the Company which the Company
in good faith believes will enable such Holders to make an
informed investment decision regarding the Asset Sale Offer;
(5) the Offered Price;
(6) the names and addresses of the Paying Agent and
the offices or agencies referred to in Section 1002;
(7) that Securities must be surrendered prior to the
Offer Date to the Paying Agent at the office of the Paying
Agent or to an office or agency referred to in Section 1002 to
collect payment;
(8) that any Securities not tendered will continue
to accrue interest and that unless the Company defaults in the
payment of the Offered Price, any Security accepted for
payment pursuant to the Asset Sale Offer shall cease to accrue
interest on and after the Offer Date;
(9) the procedures for withdrawing a tender; and
(10) that the Offered Price for any Security which
has been properly tendered and not withdrawn and which has
been accepted for payment pursuant to the Asset Sale Offer
will be paid promptly following the Offer Date.
(h) Holders electing to have Securities purchased hereunder
will be required to surrender such Securities at the address specified in the
notice on or prior to the Offer Date. Holders will be entitled to withdraw
their election to have their Securities
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purchased pursuant to this Section 1013 if the Company receives, not later than
the Offer Date, a telegram, telex, facsimile transmission or letter setting
forth (1) the name of the Holder, (2) the certificate number of the Security in
respect of which such notice of withdrawal is being submitted, (3) the
principal amount of the Security (which shall be $1,000 or an integral multiple
thereof) delivered for purchase by the Holder as to which his election is to be
withdrawn, (4) a statement that such Holder is withdrawing his election to have
such principal amount of such Security purchased, and (5) the principal amount,
if any, of such Security (which shall be $1,000 or an integral multiple
thereof) that remains subject to the original notice of the Asset Sale Offer
and that has been or will be delivered for purchase by the Company.
(i) The Company shall (i) not later than the Offer Date,
accept for payment Securities or portions thereof tendered pursuant to the
Asset Sale Offer, (ii) not later than 10:00 a.m. (New York time) on the
Business Day following the Offer Date, deposit with the Trustee or with a
Paying Agent an amount of money in same day funds (or New York Clearing House
funds if such deposit is made prior to the Offer Date) sufficient to pay the
aggregate Offered Price of all the Securities or portions thereof which are to
be purchased on that date and (iii) not later than 10:00 a.m. (New York time)
on the Business Day following the Offer Date, deliver to the Paying Agent an
Officers' Certificate stating the Securities or portions thereof accepted for
payment by the Company. The Paying Agent shall promptly mail or deliver to
Holders of Securities so accepted payment in an amount equal to the Offered
Price of the Securities purchased from each such Holder, and the Company shall
execute and the Trustee shall promptly authenticate and mail or deliver to such
Holders a new Security equal in principal amount to any unpurchased portion of
the Security surrendered. Any Securities not so accepted shall be promptly
mailed or delivered by the Paying Agent at the Company's expense to the Holder
thereof. For purposes of this Section 1011, the Company shall choose a Paying
Agent which shall not be the Company.
Subject to applicable escheat laws, the Trustee and the Paying
Agent shall return to the Company any cash that remains unclaimed, together
with interest, if any, thereon, held by them for the payment of the Offered
Price; provided, however, that (x) to the extent that the aggregate amount of
cash deposited by the Company with the Trustee in respect of an Offer exceeds
the aggregate Offered Price of the Securities or portions thereof to be
purchased, then the Trustee shall hold such excess for the Company and (y)
unless otherwise directed by the Company in writing, promptly after the
Business Day following the Offer Date the Trustee shall return any such excess
to the Company together with interest or dividends, if any, thereon.
(j) Securities to be purchased shall, on the Offer Date,
become due and payable at the Offered Price and from and after such date
(unless the Company shall default in the payment of the Offered Price) such
Securities shall cease to bear interest. Such Offered Price shall be paid to
such Holder promptly following the later of the Offer
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Date and the time of delivery of such Security to the relevant Paying Agent at
the office of such Paying Agent by the Holder thereof in the manner required.
Upon surrender of any such Security for purchase in accordance with the
foregoing provisions, such Security shall be paid by the Company at the Offered
Price; provided, however, that installments of interest whose Stated Maturity
is on or prior to the Offer Date shall be payable to the Person in whose name
the Securities (or any Predecessor Securities) is registered as such on the
relevant Regular Record Dates according to the terms and the provisions of
Section 309; provided, further, that Securities to be purchased are subject to
proration in the event the Unutilized Net Cash Proceeds are less than the
aggregate Offered Price of all Securities tendered for purchase, with such
adjustments as may be appropriate by the Trustee so that only Securities in
denominations of $1,000 or integral multiples thereof, shall be purchased. If
any Security tendered for purchase shall not be so paid upon surrender thereof
by deposit of funds with the Trustee or a Paying Agent in accordance with
paragraph (h) above, the principal thereof (and premium, if any, thereon)
shall, until paid, bear interest from the Offer Date at the rate borne by such
Security. Any Security that is to be purchased only in part shall be
surrendered to a Paying Agent at the office of such Paying Agent (with, if the
Company, the Security Registrar or the Trustee so requires, due endorsement by,
or a written instrument of transfer in form satisfactory to the Company and the
Security Registrar or the Trustee duly executed by, the Holder thereof or such
Holder's attorney duly authorized in writing), and the Company shall execute
and the Trustee shall authenticate and deliver to the Holder of such Security,
without service charge, one or more new Securities of any authorized
denomination as requested by such Holder in an aggregate principal amount equal
to, and in exchange for, the portion of the principal amount of the Security so
surrendered that is not purchased. The Company shall publicly announce the
results of the Offer on or as soon as practicable after the Offer Date.
(k) After the Securities have been assigned an Investment
Grade Rating by both Rating Agencies, and notwithstanding that the Securities
may later cease to have an Investment Grade Rating, the Company and the
Restricted Subsidiaries will not be subject to the provisions of this Section
1011; provided, that no Default has occurred and is continuing at the time the
Securities have been assigned such rating.
Section 1012. Limitation on Liens.
The Company will not, and will not cause or permit any
Restricted Subsidiary to, directly or indirectly, create, incur or assume, any
Lien of any kind (other than Permitted Liens), upon any of its property or
assets, whether now owned or acquired after the Issue Date, or any proceeds
therefrom, or assign or convey any right to receive income therefrom to secure
either (i) Subordinated Indebtedness, unless the Securities, in the case of the
Company, and the Guarantees, in the case of a Restricted Subsidiary that is a
Guarantor, are secured by a Lien on such property, assets or proceeds that is
senior in priority to the Liens securing such Subordinated Indebtedness or (ii)
any other
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Indebtedness, unless the Securities and the Guarantees, in the case of a
Restricted Subsidiary that is a Guarantor, are equally and ratably secured
thereby.
Section 1013. Limitation on Guarantees by Restricted Subsidiaries.
(a) The Company will not cause or permit any of the
Restricted Subsidiaries, directly or indirectly, to guarantee the payment of
any Indebtedness of the Company or any Restricted Subsidiary ("Other
Indebtedness"), except for guarantees to suppliers, lessors, licensees,
contractors, franchisees or customers incurred in the ordinary course of
business, unless such Restricted Subsidiary (A) is a Guarantor or (B)
simultaneously executes and delivers a supplemental indenture to this Indenture
pursuant to which it will become a Guarantor hereunder; provided, however,
that if such Other Indebtedness is (i) Indebtedness that is ranked pari passu
in right of payment with the Securities or the Guarantee of such Restricted
Subsidiary, as the case may be, the Guarantee of such Restricted Subsidiary
shall be pari passu in right of payment with the guarantee of the Other
Indebtedness; or (ii) Subordinated Indebtedness, the Guarantee of such
Restricted Subsidiary shall be senior in right of payment to the guarantee of
the Other Indebtedness (which guarantee of such Subordinated Indebtedness shall
provide that such guarantee is subordinated to the Guarantees of such
Restricted Subsidiary to the same extent and in the same manner as the other
Indebtedness is subordinated to the Securities or the Guarantee of such
Restricted Subsidiary, as the case may be).
(b) Notwithstanding the above, any Guarantee by a Restricted
Subsidiary of the Securities shall provide by its terms that it (and all Liens
securing the same) shall be automatically and unconditionally released and
discharged upon (i) any sale, exchange or transfer, to any Person not an
Affiliate of the Company, of all of the Capital Stock of such Restricted
Subsidiary held by the Company, or all or substantially all the assets of such
Restricted Subsidiary, which transaction is in compliance with the terms of
this Indenture and in which such Restricted Subsidiary is released from all
guarantees, if any, by it of Other Indebtedness of the Company or any
Restricted Subsidiaries or (ii) (with respect to any Guarantees created after
the date of this Indenture) the release by the holders of the Indebtedness of
the Company described above of their guarantee by such Restricted Subsidiary
(including any deemed release upon payment in full of all obligations under
such Indebtedness), at a time when (A) no Other Indebtedness of the Company has
been guaranteed by such Restricted Subsidiary or (B) the holders of all such
Other Indebtedness which is guaranteed by such Restricted Subsidiary also
release their guarantee by such Restricted Subsidiary (including any deemed
release upon payment in full of all obligations under such Indebtedness).
