As filed with the Securities and Exchange Commission on October 13, 1998
Registration No. 333-40967
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
POST-EFFECTIVE AMENDMENT NO. 1 TO
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------------
FINLAY ENTERPRISES, INC.
(Exact name of registrant as specified in its charter)
----------------------
Delaware 13-3492802
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
529 Fifth Avenue, New York, New York 10175
(Address of Principal Executive Offices) (Zip Code)
Finlay Enterprises, Inc. 1997 Long Term Incentive Plan
(Full title of the plan)
Bonni G. Davis, Esq.
Secretary and Corporate Counsel
Finlay Enterprises, Inc.
529 Fifth Avenue
New York, New York 10175
(Name and address of agent for service)
(212) 808-2060
(Telephone number, including area code, of agent for service)
Copy to:
James Martin Kaplan, Esq.
Tenzer Greenblatt LLP
405 Lexington Avenue
New York, New York 10174
(212) 885-5000
----------------------
CALCULATION OF REGISTRATION FEE
================================================================================
Proposed maximum
Title of securities to be Amount to be offering
registered registered(1) price per share(2)
- --------------------------------------------------------------------------------
Common Stock, par value
$.01 per share 500,000 shares $10.4603
================================================================================
=====================================================
Proposed maximum
aggregate offering Amount of
price(2) registration fee
- -----------------------------------------------------
$5,230,150 $1,543
=====================================================
_____________________
(1) In addition, pursuant to Rule 416 under the Securities Act of 1933, as
amended, this Registration Statement also covers an indeterminate number of
shares which may be issued as a result of anti-dilution provisions
contained in the 1997 Long Term Incentive Plan, as amended (the "Plan").
(2) Estimated solely for purposes of determining the registration fee in
accordance with Rule 457(h) under the Securities Act of 1933, as follows:
(i) in the case of 363,933 shares underlying awards that remained available
for grant under the Plan on the date of filing of this Registration
Statement, based on the average of the high and low prices of the Common
Stock reported on the Nasdaq National Market on October 8, 1998, which was
$5.28125, and (ii) in the case of 136,067 shares underlying awards
outstanding under the Plan on the date of filing of this Registration
Statement, based on the aggregate exercise price of $3,308,128.94, the
aggregate price at which the awards may be exercised, which averages
$24.3125 per share.
-1-
<PAGE>
Explanatory Note:
- ----------------
This Post-Effective Amendment No. 1 to the Registrant's Registration
Statement on Form S-8 (Registration No. 333-40967) is being filed to increase
the number of shares of Common Stock, par value $.01 per share, registered in
connection with the Registrant's 1997 Long Term Incentive Plan, as amended, from
350,000 shares to 850,000 shares.
The contents of the Registrant's Registration Statement on Form S-8
(Registration No. 333-40967) are hereby incorporated by reference.
-2-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this Amendment
No. 1 to the Registrant's Registration Statement on Form S-8 to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of New York,
State of New York, on this 13th day of October, 1998.
FINLAY ENTERPRISES, INC.
By /s/Arthur E. Reiner
------------------------------------------
Arthur E. Reiner
President, Chief Executive Officer and
Vice Chairman
Pursuant to the requirements of the Securities Act of 1933, as amended,
this registration statement has been signed by the following persons in the
capacities and on the date indicated.
Name Title Date
---- ----- ----
* Chairman of the Board and October 13, 1998
- ------------------------- Director
David B. Cornstein
/s/Arthur E. Reiner President, Chief Executive Officer, October 13, 1998
- ------------------------- Vice Chairman and Director
Arthur E. Reiner (Principal Executive Officer)
/s/Barry D. Scheckner Senior Vice President and Chief October 13, 1998
- ------------------------- Financial Officer (Principal
Barry D. Scheckner Financial Officer)
/s/Bruce E. Zurlnick Treasurer (Principal Accounting October 13, 1998
- ------------------------- Officer)
Bruce E. Zurlnick
* Director October 13, 1998
- -------------------------
Norman S. Matthews
/s/James Martin Kaplan Director October 13, 1998
- -------------------------
James Martin Kaplan
* Director October 13, 1998
- -------------------------
Rohit M. Desai
-3-
<PAGE>
* Director October 13, 1998
- -------------------------
Thomas H. Lee
* Director October 13, 1998
- -------------------------
Warren C. Smith, Jr.
/s/Hanne M. Merriman Director October 13, 1998
- -------------------------
Hanne M. Merriman
*By: /s/Arthur E. Reiner
---------------------
Arthur E. Reiner
Attorney-in-Fact
-4-
<PAGE>
EXHIBIT INDEX
EXHIBIT DESCRIPTION
4.1 Finlay Enterprises, Inc. 1997 Long Term Incentive Plan, as
amended (the "Plan"), filed herewith.
4.2 Form of agreement for employees relating to stock options
granted under the Plan (incorporated by reference to Exhibit
4.2 to the Registrant's Registration Statement on Form S-8
(Registration No. 333-40967)).
4.3 Restated Certificate of Incorporation of the Registrant
(incorporated by reference to Exhibit 3.1 to the Registrant's
Annual Report on Form 10-K for the fiscal year ended January
28, 1995).
4.4 Amended and Restated By-laws of the Registrant (incorporated
by reference to Exhibit 3.2 to the Registrant's Registration
Statement on Form S-1 (Registration No. 33-88938)).
5.1 Opinion of Tenzer Greenblatt LLP, filed herewith.
23.1 Consent of Arthur Andersen LLP, filed herewith.
23.2 Consent of Tenzer Greenblatt LLP, set forth in the opinion
thereof filed herewith as Exhibit 5.1.
24.1 Power of Attorney of Hanne M. Merriman, filed herewith.
-5-
FINLAY ENTERPRISES, INC.
