<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 17, 1998.
REGISTRATION NO. 333-48567
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
AMENDMENT NO. 2
TO
FORM S-3
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933
----------------------
FINLAY ENTERPRISES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
DELAWARE 5944 13-3492802
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (IRS EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
</TABLE>
----------------------
529 FIFTH AVENUE
NEW YORK, NEW YORK 10017
(212) 808-2800
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
----------------------
BONNI G. DAVIS, ESQ.
SECRETARY AND CORPORATE COUNSEL
FINLAY ENTERPRISES, INC.
529 FIFTH AVENUE
NEW YORK, NEW YORK 10017
(212) 808-2800
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
----------------------
Copies to:
JAMES M. DUBIN, ESQ. ROBERT A. PROFUSEK, ESQ.
EDWIN S. MAYNARD, ESQ. ROBERT A. ZUCCARO, ESQ.
PAUL, WEISS, RIFKIND, WHARTON & GARRISON JONES, DAY, REAVIS & POGUE
1285 AVENUE OF THE AMERICAS 599 LEXINGTON AVENUE
NEW YORK, NEW YORK 10019 NEW YORK, NEW YORK 10022
(212) 373-3000 (212) 326-3939
----------------------
APPROXIMATE DATE OF COMMENCEMENT OF THE PROPOSED SALE OF THE SECURITIES TO
THE PUBLIC: As soon as practicable after this Registration Statement becomes
effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering: / /_____________________
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering: / / _____________________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
----------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SUCH
SECTION 8(A), MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the various expenses payable in connection
with the offering of the shares being registered hereby, other than underwriting
discounts and commissions. All the amounts shown are estimates, except the
Securities and Exchange Commission registration fee and the NASD filing fee. All
of such expenses are being borne by the Company.
<TABLE>
<S> <C>
SEC registration fee.............................................. $ 35,424
NASD filing fee................................................... 12,508
Accounting fees and expenses...................................... 150,000(1)
Legal fees and expenses........................................... 750,000(1)
Printing and engraving expenses................................... 300,000(1)
Miscellaneous fees and expenses................................... 314,000(1)
---------
Total...................................................... $1,514,000
-------
-------
</TABLE>
- ------------------
(1) Estimated.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 102(b)(7) of the Delaware General Corporation Law (the 'DGCL')
permits a provision in the certificate of incorporation of each corporation
organized thereunder, eliminating or limiting, with certain exceptions, the
personal liability of a director to the corporation or its stockholders for
monetary damages for certain breaches of fiduciary duty as a director. The
Certificate of Incorporation of the Company eliminates the personal liability of
directors to the fullest extent permitted by the DGCL.
Section 145 of the DGCL ('Section 145'), in summary, empowers a Delaware
corporation, within certain limitations, to indemnify its officers, directors,
employees and agents against expenses (including attorneys' fees), judgments,
fines and amounts paid in settlement, actually and reasonably incurred by them
in connection with any suit or proceeding other than by or on behalf of the
corporation, if they acted in good faith and in a manner reasonably believed to
be in or not opposed to the best interest of the corporation, and, with respect
to a criminal action or proceeding, had no reasonable cause to believe their
conduct was unlawful.
With respect to actions by or on behalf of the corporation, Section 145
permits a corporation to indemnify its officers, directors, employees and agents
against expenses (including attorneys' fees) actually and reasonably incurred in
connection with the defense or settlement of such action or suit, provided such
person meets the standard of conduct described in the preceding paragraph,
except that no indemnification is permitted in respect of any claim where such
person has been found liable to the corporation, unless the Court of Chancery or
the court in which such action or suit was brought approves such indemnification
and determines that such person is fairly and reasonably entitled to be
indemnified.
The Certificate of Incorporation of the Company provides for the
indemnification of officers and directors and certain other parties (the
'Indemnitees') of the Company to the fullest extent permitted under Delaware
law; provided, that, except in the case of proceedings to enforce rights to
indemnification, the Company shall indemnify such Indemnitee in connection with
a proceeding initiated by such Indemnitee only if such proceeding was authorized
by the Board of Directors of the Company.
Finlay is a party to indemnification agreements with each of Finlay's
directors and executive officers. The indemnification agreements require, among
other things, that Finlay indemnify its directors and executive officers against
certain liabilities and associated expenses arising from their service as
directors and executive officers of Finlay and reimburse certain related legal
and other expenses. In the event of a Change in Control (as defined therein)
Finlay will, upon request by an indemnitee under the agreements, create and fund
a trust for the benefit of such indemnitee sufficient to satisfy reasonably
anticipated claims for indemnification. Finlay also covers each director and
executive officer under a directors and officers liability insurance policy
maintained by Finlay in such amounts as the Board of Directors of the Company
finds reasonable. Although the indemnification agreements offer coverage
II-1
<PAGE>
similar to the provisions in the Restated Certificate of Incorporation, they
provide greater assurance to directors and executive officers that
indemnification will be available because, as contracts, they cannot be modified
unilaterally in the future by the Board of Directors or by the stockholders to
eliminate the rights they provide.
The Underwriting Agreement provides for indemnification by the Underwriters
of the Company, its directors and officers, persons who control the Company
within the meaning of Section 15 of the Securities Act for certain liabilities,
including liabilities arising thereunder.
Certain of the employment and consulting agreements described in the
Prospectus under the captions 'Management -- Executive Compensation --
Employment Agreements and Change of Control Arrangements' and 'Management --
Executive Compensation -- Directors' Compensation' contain provisions entitling
the executive or consultant, as the case may be, to indemnification for losses
incurred in the course of service to the Company or Finlay Jewelry, under
certain circumstances.
Thomas H. Lee Company provides indemnification to Warren C. Smith in
connection with his service as a director of the Company and Finlay Jewelry.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- ------ -----------------------
<S> <C> <C>
1.1 -- Form of Underwriting Agreement -- Equity Offering.
1.2 -- Form of Underwriting Agreement -- Senior Debentures.
1.3 -- Form of Underwriting Agreement -- Senior Notes.
3.1 -- Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.1 filed as
part of the Annual Report on Form 10-K for the period ended January 28, 1995 filed by the
Company on April 12, 1995).
3.2 -- By-laws of the Company (incorporated by reference to Exhibit 3.2 of Form S-1 Registration
Statement, Registration No. 33-88938).
4.1 -- Article Fourth of the Certificate of Incorporation and Articles II and VI of the By-laws
(incorporated by reference to Exhibit 4.1 on Form S-1 Registration Statement, Registration No.
33-88938).
4.2 -- Specimen Common Stock certificate (incorporated by reference to Exhibit 4.2 of Form S-1
Registration Statement, Registration No. 33-88938).
4.3 -- Specimen 12% Senior Discount Debenture Due 2005 issued by the Company (incorporated by
reference to Exhibit 4.3 filed as part of the Current Report on Form 8-K filed by the Company
on June 10, 1993)
4.4 (a) -- Indenture dated as of May 26, 1993 between the Company and Marine Midland Bank, as trustee,
relating to the 12% Senior Discount Debentures Due 2005 issued by the Company (incorporated by
reference to Exhibit 4.4 filed as part of the Current Report on Form 8-K filed by the Company
on June 10, 1993).
4.4 (b) -- First Supplemental Indenture dated as of October 28, 1994 among the Company, Sonab Holdings,
Inc. ('Sonab Holdings'), Sonab International, Inc. ('Sonab International'), Sonab and Marine
Midland Bank, as trustee to the indenture relating to the 12% Senior Discount Debentures due
2005 issued by the Company (incorporated by reference to Exhibit 4.1 filed as part of the
Quarterly Report on Form 10-Q for the period ended October 29, 1994 filed by the Company on
December 13, 1994).
4.4 (c) -- Second Supplemental Indenture, dated as of July 14, 1995, among the Company, Sonab Holdings,
Sonab International, Sonab and Marine Midland Bank, as trustee, to the indenture relating to
the 12% Senior Discount Debentures due 2005 issued by the Company (incorporated by reference
to Exhibit 4.1 filed as part of the Quarterly Report on Form 10-Q for the period ended July
29, 1995 filed by the Company on September 9, 1995).
</TABLE>
II-2
<PAGE>
<TABLE>
<S> <C> <C>
4.5 -- Indenture, dated as of April , 1998, between the Company and Marine Midland Bank, as
trustee, relating to the % Senior Debentures due 2008 issued by the Company.
4.6 -- Pledge Agreement between the Company, and Marine Midland Bank, as Pledgee, dated as of May 26,
1993 (incorporated by reference to Exhibit 10.NN filed as part of the Annual Report for the
period ended January 29, 1994 filed by the Company on Form 10-K on April 27, 1994).
4.7 -- Specimen 10 5/8% Senior Note Due 2003 issued by Finlay Jewelry (incorporated by reference to
Exhibit 4.2 filed as part of the Current Report on Form 8-K filed by Finlay Jewelry on June
10, 1993).
4.8 (a) -- Indenture dated as of May 26, 1993 between Finlay Jewelry and Marine Midland Bank, as trustee,
relating to the 10 5/8% Senior Notes Due 2003 issued by Finlay Jewelry (incorporated by
reference to Exhibit 4.3 filed as part of the Current Report on Form 8-K filed by Finlay
Jewelry on June 10, 1993).
4.8 (b) -- First Supplemental Indenture dated as of October 28, 1994 among Finlay Jewelry, Sonab
Holdings, Sonab International, Sonab and Marine Midland Bank, as trustee to the indenture
relating to the 10 5/8% Senior Notes due 2003 issued by Finlay Jewelry (incorporated by
reference to Exhibit 4.1 filed as part of the Quarterly Report on Form 10-Q for the period
ended October 29, 1994 filed by Finlay Jewelry on December 13, 1994).
4.8 (c) -- Second Supplemental Indenture, dated as of July 14, 1995, among Finlay Jewelry, Sonab
Holdings, Sonab International, Sonab and Marine Midland Bank, as trustee, to the indenture
relating to the 10 5/8% Senior Notes due 2003 issued by Finlay Jewelry (incorporated by
reference to Exhibit 4.1 filed as part of the Quarterly Report on Form 10-Q for the period
ended July 29, 1995 filed by Finlay Jewelry on September 9, 1995).
4.9 -- Indenture, dated as of April , 1998, between Finlay Jewelry and Marine Midland Bank, as
trustee, as trustee, relating to the % Senior Notes due 2008 issued by Finlay Jewelry.
4.10 -- Stock Purchase Agreement dated as of May 26, 1993 among the Company, Finlay Jewelry, THL
Equity Holding Corp., Equity-Linked Investors, L.P. and Equity-Linked Investors-II
(incorporated by reference to Exhibit 4.5 filed as part of the Current Report on Form 8-K
filed by the Company on June 10, 1993).
4.11 (a) -- Amended and Restated Stockholders' Agreement dated as of March 6, 1995 among the Company,
David B. Cornstein, Arthur E. Reiner, Robert S. Lowenstein, Norman S. Matthews, Ronald B.
Grudberg, Harold S. Geneen, James Martin Kaplan, Electra Investment Trust, PLC, RHI Holdings,
Inc., Jeffrey Branman, the Lee Holders listed on the signature page thereto, Equity-Linked
Investors, L.P., Equity-Linked Investors-II and certain other security holders (incorporated
by reference to Exhibit 4.9 filed as part of the Annual Report on Form 10-K for the period
ended January 28, 1995 filed by the Company on April 12, 1995).
4.11 (b) -- Omnibus Amendment to Registration Rights and Stockholders' Agreements (incorporated by
reference to Exhibit 10.10 filed as part of the Quarterly Report on Form 10-Q for the period
ended November 1, 1997 filed by the Company on December 16, 1997).
4.12 -- Registration Rights Agreement dated as of May 26, 1993 among the Company, David B. Cornstein,
Harold S. Geneen, Ronald B. Grudberg, Robert S. Lowenstein, John C. Belknap, James Martin
Kaplan, Electra Investment Trust, PLC, RHI Holdings, Inc., Jeffrey Branman, Andrew U. Belknap,
Timothy H. Belknap, THL Equity Holding Corp., Equity-Linked Investors, L.P. and Equity-Linked
Investors-II (incorporated by reference to Exhibit 4.7 filed as part of the Current Report on
Form 8-K filed by the Company on June 10, 1993).
4.13 -- Security and Pledge Agreement between the Company and Marine Midland Bank, as collateral agent
and pledgee, dated as of April , 1998, relating to the % Senior Debentures due
, 2008.
5.1 -- Opinion of Paul, Weiss, Rifkind, Wharton & Garrison.
</TABLE>
II-3
<PAGE>
<TABLE>
<S> <C> <C>
5.2 -- Opinion of Paul, Weiss, Rifkind, Wharton & Garrison.
12.1 -- Statement Regarding Computation of Ratios.
23.1 -- Consent of Arthur Andersen LLP.
23.2 -- Consent of Paul, Weiss, Rifkind, Wharton & Garrison (included in Exhibit 5.1 and Exhibit 5.2).
24.1* -- Power of Attorney.
25.1 -- Statement of Eligibility of Trustee on Form T-1.
27.1* -- Financial Data Schedule.
</TABLE>
- ------------------
* Previously filed.
ITEM 17. UNDERTAKINGS
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Company pursuant to its Certificate of Incorporation, By-Laws, the Underwriting
Agreement or otherwise, the Company has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Company of expenses incurred or paid by a director, officer or controlling
person of the Company in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Company will, unless in the
opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
The Company hereby undertakes that: (1) For purposes of determining any
liability under the Securities Act of 1933, the information omitted from the
form of prospectus filed as part of this Registration Statement in reliance upon
Rule 430A and contained in a form of prospectus filed by the Company pursuant to
Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be a
part of this Registration Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act of
1933, each post-effective amendment that contains a form of prospectus shall be
deemed to be a new Registration Statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
II-4
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933 THE COMPANY
CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL OF THE
REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS AMENDMENT NO. 2 TO
THE REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED,
THEREUNTO DULY AUTHORIZED IN THE CITY OF NEW YORK, STATE OF NEW YORK, ON THE
17TH DAY OF APRIL 1998.
FINLAY ENTERPRISES, INC.
By: /s/ BARRY D. SCHECKNER
-----------------------------
Barry D. Scheckner
Senior Vice President and
Chief Financial Officer
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AMENDMENT NO. 2
TO THE REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
NAME TITLE DATE
- ------------------------------------------- ---------------------------------------- -------------------
<S> <C> <C>
* Chairman of the Board and Director April 17, 1998
- ------------------------------------------
David B. Cornstein
* President, Chief Executive Officer, Vice April 17, 1998
- ------------------------------------------ Chairman and Director (Principal
Arthur E. Reiner Executive Officer)
/s/ BARRY D. SCHECKNER Senior Vice President and Chief April 17, 1998
- ------------------------------------------ Financial Officer (Principal Financial
Barry D. Scheckner Officer)
* Treasurer (Principal Accounting Officer) April 17, 1998
- ------------------------------------------
Bruce E. Zurlnick
* Director April 17, 1998
- ------------------------------------------
Norman S. Matthews
* Director April 17, 1998
- ------------------------------------------
James Martin Kaplan
* Director April 17, 1998
- ------------------------------------------
Rohit M. Desai
* Director April 17, 1998
- ------------------------------------------
Thomas H. Lee
* Director April 17, 1998
- ------------------------------------------
Warren C. Smith, Jr.
* Director April 17, 1998
- ------------------------------------------
Hanne M. Merriman
</TABLE>
*By: /s/ BARRY D. SCHECKNER
-----------------------
Barry D. Scheckner
Attorney-in-Fact
II-5
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- ------------ -------------------------------------------------------------------------------------------------------
<S> <C> <C>
1.1 -- Form of Underwriting Agreement -- Equity Offering.
1.2 -- Form of Underwriting Agreement -- Senior Debentures.
1.3 -- Form of Underwriting Agreement -- Senior Notes.
3.1 -- Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.1 filed as
part of the Annual Report on Form 10-K for the period ended January 28, 1995 filed by the Company
on April 12, 1995).
3.2 -- By-laws of the Company (incorporated by reference to Exhibit 3.2 of Form S-1 Registration
Statement, Registration No. 33-88938).
4.1 -- Article Fourth of the Certificate of Incorporation and Articles II and VI of the By-laws
(incorporated by reference to Exhibit 4.1 on Form S-1 Registration Statement, Registration No.
33-88938).
4.2 -- Specimen Common Stock certificate (incorporated by reference to Exhibit 4.2 of Form S-1
Registration Statement, Registration No. 33-88938).
4.3 -- Specimen 12% Senior Discount Debenture Due 2005 issued by the Company (incorporated by reference
to Exhibit 4.3 filed as part of the Current Report on Form 8-K filed by the Company on June 10,
1993).
4.4(a) -- Indenture dated as of May 26, 1993 between the Company and Marine Midland Bank, as trustee,
relating to the 12% Senior Discount Debentures Due 2005 issued by the Company (incorporated by
reference to Exhibit 4.4 filed as part of the Current Report on Form 8-K filed by the Company on
June 10, 1993).
4.4(b) -- First Supplemental Indenture dated as of October 28, 1994 among the Company, Sonab Holdings, Inc.
('Sonab Holdings'), Sonab International, Inc. ('Sonab International'), Sonab and Marine Midland
Bank, as trustee to the indenture relating to the 12% Senior Discount Debentures due 2005 issued
by the Company (incorporated by reference to Exhibit 4.1 filed as part of the Quarterly Report on
Form 10-Q for the period ended October 29, 1994 filed by the Company on December 13, 1994).
4.4(c) -- Second Supplemental Indenture, dated as of July 14, 1995, among the Company, Sonab Holdings,
Sonab International, Sonab and Marine Midland Bank, as trustee, to the indenture relating to the
12% Senior Discount Debentures due 2005 issued by the Company (incorporated by reference to
Exhibit 4.1 filed as part of the Quarterly Report on Form 10-Q for the period ended July 29, 1995
filed by the Company on September 9, 1995).
4.5 -- Indenture, dated as of April , 1998, between the Company and Marine Midland Bank, as trustee
relating to the % Senior Debentures due 2008 issued by the Company.
4.6 -- Pledge Agreement between the Company, and Marine Midland Bank, as Pledgee, dated as of May 26,
1993 (incorporated by reference to Exhibit 10.NN filed as part of the Annual Report for the
period ended January 29, 1994 filed by the Company on Form 10-K on April 27, 1994).
4.7 -- Specimen 10 5/8% Senior Note Due 2003 issued by Finlay Jewelry (incorporated by reference to
Exhibit 4.2 filed as part of the Current Report on Form 8-K filed by Finlay Jewelry on June 10,
1993).
4.8(a) -- Indenture dated as of May 26, 1993 between Finlay Jewelry and Marine Midland Bank, as trustee,
relating to the 10 5/8% Senior Notes Due 2003 issued by Finlay Jewelry (incorporated by reference
to Exhibit 4.3 filed as part of the Current Report on Form 8-K filed by Finlay Jewelry on June
10, 1993).
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- ------------ -----------------------
<S> <C> <C>
4.8(b) -- First Supplemental Indenture dated as of October 28, 1994 among Finlay Jewelry, Sonab Holdings,
Sonab International, Sonab and Marine Midland Bank, as trustee to the indenture relating to the
10 5/8% Senior Notes due 2003 issued by Finlay Jewelry (incorporated by reference to Exhibit 4.1
filed as part of the Quarterly Report on Form 10-Q for the period ended October 29, 1994 filed by
Finlay Jewelry on December 13, 1994).
4.8(c) -- Second Supplemental Indenture, dated as of July 14, 1995, among Finlay Jewelry, Sonab Holdings,
Sonab International, Sonab and Marine Midland Bank, as trustee, to the indenture relating to the
10 5/8% Senior Notes due 2003 issued by Finlay Jewelry (incorporated by reference to Exhibit 4.1
filed as part of the Quarterly Report on Form 10-Q for the period ended July 29, 1995 filed by
Finlay Jewelry on September 9, 1995).
4.9 -- Indenture, dated as of April , 1998, between Finlay Jewelry and Marine Midland Bank, as
trustee, relating to the % Senior Notes due 2008 issued by Finlay Jewelry.
4.10 -- Stock Purchase Agreement dated as of May 26, 1993 among the Company, Finlay Jewelry, THL Equity
Holding Corp., Equity-Linked Investors, L.P. and Equity-Linked Investors-II (incorporated by
reference to Exhibit 4.5 filed as part of the Current Report on Form 8-K filed by the Company on
June 10, 1993).
4.11(a) -- Amended and Restated Stockholders' Agreement dated as of March 6, 1995 among the Company, David
B. Cornstein, Arthur E. Reiner, Robert S. Lowenstein, Norman S. Matthews, Ronald B. Grudberg,
Harold S. Geneen, James Martin Kaplan, Electra Investment Trust, PLC, RHI Holdings, Inc., Jeffrey
Branman, the Lee Holders listed on the signature page thereto, Equity-Linked Investors, L.P.,
Equity-Linked Investors-II and certain other security holders (incorporated by reference to
Exhibit 4.9 filed as part of the Annual Report on Form 10-K for the period ended January 28, 1995
filed by the Company on April 12, 1995).
4.11(b) -- Omnibus Amendment to Registration Rights and Stockholders' Agreements (incorporated by reference
to Exhibit 10.10 filed as part of the Quarterly Report on Form 10-Q for the period ended November
1, 1997 filed by the Company on December 16, 1997).
4.12 -- Registration Rights Agreement dated as of May 26, 1993 among the Company, David B. Cornstein,
Harold S. Geneen, Ronald B. Grudberg, Robert S. Lowenstein, John C. Belknap, James Martin Kaplan,
Electra Investment Trust, PLC, RHI Holdings, Inc., Jeffrey Branman, Andrew U. Belknap, Timothy H.
Belknap, THL Equity Holding Corp., Equity-Linked Investors, L.P. and Equity-Linked Investors-II
(incorporated by reference to Exhibit 4.7 filed as part of the Current Report on Form 8-K filed
by the Company on June 10, 1993).
4.13 -- Security and Pledge Agreement between the Company and Marine Midland Bank, as collateral agent
and pledgee, dated as of April , 1998, relating to the % Senior Debentures due 2008.
5.1 -- Opinion of Paul, Weiss, Rifkind, Wharton & Garrison.
5.2 -- Opinion of Paul, Weiss, Rifkind, Wharton & Garrison.
12.1 -- Statement Regarding Computation of Ratios.
23.1 -- Consent of Arthur Andersen LLP.
23.2 -- Consent of Paul, Weiss, Rifkind, Wharton & Garrison (included in Exhibit 5.1 and Exhibit 5.2).
24.1* -- Power of Attorney.
25.1 -- Statement of Eligibility of Trustee on Form T-1.
27.1* -- Financial Data Schedule.
</TABLE>
- ------------------------
* Previously filed.
<PAGE>
Exhibit 1.1
Finlay Enterprises, Inc.
Common Stock, par value $.01 per share
-----------------
Underwriting Agreement
April __, 1998
Goldman, Sachs & Co.,
Donaldson, Lufkin & Jenrette
Securities Corporation,
SBC Warburg Dillon Read Inc.
As representatives of the several Underwriters
named in Schedule I hereto,
c/o Goldman, Sachs & Co.,
85 Broad Street,
New York, New York 10004
Ladies and Gentlemen:
Finlay Enterprises, Inc., a Delaware corporation (the "Company"),
proposes, subject to the terms and conditions stated herein, to issue and sell
to the Underwriters named in Schedule I hereto (the "Underwriters") an
aggregate of 567,310 shares of the Company's Common Stock, par value $.01 per
share (the "Stock"), and the stockholders of the Company named in Schedule II
hereto (the "Selling Stockholders") propose, subject to the terms and
conditions stated herein, to sell to the Underwriters an aggregate of
1,032,690 shares of Stock. The Company and certain of the Selling Stockholders
as indicated on Schedule II hereto are granting an option to the Underwriters
to purchase up to an additional 92,792 and 147,208 shares, respectively, of
Stock. The aggregate of 1,600,000 shares of Stock to be sold by the Company
and the Selling Stockholders is herein called the "Firm Shares" and the
aggregate of up to 240,000 additional shares to be sold by the Company and
certain of the Selling Stockholders is herein called the "Optional Shares".
The Firm Shares and the Optional Shares that the Underwriters elect to
purchase pursuant to Section 2 hereof are herein collectively called the
"Shares".
1. (a) Each of the Company and Finlay Fine Jewelry Corporation, a Delaware
corporation and a wholly owned subsidiary of the Company ("Finlay Jewelry"),
jointly and severally represents and warrants to, and agrees with, each of the
Underwriters and the Selling Stockholders that:
(i) A registration statement on Form S-3 (File No.
333-48567), as amended by Amendments Nos. 1 and 2 thereto (the
"Initial Registration Statement"), in respect of the Shares has been
filed with the Securities and Exchange Commission (the "Commission");
such Initial Registration Statement and any post-effective amendment
thereto, each in the form heretofore delivered to you, and, excluding
exhibits thereto but including all documents incorporated by
reference in the prospectus contained therein, to you for each of the
other Underwriters, have been declared effective by the Commission in
such form; other than a registration statement, if any, increasing
the size of the offering (a "Rule 462(b) Registration Statement"),
filed pursuant to Rule 462(b) under the Securities Act of 1933, as
amended (the "Act"), which became effective upon filing, no other
document with respect to such Initial Registration Statement or any
such document incorporated by reference therein has heretofore been
filed with the Commission; and no stop order suspending the
effectiveness of the Initial Registration Statement, any
post-effective amendment thereto or the Rule 462(b) Registration
Statement, if any, has been issued and no
<PAGE>
proceeding for that purpose has been initiated or threatened by the
Commission to the Company or its counsel (any preliminary prospectus
included in the Initial Registration Statement or filed with the
Commission pursuant to Rule 424(a) of the rules and regulations of
the Commission under the Act is hereinafter called a "Preliminary
Prospectus"; the various parts of the Initial Registration Statement
and the Rule 462(b) Registration Statement, if any, including all
exhibits thereto but excluding Form T-1 and including (i) the
information contained in the form of final prospectus filed with the
Commission pursuant to Rule 424(b) under the Act in accordance with
Section 5(a) hereof and deemed by virtue of Rule 430A under the Act
to be part of the Initial Registration Statement at the time it was
declared effective or such part of the Rule 462(b) Registration
Statement, if any, that became or hereafter becomes effective and
(ii) the documents incorporated by reference in the prospectus
contained in the registration statement at the time such part of the
registration statement became effective, each as amended at the time
such part of the registration statement became effective, are
hereinafter collectively called the "Registration Statement"; such
final prospectus, in the form first filed pursuant to Rule 424(b)
under the Act, is hereinafter called the "Prospectus"; any reference
herein to any Preliminary Prospectus or the Prospectus shall be
deemed to refer to and include the documents incorporated by
reference therein pursuant to Item 12 of Form S-3 under the Act, as
of the date of such Preliminary Prospectus or Prospectus, as the case
may be; any reference to any amendment or supplement to any
Preliminary Prospectus or the Prospectus shall be deemed to refer to
and include any documents filed after the date of such Preliminary
Prospectus or Prospectus, as the case may be, under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and
incorporated by reference in such Preliminary Prospectus or
Prospectus, as the case may be; and any reference to any amendment to
the Registration Statement shall be deemed to refer to and include
any annual report of the Company filed pursuant to Section 13(a) or
15(d) of the Exchange Act after the effective date of the
Registration Statement that is incorporated by reference in the
Registration Statement);
(ii) No order preventing or suspending the use of any
Preliminary Prospectus has been issued by the Commission, and each
Preliminary Prospectus, at the time of filing thereof, conformed in
all material respects to the requirements of the Act and the rules
and regulations of the Commission thereunder, and did not contain an
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were
made, not misleading; and the statements made therein within the
coverage of Rule 175(b) under the Act were made by the Company with a
reasonable basis and in good faith; provided, however, that this
representation and warranty shall not apply to any statements or
omissions made in reliance upon and in conformity with information
furnished in writing to the Company by an Underwriter through
Goldman, Sachs & Co. expressly for use therein or by the Selling
Stockholders expressly for use in the preparation of the answers
therein to Item 7 of Form S-3;
(iii) The documents incorporated by reference in the
Prospectus, when they became effective or were filed with the
Commission, as the case may be, conformed in all material respects to
the requirements of the Act or the Exchange Act, as applicable, and
the rules and regulations of the Commission thereunder, and none of
such documents contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading; and any
further documents so filed or incorporated by reference in the
Prospectus or any further amendment or supplement thereto, when such
documents become effective or are filed with the Commission, as the
case may be, will conform in all material respects to the
requirements of the Act or the Exchange Act, as applicable, and the
rules and regulations of the Commission thereunder and will not
contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading; and the statements made therein
within the coverage of Rule 175(b) under the Act were made by the
Company with a reasonable basis and in good faith; provided, however,
that this representation and warranty shall not apply to any
statements or omissions made in reliance upon and in conformity with
information furnished in writing to the Company by an Underwriter
through Goldman, Sachs & Co. expressly for use therein or by the
Selling Stockholders expressly for use in the preparation of the
answers therein to item 7 of Form S-3;
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(iv) The Registration Statement conforms, and the Prospectus
and any further amendments or supplements to the Registration
Statement or the Prospectus will conform, in all material respects to
the requirements of the Act and the rules and regulations of the
Commission thereunder and do not and will not, as of the applicable
effective date as to the Registration Statement and any amendment
thereto, and as of the applicable filing date as to the Prospectus
and any amendment or supplement thereto, contain an untrue statement
of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading; and the statements made therein within the coverage of
Rule 175(b) under the Act were made by the Company with a reasonable
basis and in good faith; provided, however, that this representation
and warranty shall not apply to any statements or omissions made in
reliance upon and in conformity with information furnished in writing
to the Company by an Underwriter through Goldman, Sachs & Co.
expressly for use therein or by the Selling Stockholders expressly
for use in the preparation of the answers therein to Item 7 of Form
S-3;
(v) Neither the Company nor any of its subsidiaries has
sustained since the date of the latest audited financial statements
included or incorporated by reference in the Prospectus any material
loss or interference with its business from fire, explosion, flood or
other calamity, whether or not covered by insurance, or from any
labor dispute or court or governmental action, order or decree,
otherwise than as set forth or contemplated in the Prospectus; and,
since the respective dates as of which information is given in the
Registration Statement and the Prospectus, there has not been any
change in the capital stock or long-term debt of the Company or any
of its subsidiaries, except for borrowings and repayments under the
Revolving Credit Agreement and the Gold Consignment Agreement (each
as defined in the Prospectus and as amended as described in the
Prospectus) or any material adverse change, or any development
involving a prospective material adverse change, in or affecting the
business, operations, management, financial position or condition,
current assets, merchandise inventories, stockholders' equity or
results of operations of the Company and its subsidiaries taken as a
whole (a "Material Adverse Effect"), otherwise than as set forth or
contemplated in the Prospectus;
(vi) The Company and its subsidiaries have good and
marketable title in fee simple to all real property and good and
marketable title to all material personal property owned by them, in
each case free and clear of all liens, encumbrances and defects
except such as are described in the Prospectus or such as do not
materially affect the value of such property and do not interfere
with the use made and proposed to be made of such property by the
Company and its subsidiaries; and any material real property and
buildings held under lease by the Company and its subsidiaries are
held by them under valid, subsisting and enforceable leases with such
exceptions as are not material and do not interfere with the use made
and proposed to be made of such property and buildings by the Company
and its subsidiaries;
(vii) Each of the Company and Finlay Jewelry has been duly
incorporated and is validly existing as a corporation in good
standing under the laws of the State of Delaware, with corporate
power and authority to own its properties and conduct its business as
described in the Prospectus, and has been duly qualified as a foreign
corporation for the transaction of business and is in good standing
under the laws of each other jurisdiction in which it owns or leases
properties or conducts any business so as to require such
qualification, or is subject to no material liability or disability
by reason of the failure to be so qualified in any such jurisdiction;
the Company's indirect subsidiary, Societe Nouvelle d'Achat de
Bijouterie - S.O.N.A.B. ("Sonab") is duly organized and validly
existing as a societe en nom collectif in France; each other direct
or indirect subsidiary of the Company has been duly incorporated and
is validly existing as a corporation in good standing under the laws
of its jurisdiction of incorporation, and has been duly qualified as
a foreign corporation for the transaction of business and is in good
standing under the laws of each other jurisdiction in which it owns
or leases properties or conducts any business so as to require such
qualification, or is subject to no material liability or disability
by reason of the failure to be so qualified in any such jurisdiction;
(viii) The Company has an authorized capitalization as set
forth in the Prospectus, and all of the issued shares of capital
stock of the Company have been duly authorized and validly issued,
are fully paid and non-assessable and conform to the description of
the Stock contained in the Prospectus; and all of the issued shares
of capital stock of each subsidiary of the Company
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have been duly authorized and validly issued, are fully paid and
non-assessable and (except for directors' qualifying shares, if any,
and except as set forth in the Prospectus) are owned directly or
indirectly by the Company, free and clear of all liens, encumbrances,
equities or claims;
(ix) The Shares to be issued and sold by the Company to the
Underwriters hereunder were previously unissued, have been duly
authorized and, when issued and delivered against payment therefor as
provided herein, will be duly and validly issued and fully paid and
non-assessable and will conform to the description of the Stock
contained in the Prospectus and the issuance of such shares will not
be subject to any preemptive or similar rights which have not been
waived in a valid and binding writing duly executed and delivered to
the Company by or on behalf of the party granting such waiver;
(x) The issue and sale of the Shares to be sold by the
Company and the compliance by each of the Company and Finlay Jewelry
with all of the provisions of this Agreement applicable to it and the
consummation of the transactions herein contemplated (i) will not
conflict with or result in a breach or violation of any of the terms
or provisions of, or constitute a default under, any indenture,
mortgage, deed of trust, loan agreement, lease, license or other
agreement or instrument to which the Company or any of its
subsidiaries is a party or by which the Company or any of its
subsidiaries is bound or to which any of the property or assets of
the Company or any of its subsidiaries is subject, except any such
conflict, breach, violation or default which has been consented to or
waived in a valid and binding writing duly executed and delivered to
the Company by or on behalf of the party granting such consent or
waiver; (ii) will not result in any violation of the provisions of
the Company's or any of its subsidiaries' respective certificate or
restated certificate of incorporation or by-laws or restated by-laws
or comparable documents and (iii) will not result in any violation of
any statute or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Company or
any of its subsidiaries or any of their properties; and no consent,
approval, authorization, order, registration or qualification of or
with any such court or governmental agency or body is required for
the issue and sale of the Shares or the consummation by the Company
of the transactions contemplated by this Agreement, except the
registration under the Act of the Shares and such consents,
approvals, authorizations, registrations or qualifications as may be
required under foreign or state securities or Blue Sky laws in
connection with the purchase and distribution of the Shares by the
Underwriters;
(xi) Neither the Company nor any of its subsidiaries is in
violation of its respective certificate or restated certificate of
incorporation or by-laws or restated by-laws or comparable documents,
or in default in the performance or observance of any obligation,
agreement, covenant or condition contained in any indenture,
mortgage, deed of trust, loan agreement, lease, license or other
agreement or instrument to which it is a party or by which it or any
of its properties may be bound which default could reasonably be
expected to result in, individually or in the aggregate, a Material
Adverse Effect;
(xii) The statements set forth in the Prospectus under the
caption "Description of Certain Indebtedness", insofar as they
purport to describe the provisions of the documents referred to
therein, under the caption "Description of Capital Stock", insofar as
they purport to constitute a summary of the terms of the Stock and
under the caption "Underwriting", insofar as they purport to describe
the provisions of the laws and documents referred to therein, are
accurate and fair in all material respects;
(xiii) Other than as set forth in the Prospectus, there are
no legal or governmental proceedings pending to which the Company or
any of its subsidiaries is a party or of which any property of the
Company or any of its subsidiaries is the subject which, if
determined adversely to the Company or any of its subsidiaries, could
individually or in the aggregate reasonably be expected to have a
Material Adverse Effect; and, to the Company's and Finlay Jewelry's
knowledge, no such proceedings are threatened or contemplated by
governmental authorities or threatened by others;
(xiv) Each of the Company and Finlay Jewelry is not and,
after giving effect to the offering and sale of the Shares, will not
be an "investment company" or an entity "controlled" by an
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<PAGE>
"investment company", as such terms are defined in the Investment
Company Act of 1940, as amended (the "Investment Company Act");
(xv) Arthur Andersen LLP, who have certified certain
consolidated financial statements of the Company, are independent
public accountants as required by the Act and the rules and
regulations of the Commission thereunder;
(xvi) The Company and its subsidiaries directly or through
host store groups are subject to consent decrees, injunctions or
comparable governmental orders or decrees regarding the discount
pricing and advertising of jewelry from "regular" or "original"
prices only in the states of California, Colorado, Georgia, Oregon
and Wisconsin, and the Company and its subsidiaries are in compliance
therewith and with applicable federal and state laws with respect to
such pricing and advertising practices, except for such noncompliance
previously identified in writing by the Company to the
Representatives which could not individually or in the aggregate
reasonably be expected to have a Material Adverse Effect;
(xvii) Neither the Company nor any of its subsidiaries has
received any notice that any default by the Company or any of its
subsidiaries has occurred and is continuing under any of the license
agreements with host store groups described or identified in the
Prospectus to which the Company or any of its subsidiaries are a
party and no condition exists which could individually or in the
aggregate reasonably be expected to result in the termination or
nonrenewal of any such license agreement; each such license agreement
has been duly authorized (and, in the case of written license
agreements, duly and validly executed and delivered) by and on behalf
of the Company and its subsidiaries, as the case may be, and,
assuming the due authorization (and, in the case of written license
agreements, the due and valid execution and delivery) thereof by the
other party or parties thereto, is the valid and binding obligation
of the Company, its subsidiaries and such other party or parties, as
the case may be, enforceable in accordance with its respective terms
against the respective parties thereto subject to the effect of any
applicable bankruptcy, insolvency, reorganization, fraudulent
conveyance or transfer, moratorium and similar laws affecting
creditors' rights generally and to general principles of equity
(regardless of whether enforcement is sought in a proceeding in
equity or at law); and neither the Company nor any of its
subsidiaries has received any notice (whether actual or constructive)
that the licensor thereunder is considering limiting, suspending,
revoking or non-renewing any such license; except that no
representation is made with respect to the Company's license
agreement with Liberty House as to the effect on such license
agreement of the filing of a voluntary petition by Liberty House
under the Bankruptcy Code (as defined in the Prospectus);
(xviii) Each of the Company and Finlay Jewelry has duly
authorized the amendment to the Revolving Credit Agreement that is
described in the Prospectus. Substantially contemporaneously with the
First Time of Delivery (as defined in Section 4 hereof), the Company
and Finlay Jewelry will duly execute and deliver such amendment to
the Revolving Credit Agreement. Finlay Jewelry has duly authorized
the amendment to the Gold Consignment Agreement that is described in
the Prospectus. Substantially contemporaneously with the First Time
of Delivery, Finlay Jewelry will duly execute and deliver such
amendment to the Gold Consignment Agreement. Assuming the due
authorization, execution and delivery thereof by the other parties
thereto, (a) the Revolving Credit Agreement, as amended as described
above, will constitute the legal, valid and binding agreement of the
Company and Finlay Jewelry and (b) the Gold Consignment Agreement, as
amended as described above, will constitute the legal, valid and
binding agreement of Finlay Jewelry, in each case, enforceable
against the Company and/or Finlay Jewelry, as the case may be,
subject to the effect of any applicable bankruptcy, insolvency,
reorganization, fraudulent conveyance or transfer, moratorium and
similar laws affecting creditors' rights generally and to general
principles of equity (regardless of whether enforcement is sought in
a proceeding in equity or at law); and
(xix) Neither the Company nor Finlay Jewelry nor any of
their respective affiliates does business with the government of Cuba
or with any person or affiliate located in Cuba within the meaning of
Section 517.075, Florida Statutes.
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(b) Each of the Selling Stockholders represents and warrants
to, and agrees with, each of the Underwriters and the Company that:
(i) All consents, approvals, authorizations and orders
necessary for the execution and delivery by such Selling Stockholder
of this Agreement and the Power of Attorney and the Custody Agreement
hereinafter referred to, and for the sale and delivery of the Shares
to be sold by such Selling Stockholder hereunder, have been obtained;
and such Selling Stockholder has full right, power and authority to
enter into this Agreement, the Power of Attorney and the Custody
Agreement and to sell, assign, transfer and deliver the Shares to be
sold by such Selling Stockholder hereunder, except for any such
consents, approvals, authorizations and orders as may be required
under the Act and state securities or Blue Sky laws in connection
with the sale and delivery of such Shares;
(ii) The sale of the Shares to be sold by such Selling
Stockholder hereunder and the compliance by such Selling Stockholder
with all of the provisions of this Agreement, the Power of Attorney
and the Custody Agreement and the consummation of the transactions
herein and therein contemplated will not conflict with or result in a
breach or violation of any of the terms or provisions of, or
constitute a default under, any statute, indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument to which such
Selling Stockholder is a party or by which such Selling Stockholder
is bound or to which any of the property or assets of such Selling
Stockholder is subject, nor will such action result in any violation
of the provisions of any partnership agreement (or other comparable
organizational document) of such Selling Stockholder or any statute
or any order, rule or regulation of any court or governmental agency
or body having jurisdiction over such Selling Stockholder or the
property of such Selling Stockholder; provided, however, that such
Selling Stockholder makes no representation or warranty hereunder
with respect to the federal securities laws of the United States or
securities or Blue Sky laws of any state or other jurisdiction;
(iii) Such Selling Stockholder has, and immediately prior to
the First Time of Delivery (as defined in Section 4 hereof), such
Selling Stockholder will have, good and valid title to the Shares to
be sold by such Selling Stockholder hereunder, free and clear of all
liens, encumbrances, equities or claims (except, in the case of Mr.
Reiner, that the Shares being sold by him hereunder (the "Encumbered
Shares") are held on behalf of the Company as security for his
repayment obligations under a promissory note in favor of the
Company); and, upon delivery of such Shares and payment therefor
pursuant hereto (including, in the case of the Encumbered Shares,
payment to the Company in satisfaction of Mr. Reiner's repayment
obligations under such promissory note, which payment will extinguish
the encumbrance on the Encumbered Shares), such Selling Stockholder
will convey to the several Underwriters who have purchased such
Shares in good faith and without notice of any such lien,
encumbrance, equity or claim or any adverse claim within the meaning
of the Uniform Commercial Code (other than the encumbrance on the
Encumbered Shares which will have been extinguished) good and valid
title to such Shares, free and clear of all liens, encumbrances,
equities or claims;
(iv) During the period beginning from the date hereof and
continuing to and including the date 180 days after the date of the
Prospectus, such Selling Stockholder will not offer, sell, contract
to sell or otherwise dispose of, except as provided hereunder, any
shares of Stock or any securities of the Company that are
substantially similar to the Shares, including but not limited to any
securities that are convertible into or exchangeable for, or that
represent the right to receive, Stock or any such substantially
similar securities (other than the Shares to be sold by such Selling
Stockholder to the Underwriters hereunder), without the prior written
consent of Goldman, Sachs & Co. on behalf of the Representatives on
behalf of the Underwriters; provided, however, that such Selling
Stockholder may, without your consent, transfer stock in a private
transaction to an "affiliate" (as such term is defined in the Act)
provided that such affiliate agrees in writing to be bound by the
provisions hereof to the same extent as such Selling Stockholder is
bound hereunder;
(v) Such Selling Stockholder has not taken and will not
take, directly or indirectly, any action which is designed to or
which has constituted or which might reasonably be expected to cause
or result in stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of the
Shares;
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<PAGE>
(vi) To the extent that any statements or omissions made in
the Registration Statement, any Preliminary Prospectus, the
Prospectus or any amendment or supplement thereto are made in
reliance upon and in conformity with written information furnished to
the Company by such Selling Stockholder expressly for use therein,
such Preliminary Prospectus and the Registration Statement did, and
the Prospectus and any further amendments or supplements to the
Registration Statement and the Prospectus, when they become effective
or are filed with the Commission, as the case may be, will conform in
all material respects to the requirements of the Act and the rules
and regulations of the Commission thereunder and will not contain any
untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the
statements therein not misleading;
(vii) In order to document the Underwriters' compliance with
the reporting and withholding provisions of the Tax Equity and Fiscal
Responsibility Act of 1982 with respect to the transactions herein
contemplated, such Selling Stockholder will deliver to you prior to
or at the First Time of Delivery (as defined in Section 4 hereof) a
properly completed and executed United States Treasury Department
Form W-9 (or other applicable form or statement specified by Treasury
Department regulations in lieu thereof);
(viii) Certificates in negotiable form representing all of
the Shares to be sold by such Selling Stockholder hereunder have been
placed in custody under a Custody Agreement, in the form heretofore
furnished to you (the "Custody Agreement"), duly executed and
delivered by such Selling Stockholder to Marine Midland Bank, as
custodian (the "Custodian"), and such Selling Stockholder has duly
executed and delivered a Power of Attorney, in the form heretofore
furnished to you (the "Power of Attorney"), appointing the persons
indicated in Schedule II hereto, and each of them, as such Selling
Stockholder's attorneys-in-fact (the "Attorneys-in-Fact") with
authority to execute and deliver this Agreement on behalf of such
Selling Stockholder, to determine the purchase price to be paid by
the Underwriters to such Selling Stockholder as provided in Section 2
hereof, to authorize the delivery of the Shares to be sold by such
Selling Stockholder hereunder and otherwise to act on behalf of such
Selling Stockholder in connection with the transactions contemplated
by this Agreement and the Custody Agreement; and
(ix) The Shares represented by the certificates held in
custody for such Selling Stockholder under the Custody Agreement are
subject to the interests of the Underwriters hereunder; the
arrangements made by such Selling Stockholder for such custody, and
the appointment by such Selling Stockholder of the Attorneys-in-Fact
by the Power of Attorney, are to that extent irrevocable; the
obligations of such Selling Stockholder hereunder shall not be
terminated, except as provided in this Agreement or in the Power of
Attorney, by operation of law, whether by the death or incapacity of
any Selling Stockholder that is a natural person or, in the case of
an estate or trust, by the death or incapacity of any executor or
trustee or the termination of such estate or trust, or in the case of
a partnership or corporation, by the dissolution of such partnership
or corporation, or by the occurrence of any other event; if any
Selling Stockholder that is a natural person or any such executor or
trustee should die or become incapacitated, or if any such estate or
trust should be terminated, or if any such partnership or corporation
should be dissolved, or if any other such event should occur, before
the delivery of the Shares hereunder, certificates representing the
Shares shall be delivered by or on behalf of such Selling Stockholder
in accordance with the terms and conditions of this Agreement and of
the Custody Agreements; and actions taken by the Attorneys-in-Fact
pursuant to the Powers of Attorney shall be as valid as if such
death, incapacity, termination, dissolution or other event had not
occurred, regardless of whether or not the Custodian, the
Attorneys-in-Fact, or any of them, shall have received notice of such
death, incapacity, termination, dissolution or other event.
2. Subject to the terms and conditions herein set forth, (a) the
Company and the Selling Stockholders agree, severally and not jointly, to sell
to each of the Underwriters, and each of the Underwriters agrees, severally
and not jointly, to purchase from the Company and the Selling Stockholders, at
a purchase price per share of $______, the number of Firm Shares (to be
adjusted by you so as to eliminate fractional shares) determined by
multiplying the aggregate number of Firm Shares to be sold by the Company and
the Selling Stockholders as set forth opposite their respective names in
Schedule II hereto by a fraction, the numerator of which is the aggregate
number of Firm Shares to be purchased by such Underwriter as set forth
opposite the name of such Underwriter in Schedule I hereto and the
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denominator of which is the aggregate number of Firm Shares to be purchased by
all of the Underwriters from the Company and the Selling Stockholders
hereunder and (b) in the event and to the extent that the Underwriters shall
exercise the election to purchase Optional Shares as provided below, the
Company and each of the Selling Stockholders as designated on Schedule II
hereto agrees, severally and not jointly, to sell to each of the Underwriters,
and each of the Underwriters agrees, severally and not jointly, to purchase
from the Company and each of such Selling Stockholders, at the purchase price
per share set forth in clause (a) of this Section 2, that portion of the
number of Optional Shares as to which such election shall have been exercised
(to be adjusted by you so as to eliminate fractional shares) determined by
multiplying such number of Optional Shares by a fraction the numerator of
which is the maximum number of Optional Shares which such Underwriter is
entitled to purchase as set forth opposite the name of such Underwriter in
Schedule I hereto and the denominator of which is the maximum number of
Optional Shares that all of the Underwriters are entitled to purchase
hereunder.
The Company and the Selling Stockholders, as and to the extent
indicated in Schedule II hereto, hereby grant, severally and not jointly, to
the Underwriters the right to purchase at their election up to an aggregate of
240,000 Optional Shares, at the purchase price per share set forth in the
paragraph above, for the sole purpose of covering overallotments in the sale
of the Firm Shares, if any. Any such election to purchase Optional Shares
shall be made in proportion to the maximum number of Optional Shares to be
sold by the Company and each Selling Stockholder as set forth in Schedule II
hereto. Any such election to purchase Optional Shares may be exercised only by
written notice from Goldman, Sachs & Co., on behalf of the Representatives on
behalf of the Underwriters, to the Company and the Attorneys-in-Fact, given
within a period of 30 calendar days after the date of this Agreement, setting
forth the aggregate number of Optional Shares to be purchased and the date on
which such Optional Shares are to be delivered, as determined by Goldman,
Sachs & Co. but in no event earlier than the First Time of Delivery (as
defined in Section 4 hereof) or, unless Goldman, Sachs & Co., the Company and
the Attorneys-in-Fact otherwise agree in writing, earlier than two or later
than ten business days after the date of such notice.
3. Upon the authorization by Goldman, Sachs & Co., on behalf of the
Representatives on behalf of the Underwriters, of the release of the Firm
Shares, the several Underwriters propose to offer the Firm Shares for sale
upon the terms and conditions set forth in the Prospectus.
4. (a) The Shares to be purchased by each Underwriter hereunder, in
definitive form, and in such authorized denominations and registered in such
names as Goldman, Sachs & Co. may request upon at least forty-eight hours'
prior written notice to the Company and the Selling Stockholders shall be
delivered by or on behalf of the Company and the Selling Stockholders to
Goldman, Sachs & Co., for the account of such Underwriter, against payment by
or on behalf of such Underwriter of the purchase price therefor by wire
transfer of immediately available (same day) funds to a bank account
designated by the Company or the Selling Stockholder, as the case may be (and,
in the case of Mr. Reiner, to a bank account of the Company designated by the
Company). The Company and the Selling Stockholders severally will cause the
certificates representing the Shares to be made available for checking and
packaging at least twenty-four hours prior to the respective Time of Delivery
(as defined below) with respect thereto at the office of Goldman, Sachs & Co.,
85 Broad Street, New York, New York 10004 (the "Designated Office"). The time
and date of such delivery and payment shall be, with respect to the Firm
Shares, 9:30 a.m., New York City time, on April __, 1998 or such other time
and date as Goldman, Sachs & Co., the Company and the Attorneys-in-Fact may
agree upon in writing, and, with respect to the Optional Shares, 9:30 a.m.,
New York time, on the date specified by Goldman, Sachs & Co. in the written
notice given by Goldman, Sachs & Co. of the Underwriters' election to purchase
such Optional Shares, or such other time and date as Goldman, Sachs & Co., the
Company and the Attorneys-in-Fact may agree upon in writing. Such time and
date for delivery of the Firm Shares is herein called the "First Time of
Delivery", such time and date for delivery of the Optional Shares, if not the
First Time of Delivery, is herein called the "Second Time of Delivery", and
each such time and date for delivery is herein called a "Time of Delivery".
(b) The documents to be delivered at each Time of Delivery
by or on behalf of the parties hereto pursuant to Section 7 hereof, including
the cross receipt for the Shares and any additional documents requested by the
Underwriters pursuant to Section 7(n) hereof, will be delivered at the offices
of Jones, Day, Reavis & Pogue, 599 Lexington Avenue, 37th Floor, New York, New
York 10022 (the "Closing Location"), and the Shares will be delivered at the
Designated Office, all at such Time of Delivery. A meeting will be held at the
Closing Location at 2:00 p.m., New York City time, on the New York Business
Day next preceding such Time of Delivery, at which meeting the final drafts of
the documents to be
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delivered pursuant to the preceding sentence will be available for review by
the parties hereto. For the purposes of this Section 4, "New York Business
Day" shall mean each Monday, Tuesday, Wednesday, Thursday and Friday which is
not a day on which banking institutions in New York are generally authorized
or obligated by law or executive order to close.
5. The Company agrees with each of the Underwriters:
(a) To prepare the Prospectus in a form approved by you and to
file such Prospectus pursuant to Rule 424(b) under the Act not later
than the Commission's close of business on the second business day
following the execution and delivery of this Agreement or, if
applicable, such earlier time as may be required by Rule 430A(a)(3)
under the Act; to make no further amendment or any supplement to the
Registration Statement or Prospectus prior to the last Time of
Delivery which shall be disapproved by you promptly after reasonable
notice thereof; to advise you, promptly after it receives notice
thereof, of the time when any amendment to the Registration Statement
has been filed or becomes effective or any supplement to the
Prospectus or any amended Prospectus has been filed and to furnish
you with copies thereof; to file promptly all reports and any
definitive proxy or information statements required to be filed by
the Company with the Commission pursuant to Section 13(a), 13(c), 14
or 15(d) of the Exchange Act subsequent to the date of the Prospectus
and for so long as the delivery of a prospectus is required in
connection with the offering or sale of the Shares; to advise you,
promptly after it receives notice thereof, of the issuance by the
Commission of any stop order or of any order preventing or suspending
the use of any Preliminary Prospectus or Prospectus, of the
suspension of the qualification of the Shares for offering or sale in
any jurisdiction, of the initiation or threatening of any proceeding
for any such purpose, or of any request by the Commission for the
amending or supplementing of the Registration Statement or Prospectus
or for additional information; and, in the event of the issuance of
any stop order or of any order preventing or suspending the use of
any Preliminary Prospectus or Prospectus or suspending any such
qualification, promptly to use its best efforts to obtain the
withdrawal of such order;
(b) Promptly from time to time to take such action as you may
reasonably request to qualify the Shares for offering and sale under
the securities laws of such jurisdictions as you may reasonably
request and to comply with such laws so as to permit the continuance
of sales and dealings therein in such jurisdictions for as long as
may be necessary to complete the distribution of the Shares, provided
that in connection therewith the Company shall not be required to
qualify as a foreign corporation or to file a general consent to
service of process in any jurisdiction or to take any other action
which would subject it to the service of process in suits or to
taxation, other than as to matters and transactions relating to the
offer and sale of the Shares in each jurisdiction in which the Shares
have been qualified as provided above;
(c) Prior to 12:00 noon, New York City time, on the New York
Business Day next succeeding the date of this Agreement and from time
to time, to furnish the Underwriters with copies of the Prospectus in
New York City in such quantities as you may reasonably request, and,
if the delivery of a prospectus is required at any time prior to the
expiration of nine months after the time of issue of the Prospectus
in connection with the offering or sale of the Shares and if at such
time any event shall have occurred as a result of which the
Prospectus as then amended or supplemented would include an untrue
statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in the light of
the circumstances under which they were made when such Prospectus is
delivered, not misleading, or, if for any other reason it shall be
necessary during such period to amend or supplement the Prospectus or
to file under the Exchange Act any document incorporated by reference
in the Prospectus in order to comply with the Act or the Exchange
Act, to notify you and upon your request to file such document and to
prepare and furnish without charge to each Underwriter and to any
dealer in securities as many copies as you may from time to time
reasonably request of an amended Prospectus or a supplement to the
Prospectus which will correct such statement or omission or effect
such compliance, and in case any Underwriter is required to deliver a
prospectus in connection with sales of any of the Shares at any time
nine months or more after the time of issue of the Prospectus, upon
your request but at the expense of such Underwriter, to prepare and
deliver to such Underwriter as many copies as you may request of an
amended or supplemented Prospectus complying with Section 10(a)(3) of
the Act;
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(d) To make generally available to its securityholders as soon
as practicable, but in any event not later than eighteen months after
the effective date of the Registration Statement (as defined in Rule
158(c) under the Act), an earnings statement of the Company and its
subsidiaries (which need not be audited) complying with Section 11(a)
of the Act and the rules and regulations thereunder (including, at
the option of the Company, Rule 158);
(e) During the period beginning from the date hereof and
continuing to and including the date 180 days after the date of the
Prospectus, not to register for sale, offer, sell, contract to sell
or otherwise dispose of, except as provided hereunder, any shares of
Stock or any securities that are substantially similar to the Shares,
including but not limited to any securities that are convertible into
or exchangeable for, or that represent the right to receive, Stock or
any such substantially similar securities (other than pursuant to
employee or director stock option plans, arrangements or agreements
existing on the date of this Agreement and the Shares to be sold by
the Company to the Underwriters hereunder), without the prior written
consent of Goldman, Sachs & Co. on behalf of the Representatives on
behalf of the Underwriters;
(f) For each of the first five fiscal years ending after the
effective date of the Registration Statement or such longer period as
may be required by law or by the rule of any stock exchange on which
the Stock is listed or any quotation system in which the Stock is
included, to furnish to its stockholders, within the time limits
prescribed under the Exchange Act, after the end of each fiscal year
an annual report (including a balance sheet and statements of
operations, changes in stockholders' equity and cash flows of the
Company and its consolidated subsidiaries certified by independent
public accountants) and, within the time limits prescribed under the
Exchange Act, after the end of each of the first three quarters of
each fiscal year (beginning with the fiscal quarter ending after the
effective date of the Registration Statement), consolidated summary
financial information of the Company and its subsidiaries for such
quarter in reasonable detail;
(g) During a period of five years from the effective date of
the Registration Statement, to furnish to you copies of all reports
or other communications (financial or other) furnished to
stockholders, and to deliver to you (i) as soon as they are
available, copies of any reports and financial statements furnished
to or filed with the Commission or any national securities exchange
on which any class of securities of the Company or Finlay Jewelry is
listed or quoted (such financial statements to be on a consolidated
basis to the extent the accounts of the Company and its subsidiaries
are consolidated in reports furnished to its stockholders generally
or to the Commission); and (ii) such additional information
concerning the business and financial condition of the Company or
Finlay Jewelry as you may from time to time reasonably request;
(h) To use the net proceeds received by it from the sale of
the Shares pursuant to this Agreement in the manner specified in the
Prospectus under the caption "Use of Proceeds";
(i) To use its best efforts to list for quotation the Shares on
the Nasdaq National Market ("NASDAQ"); and
(j) If the Company elects to rely upon Rule 462(b), the
Company shall file a Rule 462(b) Registration Statement with the
Commission in compliance with Rule 462(b) by 10:00 p.m., Washington,
D.C. time, on the date of this Agreement, and the Company shall at
the time of filing either pay to the Commission the filing fee for
the Rule 462(b) Registration Statement or give irrevocable
instructions for the payment of such fee pursuant to Rule 111(b)
under the Act.
6. The Company covenants and agrees with the several Underwriters
that the Company will pay or cause to be paid the following: (i) the fees,
disbursements and expenses of the Company's counsel and accountants in
connection with the registration of the Shares under the Act and all other
expenses in connection with the preparation, printing and filing of the
Registration Statement, any Preliminary Prospectus and the Prospectus and
amendments and supplements thereto and the mailing and delivering of copies
thereof to the Underwriters and dealers; (ii) the cost of printing or
producing any Agreement Among Underwriters, this Agreement, any Blue Sky
Memorandum, closing documents (including any reasonable compilations thereof)
and any other documents in connection with the offering, purchase, sale and
delivery of the Shares; (iii) all expenses in connection with the
qualification of the Shares for offering
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and sale under state securities laws as provided in Section 5(b) hereof,
including the reasonable fees and disbursements of counsel for the
Underwriters in connection with such qualification and in connection with any
Blue Sky survey; (iv) all fees and expenses in connection with listing the
Shares on the NASDAQ; (v) the filing fees incident to, and the reasonable fees
and disbursements of counsel for the Underwriters in connection with, securing
any required review by the National Association of Securities Dealers, Inc. of
the terms of the sale of the Shares; (vi) the cost of preparing stock
certificates; (vii) the cost and charges of any transfer agent or registrar;
(viii) all costs and expenses incident to the performance of the Selling
Stockholders' obligations hereunder, including (A) any fees and expenses of
counsel for the Selling Stockholders, (B) the fees and expenses of the
Attorneys-in-Fact and the Custodian, if any, and (C) all expenses and taxes
incident to the sale and delivery of the Shares to be sold by the Selling
Stockholders to the Underwriters hereunder; and (ix) all other costs and
expenses incident to the performance of the Company's or the Selling
Stockholders' obligations hereunder which are not otherwise specifically
provided for in this Section. In connection with the preceding sentence,
Goldman, Sachs & Co. agrees to pay New York State stock transfer tax, and each
of the Company and the Selling Stockholders, severally and not jointly, agree
to reimburse Goldman, Sachs & Co. for its pro rata share of any associated
carrying costs if such tax payment is not rebated on the day of payment and
for any portion of such tax payment not rebated. It is understood, however,
that the Company shall bear, and the Selling Stockholders shall not be
required to pay or to reimburse the Company for, the cost of any matters
relating to the sale and purchase of the Shares pursuant to this Agreement,
other than the underwriting discount applicable to the Shares to be sold by
it, and that, except as provided in this Section, and Sections 8 and 11
hereof, the Underwriters will pay all of their own costs and expenses,
including the fees and disbursements of their counsel, stock transfer taxes on
resale of any of the Shares by them, and any advertising expenses connected
with any offers they may make.
7. The obligations of the Underwriters hereunder, as to the Shares to
be delivered at each Time of Delivery, shall be subject, in their discretion,
to the condition that all representations and warranties and other statements
of the Company, Finlay Jewelry and each of the Selling Stockholders herein
are, at and as of such Time of Delivery, true and correct, the condition that
the Company, Finlay Jewelry and each of the Selling Stockholders shall have
performed all of their respective obligations hereunder theretofore to be
performed, and the following additional conditions:
(a) The Prospectus shall have been filed with the Commission
pursuant to Rule 424(b) within the applicable time period prescribed for such
filing by the rules and regulations under the Act and in accordance with
Section 5(a) hereof; if the Company has elected to rely upon Rule 462(b), the
Rule 462(b) Registration Statement shall have become effective by 10:00 p.m.,
Washington, D.C. time, on the date of this Agreement; no stop order suspending
the effectiveness of the Registration Statement or any part thereof shall have
been issued and no proceeding for that purpose shall have been initiated or
threatened by the Commission; and all requests for additional information on
the part of the Commission shall have been complied with to your reasonable
satisfaction;
(b) Jones, Day, Reavis & Pogue, counsel for the
Underwriters, shall have furnished to you such opinion or opinions (a draft of
each such opinion is attached as Annex II(a) hereto), dated such Time of
Delivery, with respect to the matters covered in paragraphs (i), (ii), (v),
(viii) and (xi) of subsection (c) below as well as such other related matters
as you may reasonably request, and such counsel shall have received such
documents and information as they may reasonably request to enable them to
pass upon such matters;
(c) Paul, Weiss, Rifkind, Wharton & Garrison, counsel for
the Company, shall have furnished to you their written opinion (a draft of
such opinion is attached as Annex II(b) hereto) (which opinion may be limited
to the federal laws of the United States, the laws of the State of New York
and the General Corporation Law of the State of Delaware and in giving such
opinion such counsel may state that, insofar as any opinions involve factual
matters, they have relied, to the extent they deem proper, upon certificates
of officers of the Company or its subsidiaries and certificates of responsible
public officials, copies of which certificates will be provided to you upon
delivery of such counsel's opinion), dated such Time of Delivery, in form and
substance as attached, to the effect that:
(i) Each of the Company and Finlay Jewelry has been duly
incorporated and is validly existing as a corporation in good
standing under the laws of the State of Delaware, with
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corporate power and authority to own its properties and conduct its
business as described in the Prospectus;
(ii) The Company has an authorized capitalization as set
forth in the Prospectus, and all of the issued shares of capital
stock of the Company (including the Shares being delivered at such
Time of Delivery) have been duly authorized and, upon payment for the
Shares in accordance with the terms of this Agreement, will be
validly issued, fully paid and non-assessable; and the Shares conform
in all material respects as to legal matters to the description of
the Stock contained in the Prospectus;
(iii) Each subsidiary of the Company (other than Sonab and
Finlay Jewelry) has been duly incorporated and is validly existing as
a corporation in good standing under the laws of its jurisdiction of
incorporation; and all of the issued shares of capital stock of each
subsidiary of the Company (other than Sonab) have been duly
authorized and validly issued, are fully paid and non-assessable, and
(except for directors' qualifying shares, if any, and except as
otherwise set forth in the Prospectus) are owned of record directly
or indirectly by the Company, to the knowledge of such counsel, free
and clear of all liens, encumbrances and defects;
(iv) To such counsel's knowledge and other than as set forth
in the Prospectus, there are no legal or governmental proceedings
pending to which the Company or any of its subsidiaries is a party or
of which any property of the Company or any of its subsidiaries is
the subject which, if determined adversely to the Company or any of
its subsidiaries, could individually or in the aggregate reasonably
be expected to have a Material Adverse Effect; and, to such counsel's
knowledge, no such proceedings are threatened or contemplated by
governmental authorities or threatened by others;
(v) This Agreement has been duly authorized, executed and
delivered by the Company and Finlay Jewelry;
(vi) (a) The issue and sale of the Shares being delivered at
such Time of Delivery by the Company and the compliance by each of
the Company and Finlay Jewelry with the applicable provisions of this
Agreement and the consummation of the transactions herein
contemplated (a) will not conflict with or result in a breach or
violation of any of the terms or provisions of, or constitute a
default under, any indenture, mortgage, deed of trust, loan
agreement, real property lease, license or other material agreement
or instrument known to such counsel to which the Company or any of
its subsidiaries is a party or by which the Company or any of its
subsidiaries is bound or to which any of the property or assets of
the Company or any of its subsidiaries is subject, nor (b) will such
action result in any violation of the provisions of (i) the
respective certificate or restated certificate of incorporation, or
respective by-laws or restated by-laws, as the case may be, of the
Company or Finlay Jewelry, (ii) any statute, rule or regulation known
to such counsel of any governmental agency or body having
jurisdiction over the Company or any of its subsidiaries or any of
their respective properties or (iii) any order applicable to the
Company, any of its subsidiaries or any of their respective
properties of any court, governmental agency or body known to such
counsel based upon an officer's certificate listing any such orders
(which officer's certificate shall be delivered with such opinion);
(vii) No consent, approval, authorization, order,
registration or qualification of or with any such court or
governmental agency or body is required for the issue and sale of the
Shares or the consummation by the Company of the transactions
contemplated by this Agreement, except the registration under the Act
of the Shares, and such consents, approvals, authorizations,
registrations or qualifications as may be required under foreign or
state securities or Blue Sky laws in connection with the purchase and
distribution of the Shares by the Underwriters;
(viii) The statements set forth in the Prospectus under the
caption "Description of Certain Indebtedness", insofar as they
purport to describe the provisions of the documents referred to
therein, under the caption "Description of Capital Stock", insofar as
they purport to constitute a summary of the terms of the Stock, and
under the caption "Underwriting", insofar as they purport to describe
the provisions of the laws and documents referred to therein, are
accurate and fair in all material respects;
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(ix) Each of the Company and Finlay Jewelry is not an
"investment company" or an entity "controlled" by an "investment
company", as such terms are defined in the Investment Company Act;
(x) The documents incorporated by reference in the
Prospectus or any further amendment or supplement thereto made by the
Company prior to such Time of Delivery (other than the financial
statements and related schedules therein, as to which such counsel
need express no opinion), when they became effective or were filed
with the Commission, as the case may be, complied as to form in all
material respects with the requirements of the Act or the Exchange
Act, as applicable, and the rules and regulations of the Commission
thereunder; and
(xi) The Registration Statement and the Prospectus and any
further amendments and supplements thereto made by the Company prior
to such Time of Delivery (other than the financial statements and
related schedules and other financial data included or incorporated
by reference therein or omitted therefrom, as to which such counsel
need express no opinion) comply as to form in all material respects
with the requirements of the Act and the rules and regulations
thereunder; although they do not assume any responsibility for the
accuracy, completeness or fairness of the statements contained in the
Registration Statement or the Prospectus, except for those referred
to in the opinion in subsection (viii) of this Section 7(c), such
counsel may state that such counsel has participated in conferences
at which the contents of the Registration Statement and the
Prospectus and related matters were discussed, and, on the basis of
such participation, they have no reason to believe that, as of its
effective date, the Registration Statement or any further amendment
thereto made by the Company prior to such Time of Delivery (other
than the financial statements and related schedules and other
financial data included or incorporated by reference therein or
omitted therefrom, as to which such counsel need express no opinion)
contained or incorporated by reference an untrue statement of a
material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading or that, as of its date, the Prospectus or any further
amendment or supplement thereto made by the Company prior to such
Time of Delivery (other than the financial statements and related
schedules and other financial data included or incorporated by
reference therein or omitted therefrom, as to which such counsel need
express no opinion) contained or incorporated by reference an untrue
statement of a material fact or omitted to state a material fact
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading or that, as
of such Time of Delivery, either the Registration Statement or the
Prospectus or any further amendment or supplement thereto made by the
Company prior to such Time of Delivery (other than the financial
statements and related schedules and other financial data included or
incorporated by reference therein or omitted therefrom, as to which
such counsel need express no opinion) contains or incorporates by
reference an untrue statement of a material fact or omits to state a
material fact necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading; and
they do not know of any amendment to the Registration Statement
required to be filed or of any contracts or other documents of a
character required to be filed as an exhibit to the Registration
Statement or required to be described in the Registration Statement
or the Prospectus which are not filed or described as required or of
any filing required to be incorporated by reference into the
Prospectus which is not so incorporated by reference therein;
(d) Tenzer Greenblatt LLP, counsel for the Company, shall
have furnished to you their written opinion (a draft of such opinion is
attached as Annex II(c) hereto) (which opinion may be limited to the federal
laws of the United States, the laws of the State of New York and the General
Corporation Law of the State of Delaware and in giving such opinion such
counsel may state that, insofar as any opinions involve factual matters, they
have relied, to the extent they deem proper, upon certificates of officers of
the Company or its subsidiaries and certificates of responsible public
officials, copies of which certificates will be provided to you upon delivery
of such counsel's opinion), dated such Time of Delivery, in form and substance
as attached, to the effect that:
(i) To such counsel's knowledge, neither the Company nor any
of its subsidiaries is in violation of its respective certificate or
restated certificate of incorporation or by-laws or restated by-laws,
or comparable documents, or in default in the performance or
observance of any obligation, agreement, covenant or condition
contained in any indenture, mortgage, deed of trust, loan agreement,
lease or other agreement or instrument to which it is a party or by
which it or any
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of its properties may be bound which default, individually or in the
aggregate, could reasonably be expected to have a Material Adverse
Effect;
(e) Bonni G. Davis, Vice President, General Counsel and
Secretary of Finlay Jewelry, shall have furnished to you her written opinion
(a draft of such opinion is attached as Annex II(d) hereto) (which opinion may
be limited to the federal laws of the United States, the laws of the State of
New York and the General Corporation Law of the State of Delaware and in
giving such opinion Ms. Davis may state that, insofar as any opinions involve
factual matters, she has relied, to the extent she deems proper, upon
certificates of officers of the Company or its subsidiaries and certificates
of responsible public officials, copies of which certificates will be provided
to you upon delivery of Ms. Davis's opinion), dated such Time of Delivery, in
form and substance as attached, with respect to the matters covered in
paragraphs (iv) and (vi) of subsection (c) above and paragraph (i) of
subsection (d) above and, in addition, to the effect that:
(i) Each subsidiary of the Company (other than Sonab for
which no opinion need be given) has been duly qualified as a foreign
corporation for the transaction of business and is in good standing
under the laws of each other jurisdiction in which it owns or leases
properties or conducts any business so as to require such
qualification or is subject to no material liability or disability by
reason of failure to be so qualified in any such jurisdiction; the
Company has been duly qualified as a foreign corporation for the
transaction of business and is in good standing under the laws of
each jurisdiction in which it owns or leases properties or conducts
any business so as to require such qualification or is subject to no
material liability or disability by reason of its failure to be so
qualified in any such jurisdiction;
(ii) The Company and its subsidiaries have good and
marketable title in fee simple to all real property owned by them in
each case free and clear of all liens, encumbrances and defects
except such as are described in the Prospectus or such as do not
materially affect the value of such property and do not interfere
with the use made and proposed to be made of such property by the
Company and its subsidiaries; to such counsel's knowledge neither the
Company nor any of its subsidiaries is in default under any lease for
real property or buildings held under lease by the Company or its
subsidiaries except for such defaults that are not material and do
not interfere with the use made and proposed to be made of such
property and buildings by the Company and its subsidiaries; and the
leases listed on Schedule III hereto are the only real property
leases to which the Company and its subsidiaries are a party and are
valid, subsisting and enforceable as against the Company or its
subsidiaries (as the case may be) with such exceptions as are not
material and do not interfere with the use made and proposed to be
made of such property and buildings by the Company and its
subsidiaries and except that the enforceability of such leases is
subject to the effect of any applicable bankruptcy, insolvency,
reorganization, fraudulent conveyance or transfer, moratorium and
similar laws affecting creditors' rights generally and to general
principles of equity (regardless of whether enforcement is sought in
a proceeding in equity or at law) (in giving the opinion in this
clause, such counsel may state that no examination of record titles
for the purpose of such opinion has been made, and that they are
relying upon a general review of the titles of the Company and its
subsidiaries, upon opinions of local counsel and abstracts, reports
and policies of title companies rendered or issued at or subsequent
to the time of acquisition of such property by the Company or its
subsidiaries, upon opinions of counsel to the lessors of such
property and, in respect of matters of fact, upon certificates of
officers of the Company or its subsidiaries;
(iii) To such counsel's knowledge (a) neither the Company
nor any of its subsidiaries has received any notice that any default
by the Company or any of its subsidiaries has occurred and is
continuing under any of the license agreements with host store groups
described or identified in the Prospectus to which the Company or any
of its subsidiaries are a party and (b) no condition exists which
could individually or in the aggregate reasonably be expected to
result in the termination or nonrenewal of any such license
agreement, except that no opinion need be given with respect to the
Company's license agreement with Liberty House as to the effect on
such license agreement of the filing of a voluntary petition by
Liberty House under the Bankruptcy Code (as defined in the
Prospectus); and
(iv) To such counsel's knowledge, no legal proceedings are
pending or have been threatened against the Company or any of its
subsidiaries that are of a nature required to be disclosed in the
Prospectus which are not so disclosed therein;
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(f) Dechert Price & Rhoads, French counsel to the Company,
shall have furnished to you their written opinion (a draft of such opinion is
attached as Annex II(e) hereto) (which opinion may be limited to the laws of
France and in giving such opinion French counsel may state that, insofar as
any opinions involve factual matters, it has relied, to the extent such
counsel deems proper, upon certificates of officers of the Company or its
subsidiaries and certificates of responsible public officials, copies of which
certificates will be provided to you upon delivery of such counsel's opinion),
dated such Time of Delivery, in form and substance as attached, to the effect
that:
(i) Sonab has been duly organized and is validly existing as
a societe en nom collectif in France; and
(ii) all of the issued equity interests of Sonab have been
duly authorized and validly created, are fully paid and
non-assessable, and are validly held of record directly or indirectly
by the Company, to the knowledge of such counsel, free of all liens,
encumbrances and defects, other than the pledge under Finlay
Jewelry's Revolving Credit Agreement;
With respect to all opinions provided for above in paragraphs
(b) through (f) of this Section 7 as to validity, binding effect and/or
enforceability, any such counsel may state that any such opinion as to
enforceability is subject to the effect of any applicable bankruptcy,
insolvency, reorganization, fraudulent conveyance or transfer, moretorium and
other laws of general applicability relating to or affecting creditors' rights
and to general equity principles (regardless of whether enforcement is sought in
a proceeding in equity or at law).