Section 1014. Purchase of Securities upon a Change of Control Triggering
Event.
(a) If a Change of Control Triggering Event shall occur at
any time (the date of such occurrence being the "Change of Control Date"), then
each Holder shall have
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the right to require that the Company purchase such Holder's Securities in
whole or in part in integral multiples of $1,000, at a purchase price (the
"Change of Control Purchase Price") in cash in an amount equal to 101% of the
principal amount of such Securities, plus accrued and unpaid interest, if any,
to the date of purchase (the "Change of Control Purchase Date"), pursuant to
the offer described below in this Section 1014 (the "Change of Control Offer")
and in accordance with the other procedures set forth in subsections (b), (c),
(d), (e), (f) and (g) of this Section 1014.
(b) Within 20 days after the Change of Control Date, the
Company shall notify the Trustee thereof and give written notice (a "Change of
Control Purchase Notice") of such Change of Control to each Holder by first-
class mail, postage prepaid, at his address appearing in the Security Register,
stating among other things:
(1) that a Change of Control has occurred, the date
of such event, and that such Holder has the right to require
the Company to repurchase such Holder's Securities at the
Change of Control Purchase Price;
(2) the circumstances and relevant facts regarding
such Change of Control (including but not limited to
information with respect to pro forma historical income, cash
flow and capitalization after giving effect to such Change of
Control);
(3) (i) the most recently filed Annual Report on
Form 10-K (including audited consolidated financial
statements) of the Company, the most recent subsequently filed
Quarterly Report on Form 10-Q, as applicable, and any Current
Report on Form 8- K of the Company filed subsequent to such
Quarterly Report (or in the event the Company is not required
to prepare any of the foregoing Forms, the comparable
information required to be prepared by the Company and any
Guarantor pursuant to Section 1018), (ii) a description of
material developments, if any, in the Company's business
subsequent to the date of the latest of such reports and (iii)
such other information, if any, concerning the business of the
Company which the Company in good faith believes will enable
such Holders to make an informed investment decision regarding
the Change of Control Offer;
(4) that the Change of Control Offer is being made
pursuant to this Section 1014 and that all Securities properly
tendered pursuant to the Change of Control Offer will be
accepted for payment at the Change of Control Purchase Price;
(5) the Change of Control Purchase Date, which shall
be a Business Day no earlier than 30 days nor later than 60
days from the date
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such notice is mailed, or such later date as is necessary to
comply with requirements under the Exchange Act;
(6) the Change of Control Purchase Price;
(7) the names and addresses of the Paying Agent and
the offices or agencies referred to in Section 1002;
(8) that Securities must be surrendered prior to the
Change of Control Purchase Date to the Paying Agent at the
office of the Paying Agent or to an office or agency referred
to in Section 1002 to collect payment;
(9) that the Change of Control Purchase Price for
any Security which has been properly tendered and not
withdrawn will be paid promptly following the Change of
Control Offer Purchase Date;
(10) the procedures that a Holder must follow to
accept a Change of Control Offer or to withdraw such
acceptance;
(11) that any Security not tendered will continue to
accrue interest; and
(12) that, unless the Company defaults in the payment
of the Change of Control Purchase Price, any Securities
accepted for payment pursuant to the Change of Control Offer
shall cease to accrue interest after the Change of Control
Purchase Date.
(c) Upon receipt by the Company of the proper tender of
Securities, the Holder of the Security in respect of which such proper tender
was made shall (unless the tender of such Security is properly withdrawn)
thereafter be entitled to receive solely the Change of Control Purchase Price
with respect to such Security. Upon surrender of any such Security for
purchase in accordance with the foregoing provisions, such Security shall be
paid by the Company at the Change of Control Purchase Price; provided, however,
that installments of interest whose Stated Maturity is on or prior to the
Change of Control Purchase Date shall be payable to the Holders of such
Securities, or one or more Predecessor Securities, registered as such on the
relevant Regular Record Dates according to the terms and the provisions of
Section 309. If any Security tendered for purchase in accordance with the
provisions of this Section 1014 shall not be so paid upon surrender thereof,
the principal thereof (and premium, if any, thereon) shall, until paid, bear
interest from the Change of Control Purchase Date at the rate borne by such
Security. Holders electing to have Securities purchased will be required to
surrender such Securities to the Paying Agent at the address specified in the
Change of Control Purchase Notice on or prior to the Change of Control Purchase
Date. Any Security that is to be
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purchased only in part shall be surrendered to a Paying Agent at THE office of
such Paying Agent (with, if the Company, the Security Registrar or the Trustee
so requires, due endorsement by, or a written instrument of transfer in form
satisfactory to the Company and the Security Registrar or the Trustee, as the
case may be, duly executed by, the Holder thereof or such Holder's attorney
duly authorized in writing), and the Company shall execute and the Trustee
shall authenticate and deliver to the Holder of such Security, without service
charge, one or more new Securities of any authorized denomination as requested
by such Holder in an aggregate principal amount equal to, and in exchange for,
the portion of the principal amount of the Security so surrendered that is not
purchased.
(d) The Company shall (i) not later than the Change of
Control Purchase Date, accept for payment Securities or portions thereof
tendered pursuant to the Change of Control Offer, (ii) not later than 10:00
a.m. (New York time) on the Business Day following the Change of Control
Purchase Date, deposit with the Trustee or with a Paying Agent an amount of
money in same day funds (or New York Clearing House funds if such deposit is
made prior to the Change of Control Purchase Date) sufficient to pay the
aggregate Change of Control Purchase Price of all the Securities or portions
thereof which are to be purchased as of the Change of Control Purchase Date and
(iii) not later than 10:00 a.m. (New York time) on the Business Day following
the Change of Control Purchase Date, deliver to the Paying Agent an Officers'
Certificate stating the Securities or portions thereof accepted for payment by
the Company. The Paying Agent shall promptly mail or deliver to Holders of
Securities so accepted payment in an amount equal to the Change of Control
Purchase Price of the Securities purchased from each such Holder, and the
Company shall execute and the Trustee shall promptly authenticate and mail or
deliver to such Holders a new Security equal in principal amount to any
unpurchased portion of the Security surrendered. Any Securities not so
accepted shall be promptly mailed or delivered by the Paying Agent at the
Company's expense to the Holder thereof. The Company will publicly announce
the results of the Change of Control Offer on the Change of Control Purchase
Date. For purposes of this Section 1014, the Company shall choose a Paying
Agent which shall not be the Company.
(e) A tender made in response to a Change of Control Purchase
Notice may be withdrawn if the Company receives, not later than one Business
Day prior to the Change of Control Purchase Date, a telegram, telex, facsimile
transmission or letter, specifying, as applicable:
(1) the name of the Holder;
(2) the certificate number of the Security in respect
of which such notice of withdrawal is being submitted;
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(3) the principal amount of the Security (which shall
be $1,000 or an integral multiple thereof) delivered for
purchase by the Holder as to which such notice of withdrawal
is being submitted;
(4) a statement that such Holder is withdrawing his
election to have such principal amount of such Security
purchased; and
(5) the principal amount, if any, of such Security
(which shall be $1,000 or an integral multiple thereof) that
remains subject to the original Change of Control Purchase
Notice and that has been or will be delivered for purchase by
the Company.
(f) Subject to applicable escheat laws, the Trustee and the
Paying Agent shall return to the Company any cash that remains unclaimed,
together with interest or dividends, if any, thereon, held by them for the
payment of the Change of Control Purchase Price; provided, however, that, (x)
to the extent that the aggregate amount of cash deposited by the Company
pursuant to clause (ii) of paragraph (d) above exceeds the aggregate Change of
Control Purchase Price of the Securities or portions thereof to be purchased,
then the Trustee shall hold such excess for the Company and (y) unless
otherwise directed by the Company in writing, promptly after the Business Day
following the Change of Control Purchase Date the Trustee shall return any such
excess to the Company together with interest, if any, thereon.
(g) The Company shall comply, to the extent applicable, with
the requirements of Section 14(e) of the Exchange Act, and any other applicable
securities laws or regulations and any applicable requirements of any
securities exchange on which the Securities are listed, in connection with the
repurchase of Securities pursuant to a Change of Control Offer, and any
violation of the provisions of this Indenture relating to such Change of
Control Offer occurring as a result of such compliance, shall not be deemed a
Default or Event of Default hereunder.
Section 1015. Restrictions on Preferred Stock of Restricted Subsidiaries.
(a) The Company will not sell, and will not cause or permit
any of the Restricted Subsidiaries to issue, sell or transfer, any Preferred
Stock of any Restricted Subsidiary (other than (i) to the Company or to a
Wholly-Owned Restricted Subsidiary and (ii) Preferred Stock issued by a Person
prior to the time (A) such Person becomes a Restricted Subsidiary, (B) such
Person merges with or into a Restricted Subsidiary or (C) a Restricted
Subsidiary merges with or into such Person; provided that such Preferred Stock
was not issued or incurred by such Person in anticipation of the type of
transaction contemplated by subclause (A), (B) or (C)).