1997 LONG TERM INCENTIVE PLAN
1. Purpose of the Plan
-------------------
The purpose of the 1997 Long Term Incentive Plan is to promote the
interests of Finlay Enterprises, Inc. (the "Corporation") and its stockholders
by providing an incentive and reward for executive officers, directors, key
employees, consultants and other persons who are in a position to contribute
substantially to the progress and success of the Corporation and its
subsidiaries and thereby encourage such persons to seek such results; to closely
align the interests of such employees and other persons with the interests of
stockholders of the Corporation by linking rewards hereunder to stock
performance; to retain in the Corporation and its subsidiaries the benefits of
the services of such persons; and to attract to the service of the Corporation
and its subsidiaries new executive officers, directors, key employees,
consultants and other such persons of high quality.
2. Definitions
-----------
Unless otherwise required by the context, the terms used in this Plan shall
have the meanings ascribed to such terms in this Section 2.
"Award" shall mean an award granted under the Plan in one of the forms
provided in Section 6.
"Beneficiary," as applied to a participant, shall mean a person or entity
(including a trust or the estate of the participant) designated in writing by
the participant on such forms as the Committee may prescribe to receive benefits
under the Plan in the event of the death of the participant; provided, however,
that if, at the death of a participant, there shall not be any living person or
entity in existence so designated, the term "beneficiary" shall mean the legal
representative of the participant's estate.
"Board" or "Board of Directors" shall mean the Board of Directors of the
Corporation.
"Code" shall mean the Internal Revenue Code of 1986, as amended from time
to time. References to any provision of the Code shall be deemed to include
regulations and proposed regulations thereunder and successor provisions and
regulations thereto.
"Committee" shall mean the Compensation Committee of the Board of
Directors, and/or any other committee or subcommittee the Board may appoint to
administer the Plan as provided herein. A Committee composed solely of two or
more members of the Board who meet (i) the definition of "outside director"
under Section 162(m) of the Code, (ii) the definition of "non-employee director"
under Section 16 of the Exchange Act and (iii) any similar or successor laws
hereinafter enacted, shall administer the Plan with respect to participants who
are Covered Employees or who are subject to Section 16 of the Exchange Act at
the time of the relevant Committee action; provided, however, that if, at any
time, no Committee shall be in office, then the functions of the Committee
specified in this Plan shall be exercised by the Board or by any other committee
appointed by the Board.
"Common Stock" shall mean the Common Stock of the Corporation, $.01 par
value, or such other class of shares or other securities as may be applicable
pursuant to the provisions of Section 8.
"Covered Employee" shall mean any employee of the Corporation or any of its
Subsidiaries who is deemed to be a "covered employee" within the meaning of
Section 162(m) of the Code.
<PAGE>
"Detrimental Activity" shall mean any activity by a participant or former
participant in the Plan that is determined by the Executive Committee of the
Corporation in its sole discretion to be deleterious to the interests of the
Corporation or any Subsidiary.
"Disability" shall mean the permanent and total disability as defined by
Section 22(e)(3) of the Code.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
References to any provision of the Exchange Act shall be deemed to include the
rules and regulations thereunder and successor provisions and rules and
regulations thereto.
"Incentive Stock Option" shall mean any stock option designated as, and
qualified as, an "incentive stock option" within the meaning of Section 422 of
the Code.
"Limited Stock Appreciation Right" shall mean a right granted pursuant to
paragraph 6.6 to receive cash based on the increase in Market Value of the
shares of Common Stock subject to such right in the limited circumstances set
forth therein.
"Market Value," as applied to any date, shall mean the mean between the
highest and lowest sale prices of the Common Stock as reported on the principal
national securities exchange or National Association of Securities Dealers
Automated Quotation/National Market System ("NASDAQ/NMS"), as the case may be,
on which such stock is listed and traded for such date or, if there is no such
sale on that date, then on the last preceding date on which such a sale was
reported. If the Common Stock is not quoted or listed on an exchange or on
NASDAQ/NMS, or representative quotes are not otherwise available, the Market
Value shall mean the amount determined by the Committee to be the fair market
value based upon a good faith attempt to value the Common Stock accurately and
computed in accordance with applicable regulations of the Internal Revenue
Service.
"Non-Employee Director" shall mean a member of the Board who is not an
employee of the Corporation or any of its Subsidiaries.
"Nonqualified Stock Option" shall mean an Option that is not an Incentive
Stock Option.
"Option" or "Stock Option" shall mean an option to purchase shares of
Common Stock granted pursuant to paragraph 6.3.
"Performance Unit" shall mean a contingent right granted pursuant to
paragraph 6.5 to receive an award, payable either in cash or in Common Stock, if
specific goals prescribed by the Committee are attained.
"Plan" shall mean the 1997 Long Term Incentive Plan of the Corporation set
forth herein, as such may be amended and supplemented from time to time.
"Restricted Stock" shall mean shares of Common Stock issued or transferred
subject to restrictions precluding a sale or other disposition for a period of
time (other than as specifically may be permitted) and requiring as a condition
to retention compliance with any other terms and conditions that may be imposed
by the Committee.
"Retirement" shall mean the termination of the participant's employment
with the Corporation and its Subsidiaries for retirement purposes if such
termination occurs on or after his normal retirement date as defined under the
Corporation's Retirement Income Plan.
"Rule 16b-3," as applied on a specific date, shall mean Rule 16b-3 of the
General Rules and Regulations under the Exchange Act as then in effect or any
other provision that may have replaced such Rule and be then in effect.
<PAGE>
"Stock Appreciation Right" shall mean a right granted pursuant to paragraph
6.4 to receive cash or Common Stock based on the increase in Market Value of the
shares of Common Stock subject to such right.
