OTHER MATERIAL
OBLIGATIONS. THE ACCRUAL OF INTEREST AND THE ACCRETION OR AMORTIZATION OF
ORIGINAL ISSUE DISCOUNT ON INDEBTEDNESS AND THE PAYMENT OF INTEREST IN THE FORM
OF ADDITIONAL INDEBTEDNESS ORIGINALLY INCURRED IN ACCORDANCE WITH THIS
SECTION 7.01A WILL NOT CONSTITUTE AN INCURRENCE OF INDEBTEDNESS.
SECTION 7.01B.
Zale Insurance Subsidiaries Indebtedness.
The Borrower shall
cause the Zale Insurance Subsidiaries not to: (A) incur any Indebtedness for
borrowed money secured by their assets; (B) other than in the ordinary course of
business, cancel or compromise any Indebtedness or waive any material rights
without receiving a realizable benefit of similar or greater value; or
(C) change in any material respect any of their policies with respect to
Investments, except as required by applicable law or regulation.
SECTION 7.02.
LIENS.
THE BORROWER SHALL NOT, AND SHALL NOT PERMIT ANY OTHER
LOAN PARTY TO, CREATE, INCUR, ASSUME OR PERMIT TO EXIST ANY LIEN ON ANY PROPERTY
OR ASSET NOW OWNED OR HEREAFTER ACQUIRED BY IT, EXCEPT:
(A)
LIENS CREATED UNDER THE LOAN DOCUMENTS;
(B)
PERMITTED ENCUMBRANCES;
(C)
ANY LIEN ON ANY PROPERTY OR ASSET OF ANY LOAN PARTY SET FORTH IN SCHEDULE
7.02 AND ANY EXTENSIONS OR RENEWALS THEREOF; PROVIDED THAT (I) SUCH LIEN SHALL
NOT APPLY TO ANY OTHER PROPERTY OR ASSET OF ANY LOAN PARTY OTHER THAN
AFTER-ACQUIRED PROPERTY AFFIXED OR INCORPORATED THERETO AND THE PROCEEDS OR
PRODUCTS THEREOF AND (II) SUCH LIEN SHALL SECURE ONLY THOSE OBLIGATIONS
(INCLUDING COMMITMENTS IN RESPECT THEREOF) THAT IT SECURES AS OF THE CLOSING
DATE, AND EXTENSIONS, RENEWALS AND REPLACEMENTS THEREOF THAT DO NOT INCREASE THE
AMOUNT THEREOF;
49
(D)
LIENS ON FIXED OR CAPITAL ASSETS ACQUIRED, CONSTRUCTED OR IMPROVED BY ANY
LOAN PARTY; PROVIDED THAT (I) SUCH LIENS SECURE INDEBTEDNESS PERMITTED BY CLAUSE
(F) OF SECTION 7.01A, (II) SUCH LIENS AND THE INDEBTEDNESS SECURED THEREBY ARE
INCURRED PRIOR TO OR WITHIN 180 DAYS AFTER SUCH ACQUISITION OR THE COMPLETION OF
SUCH CONSTRUCTION OR IMPROVEMENT, (III) THE INDEBTEDNESS SECURED THEREBY DOES
NOT EXCEED 100% OF THE COST OF ACQUIRING, CONSTRUCTING OR IMPROVING SUCH FIXED
OR CAPITAL ASSETS, (IV) SUCH LIENS SHALL NOT APPLY TO ANY OTHER PROPERTY OR
ASSETS OF THE LOAN PARTIES OTHER THAN AFTER-ACQUIRED PROPERTY AFFIXED OR
INCORPORATED THERETO AND PROCEEDS OR PRODUCTS THEREOF AND (V) IF REQUESTED BY
THE ADMINISTRATIVE AGENT, THE BORROWER OR SUCH LOAN PARTY WILL USE COMMERCIALLY
REASONABLE EFFORTS TO CAUSE THE HOLDER OF SUCH LIENS TO ENTER INTO AN
INTERCREDITOR AGREEMENT WITH THE ADMINISTRATIVE AGENT PROVIDING FOR ACCESS AND
USE OF THE PROPERTY IN CONNECTION WITH THE DISPOSITION OF ALL OR ANY PORTION OF
THE COLLATERAL ON TERMS REASONABLY SATISFACTORY TO THE ADMINISTRATIVE AGENT;
(E)
[INTENTIONALLY OMITTED];
(F)
LIENS ON INVENTORY AND PROCEEDS THEREOF (UP TO THE COST TO SUCH LOAN PARTY
OF SUCH INVENTORY) HELD ON CONSIGNMENT FROM TRADE VENDORS SECURING OBLIGATIONS
TO RETURN OR PAY THE PURCHASE PRICE OF SUCH INVENTORY;
(G)
VOLUNTARY OPTIONS IN FAVOR OF ANY OF THE LOAN PARTIES AND THEIR RESPECTIVE
SUBSIDIARIES TO PURCHASE REAL PROPERTY SUBJECT TO OPERATING LEASES;
(H)
[INTENTIONALLY OMITTED];