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(b) The Company will not permit any Person (other than the
Company or a Wholly-Owned Restricted Subsidiary) to own any Preferred Stock of
any Restricted Subsidiary except upon the acquisition of all of the outstanding
Capital Stock of such Restricted Subsidiary in accordance with the terms of
this Indenture.
(c) After the Securities have been assigned an Investment
Grade Rating by both Rating Agencies, and notwithstanding that the Securities
may later cease to have an Investment Grade Rating, the Company and the
Restricted Subsidiaries will not be subject to the provisions of this Section
1015; provided, that no Default has occurred and is continuing at the time the
Securities have been assigned such rating.
Section 1016. Limitation on Dividend and Other Payment Restrictions
Affecting Restricted Subsidiaries.
(a) The Company will not, and will not cause or permit any
Restricted Subsidiary to, directly or indirectly, create or otherwise cause, or
enter into any agreement with any Person that would cause to become effective,
any consensual encumbrance or restriction of any kind, on the ability of any
Restricted Subsidiary to (i) pay dividends, in cash or otherwise, or make any
other distribution on or in respect of its Capital Stock or any other interest
or participation in, or measured by, its profits, to the Company or any other
Restricted Subsidiary, (ii) pay any Indebtedness owed to the Company or any
other Restricted Subsidiary, (iii) make loans or advances to, or guarantee any
Indebtedness or other obligations of, the Company or any other Restricted
Subsidiary or (iv) transfer any of its properties or assets to the Company or
any other Restricted Subsidiary, except any encumbrance or restriction (A) with
respect to a Restricted Subsidiary that is not a Restricted Subsidiary on the
Issue Date, in existence at the time such Person becomes a Restricted
Subsidiary (but not created in contemplation thereof); provided, however, that
such encumbrances and restrictions are not applicable to the Company or any
Restricted Subsidiary, or the properties or assets of the Company or any
Restricted Subsidiary, other than such Person; (B) arising as a result of
customary non-assignment provisions in leases entered into in the ordinary
course of business; (C) existing under any agreement governing the terms of or
otherwise arising as a result of Purchase Money Indebtedness (other than
Indebtedness incurred to finance an Asset Acquisition) for property acquired in
the ordinary course of business that only imposes encumbrances and restrictions
on the property so acquired; (D) contained in any agreement for the sale or
disposition of the Capital Stock or assets of any Restricted Subsidiary;
provided, however, that such encumbrances and restrictions described in this
clause (D) are only applicable to such Restricted Subsidiary or assets, as
applicable, and any such sale or disposition is made in compliance with Section
1011 hereof to the extent applicable thereto; (E) existing under any agreement
that Refinances the agreements containing the encumbrance or restrictions in
the foregoing clause (A); provided, however, that the terms and conditions of
any such restrictions permitted under this clause (E) are not materially less
favorable to the holders
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of the Securities than those under or pursuant to the agreement evidencing the
Indebtedness Refinanced; or (F) in existence as a result of applicable law.
(b) After the Securities have been assigned an Investment
Grade Rating by both Rating Agencies, and notwithstanding that the Securities
may later cease to have an Investment Grade Rating, the Company and the
Restricted Subsidiaries will not be subject to the provisions of this Section
1016; provided, that no Default has occurred and is continuing at the time the
Securities have been assigned such rating.
Section 1017. Limitation on Designations of Unrestricted Subsidiaries.
(a) The Company may designate after the Issue Date any
Subsidiary (other than a Guarantor) as an "Unrestricted Subsidiary" under this
Indenture (a "Designation") only if:
(i) no Default shall have occurred and be continuing
at the time of or after giving effect to such Designation;
(ii) the Company would be permitted to make an
Investment (other than a Permitted Investment) at the time of
Designation (assuming the effectiveness of such Designation)
pursuant to the first paragraph of Section 1009 in an amount
(the "Designation Amount") equal to the greater of (1) the net
book value of the Company's interest in such Subsidiary
calculated in accordance with GAAP or (2) the Fair Market
Value of the Company's interest in such Subsidiary as
determined in good faith by the Company's Board of Directors;
(iii) if the Company is then subject to Section 1008
hereof, the Company would be permitted under the Indenture to
incur $1.00 of additional Indebtedness (other than Permitted
Indebtedness) pursuant to Section 1008 at the time of such
Designation (assuming the effectiveness of such Designation);
and
(iv) such Unrestricted Subsidiary does not own any
Capital Stock in any Restricted Subsidiary of the Company
which is not simultaneously being designated an Unrestricted
Subsidiary.
In the event of any such Designation, the Company shall be deemed to have made
an Investment constituting a Restricted Payment pursuant to Section 1009 hereof
for all purposes of this Indenture in the Designation Amount.
(b) (i) The Company shall not and shall not cause or permit
any Restricted Subsidiary to at any time (x) provide credit support for, or
subject any of its property or assets (other than the Capital Stock of any
Unrestricted Subsidiary) to the satisfaction of, any Indebtedness of any
Unrestricted Subsidiary (including any undertaking, agreement or instrument
evidencing such Indebtedness) (other than
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Permitted Investments in Unrestricted Subsidiaries) or (y) be directly or
indirectly liable for any Indebtedness of any Unrestricted Subsidiary and (ii)
no Unrestricted Subsidiary shall at any time guarantee or otherwise provide
credit support for any obligation of the Company or any Restricted Subsidiary.
For purposes of the foregoing, the Designation of a Subsidiary of the Company
as an Unrestricted Subsidiary shall be deemed to be the Designation of all of
the Subsidiaries of such Subsidiary.
(c) The Company may revoke any Designation of a Subsidiary as
an Unrestricted Subsidiary (a "Revocation") if:
(i) no Default shall have occurred and be continuing
at the time of and after giving effect to such Revocation;
(ii) all Liens and Indebtedness of such Unrestricted
Subsidiary outstanding immediately following such Revocation
would, if incurred at such time, have been permitted to be
incurred for all purposes of the Indenture;
(iii) if the Company is then subject to Section 1008
hereof, unless such redesignated Subsidiary shall not have any
Indebtedness outstanding (other than Indebtedness that would
be Permitted Indebtedness), immediately after giving effect to
such proposed Revocation, and after giving pro forma effect to
the incurrence of any such Indebtedness of such redesignated
Subsidiary as if such Indebtedness was incurred on the date of
the Revocation, the Company could incur $1.00 of additional
Indebtedness (other than Permitted Indebtedness) pursuant to
Section 1008 hereof; and
(iv) any transaction (or series of related transactions)
between such Subsidiary and any of its Affiliates that
occurred while such Subsidiary was an Unrestricted Subsidiary
would be permitted by Section 1010 hereof as if such
transaction (or series of related transactions) had occurred
at the time of such Revocation.
(d) All Designations and Revocations must be evidenced by
Board Resolutions of the Company delivered to the Trustee certifying compliance
with the foregoing provisions.
(e) After the Securities have been assigned an Investment
Grade Rating by both Rating Agencies, and notwithstanding that the Securities
may later cease to have an Investment Grade Rating, the Company and the
Restricted Subsidiaries will not be subject to the provisions of this Section
1017; provided, that no Default has occurred and is continuing at the time the
Securities have been assigned such rating.
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Section 1018. Reporting Requirements.
The Company and each Guarantor will file with the Commission,
the Trustee and the Initial Purchasers, the annual reports, quarterly reports
and other documents required to be filed with the Commission pursuant to
Sections 13 and 15 of the Exchange Act, whether or not the Company or such
Guarantor has a class of securities registered under the Exchange Act, such
documents to be filed with the Commission on or prior to the date (the
"Required Filing Date") by which the Company and each Guarantor would have been
required so to file such document if the Company and such Guarantor were so
subject. The Company and each Guarantor will also in any event (x) within 15
days of each Required Filing Date file with the Trustee copies of the annual
reports, quarterly reports and other documents which the Company and each
Guarantor would have been required to file with the Commission pursuant to
Sections 13 or 15 of the Exchange Act if the Company and such Guarantor were
subject to either of such Sections and (y) if filing such documents by the
Company and such Guarantor with the Commission is not permitted under the
Exchange Act, (i) within 15 days of each Required Filing Date, transmit by mail
to all Holders, as their names and addresses appear in the Security Register,
without cost to such Holder, copies of the annual reports, quarterly reports
and other documents which the Company and each Guarantor would have been
required to file with the Commission pursuant to Sections 13 or 15 of the
Exchange Act if the Company and such Guarantor were subject to either of such
Sections, and (ii) promptly upon written request and payment of the reasonable
cost of duplication and delivery, supply copies of such documents to any Holder
or prospective Holder at the Company's cost. If any Guarantor's or other
Subsidiaries' financial statements would be required to be included in the
financial statements filed or delivered pursuant hereto if the Company were
subject to Sections 13 or 15 of the Exchange Act, the Company shall include
such Guarantor's or other Subsidiaries' financial statements in any filing or
delivery pursuant hereto.