(g) Counsel for each of the Selling Stockholders, as
indicated in Schedule II hereto, shall have furnished to you their written
opinion (drafts of such opinions are attached as Annex II(f) hereto) (in
giving such opinion such counsel may state that, insofar as any opinions
involve factual matters, such counsel has relied, to the extent they deem
proper, upon certificates of the Selling Stockholder for whom they serve as
counsel, and, if applicable, officers of such Selling Stockholder and
certificates of responsible public officials, copies of which certificates
will be provided to you upon delivery of such opinion), dated such Time of
Delivery, in form and substance satisfactory to you, to the effect that:
(i) A Power of Attorney and a Custody Agreement have been
duly executed and delivered by each Selling Stockholder and
constitute valid and binding agreements of such Selling Stockholder
in accordance with their terms, except as (a) rights to indemnity and
contribution may be limited by applicable law, (b) enforceability may
be limited by bankruptcy, insolvency, reorganization, fraudulent
conveyance or transfer, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally and (c)
the remedy of specific performance and injunctive relief may be
subject to equitable defenses and to the discretion of the court
before which any proceeding therefor may be brought;
(ii) This Agreement has been duly executed and delivered by
or on behalf of such Selling Stockholder; and the sale of the Shares
to be sold by such Selling Stockholder hereunder and the compliance
by such Selling Stockholder with all of the provisions of this
Agreement, the Power of Attorney and the Custody Agreement and the
consummation of the transactions herein and therein contemplated will
not conflict with or result in a breach or violation of any terms or
provisions of, or constitute a default under, any statute, or to the
knowledge of such counsel, indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which such Selling
Stockholder is a party or by which such Selling Stockholder is bound
or to which any of the property or assets of such Selling Stockholder
is subject, nor will such action result in any violation of the
provisions of any partnership agreement (or comparable organizational
document) of such Selling Stockholder or, to the knowledge of such
counsel, any order, rule or regulation of any court or governmental
agency or body having jurisdiction over such Selling Stockholder or
the property of such holder;
(iii) No consent, approval, authorization or order of any
court or governmental agency or body is required to be obtained by
such Selling Stockholder for the consummation of the transactions
contemplated by this Agreement in connection with the Shares to be
sold by such Selling Stockholder hereunder, except for those which
have been duly obtained and are in full force and effect and such as
may be required under the Act, state securities or Blue Sky laws or
under rules and regulations of the National Association of Securities
Dealers, Inc. in connection with the purchase and distribution of
such Shares by the Underwriters;
(iv) To such counsel's knowledge, immediately prior to the
First Time of Delivery, such Selling Stockholder had good and valid
title to the Shares to be sold at the First Time of Delivery by such
Selling Stockholder under this Agreement, free and clear of all
liens,
15
<PAGE>
encumbrances, equities or claims, and full right, power and authority
to sell, assign, transfer and deliver the Shares to be sold by such
Selling Stockholder hereunder; and
(v) Good and valid title to such Shares, free and clear of
all liens, encumbrances, equities or claims, has been conveyed by
such Selling Stockholder to each of the several Underwriters who have
purchased such Shares in good faith and without notice of any such
lien, encumbrance, equity or claim or any other adverse claim within
the meaning of the Uniform Commercial Code;
(h) On the date of the Prospectus at a time prior to the
execution of this Agreement, at 9:30 a.m., New York City time, on the
effective date of any post-effective amendment to the Registration Statement
filed subsequent to the date of this Agreement and also at each Time of
Delivery, Arthur Andersen LLP shall have furnished to you a letter or letters,
dated the respective dates of delivery thereof, in form and substance
satisfactory to you, to the effect set forth in Annex I hereto (the executed
copy of the letter delivered prior to the execution of this Agreement is
attached as Annex I(a) hereto and a draft of the form of letter to be
delivered on the effective date of any post-effective amendment to the
Registration Statement and as of each Time of Delivery is attached as Annex
I(b) hereto);
(i) (i) Neither the Company nor any of its subsidiaries
shall have sustained since the date of the latest audited financial statements
included or incorporated by reference in the Prospectus any loss or
interference with its business from fire, explosion, flood or other calamity,
whether or not covered by insurance, or from any strike, boycott or similar
labor dispute or court or governmental action, order or decree, otherwise than
as set forth or contemplated in the Prospectus, and (ii) since the respective
dates as of which information is given in the Prospectus there shall not have
been any change in the capital stock or long-term debt of the Company or any
of its subsidiaries except for borrowings and repayments under the Revolving
Credit Agreement and the Gold Consignment Agreement (each as defined in the
Prospectus and as amended as described in the Prospectus), or any change, or
any development involving a prospective change, in or affecting the business,
operations, management, financial position or condition, current assets,
merchandise inventories, stockholders' equity or results of operations of the
Company and its subsidiaries taken as a whole, otherwise than as set forth or
contemplated in the Prospectus, the effect of which, in any such case
described in clause (i) or (ii), is in the judgment of the Representatives so
material and adverse as to make it impracticable or inadvisable to proceed
with the public offering or the delivery of the Shares being delivered at such
Time of Delivery on the terms and in the manner contemplated in the
Prospectus;
(j) On or after the date hereof (i) no downgrading shall
have occurred in the rating accorded the Company's or Finlay Jewelry's debt
securities by any "nationally recognized statistical rating organization", as
that term is defined by the Commission for purposes of Rule 436(g)(2) under
the Act, and (ii) no such organization shall have publicly announced that it
has under surveillance or review, with possible negative implications, its
rating of any of the Company's or Finlay Jewelry's debt securities;
(k) On or after the date hereof there shall not have
occurred any of the following: (i) a suspension or material limitation in
trading in securities generally on the New York Stock Exchange or on NASDAQ;
(ii) a suspension or material limitation in trading in the Company's
securities on NASDAQ; (iii) a general moratorium on commercial banking
activities declared by either federal or New York State authorities; or (iv)
the outbreak or escalation of hostilities involving the United States or the
declaration by the United States of a national emergency or war, if the effect
of any such event specified in this clause (iv) in the judgment of the
Representatives makes it impracticable or inadvisable to proceed with the
public offering or the delivery of the Shares being delivered at such Time of
Delivery on the terms and in the manner contemplated in the Prospectus;
(l) The Shares to be sold at such Time of Delivery shall
have been duly listed for quotation on NASDAQ;
(m) The Company has obtained and delivered to the
Underwriters executed copies of an agreement from the persons or firms listed
on Schedule IV hereto, substantially to the effect set forth in Section 5(e)
hereof, in form and substance satisfactory to you;
16
<PAGE>
(n) The Company and the Selling Stockholders shall have
furnished or caused to be furnished to you at such Time of Delivery
certificates of officers of the Company and Finlay Jewelry and of the Selling
Stockholders, respectively, reasonably satisfactory to you as to the accuracy
of the representations and warranties of the Company and Finlay Jewelry and of
the Selling Stockholders, respectively, herein at and as of such Time of
Delivery, as to the performance by each of the Company and Finlay Jewelry and
the Selling Stockholders, respectively, of all of their respective obligations
hereunder to be performed at or prior to such Time of Delivery, and as to such
other matters as you may reasonably request, and the Company and Finlay
Jewelry shall have furnished or caused to be furnished certificates as to the
matters set forth in subsections (a) and (i) of this Section; and
(o) The Company shall have complied with the provisions of
Section 5(c) hereof with respect to the furnishing of prospectuses on the New
York Business Day next succeeding the date of this Agreement;
8. (a) The Company and Finlay Jewelry, jointly and severally, will
indemnify and hold harmless each Underwriter against any losses, claims,
damages or liabilities, joint or several, to which such Underwriter may become
subject, under the Act or otherwise, insofar as such losses, claims, damages
or liabilities (or actions in respect thereof) arise out of or are based upon
an untrue statement or alleged untrue statement of a material fact contained
or incorporated by reference in any Preliminary Prospectus, the Registration
Statement or the Prospectus, or any amendment or supplement thereto, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated or incorporated by reference therein or
necessary to make the statements therein not misleading, and will reimburse
each Underwriter for any legal or other expenses reasonably incurred by such
Underwriter in connection with investigating or defending any such action or
claim as such expenses are incurred; provided, however, that the Company and
Finlay Jewelry shall not be liable in any such case to the extent that any
such loss, claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission made in
any Preliminary Prospectus, the Registration Statement or the Prospectus or
any such amendment or supplement in reliance upon and in conformity with
written information furnished to the Company by any Underwriter through
Goldman, Sachs & Co. expressly for use therein.
(b) Each Selling Stockholder will indemnify and hold
harmless each Underwriter against any losses, claims, damages or liabilities,
joint or several, to which such Underwriter may become subject, under the Act
or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon an untrue statement
or alleged untrue statement of a material fact contained in any Preliminary
Prospectus, the Registration Statement or the Prospectus, or any amendment or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in any Preliminary
Prospectus, the Registration Statement or the Prospectus or any such amendment
or supplement in reliance upon and in conformity with written information
furnished to the Company by such Selling Stockholder expressly for use
therein; and will reimburse each Underwriter for any legal or other expenses
reasonably incurred by such Underwriter in connection with investigating or
defending any such action or claim as such expenses are incurred; provided,
however, that such Selling Stockholder shall not be liable in any such case to
the extent that any such loss, claim, damage or liability arises out of or is
based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in any Preliminary Prospectus, the Registration
Statement or the Prospectus or any such amendment or supplement in reliance
upon and in conformity with written information furnished to the Company by
any Underwriter through Goldman, Sachs & Co. expressly for use therein.
(c) Each Underwriter severally will indemnify and hold
harmless the Company, Finlay Jewelry and each of the Selling Stockholders
against any losses, claims, damages or liabilities to which the Company,
Finlay Jewelry or any Selling Stockholder may become subject, under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions
in respect thereof) arise out of or are based upon an untrue statement or
alleged untrue statement of a material fact contained in any Preliminary
Prospectus, the Registration Statement or the Prospectus, or any amendment or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, in each case to the
extent,
17
<PAGE>
but only to the extent, that such untrue statement or alleged untrue statement
or omission or alleged omission was made in any Preliminary Prospectus, the
Registration Statement or the Prospectus or any such amendment or supplement
in reliance upon and in conformity with written information furnished to the
Company by such Underwriter through Goldman, Sachs & Co. expressly for use
therein; and will reimburse the Company, Finlay Jewelry and each Selling
Stockholder for any legal or other expenses reasonably incurred by the
Company, Finlay Jewelry and such Selling Stockholder in connection with
investigating or defending any such action or claim as such expenses are
incurred.
(d) Promptly after receipt by an indemnified party under
subsection (a), (b) or (c) above of notice of the commencement of any action,
such indemnified party shall, if a claim in respect thereof is to be made
against the indemnifying party under such subsection, notify the indemnifying
party in writing of the commencement thereof; but the omission so to notify
the indemnifying party shall not relieve it from any liability which it may
have to any indemnified party otherwise than under such subsection. In case
any such action shall be brought against any indemnified party and it shall
notify the indemnifying party of the commencement thereof, the indemnifying
party shall be entitled to participate therein and, to the extent that it
shall wish, jointly with any other indemnifying party similarly notified, to
assume the defense thereof, with counsel satisfactory to such indemnified
party (who shall not, except with the consent of the indemnified party, be
counsel to the indemnifying party), and, after notice from the indemnifying
party to such indemnified party of its election so to assume the defense
thereof, the indemnifying party shall not be liable to such indemnified party
under such subsection for any legal expenses of other counsel or any other
expenses, in each case subsequently incurred by such indemnified party, in
connection with the defense thereof other than reasonable costs of
investigation. No indemnifying party shall, without the written consent of the
indemnified party, which consent shall not be unreasonably withheld, effect
the settlement or compromise of, or consent to the entry of any judgment with
respect to, any pending or threatened action or claim in respect of which
indemnification or contribution may be sought hereunder (whether or not the
indemnified party is an actual or potential party to such action or claim)
unless such settlement, compromise or judgment (i) includes an unconditional
release of the indemnified party from all liability arising out of such action
or claim and (ii) does not include a statement as to or an admission of fault,
culpability or a failure to act, by or on behalf of any indemnified party.
(e) If the indemnification provided for in this Section 8 is
unavailable to or insufficient to hold harmless an indemnified party under
subsection (a), (b) or (c) above in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities
(or actions in respect thereof) in such proportion as is appropriate to
reflect the relative benefits received by the Company, Finlay Jewelry and the
Selling Stockholders on the one hand and the Underwriters on the other from
the offering of the Shares. If, however, the allocation provided by the
immediately preceding sentence is not permitted by applicable law or if the
indemnified party failed to give the notice required under subsection (d)
above, then each indemnifying party shall contribute to such amount paid or
payable by such indemnified party in such proportion as is appropriate to
reflect not only such relative benefits but also the relative fault of the
Company, Finlay Jewelry and the Selling Stockholders on the one hand and the
Underwriters on the other in connection with the statements or omissions which
resulted in such losses, claims, damages or liabilities (or actions in respect
thereof), as well as any other relevant equitable considerations. The relative
benefits received by the Company, Finlay Jewelry and the Selling Stockholders
on the one hand and the Underwriters on the other shall be deemed to be in the
same proportion as the total net proceeds from the offering (before deducting
expenses) received by the Company and the Selling Stockholders bear to the
total underwriting discounts and commissions received by the Underwriters, in
each case as set forth in the table on the cover page of the Prospectus. The
relative fault shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company, Finlay Jewelry or the Selling Stockholders on the one
hand or the Underwriters on the other and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Company, Finlay Jewelry, the Selling Stockholders
and the Underwriters agree that it would not be just and equitable if
contributions pursuant to this subsection (e) were determined by pro rata
allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of
the equitable considerations referred to above in this subsection (e). The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages or liabilities (or actions in respect thereof) referred to
above in this subsection (e) shall be deemed to include any legal or other
expenses reasonably incurred by such
18
<PAGE>
indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this subsection (e), no
Underwriter shall be required to contribute any amount in excess of the amount
by which the total price at which the Shares underwritten by it and
distributed to the public were offered to the public exceeds the amount of any
damages which such Underwriter has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation. The Underwriters' obligations
in this subsection (e) to contribute are several in proportion to their
respective underwriting obligations and not joint. Notwithstanding the
foregoing, the liability of each Selling Stockholder under the indemnity and
contribution provisions of this Section 8 shall be limited to the aggregate
offering price of the Shares sold by each such Selling Stockholder to the
Underwriters.
(f) The obligations of the Company, Finlay Jewelry and the
Selling Stockholders under this Section 8 shall be in addition to any
liability which the Company, Finlay Jewelry and the Selling Stockholders may
otherwise have and shall extend, upon the same terms and conditions, to each
person, if any, who controls any Underwriter within the meaning of the Act;
and the obligations of the Underwriters under this Section 8 shall be in
addition to any liability which the respective Underwriters may otherwise have
and shall extend, upon the same terms and conditions, to each officer and
director of the Company and Finlay Jewelry and to each person, if any, who
controls the Company, Finlay Jewelry or any Selling Stockholder within the
meaning of the Act.
9. (a) If any Underwriter shall default in its obligation to purchase
the Shares which it has agreed to purchase hereunder at a Time of Delivery,
you may in your discretion arrange for you or another party or other parties
to purchase such Shares on the terms contained herein. If within thirty-six
hours after such default by any Underwriter you do not arrange for the
purchase of such Shares, then the Company and the Selling Stockholders shall
be entitled to a further period of thirty-six hours within which to procure
another party or other parties satisfactory to you to purchase such Shares on
such terms. In the event that, within the respective prescribed periods, you
notify the Company and the Selling Stockholders that you have so arranged for
the purchase of such Shares, or the Company and the Selling Stockholders
notify you that they have so arranged for the purchase of such Shares, you or
the Company and the Selling Stockholders shall have the right to postpone such
Time of Delivery for a period of not more than seven days, in order to effect
whatever changes may thereby be made necessary in the Registration Statement
or the Prospectus, or in any other documents or arrangements, and the Company
agrees to file promptly any amendments to the Registration Statement or the
Prospectus which in your opinion may thereby be made necessary. The term
"Underwriter" as used in this Agreement shall include any person substituted
under this Section with like effect as if such person had originally been a
party to this Agreement with respect to such Shares.
(b) If, after giving effect to any arrangements for the
purchase of the Shares of a defaulting Underwriter or Underwriters by you and
the Company and the Selling Stockholders as provided in subsection (a) above,
the aggregate number of such Shares which remains unpurchased does not exceed
one-eleventh of the aggregate number of all the Shares to be purchased at such
Time of Delivery, then the Company and the Selling Stockholders shall have the
right to require each non-defaulting Underwriter to purchase the number of
shares which such Underwriter agreed to purchase hereunder at such Time of
Delivery and, in addition, to require each non-defaulting Underwriter to
purchase its pro rata share (based on the number of Shares which such
Underwriter agreed to purchase hereunder) of the Shares of such defaulting
Underwriter or Underwriters for which such arrangements have not been made;
but nothing herein shall relieve a defaulting Underwriter from liability for
its default.
(c) If, after giving effect to any arrangements for the
purchase of the Shares of a defaulting Underwriter or Underwriters by you and
the Company and the Selling Stockholders as provided in subsection (a) above,
the aggregate number of such Shares which remains unpurchased exceeds
one-eleventh of the aggregate number of all the Shares to be purchased at such
Time of Delivery, or if the Company and the Selling Stockholders shall not
exercise the right described in subsection (b) above to require non-defaulting
Underwriters to purchase Shares of a defaulting Underwriter or Underwriters,
then this Agreement (or, with respect to the Second Time of Delivery, the
obligations of the Underwriters to purchase and of the Company and the Selling
Stockholders to sell the Optional Shares) shall thereupon terminate, without
liability on the part of any non-defaulting Underwriter, the Company, Finlay
Jewelry or the Selling Stockholders, except for the expenses to be borne by
the Company and the Selling Stockholders
19
<PAGE>
and the Underwriters as provided in Section 6 hereof and the indemnity and
contribution agreements in Section 8 hereof; but nothing herein shall relieve
a defaulting Underwriter from liability for its default.
10. The respective indemnities, agreements, representations,
warranties and other statements of the Company, Finlay Jewelry, the Selling
Stockholders and the several Underwriters, as set forth in this Agreement or
made by or on behalf of them, respectively, pursuant to this Agreement, shall
remain in full force and effect, regardless of any investigation (or any
statement as to the results thereof) made by or on behalf of any Underwriter
or any controlling person of any Underwriter, or the Company, Finlay Jewelry
or any Selling Stockholder or any officer or director or controlling person of
the Company, Finlay Jewelry or any Selling Stockholder, and shall survive
delivery of and payment for the Shares.
11. If this Agreement shall be terminated pursuant to Section 9
hereof, neither the Company nor any Selling Stockholder shall then be under
any liability to any Underwriter except as provided in Sections 6 and 8 hereof
and Finlay Jewelry shall not then be under any liability to any Underwriter
except as provided in Section 8 hereof; but, if for any other reason, any
Shares are not delivered by or on behalf of the Company and the Selling
Stockholders as provided herein, the Company will reimburse the Underwriters
through you for all out-of-pocket expenses approved in writing by you,
including fees and disbursements of counsel, reasonably incurred by the
Underwriters in making preparations for the purchase, sale and delivery of the
Shares not so delivered, but the Company and the Selling Stockholders shall
then be under no further liability to any Underwriter except as provided in
Sections 6 and 8 hereof and Finlay Jewelry shall then be under no further
liability to any Underwriter except as provided in Section 8 hereof.
12. In all dealings hereunder, you shall act on behalf of each of the
Underwriters, and the parties hereto shall be entitled to act and rely upon
any statement, request, notice or agreement on behalf of any Underwriter made
or given by you jointly or by Goldman, Sachs & Co. on behalf of you as the
representatives; and in all dealings with any Selling Stockholder hereunder,
you and the Company shall be entitled to act and rely upon any statement,
request, notice or agreement on behalf of such Selling Stockholder (in
accordance with the Power of Attorney and Custody Agreement) made or given by
any or all of the Attorneys-in-Fact for such Selling Stockholder.
All statements, requests, notices and agreements hereunder shall be
in writing, and if to the Underwriters shall be delivered or sent by mail,
telex or facsimile transmission to you as the representatives in care of
Goldman, Sachs & Co., 85 Broad Street, New York, New York 10004, Attention:
Registration Department; and if to the Company or to Finlay Jewelry shall be
delivered or sent by mail to the address of the Company set forth in the
Registration Statement, Attention: Secretary; and if to a Selling Stockholder,
shall be delivered or sent by mail to its counsel at such counsel's address
set forth in Schedule II hereto; provided, however, that any notice to an
Underwriter pursuant to Section 8(d) hereof shall be delivered or sent by
mail, telex or facsimile transmission to such Underwriter at its address set
forth in its Underwriters' Questionnaire, or telex constituting such
Questionnaire, which address will be supplied to the Company and the Selling
Stockholders by you upon request. Any such statements, requests, notices or
agreements shall take effect upon receipt thereof.
13. This Agreement shall be binding upon, and inure solely to the
benefit of, the Underwriters, the Company, Finlay Jewelry and the Selling
Stockholders and, to the extent provided in Sections 8 and 10 hereof, the
officers, directors and controlling persons of the Company, Finlay Jewelry and
each Selling Stockholder and each person who controls any Underwriter, and
their respective heirs, executors, administrators, successors and assigns, and
no other person shall acquire or have any right under or by virtue of this
Agreement. No purchaser of any of the Shares from any Underwriter shall be
deemed a successor or assign by reason merely of such purchase.
14. Time shall be of the essence of this Agreement. As used herein,
the term "business day" shall mean any day when the Commission's office in
Washington, D.C. is open for business.
15. This Agreement shall be governed by and construed in accordance
with the laws of the State of New York.
16. This Agreement may be executed by any one or more of the parties
hereto in any number of counterparts, each of which shall be deemed to be an
original, but all such counterparts shall together constitute one and the same
instrument.
20
<PAGE>
If the foregoing is in accordance with your understanding, please
sign and return to us ten counterparts hereof, and upon the acceptance hereof
by you, on behalf of each of the Underwriters, this letter and such acceptance
hereof shall constitute a binding agreement among each of the Underwriters and
the Company, Finlay Jewelry and the Selling Stockholders. It is understood
that your acceptance of this letter on behalf of each of the Underwriters is
pursuant to the authority set forth in a form of Agreement Among Underwriters,
the form of which shall be submitted to the Company and the Selling
Stockholders for examination upon request, but without warranty on your part
as to the authority of the signers thereof.
Very truly yours,
Finlay Enterprises, Inc.
By:
Name: Barry D. Scheckner
Title: Senior Vice President and
Chief Financial Officer
Finlay Fine Jewelry Corporation
By:
Name: Barry D. Scheckner
Title: Senior Vice President and
Chief Financial Officer
On behalf of the Selling Stockholders (other than
Messrs. Reiner and Scheckner) named on
Schedule II hereto
By:
Name:
Title: Attorney-in-Fact
On behalf of Messrs. Reiner and Scheckner as
Selling Stockholders
By:
Name:
Title: Attorney-in-Fact
Accepted as of the date hereof:
Goldman, Sachs & Co.
Donaldson, Lufkin & Jenrette
Securities Corporation
SBC Warburg Dillon Read Inc.
By:
(Goldman, Sachs & Co.)
On behalf of each of the Underwriters
21
<PAGE>
SCHEDULE I
<TABLE>
<CAPTION>
Number of Optional
Total Number of Shares to be
Firm Shares Purchased if Maximum
Underwriter to be Purchased Option Exercised
----------- --------------------------- ------------------------------
<S> <C> <C>
Goldman, Sachs & Co.....................................
Donaldson, Lufkin & Jenrette
Securities Corporation................................
SBC Warburg Dillon Read Inc.............................
Total.......................................... 1,600,000 240,000
=========== ========
</TABLE>
22
<PAGE>
SCHEDULE II
<TABLE>
<CAPTION>
Number of Optional
Shares to be Sold if
Total Number of Firm Maximum Option
Shares to be Sold Exercised
---------------------------- ----------------------------
<S> <C> <C>
The Company............................................................. 567,310 92,792
The Selling Stockholders:
Thomas H. Lee Equity Partners, L.P................................. 752,188 121,348
1989 Thomas H. Lee Nominee Trust................................... 84,116 13,570
Arthur E. Reiner................................................... 100,000 --
Barry D. Scheckner................................................. 20,200 --
John W. Childs..................................................... 16,075 2,593
David V. Harkins................................................... 10,713 1,728
Warren C. Smith, Jr................................................ 10,709 1,728
C. Hunter Boll..................................................... 8,033 1,296
Scott A. Schoen.................................................... 5,323 859
Thomas M. Hagerty.................................................. 4,818 777
Anthony J. Dinovi.................................................. 4,818 777
Steven G. Segal.................................................... 3,607 582
Thomas R. Shepherd................................................. 3,214 518
Joseph I. Incandela................................................ 1,760 284
Glenn A. Hopkins................................................... 1,603 259
SGS Family Limited Partnership..................................... 1,211 195
Charles W. Robins.................................................. 755 122
James Westra....................................................... 755 122
Terrence M. Mullen................................................. 723 117
Adam L. Suttin..................................................... 605 97
Andrew D. Flaster.................................................. 376 61
Wendy L. Masler.................................................... 351 57
Kristina A. Watts.................................................. 351 56
Todd M. Abbrecht................................................... 290 47
Kent R. Weldon..................................................... 96 15
---------- ------------
Total................................................................... 1,600,000 240,000
========= =======
</TABLE>
Each of the Selling Stockholders listed above is represented by Hutchins,
Wheeler & Dittmar, a Professional Corporation, 101 Federal Street, Boston, MA
02110 and has appointed Warren C. Smith, Jr. and Todd H. Abbrecht, and each of
them, as Attorneys-in-Fact for such Selling Stockholder, except for Messrs.
Reiner and Scheckner, who are represented by Tenzer Greenblatt LLP and who
have appointed Richard DiStefano and James Martin Kaplan, and each of them, as
their Attorneys-in-Fact.
23
<PAGE>
SCHEDULE III
New York Leases
Section 7(e)(ii)
1. Lease Agreement dated as of August 27, 1993 between F.H.E.A. Associates
and Finlay Jewelry
2. Lease Agreement dated as of August 19, 1993 between 529 Fifth Company and
Finlay Jewelry, as amended
3. Lease Agreement dated as of August 19, 1993 between 521 Fifth Avenue
Associates and Finlay Jewelry, as amended
4. Lease Agreement dated as of June 17, 1986 between 521 Fifth Avenue
Associates and S&L Acquisition Company L.P., as amended
5. Lease Agreement dated as of May 1, 1995 between Alvin Jacobson Realty and
Finlay Jewelry
6. Lease Agreement dated as of October 4, 1994 between Tanger Properties
Limited Partnership and Finlay Jewelry, as amended
7. Lease Agreement dated May 2, 1996 between Horizon/Glen Outlet Centers
Limited Partnership and Finlay Jewelry
24
<PAGE>
SCHEDULE IV
Persons or entities required to
execute Lock-Up Agreements
Pursuant to Section 7(m)
------------------------
David B. Cornstein
Joseph M. Melvin
Leslie A. Philip
Edward Stein
Rohit M. Desai
James Martin Kaplan
Norman S. Matthews
Hanne M. Merriman
Bruce Zurlnick
25
<PAGE>
ANNEX I
DESCRIPTION OF COMFORT LETTER
Pursuant to Section 7(h) of the Underwriting Agreement, the
accountants shall furnish letters to the Underwriters to the effect that:
(i) They are independent certified public accountants
with respect to the Company and its subsidiaries within the meaning
of the Act and the applicable published rules and regulations
thereunder;
(ii) In their opinion, the financial statements and
any supplementary financial information and schedules examined by
them (and, if applicable, financial forecasts and/or pro forma
financial information, on which they have performed more limited
procedures as specified in such letter, not constituting an
examination in accordance with generally accepted auditing standards)
and included in the Prospectus or the Registration Statement comply
as to form in all material respects (or, in the case of financial
forecasts and/or pro forma financial information, on the basis of
such limited procedures, nothing came to their attention that cause
them to believe that such financial forecasts and/or pro forma
financial information do not comply as to form in all material
respects) with the applicable accounting requirements of the Act and
the related published rules and regulations thereunder; and, if
applicable, they have made a review in accordance with standards
established by the American Institute of Certified Public Accountants
of the unaudited consolidated interim financial statements, selected
financial data, pro forma financial information, financial forecasts
and/or condensed financial statements derived from audited financial
statements of the Company for the periods specified in such letter,
as indicated in their reports thereon, copies of which have been
separately furnished to the representatives of the Underwriters (the
"Representatives") and are attached hereto;
(iii) If applicable, they have made a review in
accordance with standards established by the American Institute of
Certified Public Accountants of the unaudited condensed consolidated
statements of income, consolidated balance sheets and consolidated
statements of cash flows included in the Prospectus as indicated in
their reports thereon, copies of which have been separately furnished
to the Representatives and are attached hereto, and on the basis of
specified procedures including inquiries of officials of the Company
who have responsibility for financial and accounting matters
regarding whether the unaudited condensed consolidated financial
statements referred to in paragraph (vi)(A)(i) below comply as to
form in all material respects with the applicable accounting
requirements of the Act and the Exchange Act and the related
published rules and regulations, nothing came to their attention that
cause them to believe that the unaudited condensed consolidated
financial statements do not comply as to form in all material
respects with the applicable accounting requirements of the Act and
the Exchange Act and the related published rules and regulations;
(iv) The unaudited selected financial information with
respect to the consolidated results of operations and financial
position of the Company for the five most recent fiscal years
included in the Prospectus agrees with the corresponding amounts
(after restatements where applicable) in the audited consolidated
financial statements for such five fiscal years which were included
or incorporated by reference in the Company's Annual Reports on Form
10-K for such fiscal years;
(v) They have compared the information in the
Prospectus under selected captions with the disclosure requirements
of Regulation S-K and on the basis of limited procedures specified in
such letter nothing came to their attention as a result of the
foregoing procedures that caused them to believe that this
information does not conform in all material respects with the
<PAGE>
disclosure requirements of Items 301, 302 (if applicable), 402 and
503(d) (if applicable), respectively, of Regulation S-K;
(vi) On the basis of limited procedures, not
constituting an examination in accordance with generally accepted
auditing standards, consisting of a reading of the unaudited
financial statements and other information referred to below, a
reading of the latest available interim financial statements of the
Company and its subsidiaries, inspection of the minute books of the
Company and its subsidiaries since the date of the latest audited
financial statements included in the Prospectus, inquiries of
officials of the Company and its subsidiaries responsible for
financial and accounting matters and such other inquiries and
procedures as may be specified in such letter, nothing came to their
attention that caused them to believe that:
(A)(i) the unaudited consolidated statements of
operations, consolidated balance sheets and consolidated
statements of cash flows included in the Prospectus do not
comply as to form in all material respects with the
applicable accounting requirements of the Act and the
related published rules and regulations, or (ii) any
material modifications should be made to the unaudited
condensed consolidated statements of operations,
consolidated balance sheets and consolidated statements of
cash flows included in the Prospectus for them to be in
conformity with generally accepted accounting principles;
(B) any other unaudited statement of operations
data and balance sheet items included in the Prospectus do
not agree with the corresponding items in the unaudited
consolidated financial statements from which such data and
items were derived, and any such unaudited data and items
were not determined on a basis substantially consistent with
the basis for the corresponding amounts in the audited
consolidated financial statements included in the
Prospectus;
(C) the unaudited financial statements which were
not included in the Prospectus but from which were derived
any unaudited condensed financial statements referred to in
Clause (A) and any unaudited statement of operations data
and balance sheet items included in the Prospectus and
referred to in Clause (B) were not determined on a basis
substantially consistent with the basis for the audited
consolidated financial statements included in the
Prospectus;
(D) any unaudited pro forma consolidated condensed
financial information included in the Prospectus do not
comply as to form in all material respects with the
applicable accounting requirements of the Act and the
published rules and regulations thereunder or the pro forma
adjustments have not been properly applied to the historical
amounts in the compilation of that information;
(E) as of a specified date not more than five days
prior to the date of such letter, there have been any
changes in the consolidated capital stock (other than
issuances of capital stock upon exercise of options and
stock appreciation rights, upon earn-outs of performance
shares and upon conversions of convertible securities, in
each case which were outstanding on the date of the latest
financial statements included in the Prospectus) or any
increase in the consolidated long-term debt of the Company
and its subsidiaries, or any decreases in consolidated net
current assets or stockholders' equity or other items
specified by the Representatives, or any increases in any
items specified by the Representatives, in each case as
compared with amounts shown in the latest balance sheet
included in the Prospectus, except in each case for changes,
increases or decreases which the Prospectus discloses have
occurred or may occur or which are described in such letter;
and
I-2
<PAGE>
(F) for the period from the date of the latest
financial statements included in the Prospectus to the
specified date referred to in Clause (E) there were any
decreases in consolidated net revenues or operating profit
or the total or per share amounts of consolidated net income
or other items specified by the Representatives, or any
increases in any items specified by the Representatives, in
each case as compared with the comparable period of the
preceding year and with any other period of corresponding
length specified by the Representatives, except in each case
for decreases or increases which the Prospectus discloses
have occurred or may occur or which are described in such
letter; and
(vii) In addition to the examination referred to in
their report(s) included in the Prospectus and the limited
procedures, inspection of minute books, inquiries and other
procedures referred to in paragraphs (iii) and (vi) above, they have
carried out certain specified procedures, not constituting an
examination in accordance with generally accepted auditing standards,
with respect to certain amounts, percentages and financial
information specified by the Representatives, which are derived from
the general accounting records of the Company and its subsidiaries,
which appear in the Prospectus, or in Part II of, or in exhibits and
schedules to, the Registration Statement specified by the
Representatives, and have compared certain of such amounts,
percentages and financial information with the accounting records of
the Company and its subsidiaries and have found them to be in
agreement.
I-3
<PAGE>
Exhibit 1.2
Finlay Enterprises, Inc.
__% Senior Debentures due 2008
-----------------
Underwriting Agreement
April __, 1998
Goldman, Sachs & Co.,
Donaldson, Lufkin & Jenrette
Securities Corporation,
NationsBanc Montgomery Securities LLC
c/o Goldman, Sachs & Co.,
85 Broad Street,
New York, New York 10004
Ladies and Gentlemen:
Finlay Enterprises, Inc., a Delaware corporation (the "Company"),
proposes, subject to the terms and conditions stated herein, to issue and sell
to you as the several Underwriters named in Schedule I hereto (the
"Underwriters") an aggregate of $75,000,000 principal amount of the Company's
__% Senior Debentures due , 2008 (the "Securities").
1. Each of the Company and Finlay Fine Jewelry Corporation, a Delaware
corporation and a wholly owned subsidiary of the Company ("Finlay Jewelry"),
jointly and severally represents and warrants to, and agrees with, each of the
Underwriters that:
(a) A registration statement on Form S-3 (File No.
333-48567), as amended by Amendments Nos. 1 and 2 thereto (the
"Initial Registration Statement"), in respect of the Securities has
been filed with the Securities and Exchange Commission (the
"Commission"); such Initial Registration Statement and any
post-effective amendment thereto, each in the form heretofore
delivered to you, and, excluding exhibits thereto but including all
documents incorporated by reference in the prospectus contained
therein, to you for each of the other Underwriters, have been
declared effective by the Commission in such form; other than a
registration statement, if any, increasing the size of the offering
(a "Rule 462(b) Registration Statement"), filed pursuant to Rule
462(b) under the Securities Act of 1933, as amended (the "Act"),
which became effective upon filing, no other document with respect to
such Initial Registration Statement or any such document incorporated
by reference therein has heretofore been filed with the Commission;
and no stop order suspending the effectiveness of the Initial
Registration Statement, any post-effective amendment thereto or the
Rule 462(b) Registration Statement, if any, has been issued and no
proceeding for that purpose has been initiated or threatened by the
Commission to the Company or its counsel (any preliminary prospectus
included in the Initial Registration Statement or filed with the
Commission pursuant to Rule 424(a) of the rules and regulations of
the Commission under the Act is hereinafter called a "Preliminary
Prospectus"; the various parts of the Initial Registration Statement
and the Rule 462(b) Registration Statement, if any, including all
exhibits thereto but excluding Form T-1 and including (i) the
information contained in the form of final prospectus filed with the
Commission pursuant to Rule 424(b) under the Act in accordance with
Section 5(a) hereof and deemed by virtue of Rule 430A under the Act
to be part of the Initial Registration Statement at the time it was
declared effective or such part of the Rule 462(b) Registration
Statement, if any, that became or hereafter becomes effective and
(ii) the documents incorporated by reference in the
<PAGE>
prospectus contained in the registration statement at the time such
part of the registration statement became effective, each as amended
at the time such part of the registration statement became effective,
are hereinafter collectively called the "Registration Statement";
such final prospectus, in the form first filed pursuant to Rule
424(b) under the Act, is hereinafter called the "Prospectus"; any
reference herein to any Preliminary Prospectus or the Prospectus
shall be deemed to refer to and include the documents incorporated by
reference therein pursuant to Item 12 of Form S-3 under the Act, as
of the date of such Preliminary Prospectus or Prospectus, as the case
may be; any reference to any amendment or supplement to any
Preliminary Prospectus or the Prospectus shall be deemed to refer to
and include any documents filed after the date of such Preliminary
Prospectus or Prospectus, as the case may be, under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and
incorporated by reference in such Preliminary Prospectus or
Prospectus, as the case may be; and any reference to any amendment to
the Registration Statement shall be deemed to refer to and include
any annual report of the Company filed pursuant to Section 13(a) or
15(d) of the Exchange Act after the effective date of the
Registration Statement that is incorporated by reference in the
Registration Statement);
(b) No order preventing or suspending the use of any
Preliminary Prospectus has been issued by the Commission, and each
Preliminary Prospectus, at the time of filing thereof, conformed in
all material respects to the requirements of the Act, the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act"), and
the rules and regulations of the Commission thereunder, and did not
contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which
they were made, not misleading; and the statements made therein
within the coverage of Rule 175(b) under the Act were made by the
Company with a reasonable basis and in good faith; provided, however,
that this representation and warranty shall not apply to any
statements or omissions made in reliance upon and in conformity with
information furnished in writing to the Company by an Underwriter
through Goldman, Sachs & Co. expressly for use therein;
(c) The documents incorporated by reference in the
Prospectus, when they became effective or were filed with the
Commission, as the case may be, conformed in all material respects to
the requirements of the Act or the Exchange Act, as applicable, and
the rules and regulations of the Commission thereunder, and none of
such documents contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading; and any
further documents so filed or incorporated by reference in the
Prospectus or any further amendment or supplement thereto, when such
documents become effective or are filed with the Commission, as the
case may be, will conform in all material respects to the
requirements of the Act or the Exchange Act, as applicable, and the
rules and regulations of the Commission thereunder and will not
contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading; and the statements made therein
within the coverage of Rule 175(b) under the Act were made by the
Company with a reasonable basis and in good faith; provided, however,
that this representation and warranty shall not apply to any
statements or omissions made in reliance upon and in conformity with
information furnished in writing to the Company by an Underwriter
through Goldman, Sachs & Co. expressly for use therein;
(d) The Registration Statement conforms, and the Prospectus
and any further amendments or supplements to the Registration
Statement or the Prospectus will conform, in all material respects to
the requirements of the Act and the Trust Indenture Act and the rules
and regulations of the Commission thereunder and do not and will not,
as of the applicable effective date as to the Registration Statement
and any amendment thereto, and as of the applicable filing date as to
the Prospectus and any amendment or supplement thereto, contain an
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading; and the statements made therein within the
coverage of Rule 175(b) under the Act were made by the Company with a
reasonable basis and in good faith; provided, however, that this
representation and warranty shall not apply to any statements or
omissions made in reliance upon and in conformity with information
furnished in writing to the
2
<PAGE>
Company by an Underwriter through Goldman, Sachs & Co. expressly for
use therein or by the Selling Stockholders (as defined in the
Prospectus) expressly for use in the preparation of answers therein
to Item 7 of Form S-3;
(e) Neither the Company nor any of its subsidiaries has
sustained since the date of the latest audited financial statements
included or incorporated by reference in the Prospectus any material
loss or interference with its business from fire, explosion, flood or
other calamity, whether or not covered by insurance, or from any
labor dispute or court or governmental action, order or decree,
otherwise than as set forth or contemplated in the Prospectus; and,
since the respective dates as of which information is given in the
Registration Statement and the Prospectus, there has not been any
change in the capital stock or long-term debt of the Company or any
of its subsidiaries, except for borrowings and repayments under the
Revolving Credit Agreement and the Gold Consignment Agreement (each
as defined in the Prospectus and as amended as described in the
Prospectus) or any material adverse change, or any development
involving a prospective material adverse change, in or affecting the
business, operations, management, financial position or condition,
current assets, merchandise inventories, stockholders' equity or
results of operations of the Company and its subsidiaries taken as a
whole (a "Material Adverse Effect"), otherwise than as set forth or
contemplated in the Prospectus;
(f) The Company and its subsidiaries have good and
marketable title in fee simple to all real property and good and
marketable title to all material personal property owned by them, in
each case free and clear of all liens, encumbrances and defects
except such as are described in the Prospectus or such as do not
materially affect the value of such property and do not interfere
with the use made and proposed to be made of such property by the
Company and its subsidiaries; and any material real property and
buildings held under lease by the Company and its subsidiaries are
held by them under valid, subsisting and enforceable leases with such
exceptions as are not material and do not interfere with the use made
and proposed to be made of such property and buildings by the Company
and its subsidiaries;
(g) Each of the Company and Finlay Jewelry has been duly
incorporated and is validly existing as a corporation in good
standing under the laws of the State of Delaware, with corporate
power and authority to own its properties and conduct its business as
described in the Prospectus, and has been duly qualified as a foreign
corporation for the transaction of business and is in good standing
under the laws of each other jurisdiction in which it owns or leases
properties or conducts any business so as to require such
qualification, or is subject to no material liability or disability
by reason of the failure to be so qualified in any such jurisdiction;
the Company's indirect subsidiary, Societe Nouvelle d'Achat de
Bijouterie - S.O.N.A.B. ("Sonab") is duly organized and validly
existing as a societe en nom collectif in France; each other direct
or indirect subsidiary of the Company has been duly incorporated and
is validly existing as a corporation in good standing under the laws
of its jurisdiction of incorporation, and has been duly qualified as
a foreign corporation for the transaction of business and is in good
standing under the laws of each other jurisdiction in which it owns
or leases properties or conducts any business so as to require such
qualification, or is subject to no material liability or disability
by reason of the failure to be so qualified in any such jurisdiction;
(h) The Company has an authorized capitalization as set
forth in the Prospectus, and all of the issued shares of capital
stock of the Company have been duly authorized and validly issued,
are fully paid and non-assessable and conform to the description of
such capital stock contained in the Prospectus; and all of the issued
shares of capital stock of each subsidiary of the Company have been
duly authorized and validly issued, are fully paid and non-assessable
and (except for directors' qualifying shares, if any, and except as
set forth in the Prospectus) are owned directly or indirectly by the
Company, free and clear of all liens, encumbrances, equities or
claims;
(i) The Securities have been duly authorized by the Company
and, on the Closing Date, will have been duly executed, issued and
delivered by the Company, and when the Securities, in accordance with
the provisions of the Indenture (the "Indenture"), substantially in
the
3
<PAGE>
form filed as an exhibit to the Registration Statement, to be entered
into by the Company and Marine Midland Bank, as Trustee (the
"Trustee"), have been authenticated by the Trustee and delivered to
and paid for by the Underwriters in accordance with the terms of this
Agreement, the Securities will be entitled to the benefits of the
Indenture and will constitute valid and legally binding obligations
of the Company, enforceable against the Company in accordance with
their terms, subject, as to enforcement, to bankruptcy, insolvency,
reorganization, fraudulent conveyance or transfer, moratorium and
other laws of general applicability relating to or affecting
creditors' rights and to general equity principles (regardless of
whether enforcement is sought in a proceeding in equity or at law);
the Indenture has been duly authorized by the Company and qualified
under the Trust Indenture Act and when duly executed and delivered by
the Company and the Trustee, will constitute a valid and legally
binding instrument, enforceable against the Company in accordance with
its terms, subject, as to enforcement, to bankruptcy, insolvency,
reorganization, fraudulent conveyance or transfer, moratorium and
other laws of general applicability relating to or affecting
creditors' rights and to general equity principles (regardless of
whether enforcement is sought in a proceeding in equity or at law);
the Security and Pledge Agreement (the "Security and Pledge
Agreement") to be entered into between the Company and Marine Midland
Bank, as Collateral Agent (the "Collateral Agent"), substantially in
the form filed as an exhibit to the Registration Statement, when duly
executed and delivered by the Company and the Collateral Agent, will
constitute a valid and legally binding instrument, enforceable
against the Company in accordance with its terms, subject, as to
enforcement, to bankruptcy, insolvency, reorganization, fraudulent
conveyance or transfer, moratorium and other laws of general
applicability relating to or affecting creditors' rights and to
general equity principles (regardless of whether enforcement is
sought in a proceeding in equity or at law); and the Securities, the
Indenture and the Security and Pledge Agreement will conform in all
material respects to the descriptions thereof in the Prospectus;
(j) The issue and sale of the Securities and the compliance
by each of the Company and Finlay Jewelry with all of the provisions
of the Securities, the Indenture, the Security and Pledge Agreement
and this Agreement applicable to it and the consummation of the
transactions herein and therein contemplated (i) will not conflict
with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, any indenture,
mortgage, deed of trust, loan agreement, lease, license or other
agreement or instrument to which the Company or any of its
subsidiaries is a party or by which the Company or any of its
subsidiaries is bound or to which any of the property or assets of
the Company or any of its subsidiaries is subject, except any such
conflict, breach, violation or default which has been consented to or
waived in a valid and binding writing duly executed and delivered to
the Company by or on behalf of the party granting such consent or
waiver; (ii) will not result in any violation of the provisions of
the Company's or any of its subsidiaries' respective certificate or
restated certificate of incorporation or by-laws or restated by-laws
or comparable documents and (iii) will not result in any violation of
any statute or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Company or
any of its subsidiaries or any of their properties; and no consent,
approval, authorization, order, registration or qualification of or
with any such court or governmental agency or body is required for
the issue and sale of the Securities or the consummation by the
Company of the transactions contemplated by this Agreement, the
Indenture and the Security and Pledge Agreement, except such as have
been obtained under the Act and the Trust Indenture Act and such
consents, approvals, authorizations, registrations or qualifications
as may be required under foreign or state securities or Blue Sky laws
in connection with the purchase and distribution of the Securities by
the Underwriters;
(k) Neither the Company nor any of its subsidiaries is in
violation of its respective certificate or restated certificate of
incorporation or by-laws or restated by-laws or comparable documents,
or in default in the performance or observance of any obligation,
agreement, covenant or condition contained in any indenture,
mortgage, deed of trust, loan agreement, lease, license or other
agreement or instrument to which it is a party or by which it or any
of its properties may be bound which default could reasonably be
expected to result in, individually or in the aggregate, a Material
Adverse Effect;
4
<PAGE>
(l) The statements set forth in the Prospectus under the
caption "Description of Certain Indebtedness", insofar as they
purport to describe the provisions of the documents referred to
therein, under the caption "Description of Senior Debentures",
insofar as they purport to constitute a summary of the terms of the
Securities and under the caption "Underwriting", insofar as they
purport to describe the provisions of the laws and documents referred
to therein, are accurate and fair in all material respects;
(m) Other than as set forth in the Prospectus, there are no
legal or governmental proceedings pending to which the Company or any
of its subsidiaries is a party or of which any property of the
Company or any of its subsidiaries is the subject which, if
determined adversely to the Company or any of its subsidiaries, could
individually or in the aggregate reasonably be expected to have a
Material Adverse Effect; and, to the Company's and Finlay Jewelry's
knowledge, no such proceedings are threatened or contemplated by
governmental authorities or threatened by others;
(n) Each of the Company and Finlay Jewelry is not and, after
giving effect to the offering and sale of the Securities, will not be
an "investment company" or an entity "controlled" by an "investment
company", as such terms are defined in the Investment Company Act of
1940, as amended (the "Investment Company Act");
(o) Arthur Andersen LLP, who have certified certain
consolidated financial statements of the Company and Finlay Jewelry,
are independent public accountants as required by the Act and the
rules and regulations of the Commission thereunder;
(p) The Company and its subsidiaries directly or through
host store groups are subject to consent decrees, injunctions or
comparable governmental orders or decrees regarding the discount
pricing and advertising of jewelry from "regular" or "original"
prices only in the states of California, Colorado, Georgia, Oregon
and Wisconsin, and the Company and its subsidiaries are in compliance
therewith and with applicable federal and state laws with respect to
such pricing and advertising practices, except for such noncompliance
previously identified in writing by the Company to the Underwriters
which could not individually or in the aggregate reasonably be
expected to have a Material Adverse Effect;
(q) Neither the Company nor any of its subsidiaries has
received any notice that any default by the Company or any of its
subsidiaries has occurred and is continuing under any of the license
agreements with host store groups described or identified in the
Prospectus to which the Company or any of its subsidiaries are a
party and no condition exists which could individually or in the
aggregate reasonably be expected to result in the termination or
nonrenewal of any such license agreement; each such license agreement
has been duly authorized (and, in the case of written license
agreements, duly and validly executed and delivered) by and on behalf
of the Company and its subsidiaries, as the case may be, and,
assuming the due authorization (and, in the case of written license
agreements, the due and valid execution and delivery) thereof by the
other party or parties thereto, is the valid and binding obligation
of the Company, its subsidiaries and such other party or parties, as
the case may be, enforceable in accordance with its respective terms
against the respective parties thereto subject to the effect of any
applicable bankruptcy, insolvency, reorganization, fraudulent
conveyance or transfer, moratorium and similar laws affecting
creditors' rights generally and to general principles of equity
(regardless of whether enforcement is sought in a proceeding in
equity or at law); and neither the Company nor any of its
subsidiaries has received any notice (whether actual or constructive)
that the licensor thereunder is considering limiting, suspending,
revoking or non-renewing any such license; except that no
representation is made with respect to the Company's license
agreement with Liberty House as to the effect on such license
agreement of the filing of a voluntary petition by Liberty House
under the Bankruptcy Code (as defined in the Prospectus);
(r) Each of the Company and Finlay Jewelry has duly authorized
the amendment to the Revolving Credit Agreement that is described in
the Prospectus. Substantially
5
<PAGE>
contemporaneously with the Time of Delivery (as defined in Section 4
hereof), the Company and Finlay Jewelry will duly execute and deliver
such amendment to the Revolving Credit Agreement. Finlay Jewelry has
duly authorized the amendment to the Gold Consignment Agreement that
is described in the Prospectus. Substantially contemporaneously with
the Time of Delivery, Finlay Jewelry will duly execute and deliver
such amendment to the Gold Consignment Agreement. Assuming the due
authorization, execution and delivery thereof by the other parties
thereto, (a) the Revolving Credit Agreement, as amended as described
above, will constitute the legal, valid and binding agreement of the
Company and Finlay Jewelry and (b) the Gold Consignment Agreement, as
amended as described above, will constitute the legal, valid and
binding agreement of Finlay Jewelry, in each case, enforceable
against the Company and/or Finlay Jewelry, as the case may be,
subject, as to enforcement, to insolvency, reorganization, fraudulent
conveyance or transfer, moratorium and other laws of general
applicability relating to or affecting creditors' rights and to
general equity principles (regardless of whether enforcement is
sought in a proceeding in equity or at law); and
(s) Neither the Company nor Finlay Jewelry nor any of their
respective affiliates does business with the government of Cuba or
with any person or affiliate located in Cuba within the meaning of
Section 517.075, Florida Statutes.
2. Subject to the terms and conditions herein set forth, the Company
agrees to sell to each of the Underwriters, and each of the Underwriters
agrees, severally and not jointly, to purchase from the Company, at a purchase
price of ___% of the principal amount thereof, plus accrued interest, if any,
from April __, 1998 to the Time of Delivery hereunder, the principal amount of
Securities set forth opposite the name of such Underwriter in Schedule I
hereto.
3. Upon the authorization by Goldman, Sachs and Co., on behalf of the
Underwriters, of the release of the Securities, the several Underwriters
propose to offer the Securities for sale upon the terms and conditions set
forth in the Prospectus.
4. (a) The Securities to be purchased by each Underwriter hereunder
will be represented by one or more definitive global Securities in book-entry
form which will be deposited by or on behalf of the Company with The
Depository Trust Company ("DTC") or its designated custodian. The Company will
deliver the Securities to Goldman, Sachs & Co., for the account of each
Underwriter, against payment by or on behalf of such Underwriter of the
purchase price therefor by wire transfer of Federal (same-day) funds to the
account specified by the Company to Goldman, Sachs & Co. at least forty-eight
hours in advance, by causing DTC to credit the Securities to the account of
Goldman, Sachs & Co. at DTC. The Company will cause the certificates
representing the Securities to be made available to Goldman, Sachs & Co. for
checking at least twenty-four hours prior to the Time of Delivery (as defined
below) at the office of DTC or its designated custodian (the "Designated
Office"). The time and date of such delivery and payment shall be 9:30 a.m.,
New York City time, on April __, 1998 or such other time and date as Goldman,
Sachs & Co. and the Company may agree upon in writing. Such time and date for
delivery of the Securities is herein called the "Time of Delivery".
(b) The documents to be delivered at the Time of Delivery by
or on behalf of the parties hereto pursuant to Section 7 hereof, including the
cross receipt for the Securities and any additional documents requested by the
Underwriters pursuant to Section 7(k) hereof, will be delivered at the offices
of Jones, Day, Reavis & Pogue, 599 Lexington Avenue, 37th Floor, New York, New
York 10022 (the "Closing Location"), and the Securities will be delivered at
the Designated Office, all at the Time of Delivery. A meeting will be held at
the Closing Location at 2:00 p.m., New York City time, on the New York
Business Day next preceding the Time of Delivery, at which meeting the final
drafts of the documents to be delivered pursuant to the preceding sentence
will be available for review by the parties hereto. For the purposes of this
Section 4, "New York Business Day" shall mean each Monday, Tuesday, Wednesday,
Thursday and Friday which is not a day on which banking institutions in New
York are generally authorized or obligated by law or executive order to close.
5. The Company agrees with each of the Underwriters:
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(a) To prepare the Prospectus in a form approved by you and to
file such Prospectus pursuant to Rule 424(b) under the Act not later
than the Commission's close of business on the second business day
following the execution and delivery of this Agreement, or if
applicable, such earlier time as may be required by Rule 430A(a)(3)
under the Act; to make no further amendment or any supplement to the
Registration Statement or Prospectus prior to the Time of Delivery
which shall be disapproved by the Underwriters promptly after
reasonable notice thereof; to advise you, promptly after it receives
notice thereof, of the time when any amendment to the Registration
Statement has been filed or becomes effective or any supplement to
the Prospectus or any amended Prospectus has been filed and to
furnish you with copies thereof; to file promptly all reports and any
definitive proxy or information statements required to be filed by
the Company with the Commission pursuant to Section 13(a), 13(c), 14
or 15(d) of the Exchange Act subsequent to the date of the Prospectus
and for so long as the delivery of a prospectus is required in
connection with the offering or sale of the Securities; to advise
you, promptly after it receives notice thereof, of the issuance by
the Commission of any stop order or of any order preventing or
suspending the use of any Preliminary Prospectus or Prospectus, of
the suspension of the qualification of the Securities for offering or
sale in any jurisdiction, of the initiation or threatening of any
proceeding for any such purpose, or of any request by the Commission
for the amending or supplementing of the Registration Statement or
Prospectus or for additional information; and, in the event of the
issuance of any stop order or of any order preventing or suspending
the use of any Preliminary Prospectus or Prospectus or suspending any
such qualification, promptly to use its best efforts to obtain the
withdrawal of such order;
(b) Promptly from time to time to take such action as you may
reasonably request to qualify the Securities for offering and sale
under the securities laws of such jurisdictions as you may reasonably
request and to comply with such laws so as to permit the continuance
of sales and dealings therein in such jurisdictions for as long as
may be necessary to complete the distribution of the Securities,
provided that in connection therewith the Company shall not be
required to qualify as a foreign corporation or to file a general
consent to service of process in any jurisdiction or to take any
other action which would subject it to the service of process in
suits or to taxation, other than as to matters and transactions
relating to the offer and sale of the Securities in each jurisdiction
in which the Securities have been qualified as provided above;
(c) Prior to 12:00 noon, New York City time, on the New York
Business Day next succeeding the date of this Agreement and from time
to time, to furnish the Underwriters with copies of the Prospectus in
New York City in such quantities as you may reasonably request, and,
if the delivery of a prospectus is required at any time prior to the
expiration of nine months after the time of issue of the Prospectus
in connection with the offering or sale of the Securities and if at
such time any event shall have occurred as a result of which the
Prospectus as then amended or supplemented would include an untrue
statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in the light of
the circumstances under which they were made when such Prospectus is
delivered, not misleading, or, if for any other reason it shall be
necessary during such period to amend or supplement the Prospectus or
to file under the Exchange Act any document incorporated by reference
in the Prospectus in order to comply with the Act, the Trust
Indenture Act or the Exchange Act, to notify you and upon your
request to file such document and to prepare and furnish without
charge to each Underwriter and to any dealer in securities as many
copies as you may from time to time reasonably request of an amended
Prospectus or a supplement to the Prospectus which will correct such
statement or omission or effect such compliance, and in case any
Underwriter is required to deliver a prospectus in connection with
sales of any of the Securities at any time nine months or more after
the time of issue of the Prospectus, upon your request but at the
expense of such Underwriter, to prepare and deliver to such
Underwriter as many copies as you may request of an amended or
supplemented Prospectus complying with Section 10(a)(3) of the Act;
(d) To make generally available to its securityholders as soon
as practicable, but in any event not later than eighteen months after
the effective date of the Registration Statement (as defined in Rule
158(c) under the Act), an earnings statement of the Company and its
subsidiaries
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(which need not be audited) complying with Section 11(a) of the Act
and the rules and regulations thereunder (including, at the option of
the Company, Rule 158);
(e) During the period beginning from the date hereof and
continuing to and including the date 180 days after the date of the
Prospectus, not to (and to cause each of its direct and indirect
subsidiaries not to) register for sale, offer, sell, contract to sell
or otherwise dispose of, except as provided hereunder, any Securities
or any securities that are substantially similar to the Securities
(other than the Senior Notes (as defined in the Prospectus) of Finlay
Jewelry in an aggregate principal amount of $150.0 million), or any
securities of the Company or any such subsidiary of the Company
convertible into or exchangeable for securities of the Company or any
such subsidiary of the Company substantially similar to the
Securities;
(f) Within the time limits prescribed by the Exchange Act, to
furnish to the holders of the Securities after the end of each fiscal
year an annual report (including a balance sheet and statements of
operations, changes in stockholders' equity and cash flows of the
Company and its consolidated subsidiaries certified by independent
public accountants) and, after the end of each of the first three
quarters of each fiscal year (beginning with the fiscal quarter
ending after the effective date of the Registration Statement),
consolidated summary financial information of the Company and its
subsidiaries for such quarter in reasonable detail;
(g) During a period of five years from the effective date of
the Registration Statement, to furnish to you copies of all reports
or other communications (financial or other) furnished to
stockholders, and to deliver to you (i) as soon as they are
available, copies of any reports and financial statements furnished
to or filed with the Commission or any national securities exchange
on which any class of securities of the Company or Finlay Jewelry is
listed or quoted (such financial statements to be on a consolidated
basis to the extent the accounts of the Company and its subsidiaries
are consolidated in reports furnished to its stockholders generally
or to the Commission); and (ii) such additional information
concerning the business and financial condition of the Company or
Finlay Jewelry as you may from time to time reasonably request;
(h) To use the net proceeds received by it from the sale of
the Securities pursuant to this Agreement in the manner specified in
the Prospectus under the caption "Use of Proceeds";
(i) If the Company elects to rely upon Rule 462(b), the
Company shall file a Rule 462(b) Registration Statement with the
Commission in compliance with Rule 462(b) by 10:00 p.m., Washington,
D.C. time, on the date of this Agreement, and the Company shall at
the time of filing either pay to the Commission the filing fee for
the Rule 462(b) Registration Statement or give irrevocable
instructions for the payment of such fee pursuant to Rule 111(b)
under the Act.
6. The Company covenants and agrees with the several Underwriters
that the Company will pay or cause to be paid the following: (i) the fees,
disbursements and expenses of the Company's counsel and accountants in
connection with the registration of the Securities under the Act and all other
expenses in connection with the preparation, printing and filing of the
Registration Statement, any Preliminary Prospectus and the Prospectus and
amendments and supplements thereto and the mailing and delivering of copies
thereof to the Underwriters and dealers; (ii) the cost of printing or
producing any Agreement Among Underwriters, this Agreement, the Indenture, the
Security and Pledge Agreement, any Blue Sky Memorandum, closing documents
(including any reasonable compilations thereof) and any other documents in
connection with the offering, purchase, sale and delivery of the Securities;
(iii) all expenses in connection with the qualification of the Securities for
offering and sale under state securities laws as provided in Section 5(b)
hereof, including the reasonable fees and disbursements of counsel for the
Underwriters in connection with such qualification and in connection with any
Blue Sky and legal investment surveys, if any; (iv) all fees charged by
securities rating services for rating the Securities; (v) the filing fees
incident to, and the reasonable fees and disbursements of counsel for the
Underwriters in connection with, securing any required review by the National
Association of Securities Dealers, Inc. of the terms of the sale of the
Securities; (vi) the cost of preparing certificates representing the
Securities; (vii) the fees and expenses of the Trustee and the Collateral
Agent and any agent of the Trustee and the Collateral Agent
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and the fees and disbursements of counsel for the Trustee and the Collateral
Agent in connection with the Indenture, the Security and Pledge Agreement, and
the Securities; (viii) all other costs and expenses incident to the
performance of the Company's obligations hereunder which are not otherwise
specifically provided for in this Section. It is understood, however, that
except as provided in this Section, and Sections 8 and 11 hereof, the
Underwriters will pay all of their own costs and expenses, including the fees
and disbursements of their counsel and any advertising expenses connected with
any offers they may make.