"Stock Award" shall mean a form of Award granted pursuant to paragraph 6.2.
"Subsidiary" shall mean a corporation or other form of business association
of which shares (or other ownership interests) having 50% or more of the voting
power are owned or controlled, directly or indirectly, by the Corporation.
"Year" shall mean the Corporation's then applicable fiscal year.
3. Scope of the Plan; Eligibility
------------------------------
3.1. The Plan shall apply to the Corporation and Subsidiaries other than
those specifically excluded by the Board of Directors.
3.2. Awards may be made or granted, subject to applicable law, to executive
officers, directors, key employees, consultants and other persons who are deemed
to render significant services to the Corporation or its Subsidiaries and/or who
are deemed to have the potential to contribute to the future success of the
Corporation. The term "employees" shall include officers who are employees of
the Corporation or of a Subsidiary, as well as other employees of the
Corporation and its Subsidiaries. No Incentive Stock Option shall be granted to
any person who is not an employee of the Corporation or a "subsidiary" (as
defined in Section 424 of the Code) at the time of grant.
4. Administration
--------------
4.1. The Plan shall be administered by the Committee. Subject to the
express provisions of the Plan, the Committee shall have the full power to
interpret and administer the Plan, including, but without limiting the
generality of the foregoing, determining who shall be participants in the Plan,
the amount to be awarded to each participant and the form, manner of payment,
conditions, time and terms of payment of Awards. The interpretation by the
Committee of the terms and provisions of the Plan and the administration
thereof, as well as all actions taken by the Committee, shall be final, binding
and conclusive on the Corporation, its stockholders, Subsidiaries, all
participants and employees, and upon their respective Beneficiaries, successors
and assigns, and upon all other persons claiming under or through any of them.
4.2. The Committee may adopt such rules and regulations, not inconsistent
with the provisions of the Plan, as it deems necessary to determine
participation in the Plan, the form and distribution of benefits thereunder and
the proper administration of the Plan, and may amend or revoke any such rule or
regulation.
4.3. Unless authority is specifically reserved to the Board of Directors
under the terms of the Plan, the Corporation's Certificate of Incorporation or
By-laws, or applicable law, the Committee shall have sole discretion in
exercising authority under the Plan. The Committee shall select one of its
members as its chairman and shall hold meetings at such times and places as it
shall deem advisable. Any action of the Committee shall be taken with the
approval of a majority of its members present and voting at a meeting duly
called and held at which a quorum is present. A majority of the Committee's
members shall constitute a quorum. Any action may be taken by a written
instrument signed by all members of the Committee and such action shall be fully
as effective as if taken by a majority of the members at a meeting duly called
and held. The Committee may delegate to officers or managers of the Corporation
or any Subsidiary of the Corporation the authority, subject to such terms as the
Committee shall determine, to perform administrative functions and, with respect
to participants not subject to Section 16 of the Exchange Act, to perform such
other functions as the Committee may determine, to the extent permitted under
Rule 16b-3 and applicable law.
<PAGE>
4.4. Each member of the Committee shall be entitled to rely or act in good
faith upon any report or other information furnished to him by any officer or
other employee of the Corporation or any Subsidiary, the Corporation's
independent certified public accountants, or any executive compensation
consultant, legal counsel or other professional retained by the Corporation to
assist in the administration of the Plan. No member of the Committee, nor any
officer or employee of the Corporation or a Subsidiary acting on behalf of the
Committee, shall be personally liable for any action, determination or
interpretation taken or omitted to be taken or made in good faith with respect
to the Plan, and such persons shall, to the extent permitted by law, be fully
indemnified and protected by the Corporation with respect to any such action,
determination or interpretation.
5. Shares Subject to the Plan.
---------------------------
5.1. Subject to adjustment as provided in Section 8 hereof, the total
number of shares of Common Stock reserved for delivery to participants in
connection with Awards under the Plan shall be 850,000. If any shares of Common
Stock subject to an Award at or after the effective date of the Plan are
forfeited or such Award is settled in cash or otherwise terminates or is settled
without delivery of shares of Common Stock to the participant, such number of
shares shall be available for new Awards under the Plan.
5.2. No Award (including an Award that may only be settled in cash) may be
granted if the number of shares of Common Stock to which such Award relates,
when added to the number of shares previously delivered under the Plan and the
number of shares to which other then-outstanding Awards relate, exceeds the
number of shares of Common Stock deemed available under this Section 5. The
Committee may adopt procedures for the counting of shares under this Section 5
to ensure appropriate counting, avoid double counting (in the case of tandem or
substitute Awards), and provide for adjustments in any case in which the number
of shares actually delivered differs from the number of shares previously
counted in connection with an Award. Any shares of Common Stock delivered
pursuant to an Award may consist, in whole or in part, of authorized and
unissued shares or treasury shares.
6. Terms of Awards
---------------
6.1. Grants of Awards. Awards may be granted, in whole or in part, in one
or more following forms:
(a) A Stock Award in accordance with paragraph 6.2;
(b) An Option, in accordance with paragraph 6.3;
(c) A Stock Appreciation Right, in accordance with paragraph 6.4.
(d) A Performance Unit in accordance with paragraph 6.5.
(e) A Limited Stock Appreciation Right in accordance with paragraph
6.6.
6.2. Stock Awards. Awards granted as Stock Awards shall be in the form of
an issuance of (i) shares of Restricted Stock or (ii) shares which are not
subject to any restrictions on sale or disposition. Such Stock Awards shall
contain such terms and conditions as the Committee shall determine, including,
with respect to a Stock Award of Restricted Stock, provisions relating to
forfeiture of all or any part of the Restricted Stock upon termination of
employment prior to expiration of a designated period of time or upon the
occurrence of other events; provided, however, that upon the issuance of shares
pursuant to a Stock Award of Restricted Stock, the participant shall, with
respect to such shares, be and become a stockholder of the Corporation entitled
to receive dividends, to vote and to exercise all other rights of a stockholder
except to the extent otherwise specifically provided in the Stock Award. The
certificate for any shares of Common Stock issued or transferred as Restricted
Stock shall either be deposited in escrow or carry an appropriate legend as the
Committee shall determine.