Section 1019. Statement by Officers as to Default.
(a) The Company and the Guarantors will deliver to the
Trustee, on or before a date not more than 60 days after the end of each fiscal
quarter and not more than 120 days after the end of each fiscal year of the
Company ending after the date hereof, a written statement signed by two
executive officers of the Company and each Guarantor, one of whom shall be the
principal executive officer, principal financial officer or principal
accounting officer of the Company and such Guarantor, as to compliance
herewith, including whether or not, after a review of the activities of the
Company during such year or such quarter and of the Company's and each
Guarantor's performance under this Indenture, to the best knowledge, based on
such review, of the signers thereof, the Company and each Guarantor have
fulfilled all of their respective obligations and are in compliance with all
conditions and covenants under this Indenture throughout such year or quarter,
as the case may be, and, if there has been a Default specifying each Default
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and the nature and status thereof and any actions being taken by the Company
and the Guarantors with respect thereto.
(b) When any Default or Event of Default, or event which
after notice or lapse of time or both would become an Event of Default, has
occurred and is continuing, or if the Trustee or any Holder or the trustee for
or the holder of any other evidence of Indebtedness of the Company or any
Restricted Subsidiary gives any notice or takes any other action with respect
to a claimed default, the Company and the Guarantors shall deliver to the
Trustee by registered or certified mail or facsimile transmission followed by
hard copy an Officers' Certificate specifying such Default, Event of Default,
notice or other action, the status thereof and what actions the Company and the
Guarantors are taking or propose to take with respect thereto, within five
Business Days of its occurrence.
Section 1020. Waiver of Certain Covenants.
The Company and the Guarantors may omit in any particular
instance to comply with any covenant or condition set forth in Sections 1006
through 1010, 1012, 1013, and 1015 through 1018, if, before or after the time
for such compliance, the Holders of not less than a majority in aggregate
principal amount of the Securities at the time Outstanding shall, by Act of
such Holders, waive such compliance in such instance with such covenant or
provision, but no such waiver shall extend to or affect such covenant or
condition except to the extent so expressly waived, and, until such waiver
shall become effective, the obligations of the Company and the duties of the
Trustee in respect of any such covenant or condition shall remain in full force
and effect.
ARTICLE ELEVEN
REDEMPTION OF SECURITIES
Section 1101. Rights of Redemption.
The Securities are subject to redemption at any time on or
after October 1, 2002, at the option of the Company, in whole or in part,
subject to the conditions, and at the Redemption Prices, specified in the form
of Security, together with accrued and unpaid interest, if any, to the
Redemption Date (subject to the right of Holders of record on relevant Regular
Record Dates and Special Record Dates to receive interest due on relevant
Interest Payment Dates and Special Payment Dates).
In addition, at any time or from time to time on or prior to
October 1, 2000, the Company may, at its option, use all or any portion of the
net proceeds of one or more Public Equity Offerings to redeem up to an
aggregate of 30% of the aggregate principal amount of Securities originally
issued under this Indenture at a redemption price equal to
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108.5% of the aggregate principal amount thereof, plus accrued and unpaid
interest thereon, if any, to the Redemption Date; provided that at least
seventy percent of the aggregate principal amount of Securities (including any
Additional Securities) originally issued under this Indenture remains
outstanding immediately after the occurrence of such redemption. In order to
effect the foregoing redemption, the Company must mail a notice of redemption
no later than 60 days after the related Public Equity Offering and must
consummate such redemption within 90 days of the closing of the Public Equity
Offering.
Section 1102. Applicability of Article.
Redemption of Securities at the election of the Company or
otherwise, as permitted or required by any provision of this Indenture, shall
be made in accordance with such provision and this Article Eleven.
Section 1103. Election to Redeem; Notice to Trustee.
The election of the Company to redeem any Securities pursuant
to Section 1101 shall be evidenced by a Company Order and an Officers'
Certificate. In case of any redemption at the election of the Company, the
Company shall, not less than 30 nor more than 60 days prior to the Redemption
Date fixed by the Company (unless a shorter notice period shall be satisfactory
to the Trustee), notify the Trustee in writing of such Redemption Date and of
the principal amount of Securities to be redeemed.
Section 1104. Selection by Trustee of Securities to Be Redeemed.
If less than all the Securities are to be redeemed, the
particular Securities or portions thereof to be redeemed shall be selected not
more than 30 days prior to the Redemption Date. The Trustee shall select the
Securities or portions thereof to be redeemed pro rata, by lot or by any other
method the Trustee shall deem fair and reasonable. The amounts to be redeemed
shall be equal to $1,000 or any integral multiple thereof.
The Trustee shall promptly notify the Company and the Security
Registrar in writing of the Securities selected for redemption and, in the case
of any Securities selected for partial redemption, the principal amount thereof
to be redeemed.
For all purposes of this Indenture, unless the context
otherwise requires, all provisions relating to redemption of Securities shall
relate, in the case of any Security redeemed or to be redeemed only in part, to
the portion of the principal amount of such Security which has been or is to be
redeemed.
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Section 1105. Notice of Redemption.
Notice of redemption shall be given by first-class mail,
postage prepaid, mailed not less than 30 days nor more than 60 days prior to
the Redemption Date, to each Holder of Securities to be redeemed, at its
address appearing in the Security Register.
All notices of redemption shall state:
(a) the Redemption Date;
(b) the Redemption Price;
(c) if less than all Outstanding Securities are to be
redeemed, the identification of the particular Securities to be redeemed;
(d) in the case of a Security to be redeemed in part, the
principal amount of such Security to be redeemed and that after the Redemption
Date upon surrender of such Security, new Security or Securities in the
aggregate principal amount equal to the unredeemed portion thereof will be
issued;
(e) that Securities called for redemption must be surrendered
to the Paying Agent to collect the Redemption Price;
(f) that on the Redemption Date the Redemption Price will
become due and payable upon each such Security or portion thereof to be
redeemed, and that (unless the Company shall default in payment of the
Redemption Price) interest thereon shall cease to accrue on and after said
date;
(g) the names and addresses of the Paying Agent and the
offices or agencies referred to in Section 1002 where such Securities are to be
surrendered for payment of the Redemption Price;
(h) the CUSIP number, if any, relating to such Securities;
and
(i) the procedures that a Holder must follow to surrender
the Securities to be redeemed.
Notice of redemption of Securities to be redeemed at the
election of the Company shall be given by the Company or, at the Company's
written request, by the Trustee in the name and at the expense of the Company.
If the Company elects to give notice of redemption, it shall provide the
Trustee with a certificate stating that such notice has been given in
compliance with the requirements of this Section 1105.
The notice if mailed in the manner herein provided shall be
conclusively presumed to have been given, whether or not the Holder receives
such notice. In any
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case, failure to give such notice by mail or any defect in the notice to the
Holder of any Security designated for redemption as a whole or in part shall
not affect the validity of the proceedings for the redemption of any other
Security.
Section 1106. Deposit of Redemption Price.
On or prior to any Redemption Date, the Company shall deposit
with the Trustee or with a Paying Agent (or, if the Company or any of its
Affiliates is acting as Paying Agent, segregate and hold in trust as provided
in Section 1003) an amount of money in same day funds sufficient to pay the
Redemption Price of, and (except if the Redemption Date shall be an Interest
Payment Date or Special Payment Date) accrued interest on, all the Securities
or portions thereof which are to be redeemed on that date. The Paying Agent
shall promptly mail or deliver to Holders of Securities so redeemed payment in
an amount equal to the Redemption Price of the Securities purchased from each
such Holder. All money, if any, earned on funds held in trust by the Trustee
or any Paying Agent shall be remitted to the Company. For purposes of this
Section 1106, the Company shall choose a Paying Agent which shall not be the
Company.
Section 1107. Securities Payable on Redemption Date.
Notice of redemption having been given as aforesaid, the
Securities so to be redeemed shall, on the Redemption Date, become due and
payable at the Redemption Price therein specified and from and after such date
(unless the Company shall default in the payment of the Redemption Price and
accrued interest) such Securities shall cease to bear interest. Upon surrender
of any such Security for redemption in accordance with said notice, such
Security shall be paid by the Company at the Redemption Price together with
accrued interest to the Redemption Date; provided, however, that installments
of interest whose Stated Maturity is on or prior to the Redemption Date shall
be payable to the Holders of such Securities, or one or more Predecessor
Securities, registered as such on the relevant Regular Record Dates and Special
Record Dates according to the terms and the provisions of Section 309.
If any Security called for redemption shall not be so paid
upon surrender thereof for redemption, the principal and premium, if any,
shall, until paid, bear interest from the Redemption Date at the rate borne by
such Security.
Section 1108. Securities Redeemed or Purchased in Part.