7. The obligations of the Underwriters hereunder shall be subject, in
their discretion, to the condition that all representations and warranties and
other statements of the Company and Finlay Jewelry herein are, at and as of
the Time of Delivery, true and correct, the condition that each of the Company
and Finlay Jewelry shall have performed all of its obligations hereunder
theretofore to be performed, and the following additional conditions:
(a) The Prospectus shall have been filed with the Commission
pursuant to Rule 424(b) within the applicable time period prescribed for such
filing by the rules and regulations under the Act and in accordance with
Section 5(a) hereof; if the Company has elected to rely upon Rule 462(b), the
Rule 462(b) Registration Statement shall have become effective by 10:00 p.m.,
Washington, D.C. time, on the date of this Agreement; no stop order suspending
the effectiveness of the Registration Statement or any part thereof shall have
been issued and no proceeding for that purpose shall have been initiated or
threatened by the Commission; and all requests for additional information on
the part of the Commission shall have been complied with to your reasonable
satisfaction;
(b) Jones, Day, Reavis & Pogue, counsel for the
Underwriters, shall have furnished to you such opinion or opinions (a draft of
each such opinion is attached as Annex II(a) hereto), dated the Time of
Delivery, with respect to the matters covered in paragraphs (i), (ii), (v),
(vi), (vii), (x) and (xiii) of subsection (c) below as well as such other
related matters as you may reasonably request, and such counsel shall have
received such documents and information as they may reasonably request to
enable them to pass upon such matters;
(c) Paul, Weiss, Rifkind, Wharton & Garrison, counsel for
the Company, shall have furnished to you their written opinion (a draft of
such opinion is attached as Annex II(b) hereto) (which opinion may be limited
to the federal laws of the United States, the laws of the State of New York
and the General Corporation Law of the State of Delaware and in giving such
opinion such counsel may state that, insofar as any opinions involve factual
matters, they have relied, to the extent they deem proper, upon certificates
of officers of the Company or its subsidiaries and certificates of responsible
public officials, copies of which certificates will be provided to you upon
delivery of such counsel's opinion), dated the Time of Delivery, in form and
substance as attached, to the effect that:
(i) Each of the Company and Finlay Jewelry has been duly
incorporated and is validly existing as a corporation in good
standing under the laws of the State of Delaware, with corporate
power and authority to own its properties and conduct its business as
described in the Prospectus;
(ii) The Company has an authorized capitalization as set
forth in the Prospectus, and all of the issued shares of capital
stock of the Company have been duly authorized and validly issued,
fully paid and non-assessable;
(iii) Each subsidiary of the Company (other than Sonab and
Finlay Jewelry) has been duly incorporated and is validly existing as
a corporation in good standing under the laws of its jurisdiction of
incorporation; and all of the issued shares of capital stock of each
subsidiary of the Company (other than Sonab) have been duly
authorized and validly issued, are fully paid and non-assessable, and
(except for directors' qualifying shares, if any, and except as
otherwise set forth in the Prospectus) are owned of record directly
or indirectly by the Company, to the knowledge of such counsel, free
and clear of all liens, encumbrances and defects;
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(iv) To such counsel's knowledge and other than as set forth
in the Prospectus, there are no legal or governmental proceedings
pending to which the Company or any of its subsidiaries is a party or
of which any property of the Company or any of its subsidiaries is
the subject which, if determined adversely to the Company or any of
its subsidiaries, could individually or in the aggregate reasonably
be expected to have a Material Adverse Effect; and, to such counsel's
knowledge, no such proceedings are threatened or contemplated by
governmental authorities or threatened by others;
(v) This Agreement has been duly authorized, executed and
delivered by the Company and Finlay Jewelry;
(vi) The Securities have been duly authorized, executed,
authenticated, issued and delivered and constitute valid and legally
binding obligations of the Company entitled to the benefits provided
by the Indenture; and the Securities and the Indenture conform in all
material respects to the descriptions thereof in the Prospectus;
(vii) Each of the Indenture and the Security and Pledge
Agreement has been duly authorized, executed and delivered by the
Company and, when duly authorized, executed and delivered by the
other parties thereto, will constitute a valid and legally binding
instrument, enforceable in accordance with its terms; the Indenture
has been qualified under the Trust Indenture Act; after giving effect
to the issuance of the Securities at the First Time of Delivery, the
Security and Pledge Agreement creates a valid security interest in
all of the issued and outstanding shares of capital stock of Finlay
Jewelry for the benefit of the Collateral Agent to the extent that
security interests in such shares may be perfected by filing under
the Uniform Commercial Code in effect in the State of New York, the
Collateral Agent's security interest in all of the issued and
outstanding shares of capital stock of Finlay Jewelry has been
perfected, and upon release of the existing pledge of such shares
and the repledge and delivery of such shares in accordance with the
Security and Pledge Agreement, and assuming no issuance by Finlay
Jewelry of any additional shares of its capital stock and that the
Collateral Agent entered into the Security and Pledge Agreement in
good faith without notice of any adverse claims on such shares
(other than the existing pledge of such shares), the Collateral Agent
will have a perfected security interest in all of the issued and
outstanding shares of capital stock of Finlay Jewelry;
(viii) The issue and sale of the Securities being delivered
at the Time of Delivery by the Company and the compliance by each of
the Company and Finlay Jewelry with the applicable provisions of the
Securities, the Indenture, the Security and Pledge Agreement and this
Agreement and the consummation of the transactions herein and therein
contemplated (a) will not conflict with or result in a breach or
violation of any of the terms or provisions of, or constitute a
default under, any indenture, mortgage, deed of trust, loan
agreement, real property lease, license or other material agreement
or instrument known to such counsel to which the Company or any of
its subsidiaries is a party or by which the Company or any of its
subsidiaries is bound or to which any of the property or assets of
the Company or any of its subsidiaries is subject, nor (b) will such
action result in any violation of the provisions of (i) the
respective certificate or restated certificate of incorporation, or
respective by-Laws or restated by-laws, as the case may be, of the
Company or Finlay Jewelry, (ii) any statute, rule or regulation known
to such counsel of any governmental agency or body having
jurisdiction over the Company or any of its subsidiaries or any of
their respective properties or (iii) any order applicable to the
Company, any of its subsidiaries or any of their respective
properties of any court, governmental agency or body known to such
counsel based upon an officer's certificate listing any such orders
(which officer's certificate shall be delivered with such opinion);
(ix) No consent, approval, authorization, order,
registration or qualification of or with any such court or
governmental agency or body is required for the issue and sale of the
Securities or the consummation by the Company of the transactions
contemplated by the Indenture, the Security and Pledge Agreement and
this Agreement, except such as have been obtained under the Act and
the Trust Indenture Act and such consents, approvals, authorizations,
registrations or qualifications as may be required under foreign or
state securities or Blue Sky laws in connection with the purchase and
distribution of the Securities by the Underwriters;
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(x) The statements set forth in the Prospectus under the
caption "Description of Certain Indebtedness", insofar as they
purport to describe the provisions of the documents referred to
therein, under the caption "Description of Senior Debentures",
insofar as they purport to constitute a summary of the terms of the
Securities, and under the caption "Underwriting", insofar as they
purport to describe the provisions of the laws and documents referred
to therein, are accurate and fair in all material respects;
(xi) Each of the Company and Finlay Jewelry is not an
"investment company" or an entity "controlled" by an "investment
company", as such terms are defined in the Investment Company Act;
(xii) The documents incorporated by reference in the
Prospectus or any further amendment or supplement thereto made by the
Company prior to the Time of Delivery (other than the financial
statements and related schedules therein, as to which such counsel
need express no opinion), when they became effective or were filed
with the Commission, as the case may be, complied as to form in all
material respects with the requirements of the Act or the Exchange
Act, as applicable, and the rules and regulations of the Commission
thereunder; and
(xiii) The Registration Statement and the Prospectus and any
further amendments and supplements thereto made by the Company prior
to the Time of Delivery (other than the financial statements and
related schedules and other financial data included or incorporated
by reference therein or omitted therefrom, as to which such counsel
need express no opinion) comply as to form in all material respects
with the requirements of the Act and the rules and regulations
thereunder; although they do not assume any responsibility for the
accuracy, completeness or fairness of the statements contained in the
Registration Statement or the Prospectus, except for those referred
to in the opinion in subsection (ix) of this Section 7(c), such
counsel may state that such counsel has participated in conferences
at which the contents of the Registration Statement and the
Prospectus and related matters were discussed, and, on the basis of
such participation, they have no reason to believe that, as of its
effective date, the Registration Statement or any further amendment
thereto made by the Company prior to the Time of Delivery (other than
the financial statements and related schedules and other financial
data included or incorporated by reference therein or omitted
therefrom, as to which such counsel need express no opinion)
contained or incorporated by reference an untrue statement of a
material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading or that, as of its date, the Prospectus or any further
amendment or supplement thereto made by the Company prior to the Time
of Delivery (other than the financial statements and related
schedules and other financial data included or incorporated by
reference therein or omitted therefrom, as to which such counsel need
express no opinion) contained or incorporated by reference an untrue
statement of a material fact or omitted to state a material fact
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading or that, as
of the Time of Delivery, either the Registration Statement or the
Prospectus or any further amendment or supplement thereto made by the
Company prior to the Time of Delivery (other than the financial
statements and related schedules and other financial data included or
incorporated by reference therein or omitted therefrom, as to which
such counsel need express no opinion) contains or incorporates by
reference an untrue statement of a material fact or omits to state a
material fact necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading; and
they do not know of any amendment to the Registration Statement
required to be filed or of any contracts or other documents of a
character required to be filed as an exhibit to the Registration
Statement or required to be described in the Registration Statement
or the Prospectus which are not filed or described as required or of
any filing required to be incorporated by reference into the
Prospectus which is not so incorporated by reference therein;
(d) Tenzer Greenblatt LLP, counsel for the Company, shall
have furnished to you their written opinion (a draft of such opinion is
attached as Annex II(c) hereto) (which opinion may be limited to the federal
laws of the United States, the laws of the State of New York and the General
Corporation Law of the State of Delaware and in giving such opinion such
counsel may state that, insofar as any opinions
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involve factual matters, they have relied, to the extent they deem proper,
upon certificates of officers of the Company or its subsidiaries and
certificates of responsible public officials, copies of which certificates
will be provided to you upon delivery of such counsel's opinion), dated the
Time of Delivery, in form and substance as attached, to the effect that:
(i) To such counsel's knowledge, neither the Company nor any
of its subsidiaries is in violation of its respective certificate or
restated certificate of incorporation or by-laws or restated by-laws,
or comparable documents, or in default in the performance or
observance of any obligation, agreement, covenant or condition
contained in any indenture, mortgage, deed of trust, loan agreement,
lease or other agreement or instrument to which it is a party or by
which it or any of its properties may be bound which default,
individually or in the aggregate, could reasonably be expected to
have a Material Adverse Effect;
(e) Bonni G. Davis, Vice President, General Counsel and
Secretary of Finlay Jewelry, shall have furnished to you her written opinion
(a draft of such opinion is attached as Annex II(d) hereto) (which opinion may
be limited to the federal laws of the United States, the laws of the State of
New York and the General Corporation Law of the State of Delaware and in
giving such opinion Ms. Davis may state that, insofar as any opinions involve
factual matters, she has relied, to the extent she deems proper, upon
certificates of officers of the Company or its subsidiaries and certificates
of responsible public officials, copies of which certificates will be provided
to you upon delivery of Ms. Davis's opinion), dated the Time of Delivery, in
form and substance as attached, with respect to the matters covered in
paragraphs (iv) and (viii) of subsection (c) above and paragraph (i) of
subsection (d) above and, in addition, to the effect that:
(i) Each subsidiary of the Company (other than Sonab for
which no opinion need be given) has been duly qualified as a foreign
corporation for the transaction of business and is in good standing
under the laws of each other jurisdiction in which it owns or leases
properties or conducts any business so as to require such
qualification or is subject to no material liability or disability by
reason of failure to be so qualified in any such jurisdiction; the
Company has been duly qualified as a foreign corporation for the
transaction of business and is in good standing under the laws of
each jurisdiction in which it owns or leases properties or conducts
any business so as to require such qualification or is subject to no
material liability or disability by reason of its failure to be so
qualified in any such jurisdiction;
(ii) The Company and its subsidiaries have good and
marketable title in fee simple to all real property owned by them in
each case free and clear of all liens, encumbrances and defects
except such as are described in the Prospectus or such as do not
materially affect the value of such property and do not interfere
with the use made and proposed to be made of such property by the
Company and its subsidiaries; to such counsel's knowledge neither the
Company nor any of its subsidiaries is in default under any lease for
real property or buildings held under lease by the Company or its
subsidiaries except for such defaults that are not material and do
not interfere with the use made and proposed to be made of such
property and buildings by the Company and its subsidiaries; and the
leases listed on Schedule III hereto are the only real property
leases to which the Company and its subsidiaries are a party and are
valid, subsisting and enforceable as against the Company or its
subsidiaries (as the case may be) with such exceptions as are not
material and do not interfere with the use made and proposed to be
made of such property and buildings by the Company and its
subsidiaries and except that the enforceability of such leases is
subject to the effect of any applicable , insolvency, reorganization,
fraudulent conveyance or transfer, moratorium and similar laws
affecting creditors' rights generally and general equity principles
(regardless of whether enforcement is sought in a proceeding in
equity or at law) (in giving the opinion in this clause, such counsel
may state that no examination of record titles for the purpose of
such opinion has been made, and that they are relying upon a general
review of the titles of the Company and its subsidiaries, upon
opinions of local counsel and abstracts, reports and policies of
title companies rendered or issued at or subsequent to the time of
acquisition of such property by the Company or its subsidiaries, upon
opinions of counsel to the lessors of such property and, in respect
of matters of fact, upon certificates of officers of the Company or
its subsidiaries;
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(iii) To such counsel's knowledge (a) neither the Company
nor any of its subsidiaries has received any notice that any default
by the Company or any of its subsidiaries has occurred and is
continuing under any of the license agreements with host store groups
described or identified in the Prospectus to which the Company or any
of its subsidiaries are a party and (b) no condition exists which
could individually or in the aggregate reasonably be expected to
result in the termination or nonrenewal of any such license
agreement, except that no opinion need be given with respect to the
Company's license agreement with Liberty House as to the effect on
such license agreement of the filing of a voluntary petition by
Liberty House under the Bankruptcy Code (as defined in the
Prospectus); and
(iv) To such counsel's knowledge, no legal proceedings are
pending or have been threatened against the Company or any of its
subsidiaries that are of a nature required to be disclosed in the
Prospectus which are not so disclosed therein;
(f) Dechert Price & Rhoads, French counsel to the Company,
shall have furnished to you their written opinion (a draft of such opinion is
attached as Annex II(e) hereto) (which opinion may be limited to the laws of
France and in giving such opinion French counsel may state that, insofar as
any opinions involve factual matters, it has relied, to the extent such
counsel deems proper, upon certificates of officers of the Company or its
subsidiaries and certificates of responsible public officials, copies of which
certificates will be provided to you upon delivery of such counsel's opinion),
dated the Time of Delivery, in form and substance as attached, to the effect
that:
(i) Sonab has been duly organized and is validly existing as
a societe en nom collectif in France; and
(ii) all of the issued equity interests of Sonab have been
duly authorized and validly created, are fully paid and
non-assessable, and are validly held of record directly or indirectly
by the Company, to the knowledge of such counsel, free of all liens,
encumbrances and defects, other than the pledge under Finlay
Jewelry's Revolving Credit Agreement;
With respect to all opinions provided for above in paragraphs (b) through (f)
of this Section 7 as to validity, binding effect and/or enforceability, any
such counsel may state that any such opinion as to enforceability is subject to
the effect of any applicable bankruptcy, insolvency, reorganization, fraudulent
conveyance or transfer, moratorium and other laws of general applicability
relating to or affecting creditors' rights and to general equity principles
(regardless of whether enforcement is sought in a proceeding in equity or at
law).
(g) On the date of the Prospectus at a time prior to the
execution of this Agreement, at 9:30 a.m., New York City time, on the
effective date of any post-effective amendment to the Registration Statement
filed subsequent to the date of this Agreement and also at each Time of
Delivery, Arthur Andersen LLP shall have furnished to you a letter or letters,
dated the respective dates of delivery thereof, in form and substance
satisfactory to you, to the effect set forth in Annex I hereto (the executed
copy of the letter delivered prior to the execution of this Agreement is
attached as Annex I(a) hereto and a draft of the form of letter to be
delivered on the effective date of any post-effective amendment to the
Registration Statement and as of each Time of Delivery is attached as Annex
I(b) hereto);
(h) (i) Neither the Company nor any of its subsidiaries
shall have sustained since the date of the latest audited financial statements
included or incorporated by reference in the Prospectus any loss or
interference with its business from fire, explosion, flood or other calamity,
whether or not covered by insurance, or from any strike, boycott or similar
labor dispute or court or governmental action, order or decree, otherwise than
as set forth or contemplated in the Prospectus, and (ii) since the respective
dates as of which information is given in the Prospectus there shall not have
been any change in the capital stock or long-term debt of the Company or any
of its subsidiaries except for borrowings and repayments under the Revolving
Credit Agreement and the Gold Consignment Agreement (each as defined in the
Prospectus and as amended as described in the Prospectus), or any change, or
any development involving a prospective change, in or affecting the business,
operations, management, financial position or condition, current assets,
merchandise inventories, stockholders' equity or results of operations of the
Company and its subsidiaries taken as a whole, otherwise than as set forth or
contemplated in the Prospectus, the effect of which, in any such case
described in clause (i) or (ii), is in the judgment of Goldman, Sachs & Co. on
behalf of the Underwriters so material and adverse as to make it impracticable
or inadvisable to proceed with the public offering or the delivery of the
Securities on the terms and in the manner contemplated in the Prospectus;
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(i) On or after the date hereof (i) no downgrading shall
have occurred in the rating accorded the Company's or Finlay Jewelry's debt
securities by any "nationally recognized statistical rating organization", as
that term is defined by the Commission for purposes of Rule 436(g)(2) under
the Act, and (ii) no such organization shall have publicly announced that it
has under surveillance or review, with possible negative implications, its
rating of any of the Company's or Finlay Jewelry's debt securities;
(j) On or after the date hereof there shall not have
occurred any of the following: (i) a suspension or material limitation in
trading in securities generally on the New York Stock Exchange or on NASDAQ;
(ii) a suspension or material limitation in trading in the Company's
securities on NASDAQ; (iii) a general moratorium on commercial banking
activities declared by either federal or New York State authorities; or (iv)
the outbreak or escalation of hostilities involving the United States or the
declaration by the United States of a national emergency or war, if the effect
of any such event specified in this clause (iv) in the judgment of Goldman,
Sachs & Co. on behalf of the Underwriters makes it impracticable or
inadvisable to proceed with the public offering or the delivery of the
Securities being delivered at the Time of Delivery on the terms and in the
manner contemplated in the Prospectus;
(k) The Company shall have furnished or caused to be
furnished to you at the Time of Delivery certificates of officers of the
Company and Finlay Jewelry, respectively, reasonably satisfactory to you as to
the accuracy of the representations and warranties of the Company and Finlay
Jewelry, respectively, herein at and as of the Time of Delivery, as to the
performance by each of the Company and Finlay Jewelry, respectively, of all of
their respective obligations hereunder to be performed at or prior to the Time
of Delivery, and as to such other matters as you may reasonably request, and
the Company and Finlay Jewelry shall have furnished or caused to be furnished
certificates as to the matters set forth in subsections (a) and (h) of this
Section; and
(l) The Company shall have complied with the provisions of
Section 5(c) hereof with respect to the furnishing of prospectuses on the New
York Business Day next succeeding the date of this Agreement;
8. (a) The Company and Finlay Jewelry, jointly and severally, will
indemnify and hold harmless each Underwriter against any losses, claims,
damages or liabilities, joint or several, to which such Underwriter may become
subject, under the Act or otherwise, insofar as such losses, claims, damages
or liabilities (or actions in respect thereof) arise out of or are based upon
an untrue statement or alleged untrue statement of a material fact contained
or incorporated by reference in any Preliminary Prospectus, the Registration
Statement or the Prospectus, or any amendment or supplement thereto, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated or incorporated by reference therein or
necessary to make the statements therein not misleading, and will reimburse
each Underwriter for any legal or other expenses reasonably incurred by such
Underwriter in connection with investigating or defending any such action or
claim as such expenses are incurred; provided, however, that the Company and
Finlay Jewelry shall not be liable in any such case to the extent that any
such loss, claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission made in
any Preliminary Prospectus, the Registration Statement or the Prospectus or
any such amendment or supplement in reliance upon and in conformity with
written information furnished to the Company by any Underwriter through
Goldman, Sachs & Co. expressly for use therein.
(b) Each Underwriter severally will indemnify and hold
harmless the Company and Finlay Jewelry against any losses, claims, damages or
liabilities to which the Company or Finlay Jewelry may become subject, under
the Act or otherwise, insofar as such losses, claims, damages or liabilities
(or actions in respect thereof) arise out of or are based upon an untrue
statement or alleged untrue statement of a material fact contained in any
Preliminary Prospectus, the Registration Statement or the Prospectus, or any
amendment or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, in
each case to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was made in any
Preliminary Prospectus, the Registration Statement or the Prospectus or any
such amendment or supplement in reliance upon and in conformity
14
<PAGE>
with written information furnished to the Company by such Underwriter through
Goldman, Sachs & Co. expressly for use therein; and will reimburse the Company
and Finlay Jewelry for any legal or other expenses reasonably incurred by the
Company and Finlay Jewelry in connection with investigating or defending any
such action or claim as such expenses are incurred.
(c) Promptly after receipt by an indemnified party under
subsection (a) or (b) above of notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made against
the indemnifying party under such subsection, notify the indemnifying party in
writing of the commencement thereof; but the omission so to notify the
indemnifying party shall not relieve it from any liability which it may have
to any indemnified party otherwise than under such subsection. In case any
such action shall be brought against any indemnified party and it shall notify
the indemnifying party of the commencement thereof, the indemnifying party
shall be entitled to participate therein and, to the extent that it shall
wish, jointly with any other indemnifying party similarly notified, to assume
the defense thereof, with counsel satisfactory to such indemnified party (who
shall not, except with the consent of the indemnified party, be counsel to the
indemnifying party), and, after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party shall not be liable to such indemnified party under such
subsection for any legal expenses of other counsel or any other expenses, in
each case subsequently incurred by such indemnified party, in connection with
the defense thereof other than reasonable costs of investigation. No
indemnifying party shall, without the written consent of the indemnified
party, which consent shall not be unreasonably withheld, effect the settlement
or compromise of, or consent to the entry of any judgment with respect to, any
pending or threatened action or claim in respect of which indemnification or
contribution may be sought hereunder (whether or not the indemnified party is
an actual or potential party to such action or claim) unless such settlement,
compromise or judgment (i) includes an unconditional release of the
indemnified party from all liability arising out of such action or claim and
(ii) does not include a statement as to or an admission of fault, culpability
or a failure to act, by or on behalf of any indemnified party.
(d) If the indemnification provided for in this Section 8 is
unavailable to or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities
(or actions in respect thereof) in such proportion as is appropriate to
reflect the relative benefits received by the Company and Finlay Jewelry on
the one hand and the Underwriters on the other from the offering of the
Securities. If, however, the allocation provided by the immediately preceding
sentence is not permitted by applicable law or if the indemnified party failed
to give the notice required under subsection (c) above, then each indemnifying
party shall contribute to such amount paid or payable by such indemnified
party in such proportion as is appropriate to reflect not only such relative
benefits but also the relative fault of the Company and Finlay Jewelry on the
one hand and the Underwriters on the other in connection with the statements
or omissions which resulted in such losses, claims, damages or liabilities (or
actions in respect thereof), as well as any other relevant equitable
considerations. The relative benefits received by the Company and Finlay
Jewelry on the one hand and the Underwriters on the other shall be deemed to
be in the same proportion as the total net proceeds from the offering (before
deducting expenses) received by the Company bear to the total underwriting
discounts and commissions received by the Underwriters, in each case as set
forth in the table on the cover page of the Prospectus. The relative fault
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the
Company and Finlay Jewelry on the one hand or the Underwriters on the other
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The Company,
Finlay Jewelry and the Underwriters agree that it would not be just and
equitable if contributions pursuant to this subsection (d) were determined by
pro rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation which does not take account
of the equitable considerations referred to above in this subsection (d). The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages or liabilities (or actions in respect thereof) referred to
above in this subsection (d) shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this subsection (d), no Underwriter shall be required
15
<PAGE>
to contribute any amount in excess of the amount by which the total price at
which the Securities underwritten by it and distributed to the public were
offered to the public exceeds the amount of any damages which such Underwriter
has otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations in this subsection (d) to
contribute are several in proportion to their respective underwriting
obligations and not joint.
(e) The obligations of the Company and Finlay Jewelry under
this Section 8 shall be in addition to any liability which the Company and
Finlay Jewelry may otherwise have and shall extend, upon the same terms and
conditions, to each person, if any, who controls any Underwriter within the
meaning of the Act; and the obligations of the Underwriters under this Section
8 shall be in addition to any liability which the respective Underwriters may
otherwise have and shall extend, upon the same terms and conditions, to each
officer and director of the Company and Finlay Jewelry and to each person, if
any, who controls the Company and Finlay Jewelry within the meaning of the
Act.
9. (a) If any Underwriter shall default in its obligation to purchase
the Securities which it has agreed to purchase hereunder at a Time of
Delivery, you may in your discretion arrange for you or another party or other
parties to purchase such Securities on the terms contained herein. If within
thirty-six hours after such default by any Underwriter you do not arrange for
the purchase of such Securities, then the Company shall be entitled to a
further period of thirty-six hours within which to procure another party or
other parties satisfactory to you to purchase such Securities on such terms.
In the event that, within the respective prescribed periods, you notify the
Company that you have so arranged for the purchase of such Securities, or the
Company notify you that they have so arranged for the purchase of such
Securities, you or the Company shall have the right to postpone the Time of
Delivery for a period of not more than seven days, in order to effect whatever
changes may thereby be made necessary in the Registration Statement or the
Prospectus, or in any other documents or arrangements, and the Company agrees
to file promptly any amendments to the Registration Statement or the
Prospectus which in your opinion may thereby be made necessary. The term
"Underwriter" as used in this Agreement shall include any person substituted
under this Section with like effect as if such person had originally been a
party to this Agreement with respect to such Securities.
(b) If, after giving effect to any arrangements for the
purchase of the Securities of a defaulting Underwriter or Underwriters by you
and the Company as provided in subsection (a) above, the aggregate number of
such Securities which remains unpurchased does not exceed one-eleventh of the
aggregate number of all the Securities to be purchased at the Time of
Delivery, then the Company shall have the right to require each non-defaulting
Underwriter to purchase the number of shares which such Underwriter agreed to
purchase hereunder at the Time of Delivery and, in addition, to require each
non-defaulting Underwriter to purchase its pro rata share (based on the number
of Securities which such Underwriter agreed to purchase hereunder) of the
Securities of such defaulting Underwriter or Underwriters for which such
arrangements have not been made; but nothing herein shall relieve a defaulting
Underwriter from liability for its default.
(c) If, after giving effect to any arrangements for the
purchase of the Securities of a defaulting Underwriter or Underwriters by you
and the Company as provided in subsection (a) above, the aggregate number of
such Securities which remains unpurchased exceeds one-eleventh of the
aggregate number of all the Securities to be purchased at the Time of
Delivery, or if the Company shall not exercise the right described in
subsection (b) above to require non-defaulting Underwriters to purchase
Securities of a defaulting Underwriter or Underwriters, then this Agreement
shall thereupon terminate, without liability on the part of any non-defaulting
Underwriter or the Company or Finlay Jewelry, except for the expenses to be
borne by the Company and the Underwriters as provided in Section 6 hereof and
the indemnity and contribution agreements in Section 8 hereof; but nothing
herein shall relieve a defaulting Underwriter from liability for its default.
10. The respective indemnities, agreements, representations,
warranties and other statements of the Company, Finlay Jewelry and the several
Underwriters, as set forth in this Agreement or made by or
16
<PAGE>
on behalf of them, respectively, pursuant to this Agreement, shall remain in
full force and effect, regardless of any investigation (or any statement as to
the results thereof) made by or on behalf of any Underwriter or any
controlling person of any Underwriter, or the Company or Finlay Jewelry or any
officer or director or controlling person of the Company or Finlay Jewelry,
and shall survive delivery of and payment for the Securities.
11. If this Agreement shall be terminated pursuant to Section 9
hereof, the Company shall not then be under any liability to any Underwriter
except as provided in Sections 6 and 8 hereof and Finlay Jewelry shall not
then be under any liability to any Underwriter except as provided in Section 8
hereof; but, if for any other reason, any Securities are not delivered by or
on behalf of the Company as provided herein, the Company will reimburse the
Underwriters through you for all out-of-pocket expenses approved in writing by
you, including fees and disbursements of counsel, reasonably incurred by the
Underwriters in making preparations for the purchase, sale and delivery of the
Securities not so delivered, but the Company shall then be under no further
liability to any Underwriter except as provided in Sections 6 and 8 hereof and
Finlay Jewelry shall then be under no further liability to any Underwriter
except as provided in Section 8 hereof.
12. In all dealings hereunder, Goldman, Sachs & Co. shall act on
behalf of each of the Underwriters, and the parties hereto shall be entitled
to act and rely upon any statement, request, notice or agreement on behalf of
any Underwriter made or given by you jointly or by Goldman, Sachs & Co. on
behalf of you as the Underwriters.
All statements, requests, notices and agreements hereunder shall be
in writing, and if to the Underwriters shall be delivered or sent by mail,
telex or facsimile transmission to the Underwriters in care of Goldman, Sachs
& Co., 85 Broad Street, New York, New York 10004, Attention: Registration
Department; and if to the Company or to Finlay Jewelry shall be delivered or
sent by mail to the address of the Company set forth in the Registration
Statement, Attention: Secretary; provided, however, that any notice to an
Underwriter pursuant to Section 8(d) hereof shall be delivered or sent by
mail, telex or facsimile transmission to such Underwriter at its address set
forth in its Underwriters' Questionnaire, or telex constituting such
Questionnaire, which address will be supplied to the Company. Any such
statements, requests, notices or agreements shall take effect upon receipt
thereof.
13. This Agreement shall be binding upon, and inure solely to the
benefit of, the Underwriters, the Company and Finlay Jewelry and, to the
extent provided in Sections 8 and 10 hereof, the officers, directors and
controlling persons of the Company and Finlay Jewelry and each person who
controls any Underwriter, and their respective heirs, executors,
administrators, successors and assigns, and no other person shall acquire or
have any right under or by virtue of this Agreement. No purchaser of any of
the Securities from any Underwriter shall be deemed a successor or assign by
reason merely of such purchase.
14. Time shall be of the essence of this Agreement. As used herein,
the term "business day" shall mean any day when the Commission's office in
Washington, D.C. is open for business.
15. This Agreement shall be governed by and construed in accordance
with the laws of the State of New York.
16. This Agreement may be executed by any one or more of the parties
hereto in any number of counterparts, each of which shall be deemed to be an
original, but all such counterparts shall together constitute one and the same
instrument.
17
<PAGE>
If the foregoing is in accordance with your understanding, please
sign and return to us ten counterparts hereof, and upon the acceptance hereof
by the Underwriters, this letter and such acceptance hereof shall constitute a
binding agreement among each of the Underwriters and the Company and Finlay
Jewelry . It is understood that your acceptance of this letter on behalf of
each of the Underwriters is pursuant to the authority set forth in a form of
Agreement Among Underwriters, the form of which shall be submitted to the
Company for examination upon request, but without warranty on your part as to
the authority of the signers thereof.
Very truly yours,
Finlay Enterprises, Inc.
By:
Name: Barry D. Scheckner
Title: Senior Vice President and
Chief Financial Officer
Finlay Fine Jewelry Corporation
By:
Name: Barry D. Scheckner
Title: Senior Vice President and
Chief Financial Officer
Accepted as of the date hereof:
Goldman, Sachs & Co.
Donaldson, Lufkin & Jenrette
Securities Corporation
NationsBanc Montgomery Securities LLC
By:
(Goldman, Sachs & Co.)
On behalf of each of the Underwriters
18
<PAGE>
SCHEDULE I
<TABLE>
<CAPTION>
Principal Amount
of Securities to be
Underwriter Purchased
<S> <C>
Goldman, Sachs & Co............................................................
Donaldson, Lufkin & Jenrette
Securities Corporation.......................................................
NationsBanc Montgomery Securities LLC..........................................
Total............................................................ $75,000,000
============
</TABLE>
19
<PAGE>
SCHEDULE III
New York Leases
Section 7(e)(ii)
1. Lease Agreement dated as of August 27, 1993 between F.H.E.A. Associates
and Finlay Jewelry
2. Lease Agreement dated as of August 19, 1993 between 529 Fifth Company and
Finlay Jewelry, as amended
3. Lease Agreement dated as of August 19, 1993 between 521 Fifth Avenue
Associates and Finlay Jewelry, as amended
4. Lease Agreement dated as of June 17, 1986 between 521 Fifth Avenue
Associates and S&L Acquisition Company L.P., as amended
5. Lease Agreement dated as of May 1, 1995 between Alvin Jacobson Realty and
Finlay Jewelry
6. Lease Agreement dated as of October 4, 1994 between Tanger Properties
Limited Partnership and Finlay Jewelry, as amended
7. Lease Agreement dated May 2, 1996 between Horizon/Glen Outlet Centers
Limited Partnership and Finlay Jewelry
20
<PAGE>
ANNEX I
DESCRIPTION OF COMFORT LETTER
Pursuant to Section 7(g) of the Underwriting Agreement, the
accountants shall furnish letters to the Underwriters to the effect that:
(i) They are independent certified public accountants
with respect to the Company and its subsidiaries within the meaning
of the Act and the applicable published rules and regulations
thereunder;
(ii) In their opinion, the financial statements and
any supplementary financial information and schedules examined by
them (and, if applicable, financial forecasts and/or pro forma
financial information, on which they have performed more limited
procedures as specified in such letter, not constituting an
examination in accordance with generally accepted auditing standards)
and included in the Prospectus or the Registration Statement comply
as to form in all material respects (or, in the case of financial
forecasts and/or pro forma financial information, on the basis of
such limited procedures, nothing came to their attention that cause
them to believe that such financial forecasts and/or pro forma
financial information do not comply as to form in all material
respects) with the applicable accounting requirements of the Act and
the related published rules and regulations thereunder; and, if
applicable, they have made a review in accordance with standards
established by the American Institute of Certified Public Accountants
of the unaudited consolidated interim financial statements, selected
financial data, pro forma financial information, financial forecasts
and/or condensed financial statements derived from audited financial
statements of the Company for the periods specified in such letter,
as indicated in their reports thereon, copies of which have been
separately furnished to the Underwriters and are attached hereto;
(iii) If applicable, they have made a review in
accordance with standards established by the American Institute of
Certified Public Accountants of the unaudited condensed consolidated
statements of income, consolidated balance sheets and consolidated
statements of cash flows included in the Prospectus as indicated in
their reports thereon, copies of which have been separately furnished
to the Underwriters and are attached hereto, and on the basis of
specified procedures including inquiries of officials of the Company
who have responsibility for financial and accounting matters
regarding whether the unaudited condensed consolidated financial
statements referred to in paragraph (vi)(A)(i) below comply as to
form in all material respects with the applicable accounting
requirements of the Act and the Exchange Act and the related
published rules and regulations, nothing came to their attention that
cause them to believe that the unaudited condensed consolidated
financial statements do not comply as to form in all material
respects with the applicable accounting requirements of the Act and
the Exchange Act and the related published rules and regulations;
(iv) The unaudited selected financial information with
respect to the consolidated results of operations and financial
position of the Company for the five most recent fiscal years
included in the Prospectus agrees with the corresponding amounts
(after restatements where applicable) in the audited consolidated
financial statements for such five fiscal years which were included
or incorporated by reference in the Company's Annual Reports on Form
10-K for such fiscal years;
(v) They have compared the information in the
Prospectus under selected captions with the disclosure requirements
of Regulation S-K and on the basis of limited procedures specified in
such letter nothing came to their attention as a result of the
foregoing procedures that caused them to believe that this
information does not conform in all material respects with the
disclosure requirements of Items 301, 302 (if applicable), 402 and
503(d) (if applicable), respectively, of Regulation S-K;
I-1
<PAGE>
(vi) They have -
(a) Inquired of certain officials of the
Company who have responsibility for financial and accounting
matters as to (i) whether all significant assumptions
regarding the business combinations and financing
transactions had been reflected in the pro forma
adjustments, and (ii) whether the unaudited pro forma
condensed consolidated financial statements referred to
(vi)(a) comply as to form, in all material respects, with
the applicable accounting requirements of rule 11-02 of
Regulation S-X; and that those officials stated, in response
to such inquiries, that all significant assumptions
regarding the business combinations and financing
transactions had been reflected in the pro forma adjustments
and that the unaudited pro forma condensed consolidated
financial statements referred to in (vi)(a) comply as to
form, in all material respects, with the applicable
accounting requirements of rule 11-02 of Regulation S-X.
(b) Compared and/or recomputed the historical
financial information for the Company included on pages [ ]
and [ ] in the Registration Statement with the applicable
historical financial information for the Company on pages
F-[ ] and F-[ ], respectively, and found them to be in
agreement.
(c) Proved the arithmetic accuracy of the
application of the pro forma adjustments to the historical
amounts in the unaudited pro forma condensed consolidated
financial statements.
(vii) On the basis of limited procedures, not
constituting an examination in accordance with generally accepted
auditing standards, consisting of a reading of the unaudited
financial statements and other information referred to below, a
reading of the latest available interim financial statements of the
Company and its subsidiaries, inspection of the minute books of the
Company and its subsidiaries since the date of the latest audited
financial statements included in the Prospectus, inquiries of
officials of the Company and its subsidiaries responsible for
financial and accounting matters and such other inquiries and
procedures as may be specified in such letter, nothing came to their
attention that caused them to believe that:
(a)(i) the unaudited consolidated statements of
operations, consolidated balance sheets and consolidated
statements of cash flows included in the Prospectus do not
comply as to form in all material respects with the
applicable accounting requirements of the Act and the
related published rules and regulations, or (ii) any
material modifications should be made to the unaudited
condensed consolidated statements of operations,
consolidated balance sheets and consolidated statements of
cash flows included in the Prospectus for them to be in
conformity with generally accepted accounting principles;
(b) any other unaudited statement of operations
data and balance sheet items included in the Prospectus do
not agree with the corresponding items in the unaudited
consolidated financial statements from which such data and
items were derived, and any such unaudited data and items
were not determined on a basis substantially consistent with
the basis for the corresponding amounts in the audited
consolidated financial statements included in the
Prospectus;
(c) the unaudited financial statements which were
not included in the Prospectus but from which were derived
any unaudited condensed financial statements referred to in
Clause (A) and any unaudited statement of operations data
and balance sheet items included in the Prospectus and
referred to in Clause (B) were not determined on a basis
substantially consistent with the basis for the audited
consolidated financial statements included in the
Prospectus;
(d) any unaudited pro forma consolidated condensed
financial information included in the Prospectus do not
comply as to form in all material respects with the
applicable
I-2
<PAGE>
accounting requirements of the Act and the published rules
and regulations thereunder or the pro forma adjustments have
not been properly applied to the historical amounts in the
compilation of that information;
(e) as of a specified date not more than five days
prior to the date of such letter, there have been any
changes in the consolidated capital stock (other than
issuances of capital stock upon exercise of options and
stock appreciation rights, upon earn-outs of performance
shares and upon conversions of convertible securities, in
each case which were outstanding on the date of the latest
financial statements included in the Prospectus) or any
increase in the consolidated long-term debt of the Company
and its subsidiaries, or any decreases in consolidated net
current assets or stockholders' equity or other items
specified by the Underwriters, or any increases in any items
specified by the Underwriters, in each case as compared with
amounts shown in the latest balance sheet included in the
Prospectus, except in each case for changes, increases or
decreases which the Prospectus discloses have occurred or
may occur or which are described in such letter; and
(f) for the period from the date of the latest
financial statements included in the Prospectus to the
specified date referred to in Clause (E) there were any
decreases in consolidated net revenues or operating profit
or the total or per share amounts of consolidated net income
or other items specified by the Underwriters, or any
increases in any items specified by the Underwriters, in
each case as compared with the comparable period of the
preceding year and with any other period of corresponding
length specified by the Underwriters, except in each case
for decreases or increases which the Prospectus discloses
have occurred or may occur or which are described in such
letter; and
(viii) In addition to the examination referred to in
their report(s) included in the Prospectus and the limited
procedures, inspection of minute books, inquiries and other
procedures referred to in paragraphs (iii) and (vi) above, they have
carried out certain specified procedures, not constituting an
examination in accordance with generally accepted auditing standards,
with respect to certain amounts, percentages and financial
information specified by the Underwriters, which are derived from the
general accounting records of the Company and its subsidiaries, which
appear in the Prospectus, or in Part II of, or in exhibits and
schedules to, the Registration Statement specified by the
Underwriters, and have compared certain of such amounts, percentages
and financial information with the accounting records of the Company
and its subsidiaries and have found them to be in agreement.
I-3
<PAGE>
Exhibit 1.3
Draft 4/15/98
o For discussion
purposes only
Finlay Fine Jewelry Corporation
__% Senior Notes due 2008
-----------------
Underwriting Agreement
April __, 1998
Goldman, Sachs & Co.,
Donaldson, Lufkin & Jenrette
Securities Corporation,
NationsBanc Montgomery Securities LLC
c/o Goldman, Sachs & Co.,
85 Broad Street,
New York, New York 10004
Ladies and Gentlemen:
Finlay Fine Jewelry Corporation, a Delaware corporation (the "Company"),
proposes, subject to the terms and conditions stated herein, to issue and sell
to you as the several Underwriters named in Schedule I hereto (the
"Underwriters") an aggregate of $150,000,000 principal amount of the Company's
__% Senior Notes due , 2008 (the "Securities").
1. Each of the Company and Finlay Enterprises, Inc., a Delaware corporation
and the parent of the Company ("Parent"), represents and warrants to, and
agrees with, each of the Underwriters that:
(a) A registration statement on Form S-1 (File No.
333-48563), as amended by Amendments Nos. 1 and 2 thereto (the
"Initial Registration Statement"), in respect of the Securities has
been filed with the Securities and Exchange Commission (the
"Commission"); such Initial Registration Statement and any
post-effective amendment thereto, each in the form heretofore
delivered to you, and, excluding exhibits thereto, to you for each of
the other Underwriters, have been declared effective by the
Commission in such form; other than a registration statement, if any,
increasing the size of the offering (a "Rule 462(b) Registration
Statement"), filed pursuant to Rule 462(b) under the Securities Act
of 1933, as amended (the "Act"), which became effective upon filing,
no other document with respect to such Initial Registration Statement
has heretofore been filed with the Commission; and no stop order
suspending the effectiveness of the Initial Registration Statement,
any post-effective amendment thereto or the Rule 462(b) Registration
Statement, if any, has been issued and no proceeding for that purpose
has been initiated or threatened by the Commission to the Company or
its counsel (any preliminary prospectus included in the Initial
Registration Statement or filed with the Commission pursuant to Rule
424(a) of the rules and regulations of the Commission under the Act
is hereinafter called a "Preliminary Prospectus"; the various parts
of the Initial Registration Statement and the Rule 462(b)
Registration Statement, if any, including all exhibits thereto but
excluding Form T-1 and including the information contained in the
form of final prospectus filed with the Commission pursuant to Rule
424(b) under the Act in accordance with Section 5(a) hereof and
deemed by virtue of Rule 430A under the Act to be part of the Initial
Registration Statement at the time it was declared effective or such
part of the Rule 462(b) Registration Statement, if any, that became
or hereafter becomes effective, each as amended at the time such part
of the registration statement became effective, are hereinafter
collectively called the "Registration Statement"; such final
prospectus, in the form first filed pursuant to Rule 424(b) under the
Act, is hereinafter called the "Prospectus";
<PAGE>
(b) No order preventing or suspending the use of any
Preliminary Prospectus has been issued by the Commission, and each
Preliminary Prospectus, at the time of filing thereof, conformed in
all material respects to the requirements of the Act, the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act"), and
the rules and regulations of the Commission thereunder, and did not
contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which
they were made, not misleading; and the statements made therein
within the coverage of Rule 175(b) under the Act were made by the
Company with a reasonable basis and in good faith; provided, however,
that this representation and warranty shall not apply to any
statements or omissions made in reliance upon and in conformity with
information furnished in writing to the Company by an Underwriter
through Goldman, Sachs & Co. expressly for use therein;
(c) The Registration Statement conforms, and the Prospectus
and any further amendments or supplements to the Registration
Statement or the Prospectus will conform, in all material respects to
the requirements of the Act and the Trust Indenture Act and the rules
and regulations of the Commission thereunder and do not and will not,
as of the applicable effective date as to the Registration Statement
and any amendment thereto, and as of the applicable filing date as to
the Prospectus and any amendment or supplement thereto, contain an
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading; and the statements made therein within the
coverage of Rule 175(b) under the Act were made by the Company with a
reasonable basis and in good faith; provided, however, that this
representation and warranty shall not apply to any statements or
omissions made in reliance upon and in conformity with information
furnished in writing to the Company by an Underwriter through
Goldman, Sachs & Co. expressly for use therein;
(d) Neither Parent nor the Company nor any of its
subsidiaries has sustained since the date of the latest audited
financial statements included in the Prospectus any material loss or
interference with its business from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from any labor
dispute or court or governmental action, order or decree, otherwise
than as set forth or contemplated in the Prospectus; and, since the
respective dates as of which information is given in the Registration
Statement and the Prospectus, there has not been any change in the
capital stock or long-term debt of Parent or the Company or any of
its subsidiaries, except for borrowings and repayments under the
Revolving Credit Agreement and the Gold Consignment Agreement (each
as defined in the Prospectus and as amended as described in the
Prospectus) or any material adverse change, or any development
involving a prospective material adverse change, in or affecting the
business, operations, management, financial position or condition,
current assets, merchandise inventories, stockholders' equity or
results of operations of Parent and the Company and its subsidiaries
taken as a whole (a "Material Adverse Effect"), otherwise than as set
forth or contemplated in the Prospectus;
(e) Parent and the Company and its subsidiaries have good
and marketable title in fee simple to all real property and good and
marketable title to all material personal property owned by them, in
each case free and clear of all liens, encumbrances and defects
except such as are described in the Prospectus or such as do not
materially affect the value of such property and do not interfere
with the use made and proposed to be made of such property by Parent
and the Company and its subsidiaries; and any material real property
and buildings held under lease by Parent and the Company and its
subsidiaries are held by them under valid, subsisting and enforceable
leases with such exceptions as are not material and do not interfere
with the use made and proposed to be made of such property and
buildings by Parent and the Company and its subsidiaries;
(f) Each of the Company and Parent has been duly
incorporated and is validly existing as a corporation in good
standing under the laws of the State of Delaware, with corporate
power and authority to own its properties and conduct its business as
described in the Prospectus, and has been duly qualified as a foreign
corporation for the transaction of business and is in good
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standing under the laws of each other jurisdiction in which it owns
or leases properties or conducts any business so as to require such
qualification, or is subject to no material liability or disability
by reason of the failure to be so qualified in any such jurisdiction;
the Company's indirect subsidiary, Societe Nouvelle d'Achat de
Bijouterie - S.O.N.A.B. ("Sonab") is duly organized and validly
existing as a societe en nom collectif in France; each other direct
or indirect subsidiary of the Company has been duly incorporated and
is validly existing as a corporation in good standing under the laws
of its jurisdiction of incorporation, and has been duly qualified as
a foreign corporation for the transaction of business and is in good
standing under the laws of each other jurisdiction in which it owns
or leases properties or conducts any business so as to require such
qualification, or is subject to no material liability or disability
by reason of the failure to be so qualified in any such jurisdiction;
(g) Parent has an authorized capitalization as set forth in
the Prospectus, and all of the issued shares of capital stock of
Parent have been duly authorized and validly issued, are fully paid
and non-assessable and conform to the description of such capital
stock contained in the Prospectus; and all of the issued shares of
capital stock of the Company and each subsidiary of the Company have
been duly authorized and validly issued, are fully paid and
non-assessable and (except for directors' qualifying shares, if any,
and except as set forth in the Prospectus) are owned directly or
indirectly by Parent, free and clear of all liens, encumbrances,
equities or claims;
(h) The Securities have been duly authorized by the Company
and, on the Closing Date, will have been duly executed, issued and
delivered by the Company, and when the Securities, in accordance with
the provisions of the Indenture (the "Indenture"), substantially in
the form filed as an exhibit to the Registration Statement, to be
entered into by the Company and Marine Midland Bank, as Trustee (the
"Trustee"), have been authenticated by the Trustee and delivered to
and paid for by the Underwriters in accordance with the terms of this
Agreement, the Securities will be entitled to the benefits of the
Indenture and will constitute valid and legally binding obligations
of the Company, enforceable against the Company in accordance with
their terms, subject, as to enforcement, to bankruptcy, insolvency,
reorganization, fraudulent conveyance or transfer, moratorium and
other laws of general applicability relating to or affecting
creditors' rights and to general equity principles (regardless of
whether enforcement is sought in a proceeding in equity or at law);
the Indenture has been duly authorized by the Company and qualified
under the Trust Indenture Act and when duly executed and delivered by
the Company and the Trustee, will constitute a valid and legally
binding instrument, enforceable against the Company in accordance
with its terms, subject, as to enforcement, to bankruptcy, insolvency,
reorganization, fraudulent conveyance or transfer, moratorium and other
laws of general applicability relating to or affecting creditors'
rights and to general equity principles (regardless of whether
enforcement is sought in a proceeding in equity or at law); and the
Securities and the Indenture will conform in all material respects to
the descriptions thereof in the Prospectus;
(i) The issue and sale of the Securities and the compliance
by each of the Company and Parent with all of the provisions of the
Securities, the Indenture and this Agreement applicable to it and the
consummation of the transactions herein and therein contemplated (i)
will not conflict with or result in a breach or violation of any of
the terms or provisions of, or constitute a default under, any
indenture, mortgage, deed of trust, loan agreement, lease, license or
other agreement or instrument to which Parent or the Company or any
of its subsidiaries is a party or by which Parent, the Company or any
of its subsidiaries is bound or to which any of the property or
assets of Parent or the Company or any of its subsidiaries is
subject, except any such conflict, breach, violation or default which
has been consented to or waived in a valid and binding writing duly
executed and delivered to Parent or the Company by or on behalf of
the party granting such consent or waiver; (ii) will not result in
any violation of the provisions of Parent's or the Company's or any
of its subsidiaries' respective certificate or restated certificate
of incorporation or by-laws or restated by-laws or comparable
documents and (iii) will not result in any violation of any statute
or any order, rule or regulation of any court or governmental agency
or body having jurisdiction over Parent or the Company or any of its
subsidiaries or any of their properties; and no consent, approval,
authorization, order, registration or qualification of or with any
such court or governmental agency or body is required for the issue
and sale of the Securities or the consummation by Parent
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or the Company of the transactions contemplated by this Agreement and
the Indenture, except such as have been obtained under the Act and
the Trust Indenture Act and such consents, approvals, authorizations,
registrations or qualifications as may be required under foreign or
state securities or Blue Sky laws in connection with the purchase and
distribution of the Securities by the Underwriters;
(j) Neither Parent nor the Company nor any of its
subsidiaries is in violation of its respective certificate or
restated certificate of incorporation or by-laws or restated by-laws
or comparable documents, or in default in the performance or
observance of any obligation, agreement, covenant or condition
contained in any indenture, mortgage, deed of trust, loan agreement,
lease, license or other agreement or instrument to which it is a
party or by which it or any of its properties may be bound which
default could reasonably be expected to result in, individually or in
the aggregate, a Material Adverse Effect;
(k) The statements set forth in the Prospectus under the
caption "Description of Certain Indebtedness", insofar as they
purport to describe the provisions of the documents referred to
therein, under the caption "Description of Senior Notes", insofar as
they purport to constitute a summary of the terms of the Securities
and under the caption "Underwriting", insofar as they purport to
describe the provisions of the laws and documents referred to
therein, are accurate and fair in all material respects;
(l) Other than as set forth in the Prospectus, there are no
legal or governmental proceedings pending to which Parent or the
Company or any of its subsidiaries is a party or of which any
property of Parent or the Company or any of its subsidiaries is the
subject which, if determined adversely to Parent or the Company or
any of its subsidiaries, could individually or in the aggregate
reasonably be expected to have a Material Adverse Effect; and, to the
Company's and Parent's knowledge, no such proceedings are threatened
or contemplated by governmental authorities or threatened by others;
(m) Each of the Company and Parent is not and, after giving
effect to the offering and sale of the Securities, will not be an
"investment company" or an entity "controlled" by an "investment
company", as such terms are defined in the Investment Company Act of
1940, as amended (the "Investment Company Act");
(n) Arthur Andersen LLP, who have certified certain
consolidated financial statements of the Company, are independent
public accountants as required by the Act and the rules and
regulations of the Commission thereunder;
(o) Parent and the Company and its subsidiaries directly or
through host store groups are subject to consent decrees, injunctions
or comparable governmental orders or decrees regarding the discount
pricing and advertising of jewelry from "regular" or "original"
prices only in the states of California, Colorado, Georgia, Oregon
and Wisconsin, and Parent and the Company and its subsidiaries are in
compliance therewith and with applicable federal and state laws with
respect to such pricing and advertising practices, except for such
noncompliance previously identified in writing by the Company to the
Underwriters which could not individually or in the aggregate
reasonably be expected to have a Material Adverse Effect;
(p) Neither Parent nor the Company nor any of its
subsidiaries has received any notice that any default by Parent or
the Company or any of its subsidiaries has occurred and is continuing
under any of the license agreements with host store groups described
or identified in the Prospectus to which Parent or the Company or any
of its subsidiaries are a party and no condition exists which could
individually or in the aggregate reasonably be expected to result in
the termination or nonrenewal of any such license agreement; each
such license agreement has been duly authorized (and, in the case of
written license agreements, duly and validly executed and delivered)
by and on behalf of Parent or the Company and its subsidiaries, as
the case may be, and, assuming the due authorization (and, in the
case of written license agreements, the due and
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valid execution and delivery) thereof by the other party or parties
thereto, is the valid and binding obligation of Parent and the
Company, its subsidiaries and such other party or parties, as the
case may be, enforceable in accordance with its respective terms
against the respective parties thereto subject to the effect of any
applicable bankruptcy, insolvency, reorganization, fraudulent
conveyance or transfer, moratorium and similar laws affecting
creditors' rights generally and to general principles of equity
(regardless of whether enforcement is sought in a proceeding in
equity or at law); and neither Parent nor the Company nor any of its
subsidiaries has received any notice (whether actual or constructive)
that the licensor thereunder is considering limiting, suspending,
revoking or non-renewing any such license; except that no
representation is made with respect to the Company's license
agreement with Liberty House as to the effect on such license
agreement of the filing of a voluntary petition by Liberty House
under the Bankruptcy Code (as defined in the Prospectus);
(q) Each of the Company and Parent has duly authorized the
amendment to the Revolving Credit Agreement that is described in the
Prospectus. Substantially contemporaneously with the Time of Delivery
(as defined in Section 4 hereof), the Company and Parent will duly
execute and deliver such amendment to the Revolving Credit Agreement.
The Company has duly authorized the amendment to the Gold Consignment
Agreement that is described in the Prospectus. Substantially
contemporaneously with the Time of Delivery, the Company will duly
execute and deliver such amendment to the Gold Consignment Agreement.
Assuming the due authorization, execution and delivery thereof by the
other parties thereto, (a) the Revolving Credit Agreement, as amended
as described above, will constitute the legal, valid and binding
agreement of the Company and Parent and (b) the Gold Consignment
Agreement, as amended as described above, will constitute the legal,
valid and binding agreement of the Company, in each case, enforceable
against the Company and/or Parent, as the case may be, subject, as to
enforcement, to insolvency, reorganization, fraudulent conveyance or
transfer, moratorium and other laws of general applicability relating
to or affecting creditors' rights and to general equity principles
(regardless of whether enforcement is sought in a proceeding in
equity or at law); and
(r) Neither the Company nor Parent nor any of their
respective affiliates does business with the government of Cuba or
with any person or affiliate located in Cuba within the meaning of
Section 517.075, Florida Statutes.
2. Subject to the terms and conditions herein set forth, the Company
agrees to sell to each of the Underwriters, and each of the Underwriters
agrees, severally and not jointly, to purchase from the Company, at a purchase
price of ___% of the principal amount thereof, plus accrued interest, if any,
from April __, 1998 to the Time of Delivery hereunder, the principal amount of
Securities set forth opposite the name of such Underwriter in Schedule I
hereto.
3. Upon the authorization by Goldman, Sachs and Co., on behalf of the
Underwriters, of the release of the Securities, the several Underwriters
propose to offer the Securities for sale upon the terms and conditions set
forth in the Prospectus.
4. (a) The Securities to be purchased by each Underwriter hereunder
will be represented by one or more definitive global Securities in book-entry
form which will be deposited by or on behalf of the Company with The
Depository Trust Company ("DTC") or its designated custodian. The Company will
deliver the Securities to Goldman, Sachs & Co., for the account of each
Underwriter, against payment by or on behalf of such Underwriter of the
purchase price therefor by wire transfer of Federal (same-day) funds to the
account specified by the Company to Goldman, Sachs & Co. at least forty-eight
hours in advance, by causing DTC to credit the Securities to the account of
Goldman, Sachs & Co. at DTC. The Company will cause the certificates
representing the Securities to be made available to Goldman, Sachs & Co. for
checking at least twenty-four hours prior to the Time of Delivery (as defined
below) at the office of DTC or its designated custodian (the "Designated
Office"). The time and date of such delivery and payment shall be 9:30 a.m.,
New York City time, on April __, 1998 or such other time and date as Goldman,
Sachs & Co. and the Company may agree upon in writing. Such time and date for
delivery of the Securities is herein called the "Time of Delivery".
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(b) The documents to be delivered at the Time of Delivery by
or on behalf of the parties hereto pursuant to Section 7 hereof, including the
cross receipt for the Securities and any additional documents requested by the
Underwriters pursuant to Section 7(k) hereof, will be delivered at the offices
of Jones, Day, Reavis & Pogue, 599 Lexington Avenue, 37th Floor, New York, New
York 10022 (the "Closing Location"), and the Securities will be delivered at
the Designated Office, all at the Time of Delivery. A meeting will be held at
the Closing Location at 2:00 p.m., New York City time, on the New York
Business Day next preceding the Time of Delivery, at which meeting the final
drafts of the documents to be delivered pursuant to the preceding sentence
will be available for review by the parties hereto. For the purposes of this
Section 4, "New York Business Day" shall mean each Monday, Tuesday, Wednesday,
Thursday and Friday which is not a day on which banking institutions in New
York are generally authorized or obligated by law or executive order to close.
5. The Company agrees with each of the Underwriters:
(a) To prepare the Prospectus in a form approved by you and to
file such Prospectus pursuant to Rule 424(b) under the Act not later
than the Commission's close of business on the second business day
following the execution and delivery of this Agreement or, if
applicable, such earlier time as may be required by Rule 430A(a)(3)
under the Act; to make no further amendment or any supplement to the
Registration Statement or Prospectus prior to the Time of Delivery
which shall be disapproved by the Underwriters promptly after
reasonable notice thereof; to advise you, promptly after it receives
notice thereof, of the time when any amendment to the Registration
Statement has been filed or becomes effective or any supplement to
the Prospectus or any amended Prospectus has been filed and to
furnish you with copies thereof; to file promptly all reports and any
definitive proxy or information statements required to be filed by
the Company with the Commission pursuant to Section 13(a), 13(c), 14
or 15(d) of the Exchange Act subsequent to the date of the Prospectus
and for so long as the delivery of a prospectus is required in
connection with the offering or sale of the Securities; to advise
you, promptly after it receives notice thereof, of the issuance by
the Commission of any stop order or of any order preventing or
suspending the use of any Preliminary Prospectus or Prospectus, of
the suspension of the qualification of the Securities for offering or
sale in any jurisdiction, of the initiation or threatening of any
proceeding for any such purpose, or of any request by the Commission
for the amending or supplementing of the Registration Statement or
Prospectus or for additional information; and, in the event of the
issuance of any stop order or of any order preventing or suspending
the use of any Preliminary Prospectus or Prospectus or suspending any
such qualification, promptly to use its best efforts to obtain the
withdrawal of such order;
(b) Promptly from time to time to take such action as you may
reasonably request to qualify the Securities for offering and sale
under the securities laws of such jurisdictions as you may reasonably
request and to comply with such laws so as to permit the continuance
of sales and dealings therein in such jurisdictions for as long as
may be necessary to complete the distribution of the Securities,
provided that in connection therewith the Company shall not be
required to qualify as a foreign corporation or to file a general
consent to service of process in any jurisdiction or to take any
other action which would subject it to the service of process in
suits or to taxation, other than as to matters and transactions
relating to the offer and sale of the Securities in each jurisdiction
in which the Securities have been qualified as provided above;
(c) Prior to 12:00 noon, New York City time, on the New York
Business Day next succeeding the date of this Agreement and from time
to time, to furnish the Underwriters with copies of the Prospectus in
New York City in such quantities as you may reasonably request, and,
if the delivery of a prospectus is required at any time prior to the
expiration of nine months after the time of issue of the Prospectus
in connection with the offering or sale of the Securities and if at
such time any event shall have occurred as a result of which the
Prospectus as then amended or supplemented would include an untrue
statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in the light of
the circumstances under which they were made when such Prospectus is
delivered, not misleading, or, if for any other reason it shall be
necessary during such period to amend or supplement the Prospectus in
order to
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comply with the Act or the Trust Indenture Act, to notify you and
upon your request to file such document and to prepare and furnish
without charge to each Underwriter and to any dealer in securities as
many copies as you may from time to time reasonably request of an
amended Prospectus or a supplement to the Prospectus which will
correct such statement or omission or effect such compliance, and in
case any Underwriter is required to deliver a prospectus in
connection with sales of any of the Securities at any time nine
months or more after the time of issue of the Prospectus, upon your
request but at the expense of such Underwriter, to prepare and
deliver to such Underwriter as many copies as you may request of an
amended or supplemented Prospectus complying with Section 10(a)(3) of
the Act;
(d) To make generally available to its securityholders as soon
as practicable, but in any event not later than eighteen months after
the effective date of the Registration Statement (as defined in Rule
158(c) under the Act), an earnings statement of the Company and its
subsidiaries (which need not be audited) complying with Section 11(a)
of the Act and the rules and regulations thereunder (including, at
the option of the Company, Rule 158);
(e) During the period beginning from the date hereof and
continuing to and including the date 180 days after the date of the
Prospectus, not to (and to cause each of its subsidiaries not to)
register for sale, offer, sell, contract to sell or otherwise dispose
of, except as provided hereunder, any Securities or any securities
that are substantially similar to the Securities (other than the
Senior Debentures (as defined in the Prospectus) of Parent in an
aggregate principal amount of $75.0 million), or any securities of
the Company or any such subsidiary of the Company convertible into or
exchangeable for securities of the Company or any such subsidiary of
the Company substantially similar to the Securities;
(f) Within the time limits prescribed by the Exchange Act, to
furnish to the holders of the Securities after the end of each fiscal
year an annual report (including a balance sheet and statements of
operations, changes in stockholders' equity and cash flows of the
Company and its consolidated subsidiaries certified by independent
public accountants) and, after the end of each of the first three
quarters of each fiscal year (beginning with the fiscal quarter
ending after the effective date of the Registration Statement),
consolidated summary financial information of the Company and its
subsidiaries for such quarter in reasonable detail;
(g) During a period of five years from the effective date of
the Registration Statement, to furnish to you copies of all reports
or other communications (financial or other) furnished to
stockholders, and to deliver to you (i) as soon as they are
available, copies of any reports and financial statements furnished
to or filed with the Commission or any national securities exchange
on which any class of securities of the Company is listed or quoted
(such financial statements to be on a consolidated basis to the
extent the accounts of the Company and its subsidiaries are
consolidated in reports furnished to its stockholders generally or to
the Commission); and (ii) such additional information concerning the
business and financial condition of the Company or Parent as you may
from time to time reasonably request;
(h) To use the net proceeds received by it from the sale of
the Securities pursuant to this Agreement in the manner specified in
the Prospectus under the caption "Use of Proceeds";
(i) If the Company elects to rely upon Rule 462(b), the
Company shall file a Rule 462(b) Registration Statement with the
Commission in compliance with Rule 462(b) by 10:00 p.m., Washington,
D.C. time, on the date of this Agreement, and the Company shall at
the time of filing either pay to the Commission the filing fee for
the Rule 462(b) Registration Statement or give irrevocable
instructions for the payment of such fee pursuant to Rule 111(b)
under the Act.
6. The Company covenants and agrees with the several Underwriters
that the Company will pay or cause to be paid the following: (i) the fees,
disbursements and expenses of the Company's counsel and accountants in
connection with the registration of the Securities under the Act and all other
expenses in connection with the preparation, printing and filing of the
Registration Statement, any Preliminary
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Prospectus and the Prospectus and amendments and supplements thereto and the
mailing and delivering of copies thereof to the Underwriters and dealers; (ii)
the cost of printing or producing any Agreement Among Underwriters, this
Agreement, the Indenture, any Blue Sky Memorandum, closing documents
(including any reasonable compilations thereof) and any other documents in
connection with the offering, purchase, sale and delivery of the Securities;
(iii) all expenses in connection with the qualification of the Securities for
offering and sale under state securities laws as provided in Section 5(b)
hereof, including the reasonable fees and disbursements of counsel for the
Underwriters in connection with such qualification and in connection with any
Blue Sky and legal investment surveys, if any; (iv) all fees charged by
securities rating services for rating the Securities; (v) the filing fees
incident to, and the reasonable fees and disbursements of counsel for the
Underwriters in connection with, securing any required review by the National
Association of Securities Dealers, Inc. of the terms of the sale of the
Securities; (vi) the cost of preparing certificates representing the
Securities; (vii) the fees and expenses of the Trustee and the Collateral
Agent and any agent of the Trustee and the Collateral Agent and the fees and
disbursements of counsel for the Trustee and the Collateral Agent in
connection with the Indenture and the Securities; (viii) all other costs and
expenses incident to the performance of the Company's obligations hereunder
which are not otherwise specifically provided for in this Section. It is
understood, however, that except as provided in this Section, and Sections 8
and 11 hereof, the Underwriters will pay all of their own costs and expenses,
including the fees and disbursements of their counsel and any advertising
expenses connected with any offers they may make.
7. The obligations of the Underwriters hereunder shall be subject, in
their discretion, to the condition that all representations and warranties and
other statements of the Company and Parent herein are, at and as of the Time
of Delivery, true and correct, the condition that each of the Company and
Parent shall have performed all of its obligations hereunder theretofore to be
performed, and the following additional conditions:
(a) The Prospectus shall have been filed with the Commission
pursuant to Rule 424(b) within the applicable time period prescribed for such
filing by the rules and regulations under the Act and in accordance with
Section 5(a) hereof; if the Company has elected to rely upon Rule 462(b), the
Rule 462(b) Registration Statement shall have become effective by 10:00 p.m.,
Washington, D.C. time, on the date of this Agreement; no stop order suspending
the effectiveness of the Registration Statement or any part thereof shall have
been issued and no proceeding for that purpose shall have been initiated or
threatened by the Commission; and all requests for additional information on
the part of the Commission shall have been complied with to your reasonable
satisfaction;
(b) Jones, Day, Reavis & Pogue, counsel for the
Underwriters, shall have furnished to you such opinion or opinions (a draft of
each such opinion is attached as Annex II(a) hereto), dated the Time of
Delivery, with respect to the matters covered in paragraphs (i), (ii), (v),
(vi), (vii), (ix) and (xi) of subsection (c) below as well as such other
related matters as you may reasonably request, and such counsel shall have
received such documents and information as they may reasonably request to
enable them to pass upon such matters;
(c) Paul, Weiss, Rifkind, Wharton & Garrison, counsel for
the Company, shall have furnished to you their written opinion (a draft of
such opinion is attached as Annex II(b) hereto) (which opinion may be limited
to the federal laws of the United States, the laws of the State of New York
and the General Corporation Law of the State of Delaware and in giving such
opinion such counsel may state that, insofar as any opinions involve factual
matters, they have relied, to the extent they deem proper, upon certificates
of officers of the Company or its subsidiaries and certificates of responsible
public officials, copies of which certificates will be provided to you upon
delivery of such counsel's opinion), dated the Time of Delivery, in form and
substance as attached, to the effect that:
(i) Each of the Company and Parent has been duly
incorporated and is validly existing as a corporation in good
standing under the laws of the State of Delaware, with corporate
power and authority to own its properties and conduct its business as
described in the Prospectus;
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(ii) Parent has an authorized capitalization as set forth in
the Prospectus, and all of the issued shares of capital stock of
Parent and the Company have been duly authorized and validly issued,
fully paid and non-assessable;
(iii) Each subsidiary of the Company (other than Sonab) has
been duly incorporated and is validly existing as a corporation in
good standing under the laws of its jurisdiction of incorporation;
and all of the issued shares of capital stock of each subsidiary of
the Company (other than Sonab) have been duly authorized and validly
issued, are fully paid and non-assessable, and (except for directors'
qualifying shares, if any, and except as otherwise set forth in the
Prospectus) are owned of record directly or indirectly by the
Company, to the knowledge of such counsel, free and clear of all
liens, encumbrances and defects;
(iv) To such counsel's knowledge and other than as set forth
in the Prospectus, there are no legal or governmental proceedings
pending to which Parent or the Company or any of its subsidiaries is
a party or of which any property of Parent or the Company or any of
its subsidiaries is the subject which, if determined adversely to
Parent or the Company or any of its subsidiaries, could individually
or in the aggregate reasonably be expected to have a Material Adverse
Effect; and, to such counsel's knowledge, no such proceedings are
threatened or contemplated by governmental authorities or threatened
by others;
(v) This Agreement has been duly authorized, executed and
delivered by the Company and Parent;
(vi) The Securities have been duly authorized, executed,
authenticated, issued and delivered and constitute valid and legally
binding obligations of the Company entitled to the benefits provided
by the Indenture; and the Securities and the Indenture conform in all
material respects to the descriptions thereof in the Prospectus;
(vii) The Indenture has been duly authorized, executed and
delivered by the Company and, when duly authorized, executed and
delivered by the other parties thereto, will constitute a valid and
legally binding instrument, enforceable in accordance with its terms;
the Indenture has been qualified under the Trust Indenture Act;
(viii) The issue and sale of the Securities being delivered
at the Time of Delivery by the Company and the compliance by the
Company and Parent with the applicable provisions of the Securities,
the Indenture and this Agreement and the consummation of the
transactions herein and therein contemplated (a) will not conflict with
or result in a breach or violation of any of the terms or provisions
of, or constitute a default under, any indenture, mortgage, deed of
trust, loan agreement, real property lease, license or other material
agreement or instrument known to such counsel to which Parent or the
Company or any of its subsidiaries is a party or by which Parent or
the Company or any of its subsidiaries is bound or to which any of
the property or assets of Parent or the Company or any of its
subsidiaries is subject, nor (b) will such action result in any
violation of the provisions of (i) the respective certificate or
restated certificate of incorporation, or respective by-laws or
restated by-laws, as the case may be, of the Company or Parent, (ii)
any statute, rule or regulation known to such counsel of any
governmental agency or body having jurisdiction over Parent or the
Company or any of its subsidiaries or any of their respective
properties or (iii) any order applicable to Parent or the Company,
any of its subsidiaries or any of their respective properties of any
court, governmental agency or body known to such counsel based upon
an officer's certificate listing any such orders (which officer's
certificate shall be delivered with such opinion);
(viii) No consent, approval, authorization, order,
registration or qualification of or with any such court or
governmental agency or body is required for the issue and sale of the
Securities or the consummation by the Company of the transactions
contemplated by the Indenture and this Agreement, except such as have
been obtained under the Act and the Trust Indenture Act and such
consents, approvals, authorizations, registrations or qualifications
as may be required under
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foreign or state securities or Blue Sky laws in connection with the
purchase and distribution of the Securities by the Underwriters;
(ix) The statements set forth in the Prospectus under the
caption "Description of Certain Indebtedness", insofar as they
purport to describe the provisions of the documents referred to
therein, under the caption "Description of Senior Notes", insofar as
they purport to constitute a summary of the terms of the Securities,
and under the caption "Underwriting", insofar as they purport to
describe the provisions of the laws and documents referred to
therein, are accurate and fair in all material respects;
(x) Each of the Company and Parent is not an "investment
company" or an entity "controlled" by an "investment company", as
such terms are defined in the Investment Company Act; and
(xi) The Registration Statement and the Prospectus and any
further amendments and supplements thereto made by the Company prior
to the Time of Delivery (other than the financial statements and
related schedules and other financial data included therein or
omitted therefrom, as to which such counsel need express no opinion)
comply as to form in all material respects with the requirements of
the Act and the rules and regulations thereunder; although they do
not assume any responsibility for the accuracy, completeness or
fairness of the statements contained in the Registration Statement or
the Prospectus, except for those referred to in the opinion in
subsection (ix) of this Section 7(c), such counsel may state that
such counsel has participated in conferences at which the contents of
the Registration Statement and the Prospectus and related matters
were discussed, and, on the basis of such participation, they have no
reason to believe that, as of its effective date, the Registration
Statement or any further amendment thereto made by the Company prior
to the Time of Delivery (other than the financial statements and
related schedules and other financial data included therein or
omitted therefrom, as to which such counsel need express no opinion)
contained an untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary to make
the statements therein not misleading or that, as of its date, the
Prospectus or any further amendment or supplement thereto made by the
Company prior to the Time of Delivery (other than the financial
statements and related schedules and other financial data included
therein or omitted therefrom, as to which such counsel need express
no opinion) contained an untrue statement of a material fact or
omitted to state a material fact necessary to make the statements
therein, in the light of the circumstances under which they were
made, not misleading or that, as of the Time of Delivery, either the
Registration Statement or the Prospectus or any further amendment or
supplement thereto made by the Company prior to the Time of Delivery
(other than the financial statements and related schedules and other
financial data included therein or omitted therefrom, as to which
such counsel need express no opinion) contains an untrue statement of
a material fact or omits to state a material fact necessary to make
the statements therein, in the light of the circumstances under which
they were made, not misleading; and they do not know of any amendment
to the Registration Statement required to be filed or of any
contracts or other documents of a character required to be filed as
an exhibit to the Registration Statement or required to be described
in the Registration Statement or the Prospectus which are not filed
or described as required;
(d) Tenzer Greenblatt LLP, counsel for the Company, shall
have furnished to you their written opinion (a draft of such opinion is
attached as Annex II(c) hereto) (which opinion may be limited to the federal
laws of the United States, the laws of the State of New York and the General
Corporation Law of the State of Delaware and in giving such opinion such
counsel may state that, insofar as any opinions involve factual matters, they
have relied, to the extent they deem proper, upon certificates of officers of
the Company or its subsidiaries and certificates of responsible public
officials, copies of which certificates will be provided to you upon delivery
of such counsel's opinion), dated the Time of Delivery, in form and substance
as attached, to the effect that:
(i) To such counsel's knowledge, neither Parent nor the
Company nor any of its subsidiaries is in violation of its respective
certificate or restated certificate of incorporation or by-
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laws or restated by-laws, or comparable documents, or in default in the
performance or observance of any obligation, agreement, covenant or
condition contained in any indenture, mortgage, deed of trust, loan
agreement, lease or other agreement or instrument to which it is a
party or by which it or any of its properties may be bound which
default, individually or in the aggregate, could reasonably be expected
to have a Material Adverse Effect;
(e) Bonni G. Davis, Vice President, General Counsel and
Secretary of the Company, shall have furnished to you her written opinion (a
draft of such opinion is attached as Annex II(d) hereto) (which opinion may be
limited to the federal laws of the United States, the laws of the State of New
York and the General Corporation Law of the State of Delaware and in giving
such opinion Ms. Davis may state that, insofar as any opinions involve factual
matters, she has relied, to the extent she deems proper, upon certificates of
officers of the Company or its subsidiaries and certificates of responsible
public officials, copies of which certificates will be provided to you upon
delivery of Ms. Davis's opinion), dated the Time of Delivery, in form and
substance as attached, with respect to the matters covered in paragraphs (iv)
and (viii) of subsection (c) above and paragraph (i) of subsection (d) above
and, in addition, to the effect that:
(i) Each subsidiary of the Company (other than Sonab for
which no opinion need be given) has been duly qualified as a foreign
corporation for the transaction of business and is in good standing
under the laws of each other jurisdiction in which it owns or leases
properties or conducts any business so as to require such
qualification or is subject to no material liability or disability by
reason of failure to be so qualified in any such jurisdiction; each
of Parent and the Company has been duly qualified as a foreign
corporation for the transaction of business and is in good standing
under the laws of each jurisdiction in which it owns or leases
properties or conducts any business so as to require such
qualification or is subject to no material liability or disability by
reason of its failure to be so qualified in any such jurisdiction;
(ii) Parent and the Company and its subsidiaries have good
and marketable title in fee simple to all real property owned by them
in each case free and clear of all liens, encumbrances and defects
except such as are described in the Prospectus or such as do not
materially affect the value of such property and do not interfere
with the use made and proposed to be made of such property by Parent
and the Company and its subsidiaries; to such counsel's knowledge
neither Parent nor the Company nor any of its subsidiaries is in
default under any lease for real property or buildings held under
lease by Parent or the Company or its subsidiaries except for such
defaults that are not material and do not interfere with the use made
and proposed to be made of such property and buildings by Parent and
the Company and its subsidiaries; and the leases listed on Schedule
III hereto are the only real property leases to which Parent and the
Company and its subsidiaries are a party and are valid, subsisting
and enforceable as against Parent and the Company and its
subsidiaries (as the case may be) with such exceptions as are not
material and do not interfere with the use made and proposed to be
made of such property and buildings by Parent and the Company and its
subsidiaries and except that the enforceability of such leases is
subject to the effect of any applicable , insolvency, reorganization,
fraudulent conveyance or transfer, moratorium and similar laws
affecting creditors' rights generally and general equity principles
(regardless of whether enforcement is sought in a proceeding in
equity or at law) (in giving the opinion in this clause, such counsel
may state that no examination of record titles for the purpose of
such opinion has been made, and that they are relying upon a general
review of the titles of Parent and the Company and its subsidiaries,
upon opinions of local counsel and abstracts, reports and policies of
title companies rendered or issued at or subsequent to the time of
acquisition of such property by Parent or the Company or its
subsidiaries, upon opinions of counsel to the lessors of such
property and, in respect of matters of fact, upon certificates of
officers of Parent or the Company or its subsidiaries;
(iii) To such counsel's knowledge (a) neither Parent nor the
Company nor any of its subsidiaries has received any notice that any
default by Parent or the Company or any of its subsidiaries has
occurred and is continuing under any of the license agreements with
host store groups described or identified in the Prospectus to which
Parent or the Company or any of its subsidiaries are a party and (b)
no condition exists which could individually or in the aggregate
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reasonably be expected to result in the termination or nonrenewal of
any such license agreement, except that no opinion need be given with
respect to the Company's license agreement with Liberty House as to
the effect on such license agreement of the filing of a voluntary
petition by Liberty House under the Bankruptcy Code (as defined in
the Prospectus); and
(iv) To such counsel's knowledge, no legal proceedings are
pending or have been threatened against Parent or the Company or any
of its subsidiaries that are of a nature required to be disclosed in
the Prospectus which are not so disclosed therein;
(f) Dechert Price & Rhoads, French counsel to the Company,
shall have furnished to you their written opinion (a draft of such opinion is
attached as Annex II(e) hereto) (which opinion may be limited to the laws of
France and in giving such opinion French counsel may state that, insofar as
any opinions involve factual matters, it has relied, to the extent such
counsel deems proper, upon certificates of officers of the Company or its
subsidiaries and certificates of responsible public officials, copies of which
certificates will be provided to you upon delivery of such counsel's opinion),
dated the Time of Delivery, in form and substance as attached, to the effect
that:
(i) Sonab has been duly organized and is validly existing as
a societe en nom collectif in France; and
(ii) all of the issued equity interests of Sonab have been
duly authorized and validly created, are fully paid and
non-assessable, and are validly held of record directly or indirectly
by the Company, to the knowledge of such counsel, free of all liens,
encumbrances and defects, other than the pledge under the Company's
Revolving Credit Agreement;
With respect to all opinions provided for above in paragraphs (b) through (f) of
this Section 7 as to validity, binding effect and/or enforceability, any such
counsel may state that any such opinion as to enforceability is subject to the
effect of any applicable bankruptcy, insolvency, reorganization, fraudulent
conveyance or transfer, moratorium and other laws of general applicability
relating to or affecting creditors' rights and to general equity principles
(regardless of whether enforcement is sought in a proceeding in equity or at
law).