<PAGE>
6.3. Options. Awards granted as Options shall be subject to the following
provisions:
(a) Options granted shall be either Incentive Stock Options or Nonqualified
Stock Options, as the Committee shall specify at the time the Option is granted.
(b) The price at which shares of Common Stock covered by each Option may be
purchased pursuant thereto shall be determined in each case by the Committee,
but shall not be less than the par value of such shares or, with respect to
Incentive Stock Options, not less than 100% of the Market Value of the Common
Stock on the date the Option is granted. Notwithstanding the foregoing, in the
case of an Incentive Stock Option granted to a participant who (applying the
rules of Section 424(d) of the Code) owns stock possessing more than ten percent
(10%) of the total combined voting power of all classes of stock of the employer
corporation (or a "parent" or "subsidiary" of such corporation within the
meaning of Section 424 of the Code) (a "Ten-Percent Stockholder"), the exercise
price per share shall not be less than one hundred and ten percent (110%) of the
Market Value of the Common Stock on the date on which the Option is granted.
(c) Each Option shall expire at such time as the Committee may determine at
the time such Option is granted, but not later, in the case of Incentive Stock
Options, than ten years (or, in the case of Incentive Stock Options granted to a
Ten-Percent Stockholder, not later than five years) from the date such Option is
granted. The term of any Nonqualified Stock Option may, with the consent of the
holder of the Option, be extended by the Committee at any time prior to the
expiration of the Option without further consideration to the Corporation and,
except to the extent otherwise provided in the Code, such extension shall not be
deemed the grant of a new or additional Option for any purpose under the Plan or
otherwise.
(d) Each Option shall first become exercisable at such time or times as the
Committee may determine at the time such Option is granted, except that:
(i) In the event the employment of a participant is terminated by
reason of Retirement, death or Disability, all unexercised Options shall
thereupon, subject to the other provisions below of this paragraph 6.3,
become exercisable for the period provided in connection with such
termination in paragraph (e); and
(ii) Options granted shall not be affected by any change in the nature
of the participant's employment so long as he continues to be employed by
the Corporation or a Subsidiary. Approved leaves of absence shall not be
considered a termination or interruption of full-time employment for any
purpose of the Plan.
(e) The Committee shall determine and set forth in each option agreement
governing an Option granted under the Plan rules that specify the period, if
any, after termination of employment during which an Option shall be
exercisable, provided that in the case of an Incentive Stock Option, such Option
shall in no event be exercisable more than ten years (or, in the case of an
Incentive Stock Option granted to a Ten-Percent Stockholder, five years) after
the date of grant.
(f) Subject to the provisions of paragraphs 6.3(c), (d) and (e), Options
may be exercised, in part or in whole, at any time or from time to time during
the term of the Option.
(g) An Option shall be considered exercised under the Plan on the date
written notice is mailed to the Secretary of the Corporation, postage prepaid,
or delivered in person to the Secretary, advising of the exercise of a
particular Option and transmitting payment of the Option price for the shares
involved, plus any withholding tax required under any federal, state and local
statutes; provided, however, that this provision shall not preclude exercise of
an Option by any other proper legal method.
(h) Options are not transferable other than by will or by the laws of
descent and distribution, and during a participant's lifetime are exercisable
only by him.
<PAGE>
(i) The Committee may place such conditions on the exercise of Options and
on the transferability of shares received on exercise of an Option, in addition
to those contained herein, as it shall deem appropriate.
(j) No shares shall be issued or transferred upon exercise of an Option
until full payment of the exercise price therefor has been made. Such exercise
price may be paid (i) in cash, (ii) to the extent authorized by the Committee,
in whole shares of Common Stock owned by the participant prior to exercising the
Option, (iii) to the extent authorized by the Committee, by having the
Corporation withhold a number of shares from the exercise having a Market Value
equal to the exercise price, (iv) by delivery of any other property acceptable
to the Corporation or (v) by any combination thereof. Notwithstanding the
preceding sentence, the Corporation and the participant may agree upon any other
reasonable manner of providing for payment of the exercise price of the Option.
For the purpose of such payment, the sum of the Market Value of the shares of
Common Stock and any such other property on the date of exercise plus any cash
payment shall not be less than the option price of the shares to be issued or
transferred. Payments of the exercise price of an Option that are made in the
form of Common Stock (which shall be valued at Market Value) may be made by (i)
delivery of stock certificates in negotiable form or (ii) unless otherwise
determined by the Committee, delivery of the participant's representation that,
on the date of exercise, he owns the requisite number of shares and, unless such
shares are registered in the participant's name as verified by the records of
the Corporation's transfer agent, a representation executed by the participant's
brokerage firm or other entity in whose name such shares are registered that on
the date of exercise the participant beneficially owns the requisite number of
shares ("Certificateless Exercise"). Delivery of such a representation pursuant
to a Certificateless Exercise shall be treated as the delivery of the specified
number of shares of Common Stock; provided, however, that the number of shares
issued to the participant upon exercise of the Option shall be reduced by the
number of shares specified in the representation.
6.4. Stock Appreciation Rights. Awards granted as Stock Appreciation Rights
shall be the subject of the following provisions:
(a) Stock Appreciation Rights may be granted only in connection with an
Option (the "Related Option"), either at the time of the grant of such Option or
at any time thereafter during the term of the Option.