Any Security which is to be redeemed or purchased only in part
shall be surrendered to the Paying Agent at the office or agency maintained for
such purpose pursuant to Section 1002 (with, if the Company, the Security
Registrar or the Trustee so requires, due endorsement by, or a written
instrument of transfer in form satisfactory to the Company, the Security
Registrar or the Trustee, as the case may be, duly executed by,
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the Holder thereof or such Holder's attorney duly authorized in writing), and
the Company shall execute, and the Trustee shall authenticate and deliver to
the Holder of such Security without service charge, a new Security or
Securities, of any authorized denomination as requested by such Holder in
aggregate principal amount equal to, and in exchange for, the unredeemed
portion of the principal of the Security so surrendered that is not redeemed or
purchased.
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ARTICLE TWELVE
SATISFACTION AND DISCHARGE
Section 1201. Satisfaction and Discharge of Indenture.
This Indenture will be discharged and will cease to be of
further effect (except as to surviving rights of registration or transfer of
the Securities, as expressly provided for herein) as to all outstanding
Securities when
(i) either
(a) all the Securities theretofore authenticated and
delivered (except lost, stolen or destroyed Securities which
have been replaced or paid as provided in Section 308 and
Securities for whose payment money has theretofore been
deposited in trust or segregated and held in trust by the
Company and thereafter repaid to the Company or discharged
from such trust as provided in Section 1003) have been
delivered to the Trustee for cancellation; or
(b) all Securities not theretofore delivered to the
Trustee for cancellation (x) have become due and payable, (y)
will become due and payable at their Stated Maturity within
one year or (z) are to be called for redemption within one
year under arrangements satisfactory to the Trustee for the
giving of notice of redemption by the Trustee in the name, and
at the expense, of the Company; and the Company or any
Guarantor has irrevocably deposited or caused to be deposited
with the Trustee funds in an amount sufficient to pay and
discharge the entire Indebtedness on the Securities not
theretofore delivered to the Trustee for cancellation, for
principal of, premium, if any, and interest on the Securities
to the date of deposit together with irrevocable instructions
from the Company directing the Trustee to apply such funds to
the payment thereof at maturity or redemption, as the case may
be;
(ii) the Company or any Guarantor has paid all other sums
payable under this Indenture by the Company and the Guarantors; and
(iii) the Company and each of the Guarantors have delivered to
the Trustee an Officers' Certificate and an Opinion of Counsel each stating
that all conditions precedent herein relating to the satisfaction and discharge
hereof have been complied with and that such satisfaction and discharge will
not result in a breach or violation of, or constitute a default under, this
Indenture or any other material agreement or instrument to
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which the Company, any Guarantor or any Subsidiary is a party or by which the
Company, any Guarantor or any Subsidiary is bound.
Notwithstanding the satisfaction and discharge hereof, the
obligations of the Company to the Trustee under Section 607 and, if United
States dollars shall have been deposited with the Trustee pursuant to subclause
(2) of subsection (a) of this Section 1201, the obligations of the Trustee
under Section 1202 and the last paragraph of Section 1003 shall survive.
Section 1202. Application of Trust Money.
Subject to the provisions of the last paragraph of Section
1003, all United States dollars deposited with the Trustee pursuant to Section
1201 shall be held in trust and applied by it, in accordance with the
provisions of the Securities and this Indenture, to the payment, either
directly or through any Paying Agent (including the Company acting as its own
Paying Agent) as the Trustee may determine, to the Persons entitled thereto, of
the principal of, premium, if any, and interest on, the Securities for whose
payment such United States dollars have been deposited with the Trustee.
ARTICLE THIRTEEN
GUARANTEES
Section 1301. Guarantor's Guarantee.
For value received, the Guarantor, in accordance with this
Article Thirteen, hereby absolutely, fully, unconditionally and irrevocably
guarantees, jointly and severally with each other Person which may become a
Guarantor hereunder, to the Trustee and the Holders, as if the Guarantor were
the principal debtor, the punctual payment and performance when due of all
Indenture Obligations (which for purposes of this Guarantee shall also be
deemed to include all commissions, fees, charges, costs and other expenses
(including reasonable legal fees and disbursements of one counsel) arising out
of or incurred by the Trustee or the Holders in connection with the enforcement
of this Guarantee).
Section 1302. Continuing Guarantee; No Right of Set-Off; Independent
Obligation.
(a) This Guarantee shall be a continuing guarantee of the
payment and performance of all Indenture Obligations and shall remain in full
force and effect until the payment in full of all of the Indenture Obligations
and shall apply to and secure any ultimate balance due or remaining unpaid to
the Trustee or the Holders; and this
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Guarantee shall not be considered as wholly or partially satisfied by the
payment or liquidation at any time or from time to time of any sum of money for
the time being due or remaining unpaid to the Trustee or the Holders. Each
Guarantor, jointly and severally, covenants and agrees to comply with all
obligations, covenants, agreements and provisions applicable to it in this
Indenture including those set forth in Article Eight. Without limiting the
generality of the foregoing, each Guarantor's liability shall extend to all
amounts which constitute part of the Indenture Obligations and would be owed by
the Company under this Indenture and the Securities but for the fact that they
are unenforceable, reduced, limited, impaired, suspended or not allowable due
to the existence of a bankruptcy, reorganization or similar proceeding
involving the Company.
(b) Each Guarantor, jointly and severally, hereby guarantees
that the Indenture Obligations will be paid to the Trustee without set-off or
counterclaim or other reduction whatsoever (whether for taxes, withholding or
otherwise) in lawful currency of the United States of America.
(c) Each Guarantor, jointly and severally, guarantees that
the Indenture Obligations shall be paid strictly in accordance with their terms
regardless of any law, regulation or order now or hereafter in effect in any
jurisdiction affecting any of such terms or the rights of the holders of the
Securities.
(d) Each Guarantor's liability to pay or perform or cause the
performance of the Indenture Obligations under this Guarantee shall arise
forthwith after demand for payment or performance by the Trustee has been given
to the Guarantors in the manner prescribed in Section 106 hereof.
(e) Except as provided herein, the provisions of this Article
Thirteen cover all agreements between the parties hereto relative to this
Guarantee and none of the parties shall be bound by any representation,
warranty or promise made by any Person relative thereto which is not embodied
herein; and it is specifically acknowledged and agreed that this Guarantee has
been delivered by each Guarantor free of any conditions whatsoever and that no
representations, warranties or promises have been made to any Guarantor
affecting its liabilities hereunder, and that the Trustee shall not be bound by
any representations, warranties or promises now or at any time hereafter made
by the Company to any Guarantor.
(f) This Guarantee is a guarantee of payment, performance and
compliance and not of collectibility and is in no way conditioned or contingent
upon any attempt to collect from or enforce performance or compliance by the
Company or upon any event or condition whatsoever.
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(g) The obligations of the Guarantors set forth herein
constitute the full recourse obligations of the Guarantors enforceable against
them to the full extent of all their assets and properties.
Section 1303. Guarantee Absolute.