(g) On the date of the Prospectus at a time prior to the
execution of this Agreement, at 9:30 a.m., New York City time, on the
effective date of any post-effective amendment to the Registration Statement
filed subsequent to the date of this Agreement and also at each Time of
Delivery, Arthur Andersen LLP shall have furnished to you a letter or letters,
dated the respective dates of delivery thereof, in form and substance
satisfactory to you, to the effect set forth in Annex I hereto (the executed
copy of the letter delivered prior to the execution of this Agreement is
attached as Annex I(a) hereto and a draft of the form of letter to be
delivered on the effective date of any post-effective amendment to the
Registration Statement and as of each Time of Delivery is attached as Annex
I(b) hereto);
(h) (i) Neither Parent nor the Company nor any of its
subsidiaries shall have sustained since the date of the latest audited
financial statements included in the Prospectus any loss or interference with
its business from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any strike, boycott or similar labor dispute or
court or governmental action, order or decree, otherwise than as set forth or
contemplated in the Prospectus, and (ii) since the respective dates as of
which information is given in the Prospectus there shall not have been any
change in the capital stock or long-term debt of Parent or the Company or any
of its subsidiaries except for borrowings and repayments under the Revolving
Credit Agreement and the Gold Consignment Agreement (each as defined in the
Prospectus and as amended as described in the Prospectus), or any change, or
any development involving a prospective change, in or affecting the business,
operations, management, financial position or condition, current assets,
merchandise inventories, stockholders' equity or results of operations of
Parent and the Company and its subsidiaries taken as a whole, otherwise than
as set forth or contemplated in the Prospectus, the effect of which, in any
such case described in clause (i) or (ii), is in the judgment of Goldman,
Sachs & Co. on behalf of the Underwriters so material and adverse as to make
it impracticable or inadvisable to proceed with the public offering or the
delivery of the Securities on the terms and in the manner contemplated in the
Prospectus;
(i) On or after the date hereof (i) no downgrading shall
have occurred in the rating accorded the Company's or Parent's debt securities
by any "nationally recognized statistical rating organization", as that term
is defined by the Commission for purposes of Rule 436(g)(2) under the Act, and
(ii) no such organization shall have publicly announced that it has under
surveillance or review, with possible negative implications, its rating of any
of the Company's or Parent's debt securities;
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(j) On or after the date hereof there shall not have
occurred any of the following: (i) a suspension or material limitation in
trading in securities generally on the New York Stock Exchange or on NASDAQ;
(ii) a suspension or material limitation in trading in Parent's securities on
NASDAQ or in the Company's securities if then listed or quoted; (iii) a
general moratorium on commercial banking activities declared by either federal
or New York State authorities; or (iv) the outbreak or escalation of
hostilities involving the United States or the declaration by the United
States of a national emergency or war, if the effect of any such event
specified in this clause (iv) in the judgment of Goldman, Sachs & Co. on
behalf of the Underwriters makes it impracticable or inadvisable to proceed
with the public offering or the delivery of the Securities being delivered at
the Time of Delivery on the terms and in the manner contemplated in the
Prospectus;
(k) The Company shall have furnished or caused to be
furnished to you at the Time of Delivery certificates of officers of the
Company and Parent, respectively, reasonably satisfactory to you as to the
accuracy of the representations and warranties of the Company and Parent,
respectively, herein at and as of the Time of Delivery, as to the performance
by each of the Company and Parent, of all of their respective obligations
hereunder to be performed at or prior to the Time of Delivery, and as to such
other matters as you may reasonably request, and the Company and Parent shall
have furnished or caused to be furnished certificates as to the matters set
forth in subsections (a) and (h) of this Section; and
(l) The Company shall have complied with the provisions of
Section 5(c) hereof with respect to the furnishing of prospectuses on the New
York Business Day next succeeding the date of this Agreement;
8. (a) The Company and Parent, jointly and severally, will indemnify
and hold harmless each Underwriter against any losses, claims, damages or
liabilities, joint or several, to which such Underwriter may become subject,
under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact contained in
any Preliminary Prospectus, the Registration Statement or the Prospectus, or
any amendment or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
will reimburse each Underwriter for any legal or other expenses reasonably
incurred by such Underwriter in connection with investigating or defending any
such action or claim as such expenses are incurred; provided, however, that
the Company and Parent shall not be liable in any such case to the extent that
any such loss, claim, damage or liability arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission
made in any Preliminary Prospectus, the Registration Statement or the
Prospectus or any such amendment or supplement in reliance upon and in
conformity with written information furnished to the Company by any
Underwriter through Goldman, Sachs & Co. expressly for use therein.
(b) Each Underwriter severally will indemnify and hold
harmless the Company and Parent against any losses, claims, damages or
liabilities to which the Company or Parent may become subject, under the Act
or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon an untrue statement
or alleged untrue statement of a material fact contained in any Preliminary
Prospectus, the Registration Statement or the Prospectus, or any amendment or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in any Preliminary
Prospectus, the Registration Statement or the Prospectus or any such amendment
or supplement in reliance upon and in conformity with written information
furnished to the Company by such Underwriter through Goldman, Sachs & Co.
expressly for use therein; and will reimburse the Company and Parent for any
legal or other expenses reasonably incurred by the Company and Parent in
connection with investigating or defending any such action or claim as such
expenses are incurred.
(c) Promptly after receipt by an indemnified party under
subsection (a) or (b) above of notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to
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be made against the indemnifying party under such subsection, notify the
indemnifying party in writing of the commencement thereof; but the omission so
to notify the indemnifying party shall not relieve it from any liability which
it may have to any indemnified party otherwise than under such subsection. In
case any such action shall be brought against any indemnified party and it
shall notify the indemnifying party of the commencement thereof, the
indemnifying party shall be entitled to participate therein and, to the extent
that it shall wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, with counsel satisfactory to such
indemnified party (who shall not, except with the consent of the indemnified
party, be counsel to the indemnifying party), and, after notice from the
indemnifying party to such indemnified party of its election so to assume the
defense thereof, the indemnifying party shall not be liable to such
indemnified party under such subsection for any legal expenses of other
counsel or any other expenses, in each case subsequently incurred by such
indemnified party, in connection with the defense thereof other than
reasonable costs of investigation. No indemnifying party shall, without the
written consent of the indemnified party, which consent shall not be
unreasonably withheld, effect the settlement or compromise of, or consent to
the entry of any judgment with respect to, any pending or threatened action or
claim in respect of which indemnification or contribution may be sought
hereunder (whether or not the indemnified party is an actual or potential
party to such action or claim) unless such settlement, compromise or judgment
(i) includes an unconditional release of the indemnified party from all
liability arising out of such action or claim and (ii) does not include a
statement as to or an admission of fault, culpability or a failure to act, by
or on behalf of any indemnified party.
(d) If the indemnification provided for in this Section 8 is
unavailable to or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities
(or actions in respect thereof) in such proportion as is appropriate to
reflect the relative benefits received by the Company and Parent on the one
hand and the Underwriters on the other from the offering of the Securities.
If, however, the allocation provided by the immediately preceding sentence is
not permitted by applicable law or if the indemnified party failed to give the
notice required under subsection (c) above, then each indemnifying party shall
contribute to such amount paid or payable by such indemnified party in such
proportion as is appropriate to reflect not only such relative benefits but
also the relative fault of the Company and Parent on the one hand and the
Underwriters on the other in connection with the statements or omissions which
resulted in such losses, claims, damages or liabilities (or actions in respect
thereof), as well as any other relevant equitable considerations. The relative
benefits received by the Company and Parent on the one hand and the
Underwriters on the other shall be deemed to be in the same proportion as the
total net proceeds from the offering (before deducting expenses) received by
the Company bear to the total underwriting discounts and commissions received
by the Underwriters, in each case as set forth in the table on the cover page
of the Prospectus. The relative fault shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company and Parent on the one hand or
the Underwriters on the other and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission. The Company, Parent and the Underwriters agree that it would not be
just and equitable if contributions pursuant to this subsection (d) were
determined by pro rata allocation (even if the Underwriters were treated as
one entity for such purpose) or by any other method of allocation which does
not take account of the equitable considerations referred to above in this
subsection (d). The amount paid or payable by an indemnified party as a result
of the losses, claims, damages or liabilities (or actions in respect thereof)
referred to above in this subsection (d) shall be deemed to include any legal
or other expenses reasonably incurred by such indemnified party in connection
with investigating or defending any such action or claim. Notwithstanding the
provisions of this subsection (d), no Underwriter shall be required to
contribute any amount in excess of the amount by which the total price at
which the Securities underwritten by it and distributed to the public were
offered to the public exceeds the amount of any damages which such Underwriter
has otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations in this subsection (d) to
contribute are several in proportion to their respective underwriting
obligations and not joint.
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(e) The obligations of the Company and Parent under this
Section 8 shall be in addition to any liability which the Company and Parent
may otherwise have and shall extend, upon the same terms and conditions, to
each person, if any, who controls any Underwriter within the meaning of the
Act; and the obligations of the Underwriters under this Section 8 shall be in
addition to any liability which the respective Underwriters may otherwise have
and shall extend, upon the same terms and conditions, to each officer and
director of the Company and Parent and to each person, if any, who controls
the Company and Parent within the meaning of the Act.
9. (a) If any Underwriter shall default in its obligation to purchase
the Securities which it has agreed to purchase hereunder at a Time of
Delivery, you may in your discretion arrange for you or another party or other
parties to purchase such Securities on the terms contained herein. If within
thirty-six hours after such default by any Underwriter you do not arrange for
the purchase of such Securities, then the Company shall be entitled to a
further period of thirty-six hours within which to procure another party or
other parties satisfactory to you to purchase such Securities on such terms.
In the event that, within the respective prescribed periods, you notify the
Company that you have so arranged for the purchase of such Securities, or the
Company notify you that they have so arranged for the purchase of such
Securities, you or the Company shall have the right to postpone the Time of
Delivery for a period of not more than seven days, in order to effect whatever
changes may thereby be made necessary in the Registration Statement or the
Prospectus, or in any other documents or arrangements, and the Company agrees
to file promptly any amendments to the Registration Statement or the
Prospectus which in your opinion may thereby be made necessary. The term
"Underwriter" as used in this Agreement shall include any person substituted
under this Section with like effect as if such person had originally been a
party to this Agreement with respect to such Securities.
(b) If, after giving effect to any arrangements for the
purchase of the Securities of a defaulting Underwriter or Underwriters by you
and the Company as provided in subsection (a) above, the aggregate number of
such Securities which remains unpurchased does not exceed one-eleventh of the
aggregate number of all the Securities to be purchased at the Time of
Delivery, then the Company shall have the right to require each non-defaulting
Underwriter to purchase the number of shares which such Underwriter agreed to
purchase hereunder at the Time of Delivery and, in addition, to require each
non-defaulting Underwriter to purchase its pro rata share (based on the number
of Securities which such Underwriter agreed to purchase hereunder) of the
Securities of such defaulting Underwriter or Underwriters for which such
arrangements have not been made; but nothing herein shall relieve a defaulting
Underwriter from liability for its default.
(c) If, after giving effect to any arrangements for the
purchase of the Securities of a defaulting Underwriter or Underwriters by you
and the Company as provided in subsection (a) above, the aggregate number of
such Securities which remains unpurchased exceeds one-eleventh of the
aggregate number of all the Securities to be purchased at the Time of
Delivery, or if the Company shall not exercise the right described in
subsection (b) above to require non-defaulting Underwriters to purchase
Securities of a defaulting Underwriter or Underwriters, then this Agreement
shall thereupon terminate, without liability on the part of any non-defaulting
Underwriter or the Company or Parent, except for the expenses to be borne by
the Company and the Underwriters as provided in Section 6 hereof and the
indemnity and contribution agreements in Section 8 hereof; but nothing herein
shall relieve a defaulting Underwriter from liability for its default.
10. The respective indemnities, agreements, representations,
warranties and other statements of the Company, Parent and the several
Underwriters, as set forth in this Agreement or made by or on behalf of them,
respectively, pursuant to this Agreement, shall remain in full force and
effect, regardless of any investigation (or any statement as to the results
thereof) made by or on behalf of any Underwriter or any controlling person of
any Underwriter, or the Company or Parent or any officer or director or
controlling person of the Company or Parent, and shall survive delivery of and
payment for the Securities.
11. If this Agreement shall be terminated pursuant to Section 9
hereof, the Company shall not then be under any liability to any Underwriter
except as provided in Sections 6 and 8 hereof and Parent shall not then be
under any liability to any Underwriter except as provided in Section 8 hereof;
but, if for any
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other reason, any Securities are not delivered by or on behalf of the Company
as provided herein, the Company will reimburse the Underwriters through you
for all out-of-pocket expenses approved in writing by you, including fees and
disbursements of counsel, reasonably incurred by the Underwriters in making
preparations for the purchase, sale and delivery of the Securities not so
delivered, but the Company shall then be under no further liability to any
Underwriter except as provided in Sections 6 and 8 hereof and Parent shall
then be under no further liability to any Underwriter except as provided in
Section 8 hereof.
12. In all dealings hereunder, Goldman, Sachs & Co. shall act on
behalf of each of the Underwriters, and the parties hereto shall be entitled
to act and rely upon any statement, request, notice or agreement on behalf of
any Underwriter made or given by you jointly or by Goldman, Sachs & Co. on
behalf of you as the Underwriters.
All statements, requests, notices and agreements hereunder shall be
in writing, and if to the Underwriters shall be delivered or sent by mail,
telex or facsimile transmission to the Underwriters in care of Goldman, Sachs
& Co., 85 Broad Street, New York, New York 10004, Attention: Registration
Department; and if to the Company or to Parent shall be delivered or sent by
mail to the address of the Company set forth in the Registration Statement,
Attention: Secretary; provided, however, that any notice to an Underwriter
pursuant to Section 8(d) hereof shall be delivered or sent by mail, telex or
facsimile transmission to such Underwriter at its address set forth in its
Underwriters' Questionnaire, or telex constituting such Questionnaire, which
address will be supplied to the Company. Any such statements, requests,
notices or agreements shall take effect upon receipt thereof.
13. This Agreement shall be binding upon, and inure solely to the
benefit of, the Underwriters, the Company and Parent and, to the extent
provided in Sections 8 and 10 hereof, the officers, directors and controlling
persons of the Company and Parent and each person who controls any
Underwriter, and their respective heirs, executors, administrators, successors
and assigns, and no other person shall acquire or have any right under or by
virtue of this Agreement. No purchaser of any of the Securities from any
Underwriter shall be deemed a successor or assign by reason merely of such
purchase.
14. Time shall be of the essence of this Agreement. As used herein,
the term "business day" shall mean any day when the Commission's office in
Washington, D.C. is open for business.
15. This Agreement shall be governed by and construed in accordance
with the laws of the State of New York.
16. This Agreement may be executed by any one or more of the parties
hereto in any number of counterparts, each of which shall be deemed to be an
original, but all such counterparts shall together constitute one and the same
instrument.
16
<PAGE>
If the foregoing is in accordance with your understanding, please
sign and return to us ten counterparts hereof, and upon the acceptance hereof
by the Underwriters, this letter and such acceptance hereof shall constitute a
binding agreement among each of the Underwriters and the Company and Parent.
It is understood that your acceptance of this letter on behalf of each of the
Underwriters is pursuant to the authority set forth in a form of Agreement
Among Underwriters, the form of which shall be submitted to the Company for
examination upon request, but without warranty on your part as to the
authority of the signers thereof.
Very truly yours,
Finlay Fine Jewelry Corporation
By:
--------------------------------------
Name: Barry D. Scheckner
Title: Senior Vice President and
Chief Financial Officer
Finlay Enterprises, Inc.
By:
--------------------------------------
Name: Barry D. Scheckner
Title: Senior Vice President and
Chief Financial Officer
Accepted as of the date hereof:
Goldman, Sachs & Co.
Donaldson, Lufkin & Jenrette
Securities Corporation
NationsBanc Montgomery Securities LLC
By:
------------------------------------
(Goldman, Sachs & Co.)
On behalf of each of the Underwriters
17
<PAGE>
SCHEDULE I
<TABLE>
<CAPTION>
Principal Amount
of Securities to be
Underwriter Purchased
----------- --------------------
<S> <C>
Goldman, Sachs & Co............................................................
Donaldson, Lufkin & Jenrette
Securities Corporation.......................................................
NationsBanc Montgomery Securities LLC..........................................
-------------
Total............................................................ $150,000,000
=============
18
<PAGE>
SCHEDULE III
New York Leases
Section 7(e)(ii)
1. Lease Agreement dated as of August 27, 1993 between F.H.E.A. Associates
and the Company
2. Lease Agreement dated as of August 19, 1993 between 529 Fifth Company and
the Company, as amended
3. Lease Agreement dated as of August 19, 1993 between 521 Fifth Avenue
Associates and the Company, as amended
4. Lease Agreement dated as of June 17, 1986 between 521 Fifth Avenue
Associates and S&L Acquisition Company L.P., as amended
5. Lease Agreement dated as of May 1, 1995 between Alvin Jacobson Realty and
the Company
6. Lease Agreement dated as of October 4, 1994 between Tanger Properties
Limited Partnership and the Company, as amended
7. Lease Agreement dated May 2, 1996 between Horizon/Glen Outlet Centers
Limited Partnership and the Company
19
<PAGE>
ANNEX I
DESCRIPTION OF COMFORT LETTER
Pursuant to Section 7(g) of the Underwriting Agreement, the
accountants shall furnish letters to the Underwriters to the effect that:
(i) They are independent certified public accountants
with respect to the Company and its subsidiaries within the meaning
of the Act and the applicable published rules and regulations
thereunder;
(ii) In their opinion, the financial statements and
any supplementary financial information and schedules examined by
them (and, if applicable, financial forecasts and/or pro forma
financial information, on which they have performed more limited
procedures as specified in such letter, not constituting an
examination in accordance with generally accepted auditing standards)
and included in the Prospectus or the Registration Statement comply
as to form in all material respects (or, in the case of financial
forecasts and/or pro forma financial information, on the basis of
such limited procedures, nothing came to their attention that cause
them to believe that such financial forecasts and/or pro forma
financial information do not comply as to form in all material
respects) with the applicable accounting requirements of the Act and
the related published rules and regulations thereunder; and, if
applicable, they have made a review in accordance with standards
established by the American Institute of Certified Public Accountants
of the unaudited consolidated interim financial statements, selected
financial data, pro forma financial information, financial forecasts
and/or condensed financial statements derived from audited financial
statements of the Company for the periods specified in such letter,
as indicated in their reports thereon, copies of which have been
separately furnished to the Underwriters and are attached hereto;
(iii) If applicable, they have made a review in
accordance with standards established by the American Institute of
Certified Public Accountants of the unaudited condensed consolidated
statements of income, consolidated balance sheets and consolidated
statements of cash flows included in the Prospectus as indicated in
their reports thereon, copies of which have been separately furnished
to the Underwriters and are attached hereto, and on the basis of
specified procedures including inquiries of officials of the Company
who have responsibility for financial and accounting matters
regarding whether the unaudited condensed consolidated financial
statements referred to in paragraph (vi)(A)(i) below comply as to
form in all material respects with the applicable accounting
requirements of the Act and the Exchange Act and the related
published rules and regulations, nothing came to their attention that
cause them to believe that the unaudited condensed consolidated
financial statements do not comply as to form in all material
respects with the applicable accounting requirements of the Act and
the Exchange Act and the related published rules and regulations;
(iv) The unaudited selected financial information with
respect to the consolidated results of operations and financial
position of the Company for the five most recent fiscal years
included in the Prospectus agrees with the corresponding amounts
(after restatements where applicable) in the audited consolidated
financial statements for such five fiscal years which were included
or incorporated by reference in the Company's Annual Reports on Form
10-K for such fiscal years;
(v) They have compared the information in the
Prospectus under selected captions with the disclosure requirements
of Regulation S-K and on the basis of limited procedures specified in
such letter nothing came to their attention as a result of the
foregoing procedures that caused them to believe that this
information does not conform in all material respects with the
disclosure requirements of Items 301, 302 (if applicable), 402 and
503(d) (if applicable), respectively, of Regulation S-K;
<PAGE>
(vi) They have -
(a) Inquired of certain officials of the
Company who have responsibility for financial and accounting
matters as to (i) whether all significant assumptions
regarding the business combinations and financing
transactions had been reflected in the pro forma
adjustments, and (ii) whether the unaudited pro forma
condensed consolidated financial statements referred to
(vi)(a) comply as to form, in all material respects, with
the applicable accounting requirements of rule 11-02 of
Regulation S-X; and that those officials stated, in response
to such inquiries, that all significant assumptions
regarding the business combinations and financing
transactions had been reflected in the pro forma adjustments
and that the unaudited pro forma condensed consolidated
financial statements referred to in (vi)(a) comply as to
form, in all material respects, with the applicable
accounting requirements of rule 11-02 of Regulation S-X.
(b) Compared and/or recomputed the historical
financial information for the Company included on pages [ ]
and [ ] in the Registration Statement with the applicable
historical financial information for the Company on pages
F-[ ] and F-[ ], respectively, and found them to be in
agreement.
(c) Proved the arithmetic accuracy of the
application of the pro forma adjustments to the historical
amounts in the unaudited pro forma condensed consolidated
financial statements.
(vii) On the basis of limited procedures, not
constituting an examination in accordance with generally accepted
auditing standards, consisting of a reading of the unaudited
financial statements and other information referred to below, a
reading of the latest available interim financial statements of the
Company and its subsidiaries, inspection of the minute books of the
Company and its subsidiaries since the date of the latest audited
financial statements included in the Prospectus, inquiries of
officials of the Company and its subsidiaries responsible for
financial and accounting matters and such other inquiries and
procedures as may be specified in such letter, nothing came to their
attention that caused them to believe that:
(a)(i) the unaudited consolidated statements of
operations, consolidated balance sheets and consolidated
statements of cash flows included in the Prospectus do not
comply as to form in all material respects with the
applicable accounting requirements of the Act and the
related published rules and regulations, or (ii) any
material modifications should be made to the unaudited
condensed consolidated statements of operations,
consolidated balance sheets and consolidated statements of
cash flows included in the Prospectus for them to be in
conformity with generally accepted accounting principles;
(b) any other unaudited statement of operations
data and balance sheet items included in the Prospectus do
not agree with the corresponding items in the unaudited
consolidated financial statements from which such data and
items were derived, and any such unaudited data and items
were not determined on a basis substantially consistent with
the basis for the corresponding amounts in the audited
consolidated financial statements included in the
Prospectus;
(c) the unaudited financial statements which were
not included in the Prospectus but from which were derived
any unaudited condensed financial statements referred to in
Clause (A) and any unaudited statement of operations data
and balance sheet items included in the Prospectus and
referred to in Clause (B) were not determined on a basis
substantially consistent with the basis for the audited
consolidated financial statements included in the
Prospectus;
(d) any unaudited pro forma consolidated condensed
financial information included in the Prospectus do not
comply as to form in all material respects with the
applicable
I-2
<PAGE>
accounting requirements of the Act and the published rules
and regulations thereunder or the pro forma adjustments have
not been properly applied to the historical amounts in the
compilation of that information;
(e) as of a specified date not more than five days
prior to the date of such letter, there have been any
changes in the consolidated capital stock (other than
issuances of capital stock upon exercise of options and
stock appreciation rights, upon earn-outs of performance
shares and upon conversions of convertible securities, in
each case which were outstanding on the date of the latest
financial statements included in the Prospectus) or any
increase in the consolidated long-term debt of the Company
and its subsidiaries, or any decreases in consolidated net
current assets or stockholders' equity or other items
specified by the Underwriters, or any increases in any items
specified by the Underwriters, in each case as compared with
amounts shown in the latest balance sheet included in the
Prospectus, except in each case for changes, increases or
decreases which the Prospectus discloses have occurred or
may occur or which are described in such letter; and
(f) for the period from the date of the latest
financial statements included in the Prospectus to the
specified date referred to in Clause (E) there were any
decreases in consolidated net revenues or operating profit
or the total or per share amounts of consolidated net income
or other items specified by the Underwriters, or any
increases in any items specified by the Underwriters, in
each case as compared with the comparable period of the
preceding year and with any other period of corresponding
length specified by the Underwriters, except in each case
for decreases or increases which the Prospectus discloses
have occurred or may occur or which are described in such
letter; and
(viii) In addition to the examination referred to in
their report(s) included in the Prospectus and the limited
procedures, inspection of minute books, inquiries and other
procedures referred to in paragraphs (iii) and (vi) above, they have
carried out certain specified procedures, not constituting an
examination in accordance with generally accepted auditing standards,
with respect to certain amounts, percentages and financial
information specified by the Underwriters, which are derived from the
general accounting records of the Company and its subsidiaries, which
appear in the Prospectus, or in Part II of, or in exhibits and
schedules to, the Registration Statement specified by the
Underwriters, and have compared certain of such amounts, percentages
and financial information with the accounting records of the Company
and its subsidiaries and have found them to be in agreement.
I-3
</TABLE>
<PAGE>
Exhibit 4.5
JDRP DRAFT 4/15/98
- --------------------------------------------------------------------------------
FINLAY ENTERPRISES, INC.
% SENIOR DEBENTURES DUE , 2008
INDENTURE
------------------------------------
Dated as of April __, 1998
------------------------------------
Marine Midland Bank
Trustee
- --------------------------------------------------------------------------------
<PAGE>
CROSS-REFERENCE TABLE*
<TABLE>
<CAPTION>
Trust Indenture Act Section Indenture Section
<S> <C>
310(a)(1)..................................................................................................... 7.10
(a)(2)......................................................................................................7.10
(a)(3)......................................................................................................N.A.
(a)(4)......................................................................................................N.A.
(a)(5)......................................................................................................7.l0
(b).........................................................................................................7.10
(c).........................................................................................................N.A.
311(a).........................................................................................................7.11
(b).........................................................................................................7.11
(c).........................................................................................................N.A.
312(a).........................................................................................................2.05
(b)........................................................................................................12.03
(c)........................................................................................................12.03
313(a).........................................................................................................7.06
(b)(1).....................................................................................................10.04
(b)(2)................................................................................................7.06; 7.07
(c)..................................................................................................7.06; 12.02
(d).........................................................................................................7.06
314(a)............................................................................................4.03; 4.04; 12.02
(b)........................................................................................................10.03
(c)(1).....................................................................................................12.04
(c)(2).....................................................................................................12.04
(c)(3) .....................................................................................................N.A.
(d)..........................................................................................10.03; 10.04; 10.05
(e)........................................................................................................12.05
(f).........................................................................................................N.A.
315(a).........................................................................................................7.01
(b) .................................................................................................7.05, 12.02
(c).........................................................................................................7.01
(d).........................................................................................................7.01
(e).........................................................................................................6.11
316(a)(last sentence)..........................................................................................2.09
(a)(1)(A)...................................................................................................6.05
(a)(1)(B)...................................................................................................6.04
(a)(2)......................................................................................................N.A.
(b).........................................................................................................6.07
(c).........................................................................................................2.13
317(a)(1)......................................................................................................6.08
(a)(2)......................................................................................................6.09
(b).........................................................................................................2.04
318(a)........................................................................................................12.01
(b).........................................................................................................N.A.
(c)........................................................................................................12.0l
</TABLE>
N.A. means not applicable.
*This Cross-Reference Table is not part of the Indenture.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. DEFINITIONS............................................................................1
SECTION 1.02. OTHER DEFINITIONS.....................................................................15
SECTION 1.03. TERMS OF TIA..........................................................................16
SECTION 1.04. RULES OF CONSTRUCTION.................................................................16
ARTICLE 2
THE DEBENTURES
SECTION 2.01. FORM AND DATING.......................................................................17
SECTION 2.02. EXECUTION AND AUTHENTICATION..........................................................17
SECTION 2.03. REGISTRAR AND PAYING AGENT............................................................18
SECTION 2.04. PAYING AGENT TO HOLD MONEY IN TRUST...................................................18
SECTION 2.05. HOLDER LISTS..........................................................................19
SECTION 2.06. TRANSFER AND EXCHANGE.................................................................19
SECTION 2.07. REPLACEMENT DEBENTURES................................................................21
SECTION 2.08. OUTSTANDING DEBENTURES................................................................21
SECTION 2.09. TREASURY DEBENTURES...................................................................22
SECTION 2.10. TEMPORARY DEBENTURES..................................................................22
SECTION 2.11. CANCELLATION..........................................................................22
SECTION 2.12. DEFAULTED INTEREST....................................................................23
SECTION 2.13. RECORD DATE...........................................................................23
SECTION 2.14. CUSIP NUMBER..........................................................................23
ARTICLE 3
REDEMPTION AND PREPAYMENT
SECTION 3.01. NOTICES TO TRUSTEE....................................................................23
SECTION 3.02. SELECTION OF DEBENTURES TO BE REDEEMED................................................24
SECTION 3.03. NOTICE OF REDEMPTION..................................................................24
SECTION 3.04. EFFECT OF NOTICE OF REDEMPTION........................................................25
SECTION 3.05. DEPOSIT OF REDEMPTION PRICE...........................................................25
SECTION 3.06. DEBENTURES REDEEMED IN PART...........................................................26
SECTION 3.07. OPTIONAL REDEMPTION...................................................................26
SECTION 3.08. MANDATORY REDEMPTION..................................................................27
SECTION 3.09. OFFER TO PURCHASE BY APPLICATION OF
EXCESS PROCEEDS.......................................................................27
ARTICLE 4
COVENANTS
</TABLE>
(i)
<PAGE>
<TABLE>
<S> <C>
SECTION 4.01. PAYMENT OF DEBENTURES.................................................................29
SECTION 4.02. MAINTENANCE OF OFFICE OR AGENCY.......................................................29
SECTION 4.03. REPORTS...............................................................................29
SECTION 4.04. COMPLIANCE CERTIFICATE................................................................30
SECTION 4.05. TAXES.................................................................................31
SECTION 4.06. STAY, EXTENSION AND USURY LAWS........................................................31
SECTION 4.07. RESTRICTED PAYMENTS...................................................................31
SECTION 4.08. DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING
SUBSIDIARIES..........................................................................34
SECTION 4.09. INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF PREFERRED
STOCK.................................................................................35
SECTION 4.10. ASSET SALES...........................................................................38
SECTION 4.11. EQUITY INTERESTS OF WHOLLY OWNED SUBSIDIARIES.........................................39
SECTION 4.12. TRANSACTIONS WITH AFFILIATES..........................................................39
SECTION 4.13. LIENS.................................................................................40
SECTION 4.14. CORPORATE EXISTENCE...................................................................40
SECTION 4.15. OFFER TO REPURCHASE UPON CHANGE OF CONTROL............................................40
SECTION 4.16. PAYMENTS FOR CONSENT..................................................................41
ARTICLE 5
SUCCESSORS
SECTION 5.01. MERGER, CONSOLIDATION, OR SALE OF ASSETS..............................................42
SECTION 5.02. SUCCESSOR CORPORATION SUBSTITUTED.....................................................42
ARTICLE 6
DEFAULTS AND REMEDIES
SECTION 6.01. EVENTS OF DEFAULT.....................................................................43
SECTION 6.02. ACCELERATION..........................................................................45
SECTION 6.03. OTHER REMEDIES........................................................................46
SECTION 6.04. WAIVER OF PAST DEFAULTS...............................................................46
SECTION 6.05. CONTROL BY MAJORITY...................................................................47
SECTION 6.06. LIMITATION ON SUITS...................................................................47
SECTION 6.07. RIGHTS OF HOLDERS OF DEBENTURES TO
RECEIVE PAYMENT.......................................................................47
SECTION 6.08. COLLECTION SUIT BY TRUSTEE............................................................48
SECTION 6.09. TRUSTEE MAY FILE PROOFS OF CLAIM......................................................48
SECTION 6.10. PRIORITIES............................................................................48
SECTION 6.11. UNDERTAKING FOR COSTS.................................................................49
ARTICLE 7
TRUSTEE
SECTION 7.01. DUTIES OF TRUSTEE.....................................................................49
SECTION 7.02. RIGHTS OF TRUSTEE.....................................................................50
SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE..........................................................51
</TABLE>
(ii)
<PAGE>
<TABLE>
<S> <C>
SECTION 7.04. TRUSTEE'S DISCLAIMER..................................................................51
SECTION 7.05. NOTICE OF DEFAULTS....................................................................51
SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS OF THE DEBENTURES.......................................51
SECTION 7.07. COMPENSATION AND INDEMNITY............................................................52
SECTION 7.08. REPLACEMENT OF TRUSTEE................................................................52
SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER, ETC......................................................53
SECTION 7.10. ELIGIBILITY; DISQUALIFICATION.........................................................54
SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST
COMPANY...............................................................................54
ARTICLE 8
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
SECTION 8.01. OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT
DEFEASANCE...........................................................................54
SECTION 8.02. LEGAL DEFEASANCE AND DISCHARGE........................................................54
SECTION 8.03. COVENANT DEFEASANCE...................................................................55
SECTION 8.04. CONDITIONS TO LEGAL OR COVENANT DEFEASANCE............................................55
SECTION 8.05. DEPOSITED MONEY AND GOVERNMENT SECURITIES TO BE HELD
IN TRUST; OTHER MISCELLANEOUS PROVISIONS..............................................57
SECTION 8.06. REPAYMENT TO COMPANY..................................................................57
SECTION 8.07. REINSTATEMENT.........................................................................57
ARTICLE 9
AMENDMENT, SUPPLEMENT AND WAIVER
SECTION 9.01. WITHOUT CONSENT OF HOLDERS OF DEBENTURES..............................................58
SECTION 9.02. WITH CONSENT OF HOLDERS OF DEBENTURES.................................................59
SECTION 9.03. COMPLIANCE WITH TRUST INDENTURE ACT...................................................60
SECTION 9.04. REVOCATION AND EFFECT OF CONSENTS.....................................................60
SECTION 9.05. NOTATION ON OR EXCHANGE OF DEBENTURES.................................................60
SECTION 9.06. TRUSTEE TO SIGN AMENDMENTS, ETC.......................................................61
ARTICLE 10
COLLATERAL AND SECURITY
SECTION 10.01. SECURITY AND PLEDGE AGREEMENT.........................................................61
SECTION 10.02. TRANSFERS OF INTELLECTUAL PROPERTY AND
SIMILAR ASSETS........................................................................62
SECTION 10.03. RECORDING AND OPINIONS................................................................62
SECTION 10.04. RELEASE OF COLLATERAL.................................................................63
SECTION 10.05. CERTIFICATES OF THE COMPANY...........................................................63
SECTION 10.06. CERTIFICATES OF THE TRUSTEE...........................................................64
SECTION 10.07. AUTHORIZATION OF ACTIONS TO BE TAKEN BY THE TRUSTEE
UNDER THE SECURITY AND PLEDGE AGREEMENT...............................................64
SECTION 10.08. AUTHORIZATION OF RECEIPT OF FUNDS BY THE TRUSTEE UNDER
THE SECURITY AND PLEDGE AGREEMENT.....................................................64
</TABLE>
(iii)
<PAGE>
<TABLE>
<S> <C>
SECTION 10.09. TERMINATION OF SECURITY INTERESTS.....................................................64
ARTICLE 11
SUBSIDIARY GUARANTEES
SECTION 11.01. APPLICATION...........................................................................65
SECTION 11.02. GUARANTEE.............................................................................65
SECTION 11.03. LIMITATION ON GUARANTOR LIABILITY.....................................................66
SECTION 11.04. EXECUTION AND DELIVERY OF SUBSIDIARY GUARANTEE........................................67
SECTION 11.05. GUARANTORS MAY CONSOLIDATE, ETC., ON
CERTAIN TERMS.........................................................................67
SECTION 11.06. RELEASES FOLLOWING SALE OF ASSETS.....................................................67
ARTICLE 12
MISCELLANEOUS
SECTION 12.01. TRUST INDENTURE ACT CONTROLS..........................................................68
SECTION 12.02. NOTICES...............................................................................68
SECTION 12.03. COMMUNICATION BY HOLDERS OF DEBENTURES WITH
OTHER HOLDERS OF DEBENTURES...........................................................69
SECTION 12.04. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT....................................69
SECTION 12.05. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.........................................70
SECTION 12.06. RULES BY TRUSTEE AND AGENTS...........................................................70
SECTION 12.07. NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES
AND STOCKHOLDERS......................................................................70
SECTION 12.08. GOVERNING LAW.........................................................................70
SECTION 12.09. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.........................................71
SECTION 12.10. SUCCESSORS............................................................................71
SECTION 12.11. SEVERABILITY..........................................................................71
SECTION 12.12. COUNTERPART ORIGINALS.................................................................71
SECTION 12.13. TABLE OF CONTENTS, HEADINGS, ETC......................................................71
EXHIBIT A Form of Debenture
EXHIBIT B Form of Security and Pledge Agreement
EXHIBIT C Form of License Agreement
EXHIBIT D Form of Subsidiary Guarantee
EXHIBIT E Form of Supplemental Indenture
EXHIBIT F Form of Subsidiary Intercompany Note
</TABLE>
(iv)
<PAGE>
INDENTURE dated as of April __, 1998 between Finlay
Enterprises, Inc., a Delaware corporation (the "Company"), and Marine Midland
Bank, as trustee (the "Trustee").
The Company and the Trustee agree as follows for the benefit
of each other and for the equal and ratable benefit of the Holders of the %
Debentures due , 2008 (the "Debentures").
ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. DEFINITIONS.
"Acquired Debt" means, with respect to any specified Person: (i)
Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Subsidiary of such specified Person,
including, without limitation, Indebtedness incurred in connection with, or in
contemplation of, such other Person merging with or into or becoming a
Subsidiary of such specified Person; (ii) Indebtedness secured by a Lien
encumbering any asset acquired by such specified Person; and (iii)
Indebtedness incurred by such Person in connection with the acquisition of
assets from another Person, including Indebtedness incurred by such other
Person in connection with, or in contemplation of, such specified Person
acquiring such assets.
"Affiliate" of any specified Person means any other Person directly
or indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling", "controlled
by" and "under common control with"), as used with respect to any Person,
shall mean the possession, directly or indirectly, of the power to direct or
cause the direction of the management or policies of such Person, whether
through the ownership of voting securities, by agreement or otherwise;
provided that beneficial ownership of 10% or more of the voting securities of
a Person shall be deemed to be control.
"Agent" means any Paying Agent, Registrar or co-registrar.
"Applicable Procedures" means, with respect to any transfer or
exchange of or for beneficial interests in any Global Debenture, the rules and
procedures of the Depositary, that apply to such transfer or exchange.
"Asset Sale" means (i) the sale, lease, conveyance or other
disposition of any assets (including, without limitation, by way of a sale and
leaseback) other than sales of inventory or accounts receivable in the
ordinary course of business consistent with past practices (provided that the
sale, lease, conveyance or other disposition of all or substantially all of
the assets of the Company and its Subsidiaries taken as a whole will be
governed by the provisions of Section 4.15 hereof or the provisions of Article
5 hereof and not by the provisions of Section 4.10 hereof); and (ii) the issue
or sale by the Company or any of its Subsidiaries of Equity Interests of any
of the Company's Subsidiaries, in the case of either clause (i) or (ii),
whether in a single transaction or a series of related transactions (a) that
have a fair market value in excess of $2.0 million or (b) for net proceeds in
excess of $2.0 million. Notwithstanding the foregoing: (i) a transfer of
assets by the Company to a Wholly Owned Subsidiary of the Company or by a
Wholly Owned Subsidiary of the Company to
1
<PAGE>
the Company or to another Wholly Owned Subsidiary of the Company; (ii) an
issuance of Equity Interests by a Wholly Owned Subsidiary of the Company to
the Company or to another Wholly Owned Subsidiary of the Company; (iii) a
Restricted Payment that is permitted by the provisions of Section 4.07 hereof;
(iv) any disposition of assets of the Company or any Subsidiary of the Company
in connection with the Security and Pledge Agreement; (v) any sale of any item
pursuant to the Gold Consignment Agreement or any item deemed to be
Consignment Inventory immediately prior to such sale; (vi) any sale and
leaseback of any assets within 60 calendar days after the acquisition of such
assets; (vii) any sale, conveyance or other disposition, without recourse, of
Receivables to a Receivables Subsidiary, provided that cash or Cash
Equivalents in an amount at least equal to the fair market value thereof is
received in consideration thereof and, provided further, that any such
transfer to an entity that is not a Receivables Subsidiary or that ceases to
be a Receivables Subsidiary shall not be exempted from the definition of
"Asset Sale" by reason of this clause (vii); and (viii) sales of surplus and
other property or equipment that has become worn-out, obsolete, damaged or
otherwise unsuitable for use in connection with the business of the Company or
any Subsidiary of the Company, as the case may be, will not be deemed to be
Asset Sales. Any Asset Sale that occurs by reason of an entity ceasing to be a
Receivables Subsidiary as contemplated in clause (vii) above shall be deemed
to have been made as of the date of such cessation.
"Attributable Debt" in respect of a sale and leaseback transaction
means, at the time of determination, the present value (discounted at the rate
of interest implicit in such transaction, determined in accordance with GAAP)
of the obligation of the lessee for net rental payments during the remaining
term of the lease included in such sale and leaseback transaction (including
any period for which such lease has been extended or may, at the option of the
lessor, be extended).
"Bankruptcy Law" means Title 11, U.S. Code or any similar federal or
state law for the relief of debtors.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and
Friday, other than a day on which banking institutions in The City of New York
or at a place of payment are authorized by law, legislation or executive order
to remain closed. If a payment date is a day other than a Business Day at a
place of payment, payment may be made at that place on the next succeeding
Business Day, and no interest shall accrue on such payment for the intervening
period.
"Capital Lease Obligation" means, at the time any determination thereof
is to be made, the amount of the liability in respect of a capital lease that
would at such time be required to be capitalized on a balance sheet in
accordance with GAAP.
"Capital Stock" means (i) in the case of a corporation, corporate
stock; (ii) in the case of an association or business entity, any and all
shares, interests, participations, rights or other equivalents (however
designated) of corporate stock; (iii) in the case of a partnership, partnership
interests (whether general or limited); and (iv) any other interest or
participation that confers on a Person the right to receive a share of the
profits and losses of, or distributions of assets of, the issuing Person.
"Cash Equivalents" means (i) United States dollars; (ii) securities
issued or directly and fully guaranteed or insured by the United States
government or any agency or instrumentality thereof having maturities of not
more than one year from the date of acquisition; (iii) certificates of deposit
and Eurodollar time deposits with maturities of six months or less from the
date of acquisition,
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bankers' acceptances with maturities not exceeding six months and overnight bank
deposits, in each case with any domestic commercial bank having capital and
surplus in excess of $500.0 million and a Thompson Bank Watch Rating of "B" or
better; (iv) repurchase obligations with a term of not more than 30 days for
underlying securities of the types described in clauses (ii) and (iii) above
entered into with any financial institution meeting the qualifications specified
in clause (iii) above; and (v) commercial paper having one of the two highest
ratings obtainable from Moody's Investors Service, Inc. or Standard & Poor's
Corporation and in each case maturing within six months after the date of
acquisition.
"Change of Control" means the occurrence of any of the following: (i)
the sale, lease, transfer, conveyance or other disposition (other than by way
of merger or consolidation), in one or a series of related transactions, of
all or substantially all of the assets of the Company and its Subsidiaries
taken as a whole to any "person" (as such term is used in Section 13(d)(3) of
the Exchange Act) other than the Principals or their Related Parties (as
defined below); (ii) the adoption of a plan relating to the liquidation or
dissolution of the Company or Finlay Enterprises; (iii) the consummation of
any transaction (including, without limitation, any merger or consolidation)
the result of which is that any "person" (as defined above), other than the
Principals and their Related Parties, becomes the "beneficial owner" (as such
term is defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act), directly
or indirectly, of more than 50% of the voting power of the Company; (iv) the
first day on which a majority of the members of the Board of Directors of the
Company or Finlay Enterprises are not Continuing Directors; or (v) the first
day on which Finlay Enterprises ceases to own 100% of the outstanding Equity
Interests of the Company. For purposes of this definition, any transfer of an
Equity Interest of an entity that was formed for the purpose of acquiring
voting stock of the Company shall be deemed to be a transfer of such portion
of such voting stock as corresponds to the portion of the equity of such
entity that has been so transferred.
"Company" means Finlay Enterprises, Inc., and any and all successors
thereto.
"Consignment Inventory" means, at any time, each item of merchandise
(including any gold content thereof) which (i) at such time is in possession
of the Company, Finlay Jewelry or any of their respective Subsidiaries as
consignee pursuant to a written consignment agreement or other consignment
arrangement including, without limitation, a consignment order or consignment
invoice, (ii) at such time is identified in computer records of the Company,
Finlay Jewelry or any of their respective Subsidiaries as being "memo" or
"consigned inventory", (iii) as of such time has not been sold, and (iv) to
which title, at such time, is retained by a consignor under such consignment
agreement or other consignment arrangement until such item of merchandise is
sold or deemed sold by the consignor to the consignee. Title to an item of
merchandise described in the foregoing sentence is deemed to be retained by
such consignor until, in accordance with the applicable consignment agreement
or other consignment arrangement, title is transferred (or deemed to be
transferred) to a buyer, the Company, Finlay Jewelry or any of their
respective Subsidiaries, regardless of whether any procedures have been
performed to protect the consignor's title with respect to such item of
merchandise.
"Consolidated Cash Flow" means, with respect to any Person for any
period, the Consolidated Net Income of such Person for such period plus (i) an
amount equal to any extraordinary loss plus any net loss realized in connection
with an Asset Sale (to the extent such losses were deducted in computing such
Consolidated Net Income); plus (ii) provision for taxes
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based on income or profits of such Person and its Subsidiaries for such period,
to the extent that such provision for taxes was included in computing such
Consolidated Net Income; plus (iii) consolidated interest expense of such Person
and its Subsidiaries for such period, whether paid or accrued and whether or not
capitalized (including, without limitation, amortization of original issue
discount, non-cash interest payments, the interest component of any deferred
payment obligations, the interest component of all payments associated with
Capital Lease Obligations, imputed interest with respect to Attributable Debt,
commissions, discounts and other fees and charges incurred in respect of letter
of credit or bankers' acceptance financings, and net payments (if any) pursuant
to Hedging Obligations), to the extent that any such expense was deducted in
computing such Consolidated Net Income; plus (iv) depreciation and amortization
(including amortization of goodwill and other intangibles but excluding
amortization of prepaid cash expenses that were paid in a prior period) of such
Person and its Subsidiaries for such period to the extent that such depreciation
and amortization were deducted in computing such Consolidated Net Income; plus
(v) without duplication, the nonrecurring expenses of such Person and its
Subsidiaries relating to the Equity Offering and the Refinancing to the extent
that any such expense was deducted (and not capitalized) in computing such
Person's Consolidated Net Income; minus (vi) non-cash items increasing
consolidated revenues in determining such Consolidated Net Income for such
period, in each case on a consolidated basis and determined in accordance with
GAAP. Notwithstanding the foregoing, the provision for taxes on the income or
profits of, and the depreciation and amortization of a Subsidiary of the
referent Person shall be added to Consolidated Net Income to compute
Consolidated Cash Flow only to the extent (and in the same proportion) that the
Net Income of such Subsidiary was included in calculating the Consolidated Net
Income of such Person and only if a corresponding amount would be permitted at
the date of determination to be dividended to the Company by such Subsidiary
without prior governmental approval (that has not been obtained), and without
direct or indirect restriction pursuant to the terms of its charter and all
agreements, instruments, judgments, decrees, orders, statutes, rules and
governmental regulations applicable to that Subsidiary or its stockholders.
"Consolidated Net Income" means, with respect to any Person for any
period, the aggregate of the Net Income of such Person and its Subsidiaries
for such period, on a consolidated basis, determined in accordance with GAAP;
provided that (i) the Net Income (but not loss) of any Person that is not a
Subsidiary or that is accounted for by the equity method of accounting shall
be included only to the extent of the amount of dividends or distributions
paid in cash to the referent Person or a Wholly Owned Subsidiary thereof; (ii)
the Net Income of any Subsidiary shall be excluded to the extent that the
declaration or payment of dividends or similar distributions by that
Subsidiary of that Net Income is not at the date of determination permitted
without any prior governmental approval (that has not been obtained) or,
directly or indirectly, by operation of the terms of its charter or any
agreement, instrument, judgment, decree, order, statute, rule or governmental
regulation applicable to that Subsidiary or its stockholders; (iii) the Net
Income of any Person acquired in a pooling of interests transaction for any
period prior to the date of such acquisition shall be excluded; and (iv) the
cumulative effect of a change in accounting principles shall be excluded.
"Consolidated Net Worth" means, with respect to any Person as of any
date, the sum of (i) the consolidated equity of the common stockholders of
such Person and its consolidated Subsidiaries as of such date plus (ii) the
respective amounts reported on such Person's balance sheet as of such
date with respect to any series of preferred stock (other than Disqualified
Stock) that by its terms is not entitled to the payment of dividends unless
such dividends may be declared and paid only out of net earnings in respect of
the year of such declaration and payment, but only to the extent of any
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cash received by such Person upon issuance of such preferred stock, less (x) all
write-ups (other than write-ups resulting from foreign currency translations and
write-ups of tangible assets of a going concern business made within 12 months
after the acquisition of such business) subsequent to the date of this Indenture
in the book value of any asset owned by such Person or a consolidated Subsidiary
of such Person, (y) all Investments as of such date in unconsolidated
Subsidiaries and in Persons that are not Subsidiaries (except, in each case,
Permitted Investments), and (z) all unamortized debt discount and expense and
unamortized deferred charges as of such date, all of the foregoing determined in
accordance with GAAP.
"Continuing Directors" means, as of any date of determination, any
member of the Board of Directors of the Company or Finlay Enterprises who (i)
was a member of such Board of Directors on the date of this Indenture or (ii)
was nominated for election or elected to such Board of Directors with the
approval of two-thirds of the Continuing Directors who were members of such
Board at the time of such nomination or election.
"Corporate Trust Office of the Trustee" shall be at the address of
the Trustee specified in Section 11.02 hereof or such other address as to
which the Trustee may give notice to the Company.
"Custodian" means the Trustee, as custodian with respect to the
Debentures in global form, or any successor entity thereto.
"Default" means any event that is or with the passage of time or the
giving of notice or both would be an Event of Default.
"Depositary" means, with respect to the Debentures issuable or issued
in whole or in part in global form, the Person specified in Section 2.03
hereof as the Depositary with respect to the Debentures and any and all
successors thereto appointed as depositary hereunder and having become such
pursuant to the applicable provisions of this Indenture.
"Disqualified Stock" means any Capital Stock that, by its terms (or
by the terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable
at the option of the Holder thereof, in whole or in part, on or prior to the
date that is 91 days after the date on which the Debentures mature; provided
that any Capital Stock issued to employees, consultants or directors of the
Company or any of its Subsidiaries pursuant to a stock option or other
compensation plan of the Company or any of its Subsidiaries shall not be
deemed to be Disqualified Stock solely because of any mandatory repurchase
features contained in such plan, except to the extent that the repurchase
obligations of the Company and its Subsidiaries in respect thereof exceed $5.0
million in the aggregate since the date of this Indenture.
"Equity Interests" means Capital Stock and all warrants, options or
other rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"Equity Offering" means the sale by Finlay Enterprises and certain
selling stockholders of an aggregate of 1,600,000 shares of the of Finlay
Enterprises' Common Stock on the date of this Indenture.
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"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Existing Indebtedness" means Indebtedness of the Company and its
Subsidiaries (other than Indebtedness under the Senior Revolving Debt) in
existence on the date of this Indenture, until such amounts are repaid.
"Finlay Jewelry" means Finlay Fine Jewelry Corporation, a Delaware
corporation and a Wholly Owned Subsidiary of Finlay Enterprises, Inc., a
Delaware Corporation.
"Fixed Charge Coverage Ratio" means with respect to any Person for
any period, the ratio of the Consolidated Cash Flow of such Person for such
period to the Fixed Charges of such Person for such period. In the event that
the Company or any of its Subsidiaries incurs, assumes, Guarantees or redeems
any Indebtedness (other than revolving credit borrowings) or issues preferred
stock subsequent to the commencement of the period for which the Fixed Charge
Coverage Ratio is being calculated but prior to the date on which the event
for which the calculation of the Fixed Charge Coverage Ratio is made (the
"Calculation Date"), then the Fixed Charge Coverage Ratio shall be calculated
giving pro forma effect to such incurrence, assumption, Guarantee or
redemption of Indebtedness, or such issuance or redemption of preferred stock,
as if the same had occurred at the beginning of the applicable four-quarter
reference period. In addition, for purposes of making the computation referred
to above, (i) acquisitions that have been made by the Company or any of its
Subsidiaries, including through mergers or consolidations and including any
related financing transactions, during the four-quarter reference period or
subsequent to such reference period and on or prior to the Calculation Date
shall be deemed to have occurred on the first day of the four-quarter
reference period and Consolidated Cash Flow for such reference period shall be
calculated without giving effect to clause (iii) of the proviso set forth in
the definition of Consolidated Net Income and shall reflect any pro forma
expense and cost reductions attributable to such acquisitions (to the extent
such expense and cost reduction would be permitted under Regulation S-X
promulgated pursuant to the Securities Act to be reflected in pro forma
financial statements included in a registration statement filed with the
Commission) and (ii) the Consolidated Cash Flow attributable to discontinued
operations, as determined in accordance with GAAP, and operations or
businesses disposed of prior to the Calculation Date, shall be excluded; and
(iii) the Fixed Charges attributable to discontinued operations, as determined
in accordance with GAAP, and operations or businesses disposed of prior to the
Calculation Date, shall be excluded, but only to the extent that the
obligations giving rise to such Fixed Charges will not be obligations of the
referent Person or any of its Subsidiaries following the Calculation Date.
"Fixed Charges" means, with respect to any Person for any period, the
sum of (i) the consolidated interest expense of such Person and its
Subsidiaries for such period, whether paid or accrued (including, without
limitation, amortization of original issue discount and deferred financing
costs, non-cash interest payments, the interest component of any deferred
payment obligations, the interest component of all payments associated with
Capital Lease Obligations, imputed interest with respect to Attributable Debt,
commissions, discounts and other fees and charges incurred in respect
of letter of credit or bankers' acceptance financings, and net payments (if
any) pursuant to Hedging Obligations); and (ii) the consolidated interest
expense of such Person and its Subsidiaries that was capitalized during such
period; and (iii) to the extent not included in clause (i), any interest
expense on Indebtedness of another Person for such period that is Guaranteed
by such Person or one of its Subsidiaries or secured by a Lien on assets of
such Person or one of its Subsidiaries (whether or not
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such Guarantee or Lien is called upon); (iv) to the extent not included in
clause (i), any costs, commissions, discounts, other fees or charges relating to
or in respect of any Receivables Subsidiary; and (v) the product of (a) all cash
dividend payments (and non-cash dividend payments in the case of a Person that
is a Subsidiary) for such period on any series of preferred stock of such
Person, times (b) a fraction, the numerator of which is one and the denominator
of which is one minus the then current combined federal, state and local
statutory tax rate of such Person for such period, expressed as a decimal, in
each case, on a consolidated basis and in accordance with GAAP; provided,
however, that in no event shall any amortization of deferred financing costs
incurred in connection with the Equity Offering or the Refinancing be included
in Fixed Charges.
"GAAP" means generally accepted accounting principles set forth in
the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as have been approved by a significant segment
of the accounting profession, which are in effect on the date of this
Indenture, provided, however, that all reports and other financial information
provided by the Company to the Holders, the Trustee and/or Commission shall be
prepared in connection with GAAP, as in effect on the day of such report or
other financial information.
"Gold Consignment Agreement" means the Gold Consignment Agreement,
dated as of June 15, 1995, by and between Finlay Jewelry and Rhode Island
Hospital Trust National Bank, including any related notes, guarantees,
collateral documents, instruments and agreements executed in connection
therewith, and in each case as amended, modified, restated, renewed,
supplemented, refunded, replaced or refinanced from time to time.
"Government Securities" means direct obligations of, or obligations
guaranteed by, the United States of America for the payment of which guarantee
or obligations the full faith and credit of the United States is pledged.
"Guarantee" means a guarantee (other than by endorsement of
negotiable instruments for collection in the ordinary course of business),
direct or indirect, in any manner (including, without limitation, letters of
credit and reimbursement agreements in respect thereof), of all or any part of
any Indebtedness.
"Guarantors" means each direct and indirect Subsidiary of the Company
that executes a Subsidiary Guarantee in accordance with the provisions of this
Indenture, and their respective successors and assigns.
"Hedging Obligation" means, with respect to any Person, the
obligations of such Person under (i) interest rate swap agreements, currency
swap agreements, interest rate cap agreements and interest rate collar
agreements, (ii) other agreements or arrangements designed to protect such
Person against fluctuations in interest rates and foreign exchange rates and
(iii) precious metal options and futures contracts and other precious metal
hedging obligations.
"Holder" means a Person in whose name a Debenture is registered.
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"Indebtedness" means, with respect to any Person, any indebtedness of
such Person, whether or not contingent, in respect of borrowed money or
evidenced by bonds, notes, debentures or similar instruments or letters of
credit (or reimbursement agreements in respect thereof) or banker's
acceptances or representing Capital Lease Obligations or the balance deferred
and unpaid of the purchase price of any property or representing any Hedging
Obligations, except any such balance that constitutes an accrued expense or
trade payable, if and to the extent any of the foregoing indebtedness (other
than letters of credit and Hedging Obligations) would appear as a liability
upon a balance sheet of such Person prepared in accordance with GAAP, as well
as, to the extent not otherwise included, all indebtedness of others secured
by a Lien on any asset of such Person (whether or not such indebtedness is
assumed by such Person) and, to the extent not otherwise included, the
Guarantee by such Person of any indebtedness of any other Person.
Notwithstanding the foregoing, the term "Indebtedness" shall not include up to
$3.0 million at any one time outstanding of deferred compensation arrangements
that are not evidenced by bonds, notes, debentures or similar instruments. The
amount of any Indebtedness outstanding as of any date shall be (i) the
accreted value thereof, in the case of any Indebtedness that does not require
current payments of interest, (ii) the principal amount thereof, together with
any interest thereon that is more than 30 days past due in the case of any
other Indebtedness and (iii) for purposes of calculating the amount of
Indebtedness of any Receivables Subsidiaries, the Receivables Financing Amount
relating thereto.
"Investments" means, with respect to any Person, all investments by
such Person in other Persons (including Affiliates) in the forms of direct or
indirect loans (including guarantees of Indebtedness or other obligations),
advances or capital contributions (excluding commission, travel and similar
advances to officers and employees made in the ordinary course of business),
purchases or other acquisitions for consideration of Indebtedness, Equity
Interests or other securities of such other Persons, together with all items
of such other Persons that are or would be classified as investments on a
balance sheet prepared in accordance with GAAP. If the Company or any
Subsidiary of the Company sells or otherwise disposes of any Equity Interest
of any direct or indirect Subsidiary of the Company such that, after giving
effect to any such sale or disposition, such Person is no longer a Subsidiary
of the Company, the Company shall be deemed to have made an Investment on the
date of any such sale or disposition equal to the fair market value of the
Equity Interests of such Subsidiary not sold or disposed of.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement, any lease
in the nature thereof, any option or other agreement to sell or give a
security interest in and any filing of or agreement to give any financing
statement under the Uniform Commercial Code (or equivalent statutes) of any
jurisdiction).
"Net Income" means, with respect to any Person, the net income (loss)
of such Person, determined in accordance with GAAP and before any reduction in
respect of preferred stock dividends, excluding, however, (i) any gain (but
not loss), together with any related provision for taxes on such gain (but not
loss), realized in connection with (a) any Asset Sale (including, without
limitation, dispositions pursuant to sale and leaseback transactions) or (b)
the disposition of any securities by such Person or any of its Subsidiaries or
the extinguishment of any Indebtedness of such Person or any of its
Subsidiaries and (ii) any extraordinary or nonrecurring gain (but not loss),
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together with any related provision for taxes on such extraordinary or
nonrecurring gain (but not loss).
"Net Proceeds" means the aggregate cash proceeds received by the
Company or any of its Subsidiaries in respect of any Asset Sale (including,
without limitation, any cash received upon the sale or other disposition of
any non-cash consideration received in any Asset Sale), net of the direct
costs relating to such Asset Sales (including, without limitation, legal,
accounting and investment banking fees, and sales commissions) and any
relocation expenses incurred as a result thereof, taxes paid or payable as a
result thereof (after taking into account any available tax credits or
deductions and any tax sharing arrangements), amounts required to be applied
to the repayment of Indebtedness (other than Indebtedness under the Revolving
Credit Agreement) secured by a Lien on the asset or assets that were the
subject of such Asset Sale and any reserve for adjustment in respect of the
sale price of such asset or assets established in accordance with GAAP.
"Non-Recourse Debt" means Indebtedness (i) as to which neither the
Company nor any of its Subsidiaries (other than a Receivables Subsidiary with
respect to its own Indebtedness) (a) provides credit support of any kind
(including any undertaking, agreement or instrument that would constitute
Indebtedness) or (b) is directly or indirectly liable (as a guarantor or
otherwise); and (ii) no default with respect to which would permit (upon
notice, lapse of time or both) any holder of any other Indebtedness of the
Company or any of its Subsidiaries to declare a default on such other
Indebtedness or cause the payment thereof to be accelerated or payable prior
to its Stated Maturity; and (iii) as to which the lenders have been notified
in writing that they will not have any recourse to the stock or assets of the
Company or any of its Subsidiaries (other than a Receivables Subsidiary with
respect to its own Indebtedness); provided that, notwithstanding the
foregoing, the Company and any of its Subsidiaries that sell Receivables to
the Person incurring such Indebtedness shall be allowed to provide such
representations, warranties, covenants and indemnities as are customarily
required in such transactions so long as no such representations, warranties,
covenants or indemnities constitute a Guarantee of payment or recourse against
credit losses.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"Officer" means, with respect to any Person, the Chairman of the
Board, the Chief Executive Officer, the President, the Chief Operating
Officer, the Chief Financial Officer, the Treasurer, any Assistant Treasurer,
the Controller, the Secretary or any Vice-President of such Person.
"Officers' Certificate" means a certificate signed on behalf of the
Company by two Officers of the Company, one of whom must be the principal
executive officer, the principal financial officer, the treasurer or the
principal accounting officer of the Company, that meets the requirements of
Section 11.05 hereof.
"Old Debentures" means the Finlay Enterprises' 12% Senior Discount
Debentures due 2005.
"Old Notes" means the Company's 10 5/8% Senior Notes due 2003.
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"Opinion of Counsel" means an opinion from legal counsel who is
reasonably acceptable to the Trustee, that meets the requirements of Section
11.05 hereof. The counsel may be an employee of or counsel to the Company, any
Subsidiary of the Company or the Trustee.
"Permitted Investments" means (a) any Investment in the Company or in
a Wholly Owned Subsidiary of the Company that is evidenced by Capital Stock or
Subsidiary Intercompany Notes; (b) any Investment in Cash Equivalents; (c) any
Investment by the Company or any Subsidiary of the Company in a Person that is
evidenced by Capital Stock or Subsidiary Intercompany Notes if as a result of
such Investment (i) such Person becomes a Wholly Owned Subsidiary of the
Company and a Guarantor or (ii) such Person is merged, consolidated or
amalgamated with or into, or transfers or conveys substantially all of its
assets to, or is liquidated into, the Company or a Wholly Owned Subsidiary of
the Company that is a Guarantor; (d) any capital contribution (including any
transaction deemed to be a capital contribution in accordance with GAAP) by
the Company to any of its Wholly Owned Subsidiaries; (e) any Restricted
Investment made as a result of the receipt of non-cash consideration from an
Asset Sale that was made pursuant to and in compliance with the provisions of
Section 4.10 hereof; (f) advances to vendors in the ordinary course of
business consistent with past practices; (g) any Investment existing on the
date of this Indenture; (h) loans and relocation, travel and similar advances
to employees and officers of the Company or its Subsidiaries in the ordinary
course of business for bona-fide purposes reasonably related to the business
of the Company and its Subsidiaries, not in excess of $5.0 million at any one
time outstanding; (i) any acquisition, redemption or repurchase of Debentures
or the Senior Notes; (j) any Investments relating to a Receivables Subsidiary,
provided that any Investment in an entity that ceases to be a Receivables
Subsidiary shall cease to be a Permitted Investment by virtue of this clause
and shall be deemed to constitute a new Investment as of the date of such
cessation; and (k) other Investments in any Person having an aggregate fair
market value (measured on the date each such Investment was made and without
giving effect to subsequent changes in value), when taken together with all
other Investments made pursuant to this clause (k), not to exceed $10.0
million at any time outstanding.
"Permitted Liens" means (i) Liens securing the Senior Revolving Debt
that were permitted by the terms of this Indenture to be incurred; (ii) Liens
in favor of the Company; (iii) Liens on property of a Person existing at the
time such Person is merged into or consolidated with the Company or any
Subsidiary of the Company; provided that such Liens were in existence prior to
the contemplation of such merger or consolidation and do not extend to any
assets other than those of the Person merged into or consolidated with the
Company; (iv) Liens on property existing at the time of acquisition thereof by
the Company or any Subsidiary of the Company, provided that such liens were in
existence prior to the contemplation of such acquisition; (v) Liens to secure
the performance of statutory obligations, surety or appeal bonds, performance
bonds, landlords', carriers', warehousemen's, mechanics', suppliers',
materialmen's or other like Liens incurred in the ordinary course of business;
(vi) Liens to secure Indebtedness (including Capital Lease Obligations)
permitted by Section 4.09(b)(vi) hereof covering only the assets acquired with
such Indebtedness); (vii) Liens on Consignment Inventory; (viii) Liens under the
Gold Consignment Agreement; (ix) Liens existing on the date of this Indenture;
(x) Liens for taxes, assessments or governmental charges or claims that are not
yet delinquent or that are being contested in good faith by appropriate
proceedings promptly instituted and diligently concluded, provided that any
reserve or other appropriate provision as shall be required in conformity with
GAAP shall have been made therefor; (xi) Liens incurred in the ordinary course
of business of the Company or any Subsidiary of the Company with respect to
obligations that do not exceed $5.0 million at any one time outstanding and that
(a) are not incurred
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in connection with the borrowing of money or the obtaining of advances or credit
(other than trade credit in the ordinary course of business) and (b) do not in
the aggregate materially detract from the value of the property or materially
impair the use thereof in the operation of business by the Company or such
Subsidiary; (xii) Liens securing Capital Lease Obligations and purchase money
Indebtedness incurred in accordance with clauses (vi) and (vii), respectively,
of the definition of Permitted Debt; provided, however that in the case of
purchase money Indebtedness (a) the Indebtedness shall not exceed the cost of
such property or assets being acquired or constructed and shall not be secured
by any property or assets of the Company or any Subsidiary of the Company other
than the property and assets being acquired or constructed and (b) the Lien
securing such Indebtedness shall be created within 30 days of such acquisition
or construction; (xiii) Liens granted to lessors or licensors in the ordinary
course of business consistent with past practice with respect to fixtures and
equipment at store locations leased or licensed from such lessors or licensors;
(xiv) Liens securing any Permitted Refinancing Indebtedness to the extent the
Indebtedness being exchanged, extended, renewed, replaced or refunded (and such
Permitted Refinancing Indebtedness) was permitted to be so secured; (xv) Liens
incurred pursuant to the pledge of any assets (including intercompany notes in
respect of monies loaned or advanced by the Company or to the Company) or the
assignment of any licenses or other agreements under the Security and Pledge
Agreement; (xvi) Liens for judgments, attachments, seizures or levies not to
exceed $500,000 in the aggregate outstanding at any time; (xvii) Liens on
Receivables transferred to a Receivables Subsidiary or on assets of a
Receivables Subsidiary; and (xviii) zoning restrictions, easements, rights of
way, licenses and restrictions on the use of real property or minor
irregularities in title thereto, which do not materially impair the use of such
property in the normal operation of the business of the Company or any of its
Subsidiaries or the value of such property for the purpose of such business.
"Permitted Refinancing Indebtedness" means any Indebtedness of the
Company or any of its Subsidiaries issued in exchange for, or the net proceeds
of which are used within 60 days after the incurrence thereof to extend,
refinance, renew, replace, defease or refund, other Indebtedness of the
Company or any of its Subsidiaries that was permitted by this Indenture to be
incurred; provided that: (i) the principal amount (or accreted value, if
applicable) of such Permitted Refinancing Indebtedness does not exceed the
principal amount (or accreted value, if applicable) of the Indebtedness so
extended, refinanced, renewed, replaced, defeased or refunded (plus the amount
of reasonable expenses, premiums, penalties, consent fees and interest
incurred in connection therewith); (ii) such Permitted Refinancing
Indebtedness has a final maturity date later than the final maturity date of,
and has a Weighted Average Life to Maturity equal to or greater than the
Weighted Average Life to Maturity of, the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded; (iii) if the Indebtedness
being extended, refinanced, renewed, replaced, defeased or refunded is
subordinated in right of payment to the Debentures, such Permitted Refinancing
Indebtedness has a final maturity date later than the final maturity date of,
and is subordinated in right of payment to, the Debentures on terms at least as
favorable to the Holders of Debentures as those contained in the documentation
governing the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded; (iv) such Indebtedness is incurred either by the Company
or by the Subsidiary of the Company which is the obligor on the Indebtedness
being extended, refinanced, renewed, replaced, defeased or refunded; and (v)
such Permitted Refinancing Indebtedness shall be secured (if secured) in a
manner no more adverse (including, without limitation, by way of any increase in
the amount of Indebtedness secured) to the holders of the Debentures than the
terms of the Liens (if any) securing such refinanced Indebtedness.