(b) Each Stock Appreciation Right shall provide that the holder thereof may
exercise the same by surrendering the Related Option or any portion thereof, to
the extent unexercised, and upon such exercise and surrender shall be entitled
to receive other cash or shares of Common Stock in the amount determined
pursuant to clause (ii) of paragraph 6.4(c). Such Option shall, to the extent so
surrendered, thereupon cease to be exercisable.
(c) Stock Appreciation Rights shall be further subject to the following
terms and conditions and to such other terms and conditions, not inconsistent
with the Plan, as the Committee shall from time to time approve:
(i) Stock Appreciation Rights shall be exercisable at such time or
times and to the extent, but only to the extent, that the Related Option
shall be exercisable.
(ii) Upon exercise of Stock Appreciation Rights, the holder thereof
shall receive, at the option of the Corporation, either (i) cash in an
amount equal to the excess of the Market Value of a share of Common Stock
on the date of such exercise over the exercise price per share of Common
Stock subject to the Related Option multiplied by the number of shares of
Common Stock in respect of which the Stock Appreciation Rights are
exercised (the "Settlement Amount") or (ii) such number of shares of Common
Stock as shall be determined by dividing the Settlement Amount by the
Market Value of a share of Common Stock on the date of exercise of the
Stock Appreciation Rights.
<PAGE>
(d) To the extent that Stock Appreciation Rights shall be exercised, the
Related Option shall be deemed to have been exercised for the purpose of the
maximum limitation set forth in paragraph 5.1.
(e) Stock Appreciation Rights may be exercised by the form of notice
provided for the exercise of an Option under paragraph 6.3(g).
(f) Any provision of this Section 6 to the contrary notwithstanding, no
payment or exercise of Stock Appreciation Rights by a participant subject to the
Exchange Act shall be made other than in compliance with Rule 16b-3.
(g) Stock Appreciation Rights are not transferable other than by will or
the laws of descent and distribution, and during a participant's lifetime are
exercisable only by him.
6.5. Performance Units. Awards granted as Performance Units shall be
subject to the following provisions:
(a) The performance period for the attainment of the performance goal shall
be a cycle of not less than two nor more than five fiscal years of the
Corporation, as determined by the Committee. The Committee may establish more
than one cycle for any particular Performance Unit.
(b) The Committee shall establish a dollar value for each Performance Unit,
the principal and minimum performance goals to be attained in respect of the
Performance Unit, the various percentages of the Performance Unit value to be
paid out upon the attainment, in whole or in part, of the performance goals and
such other Performance Unit terms, conditions and restrictions as the Committee
deems appropriate. The business criteria used by the Committee in establishing
such performance goals shall include (i) return on equity, (ii) operating
income, (iii) earnings and (iv) return on invested capital, and any such
performance goals may be modified by the Committee during the course of a
performance cycle to take into account changes in conditions that occur.
Notwithstanding the foregoing, in the case of a Performance Unit granted to a
Covered Employee, no business criteria other than those enumerated herein may be
used in establishing the performance goal for such Performance Unit, and no such
performance goal may be modified by the Committee during the course of a
performance cycle except in accordance with Section 162(m) of the Code. As soon
as practicable after the termination of the performance period, the Committee
shall determine what, if any, payment is due on the Performance Unit in
accordance with the terms thereof.
(c) In the event of a participant's Retirement prior to the expiration of
the performance cycle established for any Performance Units he may have been
awarded, such units shall, to the extent that they are not fully vested at the
time of Retirement, thereupon become fully vested and be payable on expiration
of the performance cycle; provided, however, that the percentage of the
Performance Unit to be paid out upon the attainment of the performance goals
shall be reduced by multiplying that amount by a fraction, the numerator of
which is the number of months remaining in the performance cycle following the
date of Retirement and the denominator of which is the total number of months in
the performance cycle. If a participant's employment with the Corporation and
its Subsidiaries shall be terminated for any other reason prior to the
expiration of the performance cycle established for any Performance Units he has
been awarded, such units shall be canceled automatically unless the Committee,
in its sole discretion, and subject to limitations as it may deem advisable,
determines to make full or partial payment with respect to such Performance
Units, whether at the time of termination, at the expiration of the performance
cycle or otherwise. Without limiting the generality of the foregoing, any unpaid
portion of a Performance Unit otherwise payable to a terminated participant
shall be forfeited if such participant at any time engages in Detrimental
Activity. Notwithstanding the foregoing, in the case of Performance Units
granted to Covered Employees, this paragraph 6.5(c) shall not be given effect
if, as a result thereof, such Performance Units shall lose the protection
afforded by Section 162(m) of the Code.
(d) Payment of Performance Units shall be made, at the discretion of the
Committee, either in cash in the amount of the dollar value of the Performance
<PAGE>
Units awarded or in Common Stock having a Market Value at the time such award is
paid equal to such dollar amount. Payments made in the form of Common Stock
shall be charged against the maximum limitations for shares of Common Stock
provided in paragraph 5.1.
(e) Performance Units are not transferable other than by will or by the
laws of descent and distribution and during a participant's lifetime payments in
respect thereof shall be made only to the participant.
6.6. Limited Stock Appreciation Rights.
----------------------------------
Awards granted as Limited Stock Appreciation Rights shall be subject to the
following provisions:
(a) A Limited Stock Appreciation Right may be granted only in connection
with a Related Option, either at the time of the grant of such Option or at any
time thereafter during the term of such Option.
(b) Unless otherwise determined by the Committee, a Limited Stock
Appreciation Right may be exercised only during the period (i) beginning on the
first day following a Change of Control and (ii) ending on the thirtieth day (or
such other date specified by the Committee at the time of grant of the Limited
Stock Appreciation Right) following such date (such period herein referred to as
the "Limited Rights Exercise Period"). Each Limited Stock Appreciation Right
shall be exercisable during the Limited Rights Exercise Period only to the
extent the Related Option is then exercisable, and in no event after termination
of the Related Option. Limited Stock Appreciation Rights granted under the Plan
shall be exercisable in whole or in part in the manner provided for exercise of
Stock Appreciation Rights pursuant to paragraph 6.4.