The obligations of the Guarantors hereunder are independent of
the obligations of the Company under the Securities and this Indenture and a
separate action or actions may be brought and prosecuted against any Guarantor
whether or not an action or proceeding is brought against the Company and
whether or not the Company is joined in any such action or proceeding. The
liability of the Guarantors hereunder is irrevocable, absolute and
unconditional and (to the extent permitted by law) the liability and
obligations of the Guarantors hereunder shall not be released, discharged,
mitigated, waived, impaired or affected in whole or in part by:
(a) any defect or lack of validity or enforceability in
respect of any Indebtedness or other obligation of the
Company or any other Person under this Indenture or the
Securities, or any agreement or instrument relating to
any of the foregoing;
(b) any grants of time, renewals, extensions, indulgences,
releases, discharges or modifications which the Trustee
or the Holders may extend to, or make with, the Company,
any Guarantor or any other Person, or any change in the
time, manner or place of payment of, or in any other
term of, all or any of the Indenture Obligations, or any
other amendment or waiver of, or any consent to or
departure from, this Indenture or the Securities,
including any increase or decrease in the Indenture
Obligations;
(c) the taking of security from the Company, any Guarantor or
any other Person, and the release, discharge or
alteration of, or other dealing with, such security;
(d) the occurrence of any change in the laws, rules,
regulations or ordinances of any jurisdiction by any
present or future action of any governmental authority
or court amending, varying, reducing or otherwise
affecting, or purporting to amend, vary, reduce or
otherwise affect, any of the Indenture Obligations and
the obligations of any Guarantor hereunder;
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(e) the abstention from taking security from the Company, any
Guarantor or any other Person or from perfecting,
continuing to keep perfected or taking advantage of any
security;
(f) any loss, diminution of value or lack of enforceability
of any security received from the Company, any Guarantor
or any other Person, and including any other guarantees
received by the Trustee;
(g) any other dealings with the Company, any Guarantor or any
other Person, or with any security;
(h) the Trustee's or the Holders' acceptance of compositions
from the Company or any Guarantor;
(i) the application by the Holders or the Trustee of all
monies at any time and from time to time received from
the Company, any Guarantor or any other Person on
account of any indebtedness and liabilities owing by the
Company or any Guarantor to the Trustee or the Holders,
in such manner as the Trustee or the Holders deems best
and the changing of such application in whole or in part
and at any time or from time to time, or any manner of
application of collateral, or proceeds thereof, to all
or any of the Indenture Obligations, or the manner of
sale of any collateral;
(j) the release or discharge of the Company or any
Guarantor of the Securities or of any Person liable
directly as surety or otherwise by operation of law or
otherwise for the Securities, other than an express
release in writing given by the Trustee, on behalf of
the Holders, of the liability and obligations of any
Guarantor hereunder;
(k) any change in the name, business, capital structure or
governing instrument of the Company or any Guarantor or
any refinancing or restructuring of any of the Indenture
Obligations;
(l) the sale of the Company's or any Guarantor's business or
any part thereof;
(m) subject to Section 1314, any merger or consolidation,
arrangement or reorganization of the Company, any
Guarantor, any Person resulting from the merger or
consolidation of the Company or any Guarantor with any
other Person or any other successor to such Person or
merged or consolidated Person or any other change in the
corporate
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existence, structure or ownership of the Company or any
Guarantor or any change in the corporate relationship
between the Company and any Guarantor, or any
termination of such relationship;
(n) the insolvency, bankruptcy, liquidation, winding-up,
dissolution, receivership, arrangement, readjustment,
assignment for the benefit of creditors or distribution
of the assets of the Company or its assets or any
resulting discharge of any obligations of the Company
(whether voluntary or involuntary) or of any Guarantor
(whether voluntary or involuntary) or the loss of
corporate existence;
(o) subject to Section 1314, any arrangement or plan of
reorganization affecting the Company or any Guarantor;
(p) any failure, omission or delay on the part of the Company
to conform or comply with any term of this Indenture;
(q) any limitation on the liability or obligations of the
Company or any other Person under this Indenture, or any
discharge, termination, cancellation, distribution,
irregularity, invalidity or unenforceability in whole or
in part of this Indenture;
(r) any other circumstance (including any statute of
limitations) that might otherwise constitute a defense
available to, or discharge of, the Company or any
Guarantor; or
(s) any modification, compromise, settlement or release by
the Trustee, or by operation of law or otherwise, of the
Indenture Obligations or the liability of the Company or
any other obligor under the Securities, in whole or in
part, and any refusal of payment by the Trustee, in
whole or in part, from any other obligor or other
guarantor in connection with any of the Indenture
Obligations, whether or not with notice to, or further
assent by, or any reservation of rights against, each of
the Guarantors.
Section 1304. Right to Demand Full Performance.
In the event of any demand for payment or performance by the
Trustee from any Guarantor hereunder, the Trustee or the Holders shall have the
right to demand its full claim and to receive all dividends or other payments
in respect thereof until the Indenture Obligations have been paid in full, and
the Guarantors shall continue to be jointly and severally liable hereunder for
any balance which may be owing to the Trustee
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or the Holders by the Company under this Indenture and the Securities. The
retention by the Trustee or the Holders of any security, prior to the
realization by the Trustee or the Holders of its rights to such security upon
foreclosure thereon, shall not, as between the Trustee and any Guarantor, be
considered as a purchase of such security, or as payment, satisfaction or
reduction of the Indenture Obligations due to the Trustee or the Holders by the
Company or any part thereof. Each Guarantor, promptly after demand, will
reimburse the Trustee and the Holders for all costs and expenses of collecting
such amount under, or enforcing this Guarantee, including, without limitation,
the reasonable fees and expenses of counsel.
Section 1305. Waivers.
(a) Each Guarantor hereby expressly waives (to the extent
permitted by law) notice of the acceptance of this Guarantee and notice of the
existence, renewal, extension or the non-performance, non-payment, or non-
observance on the part of the Company of any of the terms, covenants,
conditions and provisions of this Indenture or the Securities or any other
notice whatsoever to or upon the Company or such Guarantor with respect to the
Indenture Obligations, whether by statute, rule of law or otherwise. Each
Guarantor hereby acknowledges communication to it of the terms of this
Indenture and the Securities and all of the provisions therein contained and
consents to and approves the same. Each Guarantor hereby expressly waives (to
the extent permitted by law) diligence, presentment, protest and demand for
payment with respect to (i) any notice of sale, transfer or other disposition
of any right, title to or interest in the Securities by the Holders or in this
Indenture, (ii) any release of any Guarantor from its obligations hereunder
resulting from any loss by it of its rights of subrogation hereunder and (iii)
any other circumstances whatsoever that might otherwise constitute a legal or
equitable discharge, release or defense of a guarantor or surety or that might
otherwise limit recourse against such Guarantor.
(b) Without prejudice to any of the rights or recourses which
the Trustee or the Holders may have against the Company, each Guarantor hereby
expressly waives (to the extent permitted by law) any right to require the
Trustee or the Holders to:
(i) enforce, assert, exercise, initiate or exhaust
any rights, remedies or recourse against the
Company, any Guarantor or any other Person under
this Indenture or otherwise;
(ii) value, realize upon, or dispose of any security
of the Company or any other Person held by the
Trustee or the Holders;
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(iii) initiate or exhaust any other remedy which the
Trustee or the Holders may have in law or equity;
or
(iv) mitigate the damages resulting from any default
under this Indenture;
before requiring or becoming entitled to demand payment from such Guarantor
under this Guarantee.
Section 1306. The Guarantor Remains Obligated in Event the Company Is No
Longer Obligated to Discharge Indenture Obligations.
It is the express intention of the Trustee and the Guarantors
that if for any reason the Company has no legal existence, is or becomes under
no legal obligation to discharge the Indenture Obligations owing to the Trustee
or the Holders by the Company or if any of the Indenture Obligations owing by
the Company to the Trustee or the Holders becomes irrecoverable from the
Company by operation of law or for any reason whatsoever, this Guarantee and
the covenants, agreements and obligations of the Guarantors contained in this
Article Thirteen shall nevertheless be binding upon the Guarantors, as
principal debtor, until such time as all such Indenture Obligations have been
paid in full to the Trustee and all Indenture Obligations owing to the Trustee
or the Holders by the Company have been discharged, or such earlier time as
Section 402 shall apply to the Securities and the Guarantors shall be
responsible for the payment thereof to the Trustee or the Holders upon demand.
Section 1307. Fraudulent Conveyance; Contribution; Subrogation.
(a) Each Guarantor that is a Subsidiary of the Company,
and by its acceptance hereof each Holder, hereby confirms that it is the
intention of all such parties that the Guarantee by such Guarantor pursuant to
its Guarantee not constitute a fraudulent transfer or conveyance for purposes
of the Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the Uniform
Fraudulent Transfer Act or any similar federal or state law. To effectuate the
foregoing intention, the Holders and such Guarantor hereby irrevocably agree
that the obligations of such Guarantor under its Guarantee shall be limited to
the maximum amount which, after giving effect to all other contingent and fixed
liabilities of such Guarantor, and after giving effect to any collections from
or payments made by or on behalf of any other Guarantor in respect of the
obligations of such other Guarantor under its Guarantee or pursuant to its
contribution obligations under this Indenture, will result in the obligations
of such Guarantor under its Guarantee not constituting such fraudulent transfer
or conveyance.
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(b) Each Guarantor that makes a payment or distribution under
its Guarantee shall be entitled to a contribution from each other Guarantor, if
any, in a pro rata amount based on the net assets of each Guarantor, determined
in accordance with GAAP.
(c) Each Guarantor hereby waives all rights of subrogation or
contribution, whether arising by contract or operation of law (including,
without limitation, any such right arising under federal bankruptcy law) or
otherwise by reason of any payment by it pursuant to the provisions of this
Article Thirteen.
Section 1308. Guarantee Is in Addition to Other Security.
This Guarantee shall be in addition to and not in substitution
for any other guarantees or other security which the Trustee may now or
hereafter hold in respect of the Indenture Obligations owing to the Trustee or
the Holders by the Company and (except as may be required by law) the Trustee
shall be under no obligation to marshal in favor of each of the Guarantors any
other guarantees or other security or any moneys or other assets which the
Trustee may be entitled to receive or upon which the Trustee or the Holders may
have a claim.
Section 1309. Release of Security Interests.
Without limiting the generality of the foregoing and except as
otherwise provided in this Indenture, each Guarantor hereby consents and
agrees, to the fullest extent permitted by applicable law, that the rights of
the Trustee hereunder, and the liability of the Guarantors hereunder, shall not
be affected by any and all releases for any purpose of any collateral, if any,
from the Liens and security interests created by any collateral document and
that this Guarantee shall continue to be effective or be reinstated, as the
case may be, if at any time any payment of any of the Indenture Obligations is
rescinded or must otherwise be returned by the Trustee upon the insolvency,
bankruptcy or reorganization of the Company or otherwise, all as though such
payment had not been made.
Section 1310. No Bar to Further Actions.
Except as provided by law, no action or proceeding brought or
instituted under Article Thirteen and this Guarantee and no recovery or
judgment in pursuance thereof shall be a bar or defense to any further action
or proceeding which may be brought under Article Thirteen and this Guarantee by
reason of any further default or defaults under Article Thirteen and this
Guarantee or in the payment of any of the Indenture Obligations owing by the
Company.