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"Person" means a natural person, partnership, corporation, limited
liability company, unincorporated organization, trust or joint venture, or a
governmental agency or political subdivision thereof.
"Principals" means David B. Cornstein, Arthur E. Reiner, Thomas H. Lee,
Thomas H. Lee Capital LLC, employees of Thomas H. Lee Capital LLC and
Equity-Linked Investors-II.
"Public Equity Offering" means an underwritten public offering of
Capital Stock (other than Disqualified Stock) of Finlay Enterprises registered
under the Securities Act (other than a public offering registered on Form S-8
under the Securities Act) after the date of this Indenture that results in net
proceeds of at least $10.0 million to Finlay Enterprises.
"Qualified Proceeds" means any of the following or any combination of
the following: (i) assets (other than cash or Cash Equivalents) or inventory
that are used or useable in the business engaged in by the Company or any of
its Subsidiaries on the date of this Indenture (or in a business reasonably
related thereto) or (ii) the Equity Interests of any Person engaged primarily
in a business similar to that of the Company or any of its Subsidiaries as of
the date of this Indenture, if, in connection with the receipt by the Company
or any Subsidiary of the Company of such Equity Interests, (a) such Person
becomes a Wholly Owned Subsidiary of the Company or (b) such Person is merged,
consolidated or amalgamated with or into, or transfers or conveys
substantially all of its assets to, or is liquidated into, the Company or any
Wholly Owned Subsidiary of the Company.
"Receivables" means, collectively, (a) the Indebtedness and other
obligations owed to the Company or any of its Subsidiaries (before giving
effect to any sale or transfer thereof pursuant to a Receivables Facility),
whether constituting an account, chattel paper, an instrument, a document or
general intangible, arising in connection with the sale of goods and/or
services by the Company or such Subsidiary, including the obligation to pay
any late fees, interest or other finance charges with respect thereto (each of
the foregoing, collectively, an "Account Receivable"), (b) all of the
Company's or such Subsidiary's interest in the goods (including returned
goods), if any, the sale of which gave rise to any Account Receivable, and all
insurance contracts with respect thereto, (c) all other security interests or
Liens and property subject thereto from time to time, if any, purporting to
secure payment of any Account Receivable, together with all financing
statements and security agreements describing any collateral securing such
Account Receivable, (d) all Guarantees, insurance and other agreements or
arrangements of whatever character from time to time supporting or securing
payment of any Account Receivable, (e) all contracts, invoices, books and
records of any kind related to any Account Receivable, (f) all cash
collections in respect of, and cash proceeds of, any of the foregoing and any
and all lockboxes, lockbox accounts, collection accounts, concentration
accounts and similar accounts in or into which such collections and cash
proceeds are now or hereafter deposited, collected or concentrated, and (g)
all proceeds of any of the foregoing.
"Receivables Facility" means, with respect to any Person, any
Receivables securitization or factoring program pursuant to which such Person
receives proceeds pursuant to a sale, pledge or other encumbrance of its
Receivables.
"Receivables Financing Amount" means at any date, with respect to any
Receivables Facility of any Person, the sum on such date of (a) the aggregate
uncollected balances of Accounts Receivable (as defined in the definition of
"Receivables") transferred ("Transferred Receivables")
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in such Receivables Facility plus (b) the aggregate amount of all collections of
Transferred Receivables theretofore received by such Person but not yet remitted
to the purchaser, net of all reserves and holdbacks retained by or for the
benefit of the purchaser and net of any interest retained by such Person and
reasonable costs and expenses (including fees and commissions and taxes other
than income taxes) incurred by such Person in connection therewith and not
payable to any Affiliate of such Person.
"Receivables Subsidiary" means any Wholly Owned Subsidiary created
primarily to purchase or finance the Receivables of the Company and/or its
Subsidiaries pursuant to a Receivables Facility, so long as it: (a) has no
Indebtedness other than Non-Recourse Debt and (b) is a Person with respect to
which neither the Company nor any of its other Subsidiaries has any direct
obligation to maintain or preserve such Person's financial condition or to
cause such Person to achieve any specified levels of operating results other
than to act as servicer of Receivables. If, at any time, such Receivables
Subsidiary would fail to meet the foregoing requirements as a Receivables
Subsidiary, it shall thereafter cease to be a Receivables Subsidiary for
purposes of this Indenture and any Indebtedness of such Receivables Subsidiary
shall be deemed to be incurred by a Subsidiary of the Company as of such date
(and, if such Indebtedness is not permitted to be incurred as of such date
under provisions of Section 4.09 hereof, the Company shall be in default of
such covenant).
"Refinancing" means (i) the offering by Finlay Enterprises of the
Debentures, (ii) the offering by Finlay Jewelry of the Senior Notes, (iii) the
repurchase or redemption of the Old Debentures by Finlay Enterprises , (iv)
the repurchase or redemption of the Old Notes by Finlay Jewelry, (v) the
repayment of the original issue discount on the Old Debentures, and (vi) the
proposed amendment of the Revolving Credit Agreement to increase the line of
credit thereunder to $275.0 million and to make certain other changes.
"Related Parties" with respect to any Principal means any controlling
stockholder, 80% (or more) owned Subsidiary, or spouse or immediate family
member (in the case of an individual) of such Principal or a trust,
corporation, partnership or other entity, the beneficiaries, stockholders,
partners, owners or Persons beneficially holding an 80% or more controlling
interest of which consist of such Principal and/or such other Persons referred
to in the immediately preceding clause.
"Responsible Officer", when used with respect to the Trustee, means
any officer within the Corporate Trust Administration of the Trustee (or any
successor group of the Trustee) or any other officer of the Trustee
customarily performing functions similar to those performed by any of the
above designated officers and also means, with respect to a particular
corporate trust matter, any other officer to whom such matter is referred
because of his or her knowledge of and familiarity with the particular subject.
"Restricted Investment" means an Investment other than a Permitted
Investment.
"Revolving Credit Agreement" means the Amended and Restated Credit
Agreement, dated as of September 11, 1997, among Finlay Jewelry and Finlay
Enterprises, as Borrowers (as defined therein), and General Electric Capital
Corporation, as Agent (as defined therein) and Lender (as defined therein),
and the other Lenders named therein, providing for revolving credit
borrowings, including any related notes, guarantees, collateral documents,
instruments and agreements executed
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in connection therewith, and in each case as amended, modified, restated,
renewed, supplemented, refunded, replaced or refinanced from time to time.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Note Indenture" means the indenture, dated the date hereof,
by and between Finlay Jewelry and Marine Midland Bank, as trustee, relating to
the Senior Notes.
"Senior Notes" means Finlay Jewelry's __% Senior Notes due ______,
2008.
"Senior Revolving Debt" means revolving credit borrowings under the
Revolving Credit Agreement and revolving consignments under the Gold
Consignment Agreement and, if any, a substantially similar gold consignment
agreement pursuant to Section 4.09(b)(iv)(y)(b) hereof.
"Significant Subsidiary" means any Subsidiary that would be a
"significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X,
promulgated pursuant to the Securities Act, as such Regulation is in effect on
the date hereof.
"Stated Maturity" means, with respect to any installment of interest
or principal on any series of Indebtedness, the date on which such payment of
interest or principal was scheduled to be paid in the original documentation
governing such Indebtedness, and shall not include any contingent obligations
to repay, redeem or repurchase any such interest or principal prior to the
date originally scheduled for the payment thereof.
"Subsidiary" means, with respect to any Person, (i) any corporation,
association or other business entity of which more than 50% of the total
voting power of share of Capital Stock entitled (without regard to the
occurrence of any contingency) to vote in the election of directors, managers
or trustees thereof is at the time owned or controlled, directly or
indirectly, by such Person or one or more of the other Subsidiaries of that
Person (or a combination thereof) and (ii) any partnership (a) the sole
general partner or the managing general partner of which is such Person or a
Subsidiary of such Person or (b) the only general partners of which are such
Person or of one or more Subsidiaries of such Person (or any combination
thereof).
"Subsidiary Intercompany Notes" means the intercompany notes,
subordinate (in accordance with the terms of this Indenture) in right of payment
to all existing Indebtedness of the issuer (other than Indebtedness which by its
terms is subordinate in right of payment to other Indebtedness of such issuer),
issued by the Company or a Subsidiary of the Company in favor of the Company or
a Subsidiary of the Company to evidence advances by the Company or a Subsidiary
of the Company, in each case, in the form attached as Exhibit F to this
Indenture.
"Tax Allocation Agreement" means the Tax Allocation Agreement, dated
as of November 1, 1992, between the Company and Finlay Jewelry.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. ss.ss.
77aaa-77bbbb), as in effect on the date on which this Indenture is qualified
under the TIA.
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"Trustee" means the party named as such above until a successor
replaces it in accordance with the applicable provisions of this Indenture and
thereafter means the successor serving hereunder.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (i) the sum
of the products obtained by multiplying (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (b) the
number of years (calculated to the nearest one-twelfth) that will elapse
between such date and the making of such payment, by (ii) the then outstanding
principal amount of such Indebtedness.
"Wholly Owned Subsidiary" of any Person means a Subsidiary of such
Person all of the outstanding Capital Stock or other ownership interests of
which (other than directors' qualifying shares) shall at the time be owned by
such Person or by one or more Wholly Owned Subsidiaries of such Person and one
or more Wholly Owned Subsidiaries of such Person.
SECTION 1.02. OTHER DEFINITIONS.
<TABLE>
<CAPTION>
Defined in
Term Section
<S> <C>
"Affiliate Transaction" ...................................................4.12
"Asset Sale Offer".........................................................3.09
"Authentication Order" ....................................................2.02
"Change of Control Offer" .................................................4.15
"Change of Control Payment" ...............................................4.15
"Change of Control Payment Date" ..........................................4.15
"Commission" ..............................................................4.03
"Covenant Defeasance" .....................................................8.03
"Definitive Debenture" ....................................................2.01
"Event of Default" ........................................................6.01
"Excess Proceeds" .........................................................4.10
"Global Debenture" ........................................................2.01
"incur" ...................................................................4.09
"Legal Defeasance" ........................................................8.02
"Offer Amount".............................................................3.09
"Offer Period" ............................................................3.09
"Paying Agent" ............................................................2.03
"Payment Default" .........................................................6.01
"Permitted Debt"...........................................................4.09
"Purchase Date" ...........................................................3.09
"Registrar" ...............................................................2.03
"Restricted Payments"......................................................4.07
"Security and Pledge Agreement"...........................................10.01
</TABLE>
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SECTION 1.03. TERMS OF TIA.
Whenever this Indenture refers to a provision of the TIA,
the provision is incorporated by reference in and made a part of this
Indenture.
The following TIA terms used in this Indenture have the
following meanings:
"indenture securities" means the Debentures;
"indenture security Holder" means a Holder of a Debenture;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the
Trustee; and
"obligor" on the Debentures and the Subsidiary Guarantees,
if any, means the Company and the Guarantors, respectively, and any successor
obligor upon the Debentures and the Subsidiary Guarantees, respectively.
All other terms used in this Indenture that are defined by
the TIA, defined by TIA reference to another statute or defined by Commission
rule under the TIA have the meanings so assigned to them.
SECTION 1.04. RULES OF CONSTRUCTION.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has
the meaning assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and
in the plural include the singular;
(5) provisions apply to successive events and
transactions;
(6) references to sections of or rules under the
Securities Act shall be deemed to include substitute,
replacement of successor sections or rules adopted by the
Commission from time to time; and
(7) words implying the feminine or masculine gender
shall be deemed to include all genders.
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ARTICLE 2
THE DEBENTURES
SECTION 2.01. FORM AND DATING.
(a) General. The Debentures and the Trustee's certificate of
authentication shall be substantially in the form of Exhibit A hereto. The
Debentures may have notations, legends or endorsements required by law, stock
exchange rule or usage. Each Debenture shall be dated the date of its
authentication. The Debentures shall be in denominations of $1,000 and
integral multiples thereof.
The terms and provisions contained in the Debentures shall
constitute, and are hereby expressly made, a part of this Indenture and the
Company and the Trustee, by their execution and delivery of this Indenture,
and each Guarantor (if any), by its execution and delivery of its Subsidiary
Guarantee, expressly agree to such terms and provisions and to be bound
thereby. However, to the extent any provision of any Debenture conflicts with
the express provisions of this Indenture, the provisions of this Indenture
shall govern and be controlling.
(b) Global Debentures. Debentures issued in global form
(each a "Global Debenture") shall be substantially in the form of Exhibit A
attached hereto (including the "Schedule of Exchanges of Interests in the
Global Debenture" attached thereto). Debentures issued in definitive form
(each a "Definitive Debenture") shall be substantially in the form, if any, of
Exhibit A attached hereto (but without the "Schedule of Exchanges of Interests
in Global Debenture" attached thereto). Each Global Debenture shall represent
such of the outstanding Debentures as shall be specified therein and each
shall provide that it shall represent the aggregate principal amount of
outstanding Debentures from time to time endorsed thereon and that the
aggregate principal amount of outstanding Debentures represented thereby may
from time to time be reduced or increased, as appropriate, to reflect
exchanges and redemptions. Any endorsement of a Global Debenture to reflect
the amount of any increase or decrease in the aggregate principal amount of
outstanding Debentures represented thereby shall be made by the Trustee or the
Custodian, at the direction of the Trustee, in accordance with instructions
given by the Holder thereof as required by Section 2.06 hereof.
SECTION 2.02. EXECUTION AND AUTHENTICATION.
An Officer shall sign the Debentures for the Company by
manual or facsimile signature. The Company's seal shall be reproduced on the
Debentures and may be in facsimile form.
If an Officer whose signature is on a Debenture no longer
holds that office at the time a Debenture is authenticated, the Debenture
shall nevertheless be valid.
A Debenture shall not be valid until authenticated by the
manual signature of the Trustee. The signature shall be conclusive evidence
that the Debenture has been authenticated under this Indenture.
The Trustee shall, upon a written order of the Company
signed by an Officer (an "Authentication Order"), authenticate Debentures for
original issue up to the aggregate principal amount stated in paragraph 4 of
the Debentures. The aggregate principal
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amount of Debentures outstanding at any time may not exceed such amount except
as provided in Section 2.07 hereof.
The Trustee may appoint an authenticating agent acceptable
to the Company to authenticate Debentures. An authenticating agent may
authenticate Debentures whenever the Trustee may do so. Each reference in this
Indenture to authentication by the Trustee includes authentication by such
agent. An authenticating agent has the same rights as an Agent to deal with
Holders or an Affiliate of the Company.
SECTION 2.03. REGISTRAR AND PAYING AGENT.
The Company shall maintain an office or agency where
Debentures may be presented for registration of transfer or for exchange
("Registrar") and an office or agency where Debentures may be presented for
payment ("Paying Agent"). The Registrar shall keep a register of the
Debentures and of their transfer and exchange. The Company may appoint one or
more co-registrars and one or more additional paying agents. The term
"Registrar" includes any co-registrar and the term "Paying Agent" includes any
additional paying agent. The Company may change any Paying Agent or Registrar
without notice to any Holder. The Company shall notify the Trustee in writing
of the name and address of any Agent not a party to this Indenture. If the
Company fails to appoint or maintain another entity as Registrar or Paying
Agent, the Trustee shall act as such and shall be entitled to appropriate
compensation in accordance with Section 7.07 hereof. The Company or any of its
Subsidiaries may act as Paying Agent or Registrar.
The Company initially appoints the Depository Trust Company
to act as Depositary with respect to the Global Debentures.
The Company initially appoints the Trustee to act as the
Registrar and Paying Agent and to act as Custodian with respect to the Global
Debentures.
SECTION 2.04. PAYING AGENT TO HOLD MONEY IN TRUST.
The Company shall require each Paying Agent other than the
Trustee to agree in writing that the Paying Agent will hold in trust for the
benefit of Holders or the Trustee all money held by the Paying Agent for the
payment of principal, premium, if any, or interest on the Debentures, and will
notify the Trustee of any default by the Company in making any such payment.
While any such default continues, the Trustee may require a Paying Agent to
pay all money held by it to the Trustee. The Company at any time may require a
Paying Agent to pay all money held by it to the Trustee. Upon payment over to
the Trustee, the Paying Agent (if other than the Company or a Subsidiary) shall
have no further liability for the money. If the Company or a Subsidiary acts as
Paying Agent, it shall segregate and hold in a separate trust fund for the
benefit of the Holders all money held by it as Paying Agent. Upon any bankruptcy
or reorganization proceedings relating to the Company, the Trustee shall serve
as Paying Agent for the Debentures.
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SECTION 2.05. HOLDER LISTS.
The Trustee shall preserve in as current a form as is
reasonably practicable the most recent list available to it of the names and
addresses of all Holders and shall otherwise comply with TIA ss. 312(a). If
the Trustee is not the Registrar, the Company shall furnish to the Trustee at
least seven Business Days before each interest payment date and at such other
times as the Trustee may request in writing, a list in such form and as of
such date as the Trustee may reasonably require of the names and addresses of
the Holders of Debentures and the Company shall otherwise comply with TIA ss.
312(a).
SECTION 2.06. TRANSFER AND EXCHANGE.
(a) Transfer and Exchange of Global Debentures. A Global
Debenture may not be transferred as a whole except by the Depositary to a
nominee of the Depositary, by a nominee of the Depositary to the Depositary or
to another nominee of the Depositary, or by the Depositary or any such nominee
to a successor Depositary or a nominee of such successor Depositary. All
Global Debentures will be exchanged by the Company for Definitive Debentures
if (i) the Company delivers to the Trustee notice from the Depositary that it
is unwilling or unable to continue to act as Depositary or that it is no
longer a clearing agency registered under the Exchange Act and, in either
case, a successor Depositary is not appointed by the Company within 120 days
after the date of such notice from the Depositary, (ii) the Company in its
sole discretion determines that the Global Debentures (in whole but not in
part) should be exchanged for Definitive Debentures and delivers a written
notice to such effect to the Trustee, or (iii) there shall have occurred and
be continuing an Event of Default. Upon the occurrence of any of the preceding
events in (i), (ii) or (iii) above, Definitive Debentures shall be issued in
such names as the Depositary shall instruct the Trustee. Global Debentures
also may be exchanged or replaced, in whole or in part, as provided in
Sections 2.07 and 2.10 hereof. Except as set forth in the second sentence of
this Section 2.06(a), every Debenture authenticated and delivered in exchange
for, or in lieu of, a Global Debenture or any portion thereof, pursuant to
this Section 2.06 or Section 2.07 or 2.10 hereof, shall be authenticated and
delivered in the form of, and shall be, a Global Debenture. A Global Debenture
may not be exchanged for another Debenture other than as provided in this
Section 2.06(a), however, beneficial interests in a Global Debenture may be
transferred and exchanged as provided in Section 2.06(b) hereof.
(b) Transfer and Exchange of Beneficial Interests in Global
Debentures. The transfer and exchange of beneficial interests in Global
Debentures shall be effected through the Depositary, in accordance with the
provisions of this Indenture and the Applicable Procedures. No written orders
or instructions shall be required to be delivered to the Registrar to effect
the transfers described in this Section 2.06(b).
(c) Transfer or Exchange of Beneficial Interests for
Definitive Debentures. Any contrary provision hereof notwithstanding, no
Definitive Debentures shall be issued or exchanged for beneficial interests in
any Global Debenture except upon the satisfaction of the conditions set forth
in Section 2.06(a)(i), (ii) or (iii) hereof.
(d) Transfer and Exchange of Definitive Debentures for
Definitive Debentures. Upon request by a Holder of Definitive Debentures and
such Holder's compliance with the
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provisions of this Section 2.06(d), the Registrar shall register the transfer or
exchange of Definitive Debentures. Prior to such registration of transfer or
exchange, the requesting Holder shall present or surrender to the Registrar the
Definitive Debentures duly endorsed or accompanied by a written instruction of
transfer in form satisfactory to the Registrar duly executed by such Holder or
by his or her attorney, duly authorized in writing. Upon receipt of a request to
register such a transfer, the Registrar shall register the Debentures pursuant
to the instructions from the Holder thereof.
(e) Cancellation and/or Adjustment of Global Debentures. At
such time as all beneficial interests in a particular Global Debenture have
been exchanged for Definitive Debentures or a particular Global Debenture has
been redeemed, repurchased or cancelled in whole and not in part, each such
Global Debenture shall be returned to or retained and cancelled by the Trustee
in accordance with Section 2.11 hereof. At any time prior to such
cancellation, if any beneficial interest in a Global Debenture is exchanged
for or transferred to a Person who will take delivery thereof in the form of a
beneficial interest in another Global Debenture or for Definitive Debentures,
the principal amount of Debentures represented by such Global Debenture shall
be reduced accordingly and an endorsement shall be made on such Global
Debenture by the Trustee or by the Depositary at the direction of the Trustee
to reflect such reduction.
(f) General Provisions Relating to Transfers and Exchanges.
(i) To permit registrations of transfers and
exchanges, the Company shall execute and the Trustee shall authenticate Global
Debentures and Definitive Debentures upon the Company's order or at the
Registrar's request.
(ii) No service charge shall be made to an owner of
a beneficial interest in
a Global Debenture or to a Holder of a Definitive Debenture for any
registration of transfer or exchange, but the Company may require payment of a
sum sufficient to cover any transfer tax or similar governmental charge
payable in connection therewith (other than any such transfer taxes or similar
governmental charge payable upon exchange or transfer pursuant to Sections
2.10, 3.06 and 9.05 hereof).
(iii) The Registrar shall not be required to
register the transfer of or exchange any Debenture selected for redemption in
whole or in part, except the unredeemed portion of any Debenture being redeemed
in part.
(iv) All Global Debentures and Definitive
Debentures issued upon any registration of transfer or exchange of Global
Debentures or Definitive Debentures shall be the valid obligations of the
Company, evidencing the same debt, and entitled to the same benefits under this
Indenture, as the Global Debentures or Definitive Debentures surrendered upon
such registration of transfer or exchange.
(v) The Company shall not be required (A) to issue,
to register the transfer of or to exchange any Debentures during a period
beginning at the opening of business 15 days before the day of any selection of
Debentures for redemption under Section 3.02 hereof and ending at the close of
business on the day of selection, (B) to register the transfer of or to exchange
any Debenture so selected for redemption in whole or in part, except the
unredeemed portion of any
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Debenture being redeemed in part or (C) to register the transfer of or to
exchange a Debenture between a record date and the next succeeding Interest
Payment Date.
(vi) Prior to due presentment for the registration
of a transfer of any Debenture, the Trustee, any Agent and the Company may deem
and treat the Person in whose name any Debenture is registered as the absolute
owner of such Debenture for the purpose of receiving payment of principal of and
interest on such Debentures and for all other purposes, and none of the Trustee,
any Agent or the Company shall be affected by notice to the contrary.
(vii) The Trustee shall authenticate Global
Debentures and Definitive Debentures in accordance with the provisions of
Section 2.02 hereof.
SECTION 2.07. REPLACEMENT DEBENTURES.
If any mutilated Debenture is surrendered to the Trustee, or
the Company and the Trustee receive evidence to their satisfaction of the
destruction, loss or theft of any Debenture, the Company shall issue and the
Trustee, upon receipt of an Authentication Order, shall authenticate a
replacement Debenture if the Trustee's requirements are met. If required by
the Trustee or the Company, an indemnity bond must be supplied by the Holder
that is sufficient in the judgment of the Trustee and the Company to protect
the Company, the Trustee, any Agent and any authenticating agent from any loss
that any of them may suffer if a Debenture is replaced. The Company may charge
for its expenses in replacing a Debenture.
Every replacement Debenture is an additional obligation of
the Company and shall be entitled to all of the benefits of this Indenture
equally and proportionately with all other Debentures duly issued hereunder.
SECTION 2.08. OUTSTANDING DEBENTURES.
The Debentures outstanding at any time are all the
Debentures authenticated by the Trustee except for those cancelled by it,
those delivered to it for cancellation, those reductions in the interest in a
Global Debenture effected by the Trustee in accordance with the provisions
hereof, and those described in this Section as not outstanding. Except as set
forth in Section 2.09 hereof, a Debenture does not cease to be outstanding
because the Company or an Affiliate of the Company holds the Debenture;
however, Debentures held by the Company or a Subsidiary of the Company shall
not be deemed to be outstanding for purposes of Section 3.07(b) hereof.
If a Debenture is replaced pursuant to Section 2.07 hereof,
it ceases to be outstanding unless the Trustee receives proof satisfactory to
it that the replaced Debenture is held by a bona fide purchaser.
If the principal amount of any Debenture is considered paid
under Section 4.01 hereof, it ceases to be outstanding and interest on it
ceases to accrue.
If the Paying Agent (other than the Company, a Subsidiary or
an Affiliate of any thereof) holds, on a redemption date or maturity date,
money sufficient to pay Debentures payable
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on that date, then on and after that date such Debentures shall be deemed to be
no longer outstanding and shall cease to accrue interest.
SECTION 2.09. TREASURY DEBENTURES.
In determining whether the Holders of the required principal
amount of Debentures have concurred in any direction, waiver or consent,
Debentures owned by the Company, or by any Affiliate of the Company, shall be
considered as though not outstanding, except that for the purposes of
determining whether the Trustee shall be protected in relying on any such
direction, waiver or consent, only Debentures that the Trustee knows are so
owned shall be so disregarded. Notwithstanding the foregoing, Debentures that
are to be acquired by the Company, any Subsidiary of the Company or an
Affiliate of the Company pursuant to an exchange offer, tender offer or other
agreement shall not be deemed to be owned by the Company, such Subsidiary of
the Company or an Affiliate of the Company until legal title to such
Debentures passes to the Company or such Subsidiary or Affiliate, as the case
may be.
SECTION 2.10. TEMPORARY DEBENTURES.
Until certificates representing Debentures are ready for
delivery, the Company may prepare and the Trustee, upon receipt of an
Authentication Order, shall authenticate temporary Debentures. Temporary
Debentures shall be substantially in the form of certificated Debentures but
may have variations that the Company considers appropriate for temporary
Debentures and as shall be reasonably acceptable to the Trustee. Without
unreasonable delay, the Company shall prepare and the Trustee shall
authenticate definitive Debentures in exchange for temporary Debentures.
Holders of temporary Debentures shall be entitled to all of
the benefits of this Indenture.
SECTION 2.11. CANCELLATION.
The Company at any time may deliver Debentures to the
Trustee for cancellation. The Registrar and Paying Agent shall forward to the
Trustee any Debentures surrendered to them for registration of transfer,
exchange or payment. The Trustee and no one else shall cancel all Debentures
surrendered for registration of transfer, exchange, payment, replacement or
cancellation and shall destroy cancelled Debentures (subject to the record
retention requirement of the Exchange Act). Certification of the destruction
of all cancelled Debentures shall be delivered to the Company. The Company
may not issue new Debentures to replace Debentures that it has paid or that
have been delivered to the Trustee for cancellation.
SECTION 2.12. DEFAULTED INTEREST.
If the Company defaults in a payment of interest on the
Debentures, it shall pay the defaulted interest in any lawful manner plus, to
the extent lawful, interest payable on the defaulted interest, to the Persons
who are Holders on a subsequent special record date, in each case at the rate
provided in the Debentures and in Section 4.01 hereof. The Company shall
notify the Trustee in writing of the amount of defaulted interest proposed to
be paid on each Debenture and the date of the proposed payment. The Company
shall fix or cause to be fixed each such special record date and
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payment date, provided that no such special record date shall be less than 10
days prior to the related payment date for such defaulted interest. At least 15
days before the special record date, the Company (or, upon the written request
of the Company, the Trustee in the name and at the expense of the Company) shall
mail or cause to be mailed to Holders a notice that states the special record
date, the related payment date and the amount of such interest to be paid.
SECTION 2.13. RECORD DATE.
The record date for purposes of determining the identity of
Holders of the Debentures entitled to vote or consent to any action by vote or
consent authorized or permitted under this Indenture shall be determined as
provided for in TIA ss.316(c).
SECTION 2.14. CUSIP NUMBER.
The Company in issuing the Debentures may use a "CUSIP"
number and, if it does so, the Trustee shall use the CUSIP number in notices
of redemption or exchange as a convenience to Holders, provided that any such
notice may state that no representation is made as to the correctness or
accuracy of the CUSIP number printed in the notice or on the Debentures and
that reliance may be placed only on the other identification numbers printed
on the Debentures. The Company shall promptly notify the Trustee of any change
in the CUSIP number.
ARTICLE 3
REDEMPTION AND PREPAYMENT
SECTION 3.01. NOTICES TO TRUSTEE.
If the Company elects to redeem Debentures pursuant to the
optional redemption provisions of Section 3.07 hereof, it shall furnish to the
Trustee, at least 30 days but not more than 60 days before a redemption date,
an Officers' Certificate setting forth (i) the clause of this Indenture
pursuant to which the redemption shall occur, (ii) the redemption date, (iii)
the principal amount of Debentures to be redeemed, and (iv) the redemption
price. In addition, in the case of a redemption pursuant to the provisions of
Section 3.07(a) hereof, if the obligations of the Company in respect of such
redemption are subject to the provisions of Section 3.04(b) hereof, such
Officer's Certificate shall so state.
SECTION 3.02. SELECTION OF DEBENTURES TO BE REDEEMED.
If less than all of the Debentures are to be redeemed or
purchased in an offer to purchase at any time, the Trustee shall select the
Debentures to be redeemed or purchased among the Holders of the Debentures in
compliance with the requirements of the principal national securities
exchange, if any, on which the Debentures are listed or, if the Debentures are
not so listed, on a pro rata basis, by lot or in accordance with any other
method the Trustee considers fair and appropriate. In the event of partial
redemption by lot, the particular Debentures to be redeemed shall be selected,
unless otherwise provided herein, not less than 30 nor more than 60 days prior
to the redemption date by the Trustee from the outstanding Debentures not
previously called for redemption.
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The Trustee shall promptly notify the Company in writing of
the Debentures selected for redemption and, in the case of any Debenture
selected for partial redemption, the principal amount thereof to be redeemed.
Debentures and portions of Debentures selected shall be in amounts of $1,000
or whole multiples of $1,000; except that if all of the Debentures of a Holder
are to be redeemed, the entire outstanding amount of Debentures held by such
Holder, even if not a multiple of $1,000, shall be redeemed. Except as
provided in the preceding sentence, provisions of this Indenture that apply to
Debentures called for redemption also apply to portions of Debentures called
for redemption.
SECTION 3.03. NOTICE OF REDEMPTION.
Subject to the provisions of Section 3.09 hereof, at least
30 days but not more than 60 days before a redemption date, the Company shall
mail or cause to be mailed, by first class mail to its registered address, a
notice of redemption to each Holder whose Debentures are to be redeemed.
The notice shall identify the Debentures to be redeemed and
shall state:
(a) the redemption date;
(b) the redemption price;
(c) if any Debenture is being redeemed in part, the portion
of the principal amount of such Debenture to be redeemed and that, after the
redemption date upon surrender of such Debenture, a new Debenture or
Debentures in principal amount equal to the unredeemed portion shall be issued
upon cancellation of the original Debenture;
(d) the name and address of the Paying Agent;
(e) that Debentures called for redemption must be
surrendered to the Paying Agent to collect the redemption price;
(f) that, unless the Company defaults in making such
redemption payment, interest on Debentures called for redemption ceases to
accrue on and after the redemption date;
(g) the paragraph of the Debentures and/or Section of this
Indenture pursuant to which the Debentures called for redemption are being
redeemed;
(h) that no representation is made as to the correctness or
accuracy of the CUSIP number, if any, listed in such notice or printed on the
Debentures; and
(i) in the case of a notice of redemption pursuant to the
provisions of Section 3.07(a) hereof subject to revocation in accordance with
the provisions of such Section, that the Company reserves the right to revoke
such notice of redemption at any time not later than the date which is ten
days prior to the date of redemption specified in such notice.
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At the Company's request, the Trustee shall give the notice
of redemption in the Company's name and at its expense; provided, however,
that the Company shall have delivered to the Trustee, at least 45 days prior
to the redemption date, an Officers' Certificate requesting that the Trustee
give such notice and setting forth the information to be stated in such notice
pursuant to this Section 3.03.
SECTION 3.04. EFFECT OF NOTICE OF REDEMPTION.
(a) Subject to the provisions of Section 3.04(b) hereof, (i)
once notice of redemption is mailed in accordance with Section 3.03 hereof,
Debentures called for redemption become irrevocably due and payable on the
redemption date at the redemption price, and (ii) a notice of redemption may
not be conditional.
(b) In the case of a notice of redemption pursuant to the
provisions of Section 3.07(a) hereof which is revoked in accordance with the
provisions of such Section, (i) the Debentures shall not become due on the
redemption date specified in such revocable notice of redemption, (ii) the
Company shall not be required to pay the redemption price or, unless the
proposed redemption date was also a semi-annual interest payment date, any
accrued interest in respect of the Debentures, on such date and (iii) the
principal of the Debentures shall remain due and payable as if such revocable
notice of redemption had not been given.
SECTION 3.05. DEPOSIT OF REDEMPTION PRICE.
One Business Day prior to the redemption date, the Company
shall deposit with the Trustee or with the Paying Agent money sufficient to
pay the redemption price of and accrued interest on all Debentures to be
redeemed on that date. The Trustee or the Paying Agent shall promptly return
to the Company any money deposited with the Trustee or the Paying Agent by the
Company in excess of the amounts necessary to pay the redemption price of and
accrued interest on all Debentures to be redeemed.
If the Company complies with the provisions of the preceding
paragraph, on and after the redemption date, interest shall cease to accrue on
the Debentures or the portions of Debentures called for redemption. If a
Debenture is redeemed on or after an interest record date but on or prior to
the related interest payment date, then any accrued and unpaid interest shall
be paid to the Person in whose name such Debenture was registered at the close
of business on such record date. If any Debenture called for redemption shall
not be so paid upon surrender for redemption because of the failure of the
Company to comply with the preceding paragraph, interest shall be paid on the
unpaid principal, from the redemption date until such principal is paid, and to
the extent lawful on any interest not paid on such unpaid principal, in each
case at the rate provided in the Debentures and in Section 4.01 hereof.
SECTION 3.06. DEBENTURES REDEEMED IN PART.
Upon surrender of a Debenture that is redeemed in part, the
Company shall issue and, upon the Company's written request, the Trustee shall
authenticate for the Holder at the expense of the Company a new Debenture
equal in principal amount to the unredeemed portion of the Debenture
surrendered.
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SECTION 3.07. OPTIONAL REDEMPTION.
(a) Except as set forth in clause (b) of this Section 3.07,
the Company shall not have the option to redeem the Debentures pursuant to
this Section 3.07 prior to _______, 2003. Thereafter, the Debentures will be
subject to redemption at any time at the option of the Company, in whole or in
part, upon not less than 30 nor more than 60 days' notice, at the redemption
prices (expressed as percentages of principal amount) set forth below plus
accrued and unpaid interest thereon to the applicable redemption date, if
redeemed during the twelve-month period beginning on _________ of the years
indicated below:
<TABLE>
<CAPTION>
Year Percentage
<S> <C>
2003..................................................................._______%
2004..................................................................._______%
2005..................................................................._______%
2006 and thereafter ..................................................100.000 %
</TABLE>
provided, however, that if the Company, at its option, specifies in the notice
of redemption provided for in this Section 3.07(a) that such notice is
revocable, then the Company may revoke such notice at its further option at
any time on or prior to the date which is 10 days prior to the redemption date
specified in such notice (provided such notice so specifies) by providing a
notice of revocation to the Trustee on or prior to the date on which the
Company's revocation right expires (and the Trustee shall promptly mail such
notice to the Holders by first class mail).
(b) Notwithstanding the provisions of clause (a) of this
Section 3.07, during the first 36 months after April __, 1998, the Company may
on any one or more occasions redeem up to $25.0 million in aggregate principal
amount of Debentures at a redemption price of 101% of the principal amount
thereof, plus accrued and unpaid interest thereon, if any, to the redemption
date, with the net cash proceeds of Public Equity Offerings by the Company;
provided that at least $50.0 million in aggregate principal amount of
Debentures remains outstanding immediately after the occurrence of such
redemption (excluding Debentures held by the Company and its Subsidiaries);
and provided, further, that such redemption shall occur within 120 days of the
date of the closing of such Public Equity Offering.
(c) Any redemption pursuant to this Section 3.07 shall be
made pursuant to the provisions of Section 3.01 through 3.06 hereof.
SECTION 3.08. MANDATORY REDEMPTION.
Except as set forth in Sections 4.10 and 4.15 hereof, the
Company shall not be required to make mandatory redemption payments with
respect to the Debentures. There are no sinking fund payments with respect to
the Debentures.
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SECTION 3.09. OFFER TO PURCHASE BY APPLICATION OF EXCESS PROCEEDS.
In the event that, pursuant to Section 4.10 hereof, the
Company shall be required to commence an offer to all Holders to purchase
Debentures (an "Asset Sale Offer"), it shall follow the procedures specified
below.
The Asset Sale Offer shall remain open for a period of 20
Business Days following its commencement and no longer, except to the extent
that a longer period is required by applicable law (the "Offer Period"). No
later than five Business Days after the termination of the Offer Period (the
"Purchase Date"), the Company shall purchase the principal amount of
Debentures required to be purchased pursuant to Section 4.10 hereof (the
"Offer Amount") or, if less than the Offer Amount has been tendered, all
Debentures tendered in response to the Asset Sale Offer. Payment for any
Debentures so purchased shall be made in the same manner as interest payments
are made.
If the Purchase Date is on or after an interest record date
and on or before the related interest payment date, any accrued and unpaid
interest shall be paid to the Person in whose name a Debenture is registered
at the close of business on such record date, and no additional interest shall
be payable to Holders who tender Debentures pursuant to the Asset Sale Offer.
Upon the commencement of an Asset Sale Offer, the Company
shall send, by first class mail, a notice to the Trustee and each of the
Holders, with a copy to the Trustee. The notice shall contain all instructions
and materials necessary to enable such Holders to tender Debentures pursuant
to the Asset Sale Offer. The Asset Sale Offer shall be made to all Holders.
The notice, which shall govern the terms of the Asset Sale Offer, shall state:
(a) that the Asset Sale Offer is being made pursuant to this
Section 3.09 and Section 4.10 hereof and the length of time the Asset Sale
Offer shall remain open;
(b) the Offer Amount, the purchase price and the Purchase
Date;
(c) that any Debenture not tendered or accepted for payment
shall continue to accrue interest;
(d) that, unless the Company defaults in making such
payment, any Debenture accepted for payment pursuant to the Asset Sale Offer
shall cease to accrue interest after the Purchase Date;
(e) that Holders electing to have a Debenture purchased
pursuant to an Asset Sale Offer may only elect to have all of such Debenture
purchased and may not elect to have only a portion of such Debenture
purchased;
(f) that Holders electing to have a Debenture purchased
pursuant to any Asset Sale Offer shall be required to surrender the Debenture,
with the form entitled "Option of Holder to Elect Purchase" on the reverse of
the Debenture completed, or transfer by book-entry transfer, to the Company, a
depositary, if appointed by the Company, or a Paying Agent at the address
specified in the notice at least three days before the Purchase Date;
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(g) that Holders shall be entitled to withdraw their
election if the Company, the Depositary or the Paying Agent, as the case may
be, receives, not later than the expiration of the Offer Period, a telegram,
telex, facsimile transmission or letter setting forth the name of the Holder,
the principal amount of the Debenture the Holder delivered for purchase and a
statement that such Holder is withdrawing his or her election to have such
Debenture purchased;
(h) that, if the aggregate principal amount of Debentures
surrendered by Holders exceeds the Offer Amount, the Trustee shall select the
Debentures to be purchased on a pro rata basis (with such adjustments as may
be deemed appropriate by the Company so that only Debentures in denominations
of $1,000, or integral multiples thereof, shall be purchased); and
(i) that Holders whose Debentures were purchased only in
part shall be issued new Debentures equal in principal amount to the
unpurchased portion of the Debentures surrendered (or transferred by
book-entry transfer).
On or before the Purchase Date, the Company shall, to the
extent lawful, accept for payment, on a pro rata basis to the extent
necessary, the Offer Amount of Debentures or portions thereof tendered
pursuant to the Asset Sale Offer, or if less than the Offer Amount has been
tendered, all Debentures tendered, and shall deliver to the Trustee an
Officers' Certificate stating that such Debentures or portions thereof were
accepted for payment by the Company in accordance with the terms of this
Section 3.09. The Company, the Depositary or the Paying Agent, as the case may
be, shall promptly (but in any case not later than five days after the
Purchase Date) mail or deliver to each tendering Holder an amount equal to the
purchase price of the Debentures tendered by such Holder and accepted by the
Company for purchase, and the Company shall promptly issue a new Debenture,
and the Trustee, upon written request from the Company shall authenticate and
mail or deliver such new Debenture to such Holder, in a principal amount equal
to any unpurchased portion of the Debenture surrendered. Any Debenture not so
accepted shall be promptly mailed or delivered by the Company to the Holder
thereof. The Company shall publicly announce the results of the Asset Sale
Offer on the Purchase Date.
Other than as specifically provided in this Section 3.09,
any purchase pursuant to this Section 3.09 shall be made pursuant to the
provisions of Sections 3.01 through 3.06 hereof. Upon completion of an Asset
Sale Offer, the amount of Excess Proceeds shall be reset at zero.
ARTICLE 4
COVENANTS
SECTION 4.01. PAYMENT OF DEBENTURES.
The Company shall pay or cause to be paid the principal of,
premium, if any, and interest on the Debentures on the dates and in the manner
provided in the Debentures. Principal, premium, if any, and interest shall be
considered paid on the date due if the Paying Agent, if other than the Company
or a Subsidiary thereof, holds as of 10:00 a.m. Eastern Time on the due date
money deposited by the Company in immediately available funds and designated
for and sufficient to pay all principal, premium, if any, and interest then
due.
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The Company shall pay interest (including post-petition
interest in any proceeding under any Bankruptcy Law) on overdue principal and
premium, if any, at the rate equal to 1% per annum in excess of the then
applicable interest rate on the Debentures to the extent lawful; it shall pay
interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue installments of interest (without regard to any
applicable grace period) at the same rate to the extent lawful.
SECTION 4.02. MAINTENANCE OF OFFICE OR AGENCY.
The Company shall maintain in the Borough of Manhattan, The
City of New York, an office or agency (which may be an office of the Trustee
or an affiliate of the Trustee, Registrar or co-registrar) where Debentures
may be surrendered for registration of transfer or for exchange and where
notices and demands to or upon the Company in respect of the Debentures and
this Indenture may be served. The Company shall give prompt written notice to
the Trustee of the location, and any change in the location, of such office or
agency. If at any time the Company shall fail to maintain any such required
office or agency or shall fail to furnish the Trustee with the address
thereof, such presentations, surrenders, notices and demands may be made or
served at the Corporate Trust Office of the Trustee.
The Company may also from time to time designate one or more
other offices or agencies where the Debentures may be presented or surrendered
for any or all such purposes and may from time to time rescind such
designations; provided, however, that no such designation or rescission shall
in any manner relieve the Company of its obligation to maintain an office or
agency in the Borough of Manhattan, The City of New York for such purposes.
The Company shall give prompt written notice to the Trustee of any such
designation or rescission and of any change in the location of any such other
office or agency.
The Company hereby designates the Corporate Trust Office of
the Trustee as one such office or agency of the Company in accordance with
Section 2.03.
SECTION 4.03. REPORTS.
Whether or not required by the rules and regulations of the
Securities and Exchange Commission (the "Commission"), so long as any Debentures
are outstanding, the Company shall furnish to the Trustee and, upon receipt
thereof, the Trustee shall mail to the Holders of Debentures all quarterly and
annual financial information that would be required to be contained in a filing
with the Commission on Forms 10-Q and 10-K if the Company were required to file
such Forms, including a "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and, with respect to the annual information
only, a report thereon by the Company's certified independent accountants, in
each case within the time periods specified in the Commission's rules and
regulations. In addition, whether or not required by rules and regulations of
the Commission, the Company shall file a copy of all such information and
reports with the Commission for public availability within the time periods
specified in the Commission's rules and regulations (unless the Commission will
not accept such a filing) and make such information available to securities
analysts and prospective investors upon request. Any materials required to be
furnished to Holders of Debentures by this Section 4.03 shall discuss, in
reasonable detail, either on the face of the financial statements included
therein or in the footnotes thereto and in any Management's
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Discussion and Analysis of Financial Condition and Results of Operations, the
financial condition and results of operations of the Company and the Guarantors,
if any, separate from the financial condition and results of operations of the
other Subsidiaries of the Company. The Company and each Guarantor, if any, shall
also comply with the provisions of TIA ss.314(a).
SECTION 4.04. COMPLIANCE CERTIFICATE.
(a) The Company and each Guarantor (to the extent that such
Guarantor is so required under the TIA) shall deliver to the Trustee, within
120 days after the end of each fiscal year, an Officers' Certificate stating
that a review of the activities of the Company and its Subsidiaries during the
preceding fiscal year has been made under the supervision of the signing
Officers with a view to determining whether the Company has kept, observed,
performed and fulfilled its obligations under this Indenture and the Security
and Pledge Agreement, and further stating, as to each such Officer signing
such certificate, that to the best of his or her knowledge the Company has
kept, observed, performed and fulfilled each and every covenant contained in
this Indenture and the Security and Pledge Agreement and is not in default in
the performance or observance of any of the terms, provisions and conditions
of this Indenture or the Security and Pledge Agreement (or, if a Default or
Event of Default shall have occurred, describing all such Defaults or Events
of Default of which he or she may have knowledge and what action the Company
is taking or proposes to take with respect thereto) and that to the best of
his or her knowledge no event has occurred and remains in existence by reason
of which payments on account of the principal of or interest, if any, on the
Debentures are prohibited or, if such event has occurred, a description of the
event and what action the Company is taking or proposes to take with respect
thereto.
(b) So long as not contrary to the then current
recommendations of the American Institute of Certified Public Accountants, the
year-end financial statements delivered pursuant to Section 4.03 above shall be
accompanied by a written statement of the Company's independent public
accountants (who shall be a firm of established national reputation) that in
making the examination necessary for certification of such financial statements,
nothing has come to their attention that would lead them to believe (i) that the
Company has violated any provisions of Article 4 (other than Sections 4.02,
4.03 (except as set forth below), 4.04 and 4.06, as to which no belief need be
expressed) or Article 5 hereof or, if any such violation has occurred,
specifying the nature and period of existence thereof or (ii) that the
information contained in the Company's filings on Forms 10-Q and 10-K failed to
comply in any material respect with the requirements of Regulations S-K and S-X
under the Securities Act insofar as they relate to accounting matters or, if any
such filing has failed to comply in all material respect with such Regulations,
specifying the nature of such violations; it being understood that such
accountants shall not be liable directly or indirectly to any Person for any
failure to obtain knowledge of any such violation.
(c) The Company shall, so long as any of the Debentures are
outstanding, deliver to the Trustee, forthwith upon any Officer becoming aware
of any Default or Event of Default, an Officers' Certificate specifying such
Default or Event of Default and what action the Company is taking or proposes
to take with respect thereto.
SECTION 4.05. TAXES.
The Company shall pay, and shall cause each of its
Subsidiaries to pay, prior to delinquency, all material taxes, assessments,
and governmental levies except such as are contested in good faith and by
appropriate proceedings or where the failure to effect such payment is not
adverse in any material respect to the Holders of the Debentures.
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SECTION 4.06. STAY, EXTENSION AND USURY LAWS.
The Company hereby, and each of the Guarantors by execution
and delivery of its Subsidiary Guarantee, covenants (to the extent that it may
lawfully do so) that it shall not at any time insist upon, plead, or in any
manner whatsoever claim or take the benefit or advantage of, any stay,
extension or usury law wherever enacted, now or at any time hereafter in
force, that may affect the covenants or the performance of this Indenture; and
the Company and each of the Guarantors (to the extent that it may lawfully do
so) hereby expressly waives all benefit or advantage of any such law, and
covenants that it shall not, by resort to any such law, hinder, delay or
impede the execution of any power herein granted to the Trustee, but shall
suffer and permit the execution of every such power as though no such law has
been enacted.
SECTION 4.07. RESTRICTED PAYMENTS.
(a) The Company shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly:
(i) declare or pay any dividend or make any other
payment or distribution on account of the Company's or any of its
Subsidiaries' Equity Interests (including, without limitation, any
payment in connection with any merger or consolidation involving the
Company) or to the direct or indirect holders of the Company's Equity
Interests (other than dividends or distributions payable in Equity
Interests (other than Disqualified Stock) of the Company or dividends
or distributions payable solely to the Company or any Wholly Owned
Subsidiary of the Company);
(ii) purchase, redeem or otherwise acquire or
retire for value (including, without limitation, in connection with
any merger or consolidation involving the Company) any Equity
Interests in the Company or any Affiliate of the Company (other than
any such Equity Interests owned by the Company or any Wholly Owned
Subsidiary of the Company);
(iii) make any payment on or with respect to, or
purchase, redeem, defease or otherwise acquire or retire for value
any Indebtedness that is subordinated to the Debentures or any
Guarantee thereof, other than a payment of interest or principal at
the Stated Maturity for such payment; or
(iv) make any Restricted Investment
(all such payments and other actions set forth in clauses (i) through (iv)
above being collectively referred to as "Restricted Payments"), unless, at the
time of and after giving effect to such Restricted Payment:
(x) no Default or Event of Default shall have
occurred and be continuing or would occur as a consequence thereof; and
(y) the Company would, at the time of such
Restricted Payment and after giving pro forma effect thereto as if
such Restricted Payment had been made at the beginning
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of the applicable four-quarter period, have been permitted to incur
at least $1.00 of additional Indebtedness pursuant to the provisions
of Section 4.09(a) hereof; and
(z) such Restricted Payment, together with the
aggregate of all other Restricted Payments made by the Company and
its Subsidiaries after the date of this Indenture (excluding
Restricted Payments permitted by the provisions of Section
4.07(b)(ii)(iii) and (vi) to the extent that payments to Finlay
Enterprises pursuant to the Tax Allocation Agreement are less than or
equal to the total tax liabilities of the Company and its
Subsidiaries that would be payable if the Company and its
Subsidiaries were to file a separate consolidated return hereof), is
less than the sum of (1) 50% of the Consolidated Net Income of the
Company (which Consolidated Net Income shall first be reduced by the
amount of any payments to Finlay Enterprises of the type described in
Section 4.07(b)(viii) hereof) for the period (taken as one accounting
period) from the beginning of the first fiscal quarter commencing
after the date of this Indenture to the end of the Company's most
recently ended fiscal quarter for which internal financial statements
are available at the time of such Restricted Payment (or, if such
Consolidated Net Income for such period is a deficit, less 100% of
such deficit), plus (2) 100% of the aggregate net cash proceeds
received by the Company from the issue or sale since the date of this
Indenture of, or capital contributions with respect to, Equity
Interests of the Company, or of debt securities of the Company that
have been converted into such Equity Interests (other than Equity
Interests (or convertible debt securities) sold to a Subsidiary of
the Company and other than Disqualified Stock or debt securities that
have been converted into Disqualified Stock), plus (3) to the extent
that any Restricted Investment that was made after the date of this
Indenture is sold for cash or otherwise liquidated or repaid for
cash, the lesser of (A) the cash return of capital with respect to
such Restricted Investment (less the cost of disposition, if any) and
(B) the initial amount of such Restricted Investment, plus (4) 100%
of any dividends, distributions or other interest actually received
in cash by the Company after the date of this Indenture from a
Subsidiary of the Company, the Net Income of which Subsidiary has
been excluded from the computation of Consolidated Net Income; plus
(5) $7.5 million.
(b) The provisions of Section 4.07(a) hereof will not
prohibit:
(i) the payment of any dividend within 60 days
after the date of declaration thereof, if at said date of declaration
such payment would have complied with the provisions of this
Indenture;
(ii) the redemption, repurchase, retirement or
other acquisition of any Equity Interests of the Company in exchange
for, or out of the proceeds of, the substantially concurrent sale
(other than to a Subsidiary of the Company) of other Equity Interests
of the Company (other than any Disqualified Stock); provided that,
the amount of any such net cash proceeds that are utilized for any
such redemption, repurchase, retirement or other acquisition shall be
excluded for purposes of Section 4.07(a)(z)(2) hereof;
(iii) the defeasance, redemption or repurchase of
subordinated Indebtedness with the net cash proceeds from an
incurrence of Permitted Refinancing Indebtedness or the substantially
concurrent sale (other than to a Subsidiary of the Company) of Equity
Interests of the Company (other than Disqualified Stock); provided
that, the
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amount of any such net cash proceeds that are utilized for
any such defeasance, redemption or repurchase shall be excluded for
purposes of Section 4.07(a)(z)(2) hereof;
(iv) payments to Finlay Enterprises to permit the
substantially concurrent repurchase, redemption or other acquisition
or retirement for value of any Equity Interests of Finlay Enterprises
held by any officer, employee, consultant or director of Finlay
Enterprises or any of its Subsidiaries, or by the estate of any such
Person, pursuant to any equity subscription, stock option, employment
or similar agreement upon the death, retirement or termination, as
the case may be, of such Person; provided that the aggregate price
paid for all such repurchased, redeemed, acquired or retired Equity
Interests shall not exceed $3.0 million during any twelve-month
period (which amount shall not be cumulative), plus (A) the aggregate
cash proceeds received by Finlay Enterprises during such twelve-month
period from any reissuance of Equity Interests by Finlay Enterprises
to any officer, employee, consultant or director of Finlay
Enterprises or any of its Subsidiaries, plus (B) the aggregate
amount, if any, paid during such twelve-month period in connection
with the repurchase, redemption, retirement or acquisition of Equity
Interests of Finlay Enterprises pursuant to any one or more
agreements between Finlay Enterprises and Arthur E. Reiner as in
effect on the date of this Indenture, and, provided further, no
Default or Event of Default shall have occurred and be continuing
immediately after such transaction;
(v) purchases of Equity Interests upon cashless
exercise of options, to the extent cashless exercise is permitted
under the terms of the relevant stock option agreement and of the
incentive plan pursuant to which such options were issued; and
(vi) required purchases of subordinated
Indebtedness upon a Change of Control or similar event constituting a
"change in control" for purposes of the agreement or agreements
governing such subordinated Indebtedness, provided that, prior to
making any such purchases of such Subordinated Indebtedness, the
Company makes a Change of Control Offer and makes the Change of
Control Payments on the Change of Control Payment Date
(in each case, whether or not otherwise required to do so by this
Indenture) that would be required if a Change in Control had
occurred.
(c) In determining whether any Restricted Payment is
permitted by this Section 4.07, the Company may allocate or reallocate any
portion or all of such Restricted Payment among the clauses (i) through (vi)
of Section 4.07(b) hereof or among such clauses and Section 4.07(a) hereof,
including clauses (x), (y) and (z), provided that, after giving effect to such
allocation or reallocation, all such Restricted Payments, or allocated
portions thereof, would be permitted under the various provisions of such
Sections.
(d) The amount of all Restricted Payments (other than cash)
shall be the fair market value on the date of the Restricted Payment of the
asset(s) proposed to be transferred by the Company or such Subsidiary, as the
case may be, pursuant to the Restricted Payment. The fair market value of any
non-cash Restricted Payment shall be determined by the Board of Directors,
whose resolutions with respect thereto shall be set forth in Officers'
Certificate delivered to the Trustee, such determination to be based upon an
opinion or appraisal issued by an accountant, appraisal or investment banking
firm of national standing if such fair market value exceeds $10.0 million. Not
later than the date of making any Restricted Payment, the Company shall
deliver to the
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Trustee an Officers' Certificate stating that such Restricted Payment is
permitted and setting forth the basis upon which the calculations required by
this Section 4.07 were computed, which calculations shall be based upon the
Company's latest available financial statements.
SECTION 4.08. DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING
SUBSIDIARIES.
The Company shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, create or otherwise cause or suffer
to exist or become effective any encumbrance or restriction on the ability of
any Subsidiary of the Company to (i)(a) pay dividends or make any other
distributions to the Company or any of its Subsidiaries (1) on its Capital
Stock or (2) with respect to any other interest or participation in, or
measured by, its profits, or (b) pay any indebtedness owed to the Company or
any of its Subsidiaries; (ii) make loans or advances to the Company or any of
its Subsidiaries; or (iii) transfer any of its properties or assets to the
Company or any of its Subsidiaries, except for such encumbrances or
restrictions existing under or by reason of (a) Existing Indebtedness as in
effect on the date hereof, (b) the Revolving Credit Agreement and the Gold
Consignment Agreement as in effect as of the date hereof, and any amendments,
modifications, restatements, renewals, increases, supplements, refundings,
replacements or refinancings thereof, provided that such amendments,
modifications, restatements, renewals, increases, supplements, refundings,
replacements or refinancings are no more restrictive with respect to such
dividend and other payment restrictions than those contained in the Revolving
Credit Agreement and the Gold Consignment Agreement as in effect on the date,
(c) this Indenture and the Debentures, and the Senior Note Indenture and the
Senior Notes, (d) applicable law, (e) any instrument governing Indebtedness or
Capital Stock of a Person acquired by the Company or any of its Subsidiaries
as in effect at the time of such acquisition (except to the extent such
Indebtedness was incurred in connection with or in contemplation of such
acquisition), which encumbrance or restriction is not applicable to any
Person, or the properties or assets of any Person, other than the Person and
its Subsidiaries, or the property or assets of the Person and its
Subsidiaries, so acquired, provided that, in the case of Indebtedness, such
Indebtedness was permitted by the terms hereof to be incurred, (f) customary
non-assignment provisions in leases and other contracts entered into in the
ordinary course of business and consistent with past practices, (g) purchase
money obligations for property acquired in the ordinary course of business that
impose restrictions of the nature described in the beginning of this clause
(iii) on the property so acquired, (h) Permitted Refinancing Indebtedness,
provided that the restrictions contained in the agreements governing such
Permitted Refinancing Indebtedness are no more restrictive than those contained
in the agreements governing the Indebtedness being refinanced, (i) Permitted
Liens, (j) any instrument binding upon a Receivables Subsidiary, provided that
such instrument does not bind the Company or any other Subsidiary of the Company
or any of their respective properties or assets or (k) any restriction with
respect to a Subsidiary imposed pursuant to an agreement entered into for the
sale or disposition of all or substantially all of the Capital Stock or assets
of such Subsidiary pending the closing of such sale or disposition.
SECTION 4.09. INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF PREFERRED
STOCK.
(a) The Company
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(i) shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, create, incur, issue,
assume, guaranty or otherwise become directly or indirectly liable,
contingently or otherwise, with respect to (collectively, "incur")
any Indebtedness (including Acquired Debt), and
(ii) shall not issue any Disqualified Stock and
shall not permit any of its Subsidiaries to issue any shares of
preferred stock;
provided, however, that the Company and its Subsidiaries may incur
Indebtedness (including Acquired Debt) or issue shares of Disqualified Stock
if the Fixed Charge Coverage Ratio for the Company's most recently ended four
full fiscal quarters for which internal financial statements are available
immediately preceding the date on which such additional Indebtedness is
incurred or such Disqualified Stock is issued would have been at least 2.0 to
1, determined on a pro forma basis (including a pro forma application of the
net proceeds therefrom), as if the additional Indebtedness had been incurred,
or the Disqualified Stock had been issued, as the case may be, at the
beginning of such four-quarter period.
(b) The provisions of Section 4.09(a) hereof shall not apply
to any of the following (collectively, "Permitted Debt"):
(i) the incurrence by the Company or any of its
Subsidiaries of revolving credit Indebtedness and letter of credit
obligations pursuant to the Revolving Credit Agreement in an
aggregate principal amount not to exceed at the time of incurrence
thereof the greater of (x) $275.0 million or (y) 70% of inventory
plus 85% of accounts receivable (each as determined in accordance
with GAAP, but excluding accounts receivable that are past due by
more than 60 days, other than by reason of any Bankruptcy Law) at any
one time outstanding, provided that such $275.0 million specified in
clause (i)(x) above shall be permanently reduced by the aggregate
amount of Indebtedness of all Receivables Subsidiaries of the Company
and its Subsidiaries;
(ii) the incurrence by the Company and its
Subsidiaries of the Existing Indebtedness;
(iii) the incurrence by the Company of Indebtedness
represented by the Debentures and by Finlay Jewelry of Indebtedness
represented by the Senior Notes;
(iv) the incurrence by Finlay Jewelry of
Indebtedness or other obligations in an aggregate principal amount of
up to the greater of (x) $37.0 million and (y) 90% of the fair market
value of the fine gold content of specified Consignment Inventory
eligible to be consigned under (a) the Gold Consignment Agreement or
(b) a substantially similar gold consignment agreement that Finlay
Jewelry may enter into subsequent to the date of this Indenture which
provides for the transfer of title to the gold content of Consignment
Inventory from the relevant vendor to a gold consignor; provided that
such $37.0 million specified in clause (x) above shall be permanently
reduced by the aggregate amount of all Net Proceeds of Asset Sales
applied to repay such Indebtedness pursuant to Section 4.10(b)(i)
hereof;
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(v) the incurrence by the Company or any of its
Subsidiaries of Indebtedness represented by Capital Lease Obligations
in aggregate principal amount not to exceed $4.0 million at any time
outstanding;
(vi) the incurrence by the Company or any of its
Subsidiaries of Indebtedness represented by mortgage financings or
purchase money obligations, in each case incurred for the purpose of
financing all or any part of the purchase price or cost of
construction or improvement of property, plant or equipment used in
the business of the Company or such Subsidiary, in an aggregate
principal amount not to exceed $4.0 million at any time outstanding;
(vii) the incurrence by the Company or any of its
Subsidiaries of Permitted Refinancing Indebtedness;
(viii) the incurrence by the Company or any of its
Subsidiaries of intercompany Indebtedness between or among the
Company and any of its Wholly Owned Subsidiaries; provided, however,
that (x) if the Company is the obligor on such Indebtedness, such
Indebtedness is expressly subordinate (in accordance with the terms
of this Indenture) to the payment in full of all Obligations with
respect to the Debentures and (y)(A) any subsequent issuance or
transfer of Equity Interests that results in any such Indebtedness
being held by a Person other than the Company or a Wholly Owned
Subsidiary of the Company and (B) any sale or other transfer of any
such Indebtedness to a Person that is not either the Company or a
Wholly Owned Subsidiary of the Company shall be deemed, in each case,
to constitute an incurrence of such Indebtedness by the Company or
such Subsidiary, as the case may be;
(ix) the incurrence by the Company or any of its
Subsidiaries of Hedging Obligations that are incurred for the purpose
of fixing or hedging interest rate risk with respect to any floating
rate Indebtedness that is permitted by the terms of this Indenture to
be outstanding;
(x) the incurrence by the Company or any of its
Subsidiaries of Hedging Obligations that are incurred for the purpose
of fixing or hedging commodity price risk, entered into in the
ordinary course of business and not for speculative purposes, to
protect against fluctuations in the prices of raw materials used in
the Company's or such Subsidiary's business in amounts reasonably
related to such business;
(xi) the incurrence by the Company or any of its
Subsidiaries of Hedging Obligations that are incurred for the purpose
of fixing or hedging foreign exchange rate risk, entered into in the
ordinary course of business and not for speculative purposes and in
amounts reasonably related to the businesses of the Company and its
Subsidiaries;
(xii) the incurrence by the Company or any of its
Subsidiaries of Acquired Debt of a Person incurred prior to the date
upon which such Person was (or such Person's assets were) acquired by
the Company or any of its Subsidiaries (excluding Indebtedness
incurred by such Person in connection with, or in contemplation of,
such acquisition) in an aggregate principal amount not to exceed
$10.0 million at any one time outstanding;
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(xiii) the incurrence by the Company or any of its
Subsidiaries of Indebtedness in respect of worker's compensation
claims, self-insurance obligations, performance, surety and similar
bonds and completion guarantees provided by the Company or any of its
Subsidiaries in the ordinary course of business;
(xiv) the incurrence by the Company or any of its
Subsidiaries of Indebtedness arising from any agreement entered into
by the Company or any of its Subsidiaries providing for
indemnification, purchase price adjustment or similar obligations, in
each case incurred or assumed in connection with any asset sale;
(xv) the incurrence of Indebtedness by the Company
or any of its Subsidiaries in connection with a Guarantee of any
Indebtedness of the Company or any of its Subsidiaries that was
permitted to be incurred by another provision of this Section 4.09;
(xvi) the incurrence by the Company or any of its
Subsidiaries of Indebtedness arising from the honoring by a bank or
other financial institution of a check, draft or similar instrument
inadvertently (except in the case of daylight overdrafts) drawn
against insufficient funds in the ordinary course of business;
provided, however, that such Indebtedness is extinguished within five
Business Days of incurrence; and
(xvii) the incurrence by the Company or any of its
Subsidiaries of Indebtedness (in addition to Indebtedness permitted
by any other clause of this Section 4.09(b) in an aggregate principal
amount (or accreted value, as applicable) at any time outstanding not
to exceed $40.0 million.
(c) For purposes of determining compliance with the
provisions of Section 4.09(b), in the event that an item of Indebtedness meets
the criteria of more than one of the categories of Permitted Debt described in
Sections 4.09(b)(i) through (xvii) above or is entitled to be incurred
pursuant to Section 4.09(a) hereof, the Company shall, in its sole discretion,
classify such item of Indebtedness in any manner that complies with the
provisions of this Section 4.09 and such item of Indebtedness will be treated
as having been incurred pursuant to only one of such clauses or pursuant to
Section 4.09(a) hereof. Indebtedness permitted to be incurred pursuant to
Sections 4.09(b)(i) through (xvii) above may be incurred pursuant to one
agreement or several agreements with one lender or several lenders.
SECTION 4.10. ASSET SALES.
(a) The Company shall not, and shall not permit any of its
Subsidiaries to, engage in an Asset Sale unless (i) the Company (or the
Subsidiary, as the case may be) receives consideration at the time of such
Asset Sale at least equal to the fair market value (evidenced by a resolution
of the Board of Directors set forth in an Officers' Certificate delivered to
the Trustee) of the assets or Equity Interests issued or sold or otherwise
disposed of and (ii) at least 75% of the consideration therefor received by
the Company or such Subsidiary is in the form of (a) cash or Cash Equivalents
or (b) Qualified Proceeds, provided, that the aggregate fair market value of
Qualified Proceeds that may be received pursuant to this clause (ii)(b) shall
not exceed an aggregate of $10.0 million after the date of this Indenture;
provided further, that the amount of
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(x) any liabilities (as shown on the Company's or such Subsidiary's most recent
balance sheet), of the Company or any Subsidiary of the Company (other than
contingent liabilities and liabilities that are by their terms subordinated to
the Debentures or any guarantee thereof) that are assumed by the transferee of
any such assets pursuant to a customary novation agreement that releases the
Company or such Subsidiary from further liability and (y) any securities, notes
or other obligations received by the Company or any such Subsidiary from such
transferee that are promptly (and in any event, in not more than 30 days)
converted by the Company or such Subsidiary into cash or Cash Equivalents (to
the extent of the cash or Cash Equivalents received), shall be deemed to be cash
for purposes of this provision.
(b) Within 360 days after the receipt of any Net Proceeds
from an Asset Sale, the Company may apply such Net Proceeds at its option to
(i) repay revolving indebtedness or other obligations either under the
Revolving Credit Agreement or the Gold Consignment Agreement (or a
substantially similar gold consignment agreement pursuant to Section
4.09(b)(iv)(y)(b) hereof) or a combination thereof (and to correspondingly
permanently reduce revolving borrowing commitments or revolving consignment
commitments or a combination thereof with respect thereto) or (ii) the
acquisition of a controlling interest in another business, the making of
capital expenditures or the acquisition of other assets used or useable, in
each such case, in the business engaged in by the Company or any of its
Subsidiaries on the date hereof or in a business reasonably related thereto.
Pending the final application of any such Net Proceeds, the Company may
temporarily reduce Senior Revolving Debt or otherwise make an Investment of
such Net Proceeds in any manner that is not prohibited by the terms of this
Indenture. Any Net Proceeds from Asset Sales that are not applied or invested
as provided in the first sentence of this Section 4.10(b) will be deemed to
constitute "Excess Proceeds". When the aggregate amount of Excess Proceeds
exceeds $10.0 million, the Company shall make an offer to all Holders of
Debentures (an "Asset Sale Offer") in accordance with the provisions of Section
3.09 hereof to purchase the maximum principal amount of Debentures that may be
purchased out of such Excess Proceeds, at an offer price in cash in an amount
equal to 100% of the principal amount thereof plus accrued and unpaid interest
thereon, if any, to the date of purchase. To the extent that the aggregate
amount of Debentures tendered pursuant to an Asset Sale Offer is less than the
Excess Proceeds, the Company or any of its Subsidiaries may use any remaining
Excess Proceeds for general corporate purposes or otherwise make an Investment
of such remaining amounts in any manner that is not prohibited by this
Indenture. If the aggregate principal amount of Debentures surrendered by
Holders thereof exceeds the amount of Excess Proceeds, the Trustee shall select
the Debentures to be purchased on a pro rata basis. Notwithstanding the
foregoing, the Company shall not be required to make an Asset Sale Offer if (i)
the Company's obligation to make such Asset Sale Offer is due to an Asset Sale
by one or more of the Company's Subsidiaries, (ii) as a result of such Asset
Sale (or Asset Sales), Finlay Jewelry is required to make and does make an offer
similar to an Asset Sale Offer to the holders of the Senior Notes in accordance
with the terms of the Senior Note Indenture and (iii) to the extent that the
aggregate amount of Senior Notes tendered pursuant to such offer is less than
the Excess Proceeds, Finlay Jewelry makes an Asset Sale Offer to all Holders of
Debentures with such remaining Excess Proceeds.
SECTION 4.11. EQUITY INTERESTS OF WHOLLY OWNED SUBSIDIARIES.
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The Company (a) shall not, and shall not permit any Wholly
Owned Subsidiary of the Company to, transfer, convey, sell, lease or otherwise
dispose of any Capital Stock of any Wholly Owned Subsidiary of the Company to
any Person (other than to the Company or to a Wholly Owned Subsidiary of the
Company), unless (i) such transfer, conveyance, sale, lease or other
disposition is of all the Capital Stock of such Wholly Owned Subsidiary and
(ii) the Net Proceeds from such transfer, conveyance, sale, lease or other
disposition are applied in accordance with the provisions of Section 4.10 and,
if applicable pursuant to the provisions of Section 4.10 hereof, Section 3.09
hereof and (b) shall not permit any Wholly Owned Subsidiary of the Company to
issue any of its Equity Interests (other than, if necessary, shares of its
Capital Stock constituting directors' qualifying shares) to any Person other
than to the Company or to a Wholly Owned Subsidiary of the Company.
SECTION 4.12. TRANSACTIONS WITH AFFILIATES.
The Company shall not, and shall not permit any of its
Subsidiaries to, make any payment to or Investment in, or sell, lease,
transfer or otherwise dispose of any of its properties or assets to, or
purchase any property or assets from, or enter into or make or amend any
contract, agreement, understanding, loan, advance or guarantee with, or for
the benefit of, any Affiliate (each of the foregoing, an "Affiliate
Transaction"), unless (i) such Affiliate Transaction is on terms that are no
less favorable to the Company or the relevant Subsidiary than those that would
have been obtained in a comparable transaction by the Company or such
Subsidiary with an unrelated Person and (ii) the Company delivers to the
Trustee (a) with respect to any Affiliate Transaction or series of related
Affiliate Transactions involving aggregate consideration in excess of $1.0
million, a resolution approved by a majority of the disinterested members of
the Board of Directors set forth in an Officers' Certificate certifying that
such Affiliate Transaction complies with clause (i) above and (b) with respect
to any Affiliate Transaction or series of related Affiliate Transactions
involving aggregate consideration in excess of $10.0 million, an opinion issued
by an accounting, appraisal or investment banking firm of national standing as
to the fairness of such Affiliate Transaction, from a financial point of view,
to the Holders; provided that (a) any employment, deferred compensation, stock
option, noncompetition, consulting, indemnification or similar agreement entered
into by the Company or any of its Subsidiaries in the ordinary course of
business and consistent with the past practice of the Company or such
Subsidiary, (b) transactions between or among the Company and/or its Wholly
Owned Subsidiaries, (c) Restricted Payments and Permitted Investments that are
permitted by the provisions of Section 4.07 hereof, (d) any payments due to the
Thomas H. Lee Capital LLC or Desai Capital Management Incorporated under the Lee
Management Agreement or the Desai Management Agreement, each as amended as of
the date hereof, (e) the performance by the Company of its obligations under the
Stockholders' Agreement and the Registration Rights Agreement, each as amended
as of the date hereof, (f) any payments by or to the Company or any Wholly Owned
Subsidiary of the Company pursuant to the terms of the Tax Allocation Agreement,
as amended as of the date hereof, (g) transfers, conveyances, sales, leases or
other dispositions of Receivables to a Receivables Subsidiary, and (h)
contracts, agreements and understandings in existence in writing on the date
hereof and as in effect on such date, in each case, shall not be deemed
Affiliate Transactions.