(c) Upon the exercise of Limited Stock Appreciation Rights, the holder
shall receive in cash an amount equal to the excess of the Market Value on the
date of exercise of each share of Common Stock with respect to which such
Limited Stock Appreciation Rights shall have been exercised over the exercise
price per share of Common Stock subject to the Related Option, multiplied by the
number of shares of Common Stock in respect of which the Limited Stock
Appreciation Rights are exercised.
(d) To the extent that Limited Stock Appreciation Rights shall be
exercised, the Related Option shall be deemed to have been exercised for the
purpose of the maximum limitation set forth in paragraph 5.1.
(e) For purposes of this Section 6.6, a "Change in Control" shall be deemed
to have occurred if:
(i) the stockholders of the Corporation shall have approved (A) any
consolidation or merger of the Corporation in which the Corporation is not
the continuing or surviving corporation or pursuant to which shares of
Common Stock would be converted into cash, securities or other property,
other than a merger of the Corporation in which the holders of Common Stock
immediately prior to the merger have the same proportionate ownership of
common stock of the surviving corporation immediately after the merger, or
(B) any sale, lease, exchange or other transfer (in one transaction or a
series of related transactions) of all, or substantially all, of the assets
of the Corporation, or (C) the adoption of any plan or proposal for the
liquidation or dissolution of the Corporation;
(ii) any person (as such term is defined in Sections 13(d)(3) and
14(d)(2) of the Exchange Act), corporation or other entity (other than the
Corporation or any employee benefit plan sponsored by the Corporation or
any Subsidiary) (A) shall have purchased any Common Stock (or securities
convertible into the Common Stock) for cash, securities, or any other
consideration pursuant to a tender offer, without the prior consent of the
Board of Directors, or (B) shall have become the "beneficial owner" (as
such term is defined in Rule 13d-3 under the Exchange Act), directly or
<PAGE>
indirectly, of securities of the Corporation representing fifteen percent
(15%) or more of the issued and outstanding Common Stock; or
(iii) individuals who on the date of the adoption of the Plan
constituted the entire Board shall have ceased for any reason to constitute
a majority unless the election, or the nomination for election by the
Corporation's stockholders, of each new director was approved by a vote of
at least a majority of the directors then still in office.
7. Limit on Awards.
----------------
7.1. Notwithstanding any provision contained herein, the aggregate Market
Value of the shares of Common Stock with respect to which Incentive Stock
Options are first exercisable by any employee during any calendar year (under
all stock option plans of the employee's employer corporation and its "parent"
and "subsidiary" corporation within the meaning of Section 424 of the Code)
shall not exceed $100,000.
7.2. Notwithstanding any provision contained herein, no participant may be
granted under the Plan, during any Year, Options or other Awards relating to
more than 175,000 shares of Common Stock, subject to adjustment in accordance
with Section 8 hereof. With respect to an Award that may be settled in cash, no
participant may be paid in respect of any fiscal year an amount that exceeds the
greater of the Market Value of the number of shares of Common Stock set forth in
the preceding sentence at the date of grant or at the date of settlement of the
Award, provided that this limitation is separate from and not affected by the
number of Awards granted during such fiscal year subject to the limitation in
the preceding sentence.
8. Adjustments.
------------
In the event that the Committee shall determine that any dividend or other
distribution (whether in the form of cash, shares of Common Stock or other
property), recapitalization, forward or reverse split, reorganization, merger,
consolidation, spin-off, combination, repurchase or share exchange, or other
similar corporate transaction or event, affects the shares of Common Stock such
that an adjustment is appropriate in order to prevent dilution or enlargement of
the rights of participants under the Plan, then the Committee shall, in such
manner as it may deem equitable, adjust any or all of (i) the number and kind of
shares which may thereafter be delivered in connection with Awards, (ii) the
number and kind of shares that may be delivered or deliverable in respect of
outstanding Awards, (iii) the number of shares with respect to which Awards may
be granted to a given participant and (iv) the exercise price, grant price, or
purchase price relating to any Award or, if deemed appropriate, make provision
for a cash payment with respect to any outstanding Award; provided, however,
that, with respect to Incentive Stock Options, no such adjustment shall be
authorized to the extent that such authority would cause the Plan to violate
Section 422(b)(1) of the Code or previously issued Incentive Stock Options to
lose their status as such and, with respect to Awards granted to Covered
Employees, no such adjustment shall be authorized to the extent that such
adjustment would cause such Award to lose the benefits of Section 162(m) of the
Code.
9. General Provisions.
-------------------
9.1. Compliance With Legal and Exchange Requirements. The Corporation shall
not be obligated to deliver shares of Common Stock upon the exercise or
settlement of any Award or take other actions under the Plan until the
Corporation shall have determined that applicable federal and state laws, rules
and regulations have been complied with and such approvals of any regulatory or
governmental agency have been obtained and contractual obligations to which the
Award may be subject have been satisfied. The Corporation, in its discretion,
may postpone the issuance or delivery of shares of Common Stock under any Award
until completion of such listing or registration or qualification of such shares
or other required action under any federal or state law, rule or regulation as
the Corporation may consider appropriate, and may require any participant to
make such representations and furnish such information as it may consider
<PAGE>
appropriate in connection with the issuance or delivery of shares under the
Plan.
9.2. Awards Granted to Foreign Participants. Awards granted to a
participant who is subject to the laws of a country other than the United States
of America may contain terms and conditions inconsistent with the provisions of
the Plan (except those necessary to retain the benefits of Section 162(m) or
Section 422 of the Code), or may be granted under such supplemental documents,
as required under such laws.