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Section 1311. Failure to Exercise Rights Shall Not Operate as a Waiver;
No Suspension of Remedies.
(a) No failure to exercise and no delay in exercising, on the
part of the Trustee or the Holders, any right, power, privilege or remedy under
this Article Thirteen and this Guarantee shall operate as a waiver thereof, nor
shall any single or partial exercise of any rights, power, privilege or remedy
preclude any other or further exercise thereof, or the exercise of any other
rights, powers, privileges or remedies. The rights and remedies herein
provided for are cumulative and not exclusive of any rights or remedies
provided in law or equity.
(b) Nothing contained in this Article Thirteen shall limit
the right of the Trustee or the Holders to take any action to accelerate the
maturity of the Securities pursuant to Article Five or to pursue any rights or
remedies hereunder or under applicable law.
Section 1312. Trustee's Duties; Notice to Trustee.
(a) Any provision in this Article Thirteen or elsewhere in
this Indenture allowing the Trustee to request any information or to take any
action authorized by, or on behalf of any Guarantor, shall be permissive and
shall not be obligatory on the Trustee except as the Holders may direct in
accordance with the provisions of this Indenture or where the failure of the
Trustee to request any such information or to take any such action arises from
the Trustee's negligence, bad faith or willful misconduct.
(b) The Trustee shall not be required to inquire into the
existence, powers or capacities of the Company, any Guarantor or the officers,
directors or agents acting or purporting to act on their respective behalf.
Section 1313. Successors and Assigns.
All terms, agreements and conditions of this Article Thirteen
shall extend to and be binding upon each Guarantor and its successors and
permitted assigns and shall enure to the benefit of and may be enforced by the
Trustee and its successors and assigns; provided, however, that the Guarantors
may not assign any of their rights or obligations hereunder other than in
accordance with Article Eight.
Section 1314. Release of Guarantee.
Concurrently with the payment in full of all of the Indenture
Obligations, the Guarantors shall be released from and relieved of their
obligations under this Article Thirteen. Upon the delivery by the Company to
the Trustee of an Officers' Certificate and, if requested by the Trustee, an
Opinion of Counsel to the effect that the transaction
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giving rise to the release of this Guarantee was made by the Company in
accordance with the provisions of this Indenture and the Securities, the
Trustee shall execute any documents reasonably required in order to evidence
the release of the Guarantors from their obligations under this Guarantee. If
any of the Indenture Obligations are revived and reinstated after the
termination of this Guarantee, then all of the obligations of the Guarantors
under this Guarantee shall be revived and reinstated as if this Guarantee had
not been terminated until such time as the Indenture Obligations are paid in
full, and each Guarantor shall enter into an amendment to this Guarantee,
reasonably satisfactory to the Trustee, evidencing such revival and
reinstatement.
This Guarantee shall terminate with respect to each Guarantor
and shall be automatically and unconditionally released and discharged as
provided in Section 1013(b).
Section 1315. Execution of Guarantee.
(a) To evidence the Guarantee, each Guarantor hereby agrees
to execute the guarantee substantially in the form set forth in Section 205, to
be endorsed on each Security authenticated and delivered by the Trustee and
that this Indenture shall be executed on behalf of each Guarantor by its
Chairman of the Board, its President, its Chief Executive Officer, Chief
Operating Officer or one of its Vice Presidents, under its corporate seal
reproduced thereon attested by its Secretary or one of its Assistant
Secretaries. The signature of any of these officers on the Securities may be
manual or facsimile.
(b) Any person that was not a Guarantor on the date of this
Indenture may become a Guarantor by executing and delivering to the Trustee (i)
a supplemental indenture in form and substance satisfactory to the Trustee,
which subjects such person to the provisions (including the representations and
warranties) of this Indenture as a Guarantor, (ii) in the event that as of the
date of such supplemental indenture any Registrable Securities are outstanding,
an instrument in form and substance satisfactory to the Trustee which subjects
such person to the provisions of the Registration Rights Agreement with respect
to such outstanding Registrable Securities, and (iii) an Opinion of Counsel to
the effect that such supplemental indenture has been duly authorized and
executed by such person and constitutes the legal, valid and binding obligation
of such person (subject to such customary assumptions and exceptions as may be
acceptable to the Trustee in its reasonable discretion).
(c) If an officer whose signature is on this Indenture no
longer holds that office at the time the Trustee authenticates a Security on
which this Guarantee is endorsed, such Guarantee shall be valid nevertheless.
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* * *
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IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed, all as of the day and year first above written.
ZALE CORPORATION
By: /s/ ALAN P. SHOR
--------------------------------------
Name: Alan P. Shor
Title: Executive Vice President and Chief
Accounting Officer
Attest: /s/ STEVE MASSANELLI
--------------------------
Name: Steve Massanelli
Title: Senior Vice President
and Treasurer
ZALE DELAWARE, INC.
By: /s/ ALAN P. SHOR
--------------------------------------
Name: Alan P. Shor
Title: Executive Vice President and Chief
Accounting Officer
Attest:/s/ STEVE MASSANELLI
--------------------------
Name: Steve Massanelli
Title: Senior Vice President
and Treasurer
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BANK ONE, N.A.
By: /s/ JON A. BEACHAM
---------------------------------
Name: Jon A. Beacham
Title:
Attest:/s/ MICHAEL DOCKMAN
---------------------------
Name: Michael Dockman
Title:
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152
STATE OF __________________ )
) ss.:
COUNTY OF _________________ )
On the _____ day of September, 1997, before me personally came
______________________, to me known, who, being by me duly sworn, did depose
and say that he resides at _________________________; that he is
_______________ of Zale Corporation and Zale Delaware, Inc., each of which is a
corporation described in and which executed the foregoing instrument; and that
he signed his name thereto pursuant to authority of the Board of Directors of
each such corporation.
(NOTARIAL
SEAL)
______________________________
153
STATE OF __________________ )
) ss.:
COUNTY ____________________ )
On the _____ day of September, 1997, before me personally came
___________, to me known, who, being by me duly sworn, did depose and say that
he resides at _____________________________________; that he is
_________________ of Bank One, N.A., a _____________ banking corporation
described in and which executed the foregoing instrument; and that he signed
his name thereto pursuant to authority of the Board of Directors of such
banking corporation.
(NOTARIAL
SEAL)
______________________________
154
SCHEDULE I
Existing Indebtedness
Construction Loan dated as of September 1988 with HCV-V Venture for $157,500
155
SCHEDULE II
Excluded Assets
1. 50% interest in Meta Vertag Diamond (438 carat yellow diamond)
2. Antique Watch Collection (consists of approximately 150 antique
watches and clocks)
3. Light of Peace Satellite Stone
4. Star of Texas (48.17 carat diamond, natural sherry color, set with
nine 5.5 mm white round diamonds and nine 4.5 mm yellow round diamonds
in 18K mounting)
5. Tiara (consists of 240 carat (total weight) turquoise stones and 10
carats total weight diamonds)
6. Broach (27.92 carat (total weight) diamonds consisting of 36 marquise
cut, 16 round cut, 22 pear cut and 23 baguette cut diamonds set in
platinum)
7. Art Collection
8. Richey Road, Houston, Texas
Approximately 17.7 acres land
9. 900 W. Texas Ave., Baytown, Texas
99,315 s.f. land, 1.5 story, 22,400 s.f. building
10. Approximately 31 acres in Irving, Texas
156
EXHIBIT A
INTERCOMPANY NOTE
____________, 19______
Evidences of all loans or advances ("Loans") made hereunder
shall be reflected on the grid attached hereto. FOR VALUE RECEIVED,
______________, a ________________ corporation (the "Maker"), HEREBY PROMISES
TO PAY ON DEMAND to the order of ________________ (the "Holder") the principal
sum of the aggregate unpaid principal amount of all Loans (plus accrued
interest thereon) at any time and from time to time made hereunder which has
not been previously paid.
All capitalized terms used herein that are defined in, or by
reference in, the Indenture between Zale Corporation, a Delaware corporation
(the "Company"), Zale Delaware, Inc., a Delaware corporation (the "Guarantor"),
and Bank One, N.A., as trustee, dated as of September 30, 1997 (the
"Indenture"), have the meanings assigned to such terms therein, or by reference
therein, unless otherwise defined.
ARTICLE I
TERMS OF INTERCOMPANY NOTE
Section 1.01 Note Not Forgivable. Unless the Maker of the
Loan hereunder is the Company or any Guarantor, the Holder may not forgive any
amounts owing under this intercompany note.
Section 1.02 Interest: Prepayment. (a) The interest rate
("Interest Rate") on the Loans shall be a rate per annum reflected on the grid
attached hereto.
(b) The interest, if any, payable on each of the
Loans shall accrue from the date such Loan is made and, subject to Section
2.01, shall be payable upon demand of the Holder.