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SECTION 4.13. LIENS.
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The Company shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly create, incur, assume or otherwise
cause or suffer to exist or become effective any Lien of any kind, other than
Permitted Liens, upon any of their property or assets, now owned or hereafter
acquired, or any income or profits therefrom or assign or convey any right to
receive income therefrom, securing Indebtedness or trade payables, unless all
payments due hereunder and under the Debentures are secured on an equal and
ratable basis with the obligations so secured until such time as such
obligations are no longer secured by a Lien.
SECTION 4.14. CORPORATE EXISTENCE.
Subject to Article 5 hereof, the Company shall do or cause
to be done all things necessary to preserve and keep in full force and effect
(i) its corporate existence, and the corporate, partnership or other existence
of each of its Subsidiaries, in accordance with the respective organizational
documents (as the same may be amended from time to time) of the Company or any
such Subsidiary and (ii) the rights (charter and statutory), licenses and
franchises of the Company and its Subsidiaries; provided, however, that the
Company shall not be required to preserve any such right, license or
franchise, or the corporate, partnership or other existence of any of its
Subsidiaries, if the Board of Directors shall determine that the preservation
thereof is no longer desirable in the conduct of the business of the Company
and its Subsidiaries, taken as a whole, and that the loss thereof is not
adverse in any material respect to the Holders of the Debentures.
SECTION 4.15. OFFER TO REPURCHASE UPON CHANGE OF CONTROL.
(a) Upon the occurrence of a Change of Control, each Holder
of Debentures shall have the right to require the Company to repurchase all or
any part (equal to $1,000 or an integral multiple thereof) of such Holder's
Debentures pursuant to the offer described below (the "Change of Control
Offer") at an offer price in cash equal to 101% of the aggregate principal
amount thereof plus accrued and unpaid interest thereon, if any, to the date
of purchase (the "Change of Control Payment").
(b) Within 30 days following any Change of Control, the
Company shall mail a notice to each Holder describing the transaction or
transactions that constitute the Change of Control and offering to repurchase
Debentures pursuant to the procedures required by this Section 4.15, which
procedures shall be described in such notice. The Company shall comply with
the requirements of Rule 14e-1 under the Exchange Act and any other securities
laws and regulations thereunder to the extent such laws and regulations are
applicable in connection with the repurchase of the Debentures as a result of
a Change of Control.
(c) On a date that is at least 30 but no more than 60 days
from the date on which the Company mails notice of the Change of Control (the
"Change of Control Payment Date"), the Company shall, to the extent lawful,
(1) accept for payment all Debentures or portions thereof properly tendered
pursuant to the Change of Control Offer, (2) deposit with the Paying Agent an
amount equal to the Change of Control Payment in respect of all Debentures or
portions thereof so tendered and (3) deliver or cause to be delivered to the
Trustee the Debentures so accepted together with an Officers' Certificate
stating the aggregate principal amount of Debentures or portions thereof being
purchased by the Company. The Paying Agent will promptly mail to each Holder
of Debentures so tendered the Change of Control Payment for such Debentures,
and the Trustee will
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promptly authenticate and mail (or cause to be transferred by book entry) to
each tendering Holder a new Debenture equal in principal amount to any
unpurchased portion of the Debentures surrendered, if any; provided that each
such new Debenture will be in a principal amount of $1,000 or an integral
multiple thereof. The Company shall publicly announce the results of the Change
of Control Offer on or as soon as practicable after the Change of Control
Payment Date.
The Change of Control provisions described above shall apply
whether or not any other provision hereof is applicable.
(d) Notwithstanding anything to the contrary in this Section
4.15, the Company shall not be required to make a Change of Control Offer upon
a Change of Control if a third party makes the Change of Control Offer in the
manner, at the times and otherwise in compliance with the requirements set
forth in this Section 4.15 and Section 3.09 hereof and purchases all
Debentures validly tendered and not withdrawn under such Change of Control
Offer.
SECTION 4.16. PAYMENTS FOR CONSENT.
Neither the Company nor any of its Subsidiaries shall,
directly or indirectly, pay or cause to be paid any consideration, whether by
way of interest, fee or otherwise, to any Holder of any Debentures for or as
an inducement to any consent, waiver or amendment of any of the terms or
provisions of this Indenture or the Debentures unless such consideration is
offered to be paid or is paid to all Holders of the Debentures that consent,
waive or agree to amend in the time frame set forth in the solicitation
documents relating to such consent, waiver or agreement.
ARTICLE 5
SUCCESSORS
SECTION 5.01. MERGER, CONSOLIDATION, OR SALE OF ASSETS.
The Company shall not consolidate or merge with or into
(whether or not the Company is the surviving corporation), or sell, assign,
transfer, lease, convey or otherwise dispose of all or substantially all of
its properties or assets in one or more related transactions, to another
corporation, Person or entity unless (i) the Company is the surviving
corporation or the entity or the Person formed by or surviving any such
consolidation or merger (if other than the Company) or to which such sale,
assignment, transfer, lease, conveyance or other disposition shall have been
made is a corporation organized or existing under the laws of the United
States, any state thereof or the District of Columbia; (ii) the entity or
Person formed by or surviving any such consolidation or merger (if other than
the Company) or the entity or Person to which such sale, assignment, transfer,
lease, conveyance or other disposition shall have been made assumes all the
obligations of the Company under the Debentures and hereunder pursuant to a
supplemental indenture in a form reasonably satisfactory to the Trustee; (iii)
immediately after such transaction no Default or Event of Default exists; and
(iv) except in the case of a merger of the Company with or into a Wholly Owned
Subsidiary of the Company, the Company or the entity or Person formed by or
surviving any such consolidation or merger (if other than the Company), or to
which such sale, assignment, transfer, lease, conveyance or other disposition
shall have been made (A) shall have Consolidated Net Worth immediately after
the transaction equal to or greater than 90% of the Consolidated Net
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Worth of the Company immediately preceding the transaction and (B) shall, at the
time of such transaction and after giving pro forma effect thereto as if such
transaction had occurred at the beginning of the applicable four-quarter period,
be permitted to incur at least $1.00 of additional Indebtedness pursuant to the
Fixed Charge Coverage Ratio test set forth in the Section 4.09(a) hereof.
SECTION 5.02. SUCCESSOR CORPORATION SUBSTITUTED.
Upon any consolidation or merger, or any sale, assignment,
transfer, lease, conveyance or other disposition of all or substantially all
of the assets of the Company in accordance with Section 5.01 hereof, the
successor corporation formed by such consolidation or into or with which the
Company is merged or to which such sale, assignment, transfer, lease,
conveyance or other disposition is made shall succeed to, and be substituted
for (so that from and after the date of such consolidation, merger, sale,
lease, conveyance or other disposition, the provisions of this Indenture
referring to the "Company" shall refer instead to the successor corporation
and not to the Company), and may exercise every right and power of the Company
under this Indenture with the same effect as if such successor Person had been
named as the Company herein; provided, however, that the predecessor Company
shall not be relieved from the obligation to pay the principal of and interest
on the Debentures except in the case of a sale of all of the Company's assets
that meets the requirements of Section 5.01 hereof.
ARTICLE 6
DEFAULTS AND REMEDIES
SECTION 6.01. EVENTS OF DEFAULT.
An "Event of Default" occurs if:
(a) default for 30 days in the payment when due of interest on
the Debentures;
(b) default in payment when due of the principal of or
premium, if any, on the Debentures;
(c) failure by the Company to comply with the provisions of
Sections 3.09, 4.10 or 4.15 or Article 5 hereof;
(d) failure by the Company for 45 days after notice to
comply with any of its other covenants hereunder or under the Debentures;
(e) default under any mortgage, indenture or instrument
under which there may be issued or by which there may be secured or evidenced
any Indebtedness for money borrowed by the Company or any of its Subsidiaries
(including any Indebtedness the payment of which is guaranteed by the Company
or any of its Subsidiaries) other than a Receivables Subsidiary whether such
Indebtedness or guarantee now exists, or is created after the date hereof,
which default:
(i) is caused by a failure to pay principal or a
premium, if any, on such Indebtedness at the Stated Maturity for such
payment of principal or premium, if any, or such later date as has
been agreed in a writing (provided such writing is entered into prior
to such
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Stated Maturity) by the parties to the documentation relating
to such Indebtedness (a "Payment Default") or
(ii) results in the acceleration of such
Indebtedness prior to its express maturity and, in each case, the
principal amount of any such Indebtedness, together with the
principal amount of any other such Indebtedness under which there has
been a Payment Default or the maturity of which has been so
accelerated, aggregates $12.5 million or more;
(f) failure by the Company or any of its Subsidiaries other
than a Receivables Subsidiary to pay final judgments aggregating in excess of
$12.5 million, which judgments are not paid, discharged or stayed for a period
of 60 days (or 90 days if prior to such sixtieth day the Company has delivered
to the Trustee an Officers' Certificate attesting that a financially
responsible insurance company of recognized national standing has acknowledged
in writing complete liability for such judgment and attached a copy of such
acknowledgment thereto);
(g) the failure of any material representation or warranty
of the Company set forth in the Security and Pledge Agreement to be true and
correct or the failure by the Company to
perform any of its material covenants under the Security and Pledge Agreement
which, in either case,
(i) continues for five days after the earlier of
the Company's management becoming aware thereof or the receipt of
written notice thereof from the Trustee, the Pledgee or the Holders
of 25% or more in principal amount of the then outstanding Debentures
and
(ii) materially impairs or diminishes the Trustee's
Lien on or the value of the Collateral (as defined in the Security
and Pledge Agreement);
(h) repudiation by the Company of its obligations under the
Security and Pledge Agreement or the unenforceability of the Security and
Pledge Agreement against the Company for any reason;
(i) repudiation by any Subsidiary of its obligations under
any Subsidiary Guarantee or, except as permitted hereunder, any Subsidiary
Guarantee shall be held in a judicial proceeding to be unenforceable or
invalid in any material respect or shall cease to be in full force and effect;
and
(j) the Company or any of its Subsidiaries (other than a
Receivables Subsidiary) within the meaning of any Bankruptcy Law:
(i) commences a voluntary case,
(ii) consents to the entry of an order for relief
against it in an involuntary case,
(iii) consents to the appointment of a custodian of
it or for all or substantially all of its property,
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(iv) makes a general assignment for the benefit of
its creditors, or
(v) generally is not paying its debts as they become
due; or
(k) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that:
(i) is for relief against the Company or any of its
Subsidiaries (other than a Receivables Subsidiary);
(ii) appoints a custodian of the Company or any of
its Subsidiaries or for all or substantially all of the property of
the Company or any of its Subsidiaries (other than a Receivables
Subsidiary); or
(iii) orders the liquidation of the Company or any
of its Subsidiaries (other than a Receivables Subsidiary);
and the order or decree remains unstayed and in effect for 60
consecutive days; or
(l) except as permitted by this Indenture, any Subsidiary
Guarantee is held in any judicial proceeding to be unenforceable or invalid in
any material respect or shall cease for any reason to be in full force and
effect or any Guarantor, or any Person acting on behalf of any Guarantor,
shall deny or disaffirm its obligations under its Subsidiary Guarantee.
SECTION 6.02. ACCELERATION.
(a) If any Event of Default occurs and is continuing (other
than as specified in Sections 6.01(j) or (k)), the Trustee or the Holders of
at least 25% in principal amount of the then outstanding Debentures by written
notice to the Trustee and the Company may declare all the Debentures to be due
and payable immediately. Notwithstanding the foregoing, in the case of an
Event of Default arising from Sections 6.01(j) or (k) hereof, with respect to
the Company, any Significant Subsidiary of the Company or any group of its
Subsidiaries that, taken together, would constitute a Significant Subsidiary
of the Company, all outstanding Debentures will become due and payable without
further action or notice. Holders of the Debentures may not enforce this
Indenture or the Debentures except as provided in this Indenture. Subject to
certain limitations, Holders of a majority in principal amount of the then
outstanding Debentures may direct the Trustee in its exercise of any trust or
power. The Trustee may withhold from Holders of the Debentures notice of any
continuing Default or Event of Default (except a Default or Event of Default
relating to the payment of principal or interest) if it determines that
withholding notice is in their interest.
(b) If an Event of Default occurs on or after , 2003 by
reason of any willful action (or inaction) taken (or not taken) by or on
behalf of the Company with the intention of avoiding payment of the premium
that the Company would have had to pay if the Company then had elected to
redeem the Debentures pursuant to Section 3.07 hereof, then, upon acceleration
of the Debentures, an equivalent premium shall also become and be immediately
due and payable to the extent permitted by law, anything in this Indenture or
in the Debentures to the contrary notwithstanding. If an Event of Default
occurs prior to _________, 2003 by reason of any willful
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action (or inaction) taken (or not taken) by or on behalf of the Company with
the intention of avoiding the prohibition on redemption of the Debentures prior
to such date, then, upon acceleration of the Debentures, an additional premium
shall also become and be immediately due and payable in an amount, for each of
the years beginning on _________ of the years set forth below, as set forth
below (expressed as a percentage of the principal amount to the date of payment
that would otherwise be due but for the provisions of this sentence):
<TABLE>
<CAPTION>
Year Percentage
<S> <C>
1998 .................................................................________%
1999 .................................................................________%
2000 .................................................................________%
2001 .................................................................________%
2002 .................................................................________%
2003 .................................................................________%
</TABLE>
(c) In the event of a declaration of acceleration of the
Debentures because an Event of Default has occurred and is continuing as a
result of a Payment Default or the acceleration of any Indebtedness described
in Section 6.01(e) hereof, the declaration of acceleration of the Debentures
shall be automatically annulled if
(i) any Payment Default described in clause (i) of
such Section has been cured or waived and
(ii) the holders of any accelerated Indebtedness
described in clause (ii) of such Section have rescinded the
declaration of acceleration in respect of such Indebtedness provided
in each such case that (a) such cure, waiver or rescission of such
declaration of acceleration shall have been made in writing within 30
days of the date of such Payment Default or declaration, as the case
may be, and (b) the annulment of the acceleration of such Debentures
would not conflict with any judgment or decree of a court of
competent jurisdiction and (c) all existing Events of Default, except
nonpayment of principal or interest on the Debentures that became due
solely because of the acceleration of the Debentures, have been cured
or waived.
(d) A Default under Section 6.01(d) hereof is not an Event
of Default until the Trustee or the Holders of at least 25% in principal
amount of the then outstanding Debentures give written notice to the Company
of the default and the Company does not cure the Default within the period
provided therein. The notice must specify in reasonable detail the Default,
demand that it be remedied and state that the notice is a "Notice of Default".
If the Holders of 25% or more in principal amount of the then outstanding
Debentures request the Trustee to give such notice on their behalf, the
Trustee shall do so.
SECTION 6.03. OTHER REMEDIES.
If an Event of Default occurs and is continuing, the Trustee
may pursue any available remedy to collect the payment of principal, premium,
if any, and interest on the Debentures or to enforce the performance of any
provision of the Debentures or this Indenture.
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The Trustee may maintain a proceeding even if it does not
possess any of the Debentures or does not produce any of them in the
proceeding. A delay or omission by the Trustee or any Holder of a Debenture in
exercising any right or remedy accruing upon an Event of Default shall not
impair the right or remedy or constitute a waiver of or acquiescence in the
Event of Default.
All remedies are cumulative to the extent permitted by law.
SECTION 6.04. WAIVER OF PAST DEFAULTS.
Holders of not less than a majority in aggregate principal
amount of the Debentures then outstanding by notice to the Trustee may on
behalf of the Holders of all of the Debentures waive any existing Default or
Event of Default and its consequences hereunder, except a continuing Default
or Event of Default in the payment of the principal of, premium, if any, or
interest on the Debentures (including in connection with an offer to
purchase); provided, however, that the Holders of a majority in aggregate
principal amount of the then outstanding Debentures may rescind an
acceleration and its consequences, including any related payment default that
resulted from such acceleration. Upon such waiver, such Default shall cease to
exist, and any Event of Default arising therefrom shall be deemed to have been
cured for every purpose of this Indenture; but no such waiver shall extend to
any subsequent or other Default or impair any right consequent thereon.
SECTION 6.05. CONTROL BY MAJORITY.
Holders of a majority in principal amount of the then
outstanding Debentures may 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 it. The Trustee may, however, refuse to follow
any direction that conflicts with law or this Indenture that the Trustee
determines may be unduly prejudicial to the rights of other Holders of
Debentures or that may involve the Trustee in personal liability.
SECTION 6.06. LIMITATION ON SUITS.
A Holder of a Debenture may pursue a remedy with respect to
this Indenture or the Debentures only if:
(a) the Holder of a Debenture gives to the Trustee written
notice of a continuing Event of Default;
(b) the Holders of at least 25 % in principal amount of the
then outstanding Debentures make a written request to the Trustee to pursue
the remedy;
(c) such Holder of a Debenture or Holders of Debentures
offer and, if requested, provide to the Trustee indemnity satisfactory to the
Trustee against any loss, liability or expense;
(d) the Trustee does not comply with the request within 60
days after receipt of the request and the offer and, if requested, the
provision of indemnity; and
(e) during such 60-day period the Holders of a majority in
principal amount of the then outstanding Debentures do not give the Trustee a
direction inconsistent with the request.
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A Holder of a Debenture may not use this Indenture to
prejudice the rights of another Holder of a Debenture or to obtain a
preference or priority over another Holder of a Debenture.
SECTION 6.07. RIGHTS OF HOLDERS OF DEBENTURES TO RECEIVE PAYMENT.
Notwithstanding any other provision of this Indenture, the
right of any Holder of a Debenture to receive payment of principal, premium,
if any, and interest on the Debenture, on or after the respective due dates
expressed in the Debenture (including in connection with an offer to
purchase), or to bring suit for the enforcement of any such payment on or
after such respective dates, shall not be impaired or affected without the
consent of such Holder.
SECTION 6.08. COLLECTION SUIT BY TRUSTEE.
If an Event of Default specified in Section 6.01(a) or (b)
occurs and is continuing, the Trustee is authorized to recover judgment in its
own name and as trustee of an express trust against the Company for the whole
amount of principal of, premium, if any, and interest remaining unpaid on the
Debentures and interest on overdue principal and, to the extent lawful,
interest and such further amount as shall be sufficient to cover the costs and
expenses of collection, including the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel.
SECTION 6.09. TRUSTEE MAY FILE PROOFS OF CLAIM.
The Trustee is authorized to file such proofs of claim and
other papers or documents as may be necessary or advisable in order to have
the claims of the Trustee (including any claim for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel) and the Holders of the Debentures allowed in any judicial
proceedings relative to the Company (or any other obligor upon the
Debentures), its creditors or its property and shall be entitled and empowered
to collect, receive and distribute any money or other property payable or
deliverable on any such claims and any custodian in any such judicial
proceeding is hereby authorized by each Holder to make such payments to the
Trustee, and, in the event that the Trustee shall consent to the making of
such payments directly to the Holders, to pay to the Trustee any amount due to
it for the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel, and any other amounts due the Trustee
under Section 7.07 hereof. To the extent that the payment of any such
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, and any other amounts due the Trustee under Section 7.07 hereof
out of the estate in any such proceeding, shall be denied for any reason,
payment of the same shall be secured by a Lien on, and shall be paid out of,
any and all distributions, dividends, money, securities and other properties
that the Holders may be entitled to receive in such proceeding whether in
liquidation or under any plan of reorganization or arrangement or otherwise.
Nothing herein contained shall be deemed to authorize the Trustee to authorize
or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the
Debentures or the rights of any Holder, or to authorize the Trustee to vote in
respect of the claim of any Holder in any such proceeding.
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SECTION 6.10. PRIORITIES.
If the Trustee collects any money pursuant to this Article,
it shall pay out the money in the following order:
First: to the Trustee, its agents and attorneys for amounts
due under Section 7.07 hereof, including payment of all compensation, expense
and liabilities incurred, and all advances made, by the Trustee and the costs
and expenses of collection;
Second: to Holders of Debentures for amounts due and unpaid on
the Debentures for principal, premium, if any, and interest, ratably, without
preference or priority of any kind, according
to the amounts due and payable on the Debentures for principal, premium, if any
and interest, respectively; and
Third: to the Company or to such party as a court of
competent jurisdiction shall direct.
The Trustee may fix a record date and payment date for any
payment to Holders of Debentures pursuant to this Section 6.10.
SECTION 6.11. UNDERTAKING FOR COSTS.
In any suit for the enforcement of any right or remedy under
this Indenture or in any suit against the Trustee for any action taken or
omitted by it as a Trustee, a court in its discretion may require the filing
by any party litigant in the suit of an undertaking to pay the costs of the
suit, and the court in its discretion may assess reasonable costs, including
reasonable attorneys' fees, against any party litigant in the suit, having due
regard to the merits and good faith of the claims or defenses made by the
party litigant. This Section does not apply to a suit by the Trustee, a suit
by a Holder of a Debenture pursuant to Section 6.07 hereof, or a suit by
Holders of more than 10% in principal amount of the then outstanding
Debentures.
ARTICLE 7
TRUSTEE
SECTION 7.01. DUTIES OF TRUSTEE.
(a) If an Event of Default has occurred and is continuing,
the Trustee shall exercise such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in its exercise, as a
prudent person would exercise or use under the circumstances in the conduct of
such person's own affairs.
(b) Except during the continuance of an Event of Default:
(i) the duties of the Trustee shall be determined
solely by the express provisions of this Indenture and the Trustee
need perform only those duties that are
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specifically set forth in this Indenture and no others, and no implied
covenants or obligations shall be read into this Indenture against the
Trustee; and
(ii) in the absence of bad faith on its part, the
Trustee may conclusively rely, as to the truth of the statements and
the correctness of the opinions expressed therein, upon certificates
or opinions furnished to the Trustee and conforming to the
requirements of this Indenture. The Trustee shall examine the
certificates and opinions, however, to determine whether or not they
conform to the requirements of this Indenture.
(c) The Trustee may not be relieved from liabilities for its
own negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) this clause does not limit the effect of clause
(b) of this Section;
(ii) the Trustee shall not be liable for any error
of judgment made in good faith by a Responsible Officer, unless it is
proved that the Trustee was negligent in ascertaining the pertinent
facts; and
(iii) the Trustee shall not be liable with respect
to any action it takes or omits to take in good faith in accordance
with a direction received by it pursuant to Section 6.05 hereof.
(d) Whether or not therein expressly so provided, every
provision of this Indenture that in any way relates to the Trustee is subject
to clauses (a), (b), and (c) of this Section.
(e) No provision of this Indenture shall require the Trustee
to expend or risk its own funds or incur any liability. The Trustee shall be
under no obligation to exercise any of its rights and powers under this
Indenture at the request of any Holders, unless such Holder shall have offered
to the Trustee security and indemnity satisfactory to it against any loss,
liability or expense.
(f) The Trustee shall not be liable for interest on any
money received by it except as the Trustee may agree in writing with the
Company. Money held in trust by the Trustee need not be segregated from other
funds except to the extent required by law.
SECTION 7.02. RIGHTS OF TRUSTEE.
(a) The Trustee may conclusively rely upon any document
believed by it to be genuine and to have been signed or presented by the
proper Person. The Trustee need not investigate any fact or matter stated in
the document.
(b) Before the Trustee acts or refrains from acting, it may
require an Officers' Certificate or an Opinion of Counsel or both. The Trustee
shall not be liable for any action it takes or omits to take in good faith in
reliance on such Officers' Certificate or Opinion of Counsel. The Trustee may
consult with counsel and the written advice of such counsel or any Opinion of
Counsel shall be full and complete authorization and protection from liability
in respect of any action taken, suffered or omitted by it hereunder in good
faith and in reliance thereon.
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(c) The Trustee may act through its attorneys and agents and
shall not be responsible for the misconduct or negligence of any agent
appointed with due care.
(d) The Trustee shall not be liable for any action it takes
or omits to take in good faith that it believes to be authorized or within the
rights or powers conferred upon it by this Indenture.
(e) Unless otherwise specifically provided in this
Indenture, any demand, request, direction or notice from the Company shall be
sufficient if signed by an Officer of the Company.
(f) The Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Indenture at the request or
direction of any of the Holders unless such Holders shall have offered to the
Trustee reasonable security or indemnity against the costs, expenses and
liabilities that might be incurred by it in compliance with such request or
direction.
SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE.
The Trustee in its individual or any other capacity may
become the owner or pledgee of Debentures and may otherwise deal with the
Company or any Affiliate of the Company with the same rights it would have if
it were not Trustee. In the event that the Trustee acquires any conflicting
interest, however, it must eliminate such conflict within 90 days, apply to
the Commission for permission to continue as trustee or resign. Any Agent may
do the same with like rights and duties. The Trustee is also subject to
Sections 7.10 and 7.11 hereof.
SECTION 7.04. TRUSTEE'S DISCLAIMER.
The Trustee shall not be responsible for and makes no
representation as to the validity or adequacy of this Indenture or the
Debentures, it shall not be accountable for the Company's use of the proceeds
from the Debentures or any money paid to the Company or upon the Company's
direction under any provision of this Indenture, it shall not be responsible
for the use or application of any money received by any Paying Agent other
than the Trustee, and it shall not be responsible for any statement or recital
herein or any statement in the Debentures or any other document in connection
with the sale of the Debentures or pursuant to this Indenture other than its
certificate of authentication.
SECTION 7.05. NOTICE OF DEFAULTS.
If a Default or Event of Default occurs and is continuing
and if it is actually known to a Responsible Officer of the Trustee, the
Trustee shall mail to Holders of Debentures a notice of the Default or Event
of Default within 90 days after it occurs. Except in the case of a Default or
Event of Default relating to the payment of principal or interest on any
Debenture, the Trustee may withhold the notice if it determines that
withholding the notice is in the interests of the Holders of the Debentures.
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SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS OF THE DEBENTURES.
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Within 60 days after each _____________ beginning with the
_____________ following the date of this Indenture, and for so long as
Debentures remain outstanding, the Trustee shall mail to the Holders of the
Debentures a brief report dated as of such reporting date that complies with
TIA ss. 313(a) (but if no event described in TIA ss. 313(a) has occurred
within the twelve months preceding the reporting date, no report need be
transmitted). The Trustee also shall comply with TIA ss. 313(b)(2). The
Trustee shall also transmit by mail all reports as required by TIA ss. 313(c).
A copy of each report at the time of its mailing to the
Holders of Debentures shall be mailed to the Company and filed with the
Commission and each stock exchange on which the Debentures are listed in
accordance with TIA ss. 313(d). The Company shall promptly notify the Trustee
when the Debentures are listed on any stock exchange.
SECTION 7.07. COMPENSATION AND INDEMNITY.
The Company shall pay to the Trustee from time to time
reasonable compensation for its acceptance of this Indenture and services
hereunder. The Trustee's compensation shall not be limited by any law on
compensation of a trustee of an express trust. The Company shall reimburse the
Trustee promptly upon request for all reasonable disbursements, advances and
expenses incurred or made by it in addition to the compensation for its
services. Such expenses shall include the reasonable compensation,
disbursements and expenses of the Trustee's agents and counsel.
The Company shall indemnify the Trustee against any and all
losses, liabilities or expenses incurred by it arising out of or in connection
with the acceptance or administration of its duties under this Indenture,
including the costs and expenses of enforcing this Indenture against the
Company (including this Section 7.07) and defending itself against any claim
(whether asserted by the Company or any Holder or any other person) or
liability in connection with the exercise or performance of any of its powers
or duties hereunder, except to the extent any such loss, liability or expense
may be attributable to its negligence or bad faith. The Trustee shall notify
the Company promptly of any claim for which it may seek indemnity. Failure by
the Trustee to so notify the Company shall not relieve the Company of its
obligations hereunder. The Company shall defend the claim and the Trustee
shall cooperate in the defense. The Trustee may have separate counsel and the
Company shall pay the reasonable fees and expenses of such counsel. The
Company need not pay for any settlement made without its consent, which
consent shall not be unreasonably withheld.
The obligations of the Company under this Section 7.07 shall
survive the satisfaction and discharge of this Indenture.
To secure the Company's payment obligations in this Section,
the Trustee shall have a Lien prior to the Debentures on all money or property
held or collected by the Trustee, except that held in trust to pay principal
and interest on particular Debentures. Such Lien shall survive the
satisfaction and discharge of this Indenture.
When the Trustee incurs expenses or renders services after
an Event of Default specified in Section 6.01(j) or (k) hereof occurs, the
expenses and the compensation for the services (including the fees and
expenses of its agents and counsel) are intended to constitute expenses of
administration under any Bankruptcy Law.
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The Trustee shall comply with the provisions of TIA ss.
313(b)(2) to the extent applicable.
SECTION 7.08. REPLACEMENT OF TRUSTEE.
A resignation or removal of the Trustee and appointment of a
successor Trustee shall become effective only upon the successor Trustee's
acceptance of appointment as provided in this Section.
The Trustee may resign in writing at any time and be
discharged from the trust hereby created by so notifying the Company. The
Holders of Debentures of a majority in principal amount of the then
outstanding Debentures may remove the Trustee by so notifying the Trustee and
the Company in writing. The Company may remove the Trustee if:
(a) the Trustee fails to comply with Section 7.10 hereof;
(b) the Trustee is adjudged a bankrupt or an insolvent or an
order for relief is entered with respect to the Trustee under any Bankruptcy
Law;
(c) a custodian or public officer takes charge of the Trustee
or its property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists
in the office of Trustee for any reason, the Company shall promptly appoint a
successor Trustee. Within one year after the successor Trustee takes office,
the Holders of a majority in principal amount of the then outstanding
Debentures may appoint a successor Trustee to replace the successor Trustee
appointed by the Company.
If a successor Trustee does not take office within 60 days
after the retiring Trustee resigns or is removed, the retiring Trustee, the
Company, or the Holders of Debentures of at least 10% in principal amount of
the then outstanding Debentures may petition any court of competent
jurisdiction for the appointment of a successor Trustee.
If the Trustee, after written request by any Holder of a
Debenture who has been a Holder of a Debenture for at least six months, fails
to comply with Section 7.10, such Holder of a Debenture may petition any court
of competent jurisdiction for the removal of the Trustee and the appointment
of a successor Trustee.
A successor Trustee shall deliver a written acceptance of
its appointment to the retiring Trustee and to the Company. Thereupon, the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to the Holders of the Debentures. The retiring Trustee shall
promptly transfer all property held by it as Trustee to the successor Trustee,
provided all sums owing to the Trustee hereunder have been paid and subject to
the Lien provided for in Section 7.07 hereof. Notwithstanding replacement of
the
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Trustee pursuant to this Section 7.08, the Company's obligations under
Section 7.07 hereof shall continue for the benefit of the retiring Trustee.
SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER, ETC.
If the Trustee consolidates, merges or converts into, or
transfers all or substantially all of its corporate trust business to, another
corporation, the successor corporation without any further act shall be the
successor Trustee.
SECTION 7.10. ELIGIBILITY; DISQUALIFICATION.
There shall at all times be a Trustee hereunder that is a
corporation organized and doing business under the laws of the United States
of America or of any state thereof that is authorized under such laws to
exercise corporate trustee power, that is subject to supervision or
examination by federal or state authorities and that has a combined capital
and surplus of at least $100 million as set forth in its most recent published
annual report of condition.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA ss. 310(a)(1), (2) and (5). The Trustee is subject to TIA
ss. 310(b).
SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.
The Trustee is subject to TIA ss. 311(a), excluding any
creditor relationship listed in TIA ss. 311(b). A Trustee who has resigned or
been removed shall be subject to TIA ss. 311(a) to the extent indicated
therein.
ARTICLE 8
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
SECTION 8.01. OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT
DEFEASANCE.
The Company may, at the option of its Board of Directors
evidenced by a resolution set forth in an Officers' Certificate, at any time,
elect to have either Section 8.02 or 8.03 hereof be applied to all outstanding
Debentures upon compliance with the conditions set forth below in this Article
8.
SECTION 8.02. LEGAL DEFEASANCE AND DISCHARGE.
Upon the Company's exercise under Section 8.01 hereof of the
option applicable to this Section 8.02 and subject to the satisfaction of the
conditions set forth in Section 8.04 hereof, the Company shall be deemed to
have been discharged from its obligations with respect to all outstanding
Debentures on the date the conditions set forth below are satisfied
(hereinafter, "Legal Defeasance") and the obligations of the Guarantors under
the Subsidiary Guarantees, if any, then existing shall concurrently terminate.
For this purpose, Legal Defeasance means that the Company shall be deemed to
have paid and discharged the entire Indebtedness represented by the
outstanding
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Debentures, which shall thereafter be deemed to be "outstanding"
only for the purposes of Section 8.05 hereof and the other Sections of this
Indenture referred to in (a) and (b) below, and to have satisfied all its
other obligations under such Debentures and this Indenture (and the Trustee,
on demand of and at the expense of the Company, shall execute proper
instruments acknowledging the same), except for the following provisions which
shall survive until otherwise terminated or discharged hereunder: (a) the
rights of Holders of outstanding Debentures to receive, solely from the trust
fund described in Section 8.04 hereof, and as more fully set forth in such
Section, payments in respect of the principal of, premium, if any, and
interest on such Debentures when such payments are due, (b) the Company's
obligations with respect to such Debentures under Articles 2 and 7 and Section
4.02 hereof, (c) the rights, powers, trusts, duties and immunities of the
Trustee hereunder and the Company's obligations in connection therewith and (d)
this Article 8. Subject to compliance with this Article 8, the Company may
exercise its option under this Section 8.02 notwithstanding the prior exercise
of its option under Section 8.03 hereof.
SECTION 8.03. COVENANT DEFEASANCE.
Upon the Company's exercise under Section 8.01 hereof of the
option applicable to this Section 8.03, the Company shall, subject to the
satisfaction of the conditions set forth in Section 8.04 hereof, be released
from its obligations under the covenants contained in Sections 4.07, 4.08,
4.09, 4.10, 4.11, 4.12, 4.13 and 4.15 hereof with respect to the outstanding
Debentures on and after the date the conditions set forth in Section 8.04 are
satisfied (hereinafter, "Covenant Defeasance"), and the Debentures shall
thereafter be deemed not "outstanding" for the purposes of any direction,
waiver, consent or declaration or act of Holders (and the consequences of any
thereof) in connection with such covenants, but shall continue to be deemed
"outstanding" for all other purposes hereunder (it being understood that such
Debentures shall not be deemed outstanding for accounting purposes). For this
purpose, Covenant Defeasance means that, with respect to the outstanding
Debentures, the Company may omit to comply with and shall have no liability in
respect of any term, condition or limitation set forth in any such covenant,
whether directly or indirectly, by reason of any reference elsewhere herein to
any such covenant or by reason of any reference in any such covenant to any
other provision herein or in any other document and such omission to comply
shall not constitute a Default or an Event of Default under Section 6.01
hereof, but, except as specified above, the remainder of this Indenture and
such Debentures shall be unaffected thereby. In addition, upon the Company's
exercise under Section 8.01 hereof of the option applicable to this Section
8.03, subject to the satisfaction of the conditions set forth in Section 8.04
hereof, the Company's failure to perform its obligations pursuant to Sections
4.07, 4.08, 4.09, 4.10, 4.11, 4.12, 4.13 and 4.15 hereof shall not result in
an Event of Default pursuant to Section 6.01(d) hereof, nor shall Sections
6.01(e) or 6.01(f) hereof constitute Events of Default. In connection with any
Covenant Defeasance, the Company may, at its option, by written notice given
to the Trustee prior to the delivery to the Trustee of the Opinion of Counsel
referred to in Section 8.04(c) hereof, elect that any or all of the Subsidiary
Guarantees, if any, then existing will be terminated on the date the
obligations set forth in Section 8.04 hereof are satisfied. If no such notice
is given to the Trustee with respect to a Subsidiary Guarantee, such
Subsidiary Guarantee shall remain in full force and effect following such
Covenant Defeasance.
SECTION 8.04. CONDITIONS TO LEGAL OR COVENANT DEFEASANCE.
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The following shall be the conditions to the application of
either Section 8.02 or 8.03 hereof to the outstanding Debentures:
In order to exercise either Legal Defeasance or Covenant Defeasance:
(a) the Company must irrevocably deposit with the Trustee,
in trust, for the benefit of the Holders of the Debentures, cash in United
States dollars, non-callable Government Securities, or a combination thereof,
in such amounts as will be sufficient, in the opinion of a nationally recognized
firm of independent public accountants, to pay the principal of, premium, if
any, and interest on the outstanding Debentures on the Stated Maturity or on the
applicable redemption date, as the case may be, and the Company must specify
whether the Debentures are being defeased to maturity or to a particular
redemption date;
(b) in the case of an election under Section 8.02 hereof,
the Company shall have delivered to the Trustee an Opinion of Counsel in the
United States reasonably acceptable to the Trustee confirming that (A) the
Company has received from, or there has been published by, the Internal
Revenue Service a ruling or (B) since the date of this Indenture, there has
been a change in the applicable federal income tax law, in either case to the
effect that, and based thereon such Opinion of Counsel shall confirm that, the
Holders of the outstanding Debentures will not recognize income, gain or loss
for federal income tax purposes as a result of such Legal Defeasance and will
be subject to federal income tax on the same amounts, in the same manner and
at the same times as would have been the case if such Legal Defeasance had not
occurred;
(c) in the case of an election under Section 8.03 hereof,
the Company shall have delivered to the Trustee an Opinion of Counsel in the
United States reasonably acceptable to the Trustee confirming that the Holders
of the outstanding Debentures will not recognize income, gain or loss for
federal income tax purposes as a result of such Covenant Defeasance and will
be subject to federal income tax on the same amounts, in the same manner and
at the same times as would have been the case if such Covenant Defeasance had
not occurred;
(d) no Default or Event of Default shall have occurred and
be continuing on the date of such deposit (other than a Default or Event of
Default resulting from the borrowing of funds to be applied to such deposit)
or, insofar as Sections 6.01(j) or 6.01(k) hereof is concerned, at any time in
the period ending on the 91st day after the date of deposit;
(e) such Legal Defeasance or Covenant Defeasance shall not
result in a breach or violation of, or constitute a default under, any
material agreement or instrument (other than this Indenture) to which the
Company or any of its Subsidiaries is bound including, without limitation, the
Revolving Credit Agreement and the Gold Consignment Agreement;
(f) the Company shall have delivered to the Trustee an
Opinion of Counsel to the effect that after the 91st day following the
deposit, the trust funds will not be subject to the effect of any applicable
bankruptcy, insolvency, reorganization or similar laws affecting creditors'
rights generally;
(g) the Company shall have delivered to the Trustee an
Officers' Certificate stating that the deposit was not made by the Company
with the intent of preferring the Holders of
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Debentures over any other creditors of the Company with the intent of defeating,
hindering, delaying or defrauding any other creditors of the Company or others;
and
(h) the Company shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that all
conditions precedent provided for or relating to the Legal Defeasance or the
Covenant Defeasance have been complied with.
SECTION 8.05. DEPOSITED MONEY AND GOVERNMENT SECURITIES TO BE HELD
IN TRUST; OTHER MISCELLANEOUS PROVISIONS.
Subject to Section 8.06 hereof, all money and non-callable
Government Securities (including the proceeds thereof) deposited with the
Trustee (or other qualifying trustee, collectively for purposes of this
Section 8.05, the "Trustee") pursuant to Section 8.04 hereof in respect of the
outstanding Debentures shall be held in trust and applied by the Trustee, in
accordance with the provisions of such Debentures and this Indenture, to the
payment, either directly or through any Paying Agent (including the Company
acting as Paying Agent) as the Trustee may determine, to the Holders of such
Debentures of all sums due and to become due thereon in respect of principal,
premium, if any, and interest, but such money need not be segregated from
other funds except to the extent required by law.
The Company shall pay and indemnify the Trustee against any
tax, fee or other charge imposed on or assessed against the cash or
non-callable Government Securities deposited pursuant to Section 8.04 hereof
or the principal and interest received in respect thereof other than any such
tax, fee or other charge which by law is for the account of the Holders of the
outstanding Debentures.
Anything in this Article 8 to the contrary notwithstanding,
the Trustee shall deliver or pay to the Company from time to time upon the
request of the Company any money or non-callable Government Securities held by
it as provided in Section 8.04 hereof which, in the opinion of a nationally
recognized firm of independent public accountants expressed in a written
certification thereof delivered to the Trustee (which may be the opinion
delivered under Section 8.04(a) hereof), are in excess of the amount thereof
that would then be required to be deposited to effect an equivalent Legal
Defeasance or Covenant Defeasance.
SECTION 8.06. REPAYMENT TO COMPANY.
Any money deposited with the Trustee or any Paying Agent, or
then held by the Company, in trust for the payment of the principal of,
premium, if any, or interest on any Debenture and remaining unclaimed for two
years after such principal, and premium, if any, or interest has become due
and payable shall be paid to the Company on its request or (if then held by
the Company) shall be discharged from such trust; and the Holder of such
Debenture shall thereafter, as a secured creditor, look only to the Company
for payment thereof, and all liability of the Trustee or such Paying Agent
with respect to such trust money, and all liability of the Company as trustee
thereof, shall thereupon cease; provided, however, that the Trustee or such
Paying Agent, before being required to make any such repayment, may at the
expense of the Company cause to be published once, in the New York Times and
The Wall Street Journal (national edition), notice that such money remains
unclaimed and that, after a date specified therein, which shall not be less
than
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30 days from the date of such notification or publication, any unclaimed
balance of such money then remaining will be repaid to the Company.
SECTION 8.07. REINSTATEMENT.
If the Trustee or Paying Agent is unable to apply any United
States dollars or non-callable Government Securities in accordance with
Section 8.02 or Section 8.03 hereof, as the case may be, by reason of any order
or judgment of any court or governmental authority enjoining, restraining or
otherwise prohibiting such application, then the Company's obligations under
this Indenture and the Debentures shall be revived and reinstated as though no
deposit had occurred pursuant to Section 8.02 or Section 8.03 hereof until such
time as the Trustee or Paying Agent is permitted to apply all such money in
accordance with Section 8.02 or Section 8.03 hereof, as the case may be;
provided, however, that, if the Company makes any payment of principal of,
premium, if any, or interest on any Debenture following the reinstatement of its
obligations, the Company shall be subrogated to the rights of the Holders of
such Debentures to receive such payment from the money held by the Trustee or
Paying Agent.
ARTICLE 9
AMENDMENT, SUPPLEMENT AND WAIVER
SECTION 9.01. WITHOUT CONSENT OF HOLDERS OF DEBENTURES.
Notwithstanding Section 9.02 of this Indenture, the Company
and the Trustee may amend or supplement this Indenture or the Debentures
without the consent of any Holder of a Debenture:
(a) to cure any ambiguity, defect or inconsistency;
(b) to provide for uncertificated Debentures in addition to
or in place of certificated Debentures or to alter the provisions of Article 2
hereof (including the related definitions) in a manner that does not
materially adversely affect any Holder;
(c) to provide for the assumption of the Company's (and
Guarantors') obligations to the Holders of the Debentures in the case of a
merger or consolidation or sale of all or substantially all of the Company's
(and Guarantors') assets pursuant to Article 5 or Article 11 hereof;
(d) to release Liens on any Collateral as permitted by Section
10.04 hereof;
(e) to make any change that would provide any additional
rights or benefits to the Holders of the Debentures or that does not adversely
affect the legal rights hereunder of any Holder of the Debenture; and
(f) to comply with requirements of the Commission in order
to effect or maintain the qualification of this Indenture under the TIA;
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Upon the request of the Company accompanied by a resolution
of its Board of Directors authorizing the execution of any such amended or
supplemental Indenture, and upon receipt by the Trustee of the documents
described in Section 7.02(b) hereof, the Trustee shall join with the Company
and the Guarantors, if any, in the execution of any amended or supplemental
Indenture authorized or permitted by the terms of this Indenture and to make
any further appropriate agreements and stipulations that may be therein
contained, but the Trustee shall not be obligated to
enter into such amended or supplemental Indenture that affects its own rights,
duties or immunities under this Indenture or otherwise.
SECTION 9.02. WITH CONSENT OF HOLDERS OF DEBENTURES.
Except as provided below in this Section 9.02, the Company
and the Trustee may amend or supplement this Indenture and the Debentures and
any Subsidiary Guarantees may be amended or supplemented with the consent of
the Holders of at least a majority in principal amount of the Debentures then
outstanding (including consents obtained in connection with a purchase of, or
tender offer or exchange offer for, Debentures), and, subject to Sections 6.04
and 6.07 hereof, any existing Default or Event of Default (other than a
Default or Event of Default in the payment of the principal of, premium, if
any, or interest on the Debentures, except a payment default resulting from an
acceleration that has been rescinded) or compliance with any provision of this
Indenture or the Debentures may be waived with the consent of the Holders of a
majority in principal amount of the then outstanding Debentures (including
consents obtained in connection with a purchase of, tender offer or exchange
offer for, Debentures). The determination as to which Debentures are
considered to be "outstanding" for purposes of this Section 9.02 shall be made
in accordance with the provisions of Section 2.08 hereof.
Upon the request of the Company accompanied by a resolution
of its Board of Directors authorizing the execution of any such amended or
supplemental Indenture, and upon the filing with the Trustee of evidence
satisfactory to the Trustee of the consent of the Holders of Debentures as
aforesaid, and upon receipt by the Trustee of the documents described in
Section 7.02 hereof, the Trustee shall join with the Company in the execution
of such amended or supplemental Indenture unless such amended or supplemental
Indenture directly affects the Trustee's own rights, duties or immunities
under this Indenture or otherwise, in which case the Trustee may in its
discretion, but shall not be obligated to, enter into such amended or
supplemental Indenture.
It shall not be necessary for the consent of the Holders of
Debentures under this Section 9.02 to approve the particular form of any
proposed amendment or waiver, but it shall be sufficient if such consent
approves the substance thereof.
After an amendment, supplement or waiver under this Section
becomes effective, the Company shall mail to the Holders of Debentures
affected thereby a notice briefly describing the amendment, supplement or
waiver. Any failure of the Company to mail such notice, or any defect therein,
shall not, however, in any way impair or affect the validity of any such
amended or supplemental Indenture or waiver. Subject to Sections 6.04 and 6.07
hereof, the Holders of a majority in aggregate principal amount of the
Debentures then outstanding may waive compliance in a particular instance by
the Company with any provision of this Indenture or the Debentures. However,
without the consent of each Holder affected, an amendment or waiver under this
Section 9.02 may not (with respect to any Debentures held by a non-consenting
Holder):
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(a) reduce the principal amount of Debentures whose Holders
must consent to an amendment, supplement or waiver;
(b) reduce the principal of or change the fixed maturity of
any Debenture or alter the provisions with respect to the redemption of the
Debentures;
(c) reduce the rate of or change the time for payment of
interest on any Debenture;
(d) waive a Default or Event of Default in the payment of
principal of or premium, if any, or interest on the Debentures (except a
rescission of acceleration of the Debentures by the Holders of at least a
majority in aggregate principal amount of the Debentures and a waiver of the
payment default that resulted from such acceleration);
(e) make any Debenture payable in money other than that
stated in the Debentures;
(f) make any change in the provisions of this Indenture
relating to waivers of past Defaults or the rights of Holders of Debentures to
receive payments of principal of or premium, if any, or interest on the
Debentures;
(g) release the Lien of the Collateral Agent in any of the
Collateral other than pursuant to the terms of this Indenture of the Security
and Pledge Agreement; and
(h) waive a redemption payment with respect to any Debenture
or make any change in Sections 4.10, 4.15, 6.04 or 6.07 hereof or in the
foregoing amendment and waiver provisions.
SECTION 9.03. COMPLIANCE WITH TRUST INDENTURE ACT.
Every amendment or supplement to this Indenture or the
Debentures shall be set forth in a amended or supplemental Indenture that
complies with the TIA as then in effect.
SECTION 9.04. REVOCATION AND EFFECT OF CONSENTS.
Until an amendment, supplement or waiver becomes effective,
a consent to it by a Holder of a Debenture is a continuing consent by the
Holder of a Debenture and every subsequent Holder of a Debenture or portion of
a Debenture that evidences the same debt as the consenting Holder's Debenture,
even if notation of the consent is not made on any Debenture. Any such Holder
of a Debenture or subsequent Holder of a Debenture, however, may revoke the
consent as to its Debenture if the Trustee receives written notice of
revocation before the date the waiver, supplement or amendment becomes
effective. An amendment, supplement or waiver becomes effective in accordance
with its terms and thereafter binds every Holder of a Debenture.
SECTION 9.05. NOTATION ON OR EXCHANGE OF DEBENTURES.
The Trustee may place an appropriate notation about an
amendment, supplement or waiver on any Debenture thereafter authenticated. The
Company in exchange for all
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Debentures may issue and the Trustee shall, upon receipt of an Authentication
Order, authenticate new Debentures that reflect the amendment, supplement or
waiver.
Failure to make the appropriate notation or issue a new
Debenture shall not affect the validity and effect of such amendment,
supplement or waiver.
SECTION 9.06. TRUSTEE TO SIGN AMENDMENTS, ETC.
The Trustee shall sign any amended or supplemental Indenture
authorized pursuant to this Article 9 if the amendment or supplement does not
adversely affect the rights, duties, liabilities or immunities of the Trustee.
The Company may not sign an amendment or supplemental Indenture until the
Board of Directors approves it. In executing any amended or supplemental
indenture, the Trustee shall be entitled to receive and (subject to Section
7.01 hereof) shall be fully protected in relying upon, in addition to the
documents required by Section 12.04 hereof, an Officer's Certificate and an
Opinion of Counsel stating that the execution of such amended or supplemental
indenture is authorized or permitted by this Indenture.
ARTICLE 10
COLLATERAL AND SECURITY
SECTION 10.01. SECURITY AND PLEDGE AGREEMENT.
The due and punctual payment of the principal of and
interest on the Debentures when and as the same shall be due and payable,
whether on an interest payment date, at maturity, by acceleration, repurchase,
redemption or otherwise, and interest on the overdue principal of and interest
(to the extent permitted by law), if any, on the Debentures and performance of
all other obligations of the Company to the Holders of Debentures or the
Trustee under this Indenture and the Debentures, according to the terms
hereunder or thereunder, shall be secured as provided in the Security and
Pledge Agreement, a copy of which is attached hereto as Exhibit B, which the
Company has entered into simultaneously with the execution of this Indenture
(the "Security and Pledge Agreement"). Each Holder of Debentures, by its
acceptance thereof, consents and agrees to the terms of the Security and
Pledge Agreement (including, without limitation, the provisions providing for
foreclosure and release of Collateral) as the same may be in effect or may be
amended from time to time in accordance with its terms and authorizes and
directs the Collateral Agent to enter into the Security and Pledge Agreement
and to perform its obligations and exercise its rights thereunder in
accordance therewith. The Company shall deliver to the Trustee copies of all
documents delivered to the Collateral Agent pursuant to the Security and
Pledge Agreement, and shall do or cause to be done all such acts and things as
may be necessary or proper, or as may be required by the provisions of the
Security and Pledge Agreement, to assure and confirm to the Trustee and the
Collateral Agent the security interest in the Collateral contemplated hereby
and by the Security and Pledge Agreement or any part thereof, as from time to
time constituted, so as to render the same available for the security and
benefit of this Indenture and of the Debentures secured hereby, according to
the intent and purposes herein expressed. The Company shall take, or shall
cause its Subsidiaries to take, upon request of the Trustee, any and all
actions reasonably required to cause the Security and Pledge Agreement, in
accordance with the terms and conditions thereof, to create and maintain, as
security for the
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Obligations of the Company hereunder, a valid and enforceable perfected first
priority Lien in and on all the Collateral, in favor of the Collateral Agent for
the benefit of the Holders of Debentures, superior to and prior to the rights of
all third Persons and subject to no other Liens than Permitted Liens; provided,
however, that so long as any of the Old Debentures shall remain outstanding,
such Lien created by the Security and Pledge Agreement shall be permitted to be
a second priority Lien.
SECTION 10.02. TRANSFERS OF INTELLECTUAL PROPERTY AND SIMILAR
ASSETS.
If the Company or any Wholly Owned Subsidiary of the Company
proposes to convey, transfer, contribute, sell, lease or assign or otherwise
distribute (collectively, "transfer") any intellectual property or similar
assets to any other Subsidiary of the Company after the date of this
Indenture, (i) such transfer shall be made only to another Wholly Owned
Subsidiary of the Company and (ii) prior to or concurrently with such
transfer, the Company or such Wholly Owned Subsidiary effecting such transfer
shall enter into a license agreement with such other Wholly Owned Subsidiary
in the form attached hereto as Exhibit C (with such modifications as may be
agreed to by the Company and the Trustee), pursuant to which the Company or
such Wholly Owned Subsidiary effecting such transfer, as the case may be,
shall be permitted to utilize such property or assets in the same manner and
to the same extent as such property or assets were used by such entity prior
to the transfer thereof.
SECTION 10.03. RECORDING AND OPINIONS.
(a) The Company shall furnish to the Trustee simultaneously
with the execution and delivery of this Indenture an Opinion of Counsel either
(i) stating that in the opinion of such counsel all action has been taken with
respect to the recording, registering and filing of this Indenture, financing
statements or other instruments necessary to make effective the Lien intended
to be created by the Security and Pledge Agreement, and reciting with respect
to the security interests in the Collateral, the details of such action, or
(ii) stating that, in the opinion of such counsel, no such action is necessary
to make such Lien effective.
(b) The Company shall furnish to the Collateral Agent and
the Trustee on __________ in each year beginning with ________, 199_, an
Opinion of Counsel, dated as of such date, either (i) (A) stating that, in the
opinion of such counsel, action has been taken with respect to the recording,
registering, filing, re-recording, re-registering and refiling of all
supplemental indentures, financing statements, continuation statements or
other instruments of further assurance as is necessary to maintain the Lien
pursuant to the Security and Pledge Agreement and reciting with respect to the
security interests in the Collateral the details of such action or referring
to prior Opinions of Counsel in which such details are given and (B) stating
that, based on relevant laws as in effect on the date of such Opinion of
Counsel, all financing statements and continuation statements have been
executed and filed that are necessary as of such date fully to preserve and
protect, to the extent such protection and preservation are possible by
filing, the rights of the Holders of Debentures and the Collateral Agent and
the Trustee hereunder and under the Security and Pledge Agreement with respect
to the security interests in the Collateral, or (ii) stating that, in the
opinion of such counsel, no such action is necessary to maintain such Lien and
assignment.
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SECTION 10.04. RELEASE OF COLLATERAL.
(a) Subject to subsections (b), (c) and (d) of this Section
10.04, Collateral may be released from the Lien and security interest created
by the Security and Pledge Agreement at any time or from time to time in
accordance with the provisions of the Security and Pledge Agreement or as
provided hereby. In addition, upon the request of the Company pursuant to an
Officers' Certificate certifying that all conditions precedent hereunder have
been met and stating whether or not such release is in connection with an
Asset Sale and (at the sole cost and expense of the Company) the Collateral
Agent shall release (i) Collateral which is sold, conveyed or disposed of in
compliance with the provisions of this Indenture; provided, that if such sale,
conveyance or disposition constitutes an Asset Sale, the Company shall apply
the Net Proceeds in accordance with Section 4.10 hereof. Upon receipt of such
Officers' Certificate the Collateral Agent shall execute, deliver or
acknowledge any necessary or proper instruments of termination, satisfaction
or release to evidence the release of any Collateral permitted to be released
pursuant to this Indenture or the Security and Pledge Agreement.
(b) No Collateral shall be released from the Lien and
security interest created by the Security and Pledge Agreement pursuant to the
provisions of the Security and Pledge Agreement unless there shall have been
delivered to the Collateral Agent the certificate required by this Section
10.04.
(c) At any time when a Default or Event of Default shall
have occurred and be continuing and the maturity of the Debentures shall have
been accelerated (whether by declaration or otherwise) and the Trustee shall
have delivered a notice of acceleration to the Collateral Agent, no release of
Collateral pursuant to the provisions of the Security and Pledge Agreement
shall be effective as against the Holders of Debentures.
(d) The release of any Collateral from the terms of this
Indenture and the pledge thereof pursuant to the terms of the Security and
Pledge Agreement shall not be deemed to impair the security under this
Indenture in contravention of the provisions hereof if and to the extent the
Collateral is released pursuant to the terms hereof. To the extent applicable,
the Company shall cause TIA ss. 314(d) relating to the release of property or
securities from the Lien and security interest of the Security and Pledge
Agreement and relating to the substitution therefor of any property or
securities to be subjected to the Lien and security interest of the Security
and Pledge Agreement to be complied with. Any certificate or opinion required
by TIA ss. 314(d) may be made by an Officer of the Company except in cases
where TIA ss. 314(d) requires that such certificate or opinion be made by an
independent Person, which Person shall be an independent appraiser or other
expert selected or approved by the Trustee and the Collateral Agent in the
exercise of reasonable care.
SECTION 10.05. CERTIFICATES OF THE COMPANY.
The Company shall furnish to the Trustee and the Collateral
Agent, prior to each proposed release of Collateral pursuant to the Security and
Pledge Agreement, (a) all documents required by Section 314(d) of the TIA and
(b) an Opinion of Counsel to the effect that such accompanying documents
constitute all documents required by Section 314(d) of the TIA. The Trustee
may, to the extent permitted by Sections 7.01 and 7.02 hereof, accept as
conclusive
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evidence of compliance with the foregoing provisions the appropriate statements
contained in such documents and such Opinion of Counsel.
SECTION 10.06. CERTIFICATES OF THE TRUSTEE.
In the event that the Company wishes to release Collateral
in accordance with the Security and Pledge Agreement and has delivered the
certificates and documents required by the Security and Pledge Agreement and
Sections 10.04 and 10.05 hereof, the Trustee shall determine whether it has
received all documentation required by Section 314(d) of the TIA in connection
with such release and, based on such determination and the Opinion of Counsel
delivered pursuant to Section 10.05(b) hereof, shall deliver a certificate to
the Collateral Agent setting forth such determination.
SECTION 10.07. AUTHORIZATION OF ACTIONS TO BE TAKEN BY THE TRUSTEE
UNDER THE SECURITY AND PLEDGE AGREEMENT.
Subject to the provisions of Section 7.01 and 7.02 hereof,
the Trustee may, in its sole discretion and without the consent of the Holders
of Debentures, direct, on behalf of the Holders of Debentures, the Collateral
Agent to take all actions it deems necessary or appropriate in order to (a)
enforce any of the terms of the Security and Pledge Agreement and (b) collect
and receive any and all amounts payable in respect of the Obligations of the
Company hereunder. The Trustee shall have power to institute and maintain such
suits and proceedings as it may deem expedient to prevent any impairment of
the Collateral by any acts that may be unlawful or in violation of the
Security and Pledge Agreement or this Indenture, and such suits and
proceedings as the Trustee may deem expedient to preserve or protect its
interests and the interests of the Holders of Debentures in the Collateral
(including power to institute and maintain suits or proceedings to restrain
the enforcement of or compliance with any legislative or other governmental
enactment, rule or order that may be unconstitutional or otherwise invalid if
the enforcement of, or compliance with, such enactment, rule or order would
impair the security interest hereunder or under the Security and Pledge
Agreement or be prejudicial to the interests of the Holders of Debentures or
of the Trustee).
SECTION 10.08. AUTHORIZATION OF RECEIPT OF FUNDS BY THE TRUSTEE
UNDER THE SECURITY AND PLEDGE AGREEMENT.
The Trustee is authorized to receive any funds for the
benefit of the Holders of Debentures distributed under the Security and Pledge
Agreement, and to make further distributions of such funds to the Holders of
Debentures according to the provisions of this Indenture.
SECTION 10.09. TERMINATION OF SECURITY INTERESTS.
Upon the payment in full of all Obligations of the Company
under this Indenture and the Debentures, the Trustee shall, at the request of
the Company, deliver a certificate to the Collateral Agent stating that such
Obligations have been paid in full, and instruct the Collateral Agent to release
the Liens pursuant to this Indenture and the Security and Pledge Agreement.
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ARTICLE 11
SUBSIDIARY GUARANTEES
SECTION 11.01. APPLICATION.
The provisions of Sections 11.02 through 11.06 hereof shall
apply in respect of (a) each Subsidiary of the Company (other than a
Subsidiary organized under the laws of a jurisdiction other than the United
States of America, its territories and possessions, any State thereof or the
District of Colombia) to which the Company conveys, transfers, contributes,
sells, leases or assigns or otherwise distributes any tangible property or
assets after the date of this Indenture and (b) each Subsidiary of the Company
which is acquired or created by the Company after the date of this Indenture,
in either case, in any transaction or series of transactions involving
aggregate value or consideration in excess of $10.0 million; provided,
however, that for the purposes of determining the applicability of this
Article 11, the value of property or assets (other than cash) transferred to
any such Subsidiary of the Company in exchange for cash in an amount equal to
the fair market value of such property or assets, as determined by the Board
of Directors of the Company and evidenced by a resolution set forth in an
Officers' Certificate and delivered to the Trustee, shall be excluded.
SECTION 11.02. GUARANTEE.
Subject to this Article 11, the Company shall cause each of
the Guarantors, jointly and severally, unconditionally to guarantee to each
Holder of a Debenture authenticated and delivered by the Trustee and to the
Trustee and its successors and assigns, irrespective of the validity and
enforceability of this Indenture, the Debentures or the obligations of the
Company hereunder or thereunder, that: (a) the principal of and interest on
the Debentures will be promptly paid in full when due, whether at maturity, by
acceleration, redemption or otherwise, and interest on the overdue principal
of and interest on the Debentures, if any, if lawful, and all other
obligations of the Company to the Holders or the Trustee hereunder or
thereunder will be promptly paid in full or performed, all in accordance with
the terms hereof and thereof; and (b) in case of any extension of time of
payment or renewal of any Debentures or any of such other obligations, that
same will be promptly paid in full when due or performed in accordance with
the terms of the extension or renewal, whether at stated maturity, by
acceleration or otherwise. The Company shall cause each Guarantor, failing
payment when due of any amount so guaranteed or any performance so guaranteed
for whatever reason, to be jointly and severally obligated to pay the same
immediately. The Company shall cause each Guarantor further to agree that such
guarantee is a guarantee of payment and not a guarantee of collection.
The Company shall further cause each Guarantor (i) to agree
that its obligations under its Subsidiary Guarantee shall be unconditional,
irrespective of the validity, regularity or enforceability of the Debentures
or this Indenture, the absence of any action to enforce the same, any waiver
or consent by any Holder of the Debentures with respect to any provisions
hereof or thereof, the recovery of any judgment against the Company, any
action to enforce the same or any other circumstance which might otherwise
constitute a legal or equitable discharge or defense of a guarantor; (ii) to
waive diligence, presentment, demand of payment, filing of claims with a court
in the event of insolvency or bankruptcy of the Company, any right to require a
proceeding first against the Company, protest, notice and all demands
whatsoever; and (iii) to
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covenant that its Subsidiary Guarantee shall not be discharged except by
complete performance of the obligations contained in the Debentures and this
Indenture.
If any Holder or the Trustee is required by any court or
otherwise to return to the Company, the Guarantors or any custodian, trustee,
liquidator or other similar official acting in relation to either the Company
or any Guarantor, any amount paid by the Company or any Guarantor either to
the Trustee or to such Holder, each Subsidiary Guarantee, to the extent
theretofore discharged, shall be reinstated in full force and effect.
The Company shall further cause each Guarantor to agree that
(i) it shall not be entitled to any right of subrogation in relation to the
Holders in respect of any obligations guaranteed hereby until payment in full
of all obligations guaranteed hereby, and (ii) as between the Guarantors, on
the one hand, and the Holders and the Trustee, on the other hand, (x) the
maturity of the obligations guaranteed by the Subsidiary Guarantees may be
accelerated as provided in Article 6 hereof for the purposes of the Subsidiary
Guarantees notwithstanding any stay, injunction or other prohibition
preventing such acceleration in respect of the obligations guaranteed by the
Subsidiary Guarantees, and (y) in the event of any declaration of acceleration
of such obligations as provided in Article 6 hereof, such obligations (whether
or not due and payable) shall forthwith become due and payable by the
Guarantors for the purpose of the Subsidiary Guarantees. The Guarantors shall
have the right to seek contribution from any non-paying Guarantor so long as
the exercise of such right does not impair the rights of the Holders under the
Guarantee.
SECTION 11.03. LIMITATION ON GUARANTOR LIABILITY.
By its execution of its Subsidiary Guarantee, each
Guarantor, and by its acceptance of Debentures, each Holder, confirms that it
is the intention of all such parties that the Subsidiary Guarantee of such
Guarantor not constitute a fraudulent transfer or conveyance for purposes of
any Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the Uniform
Fraudulent Transfer Act or any similar federal or state law to the extent
applicable to any Subsidiary Guarantee. To effectuate the foregoing intention,
the Trustee and the Holders hereby irrevocably agree, and by its execution of
its Subsidiary Guarantee each Guarantor shall irrevocably agree, that the
obligations of such Guarantor under its Subsidiary Guarantee and this Article
11 shall be limited to such maximum amount as will, after giving effect to
such maximum amount and all other contingent and fixed liabilities of such
Guarantor that are relevant under such laws, and after giving effect to any
collections from, rights to receive contribution from or payments made by or
on behalf of any other Guarantor in respect of the obligations of such other
Guarantor under this Article 11, result in the obligations of such Guarantor
under its Subsidiary Guarantee not constituting a fraudulent transfer or
conveyance.
SECTION 11.04. EXECUTION AND DELIVERY OF SUBSIDIARY GUARANTEE.
To evidence its Subsidiary Guarantee, the Company shall
cause each Guarantor to agree that a notation of such Subsidiary Guarantee
substantially in the form included in Exhibit D hereto shall be endorsed by an
Officer of such Guarantor on each Debenture authenticated and delivered by the
Trustee on or after the date of such Guarantee. Further, the Company shall
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cause each Guarantor promptly to execute a supplemental indenture
substantially in the form of Exhibit E hereto.
The Company shall further cause each Guarantor to agree that
its Subsidiary Guarantee shall remain in full force and effect notwithstanding
any failure to endorse on each Debenture a notation of such Subsidiary
Guarantee.
If an Officer whose signature is on any Subsidiary Guarantee
no longer holds that office at the time the Trustee authenticates the
Debenture on which such Subsidiary Guarantee is endorsed, such Subsidiary
Guarantee shall be valid nevertheless.
The delivery of any Debenture by the Trustee, after the
authentication thereof hereunder, shall constitute due delivery of each
Subsidiary Guarantee theretofore or thereafter executed and delivered by or on
behalf of the Guarantors or any of them.
In the event that the Company creates or acquires any new
Subsidiaries subsequent to the date of this Indenture, the Company shall cause
such Subsidiaries to execute supplemental indentures to this Indenture and
Subsidiary Guarantees in accordance with this Article 11.
SECTION 11.05. GUARANTORS MAY CONSOLIDATE, ETC., ON CERTAIN TERMS.
No Guarantor may consolidate with or merge with or into
(whether or not such Guarantor is the surviving Person) another corporation,
Person or other entity whether or not affiliated with such Guarantor unless
(i) subject to the provisions of Section 11.06 hereof, the Person formed by or
surviving any such consolidation or merger (if other than such Guarantor)
assumes all the obligations of such Guarantor under its Subsidiary Guarantee,
the Debentures and the Indenture pursuant to a supplemental indenture, in form
and substance reasonably satisfactory to the Trustee; (ii) immediately after
giving effect to such transaction, no Default or Event of Default exists; and
(iii) the Company would be permitted immediately after giving effect to such
transaction to incur at least $1.00 of additional Indebtedness pursuant to the
Fixed Charge Coverage Ratio test set forth in Section 4.09(a) hereof.
SECTION 11.06. RELEASES FOLLOWING SALE OF ASSETS.
In the event of a sale or other disposition of all of the
assets of any Guarantor (other than to the Company or another Guarantor), by
way of merger, consolidation or otherwise, or a sale or other disposition of
all of the Capital Stock of any Guarantor (other than to the Company or
another Guarantor), then such Guarantor (in the event of a sale or other
disposition, by way of such a merger, consolidation or otherwise, of all of
the Capital Stock of such Guarantor) or the corporation acquiring the property
(in the event of a sale or other disposition of all of the assets of such
Guarantor) will be released and relieved of any obligations under its Subsidiary
Guarantee and any such acquiring corporation will not be required to assume any
obligations of such Guarantor under the applicable Subsidiary Guarantee;
provided that such sale or other disposition complies with all applicable
provisions of this Indenture including, without limitation, Section 4.10 hereof.
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Any Guarantor not released from its obligations under its
Subsidiary Guarantee shall remain liable for the full amount of principal of
and interest on the Debentures and for the other obligations of such Guarantor
under this Indenture as provided in this Article 11.
ARTICLE 12
MISCELLANEOUS
SECTION 12.01. TRUST INDENTURE ACT CONTROLS.
If any provision of this Indenture limits, qualifies or
conflicts with the duties imposed by TIA ss. 318(c), the imposed duties shall
control.
SECTION 12.02. NOTICES.
Any notice or communication by the Company, any Guarantor or
the Trustee to the others is duly given if in writing and delivered in person
or mailed by first class mail (registered or certified, return receipt
requested), telex, telecopier or overnight air courier guaranteeing next day
delivery, to the other's address:
If to the Company and/or any Guarantor:
Finlay Enterprises, Inc.
529 Fifth Avenue, New York, New York 10175
Telecopier No.: (212) 557-3848
Attention: Secretary and Corporate Counsel
With a copy to:
Tenzer Greenblatt LLP
405 Lexington Avenue
New York, New York 10174
Telecopier No.: (212) 885-5001
Attention: James Martin Kaplan
If to the Trustee:
Marine Midland Bank
140 Broadway, 12th Floor
New York, New York 10005
Telecopier No. (212) 658-6425
Attention: Corporate Trust Administration
The Company, any Guarantor or the Trustee, by notice to the
others, may designate additional or different addresses for subsequent notices
or communications.
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All notices and communications (other than those sent to
Holders) shall be deemed to have been duly given: at the time delivered by
hand, if personally delivered; five Business Days after being deposited in the
mail, postage prepaid, if mailed; when answered back, if telexed; when receipt
acknowledged, if telecopied; and the next Business Day after timely delivery
to the courier, if sent by overnight air courier guaranteeing next day
delivery.
Any notice or communication to a Holder shall be mailed by
first class mail, certified or registered, return receipt requested, or by
overnight air courier guaranteeing next day delivery to its address shown on
the register kept by the Registrar. Any notice or communication shall also be
so mailed to any Person described in TIA ss. 313(c), to the extent required by
the TIA. Failure to mail a notice or communication to a Holder or any defect
in it shall not affect its sufficiency with respect to other Holders.
If a notice or communication is mailed in the manner
provided above within the time prescribed, it is duly given, whether or not
the addressee receives it.
If the Company mails a notice or communication to Holders,
it shall mail a copy to the Trustee and each Agent at the same time.
SECTION 12.03. COMMUNICATION BY HOLDERS OF DEBENTURES WITH OTHER
HOLDERS OF DEBENTURES.
Holders may communicate pursuant to TIA ss. 312(b) with
other Holders with respect to their rights under this Indenture or the
Debentures. The Company, the Trustee, the Registrar and anyone else shall have
the protection of TIA ss. 312(c).
SECTION 12.04. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.