9.3. No Right to Continued Employment. Neither the Plan nor any action
taken hereunder shall be construed as creating any contract of employment
between the Corporation or any of its Subsidiaries and any employee or otherwise
giving any employee the right to be retained in the employ of the Corporation or
any of its Subsidiaries, nor shall it interfere in any way with the right of the
Corporation or any of its Subsidiaries to terminate any employee's employment at
any time.
9.4. Withholding Taxes. In the event that the Corporation or any of its
Subsidiaries shall be required to withhold any amounts by reason of any federal,
state, or local tax law, rule or regulation by reason of the grant to or
exercise by a participant of any Award, the participant shall make available to
the Corporation or its Subsidiaries, promptly when required, sufficient funds to
meet the Corporation's or Subsidiary's requirement of such withholding, and the
Corporation shall be entitled to take such steps as the Committee may deem
advisable in order to have such funds available to the Corporation or its
Subsidiary at the required time or times. This Committee authority shall include
authority to deduct and withhold such required amounts from any other cash
payment or payments to be made by the Corporation or its Subsidiaries (including
from payroll) to such participant or to withhold or receive shares of Common
Stock or other property, on a mandatory basis or at the election of the
participant, and to make cash payments in respect thereof in satisfaction of a
participant's tax obligations (which may include mandatory withholding
obligations and obligations of the participant in excess of such mandatory
obligations relating to an Award).
9.5. Changes to the Plan and Awards. The Board may amend, alter, suspend,
discontinue or terminate the Plan or the Committee's authority to grant Awards
under the Plan without the consent of stockholders or participants, except that
any such action shall be subject to the approval of the Corporation's
stockholders if the Committee determines that such approval would be necessary
to retain the benefits of Rule 16b-3 (with respect to participants who are
subject to Section 16 of the Exchange Act), Section 162(m) of the Code (with
respect to Covered Employees) or Section 422 of the Code (with respect to
Incentive Stock Options) or if such stockholder approval is required by any
federal or state law or regulation or the rules of any stock exchange or
automated quotation system on which the Common Stock may then be listed or
quoted or if the Board of Directors otherwise determines to submit any such
action to stockholder approval; provided, however, that, without the consent of
an affected participant, no amendment, alteration, suspension, discontinuation
or termination of the Plan may materially impair the rights of such participant
under any Award theretofore granted to him. The Committee may waive any
conditions or rights under, or amend, alter, suspend, discontinue or terminate,
any Award theretofore granted and any Award agreement relating thereto;
provided, however, that, without the consent of an affected participant, no such
amendment, alteration, suspension, discontinuation or termination of any Award
may materially impair the rights of such participant under such Award.
9.6. No Rights to Awards; No Stockholder Rights. Nothing contained in the
Plan shall be deemed to give any person eligible to receive an Award hereunder,
or any heir, distributee, executor, administrator or personal representative of
any such person, any interest or title to any specific property of the
Corporation or any of its Subsidiaries, or any other right against the
Corporation or any of its Subsidiaries other than as set forth in the Plan.
Neither the establishment of the Plan nor any other action taken now or at any
time with regard thereto shall be construed as giving any person whatsoever any
legal or equitable right against the Corporation unless such right shall be
specifically provided for in the Plan. There is no obligation for uniformity of
treatment of participants and employees under the Plan. Except as otherwise
provided in Section 6.2 with respect to Restricted Stock, no Award shall confer
on any participant any of the rights of a stockholder of the Corporation unless
<PAGE>
and until shares of Common Stock are duly issued or transferred and delivered to
the participant in accordance with the terms of the Award.
9.7. Unfunded Status of Awards. The Plan is intended to constitute an
"unfunded" plan for incentive and deferred compensation. With respect to any
payments not yet made to a participant pursuant to an Award, nothing contained
in the Plan or any Award shall give any such participant any rights that are
greater than those of a general creditor of the Corporation.
9.8. Nonexclusivity of the Plan. Neither the adoption of the Plan by the
Board nor its submission to the stockholders of the Corporation for approval
shall be construed as creating any limitations on the power of the Board to
adopt such other incentive arrangements as it may deem desirable, including,
without limitation, the granting of stock options otherwise than under the Plan,
and such arrangements may be either applicable generally or only in specific
cases.
9.9. Binding Effect. The provisions of the Plan shall be binding upon the
heirs, distributees, executors, administrators and personal representatives of
any person participating under the Plan. A person claiming any rights under the
Plan as a beneficiary or otherwise through a participant shall be subject to all
of the terms and conditions of the Plan and any additional terms and conditions
as may be imposed by the Committee.
9.10. No Fractional Shares. No fractional shares of Common Stock shall be
issued or delivered pursuant to the Plan or any Award. The Committee shall
determine whether cash, other Awards, or other property shall be issued or paid
in lieu of such fractional shares or whether such fractional shares or any
rights thereto shall be forfeited or otherwise eliminated.
9.11. Compliance with Code Section 162(m). In the event it is determined by
the Committee prior to the grant of an Award to a Covered Employee that such
Award shall constitute "qualified performance-based compensation" within the
meaning of Code Section 162(m) of the Code, then, unless otherwise determined by
the Committee, if any provision of the Plan or any Award agreement relating to
such an Award granted to a Covered Employee does not comply or is inconsistent
with the requirements of Section 162(m) of the Code or the regulations
thereunder, such provision shall be construed or deemed amended to the extent
necessary to conform to such requirements, and no provision shall be deemed to
confer upon the Committee or any other person discretion to increase the amount
of compensation otherwise payable to a Covered Employee in connection with any
such Award upon attainment of the performance objectives to which such Award is
subject.