(c) If the principal or accrued interest, if any,
of the Loans is not paid on the date demand is made, interest on the unpaid
principal and interest will accrue at a rate equal to the Interest Rate, if
any, plus 100 basis points per annum from maturity until the principal and
interest on such Loans are fully paid.
(d) Subject to Section 2.01, any amounts hereunder may be
repaid at any time by the Maker.
Section 1.03 Subordination. All Loans made to the Company
OR any Guarantor shall be subordinated in right of payment to the payment and
performance of
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the obligations of the Company, the Guarantors and any Restricted Subsidiary
under the Indenture, the Securities, the Guarantees or any other Indebtedness
ranking pari passu with the Securities or the Guarantees, including, without
limitation, any Indebtedness incurred under the Credit Facility; provided, that
with respect to a Subsidiary in any specific instance, such Restricted
Subsidiary is also an obligor under the Indenture, the Securities, the
Guarantees or such other pari passu Indebtedness, as the case may be, whether
as a borrower, guarantor or pledgor of collateral.
ARTICLE II
EVENTS OF DEFAULT
Section 2.01 Events of Default. If after the date of issuance of
this Loan (i) an Event of Default has occurred under the Indenture, (ii) an
Event of Default (as defined) has occurred under the Credit Facility or any
refinancing of the Credit Facility or (iii) an "event of default" (as defined)
has occurred under any other Indebtedness of the Company or any Guarantor, then
(x) in the event the Maker is not either one of the Company or a Guarantor, all
amounts owing under the Loans hereunder shall be immediately due and payable to
the Holder, and (y) in the event the Maker is either the Company or a
Guarantor, the amounts owing under the Loans hereunder shall not be due and
payable; provided, however, that if such Event of Default or event of default
has been waived, cured or rescinded, such amounts shall no longer be due and
payable in the case of clause (x), and such amounts may be payable in the case
of clause (y). If the Holder is a Subsidiary, then the Holder hereby agrees
that if it receives any payments or distributions on any Loan from the Company
or a Guarantor which is not payable pursuant to clause (y) of the prior
sentence after any Event of Default or event of default described in clauses
(i), (ii) or (iii) above has occurred, is continuing and has not been waived,
cured or rescinded, it will pay over and deliver forthwith to the Company or
such Guarantor, as the case may be, all such payments and distributions.
ARTICLE III
MISCELLANEOUS
Section 3.01 Amendments, Etc. No amendment or waiver of any
provision of this intercompany note, or consent to depart herefrom is permitted
at any time for any reason, except with the consent of the Holders of not less
than a majority in aggregate principal amount of the Outstanding Securities.
Section 3.02 Assignment. No party to this Agreement may
assign, in whole or in part, any of its rights and obligations under this
intercompany note, except to its legal successor in interest.
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Section 3.03 Third Party Beneficiaries. The holders of the
Securities or any other Indebtedness ranking pari passu with or senior to, the
Securities or any Guarantees, including without limitation, any Indebtedness
incurred under the Credit Facility, shall be third party beneficiaries to this
intercompany note and upon an Event of Default shall have the right to enforce
this intercompany note against the Company or any of its Subsidiaries.
Section 3.04 Headings. Article and Section headings in this
intercompany note are included for convenience of reference only and shall not
constitute a part of this intercompany note for any other purpose.
Section 3.05 Entire Agreement. This intercompany note sets
forth the entire agreement of the parties with respect to its subject matter
and supersedes all previous understandings, written or oral, in respect
thereof.
Section 3.06 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK (WITHOUT
GIVING EFFECT TO THE CONFLICT OF LAWS PRINCIPLES THEREOF).
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Section 3.07 Waivers. The Maker hereby waives presentment,
demand for payment, notice of protest and all other demands and notices in
connection with the delivery, acceptance, performance or enforcement hereof.
By:______________________________________
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BORROWINGS, MATURITIES, AND PAYMENTS OF PRINCIPAL
Amount of Maturity of Amount
Borrowing/ Borrowing/ Principal Paid Unpaid Principal Notation
Date Principal Principal or Prepaid Balance Made by
- ---------- --------------- ------------------- ----------------------- ------------------- -----------------------
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Exhibit B
Form of Certificate to Be Delivered
in Connection with Transfers
Pursuant to Regulation S
________________, _____
Bank One, N.A.
100 East Broad Street
Columbus, Ohio 43215
Attention: Corporate Trust Division
Re: Zale Corporation (the "Company")
8 1/2% Senior Notes due 2007 (the "Securities")
Ladies and Gentlemen:
In connection with our proposed sale of $________ aggregate principal
amount of the Securities, we confirm that such sale has been effected pursuant
to and in accordance with Regulation S under the Securities Act of 1933, as
amended, and, accordingly, we represent that:
(1) the offer of the Securities was not made to a person in
the United States;
(2) either (a) at the time the buy order was originated, the
transferee was outside the United States or we and any person acting
on our behalf reasonably believed that the transferee was outside the
United States or (b) the transaction was executed in, on or through
the facilities of a designated off-shore securities market and neither
we nor any person acting on our behalf knows that the transaction has
been pre-arranged with a buyer in the United States;
(3) no directed selling efforts have been made in the United
States in contravention of the requirements of Rule 903(b) or Rule
904(b) of Regulation S, as applicable; and
(4) the transaction is not part of a plan or scheme to evade
the registration requirements of the U.S. Securities Act of 1933, as
amended.
In addition, if the sale is made during a restricted period and the
provisions of Rule 903(c)(3) or Rule 904(c)(1) of Regulation S are applicable
thereto, we confirm that such sale has been made in accordance with the
applicable provisions of Rule 903(c)(3) or Rule 904(c)(1), as the case may be.
162
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any
interested party in any administrative or legal proceedings or official inquiry
with respect to the matters covered hereby. Terms used in this certificate
have the meanings set forth in Regulation S.
Very truly yours,
[Name of Transferor]
By: ___________________________
Authorized Signature
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APPENDIX I
[FORM OF TRANSFER NOTICE]
FOR VALUE RECEIVED the undersigned registered holder hereby sell(s),
assign(s) and transfer(s) unto
Insert Taxpayer Identification No.
- -------------------------------------------------------------------------------
(Please print or typewrite name and address including zip code of assignee)
- -------------------------------------------------------------------------------
the within Security and all rights thereunder, hereby irrevocably constituting
and appointing
- -------------------------------------------------------------------------------
attorney to transfer such Security on the books of the Company with full power
of substitution in the premises.
[THE FOLLOWING PROVISION TO BE INCLUDED
ON ALL CERTIFICATES FOR SERIES A SECURITIES
EXCEPT PERMANENT OFFSHORE PHYSICAL
CERTIFICATES]
In connection with any transfer of this Security occurring prior to
the date which is the earlier of the date of an effective Registration
Statement or September 30, 1999, the undersigned confirms that without
utilizing any general solicitation or general advertising that:
[Check One]
[ ] (a) this Security is being transferred in compliance with the
exemption from registration under the Securities Act of 1933,
as amended, provided by Rule 144A thereunder.
or
[ ] (b) this Security is being transferred other than in accordance
with (a) above and documents are being furnished which comply
with the conditions of transfer set forth in this Security and
the Indenture.
If none of the foregoing boxes is checked, the Trustee or other Security
Registrar shall not be obligated to register this Security in the name of any
Person other than the Holder hereof unless
164
and until the conditions to any such transfer of registration set forth herein
and in Section 307 of the Indenture shall have been satisfied.
Date: _______________________ _______________________________________
NOTICE: The signature to this assignment
must correspond with the name as written upon
the face of the within-mentioned instrument
in every particular, without alteration or
any change whatsoever.
Signature Guarantee: _____________________________
[Signature must be guaranteed by an eligible Guarantor Institution (banks,
stock brokers, savings and loan associations and credit unions) with membership
in an approved guarantee medallion program pursuant to Securities and Exchange
Commission Rule 17Ad-15]
TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing this
Security for its own account or an account with respect to which it exercises
sole investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act
of 1933, as amended, and is aware that the sale to it is being made in reliance
on Rule 144A and acknowledges that it has received such information regarding
the Company as the undersigned has requested pursuant to Rule 144A or has
determined not to request such information and that it is aware that the
transferor is relying upon the undersigned's foregoing representations in order
to claim the exemption from registration provided by Rule 144A.
Dated: _________ ___________________________________________________
NOTICE: To be executed by an authorized signatory
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APPENDIX II
FORM OF TRANSFEREE CERTIFICATE
I or we assign and transfer this Security to:
- --------------------------------------------
Please insert social security or other identifying number of assignee
- ---------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Print or type name, address and zip code of assignee and irrevocably
appoint________________________________________________________________
[Agent], to transfer this Security on the books of the Company. The Agent may
substitute another to act for him.
Dated ____________________ Signed _____________________________
(Sign exactly as name appears on the other side of this Security)
[Signature must be guaranteed by an eligible Guarantor Institution (banks,
stock brokers, savings and loan associations and credit unions) with membership
in an approved guarantee medallion program pursuant to Securities and Exchange
Commission Rule 17 Ad-15]