Upon any request or application by the Company to the
Trustee to take any action under this Indenture, the Company shall furnish to
the Trustee:
(a) an Officers' Certificate in form and substance
reasonably satisfactory to the Trustee (which shall include the statements set
forth in Section 12.05 hereof) stating that, in the opinion of the signers,
all conditions precedent and covenants, if any, provided for in this Indenture
relating to the proposed action have been satisfied; and
(b) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth in
Section 12.05 hereof) stating that, in the opinion of such counsel, all such
conditions precedent and covenants have been satisfied.
SECTION 12.05. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.
Each certificate or opinion with respect to compliance with
a condition or covenant provided for in this Indenture (other than a
certificate provided pursuant to TIA ss. 314(a)(4)) shall comply with the
provisions of TIA ss. 314(e) and shall include:
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(a) a statement that the Person making such certificate or
opinion has read such covenant or condition;
(b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions contained
in such certificate or opinion are based;
(c) a statement that, in the opinion of such Person, he or
she has made such examination or investigation as is necessary to enable him
or her to express an informed opinion as to whether or not such covenant or
condition has been satisfied; and
(d) a statement as to whether or not, in the opinion of such
Person, such condition or covenant has been satisfied.
SECTION 12.06. RULES BY TRUSTEE AND AGENTS.
The Trustee may make reasonable rules for action by or at a
meeting of Holders. The Registrar or Paying Agent may make reasonable rules
and set reasonable requirements for its functions.
SECTION 12.07. NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS,
EMPLOYEES AND STOCKHOLDERS.
No past, present or future director, officer, employee,
incorporator or stockholder of the Company, as such, shall have any liability
for any obligations of the Company under the Debentures, this Indenture or the
Security and Pledge Agreement or for any claim based on, in respect of, or by
reason of, such obligations or their creation. Each Holder by accepting a
Debenture waives and releases all such liability. The waiver and release are
part of the consideration for issuance of the Debentures.
SECTION 12.08. GOVERNING LAW.
THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE
USED TO CONSTRUE THIS INDENTURE, THE DEBENTURES AND THE SUBSIDIARY GUARANTEES,
IF ANY, WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO
THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE
REQUIRED THEREBY.
SECTION 12.09. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.
This Indenture may not be used to interpret any other
indenture, loan or debt agreement of the Company or its Subsidiaries or of any
other Person. Any such indenture, loan or debt agreement may not be used to
interpret this Indenture.
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SECTION 12.10. SUCCESSORS.
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All agreements of the Company in this Indenture and the
Debentures shall bind its successors. All agreements of the Trustee in this
Indenture shall bind its successors.
SECTION 12.11. SEVERABILITY.
In case any provision in this Indenture or in the Debentures
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 12.12. COUNTERPART ORIGINALS.
The parties may sign any number of copies of this Indenture.
Each signed copy shall be an original, but all of them together constitute the
same agreement.
SECTION 12.13. TABLE OF CONTENTS, HEADINGS, ETC.
The Table of Contents, Cross-Reference Table and Headings of
the Articles and Sections of this Indenture have been inserted for convenience
of reference only, are not to be considered a part of this Indenture and shall
in no way modify or restrict any of the terms or provisions hereof.
[Signatures on following page]
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SIGNATURES
Dated as of April , 1998 FINLAY ENTERPRISES, INC.
-----
By: ____________________________
Name:
Title:
Attest:
Name:
Title:
Dated as of April , 1998 MARINE MIDLAND BANK, as Trustee
-----
By: ____________________________
Name:
Title:
Attest:
Name:
Title:
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EXHIBIT A
(Face of Debenture)
- -------------------------------------------------------------------------------
CUSIP/CINS__________
% Senior Debenture due ________, 2008
No.: $
Finlay Enterprises, Inc. promises to pay to _______________ or
registered assigns, the principal sum of _______________ Dollars on
_______________, 2008.
Interest Payment Dates: _______________ and _______________.
Record Dates: _______________ and _______________.
Reference is hereby made to the further provisions of this Debenture
set forth on the reverse hereof, which further provisions shall for all
purposes have the same effect as if set forth at this place.
FINLAY ENTERPRISES, INC.
By:
-------------------------
Name:
Title:
(SEAL)
This is one of the [Global]
Debentures referred to in the
within-mentioned Indenture:
MARINE MIDLAND BANK,
as Trustee
By:
----------------------------
Name:
Title:
Dated:__________________, 1998
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(Back of Debenture)
____% Senior Debentures due 2008
Capitalized terms used herein shall have the meanings
assigned to them in the Indenture referred to below unless otherwise
indicated.
1. INTEREST. Finlay Enterprises, Inc., a Delaware
corporation (the "Company"), promises to pay interest on the principal amount
of this Debenture at __% per annum from , 1998 until maturity. The Company
shall pay interest semiannually in arrears on and of each year, or if any such
day is not a Business Day, on the next succeeding Business Day (each an
"Interest Payment Date"). Interest on the Debentures will accrue from the most
recent date to which interest has been paid or, if no interest has been paid,
from the date of original issuance; provided that if there is no existing
Default in the payment of interest, and if this Debenture is authenticated
between a record date referred to on the face hereof and the next succeeding
Interest Payment Date, interest shall accrue from such next succeeding
Interest Payment Date; provided, further, that the first Interest Payment Date
shall be , 1998. The Company shall pay interest (including post-petition
interest in any proceeding under any Bankruptcy Law) on overdue principal and
premium, if any, from time to time on demand at a rate that is 1% per annum in
excess of the rate then in effect; it shall pay interest (including
post-petition interest in any proceeding under any Bankruptcy Law) on overdue
installments of interest (without regard to any applicable grace periods) from
time to time on demand at the same rate to the extent lawful. Interest will be
computed on the basis of a 360-day year of twelve 30-day months.
2. METHOD OF PAYMENT. The Company shall pay interest on the
Debentures (except defaulted interest) to the Persons who are registered
Holders of Debentures at the close of business on the ______________ or
____________ next preceding the Interest Payment Date, even if such Debentures
are cancelled after such record date and on or before such Interest Payment
Date, except as provided in Section 2.12 of the Indenture with respect to
defaulted interest. Principal, premium, if any, and interest on the Debentures
will be payable at the office or agency of the Company maintained for such
purpose within the City and State of New York or, at the option of the
Company, payment of interest may be made by check mailed to the Holders of the
Debentures at their respective addresses set forth in the register of Holders
of Debentures; provided that all payments of principal, premium and interest
with respect to Debentures the Holders of which have given wire transfer
instructions to the Company prior to the relevant record date will be required
to be made by wire transfer of immediately available funds to the accounts
specified by the Holders thereof. Until otherwise designated by the Company,
the Company's office or agency in New York will be the office of the Trustee
maintained for such purpose. Such payment shall be in such coin or currency of
the United States of America as at the time of payment is legal tender for
payment of public and private debts.
3. PAYING AGENT AND REGISTRAR. Initially, Marine Midland
Bank, the Trustee under the Indenture, will act as Paying Agent and Registrar.
The Company may
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change any Paying Agent or Registrar without notice to any Holder. The Company
or any of its Subsidiaries may act in any such capacity.
4. INDENTURE. The Company issued the Debentures under an
Indenture dated as of April __, 1998 ("Indenture") between the Company and the
Trustee. The terms of the Debentures include those stated in the Indenture and
those made part of the Indenture by reference to the Trust Indenture Act of
1939, as amended (15 U.S. Code ss.ss. 77aaa-77bbbb), as in effect on the date
on which the Indenture is qualified thereunder. The Debentures are subject to
all such terms, and Holders are referred to the Indenture and such Act for a
statement of such terms. To the extent any provision of this Debenture
conflicts with the express provisions of the Indenture, the provisions of the
Indenture shall govern and be controlling. The Debentures are obligations of
the Company limited to $75.0 million in aggregate principal amount, subject to
the provisions of Section 2.07 of the Indenture.
5. OPTIONAL REDEMPTION. (a) Except as set forth in
subparagraph (b) of this Paragraph 5, the Debentures are not redeemable at the
Company's option prior to __________________, 2003. Thereafter, the Debentures
will be subject to redemption at any time at the option of the Company, in whole
or in part, upon not less than 30 nor more than 60 days' notice, at the
redemption prices (expressed as percentages of principal amount) set forth below
plus accrued and unpaid interest thereon to the applicable redemption date, if
redeemed during the twelve-month period beginning on __________ of the years
indicated below:
Year Percentage
2003..........................................______%
2004..........................................______%
2005..........................................______%
2006 and thereafter..........................100.000%
provided, however, that if the Company, at its option, specifies in the notice
of redemption provided for in this paragraph 5(a) that such notice is
revocable, then the Company may revoke such notice at its further option at
any time on or prior to the date which is 10 days prior to the redemption date
specified in such notice (provided such notice so specifies) by providing a
notice of revocation to the Trustee on or prior to the date on which the
Company's revocation right expires (and the Trustee shall promptly mail such
notice to the Holders by first class mail).
(b) Notwithstanding the foregoing, until April __, 2001 (36
months after the date of the Indenture), the Company may on any one or more
occasions redeem up to $25.0 million in aggregate principal amount of
Debentures at a redemption price of 101% of the principal amount thereof, plus
accrued and unpaid interest thereon, if any, to the redemption date, with the
net cash proceeds of Public Equity Offerings by the Company; provided that at
least $50.0 million in aggregate principal amount of Debentures remains
outstanding immediately after the occurrence of each such redemption
(excluding Debentures held by the Company and its Subsidiaries); and provided
further, that such redemption shall occur within 120 days of the date of the
closing of such Public Equity Offering.
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6. MANDATORY REDEMPTION. Except as set forth in Paragraph 7 below, the
Company shall not be required to make mandatory redemption payments with
respect to the Debentures.
7. REPURCHASE AT OPTION OF HOLDER. (a) If there is a Change of
Control, each Holder of Debentures will have the right to require the Company
to make an offer (a "Change of Control Offer") to repurchase all or any part
(equal to $1,000 or an integral multiple thereof) of such Holder's Debentures
at an offer price in cash equal to 101% of the aggregate principal amount
thereof plus accrued and unpaid interest thereon, if any, to the date of
purchase (the "Change of Control Payment"). Within 30 days following any
Change of Control, the Company shall mail a notice to each Holder describing
the transaction or transactions that constitute the Change of Control and
offering to repurchase Debentures on the date specified in such notice, which
date shall be no earlier than 30 days and no later than 60 days from the date
such notice is mailed (the "Change of Control Payment Date"), pursuant to the
procedures required by the Indenture and described in such notice. The Company
shall comply with the requirements of Rule 14e-1 under the Exchange Act and
any other securities laws and regulations thereunder to the extent such laws
and regulations are applicable in connection with the repurchase of Debentures
as a result of a Change of Control.
(b) If the Company or any Subsidiary of the Company
consummates any Asset Sales, when the aggregate amount of Excess Proceeds
exceeds $10.0 million, the Company shall be required to make an offer to all
Holders of Debentures (an "Asset Sale Offer") to purchase the maximum
principal amount of Debentures that may be purchased out of the Excess
Proceeds, at an offer price in cash in an amount equal to 100% of the
principal amount thereof plus accrued and unpaid interest thereon, if any, to
the date of purchase, in accordance with the procedures set forth in the
Indenture. To the extent that any Excess Proceeds remain after consummation of
an Asset Sale Offer, the Company may use such Excess Proceeds for any purpose
not otherwise prohibited by the Indenture. If the aggregate principal amount
of Debentures tendered in connection with such Asset Sale Offer and
surrendered by Holders thereof exceeds the amount of Excess Proceeds, the
Trustee shall select the Debentures to be purchased on a pro rata basis. Upon
completion of such offer to purchase, the amount of Excess Proceeds shall be
reset at zero. Notwithstanding the foregoing, the Company shall not be
required to make an Asset Sale Offer if (i) the Company's obligation to make
such Asset Sale Offer is due to an Asset Sale by one or more of the Company's
Subsidiaries, (ii) as a result of such Asset Sale (or Asset Sales), Finlay
Jewelry is required to make and does make an offer similar to an Asset Sale
Offer to the holders of the Senior Notes in accordance with the terms of the
Senior Note Indenture and (iii) to the extent that the aggregate amount of
Senior Notes tendered pursuant to such offer is less than the Excess Proceeds,
Finlay Jewelry makes an Asset Sale Offer to all Holders of Debentures with
such remaining Excess Proceeds.
8. NOTICE OF REDEMPTION. Notice of redemption will be mailed
by first class mail at least 30 days but not more than 60 days before the
redemption date to each Holder of Debentures to be redeemed at its registered
address. Subject to the Company's right of revocation under the Indenture in
connection with any redemption pursuant to Paragraph 5(a) hereof, notices of
redemption may not be conditional. Debentures in denominations larger than
$1,000 may be redeemed in part. If any Debenture is to be redeemed in part
only, the notice of
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redemption that relates to such Debenture shall state the portion of the
principal amount thereof to be redeemed. A new Debenture in principal amount
equal to the unredeemed portion thereof will be issued in the name of the
Holder thereof upon cancellation of the original Debenture. On and after the
redemption date interest, ceases to accrue on Debentures or portions thereof
called for redemption.
9. DENOMINATIONS, TRANSFER, EXCHANGE. The Debentures are in
registered form without coupons in denominations of $1,000 and integral
multiples of $1,000. The transfer of Debentures may be registered and
Debentures may be exchanged as provided in the Indenture. The Registrar and
the Trustee may require a Holder, among other things, to furnish appropriate
endorsements and transfer documents and the Company may require a Holder to
pay any taxes and fees required by law or permitted by the Indenture. The
Company is not required (a) to issue, to register the transfer of or to
exchange any Debentures during a period beginning at the opening of business
15 days before the day of any selection of Debentures for redemption and
ending at the close of business on the day of selection, (b) to register the
transfer of or to exchange any Debenture so selected for redemption in whole
or in part, except the unredeemed portion of any Debenture being redeemed in
part or (c) to register the transfer of or to exchange a Debenture between a
record date and the next succeeding Interest Payment Date.
10. PERSONS DEEMED OWNERS. The registered Holder of a
Debenture may be treated as its owner for all purposes, subject to the
provisions of the Indenture with respect to record dates for the payment of
interest.
11. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain
exceptions, the Indenture or the Debentures may be amended or supplemented
with the consent of the Holders of at least a majority in principal amount of
the Debentures then outstanding (including, without limitation, consents
obtained in connection with a purchase of, or tender offer or exchange offer
for, Debentures) and any existing default or compliance with any provision of
the Indenture or the Debentures may be waived with the consent of the Holders
of a majority in principal amount of the Debentures then outstanding
(including, without limitation, consents obtained in connection with a
purchase of, or tender offer or exchange offer for, Debentures). Without the
consent of any Holder of Debentures, the Company and the Trustee may amend or
supplement the Indenture or the Debentures to cure any ambiguity, defect or
inconsistency, to provide for uncertificated Debentures in addition to or in
place of certificated Debentures, to provide for the assumption of the
Company's obligations to Holders of the Debentures in case of a merger or
consolidation, or sale of all or substantially all of the Company's assets, to
execute and deliver any document necessary or appropriate to release Liens on
any Collateral in accordance with the terms of the Indenture, to make any
change that would provide any additional rights or benefits to the Holders of
the Debentures or that does not adversely affect the legal rights under the
Indenture of any such Holder, or to comply with the requirements of the
Commission in order to effect or maintain the qualification of the Indenture
under the Trust Indenture Act.
12. DEFAULTS AND REMEDIES. Events of Default include: (i)
default for 30 days in the payment when due of interest on the Debentures;
(ii) default in payment when due of the principal of or premium, if any, on
the Debentures; (iii) failure by the Company to comply
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with the provisions of Sections 3.09, 4.10, 4.15 or Article 5 of the
Indenture; (iv) failure by the Company for 45 days after notice to comply with
any of its other agreements in the Indenture or the Debentures; (v) default
under any mortgage, indenture or instrument under which there may be issued or
by which there may be secured or evidenced any Indebtedness for money borrowed
by the Company or any of its Subsidiaries (including any Indebtedness the
payment of which is guaranteed by the Company or any of its Subsidiaries)
other than a Receivables Subsidiary whether such Indebtedness or guarantee now
exists, or is created after the date of the Indenture, which default (a) is
caused by a failure to pay principal or a premium, if any, on such
Indebtedness at the Stated Maturity for such payment of principal or premium,
if any, or such later date as has been agreed in a writing (provided such
writing is entered into prior to such Stated Maturity) by the parties to the
documentation relating to such Indebtedness (a "Payment Default") or (b)
results in the acceleration of such Indebtedness prior to its express maturity
and, in each case, the principal amount of any such Indebtedness, together
with the principal amount of any other such Indebtedness under which there has
been a Payment Default or the maturity of which has been so accelerated,
aggregates $12.5 million or more; (vi) failure by the Company or any of its
Subsidiaries other than a Receivables Subsidiary to pay final judgments
aggregating in excess of $12.5 million, which judgments are not paid,
discharged or stayed for a period of 60 days (or 90 days if prior to such
sixtieth day the Company has delivered to the Trustee an Officers' Certificate
attesting that a financially responsible insurance company of recognized
national standing has acknowledged in writing complete liability for such
judgment and attached a copy of such acknowledgment thereto); (vii) the
failure of any material representation or warranty of the Company set forth in
the Security and Pledge Agreement to be true and correct or the failure by the
Company to perform any of its material covenants under the Security and Pledge
Agreement which, in either case, (a) continues for five days after the earlier
of the Company's management becoming aware thereof or the receipt of written
notice thereof from the Trustee, the Collateral Agent or the Holders of 25% or
more in principal amount of the then outstanding Debentures and (b) materially
impairs or diminishes the Trustee's Lien on or the value of the Collateral (as
defined in the Security and Pledge Agreement); (viii) repudiation by the
Company of its obligations under the Security and Pledge Agreement or the
unenforceability of the Security and Pledge Agreement against the Company for
any reason; and (ix) repudiation by any Subsidiary of its obligations under
any Subsidiary Guarantee or, except as permitted by the Indenture, any
Subsidiary Guarantee shall be held in a judicial proceeding to be
unenforceable or invalid in any material respect or shall cease to be in full
force and effect;
In the event of a declaration of acceleration of the
Debentures because an Event of Default has occurred and is continuing as a
result of a Payment Default or the acceleration of any Indebtedness described
in clause (v) of the preceding paragraph, the declaration of acceleration of
the Debentures shall be automatically annulled if (i) any Payment Default
described in clause (v)(a) of the preceding paragraph has been cured or waived
and (ii) the holders of any accelerated Indebtedness described in clause
(v)(b) of the preceding paragraph have rescinded the declaration of
acceleration in respect of such Indebtedness provided in each such case that
(a) such cure, waiver or rescission of such declaration of acceleration shall
have been made in writing within 30 days of the date of such Payment Default
or declaration, as the case may be, and (b) the annulment of the acceleration
of such Debentures would not conflict with any judgment or decree of a court
of competent jurisdiction and (c) all existing Events of Default, except
nonpayment of
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principal or interest on the Debentures that became due solely because of the
acceleration of the Debentures, have been cured or waived.
A Default under clause (iv) the first paragraph of this
Paragraph 12 is not an Event of Default until the Trustee or the Holders of at
least 25% in principal amount of the then outstanding Debentures give written
notice to the Company of the default and the Company does not cure the Default
within the period provided in such clause. The notice must specify in
reasonable detail the Default, demand that it be remedied and state that the
notice is a "Notice of Default". If the Holders of 25% or more in principal
amount of the then outstanding Debentures request the Trustee to give such
notice on their behalf, the Trustee shall do so.
If any Event of Default occurs and is continuing, the
Trustee or the Holders of at least 25% in principal amount of the then
outstanding Debentures may declare all the Debentures to be due and payable
immediately. Notwithstanding the foregoing, in the case of an Event of Default
arising from certain events of bankruptcy or insolvency, with respect to the
Company, any Significant Subsidiary or any group of Subsidiaries, that taken
together would constitute a Significant Subsidiary, all outstanding Debentures
will become due and payable without further action or notice. Holders of the
Debentures may not enforce the Indenture or the Debentures except as provided
in the Indenture. Subject to certain limitations, Holders of a majority in
principal amount of the then outstanding Debentures may direct the Trustee in
its exercise of any trust or power. The Trustee may withhold from Holders of
the Debentures notice of any continuing Default or Event of Default (except a
Default or Event of Default relating to the payment of principal or interest)
if it determines that withholding notice is in their interest. The Holders of
a majority in aggregate principal amount of the Debentures then outstanding by
notice to the Trustee may on behalf of the Holders of all of the Debentures
waive any existing Default or Event of Default and its consequences under the
Indenture except a continuing Default or Event of Default in the payment of
interest on, or the principal of, the Debentures. The Company is required to
deliver to the Trustee annually a statement regarding compliance with the
Indenture, and the Company is required upon becoming aware of any Default or
Event of Default, to deliver to the Trustee a statement specifying such
Default or Event of Default.
13. TRUSTEE DEALINGS WITH COMPANY. The Trustee, in its
individual or any other capacity, may make loans to, accept deposits from, and
perform services for the Company or its Affiliates, and may otherwise deal
with the Company or its Affiliates, as if it were not the Trustee; however, if
it acquires any conflicting interest it must eliminate such conflict within 90
days, apply to the Commission for permission to continue or resign.
14. NO RECOURSE AGAINST OTHERS. No past, present or future
director, officer, employee, incorporator or stockholder of the Company, as
such, shall have any liability for any obligations of the Company under the
Debentures or the Indenture or for any claim based on, in respect of, or by
reason of, such obligations or their creation. Each Holder by accepting a
Debenture waives and releases all such liability. The waiver and release are
part of the consideration for the issuance of the Debentures. Such waiver may
not be effective to waive liabilities under the federal securities laws and it
is the view of the Commission that such a waiver is against public policy.
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15. AUTHENTICATION. This Debenture shall not be valid until
authenticated by the manual signature of the Trustee or an authenticating
agent.
16. ABBREVIATIONS. Customary abbreviations may be used in
the name of a Holder or an assignee, such as: TEN COM (= tenants in common),
TEN ENT (= tenants by the entireties), JT TEN (-- joint tenants with right of
survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (=
Uniform Gifts to Minors Act).
17. CUSIP NUMBERS. Pursuant to a recommendation promulgated
by the Committee on Uniform Security Identification Procedures, the Company
has caused CUSIP numbers to be printed on the Debentures and the Trustee may
use CUSIP numbers in notices of redemption as a convenience to Holders. No
representation is made as to the accuracy of such numbers either as printed on
the Debentures or as contained in any notice of redemption and reliance may be
placed only on the other identification numbers placed thereon.
18. ADDITIONAL INFORMATION. The Company shall furnish to any
Holder upon written request and without charge a copy of the Indenture and/or
the Security and Pledge Agreement. Requests may be made to:
Finlay Enterprises, Inc.
529 Fifth Avenue
New York, New York 10017
Attention: Secretary and Corporate Counsel
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ASSIGNMENT FORM
To assign this Debenture, fill in the form below: (I) or (we) assign and
transfer this Debenture to
- ------------------------------------------------------------------------------
(Insert assignee's soc. sec. or tax I.D. no.)
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint __________________ to transfer this Debenture on the
books of the Company. The agent may substitute another to act for him or her.
- ------------------------------------------------------------------------------
Date:____________
Your Signature:_______________________________
(Sign exactly as your name appears on the face
of this Debenture)
Signature Guarantee.*
* NOTICE: The signature must be guaranteed by an institution which
is a member of one of the following recognized signature
guarantee programs:
(1) The Securities Transfer Agent Medallion Program (STAMP);
(2) The New York Stock Exchange Medallion Program (MSP);
(3) The Stock Exchange Medallion Program (SEMP).
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OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Debenture purchased by the
Company pursuant to Section 4.10 or 4.15 of the Indenture, check the box
below:
|_| Section 4.10 |_|Section 4.15
If you want to elect to have only part of the Debenture
purchased by the Company pursuant to Section 4.10 or Section 4.15 of the
Indenture, state the amount you elect to have purchased (if all, write "ALL"):
$
Date: Your Signature:__________________________________________________
(Sign exactly as your name appears on the Debenture)
Tax Identification No:___________________________________________
Signature Guarantee.*
* NOTICE: The signature must be guaranteed by an institution which
is a member of one of the following recognized signature
guarantee programs:
(1) The Securities Transfer Agent Medallion Program (STAMP);
(2) The New York Stock Exchange Medallion Program (MSP);
(3) The Stock Exchange Medallion Program (SEMP).
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SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL DEBENTURE1
The following exchanges of a part of this Global Debenture
for an interest in another Global Debenture or for a Definitive Debenture, or
exchanges of a part of another Global Debenture or Definitive Debenture for an
interest in this Global Debenture, have been made:
<TABLE>
<CAPTION>
Principal
Amount
Amount of Amount of of this
decrease in increase in Global Signature of
Principal Principal Debenture authorized
Amount of Amount of following such officer
Date of this Global this Global decrease (or of Trustee or
Exchange Debenture Debenture increase) Custodian
--------- ----------- ----------- --------------- -------------
<S> <C> <C> <C> <C>
- -----------
1/ This should be included only if the Debenture is issued in global form.
</TABLE>
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EXHIBIT B
SECURITY AND PLEDGE AGREEMENT
THIS SECURITY AND PLEDGE AGREEMENT (together with the
Annexes hereto, the "Agreement") is made and entered into as of April __, 1998
by FINLAY ENTERPRISES, INC., a Delaware corporation (the "Pledgor"), having
its principal office at 521 Fifth Avenue, New York, New York 10175, in favor
of Marine Midland Bank, having an office at 140 Broadway, New York, New York
10015, as Collateral Agent (the "Collateral Agent") for the trustee (the
"Trustee") under the Senior Debenture Indenture (as defined herein) and each
Person (as defined in the Senior Debenture Indenture) in whose name any of the
Pledgor's __% Senior Debentures due ______, 2008 are registered (each a
"Holder").
WITNESSETH:
WHEREAS, the Pledgor is the legal and beneficial owner of
(i) all of the issued and outstanding shares of capital stock set forth on
Schedule I hereto (the "Pledged Shares") of Finlay Fine Jewelry Corporation, a
Delaware corporation (together with any successor thereto, the "Issuer"), and
(ii) those certain intercompany promissory notes (if any) set forth on
Schedule I hereto issued by the Issuer in favor of the Pledgor to evidence
monies loaned or advanced by the Pledgor to the Issuer (collectively, the
"Pledged Notes"); and
WHEREAS, the Pledgor and Marine Midland Bank, N.A., as
trustee (the "Old Trustee") have entered into that certain indenture dated as
of May 26, 1993 (as amended, amended and restated, supplemented or otherwise
modified from time to time, the "Old Indenture"), pursuant to which the
Pledgor issued $98 million in aggregate principal amount of its 12% Senior
Discount Debentures due 2005 (together with any debentures issued in
replacement thereof or in exchange or substitution therefor, the "Old
Debentures"), and the Pledgor and Marine Midland Bank, N.A., as collateral
agent (the "Old Collateral Agent") have entered into that certain Pledge
Agreement dated as of May 26, 1993 (as amended, amended and restated,
supplemented or otherwise modified, from time to time, the "Old Pledge
Agreement"), pursuant to which the Pledgor pledged to the Old Collateral Agent
and granted to the Old Collateral Agent a continuing first priority security
interest (the "Permitted Security Interest") in the Pledged Collateral (as
defined in the Old Pledge Agreement); and
WHEREAS, the Pledgor and Marine Midland Bank, as trustee
(the "Trustee"), have entered into that certain indenture dated as of April
__, 1998 (as amended, amended and restated, supplemented or otherwise modified
from time to time, the "Senior Debenture Indenture"), pursuant to which the
Pledgor is issuing $75 million in aggregate principal amount of its ___%
Senior Debentures due 2008 (together with any debentures issued in replacement
thereof or in exchange or substitution therefor, the "Senior Debentures").
Capitalized terms used herein and not otherwise defined herein shall have the
meanings given to such terms in the Senior Debenture Indenture; and
WHEREAS, the terms of the Senior Debenture Indenture require
that the Pledgor (i) pledge to the Collateral Agent for its benefit and the
ratable benefit of the Trustee and the
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Holders, and grant to the Collateral Agent for its benefit and the ratable
benefit of the Trustee and the Holders a security interest in, the Pledged
Collateral (as defined herein) and (ii) execute and deliver this Agreement in
order to secure the payment and performance by the Pledgor of all of the
obligations of the Pledgor under this Agreement, the Senior Debenture
Indenture and the Senior Debentures, whether for principal, interest, fees,
indemnities, expenses, premiums or otherwise (including, without limitation,
any such amounts that constitute part of the obligations secured hereby and
would be owed by the Pledgor under any of the foregoing documents but for the
fact that such obligations are unenforceable or not allowed due to the
existence of a bankruptcy, reorganization or similar proceeding involving the
Pledgor (collectively, the "Secured Obligations").
AGREEMENT
NOW, THEREFORE, in consideration of the premises, and in
order to induce the Holders to purchase the Senior Debentures, the Pledgor
hereby agrees with the Collateral Agent for its benefit and the ratable
benefit of the Trustee and the Holders as follows:
SECTION 1. Pledge. The Pledgor hereby pledges to the Collateral Agent
for its benefit and for the ratable benefit of the Trustee and the Holders,
and hereby grants to the Collateral Agent for its benefit and the ratable
benefit of the Trustee and the Holders a present and continuing security
interest in, all of its right, title and interest in, to and under the
following, whether now owned or at any time hereafter acquired (the "Pledged
Collateral"):
(a) the Pledged Shares and the certificates representing the
Pledged Shares, and all products and proceeds of any of the Pledged
Shares, including, without limitation, all dividends, cash, options,
warrants, rights, instruments, subscriptions and other property or
proceeds from time to time received, receivable or otherwise
distributed or distributable in respect of or in substitution of or
exchange for any or all of the Pledged Shares; and
(b) all additional shares of, and all securities convertible
into and all warrants, options or other rights to purchase, capital
stock of, or other equity interests in, the Issuer from time to time
acquired by the Pledgor in any manner, and the certificates
representing such additional shares or other interests (any such
additional shares and other securities, rights and interests shall
constitute part of the Pledged Shares under and as defined in this
Agreement), and all products and proceeds of any of such additional
Pledged Shares, including, without limitation, all dividends, cash,
options, warrants, rights, instruments, subscriptions, and other
property or proceeds from time to time received, receivable or
otherwise distributed or distributable in respect of or in
substitution of or exchange for any or all of such additional Pledged
Shares; and
(c) the Indebtedness evidenced by the Pledged Notes and the
instruments representing the Pledged Notes, and all products and
proceeds of the Pledged Notes, including, without limitation, all
interest and principal payments, instruments, and other property from
time to time received, receivable or otherwise distributed in respect
of or in substitution of or exchange for any or all of the Pledged
Notes; and
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(d) all additional Indebtedness from time to time owing to
the Pledgor by the Issuer (whether or not evidenced by instruments)
and all additional promissory notes or other instruments made by the
Issuer from time to time in favor of and/or held by the Pledgor in
any manner other than those promissory notes issued in violation of
that certain Amended and Restated Credit Agreement, dated as of
September 11, 1997, by and among the Issuer, the Pledgor and General
Electric Capital Corporation, individually and as agent, and the
other lenders parties thereto from time to time, as amended as of the
date hereof (any such additional Indebtedness and promissory notes
shall constitute part of the Pledged Notes under and as defined in
this Agreement), and all products and proceeds of any of such
additional Pledged Notes including, without limitation, all interest
and principal payments, instruments, and other amounts and property
from time to time received, receivable or otherwise distributed or
distributable in respect of or in substitution of or exchange for any
or all of such additional Pledged Notes; and
(e) all proceeds of any and all of the foregoing Pledged
Collateral;
and, concurrently with the execution and delivery hereof, the Pledgor shall
cause the Issuer to execute and deliver to the Collateral Agent its
acknowledgment of the pledge and grant of a security interest contemplated
hereby in the form attached hereto as Annex A.
SECTION 2. Security for Secured Obligations. This Agreement secures
the prompt and complete payment and performance when due (whether at stated
maturity, by acceleration or otherwise) of all Secured Obligations.
SECTION 3. Delivery of Pledged Collateral. Upon the payment in full
by the Pledgor of the Pledgor's Obligations (as defined in the Old Indenture )
under the Old Debentures and the Old Indenture in accordance with the
provisions of the Old Indenture, the Pledgor shall immediately (i) deliver to
the Old Trustee and the Old Collateral Agent an Officers' Certificate (as
defined in the Old Indenture) in substantially the form attached hereto as
Annex B certifying that all of such Obligations have been paid in full and
satisfied and instructing the Old Trustee to deliver to the Old Collateral
Agent a certificate (x) stating that such Obligations have been paid in full
and (y) instructing the Collateral Agent to release the liens pursuant to the
Old Indenture and the Old Pledge Agreement, (ii) cause the Old Collateral
Agent to execute, deliver, acknowledge and file all such instruments of
termination, satisfaction or release (including, without limitation, any
termination statements) to evidence the release of the Liens on all Pledged
Collateral under and as defined in the Old Pledge Agreement as the Collateral
Agent may reasonably request and to deliver or cause to be delivered to the
Collateral Agent all certificates or instruments representing or evidencing
the Pledged Collateral to be held by it pursuant hereto, accompanied by duly
executed instruments of transfer or assignment in blank, all in form and
substance satisfactory to the Collateral Agent, and (iii) obtain from the Old
Collateral Agent its confirmation, in substantially the form attached hereto
as Annex C, of the payment of all fees and expenses owing by the Pledgor to
the Old Collateral Agent. Immediately upon receipt of the certificates
representing the Pledged Shares and instruments comprising the Pledged Notes,
if any, in each case accompanied by the duly executed instruments of transfer
or assignment in blank, the Collateral Agent shall execute and deliver its
acknowledgment of
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receipt thereof in substantially the form attached hereto as
Annex D to each of the addressees thereof.
SECTION 4. Representations and Warranties. The Pledgor hereby makes
all representations and warranties, and agrees to comply with all of the
obligations, requirements and restrictions in the covenants and agreements,
applicable to the Pledgor contained in the Senior Debenture Indenture. The
Pledgor further represents and warrants that:
(a) The execution, delivery and performance by the Pledgor
of this Agreement are within the Pledgor's corporate powers, have
been duly authorized by all necessary corporate action, and do not
contravene, or constitute a default under, any provision of
applicable law or regulation or of the certificate of incorporation
or bylaws of the Pledgor or of any agreement, judgment, injunction,
order, decree or other instrument binding upon the Pledgor or result
in or require the creation or imposition of any Lien on any assets of
the Pledgor, other than the Lien contemplated hereby.
(b) The Pledged Shares have been duly authorized and validly
issued and are fully paid and non-assessable. Each Pledged Note, if
any, has been duly authorized and executed by the Issuer and
constitutes a legal, valid and binding obligation of such Issuer,
enforceable against the Issuer in accordance with its terms.
(c) The Pledgor is the legal, record and beneficial owner of
the Pledged Collateral, free and clear of any Lien or claims of any
Person except for the security interest created by this Agreement and
the Permitted Security Interest.
(d) The Pledgor has full power and authority to enter into
this Agreement and has the right to vote, pledge and grant a security
interest in the Pledged Collateral as provided by this Agreement.
(e) This Agreement has been duly executed and delivered by
the Pledgor and constitutes a legal, valid and binding obligation of
the Pledgor, enforceable against the Pledgor in accordance with its
terms.
(f) Upon the issuance, authentication and delivery of the
Debentures, filing of Uniform Commercial Code ("U.C.C.") financing
statements and delivery to the Old Collateral Agent of the
notification of the Collateral Agent's security interest in, to and
under the Indebtedness evidenced by the Pledged Notes in accordance
with Section 9-305 of the U.C.C., the pledge of the Pledged
Collateral pursuant to this Agreement creates a valid and perfected
continuing first priority security interest in the Pledged Collateral
securing the payment of the Secured Obligations for the benefit of
the Collateral Agent and the ratable benefit of the Trustee and the
Holders, subject only to the Permitted Security Interest.
(g) No consent of any other Person (other than the consent
of General Electric Capital Corporation, which has been obtained) and
no consent, authorization, approval, or other action by, and no notice
to or filing with, any governmental authority or regulatory body is
required either (i) for the pledge by the Pledgor of the Pledged
Collateral pursuant
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to this Agreement or for the execution, delivery
or performance of this Agreement by the Pledgor or (ii) for the
exercise by the Collateral Agent of the voting or other rights
provided for in this Agreement or the remedies in respect of the
Pledged Collateral pursuant to this Agreement (except as may be
required in connection with any disposition of Pledged Collateral by
laws affecting the offering and sale of securities).
(h) No litigation, investigation or proceeding of or before
any arbitrator or governmental authority is pending or, to the
knowledge of the Pledgor, threatened by or against the Pledgor or
against any of its properties or revenues with respect to this
Agreement or any of the transactions contemplated hereby.
(i) The Pledged Shares constitute all of the authorized,
issued and outstanding capital stock of the Issuer and constitute all
of the shares of capital stock and voting securities of the Issuer
beneficially owned by the Pledgor.
(j) The Pledged Notes, if any, constitute all of the
promissory notes of the Issuer in favor of the Pledgor, there are no
other instruments, certificates, securities or other writings or
chattel paper evidencing or representing any Indebtedness of the
Issuer owing to the Pledgor and as of the date hereof there is no
Indebtedness owing by the Issuer to the Pledgor other than the
Indebtedness evidenced by the instruments comprising the Pledged
Notes, if any, delivered on the date hereof to the Trustee.
(k) The pledge of the Pledged Collateral pursuant to this
Agreement is not prohibited by or in violation of any applicable law
or governmental regulation, release, interpretation or opinion of the
Board of Governors of the Federal Reserve System or other regulatory
agency (including, without limitation, Regulations T, U and X of the
Board of Governors of the Federal Reserve System).
(l) All information set forth herein relating to the Pledged
Collateral is accurate and complete in all respects.
SECTION 5. Further Assurance. The Pledgor will, promptly upon request
by the Collateral Agent, execute, deliver and file, or cause to be executed,
delivered and filed, all stock powers, allonges, proxies, assignments, other
instruments of assignment and transfer, instruments and other documents
(including, without limitation, all financing statements and continuation
statements and amendments thereto), all in form and substance satisfactory to
the Collateral Agent, deliver any instruments constituting Pledged Collateral
to the Collateral Agent and take any other actions that are necessary or, in
the reasonable opinion of the Collateral Agent, desirable to perfect, continue
the perfection of, or protect the first priority (subject solely to the
Permitted Security Interest) of the Collateral Agent's security interest in
the Pledged Collateral, to protect the Pledged Collateral against the rights,
claims, or interests of third persons and to permit the Collateral Agent to
exercise and enforce its rights and remedies hereunder with respect to the
Pledged Collateral. The Pledgor also hereby authorizes the Collateral Agent to
file any financing or continuation statements with respect to the Pledged
Collateral without the signature of the Pledgor to the extent permitted by
applicable law. The Pledgor will pay all costs incurred in connection with any
of the foregoing.
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SECTION 6. Voting Rights; Dividends; Etc.
(a) So long as no Event of Default shall have occurred and
be continuing, the Pledgor shall be entitled to exercise any and all
voting and other consensual rights pertaining to the Pledged Shares
or any part thereof for any purpose not inconsistent with the terms
of this Agreement or the Senior Debenture Indenture; provided,
however, that the Pledgor shall not exercise or shall refrain from
exercising any such right if, in the Collateral Agent's judgment,
such action would have a material adverse effect on the value of the
Pledged Collateral or any part thereof or be inconsistent with or
violate any provisions of this Agreement or the Senior Debenture
Indenture.
(b) So long as no Event of Default shall have occurred and
be continuing, the Pledgor shall be entitled to receive, and to
utilize free and clear of the Lien of this Agreement, all cash
payments of interest and principal paid from time to time with
respect to any Pledged Note.
(c) So long as no Event of Default shall have occurred and
be continuing, and subject to the other terms and conditions of the
Senior Debenture Indenture, the Pledgor shall be entitled to receive,
and to utilize free and clear of the Lien of this Agreement, all cash
dividends paid from time to time in respect of the Pledged Shares as
permitted by the Senior Debenture Indenture.
(d) Any and all (i) dividends or other distributions and
interest and principal payments paid or payable in the form of
instruments and other property (other than cash interest and
principal payments permitted under Section 6(b) hereof and cash
dividends permitted under Section 6(c) hereof) received, receivable
or otherwise distributed in respect of, or in substitution of or
exchange for, any Pledged Collateral, (ii) dividends and other
distributions paid or payable in cash in respect of any Pledged
Shares in connection with a partial or total liquidation or
dissolution or in connection with a reduction of capital, capital
surplus or paid-in-surplus, and (iii) cash paid, payable or otherwise
distributed in redemption of, or in substitution of or exchange for,
any Pledged Collateral, shall in each case be forthwith delivered to
the Collateral Agent to hold as Pledged Collateral and shall, if
received by the Pledgor, be received in trust for the benefit of the
Collateral Agent, the Trustee and the Holders, be segregated from the
other property and funds of the Pledgor and be forthwith delivered to
the Collateral Agent as Pledged Collateral in the same form as so
received (with any necessary endorsements).
(e) The Collateral Agent shall execute and deliver (or cause
to be executed and delivered) to the Pledgor all such proxies and
other instruments as the Pledgor may reasonably request for the
purpose of enabling the Pledgor to exercise the voting and other
rights that it is entitled to exercise pursuant to Sections 6(a)
through (c) above.
(f) Upon the occurrence and during the continuance of an
Event of Default, (i) all rights of the Pledgor to exercise the
voting and other consensual rights that it would otherwise be
entitled to exercise pursuant to Section 6(a) shall be suspended, and
all such rights shall thereupon become vested in the Collateral
Agent, which, to the extent
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permitted by law, shall thereupon have the sole right to exercise
such voting and other consensual rights, and (ii) all cash interest
and principal payments and dividends or other distributions payable
in respect of the Pledged Collateral shall be paid to the Collateral
Agent and the Pledgor's right to receive such cash payments pursuant
to Sections 6(b) and 6(c) hereof shall immediately cease.
(g) Upon the occurrence and during the continuance of an
Event of Default, the Pledgor shall execute and deliver (or cause to
be executed and delivered) to the Collateral Agent all such proxies
and other instruments as the Collateral Agent may reasonably request
for the purpose of enabling the Collateral Agent to exercise the
voting and other rights that it is entitled to exercise pursuant to
Section 6(f) above.
(h) All interest and principal payments and all dividends or
other distributions that are received by the Pledgor contrary to the
provisions of this Section 6 shall be received in trust for the
benefit of the Collateral Agent, the Trustee and the Holders, be
segregated from the other property or funds of the Pledgor and be
forthwith delivered to the Collateral Agent as Pledged Collateral in
the same form as so received (with any necessary endorsements).
SECTION 7. Covenants. The Pledgor covenants and agrees with the
Collateral Agent and the Holders that from and after the date of this
Agreement and until the Secured Obligations have been paid in full:
(a) The Pledgor agrees that it will not (i) sell or
otherwise dispose of, or grant any option or warrant with respect to,
any of the Pledged Collateral without the prior written consent of
the Collateral Agent, (ii) create or permit to exist any Lien upon or
with respect to any of the Pledged Collateral, except for the
Permitted Security Interest, the security interest granted under this
Agreement and any Lien permitted by the Senior Debenture Indenture,
and at all times will be the sole beneficial owner of the Pledged
Collateral, (iii) enter into any agreement or understanding that
purports to or that may restrict or inhibit the Collateral Agent's
rights or remedies hereunder, including, without limitation, the
Collateral Agent's right to sell or otherwise dispose of the Pledged
Collateral, (iv) take or fail to take any action with respect to a
Pledged Note the taking of which or the failure to take which would
result in a material impairment of the economic value of the Pledged
Note as Pledged Collateral or a violation of the Senior Debenture
Indenture or this Agreement, (v) without the prior written consent of
the Collateral Agent, enter into any agreement amending, modifying or
supplementing the interest, principal or maturity terms of the
Pledged Notes in a manner adverse to the interests of the Collateral
Agent and the Holders, (vi) fail to give prompt notice to the
Collateral Agent of any notice of default given by or to the Pledgor
under or with respect to any Pledged Note together with a complete
copy of such notice, (vii) permit the Issuer to merge or consolidate
with or into another person or entity or sell or transfer all or
substantially all of its assets to another person or entity, unless
(x) the Pledgor shall have delivered to the Collateral Agent an
Opinion of Counsel substantially in the form of Exhibit B hereto and
a certificate executed by the President and Chief Financial Officer
of Pledgor substantially in the form of Exhibit C hereto and (y) all
outstanding capital stock of the
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surviving entity in such merger or consolidation or of the entity to
which such sale or transfer was made, together with any promissory
notes issued by such entity in favor of Pledgor are, upon such merger
or consolidation, pledged hereunder to and deposited with the
Collateral Agent and all actions required under Section 5 with respect
thereto have been taken, and (viii) fail to pay or discharge any tax,
assessment or levy of any nature not later than five days prior to the
date of any proposed sale under any judgment, writ or warrant of
attachment with regard to the Pledged Collateral.
(b) The Pledgor agrees that immediately upon becoming the
beneficial owner of any additional shares of capital stock, notes or
other securities or instruments of the Issuer (including as a result
of the merger or consolidation of the Issuer) it will pledge and
deliver to the Collateral Agent for its benefit and the ratable
benefit of the Trustee and the Holders and, to the extent a security
interest therein has not already been granted pursuant hereto, grant
to the Collateral Agent for its benefit and the ratable benefit of
the Trustee and the Holders, a continuing first priority security
interest, subject solely to the Permitted Security Interest, in such
shares, notes or other securities (in each case, accompanied by all
such duly executed instruments of transfer or assignment in blank as
the Collateral Agent may request, all in form and substance
satisfactory to the Collateral Agent). The Pledgor further agrees
that it will promptly (i) cause the Issuer, upon becoming indebted to
the Pledgor in respect of monies loaned or advanced to the Issuer by
the Pledgor, to execute a promissory note in the form of Exhibit A
hereto evidencing such debt in order that such promissory note may be
promptly pledged as a Pledged Note pursuant hereto and (ii) deliver
to the Collateral Agent such Pledged Note (in each case, accompanied
by all such duly executed instruments of transfer or assignment in
blank as the Collateral Agent may request, all in form and substance
satisfactory to the Collateral Agent). Upon any delivery of
securities or instruments pursuant to this paragraph (b), the Pledgor
will deliver to the Collateral Agent a certificate executed by a
principal executive officer of the Pledgor describing such additional
securities or instruments and certifying that the same have been duly
pledged and delivered to the Collateral Agent hereunder.
(c) The Pledgor represents and warrants and that its chief
executive office and chief place of business are located at 529 Fifth
Avenue, New York, New York 10175, and agrees that it will not change
the location of its chief executive office and chief place of
business unless it shall have given the Collateral Agent at least 30
days' prior written notice of such change and taken all actions
requested by the Collateral Agent pursuant to Section 5 hereof in
connection therewith. Additionally, the Pledgor agrees that it will
not change its name, identity or corporate structure in any manner
that might cause any financing statement filed in connection herewith
to become seriously misleading within the meaning of any applicable
U.C.C. unless it shall have given the Collateral Agent at least 30
days' prior written notice of such change and taken all actions
requested by the Collateral Agent pursuant to Section 5 hereof in
connection therewith.
SECTION 8. Power of Attorney. In addition to all of the powers
granted to the Collateral Agent pursuant to Section 10.07 of the Senior
Debenture Indenture, the Pledgor hereby appoints and constitutes the
Collateral Agent as the Pledgor's attorney-in-fact to exercise all of the
following powers upon and at any time after the occurrence of an Event of
Default and so
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long as an Event of Default is continuing: (i) collection of proceeds of any
Pledged Collateral; (ii) conveyance of any item of Pledged Collateral to any
purchaser thereof; (iii) giving of any notices or recording of any Liens under
Section 5 hereof; (iv) making of any payments or taking of any acts under
Section 9 hereof and (v) paying or discharging taxes or Liens levied or placed
upon or threatened against the Pledged Collateral, the legality or validity
thereof and the amounts necessary to discharge the same to be determined by
the Collateral Agent in its sole discretion, and such payments made by the
Collateral Agent shall be obligations of the Pledgor to the Collateral Agent,
due and payable immediately without demand and shall constitute Secured
Obligations hereunder. The Collateral Agent's authority hereunder shall
include, without limitation, while any Event of Default is continuing, the
authority to endorse and negotiate, for the Collateral Agent's own account,
any checks or instruments in the name of the Pledgor constituting or relating
to the Pledged Collateral, execute and give receipt for any certificate of
ownership or any document, transfer title to any item of Pledged Collateral,
sign the Pledgor's name on all financing statements or any other documents
deemed necessary or appropriate to preserve, protect and perfect the security
interest in the Pledged Collateral and to file the same, prepare, file and
sign the Pledgor's name on any notice of Lien, and prepare, file and sign the
Pledgor's name on a proof of claim in bankruptcy or similar document against
any customer of the Pledgor, and to take any other actions arising from or
incident to the powers granted to the Collateral Agent in this Agreement. This
power of attorney is coupled with an interest and is irrevocable by the
Pledgor.
SECTION 9. Collateral Agent May Perform. If the Pledgor fails to
perform any agreement contained herein, the Collateral Agent may itself
perform, or cause performance of, such agreement, and the reasonable expenses
of the Collateral Agent incurred in connection therewith shall be payable by
the Pledgor under Section 14 hereof and shall constitute Secured Obligations
hereunder.
SECTION 10. No Assumption of Duties; Reasonable Care. The rights and
powers granted to the Collateral Agent hereunder are being granted in order to
preserve and protect the Collateral Agent's and the Holders' security interest
in and to the Pledged Collateral granted hereby and shall not be interpreted
to, and shall not, impose any duties on the Collateral Agent in connection
therewith. The Collateral Agent shall be deemed to have exercised reasonable
care in the custody and preservation of the Pledged Collateral in its
possession if the Pledged Collateral is accorded treatment substantially equal
to that which the Collateral Agent accords its own property, it being
understood that the Collateral Agent shall not have any responsibility for (i)
ascertaining or taking action with respect to calls, conversions, exchanges,
maturities, tenders or other matters relative to any Pledged Collateral,
whether or not the Collateral Agent has or is deemed to have knowledge of such
matters, or (ii) taking any necessary steps to preserve rights against any
parties with respect to any Pledged Collateral.
SECTION 11. Subsequent Changes Affecting Collateral. The Pledgor
represents to the Collateral Agent and the Holders that the Pledgor has made
its own arrangements for keeping informed of changes or potential changes
affecting the Pledged Collateral (including, but not limited to, rights to
convert, rights to subscribe, payment of dividends, payments of interest
and/or principal, reorganization or other exchanges, tender offers and voting
rights), and the Pledgor agrees that the Collateral Agent and the Holders
shall have no responsibility or liability
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for informing or not informing the Pledgor of any such changes or potential
changes or for taking any action or omitting to take any action with respect
thereto. The Pledgor covenants that it will not, without the prior written
consent of the Collateral Agent, vote to enable, or take any other action to
permit, the Issuer to issue any capital stock or other securities or to sell
or otherwise dispose of, or grant any option with respect to, any of the
Pledged Collateral or create or permit to exist any Lien upon or with respect
to any of the Pledged Collateral, except for the security interests granted
under this Agreement and the Permitted Security Interest. The Pledgor will
defend the right, title and interest of the Collateral Agent and the Holders
in and to the Pledged Collateral against the claims and demands of all
Persons, except the claims and demands of the Old Collateral Agent.
SECTION 12. Remedies Upon Default.
(a) If any Event of Default shall have occurred and be
continuing, the Collateral Agent and the Holders shall have, in
addition to all other rights given by law or by this Agreement or the
Senior Debenture Indenture, and subject to the rights and claims of
the holders of the Old Debentures, all of the rights and remedies
with respect to the Pledged Collateral of a secured party under the
U.C.C. in effect in the State of New York at that time. Subject to
the rights of the holders of the Old Debentures, the Collateral Agent
may, without notice and at its option, transfer or register, and the
Pledgor shall register or cause to be registered upon request
therefor by the Collateral Agent, the Pledged Collateral or any part
thereof on the books of the Issuer thereof into the name of the
Collateral Agent or the Collateral Agent's nominee(s), with or
without any indication that such Pledged Collateral is subject to the
security interest hereunder. In addition, with respect to any Pledged
Collateral that shall then be in or shall thereafter come into the
possession or custody of the Collateral Agent, the Collateral Agent
may sell or cause the same to be sold at public or private sale, in
one or more sales or lots, at such price or prices as the Collateral
Agent may deem commercially reasonable, for cash or on credit or for
future delivery, without assumption of any credit risk. The purchaser
of any or all Pledged Collateral so sold shall thereafter hold the
same absolutely, free from any claim, encumbrance or right of any
kind whatsoever subject only, for so long as any of the Old
Debentures remain outstanding, to the Permitted Security Interest.
Unless any of the Pledged Collateral threatens to decline speedily in
value or is or becomes of a type sold on a recognized market or to
the extent notice of sale is not otherwise required by law, the
Collateral Agent will give Pledgor reasonable notice of the time and
place of any public sale thereof, or of the time after which any
private sale or other intended disposition is to be made. Any sale of
the Pledged Collateral conducted in conformity with reasonable
commercial practices of banks, insurance companies, commercial
finance companies, or other financial institutions disposing of
property similar to the Pledged Collateral shall be deemed to be
commercially reasonable. Any requirements of reasonable notice shall
be met if such notice is given to the Pledgor as provided in Section
18.1 hereof, at least ten days before the time of any public sale or
the time after which any private sale or other intended disposition
is to be made. Any other requirement of notice, demand or
advertisement for sale is, to the extent permitted by law, waived.
The Collateral Agent or any Holder may, in its own name or in the
name of a designee or nominee, buy any of the Pledged Collateral at
any public sale and, if permitted by applicable law, at any private
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sale. All expenses (including court costs and reasonable attorneys'
fees, expenses and disbursements) of, or incident to, the enforcement
of any of the provisions hereof shall be recoverable from the
proceeds of the sale or other disposition of the Pledged Collateral.
(b) If the Collateral Agent shall determine to exercise its
right to sell any or all of the Pledged Shares pursuant to Section
12(a) above, and, if in the opinion of counsel for the Collateral
Agent it is necessary, or, if in the opinion of the Collateral Agent
it is advisable, to have the Pledged Shares or that portion thereof
to be sold, registered under the provisions of the Securities Act of
1933, as amended (the "Securities Act"), Pledgor will cause the
Issuer to (i) execute and deliver and cause its directors and
officers to execute and deliver, all at the Issuer's expense, all
such instruments and documents, and do or cause to be done all such
other acts and things as may be necessary or, in the opinion of the
Collateral Agent, advisable to register such Pledged Shares under the
provisions of the Securities Act, (ii) cause the registration
statement relating thereto to become effective and to remain
effective for a period of 180 days from the date of the first public
offering of such Pledged Shares, or that portion thereof to be sold
and (iii) make all amendments thereto and/or to the related
prospectus that, in the opinion of the Collateral Agent, are
necessary or advisable, all in conformity with the requirements of
the Securities Act and the rules and regulations of the Securities
and Exchange Commission applicable thereto. The Pledgor agrees to
cause such Issuer to comply with the provisions of the securities or
"Blue Sky" laws of any jurisdiction that the Collateral Agent shall
designate for the sale of the Pledged Shares and to make available to
the Issuer's securityholders, as soon as practicable, an earnings
statement (which need not be audited) that will satisfy the
provisions of Section 11(a) of the Securities Act. The Pledgor will
cause such Issuer to furnish to the Collateral Agent such number of
copies as the Collateral Agent may reasonably request of each
preliminary prospectus and prospectus, to notify promptly the
Collateral Agent of the happening of any event as a result of which
any then effective prospectus includes an untrue statement of a
material fact or omits to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in
the light of then existing circumstances and cause the Collateral
Agent to be furnished with such number of copies as the Collateral
Agent may request of such supplement to or amendment of such
prospectus as is necessary to eliminate such untrue statement or
supply such omission. The Pledgor will cause such Issuer, to the
extent permitted by law, to indemnify, defend and hold harmless the
Collateral Agent and the Holders from and against all losses,
liabilities, expenses or claims (including reasonable legal expenses
and the reasonable costs of investigation) that the Collateral Agent
or the Holders may incur under the Securities Act or otherwise,
insofar as such losses, liabilities, expenses or claims arise out of
or are based upon any alleged untrue statement of a material fact
contained in such registration statement (or any amendment thereto)
or in any preliminary prospectus or prospectus (or any amendment or
supplement thereto), or arise out of or are based upon any alleged
omission to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, except to
the extent that any such losses, liabilities, expenses or claims
arise solely out of or are based upon any such alleged untrue
statement made or such alleged omission to state a material fact
included or excluded on the written direction of the
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Collateral Agent. The Pledgor will cause such Issuer to bear all costs
and expense of carrying out its obligations hereunder.
(c) In view of the fact that federal and state securities
laws may impose certain restrictions on the method by which a sale of
the Pledged Collateral may be effected after an Event of Default,
Pledgor agrees that upon the occurrence or existence of any Event of
Default, the Collateral Agent may, from time to time, in each case in
compliance with or pursuant to an exemption from all applicable
securities laws, attempt to sell all or any part of the Pledged
Collateral by means of a private placement, restricting the
prospective purchasers to those who will represent and agree that
they are purchasing for investment only and not for distribution. In
so doing, the Collateral Agent may solicit offers to buy the Pledged
Collateral, or any part of it, for cash, from a limited number of
investors who might be interested in purchasing the Pledged
Collateral. The Pledgor acknowledges and agrees that any such private
sale may result in prices and terms less favorable then if such sale
were a public sale and, notwithstanding such circumstances, agrees
that any such private sale shall be deemed to have been made in a
commercially reasonable manner. The Collateral Agent shall be under
no obligation to delay a sale of any of the Pledged Collateral for
the period of time necessary to permit the Issuer to register such
securities for public sale under the Securities Act, or under
applicable state securities laws, even if the Issuer would agree to
do so.
(d) The Pledgor further agrees to use its best efforts to do
or cause to be done all such other acts as may be necessary to make
such sale or sales of all or any portion of the Pledged Collateral
pursuant to this Section 12 valid and binding and in compliance with
any and all other applicable requirements of law. The Pledgor further
agrees that a breach of any of the covenants contained in this
Section 12 will cause irreparable injury to the Collateral Agent and
the Holders, that the Collateral Agent and the Holders have no
adequate remedy at law in respect of such breach and, as a
consequence, that each and every covenant contained in this Section
12 shall be specifically enforceable against the Pledgor, and the
Pledgor hereby waives and agrees not to assert any defenses against
an action for specific performance of such covenants except for a
defense that no Event of Default has occurred under the Senior
Debenture Indenture.
SECTION 13. Irrevocable Authorization and Instruction to the Issuer.
The Pledgor hereby authorizes and instructs the Issuer to comply with any
instruction received by such Issuer from the Collateral Agent that (i) states
that an Event of Default has occurred and (ii) is otherwise in accordance with
the terms of this Agreement, without any other or further instructions from
the Pledgor, and the Pledgor agrees that the Issuer shall be fully protected
in so complying.
SECTION 14. Fees and Expenses. The Pledgor will upon demand pay to
the Collateral Agent the amount of any and all fees and expenses, including,
without limitation, the reasonable fees, expenses and disbursements of its
counsel, of any investment banking firm, business broker or other selling
agent and of any other experts and agents retained by the Collateral Agent,
that the Collateral Agent may incur in connection with (i) the administration
of this Agreement, (ii) the custody or preservation of, or the sale of,
collection from, or other realization upon, any of
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the Pledged Collateral, (iii) the exercise or enforcement of any of the rights
or remedies of the Collateral Agent and the Holders hereunder or (iv) the
failure by the Pledgor to perform or observe any of the provisions hereof. All
such fees and expenses shall constitute Secured Obligations hereunder.
SECTION 15. Senior Debenture Interest Absolute. All rights of the
Collateral Agent and the Holders and security interests hereunder, and all
obligations of the Pledgor hereunder, shall be absolute and unconditional
irrespective of:
(a) any lack of validity or enforceability of the Senior
Debenture Indenture or any other agreement or instrument relating
thereto;
(b) any change in the time, manner or place of payment of,
or in any other term of, all or any of the Secured Obligations, or
any other amendment or waiver of or any consent to any departure from
the Senior Debenture Indenture;
(c) any exchange, surrender, release or non-perfection of
any other collateral, or any release or amendment or waiver of or
consent to departure from any guarantee, for all or any of the
Secured Obligations; or
(d) any other circumstance that might otherwise constitute a
defense available to, or a discharge of, the Pledgor in respect of
the Secured Obligations or of this Agreement.
SECTION 16. Application of Proceeds. Upon the occurrence and during
the continuance of an Event of Default, the proceeds of any sale of, or other
realization upon, all or any part of the Pledged Collateral and any cash held
by the Collateral Agent as Pledged Collateral shall be applied by the
Collateral Agent, subject to the existing obligations under the Old Pledge
Agreement, in the following order of priorities:
first, to payment of the expenses of such sale or other
realization, including, without limitation, reasonable compensation to agents
and counsel for the Collateral Agent, and all expenses, liabilities and
advances incurred or made by the Collateral Agent in connection therewith, and
any other unreimbursed fees and expenses for which the Collateral Agent is to
be reimbursed pursuant to Section 14 hereof;
second, to the ratable payment (based on the principal
amount of the Secured Obligations outstanding at the time of distribution) of
accrued but unpaid interest on the Secured Obligations;
third, to the ratable payment (based on the principal amount
of the Secured Obligations outstanding at the time of distribution) of unpaid
principal of the Secured Obligations;
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fourth, to the ratable payment (based on the principal
amount of the Secured Obligations outstanding at the time of distribution) of
all other Secured Obligations, until all Secured Obligations shall have been
paid in full; and
finally, to payment to the Pledgor or its successors or
assigns, or as a court of competent jurisdiction may direct, of any surplus
then remaining from such proceeds.
SECTION 17. Uncertificated Securities. Notwithstanding anything to
the contrary contained herein, if any Pledged Shares (whether now owned or
hereafter acquired) are uncertificated Pledged Shares, the Pledgor shall
promptly notify the Collateral Agent, and shall promptly take all actions
required to perfect the security interest of the Collateral Agent under
applicable law. The Pledgor further agrees to take such actions as the
Collateral Agent deems necessary or desirable to effect the foregoing and to
permit the Collateral Agent to exercise any of its rights and remedies
hereunder, and agrees to provide an Opinion of Counsel satisfactory to the
Collateral Agent with respect to any such pledge of uncertificated Pledged
Shares promptly upon request of the Collateral Agent.
SECTION 18. Miscellaneous Provisions.
SECTION 18.1 Notices. All notices, approvals, consents or
other communications required or desired to be given hereunder shall be in the
form and manner as set forth in Section 12.02 of the Senior Debenture
Indenture, and delivered to the addresses set forth in such Section, or, in
the case of the Collateral Agent, to: Marine Midland Bank, 140 Broadway, New
York, New York, 10005, Attention: Corporate Trust Administration, Telecopy No.
(212) 658-6425.
SECTION 18.2 Certificate and Opinion as to Conditions
Precedent. Upon any request or application by the Pledgor to the Collateral
Agent to take any action or omit to take any action under this Agreement, the
Pledgor shall deliver to the Collateral Agent an Officer's Certificate or an
Opinion of Counsel in accordance with the requirements of Section 12.04 of the
Senior Debenture Indenture.
SECTION 18.3 No Adverse Interpretation of Other Agreements.
This Agreement may not be used to interpret another pledge, security or debt
agreement of the Pledgor, the Issuer or any subsidiary thereof. No such
pledge, security or debt agreement may be used to interpret this Agreement.
SECTION 18.4 Severability. The provisions of this Agreement
are severable, and, if any clause or provision shall be held invalid or
unenforceable in whole or in part in any jurisdiction, then such invalidity or
unenforceability shall affect in that jurisdiction only such clause or
provision, or part thereof, and shall not in any manner affect such clause or
provision in any other jurisdiction or any other clause or provision of this
Agreement in any jurisdiction.
SECTION 18.5 No Recourse Against Others. No director,
officer, employee, stockholder or affiliate, as such, of the Pledgor, of the
Issuer or any subsidiary thereof that subsequent to the date of the Agreement
guarantees the obligations of the Pledgor in respect of
B-14
<PAGE>
the Senior Debentures shall have any liability for any obligations of the
Pledgor under this Agreement or for any claim based on, in respect of or by
reason of such obligations or their creation. Each Holder, by accepting a
Senior Debenture, waives and releases all such liability. The waiver and
release are part of the consideration for the issue of the Senior Debentures.
SECTION 18.6 Headings. The headings of the Articles and
Sections of this Agreement have been inserted for convenience of reference
only are not to be considered a part hereof and shall in no way modify or
restrict any of the terms or provisions hereof.
SECTION 18.7 Counterpart Originals. This Agreement may be
signed in two or more counterparts. Each signed copy shall be an original, but
all of them together represent one and the same agreement.
SECTION 18.8 Benefits of Agreement. Nothing in this
Agreement, express or implied, shall give to any Person, other than the
parties hereto and their successors hereunder, and the Holders, any benefit or
any legal or equitable right, remedy or claim under this Agreement.
SECTION 18.9 Amendments, Waivers and Consents. Any amendment
or waiver of any provision of this Agreement and any consent to any departure
by the Pledgor from any provision of this Agreement shall be effective only if
made or given in compliance with all of the applicable terms and provisions of
the Senior Debenture Indenture necessary for amendments or waivers of, or
consents to any departure by the Pledgor from, any provision of the Senior
Debenture Indenture, as applicable, and neither the Collateral Agent nor any
Holder shall be deemed, by any act, delay, indulgence, omission or otherwise,
to have waived any right or remedy hereunder or to have acquiesced in any
Default or Event of Default or in any breach of any of the terms and
conditions hereof. Failure of the Collateral Agent or any Holder to exercise,
or delay in exercising, any right, power or privilege hereunder shall not
operate as a waiver thereof. No single or partial exercise of any right, power
or privilege hereunder shall preclude any other or further exercise thereof or
the exercise of any other right, power or privilege. A waiver by the
Collateral Agent or any Holder of any right or remedy hereunder on any one
occasion shall not be construed as a waiver of or a bar to the exercise of any
right or remedy that the Collateral Agent or such Holder would otherwise have
on any future occasion. The rights and remedies herein provided are
cumulative, may be exercised singly or concurrently and are not exclusive of
any rights or remedies provided by law.
SECTION 18.10 Interpretation of Agreement. Time is of the
essence in each provision of this Agreement of which time is an element. All
terms not defined herein or in the Senior Debenture Indenture shall have the
meaning set forth in the applicable U.C.C., except where the context otherwise
requires. To the extent a term or provision of this Agreement conflicts with
the Senior Debenture Indenture and is not dealt with herein with more
specificity, the Senior Debenture Indenture shall control with respect to the
subject matter of such term or provision. Acceptance of or acquiescence in a
course of performance rendered under this Agreement shall not be relevant to
determine the meaning of this Agreement even though the accepting or
acquiescing party had knowledge of the nature of the performance and
opportunity for objection.
B-15
<PAGE>
SECTION 18.11 Continuing Security Interest; Transfer of
Notes. This Agreement creates a present and continuing security interest in the
Pledged Collateral and shall (i) remain in full force and effect until the
payment in full of all of the Secured Obligations, including all the fees and
expenses owing to the Collateral Agent, (ii) be binding upon the Pledgor, its
successors and assigns, and (iii) inure, together with the rights and remedies
of the Collateral Agent hereunder, to the benefit of the Collateral Agent and
the ratable benefit of the Trustee and the Holders and their respective
successors, transferees and assigns.
SECTION 18.12 Reinstatement. This Agreement shall continue
to be effective or be reinstated if at any time any amount received by the
Collateral Agent or any Holder in respect of the Secured Obligations is
rescinded or must otherwise be restored or returned by the Collateral Agent or
any Holder upon the insolvency, bankruptcy, dissolution, liquidation or
reorganization of the Pledgor or upon the appointment of any receiver,
intervenor, conservator, Collateral Agent or similar official for the Pledgor
or any substantial part of its assets, or otherwise, all as though such
payments had not been made.
SECTION 18.13 Survival of Provisions. All representations,
warranties and covenants of the Pledgor contained herein shall survive the
execution and delivery of this Agreement, and shall terminate only upon the
full and final payment and performance by the Pledgor of the Secured
Obligations.
SECTION 18.14 Waivers. The Pledgor waives presentment and
demand for payment of any of the Secured Obligations, protest and notice of
dishonor or default with respect to any of the Secured Obligations, and all
other notices to which the Pledgor might otherwise be entitled, except as
otherwise expressly provided herein or in the Senior Debenture Indenture.
SECTION 18.15 Authority of the Collateral Agent.
(a) The Collateral Agent shall have and be entitled to
exercise all powers hereunder that are specifically granted to the
Collateral Agent by the terms hereof, together with such powers as
are reasonably incident thereto. The Collateral Agent may perform any
of its duties hereunder or in connection with the Pledged Collateral
by or through agents or employees and shall be entitled to retain
counsel and to act in reliance upon the advice of counsel concerning
all such matters. None of the Collateral Agent, any director,
officer, employee, attorney or agent of the Collateral Agent or the
Holders shall be liable to the Pledgor for any action taken or
omitted to be taken by it or them hereunder, except for its or their
own gross negligence or willful misconduct, nor shall the Collateral
Agent be responsible for the validity, effectiveness or sufficiency
hereof or of any document or security furnished pursuant hereto. The
Collateral Agent and its directors, officers, employees, attorneys
and agents shall be entitled to rely on any communication, instrument
or document believed by it or them to be genuine and correct and to
have been signed or sent by the proper person or persons. The Pledgor
agrees to indemnify and hold harmless the Collateral Agent, the
Holders and any other Person from and against any and all costs,
expenses (including reasonable fees, expenses and disbursements of
attorneys and paralegals (including the allocated costs of inside
counsel)), claims and liabilities incurred by the Collateral Agent,
the Holders or such
B-16
<PAGE>
Person hereunder, unless such claim or liability shall be due to
willful misconduct or gross negligence on the part of the Person
seeking indemnification.
(b) The Pledgor acknowledges that the rights and
responsibilities of the Collateral Agent under this Agreement with
respect to any action taken by the Collateral Agent or the exercise or
non-exercise by the Collateral Agent of any option, right, request,
judgment or other right or remedy provided for herein or resulting or
arising out of this Agreement shall, as between the Collateral Agent
and the Holders, be governed by the Senior Debenture Indenture and by
such other agreements with respect thereto as may exist from time to
time among them, but, as between the Collateral Agent and the Pledgor,
the Collateral Agent shall be conclusively presumed to be acting as
agent for the Holders with full and valid authority so to act or
refrain from acting, and the Pledgor shall not be obligated or entitled
to make any inquiry respecting such authority.
SECTION 18.16 Resignation or Removal of the Collateral
Agent. Until such time as the Secured Obligations shall have been paid in
full, the Collateral Agent may at any time, by giving written notice to the
Pledgor and the Holders, resign and be discharged of the responsibilities
hereby created, such resignation to become effective upon (i) the appointment
of a successor Collateral Agent and (ii) the acceptance of such appointment by
such successor Collateral Agent. As promptly as practicable after the giving
of any such notice, the Holder or Holders of at least 25% in principal amount
of the Senior Debentures then outstanding shall appoint a successor Collateral
Agent, which successor Collateral Agent shall be reasonably acceptable to the
Pledgor. If no successor Collateral Agent shall be appointed and shall have
accepted such appointment within 90 days after the Collateral Agent gives the
aforesaid notice of resignation, the Collateral Agent may apply to any court
of competent jurisdiction to appoint a successor Collateral Agent to act until
such time, if any, as a successor shall have been appointed as provided in
this Section 18.16. Any successor so appointed by such court shall immediately
and without further act be superseded by any successor Collateral Agent
appointed by the Holders, as provided in this Section 18.16. Simultaneously
with its replacement as Collateral Agent hereunder, the Collateral Agent so
replaced shall deliver to its successor all documents, instruments,
certificates and other items of whatever kind (including, without limitation,
the certificates and instruments evidencing the Pledged Collateral and all
instruments of transfer or assignment) held by it pursuant to the terms
hereof. The Collateral Agent that has resigned shall be entitled to fees,
costs and expenses to the extent incurred or arising, or relating to events
occurring, before its resignation or removal.