9.12. Governing Law. The Plan and all related documents shall be governed
by, and construed in accordance with, the laws of the State of Delaware (except
to the extent provisions of federal law may be applicable). If any provision
hereof shall be held by a court of competent jurisdiction to be invalid and
unenforceable, the remaining provisions of the Plan shall continue to be fully
effective.
9.13. Headings. Headings are given to the sections of the Plan solely as a
convenience to facilitate reference and neither such headings or numbering or
paragraphing shall be deemed in any way material or relevant to the construction
of the Plan or any provision thereof.
9.14. Terminology. In order to shorten and improve the understandability of
the Plan document by eliminating the repeated use of the phrase "his or her",
any masculine terminology herein shall also include the feminine.
9.15. Effective Date; Plan Termination. The Plan shall become effective as
of March 6, 1997; provided, however, that the Plan shall have been approved by
the affirmative votes of the holders of a majority of voting securities present
in person or represented by proxy and entitled to vote at the June 19, 1997
annual meeting of the Corporation's stockholders, or any adjournment thereof, in
accordance with applicable provisions of the Delaware General Corporation Law.
Any Awards granted under the Plan prior to such approval of stockholders shall
not be effective unless stockholder approval is obtained, and, if stockholders
<PAGE>
fail to approve the Plan as specified hereunder, any previously granted Award
shall be forfeited and cancelled. Unless earlier terminated under Section 9.5
hereto, the Plan shall terminate on and no further Awards may be granted under
the Plan after March 5, 2007.
Tenzer Greenblatt LLP
405 Lexington Avenue
New York, N.Y. 10174
October 13, 1998
Securities and Exchange Commission
Judiciary Plaza
450 Fifth Street, N.W.
Washington, D. C. 20549-1004
Re: Finlay Enterprises, Inc.
------------------------
Gentlemen:
We have acted as counsel to Finlay Enterprises, Inc., a Delaware
corporation (the "Company"), in connection with the preparation and filing of a
post-effective amendment to the Company's Registration Statement on Form S-8
(Registration No. 333-40967) (the "Registration Statement") relating to the
registration under the Securities Act of 1933, as amended (the "Act"), and the
rules and regulations thereunder, of 500,000 additional shares (the "Shares") of
Common Stock, par value $.01 per share ("Common Stock"), of the Company reserved
for issuance pursuant to awards (the "Awards") granted or available for future
grant under the Company's 1997 Long Term Incentive Plan, as amended (the "1997
Plan"). On November 25, 1997, the Company filed the Registration Statement with
the Securities and Exchange Commission in order to register under the Act
350,000 shares of Common Stock reserved for issuance pursuant to Awards granted
or available for grant under the 1997 Plan. On June 22, 1998, the stockholders
of the Company approved and adopted an amendment to the 1997 Plan which
increased by 500,000 shares of Common Stock the number of shares available for
issuance under the 1997 Plan.
In connection with this opinion, we have examined originals, or copies
certified or otherwise identified to our satisfaction, of the Restated
Certificate of Incorporation of the Company, the Amended and Restated By-Laws of
the Company, each as amended to date, the minutes and other records of the
proceedings of the Board of Directors and of the stockholders of the Company,
the 1997 Plan and such other documents, corporate and public records,
<PAGE>
agreements, and certificates of officers of the Company and of public and other
officials, and we have considered such questions of law, as we have deemed
necessary as a basis for the opinions hereinafter expressed. In such examination
we have assumed the genuineness of all signatures and the authenticity of all
documents submitted to us as originals and the conformity to original documents
of all documents submitted to us as certified or photostatic copies. As to any
facts material to this opinion, we have relied upon statements and
representations of officers and other representatives of the Company.
Based on and subject to the foregoing, we hereby advise you that, in our
opinion, (i) the issuance and sale of Shares pursuant to Awards granted under
the 1997 Plan, in each case in accordance with the terms and subject to the
conditions set forth in the respective agreements governing such Awards (the
"Award Agreements"), have been duly authorized and (ii) when any such Shares are
issued in accordance with the terms and subject to the conditions set forth in
the respective Award Agreements, such shares of Common Stock will be validly
issued, fully paid and nonassessable.
We are lawyers admitted to practice only in the State of New York. Although
none of the members of this firm is admitted to the bar of the State of
Delaware, in rendering this opinion we have considered the General Corporation
Law of such State. Accordingly, the foregoing opinion is limited solely to the
effect of the laws of New York and of the United States of America, and the
General Corporation Law of the State of Delaware.
We hereby consent to the reference to our firm in the
Company's Registration Statement on Form S-8.
Very truly yours,
/s/Tenzer Greenblatt LLP
TENZER GREENBLATT LLP
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
by reference in this Registration Statement on Form S-8 of our report dated
March 18, 1998 included in Finlay Enterprises, Inc.'s Annual Report on Form 10-K
for the fiscal year ended January 31, 1998 and to all references to our Firm
included in this Registration Statement.
/s/Arthur Andersen LLP
New York, New York
October 8, 1998
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and
appoints each of Arthur E. Reiner and Barry D. Scheckner, and each of them, as
her true and lawful attorneys-in-fact and agents with full power of substitution
and resubstitution, for her and in her name, place and stead, in any and all
capacities, to sign any and all amendments, including post-effective amendments,
to the Registration Statement on Form S-8 of Finlay Enterprises, Inc.
(Registration No. 333-40967), and to file the same, with all exhibits thereto,
and all documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, full power and
authority to do and perform each and every act and thing requisite and necessary
to be done, as fully to all intents and purposes as she might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, or his or their substitute or substitutes, may lawfully do or cause to
be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney
this 13th day of October, 1998.
/s/Hanne M. Merriman
----------------------------------
Hanne M. Merriman