SECTION 18.17 Release; Termination of Agreement. Subject to
the provisions of Section 18.12 hereof, this Agreement shall terminate (i)
upon full and final payment and performance of the Secured Obligations (and
upon receipt by the Collateral Agent of the Trustee's written certification
that all such Obligations have been satisfied) and payment in full of all fees
and expenses owing by the Pledgor to the Collateral Agent or (ii) upon Legal
Defeasance of all of the Secured Obligations pursuant to Section 8.02 of the
Senior Debenture Indenture (other than those surviving Obligations specified
therein). At such time, the Collateral Agent shall, at the request of the
Pledgor, reassign and redeliver to the Pledgor all of the Pledged Collateral
hereunder that has not been sold, disposed of, retained or applied by the
Collateral Agent in accordance with the terms hereof. Such reassignment and
redelivery shall be without
B-17
<PAGE>
warranty by or recourse to the Collateral Agent, except as to the absence of
any prior assignments by the Collateral Agent of its interest in the Pledged
Collateral, and shall be at the expense of the Pledgor.
SECTION 18.18 Final Expression. This Agreement, together
with any other agreement executed in connection herewith, is intended by the
parties as a final expression of this Agreement and is intended as a complete
and exclusive statement of the terms and conditions thereof.
SECTION 18.19 GOVERNING LAW; SUBMISSION TO JURISDICTION;
WAIVER OF JURY TRIAL; WAIVER OF DAMAGES.
(i) THIS AGREEMENT SHALL BE GOVERNED BY AND INTERPRETED
UNDER THE LAWS OF THE STATE OF NEW YORK, AND ANY DISPUTE ARISING OUT OF,
CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED
BETWEEN THE PLEDGOR, THE COLLATERAL AGENT AND THE HOLDERS IN CONNECTION WITH
THIS AGREEMENT, AND WHETHER ARISING IN CONTRACT, TORT, EQUITY OR OTHERWISE,
SHALL BE RESOLVED IN ACCORDANCE WITH THE INTERNAL LAWS (AS OPPOSED TO THE
CONFLICT OF LAWS PROVISIONS) AND DECISIONS OF THE STATE OF NEW YORK.
(ii) EXCEPT AS PROVIDED IN THE NEXT PARAGRAPH AND IN
PARAGRAPH (vi) BELOW, THE PLEDGOR, THE COLLATERAL AGENT AND THE HOLDERS AGREE
THAT ALL DISPUTES BETWEEN OR AMONG THEM ARISING OUT OF, CONNECTED WITH,
RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN
CONNECTION WITH THIS AGREEMENT, AND WHETHER ARISING IN CONTRACT, TORT, EQUITY,
OR OTHERWISE, SHALL BE RESOLVED ONLY BY STATE OR FEDERAL COURTS LOCATED IN NEW
YORK, NEW YORK, BUT THE PLEDGOR, THE COLLATERAL AGENT AND THE HOLDERS
ACKNOWLEDGE THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY A COURT
LOCATED OUTSIDE OF NEW YORK, NEW YORK. THE PLEDGOR WAIVES IN ALL DISPUTES ANY
OBJECTION THAT IT MAY HAVE TO THE LOCATION OF THE COURT CONSIDERING THE
DISPUTE INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR
BASED ON THE GROUNDS OF FORUM NON CONVENIENS.
(iii) THE PLEDGOR AGREES THAT THE COLLATERAL AGENT SHALL, IN
ITS OWN NAME OR IN THE NAME AND ON BEHALF OF ANY HOLDER, HAVE THE RIGHT, TO
THE EXTENT PERMITTED BY APPLICABLE LAW, TO PROCEED AGAINST THE PLEDGOR OR ITS
PROPERTY IN A COURT IN ANY LOCATION REASONABLY SELECTED IN GOOD FAITH TO
ENABLE THE COLLATERAL AGENT TO REALIZE ON SUCH PROPERTY, OR TO ENFORCE A
JUDGEMENT OR OTHER COURT ORDER ENTERED IN FAVOR OF THE COLLATERAL AGENT. THE
PLEDGOR AGREES THAT IT WILL NOT ASSERT ANY PERMISSIVE COUNTERCLAIMS IN ANY
PROCEEDING BROUGHT BY THE COLLATERAL AGENT TO REALIZE ON SUCH PROPERTY, OR TO
ENFORCE A JUDGMENT OR OTHER
B-18
<PAGE>
COURT ORDER IN FAVOR OF THE COLLATERAL AGENT. THE PLEDGOR WAIVES ANY OBJECTION
THAT IT MAY HAVE TO THE LOCATION OF THE COURT IN WHICH THE COLLATERAL AGENT
HAS COMMENCED A PROCEEDING DESCRIBED IN THIS PARAGRAPH INCLUDING, WITHOUT
LIMITATION, ANY OBJECTION TO COURT ORDER IN FAVOR OF THE COLLATERAL AGENT. THE
PLEDGOR WAIVES ANY OBJECTION THAT IT MAY HAVE TO THE LOCATION OF THE COURT IN
WHICH THE COLLATERAL AGENT HAS COMMENCED A PROCEEDING DESCRIBED IN THIS
PARAGRAPH INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE
OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS.
(iv) THE PLEDGOR, THE COLLATERAL AGENT AND THE HOLDERS EACH
WAIVE ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER
SOUNDING IN CONTRACT, TORT, OR OTHERWISE ARISING OUT OF, CONNECTED WITH,
RELATED TO OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN
CONNECTION WITH THIS AGREEMENT. INSTEAD, ANY DISPUTES RESOLVED IN COURT WILL
BE RESOLVED IN A BENCH TRIAL WITHOUT A JURY.
(v) THE PLEDGOR HEREBY IRREVOCABLY DESIGNATES ITS SECRETARY
AS THE DESIGNEE, APPOINTEE AND AGENT OF THE PLEDGOR TO RECEIVE, FOR AND ON
BEHALF OF THE PLEDGOR, SERVICE OF PROCESS IN SUCH RESPECTIVE JURISDICTIONS IN
ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT. IT IS
UNDERSTOOD THAT NOTICE AND A COPY OF SUCH PROCESS SERVED ON SUCH AGENT WILL BE
FORWARDED PROMPTLY TO THE PLEDGOR, BUT THE FAILURE OF THE PLEDGOR TO RECEIVE
SUCH NOTICE AND COPY SHALL NOT AFFECT IN ANY WAY THE SERVICE OF SUCH PROCESS.
THE PLEDGOR FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS ANY OF THE
AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF
COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO THE
PLEDGOR AT ITS ADDRESS SET FORTH IN SECTION 12.02 OF THE SENIOR DEBENTURE
INDENTURE, SUCH SERVICE TO BECOME EFFECTIVE FIVE (5) BUSINESS DAYS AFTER SUCH
MAILING.
(vi) NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE COLLATERAL
AGENT, ANY HOLDER OR ANY HOLDER OF ANY OF THE NOTES TO SERVE PROCESS IN ANY
OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE
PROCEED AGAINST THE PLEDGOR IN ANY OTHER JURISDICTION.
(vii) THE PLEDGOR AGREES THAT NEITHER THE COLLATERAL AGENT
NOR ANY HOLDER SHALL HAVE ANY LIABILITY TO THE PLEDGOR (WHETHER SOUNDING IN
TORT, CONTRACT OR OTHERWISE) FOR LOSSES SUFFERED BY THE PLEDGOR IN CONNECTION
WITH, ARISING OUT OF, OR IN ANY WAY RELATED TO, THE TRANSACTIONS CONTEMPLATED
AND THE RELATIONSHIP ESTABLISHED BY THIS AGREEMENT, OR ANY ACT, OMISSION OR
EVENT OCCURRING IN CONNECTION THEREWITH, UNLESS IT IS DETERMINED BY A FINAL
AND NONAPPEALABLE JUDGMENT OF A COURT THAT IS BINDING ON THE COLLATERAL AGENT
OR SUCH HOLDER, AS THE CASE MAY BE, THAT SUCH LOSSES WERE THE RESULT OF ACTS
OR OMISSIONS ON THE PART OF THE
B-19
<PAGE>
COLLATERAL AGENT OR SUCH HOLDER, AS THE CASE MAY BE, CONSTITUTING GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT.
(viii) THE PLEDGOR WAIVES ALL RIGHTS OF NOTICE AND HEARING
OF ANY KIND PRIOR TO THE EXERCISE BY THE COLLATERAL AGENT OR ANY HOLDER OF ITS
RIGHTS DURING THE CONTINUANCE OF AN EVENT OF DEFAULT TO REPOSSESS THE PLEDGED
COLLATERAL WITH JUDICIAL PROCESS OR TO REPLEVY, ATTACH OR LEVY UPON THE
PLEDGED COLLATERAL OR OTHER SECURITY FOR THE SECURED OBLIGATIONS. THE PLEDGOR
WAIVES THE POSTING OF ANY BOND OTHERWISE REQUIRED OF THE COLLATERAL AGENT OR
ANY HOLDER IN CONNECTION WITH ANY JUDICIAL PROCESS OR PROCEEDING TO OBTAIN
POSSESSION OF, REPLEVY, ATTACH OR LEVY UPON COLLATERAL OR OTHER SECURITY FOR
THE SECURED OBLIGATIONS, TO ENFORCE ANY JUDGMENT OR OTHER COURT ORDER ENTERED
IN FAVOR OF THE COLLATERAL AGENT OR ANY HOLDER, OR TO ENFORCE BY SPECIFIC
PERFORMANCE, TEMPORARY RESTRAINING ORDER OR PRELIMINARY OR PERMANENT
INJUNCTION, THIS AGREEMENT OR ANY OTHER AGREEMENT OR DOCUMENT BETWEEN THE
PLEDGOR, THE COLLATERAL AGENT AND THE HOLDERS.
SECTION 18.20 Acknowledgments. The Pledgor hereby
acknowledges that:
(a) it has been advised by counsel in the negotiation,
execution and delivery of this Agreement;
(b) neither the Collateral Agent nor any Holder has any
fiduciary relationship to the Pledgor, and the relationship between
the Collateral Agent and the Holders, on the one hand, and the
Pledgor, on the other hand, is solely that of a secured party and a
debtor; and
(c) no joint venture exists among the Holders or among the
Pledgor and the Holders.
[Signature Page Follows]
B-20
<PAGE>
[Security and Pledge Agreement Signature Page]
IN WITNESS WHEREOF, the Pledgor and the Collateral Agent
have each caused this Agreement to be duly executed and delivered as of the
date first above written.
PLEDGOR:
Finlay Enterprises, Inc.
By:
-----------------------
Name:
Title:
COLLATERAL AGENT:
Marine Midland Bank
By:
------------------------
Name:
Title:
B-21
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE I
PLEDGED SHARES
Number of Pledged Share Certificate Percentage of
Issuer Shares Number Outstanding
- ------ ----------------- ----------------- -------------
<S> <C> <C> <C>
Finlay Fine Jewelry 1000 1 100.000%
Corporation
</TABLE>
<TABLE>
<CAPTION>
PLEDGED NOTES
Original Principal
Maker of Note Payee of Note Final Maturity Amount
- ------------- ------------- -------------- ------------------
<S> <C> <C> <C>
</TABLE>
B-22
<PAGE>
ANNEX A
[Form of Issuer's Acknowledgment]
Marine Midland Bank
[address]
Attn: [ ]
[ date]
Re: Finlay Enterprises, Inc.
___% Senior Debentures due _______, 2008
Security and Pledge Agreement dated as of _____, 1998
Ladies and Gentlemen:
We refer to the Security and Pledge Agreement, dated the date hereof (the
"Security and Pledge Agreement"), by and between Finlay Enterprises, Inc. (the
"Pledgor"), and Marine Midland Bank, as collateral agent (the "Collateral
Agent"), a copy of which is attached hereto as Exhibit 1. Capitalized terms
used but not defined herein shall have the meaning ascribed thereto in the
Security and Pledge Agreement.
For good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Finlay Fine Jewelry Corporation (the "Company") hereby
irrevocably consents to the terms and conditions of the Security and Pledge
Agreement and covenants and agrees that it shall perform all acts and discharge
all obligations which the Pledgor is required pursuant to the terms thereof to
cause to be performed or discharged by it. Without limiting the generality of
the foregoing, the Company irrevocably agrees that (i) it shall upon receipt of
notice from the Collateral Agent of certificates representing the Pledged
Shares, together with duly executed instruments of transfer or assignment,
immediately cause such Pledged Shares to be registered in the name of the
Collateral Agent and (ii) it shall, upon receipt of notice from the Collateral
Agent of an Event of Default, execute all such documents and take all such
actions as may be convenient or necessary in order to give effect to the
provisions of Section 6(f) of the Security and Pledge Agreement.
By:
-----------------------
[name]
[title]
B-23
<PAGE>
Exhibit 1
[Form of Security and Pledge Agreement]
B-24
<PAGE>
ANNEX B
[Form of Officers' Certificate]
Marine Midland Bank
[address]
Attn: [ ]
[date]
Re: Finlay Enterprises, Inc.
12% Senior Discount Debentures Due 2005
Indenture dated as of May 26, 1993, as Supplemented
Ladies and Gentlemen:
This Officers' Certificate is issued (i) to you in your capacity as trustee
(the "Old Trustee") under the indenture, dated as of May 26, 1993, by and
between you and ourselves (as supplemented by the First Supplemental
Indenture, dated as of October 28, 1994, by and among Finlay Enterprises,
Inc., a Delaware corporation ("Finlay Enterprises"), Sonab Holdings, Inc., a
Delaware corporation ("Holdings"), Sonab International, Inc., a Delaware
Corporation ("International"), Societe Nouvelle D'Achat De Bijouterie, a
French societe en nom collectif ("Sonab"), and the Trustee, and the Second
Supplemental Indenture, dated as of July 14, 1995, by and among Finlay
Enterprises, Holdings, International, Sonab and the Trustee (the "Old
Indenture"), pursuant to Sections 10.08 and 11.04 thereof and (ii) to you in
your capacity as collateral agent (the "Old Collateral Agent") under the
Pledge Agreement, dated as of May 26, 1993, by and between you and ourselves
(as amended as of the date hereof, the "Old Pledge Agreement"), in accordance
with Section 18.17 thereof. Capitalized terms used but not defined herein
shall have the meaning ascribed thereto in the Security and Pledge Agreement
(the "Security and Pledge Agreement"), dated the date hereof, by and between
you, as collateral agent (the "Collateral Agent"), and ourselves.
We confirm that (i) we have read Sections 4.10 and 10.08 of the Old Indenture
and Section 18.17 of the Old Pledge Agreement, (ii) we have examined the other
provisions of the Old Indenture and the Old Pledge Agreement applicable to or
in connection with the release of the Liens (as defined in the Old Indenture)
upon the Pledged Collateral (as defined in the Old Pledge Agreement), (iii) in
our opinion, we have made such examination or investigation as is necessary to
enable us to express an informed opinion as to whether the conditions to the
release of such Liens have been satisfied and (iv) in our opinion, the
Obligations (as defined in the Old Indenture) of the Pledgor under the Old
Indenture and the Old Debentures have been paid in full and satisfied and all
conditions to the release of such Liens have been satisfied.
Accordingly, you are hereby irrevocably instructed in your capacity as Old
Trustee to deliver to the Old Collateral Agent a certificate stating that such
Obligations have been paid in full and instructing the Old Collateral Agent to
execute, deliver, acknowledge and file such instruments
B-25
<PAGE>
of termination, satisfaction or release (including, without limitation, any
termination statements) as the Collateral Agent may direct in order to
evidence the release of all Pledged Collateral permitted to be released
pursuant to the Old Indenture, and to deliver or cause to be delivered to the
Collateral Agent all certificates or instruments representing, evidencing or
comprising the Pledged Collateral to be held by it pursuant to the Security
and Pledge Agreement, accompanied by duly executed instruments of transfer or
assignment in blank, all in form and substance satisfactory to the Collateral
Agent.
These instructions may not be countermanded or varied without the prior
written consent of Marine Midland Bank, in its capacity as Trustee under the
Senior Debenture Indenture.
By:_____________________________
[name]
[title]
By:_____________________________
[name]
[title]
B-26
<PAGE>
ANNEX C
[Form of Old Collateral Agent's Confirmation]
Finlay Enterprises, Inc.
529 Fifth Avenue
New York, New York 10017
Attn: Secretary and Corporate Counsel
[date]
Ladies and Gentlemen:
Reference is made to your Officers' Certificate, dated the date hereof.
Capitalized terms used but not defined herein shall have the meaning ascribed
thereto therein.
We hereby confirm that all fees and expenses owing to us in our capacity as
Old Collateral Agent have been paid.
By: MARINE MIDLAND BANK
By:_______________________
[name]
[title]
B-27
<PAGE>
ANNEX D
[Form of Collateral Agent's Acknowledgment]
Finlay Enterprises, Inc.
529 Fifth Avenue
New York, New York 10017
Attn: [ ]
Goldman, Sachs & Co.
Donaldson, Lufkin & Jenrette Securities Corporation
NationsBanc Montgomery Securities LLC
c/o Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
[date]
Ladies and Gentlemen:
We refer to the Security and Pledge Agreement, dated the date hereof, by and
between Finlay Enterprises, Inc. and ourselves (the "Security and Pledge
Agreement"). Capitalized terms used but not defined herein shall have the
meaning ascribed thereto in the Security and Pledge Agreement. We hereby
confirm that the certificates and instruments set forth on Schedule I hereto
evidencing, representing or comprising the Pledged Collateral, accompanied, in
each case, by duly executed instruments of transfer or assignment in blank,
have been delivered to us, in our capacity as Collateral Agent, by Marine
Midland Bank, in its capacity as Old Collateral Agent.
By: MARINE MIDLAND BANK
By:_______________________
[name]
[title]
B-28
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE I
PLEDGED SHARES
Number of Pledged Share Certificate Percentage of
Issuer Shares Number Outstanding
- ------ ------------------ ----------------- -------------
<S> <C> <C> <C>
Finlay Fine Jewelry 1000 1 100.000%
Corporation
</TABLE>
<TABLE>
<CAPTION>
PLEDGED NOTES
Original Principal
Maker of Note Payee of Note Final Maturity Amount
- ------------- ------------- -------------- ------------------
<S> <C> <C> <C>
</TABLE>
B-29
<PAGE>
EXHIBIT C
[FORM OF TRADE NAME LICENSE AGREEMENT]
Trade Name License Agreement (this "Agreement"), dated as of
____________, ________, between [_____________], a corporation organized and
existing under the laws of [state] (the "Licensor"), and [____________], a
corporation organized and existing under the laws of [state] (the "Licensee").
Whereas, the Licensee is the owner of certain trade names and service
marks shown on Schedule A hereto and has utilized such trade names and services
marks in the operation of jewelry departments or stores and related activities;
and
Whereas, on the date hereof Licensee has sold, transferred, conveyed
and assigned its right, title and interest to use such trade names and service
marks and goodwill associated therewith in the United States (but not elsewhere)
to Licensor; and
Whereas, pursuant to the Indenture dated as of April __, 1998 between
Finlay Enterprises, Inc. and Marine Midland Bank, as trustee (the "Indenture"),
relating to Finlay Enterprises, Inc.'s __% Senior Debentures due 2008 (the
"Senior Debentures"), in connection with such sale, transfer, conveyance and
assignment, Licensee and Licensor are required to enter into this Agreement; and
Whereas, the Licensee desires to obtain, and the Licensor desires to
grant to the Licensee, an exclusive right to use the Licensed Trade Names (as
defined in Section 1) in the Territory (as defined in Section 1) on or in
connection with the operation of jewelry departments or stores and related
purchasing, consigning, merchandising, selling, marketing, promoting,
advertising, distributing, manufacturing, importing of or other activities
relating to jewelry upon the terms and conditions set forth below;
Now therefore, to effect the foregoing, the parties hereto agree as
follows:
SECTION 1. DEFINITIONS.
"Affiliate" as used herein means, with respect to either party, any
entity controlling, controlled by or under common control with such party. For
purposes of the foregoing definition, the term "control" (and correlative terms)
means the power, whether by contract, equity ownership or otherwise, to direct
the policies or management of an entity.
"Governmental Authority" as used herein means any federal, state,
county, local or other governmental department, regulatory body, commission,
board, bureau, agency or instrumentality.
"Licensed Products" as used herein means jewelry products which are
sold in jewelry departments or stores operated by the Licensee or any other
products sold in any other venue with the prior approval of the Licensor.
<PAGE>
"Licensed Trade Names" as used herein means the trade names and service
marks shown on Schedule A attached hereto.
"Licensee" as used herein means the Licensee, its Affiliates (other
than the Licensor), sublicensees and successors to the Licensee's business.
"Parties" as used herein means the Licensor and the Licensee.
"Quality" as used herein means products marketed and promoted as
quality items which meet or exceed the quality standards set forth in Section 4
below.
"Revenues" as used herein means gross revenues generated by sales of
the Licensed Products in the Territory less sales taxes, shipping, freight, or
transport charges if separately stated on an invoice; actual discounts or
allowances to customers; and returns in the normal course of business.
"Territory" as used herein means the United States of America, any
political subdivisions thereof and its territories, commonwealths and
possessions.
SECTION 2. GRANT TO THE LICENSEE AND RELATED MATTERS.
(a) Exclusivity. The Licensor hereby grants to the Licensee, except as
otherwise provided herein, an exclusive right in the Territory to use the
Licensed Trade Names in connection with the operation of jewelry departments and
stores whether now existing or hereafter established and the related purchasing,
consigning, merchandising, selling, marketing, promoting, advertising,
distributing, manufacturing, importing of or other activities relating to the
Licensed Products.
(b) Reserved Rights. All rights in the Licensed Trade Names other than
those specifically granted herein are reserved to the Licensor for its own use
and benefit.
(c) Ownership. The parties acknowledge and agree that the Licensed
Trade Names are the sole and exclusive property of the Licensor. The Licensee
acknowledges and agrees that the Licensee shall not acquire any right, title or
interest in or to the Licensed Trade Names as a result of this License
Agreement, or the Licensee's use thereof, or as a result of any other act or
thing, that the Licensee shall not attack the Licensor's title to or ownership
of the Licensed Trade Names, and that all use of the Licensed Trade Names by the
Licensee and all goodwill generated thereby shall inure to the benefit of the
Licensor. The Licensee shall not use or register or claim rights in any trade
name, trade dress or other indicia confusingly similar, in whole or in part, to
the Licensed Trade Names.
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(d) Sublicenses. The Licensee shall not grant any sublicense to use the
Licensed Trade Names, other than to Licensee's Affiliates without the express
prior written approval of the Licensor.
(e) Royalty Provisions. Upon receipt of an invoice from the Licensor,
Licensee agrees to pay the Licensor a royalty equal to [___ percent (__%) of
Revenues generated from sales of the Licensed Products by the Licensee in the
Territory.]
(f) Statements and Payments.
(i) Licensor has the option to request payment of such
royalties at the end of each six-month period by sending an invoice to Licensee.
Within thirty (30) days after receipt of such invoice, Licensee shall furnish a
statement, certified as accurate by an officer of Licensee, showing in
reasonable detail Licensee's sales of the Licensed Products, applicable
allowances or credits, uncollectible amounts, invoiced free or sample items
distributed and a calculation of Revenues for the Licensed Products, as well as
the amount of royalties payable with respect to such prior six month period.
(ii) Acceptance by the Licensor of any statement furnished or
royalty paid shall not preclude the Licensor from questioning its correctness
and, if any inconsistencies or mistakes are discovered, they shall immediately
be rectified.
(iii) All payments made by Licensee hereunder will be paid to
Licensor or its designee in United States Dollars.
(iv) The Licensee shall pay interest on any overdue royalty
payment at the prime rate in effect on the date on which such payment was due,
and such interest shall accrue from the date on which such payment was due.
(v) If the Licensee does not receive an invoice from the
Licensor, all royalties due and payable shall be paid within thirty (30) days
after receiving the next invoice, together with interest on such royalties at
the prime rate in effect on the date such payment was initially due, and such
interest shall accrue from the date on which such payment was due.
(g) Audit.
(i) The Licensee shall keep complete and accurate records and
books of account at its principal place of business covering all transactions
relating to this Agreement, and the Licensor and/or its duly authorized
representative shall have the right, during regular business hours and upon ten
(10) days reasonable notice, at least once quarterly, to examine such books and
all other documents and materials in Licensee's possession or control with
respect to this Agreement. Neither Licensor nor any of its representatives shall
disclose to any other person, firm or corporation any information acquired as a
result of such examination, provided, however, that nothing herein contained
shall be construed to prevent Licensor and/or Licensee or their duly authorized
representatives from testifying in any court of competent jurisdiction with
respect to the information obtained as a result of any such examination in any
action instituted to enforce the
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rights of Licensor under the terms of this Agreement. If such an audit reveals
an underpayment by the Licensee, the Licensee shall immediately remit payment to
the Licensor in the amount of the underpayment plus interest calculated at the
prime rate then in effect from the date such payment(s) were actually due. If
such underpayment is greater than __% of the royalties payable for the audited
period, the Licensee shall reimburse the Licensor for the costs and expenses of
such audit.
(ii) All books of account and records of the Licensee relating
to this Agreement shall be retained for at least two (2) years after termination
of this Agreement.
SECTION 3. METHOD OF USE OF THE LICENSED TRADE NAMES.
(a) Use. The Licensee acknowledges that the Licensed Trade Names have
acquired a valuable secondary meaning and goodwill to department stores and
vendors in the retail jewelry market place. Accordingly, the Licensee undertakes
and agrees not to use the Licensed Trade Names in any manner whatsoever which,
directly or indirectly, would derogate or detract from its repute or which would
dilute, demean, ridicule or reflect adversely upon the Licensed Trade Names or
the Licensor, it being mutually agreed that use by the Licensee of the Licensed
Trade Names in the manner being used on the date hereof shall meet Licensor's
standards. The Licensee acknowledges that the Licensed Trade Names have become
associated generally with products and services that possess a positive and
quality image, and the Licensee agrees not to use the Licensed Trade Names in
any manner inconsistent with such image. The Licensee agrees to utilize the
Licensed Trade Names in a Quality manner in connection with the operation of
jewelry departments or stores and the purchasing, consigning, merchandising,
selling, marketing, promoting, advertising, distributing, manufacturing,
importing of or other activities relating to the Licensed Products.
(b) Form and Manner. Except as may be otherwise specifically provided
in this Agreement, the Licensee may not (i) make any change in the form of the
Licensed Trade Names, (ii) use any partial version of the Licensed Trade Names
at any time for any purpose, or (iii) use the Licensed Trade Names in
combination, juxtaposition or conjunction with, or as part of, any other
trademarks, service marks or trade names without the express prior written
approval of the Licensor, which approval may not be unreasonably withheld, it
being mutually agreed that use by the Licensee of the Licensed Trade Names in
the manner being used on the date hereof shall meet Licensor's standards. Any
mark approved pursuant to this paragraph shall be owned solely and exclusively
by the Licensor and after approval shall be deemed a Licensed Trade Name
pursuant to this Agreement.
(c) Marking. The Licensee shall apply such trade name notices,
copyright notices or other markings in connection with the Licensed Trade Names
as may be necessary or reasonably deemed desirable by the Licensor under the
laws or regulations of each jurisdiction of the Territory where such Licensed
Trade Names are used.
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SECTION 4. QUALITY STANDARDS.
(a) Quality. The Licensee shall not sell any Licensed Products or
operate any jewelry departments or stores or conduct related activities in
connection with the Licensed Trade Names that shall fail to meet the quality
standards and specifications employed in connection with use of the Licensed
Trade Names as of the date hereof or such additional standards or specifications
as may be reasonably specified by the Licensor from time to time, it being
mutually agreed that use by the Licensee of the Licensed Trade Names in the
manner being used on the date hereof shall meet Licensor's standards. The
Licensee shall operate jewelry departments or stores or conduct related
activities in connection with the Licensed Trade Names only in a manner that
will protect the reputation of the Licensed Trade Names.
(b) On Site Inspections. Upon reasonable notice, the Licensor or its
representatives shall have access for inspection purposes to the jewelry
departments or stores operated by Licensee during regular business hours at such
time or times as to not unduly interfere with the operations of the Licensee to
determine compliance with quality control standards. If any inspection of any
premises reveals that the Licensee has failed to comply with the quality
standards or other requirements of this Section 4, the Licensor shall be
entitled to reinspect such premises until receipt of notice of cure by the
Licensee. All expenses of conducting such inspections shall be borne by the
Licensor.
(c) Governmental Inquiries. The Licensee shall immediately notify the
Licensor in writing of any investigation, inquiry, claim or sanction by any
Governmental Authority regarding any quality, labeling, advertising or other
regulatory matter relating to the Licensed Products and shall keep the Licensor
advised of the progress and findings of such investigation or inquiry.
(d) Compliance; Fitness for Use. The Licensee shall be solely
responsible for and shall comply with all laws, rules and regulations, if any,
of Governmental Authorities in connection with the operation of jewelry
departments or stores in connection with the Licensed Trade Names and the
related purchasing, consigning, merchandising, selling, marketing, promoting,
advertising, distributing, manufacturing, importing of or other activities
relating to any goods or services.
SECTION 5. TERM.
The term of this License Agreement shall commence as of the date hereof
and continue until the earlier of (a) the date on which none of the Senior
Debentures is outstanding and all obligations of Finlay Enterprises, Inc. under
the Indenture have been satisfied in full, (b) the date on which Licensee
permanently ceases operating jewelry departments and stores and the related
purchasing, consigning, merchandising, selling, marketing, promoting,
advertising, distributing, manufacturing, importing of or other activities
relating to the Licensed Products, or (c) the date on which the Licensor sells,
transfers, conveys and assigns to the Licensee all of the Licensor's right,
title and interest in and to the Licensed Trade Names. Upon the termination of
this Agreement, all the rights of the Licensee hereunder shall automatically
revert to the Licensor, the parties shall perform all other acts which may be
necessary or useful to render effective the
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termination of the interest of the Licensee in the Licensed Trade Names, and the
Licensee shall execute any assignment, conveyance, acknowledgment or other
document that the Licensor may require, relinquishing or conveying to the
Licensor any and all rights to or interest in use of the Licensed Trade Names
that the Licensee has and any goodwill associated therewith. Without any
limitation of the foregoing, the Licensee hereby consents to any application
which the Licensor may make, upon termination of this Agreement, to limit or
terminate the Licensee's status as a registered user and hereby irrevocably
agrees not to contest, oppose or dispute such application.
SECTION 6. REMEDIES.
(a) In the event of a breach of this Agreement, the aggrieved party's
sole and exclusive remedy shall be specific performance of this Agreement,
including any injunctive relief necessary to effect such specific performance.
In particular and without any limitation of the foregoing, the Licensor shall
not institute litigation against any person or entity for infringement of any
Licensed Trade Name based in whole or in part on any activities or rights
covered or protected by this Agreement, and Licensee shall not commence any
action seeking a declaration of invalidity, unenforceability or noninfringement
of any registrations or applications covering the Licensed Trade Names or
asserting any rights to the Licensed Trade Names or any mark or name confusingly
similar thereto.
(b) The parties further agree that this Agreement and the license
granted herein may under no circumstances be rescinded and may be terminated
only as expressly provided in Section 5 above.
SECTION 7. PROTECTION OF THE LICENSED TRADE NAMES.
(a) Maintenance. The Licensor shall maintain at its expense each of the
registrations for the Licensed Trade Names shown on Schedule A, if any, in full
force and effect as long as this Agreement continues in effect, and the Licensee
agrees to provide such assistance and documentation as is required for such
maintenance. The Licensor shall file such additional applications as Licensee
shall reasonably request to protect the Licensed Trade Names, and Licensor shall
diligently prosecute such applications and maintain any registrations issuing
thereon.
(b) Infringement. The Licensee shall notify the Licensor of any
suspected, actual or threatened infringement of or act of unfair competition or
other harmful or wrongful activities of third parties with respect to the
Licensed Trade Names as to which it has notice. The Licensee shall cooperate
with the Licensor with respect to any action to be taken with respect thereto.
The Licensor will have the obligation to take whatever steps are reasonably
necessary or desirable to protect the Licensed Trade Names from any such
infringement or other harmful or wrongful activities of third parties and shall
have the right to control any litigation or other proceeding undertaken by it
for any such purpose. Such steps may include the filing and prosecution of (i)
litigation against infringement or unfair competition by third parties, (ii)
opposition proceedings to oppose applications for trade name or service mark
registration for marks that are confusingly similar to any one or more of the
Licensed Trade Names, and
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(iii) cancellation proceedings to cancel registration of trade names or service
marks that are confusingly similar to any one or more of the Licensed Trade
Names.
(c) Claims Against the Licensee. The Licensee shall promptly notify the
Licensor of any claim of infringement or any complaint based upon the Licensee's
use of the Licensed Trade Names and of any suit, action or proceeding brought
against the Licensee based upon said claim or complaint, and the provisions of
Section 10 shall apply.
SECTION 8. RECORDATION OF AGREEMENT.
The parties shall cooperate to determine and comply with applicable
laws or regulations throughout the Territory with respect to the recordation of,
validation of, or otherwise to render effective this Agreement. In countries
having registered user or license recordation requirements, the parties shall
execute all documents which may be necessary to record the Licensee as a
registered user or licensee for the Licensed Trade Names, and all costs of
preparing and recording any necessary documents or other costs in connection
therewith shall be borne by the Licensee.
SECTION 9. REPRESENTATIONS AND WARRANTIES.
(a) Representations and Warranties of the Licensor. The Licensor
represents and warrants as follows:
(i) Due Organization and Power of the Licensor. The Licensor
is a corporation duly organized, validly existing and in good standing
under the laws of [state] and has all requisite corporate power and
authority to enter into this Agreement and perform its obligations
hereunder.
(ii) Authorization and Validity of the Agreement. The
execution, delivery and performance by the Licensor of this Agreement
and the consummation by it of the transactions contemplated hereby has
been duly authorized by its Board of Directors and, if necessary, its
shareholders, and no other corporate action on the part of the Licensor
is necessary for the execution, delivery and performance by the
Licensor of this Agreement and the consummation by the Licensor of the
transactions contemplated hereby. This Agreement has been duly executed
and delivered by the Licensor, and this License Agreement is the legal,
valid and binding obligation of the Licensor, enforceable against the
Licensor in accordance with and subject to its terms except as may be
limited by bankruptcy, insolvency, reorganization, fraudulent
conveyance or transfer, moratorium, or other similar laws and equitable
principles relating to or limiting creditor's rights generally.
(iii) No Conflict. The execution, delivery and performance by
the Licensor of this Agreement and the consummation by the Licensor of
the transactions contemplated hereby does not and will not (A) violate
any provision of any federal, state, local or foreign law, rule or
regulation or any order, injunction, judgment or decree applicable to
the Licensor; (B) require any consent or approval of, or filing
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with or notice to, any Governmental Authority under any provision of
law applicable to the Licensor other than filings under applicable
trade name laws or except as may be contemplated under any provision of
this Agreement; (C) violate any provision of the Certificate of
Incorporation or By-Laws or other constituent documents of the
Licensor; or (D) require any consent, approval or notice under,
conflict with, or result in the breach, lapse, cancellation or
termination of, or result in the acceleration (whether after the filing
of notice or the lapse of time or both) of any right or obligation of
or the performance by the Licensor under, or result in a loss of any
benefit to which the Licensor is entitled under, or constitute a
default under any indenture, mortgage, deed of trust, lease, license,
franchise, contract, agreement, concession or other instrument to which
the Licensor is a party or by which it, or any of its assets, are bound
or encumbered, where the failure to obtain such consent, approval or
notice or the occurrence of any of the matters referred to in this
subsection (D) would materially adversely affect the Licensee's rights
hereunder.
Except as expressly provided above in this Section 9(a) or elsewhere in this
Agreement, the Licensor makes no other representations or warranties regarding
this Agreement or the rights Licensed hereunder.
(b) Representations and of Warranties of the Licensee. The Licensee
represents and warrants as follows:
(i) Due Organization and Power of the Licensee. The Licensee
is a corporation duly organized, validly existing and in good standing
under the laws of [state] and has all requisite corporate power and
authority to enter into this Agreement and perform its obligations
hereunder.
(ii) Authorization and Validity of the Agreement. The
execution, delivery and performance by the Licensee of this Agreement
and the consummation by it of the transactions contemplated hereby have
been duly authorized by its Board of Directors, and no other corporate
action on the part of the Licensee is necessary for the execution,
delivery and performance by the Licensee of this Agreement and the
consummation by the Licensee of the transactions contemplated hereby.
This Agreement has been duly executed and delivered by the Licensee,
and this Agreement is the legal, valid and binding obligation of the
Licensee, enforceable against the Licensee in accordance with and
subject to its terms except as may be limited by bankruptcy,
insolvency, reorganization, fraudulent conveyance or transfer,
moratorium or other similar laws and equitable principles relating to
or limiting creditors' rights generally.
(iii) No Conflict. The execution, delivery and performance by
the Licensee of this Agreement and the consummation by the Licensee of
the transactions contemplated hereby does not and will not (A) violate
any provision of any federal, state, local or foreign law, rule or
regulation or any order, injunction, judgment or decree applicable to
the Licensee; (B) require any consent or approval of, or filing
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with or notice to, any Governmental Authority under any provision of
law applicable to the Licensee; (C) violate any provision of the
Certificate of Incorporation or By-Laws or other constituent documents
of the Licensee; or (D) require any consent, approval or notice under,
conflict with, or result in the breach, lapse, cancellation or
termination of, or result in the acceleration (whether after the filing
of notice or the lapse of time or both) of any right or obligation of
or the performance by the Licensee under, or result in a loss of any
benefit to which the Licensee is entitled under, or constitute a
default under any indenture, mortgage, deed of trust, lease, license,
franchise, contract, agreement, concession or other instrument to which
the Licensee is a party or by which it or any of its assets are bound
or encumbered, where the failure to obtain such consent, approval or
notice or the occurrence of any of the matters referred to in this
subsection (D) would materially adversely affect the Licensee's rights
hereunder.
SECTION 10. INDEMNIFICATION.
(a) By the Licensor. The Licensor shall indemnify, defend and hold
harmless the Licensee from and against and in respect of any and all claims,
losses, damages, expenses, obligations, penalties, demands, suits, procedures,
assessments, judgments, costs and liabilities (including costs of collection,
investigation, reasonable attorneys' fees and other costs of defense) ("Losses")
incurred by it, arising out of or resulting from any breach of any
representation, warranty, covenant or agreement made by the Licensor herein.
(b) By the Licensee. The Licensee shall indemnify, defend and hold
harmless the Licensor and its Affiliates from and against and in respect of any
and all Losses incurred by them arising out of or resulting from any breach of
any representation, warranty, covenant or agreement made by the Licensee herein.
(c) Procedure. If a claim by a third party is made against an
indemnified party, the indemnified party shall promptly notify the indemnifying
party of such claim. Failure to so notify the indemnifying party shall not
relieve the indemnifying party of any liability which the indemnifying party
might have, except to the extent that such failure materially prejudices the
indemnifying party's legal rights. The indemnifying party shall have thirty days
after receipt of such notice to undertake, conduct and control, through counsel
of its own choosing (subject to the consent of the indemnified party, such
consent not to be unreasonably withheld) and at its expense, the settlement or
defense of such claim, and the indemnified party shall cooperate with the
indemnifying party in connection therewith; provided, however, that (i) the
indemnifying party shall permit the indemnified party to participate in such
settlement or defense through counsel chosen by the indemnified party, provided
that the fees and expenses of such counsel shall be borne by the indemnified
party and (ii) the indemnifying party shall reimburse the indemnified party for
the full amount of any Loss resulting from such claim and all related expenses
incurred by the indemnified party within the limits of this Section 10 as such
are incurred. Notwithstanding anything contained herein, the indemnifying party
shall not enter into any settlement without the consent of the indemnified
party, unless the settlement involves the payment of money only and the
indemnified party is solely liable for payment of said money. So long as the
indemnifying party is reasonably contesting any such claim in good faith, the
indemnified party shall not pay or
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settle any such claim. Notwithstanding the foregoing, the indemnified party
shall have the right to pay or settle any such contested claim (provided that
such settlement does not adversely affect any rights of the indemnifying party
with respect to the Licensed Trade Names), but in such event it shall
automatically waive any right to indemnity therefor by the indemnifying party.
If the indemnifying party does not notify the indemnified party within thirty
days after receipt of the indemnified party's notice of a claim of indemnity
hereunder that it elects to undertake the defense thereof, or so notifies the
indemnified party but fails to undertake or maintain such defense promptly and
in good faith, the indemnified party shall have the right to contest, settle or
compromise the claim in the exercise of its reasonable judgment and without
prejudice to the rights of the indemnified party to indemnification hereunder.
(d) Survival. The provisions of this Section 10 shall survive the
termination or expiration of this Agreement.
SECTION 11. MISCELLANEOUS.
(e) Notices. Except as otherwise provided herein, all notices,
requests, demands, waivers and other communications required or permitted to be
given under this Agreement shall be in writing and shall be deemed to have been
duly given if delivered personally or by overnight courier with delivery charges
prepaid, or mailed by certified or registered mail, postage prepaid, receipt
requested, or sent by telecopy, as follows:
If to the Licensor, to it at:
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with a copy to:
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If to the Licensee, to it at:
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with a copy to:
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or to such other person or address as either party shall specify by notice in
writing to the other party. All such notices, requests, demands, waivers and
communications shall be deemed to have been received on the date of delivery.
(f) Binding Effect; Benefit. This Agreement shall inure to the benefit
of and be binding upon the parties hereto and their respective successors and
permitted assigns. Nothing in this Agreement, expressed or implied, is intended
to confer on any person other than the parties
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hereto or their respective successors and assigns, any rights, remedies,
obligations or liabilities under or by reason of this Agreement.
(g) Entire Agreement. This Agreement (including the Schedule hereto)
constitutes the entire agreement between the parties hereto with respect to the
subject matter hereof and supersedes all other prior agreements and
understandings, oral and written, between the parties hereto with respect to the
subject matter hereof.
(h) Assignability. This Agreement shall be freely assignable by the
Licensee to any successor of the Licensee's business which is a wholly owned
subsidiary of the Licensee with respect to the operation of jewelry departments
and the related purchasing, consigning, merchandising, selling, marketing,
promoting, advertising, distributing, manufacturing, importing of or other
activities relating to jewelry products. This Agreement shall not be assignable
by the Licensor.
(i) Relationship of the Parties. This Agreement shall in no way
constitute or give rise to a partnership, joint venture or agency between the
parties, it being acknowledged and agreed that the relationship created hereby
is strictly that of licensor and licensee. Except as may be expressly provided
to the contrary herein, nothing in this Agreement shall constitute or be deemed
to constitute either party as the legal representative or agent of the other,
nor shall either party have the right or authority to assume, create or incur
any liability or any obligation of any kind, express or implied, in the name of
or on behalf of the other party.
(j) Amendment and Modification; Waiver. Subject to applicable law, this
Agreement (including Schedule A hereto) may only be amended, modified and
supplemented by written instrument expressly identified as an amendment hereto
authorized and executed by the Licensor and the Licensee at any time prior to
the termination hereof with respect to any of the terms contained herein. No
waiver by any party of any of the provisions hereof shall be effective unless
explicitly set forth in writing and executed by the party so waiving. The waiver
by any party hereto of a breach of any provision of this Agreement shall not
operate or be construed as a waiver of any other or subsequent breach. No
failure on the part of either party hereto to exercise, and no delay in
exercising, any right hereunder shall operate as a waiver thereof.
(k) Further Assurances. From time to time, pursuant to the request of
the Licensee delivered to the Licensor, the Licensor, at the Licensee's expense,
shall execute and deliver such instruments and documents and take such actions
as the Licensee may reasonably request in order to allow the Licensee the use of
the Licensed Trade Names contemplated hereby or otherwise to carry out the
purposes and intent of this Agreement. From time to time, pursuant to the
request of the Licensor delivered to the Licensee, the Licensee, at the
Licensor's expense, shall execute and deliver such instruments and documents and
take such actions as the Licensor may reasonably request to carry out the
purposes and intent of this Agreement.
(l) Section Headings. The section headings contained in this Agreement
are inserted for reference purposes only and shall not affect the meaning or
interpretation of this Agreement.
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(m) Counterparts. This Agreement may be executed in several
counterparts, each of which shall be an original, and all of which shall be
deemed to be one and the same agreement.
(n) Applicable Law. This Agreement and the legal relations between the
parties hereto shall be governed by and construed in accordance with the laws of
the State of New York without regard to choice of laws or principles thereof.
(o) Severability of Provisions. Any provision of this Agreement which
is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or enforceability
without invalidating the remaining provisions hereof or affecting the validity
or enforceability of such provisions in any other jurisdiction.
IN WITNESS WHEREOF, the parties hereto have executed this License
Agreement as of the date first above written.
[NAME OF LICENSOR]
By:
--------------------------------
Name:
Title:
[NAME OF LICENSEE]
By:
--------------------------------
Name:
Title:
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SCHEDULE A
Licensed Trade Names
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EXHIBIT D
FORM OF SUBSIDIARY GUARANTEE
For good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the undersigned Guarantor (which
term includes any successor Person under the Indenture) jointly and severally,
hereby unconditionally guarantees, subject to the provisions in the Indenture
dated as of April __, 1998 (the "Indenture") among Finlay Enterprises, Inc.,
and Marine Midland Bank, as trustee (the "Trustee"), but irrespective of the
validity and enforceability of the Indenture, the Debentures and the
obligations of the Company thereunder, (a) the due and punctual payment of the
principal of, premium, if any, and interest on the Debentures (as defined in
the Indenture), whether at maturity, by acceleration, redemption or otherwise,
the due and punctual payment of interest on overdue principal and premium,
and, to the extent permitted by law, interest, and the due and punctual
performance of all other obligations of the Company to the Holders or the
Trustee all in accordance with the terms of the Indenture and (b) in case of
any extension of time of payment or renewal of any Debentures or any of such
other obligations, that the same will be promptly paid in full when due or
performed in accordance with the terms of the extension or renewal, whether at
stated maturity, by acceleration or otherwise. The obligations of the
Guarantors to the Holders of Debentures and to the Trustee pursuant to the
Subsidiary Guarantee and the Indenture are expressly set forth in Article 11
of the Indenture and reference is hereby made to the Indenture for the precise
terms of the Subsidiary Guarantee. Each Holder of a Debenture, by accepting
the same, agrees to and shall be bound by such provisions.
[Name of Guarantor]
By:
--------------------------
Name:
Title:
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EXHIBIT E
FORM OF SUPPLEMENTAL INDENTURE
TO BE DELIVERED BY SUBSIDIARY GUARANTORS
SUPPLEMENTAL INDENTURE (this "Supplemental Indenture"),
dated as of _______________, among ___________________ (the "Guaranteeing
Subsidiary"), a subsidiary of Finlay Enterprises, Inc. (or its permitted
successor), a Delaware corporation (the "Company"), the other Guarantors (as
defined in the Indenture referred to herein) and Marine Midland Bank, as
trustee under the Indenture referred to below (the "Trustee").
WITNESSETH
WHEREAS, the Company has heretofore executed and delivered
to the Trustee an indenture (the "Indenture"), dated as of April __, 1998
providing for the issuance of an aggregate principal amount of up to $75.0
million of __% Debentures due ________, 2008 (the "Debentures");
WHEREAS, the Indenture provides that under certain
circumstances the Guaranteeing Subsidiary shall execute and deliver to the
Trustee a supplemental indenture pursuant to which the Guaranteeing Subsidiary
shall unconditionally guarantee all of the Company's Obligations under the
Debentures and the Indenture on the terms and conditions set forth herein and
in the Indenture (the "Subsidiary Guarantee"); and
WHEREAS, pursuant to Sections 9.01 and 9.06 of the
Indenture, the Trustee is authorized to execute and deliver this Supplemental
Indenture;
NOW THEREFORE, in consideration of the foregoing and for
other good and valuable consideration, the receipt of which is hereby
acknowledged, the Guaranteeing Subsidiary, the Company and the Trustee
mutually covenant and agree for the equal and ratable benefit of the Holders
of the Debentures as follows:
1. Capitalized Terms. Capitalized terms used herein without
definition shall have the meanings assigned to them in the Indenture.
2. Agreement to Guarantee. The Guaranteeing Subsidiary
hereby unconditionally guarantees all of the Company's Obligations as set
forth in Article 11 of the Indenture in the same manner and to the same extent
as if it had executed the Indenture on the date thereof as Guarantor
thereunder.
3. Continuing Agreement. Except as herein amended, all
terms, provisions and conditions of the Indenture, all Exhibits thereto and
all instruments executed in connection therewith shall continue in full force
and effect and shall remain enforceable and binding in accordance with their
respective terms.
4. New York Law to Govern. THE INTERNAL LAW OF THE STATE OF
NEW YORK SHALL GOVERN AND BE USED TO CONSTRUE THIS SUPPLEMENTAL
E-1
<PAGE>
INDENTURE BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF
LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION
WOULD BE REQUIRED THEREBY.
5. Counterparts. The parties may sign any number of copies
of this Supplemental Indenture. Each signed copy shall be an original, but all
of them together constitute the same agreement.
6. Effect of Headings. The Section headings herein are for
convenience only and shall not affect the construction hereof.
7. The Trustee. The Trustee shall not be responsible in any
manner whatsoever for or in respect of the validity or sufficiency of this
Supplemental Indenture or for or in respect of the recitals contained herein,
all of which recitals are made solely by the Guaranteeing Subsidiary and the
Company.
IN WITNESS WHEREOF, the parties hereto have caused this
Supplemental Indenture to be duly executed and attested, all as of the date
first above written.
Dated: ______________, ____
[GUARANTEEING SUBSIDIARY]
By: _____________________________
Name:
Title:
FINLAY ENTERPRISES, INC.
By: _____________________________
Name:
Title:
MARINE MIDLAND BANK, as Trustee
By: _____________________________
Name:
Title:
E-2
<PAGE>
EXHIBIT F
[FORM OF SUBSIDIARY INTERCOMPANY NOTE]
PROMISSORY NOTE
$[ ] New York, New York
[date]
FOR VALUE RECEIVED, [ ], a [ ] corporation ("Borrower"), promises to
pay to the order of [ ], a [ ] corporation ("Payee"), [upon demand by the
Payee] [on _______], at its office at [ ], or at such other place as the Payee
may, from time to time, designate in writing, in lawful money of the United
States of America, in immediately available funds, the principal sum of [ ]
Dollars ($[ ]) [together with interest thereon at a rate of [ ]% per annum from
[ ] until maturity].
PAYEE AND ANY HOLDER HEREOF, BY ITS ACCEPTANCE OF THIS PROMISSORY
NOTE, AGREES THAT THE PAYMENT OF THE PRINCIPAL OF [AND INTEREST ON] THIS
PROMISSORY NOTE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE PRIOR PAYMENT IN
FULL IN CASH OF ALL INDEBTEDNESS OF THE BORROWER OTHER THAN INDEBTEDNESS WHICH
BY ITS TERMS IS SUBORDINATE IN RIGHT OF PAYMENT TO OTHER INDEBTEDNESS OF THE
BORROWER ("SENIOR DEBT"), WHETHER OUTSTANDING ON THE DATE HEREOF OR HEREAFTER
CREATED, INCURRED, ASSUMED OR GUARANTEED, AND THAT THE SUBORDINATION IS FOR
THE BENEFIT OF THE HOLDERS OF THE SENIOR DEBENTURES.
[Borrower will pay interest [semi-annually] in arrears on [ ] and [ ]
of each year, or if any such day is not a Business Day, on the next succeeding
Business Day (each an "Interest Payment Date"). Interest on this Promissory Note
will accrue from the most recent date
F-1
<PAGE>
to which interest has been paid or, if no interest has been paid, from the
date of issuance; provided that the first Interest Payment Date shall be [ ].
[Borrower shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue principal from time to time on
demand at a rate that is [ ]% per annum in excess of the rate then in effect;
it shall pay interest (including post-petition interest in any proceeding
under any Bankruptcy Law) on overdue installments of interest (without regard
to any applicable grace periods) from time to time on demand at the same rate
to the extent lawful.] Interest will be computed on the basis of a 360- day
year of twelve 30-day months.]
Upon any distribution to creditors of Borrower in an insolvency or in
connection with any proceeding under Bankruptcy Law relating to Borrower or
its property, (i) holders of Senior Debt shall be entitled to receive payment
in full in cash of all Obligations due in respect of such Senior Debt
(including post-petition interest in any proceeding under Bankruptcy Law)
before the holder hereof shall be entitled to receive any payment of the
principal hereof [or interest hereon] and (ii) until all Obligations with
respect to Senior Debt are paid in full in cash, any distribution to which the
holder hereof would otherwise be entitled shall be made to the holders of such
Senior Debt on a pro rata basis.
Any contrary provision hereof notwithstanding, Borrower may not make
any payment of the principal hereof [or interest hereon] if a default occurs and
is continuing with respect to any Senior Debt.
Upon the failure of the Borrower to pay principal [or accrued interest]
when due and at any time thereafter (but prior to the payment in full of all
such accrued and unpaid interest) the holder of this Promissory Note may declare
the unpaid principal balance and all accrued and unpaid interest hereon to be
immediately due and payable.
F-2
<PAGE>
In the event that any action shall be brought for the enforcement
hereof, the undersigned hereby promises to pay all costs and expenses hereof,
including, but not limited to, reasonable attorneys' fees and disbursements.
Borrower's obligations hereunder shall be unconditional and shall not
be subject to any defense (other than prior payment), set-off, deduction,
counterclaim or recoupment whatsoever by Borrower.
Any amounts due under this Promissory Note may be prepaid at any time
or times in whole or in part without premium or penalty.
Presentation, notice of protest, and demand are hereby expressly
waived by the undersigned.
Capitalized terms used but not defined herein have the meanings
ascribed to such terms in the Indenture, dated as of April __, 1998, between
Finlay Enterprises, Inc. and Marine Midland Bank, as trustee.
THE TERMS OF THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS
MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE.
BORROWER
By: ______________________________
Name:
Title:
F-3
<PAGE>
April 17, 1998
Finlay Enterprises, Inc.
529 Fifth Avenue
New York, New York 10017
Finlay Enterprises, Inc.
Registration Statement on Form S-3
Registration No. 333-48567
Ladies and Gentlemen:
In connection with the referenced Registration Statement on
Form S-3, as amended (the "Registration Statement"), filed with the Securities
and Exchange Commission under the Securities Act of 1933, as amended (the
"Act"), and the rules and regulations under the Act (the "Rules"), we have been
requested by Finlay Enterprises, Inc., a Delaware corporation (the "Company"),
to furnish our opinion as to the legality of the 567,310 shares (the "Company
Shares") of the Company's Common Stock, par value $.01 (the "Common Stock"),
offered by the Company, the 1,032,690 shares (the "Stockholder Shares" and,
together with the Company Shares, the "Shares") of the Company's Common Stock
offered by the selling stockholders
<PAGE>
Finlay Enterprises, Inc. 2
(the "Selling Stockholders") and the aggregate of up to 240,000 Shares of stock
to be sold by the Company and certain Selling Stockholders if the over-allotment
option is exercised by the Underwriters, all of which Shares are registered for
sale under the Registration Statement.
In connection with the furnishing of this opinion, we have reviewed the
Registration Statement (including all amendments), the form of the Underwriting
Agreement included as Exhibit 1.1 to the Registration Statement (the
"Underwriting Agreement"), originals, or copies certified or otherwise
identified to our satisfaction, of the Company's Amended and Restated
Certificate of Incorporation and Amended and Restated By-laws, each as in effect
today and records of certain corporate proceedings of the Company.
In addition, we have assumed, without independent investigation, the
genuineness of all signatures, the authenticity of all documents submitted to us
as originals and the conformity of original documents to all documents submitted
to us as certified, photostatic, reproduced or conformed copies, the
authenticity of all the latter documents and the legal capacity of all
individuals who have executed any of the documents reviewed by us.
We have also examined and relied upon representations as to factual
matters contained in certificates of officers of the Company, and have made
those other investigations of fact and law and have examined and relied upon the
originals, or copies certified or otherwise identified to our satisfaction, of
those documents,
<PAGE>
Finlay Enterprises, Inc. 3
records, certificates or other instruments, and upon factual information
otherwise supplied to us, as in our judgment are necessary or appropriate to
render the opinions expressed below.
Based upon the foregoing, we are of the opinion that (i) the Company
Shares, when issued, delivered and paid for as contemplated in the Registration
Statement and the Underwriting Agreement, will be duly authorized, validly
issued, fully paid and nonassessable, (ii) the Stockholder Shares have been duly
authorized, validly issued and fully paid and are nonassessable and (iii) any
shares of Common Stock which may be registered for sale under a related
registration statement filed under Rule 462(b) under the Act (a) by the Company,
when duly issued, delivered and paid for, will be duly authorized, validly
issued, fully paid and nonassessable and (b) by the Selling Stockholders have
been duly authorized, validly issued and fully paid and are nonassessable.
Our opinions expressed above are limited to the General Corporation Law
of the State of Delaware. Please be advised that no member of this firm is
admitted to practice in the State of Delaware. Our opinion is rendered only with
respect to laws, and the rules, regulations and orders under them, which are
currently in effect.
We hereby consent to use of this opinion as an Exhibit to the
Registration Statement and to the use of our name under the heading "Legal
Matters" contained in the Prospectus included in the Registration Statement. In
giving this
<PAGE>
Finlay Enterprises, Inc. 4
consent, we do not admit that we come within the category of persons whose
consent is required by the Act or the Rules.
We also consent to the incorporation by reference of this opinion as an
Exhibit in a related registration statement filed by the Company under Rule
462(b) under the Act and to the use of our name under the heading "Legal
Matters" contained in the Prospectus included in the Registration Statement. In
giving this consent, we do not admit that we come within the category of persons
whose consent is required by the Act or the Rules.
Very truly yours,
/s/ PAUL, WEISS, RIFKIND, WHARTON & GARRISON
<PAGE>
April 17, 1998
Finlay Enterprises, Inc.
529 Fifth Avenue
New York, New York 10017
Finlay Enterprises, Inc.
Registration Statement on Form S-3
Registration No. 333-48567
--------------------------
Ladies and Gentlemen:
In connection with the referenced Registration Statement on Form S-3,
as amended (the "Registration Statement"), filed with the Securities and
Exchange Commission under the Securities Act of 1933, as amended (the "Act"),
and the rules and regulations under the Act (the "Rules"), we have been
requested by Finlay Enterprises, Inc., a Delaware corporation (the "Company"),
to furnish our opinion as to the legality of $75,000,000 aggregate principal
amount of the Company's Senior Debentures due 2008 (the "Securities") being
registered under the Registration Statement.
<PAGE>
Finlay Enterprises, Inc. 2
In connection with the furnishing of this opinion, we have reviewed (i)
the Registration Statement (including all amendments filed on or prior to the
date of this letter); (ii) the form of Indenture to be executed by the Company
and Marine Midland Bank, as Trustee, relating to the Securities (the
"Indenture"); (iii) the form of the Underwriting Agreement included as Exhibit
1.1 to the Registration Statement (the "Underwriting Agreement," and, together
with the Registration Statement and the Indenture, the "Documents"); and (iv)
originals, or copies certified or otherwise identified to our satisfaction, of
the Company's Amended and Restated Certificate of Incorporation and Amended and
Restated By-laws, each as in effect on the date of this letter, and records of
certain corporate proceedings of the Company.
In our examination of the above documents, we have assumed, without
independent investigation, (i) the enforceability of the Documents against each
party thereto (other than the Company), (ii) the genuineness of all signatures,
(iii) the authenticity of all documents submitted to us as originals and the
conformity of original documents to all documents submitted to us as certified,
photostatic, reproduced or conformed copies, (iv) the authenticity of all the
latter documents and (v) the legal capacity of all individuals who have executed
any of the documents reviewed by us.
We have also examined and relied upon representations as to factual
matters contained in certificates of officers of the Company, and have made
those other investigations of fact and law and have examined and relied upon the
originals,
<PAGE>
Finlay Enterprises, Inc. 3
or copies certified or otherwise identified to our satisfaction, of those
documents, records, certificates or other instruments, and upon factual
information otherwise supplied to us, as in our judgment are necessary or
appropriate to render the opinions expressed below.
Based upon the foregoing, and subject to the assumptions, exceptions
and qualifications set forth in this opinion, we are of the opinion that (i) the
Securities, when issued, delivered and paid for as provided in the Underwriting
Agreement and when issued, authenticated and delivered in accordance with the
terms of the Indenture and in accordance with the terms set forth in the
Registration Statement, will be legal, valid and binding obligations of the
Company enforceable against the Company in accordance with their terms, and (ii)
any additional Securities which may be registered for sale under a related
registration statement filed under Rule 462(b) under the Act, when issued,
delivered and paid for as provided in the Underwriting Agreement and when
issued, authenticated and delivered in accordance with the terms of the
Indenture and in accordance with the terms set forth in the Registration
Statement, will be legal, valid and binding obligations of the Company
enforceable against the Company in accordance with their terms. The
enforceability of the Securities or any additional Securities registered for
sale pursuant to Rule 462(b) may be limited by (a) bankruptcy, insolvency,
fraudulent conveyance or transfer, reorganization, moratorium and other similar
laws affecting creditors' rights
<PAGE>
Finlay Enterprises, Inc. 4
generally and (b) general principles of equity (regardless of whether
enforcement is considered in equity or at law).
Our opinions expressed above are limited to the General Corporation Law
of the State of Delaware, the laws of the State of New York and the federal laws
of the United States. Please be advised that no member of this firm is admitted
to practice in the State of Delaware. Our opinion is rendered only with respect
to laws, and the rules, regulations and orders under them, which are currently
in effect.
We hereby consent to use of this opinion as an Exhibit to the
Registration Statement and to the use of our name under the heading "Legal
Matters" contained in the Prospectus included in the Registration Statement. In
giving this consent, we do not admit that we come within the category of persons
whose consent is required by the Act or the Rules.
We also consent to the incorporation by reference of this opinion as an
Exhibit in a related registration statement filed by the Company pursuant to
Rule 462(b) under the Act and to the use of our name under the heading "Legal
Matters" contained in the Prospectus included in the Registration Statement. In
giving this consent, we do not admit that we come within the category of persons
whose consent is required by the Act or the Rules.
Very truly yours,
/s/ PAUL, WEISS, RIFKIND, WHARTON & GARRISON
<PAGE>
EXHIBIT 12.1
FINLAY ENTERPRISES, INC.
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
--------------------------------------------------------------------
PRO FORMA
JAN. 29, JAN. 28, FEB. 3, FEB. 1, JAN. 31, JAN. 31,
1994 1995 1996 1997 1998 1998
-------- -------- -------- ------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
EARNINGS:
Income (loss) from operations............ $ 33,819 $ 36,499 $ 48,299 $53,996 $ 61,837 $61,837
-------- -------- -------- ------- -------- --------
FIXED CHARGES:
Interest expense, net (including debt
issuance costs amortization)........... $ 25,469 $ 28,488 $ 29,705 $31,204 $ 34,115 $30,530
Interest income.......................... 36 26 154 97 98 98
-------- -------- -------- ------- -------- --------
Total interest expense................. 25,505 28,514 29,859 31,301 34,213 30,628
Capitalized interest..................... -- -- -- -- 660 660
======== ======== ======== ======= ======== ========
Total fixed charges.................... $ 25,505 $ 28,514 $ 29,859 $31,301 $ 34,873 $31,288
======== ======== ======== ======= ======== ========
Earnings divided by fixed charges........ 1.3x 1.3x 1.6x 1.7x 1.8x 2.0x
======== ======== ======== ======= ======== ========
</TABLE>
<PAGE>
Exhibit 23.1
[ARTHUR ANDERSEN LLP LETTERHEAD]
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our
report included in this Registration Statement and to the incorporation by
reference in this Registration Statement 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
-----------------------
Arthur Andersen LLP
New York, New York
April 15, 1998
<PAGE>
EXHIBIT 25
Conformed Copy
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE TRUST
INDENTURE ACT OF 1939 OF A CORPORATION
DESIGNATED TO ACT AS TRUSTEE
-----------
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2)
-----------
Marine Midland Bank
(Exact name of trustee as specified in its charter)
New York 16-1057879
(Jurisdiction of incorporation (I.R.S. Employer
or organization if not a U.S. Identification No.)
national bank)
140 Broadway, New York, N.Y. 10005-1180
(212) 658-1000 (Zip Code)
(Address of principal executive
offices)
Charles E. Bauer
Vice President
Marine Midland Bank
140 Broadway
New York, New York 10005-1180
Tel: (212) 658-1792
(Name, address and telephone number of agent for service)
FINLAY ENTERPRISES, INC.
(Exact name of registrant as specified in its charter)
Delaware 13-3492802
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
529 Fifth Avenue
New York, New York 10175
(212) 808-2800 (Zip Code)
(Address of principal executive
offices)
Senior Debentures due 2008
(Title of Indenture Securities)
<PAGE>
General
Item 1. General Information.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervisory authority to
which it is subject.
State of New York Banking Department.
Federal Deposit Insurance Corporation, Washington, D.C.
Board of Governors of the Federal Reserve System,
Washington, D.C.
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
Item 2. Affiliations with Obligor.
If the obligor is an affiliate of the trustee, describe each
such affiliation.
None
<PAGE>
Item 16. List of Exhibits.
Exhibit
T1A(i) * - Copy of the Organization Certificate of
Marine Midland Bank.
T1A(ii) * - Certificate of the State of New York
Banking Department dated December 31,
1993 as to the authority of Marine Midland
Bank to commence business.
T1A(iii) - Not applicable.
T1A(iv) * - Copy of the existing By-Laws of Marine
Midland Bank as adopted on January 20,
1994.
T1A(v) - Not applicable.
T1A(vi) * - Consent of Marine Midland Bank required
by Section 321(b) of the Trust Indenture
Act of 1939.
T1A(vii) - Copy of the latest report of condition of
the trustee (December 31, 1997), published
pursuant to law or the requirement of its
supervisory or examining authority.
T1A(viii) - Not applicable.
T1A(ix) - Not applicable.
* Exhibits previously filed with the Securities and Exchange Commission with
Registration No. 33-53693 and incorporated herein by reference thereto.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, the Trustee,
Marine Midland Bank, a banking corporation and trust company organized under
the laws of the State of New York, has duly caused this statement of
eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in the City of New York and State of New York on the 8th day
of April, 1998.
MARINE MIDLAND BANK
By: /s/ Frank J. Godino
----------------------
Frank J. Godino
Vice President
<PAGE>
Exhibit T1A (vii)
Board of Governors of the Federal Reserve System
OMB Number: 7100-0036
Federal Deposit Insurance Corporation
OMB Number: 3064-0052
Office of the Comptroller of the Currency
OMB Number: 1557-0081
Federal Financial Institutions Examination Council Expires March 31, 2000
- -------------------------------------------------------------------------------
Please refer to page i, Table of Contents, for the required disclosure of
estimated burden. /1/
Consolidated Reports of Condition and Income for A Bank With Domestic and
Foreign Offices--CFFIEC 031
Report at the close of business December 31, 1997
(971231)
------------
(RCRI 9999)
This report is required by law; 12 U.S.C. Section 324 (State member banks); 12
U.S.C. Section 1817 (State nonmember banks); and 12 U.S.C. Section 161 (National
banks).
This report form is to be filed by banks with branches and consolidated
subsidiaries in U.S. territories and possessions, Edge or Agreement
subsidiaries, foreign branches, consoli-dated foreign subsidiaries, or
International Banking Facilities.
NOTE: The Reports of Condition and Income must be signed by an authorized
officer and the Report of Condition must be attested to by not less than two
directors (trustees) for State nonmember banks and three directors for State
member and National Banks.
I, Gerald A. Ronning, Executive VP & Controller
--------------------------------------------
Name and Title of Officer Authorized to Sign Report
of the named bank do hereby declare that these Reports of Condition and Income
(including the supporting schedules) have been prepared in conformance with
the instructions issued by the appropriate Federal regulatory authority and
are true to the best of my knowledge and believe.
/s/ Gerald A. Ronning
------------------------
Signature of Officer Authorized to Sign Report
1/26/98
-------------------------
Date of Signature
The Reports of Condition and Income are to be prepared in accordance with
Federal regulatory authority instructions.
We, the undersigned directors (trustees), attest to the correctness of this
Report of Condition (including the supporting schedules) and declare that it
has been examined by us and to the best of our knowledge and belief has been
prepared in conformance with the instructions issued by the appropriate
Federal regulatory authority and is true and correct.
/s/ Malcolm Burnett
- ---------------------------
Director (Trustee)
/s/ Bernard J. Kennedy
- ---------------------------
Director (Trustee)
/s/ Sal H. Alfiero
- ---------------------------
Director (Trustee)
Submission of Reports
Each Bank must prepare its Reports of Condition and Income either:
(a) in automated form and then file the computer data file directly with
the banking agencies collection agent, Electronic Data System Corporation
(EDS), by modem or computer diskette; or
(b) in hard-copy (paper) form and arrange for another party to convert
the paper report to automated for. That party (if other than EDS) must
transmit the bank's computer data file to EDS
To fulfill the signature and attestation requirement for the Reports of
Condition and Income for this report date, attach this signature page to the
hard-copy f the completed report that the bank places in its files.
- -------------------------------------------------------------------------------
FDIC Certificate Number 0 0 5 8 9
----------------
(RCRI 9030)
<PAGE>
REPORT OF CONDITION
Consolidating domestic and foreign subsidiaries of the
Marine Midland Bank of Buffalo
Name of Bank City
in the state of New York, at the close of business
December 31, 1997
ASSETS
Thousands
of dollars
Cash and balances due from depository
institutions:
Noninterest-bearing balances
currency and coin.................................... $928,754
Interest-bearing balances ........................... 2,571,410
Held-to-maturity securities.......................... 0
Available-for-sale securities........................ 3,968,837
Federal funds sold and securities purchased
under agreements to resell............................ 497,992
Loans and lease financing receivables:
Loans and leases net of unearned
income....................21,550,115
LESS: Allowance for loan and lease
losses....................407,355
LESS: Allocated transfer risk reserve 0
Loans and lease, net of unearned
income, allowance, and reserve....................... 21,142,760
Trading assets....................................... 979,454
Premises and fixed assets (including
capitalized leases).................................. 225,646
Other real estate owned................................. 8,092
Investments in unconsolidated
subsidiaries and associated companies................... 0
Customers' liability to this bank on
acceptances outstanding................................. 24,795
Intangible assets.................................... 479,713
Other assets........................................ 488,168
Total assets...................................... 31,315,621
<PAGE>
LIABILITIES
Deposits:
In domestic offices............................ 20,072,724
Noninterest-bearing............... 4,090,858
Interest-bearing................ 15,981,866
In foreign offices, Edge, and Agreement
subsidiaries, and IBFs............................ 3,834,827
Noninterest-bearing.................. 0
Interest-bearing.................. 3,834,827
Federal funds purchased and securities sold
under agreements to repurchase.................... 2,007,482
Demand notes issued to the U.S. Treasury 192,186
Trading Liabilities............................. 215,748
Other borrowed money:
With a remaining maturity of one year
or less................................. 1,402,449
With a remaining maturity of more than
one year through three years................. 63,601
With a remaining maturity of more than
three years......................... 61,707
Bank's liability on acceptances
executed and outstanding............. 24,795
Subordinated notes and debentures.................. 497,774
Other liabilities............. 719,423
Total liabilities............. 29,092,716
EQUITY CAPITAL
Perpetual preferred stock and related
surplus.........................................0
Common Stock....................................... 205,000
Surplus........................................ 1,984,326
Undivided profits and capital reserves.............. 8,678
Net unrealized holding gains (losses)
on available-for-sale securities................. 24,901
Cumulative foreign currency translation
adjustments...................................... 0
Total equity capital.............................. 2,222,905
Total liabilities, limited-life
preferred stock, and equity capital................. 31,315,621
